<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 1996
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
HORIZON FINANCE CORPORATION
-------------------------------------------------------------
(Exact name of registrants as specified in their charters)
Delaware
------------------------------------------------
(State or other jurisdiction of organization)
23-2617703 - Horizon Cellular
33-71002 Telephone Company, L.P.
23-2741164 - Horizon Finance
33-71002-01 Corporation
- ----------------------- ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
101 Lindenwood Drive, Suite 125, Malvern, PA 19355
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (610) 651-5900
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On July 23, 1996, Horizon Cellular Telephone Company of Monongalia,
L.P., an affiliate of the Registrants ("Monongalia"), consummated the sale of
substantially all of its assets pursuant to the terms of an Asset Acquisition
Agreement dated as of May 8, 1996, as amended July 22, 1996, among Monongalia,
Eastern Wireless Cellular Corporation ("Eastern") and PriCellular Corporation
("PriCellular"). At Closing, Monongalia's assets were transferred to Northland
Cellular Corporation, an affiliate of Eastern and PriCellular. The assets
included a cellular operating license granted by the Federal Communications
Commission for the West Virginia Non-Wireline Rural Service Area ("RSA") Number
3 and related assets used in connection with the operation of a cellular
communications system in that RSA. Monongalia received approximately $35
million, which amount is subject to certain post-closing adjustments.
-2-
<PAGE> 3
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Filed herewith is the pro forma financial information required
pursuant to Article 11 of Regulation S-X.
(c) Exhibits.
Exhibit No. Description
2.1 Asset Acquisition Agreement dated as of May 8, 1996
among Horizon Cellular Telephone Company of
Monongalia, L.P., Eastern Wireless Cellular
Corporation and PriCellular Corporation
2.2 First Amendment to Asset Acquisition Agreement dated
July 22, 1996 among Horizon Cellular Telephone
Company of Monongalia, L.P., Eastern Wireless
Cellular Corporation and PriCellular Corporation
-3-
<PAGE> 4
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 hereunto duly authorized.
HORIZON CELLULAR TELEPHONE
COMPANY, L.P. (a Delaware
Limited Partnership)
BY: KCCGP, L.P., its General
Partner
BY: HORIZON G.P., INC., its
(Corporate) General Partner
Date: August 6, 1996 BY: /s/ Bruce M. Hernandez
----------------------------
Bruce M. Hernandez,
Vice President-
Finance and Chief
Financial Officer
HORIZON FINANCE CORPORATION
Date: August 6, 1996 BY: /s/ Bruce M. Hernandez
----------------------------
Bruce M. Hernandez, Vice
President
-4-
<PAGE> 5
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENT DATA
The unaudited consolidated pro forma statements of operations data for the year
ended December 31, 1995 and the three months ended March 31, 1996 give effect
to the sale in July 1996 of the Federal Communications Commission ("FCC")
Operating Licenses, together with certain operating assets and liabilities, of
Georgia RSA #6 for $35.4 million and of Georgia RSA #2 for $54.4 million
(collectively referred to as the "Georgia Cluster") as reported in the
Company's Current Report on Form 8-K filed on July 22, 1996, and of West
Virginia RSA #3 for $34.7 million ("Monongalia"), and the assumed application
of proceeds as if the transactions had occurred as of January 1, 1995.
The unaudited consolidated pro forma balance sheet data as of March 31, 1996
give effect to the sales of the Georgia Cluster and Monongalia as if they had
occurred on March 31, 1996.
The pro forma adjustments are based upon available information and upon certain
assumptions that the Company believes are reasonable. The unaudited
consolidated pro forma financial statement data are provided for informational
purposes only and do not purport to be indicative of the Company's consolidated
results of operations or consolidated financial position which would actually
have been obtained had such sales of the Georgia Cluster and Monongalia been
completed as of or for the periods presented, or which may be obtained in the
future. They should be read in conjunction with the audited and unaudited
historical consolidated financial statements of the Company.
<PAGE> 6
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET DATA
<TABLE>
<CAPTION>
ASSETS
Sale of
March 31, Georgia Sale of Use of
1996 Cluster (a) Monongalia (a) Cash (b) Pro Forma
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents . . . $ 2,121,535 $ 89,834,770 $ 35,152,640 $ (88,900,074) $ 38,208,871
Cash in escrow . . . . . . . . 9,250,000 9,250,000
Accounts receivable, net . . . 11,009,697 (2,060,763) (624,000) 8,324,934
Inventory . . . . . . . . . . . 760,700 (125,420) (45,975) 589,305
Prepaid expenses . . . . . . . 1,032,980 (79,272) (30,742) 922,966
-------------- -------------- --------------- --------------- ---------------
Total current assets . . . . . . . . 14,924,912 87,569,315 34,451,923 (79,650,074) 57,296,076
Property and equipment:
Cellular systems . . . . . . . 65,980,810 (11,230,683) (3,251,115) 51,499,012
Other . . . . . . . . . . . . . 7,242,074 (1,440,532) (521,433) 5,280,109
-------------- -------------- --------------- --------------- ---------------
73,222,884 (12,671,215) (3,772,548) 56,779,121
Accumulated depreciation . . . . . . (19,943,151) 2,881,748 1,500,884 (15,560,519)
-------------- -------------- --------------- --------------- ---------------
53,279,733 (9,789,467) (2,271,664) 41,218,602
License . . . . . . . . . . . . . . . 239,574,857 (48,973,462) (14,013,096) 176,588,299
Less accumulated amortization . . . . (16,065,390) 2,472,926 1,137,705 (12,454,759)
-------------- -------------- --------------- --------------- ---------------
223,509,467 (46,500,536) (12,875,391) 164,133,540
Advances to affiliates . . . . . . . 991,341 991,341
Other assets . . . . . . . . . . . . 35,853,046 (3,746,710) (1,825,592) (2,184,677) (c) 28,096,067
Less accumulated amortization . . . . (15,717,850) 1,182,954 1,169,167 (13,365,729)
-------------- -------------- --------------- --------------- ---------------
20,135,196 (2,563,756) (656,425) (2,184,677) 14,730,338
-------------- -------------- --------------- --------------- ---------------
Total assets . . . . . . . . . . . . $ 312,840,649 $ 28,715,556 $ 18,648,443 $ (81,834,751) $ 278,369,897
============== ============== =============== =============== ===============
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
<S> <C> <C> <C> <C> <C>
Current liabilities:
Accounts payable . . . . . . . $ 3,330,623 $ (598,725) $ (156,005) $ $ 2,575,893
Accrued liabilities . . . . . . 4,930,691 (1,017,758) (244,232) 3,668,701
Deferred revenue . . . . . . . 1,991,932 (206,503) (56,332) 1,729,097
Current portion of revolving
credit agreement . . . . . . 4,875,000 (4,875,000)
-------------- -------------- -------------- --------------- ---------------
Total current liabilities . . . . . . 15,128,246 (1,822,986) (456,569) (4,875,000) 7,973,691
Revolving credit agreement, net of
current portion . . . . . . . 73,125,000 (73,125,000)
11 3/8% senior subordinated notes . . 174,182,769 174,182,769
Minority interest . . . . . . . . . . 2,840,138 305,385 (d) 191,050 (d) (919,168) 2,417,405
Partners' Equity:
Partners' contributions . . . 127,197,323 127,197,323
Cumulative net loss . . . . . . (79,632,827) 30,233,157 (d) 18,913,962 (d) (2,915,583) (c) (33,401,291)
-------------- -------------- --------------- --------------- ---------------
Total partners' equity 47,564,496 30,233,157 18,913,962 (2,915,583) 93,796,032
Total liabilities and -------------- -------------- --------------- --------------- ---------------
partners' equity . . . . . . . . . $ 312,840,649 $ 28,715,556 $ 18,648,443 $ (81,834,751) $ 278,369,897
============== ============== =============== =============== ===============
</TABLE>
See accompanying notes.
