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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1997
REGISTRATION NO. 333-14859
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-1
(POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-4)
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WESTERN WIRELESS CORPORATION
(Exact name of registrant as specified in its charter)
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WASHINGTON 4812 91-1638901
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification number)
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2001 NW SAMMAMISH ROAD
ISSAQUAH, WASHINGTON 98027
(425) 313-5200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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ALAN R. BENDER, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL
WESTERN WIRELESS CORPORATION
2001 NW SAMMAMISH ROAD
ISSAQUAH, WASHINGTON 98027
(425) 313-5200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
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G. SCOTT GREENBURG, ESQ. ALISON S. RESSLER, ESQ.
PRESTON GATES & ELLIS LLP SULLIVAN & CROMWELL
5000 COLUMBIA CENTER 444 SOUTH FLOWER STREET, SUITE 1200
701 FIFTH AVENUE LOS ANGELES, CALIFORNIA 90071
SEATTLE, WASHINGTON 98104-7078 (213) 955-8000
(206) 623-7580
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1993, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
This Registration Statement contains a combined prospectus in accordance
with Rule 429 under the Securities Act of 1933 which relates to this
Registration Statement and the Registrant's Registration Statement on Form S-1
(Commission File No. 333-2432), Registration Statement on Form S-1 (Commission
File No. 333-3688) and Registration Statement on Form S-1 (Commission File No.
333-4229).
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, incurred by the Company in connection
with the initial sale and distribution of Class A Common Stock and Senior
Subordinated Notes registered by the Company.
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SEC Registration Fee........................................ $ 280,164
Nasdaq Listing Fee.......................................... 107,458
NASD Filing Fee............................................. 46,000
Blue Sky Qualification Fees and Expenses (including Legal
Fees)..................................................... 275,000
Transfer Agent and Registrar Fees........................... 10,000
Legal Fees and Expenses..................................... 1,018,470
Printing Expenses........................................... 770,640
Auditors' Fees and Expenses................................. 292,175
Miscellaneous Expenses...................................... 803,093
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TOTAL............................................. $3,603,000
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ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 23B.08.510 of the Revised Code of Washington authorizes Washington
corporations to indemnify their officers and directors under certain
circumstances against expenses and liabilities incurred in legal proceedings
involving such persons because of their being or having been an officer or
director. The Company's Articles of Incorporation and Bylaws require
indemnification of the Company's officers and directors to the fullest extent
permitted by Washington law. The Company also maintains directors' and officers'
liability insurance.
The Company's By laws and Articles of Incorporation provide that the
Company shall, to the full extent permitted by the Washington Business
Corporation Act (the "Washington Business Act") of the State of Washington, as
amended from time to time, indemnify all directors and officers of the Company.
In addition, the Company's Articles of Incorporation contains a provision
eliminating the personal liability of directors to the Company or its
shareholders for monetary damages arising out of a breach of fiduciary duty.
Under Washington law, this provision eliminates the liability of a director for
breach of fiduciary duty but does not eliminate the personal liability of any
director for (i) acts or omissions of a director that involve intentional
misconduct or a knowing violation of law, (ii) conduct in violation of Section
23B.08.310 of the Revised Code of Washington (which section relates to unlawful
distributions) or (iii) any transaction from which a director personally
received a benefit in money, property or services to which the director was not
legally entitled.
The Company has entered into separate indemnification agreements with each
of its directors and executive officers, which agreements will supersede prior
indemnification agreements entered into by the Company with each of its
directors and executive officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The table below sets forth the sales of unregistered securities made by the
registrant or its subsidiaries since July 29, 1994. References to "Common Stock"
below are to the Company's Common Stock, part value $0.001 per share, which was
converted into shares of Class B Common
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Stock, no par value. The number of shares set forth below reflects the 3.1-for-1
split to be effected in the recapitalization.
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NUMBER OF
TITLE AND AMOUNT OF SECURITY DATE OF SALE PURCHASERS(1) EXEMPTION(1)
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$200 million principal amount 10 1/2
Senior Subordinated Notes Due 2007.... October 1996 4 (2)
36,567 shares of Common Stock........... February 1996 3 (3)
515,561 shares of Common Stock.......... February 1996 2 (4)
79,748 shares of Common Stock........... February 1996 2 (5)
3,842,531 shares of Common Stock........ December 1995 2 (6)
217,000 shares of Common Stock.......... December 1995 2 (7)
Exchange Rights exchangeable into
327,882 shares of the Common Stock.... November 1995 3 (8)
896,210 shares of Common Stock.......... June 1995 47 (9)
13,241,428 shares of Common Stock....... June 1995 13 (10)
670,475 shares of Common Stock.......... June 1995 23 (11)
38,762 shares of Common Stock........... June-December 1995 6 (12)
45,042,712 shares of Common Stock....... July 1994 74 (13)
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(1) Other than as provided in footnote (2) hereto, all sales were made to
accredited investors in private transactions not involving any public
offering made in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"). No underwriters were involved. Unless otherwise indicated, no
purchaser was an officer or director of the Company or holder of more than
5% of any class of the Company's voting securities (a "5% shareholder").
Please refer to "Certain Transactions" in the Prospectus for a more
detailed description of the transactions in which the Company's officers,
directors and 5% shareholders participated.
(2) Issued and sold in reliance upon the exemptions from registration provided
in Section 4(2) of Regulation D under the Securities Act to the initial
Purchasers thereof, consisting of Goldman, Sachs & Co., Donaldson, Lufkin &
Jenrette Securities Corporation, Salomon Brothers Inc and Toronto Dominion
Securities (USA) Inc. The initial Purchasers resold the 2007 Notes in
reliance upon the exemptions from registration provided in Rule 144A and
Regulation S under the Securities Act.
(3) Issued to Donald Guthrie in consideration for $999,950.
(4) Issued to the shareholders of Palouse Paging, Inc. ("Palouse"), including
two officers of the Company (one of whom is also a director), in
consideration for all of the issued and outstanding stock of Palouse.
(5) Issued to the shareholders of Sawtooth Paging, Inc. ("Sawtooth"), including
two officers of the Company (one of whom is also a director), other than
the Company, in consideration for the shares of stock of Sawtooth
representing the 55% ownership interest in Sawtooth not held by the
Company.
(6) Issued to GS Capital Partners, L.P. ("GS Capital"), an affiliate of Goldman
Sachs, upon the termination of another Goldman Sachs affiliate, GS Capital
Partners Media Holding I, L.P. (the "Partnership"), which was the
registered owner of 3,842,531 shares of Common Stock that it acquired on
July 29, 1994. Following the distribution of the shares of Common Stock to
the Partnership's partners, GS Capital and GS Capital Partners Media
Holding I, Inc., GS Capital Partners Media Holding I, Inc. merged with and
into the Company and the 2,766,623 shares of Common Stock owned GS Capital
Partners Media Holding I, Inc. were canceled and a like number of shares of
Common Stock were issued to GS Capital. GS Capital reimbursed the Company
for all of the out-of-pocket expenses incurred by the Company in connection
with this transaction. No cash proceeds were received by the Company in
this transaction.
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(7) Issued to the shareholders of Deadwood Cellular Telephone Company
("Deadwood"), the unaffiliated owner of the Harding (SD-1) cellular market,
in consideration for all the issued and outstanding stock of Deadwood.
(8) Issued to the general and limited partners of Cook Inlet PV/SS PCS
Partners, L.P., including Providence Media Partners, L.P., the general
partner of Cook Inlet Western Wireless PV/SS PCS, L.P., in which Western
PCS BTA I Corporation, a wholly-owned subsidiary of the Company, is the
sole limited partner.
(9) Exchanged for 8,963 shares of common stock of GCC with purchasers including
three officers of the Company. A Form D with respect to such sale was filed
with the Securities and Exchange Commission under regulation D under the
Securities Act.
(10) Issued upon exchange of 4,271,428 shares of Series A Preferred Stock of
Western PCS Entities, Providence Ventures, L.P., and two directors (one of
whom is also an officer) and one officer of the Company. Commitments to
purchase shares of Series A Preferred Stock in the aggregate amount of
$149.5 million were received by Western PCS Corporation in April 1995. A
Form D with respect to such sale was filed with the Securities and Exchange
Commission under regulation D under the Securities Act.
(11) Issued to certain then-existing shareholders for total proceeds of $7.6
million. A Form D with respect to such sale was filed with the Securities
and Exchange Commission under regulation D under the Securities Act.
(12) Issued upon exercise of stock options for total proceeds of $78,000.
(13) Issued in connection with the Business Combination. A Form D with respect
to such sale was filed with the Securities and Exchange Commission under
Regulation D under the Securities Act. See "Certain Transactions."
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)Exhibits:
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EXHIBIT DESCRIPTION FOOTNOTE
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1.1 -- U.S. Underwriting Agreement............................................ (1)
1.2 -- International Underwriting Agreement................................... (2)
1.3 -- Underwriting Agreement................................................. (3)
3.1 -- Amended and Restated Articles of Incorporation of the Registrant....... (1)
3.2 -- Bylaws of the Registrant............................................... (1)
4.1 -- Indenture between Western Wireless Corporation and Harris Trust Company
of California, dated October 24, 1996, relating to the 10 1/2% Senior
Subordinated Notes Due 2007............................................ (3)
4.2 -- Indenture between Western Wireless Corporation and Harris Trust Company
of California, dated May 22, 1996, with respect to 10 1/2% Senior
Subordinated Notes due 2006............................................ (2)
5.1 -- Opinion of Preston Gates & Ellis LLP with respect to Class A Common
Stock.................................................................. (1)
5.2 -- Opinion of Preston Gates & Ellis LLP with respect to Senior
Subordinated Notes Due 2006............................................ (2)
5.3 -- Opinion of Preston Gates & Ellis LLP with respect to Senior
Subordinated Notes Due 2007............................................ (3)
8.1 -- Opinion of Preston Gates & Ellis LLP as to certain tax matters......... (3)
10.1 -- Loan Agreement between Western PCS II Corporation and Northern Telecom
Inc., dated June 30, 1995.............................................. (1)
10.2 -- PCS 1900 Project and Supply Agreement between Western PCS Corporation
and Northern Telecom Inc., dated June 30, 1995......................... (1)
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EXHIBIT DESCRIPTION FOOTNOTE
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10.3 -- Purchase Agreement between Motorola Nortel Communications Co. and
General Cellular Corporation, dated July 29, 1993...................... (1)
10.4 -- Loan Agreement among Western Wireless Corporation and The Toronto-
Dominion Bank, Barclays Bank, PLC, and Morgan Guaranty Trust Company of
New York, as Managing Agents for the Various Lenders, dated June 30,
1995................................................................... (1)
10.5 -- First Amendment to Loan Agreement by and among Western Wireless
Corporation, The Toronto-Dominion Bank, Barclays Bank, PLC, and Morgan
Guaranty Trust Company of New York, as Managing Agents for the Various
Lenders, dated January 11, 1996........................................ (1)
10.6 -- Supply Contract by and between Western PCS Corporation and Nokia
Telecommunications Inc., dated December 14, 1995....................... (1)
10.7 -- Purchase and Sale Agreement, Nokia Mobile Phones, Inc. and Western
Wireless Corporation, dated November 10, 1995.......................... (1)
10.8 -- Western Wireless Corporation, 1994 Management Incentive Stock Option
Plan, approved, as adopted and amended, by Shareholders November 16,
1995, together with form of Stock Option Agreement for offers
thereunder............................................................. (1)
10.9 -- Stockholders Agreement by and among Western Wireless Corporation and
certain of its shareholders, dated July 29, 1994....................... (1)
10.10 -- First Amendment to Stockholders Agreement by and among Western Wireless
Corporation and certain of its shareholders, Adding as a Party Western
PCS Corporation, dated November 30, 1994............................... (1)
10.11 -- Waiver Agreement by and among Western Wireless Corporation, Western PCS
Corporation and certain of Western Wireless Corporation's shareholders,
dated November 30, 1994................................................ (1)
10.12 -- Waiver Agreement by and among Western Wireless Corporation, Western PCS
Corporation and certain of Western Wireless Corporation's shareholders,
dated February 15, 1996................................................ (1)
10.13 -- Voting Agreement by and among certain shareholders of Western Wireless
Corporation, dated July 29, 1994....................................... (1)
10.14 -- Voting Agreement by and among Western Wireless Corporation and certain
of its shareholders.................................................... (1)
10.15 -- Lease Agreement by and between WWC Holding Co., Inc., successor in
interest to MARKETS Cellular Limited Partnership, and WRC Properties,
Inc., dated May 1, 1994................................................ (1)
10.16 -- Lease Agreement by and between Western Wireless Corporation and
Department of Natural Resources, dated August 25, 1995................. (1)
10.17 -- First Amendment to Lease Agreement by and between Western Wireless
Corporation and Department of Natural Resources, dated February 28,
1996................................................................... (1)
10.18 -- Form of Cellular One Group License Agreement........................... (1)
10.19 -- Asset Purchase Agreement between Western PCS III License Corporation as
Buyer and GTE Mobilnet Incorporated as Seller, dated January 16,
1996................................................................... (1)
10.20 -- Purchase and Sale Agreement by and between Robert O. Tyler, Esq., as
Trustee, Seller, and GCC License Corporation, Purchaser, dated December
22, 1995............................................................... (1)
10.21 -- Agreement for Purchase and Sale of Autoplex Cellular Equipment,
Software and Services by and among American Telephone and Telegraph
Company, WWC Holding Co., Inc., successor to MARKETS Cellular Limited
Partnership and MCII General Partnership, dated March 17, 1993......... (1)
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EXHIBIT DESCRIPTION FOOTNOTE
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10.22 -- Agreement and Plan of Reorganization by and among Palouse Paging, Inc.,
the Shareholders of 100% of the Stock of Palouse Paging, Inc., Western
Paging I Corporation and Western Wireless Corporation, dated February
5, 1996................................................................ (1)
10.23 -- First Amendment to Agreement and Plan of Reorganization by and among
Western Paging I Corporation, the former Shareholders of 100% of the
Stock of Palouse Paging, Inc. and Western Wireless Corporation......... (1)
10.24 -- Agreement and Plan of Reorganization by and among Sawtooth Paging,
Inc., the Shareholders of 52.93% of the Stock of Sawtooth Paging, Inc.,
Western Paging II Corporation and Western Wireless Corporation, dated
February 5, 1996....................................................... (1)
10.25 -- Employment Agreement by and between John W. Stanton and Western
Wireless Corporation, dated March 12, 1996............................. (1)
10.26 -- Employment Agreement by and between Robert R. Stapleton and Western
Wireless Corporation, dated March 12, 1996............................. (1)
10.27 -- Employment Agreement by and between Mikal J. Thomsen and Western
Wireless Corporation, dated March 12, 1996............................. (1)
10.28 -- Employment Agreement by and between Theresa E. Gillespie and Western
Wireless Corporation, dated March 12, 1996............................. (1)
10.29 -- Employment Agreement by and between Alan R. Bender and Western Wireless
Corporation, dated March 12, 1996...................................... (1)
10.30 -- Employment Agreement by and between Cregg B. Baumbaugh and Western
Wireless Corporation, dated March 12, 1996............................. (1)
10.31 -- Employment Agreement by and between Donald Guthrie and Western Wireless
Corporation, dated March 12, 1996...................................... (5)
10.32 -- Form of Registrant's Restrictive Covenant and Confidentiality
Agreement.............................................................. (1)
10.33 -- Form of Director and Officer Indemnification Agreement................. (1)
10.34 -- Western PCS Corporation Series A Preferred Stock Purchase Agreement
among Western Wireless Corporation, Western PCS Corporation and the
Purchasers listed therein, dated April 10, 1995........................ (1)
10.35 -- Second Amendment to Loan Agreement by and among Western Wireless
Corporation, The Toronto-Dominion Bank, Barclays Bank, PLC, and Morgan
Guaranty Trust Company of New York, as Managing Agents for the Various
Lenders, dated......................................................... (1)
10.36 -- Subscription and Put and Call Agreement with respect to shares of
Common Stock of Western Wireless International Corporation, dated as of
January 1, 1996........................................................ (1)
10.37 -- PCS Block "C" Organization and Financing Agreement by and among Western
PCS BTA I Corporation, Western Wireless Corporation, Cook Inlet PV/SS
PCS Partners, L.P., Cook Inlet Telecommunications, Inc., SSPCS
Corporation and Providence Media Partners L.P. dated as of November 5,
1995................................................................... (1)
10.38 -- Limited Partnership Agreement by and between Cook Inlet PV/SS PCS
Partners, L.P. and Western PCS BTA I Corporation dated as of November
5, 1995................................................................ (1)
10.39 -- First Amendment to Block "C" Organization and Financing Agreement and
Cook Inlet Western Wireless PV/SS PCS, L.P. Limited Partnership
Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet
Telecommunications, Inc., SSPCS Corporation and Providence Media
Partners L.P. dated as of April 8, 1996................................ (1)
10.40 -- Amended and Restated Loan Agreement among Western Wireless Corporation
and The Toronto-Dominion Bank, Barclays Bank, PLC, and Morgan Guaranty
Trust Company of New York, as Managing Agents for the Various Lenders,
dated May 6, 1996...................................................... (1)
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10.41 -- Second Amendment to Block "C" Organization and Financing Agreement and
Cook Inlet Western Wireless PV/SS PCS, L.P. Limited Partnership
Agreement by and among Western PCS BTA I Corporation, Western Wireless
Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet
Telecommunications, Inc., SSPCS Corporation and Providence Media
Partners L.P. dated as of June 27, 1996................................ (3)
10.42 -- Third Amendment to Block "C" Organization and Financing Agreement and
Cook Inlet Western Wireless PV/SS PCS, L.P. Limited Partnership
Agreement and First Amendment to Technical Services Agreement by and
among Western PCS BTA I Corporation, Western Wireless Corporation, Cook
Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications, Inc.,
SSPCS Corporation, Providence Media Partners L.P. and Cook Inlet
Western Wireless PV/SS PCS, L.P., dated July 30, 1996.................. (3)
10.43 -- General Agreement for Purchase of Cellular Systems between Lucent
Technologies Inc. and Western Wireless Corporation, dated September 16,
1996................................................................... (3)
10.44 -- Amendment No. 1 to PCS 1900 Supply Agreement between Western PCS
Corporation and Northern Telecom Inc., dated July 25, 1996............. (3)
10.45 -- Amendment No. 2 to PCS 1900 Supply Agreement between Western PCS
Corporation and Northern Telecom Inc., dated July 25, 1996............. (3)
10.46 -- Agreement of Exchange Agent between Harris Trust Company of California
and Western Wireless Corporation, dated October 25, 1996............... (3)
10.47 -- Purchase Agreement between Western Wireless Corporation and Goldman,
Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Brothers Inc and Toronto Dominion Securities (USA) Inc., dated
October 18, 1996....................................................... (3)
10.48 -- Exchange and Registration Rights Agreement between Western Wireless
Corporation and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Toronto Dominion
Securities (USA) Inc., dated October 24, 1996.......................... (2)
10.49 -- Amendment No. 3 to PCS Supply Agreement between Western PCS Corporation
and Northern Telecom Inc., dated October 14, 1996...................... (5)
10.50 -- Western Wireless Corporation 1996 Employee Stock Purchase Plan......... (6)
10.51 -- Western Wireless Corporation 1997 Executive Restricted Stock Plan...... (7)
10.52 -- Form of First Amendment to Amended and Restated Loan Agreement among
Western Wireless Corporation and The Toronto Dominion Bank, Barclays
Bank, PLC, and Morgan Guaranty Trust Company of New York, as Managing
Agents for the various lenders, dated March 27, 1997................... (7)
10.53 -- Purchase Agreement, dated April 24, 1997, by and among Western Wireless
Corporation, Triad Texas, L.P., Triad Utah, L.P., Triad Oklahoma, L.P.,
Triad Cellular Corporation and Triad Cellular L.P.
10.54 -- Purchase Agreement, dated April 24, 1997, by and between Western
Wireless Corporation and Triad Cellular Corporation.
10.55 -- Agreement and Plan of Merger, dated April 24, 1997, by and among
Western Wireless Corporation, Minnesota Cellular Corporation, Triad
Investment Minnesota, Inc., Barry B. Lewis, Craig W. Viehweg, Terry E.
Purvis, Triad Cellular Corporation, Triad Cellular L.P., and Triad
Minnesota, L.P.
10.56 -- Purchase Agreement, dated April 24, 1997, by and between Western
Wireless Corporation and Triad Cellular L.P.
12.1 -- Computation of Ratio of Earnings to Fixed Charges...................... (7)
21 -- List of material subsidiaries.......................................... (1)
23.1 -- Consent of Arthur Andersen LLP......................................... (7)
23.2 -- Consents of Preston Gates & Ellis LLP (See Exhibits 5.1, 5.2, 5.3 and
5.4)...................................................................
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24.1 -- Power of Attorney...................................................... (3)
25.1 -- Statement of Eligibility of Trustee.................................... (2)
25.2 -- Statement of Eligibility of Trustee.................................... (3)
99.1 -- Form of Letter of Transmittal for 10 1/2% Senior Subordinated Notes Due
2007................................................................... (3)
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(1) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (Commission File No. 333-2432).
(2) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (Commission File No. 333-2688).
(3) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on form S-4 (Commission File No. 333-14859).
(4) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-8 (Commission File No. 333-18137).
(5) Incorporated herein by reference to the exhibit filed with the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
(6) Incorporated herein by reference to the exhibit filed with the Registrant's
Registration Statement on Form S-8 (Commission File No. 333-18137).
(7) Filed previously with the Registrant's Registration Statement on From S-1
(Commission File No. 333-14859)
(b) Financial Statement Schedule:
Schedule II -- Valuation and Qualifying Accounts and Reserves (see
F-23)
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
adjudication of such issue.
With respect to the Securities registered on this form pursuant to Rule
415, the undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
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in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-8
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized on this 6th day of May,
1997.
WESTERN WIRELESS CORPORATION
By /s/ ALAN R. BENDER
------------------------------------
Alan R. Bender
Senior Vice President, General
Counsel
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below on May 6, 1997 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
/s/ JOHN W. STANTON Chairman, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
John W. Stanton
/s/ DONALD GUTHRIE Vice Chairman and Chief Financial Officer
- --------------------------------------------- (Principal Financial Officer)
Donald Guthrie
/s/ NASTASHIA S. PRESS Principal Accounting Officer
- ---------------------------------------------
Nastashia S. Press
* Director
- ---------------------------------------------
John L. Bunce, Jr.
* Director
- ---------------------------------------------
Mitchell R. Cohen
* Director
- ---------------------------------------------
Jonathan M. Nelson
* Director
- ---------------------------------------------
Terence M. O'Toole
*By /s/ ALAN R. BENDER
- ---------------------------------------------
Alan R. Bender
Attorney-in-Fact
</TABLE>
II-9
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO.
- ------- ----------- --------
<S> <C> <C> <C>
1.1 -- U.S. Underwriting Agreement(1)......................................
1.2 -- International Underwriting Agreement(2).............................
1.3 -- Underwriting Agreement(3)...........................................
3.1 -- Amended and Restated Articles of Incorporation of the
Registrant(1).......................................................
3.2 -- Bylaws of the Registrant(1).........................................
4.1 -- Indenture between Western Wireless Corporation and Harris Trust
Company of California, dated October 24, 1996, relating to the
10 1/2% Senior Subordinated Notes Due 2007(3).......................
4.2 -- Indenture between Western Wireless Corporation and Harris Trust
Company of California, dated May 22, 1996, with respect to 10 1/2%
Senior Subordinated Notes due 2006(2)...............................
5.1 -- Opinion of Preston Gates & Ellis LLP with respect to Class A Common
Stock(1)............................................................
5.2 -- Opinion of Preston Gates & Ellis LLP with respect to Senior
Subordinated Notes Due 2006(2)......................................
5.3 -- Opinion of Preston Gates & Ellis LLP with respect to Senior
Subordinated Notes Due 2007(3)......................................
8.1 -- Opinion of Preston Gates & Ellis LLP as to certain tax matters(3)...
10.1 -- Loan Agreement between Western PCS II Corporation and Northern
Telecom Inc., dated June 30, 1995(1)................................
10.2 -- PCS 1900 Project and Supply Agreement between Western PCS
Corporation and Northern Telecom Inc., dated June 30, 1995(1).......
10.3 -- Purchase Agreement between Motorola Nortel Communications Co. and
General Cellular Corporation, dated July 29, 1993(1)................
10.4 -- Loan Agreement among Western Wireless Corporation and The
Toronto-Dominion Bank, Barclays Bank, PLC, and Morgan Guaranty Trust
Company of New York, as Managing Agents for the Various Lenders,
dated June 30, 1995(1)..............................................
10.5 -- First Amendment to Loan Agreement by and among Western Wireless
Corporation, The Toronto-Dominion Bank, Barclays Bank, PLC, and
Morgan Guaranty Trust Company of New York, as Managing Agents for
the Various Lenders, dated January 11, 1996(1)......................
10.6 -- Supply Contract by and between Western PCS Corporation and Nokia
Telecommunications Inc., dated December 14, 1995(1).................
10.7 -- Purchase and Sale Agreement, Nokia Mobile Phones, Inc. and Western
Wireless Corporation, dated November 10, 1995(1)....................
10.8 -- Western Wireless Corporation, 1994 Management Incentive Stock Option
Plan, approved, as adopted and amended, by Shareholders November 16,
1995, together with form of Stock Option Agreement for offers
thereunder(1).......................................................
10.9 -- Stockholders Agreement by and among Western Wireless Corporation and
certain of its shareholders, dated July 29, 1994(1).................
10.10 -- First Amendment to Stockholders Agreement by and among Western
Wireless Corporation and certain of its shareholders, Adding as a
Party Western PCS Corporation, dated November 30, 1994(1)...........
10.11 -- Waiver Agreement by and among Western Wireless Corporation, Western
PCS Corporation and certain of Western Wireless Corporation's
shareholders, dated November 30, 1994(1)............................
10.12 -- Waiver Agreement by and among Western Wireless Corporation, Western
PCS Corporation and certain of Western Wireless Corporation's
shareholders, dated February 15, 1996(1)............................
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO.
- ------- ----------- --------
<S> <C> <C> <C>
10.13 -- Voting Agreement by and among certain shareholders of Western
Wireless Corporation, dated July 29, 1994(1)........................
10.14 -- Voting Agreement by and among Western Wireless Corporation and
certain of its shareholders(1)......................................
10.15 -- Lease Agreement by and between WWC Holding Co., Inc., successor in
interest to MARKETS Cellular Limited Partnership, and WRC
Properties, Inc., dated May 1, 1994(1)..............................
10.16 -- Lease Agreement by and between Western Wireless Corporation and
Department of Natural Resources, dated August 25, 1995(1)...........
10.17 -- First Amendment to Lease Agreement by and between Western Wireless
Corporation and Department of Natural Resources, dated February 28,
1996(1).............................................................
10.18 -- Form of Cellular One Group License Agreement(1).....................
10.19 -- Asset Purchase Agreement between Western PCS III License Corporation
as Buyer and GTE Mobilnet Incorporated as Seller, dated January 16,
1996(1).............................................................
10.20 -- Purchase and Sale Agreement by and between Robert O. Tyler, Esq., as
Trustee, Seller, and GCC License Corporation, Purchaser, dated
December 22, 1995(1)................................................
10.21 -- Agreement for Purchase and Sale of Autoplex Cellular Equipment,
Software and Services by and among American Telephone and Telegraph
Company, WWC Holding Co., Inc., successor to MARKETS Cellular
Limited Partnership and MCII General Partnership, dated March 17,
1993(1).............................................................
10.22 -- Agreement and Plan of Reorganization by and among Palouse Paging,
Inc., the Shareholders of 100% of the Stock of Palouse Paging, Inc.,
Western Paging I Corporation and Western Wireless Corporation, dated
February 5, 1996(1).................................................
10.23 -- First Amendment to Agreement and Plan of Reorganization by and among
Western Paging I Corporation, the former Shareholders of 100% of the
Stock of Palouse Paging, Inc. and Western Wireless Corporation(1)...
10.24 -- Agreement and Plan of Reorganization by and among Sawtooth Paging,
Inc., the Shareholders of 52.93% of the Stock of Sawtooth Paging,
Inc., Western Paging II Corporation and Western Wireless
Corporation, dated February 5, 1996(1)..............................
10.25 -- Employment Agreement by and between John W. Stanton and Western
Wireless Corporation, dated March 12, 1996(1).......................
10.26 -- Employment Agreement by and between Robert R. Stapleton and Western
Wireless Corporation, dated March 12, 1996(1).......................
10.27 -- Employment Agreement by and between Mikal J. Thomsen and Western
Wireless Corporation, dated March 12, 1996(1).......................
10.28 -- Employment Agreement by and between Theresa E. Gillespie and Western
Wireless Corporation, dated March 12, 1996(1).......................
10.29 -- Employment Agreement by and between Alan R. Bender and Western
Wireless Corporation, dated March 12, 1996(1).......................
10.30 -- Employment Agreement by and between Cregg B. Baumbaugh and Western
Wireless Corporation, dated March 12, 1996(1).......................
10.31 -- Employment Agreement by and between Donald Guthrie and Western
Wireless Corporation, dated March 12, 1996(5).......................
10.32 -- Form of Registrant's Restrictive Covenant and Confidentiality
Agreement(1)........................................................
10.33 -- Form of Director and Officer Indemnification Agreement(1)...........
10.34 -- Western PCS Corporation Series A Preferred Stock Purchase Agreement
among Western Wireless Corporation, Western PCS Corporation and the
Purchasers listed therein, dated April 10, 1995(1)..................
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO.
- ------- ----------- --------
<S> <C> <C> <C>
10.35 -- Second Amendment to Loan Agreement by and among Western Wireless
Corporation, The Toronto-Dominion Bank, Barclays Bank, PLC, and
Morgan Guaranty Trust Company of New York, as Managing Agents for
the Various Lenders, dated(1).......................................
10.36 -- Subscription and Put and Call Agreement with respect to shares of
Common Stock of Western Wireless International Corporation, dated as
of January 1, 1996(1)...............................................
10.37 -- PCS Block "C" Organization and Financing Agreement by and among
Western PCS BTA I Corporation, Western Wireless Corporation, Cook
Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications, Inc.,
SSPCS Corporation and Providence Media Partners L.P. dated as of
November 5, 1995(1).................................................
10.38 -- Limited Partnership Agreement by and between Cook Inlet PV/SS PCS
Partners, L.P. and Western PCS BTA I Corporation dated as of
November 5, 1995(1).................................................
10.39 -- First Amendment to Block "C" Organization and Financing Agreement
and Cook Inlet Western Wireless PV/SS PCS, L.P. Limited Partnership
Agreement by and among Western PCS BTA I Corporation, Western
Wireless Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook
Inlet Telecommunications, Inc., SSPCS Corporation and Providence
Media Partners L.P. dated as of April 8, 1996(1)....................
10.40 -- Amended and Restated Loan Agreement among Western Wireless
Corporation and The Toronto-Dominion Bank, Barclays Bank, PLC, and
Morgan Guaranty Trust Company of New York, as Managing Agents for
the Various Lenders, dated May 6, 1996(1)...........................
10.41 -- Second Amendment to Block "C" Organization and Financing Agreement
and Cook Inlet Western Wireless PV/SS PCS, L.P. Limited Partnership
Agreement by and among Western PCS BTA I Corporation, Western
Wireless Corporation, Cook Inlet PV/SS PCS Partners, L.P., Cook
Inlet Telecommunications, Inc., SSPCS Corporation and Providence
Media Partners L.P. dated as of June 27, 1996(3)....................
10.42 -- Third Amendment to Block "C" Organization and Financing Agreement
and Cook Inlet Western Wireless PV/SS PCS, L.P. Limited Partnership
Agreement and First Amendment to Technical Services Agreement by and
among Western PCS BTA I Corporation, Western Wireless Corporation,
Cook Inlet PV/SS PCS Partners, L.P., Cook Inlet Telecommunications,
Inc., SSPCS Corporation, Providence Media Partners L.P. and Cook
Inlet Western Wireless PV/SS PCS, L.P., dated July 30, 1996(3)......
10.43 -- General Agreement for Purchase of Cellular Systems between Lucent
Technologies Inc. and Western Wireless Corporation, dated September
16, 1996(3).........................................................
10.44 -- Amendment No. 1 to PCS 1900 Supply Agreement between Western PCS
Corporation and Northern Telecom Inc., dated July 25, 1996(3).......
10.45 -- Amendment No. 2 to PCS 1900 Supply Agreement between Western PCS
Corporation and Northern Telecom Inc., dated July 25, 1996(3).......
10.46 -- Agreement of Exchange Agent between Harris Trust Company of
California and Western Wireless Corporation, dated October 25,
1996(3).............................................................
10.47 -- Purchase Agreement between Western Wireless Corporation and Goldman,
Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Brothers Inc and Toronto Dominion Securities (USA) Inc.,
dated October 18, 1996(3)...........................................
10.48 -- Exchange and Registration Rights Agreement between Western Wireless
Corporation and Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Toronto Dominion
Securities (USA) Inc., dated October 24, 1996(2)....................
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO.
- ------- -------------------------------------------------------------------- --------
<S> <C> <C> <C>
10.49 -- Amendment No. 3 to PCS Supply Agreement between Western PCS
Corporation and Northern Telecom Inc., dated October 14, 1996.(5)...
10.50 -- Western Wireless Corporation 1996 Employee Stock Purchase Plan(6)...
10.51 -- Western Wireless Corporation 1997 Executive Restricted Stock Plan(7)
10.52 -- Form of First Amendment to Amended and Restated Loan Agreement among
Western Wireless Corporation and The Toronto Dominion Bank, Barclays
Bank, PLC, and Morgan Guaranty Trust Company of New York, as
Managing Agents for the various lenders, dated March 27, 1997.(7)...
10.53 -- Purchase Agreement, dated April 24, 1997, by and among Western
Wireless Corporation, Triad Texas, L.P., Triad Utah, L.P., Triad
Oklahoma, L.P., Triad Cellular Corporation and Triad Cellular L.P.
10.54 -- Purchase Agreement, dated April 24, 1997, by and between Western
Wireless Corporation and Triad Cellular Corporation.
10.55 -- Agreement and Plan of Merger, dated April 24, 1997, by and among
Western Wireless Corporation, Minnesota Cellular Corporation, Triad
Investment Minnesota, Inc., Barry B. Lewis, Craig W. Viehweg, Terry
E. Purvis, Triad Cellular Corporation, Triad Cellular L.P., and
Triad Minnesota, L.P.
10.56 -- Purchase Agreement, dated April 24, 1997, by and between Western
Wireless Corporation and Triad Cellular L.P.
12.1 -- Computation of Ratio of Earnings to Fixed Charges(7)................
21 -- List of material subsidiaries(1)....................................
23.1 -- Consent of Arthur Andersen LLP(7)...................................
23.2 -- Consents of Preston Gates & Ellis LLP (See Exhibits 5.1, 5.2, 5.3
and 5.4)............................................................
24.1 -- Power of Attorney(3)................................................
25.1 -- Statement of Eligibility of Trustee(2)..............................
25.2 -- Statement of Eligibility of Trustee(3)..............................
99.1 -- Form of Letter of Transmittal for 10 1/2% Senior Subordinated Notes
Due 2007(3).........................................................
</TABLE>
- ---------------
(1) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (Commission File No. 333-2432).
(2) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (Commission File No. 333-2688).
(3) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on form S-4 (Commission File No. 333-14859).
(4) Incorporated herein by reference to the exhibit filed with the Company's
Registration Statement on Form S-8 (Commission File No. 333-18137).
(5) Incorporated herein by reference to the exhibit filed with the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
(6) Incorporated herein by reference to the exhibit filed with the Registrant's
Registration Statement on Form S-8 (Commission File No. 333-18137).
(7) Filed previously with the Registrant's Registration Statement on From S-1
(Commission File No. 333-14859)
<PAGE> 1
EXHIBIT 10.53
PURCHASE AGREEMENT BY AND AMONG
WESTERN WIRELESS CORPORATION,
TRIAD TEXAS, L.P. AND
TRIAD UTAH, L.P.
TRIAD OKLAHOMA, L.P.
TRIAD CELLULAR CORPORATION AND
TRIAD CELLULAR L.P.
DATED: APRIL 24, 1997
<PAGE> 2
PURCHASE AGREEMENT
AGREEMENT, dated April 24, 1997 (the "Agreement"), by and among
WESTERN WIRELESS CORPORATION, a Washington corporation ("Buyer"), TRIAD TEXAS,
L.P., a Delaware limited partnership ("TTLP"), TRIAD UTAH, L.P., a Delaware
limited partnership ("TULP"), TRIAD OKLAHOMA, L.P., a Delaware limited
partnership ("TOLP"; TTLP, TULP and TOLP are hereinafter individually referred
to as a "Seller" and collectively as "Sellers"), TRIAD CELLULAR CORPORATION, a
Delaware corporation ("TCC") and TRIAD CELLULAR L.P., a Delaware limited
partnership ("TCLP"; TCC and TCLP are hereinafter individually referred to as a
"Partner" and collectively as "Partners").
W I T N E S S E T H:
WHEREAS, Sellers are the owners of (i) the Authorizations (as
hereinafter defined) listed on Exhibit 5.01(h) annexed hereto to operate
wireless telephone communications businesses in the geographic areas covered by
such Authorizations (the "Businesses") and (ii) the Businesses and the assets
used in the Businesses; and
WHEREAS, subject to the terms and conditions hereinafter provided,
Buyer desires to purchase from Sellers, and Sellers desire to sell and transfer
to Buyer, the Authorizations and substantially all of the assets of Sellers
relating to the wireless telephone operations covered by the Authorizations.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.01. Purchase of Assets. Subject to the terms and conditions hereof
and in reliance upon the representations, warranties, covenants and agreements
herein contained, on the Closing Date (as defined in Article 2 hereof),
Sellers, jointly and severally, agree to sell, transfer, convey, assign and
deliver to Buyer, and Buyer agrees to purchase, acquire and accept from
Sellers, the Businesses of Sellers as a going concern including all the assets,
properties, claims and rights of each Seller used in or pertaining to the
Businesses, of every type and description, wherever located, tangible and
intangible, vested or unvested, contingent or otherwise, as the same shall
exist on the Closing Date, whether or not recorded on the books and records of
such Seller and whether or not described herein or in any of the exhibits or
schedules delivered or to be delivered to Buyer hereunder (collectively the
"Purchased Assets"), other than those assets expressly excluded pursuant to the
provisions of Section 1.02 hereof. Such sale and transfer to Buyer shall be
free and clear of all Liens (as hereinafter defined).
Without in any way limiting the generality of the foregoing, the
Purchased Assets include the following:
<PAGE> 3
(a) All fixed assets of each Seller, including real property,
buildings and improvements to real property, furniture, furnishings, fixtures,
leasehold improvements, office or other equipment, vehicles, all machinery and
equipment of each Seller, including those items referred to on Exhibit 1.01(a)
annexed hereto.
(b) All inventory and supplies of each Seller, including goods in
transit.
(c) The leasehold interests of each Seller described on Exhibit
1.01(c) annexed hereto.
(d) All prepaid property taxes, prepaid rent, prepaid freight,
prepaid insurance and other prepaid expenses, deposits and deferred charges of
each Seller and any and all advances by each Seller to its employees.
(e) All rights and benefits under all contracts to which each
Seller is a party, including contracts of purchase or sale of goods or
services, purchase orders, warranty rights with respect to all machinery,
equipment or other personal property, patent, software and other licenses,
leases of personal property, contracts with agents, and including all Contracts
(as hereinafter defined) referred to on Exhibit 5.01(p) annexed hereto but
excluding those Contracts referred to on Exhibit 5.01(p) annexed hereto as not
being assumed.
(f) All Authorizations.
(g) All patents, trademarks, trade names, service marks and
copyrights and applications for any thereof, operating data, records and other
intangible assets, including all books (other than Sellers' minute books,
corporate seals, stock records and stock transfer books), records, customer and
subscriber lists and credit information, mailing lists and all other customer
or subscriber or potential customer or subscriber data, personnel records of
employees of each Seller and such accounting records as Buyer may reasonably
require, slogans, processes, trade secrets, formulae, job rights, rights to
inventions, engineering data, drawings, art work, photographs and advertising
and promotional materials, suppliers' lists, goodwill and other similar
property and rights, and all claims and interests arising therefrom or relating
thereto, (other than the right, title and interest of each Seller in and to its
corporate or partnership name and any and all logos related thereto) including
the items referred to or described on Exhibit 1.01(g) annexed hereto. Sellers
may make and retain, or Buyer will furnish to Sellers at Sellers' expense
copies of such records as reasonably required by Sellers.
(h) All trade accounts receivable, miscellaneous accounts
receivable, claims receivable and notes receivable of each Seller.
(i) All rights and benefits under the insurance policies described
on Exhibit 1.01(i) annexed hereto as such rights and benefits relate to claims
arising out of events occurring prior to the Closing Date.
1.02. Assets Not Purchased. Notwithstanding anything to the contrary
herein contained, there is hereby expressly excluded from the assets of Sellers
which are being sold, transferred or purchased hereunder the following:
Execution -2-
<PAGE> 4
(a) All cash on hand or in banks;
(b) The ownership interest of Sellers in and to the CoBank Capital
Plan;
(c) Accounts receivable of Sellers from Affiliates which are
listed on Exhibit 1.02(c) annexed hereto;
(d) All inter-company receivables owed by TTLP, TULP or TOLP to TCLP; and
(e) All furniture, equipment and leasehold improvements located in
Sellers' Menlo Park, California offices.
1.03. Buyer's Designee. Buyer shall have the right to assign to one
or more Affiliates of Buyer any and all rights and obligations of Buyer under
this Agreement; provided, however, that, no such assignment shall delay the
Closing beyond October 31, 1997 or relieve Buyer of its obligations hereunder,
and Buyer and its assignee shall be jointly and severally liable for Buyer's
obligations hereunder. "Affiliate" shall mean, with respect to any party
hereto, any corporation or other business entity which directly or indirectly
through stock ownership or through any other arrangement either controls, is
controlled by or is under common control with, such party. The term "control"
shall mean the power to direct the affairs of such person by reason of
ownership of voting stock or other equity interests, by contract or otherwise.
ARTICLE 2
CLOSING AND CLOSING DATE
The consummation of the transactions provided for herein (the
"Closing") shall take place at the offices of Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, 29th Floor, New York, New York or at such other
mutually agreeable location, at 11:00 A.M. local time, on the latest to occur
of (a) the last Business Day (as hereinafter defined) of the month in which all
Federal Communications Commission ("FCC") and state regulatory approvals (if
any) necessary in order to consummate lawfully the transactions contemplated
hereby have been received and shall have become Final Orders (as hereinafter
defined), (b) the last Business Day of the month in which all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), shall have expired or been terminated without
objection by the Federal Trade Commission (the events described in clauses (a)
and (b) above being hereinafter referred to as the "Regulatory Approvals" and
the later of the dates described in clauses (a) and (b) above being referred to
as the "Regulatory Approval Date"), and (c) October 31, 1997, or at such other
time or date to which the parties hereto mutually agree. The day on which the
Closing occurs is herein referred to as the "Closing Date." As used herein the
term "Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday in New York, New York or in Seattle, Washington or any other day on
which commercial banks are authorized by law or governmental decree to close.
Execution - 3 -
<PAGE> 5
ARTICLE 3
PURCHASE PRICE AND LIABILITIES
3.01. Calculation of Purchase Price. In consideration of the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets at the
Closing, Buyer shall pay or deliver to Sellers the following (the "Purchase
Price"):
(a) (i) the aggregate amount of One Hundred Thirty-Six
Million ($136,000,000) Dollars in immediately available funds; provided,
however, if the Closing Date shall occur on or prior to December 31, 1997, an
aggregate amount of Ten Million ($10,000,000) Dollars of such payment shall be
deferred until, and be due and payable on, January 5, 1998 (the "Deferred
Payment"). Buyer shall pay to Sellers the Deferred Payment by delivery at the
Closing of Buyer's non-negotiable, non-transferable promissory notes, in the
aggregate principal amount of the Deferred Payment, which promissory notes
shall bear interest at the rate of five (5%) percent per annum and shall be
secured by an irrevocable letter of credit issued by The Toronto-Dominion Bank
or its affiliates or a national bank with capital and surplus in excess of
$100,000,000 in an amount equal to the principal amount of the Deferred
Payment, such letter of credit and promissory notes to be in form and substance
reasonably satisfactory to Sellers; plus or minus (as the case may be)
(ii) the aggregate Working Capital of Sellers as of the
Closing Date. As used herein "Working Capital" means the total of the current
assets (in determining Working Capital (A) the amount of the accounts
receivable of each Seller shall be computed in accordance with the provisions
of Exhibit 3.03(b) annexed hereto and (B) any assets listed in Section 1.02
hereof which are not being purchased by Buyer shall be excluded) of all Sellers
minus the total of the current liabilities of all Sellers (other than current
maturities of long-term indebtedness and all other liabilities of Sellers which
are not being assumed by Buyer as set forth in Section 3.05 hereof), as such
terms are used in accordance with generally accepted principles of accounting.
If the aggregate Working Capital of Sellers as of the Closing Date (A) is a
positive number, the Purchase Price shall be increased by such amount, or (B)
is a negative number, the Purchase Price shall be reduced by such amount; and
plus
(iii) an amount equal to the out-of-pocket capital
expenditures (excluding any capitalized labor) actually made by Sellers which
Buyer consents to in writing and agrees in writing to reimburse to Sellers in
full in cash at the Closing (collectively the "Reimbursable Capital
Expenditures").
The Purchase Price shall be allocated among Sellers and the Purchased
Assets as set forth in Exhibit 3.01 annexed hereto.
3.02. Delivery of Instruments of Transfer. At the Closing, Sellers
shall deliver to Buyer such deeds, bills of sale, assignments and other good
and sufficient instruments of conveyance, transfer and assignment as shall be
necessary to vest in Buyer title in and to the Purchased Assets of the quality
described in Section 5.01(i) hereof.
Execution - 4 -
<PAGE> 6
3.03. Payment of Purchase Price.
(a) (i) At the Closing Buyer shall pay to Sellers the portion
of the Purchase Price set forth in Section 3.01(a)(i) hereof.
(ii) On or prior to the Closing Date Sellers shall, and
each of the Partners shall cause Sellers to, pay or cause to be paid all
liabilities other than current liabilities reflected in the Closing Date
Balance Sheets (as hereinafter defined) of Sellers as at the Closing Date,
including any and all accrued but unpaid interest, current and long-term
maturities of long-term indebtedness, prepayment penalties and fees and
expenses relating thereto (and Sellers may direct Buyer to pay all or a portion
of the Purchase Price payable under Section 3.03(a)(i) hereof to pay such
liabilities). Sellers shall provide to Buyer on the Closing Date evidence
reasonably satisfactory to Buyer of Sellers' payment of such liabilities and of
the release or termination of all Liens on any of the Purchased Assets of
Sellers which secured such liabilities.
(b) (i) At least five (5) Business Days prior to the Closing
Date, Sellers shall deliver to Buyer (A) Sellers' bona fide written estimate of
the Working Capital and Reimbursable Capital Expenditures, certified by the
chief financial officer of each Seller, which estimate, unless otherwise agreed
in writing by Buyer, shall be, in the case of Working Capital, the Working
Capital of Sellers as shown on the then most recently prepared and available
monthly balance sheets of Sellers (such balance sheets to be prepared by
Sellers on a basis consistent with prior periods), and in the case of
Reimbursable Capital Expenditures, the actual amount thereof, such actual
amount to be certified by Sellers' chief financial officer and such
certification to be accompanied by evidence reasonably satisfactory to Buyer as
to the accuracy and completeness of the amounts so certified, and (B) the
unaudited financial statements of each Seller as of, and for such portion (as
requested by Buyer) of the fiscal year ended through, the end of the month
immediately preceding the Closing Date, certified by the Chief Financial
Officer of such Seller, which financial statements shall have been prepared in
accordance with generally accepted accounting principles consistently applied.
On the Closing Date (1) in the event the aggregate of estimated Working Capital
and the Reimbursable Capital Expenditures is a positive number, the Purchase
Price payable pursuant to Section 3.01 hereof shall be the sum of the amount
payable pursuant to Section 3.01(a)(i) plus an amount equal to such bona fide
written estimate of the Working Capital and the Reimbursable Capital
Expenditures and shall be paid by Buyer to Sellers in immediately available
funds on the Closing Date, or (2) in the event the aggregate of the estimated
Working Capital and the Reimbursable Capital Expenditures is a negative number,
the Purchase Price payable pursuant to Section 3.01 hereof shall be the sum of
the amount payable pursuant to Section 3.01(a)(i) minus an amount equal to such
bona fide written estimate of the Working Capital and the Reimbursable Capital
Expenditures.
(ii) Sellers shall deliver to Buyer within forty-five (45)
days after the end of the month in which the Closing shall have occurred
balance sheets of each Seller as of the Closing Date (the "Closing Date Balance
Sheets") prepared by each Seller on a basis consistent with prior periods. In
calculating revenues and expenses for the period between the first day of the
month in which the Closing occurs and the Closing Date, items of revenue and
expense shall be calculated by multiplying the aggregate amount of each such
item realized or incurred during the month in which the Closing occurs by a
fraction, the numerator of which shall be the day of the month on which the
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Closing occurs and the denominator of which shall be the number of days in the
month in which the Closing occurs. Buyer and Sellers shall, as promptly as
practicable but in no event later than ninety (90) days following the Closing
Date, determine the amount of the Working Capital and the Reimbursable Capital
Expenditures as of the close of business on the Closing Date. Buyer and
Sellers shall, and shall cause their respective independent certified public
accountants to, give each other and their respective representatives full
access to each other's books and records (which relate to or are necessary for
the determination of the Working Capital and the Reimbursable Capital
Expenditures) and representatives during regular business hours upon reasonable
notice for the purpose of determining the Working Capital and the Reimbursable
Capital Expenditures. The parties shall in good faith attempt to resolve any
dispute concerning the Working Capital and the Reimbursable Capital
Expenditures. If the parties do not reach agreement concerning the Working
Capital and the Reimbursable Capital Expenditures within ninety (90) days
following the Closing Date, then the parties shall submit the matter for
resolution to a nationally recognized firm of independent certified public
accountants which has not had a material relationship with either Buyer and its
Affiliates or Sellers and their Affiliates within the preceding two years (the
"Arbiter") and which is mutually agreeable to the parties. If the parties
cannot agree on the selection of the Arbiter, the Arbiter shall be selected by
mutual agreement of the parties' respective independent certified public
accountants, or, if they cannot agree, the parties shall request the American
Arbitration Association (the "AAA") to appoint the Arbiter, and such
appointment by the parties' respective independent certified public accountants
or the AAA, as the case may be, shall be conclusive and binding on the
parties. Promptly, but no later than twenty (20) days after its acceptance of
its appointment as Arbiter, the Arbiter shall determine, based solely on
presentations by Buyer and Sellers, and not by independent review, only those
issues concerning the Working Capital and the Reimbursable Capital Expenditures
which are in dispute and shall render a report as to the dispute and the
resulting computation of the Working Capital and the Reimbursable Capital
Expenditures, which shall be conclusive and binding upon the parties. The
fees, costs and expenses of the Arbiter shall be paid one-half by Buyer and
one-half by Sellers; provided, however, that the Arbiter shall have the right
(but not the obligation) to reapportion the fees, costs and expenses of the
Arbiter between Buyer and Sellers in accordance with the Arbiter's
determination of the relative merit of the parties' respective positions on the
matters in dispute. Within five (5) Business Days of the determination of the
Working Capital and the Reimbursable Capital Expenditures, whether by mutual
agreement of the parties or by the Arbiter, and provided there is a difference
between such aggregate amount and the estimated aggregate of the Working
Capital and the Reimbursable Capital Expenditures, (A) if the aggregate of the
estimated Working Capital and the Reimbursable Capital Expenditures is greater
than the aggregate of the Working Capital and the Reimbursable Capital
Expenditures, then Sellers shall pay to Buyer, or, in Buyer's discretion, to
Buyer's designee, in cash such difference, or (B) if the aggregate of the
Working Capital and the Reimbursable Capital Expenditures is greater than the
aggregate of the Estimated Working Capital and the Reimbursable Capital
Expenditures, Buyer shall pay to Sellers in cash such difference.
Notwithstanding anything to the contrary contained in this Agreement, Buyer and
Sellers agree that in determining the Working Capital and the Reimbursable
Capital Expenditures pursuant to this Section 3.03(b), the amounts of the
accounts receivable of each Seller at the Closing Date shall be computed in
accordance with the provisions of Exhibit 3.03(b) annexed hereto.
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(c) Sellers shall, and each of the Partners shall cause Sellers
to, pay at the Closing or, if due thereafter, promptly when due, all gross
receipts taxes, transfer taxes, sales taxes, stamp taxes and any other taxes
(collectively, "Transfer Taxes") payable in connection with the transfer of the
Purchased Assets and the Businesses from Sellers to Buyer hereunder. Sellers
shall prepare and file any tax return with respect to such Transfer Taxes;
provided, however, that Buyer shall have the right of reasonable review and
comment prior to such filing (such right to be exercised by Buyer within five
(5) Business Days after delivery of such returns to Buyer, and if such right is
not so exercised within such five (5) day period, Buyer shall be deemed to have
waived such right).
3.04. Assumed Liabilities. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties, covenants and
agreements herein contained, at the Closing Buyer agrees to assume and perform,
according to their respective terms, the following obligations of Sellers as
the same shall exist at the Closing Date:
(a) obligations under the leases listed on Exhibit 1.01(c) annexed
hereto, including obligations arising under leases entered into after the date
hereof as permitted by Section 4.01(c) hereof;
(b) obligations under the Contracts listed on Exhibit 5.01(p)
annexed hereto, including obligations arising under Contracts entered into
after the date hereof as permitted by Section 4.01(c) hereof; and
(c) liabilities reflected on the Closing Date Balance Sheets
(other than liabilities which are not being assumed by Buyer as set forth in
Section 3.05 hereof), including obligations arising under Contracts and leases
entered into after the date hereof as permitted by Section 4.01(c) hereof and
including sales or similar taxes which are reflected on the Closing Date
Balance Sheet and which were deducted in computing Working Capital;
provided, however, that Buyer shall not assume any such liabilities or
obligations resulting from breaches of or defaults by Sellers under any of such
leases or Contracts attributable to any period ending prior to or on the
Closing Date unless reflected on the Closing Date Balance Sheets and unless
such liabilities are not excluded liabilities pursuant to Section 3.05 hereof.
3.05. Excluded Liabilities. Notwithstanding anything to the contrary
herein contained, Buyer shall not assume any liabilities of any Seller other
than as expressly set forth in Section 3.04 hereof. Any liabilities or
obligations of any Seller not specifically assumed by Buyer hereunder shall
continue to be the liabilities and obligations of Sellers and Sellers shall
jointly and severally indemnify and hold harmless Buyer from and against all
such liabilities and obligations. The liabilities and obligations of Sellers
not assumed by Buyer hereunder include the following:
(a) Liabilities or obligations of any Seller arising out of the
indemnification agreements contained in Article 7 hereof;
(b) Any claim, liability or obligation, known or unknown, whether
absolute, contingent or otherwise, the existence of which is a breach of any
representation, warranty or covenant of, any Seller set forth in this
Agreement;
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(c) Liabilities or obligations of any Seller arising on or after
the Closing;
(d) Liabilities or obligations of any Seller arising out of this
Agreement or the transactions contemplated hereby or incurred in respect of any
transaction occurring after the Closing;
(e) Liabilities for all taxes (other than taxes which are
reflected on the Closing Date Balance Sheets and which were deducted in
computing Working Capital) whatsoever, whether income, gross receipts,
property, sales, use, franchise or any other taxes whatsoever, including taxes,
if any, attributable to the sale of the Businesses and Purchased Assets
hereunder, any liquidation and dissolution of any Seller or the distribution of
its assets to its equity holders;
(f) Liabilities for breach of representations or warranties to any
person and liabilities arising out of product liability, negligence or willful
misconduct claims; and
(g) Liabilities, claims, obligations, judgments, orders, duties or
responsibilities of any kind or nature whatsoever, whether arising before, on
or after the Closing Date, relating to amounts payable to Employees (as
hereinafter defined) as salary, bonus, severance or other compensation or
benefits and with respect to any Employee Plans (as hereinafter defined) which
are now or ever have been maintained, contributed to or required to be
contributed to for the benefit of any Employee.
Sellers, jointly and severally, covenant and agree to pay all
liabilities and to fulfill all obligations of any Seller not assumed by Buyer
hereunder as and when the same become due, except those being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.01. Covenants of Sellers. Each of Sellers and each of Partners,
jointly and severally, covenants and agrees from and after the execution and
delivery of this Agreement to and including the Closing Date as follows:
(a) Consummate Transactions. Each Seller and each Partner shall
use its best efforts to cause the transactions contemplated by this Agreement
to be consummated in accordance with the terms hereof, and, without limiting
the generality of the foregoing, use its best efforts to obtain all necessary
approvals, consents, permits, licenses and other authorizations required in
connection with this Agreement and the transactions contemplated hereby of
third parties including all governmental authorities and agencies such as the
FCC, and any state public utilities or public service commission, and to make
all filings with and to give all notices to third parties which may be
necessary or reasonably required of any Seller, in order to consummate the
transactions contemplated hereby, including the transfer and delivery from
Sellers to Buyer of the Businesses and the Purchased Assets.
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(b) Full Access. Each Seller and each Partner shall give to Buyer
and its agents and representatives (including its independent auditors and
attorneys) reasonable access (such access not to interfere unreasonably with
Sellers' Businesses) during normal business hours and upon reasonable notice as
described below to all of such Seller's or Partner's personnel, premises,
properties, assets, financial statements and records, books, contracts,
documents and commitments of or relating to the Businesses or the Purchased
Assets, and shall furnish Buyer and its agents and representatives with all
such information concerning the affairs of such Seller as Buyer may reasonably
request. In addition, Sellers and Partners shall permit Buyer's accountants to
conduct an audit (at Buyer's expense) of the books and records of Sellers in
such detail as Buyer may reasonably require. Buyer shall contact either Barry
B. Lewis, Craig W. Viehweg or any other person(s) designated by Sellers, on
behalf of all Sellers, to arrange for Buyer's personnel, agents and
representatives visiting any of Seller's premises or personnel, agents or
representatives, such visits to be arranged for by Sellers not later than three
(3) Business Days of Buyer's request therefor.
(c) Ordinary Course. Each Seller shall, and each Partner shall
cause each Seller to, conduct its Businesses only in the ordinary course and
consistent with past practices. Without limiting the foregoing, each Seller
shall, and each Partner shall cause each Seller to (i) continue to expend funds
for sales promotion and marketing and to pay its bills and other obligations,
all in the ordinary course of business consistent with past practices; and (ii)
make all capital expenditures described on or set forth in Exhibit 4.01(q)
annexed hereto or which Buyer otherwise consents to in writing. Without
limiting the foregoing, no Seller shall, and no Partner shall cause or permit
any Seller to, without the prior written consent of Buyer, such consent not to
be unreasonably withheld, (A) incur any material liability, absolute or
contingent, other than current liabilities arising in the ordinary course of
business or pursuant to Contracts in existence on the date hereof and set forth
or described in Exhibit 5.01(p) annexed hereto or hereafter entered into as
permitted pursuant to this Agreement and other than additional loans from TCLP
with the proceeds of draws made under the Loan Agreement referenced in item 2
of Exhibit 5.01(m) hereto; (B) assume, guarantee, change any existing
guarantee, endorse or otherwise as an accommodation become responsible for
obligations of any other individual or entity (except by endorsement for
collection or deposit of negotiable instruments received in the ordinary course
of business and except pursuant to Contracts in existence on the date hereof
and set forth or described in Exhibit 5.01(p) annexed hereto); (C) other than
in the ordinary course of business and in amounts not exceeding $25,000 in the
aggregate, make any loans or advances to any individual or entity; provided,
however, that TCLP shall be permitted to distribute an aggregate of $7,500,000
(1) to TCC to enable TCC to pay debt of TCC, or (2) to make equity
distributions or loans to its partners and affiliates, in either case so long
as such distributions would not have a material adverse effect on the business,
operations or prospects of the Sellers or on the transactions contemplated
hereby; (D) sell, transfer, convey, mortgage, pledge, hypothecate or subject to
any lien, claim, security interest, charge, encumbrance, restriction, title
retention agreement or any liability or claim of any nature (all of the
foregoing, collectively "Liens") any of the Purchased Assets or the Businesses
except for sales of subscriber equipment or retirements of old or obsolete
equipment (such retired equipment to be replaced with equipment of equivalent
cost and utility) in the ordinary course of business or pursuant to agreements
or binding commitments in existence on the date hereof and set forth or
described in Exhibit 5.01(p) annexed hereto or Liens which in the aggregate are
not material and have been incurred in the ordinary
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course of business and which Liens will be released on or prior to the Closing
Date; (E) intentionally waive or compromise any right or claim for any amount
in excess of $25,000; (F) cancel, without fair consideration, any note, loan or
other material obligation owing to it; (G) enter into or extend or renew any
Contract with (1) except for Contracts having an annual cost of less than
$5,000 for any single contract and $50,000 for all such Contracts, any Person
(as hereinafter defined) which is not assignable to Buyer and terminable at
will on not more than thirty (30) days notice and without material liability,
or (2) any Seller or Partner or any Affiliates, partners, employees, agents or
assigns of any Seller or Partner or of any Seller's or Partner's Affiliates;
(H) make any increase in the compensation payable or to become payable by any
Seller to any of its officers, employees, agents or consultants except for
routine increases made in the ordinary course of business consistent with past
practices, which in any event shall not exceed five (5%) percent; (I) make any
arrangement for any new or additional, or amend or extend any existing,
profit-sharing plan, retirement plan, bonus plan, severance arrangement,
employee benefit plan, or any similar plan, or make or agree to make any change
to any such plan if the result thereof increases any benefits paid or payable
thereunder to any Person; (J) except as required by law, enter into any
collective bargaining agreement, or make any commitment whatsoever to any union
or other representative or party which intends to represent any employees; (K)
extend the maturity date of or renew any (1) indebtedness for borrowed money or
for the deferred purchase price of property or services or evidenced by notes,
bonds or other instruments, (2) lease obligations which would normally be
capitalized under generally accepted accounting principles, or (3) obligations
under direct or indirect guarantees of (including obligations (contingent or
otherwise) to assure a creditor against loss in respect of) indebtedness or
obligations of others of types referred to in subclauses (1) and (2) above (the
obligations specified in this clause (K) are collectively referred to herein as
"Indebtedness"), if such Indebtedness will survive the Closing; (L) prepay,
other than as contemplated by the provisions of Section 3.03(a)(ii) hereof,
prior to its stated maturity any Indebtedness or any lease or rental or any
other amounts; or (M) enter into any reseller agreements or any agent
agreements other than in the ordinary course of business consistent with past
practice and only so long as such agreements are assignable to Buyer and
terminable at will, without penalty, by Sellers or Buyer upon not more than
thirty (30) days' notice. As used herein the term "Person" means any general
or limited partnership, corporation, joint venture, trust, business trust,
governmental agency, cooperative, association, individual or other entity, and
heirs, executors, administrators, legal representatives, successors and assigns
of such person.
(d) Preserve Goodwill. Sellers shall, and each Partner shall
cause Sellers to, use their diligent efforts to preserve the Businesses of each
Seller and the goodwill of suppliers, subscribers and others dealing with each
Seller, and to retain the services of the employees of each Seller and to
maintain the goodwill of such employees.
(e) Compliance with Law. Each Seller shall, and each Partner
shall cause each Seller to, comply in all material respects with all applicable
laws, rules, ordinances, regulations, codes, orders, decrees, licenses and
permits of all applicable jurisdictions and governmental authorities or
agencies relating to it, to its properties (including the Businesses and the
Purchased Assets) or to the conduct of its Businesses.
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(f) Approvals, Consents. Each Seller shall, and each Partner
shall cause each Seller to, obtain and maintain in full force and effect all
approvals, consents, permits, licenses and other authorizations, from all
appropriate Federal, state and local governmental agencies or authorities
necessary or required for the operation of such Seller's Businesses as
presently conducted, as and when such approvals, consents, permits, licenses or
other authorizations are necessary or required except, in the case of
non-material approvals, consents, permits, licenses or other authorizations of
state and local governmental agencies and authorities, where such failure would
not have a material adverse effect on such Seller, its financial condition,
prospects, the Purchased Assets or the Businesses. The parties shall consult
with one another as to the general approach to be taken with any governmental
authority or agency with respect to obtaining any necessary consent of such
governmental agency or authority to the transactions contemplated hereby, and
each of the parties shall keep each other party reasonably informed as to the
status of any such communications with any governmental authority or agency.