<PAGE> 7
UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS DATA
<TABLE>
<CAPTION>
Year ended December 31, 1995
-----------------------------------------------------------------------------------------
SALE OF
HORIZON GEORGIA SALE OF PRO FORMA
HISTORICAL CLUSTER (e) MONONGALIA (e) ADJUSTMENTS PRO FORMA
-------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues and sales:
Subscriber revenues . . . . . . . $ 28,610,515 $ 3,071,601 $ 2,484,670 $ $ 23,054,244
Roaming revenues . . . . . . . . 25,287,319 4,358,090 1,251,735 19,677,494
Toll revenue . . . . . . . . . . 4,603,618 1,039,816 303,460 3,260,342
Equipment sales . . . . . . . . . 2,996,780 306,131 197,451 2,493,198
--------------- ------------ -------------- -------------- --------------
Total revenues and sales . . . . . . . 61,498,232 8,775,638 4,237,316 48,485,278
Costs and expenses:
Cost of Services . . . . . . . . 8,814,789 1,475,453 598,958 6,740,378
Cost of equipment sales . . . . . 6,428,954 811,515 513,929 5,103,510
General and adminstrative . . . . 13,735,363 1,716,157 1,181,629 10,837,577
Selling . . . . . . . . . . . . . 11,283,926 1,993,120 887,734 8,403,072
Depreciation and amortization . . 18,639,219 3,343,376 1,172,107 14,123,736
--------------- ------------ -------------- -------------- --------------
58,902,251 9,339,621 4,354,357 45,208,273
--------------- ------------ -------------- -------------- --------------
Income (loss) from operations . . . . . 2,595,981 (563,983) (117,041) 3,277,005
Interest expense, net . . . . . . . . . 26,240,552 5,713,937 (f) 20,526,615
Loss before extraordinary item --------------- ------------ -------------- -------------- --------------
and minority interest (g) . . . . $ (23,644,571) $ (563,983) $ (117,041) $ (5,713,937) $ (17,249,610)
=============== ============ ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1996
-----------------------------------------------------------------------------------------
SALE OF
HORIZON GEORGIA SALE OF PRO FORMA
HISTORICAL CLUSTER (e) MONONGALIA (e) ADJUSTMENTS PRO FORMA
-------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues and sales:
Subscriber revenues . . . . . . . $ 9,100,112 $ 1,159,282 $ 742,499 $ $ 7,198,331
Roaming revenues . . . . . . . . 6,931,860 1,465,341 270,847 5,195,672
Toll revenue . . . . . . . . . . 1,232,417 265,627 68,976 897,814
Equipment sales . . . . . . . . . 764,268 81,347 31,445 651,476
-------------- ------------- -------------- -------------- --------------
Total revenues and sales . . . . . . . 18,028,657 2,971,597 1,113,767 13,943,293
Cost and expenses:
Cost of Services . . . . . . . . 2,447,051 404,610 178,341 1,864,100
Cost of equipment sales . . . . . 1,516,642 153,510 71,396 1,291,736
General and administrative . . . . 3,845,802 501,287 297,200 3,047,315
Selling . . . . . . . . . . . . . 2,962,849 408,950 210,489 2,343,410
Depreciation and amortization . . 5,354,326 893,506 313,136 4,147,684
-------------- ------------- -------------- -------------- --------------
16,126,670 2,361,863 1,070,562 12,694,245
-------------- ------------- -------------- -------------- --------------
Income (loss) from operations . . . . . 1,901,987 609,734 43,205 1,249,048
Interest expense, net . . . . . . . . . 6,819,220 1,829,166 (f) 4,990,054
Loss before extraordinary item -------------- ------------- -------------- -------------- --------------
and minority interest (g) . . . . $ (4,917,233) $ 609,734 $ 43,205 $ (1,829,166) $ (3,741,006)
============== ============= ============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE> 8
NOTES TO THE UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENT DATA
a. Reflects the sale of the related FCC operating licenses, together with
certain operating assets and liabilities assumed by the purchasers, of
the Georgia Cluster and Monongalia as if the transactions had occurred
on March 31, 1996. The sale of Monongalia reflects the conversion of
accounts receivable (which were not sold to the purchaser) to cash, and
payment of certain liabilities not assumed by the purchaser.
b. Assumes the application of the $124.4 million generated from the sale
of the Georgia Cluster and Monongalia as follows: a) $78.0 million
used to repay borrowings under the revolving credit agreement; b)
$5.3 million and $4.0 million placed in escrow per the sale
agreements for the Georgia Cluster and Monongalia, respectively; c)
$0.7 million and $0.2 million minority interest payment for the Georgia
Cluster and Monongalia, respectively; d) $0.7 million for certain
closing costs and expenses, and e) $35.5 million excess cash.
c. Represents the write - off of deferred financing fees ($2.2 million)
related to the assumed repayment of borrowings under the revolving
credit agreement and certain closing costs and expenses aggregating
$0.7 million.
d. Represents the gain on the sale of the Georgia Cluster and Monongalia
as if the sales had occurred on March 31, 1996, net of the $0.5 million
allocated to minority interest and before write-off of deferred
financing fees and certain costs described in Note c above.
e. Reflects the actual results of operations of the Georgia Cluster and
Monongalia for the periods presented.
f. Represents a reduction of interest expense resulting from the assumed
repayment of borrowings under the revolving credit agreement from the
application of the proceeds of the sales. The pro forma adjustments
do not assume any potential investment income earned on the excess
cash proceeds, which will be temporarily invested in liquid funds
pending a decision on the ultimate use of such funds.
g. Loss before extraordinary item and minority interest does not include
the gain on the sale of the Georgia Cluster and Monongalia or any
allocation to minority interest. Minority interest primarily
represents KCCGP, L.P.
<PAGE> 9
EXHIBIT INDEX
Exhibit Page
2.1 Asset Acquisition Agreement dated as of May 8, 1996
among Horizon Cellular Telephone Company of
Monongalia, L.P., Eastern Wireless Cellular
Corporation and PriCellular Corporation
2.2 First Amendment to Asset Acquisition Agreement dated
July 22, 1996 among Horizon Cellular Telephone
Company of Monongalia, L.P., Eastern Wireless
Cellular Corporation and PriCellular Corporation
-5-
<PAGE> 1
EXHIBIT 2.1
ASSET ACQUISITION AGREEMENT
AMONG
HORIZON CELLULAR TELEPHONE COMPANY OF MONONGALIA, L.P.