Each Seller shall not, and each Partner shall cause each Seller not to, with
respect to the Authorizations, the Businesses or the Purchased Assets, make any
material commitments (other than those typical in the wireless telephone
industry) relating to any approval, consent, permit or license to any
governmental authority or agency without the prior written consent of Buyer.
(g) No Transfer. None of Sellers shall, and none of Partners
shall cause or permit any Seller to, (i) sell, transfer, assign or dispose of,
or offer to, or enter into an agreement to, sell, transfer, assign or dispose
of any of the Purchased Assets or the Businesses or negotiate therefor, other
than sales of such of the Purchased Assets that are immaterial or that are no
longer useable in the Businesses or which are being replaced with assets of
comparable quality and utility in the ordinary course of business consistent
with past practice or (ii) create, incur or suffer to exist any Lien of any
nature whatsoever or enter into any restriction on transfer or grant any right
of first refusal relating to the Purchased Assets or the Businesses, other than
Liens not in the aggregate material to the business or financial condition of
such entity and which Liens will be terminated on or prior to the Closing Date.
(h) Insurance. From the date hereof through the Closing Date,
each Seller shall, and each Partner shall cause each Seller to, maintain in
full force and effect (including necessary renewals thereof) all of the
insurance policies relating to such Seller set forth on Exhibit 5.01(j) annexed
hereto existing on the date hereof. From and after the Closing Date, each
Seller shall, and each Partner shall cause each Seller to, take all action that
may be necessary to cause the coverage under such policies to continue in full
force and effect after the Closing Date with respect to occurrences prior to
the Closing Date and shall take all actions necessary to preserve or protect
rights under any such policies with respect to any claim against any Seller
arising out of the Purchased Assets or Businesses of Sellers prior to the
Closing Date. Sellers shall, and Partners shall cause Sellers to, provide
Buyer with information and records regarding all claims pending with respect to
the Purchased Assets or Businesses of Sellers and agree to provide to Buyer any
additional information and records Buyer may reasonably require regarding such
claims.
(i) No Amendments or Issuance of Additional Shares. No Seller
shall, and no Partner shall cause or permit any Seller to, amend its charter,
by-laws, partnership agreement, or comparable governing instrument, which
amendment would have a material adverse effect on the
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Purchased Assets, the Businesses or the transactions contemplated by this
Agreement or which would require any additional consents or approvals of the
transactions contemplated by this Agreement. No Seller shall, and no Partner
shall cause or permit any Seller to, issue or sell any shares of its capital
stock, partnership interests or other securities, or issue options, warrants or
rights of any kind to acquire, or any securities convertible into, exchangeable
for or representing a right to purchase or receive, or enter into any contract,
plan, understanding or arrangement with respect to the issuance of, any
stock-based or stock-related awards or other equity-based awards, shares of its
capital stock or other equity or other securities, or enter into any
arrangement or contract with respect to the purchase or voting of shares of its
capital stock or other equity, or adjust, split, combine or reclassify any of
its securities, or make any other changes in its capital structure, if any such
issuance, sale, contract, plan, understanding, arrangement, adjustment, split,
combination, reclassification or changes would require any additional approvals
of the transactions contemplated by this Agreement or would otherwise adversely
affect the transactions contemplated by this Agreement.
(j) Condition of Assets. Each Seller shall, and each Partner
shall cause each Seller to, use its diligent efforts to preserve its assets
intact and, from time to time, to make all necessary repairs thereto, so that
the Businesses carried on by it may be conducted in the ordinary course of
business and consistent with past practices.
(k) Books and Records. Each Seller shall, and each Partner shall
cause each Seller to, maintain its books, accounts and records in the usual
manner, on a basis consistent with prior years and in accordance with generally
accepted accounting principles.
(l) Notice of Claims. Each Seller shall, and each Partner shall
cause each Seller to, give written notice to Buyer promptly upon the
commencement of any action, investigation, arbitration or proceeding (including
any proceeding before any governmental agency), or promptly upon obtaining
knowledge of any facts giving rise to a threat of any such action,
investigation, arbitration or proceeding (i) which would, if adversely
determined, materially and adversely affect (A) any Seller's ability to
consummate the transactions contemplated hereby or (B) the business or
financial condition of any Seller, any Businesses or the Purchased Assets or
(ii) where the amount involved exceeds $25,000.
(m) Certain Actions. None of Sellers shall, and none of Partners
shall cause or permit any Seller to, take any action or refrain from taking any
action which would materially interfere with or preclude the consummation of
the transactions contemplated by this Agreement, result in any of the
representations and warranties of any Seller or any Partner contained herein
being incorrect or incomplete in any material respect, or result in any of the
conditions to Buyer's obligation to consummate the transactions contemplated by
this Agreement as set forth in Section 6.01 hereof being unsatisfied in
accordance with the terms hereof.
(n) Dividends, Distributions and Other Payments. None of Sellers
shall, and none of Partners shall cause or permit any Seller to, declare or
make any dividends, distributions or other payments (whether of loans or
otherwise) to any shareholder or partner of any of Sellers or to any Affiliate
of any shareholder or partner of Sellers; provided, however, that TCLP shall be
permitted
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to distribute an aggregate of $7,500,000 (i) to TCC to enable TCC to pay debt
of TCC, or (ii) to make equity distributions or loans to its partners or
affiliates, in either case so long as such distributions would not have a
material adverse effect on the business, operations or prospects of the Sellers
or on the transactions contemplated hereby.
(o) Notice of Breaches. Each Seller shall, and each Partner shall
cause each Seller, promptly after obtaining knowledge of the occurrence of, or
the impending or threatened occurrence of, any event which would cause or
constitute a breach of any warranties, representations, covenants or agreements
of any Seller or any Partner contained in this Agreement, give notice in
writing of such event or occurrence or impending or threatened event or
occurrence, to Buyer and use its diligent efforts to prevent or promptly remedy
such breach.
(p) Material Contracts. None of Sellers shall, and none of
Partners shall cause or permit any Seller to, default in any material respect
under, or breach any term or provision of, or suffer or permit to exist any
condition or event which, after notice or lapse of time, or both, would
constitute a material default by Sellers under, any Contract listed on Exhibit
5.01(p) annexed hereto or which are entered into after the date hereof and
prior to the Closing as permitted by Section 4.01(c) and which would have been
listed on such Exhibit if they were in effect on the date hereof.
(q) Capital Expenditures. Following the date hereof and prior to
the Closing Date, each Seller shall, and each Partner shall cause each Seller
to, make the capital expenditures of the type and in the amounts set forth on
Exhibit 4.01(q) annexed hereto and such other capital expenditures to which
Buyer shall consent in writing and agree in writing to reimburse to Sellers in
full in cash at the Closing.
(r) Notification of Change. Each Seller shall, and each Partner
shall cause each Seller to, advise Buyer promptly in writing of (i) any event,
condition or state of facts, including any action, suit or proceeding, which
has had or would have a material adverse effect on the business or financial
condition of any Seller, on the Businesses or the Purchased Assets or on the
transactions contemplated by this Agreement or (ii) the commencement of any
action, suit or proceeding which seeks to enjoin the consummation of the
transactions contemplated hereby.
(s) Retention of Records. On the Closing Date, Sellers shall, and
Partners shall cause Sellers to, deliver to Buyer all books, contracts and
records of Sellers relating to the Businesses or to the Purchased Assets, other
than Sellers' minute and stock records books; provided, however, Sellers shall
be entitled to retain a copy of all books, accounting and other records
following the Closing for purposes of winding up their respective affairs and
other proper purposes incidental to the transactions contemplated hereby.
Buyer agrees that after the Closing Date all books, contracts and records
relating to the Purchased Assets and the Businesses prior to the Closing Date,
shall for a period of five (5) years following the Closing Date or, if later,
up to the termination of the statute of limitations for any matter with respect
to which Sellers or Partners are indemnifying Buyer and its Affiliates
hereunder, be available at the written request of and at the expense of Sellers
during regular business hours to Sellers and their authorized representatives,
accountants and attorneys for any reasonable business purpose. All information
so made available to any Seller or retained by Seller after the Closing Date
shall be held in confidence by such Seller in accordance with
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Section 9.11 hereof. In addition, for a period of five (5) years after the
Closing Date, at the written request and expense of Buyer, Sellers shall, and
Partners shall cause Sellers to, make available to Buyer copies of any
documents not theretofore delivered to Buyer relating to any potential or
actual tax liabilities of Sellers for any periods ending on or prior to the
Closing Date.
(t) Interim Financial Statements and Statistical Summaries.
Between the date of this Agreement and the Closing Date, each Seller shall, and
each Partner shall cause each Seller to, deliver to Buyer (i) as soon as
practicable but no later than forty-five (45) days after the end of each
calendar month with respect to such Seller unaudited financial statements
("Interim Financial Statements") for the most recent month and the interim
period then ended and (ii) within ten (10) Business Days after the end of each
calendar month with respect to such Seller interim statistical summaries (the
"Interim Statistical Summaries") for the most recent month and interim period
then ended, which summaries will be in scope and format substantially identical
to the Statistical Summaries (as hereinafter defined).
(u) No Termination or Settlement. Without the prior written
consent of Buyer, which consent shall not be unreasonably withheld, none of
Sellers shall, and none of Partners shall cause or permit any Seller to,
terminate any agent or settle any dispute with any agent if such termination or
settlement would cause Buyer to have any continuing obligation after the
Closing with respect thereto.
(v) Training. At the request of Buyer, Sellers shall, and
Partners shall cause Sellers to, train Buyer's employees and agents in the use
of Sellers' billing system, such training to be provided at Sellers' premises
at mutually convenient times so as not to disrupt Sellers' Businesses and at no
cost to Buyer. In addition Sellers shall, and Partners shall cause Sellers to,
at the request of Buyer, use all commercially reasonable efforts to assist, and
shall cause its employees, agents, officers and subcontractors to assist, Buyer
in converting and transferring Sellers' subscribers to Buyer's billing system
so that at the Closing Date or as soon thereafter as is reasonably practicable
all of Sellers' subscriber information shall have been transferred and
converted to Buyer's billing system.
(w) Dismissal with Prejudice. Sellers shall, and each Partner
shall cause Sellers to, deliver to Buyer, and Buyer shall deliver to Sellers,
all such documents and instruments as Buyer or Sellers shall reasonably
request, to effect the dismissal with prejudice of all informal objections,
petitions to deny or other actions or filings before the FCC or any other
regulatory agency or any other Legal Matters (as hereinafter defined) (except
for any Legal Matters arising under this Agreement or the Concurrent
Agreements) whether or not listed on Exhibit 5.01(d) to which Buyer or any
Affiliate of Buyer is a party, or affecting any Authorizations or application
for Authorizations of Buyer or any Affiliate of Buyer on the one hand, and
Sellers or any Affiliate of Sellers, on the other hand.
4.02. Covenants of Buyer. Buyer covenants and agrees that from and
after the execution and delivery of this Agreement to and including the Closing
Date:
(a) Consummate Transaction. Buyer shall use its best efforts to
cause the transactions contemplated by this Agreement to be consummated in
accordance with the terms hereof, and,
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without limiting the generality of the foregoing, to obtain all necessary
consents and authorizations of third parties, including the approval of this
Agreement and the transactions contemplated hereby by all governmental
authorities and agencies, including the FCC and any state public utilities or
public service commission, and to make all filings with and to give all notices
to third parties which may be necessary or reasonably required of Buyer in
order to consummate the transactions contemplated hereby.
(b) Buyer Not to Control. Notwithstanding any provision of this
Agreement that may be construed to the contrary, pending the Closing, each
Seller shall maintain actual (de facto) and legal (de jure) control over its
Businesses. Specifically, the responsibility for the operation of each
Seller's Businesses shall, pending the Closing, reside with its general
partners or board of directors, as the case may be, including responsibility
for the following matters: (i) access to and the use of the facilities of and
equipment owned by such Seller; (ii) control of the daily operation of such
Seller; (iii) creation and implementation of policy decisions; (iv) employment
and supervision of employees; (v) payment of financing obligations and expenses
incurred in the operation of such Seller; (vi) receipt and distribution of
monies and profits derived from the operation of such Seller; and (vii)
execution and approval of all contracts and applications prepared and filed
before regulatory agencies.
4.03 Governmental Filings. Each of Sellers and each of Partners,
jointly and severally, and Buyer covenant and agree from and after the
execution and delivery of this Agreement to and including the Closing Date as
follows:
(a) It is understood that the Closing of this transaction is
subject to prior approval of the FCC and may be subject to the prior approval
of one or more state regulatory commissions. The parties shall use their best
efforts to file with the FCC and any relevant state agency or agencies, as soon
as practicable following the date hereof and in no event later than ten (10)
Business Days from the date hereof, a joint application requesting the approval
of the transfer of the Authorizations, Businesses and Purchased Assets to
Buyer, or its designee. Each of the parties hereto shall diligently take or
cooperate in the taking of all steps which are necessary or appropriate to
expedite the prosecution and favorable consideration of such applications. The
parties covenant and agree to undertake all actions reasonably requested by the
FCC or other regulatory authority and to file such material as shall be
necessary or required to obtain any necessary waivers or other authority from
the FCC or such state agency or agencies in connection with the foregoing
applications.
(b) Within fifteen (15) Business Days of the date of execution
hereof, Buyer and Sellers shall file, or cause to be filed, with the Federal
Trade Commission and the Antitrust Division of the Department of Justice any
and all reports or notifications which are required to be filed under the HSR
Act or other Federal law or administrative regulations.
4.04. Cooperation. Each of Sellers and each of Partners, jointly and
severally, and Buyer agree to cooperate with and to take all actions reasonably
requested by the other so as to minimize, to the extent possible, any
disruption to any of Sellers' operations upon the Closing and, in connection
therewith, each of Sellers shall, and each of Partners shall cause each Seller
to, provide, subject to the last sentence of Section 4.01(b) hereof, Buyer with
reasonable access to its employees
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and facilities prior to the Closing Date, and shall cause such Seller's
employees, agents, advisors, subcontractors and representatives to work with
Buyer and its employees, agents, advisors, subcontractors and representatives
for purposes of planning for and implementing the transfer of control of the
Businesses and Purchased Assets to Buyer on the Closing Date.
4.05. Bulk Sales. Each of the parties hereto waives the obligation
of the other parties under the provisions of any "Bulk Sales" laws of the
uniform commercial code as in effect in any state having jurisdiction over any
Seller or the transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.01. Sellers' Representations and Warranties. Each of Sellers and
each of Partners, jointly and severally, represent and warrant to Buyer, which
representations and warranties shall survive the execution and delivery of this
Agreement and the consummation of the transactions herein contemplated, as
follows:
(a) Due Organization. TCC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and each of TCLP and each Seller is a limited partnership, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each Seller and each Partner has all requisite corporate or partnership, as the
case may be, power and authority to own, operate and lease its property and to
carry on its business as now conducted. Each Seller and each Partner is duly
qualified to do business and is in good standing in all states where the
conduct of its business or the ownership of its properties makes such
qualification necessary, except where the failure to so qualify would not have
a material adverse effect on such Seller or Partner, its financial condition or
business, or the transactions contemplated hereby. The certificates of
incorporation, by-laws or partnership agreements, as applicable, of Sellers and
Partners to be delivered to Buyer pursuant to this Agreement will be true,
correct and complete as of the date of delivery thereof.
(b) Power and Authority; No Violation. Each Seller and each
Partner has full power and authority to execute, deliver and perform its
obligations under this Agreement, and to consummate the transactions
contemplated hereby. This Agreement and all transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part of
each Seller and each Partner and this Agreement constitutes a legal, valid and
binding obligation of each Seller and each Partner enforceable in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally. Neither the execution, delivery or
performance of this Agreement by any Seller or Partner, nor the consummation of
the transactions contemplated hereby will, with or without the giving of notice
or the passage of time, or both (i) conflict with, result in a default or loss
of rights (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Lien, pursuant to (A) any
provision of the certificate of incorporation, by-laws or partnership
agreement, shareholders agreement or other constituent documents of any Seller
or any Partner; (B) any material note, bond, indenture, mortgage, deed of
trust, contract, agreement, lease or other instrument or obligation to which
any Seller or any Partner
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is a party or by which any Seller or any Partner or its properties may be bound
or affected; or (C) any law, order, judgment, ordinance, rule, regulation or
decree to which any Seller or any Partner is a party or by which its properties
are bound or affected; or (ii) give rise to any right of first refusal or
similar right with respect to any interest, or any properties or assets, of any
Seller or any Partner. Except as described on Exhibit 5.01(b) annexed hereto,
no permit, consent, filing or approval of any third party is required to be
obtained or made by any Seller or any Partner in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby in order to (A) render this Agreement and the transactions
contemplated hereby valid and effective and (B) enable Sellers to sell the
Purchased Assets and Businesses to Buyer and to consummate the transactions
contemplated hereby. None of Sellers and none of Partners have granted any
powers of attorney granting to any Person the right to bind such Seller or
Partner other than those to be released on or prior to the Closing Date or
those which do not relate to the Businesses, the Purchased Assets or the
transactions contemplated hereby.
(c) Financial Statements. Exhibit 5.01(c) annexed hereto contains
a list of audited and unaudited financial statements of each Seller for the
periods indicated on such Exhibit 5.01(c) (the "Operating Financial
Statements") and a list of Key Statistical Summaries of each Seller for the
periods indicated on such Exhibit 5.01(c) (the "Statistical Summaries"). True
and complete copies of each item listed thereon have previously been delivered
to Buyer. The Operating Financial Statements are, and the Interim Financial
Statements will be, true and correct in all material respects, have been or
will be prepared from the books and records of each Seller and fairly present
or will fairly present the financial position of each Seller in a manner
consistent with prior periods as of the dates of such statements and the
results of its operations and statements of cash flow for the year or interim
period then ended, in each case in conformity with generally accepted
accounting principles applied on a basis consistent with past practices. The
Statistical Summaries are, and the Interim Statistical Summaries will be, true
and correct in all material respects and have been or will be prepared from the
books and records of each Seller in a manner consistent with prior periods.
None of Sellers has incurred nor is it subject to any liabilities or
obligations, whether accrued, absolute or contingent, which are in the
aggregate material to the business or financial condition of such Seller, and
which have not been (i) reflected or accrued against in the Operating Financial
Statements of such Seller, (ii) incurred since the date of the latest Operating
Financial Statements as permitted by Section 4.01(c) hereof and will be
reflected on the Interim Financial Statements or the Closing Date Balance
Sheets, as the case may be, or (iii) reflected in the Exhibits annexed hereto.
(d) Legal Matters. Except as set forth on Exhibit 5.01(d) annexed
hereto, there is no claim, legal action, counterclaim, suit, arbitration,
governmental investigation or other legal, administrative or tax proceeding,
nor any order, writ, injunction, decree or judgment (collectively, the "Legal
Matters"), in progress or pending, or to the knowledge of any Seller or
Partner, threatened, against or relating to any Seller or its businesses or
assets including the Businesses and the Purchased Assets, nor does any Seller
or Partner know or have reason to be aware of any basis for the same, which
would individually or in the aggregate have a material adverse effect on (i)
any Seller or any Seller's ownership of the Businesses or the Purchased Assets
or such Seller's ability to sell the Businesses or the Purchased Assets as
herein contemplated, (ii) the business or financial condition of any Seller, or
(iii) the transactions contemplated by this Agreement.
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(e) Accounts Receivable. The accounts receivable of each Seller
shown on its Operating Financial Statements arose in the ordinary course of
business, are owned by it free and clear of any Lien (other than Liens to be
released on or prior to the Closing Date) and have been collected or are
collectible in the normal course at the aggregate recorded amounts thereof,
subject to no valid counter claims or set-offs, less a reserve for
uncollectible items as set forth on Exhibit 5.01(e) annexed hereto. The
accounts receivable acquired by each Seller and shown on the Interim Financial
Statements or the Closing Date Balance Sheets, as the case may be, will have
arisen in the ordinary course of business, are or will be owned by it free and
clear of any Lien (other than Liens to be released on or prior to the Closing
Date) and have been collected or will be collectible in the normal course of
business at the aggregate recorded amounts thereof, less a reserve for
uncollectible items as set forth on Exhibit 5.01(e) annexed hereto. Such
percentage is based upon the historical collectibility of the accounts
receivable of each Seller and represents Sellers' good faith estimate of the
percentage of each Sellers' accounts receivable which will not be collectible
in the ordinary course of business.
(f) Compliance with Laws. Each Seller and each Partner is in
compliance with all applicable laws, regulations and administrative orders of
the United States and the states in which such Seller or Partner transacts
business (including all applicable rules and regulations of the FCC, any state
public utilities or public service commission, or any other Federal or state
governmental agency or instrumentality exercising jurisdiction over such Seller
or Partner or its properties or businesses), and of each municipality, county
or subdivision of any thereof, to which any of its businesses or any of its
properties may be subject, the non-compliance with which would have a material
adverse effect upon (i) any Seller's ownership of the Businesses or the
Purchased Assets or ability to sell the Businesses or the Purchased Assets as
herein contemplated, or (ii) any Seller, its financial condition or business,
or the transactions contemplated hereby.
(g) Environmental Matters. There has been no manufacture,
refining, storage, disposal or treatment of Hazardous Substances (as
hereinafter defined) by any Seller (or, to the knowledge of any Seller or
Partner, its predecessors in interest) at any real property currently or in the
past owned, operated, used, leased or contracted for by any Seller or otherwise
in violation of any Environmental Laws (as hereinafter defined) or which would
require remedial action under any Environmental Law; to the knowledge of any
Seller, none of the soil, ground water, or surface water of such real property
is contaminated by any Hazardous Substance. During the past five years none of
Sellers has received any (i) notice of any such violation with respect to any
Hazardous Substance at or by any of such real property, (ii) notice from any
governmental agency that it, or any present or former owner, lessee or operator
of such real property is a potentially responsible party for cleanup liability
with respect to the emission, discharge or release of any Hazardous Substance
or for any other matter arising under the Environmental Laws or in any
litigation, administrative proceeding, finding, order, citation, notice,
investigation or complaint under any Environmental Law, or (iii) notice of
violation, citation, complaint, request for information, order, directive,
compliance schedule, notice of claim, proceeding or litigation from any party
concerning the compliance of any Seller with any Environmental Law. To the
knowledge of any Seller, there are no incinerators, septic tanks or cesspools
located on such real property, all sewage is discharged into a public sanitary
sewer system (except that at certain switch sites Sellers contract with third
party providers for siting and servicing of portable sanitary toilet
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facilities) and no Hazardous Substances are emitted, discharged or released,
directly or indirectly, by any Seller into the atmosphere or any body of water.
No permits, licenses or other authorizations issued pursuant to the
Environmental Laws are required for Buyer's ownership, use or occupancy of, or
any Seller's present ownership, use or occupancy of, such real property. As
used herein "Environmental Laws" means the Resource Conservation Recovery Act,
the Comprehensive Environmental Responsibility Compensation and Liability Act,
the Superfund Amendments and Reauthorization Act, the Toxic Substances Control
Act, the Hazardous Materials Transportation Act, the Clean Air Act, the Clean
Water Act, and other similar Federal and state laws, as amended, together with
all regulations issued or promulgated thereunder, relating to pollution, the
protection of the environment or the health and safety of workers or the
general public. As used herein "Hazardous Substance" means any hazardous
substance, hazardous or toxic waste, hazardous material, pollutant or
contaminant, as those or similar terms are used in the Environmental Laws,
including asbestos and asbestos-related products, chlorofluorocarbons, oils or
petroleum-derived compounds, polychlorinated biphenyls, pesticides and radon.
As used in this Section 5.01(g), the term "knowledge" refers to actual and not
constructive knowledge and is not intended to impose upon Sellers any duty to
investigate the condition of any real property other than in the ordinary
course of business and consistent with past practices.
(h) Authorizations.
(i) Each Seller has (A) all requisite franchises,
licenses, authorizations, consents, permits and approvals of the FCC and of all
state public utility or public service commissions and (B) all other material
franchises, licenses, authorizations, consents, permits and approvals of
governmental agencies exercising jurisdiction over such Seller or its
businesses or assets (all such franchises, licenses, authorizations, consents,
permits and approvals, as amended to the date hereof, are collectively referred
to as the "Authorizations"), required to carry on the Businesses of such
Sellers as now conducted or as contemplated to be conducted. All such
Authorizations are listed on Exhibit 5.01(h) annexed hereto.
(ii) The Authorizations are in full force and effect and
have not been suspended, modified in any material adverse respect, canceled or
revoked, and each Seller has operated in compliance with all terms thereof or
any renewals thereof applicable to it except where failure to so comply would
not have a material adverse effect on such Seller, its financial condition or
the Businesses or the Purchased Assets. No event has occurred with respect to
any of the Authorizations which permits, or after notice or lapse of time or
both would permit, revocation or termination thereof or would result in any
other material impairment of the rights of the holder of any such
Authorizations. Except as set forth on Exhibit 5.01(h) annexed hereto, there
is not pending as of the date hereof any application, petition, objection or
other pleading with the FCC or any public service commission or similar body
having jurisdiction or authority over the communications operations of any
Seller which questions the validity of or contests any Authorization or which
presents a substantial risk that, if accepted or granted, would result in the
revocation, cancellation, suspension or any materially adverse modification of
any Authorization.
(iii) Except as set forth on Exhibit 5.01(h) annexed
hereto, no permit, consent, approval, authorization, qualification or
registration of, or declaration to or filing with, any
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governmental or regulatory authority or agency is required to be obtained or
made by any Seller in connection with the execution and delivery of this
Agreement or with the consummation of the transactions contemplated hereby in
order to (A) render this Agreement and the transactions contemplated hereby
valid and effective and (B) enable Sellers to sell the Businesses and Purchased
Assets to Buyer as herein contemplated.
(i) Title of Sellers to Purchased Assets.
(i) Except as disclosed in Exhibit 5.01(i) annexed
hereto, each Seller has good and marketable title to all property owned
(including all property and assets, real and personal, included in the
Operating Financial Statements) and a good and valid leasehold interest in all
property leased by such Seller, free and clear of all Liens except for Liens
for taxes, assessments, governmental charges or levies which shall not at this
time be due and delinquent or which hereafter can be paid without penalty or
with respect to which such Seller is currently contesting the validity thereof
in good faith by appropriate proceedings and with respect to which it has
established adequate reserves, and except for warehousemen's, mechanics',
carriers', landlords', repairmen's, or other similar Liens arising in the
ordinary course of business, (none of which, either singly or in the aggregate,
is material). Exhibit 5.01(i) annexed hereto correctly identifies (A) each
parcel of real property owned by each Seller, (B) each lease by each Seller of
any real property and each space allocation arrangement with such Seller
covering any real or other material property used in such Seller's businesses,
and (C) each guaranty by any Seller of any such lease. Exhibit 5.01(i) annexed
hereto contains, with respect to each Seller, a list setting forth (1) the
location of all cell and switch sites and (2) the number of voice channels
installed and operational at each site.
(ii) All of the buildings and other material tangible
personal property owned or leased by each Seller are in good working condition
(normal wear and tear excepted), and are adequate and suitable for the purposes
for which they are presently being used. All such property is being operated
in conformity with applicable statutes, regulations, and ordinances, the
failure of which to so conform would have a material adverse effect on any
Seller, its financial condition or business or the transactions contemplated
hereby. All such assets are, in the aggregate, sufficient in all material
respects to continue operating the business of each Seller as has been
heretofore conducted.
(iii) Neither the whole nor any material portion of any
real property owned or leased by any Seller has been condemned, requisitioned
or otherwise taken by any public authority, and none of Sellers has actual
knowledge that any such condemnation, requisition or taking is threatened or
contemplated. None of the real or personal properties owned, leased or
operated by any Seller, or the ownership, occupancy or operation thereof, is in
violation in any material respect of any law or any building, zoning or other
ordinance, code, rule, regulation or requirement, and no notice from any
governmental body or other Person has been served upon any Seller claiming any
violation of any such law, ordinance, code, rule or regulation or requiring, or
calling attention to the need for, any work, repairs, construction, alterations
or installation on or in connection with said property which has not been
complied with.
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(j) Insurance. Exhibit 5.01(j) annexed hereto sets forth a list
and brief description of all policies of fire, liability and other forms of
insurance and material fidelity bonds held by each Seller. Each Seller's
assets, business, equipment, property and operations are adequately insured
against loss or damage and all other hazards or risks of the character usually
insured against by companies in the same or similar business and such insurance
shall be continued in full force and effect through 11:59 p.m. on the Closing
Date. Each such policy and fidelity bond referenced in such Exhibit 5.01(j)
annexed hereto is in full force and effect, all premiums due and payable under
such policies and fidelity bonds have been and on the Closing Date will be paid
in full, and there are no disputed claims arising under such policies or
fidelity bonds.
(k) Employees. Exhibit 5.01(k) annexed hereto contains a list
setting forth the name and current annual salary and other compensation payable
by each Seller to each Employee (as hereinafter defined), and the profit
sharing, bonus or other form of additional compensation paid or payable by each
Seller to or for the benefit of each Employee for the current fiscal year.
Except as set forth on Exhibit 5.01(k) annexed hereto or under the employment,
consulting or other agreements listed thereon, there are no oral or written
contracts, agreements or arrangements obligating any Seller to increase the
compensation or benefits presently being paid or hereafter payable to any of
its Employees. Exhibit 5.01(k) annexed hereto sets forth summaries of all oral
employment or consulting or similar arrangements between any Seller and any
Person which are not terminable without liability on thirty (30) days' or less
prior notice and lists all written employment and consulting agreements between
any Seller and any Employee, true and complete copies of which have been
provided to Buyer. Except for severance obligations to Employees of any Seller
set forth on Exhibit 5.01(k) annexed hereto, there is not due or owing and
there will not be due and owing at the Closing to any of Sellers' Employees,
any sick pay, severance pay (whether arising out of the termination of an
Employee of Sellers prior to, on, or subsequent to the Closing), compensable
time or pay, including salary, commission and bonuses, personal time or pay or
vacation time or vacation pay attributable to service rendered on or prior to
the Closing Date. Except as disclosed in the Exhibits annexed hereto, there is
not now, and there will not be as of the Closing Date, any liability of any
Seller arising out of claims made or suits brought (including workers'
compensation claims and claims or suits for contribution to, or indemnification
of, third parties, occupational health and safety, environmental, consumer
protection or equal employment matters) for injury, sickness, disease,
discrimination, death or termination of employment of any Employee, or other
employment matter to the extent attributable to an event occurring or a state
of facts existing on or prior to the Closing.
(l) Intellectual Property Rights. All of the patents, trademarks,
service marks, tradenames, trade secrets, copyrights, licenses and other
intellectual property rights material to the operation of any of the Businesses
or owned or held by any Seller are described on Exhibit 5.01(l) annexed hereto.
Except as set forth on Exhibit 5.01(l) annexed hereto, the conduct by each
Seller of its businesses does not to the knowledge of any Seller infringe upon
or violate any patents, trademarks, service marks, trade names, trade secrets,
copyrights, licenses or rights of anyone, and, except as set forth on Exhibit
5.01(l) annexed hereto, no claim is pending or threatened to the effect that
the conduct by any Seller of its businesses infringes upon or violates any
patents, trademarks, service marks, trade names, trade secrets, copyrights,
licenses or rights of anyone.
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(m) Indebtedness. Exhibit 5.01(m) annexed hereto lists generally
all indentures, trust deeds, loan agreements, or other instruments pursuant to
which any Seller has incurred Indebtedness or has guaranteed the Indebtedness
of any Person all of which shall be terminated and released with respect to
Sellers on or prior to the Closing Date. Other than as set forth in Exhibit
5.01(m) annexed hereto, no Seller is indebted to any Affiliate, shareholder,
director, officer, employee, agent or partner of any Seller or of any Affiliate
of any Seller and no Affiliate, shareholder, director, officer, employee, agent
or partner of any Seller or of any Affiliate of any Seller is indebted to any
Seller.