EASTERN WIRELESS CELLULAR CORPORATION
AND
PRICELLULAR CORPORATION
May 8, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Certain Definitions; Purchase and Sale of Assets; Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1 .3 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Assumption of Liabilities by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Assets Not Assignable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. Escrow, Acquisition Price and Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Escrows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Acquisition Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Acquisition Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Allocation of Acquisition Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Closing Costs; Transfer Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Organizational Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Permits; FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Contracts and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12 Title; Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.13 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.16 ERISA; Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.17 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.18 Representations Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.19 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.21 Condition of Cellular Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
4. Representations and Warranties of Purchaser and PriCellular . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Organizational Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 FCC and PSC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Financial Ability to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.9 Representations of PriCellular . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Covenants of Seller, PriCellular 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 Tax Cooperation; Allocation of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Environmental Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.11 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.12 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.13 Disclaimer of Other Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 24
5.14 Guaranty by PriCellular of Purchaser's Obligations . . . . . . . . . . . . . . . . . . . . . 24
5.15 Excluded Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6. Conditions Precedent to Purchaser's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 Premerger Notification Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Representations and Warranties on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Terms, Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Absence of Restricted Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7. Conditions Precedent to Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Premerger Notification Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Representations and Warranties on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 Terms, Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
8. Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Purchaser's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Obligation to Indemnify by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Obligation to Indemnify by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Procedures for Claims Between the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 Defense of Third-Party Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12. Breaches and Defaults; Termination; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.1 Breaches and Defaults; Opportunity to Cure . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.1 Resolution of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.4 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.5 Indemnification of Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.9 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.11 Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.12 Beneficiaries of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.13 Counterparts; Facsimile Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.14 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.15 Computation of Days; Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.16 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.17 Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<PAGE> 5
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
2.1 Form of Escrow Agreement
2.3(a) Form of Instrument of Assumption
8.l(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
1.1(m) Certain Permitted Encumbrances
1.2 Purchased Assets
1.2(e) Excluded Leases
1.2(g) Prepaid Expenses
1.2(i) Excluded Contracts
1.3(h) Certain Affiliate Assets Not Used Exclusively for the
Systems
1.3(i) Other Excluded Assets
1.4 Assumed Liabilities
2.3(c) Capital Expenditures
2.4(a)(ii) Targeted Subscribers
3.4 Unaudited Financial Statements
3.6(b) FCC Licenses
3.6(c) PSC Licenses
3.8(b) Real Property Leases
3.9 Material Personal Property Leases
3.10 Material Contracts
3.11 Seller's Material Consents
3.14 Taxes
3.16 Employee Benefit Plans
4.6 Purchaser's Consents
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<PAGE> 6
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT (this "Agreement") is made as of May
8, 1996 among HORIZON CELLULAR TELEPHONE COMPANY OF MONONGALIA, L.P., a
Delaware limited partnership ("Seller"), PRICELLULAR CORPORATION, a Delaware
corporation ("PriCellular"), and EASTERN WIRELESS CELLULAR CORPORATION, a
Delaware corporation and wholly-owned subsidiary of PriCellular ("Purchaser").
WITNESSETH
WHEREAS, Seller is the sole holder of certain licenses, including the
cellular licenses granted by the Federal Communications Commission (the "FCC")
for the West Virginia Non-Wireline Cellular Rural Service Area No. 3 ("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 foregoing 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 unless the context otherwise
requires:
(a) "affiliate", with respect to any person,
means any other person controlling, controlled by or under common control with
such person. For the purposes of this definition, "control" when used with
respect to any person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
<PAGE> 7
(b) "business day" means any day other than a
Saturday, Sunday, legal holiday in the Commonwealth of Pennsylvania or the
State of New York or other day of the year on which banks are authorized or
required by law to close.
(c) "Environmental Laws" means any and all
federal, state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and
governmental restrictions, whether now or hereafter in effect, relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic, radioactive or hazardous substances
or wastes into the environment including without limitation ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic, radioactive or hazardous substances or wastes
or the clean-up or other remediation thereof.
(d) "Environmental Liabilities" means any and all
liabilities of or relating to Seller or any of its affiliates (including any
entity which is, in whole or in part, a predecessor of Seller or any such
affiliate) or arising in connection with or in any way relating to the System,
the Purchased Assets or activities or operations occurring or conducted at any
real property constituting part of the Purchased Assets (including, without
limitation, offsite disposal), whether vested or unvested, contingent or fixed,
actual or potential, known or unknown, which (i) arise under or relate to
Environmental Laws and (ii) relate to actions occurring or conditions existing
on or prior to the Closing Date.
(e) "Executive Officers" shall mean Messrs.
Michael E. Kalogris, Steven R. Skinner, Bruce M. Hernandez, J. C. Calhoun and
Robin Barnett.
(f) "GAAP" means United States generally accepted
accounting principles as in effect from time to time, applied on a basis
consistent with the most recent financial statements of Seller.
(g) "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.
(h) "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.
(i) "includes", "including" or other equivalent
words mean "including, without limitation".
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<PAGE> 8
(j) "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.
(k) "Material Adverse Change" means a material
adverse change in the Purchased Assets or in the Business, condition (financial
or otherwise) or results of operations of the System, taken as a whole,
excluding any such material adverse change resulting solely from changes,
developments or circumstances that adversely affect the cellular telephone or
telecommunications industry generally.
(l) "Material Adverse Effect" means an effect
that would result in a Material Adverse Change.
(m) "Permitted Encumbrances" means any lien or
other encumbrance set forth on Schedule 1.1(m).
(n) "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.
(o) "to Seller's knowledge" or any similar phrase
means the actual knowledge of one of the Executive Officers after due inquiry.
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 and interest of Seller in or
to all of the assets, properties and business, of every kind and description
(other than the Excluded Assets), wherever located, real, personal or mixed,
tangible or intangible, now owned or held by Seller or hereafter acquired by
Seller on or prior to the Closing Date and used in connection with the System
or the Business, including all assets shown on Schedule 1.2 as owned by Seller
and the following assets in existence as of the Closing Date (as hereinafter
defined) (collectively referred to herein as the "Purchased Assets"):
(a) all negotiable instruments or other
instruments and chattel paper generated in the conduct of the Business;
(b) all new inventory in original packaging,
including cellular mobile telephones and related accessories (collectively, the
"Inventory");
(c) all furniture, fixtures, transmitters,
switching and receiving equipment, 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, computers, improvements, parts and other tangible
personal property other than Inventory, whether or not obsolete;
3
<PAGE> 9
(d) all those certain lots and pieces of ground
now owned by Seller or acquired hereafter by Seller on or prior to the Closing
Date together with the buildings, structures and improvements erected thereon,
and together with all easements, rights and privileges appurtenant thereto (the
"Owned Real Property");
(e) except as set forth on Schedule 1.2(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 or under which Seller becomes a lessee or lessor
hereafter on or prior to the Closing Date;
(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 set forth on Schedule
1.2(g);
(h) all licenses, 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 relating to the Business, including all licenses, permits and
authorizations issued by the FCC (the "FCC Licenses") and the West Virginia
Public Service Commission ("PSC") (the "PSC Licenses") and pending applications
with the FCC and PSC, 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 and the PSC Licenses, the "Permits");
(i) except as set forth on Schedule 1.2(i), all
rights of Seller under all contracts, agreements, commitments, sales and
purchase orders and other instruments relating to the Business (collectively,
and including the Personal Property Leases and the Real Property Leases, the
"Contracts");
(j) originals or copies (at the option and
expense of Seller) of all books and records, including manuals, files, tax
returns and operating data relating to the Business or the Purchased Assets;
and
(k) all intangibles, including all rights to
the "MOUNTAINEER MOBILE" trade name.
1.3 Excluded Assets. Notwithstanding anything to the
contrary contained herein or otherwise, the Purchased Assets do not include the
following:
4
<PAGE> 10
(a) all cash on hand and in financial
institutions, cash equivalents, marketable securities and bonds ("Cash and Cash
Equivalents");
(b) all accounts receivable billed and unbilled;
(c) all federal, state and local income and
franchise tax credits and tax refund claims;
(d) partnership record books and tax returns of
Seller;
(e) any insurance policies maintained by Seller
with respect to the Business;
(f) 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;
(g) Seller's rights under this Agreement;
(h) those assets set forth on Schedule 1.3(h),
which assets are used by affiliates of Seller and do not relate to the
operation of the System;
(i) obligations of any of Seller's affiliates to
Seller;
(j) all inventory other than the Inventory;
(k) all prepaid expenses not set forth on
Schedule 1.2(g); and
(l) 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 assume and agree to discharge and perform, as and
when due, the liabilities and obligations of Seller set forth on Schedule 1.4
(which shall be prepared by Purchaser), except for the Excluded Liabilities (as
hereinafter defined) (collectively the "Assumed Liabilities").
1.5 Excluded Liabilities. Purchaser is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of
Seller of whatever nature whether presently in existence or arising hereafter.
All such other liabilities and obligations shall be retained by and remain
obligations and liabilities of Seller (all such liabilities and obligations not
being assumed herein referred to as the "Excluded Liabilities"), and,
notwithstanding anything to the contrary in this Agreement, none of the
following shall be Assumed Liabilities for the purposes of this Agreement:
5
<PAGE> 11
(a) any obligations of Seller to any of Seller's
affiliates;
(b) any liabilities for legal, accounting and
audit fees 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 obligation or liability for Tax arising
from or with respect to the Purchased Assets, the System or the Business
incurred or attributable to any period prior to (or prior to and including) the
Closing Date;
(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 or otherwise
relating to employee benefits or compensation arrangements existing on or prior
to the Closing Date;
(e) any liabilities of Seller as a borrower under
any loan agreements, subordinated debt agreements or other credit facilities;
(f) any liabilities or obligations relating to
any asset that is not a Purchased Asset; and
(g) any Environmental Liability.
1.6 Assets Not Assignable. To the extent that any
interest in the Contracts, 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, 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. Escrow, Acquisition Price and Closing.
2.1 Escrows.
(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
6
<PAGE> 12
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 event of a termination of this
Agreement by Seller in accordance with the terms of Section 12.2(c)(ii), Seller
shall be entitled to retain the entire Escrow Amount.
(b) As security for the indemnification covenants
of Seller contained in this Agreement, Four Million Dollars ($4,000,000)
(including, unless otherwise stated herein, any interest earned thereon, the
"Indemnification Escrow") shall be held and released by the Escrow Agent
pursuant to the terms of the Escrow Agreement. The Indemnification Escrow shall
be funded at the Closing, as set forth in Section 2.3(b), through the retention
of the Escrow Amount (excluding interest thereon) by the Escrow Agent and, as
set forth in Section 2.3(d), by the delivery by the Purchaser to the Escrow
Agent of $2,250,000 of the Preliminary Acquisition Price. 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 $1,750,000 of the Escrow Amount as a portion
of 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) 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 Preliminary Acquisition Price; minus
(ii) Four Million Dollars ($4,000,000); minus
(iii) the amount of Seller's budgeted
capital expenditures as set forth on Schedule 2.3(c) (the "Budgeted Capital
Expenditures"); plus
7
<PAGE> 13
(iv) an amount equal to the sum of (A)
the Budgeted Capital Expenditures actually paid by Seller prior to the Closing
Date; provided that to the extent the amount actually paid by Seller with
respect to any of the Budgeted Capital Expenditures is less than the amount so
budgeted, such difference will be credited to Seller and (B) any other capital
expenditures that are made by Seller with the prior consent of the Purchaser;
plus
(v) the amount obtained (the "Accretion
Factor Payment") by multiplying (A) the Preliminary Acquisition Price times (B)
seven percent (7%) times (C) the number of days elapsed between receipt of the
Effective Orders (as defined in Section 5.6(b)) and the earlier to occur of (x)
the date on which Purchaser delivers written notice to Seller that it is
waiving the condition that the Regulatory Approvals shall have become Final
Orders, as permitted by Section 5.6(b) and (y) the Closing Date, divided by
365; plus or minus
(vi) the Initial Adjustments Amount (as
hereinafter defined), as the case may be; and
(d) Purchaser shall deliver to the Escrow Agent Two
Million Two Hundred Fifty Thousand Dollars ($2,250,000) by wire transfer of
immediately available funds, which amount represents a portion of the
Indemnification Escrow.
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) the Preliminary Acquisition Price shall be adjusted by dollar
amount (positive or negative) of the Net Working Capital of Seller on the
Closing Date. As used herein, the term "Net Working Capital" shall mean
Seller's current assets (other than Cash and Cash Equivalents and Accounts
Receivable) minus current liabilities (other than Excluded Liabilities), as
such amounts are reflected on the Closing Date Balance Sheet (as hereinafter
defined); and (ii) if at Closing the number of actual ending subscribers
(excluding demos, loaners and employee accounts) for the System on the last day
of the month prior to Closing ("Actual Subscriber Number") is less than the
minimum ending number of subscribers for the System as of the month prior to
Closing (as reflected on Schedule 2.4(a)(ii) (the "Minimum Subscriber Number"),
then there shall be deducted from the Preliminary Acquisition Price an amount
equal to $300 times the difference between the budgeted number of subscribers
for the System as of the month prior to Closing (the "Budgeted Subscriber
Number") and the Actual Subscriber Number. If at Closing the Actual Subscriber
Number is greater than the maximum ending number of subscribers for the System
as of the month prior to Closing (as reflected on Schedule 2.4(a)(ii) (the
"Maximum Subscriber Number"), then there shall be added to the Preliminary
Acquisition Price an amount equal to $300 times the difference between the
Maximum Subscriber Number and the Actual Subscriber Number.
8
<PAGE> 14
(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 adjustment (the "Initial Adjustments
Amount") based upon an unaudited balance sheet to be prepared by Seller as of
the end of the month immediately preceding the Closing Date, such estimate to
be delivered by Seller to Purchaser at least three (3) business days prior to
Closing along with such balance sheet.
(c) As promptly as practicable after the Closing
Date (but in no event later than ninety (90) days thereafter) Seller shall
prepare and deliver to Purchaser for its review and comment (i) a balance sheet
dated as of the close 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 close of business on the Closing
Date Seller's determination of each element of the Acquisition Price
Adjustment. The Closing Date Balance Sheet shall fairly present the financial
position of the Seller as at the close of business on the Closing Date in
accordance with GAAP (except for the omission of certain footnotes and other
presentation items required by GAAP with respect to such financial statements).
If Purchaser objects to any amounts reflected on the Closing Date Balance Sheet
or the Closing Statement, Purchaser must, within thirty (30) days after
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 thirty (30) 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 Arthur Anderson & Co. or, if such firm is
unavailable or unwilling to resolve such disputes, to another nationally
recognized accounting firm mutually acceptable to Purchaser and Seller (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 requests.
(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.
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
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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 parties will agree as to
the fair market value of the tangible personal property of Seller to be
transferred to Purchaser on the Closing Date. 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) 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 11:59 p.m. on the Closing Date.
2.7 Rescission. In the event that the transactions
contemplated hereby are consummated prior to the receipt of the Final Orders
and an initial FCC approval is subsequently withdrawn and if at such time or
thereafter the parties are legally obligated to rescind, the parties shall
rescind the transaction in a manner that puts each party in the position it
would have been as of the Closing Date, had the transactions contemplated
hereby not been consummated. Purchaser further covenants and agrees that in
the event of a rescission pursuant to this Section 2.7, Purchaser will
transfer, assign and deliver the Purchased Assets to Seller in substantially
the same condition as the Purchased Assets existed on the Balance Sheet Date,
except for (i) ordinary wear and tear, (ii) Purchased Assets sold, transferred
or otherwise disposed of in the ordinary course of business and (iii) changes
in any Purchased Assets (including the loss or destruction thereof) after the
Balance Sheet Date to the extent such changes are not due to the acts or
omissions of Purchaser or would have occurred absent the consummation of the
transactions contemplated hereby; provided, that in the event of the loss or
destruction of any Purchased Assets, Purchaser shall deliver to Seller all
insurance proceeds, if any, Purchaser receives with respect thereto.
2.8 Closing Costs; Transfer Taxes and Fees. Seller and
Purchaser shall be equally 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.l(a) or
otherwise; (iii) all costs of applying for new Permits and obtaining the
transfer of existing Permits that may be lawfully transferred; (iv) the filing
fee required under the HSR Act (as hereinafter defined) and (v) the costs and
expenses of the environmental audits that are conducted pursuant to Section
5.10.
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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.
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
obligations hereunder and thereunder. The execution, delivery and performance
of this Agreement by Seller has 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. The execution, delivery and performance of this
Agreement and the documents and other agreements to be delivered hereunder by
Seller and 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) 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 would not individually or in
the aggregate 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) violate any statute, law or
regulation, excluding in any case such violations that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect,
or (v) violate or cause any revocation of or limitation on any Permit the
violation, revocation or limitation of which could reasonably be expected to
have a Material Adverse Effect.