(n) Tax Matters. Each Seller has timely filed all Federal, state
and local Tax (as defined in Section 7.03(a)) returns and all information
returns and reports required to be filed by or with respect to it under the
laws of the United States or any state or other jurisdiction on or prior to the
date hereof and will timely file all such returns and reports required to be
filed from the date hereof through the Closing Date. True and complete copies
of such reports and returns filed on or before the date hereof have been or
will be furnished or made available to Buyer within thirty (30) days after the
date hereof and true and complete copies of all such returns and reports filed
after the date hereof and on or before the Closing Date will be furnished to
Buyer within five (5) days after they are filed. All such reports and returns
were or will be accurately prepared in accordance with all applicable statutes,
rules and regulations and are or will be correct as filed. None of Sellers is
or was an association taxable as a corporation for Federal, state or local tax
purposes. Each Seller has paid all Taxes (including Taxes for which such
Seller is a collection agent, e.g., withholding, excise, sales, use, Social
Security and similar Taxes) which have become due and payable (and will pay
prior to the Closing Date all Taxes which shall have become due and payable on
or prior to the Closing Date) with respect to such Seller for all taxable
periods ending on or prior to the Closing Date or will have set aside and
reflected on the Closing Date Balance Sheets adequate reserves therefor. No
Seller has ever been included in a consolidated Federal income tax return or
combined or unitary state tax return. No Seller is a party to nor has any
Seller been notified that it is the subject of any pending, proposed or
threatened action, investigation, proceeding, audit, claim or assessment by or
before the Internal Revenue Service or any other governmental authority and no
claim for assessment, deficiency or collection of Taxes, or proposed
assessment, deficiency or collection, for which any Seller may be liable, has
been asserted or threatened against it. No Seller has received any notice of
deficiency, assessment or collection or proposed deficiency, assessment or
collection from the Internal Revenue Service or any other governmental
authority which has not been satisfied, nor, except as set forth on Exhibit
5.01(n) annexed hereto, does any Seller have any reason to believe that any
such notice will be received in the future. The Internal Revenue Service has
never audited any Federal income tax return of any Seller. The charges,
accruals and reserves shown in the Operating Financial Statements of Sellers in
respect of Taxes for all fiscal periods to date are adequate. There are no
material unpaid assessments or proposals for additional Taxes for which any
Seller does not have adequate reserves, nor does any Seller know of any basis
therefor for any such period. There are no Tax rulings, requests for rulings
or closing agreements relating to any Seller which could affect its liability
for Taxes for any period after the Closing Date. Except as set forth on
Exhibit 5.01(n) annexed hereto (i) no power of attorney has been granted by any
Seller or any of its Affiliates with respect to any matter relating to Taxes of
Sellers which is currently in force, (ii) none of Sellers has filed any
agreement with the Internal Revenue Service described in Section
1.1503-2A(c)(3) of the Treasury Regulations, (iii) none of Sellers has filed a
consent or
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made any agreement with the Internal Revenue Service under Section 341(f) of
the Internal Revenue Code of 1986, as amended (the "Code"), or any comparable
provision of state revenue statutes, and (iv) no Seller and none of the
partners of any Seller which is a partnership is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code. No Seller has executed or filed
with the Internal Revenue Service or any other governmental authority any
agreement which is still in effect waiving or extending the period for
assessment or collection of any Taxes. Sellers, and not Buyer, shall be liable
for any Taxes, payable by Buyer or Sellers by reason of the ownership of the
Businesses or the Purchased Assets on or prior to the Closing Date, the conduct
of Sellers' Businesses with respect to all periods ending on or prior to the
Closing Date or payable by any Seller by reason of the sale of the Businesses
and the Purchased Assets.
(o) Employee Benefit Plans.
(i) Generally. Exhibit 5.01(o) annexed hereto contains a
true and complete list of each plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock-related awards or other
equity based awards, fringe benefits or other employee benefits of any kind,
whether formal or informal, proposed or final, funded or unfunded and whether
or not legally binding, including each "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") which is now, or ever has been, maintained, contributed
to, or required to be contributed to, for the benefit of any current or former
employee, independent contractor, agent or consultant of any Seller or engaged
in the Businesses ("Employee"), or any current or former employee, independent
contractor, agent or consultant of any entity required to be aggregated with
any Seller pursuant to Section 414(b), (c), (m), or (o) of the Code and each
management, employment, severance or consulting agreement or contract between
any Seller or any of its Affiliates and any Employee for which any Seller may
have liability or between any Seller and any Employee ("Employee Plan"). Each
Seller will provide to Buyer prior to the Closing true and complete copies of
all documents, if any, embodying each Employee Plan, including all amendments
thereto and written interpretations thereof; the three most recent annual
reports filed (Form 5500 Series with applicable schedules) with respect to each
Employee Plan required under ERISA; and the most recent summary plan
description, if any, with respect to each Employee Plan required under ERISA.
(ii) Compliance. Each Seller has performed in all
material respects all obligations required to be performed by it under each
Employee Plan and each Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including ERISA or
the Code. No Employee Plan that is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA is subject to Title IV of ERISA or is a
multiemployer plan within the meaning of Section 3(37) of ERISA, and none of
Sellers has any liability with respect to any such plan as a result of having
been part of a "controlled group" within the meaning of Section 414(b), (c),
(m), and (o) of the Code, nor is there any basis for such liability being
imposed. There are no investigations, proceedings, actions, suits or claims
pending, or, to the best knowledge of any Seller, threatened or anticipated
(other than routine claims for benefits) against any Employee Plan or the
assets of any Employee Plan; each Employee Plan can be amended, terminated, or
otherwise
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discontinued on or after the Closing in accordance with its terms, without
liability to Sellers, Buyer or any of Buyer's Affiliates; all premiums required
by any Employee Plan have been paid thereunder; all outstanding indebtedness
for services performed for any Seller or accrued vacation, holiday pay, earned
commissions, accrued bonuses or other benefits owed to any Employee has been
paid when due or accrued on the books of such Seller; all contributions due to
and payments from, the Employee Plans that may have been required to be made
have been made; no "prohibited transaction" within the meaning of Section 4975
of the Code or Section 406 of ERISA for which a statutory, administrative or
regulatory exemption is not available has occurred with respect to any Employee
Plan; and no action or failure to act with respect to any Employee Plan will
subject any Seller, Buyer or any of Buyer's Affiliates to any tax or penalty or
other liability.
Except as listed on Exhibit 5.01(o) annexed hereto, each
Employee Plan that is intended to be qualified under the Code has received a
determination letter from the Internal Revenue Service to the effect that such
Employee Plan and related trust are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively; such determination letter
includes any new or modified requirements under the Tax Reform Act of 1986 and
subsequent legislation enacted thereafter; and no such determination letter has
been revoked, nor to the knowledge of Seller, has revocation been threatened.
To Seller's knowledge, nothing has occurred or is expected to occur that would
adversely affect the qualified status of any Plan or any related trust
subsequent to the issuance of such determination letter.
(iii) No Post-Employment Obligations. No Seller maintains
or contributes to any Employee Plan which provides, or has any liability to
provide, life insurance, medical or other employee welfare benefits (other than
severance and accrued vacation and holiday pay) to any Employee upon his
retirement or termination of employment, except as may be required by Federal
or state statute and no Seller has ever represented, promised, or contracted
(orally or in writing) to any Employee (individually or as a group) that life
insurance, medical or other employee welfare benefits (other than severance and
accrued vacation and holiday pay) would be provided upon their retirement or
termination of employment, except to the extent required by Federal or state
statute.
(iv) COBRA. Each "group health plan" within the meaning
of Section 4980B(g)(2) of the Code maintained by any Seller or any entity with
which it is considered a "single employer" within the meaning of Section
414(b), (c), (m) and (o) of the Code, has been administered in good faith in
compliance with the continuation coverage requirements contained in the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
as set forth at Section 4980B of the Code and any regulations promulgated or
proposed (if such proposed regulations constitute substantial authority within
the meaning of Section 6662 of the Code and any regulations promulgated
thereunder) thereunder.
(v) Effect of Transaction. Except as set forth on
Exhibit 5.01(o)(v) annexed hereto, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
when taken together with any additional or subsequent events) constitute an
event under any Employee Plan that will or may result in any payment, upon a
change in control or otherwise, whether of severance, accrued vacations or
otherwise, acceleration, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee. No
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payment or benefit which will or may be made by any Seller with respect to any
Employee as a result of the transactions contemplated hereby will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
(vi) Employment Matters. Each Seller (A) is in compliance
with all applicable Federal and state laws, rules and regulations respecting
employment, employment practices, terms and conditions of employment and wages
and hours, in each case, with respect to Employees, except where the failure to
be in compliance would not, singly or in the aggregate, have a material adverse
effect on any Seller, its financial condition or business; (B) has withheld all
amounts required by law or by agreement to be withheld from the wages, salaries
and other payments to Employees; (C) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing,
except as would not have a material adverse effect on such Seller, its
financial condition or business; and (D) (other than routine payments to be
made in the normal course of business and consistent with past practice) is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
Social Security or other benefits for Employees.
(vii) Labor. No work stoppage or labor strike with respect
to Employees or against any Seller is pending or, to the best knowledge of any
Seller or any Partner, threatened. Except as set forth on Exhibit 5.01(o)(vii)
annexed hereto, no Seller is involved in or, to the best knowledge of any
Seller, threatened with, any labor dispute, grievance or litigation relating to
labor, safety or discrimination matters involving any Employee including
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, have a material
adverse effect on such Seller, its financial condition or business. No Seller
has engaged in any unfair labor practices within the meaning of the National
Labor Relations Act which would, individually or in the aggregate, have a
material adverse effect on such Seller, its financial condition or business.
(viii) No Seller is presently or has been in the past a
party to, or bound by, any collective bargaining agreement or union contract
with respect to Employees and no collective bargaining agreement is at the date
hereof being negotiated by or on behalf of any Seller.
(p) Contracts.
(i) Exhibit 5.01(p) annexed hereto contains a list of all
Contracts (other than subscriber agreements and agreements having an annual
cost of less than $5,000 for any single agreement and $50,000 for all such
agreements) to which any Seller is a party and which in any way relate to the
operations or properties of any Seller or which will be binding upon Buyer, its
operations or properties (including the Businesses or the Purchased Assets)
after the Closing Date. As used herein "Contracts" means all leases, rental
agreements, insurance policies, collective bargaining agreements, union
contracts, licenses, agreements, permits, purchase orders, sales orders,
agreements with suppliers, reseller agreements, agreements with agents,
agreements with customers, commitments and any and all other contracts,
consents or binding arrangements or understandings (including capital
commitments and arrangements with respect to construction in progress), whether
written or oral, express or implied, to which any Seller is a party and which
in
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any way relate to the operations of the Businesses or the Purchased Assets of
any Seller or which will be binding upon Buyer, its operations or properties
(including the Businesses or the Purchased Assets) after the Closing Date.
Except for (i) the Contracts listed on Exhibit 5.01(p) annexed hereto (true and
complete copies of which agreements have been previously delivered to Buyer or,
in the case of oral agreements, descriptions of which are set forth on said
Exhibit 5.01(p)), (ii) subscriber agreements and agreements having an annual
cost of less than $5,000 for any single agreement and $50,000 for all such
agreements and (iii) Contracts entered into between the date hereof and the
Closing Date as permitted by Section 4.01(c) hereof, none of Sellers is a party
to nor is it or any of its property bound by any Contract.
(ii) Each Seller has performed and will perform in all
material respects all obligations required to be performed by it under all
Contracts, and will in all material respects perform all obligations required
to be performed by it under Contracts entered into after the date hereof as
permitted by Section 4.01(c) hereof; none of Sellers nor, to the best of any
Seller's or any Partner's knowledge, any party with whom any Seller has an
agreement is in material default under any Contract, and no event exists which
with the giving of notice or the passage of time, or both, would create such a
default; and no Seller knows of a meritorious basis for any claim of any such
default.
(iii) Each of the Contracts has been, and each Contract
entered into after the date hereof as permitted by Section 4.01(c) hereof will
be, lawfully entered into and is or will be valid and in full force and effect
and is or will be enforceable in accordance with its terms for the period
stated in such Contract. There are no currently threatened cancellations of,
nor are there any outstanding disputes under, any Contracts. No Seller will
modify, amend or waive any provisions of any Contract in a manner that would
materially adversely affect the Businesses, the Purchased Assets or, financial
condition of Buyer after the Closing Date, or terminate any Contract prior to
the Closing without the prior written consent of Buyer, which consent will not
be unreasonably withheld.
(iv) Except as set forth on Exhibit 5.01(b) annexed
hereto, the consummation of the transactions contemplated by this Agreement
does not require any consent under any Contract listed on Exhibit 5.01(p)
annexed hereto, and the consummation of the transactions contemplated by this
Agreement will not require any consent under any Contract (which will survive
the Closing) entered into after the date hereof as permitted by Section 4.01(c)
hereof, in each case which will not have been obtained by the Closing (and
copies of such consents will be given to Buyer on or prior to the Closing
Date), and such consummation will not result in the termination of any right or
privilege under any Contract listed on Exhibit 5.01(p) annexed hereto or any
other Contract (which will survive the Closing) entered into after the date
hereof as permitted by Section 4.01(c) hereof; provided, however, that Sellers
shall not be deemed to be in default of any of their obligations under this
Agreement by reason of the failure to obtain any such individual consent so
long as the failure to obtain any such consent would not individually or
together with all such other failures to obtain consents have a material
adverse effect on the Businesses, the Purchased Assets or their ownership or
operation by Buyer or the consummation of the transactions contemplated hereby.
No Seller has received notice that any party to any Contract listed on Exhibit
5.01(p) annexed hereto intends to cancel such Contract nor has any party given
any Seller notice of any alleged
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breach of any Contract or of its intent to take any legal action in order to
enforce its rights thereunder. All liabilities and obligations of any Seller
which are due and payable or which are to be performed on or before the Closing
Date under such Contracts have been, or will have been on the Closing Date,
duly paid in full or performed in all material respects.
(v) Exhibit 5.01(p) annexed hereto contains true and
complete copies of all forms of subscriber agreements used by any Seller.
(vi) No Seller has any Contracts with any Person (or group
of Affiliated Persons) which cover more than 2% of such Seller's wireless
telephone subscribers.
(vii) Each of the agreements between any Seller and its
agents or dealers, including those entered into between the date hereof and the
Closing Date as permitted by Section 4.01(c) hereof, contains or will at the
Closing Date contain a provision permitting such Seller, in its sole
discretion, to change the amount and rate of the fees or other consideration to
be paid to such agent or dealer upon ninety (90) days or less written notice by
such Seller to such agent or dealer.
(q) No Sale. No Seller has entered into any contract to sell,
mortgage or encumber any of its material assets.
(r) No Material Adverse Change. Since the date of the most recent
Operating Financial Statements, there has not been
(i) any material adverse change in the rate of any
Seller's generation of cash flow from operations, as opposed to cash flow from
financing operations and investment activities, after giving effect to
customary seasonal fluctuations of cash flow generation and after giving effect
to agents' commissions and other marketing expenses incurred in the ordinary
course of business consistent with past practices;
(ii) any incurrence, assumption or guarantee by any of
Sellers of Indebtedness other than pursuant to Contracts in existence on the
date hereof and set forth or described in Exhibit 5.01(p) annexed hereto or as
permitted pursuant to Section 4.01(c) hereof;
(iii) any creation by any of Sellers of any Lien on any of
the Purchased Assets other than pursuant to Contracts in existence on the date
hereof and set forth or described in Exhibit 5.01(p) annexed hereto or as
permitted pursuant to Section 4.01(c) hereof, each of which Liens will be
terminated and released on or prior to the Closing Date;
(iv) any making of any loan, advance or capital
contribution to or investment in any Person by any Seller other than as
permitted pursuant to Section 4.01(c) hereof;
(v) any damage, destruction or other casualty loss
affecting the Business or the Purchased Assets of any Seller which, after
giving effect to payments to such Seller under applicable insurance policies,
has had or is likely to have a material adverse effect on such Seller, its
financial condition or business;
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(vi) any repurchase, redemption or other acquisition by
Sellers of any outstanding interest in Sellers;
(vii) any change by any Seller in accounting principles or
methods; or
(viii) any other action taken by any Seller which, without
the prior written consent of Buyer, would not be permitted pursuant to Section
4.01(c) hereof.
(s) Equipment. Except for that being replaced as set forth on
Exhibit 4.01(q) annexed hereto, substantially all of Sellers' (i) wireless
telephone equipment, including system equipment, switch, cell site and test
equipment, (ii) mobile telephone equipment in inventory, and (iii) equipment
and software relating to any of Sellers' billing systems are in good working
condition and are suitable for the use for which they are intended.
(t) Transactions with Affiliates. No Seller nor any Affiliate of
any Seller, nor any shareholder, officer, director, partner, member, consultant
or employee of any thereof, is at the date hereof a party to any transaction
with any Seller which would survive the Closing Date, including any contract or
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property (including intellectual property) to or
from, or otherwise requiring payments to or from, any such Seller or Affiliate.
(u) No Other Business; No Subsidiaries. No Seller has conducted
any business other than the business of owning and operating wireless
telephone companies. No Seller has any subsidiaries nor is any Seller a partner
in any other partnership or joint venture, nor does any Seller own any equity
interest in any other entity.
(v) Investment Company Act. No Seller is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(w) Truth and Correctness. No representation or warranty by any
Seller or Partner herein, nor any written statement or certificate or other
instrument furnished to Buyer by any Seller or Partner pursuant hereto or in
connection with the transactions contemplated hereby, including the Exhibits
annexed hereto, contains any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which such statements
are made, not misleading.
5.02 Buyer's Representations and Warranties. Buyer represents and
warrants to Sellers as follows:
(a) Due Incorporation. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Washington
and has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder.
(b) Authority. This Agreement and all transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Buyer and this Agreement constitutes a legal, valid and binding
obligation of Buyer enforceable in accordance
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with its terms except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby by Buyer will, with or without the giving of notice or the
passage of time, or both, conflict with, result in a default or loss of rights
(or give rise to any right of termination, cancellation or acceleration) under,
or result in the creation of any Lien, pursuant to (i) any provision of the
certificate of incorporation or by-laws of Buyer; (ii) any material note, bond,
indenture, mortgage, deed of trust, contract, agreement, lease or other
instrument or obligation to which Buyer is a party or by which it or its
property is bound or affected; or (iii) any law, order, judgment, ordinance,
rule, regulation or decree to which Buyer is a party or by which it or its
property is bound or affected. Except as described on Exhibit 5.02(b) annexed
hereto, no permit, consent, approval, authorization, qualification or
registration of, or declaration to or filing with any governmental or
regulatory authority or agency or third party is required to be obtained or
made by Buyer in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby in order to (A)
render this Agreement or the transactions contemplated hereby valid and
effective and (B) enable Buyer to purchase the Businesses and the Purchased
Assets as herein contemplated.
(c) Legal Matters. There is no claim, legal action, counterclaim,
suit, arbitration, governmental investigation or other legal, administrative or
tax proceeding, nor any order, decree or judgment, in progress or pending, or
to the knowledge of Buyer threatened, against or relating to Buyer's right to
perform its obligations under this Agreement, nor does Buyer know or have
reason to be aware of any basis for the same. There is outstanding no order,
writ, injunction, judgment or decree of any court, governmental agency or
arbitration tribunal which would individually or in the aggregate have a
material adverse effect on Buyer's obligations hereunder or the transactions
contemplated by this Agreement other than orders or decrees involving the
wireless telephone industry in general.
(d) Truth and Correctness. No representation or warranty by
Buyer, or any written statement or certificate or other instrument furnished to
Sellers by Buyer pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which such statements are made, not misleading.
5.03 No Brokers. Buyer represents and warrants to Sellers and the
Partners that no agent, broker, investment banker, Person or firm is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee directly or indirectly in connection with the transactions contemplated by
this Agreement based in any way on any arrangements, agreements or
understandings made by or on behalf of Buyer, and Buyer hereby agrees to
indemnify Sellers and the Partners and agrees to hold harmless Sellers against
and in respect of any claims for brokerage and other commissions relating to
such transactions based in any way on any arrangements, agreements or
understandings made by or on behalf of Buyer. Sellers and the Partners
represent and warrant, jointly and severally, to Buyer that, except for
Columbia Capital Corporation, no agent, broker, investment banker, Person or
firm is or will be entitled to any broker's or finder's fee
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or any other commission or similar fee directly or indirectly in connection
with the transactions contemplated by this Agreement based in any way on any
arrangements, agreements or understandings made by or on behalf of Sellers and
the Partners and Sellers and the Partners hereby agree, jointly and severally,
to indemnify Buyer and agree, jointly and severally, to hold harmless Buyer
against and in respect of any claims for brokerage and other commissions
relating to such transactions based in any way on any arrangements, agreements
or understandings made by or on behalf of any Seller and the Partners,
including those with Columbia Capital Corporation.
ARTICLE 6
CONDITIONS TO OBLIGATIONS
6.01. Conditions to Buyer's Obligation. The obligation of Buyer to
perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Buyer, in its sole discretion, in whole or in part:
(a) Each of the representations and warranties of each Seller and
each Partner contained in this Agreement shall be deemed to have been made
again at and as of the time of the Closing and shall then be true in all
material respects except for changes contemplated by this Agreement. Each
Seller and each Partner shall have performed and complied in all material
respects, with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by each of them prior to or at the
Closing. Buyer shall have been furnished with a certificate of each Seller and
each Partner signed by its Chairman, President, Vice Chairman or general
partner, as the case may be, dated the Closing Date, certifying to the
fulfillment of the foregoing conditions by such Seller or such Partner and to
the truth and correctness in all material respects, except for changes
contemplated by this Agreement, as of the Closing Date, of the representations
and warranties of such Seller or Partner contained herein.
(b) There shall not then be pending by any third party any suit or
proceeding to restrain or invalidate, in whole or in part, this Agreement or
the transactions herein contemplated.
(c) Buyer shall have been furnished with an opinion of Edwards &
Angell, counsel for Sellers and Partners, dated the Closing Date, substantially
in the form of Exhibit 6.01(c) annexed hereto.
(d) Buyer shall have been furnished with an opinion of Paul,
Hastings, Janofsky & Walker LLP, FCC counsel for Sellers, dated the Closing
Date, substantially in the form of Exhibit 6.01(d) annexed hereto.
(e) The waiting periods, if applicable, of the HSR Act shall have
expired or been terminated.
(f) All consents, approvals and actions of third parties including
all approvals from Federal, state and local authorities (including the FCC and
all public service commissions and
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public utility commissions or comparable bodies exercising jurisdiction over
Sellers) as may be required for the valid assignment and transfer to Buyer, as
of the Closing Date, of all right, title and interest in and to the Businesses
and the Purchased Assets, shall have been obtained or made pursuant to a Final
Order, which consents and approvals shall not contain any conditions or
restrictions which, in the case of FCC approvals, are not customary in
transactions of this nature, and which in the case of third party consents and
approvals, materially adversely affect any Seller or its business or financial
condition, or the value of the Businesses or the Purchased Assets, or the
consummation of the transactions contemplated hereby. "Final Order" means an
action or decision as to which: (i) no request for a stay is pending, no stay
is in effect, and any deadline for filing such request that may be designated
by statute or regulation has passed; (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for filing
any such petition or application has passed; (iii) the FCC or public utility
commission, public service commission (or comparable bodies exercising
jurisdiction over any of Sellers or the Businesses) does not have the action or
decision under reconsideration on its own motion and the time for initiating
such reconsideration has passed; and (iv) no appeal is pending or in effect and
any deadline for filing any such appeal that may be designated by statute or
rule has passed. Notwithstanding anything to the contrary herein contained, it
shall not be a condition to Buyer's obligations under this Agreement for
Sellers to obtain each individual required consent (other than any consents of
the FCC, any public utility or public service commission (or comparable bodies
exercising jurisdiction over any of Sellers or the Businesses)) so long as the
failure to obtain any such individual consent would not individually or
together with all such other failures to obtain consents have a material
adverse effect on the Businesses, the Purchased Assets or their ownership or
operation by Buyer or the consummation of the transactions contemplated hereby.
(g) Sellers shall have delivered to Buyer such deeds, bills of
sale and other good and sufficient instruments of conveyance, transfer and
assignment, all in form and substance reasonably satisfactory to Buyer's
counsel, as shall be effective to vest in Buyer good and marketable title in
and to the Businesses and the Purchased Assets, free and clear of any Liens,
restrictions on transfer and rights of first refusal.
(h) Each Seller shall deliver to Buyer (i) if such Seller is a
corporation (A) copies of its certificate of incorporation certified by the
Secretary of State of the jurisdiction of its incorporation, (B) copies of its
by-laws certified by its secretary, and (C) certificates of good standing of
recent date from the jurisdiction of its incorporation and all jurisdictions in
which it is qualified to do business; (ii) if such Seller is a partnership, (A)
a copy of its partnership agreement certified by its general partner (other
than portions thereof which disclose the relative economic interests of the
partners thereof) and (B) certificates of good standing from the jurisdiction
of its organization and all jurisdictions in which it is qualified to do
business; and (iii) a lien and judgment search in the offices of the
Secretaries of State of the states of Colorado, Kansas, Minnesota, New Mexico,
Oklahoma, Texas and Utah and in the office of the county clerk of the
appropriate counties therein, dated not earlier than fifteen (15) Business Days
prior to the Closing Date, the results of which are consistent with the
representations of Sellers contained herein.
(i) Each Seller and each Partner, for itself and its Affiliates,
officers, directors and shareholders shall have delivered to Buyer
documentation (including a general release) in form
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reasonably satisfactory to Buyer evidencing the release and discharge of any
and all claims which it or its Affiliates, officers, directors and shareholders
may have against the Businesses or the Purchased Assets.
(j) Each Seller shall have delivered to Buyer a certified copy of
the resolution or resolutions duly adopted by its board of directors (and
shareholders if required) or general partner (and the consents of its partners
if required pursuant to its partnership agreement or other governing documents
or under the Delaware Revised Uniform Limited Partnership Act, as amended)
authorizing the execution, delivery and performance of this Agreement.
(k) No statute, rule or regulation shall have been enacted by any
state or Federal government or governmental agency in the United States which
would render the consummation of this Agreement unlawful.
(l) Each Seller shall have delivered to Buyer an affidavit
certifying as to such Seller's non-foreign status in accordance with Section
1445(b)(2) of the Code.
(m) The transactions contemplated by the Agreement and Plan of
Merger of even date herewith, among Buyer, Triad Cellular L.P., Minnesota
Cellular Corporation, Triad Investment Minnesota, Inc., Barry B. Lewis, Craig
Viehweg, Terry E. Purvis, Triad Cellular Corporation ("TCC") and Triad
Minnesota L.P. (the "Merger Agreement") shall have been consummated, or shall
be consummated concurrently herewith, in accordance with the terms of such
Merger Agreement; provided, however, if the Merger Agreement shall have been
terminated by reason of a Stockholder's Failure (as defined in the Merger
Agreement), the consummation of the transactions contemplated by the Merger
Agreement shall not be a condition to the consummation of the transactions
contemplated hereby.
6.02. Conditions to Sellers' Obligation. The obligation of Sellers
to perform, fulfill or carry out their agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Sellers, in their sole discretion, in whole or in part:
(a) Each of Buyer's representations and warranties contained in
this Agreement shall be deemed to have been made again at and as of the time of
the Closing and shall then be true in all material respects, except for changes
contemplated by this Agreement. Buyer shall have performed and complied in all
material respects with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by Buyer prior to or at the
Closing. Sellers shall have been furnished with a certificate of Buyer's Chief
Executive Officer, Vice Chairman or Senior Vice President, dated the Closing
Date, certifying to the fulfillment of the foregoing conditions by Buyer and to
the truth and correctness in all material respects, except for changes
contemplated by this Agreement, as of the Closing Date, of the representations
and warranties of Buyer contained herein.
(b) There shall not then be pending by any third party any suit or
proceeding to restrain or invalidate this Agreement or the transactions
contemplated hereby; provided, however, if Buyer desires to close
notwithstanding any such suit or proceeding and agrees to indemnify and hold
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harmless Sellers from any damages, losses, liabilities and expenses (including
reasonable attorneys' fees and expenses) incurred by Sellers as a result of
such suit or proceeding, then Sellers shall nevertheless be obligated to
consummate the transactions contemplated hereby.
(c) Buyer shall have delivered to Sellers on the Closing Date the
Purchase Price as provided in Section 3.01(a) hereof.
(d) All consents, approvals and actions of third parties,
including all approvals from Federal, state and local authorities (including
the FCC and all public service commission and public utilities commission or
comparable bodies exercising jurisdiction over Sellers) as may be required for
the valid assignment and transfer by Sellers to Buyer of the Businesses and the
Purchased Assets shall have been obtained; provided, however, that such
consents, approvals and actions need not be Final Orders.
(e) Sellers shall have been furnished with an opinion of Rubin
Baum Levin Constant & Friedman, counsel for Buyer, dated the Closing Date,
substantially in the form of Exhibit 6.02(e) annexed hereto.
(f) Sellers shall have been furnished with a certified copy of the
resolution or resolutions duly adopted by the board of directors of Buyer
authorizing the execution, delivery and performance of this Agreement.
(g) No statute, rule or regulation shall have been enacted by any
state or Federal government or governmental agency in the United States which
would render the consummation of this Agreement unlawful.
(h) The waiting periods, if applicable, of the HSR Act shall have
expired or been terminated.
(i) The transactions contemplated by the Merger Agreement shall
have been consummated, or shall be consummated concurrently herewith, in
accordance with the terms of such agreement; provided, however, if the Merger
Agreement shall have been terminated by reason of a Stockholder's Failure (as
defined in the Merger Agreement), the consummation of the transactions
contemplated by the Merger Agreement shall not be a condition to the
consummation of the transactions contemplated hereby.
ARTICLE 7
SURVIVAL; INDEMNITY
7.01. Survival of Representations and Warranties. Notwithstanding any
investigation or review made at any time by or on behalf of any party hereto,
all representations and warranties contained in this Agreement or in the
Exhibits annexed hereto or in any of the agreements, certificates or
instruments delivered in connection herewith (other than the representations
and warranties contained in Section 5.01(i) (the "Title Representations"),
Section 5.01(h) and the first two sentences of Section 5.01(b) and the first
sentence of Section 5.02(b) (the "Authorization
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Representations"), Section 5.01(n) (the "Tax Representations"), Sections
5.01(o) and 5.01(k) (the "Employee Representations") and 5.01(g) (the
"Environmental Representations")) shall survive the Closing for a period of one
(1) year and one hundred and eighty (180) days after the Closing Date (the
"Indemnification Period") and shall thereupon expire together with any right to
indemnification (except with respect to any claim for breach of any such
representation or warranty for which written notice shall have been given prior
to the termination of the Indemnification Period to the party which made such
representation or warranty). The Environmental Representations shall survive
the Closing for a period of three (3) years after the Closing Date and the
Title Representations, the Authorization Representations, the Tax
Representations and the Employee Representations and the liabilities and
obligations of Sellers under Sections 3.05 and 7.03 hereof and under Article 8
hereof shall survive the Closing until the expiration of any applicable
statutes of limitation (such three (3) year period being the Indemnification
Period with respect to the Environmental Representations and such statutes of
limitations period being the Indemnification Period with respect to the Title
Representations, the Authorizations Representations, the Tax Representations
and the Employee Representations and the liabilities and obligations of Sellers
under Sections 3.05 and 7.03 hereof and under Article 8 hereof).