3.4 Financial Statements. Seller has delivered to
Purchaser copies of the audited annual financial statements of Horizon Cellular
Telephone Company, L.P. ("Horizon") as of December 31, 1995, 1994 and 1993 and
for the years then ended (collectively, the "Financial Statements"). The
Financial Statements (i) are true and correct in all material respects, (ii)
fairly present the financial condition of Horizon as of such dates and the
results of its operations and
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changes in its cash flows for the periods covered thereby, and (iii) were
prepared in accordance with GAAP. Seller has also delivered to Purchaser copies
of Seller's unaudited financial statements as of March 31, 1996 (the "Balance
Sheet Date") and for the period then ended (the "Unaudited Financial
Statements"). The Unaudited Financial Statements (i) are true and correct in
all material respects, (ii) fairly present the financial condition of Seller as
of such date and the results of its operations 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).
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 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
individually or in the aggregate has not and would not reasonably be expected
to have a Material Adverse Effect.
3.6 Permits; FCC Licenses.
(a) Seller has all of the Permits necessary to
operate the System as now operated, except for those Permits the absence of
which individually or in the aggregate would not reasonably be expected to have
a Material Adverse Effect. Such Permits are in full force and effect, and are
unimpaired by any acts or omissions of Seller.
(b) 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(b). The FCC Licenses are in full
force and effect. 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.
(c) Seller applied for and obtained the PSC
Licenses in compliance with the laws of the State of West Virginia, and Seller
is, and on the Closing Date will be, the exclusive holder of the PSC Licenses.
The consents of the PSC to the assignment or transfer of control of the PSC
Licenses to Seller have been granted by Final Order. A list of the PSC
Licenses is set forth on Schedule 3.6(c). The PSC Licenses are in full force
and effect. There are no existing or, to Seller's knowledge, threatened
proceedings by or before the PSC that individually or in the aggregate could
reasonably be expected to result in the revocation, cancellation, suspension,
or material adverse modification of the PSC Licenses, except for
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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 PSC 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 or PSC (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 or PSC's own motion have expired.
(e) Seller is in material compliance with all
requirements imposed upon it by the National Radio Astronomy Observatory (the
"NROA") at Green Bank, West Virginia, and with all requirements of the FCC
related to the NROA.
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 individually or in
the aggregate 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(b) 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 individually or in the
aggregate 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 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
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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
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
3.10 Contracts and Other Agreements.
(a) Schedule 3.l0 lists the following contracts
and other agreements relating to the Business to which Seller is a party:
(i) those contracts and other agreements
that involve, as of the date hereof, the receipt or payment by Seller of more
than $25,000 annually; and
(ii) those contracts and other agreements
that involve the receipt or payment after the date hereof by Seller of more
than $10,000 annually (but less than $25,000 annually) that are not terminable
by Seller on thirty (30) or fewer days' notice at any time without penalty.
(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, 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 individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.
3.11 Consents.
(a) Except for (i) the consent of such governmental
or regulatory body or third parties as are separately identified on Schedule
3.11 (the "Material Consents"), (ii) the consent of the FCC to the assignment
of the FCC Licenses from Seller to Purchaser, (iii) the consent of the PSC to
the assignment of the PSC Licenses from Seller to Purchaser, and (iv) 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, excluding in any case
such consents, approvals, authorizations, registrations or filings, the failure
of which to obtain or make, as the case may be, individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
(b) Without independent investigation by any of the
Executive Officers, Seller knows of no reason why Easterbrooke Cellular
Corporation will not consent to an
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extension or extensions of the July 7, 1995 dual licensing agreements regarding
the Pumpkintown and Elkins cell sites, as such agreements have been modified
prior to the date hereof, beyond their current termination date of July 7,
1998.
3.12 Title; Condition. Seller has good and marketable
title to all of the Purchased Assets. 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 simultaneously with the Closing upon payment
by Seller to Lender of certain amounts owed thereto in accordance with the
provisions of Section 5.11 herein. Subject to such Section 5.11, 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 5.12) to be delivered by Lender upon payment thereto.
3.13 No Material Adverse Change. Since the Balance Sheet
Date, there has been no Material Adverse Change.
3.14 Taxes. Except as set forth on Schedule 3.14, (i)
Seller has timely filed or caused to be filed with the appropriate taxing
authorities all true, correct and complete tax returns for any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
like assessment or charge of any kind whatsoever, together with any interest
or any penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the imposition of
any such tax (collectively, "Taxes"), (ii) all Seller's 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 Seller's Taxes.
3.15 Environmental Matters. Neither the Business nor the
operation thereof by Seller, nor the ownership or use of the Purchased Assets
by Seller or any of its Affiliates, violates any applicable Environmental Law,
and no condition or event has occurred with respect to the Business or
Purchased Assets that, with the giving of notice, lapse of time, or both, would
constitute a violation of any such Environmental Law, excluding in any event
such violations, conditions and events that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. To
Seller's knowledge, no other person has violated any Environmental Law with
respect to the Business or the Purchased Assets. Seller has never generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced or processed any Contaminant in any reportable quantity
at or in the vicinity of any Real Property. For purposes of this Section,
"Contaminant" means any waste, pollutant, hazardous or toxic substance or
waste, petroleum, petroleum-based substance or waste, special waste, or any
constituent of any such substance of waste as defined in or pursuant to any
Environmental Law.
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3.16 ERISA; Employee Benefits. Except as set forth on
Schedule 3.16, Seller does not maintain, and has never maintained, an "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, nor any other type of employee benefit
plan. Except as set forth on Schedule 3.16, 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. The transactions
contemplated by this Agreement shall not create any material obligation on the
part of Purchaser for any severance payment or similar payment to any employee
of Seller or any of its affiliates.
3.17 Intellectual Property. To Seller's knowledge, the
conduct by Seller of the Business does not infringe upon or violate, and has
not infringed upon or violated, any patents, trademarks, service marks, trade
names, trade secrets, copyrights, license or rights of any person, including
those of Motorola, Inc., and no claim is pending or, to Seller's knowledge,
threatened to the effect that the conduct by Seller of the Business infringes
upon or violates any patents, trademarks, service marks, trade names, trade
secrets, copyrights, licenses or rights of any person.
3.18 Representations Correct. No representation or
warranty or other statement made by Seller herein or in any other document,
certificate or instrument furnished or to be furnished to Purchaser pursuant to
this Agreement or in connection with the transactions contemplated herein
contains or will contain any untrue statement of a material fact. All copies
of agreements and documents delivered and to be delivered to Purchaser pursuant
hereto have been and will be true, correct and complete.
3.19 Inventories. The inventories reflected on the
Closing Date Balance Sheet will be usable or salable in the ordinary course of
business, except for obsolete materials and materials of below standard
quality, which have either been written down in the accounts and records of
Seller (with such write-down reflected on the Closing Date Balance Sheet) to
realizable market value or for which adequate reserves have been provided for
in such accounts and such inventories will not be excessive in light of past
experience or current projections.
3.20 Condition of Cellular Assets. The Purchased Assets
are in a state of good maintenance and repair, normal wear and tear excepted,
and are in operating condition. Seller has in operation adequage cellular base
stations required to provide 32 dBu contour coverage, as calculated under the
formula prescribed by the FCC in 47 C.F.R. Section Section 22.911, to all
areas of the RSA except for coverage gaps that are less than 50 contiguous
square miles in size. All cellular base and microwave stations in operation as
of the date hereof are in accordance with the FCC licences therefor (subject to
tolerances permitted under FCC regulations), shall through the Closing Date be
maintained in a state of good maintenance and repair, normal wear and tear
excepted, and shall be maintained in operation.
4. Representations and Warranties of Purchaser and PriCellular.
Purchaser and PriCellular jointly and severally represent and warrant to Seller
as follows:
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4.1 Organizational Status. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate 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 corporation 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
corporate 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 corporate 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 certificate of
incorporation or bylaws, (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, 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
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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.