7.02. Sellers' and Partners' Indemnity.
(a) During the Indemnification Period (or thereafter solely with
respect to any claim for indemnification for which notice has been given prior
to the expiration of the Indemnification Period), in addition to any other
indemnification provided for under this Agreement, each Seller and each Partner
shall jointly and severally indemnify and hold harmless Buyer and its
Affiliates from and against any and all demands, claims, losses, liabilities,
actions or causes of action, assessments, actual damages (but excluding
consequential damages), fines, Taxes (including excise and penalty taxes),
penalties, costs and expenses (including interest, expenses of investigation,
reasonable fees and disbursements of counsel, accountants and other experts
(whether such reasonable fees and disbursements of counsel, accountants and
other experts relate to claims, actions or causes of action asserted by Buyer
against Sellers or asserted by third parties)) (collectively "Losses") incurred
or suffered by Buyer and its Affiliates and their respective officers,
directors, employees, shareholders, agents and representatives arising out of,
resulting from, or relating to:
(i) any breach of any of the representations or
warranties made by any Seller or any Partner in this Agreement or in any
agreement, certificate, Exhibit or other instrument delivered by any Seller or
any Partner pursuant to this Agreement;
(ii) any failure by any Seller or any Partner to perform
any of its covenants or agreements contained in this Agreement or in any
agreement, certificate, Exhibit or other instrument delivered by any Seller or
any Partner pursuant to this Agreement;
(iii) any and all liabilities of Sellers other than those
expressly assumed by Buyer pursuant to Section 3.04 hereof;
(iv) any liabilities arising out of, resulting from or
relating to the liabilities of Sellers, or any other member of any affiliated
group or "controlled group," within the meaning of
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Section 414(b), (c), (m) and (o) of the Code, of which any Seller was a member
on or prior to the Closing Date which liability exists by reason of such Seller
having been a member of such affiliated or controlled group, including
liabilities relating to (A) the funding, operation, maintenance,
administration, amendment or termination of, or the withdrawal or partial
withdrawal from, any employee plan relating to any period on or prior to the
Closing and including losses arising under Title IV of ERISA, Section 302 of
ERISA, Section 412 or 4971 of the Code, (B) compliance with COBRA under Section
4980B of the Code, and (C) environmental matters with respect to any operations
of, or properties owned, occupied or operated or formerly owned, leased or
operated by, any Seller or any other member of an affiliated group or
"controlled group" of which any Seller was a member prior to the Closing Date;
(v) Any failure by Buyer or any of Sellers to comply with
the provisions of any Bulk Sales laws of the uniform commercial code as in
effect in any state having jurisdiction over Sellers or the transactions
contemplated hereby.
(b) Notwithstanding anything to the contrary contained in Section
7.02(a), Sellers and Partners shall not be required to pay or reimburse Buyer
or its Affiliates, for Losses pursuant to Sellers' and Partners' joint and
several indemnification obligation pursuant to Section 7.02 which (when
aggregated with any Losses paid to Buyer, or Buyer's Affiliates, by Seller or
Seller's Affiliates pursuant to Article 7 of (i) the Merger Agreement, (ii) the
Agreement, of even date herewith, between Buyer and TCC with respect to the
acquisition by Buyer of rights to certain D and E Block PCS licenses, and (iii)
the Agreement, of even date herewith, between Buyer and TCLP with respect to
the acquisition by Buyer of the Texas 1 RSA; the Agreements referred to in
clauses (i), (ii) and (iii) above being referred to as the "Concurrent
Agreements") are in excess of One Hundred Million ($100,000,000) Dollars.
(c) Notwithstanding anything to the contrary contained in this
Section 7.02, neither Buyer nor its Affiliates shall be entitled to seek
indemnification under Section 7.02(a) for any Losses unless the aggregate
amount of Buyer's or its Affiliates' Losses in respect of all such matters,
when aggregated with the aggregate amount of Buyer's or its Affiliates' Losses
(as such terms are defined in the Concurrent Agreements) arising under the
Concurrent Agreements (as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000 in which event Buyer and its
Affiliates shall be entitled to seek indemnification under this Section 7.02
for the amount of such Losses in excess of $375,000; provided, however, that
the limitations set forth in this Section 7.02(c) shall not be taken into
account in determining the amount of the Working Capital and Reimbursable
Capital Expenditures determined in accordance with the procedure set forth in
Section 3.03(b) (which determination shall be made without any exclusions
whatsoever by reason of the foregoing); provided further, however, that the
foregoing limitation with respect to Buyer's or its Affiliates' right to
indemnification shall not be applicable to Losses arising from or relating to
(and Buyer and its Affiliates shall be entitled to indemnification for all such
Losses commencing with the first dollar of such Losses) (i) any breach of the
Title Representations, the Authorization Representations, the Tax
Representations, the Employee Representations and the liabilities and
obligations of Sellers under Sections 3.05 and 7.03 hereof and under Article 8
hereof; (ii) any Losses arising by reason of or relating to any inaccuracy or
omission relating to current assets or current liabilities included on the
Closing Date Balance Sheets, which affected in any way
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the determination of Working Capital or Reimbursable Capital Expenditures
pursuant to Section 3.03 hereof and which were known to, or should have been
reasonably foreseeable by, Sellers at the time of preparation of the Closing
Date Balance Sheets; or (iii) any Losses arising by reason of or relating to
any litigation listed on Exhibit 5.01(d) annexed hereto.
(d) As collateral security for Sellers' or Partners'
indemnification obligations under this Agreement and Seller's or its
Affiliates' indemnification obligations under the Concurrent Agreements,
Sellers, or their Affiliates shall deliver, or cause to be delivered, to a
national bank to be mutually agreed to (the "Escrow Agent") to be held in
escrow pursuant to the terms of an Escrow Agreement, in substantially the form
of Exhibit 7.02(d) annexed hereto (the "Escrow Agreement"), to be entered into
on the Closing Date, at Seller's option either Six Million ($6,000,000) Dollars
in cash or Four Hundred Eighty Thousand (480,000) shares of Buyer's Class A
Common Stock, no par value ("Shares"), issued in accordance with the Merger
Agreement (such cash or shares being referred to herein as the "Escrow Fund").
The Escrow Fund shall be held by the Escrow Agent pursuant to the Escrow
Agreement for a period of one (1) year and one hundred eighty (180) days after
the Closing Date; provided, however, that on the first anniversary of the
Closing Date the Escrow Fund shall be reduced to an amount equal to the lesser
of the balance of the Escrow Fund on such first anniversary or 75% (if the
Escrow Fund is originally funded with Shares, as measured by Shares) of the
original Escrow Fund (except to the extent any claims in excess of such reduced
amount have been asserted prior to such first anniversary). The Escrow
Agreement shall set forth the procedures for Buyer to make any claims against
the Escrow Fund, the circumstances under which such Escrow Fund shall be
distributed either to Buyer or to Sellers and procedures for the Sellers to
substitute cash in lieu of stock. Nothing contained in this Section 7.02(d) or
in the Escrow Agreement shall limit in any way Sellers' and Partners'
indemnification obligations under this Agreement or the indemnification
obligations of Sellers or their Affiliates, as applicable, under the Concurrent
Agreements; it being understood that, if the Escrow Fund is not sufficient to
satisfy such indemnification obligations, then Sellers, the Partners and
Sellers' Affiliates, as applicable, shall (subject to Section 7.02(b) hereof)
remain liable for such indemnification obligations as set forth in this
Agreement or in the Concurrent Agreements.
7.03. Tax Indemnification.
(a) During the Indemnification Period (or thereafter solely with
respect to any claim for indemnification for which notice has been given prior
to the expiration of the Indemnification Period, each Seller and each Partner
hereby agrees, jointly and severally, to indemnify and hold harmless Buyer and
its Affiliates from and against (i) all liability for Taxes of Sellers
(including any liability for Taxes by reason of Sellers being included in a
Federal or state consolidated, combined or unitary return and including any Tax
liabilities resulting from the transactions contemplated by this Agreement),
and amounts with respect to liability for Taxes pursuant to any written or
unwritten agreement for the allocation or payment of or with respect to Tax
liabilities or benefits ("Tax Sharing Arrangements"; such amounts being
included in the definition of "Taxes" for purposes of this Section 7.03), to
the extent such Taxes, in the aggregate, exceed the reserve therefor on the
Closing Date Balance Sheets and (ii) any liability for out-of-pocket fees,
costs and expenses (including reasonable attorney's fees) arising out of or
incident to any Tax indemnified hereunder. If any amount for which Sellers and
Partners are to indemnify Buyer and its Affiliates
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pursuant to the immediately preceding sentence is, subject to Sellers' rights
under Section 7.03(b), determined to be payable (whether as a payment of
estimated tax or otherwise) after the Closing Date, Sellers shall pay or cause
to be paid to Buyer such amount no later than the later of (A) five (5)
Business Days after Buyer gives notice to Sellers of both the amount due and
the date such amount is due and payable (the "Due Date") and (B) three (3)
Business Days before the Due Date. Amounts described in clause (ii) shall be
reimbursed as incurred. Any payment required to be made hereunder and not made
at the time specified in the preceding two sentences shall bear interest at the
prime rate of The Toronto-Dominion Bank as in effect from time to time or such
higher rate actually payable by the indemnified party on the delayed payment of
the Taxes being indemnified, calculated from the date such payment was required
to be made hereunder to the date such payment is actually received by the
indemnified party. "Taxes" shall mean all taxes of any kind, including those
on, or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
customs duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority, domestic or foreign.
(b) If any claim or demand is asserted by any taxing authority in
writing with respect to a Tax indemnified hereunder, Buyer shall notify Sellers
of such claim or demand within fifteen (15) days of receipt thereof; provided,
however, that failure to give such notification shall not affect the
indemnified party's entitlement to indemnification hereunder except to the
extent the indemnifying party shall have been actually prejudiced as a result
of such failure. The indemnifying party shall have the right to control the
defense, compromise or settlement thereof; provided, however, that the
indemnifying party shall not be permitted to take any action with respect to an
issue that could adversely affect the Tax liability of the indemnified party
(with respect to liabilities not indemnified hereunder) unless the indemnified
party consents to such action. Without limiting the indemnifying party's
rights under the preceding sentence, the indemnified party shall be permitted
to participate in the defense of any such claim or demand, at its own expense.
The indemnified party shall cooperate fully in such defense as and to the
extent reasonably requested by the indemnifying party. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such claims or demand and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
7.04. Buyer's Indemnity.
(a) During the Indemnification Period (or thereafter solely with
respect to any claim for indemnification for which notice has been given prior
to expiration of the Indemnification Period), in addition to any other
indemnification provided for under this Agreement, from and after the Closing,
Buyer shall indemnify and hold harmless Sellers and their respective Affiliates
from and against any and all Losses (as defined in Section 7.02, except that
reasonable fees and disbursements of counsel, accountants and other experts
shall be included whether they relate to claims, actions or causes of action
asserted by Sellers against Buyer or asserted by third parties) incurred or
suffered by Sellers and their Affiliates and their respective officers,
directors, partners, employees, agents and representatives arising out of,
resulting from, or relating to:
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(i) any breach of any of the representations or
warranties made by Buyer in this Agreement or in any agreement, certificate or
other instrument delivered by Buyer pursuant to this Agreement; and
(ii) any failure by Buyer to perform any of its covenants
or agreements contained in this Agreement or in any agreement, certificate or
other instrument delivered by Buyer pursuant to this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Section 7.04, neither Sellers nor their Affiliates shall be entitled to seek
indemnification under this Section 7.04 for any Losses unless the aggregate
amount of Sellers' and their Affiliates' Losses in respect of all such matters,
when aggregated with the aggregate amount of Sellers' or their Affiliates'
Losses (as such terms are defined in the Concurrent Agreements) arising under
the Concurrent Agreements (as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000 in which event Sellers and their
Affiliates shall be entitled to seek indemnification under this Section 7.04
for the amount of such Losses in excess of $375,000; provided, however, that
the limitations set forth in this Section 7.04(b) shall not be taken into
account in determining the amount of the Working Capital and Reimbursable
Capital Expenditures determined in accordance with the procedure set forth in
Section 3.03(b) (which determination shall be made without any exclusions
whatsoever by reason of the foregoing); provided further, however, that the
foregoing limitation with respect to Sellers' right to indemnification shall
not be applicable to Losses arising from or relating to (and Sellers shall be
entitled to indemnification for all such Losses commencing with the first
dollar of such Losses) any breach of the representation and warranty set forth
in the first sentence of Section 5.02(b) hereof.
7.05. Procedure.
(a) In the event that any party hereto shall sustain or incur any
Losses in respect of which indemnification may be sought by such party pursuant
to this Article 7, the party seeking such indemnification (the "Indemnitee")
shall assert a claim for indemnification by giving prompt (in the event of
claims arising by reason of the commencement of litigation against an
Indemnitee by third parties, in no event later than ten (10) days after service
of process, which process expressly indicates a claim for which Indemnitor (as
hereinafter defined) may be liable) written notice thereof (the "Notice"),
which shall describe in reasonable detail the facts and circumstances upon
which the asserted claim for indemnification is based, to the party providing
indemnification (the "Indemnitor") and shall thereafter keep the Indemnitor
reasonably informed with respect thereto; provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any third party claim, action or proceeding (a "Claim") is brought against any
Indemnitee, the Indemnitor shall have the right to assume, conduct and control
the defense, compromise or settlement thereof, by written notice to the
Indemnitee of its intention to do so within thirty (30) days after receipt of
the Notice, with counsel reasonably satisfactory to the Indemnitee, at the
Indemnitor's own expense, and thereupon to prosecute in the name and on behalf
of the Indemnitee any available cross-claims, counter-claims or third-party
claims arising with respect to the Claim. If the Indemnitor shall assume the
defense of
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such Claim, it shall not settle such Claim unless such settlement includes as
an unconditional term thereof the giving by the claimant or the plaintiff of a
release of the Indemnitee, reasonably satisfactory to the Indemnitee, from all
liability with respect to such Claim. As long as the Indemnitor is contesting
any such Claim in good faith and on a timely basis, the Indemnitee shall not
pay or settle any such Claim. Notwithstanding the assumption by the Indemnitor
of the defense of any Claim as provided in this Section 7.05 and without
limiting the Indemnitor's right to assume, conduct and control the defense,
compromise or settlement thereof, the Indemnitee shall be permitted to join in
the defense of such Claim and to employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee of its
desire to assume the defense of any such Claim within the prescribed 30-day
period set forth in Section 7.05(a), or shall notify the Indemnitee that it
will not assume the defense of any such Claim, then the Indemnitee may assume
the defense of any such Claim, in which event it may do so in such manner as it
may deem appropriate, and the Indemnitor shall be bound by any determinations
made in any litigation with respect to such Claim or any settlement thereof
effected by the Indemnitee, provided that any such determinations or settlement
shall not affect the right of the Indemnitor to dispute the Indemnitee's claim
for indemnification. The failure of the Indemnitor to assume the defense of
any Claim shall not be deemed a concession by Indemnitor that it is required to
indemnify the Indemnitee for the subject matter of such Claim.
(c) Amounts payable by the Indemnitor to the Indemnitee in respect
of any Losses for which any party is entitled to indemnification hereunder
shall be payable by the Indemnitor as incurred by the Indemnitee. Any
payments by any Indemnitor in indemnification hereunder shall be treated as
adjustments to the Purchase Price.
(d) The provisions of this Section 7.05 shall be subject to the
provisions of Section 7.03(b).
7.06. Indemnification Payments in Cash. All payments by Sellers to
Buyer or its Affiliates in respect of any indemnification obligation to Buyer
or its Affiliates shall be made by Sellers in cash, or at Sellers' option, if
the Escrow Fund contains shares of Class A Common Stock, by the delivery to
Buyer or its Affiliates of shares of its Class A Common Stock from the Escrow
Fund (valuing such shares so delivered at the average closing price on NASDAQ
of such shares for the six (6) Business Days immediately preceding the date of
the delivery of such shares).
7.07. Investigations; Waivers. The survival periods and rights to
indemnification provided for in this Article 7 shall remain in effect
notwithstanding any investigation at any time by or on behalf of any party
hereto or any waiver by any party hereto of any condition to such party's
obligations to consummate the transactions contemplated hereby.
7.08. Indemnity Sole Remedy. In the absence of fraud or of a suit
seeking specific performance as contemplated by this Agreement, the remedies
provided to each Seller and to Buyer by the foregoing provisions of this
Article 7 shall after the Closing Date be in lieu of any other remedies to
which the respective party is entitled at law or in equity for any breach or
noncompliance by a party with the provisions of this Agreement.
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ARTICLE 8
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
8.01. Employees.
(a) On or before thirty (30) days prior to the Closing Date, Buyer
will provide written notice to Sellers setting forth the identity of the
Employees it desires to employ after the Closing Date. Sellers agree to use
all reasonable efforts to assist Buyer in employing such Employees and, in this
regard, to terminate such Employees on or prior to the Closing Date.
(b) Upon reasonable notice, Sellers shall, and Partners shall
cause Sellers to, provide Buyer with access to the Employees during normal
business hours throughout the period on and before the Closing Date in
accordance with the procedure established in Section 4.01(b). Such access
shall be for the purpose of interviewing the Employees and providing transition
training for those Employees continuing in employment after the Closing Date.
(c) Buyer and Sellers shall consult regarding communications with
the Employees whom Buyer does not intend to retain after the Closing so as to
minimize any adverse impact on the Businesses. Upon the reasonable request of
Buyer, Sellers shall, and Partners shall cause Sellers to, use all
commercially reasonable efforts to minimize such impact, including enforcing
Sellers' rights under any confidential or non-compete agreement with such
Employees (other than the non-compete agreements of Barry B. Lewis or Craig W.
Viehweg).
(d) Nothing contained in this Agreement shall confer upon any
Employee any right with respect to continued employment with Buyer. No
provision of this Agreement shall create any third-party rights in any
Employee, or beneficiary or dependent thereof, with respect to the
compensation, terms and conditions of employment and benefits that may be
provided to such Employee by the Buyer after the Closing Date.
8.02. Employee Benefit Plans.
(a) All medical, dental, vision, travel accident, accidental death
and dismemberment, and life insurance expenses incurred by Employees and their
dependents on or before the Closing Date, pursuant to Employee Plans,
irrespective of the time at which claims are presented, are the responsibility
of Sellers and shall be paid directly by Sellers or their medical, dental or
life insurance carrier to such Employees and dependents.
(b) Sellers shall be responsible for any medical, dental or life
insurance coverage due to any Employees and their dependents who retired on or
before the Closing Date.
(c) Sellers, jointly and severally, agree to fulfill their
obligations under continuation coverage rules of COBRA with respect to a
"qualifying event," within the meaning of Section 4980B(f) of the Code or
Section 603 of ERISA, occurring on or before the Closing Date with respect to
any Employees and their dependents.
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(d) All short-term, long-term and extended disability benefits
payable to Employees and their dependents who became disabled on or before the
Closing Date are the responsibility of Sellers and shall be paid directly by
Sellers or their insurance carriers to such Employees and their dependents.
(e) If any Employees are terminated from employment by a Seller as
a result of the transactions contemplated by this Agreement or otherwise, any
obligations arising out of such termination of employment, including severance,
accrued vacation pay, COBRA obligations, notices or compensation required under
the Worker Adjustment and Retraining Notification ("WARN") Act, employment
discrimination complaints, unfair labor practice charges, grievance under any
collective bargaining agreement, breach of contract claims, and wrongful
termination and related tort claims shall be the sole responsibility of such
Seller.
(f) Sellers and Partners hereby jointly and severally agree, until
expiration of all applicable statutes of limitations, to indemnify, hold
harmless and defend Buyer and its Affiliates from and against any and all
claims, damages, liabilities and expenses including reasonable attorney's fees
and disbursements of counsel, incurred by Buyer or any of its Affiliates
arising from or in connection with any failure of Sellers or their Affiliates
to discharge their responsibilities to pay benefits under paragraphs (a) - (e)
of this Section 8.01.
ARTICLE 9
MISCELLANEOUS
9.01. Expenses. Each party shall bear its own expenses incident to
the negotiation, preparation, authorization and consummation of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
its counsel and accountants, whether or not such transactions are consummated.
9.02. Equitable Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with the specific terms of the provisions or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party agrees
that it will not assert, as a defense against a claim for specific performance,
that the party seeking specific performance has an adequate remedy at law.
9.03. Notices. All notices, claims and other communications
hereunder shall be in writing and shall be made by hand delivery, registered or
certified mail (postage prepaid, return receipt requested), facsimile, or
overnight air courier guaranteeing next day delivery (a) if to Buyer, to it at
Western Wireless Corporation, 2001 NW Sammamish Road, Issaquah, Washington
98027, Attention: Alan R. Bender, Esq. (Fax No. 206-313-5547), with a copy
(which shall not constitute notice) to Rubin Baum Levin Constant & Friedman, 30
Rockefeller Plaza, New York, New York 10112, Attention: Barry A. Adelman, Esq.
(Fax No. 212-698-7825) or (b) if to any Seller or Partner, to it at 2420 Sand
Hill Road, Menlo Park, California 94025, Attention: Barry Lewis (Fax
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<PAGE> 43
No. 415-854-4512), with a copy (which shall not constitute notice) to Edwards &
Angell, 101 Federal Street, Boston, Massachusetts 02110, Attention: Stephen O.
Meredith, Esq. (Fax No. 617-439-4170), or at such other address as any party
may from time to time furnish to the other parties by a notice given in
accordance with the provisions of this Section 9.03. All such notices and
communications shall be deemed to have been duly given at the time delivered by
hand, if personally delivered; five (5) Business Days after being deposited in
the mail, first class postage prepaid, return receipt requested, if mailed;
when receipt confirmed, if sent by facsimile; and the next Business Day after
timely delivery to the courier, if sent by an overnight air courier service
guaranteeing next day delivery.
9.04. Entire Agreement. This Agreement, together with the Exhibits
annexed hereto, contains the entire understanding among the parties hereto
concerning the subject matter hereof and may not be changed, modified, altered
or terminated except by an agreement in writing executed by the parties hereto.
Any waiver by any party of any of its rights under this Agreement or of any
breach of this Agreement shall not constitute a waiver of any other rights or
of any other or future breach.
9.05. Remedies Cumulative. Except as otherwise provided herein, each
and all of the rights and remedies in this Agreement provided, and each and all
of the rights and remedies allowed at law and in equity in like case, shall be
cumulative, and the exercise of one right or remedy shall not be exclusive of
the right to exercise or resort to any and all other rights or remedies
provided in this Agreement or at law or in equity.
9.06. Governing Law. This Agreement shall be construed in accordance
with and subject to the laws and decisions of the State of Washington
applicable to contracts made and to be performed entirely therein.
9.07. Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
9.08. Waivers. No provision in this Agreement shall be deemed waived
by course of conduct, including the act of Closing, unless such waiver is in
writing signed by the parties and stating specifically that it was intended to
modify this Agreement.
9.09. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
successors and assigns. No Seller and no Partner shall have the right to
assign this Agreement or any of its rights or obligations hereunder to any
Person; provided, however, that Buyer shall have the right to assign this
Agreement and its rights and obligations hereunder in accordance with Section
1.03 hereof.
9.10 Further Assurances. Buyer shall, at the request of Sellers and
Partners, and each Seller and each Partner shall, at the request of Buyer, from
time to time, execute and deliver such other assignments, transfers,
conveyances and other instruments and documents and do and perform such other
acts and things as may be reasonably necessary or desirable for effecting
complete consummation of this Agreement and the transactions herein
contemplated.
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<PAGE> 44
9.11. Disclosures.
(a) Each of Buyer and each Seller and each Partner acknowledges
and confirms in connection with the negotiation of this Agreement and the
execution hereof, during the period from the date hereof through the Closing
Date, the parties hereto will have furnished to one another certain materials,
information, data and other documentation ("Disclosures") concerning their
business, financial condition and operations which are proprietary and
confidential. Each party acknowledges the party disclosing such Disclosures
considers them secret and confidential and asserts a proprietary interest
therein. Accordingly, each of Buyer and each Seller and each Partner covenants
and agrees that it shall maintain all Disclosures made by another party in
strict confidence and shall not use such Disclosures for its own benefit or
disclose them to third parties, except to its agents, representatives, bankers,
investment bankers, counsel and employees involved in evaluating the
transactions contemplated by this Agreement, its partners (and the partners or
other security holders thereof) or as otherwise required by law (including the
requirement of Buyer to disclose such terms under any Federal or state
securities laws); provided, however, that in no event shall Sellers be
permitted to disclose the Purchase Price or any information concerning the
calculation of the Purchase Price to any other Person (including its employees)
unless and until such time as such information otherwise becomes public.
(b) No public announcement by any party hereto with regard to the
transactions contemplated hereby or the material terms hereof (including the
Purchase Price) shall be issued by any party without the mutual prior consent
of the other parties, except in the event the parties are unable to agree on a
press release and legal counsel for one party is of the opinion that such press
release is required by law and such party furnishes the other parties a written
opinion of outside legal counsel, or other counsel reasonably acceptable to the
party being furnished such opinion, to that effect, then such party may issue
the legally required press release.
(c) This Agreement shall not restrict any party hereto from using
information already known to it, to which it is entitled under existing
agreements, or information generally in the public domain or any information
coming into its possession after it becomes public knowledge unless it became
public knowledge through a breach of this Agreement.
9.12. Termination.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, without further obligation of either
Seller or any Partner, or Buyer, at any time prior to the Closing Date as
follows:
(i) by mutual written consent duly authorized by the
general partners and board of directors, as applicable, of Sellers and Partners
and board of directors of Buyer; or
(ii) by Sellers and Partners or by Buyer if the Closing
shall not have occurred on or before the first anniversary of the date hereof,
or such later date, if any, as Sellers, Partners and Buyer shall agree in
writing; provided, that the party exercising such right is not in default of
its obligations under this Agreement in a manner which results in the failure
to satisfy the conditions to Closing of the other parties; or
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<PAGE> 45
(iii) by Sellers and Partners or by Buyer if the
consummation of the transactions contemplated hereby shall be prohibited by a
final, non-appealable order, decree or injunction of a court of competent
jurisdiction or of the FCC.
(b) In the event of a termination of this Agreement, no party
hereto shall have any liability or further obligation to any other party to
this Agreement except that nothing herein will relieve any party from liability
for any breach of this Agreement.
9.13. Definitions; Etc.
Unless the context otherwise requires, the terms defined in any
Section of this Agreement shall have the meanings therein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The use of a gender herein shall be deemed to include the
neuter, masculine and feminine genders wherever necessary or appropriate.
Whenever the word "herein" or "hereof" is used in this Agreement, it shall be
deemed to refer to the Agreement and not to a particular Section of the
Agreement unless expressly stated otherwise.
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<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WESTERN WIRELESS CORPORATION
By: /s/ JOHN W. STANTON
---------------------------------
Title: Chief Executive Officer
TRIAD TEXAS, L.P.
By: Triad Cellular Corporation, a
general partner
By: /s/ BARRY B. LEWIS
-----------------------------------
Title: President
By: Triad Cellular L.P., a general
partner
By: Triad Cellular Corporation, its
general partner
By: /s/ BARRY B. LEWIS
-----------------------------------
Title: President
TRIAD UTAH, L.P.
By: Triad Cellular Corporation,
a general partner
By: /s/ BARRY B. LEWIS
----------------------------------
Title: President
By: Triad Cellular L.P., a
general partner
By: Triad Cellular Corporation,
its general partner
By: /s/ BARRY B. LEWIS
-------------------------------
Title: President
<PAGE> 47
TRIAD OKLAHOMA, L.P.
By: Triad Cellular Corporation, a
general partner
By: /s/ BARRY B. LEWIS
---------------------------------
Title: President
By: Triad Cellular L.P., a
general partner
By: Triad Cellular Corporation, its
general partner
By: /s/ BARRY B. LEWIS
---------------------------------
Title: President
TRIAD CELLULAR CORPORATION
By: /s/ BARRY B. LEWIS
---------------------------------
Title: President
TRIAD CELLULAR L.P.
By: Triad Cellular Corporation, its
general partner
By: /s/ BARRY B. LEWIS
---------------------------------
Title: President
<PAGE> 1
EXHIBIT 10.54
PURCHASE AGREEMENT BY AND AMONG
WESTERN WIRELESS CORPORATION
AND
TRIAD CELLULAR CORPORATION
DATED: APRIL 24, 1997
<PAGE> 2
PURCHASE AGREEMENT
PCS
AGREEMENT, dated April 24, 1997 (the "Agreement"), by and between
WESTERN WIRELESS CORPORATION, a Washington corporation ("Buyer") and TRIAD
CELLULAR CORPORATION, a Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller was the successful bidder in the recently conducted
FCC auctions for the "D" and "E" Block FCC licenses for the PCS systems in the
geographic areas listed on Exhibit 5.01(f) annexed hereto; and
WHEREAS, subject to the terms and conditions hereinafter provided,
Buyer desires to purchase from Seller, and Seller desires to sell and transfer
to Buyer, Seller's right, title and interest in and to the Authorizations (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.01 Purchase of Assets. Subject to the terms and conditions hereof
and in reliance upon the representations, warranties, covenants and agreements
herein contained, on the Closing Date (as defined in Article 2 hereof), Seller
agrees to sell, transfer, convey, assign and deliver to Buyer, and Buyer agrees
to purchase, acquire and accept from Seller, all of Seller's right, title and
interest in and to the Authorizations and all deposits with the Federal
Communications Commission ("FCC") relating thereto (collectively the "Purchased
Assets"). Seller agrees that the Purchased Assets shall include all rights
that Seller may have, whether now existing or hereafter arising, to a refund or
return of any amounts heretofore or hereafter deposited by Seller with the FCC
in connection with Seller's purchase of the Authorizations.
1.02 Buyer's Designee. Buyer shall have the right to assign to any
Person (as hereinafter defined), whether or not an Affiliate of Buyer, any and
all rights and obligations of Buyer under this Agreement; provided, however,
that no such assignment shall delay the Closing beyond October 31, 1997 or
relieve Buyer of its obligations hereunder, and Buyer and its assignee shall be
jointly and severally liable for Buyer's obligations hereunder, except that
with respect to properties purchased by a non-Affiliate of Buyer upon payment
to Seller of the Purchase Price therefor, Buyer shall be relieved of any and
all further obligations with respect to such assigned properties. "Affiliate"
shall mean, with respect to any party hereto, any corporation or other business
entity which directly or indirectly through stock ownership or through any
other arrangement either controls, is controlled by or is under common control
with, such party. The term "control" shall
<PAGE> 3
mean the power to direct the affairs of such person by reason of ownership of
voting stock or other equity interests, by contract or otherwise.
ARTICLE 2
CLOSING AND CLOSING DATE
The consummation of the transactions provided for herein (the
"Closing") shall take place at the offices of Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, 29th Floor, New York, New York or at such other
mutually agreeable location, at 11:00 A.M. local time, on the latest to occur
of (a) the last Business Day (as hereinafter defined) of the month in which all
FCC and state regulatory approvals (if any) necessary in order to consummate
lawfully the transactions contemplated hereby have been received and shall have
become Final Orders (as hereinafter defined), (b) the last Business Day of the
month in which all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or been terminated without objection by the Federal Trade Commission
(the events described in clauses (a) and (b) above being hereinafter referred
to as the "Regulatory Approvals" and the later of the dates described in
clauses (a) and (b) above being referred to as the "Regulatory Approval Date"),
and (c) October 31, 1997, or at such other time or date to which the parties
hereto mutually agree. The day on which the Closing occurs is herein referred
to as the "Closing Date." As used herein the term "Business Day" shall mean
any day other than a Saturday, Sunday or a legal holiday in New York, New York
or in Seattle, Washington or any other day on which commercial banks are
authorized by law or governmental decree to close.
ARTICLE 3
PURCHASE PRICE AND LIABILITIES
3.01 Calculation of Purchase Price. In consideration of the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets at the
Closing, Buyer shall pay or deliver to Seller the following on account of each
Authorization (the "Purchase Price"):
(a) If the Authorization has not been issued by the FCC
to Seller, the amount deposited by Seller with the FCC in connection with
Seller's successful bid for such Authorization, in immediately available funds;
or
(b) If the Authorization has been issued by the FCC to
Seller, the total amount paid by Seller to the FCC in connection with Seller's
successful bid for such Authorization, in immediately available funds.
3.02 Delivery of Instruments of Transfer. At the Closing, Seller
shall deliver to Buyer such deeds, bills of sale, assignments and other good
and sufficient instruments of conveyance, transfer and assignment as shall be
necessary to vest in Buyer title in and to the Purchased Assets of the quality
described in Section 5.01(g) hereof.
3.03 Payment of Purchase Price.
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<PAGE> 4
(a) (i) At the Closing Buyer shall pay to Seller the Purchase
Price set forth in Section 3.01 hereof in immediately available funds.
(ii) Seller shall provide to Buyer on the Closing Date
evidence reasonably satisfactory to Buyer of Seller's payment of any
liabilities relating to, and of the release or termination of all Liens on, any
of the Purchased Assets of Seller.