4.6 Consents. Except for (i) the consent of the FCC to
the assignment of the FCC Licenses from Seller to Purchaser, (ii) the consent
of the PSC to the assignment of the PSC Licenses from Seller to Purchaser,
(iii) the expiration of the waiting period under the HSR Act, and (iv) 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 and PSC Matters. Purchaser is fully qualified
under the Communications Act and any comparable West Virginia state law to be
an FCC and PSC licensee, respectively, and to be approved as the assignee of
the FCC Licenses and the PSC Licenses, respectively. Purchaser knows of no
reason why the FCC and the PSC will not grant its consent to the assignment of
the FCC Licenses and the PSC Licenses, respectively, 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 or PSC deny an application for an
authorization, (ii) has had the FCC or PSC revoke an authorization granted to
it, or (iii) has been the subject of an investigation by the FCC or PSC.
4.8 Financial Ability to Close. Purchaser presently has,
and at Closing will have, the financial ability to perform Purchaser's
obligations under this Agreement.
4.9 Representations of PriCellular.
(a) PriCellular is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate 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.
(b) PriCelluar has the full corporate 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 PriCellular have been duly
authorized by all necessary corporate action on the part of PriCellular. This
Agreement has been duly executed and delivered and constitutes, and each of the
other agreements and documents to be delivered by PriCellular hereunder when
executed and delivered by PriCellular,
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will constitute, the valid and binding obligation of PriCellular, 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
PriCellular and the consummation of the transactions contemplated hereby and
thereby by PriCellular will not (i) violate any provision of PriCellular's
certificate of incorporation or bylaws, (ii) to PriCellular'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 PriCellular 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
PriCellular'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 PriCellular, or the assets, properties
or business of PriCellular are bound, (iv) to PriCellular'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 PriCellular's ability to perform its obligations hereunder, (v)
violate or cause any revocation of or limitation on any permit, the violation,
revocation or limitation of which could reasonably be expected to have a
material adverse effect on PriCellular's ability to perform its obligations
hereunder.
5. Covenants of Seller, PriCellular and Purchaser. Seller, on
the one hand, and PriCellular and Purchaser, jointly and severally, on the
other, 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, unless otherwise consented to in writing by Purchaser, which consent will
not be unreasonably withheld, conditioned or delayed:
(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; and use its best 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;
(b) use commercially reasonable efforts to
increase its net activations of subscribers in the usual, regular and ordinary
course in substantially the same manner as heretofore carried on and consistent
with the budget previously provided to Purchaser, provided that, in the course
thereof, Seller will not offer materially different standard rate plans,
activation terms or equipment pricing;
(c) 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;
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(d) 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;
(e) not amend its certificate of limited
partnership or limited partnership agreement in any way which could reasonably
be expected to have a Material Adverse Effect or which would prevent, enjoin,
alter or materially delay the transactions contemplated hereby;
(f) 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; and
(g) shall at all times prior to the Closing Date
maintain the FCC Licenses and PSC Licenses in full force and effect and shall
maintain the books, accounts and records in the usual, regular and ordinary
manner on a basis consistent with prior years and in accordance with GAAP.
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 reasonable 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, Seller is in breach of
any representation, warranty or covenant of Seller set forth in this Agreement.
Seller agrees to provide Purchaser with prompt written notice if Seller
determines that Seller is in breach of any representation, warranty or covenant
of Purchaser 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.
(a) 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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(b) With respect to any Material Consent that
Seller is unable to obtain and deliver to Purchaser, Seller and Purchaser shall
use commercially reasonable efforts to (i) provide to Purchaser the benefits of
the related Restricted Interest, and (ii) cooperate in reasonable and lawful
arrangements designed to provide such benefits to Purchaser.
5.4 Employees; Employee Compensation. Seller agrees to
terminate each of its employees as of the Closing Date. Purchaser has no
obligation to re-employ any of the employees of Seller. Seller shall not make
any representations to the contrary to any such employees. At least fourteen
(14) days prior to the Closing Date, Purchaser shall provide notice to Seller
identifying any employees of Seller to whom Purchaser does not intend to extend
offers of employment; provided, that Seller agrees that it will not disclose
the contents of such notice or of any discussions between Seller and Purchaser
regarding any employees of Seller without the prior written consent of
Purchaser. Purchaser shall consult with Seller prior to any communications with
employees regarding future employment. Seller shall use commercially reasonable
efforts to maintain staffing at current levels and with existing employees
through Closing except as previously disclosed by Seller and as otherwise
agreed to by the parties.
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 (collectively, the "Regulatory Approvals"),
and, subject to Section 5.6(b), the consent of the FCC shall have become Final
Orders.
(b) Notwithstanding anything to the contrary
contained herein or otherwise, if no petitions to deny the FCC application to
assign the FCC Licenses from Seller to Purchaser have been filed within the
applicable public comment period and the FCC thereafter grants its consent to
the assignment and such grant becomes legally effective (the "Effective
Orders"), Purchaser may, at its option by written notice to Seller, waive on
behalf of the parties the agreement in Section 5.6 (a) that the Regulatory
Approvals shall have become Final Orders.
(c) 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
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will use commercially reasonable efforts to ensure that all persons whose
actions or ownership interests would be attributable to Purchaser under the
Communications Act or any comparable West Virginia state law 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 or PSC license that, if consummated, would have the
effect under the Communications Act or any comparable West Virginia state law
of preventing or delaying Purchaser from consummating the acquisition of the
Purchased Assets as contemplated by this Agreement.
5.8 Casualty or Condemnation. If, after the date hereof
but prior to the Closing Date, any 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 any of the
Purchased Assets, Seller will promptly notify Purchaser of such event. Seller
shall, at its option, (i) repair, rebuild or replace the portion of the
Purchased Assets damaged, destroyed or lost prior to the Closing Date, or (ii)
assign to Purchaser at Closing any and all insurance or condemnation proceeds,
if any, payable as the result of such casualty or condemnation.
5.9 Tax Cooperation; Allocation of Taxes. (a) Purchaser
and Seller agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information and assistance relating
to the Purchased Assets, the System and the Business as is reasonably necessary
for the filing of all Tax returns, and making of any election related to Taxes,
the preparation for any audit by any taxing authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax return. Seller
and Purchaser shall cooperate with each other in the conduct of any audit or
other proceeding related to Taxes involving the Purchased Assets or the
Business and each shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this paragraph (a) of
Section 5.9.
(b) All real property taxes, personal property
taxes and similar ad valorem obligations levied with respect to the Purchased
Assets for a taxable period which includes (but does not end on) the Closing
Balance Sheet Date (collectively, the "Apportioned Obligations") shall be
apportioned between Seller and Buyer as of the Closing Date based on the number
of days of such taxable period included in the period prior to the Closing Date
and the number of days of such taxable period included in the period after the
Closing Date. Seller shall be liable for the proportionate amount of such taxes
that is attributable to the period prior to the Closing Date, and Purchaser
shall be liable for the proportionate amount of such taxes that is attributable
to the period following the Closing Date. Within 90 days after the Closing
Date, Seller and Purchaser shall present a statement to the other setting forth
the amount of reimbursement to which each is entitled under this Section 5.9(b)
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within 10 days after delivery of such statement. Thereafter,
Seller shall notify Purchaser upon receipt of any bill for real or personal
property taxes relating to the Purchased Assets, part or all of which are
attributable to the period after the Closing Date, and shall promptly deliver
such bill to Purchaser who shall pay the same to the
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appropriate taxing authority, provided that if such bill covers the period
prior to the Closing Date, Seller shall also remit prior to the due date of
assessment to Purchaser payment for the proportionate amount of such bill that
is attributable to the such pre-Closing Date period. In the event that either
Seller or Purchaser shall thereafter make a payment for which it is entitled to
reimbursement under this Section 5.9(b), the other party shall make such
reimbursement promptly but in no event later than 30 days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement. Any payment
required under this Section 5.9 and not made within 10 days of delivery of the
statement shall bear interest at the rate per annum determined, from time to
time, under the provisions of Section 6621(a) (2) of the Internal Revenue Code
of 1986, as amended, for each day until paid.