(b) Seller shall pay at the Closing or, if due thereafter,
promptly when due, all gross receipts taxes, transfer taxes, sales taxes, stamp
taxes and any other taxes (collectively, "Transfer Taxes") payable in
connection with the transfer of the Purchased Assets from Seller to Buyer
hereunder. Seller shall prepare and file any tax return with respect to such
Transfer Taxes; provided, however, that Buyer shall have the right of
reasonable review and comment prior to such filing (such right to be exercised
by Buyer within five (5) Business Days after delivery of such returns to Buyer,
and if such right is not so exercised within such five (5) day period, Buyer
shall be deemed to have waived such right).
3.04 Assumed Liabilities. Subject to the terms and conditions hereof
and in reliance upon the representations, warranties, covenants and agreements
herein contained, at the Closing Buyer agrees to assume and perform, according
to their respective terms, as the same shall exist at the Closing Date, any and
all obligations as the successful bidder with respect to the Authorizations to
pay the FCC the successful bid amounts, less the amount of any deposits or
other amounts theretofore paid by or on behalf of Seller.
3.05 Excluded Liabilities. Notwithstanding anything to the contrary
herein contained, Buyer shall not assume any liabilities of Seller other than
as expressly set forth in Section 3.04 hereof. Any liabilities or obligations
of Seller not specifically assumed by Buyer hereunder shall continue to be the
liabilities and obligations of Seller and Seller shall indemnify and hold
harmless Buyer from and against all such liabilities and obligations. The
liabilities and obligations of Seller not assumed by Buyer hereunder include
the following:
(a) Liabilities or obligations of Seller arising out of
the indemnification agreements contained in Article 7 hereof;
(b) Any claim, liability or obligation, known or unknown,
whether absolute, contingent or otherwise, the existence of which is a breach
of any representation, warranty or covenant of Seller set forth in this
Agreement;
(c) Liabilities or obligations of Seller arising prior
to, on or after the Closing;
(d) Liabilities or obligations of Seller arising out of
this Agreement or the transactions contemplated hereby or incurred in respect
of any transaction occurring after the Closing;
(e) Liabilities for all Taxes whatsoever, whether income,
gross receipts, property, sales, use, franchise or any other taxes whatsoever,
including taxes, if any, attributable to
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<PAGE> 5
the sale of the Purchased Assets hereunder, any liquidation and dissolution of
Seller or the distribution of its assets to its equity holders;
(f) Liabilities for breach of representations or
warranties to any person and liabilities arising out of product liability,
negligence or willful misconduct claims; and
(g) Liabilities, claims, obligations, judgments, orders,
duties or responsibilities of any kind or nature whatsoever, whether arising
before, on or after the Closing Date, relating to amounts payable to current or
former employees or independent contractors or agents of Seller as salary,
bonus or other compensation or benefits and with respect to any employee plans
which are now or ever have been maintained, contributed to or required to be
contributed to for the benefit of any employee.
Seller covenants and agrees to pay all liabilities and to
fulfill all obligations of Seller not assumed by Buyer hereunder as and when
the same become due, except those being contested in good faith by appropriate
proceedings and for which adequate reserves have been established.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.01 Covenants of Seller. Seller covenants and agrees from and
after the execution and delivery of this Agreement to and including the Closing
Date as follows:
(a) Consummate Transactions. Seller shall use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated in accordance with the terms hereof, and, without limiting the
generality of the foregoing, use its best efforts to obtain all necessary
approvals, consents, permits, licenses and other authorizations required in
connection with this Agreement and the transactions contemplated hereby of
third parties including all governmental authorities and agencies such as the
FCC, and any state public utilities or public service commission, and to make
all filings with and to give all notices to third parties which may be
necessary or reasonably required of Seller, in order to consummate the
transactions contemplated hereby, including the transfer and delivery from
Seller to Buyer of the Purchased Assets.
(b) No Binding with Respect to Purchased Assets. Seller
shall not take or consent to any action or enter into any agreements which will
bind Seller with respect to the Purchased Assets or which, upon consummation of
the transactions contemplated hereby, will bind the Buyer.
(c) Full Access. Seller shall give to Buyer and its
agents and representatives (including its independent auditors and attorneys)
reasonable access (such access not to interfere unreasonably with Seller's
business) during normal business hours and upon reasonable notice as described
below to all of Seller's personnel, premises, properties, assets, financial
statements and records, books, Contracts, documents and commitments of or
relating to the Purchased Assets, and shall furnish Buyer and its agents and
representatives with all such information concerning the
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<PAGE> 6
affairs of Seller as Buyer may reasonably request. Buyer shall contact either
Barry B. Lewis, Craig W. Viehweg or any other person(s) designated by Seller,
on behalf of Seller, to arrange for Buyer's personnel, agents and
representatives visiting any of Seller's premises or personnel, agents or
representatives, such visits to be arranged for by Seller not later than three
(3) Business Days of Buyer's request therefor.
(d) Ordinary Course. Seller hereby agrees to take all
actions necessary or required to maintain and preserve all of its rights in and
to the "D" and "E" Block FCC Licenses with respect to which Seller was the
successful bidder in the FCC auctions and which are included in the Purchased
Assets, including making all filings required to be made with the FCC (or any
other person) in a timely manner, paying all amounts required to be paid to the
FCC in a timely manner and taking all such other actions as shall be necessary
or required to obtain the Authorizations. Seller shall not, (i) without the
prior written consent of Buyer, such consent not to be unreasonably withheld,
take any actions which would be binding upon or materially adversely affect the
Purchased Assets (ii) incur any material liability, absolute or contingent,
relating to the Purchased Assets; (iii) sell, transfer, convey, mortgage,
pledge, hypothecate or subject to any lien, claim, security interest, charge,
encumbrance, restriction, title retention agreement or any liability or claim
of any nature (all of the foregoing, collectively "Liens") any of the Purchased
Assets; or (iv) enter into or extend or renew any Contract (as hereinafter
defined) relating to the Purchased Assets with any Person. As used herein the
term "Person" means any general or limited partnership, corporation, joint
venture, trust, business trust, governmental agency, cooperative, association,
individual or other entity, and heirs, executors, administrators, legal
representatives, successors and assigns of such person.
(e) Preserve Goodwill. Seller shall use its diligent
efforts to preserve the Purchased Assets.
(f) Compliance with Law. Seller shall comply in all
material respects with all applicable laws, rules, ordinances, regulations,
codes, orders, decrees, licenses and permits of all applicable jurisdictions
and governmental authorities or agencies relating to it, to its properties
(including the Purchased Assets) or to the conduct of its business.
(g) Approvals, Consents. Seller shall obtain and
maintain in full force and effect all approvals, consents, permits, licenses
and other authorizations, from all appropriate Federal, state and local
governmental agencies or authorities necessary or required for the operation of
Seller's business as it is intended to be conducted, as and when such
approvals, consents, permits, licenses or other authorizations are necessary or
required except, in the case of non-material approvals, consents, permits,
licenses or other authorizations of state and local governmental agencies and
authorities, where such failure would not have a material adverse effect on
Seller, its financial condition, prospects, the Purchased Assets or the
consummation of the transactions contemplated hereby. The parties shall
consult with one another as to the general approach to be taken with any
governmental authority or agency with respect to obtaining any necessary
consent of such governmental agency or authority to the transactions
contemplated hereby, and each of the parties shall keep each other party
reasonably informed as to the status of any such communications with any
governmental authority or agency. Seller shall not, with respect
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<PAGE> 7
to the Purchased Assets, make any material commitments (other than those
typical in the wireless telephone industry) relating to any approval, consent,
permit or license to any governmental authority or agency without the prior
written consent of Buyer.
(h) No Transfer. Seller shall not (i) sell, transfer,
assign or dispose of, or offer to, or enter into an agreement to, sell,
transfer, assign or dispose of any of the Purchased Assets or (ii) create,
incur or suffer to exist any Lien of any nature whatsoever or enter into any
restriction on transfer or grant any right of first refusal relating to the
Purchased Assets.
(i) No Amendments or Issuance of Additional Shares.
Seller shall not amend its charter, by-laws or other constituent documents of
Seller, which amendment would have a material adverse effect on the Purchased
Assets or the transactions contemplated by this Agreement or which would
require any additional consents or approvals of the transactions contemplated
by this Agreement. Seller shall not issue or sell any shares of its capital
stock, or other securities, or issue options, warrants or rights of any kind to
acquire, or any securities convertible into, exchangeable for or representing a
right to purchase or receive, or enter into any contract, plan, understanding
or arrangement with respect to the issuance of, any stock-based or
stock-related awards or other equity-based awards, shares of its capital stock
or other equity or other securities, or enter into any arrangement or contract
with respect to the purchase or voting of shares of its capital stock or other
equity, or adjust, split, combine or reclassify any of its securities, or make
any other changes in its capital structure, if any such issuance, sale,
contract, plan, understanding, arrangement, adjustment, split, combination,
reclassification or changes would require any additional approvals of the
transactions contemplated by this Agreement or would otherwise adversely affect
the transactions contemplated by this Agreement.
(j) Books and Records. Seller shall maintain its books,
accounts and records in the usual manner, on a basis consistent with prior
years and in accordance with generally accepted accounting principles.
(k) Notice of Claims. Seller shall give written notice
to Buyer promptly upon the commencement of any action, investigation,
arbitration or proceeding (including any proceeding before any governmental
agency), or promptly upon obtaining knowledge of any facts giving rise to a
threat of any such action, investigation, arbitration or proceeding which
would, if adversely determined, materially and adversely affect (i) Seller's
ability to consummate the transactions contemplated hereby or (ii) the
Purchased Assets.
(l) Certain Actions. Seller shall not take any action or
refrain from taking any action which would materially interfere with or
preclude the consummation of the transactions contemplated by this Agreement,
result in any of the representations and warranties of Seller contained herein
being incorrect or incomplete in any material respect, or result in any of the
conditions to Buyer's obligation to consummate the transactions contemplated by
this Agreement as set forth in Section 6.01 hereof being unsatisfied in
accordance with the terms hereof.
(m) Notice of Breaches. Seller shall promptly after
obtaining knowledge of the occurrence of, or the impending or threatened
occurrence of, any event which would cause or constitute a breach of any
warranties, representations, covenants or agreements of Seller contained
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<PAGE> 8
in this Agreement, give notice in writing of such event or occurrence or
impending or threatened event or occurrence, to Buyer and use its diligent
efforts to prevent or promptly to remedy such breach.
(n) Material Contracts. Seller shall not default in any
material respect under, or breach any term or provision of, or suffer or permit
to exist any condition or event which, after notice or lapse of time, or both,
would constitute a material default by Seller under, any contract, agreement or
other document which is binding upon or could effect the Purchased Assets or
the transactions contemplated thereby.
(o) Capital Expenditures. Following the date hereof and
prior to the Closing Date, Seller shall not make or commit or agree to make,
any capital expenditures relating to the Purchased Assets (other than the
making of any required payment to the FCC with respect to the Authorizations)
and such other capital expenditures to which Buyer shall consent in writing and
agree in writing to reimburse to Seller in full in cash on the Closing Date.
(p) Notification of Change. Seller shall advise Buyer
promptly in writing of (i) any event, condition or state of facts, including
any action, suit or proceeding, which has had or would have a material adverse
effect on the business or financial condition of Seller, on the Purchased
Assets or on the transactions contemplated by this Agreement or (ii) the
commencement of any action, suit or proceeding which seeks to enjoin the
consummation of the transactions contemplated hereby.
(r) Retention of Records. On the Closing Date, Seller
shall deliver to Buyer all books, Contracts and records of Seller relating to
the Purchased Assets; provided, however, Seller shall be entitled to retain a
copy of all books, accounting and other records following the Closing for
purposes of winding up its affairs and other proper purposes incidental to the
transactions contemplated hereby. Buyer agrees that after the Closing Date all
books, Contracts and records relating to the Purchased Assets prior to the
Closing Date, shall for a period of five (5) years following the Closing Date
or, if later, up to the termination of the statute of limitations for any
matter with respect to which Seller is indemnifying Buyer and its Affiliates
hereunder, be available at the written request of and at the expense of Seller
during regular business hours to Seller and its authorized representatives,
accountants and attorneys for any reasonable business purpose. All information
so made available to Seller or retained by Seller after the Closing Date shall
be held in confidence by Seller in accordance with Section 8.11 hereof. In
addition, for a period of five (5) years after the Closing Date, at the written
request and expense of Buyer, Seller shall make available to Buyer copies of
any documents not theretofore delivered to Buyer relating to any potential or
actual tax liabilities of Seller for any periods ending on or prior to the
Closing Date.
(s) No Termination or Settlement. Without the prior
written consent of Buyer, which consent shall not be unreasonably withheld,
Seller shall not terminate any agent or settle any dispute with any agent if
such termination or settlement would cause Buyer to have any continuing
obligation after the Closing with respect thereto.
4.02 Covenants of Buyer. Buyer covenants and agrees that from and
after the execution and delivery of this Agreement to and including the Closing
Date:
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<PAGE> 9
(a) Consummate Transaction. Buyer shall use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated in accordance with the terms hereof, and, without limiting the
generality of the foregoing, (i) to obtain all necessary consents and
authorizations of third parties, including the approval of this Agreement and
the transactions contemplated hereby by all governmental authorities and
agencies, including the FCC and any state public utilities or public service
commission, (ii) to make all filings with and to give all notices to third
parties which may be necessary or reasonably required of Buyer in order to
consummate the transactions contemplated hereby and (iii) if necessary in order
to obtain any required FCC consent, assign its rights hereunder with respect to
one or more of the Authorizations to one or more third parties (subject to the
provisions of Section 1.02 hereof).
(b) Buyer Not to Control. Notwithstanding any provision
of this Agreement that may be construed to the contrary, pending the Closing,
Seller shall maintain actual (de facto) and legal (de jure) control over its
business, including the Authorizations and the commencement of any operations
thereunder. Specifically, the responsibility for the operation of Seller's
business shall, pending the Closing, reside with its board of directors,
including responsibility for the following matters: (i) access to and the use
of the facilities of and equipment owned by Seller; (ii) control of the daily
operation of Seller; (iii) creation and implementation of policy decisions;
(iv) employment and supervision of employees; (v) payment of financing
obligations and expenses incurred in the operation of Seller; (vi) receipt and
distribution of monies and profits derived from the operation of Seller; and
(vii) execution and approval of all Contracts and applications prepared and
filed before regulatory agencies.
(c) Buyer covenants at Seller's request to enter into
roaming agreements with Seller or persons which on the date hereof are
Affiliates of Seller pursuant to which Seller's or such other person's PCS
customers are permitted to roam during the five year period following the
Closing Date on Buyer's wireless communications systems on terms substantially
equivalent in all material respects to those provided for in the roaming
agreements existing at the date hereof between Buyer and AT&T Wireless
Services.
4.03 Governmental Filings. Seller and Buyer covenant and agree from
and after the execution and delivery of this Agreement to and including the
Closing Date as follows:
(a) It is understood that the Closing of this transaction
is subject to prior approval of the FCC and may be subject to the prior
approval of one or more state regulatory commissions. The parties shall use
their best efforts to file with the FCC and any relevant state agency or
agencies, as soon as practicable following the date hereof and in no event
later than ten (10) Business Days from the date hereof, a joint application
requesting the approval of the assignment or transfer of the Authorizations and
Purchased Assets to Buyer, or its designee. Each of the parties hereto shall
diligently take or cooperate in the taking of all steps which are necessary or
appropriate to expedite the prosecution and favorable consideration of such
applications. The parties covenant and agree to undertake all actions
reasonably requested by the FCC or other regulatory authority and to file such
material as shall be necessary or required to obtain any necessary waivers or
other authority from the FCC or such state agency or agencies in connection
with the foregoing applications.
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<PAGE> 10
(b) Within fifteen (15) Business Days of the date of
execution hereof, Buyer and Seller shall file, or cause to be filed, with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice any and all reports or notifications which are required to be filed
under the HSR Act or other Federal law or administrative regulations.
4.04 Cooperation. Seller and Buyer agree to cooperate with and to
take all actions reasonably requested by the other so as to minimize, to the
extent possible, any disruption to any of Seller's operations upon the Closing
and, in connection therewith, Seller shall provide, subject to the last
sentence of Section 4.01(c) hereof, Buyer with reasonable access to its
employees and facilities prior to the Closing Date, and shall cause Seller's
employees, agents, advisors, subcontractors and representatives to work with
Buyer and its employees, agents, advisors, subcontractors and representatives
for purposes of planning for and implementing the transfer of control of the
Purchased Assets to Buyer on the Closing Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.01 Seller's Representations and Warranties. Seller represents and
warrants to Buyer, which representations and warranties shall survive the
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, as follows:
(a) Due Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has all requisite corporate power and authority to own,
operate and lease its property and to carry on its business as now conducted.
Seller is duly qualified to do business and is in good standing in all states
where the conduct of its business or the ownership of its properties makes such
qualification necessary, except where the failure to so qualify would not have
a material adverse effect on Seller, its financial condition or business, or
the transactions contemplated hereby. The certificate of incorporation and
by-laws of Seller to be delivered to Buyer pursuant to this Agreement will be
true, correct and complete as of the date of delivery thereof.
(b) Power and Authority; No Violation. Seller has full
power and authority to execute, deliver and perform its obligations under this
Agreement, and to consummate the transactions contemplated hereby. This
Agreement and all transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Seller and this Agreement
constitutes a legal, valid and binding obligation of Seller enforceable in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally. Neither the execution, delivery
or performance of this Agreement by Seller nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
the passage of time, or both (i) conflict with, result in a default or loss of
rights (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Lien, pursuant to (A) any provision of
the certificate of incorporation, by-laws, shareholders agreement or other
constituent documents of Seller; (B) any material note, bond, indenture,
mortgage, deed of trust, contract, agreement, lease or other instrument or
obligation to which Seller is a party or by which Seller or its
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properties may be bound or affected; or (C) any law, order, judgment,
ordinance, rule, regulation or decree to which Seller is a party or by which
its properties are bound or affected; or (ii) give rise to any right of first
refusal or similar right with respect to any interest, or any properties or
assets, of Seller. Except as described on Exhibit 5.01(b) annexed hereto, no
permit, consent, filing or approval of any third party is required to be
obtained or made by Seller in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby in
order to (A) render this Agreement and the transactions contemplated hereby
valid and effective and (B) enable Seller to sell the Purchased Assets to Buyer
and to consummate the transactions contemplated hereby. Seller has not granted
any powers of attorney granting to any Person the right to bind Seller other
than those to be released on or prior to the Closing Date or those which do not
relate to the Purchased Assets or the transactions contemplated hereby.
(c) Legal Matters. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, writ, injunction, decree or
judgment (collectively, the "Legal Matters"), in progress or pending, or to the
knowledge of Seller, threatened, against or relating to Seller or its business
or assets including the Purchased Assets, nor does Seller know or have reason
to be aware of any basis for the same, which would individually or in the
aggregate have a material adverse effect on (i) Seller or Seller's ownership of
the Purchased Assets or Seller's ability to sell the Purchased Assets as herein
contemplated, (ii) the business or financial condition of Seller, or (iii) the
transactions contemplated by this Agreement.
(d) Accounts Receivable. Seller has no accounts
receivable relating to the Purchased Assets.
(e) Compliance with Laws. Seller is in compliance with
all applicable laws, regulations and administrative orders of the United States
and the states in which Seller transacts business (including all applicable
rules and regulations of the FCC, any state public utilities or public service
commission, or any other Federal or state governmental agency or
instrumentality exercising jurisdiction over Seller or its properties or
business), and of each municipality, county or subdivision of any thereof, to
which any of its business or any of its properties may be subject, the
non-compliance with which would have a material adverse effect upon (i)
Seller's ownership of the Purchased Assets or ability to sell the Purchased
Assets as herein contemplated, or (ii) Seller, its financial condition or
business, or the transactions contemplated hereby.
(f) Authorizations.
(i) Seller (A) was the successful bidder for the
"D" and "E" Block FCC licenses for the PCS systems in the geographic areas
listed on Exhibit 5.01(f) annexed hereto and has filed applications for all
requisite franchises, licenses, authorizations, consents, permits and approvals
of the FCC related to the PCS Systems covered by such "D" and "E" Block FCC
licenses and (B) has filed applications for all other material franchises,
licenses, authorizations, consents, permits and approvals of governmental
agencies exercising jurisdiction over Seller or its business or assets (all
such franchises, licenses, authorizations, consents, permits and approvals, as
amended to the date hereof, including all rights of Seller as the successful
bidder for the "D" and "E" block
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FCC licenses for the PCS systems in the geographic areas listed on Exhibit
5.01(f) annexed hereto, are collectively referred to as the "Authorizations"),
required to carry on the business of Seller as now conducted with respect to
the PCS systems in the geographic areas listed on Exhibit 501.(f) annexed
hereto.
(ii) Except as set forth on Exhibit 5.01(f)
annexed hereto, there is not pending as of the date hereof any application,
petition, objection or other pleading with the FCC or any public service
commission or similar body having jurisdiction or authority over the
communications operations of Seller which questions the validity of or contests
any Authorization or associated application, or which presents a substantial
risk that, if accepted or granted, would result in the revocation,
cancellation, suspension or any materially adverse modification of any
Authorization, or would result in the failure of the FCC to grant any of the
Authorizations to Seller.
(iii) Except as set forth on Exhibit 5.01(f)
annexed hereto, no permit, consent, approval, authorization, qualification or
registration of, or declaration to or filing with, any governmental or
regulatory authority or agency is required to be obtained or made by Seller in
connection with the execution and delivery of this Agreement or with the
consummation of the transactions contemplated hereby in order to (A) render
this Agreement and the transactions contemplated hereby valid and effective and
(B) enable Seller to sell the Purchased Assets to Buyer as herein contemplated.
(iv) At the Closing no action shall have been
taken or will be taken to set aside the rights granted by the FCC with respect
to the "D" and "E" Block licenses with respect to the PCS systems in the
geographic areas listed on Exhibit 5.01(f) annexed hereto.
(g) Title of Seller to Purchased Assets. Seller has all
right, title and interest in and to the Purchased Assets, free and clear of all
Liens; provided, however, that the FCC has not yet awarded the Authorizations
and Seller has not yet made final payment for the Authorizations, but has made
a deposit therefor.
(h) Tax Matters. Seller has timely filed all Federal,
state and local Tax (as hereinafter defined) returns and all information
returns and reports required to be filed by or with respect to it under the
laws of the United States or any state or other jurisdiction on or prior to the
date hereof and will timely file all such returns and reports required to be
filed from the date hereof through the Closing Date. True and complete copies
of such reports and returns filed on or before the date hereof have been or
will be furnished or made available to Buyer within thirty (30) days after the
date hereof and true and complete copies of all such returns and reports filed
after the date hereof and on or before the Closing Date will be furnished to
Buyer within five (5) days after they are filed. All such reports and returns
were or will be accurately prepared in accordance with all applicable statutes,
rules and regulations and are or will be correct as filed. Seller has paid
all Taxes (including Taxes for which Seller is a collection agent, e.g.,
withholding, excise, sales, use, Social Security and similar Taxes) which have
become due and payable (and will pay prior to the Closing Date all Taxes which
shall have become due and payable on or prior to the Closing Date) with respect
to Seller for all taxable periods ending on or prior to the Closing Date or
will have set aside and reflected on the Closing Date Balance Sheets adequate
reserves therefor. Seller has never
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been included in a consolidated Federal income tax return or combined or
unitary state tax return. Seller is not a party to nor has Seller been
notified that it is the subject of any pending, proposed or threatened action,
investigation, proceeding, audit, claim or assessment by or before the Internal
Revenue Service or any other governmental authority and no claim for
assessment, deficiency or collection of Taxes, or proposed assessment,
deficiency or collection, for which Seller may be liable, has been asserted or
threatened against it. Seller has not received any notice of deficiency,
assessment or collection or proposed deficiency, assessment or collection from
the Internal Revenue Service or any other governmental authority which has not
been satisfied, nor, except as set forth on Exhibit 5.01(h)annexed hereto, does
Seller have any reason to believe that any such notice will be received in the
future. The Internal Revenue Service has never audited any Federal income tax
return of Seller. The charges, accruals and reserves shown in the Operating
Financial Statements of Seller in respect of Taxes for all fiscal periods to
date are adequate. There are no material unpaid assessments or proposals for
additional Taxes for which Seller does not have adequate reserves, nor does
Seller know of any basis therefor for any such period. There are no Tax
rulings, requests for rulings or closing agreements relating to Seller which
could affect its liability for Taxes for any period after the Closing Date.
Except as set forth on Exhibit 5.01(h) annexed hereto (i) no power of attorney
has been granted by Seller or any of its Affiliates with respect to any matter
relating to Taxes of Seller which is currently in force, (ii) Seller has not
filed any agreement with the Internal Revenue Service described in Section
1.1503-2A(c)(3) of the Treasury Regulations, (iii) Seller has not filed a
consent or made any agreement with the Internal Revenue Service under Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), or any
comparable provision of state revenue statutes, and (iv) Seller is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Code. Seller
has not executed or filed with the Internal Revenue Service or any other
governmental authority any agreement which is still in effect waiving or
extending the period for assessment or collection of any Taxes. Seller, and
not Buyer, shall be liable for any Taxes, payable by Buyer or Seller by reason
of the ownership of the Purchased Assets on or prior to the Closing Date, the
conduct of Seller's business with respect to all periods ending prior to, on or
after the Closing Date or payable by Seller by reason of the sale of the
Purchased Assets. "Taxes" shall mean all taxes of any kind, including those
on, or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
customs duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority, domestic or foreign.
(i) Contracts. Seller has not entered into any Contracts
(as hereinafter defined) relating to the Purchased Assets. As used herein,
"Contracts" means all leases, rental agreements, insurance policies, collective
bargaining agreements, union contracts, licenses, agreements, permits, purchase
orders, sales orders, agreements with suppliers, reseller agreements,
agreements with agents, agreements with customers, commitments and any and all
other contracts, consents or binding arrangements or understandings (including
capital commitments and arrangements with respect to construction in progress),
whether written or oral, express or implied, to which Seller is a party and
which in any way relate to the Purchased Assets or which will be binding upon
Buyer, its operations or properties (including Purchased Assets) after the
Closing Date.
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(j) No Sale. Except for this Agreement, Seller has not
entered into any Contract to sell, mortgage or encumber any of the Purchased
Assets, nor is there any Lien on any of the Purchased Assets.
(k) Investment Company Act. Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(l) Truth and Correctness. No representation or warranty
by Seller herein, nor any written statement or certificate or other instrument
furnished to Buyer by Seller pursuant hereto or in connection with the
transactions contemplated hereby, including the Exhibits annexed hereto,
contains any untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained herein or therein,
in light of the circumstances under which such statements are made, not
misleading.
5.02 Buyer's Representations and Warranties. Buyer represents and
warrants to Seller as follows:
(a) Due Incorporation. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder.
(b) Authority. This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Buyer and this Agreement constitutes a legal,
valid and binding obligation of Buyer enforceable in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally. Neither the execution, delivery or performance of
this Agreement nor the consummation of the transactions contemplated hereby by
Buyer will, with or without the giving of notice or the passage of time, or
both, conflict with, result in a default or loss of rights (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to (i) any provision of the certificate of
incorporation or by-laws of Buyer; (ii) any material note, bond, indenture,
mortgage, deed of trust, contract, agreement, lease or other instrument or
obligation to which Buyer is a party or by which it or its property is bound or
affected; or (iii) any law, order, judgment, ordinance, rule, regulation or
decree to which Buyer is a party or by which it or its property is bound or
affected. Except as described on Exhibit 5.02(b) annexed hereto, no permit,
consent, approval, authorization, qualification or registration of, or
declaration to or filing with any governmental or regulatory authority or
agency or third party is required to be obtained or made by Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby in order to (A) render this Agreement or the
transactions contemplated hereby valid and effective and (B) enable Buyer to
purchase the Purchased Assets as herein contemplated.
(c) Legal Matters. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Buyer threatened, against or
relating to Buyer's right to perform its obligations under this Agreement, nor
does Buyer know
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or have reason to be aware of any basis for the same. There is outstanding no
order, writ, injunction, judgment or decree of any court, governmental agency
or arbitration tribunal which would individually or in the aggregate have a
material adverse effect on Buyer's obligations hereunder or the transactions
contemplated by this Agreement other than orders or decrees involving the
wireless telephone industry in general.
(d) Truth and Correctness. No representation or warranty
by Buyer, or any written statement or certificate or other instrument furnished
to Seller by Buyer pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which such statements are made, not misleading.
5.03 No Brokers. Buyer represents and warrants to Seller that no
agent, broker, investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly in connection with the transactions contemplated by this Agreement
based in any way on any arrangements, agreements or understandings made by or
on behalf of Buyer, and Buyer hereby agrees to indemnify Seller and agrees to
hold harmless Seller against and in respect of any claims for brokerage and
other commissions relating to such transactions based in any way on any
arrangements, agreements or understandings made by or on behalf of Buyer.
Seller represents and warrants to Buyer that, except for Columbia Capital
Corporation, no agent, broker, investment banker, Person or firm is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions contemplated by this
Agreement based in any way on any arrangements, agreements or understandings
made by or on behalf of Seller and Seller hereby agrees to indemnify Buyer and
agrees to hold harmless Buyer against and in respect of any claims for
brokerage and other commissions relating to such transactions based in any way
on any arrangements, agreements or understandings made by or on behalf of
Seller, including those with Columbia Capital Corporation.
ARTICLE 6
CONDITIONS TO OBLIGATIONS
6.01 Conditions to Buyer's Obligation. The obligation of Buyer to
perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Buyer, in its sole discretion, in whole or in part:
(a) Each of the representations and warranties of Seller
contained in this Agreement shall be deemed to have been made again at and as
of the time of the Closing and shall then be true in all material respects
except for changes contemplated by this Agreement. Seller shall have performed
and complied in all material respects, with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by each
of them prior to or at the Closing. Buyer shall have been furnished with a
certificate of Seller signed by its
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Chairman, President or Vice Chairman dated the Closing Date, certifying to the
fulfillment of the foregoing conditions by Seller and to the truth and
correctness in all material respects, except for changes contemplated by this
Agreement, as of the Closing Date, of the representations and warranties of
Seller contained herein.
(b) There shall not then be pending by any third party
any suit or proceeding to restrain or invalidate, in whole or in part, this
Agreement or the transactions herein contemplated.
(c) Buyer shall have been furnished with an opinion of
Edwards & Angell, counsel for Seller, dated the Closing Date, substantially in
the form of Exhibit 6.01(c) annexed hereto.
(d) Buyer shall have been furnished with an opinion of
Paul, Hastings, Janofsky & Walker LLP, FCC counsel for Seller, dated the
Closing Date, substantially in the form of Exhibit 6.01(d) annexed hereto.
(e) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(f) All consents, approvals and actions of third parties
including all approvals from Federal, state and local authorities (including
the FCC and all public service commissions and public utility commissions or
comparable bodies exercising jurisdiction over Seller) as may be required for
the valid assignment and transfer to Buyer, as of the Closing Date, of all
right, title and interest in and to the Purchased Assets, shall have been
obtained or made pursuant to a Final Order, which consents and approvals shall
not contain any conditions or restrictions which, in the case of FCC approvals,
are not customary in transactions of this nature, and which in the case of
third party consents and approvals, materially adversely affect Seller or its
business or financial condition, or the value of the Purchased Assets, or the
consummation of the transactions contemplated hereby. "Final Order" means an
action or decision as to which: (i) no request for a stay is pending, no stay
is in effect, and any deadline for filing such request that may be designated
by statute or regulation has passed; (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for filing
any such petition or application has passed; (iii) the FCC or public utility
commission, public service commission (or comparable bodies exercising
jurisdiction over any of Seller or its business) does not have the action or
decision under reconsideration on its own motion and the time for initiating
such reconsideration has passed; and (iv) no appeal is pending or in effect and
any deadline for filing any such appeal that may be designated by statute or
rule has passed. Notwithstanding anything to the contrary herein contained, it
shall not be a condition to Buyer's obligations under this Agreement for Seller
to obtain each individual required consent (other than any consents of the FCC,
any public utility or public service commission (or comparable bodies
exercising jurisdiction over Seller or its business)) so long as the failure to
obtain any such individual consent would not individually or together with all
such other failures to obtain consents have a material adverse effect on the
Purchased Assets or their ownership or operation by Buyer or the consummation
of the transactions contemplated hereby.
(g) Seller shall have delivered to Buyer such deeds,
bills of sale and other good and sufficient instruments of conveyance, transfer
and assignment, all in form and substance
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reasonably satisfactory to Buyer's counsel, as shall be effective to vest in
Buyer good and marketable title in and to the Purchased Assets, free and clear
of any Liens, restrictions on transfer and rights of first refusal.
(h) Seller shall deliver to Buyer (i) copies of its
certificate of incorporation certified by the Secretary of State of the
jurisdiction of its incorporation, (ii) copies of its by-laws certified by its
secretary, and (iii) certificates of good standing of recent date from the
jurisdiction of its incorporation and all jurisdictions in which it is
qualified to do business; and (iv) a lien and judgment search in the offices of
the Secretaries of State of the states of Colorado, Kansas, Minnesota, New
Mexico, Oklahoma, Texas and Utah and in the office of the county clerk of the
appropriate counties therein, dated not earlier than fifteen (15) Business Days
prior to the Closing Date, the results of which are consistent with the
representations of Seller contained herein.
(i) Seller, for itself and its Affiliates, officers,
directors and shareholders shall have delivered to Buyer documentation
(including a general release) in form reasonably satisfactory to Buyer
evidencing the release and discharge of any and all claims which it or its
Affiliates, partners, officers, directors and shareholders may have against the
Purchased Assets.
(j) Seller shall have delivered to Buyer a certified copy
of the resolution or resolutions duly adopted by its board of directors (and
shareholders if required) authorizing the execution, delivery and performance
of this Agreement.
(k) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(l) Seller shall have delivered to Buyer an affidavit
certifying as to Seller's non-foreign status in accordance with Section
1445(b)(2) of the Code.
(m) The transactions contemplated by each of (i) the
Purchase Agreement, of even date herewith, among Buyer, Seller, Triad Texas,
L.P., Triad Utah, L.P., Triad Oklahoma, L.P. and Triad Cellular, L.P. and (ii)
the Agreement and Plan of Merger, of even date herewith, among Buyer, Seller,
Minnesota Cellular Corporation, Triad Investment Minnesota, Inc., Barry B.
Lewis, Craig W. Viehweg, Terry E. Purvis, Triad Cellular L.P. and Triad
Minnesota, L.P. (the Agreements referred to in clauses (i) and (ii)
collectively referred to as the "Purchase Agreements") shall have been
consummated, or shall be consummated concurrently herewith, in accordance with
the terms of such Purchase Agreements; provided, however, if such Agreement and
Plan of Merger shall have been terminated by reason of a Stockholder's Failure
(as defined in such Agreement and Plan of Merger), the consummation of the
Agreement and Plan of Merger shall not be a condition to the consummation of
the transactions contemplated hereby.
6.02 Conditions to Seller's Obligation. The obligation of Seller to
perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Seller, in its sole discretion, in whole or in part:
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(a) Each of Buyer's representations and warranties
contained in this Agreement shall be deemed to have been made again at and as
of the time of the Closing and shall then be true in all material respects,
except for changes contemplated by this Agreement. Buyer shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by Buyer
prior to or at the Closing. Seller shall have been furnished with a
certificate of Buyer's Chief Executive Officer, Vice Chairman or Senior Vice
President, dated the Closing Date, certifying to the fulfillment of the
foregoing conditions by Buyer and to the truth and correctness in all material
respects, except for changes contemplated by this Agreement, as of the Closing
Date, of the representations and warranties of Buyer contained herein.
(b) There shall not then be pending by any third party
any suit or proceeding to restrain or invalidate this Agreement or the
transactions contemplated hereby; provided, however, if Buyer desires to close
notwithstanding any such suit or proceeding and agrees to indemnify and hold
harmless Seller from any damages, losses, liabilities and expenses (including
reasonable attorneys' fees and expenses) incurred by Seller as a result of such
suit or proceeding, then Seller shall nevertheless be obligated to consummate
the transactions contemplated hereby.
(c) Buyer shall have delivered to Seller on the Closing
Date the Purchase Price as provided in Section 3.01 hereof.
(d) All consents, approvals and actions of third parties,
including all approvals from Federal, state and local authorities (including
the FCC and all public service commission and public utilities commission or
comparable bodies exercising jurisdiction over Seller) as may be required for
the valid assignment and transfer by Seller to Buyer of the Purchased Assets
shall have been obtained; provided, however, that such consents, approvals and
actions need not be Final Orders.
(e) Seller shall have been furnished with an opinion of
Rubin Baum Levin Constant & Friedman, counsel for Buyer, dated the Closing
Date, substantially in the form of Exhibit 6.02(e) annexed hereto.
(f) Seller shall have been furnished with a certified
copy of the resolution or resolutions duly adopted by the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement.
(g) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(h) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(i) The transactions contemplated by each of the Purchase
Agreements shall have been consummated in accordance with the terms of such
Purchase Agreements; provided, however, if such Agreement and Plan of Merger
shall have been terminated by reason of a
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Stockholder's Failure (as defined in such Agreement and Plan of Merger), the
consummation of the Agreement and Plan of Merger shall not be a condition to
the consummation of the transactions contemplated hereby.
ARTICLE 7
SURVIVAL; INDEMNITY
7.01 Survival of Representations and Warranties. Notwithstanding any
investigation or review made at any time by or on behalf of any party hereto,
all representations and warranties contained in this Agreement or in the
Exhibits annexed hereto or in any of the agreements, certificates or
instruments delivered in connection herewith (other than the representations
and warranties contained in Section 5.01(g) (the "Title Representations"),
Section 5.01(f) and the first two sentences of Section 5.01(b) and the first
sentence of Section 5.02(b) (the "Authorization Representations") and Section
5.01(h) (the "Tax Representations"), shall survive the Closing for a period of
one year and one hundred and eighty days after the Closing Date (the
"Indemnification Period") and shall thereupon expire together with any right to
indemnification (except with respect to any claim for breach of any such
representation or warranty for which written notice shall have been given prior
to the termination of the Indemnification Period to the party which made such
representation or warranty). The Title Representations, the Authorization
Representations and the Tax Representations and the liabilities and obligations
of Seller under Section 3.05 hereof shall survive the Closing until the
expiration of any applicable statutes of limitation, such statutes of
limitations period being the Indemnification Period with respect to the Title
Representations, the Authorizations Representations and the Tax Representations
and the liabilities and obligations of Seller under Sections 3.05 hereof.
7.02 Seller's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period), in addition to
any other indemnification provided for under this Agreement, Seller shall
indemnify and hold harmless Buyer and its Affiliates from and against any and
all demands, claims, losses, liabilities, actions or causes of action,
assessments, actual damages (but excluding consequential damages), fines, Taxes
(including excise and penalty taxes), penalties, costs and expenses (including
interest, expenses of investigation, reasonable fees and disbursements of
counsel, accountants and other experts (whether such reasonable fees and
disbursements of counsel, accountants and other experts relate to claims,
actions or causes of action asserted by Buyer against Seller or asserted by
third parties)) (collectively "Losses") incurred or suffered by Buyer and its
Affiliates and their respective officers, directors, employees, shareholders,
agents and representatives arising out of, resulting from, or relating to:
(i) any breach of any of the representations or
warranties made by Seller in this Agreement or in any agreement, certificate,
Exhibit or other instrument delivered by Seller pursuant to this Agreement;
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(ii) any failure by Seller to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate, Exhibit or other instrument delivered by Seller pursuant to this
Agreement;
(iii) any and all liabilities of Seller other than
those expressly assumed by Buyer pursuant to Section 3.04 hereof;
(iv) any liabilities arising out of, resulting
from or relating to the liabilities of Seller, or any other member of any
affiliated group or "controlled group," within the meaning of Section 414(b),
(c), (m) and (o) of the Code, of which Seller was a member on or prior to the
Closing Date which liability exists by reason of Seller having been a member of
such affiliated or controlled group, including liabilities relating to (A) the
funding, operation, maintenance, administration, amendment or termination of,
or the withdrawal or partial withdrawal from, any employee plan relating to any
period on or prior to the Closing and including losses arising under Title IV
of ERISA, Section 302 of ERISA, Section 412 or 4971 of the Code, (B) compliance
with COBRA under Section 4980B of the Code, and (C) environmental matters with
respect to any operations of, or properties owned, occupied or operated or
formerly owned, leased or operated by, Seller or any other member of an
affiliated group or "controlled group" of which Seller was a member prior to
the Closing Date; or
(v) any and all of liabilities of Seller for
Taxes.
(b) Notwithstanding anything to the contrary contained in
Section 7.02(a), Seller shall not be required to pay or reimburse Buyer or its
Affiliates for Losses pursuant to Seller's indemnification obligation pursuant
to Section 7.02 which (when aggregated with any Losses paid to Buyer, or
Buyer's Affiliates, by Seller or Seller's Affiliates pursuant to Article 7 of
(i) the Purchase Agreements, or (ii) the Agreement, of even date herewith,
between Buyer and TCLP with respect to the acquisition by Buyer of the Texas 1
RSA; the Agreements referred to in clauses (i) and (ii) above being referred to
as the "Concurrent Agreements") are in excess of One Hundred Million
($100,000,000) Dollars.
(c) Notwithstanding anything to the contrary contained in
this Section 7.02, neither Buyer nor its Affiliates shall be entitled to seek
indemnification under Section 7.02(a) for any Losses unless the aggregate
amount of Buyer's or its Affiliates' Losses in respect of all such matters,
when aggregated with the aggregate amount of Buyer's or its Affiliates Losses
(as such terms are defined in the Concurrent Agreements) arising under the
Concurrent Agreements (as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000, in which event Buyer and its
Affiliates shall be entitled to seek indemnification under this Section 7.02
for the amount of such Losses in excess of $375,000; provided, however, that
the foregoing limitation with respect to Buyer's or its Affiliates' right to
indemnification shall not be applicable to Losses arising from or relating to
(and Buyer and its Affiliates shall be entitled to indemnification for all such
Losses commencing with the first dollar of such Losses) any breach of the Title
Representations, the Authorization Representations and the Tax Representations
and the liabilities and obligations of Seller under Section 3.05 hereof.
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<PAGE> 21
(d) As collateral security for Seller's indemnification
obligations under this Agreement and Seller's or its Affiliates'
indemnification obligations under the Concurrent Agreements, Seller, or its
Affiliates shall deliver, or cause to be delivered to a national bank to be
mutually agreed to (the "Escrow Agent") to be held in escrow pursuant to the
terms of an Escrow Agreement, in substantially the form of Exhibit 7.02(d)
annexed hereto (the "Escrow Agreement"); to be entered into on the Closing
Date, at Seller's option either Six Million ($6,000,000) Dollars in cash or
Four Hundred Eighty Thousand (480,000) shares of Buyer's Class A Common Stock,
no par value ("Shares"), issued in accordance with the Merger Agreement (such
cash or shares being referred to herein as the "Escrow Fund"). The Escrow Fund
shall be held by the Escrow Agent pursuant to the Escrow Agreement for a period
of one (1) year and one hundred eighty (180) days after the Closing Date;
provided, however, that on the first anniversary of the Closing Date the Escrow
Fund shall be reduced to an amount equal to the lesser of the balance of the
Escrow Fund on such first anniversary or 75% (if the Escrow Fund is originally
funded with Shares, as measured by Shares) of the original Escrow Fund except
to the extent any claims in excess of such reduced amount have been asserted
prior to such first anniversary. The Escrow Agreement shall set forth the
procedures for Buyer to make any claims against the Escrow Fund, the
circumstances under which such Escrow Fund shall be distributed either to Buyer
or to Seller and procedures for the Seller to substitute cash in lieu of stock.
Nothing contained in this Section 7.02(d) or in the Escrow Agreement shall
limit in any way Seller's indemnification obligations under this Agreement or
the indemnification obligations of Seller or its Affiliates, as applicable,
under the Concurrent Agreements; it being understood that if the Escrow Fund is
not sufficient to satisfy such indemnification obligations, Seller and its
Affiliates, as applicable, shall (subject to Section 7.02(b) hereof), remain
liable for such indemnification obligations as set forth in this Agreement or
in the Concurrent Agreements.
7.03 Buyer's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to expiration of the Indemnification Period), in addition to any
other indemnification provided for under this Agreement, from and after the
Closing, Buyer shall indemnify and hold harmless Seller and its respective
Affiliates from and against any and all Losses (as defined in Section 7.02,
except that reasonable fees and disbursements of counsel, accountants and other
experts shall be included whether they relate to claims, actions or causes of
action asserted by Seller against Buyer or asserted by third parties) incurred
or suffered by Seller and its Affiliates and their respective officers,
directors, partners, employees, agents and representatives arising out of,
resulting from, or relating to:
(i) any breach of any of the representations or
warranties made by Buyer in this Agreement or in any agreement, certificate or
other instrument delivered by Buyer pursuant to this Agreement; and
(ii) any failure by Buyer to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Buyer pursuant to this Agreement.
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<PAGE> 22
(b) Notwithstanding anything to the contrary contained in
this Section 7.03, neither Seller nor its Affiliates shall be entitled to seek
indemnification under this Section 7.03 for any Losses unless the aggregate
amount of Seller's and its Affiliates' Losses in respect of all such matters,
when aggregated with the aggregate amount of Seller's or its Affiliates' Losses
(as such terms are defined in the Concurrent Agreements) arising under the
Concurrent Agreements (as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000 in which event Seller and its
Affiliates shall be entitled to seek indemnification under this Section 7.03
for the amount of such Losses in excess of $375,000; provided, however, that
the foregoing limitation with respect to Seller's right to indemnification
shall not be applicable to Losses arising from or relating to (and Seller shall
be entitled to indemnification for all such Losses commencing with the first
dollar of such Losses) any breach of the representation and warranty set forth
in the first sentence of Section 5.02(b) hereof.
7.04 Procedure.
(a) In the event that any party hereto shall sustain or
incur any Losses in respect of which indemnification may be sought by such
party pursuant to this Article 7, the party seeking such indemnification (the
"Indemnitee") shall assert a claim for indemnification by giving prompt (in the
event of claims arising by reason of the commencement of litigation against an
Indemnitee by third parties, in no event later than ten (10) days after service
of process, which process expressly indicates a claim for which Indemnitor (as
hereinafter defined) may be liable) written notice thereof (the "Notice"),
which shall describe in reasonable detail the facts and circumstances upon
which the asserted claim for indemnification is based, to the party providing
indemnification (the "Indemnitor") and shall thereafter keep the Indemnitor
reasonably informed with respect thereto; provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any third party claim, action or proceeding (a "Claim") is brought against any
Indemnitee, the Indemnitor shall have the right to assume, conduct and control
the defense, compromise or settlement thereof, by written notice to the
Indemnitee of its intention to do so within thirty (30) days after receipt of
the Notice, with counsel reasonably satisfactory to the Indemnitee, at the
Indemnitor's own expense, and thereupon to prosecute in the name and on behalf
of the Indemnitee any available cross-claims, counter-claims or third-party
claims arising with respect to the Claim. If the Indemnitor shall assume the
defense of such Claim, it shall not settle such Claim unless such settlement
includes as an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, reasonably satisfactory to the
Indemnitee, from all liability with respect to such Claim. As long as the
Indemnitor is contesting any such Claim in good faith and on a timely basis,
the Indemnitee shall not pay or settle any such Claim. Notwithstanding the
assumption by the Indemnitor of the defense of any Claim as provided in this
Section 7.04 and without limiting the Indemnitor's right to assume, conduct and
control the defense, compromise or settlement thereof, the Indemnitee shall be
permitted to join in the defense of such Claim and to employ counsel at its own
expense.
(b) If the Indemnitor shall fail to notify the Indemnitee
of its desire to assume the defense of any such Claim within the prescribed
30-day period set forth in Section 7.04(a), or shall notify the Indemnitee that
it will not assume the defense of any such Claim, then the
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<PAGE> 23
Indemnitee may assume the defense of any such Claim, in which event it may do
so in such manner as it may deem appropriate, and the Indemnitor shall be bound
by any determinations made in any litigation with respect to such Claim or any
settlement thereof effected by the Indemnitee, provided that any such
determinations or settlement shall not affect the right of the Indemnitor to
dispute the Indemnitee's claim for indemnification. The failure of the
Indemnitor to assume the defense of any Claim shall not be deemed a concession
by Indemnitor that it is required to indemnify the Indemnitee for the subject
matter of such Claim.
(c) Amounts payable by the Indemnitor to the Indemnitee
in respect of any Losses for which any party is entitled to indemnification
hereunder shall be payable by the Indemnitor as incurred by the Indemnitee.
Any payments by any Indemnitor in indemnification hereunder shall be treated as
adjustments to the Purchase Price.
7.05 Indemnification Payments in Cash. All payments by Seller to
Buyer or its Affiliates in respect of any indemnification obligation to Buyer
or its Affiliates shall be made by Seller in cash or at Seller's option, if the
Escrow Fund contains shares of Class A Common Stock, by the delivery to Buyer
or its Affiliates of shares of its Class A Common Stock from the Escrow Fund
(valuing such shares so delivered at the average closing price on NASDAQ of
such shares for the six (6) Business Days immediately preceding the date of the
delivery of such shares).
7.06 Investigations; Waivers. The survival periods and rights to
indemnification provided for in this Article 7 shall remain in effect
notwithstanding any investigation at any time by or on behalf of any party
hereto or any waiver by any party hereto of any condition to such party's
obligations to consummate the transactions contemplated hereby.
7.07 Indemnity Sole Remedy. In the absence of fraud or of a suit
seeking specific performance as contemplated by this Agreement, the remedies
provided to Seller and to Buyer by the foregoing provisions of this Article 7
shall after the Closing Date be in lieu of any other remedies to which the
respective party is entitled at law or in equity for any breach or
noncompliance by a party with the provisions of this Agreement.
ARTICLE 8
MISCELLANEOUS
8.01 Expenses. Each party shall bear its own expenses incident to
the negotiation, preparation, authorization and consummation of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
its counsel and accountants, whether or not such transactions are consummated.
8.02 Equitable Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with the specific terms of the provisions or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in
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<PAGE> 24
equity. Each party agrees that it will not assert, as a defense against a
claim for specific performance, that the party seeking specific performance has
an adequate remedy at law.
8.03 Notices. All notices, claims and other communications hereunder
shall be in writing and shall be made by hand delivery, registered or certified
mail (postage prepaid, return receipt requested), facsimile, or overnight air
courier guaranteeing next day delivery (a) if to Buyer, to it at Western
Wireless Corporation, 2001 NW Sammamish Road, Issaquah, Washington 98027,
Attention: Alan R. Bender, Esq. (Fax No. 206-313-5547), with a copy (which
shall not constitute notice) to Rubin Baum Levin Constant & Friedman, 30
Rockefeller Plaza, New York, New York 10112, Attention: Barry A. Adelman, Esq.
(Fax No. 212-698-7825) or (b) if to Seller , to it at 2420 Sand Hill Road,
Menlo Park, California 94025, Attention: Barry Lewis (Fax No. 415-854-4512),
with a copy (which shall not constitute notice) to Edwards & Angell, 101
Federal Street, Boston, Massachusetts 02110, Attention: Stephen O. Meredith,
Esq. (Fax No. 617-439-4170), or at such other address as any party may from
time to time furnish to the other parties by a notice given in accordance with
the provisions of this Section 8.03. All such notices and communications shall
be deemed to have been duly given at the time delivered by hand, if personally
delivered; five (5) Business Days after being deposited in the mail, first
class postage prepaid, return receipt requested, if mailed; when receipt
confirmed, if sent by facsimile; and the next Business Day after timely
delivery to the courier, if sent by an overnight air courier service
guaranteeing next day delivery.
8.04 Entire Agreement. This Agreement, together with the Exhibits
annexed hereto, contains the entire understanding among the parties hereto
concerning the subject matter hereof and may not be changed, modified, altered
or terminated except by an agreement in writing executed by the parties hereto.
Any waiver by any party of any of its rights under this Agreement or of any
breach of this Agreement shall not constitute a waiver of any other rights or
of any other or future breach.
8.05 Remedies Cumulative. Except as otherwise provided herein, each
and all of the rights and remedies in this Agreement provided, and each and all
of the rights and remedies allowed at law and in equity in like case, shall be
cumulative, and the exercise of one right or remedy shall not be exclusive of
the right to exercise or resort to any and all other rights or remedies
provided in this Agreement or at law or in equity.
8.06 Governing Law. This Agreement shall be construed in accordance
with and subject to the laws and decisions of the State of Washington
applicable to Contracts made and to be performed entirely therein.
8.07 Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
8.08 Waivers. No provision in this Agreement shall be deemed waived
by course of conduct, including the act of Closing, unless such waiver is in
writing signed by the parties and stating specifically that it was intended to
modify this Agreement.
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<PAGE> 25
8.09 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
successors and assigns. Seller shall not have the right to assign this
Agreement or any of its rights or obligations hereunder to any Person;
provided, however, that Buyer shall have the right to assign this Agreement and
its rights and obligations hereunder in accordance with Section 1.02 hereof.
8.10 Further Assurances. Buyer shall, at the request of Seller, and
Seller shall, at the request of Buyer, from time to time, execute and deliver
such other assignments, transfers, conveyances and other instruments and
documents and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting complete consummation of this Agreement
and the transactions herein contemplated.
8.11 Disclosures.
(a) Each of Buyer and Seller acknowledges and confirms in
connection with the negotiation of this Agreement and the execution hereof,
during the period from the date hereof through the Closing Date, the parties
hereto will have furnished to one another certain materials, information, data
and other documentation ("Disclosures") concerning their business, financial
condition and operations which are proprietary and confidential. Each party
acknowledges the party disclosing such Disclosures considers them secret and
confidential and asserts a proprietary interest therein. Accordingly, each of
Buyer and Seller covenants and agrees that it shall maintain all Disclosures
made by another party in strict confidence and shall not use such Disclosures
for its own benefit or disclose them to third parties, except to its agents,
representatives, bankers, investment bankers, counsel and employees involved in
evaluating the transactions contemplated by this Agreement, or as otherwise
required by law (including the requirement of Buyer to disclose such terms
under any federal or state securities laws); provided, however, that in no
event shall Seller be permitted to disclose the Purchase Price or any
information concerning the calculation of the Purchase Price to any other
Person (including its employees) unless and until such time as such information
otherwise becomes public.
(b) No public announcement by any party hereto with
regard to the transactions contemplated hereby or the material terms hereof
(including the Purchase Price) shall be issued by any party without the mutual
prior consent of the other parties, except in the event the parties are unable
to agree on a press release and legal counsel for one party is of the opinion
that such press release is required by law and such party furnishes the other
parties a written opinion of outside legal counsel, or other counsel reasonably
acceptable to the party being furnished such opinion, to that effect, then such
party may issue the legally required press release.
(c) This Agreement shall not restrict any party hereto
from using information already known to it, to which it is entitled under
existing agreements, or information generally in the public domain or any
information coming into its possession after it becomes public knowledge unless
it became public knowledge through a breach of this Agreement.
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<PAGE> 26
8.12. Termination.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, without further obligation of either
Seller or Buyer, at any time prior to the Closing Date as follows:
(i) by mutual written consent duly authorized by
the boards of directors of each of Seller and Buyer; or
(ii) by Seller or by Buyer if the Closing shall
not have occurred on or before the first anniversary of the date hereof, or
such later date, if any, as Seller and Buyer shall agree in writing; provided,
that the party exercising such right is not in default of its obligations under
this Agreement in a manner which results in the failure to satisfy the
conditions to Closing of the other parties; or
(iii) by Seller or by Buyer if the consummation of
the transactions contemplated hereby shall be prohibited by a final,
non-appealable order, decree or injunction of a court of competent jurisdiction
or of the FCC.
(b) In the event of a termination of this Agreement, no
party hereto shall have any liability or further obligation to any other party
to this Agreement except that nothing herein will relieve any party from
liability for any breach of this Agreement.
8.13 Definitions; Etc.
Unless the context otherwise requires, the terms defined in any
Section of this Agreement shall have the meanings therein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The use of a gender herein shall be deemed to include the
neuter, masculine and feminine genders wherever necessary or appropriate.
Whenever the word "herein" or "hereof" is used in this Agreement, it shall be
deemed to refer to the Agreement and not to a particular Section of the
Agreement unless expressly stated otherwise.
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WESTERN WIRELESS CORPORATION
By: /s/ JOHN W. STANTON
---------------------------------
Title: Chief Executive Officer
TRIAD CELLULAR CORPORATION
By: /s/ BARRY B. LEWIS
--------------------------------
Title: President
<PAGE> 1
EXHIBIT 10.55
AGREEMENT AND PLAN OF MERGER
AGREEMENT, dated April 24, 1997 (the "Agreement"), by and among
Western Wireless Corporation, a Washington corporation ("Western"), Minnesota
Cellular Corporation, a Delaware corporation ("Western Sub"), Triad Investment
Minnesota, Inc., a Delaware corporation ("TIM"), Barry B. Lewis ("Lewis"),
Craig W. Viehweg ("Viehweg"), Terry E. Purvis ("Purvis"), (Lewis, Viehweg and
Purvis are hereinafter referred to individually as a "Stockholder" and
collectively as "the Stockholders"), Triad Cellular Corporation, a Delaware
corporation ("TCC"), Triad Cellular L.P., a Delaware limited partnership
("TCLP"), and Triad Minnesota, L.P., a Delaware limited partnership (the
"Partnership").
W I T N E S S E T H:
WHEREAS, Western is the owner of 1,000 shares of common stock, no par
value, of Western Sub;
WHEREAS, TCLP is the owner of a 25% general partnership interest and a
74% limited partnership interest (collectively, the "Partnership Interest") in
the Partnership, which is the owner of (i) the Authorizations (as hereinafter
defined) listed on Exhibit 5.01(k) annexed hereto to operate wireless telephone
communications businesses in the Minnesota 7, 8 and 9 Rural Service Areas
(the "Businesses") and (ii) the Businesses and the assets used in the
Businesses;
WHEREAS, TIM is the owner of a 99% limited partnership interest in
TCLP, which limited partnership interest relates to the Partnership Interest;
WHEREAS, TCLP and TCC, as the only partners of the Partnership, and
TIM, have approved the transfer and assignment of the Partnership Interest to
TIM upon the terms and conditions hereinafter set forth;
WHEREAS, the board of directors and the stockholders of TCC have
approved and adopted resolutions approving the transfer and assignment of TCC's
one (1%) percent general partnership interest in the Partnership to TIM upon
the terms and conditions hereinafter set forth;
WHEREAS, Lewis, Viehweg and Purvis are on the date hereof, and they,
together with Media/Communications Partners II Limited Partnership ("MCP") and
Media/Communications Investors Limited Partnership ("MCI") will on the
Effective Date (as hereinafter defined) be, the owners of all of the issued
and outstanding shares of common stock, par value $ .01 per share
(individually a "TIM Share" and collectively the "TIM Shares"), of TIM;
WHEREAS, the boards of directors and the stockholders of Western Sub
and TIM have approved and adopted resolutions approving the merger of Western
Sub with and into TIM on the terms and conditions hereinafter set forth and
have also approved and adopted this Agreement and Plan of Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
<PAGE> 2
ARTICLE 1
MERGER
1.01 The Merger. Subject to the terms and conditions hereof and in
reliance upon the representations, warranties, covenants and agreements herein
contained, on the Effective Date (as hereinafter defined), Western Sub shall,
pursuant to the General Corporation Law of the State of Delaware, be merged
(the "Merger") with and into TIM (Western Sub and TIM are sometimes hereinafter
referred to individually as a "Constituent Corporation" and collectively as the
"Constituent Corporations"), which shall be the surviving corporation (the
"Surviving Corporation") and whose name shall be changed to Minnesota Cellular
Corporation.
1.02 Capitalization. The number of authorized shares of the capital
stock of the Surviving Corporation shall be 3000 shares of Common Stock, par
value $.001 per share.
1.03 Certificate of Incorporation and By-laws. On the Effective
Date, the Certificate of Incorporation of TIM shall be amended in its entirety
to read as set forth in the Certificate of Incorporation of Western Sub in
effect immediately prior to the Effective Date, and said Certificate of
Incorporation as so amended shall, from and after the Effective Date, be, and
continue to be, the Certificate of Incorporation of the Surviving Corporation
until further amended as provided by law. On the Effective Date, the By-Laws
of Western Sub in effect immediately prior to the Effective Date shall
automatically be the By-Laws of the Surviving Corporation until altered,
amended or repealed.
1.04 Directors and Officers. The directors and officers of Western
Sub in office as of the Effective Date shall be the directors and officers of
the Surviving Corporation and shall continue to act as such and shall hold
office until their successors have been elected and have qualified in
accordance with law and the By-Laws of the Surviving Corporation.
1.05 Property and Liabilities of Constituent Corporations. When the
Merger shall have become effective, the separate existence of Western Sub shall
cease and Western Sub shall be merged with and into TIM which as the Surviving
Corporation shall possess all the rights, privileges, powers and franchises as
well of a public as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the Constituent Corporations;
and all and singular, the rights, privileges, powers and franchises of each of
the Constituent Corporations, and all property, real, personal and mixed,
tangible and intangible, and all debts due to either of the Constituent
Corporations on whatever account, as well for stock subscriptions as all other
things in action or belonging to each of such corporations shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the several and
respective Constituent Corporations, and the title to any real estate vested by
deed or otherwise, under the laws of Delaware, in either of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the respective Constituent Corporations shall thenceforth attach to
the Surviving Corporation and may be
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<PAGE> 3
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
1.06 Further Assurances. If at any time the Surviving Corporation
shall consider or be advised that any further assignments, conveyances or
assurances in law are necessary or desirable to vest, perfect or confirm of
record in the Surviving Corporation the title to any property or rights of the
Constituent Corporations, or otherwise to carry out the provisions hereof, the
proper officers and directors of the Constituent Corporations immediately prior
to the Merger becoming effective shall, upon the Surviving Corporation's
reasonable request, execute and deliver any and all proper deeds, assignments
and assurances in law, and do all things necessary or proper to vest, perfect
or confirm title to such property or rights in the Surviving Corporation and
otherwise carry out the provisions hereof.
ARTICLE 2
EFFECTIVE DATE
2.01 Filing of Agreement of Merger; Effective Date.
(a) Each of Western, as the sole stockholder of Western
Sub, and Western Sub, by its execution and delivery of this Agreement, hereby
confirms and acknowledges that it has approved and adopted this Agreement in
accordance with the General Corporation Law of the State of Delaware and the
Certificate of Incorporation and By-Laws of Western Sub, and represents that
any and all actions required to approve and adopt this Agreement and the Merger
upon the terms and conditions herein set forth under the General Corporation
Law of the State of Delaware or such Certificate of Incorporation or By-Laws
have been or will be, on or prior to the Effective Date, taken.
(b) Lewis, Viehweg and Purvis, as the holders on the
date hereof of all of the issued and outstanding TIM Shares, by their execution
and delivery of this Agreement, hereby confirm and acknowledge that they have
approved and adopted this Agreement in accordance with the General Corporation
Law of the State of Delaware and the Certificate of Incorporation and By-Laws
of TIM, and represent that any and all actions required to approve and adopt
this Agreement and the Merger upon the terms and conditions herein set forth
under the General Corporation Law of the State of Delaware or such Certificate
of Incorporation or By-Laws have been or will be, on or prior to the Effective
Date, taken.
(c) Western Sub and TIM shall file a Certificate of
Merger in accordance with the General Corporation Law of the State of Delaware
on the latest to occur of (a) the last Business Day (as hereinafter defined) of
the month in which all Federal Communications Commission ("FCC") and state
regulatory approvals (if any) necessary in order to consummate lawfully the
transactions contemplated hereby have been received and shall have become Final
Orders (as hereinafter defined), (b) the last Business Day of the month in
which all applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall have expired or
been terminated without objection by the Federal Trade Commission (the events
described in clauses (a) and (b) above being hereinafter referred to as the
"Regulatory
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<PAGE> 4
Approvals" and the later of the dates described in clauses (a) and (b) above
being referred to as the "Regulatory Approval Date"), and (c) October 31, 1997,
or at such other time or date to which the parties hereto mutually agree. As
used herein the term "Business Day" shall mean any day other than a Saturday,
Sunday or a legal holiday in New York, New York or in Seattle, Washington or
any other day on which commercial banks are authorized by law or governmental
decree to close. The day on which the Certificate of Merger is filed is herein
referred to as the "Effective Date."