5.10 Environmental Audits.
(a) Seller will cause to be conducted preliminary
environmental site assessments (Phase Ones) AST Standard of each parcel of its
Real Property. Such Phase Ones shall be performed by licensed environmental
professionals selected by Seller with the consent of Purchaser, which consent
will not be unreasonably withheld, conditioned or delayed. Copies of the
reports of each Phase One conducted will be provided to Purchaser at least
thirty (30) days prior to the Closing.
(b) If any Phase One reveals any condition that
the Purchaser reasonably determines would be likely to require remediation
under applicable state or federal law, then Seller shall 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
Acquisition Price (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, if any, nor be
subject to Section 11.5.
(c) Notwithstanding the foregoing, if it is
estimated that the remediation costs will exceed $500,000, Seller may, at its
option, elect not to undertake such remediation or relocation, and may instead
elect to terminate this Agreement without further cost or obligation on the
part of any party hereto.
(d) Notwithstanding the foregoing, if it is
estimated that the remediation costs will exceed $500,000, then Purchaser shall
have the right, at its option, to terminate this Agreement without further cost
or obligation on the part of any party hereto.
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(e) Subject to the foregoing, 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 any of Seller's representations or
warranties herein (which were qualified as to Seller's knowledge), Seller shall
not have breached such representation or warranty of this Agreement.
5.11 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 and the
release of all such security interests.
5.12 Accounts Receivable. Purchaser and Seller
acknowledge and agree that, commencing as of the Closing, Purchaser will be
entitled to all accounts receivable with respect to services rendered or
inventory sold with respect to the System subsequent to the Closing Date.
Purchaser and Seller further acknowledge and agree that all accounts receivable
with respect to services rendered or inventory sold by Seller prior to or on
the Closing Date shall be the property of Seller. Purchaser and Seller agree
to cooperate to effectuate the intent of this Section 5.12.
5.13 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 or in any agreement or certificate
delivered pursuant hereto. 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.
5.14 Guaranty by PriCellular of Purchaser's Obligations.
PriCellular agrees to take all action necessary or appropriate to cause and
enable Purchaser to perform all of its covenants, agreements and obligations
under this Agreement. In addition, PriCellular hereby irrevocably and
unconditionally guarantees to Seller the prompt and full discharge by Purchaser
of all of Purchaser's covenants, agreements, obligations and liabilities under
this Agreement, including, without limitation, the due and punctual payment of
all amounts which are or may become due and payable by Purchaser hereunder when
and as the same shall become due and
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payable (collectively, the "Purchaser Obligations"), in accordance with the
terms hereof. PriCellular acknowledges and agrees that, with respect to all
Purchaser Obligations to pay money, such guaranty shall be a guaranty of
payment and performance and not of collection and shall not be conditioned or
contingent upon the pursuit of any remedies against Purchaser. If Purchaser
shall default in the due and punctual performance of any Purchaser Obligation,
including the full and timely payment of any amount due and payable pursuant to
any Purchaser Obligation, PriCellular will forthwith perform or cause to be
performed such Purchaser Obligation and will forthwith make full payment of any
amount due with respect thereto at its sole cost and expense.
5.15 Excluded Leases. Seller agrees to use commercially
reasonable efforts to maintain in full force and effect the leases described on
Schedule 1.2(e) and to sublet to Purchaser the facility covered by the 1390
University Avenue lease, at the rate or rates at which Seller rents such
facility as of the date hereof, on a month-to-month basis from the Closing Date
through the date which is six months after the Closing Date. Purchaser agrees
to rent such facility pursuant to such sublease for at least three months
beginning on the Closing Date and to provide Seller with at least 60-days
notice of termination of such sublease.
5.16 Supplemental Disclosure. Seller shall have the right,
from time to time, prior to the Closing Date to supplement the Schedules hereto
relating to representations and warranties, Purchased Assets or Prepaid
Expenses with respect to any matter hereafter arising that was not known as of
the date hereof but that, if existing or known as of the date hereof, would
have been required to be set forth or described in the Schedules hereto.
Notwithstanding the foregoing, (i) no such supplemental disclosure shall
relieve Seller in any way from its indemnification obligations pursuant to
Section 11.1 if any such represenation or warranty was inaccurate or incorrect
when given and (ii) such supplemental disclosure by Seller shall not (unless
expressly 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 Adverse Change or change any of the financial terms hereof.
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 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.
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6.3 Representations and Warranties on Closing Date. All
representations and warranties of Seller made in this Agreement and in any
certificate or other writing delivered by Seller pursuant hereto 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, disregarding all qualifications and
exceptions contained in such representations and warranties relating to
materiality, Material Adverse Effect or Material Adverse Change, would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (ii) changes contemplated by this Agreement, (iii) inaccuracies
that have been waived in writing by Purchaser and (iv) representations and
warranties that are made as of a specific date.
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 or any event or occurrence that could reasonably be
expected to have a Material Adverse Effect 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 Absence of Restricted Interests. There shall be no
Restricted Interests as of the Closing Date.
6.8 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 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
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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 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) inaccuracies that, disregarding all qualifications
and exceptions contained in such representations and warranties relating to
materiality, Material Adverse Effect or Material Adverse Change, would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (ii) inaccuracies that have been waived in writing by Seller
and (iii) representations and warranties that are made as of a specific date.
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.
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 Purchaser
the Purchased Assets, along with any other documents that Buyer reasonably
requests;
(b) the opinions of Kleinbard, Bell & Brecker,
corporate counsel to Seller, and Latham & Watkins, FCC counsel to Seller, to be
negotiated in good faith by the parties within ten business days hereof and
attached hereto as Exhibits 8.l(b)(i) and 8.1(b)(ii), respectively;
(c) the Capital Expenditures Summary;
(d) the Escrow Agreement;
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(e) 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, 6.4 and 6.5;
(f) 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;
(g) good standing certificates of Seller, KCCGP
and Horizon Corporate from the Secretary of State of Delaware;
(h) the Material Consents (or, alternatively,
with respect to any Material Consent that Seller was unable to deliver to
Purchaser, Seller shall have complied with its obligations under the provisions
of Section 5.3(b)); 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 plus or minus the
Initial Adjustments Amount;
(c) Accretion Factor Payment, if any;
(d) the Escrow Agent Instructions;
(e) the opinion of Vorys, Sater, Seymour and
Pease, corporate counsel to Purchaser, to be negotiated in good faith by the
parties within ten business days hereof and attached hereto as Exhibit 8.2(e);
(f) a certificate executed by an executive
officer of Purchaser confirming the matters contained in Sections 7.3 and 7.4;
and
(g) 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
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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
(h) a good standing certificate of Purchaser from
the Secretary of State of Delaware.
9. Confidentiality. Prior to the Closing Date and after any
termination of this Agreement, Purchaser shall use commercially reasonable
efforts to keep secret and retain in strictest confidence, and shall use
commercially reasonable efforts to 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 (including the requirements of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended),
(iii) as required to obtain the Regulatory Approvals and (iv) to the extent
such information can be shown to have been previously known on a
nonconfidential basis by Purchaser, is in the public domain or is later
lawfully acquired by Purchaser from sources other than Seller. 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.
10. Survival of Representations and Warranties. Unless this
Agreement is terminated as provided herein, the representations and warranties
of Seller and, except as otherwise set forth herein, Horizon, on the one hand,
and Purchaser, on the other, contained herein shall survive the consummation of
the transactions contemplated hereby and the Closing Date and shall expire
eighteen (18) months after the Closing Date. Notwithstanding the preceding
sentence, any representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy
thereof giving rise to such right to indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.
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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
respective 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, except to the extent permitted by Section 10, in no
event shall such notice be effective if given after the date that is eighteen
(18) 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. Seller's obligation for any indemnifiable Loss shall, to the
extent the Escrow Agent holds cash sufficient to satisfy Seller's obligation in
respect thereof, be satisfied pursuant to the procedures established in the
Escrow Agreement.
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) business
days after the service of the citation or summons or other manner of process),
provided, that the failure to provide such timely notice shall not relieve the
Indemnifying Party of its indemnification
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<PAGE> 36
obligations hereunder unless it has been unduly prejudiced thereby and provided
further that, except to the extent permitted by Section 10, in no event shall
such notice be effective if given after the date that is eighteen (18) 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 Action, (ii) to employ and engage attorneys of its choice
reasonably satisfactory to the Claimant 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 Seventy-Five Thousand Dollars ($75,000), in which case the
Indemnifying Party shall be liable for the full amount of such Losses.
(b) No indemnification shall be required to be
made by the Indemnifying Party for the amount of Claimant's Losses that is in
excess the Indemnification Escrow. 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.
(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.
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<PAGE> 37
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 reasonable amount of time 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, or
(iii) if the Closing shall not have taken place by the Outside Date (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
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<PAGE> 38
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 New York, New York 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 New York, New York; 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.
(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 thirty (30) 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.
(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
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<PAGE> 39
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 or Purchased Assets. 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 require in order to comply with their
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.
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
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<PAGE> 40
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
(b) if to Purchaser, to:
PriCellular Corporation
45 Rockefeller Plaza / Suite 3200
New York, NY 10020
Telecopy No.: 212-245-3058
Attention: Mr. Robert Price
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<PAGE> 41
with a required copy to:
Vorys, Sater, Seymour and Pease
52 East Gay Street
Columbus, OH 43216
Telecopy No.: 614-464-6350
Attention: Ronald A. Robins, Jr.
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, 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 September 8, 1995 between Purchaser and
Horizon shall be construed as integrated and complementary of each other.
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.
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 which consent shall not be unreasonably delayed, conditioned or withheld.
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 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.
13.13 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
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<PAGE> 42
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.
13.14 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.
13.15 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 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.
13.16 Headings. The headings in this Agreement are for
reference only, and shall not affect the meaning or interpretation of this
Agreement.
13.17 Limited Recourse. Except as provided in this Section
13.17, 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/or
stockholders. If Seller is in default hereunder or under any such other
agreement or document, Purchaser's recourse shall be limited solely to (a) the
Indemnification Escrow or (b) in the case of claims for fraud or intentional
tort by Seller, to Horizon and Horizon's equity in its assets without any
recourse to Horizon's partners, affiliates or officers or to their partners,
affiliates, officers, directors and/or stockholders.
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<PAGE> 43
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HORIZON CELLULAR TELEPHONE COMPANY OF
MONONGALIA, L. P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general
partner
By: /s/ BRUCE M. HERNANDEZ
----------------------------------
Name: Bruce Hernandez
Title: Vice President
EASTERN WIRELESS CELLULAR CORPORATION
By: /s/ ROBERT PRICE
----------------------------------
Name: Robert Price
Title: President
PRICELLULAR CORPORATION
By: /s/ ROBERT PRICE
----------------------------------
Name: Robert Price
Title: President
38
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO
ASSET ACQUISITION AGREEMENT
THIS FIRST AMENDMENT TO ASSET ACQUISITION AGREEMENT ("Amendment") is
made and entered into this 22nd day of July, 1996, by and among PRICELLULAR
CORPORATION, a Delaware corporation ("PriCellular"), EASTERN WIRELESS
CORPORATION, a Delaware corporation (the "Purchaser") and HORIZON CELLULAR
TELEPHONE COMPANY OF MONONGALIA, L.P., a Delaware limited partnership (the
"Seller").
W I T N E S S E T H:
WHEREAS, the Purchaser, PriCellular and the Seller are parties to that
certain Asset Acquisition Agreement (the "Agreement"), dated as of May 8, 1996;
and
WHEREAS, the Purchaser, PriCellular and the Seller desire to modify
and amend certain provisions in the Agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Purchaser, PriCellular and the Seller, intending
to be legally bound hereby, agree as follows:
1. Capitalized terms used herein shall have the meanings
set forth in the Agreement unless otherwise provided hereunder.
2. Sections 2.1(a) and (b) of the Agreement are hereby
amended as follows:
Notwithstanding anything in the Agreement or the
Escrow Agreement to the contrary, the Purchaser and the Seller
agree that the One Million Seven Hundred Fifty Thousand
Dollars ($1,750,000) which was paid by the Purchaser to the
Escrow Agent upon the execution of the Agreement, together
with any interest earned on such sum thereafter, shall be
returned by certified check or electronic transfer to the
Purchaser at Closing. Following the transfer by the Escrow
Agent of such funds as required hereby, the Purchaser shall
cause to be deposited Four Million Dollars ($4,000,000) with
the Escrow Agent which shall be held and released by the
Escrow Agent pursuant to the Escrow Agreement, as amended.
The second sentence of Section 2.1(b) is hereby deleted. The
Escrow Agreement is hereby amended consistent with the
provisions hereof as reflected in Exhibit A attached hereto
and incorporated herein by this reference.
3. Sections 2.3(b) and (d) of the Agreement are hereby
deleted.
<PAGE> 2
4. Section 13.11 of the Agreement is hereby amended by
deleting it in its entirety and substituting in lieu thereof the
following:
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 which consent shall not be unreasonably delayed,
conditioned or withheld; provided that the Purchaser shall be
entitled to assign all of its right, title and interest under
the Agreement, the Escrow Agreement, Instrument of Assumption
and any related agreements (collectively, the "Documents"),
without the Seller's consent, to its affiliate Northland
Cellular Corporation pursuant to the Assignment and Assumption
Agreement attached hereto as Exhibit B and incorporated herein
by this reference; and provided further that the Purchaser's
rights under the Documents, as amended, may be assigned to
Bank One Trust Company, N.A., a national banking association
or another "qualified intermediary" without the consent of the
Seller in order to facilitate a like-kind exchange under
Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code"). This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and permitted assigns.
5. Section 2.5 of the Agreement is hereby amended by
adding the following at the end thereof:
Notwithstanding anything to the contrary in this
Section 2.5, the Purchaser and the Seller acknowledge and
agree that if, and to the extent, the Purchaser consummates a
like-kind exchange under Section 1031 of the Code, Section
1031 of the Code will override the application of Section 1060
of the Code. Accordingly, although the Purchaser will not
assert for income tax purposes any allocation of the
Acquisition Price that differs from that determined pursuant
to this section, the Purchaser's IRS Form 8594 will cover only
that portion of the Purchased Assets, if any, that are not
subject to Section 1031 of the Code.
6. The Agreement is hereby amended by adding the
following new section which shall be designated as Section 13.18:
At the request of the Purchaser and at no cost to the
Seller, the Seller will agree to take all actions reasonably
requested by the Purchaser in order to effectuate all or any
part of the transactions contemplated by this Agreement as a
like-kind exchange in accordance with Section 1031 of the Code
and the rules and regulations thereunder. Purchaser agrees to
indemnify Seller pursuant to Section 11 hereof for any Losses
incurred by Seller in connection with such actions.
7. All other terms and conditions of the Agreement shall
remain the same and in full force and effect, and all references to
the Agreement shall be deemed to include and incorporate this
Amendment.
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<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year first above written.
HORIZON CELLULAR TELEPHONE COMPANY OF
MONONGALIA, 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
PRICELLULAR CORPORATION
By: /s/ ROBERT PRICE
---------------------------------
Robert Price
President
EASTERN WIRELESS CORPORATION
By: /s/ ROBERT PRICE
---------------------------------
Robert Price
President
3