(d) TCC, by its execution and delivery of this Agreement,
hereby acknowledges that (i) its board of directors and stockholders have
approved this Agreement and the transfer and assignment of its one (1%) percent
general partnership interest in the Partnership to TIM and (ii) in its capacity
as the sole general partner of TCLP, it has approved this Agreement and the
transfer and assignment of the Partnership Interest to TIM, in each case in
accordance with the General Corporation Law of the State of Delaware, the
Revised Uniform Limited Partnership Act of the State of Delaware, as amended
("RULPA"), the Certificate of Incorporation and By-Laws of TCC, the TMLP
Limited Partnership Agreement (as hereinafter defined) and the TCLP Limited
Partnership Agreement (as hereinafter defined), and represents that any and all
actions required to approve this Agreement and such transfer and assignment
upon the terms and conditions herein set forth under the General Corporation
Law of the State of Delaware, RULPA or such Certificate of Incorporation,
By-Laws, TMLP Limited Partnership Agreement or TCLP Limited Partnership
Agreement have been or will be, on or prior to the Effective Date, taken.
(e) TCLP, by its execution and delivery of this
Agreement, hereby acknowledges that its partners have approved this Agreement
and the transfer and assignment of the Partnership Interest to TIM in
accordance with the General Corporation Law of the State of Delaware, RULPA,
the Certificate of Incorporation and By-Laws of TCC, the TMLP Limited
Partnership Agreement and the TCLP Limited Partnership Agreement and represents
that any and all actions required to approve this Agreement and such transfer
and assignment upon the terms and conditions herein set forth under the General
Corporation Law of the State of Delaware, RULPA, or such Certificate of
Incorporation, By-Laws, TMLP Limited Partnership Agreement or TCLP Limited
Partnership Agreement have been or will be, on or prior to the Effective Date,
taken.
(f) TIM, by its execution and delivery of this Agreement,
hereby acknowledges that its board of directors and Lewis, Viehweg and Purvis,
as the holders on the date hereof of all of the issued and outstanding TIM
Shares, have approved this Agreement, the Merger and the transfer and
assignment of the Partnership Interest and the one (1%) percent general
partnership interest in the Partnership to it by TCLP and TCC, respectively,
in accordance with the General Corporation Law of the State of Delaware, RULPA,
the Certificate of Incorporation and By-Laws of TIM and the TMLP Limited
Partnership Agreement and represents that any and all actions required to
approve this Agreement, the Merger and such transfer and assignment upon the
terms and conditions herein set forth under the General Corporation Law of the
State of Delaware, RULPA, or such Certificate of Incorporation or By-Laws or
the TMLP Limited Partnership Agreement have been or will be, on or prior to the
Effective Date, taken.
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ARTICLE 3
CAPITAL STOCK OF THE SURVIVING CORPORATION
3.01 Stock of Western Sub. Each share of capital stock of Western
Sub issued and outstanding immediately prior to the Effective Date shall upon
the Effective Date, by virtue of the Merger and without any action on the part
of the holder thereof, be exchanged for and converted into one share of Common
Stock of the Surviving Corporation.
3.02 Stock of TIM. The TIM Shares issued and outstanding immediately
prior to the Effective Date, all of which shall on the Effective Date be owned
by the Stockholders (or if MCP and MCI exercise their options to acquire TIM
Shares prior to the Merger, by the Stockholders, MCP and MCI) (excluding shares
of TIM held by TIM as treasury stock, which shares shall be canceled and
extinguished on the Effective Date), shall, in the aggregate, upon the
Effective Date, by virtue of the Merger and without any action on the part of
the holder thereof, be exchanged for and converted into (i) an aggregate of One
Million Six Hundred Thousand (1,600,000) shares (as adjusted for stock splits,
stock dividends, stock reclassification and the like) of Western's Class A
Common Stock, no par value (the "Class A Common Stock"), and (ii) the Capital
Adjustment Amount (as hereinafter defined).
3.03 Exchange of Stock Certificate. On the Effective Date the
Stockholders shall surrender to the Surviving Corporation all outstanding
certificates theretofore representing the TIM Shares, together with stock
powers duly endorsed in blank with signatures appropriately guaranteed, and
shall thereupon receive, in the aggregate for all TIM Shares, in exchange
therefor (i) certificates representing 1,600,000 shares of Class A Common Stock
(the "Stock Consideration"), and (ii) the Capital Adjustment Amount (the Stock
Consideration and the Capital Adjustment Amount are referred to collectively as
the "Merger Consideration"). Each TIM share shall be converted into a
proportionate amount of the Merger Consideration. Until such surrender and
cancellation, each such outstanding certificate representing the TIM Shares
shall, after the Effective Date, be deemed for all purposes to evidence the
right, to only receive its proportionate share of the Merger Consideration into
which the same shall have been converted. If any certificate for Class A
Common Stock is to be issued in a name other than that in which the certificate
for TIM Shares surrendered shall have been registered, it shall be a condition
of such issuance that the certificate so surrendered shall be properly endorsed
for transfer or accompanied by an appropriate instrument of assignment and
transfer, and that the person requesting such issuance shall pay to the
Surviving Corporation any transfer or like taxes payable by reason thereof or
of any prior transfer of such certificate, or establish to the satisfaction of
the Surviving Corporation that such taxes have been paid or are not payable.
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3.04 Delivery of Shares of Class A Common Stock.
(a) As a condition to the Stockholders' obligation to
accept delivery of Western's shares of Class A Common Stock, Western shall, at
the time of delivery of such shares to the Stockholders, deliver to the
Stockholders an opinion of counsel to Western, in form and scope reasonably
satisfactory to the Stockholders and their counsel, stating that, based on
(among other things) the representations of the Stockholders contained in
Section 5.01(z) hereto, registration of such shares under the Securities Act of
1933 (as amended, and, together with the rules and regulations promulgated
thereunder, the "Securities Act"), is not required. If Western is unable to
deliver such an opinion solely by reason of the Stockholders' failure to
reconfirm at the Effective Date the Stockholder's representations contained in
Section 5.01(z) (such a failure being referred to as a "Stockholder's
Failure"), then Western shall at its option either (i) register the delivery of
the 1,600,000 shares of Class A Common Stock to the Stockholders as
contemplated by Section 3.03 hereof under the Securities Act on Form S-4 or
other appropriate registration form, (ii) deliver to the Stockholders on the
Closing Date the sum of $20,000,000 in immediately available funds in lieu of
1,600,000 shares of Class A Common Stock, or (iii) terminate this Agreement,
whereupon the provisions of Section 9.13(b) shall be effective.
(b) With respect to the 1,600,000 shares of Class A
Common Stock acquired by the Stockholders pursuant to the Merger (the
"Shares"), Western agrees to file a registration statement covering the re-sale
(pursuant to Rule 415 of the Securities Act) of the Shares on Form S-3 or on
any other form for which Western then qualifies which counsel to Western shall
deem appropriate, in order to permit (i) the disposition or distribution of the
Shares by the Stockholders to their respective stockholders or partners, and
(ii) the further disposition (by public offering and sale) by such partners or
stockholders of Shares obtained from the Stockholders as described in the
preceding clause (i) (each such person which is to receive a disposition from
the Stockholders being referred to as a "Beneficial Owner" and each such person
(whether a Stockholder or a Beneficial Owner) effecting such a disposition
being referred to as a "Selling Securityholder"); provided, however, that the
obligation to include a Selling Securityholder within the coverage of such
registration statement is contingent upon such Selling Securityholder providing
Western with all information regarding such Selling Securityholder or any of
their affiliates (as defined in the Securities Act) required
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<PAGE> 7
by the Securities Act or SEC interpretations to be included in any such
registration statement and executing and delivering to Western the indemnity
agreement described in Section 3.04(f)(B) hereof. Western may, at its option,
include in said registration statement shares or other securities of Western to
be offered for the account of any persons other than Western or the Selling
Securityholders in secondary offerings. Western will use its commercially
reasonable efforts to cause the registration statement contemplated by this
Section 3.04(b) to become effective on the Effective Date or as soon thereafter
as practicable and keep effective such registration statement for a period
ending on the second anniversary of the Effective Date (or, if shorter, the
applicable holding period required under Rule 144(k)), after which Western may
withdraw the registration statement. In the event that the registration
statement contemplated by this Section 3.04 is not declared effective by the
SEC within ninety (90) days after the Effective Date, (unless the reason such
registration statement cannot so become effective is a result of either (A) the
failure of any Selling Securityholder to provide on a timely basis any
information regarding the Selling Securityholders or any of their Affiliates
(as defined under the Securities Act) required by the Securities Act or SEC
interpretations to be included in any registration statement described in this
Section 3.04(b), or (B) the existence of any state of facts with respect to the
Selling Securityholders, or any of their affiliates (as defined under the
Securities Act) which prevents the registration statement described in this
Section 3.04(b) from being declared effective on a timely basis), then :the
Stockholders shall have the right, exercisable at any time by the holders of a
majority of the Shares, to request that Western obtain all necessary consents
and approvals to permit it to purchase all, but not less than all, of the Stock
Consideration for an aggregate purchase price of Twenty Million ($20,000,000)
Dollars and, if so requested, Western shall use all diligent efforts to obtain
such consents and approvals, and if all such consents and approvals are
obtained, Western shall so purchase all, but not less than all, of such Stock
Consideration for a purchase price of Twenty Million ($20,000,000) Dollars.
Any such request made by the Stockholders shall be irrevocable. In the event
that the registration statement contemplated by this Section 3.04(b) is not
declared effective by the SEC within ninety (90) days after the Effective Date
(unless the reason such registration statement cannot so become effective is a
result of either (1) the failure of any Selling Securityholder to provide on a
timely basis any information regarding the Selling Securityholders or any of
their affiliates (as defined under the Securities Act) required by the
Securities Act or SEC interpretations to be included in any registration
statement described in this Section 3.04(b), or (2) the existence of any state
of facts with respect to the Selling Securityholders, or any of their
Affiliates (as defined under the Securities Act) which prevents the
registration statement described in this Section 3.04(b) from being declared
effective on a timely basis) and the Stockholders do not request in accordance
with the preceding sentence that Western purchase all of the Stock
Consideration for an aggregate of Twenty Million ($20,000,000) Dollars, Western
agrees that, until such registration statement is declared effective or the
Shares shall be purchased by Western as provided herein for Twenty Million
($20,000,000) Dollars, it will not register any shares of its capital stock,
whether for its own account or on behalf of any of its stockholders.
(c) In connection with any registration statement filed
pursuant to Section 3.04(b), Western shall (i) immediately notify the
Stockholders (who will have the responsibility of notifying the other Selling
Securityholders) of the effectiveness of the registration statement, (ii)
furnish to the Stockholders and the other Selling Securityholders such number
of copies of any prospectus as they may reasonably request, (iii) take such
commercially reasonable action as shall be necessary to qualify or register the
shares of Class A Common Stock covered by such registration under such blue sky
or other state securities laws for offer and sale as a Selling Securityholder
shall reasonably request; provided, however, that Western shall not be
obligated to qualify as a foreign corporation to do business under the laws of
or to become subject to taxation in, any jurisdiction in which it shall not be
then qualified, or to file any general consent to service of process, (iv) make
available to Western's security holders, not more than sixteen (16) months
after the first day of the month following the effective date of the
registration statement, an earnings statement (which need not be audited and
which may be satisfied in the manner set forth in Rule 158 under the Securities
Act) covering a period of at least twelve (12) months, which earnings statement
shall satisfy the requirements of Section 11(a) of the Securities Act; and (v)
use its commercially reasonable best efforts to cause such Class A Common Stock
to be listed, subject to notice of issuance, on The NASDAQ National Market
("NASDAQ"), or such exchange on which shares of Class A Common Stock are then
listed.
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<PAGE> 8
(d) All costs and expenses relating to the
above-described registration statement (other than the fees and disbursements
of the Stockholders' (or any other Selling Securityholder's) counsel and
accountants, any stock transfer taxes, and any discounts and commissions or
other charges, if any, of any underwriter, broker or dealer) shall be borne by
Western.
(e) The Stockholders shall (i) furnish to Western
promptly upon request all such information regarding the Selling
Securityholders required by the Securities Act or SEC Interpretations to be
included in such registration statement, (ii) do all such things and execute
all such additional instruments as may be reasonably necessary or customary in
connection with such registration statement or offerings, and (iii) comply in
all respects with the Securities Act and the Securities Exchange Act of 1934
and all applicable rules and regulations thereunder and with the securities
laws of the states in which any such offerings are made. Western agrees to
take all necessary steps to comply in all respects with the Securities Act and
with the securities laws of the states in which any such public offering is
made pursuant to the foregoing paragraph (c)(iii).
(f) (A) In connection with such registration statement,
Western shall indemnify and hold harmless the Stockholders and the other
Selling Securityholders, their officers and directors and any controlling
persons of the Stockholders or the Selling Securityholders against and in
respect of any losses, claims, damages or liabilities, joint or several
(including legal or other fees and expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action) to which the Stockholders, Selling Securityholders or any
such persons may become subject under the Securities Act or otherwise insofar
as such losses, claims, damages or liabilities (or actions with respect
thereto) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except to the extent that any such untrue
statement or omission is based upon information supplied in writing by the
Stockholders or the Selling Securityholders or by any of their respective
authorized representatives specifically for use in such registration statement.
(B) In connection with such registration statement,
the Stockholders and (pursuant to agreements to be executed prior to the filing
of the registration statement) Selling Securityholders shall jointly and
severally indemnify and hold harmless Western, its officers and its directors
and any controlling persons of Western against and in respect of any losses,
claims, damages or liabilities, joint or several (including legal or other fees
and expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action)
to which Western or any such persons may become subject under the Securities
Act or otherwise insofar as such losses, claims, damages or liabilities (or
actions with respect thereto) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent that any such untrue statement or omission is based upon information
supplied in writing by the Stockholders or Selling
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<PAGE> 9
Securityholders or any of their respective authorized representatives
specifically for use in such registration statement; provided, however, that
the obligation of the Stockholders or Selling Securityholders hereunder shall
be limited to an amount equal to the proceeds received by such Stockholders or
Selling Securityholders upon the sale of the Class A Common Stock in the
offering covered by such registration statement.
(C) The indemnification obligations of the parties
hereunder shall be subject to Section 7.05 hereof and, notwithstanding any
other provision of this Agreement, shall survive indefinitely and shall not be
subject to any of Section 7.02(b), 7.02(c) or 7.04(b) hereof.
(D) If for any reason the indemnification provided
for in the preceding clauses is unavailable to an indemnified party as
contemplated by the preceding clauses, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified party and
the indemnifying party, but also the relative fault of the indemnified party
and the indemnifying party, as well as any other relevant equitable
considerations.
(g) (i) The Stockholders agree (and pursuant to
agreements to be executed prior to the filing of the registration statement,
each other Selling Securityholder shall agree) not to dispose of any shares of
Class A Common Stock acquired pursuant hereto (directly or indirectly) from
Western except pursuant to the above-described registration statement, pursuant
to a Subsequent Registration Statement as defined in Section 3.04(h)(iii)
hereof, or pursuant to an applicable exemption from registration under the
Securities Act, and agree that the initial share certificate(s) which the
Stockholders receive from Western (and any share certificates issued upon
transfers pursuant to an applicable exemption from registration under the
Securities Act) may be legended with one of the following legends, as
appropriate to reflect such resale restriction:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
or
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
BEEN REGISTERED FOR RESALE UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), PURSUANT TO A
REGISTRATION STATEMENT ON FORM S-3, NO. ________,
DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION ON ______, 1997. NO TRANSFER, SALE OR
OTHER DISPOSITION OF SUCH SECURITIES MAY BE MADE
UNLESS (A) A CURRENT PROSPECTUS IS DELIVERED IN
CONNECTION THEREWITH AS REQUIRED BY THE ACT OR (B) AN
EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT IS
AVAILABLE,
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<PAGE> 10
AND, IN EITHER CASE, AN EXEMPTION FROM STATE
SECURITIES LAWS IS AVAILABLE."
(ii) Western agrees that for a period of two years
from the Effective Date or for so long as the Stockholders or the Selling
Securityholders own any shares of Class A Common Stock issued to them
hereunder, whichever is shorter, but subject to the provisions of Section
4.02(c)(i), Western will (A) use its best efforts to file in a timely manner
all reports required to be filed by it pursuant to the Securities Exchange Act
of 1934, (B) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, and (C) at any
time during such period and upon request of a Selling Securityholder, furnish
such Selling Securityholder and others with such information and documents as
may be reasonably necessary to enable the restricted person to effect sales of
shares of Class A Common Stock received from Western or the Stockholders, in
compliance with Rule 144 under the Securities Act. During such period (subject
to Section 4.02(c)), Western will furnish any such Selling Securityholder, upon
its request, a written statement as to Western's compliance with the public
information requirements of Rule 144.
(h) (i) The registration statement shall, upon its
effectiveness but subject to paragraphs (ii), (iii) and (iv) below, be
available for transactions (as described in the plan of distribution to be
included in the registration statement) by Selling Securityholders (A) during
the ten (10) Business Day period immediately following the date on which such
registration statement shall be declared effective, and (B) subject to any
obligation of a Selling Securityholder to refrain from selling or offering to
sell any Shares during a Blackout Period (as hereinafter defined), for a period
of two (2) years from the Effective Date (or, if shorter, the applicable
holding period under Rule 144(k)). Subject to any obligation of a Selling
Securityholder to refrain from selling or offering to sell any Shares during a
Blackout Period, nothing contained in this Section 3.04 shall in any way limit
the ability of a Selling Securityholder to sell Shares pursuant to Rule 144.
(ii) Western shall be entitled to elect that the
registration statement not be usable, for a reasonable period of time, but not
in excess of ninety (90) consecutive days (a "Blackout Period") during any
twelve (12) month period, if Western determines in good faith that the use of
such registration statement or the related prospectus would interfere with any
pending financing, acquisition, corporate reorganization or any other corporate
development involving Western or any of its subsidiaries (other than a
corporate development described in paragraph (iii) below) or would require
premature disclosure thereof, and Western promptly gives the Selling
Securityholders written notice of such determination, containing a general
statement of the reasons for such postponement or restriction on use and an
approximation of the anticipated delay; provided, however, that Western shall
not be entitled to initiate a Blackout Period unless it shall concurrently
forbid purchases or sales in the open market by directors, senior executives
and other affiliates of Western. Western shall give written notice to each
Selling Securityholder of record of the commencement and the termination of any
Blackout Period.
(iii) If Western for itself or any of its security
holders shall at any time or times after the Effective Date register under the
Securities Act any shares of its Class A Common Stock in an underwritten
offering (other than in connection with the registration of
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securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act) (a "Subsequent
Registration Statement") at a time when the Stockholders shall not have
disposed of all of the Shares, on each such occasion Western will notify the
Stockholders (who shall have the obligation to notify each Selling
Securityholder) of such registration at least fifteen (15) Business Days prior
to the filing of such Subsequent Registration Statement, and upon the request
of any Selling Securityholder given in writing within ten (10) Business Days
after the receipt of such notice by the Stockholders, Western will use its best
efforts to cause any of the Shares specified by any such Selling Securityholder
to be included in such Subsequent Registration Statement and underwritten
offering to the extent such registration and underwritten offering is
permissible under the Securities Act and subject to the conditions of the
Securities Act. In connection with any such underwriting, each Selling
Securityholder agrees to execute all agreements and instruments requested by
the underwriter of all of the participants in such offering and which are
typical in underwritten offerings, including custodial agreements, underwriting
agreements, powers of attorney, deposit agreements and lock-up agreements.
If the managing underwriters of such offering shall give written
advice to Western that, in their opinion, market conditions dictate that no
more than a specified maximum number of securities (the "Underwriter's Maximum
Number") could successfully be included in such Subsequent Registration
Statement, then: (i) Western shall be entitled to include in such Subsequent
Registration Statement that number of securities which Western proposes to
offer and sell for its own account in such Subsequent Registration Statement
and which does not exceed the Underwriter's Maximum Number; and (ii) subject to
any agreement in existence on the date hereof pursuant to which Western has
granted registration rights to any Person which conflicts with the rights being
granted to the Selling Securityholders pursuant to this clause (ii), Western
will be obligated and required to include in such Subsequent Registration
Statement that number of Shares which shall have been requested by the Selling
Securityholders and by other holders of Class A Common Stock having
registration rights to be included in such Subsequent Registration Statement
and which does not exceed the difference between the Underwriter's Maximum
Number and that number of securities which Western is entitled to include
therein pursuant to clause (i) above and such number of shares shall be
allocated pro rata between the Selling Securityholders and any other such
holders on the basis of the number of shares requested to be included therein
by the Selling Securityholders, on the one hand, and such other holders, on the
other hand.
If less than all of the Shares requested to be included in any such
Subsequent Registration Statement by the Selling Securityholders can be so
included due to these priority requirements, then each requesting Selling
Securityholder's request shall be granted on an pro rata basis with the other
requesting Selling Securityholders.
Any Selling Securityholder who has Shares included in such Subsequent
Registration Statement agrees, during the ten (10) day period prior to, and
during the ninety (90) day period beginning on, the effective date of the
Subsequent Registration Statement, not to sell any of its Shares pursuant to
the registration statement filed pursuant to Section 3.04(b) hereof.
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<PAGE> 12
(iv) Western shall notify each Selling
Securityholder during the period that the registration statement is required
to be kept effective, of Western's becoming aware that the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and at the request of any such Selling
Securityholder, Western shall prepare and furnish to such Selling
Securityholder a reasonable number of copies of any amendment or supplement to
such registration statement or related prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Shares, such Prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
3.05 Capital Adjustment Amount.
(a) On the Effective Date Western shall (i) (A)
contribute or cause to be contributed to the Surviving Corporation an amount in
cash equal to the amount of the Partnership's and TIM's long term indebtedness,
including accrued interest thereon and the current portion of any long term
indebtedness, on the Effective Date ("Reimbursable Indebtedness Amount") and
(B) cause to be paid all such long term indebtedness in full in cash and (ii)
cause to be paid to the Stockholders an amount of cash equal to the difference
between (A)(1) $35,000,000 plus (2) the estimated aggregate amount of all
capital expenditures (determined as set forth in Section 3.05(b)(i) below)
actually made by the Partnership and TIM in accordance with generally accepted
accounting principles, through the Effective Date (the "Reimbursable Capital
Expenditures") but only to the extent such capital expenditures are described
in Exhibit 4.01(r) annexed hereto or have been approved in writing by Western,
plus or minus (as the case may be) (3) the estimated Working Capital (as
hereinafter defined) determined as set forth in Section 3.05(b)(i) below) of
the Partnership and TIM at the Effective Date, minus (B) the estimated
Reimbursable Indebtedness Amount contributed to the Surviving Corporation in
accordance with clause (i)(A) of this Section 3.05(a) (such difference being
referred to as the "Estimated Capital Adjustment Amount").
(b) (i) At least five (5) Business Days prior to the
Effective Date, Stockholders shall deliver to Western (A) Stockholders' bona
fide written estimate of the Working Capital, the Reimbursable Capital
Expenditures and the Reimbursable Indebtedness Amount certified by the chief
financial officer of TCLP and TIM, which estimates, unless otherwise agreed to
in writing by Western, shall be, in the case of Working Capital, the Working
Capital of the Partnership and TIM as shown on the then most recently prepared
and available monthly balance sheets of the Partnership and TIM (such balance
sheets to be prepared by the Partnership and TIM on a basis consistent with
prior periods), and in the case of Reimbursable Capital Expenditures and the
Reimbursable Indebtedness Amount, the actual amount thereof, such actual amount
to be certified by the chief financial officer of TCLP and TIM as of the
Effective Date and such certification to be accompanied by evidence reasonably
satisfactory to Western as to accuracy and completedness of the amounts so
certified, and (B) the unaudited financial statements of the Partnership and
TIM as of, and for such portion (as requested by Western) of the fiscal year
ended through, the end of the month immediately preceding the
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<PAGE> 13
Effective Date, certified by the chief financial officer of TCLP and TIM, which
financial statements shall have been prepared in accordance with generally
accepted accounting principles consistently applied.
(ii) The Stockholders shall deliver to Western
within forty-five (45) days after the end of the month in which the Effective
Date shall have occurred balance sheets of the Partnership and TIM as of the
Effective Date (the "Effective Date Balance Sheets") prepared by or on behalf
of the Stockholders on a basis consistent with prior periods, and a statement
of the amount of the Reimbursable Capital Expenditures, the Reimbursable
Indebtedness Amount and the Working Capital as of the Effective Date. In
calculating revenues and expenses for the period between the first day of the
month in which the Effective Date occurs and the Effective Date, items of
revenue and expense shall be calculated by multiplying the aggregate amount of
each such item realized or incurred during the month in which the Effective
Date occurs by a fraction, the numerator of which shall be the day of the month
on which the Effective Date occurs and the denominator of which shall be the
number of days in the month in which the Effective Date occurs. Western and
the Stockholders shall, as promptly as practicable but in no event later than
ninety (90) days following the Effective Date, determine the amount of the
Working Capital, the Reimbursable Capital Expenditures and the Reimbursable
Indebtedness Amount of the Partnership and TIM as of the close of business on
the Effective Date. As used herein "Working Capital" means the total of the
current assets of the Partnership and TIM minus the total of the current
liabilities of the Partnership and TIM (other than current maturities of the
Reimbursable Indebtedness Amount) at the Effective Date, as such terms are used
in accordance with generally accepted accounting principles. Western and the
Stockholders shall, and shall cause their respective independent certified
public accountants to, give each other and their respective representatives
full access to each other's books and records (which relate to or are necessary
for the determination of the Reimbursable Capital Expenditures, the
Reimbursable Indebtedness Amount and the Working Capital of the Partnership and
TIM) and representatives during regular business hours upon reasonable notice
for the purpose of determining the Working Capital, the Reimbursable Capital
Expenditures and the Reimbursable Indebtedness Amount of the Partnership and
TIM at the Effective Date. The parties shall in good faith attempt to resolve
any dispute concerning the amount of the Working Capital, the Reimbursable
Capital Expenditures and the Reimbursable Indebtedness Amount. If the parties
do not reach agreement concerning the amount of the Working Capital, the
Reimbursable Capital Expenditures and the Reimbursable Indebtedness Amount
within ninety (90) days following the Effective Date, then the parties shall
submit the matter for resolution to a nationally recognized firm of independent
certified public accountants which has not had a material relationship with
either Western and its Affiliates (as hereinafter defined) or the Stockholders
and their Affiliates within the preceding two years (the "Arbiter") and which
is mutually agreeable to the parties. If the parties cannot agree on the
selection of the Arbiter, the Arbiter shall be selected by mutual agreement of
the parties' respective independent certified public accountants, or, if they
cannot agree, the parties shall request the American Arbitration Association
(the "AAA") to appoint the Arbiter, and such appointment by the parties'
respective independent certified public accountants or the AAA, as the case may
be, shall be conclusive and binding on the parties. Promptly, but no later
than twenty (20) days after its acceptance of its appointment as Arbiter, the
Arbiter shall determine, based solely on presentations by Western and the
Stockholders, and not by independent review, only those issues concerning the
Reimbursable Capital
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Expenditures, the Reimbursable Indebtedness Amount and the Working Capital of
the Partnership and TIM at the Effective Date which are in dispute and shall
render a report as to the dispute and the resulting computation of the Working
Capital, the Reimbursable Capital Expenditures and the Reimbursable
Indebtedness Amount, which shall be conclusive and binding upon the parties.
The fees, costs and expenses of the Arbiter shall be paid one-half by Western
and one-half by the Stockholders; provided, however, that the Arbiter shall
have the right (but not the obligation) to reapportion the fees, costs and
expenses of the Arbiter between Western and the Stockholders in accordance with
the Arbiter's determination of the relative merit of the parties' respective
positions on the matters in dispute. Within five (5) Business Days of the
determination of the amount of the Working Capital, the Reimbursable Capital
Expenditures and the Reimbursable Indebtedness Amount, whether by mutual
agreement of the parties or by the Arbiter, the parties shall make the
following computation: The parties shall determine the amount by which (A)(1)
$35,000,000 plus (2) the Reimbursable Capital Expenditures of the Partnership
and TIM at the Effective Date (as determined in accordance with this Section
3.05(b)(ii)) plus or minus, as the case may be, (3) the Working Capital of the
Partnership and TIM at the Effective Date (as determined in accordance with
this Section 3.05(b)(ii)) exceeds (B) the Reimbursable Indebtedness Amount of
the Partnership and TIM (determined in accordance with this Section
3.05(b)(ii)); the amount so determined being referred to as the "Capital
Adjustment Amount". If the Estimated Capital Adjustment Amount exceeds the
Capital Adjustment Amount, the Stockholders, TCC and TCLP shall cause to be
paid to the Surviving Corporation such excess in cash. If the Capital
Adjustment Amount exceeds the Estimated Capital Adjustment Amount, then Western
shall cause such excess to be paid to the Stockholders in cash.
Notwithstanding anything to the contrary contained in this Agreement, Western
and the Stockholders agree that in determining the Working Capital and the
Reimbursable Capital Expenditures pursuant to this Section 3.05(b)(ii), the
amount of the accounts receivable of the Partnership at the Effective Date
shall be computed in accordance with the provisions of Exhibit 3.05(b) annexed
hereto. "Affiliate" shall mean, with respect to any party hereto, any
corporation or other business entity which directly or indirectly through stock
ownership or through any other arrangement either controls, is controlled by or
is under common control with, such party. The term "control" shall mean the
power to direct the affairs of such person by reason of ownership of voting
stock or other equity interests, by contract or otherwise.
3.06 TCC as Agent For Stockholders By their execution of this
Agreement, each of the Stockholders agrees that any cash payment required to be
made to the Stockholders hereunder may be made to TCC on behalf of and as agent
for all such Stockholders. Each of the Stockholders hereby authorizes and
directs the Surviving Corporation to make such payments to TCC on behalf of all
such Stockholders and agrees that neither Western nor the Surviving Corporation
shall have any obligation or liability with respect to the allocation of such
payments or any other Merger Consideration among the Stockholders.
3.07 Transfer Taxes. The Stockholders shall pay at the Effective
Date or, if due thereafter, promptly when due, all gross receipts taxes,
transfer taxes, sales taxes, stamp taxes and any other taxes (collectively,
"Transfer Taxes") payable in connection with the consummation of the
transactions contemplated hereby. The Stockholders shall prepare and file any
tax return with respect to such Transfer Taxes; provided, however, that Western
shall have the right of reasonable review and comment prior to such filing
(such right to be exercised by Western within five (5)
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Business Days after delivery of such returns to Western, and if such right is
not so exercised within such five (5) day period, Western shall be deemed to
have waived such right).
3.08 Options. If for any reason whatsoever, MCP and MCI shall have
not prior to the Closing exercised or sold to the Stockholders all of their
options to acquire issued and outstanding voting capital stock of TIM, all such
unexercised and unsold options shall at the Effective Date automatically and
without any further action on the part of TIM or the Surviving Corporation
become a right solely to acquire from the Stockholders (and not Western, TIM or
the Surviving Corporation) a portion of the Merger Consideration and shall no
longer represent a right to acquire capital stock in TIM or the Surviving
Corporation. By their execution of this Agreement each of MCP and MCI agrees
to be bound by the terms of this Section 3.08 and confirm that on and after the
Effective Date they shall have no further rights of any nature whatsoever as an
option holder or securityholder of the Surviving Corporation. Each of MCP, MCI
and the Stockholders hereby agree that on or prior to the Effective Date,
neither TIM nor the Surviving Corporation shall have any further rights or
obligations under the Securityholders' Agreement whatsoever.
3.09 Inter-company Accounts Receivable and Accounts Payable. On or
prior to the Effective Date, but in any event prior to the consummation of the
Merger, TIM, each of the Stockholders, TCC, TCLP and the Partnership shall, and
each of them shall cause each of their respective Affiliates to, cause all
accounts receivable, accounts payable and other inter-company indebtedness owed
to or by the Partnership or TIM to any of the Partnership's or TIM's Affiliates
to be canceled, satisfied and released in all respects so that no further
liabilities or obligations with respect thereto shall survive the Merger;
provided, however, that the foregoing provision of this Section 3.09 shall in
no event require the Stockholders, TIM, TCC, TCLP or the Partnership to satisfy
any indebtedness that is to be satisfied in accordance with Section 3.05(a)
hereof.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.01 Covenants of TIM, the Partnership, the Stockholders, TCC and
TCLP. Each of TIM, the Partnership, each of the Stockholders, TCC and TCLP,
jointly and severally, covenant and agree from and after the execution and
delivery of this Agreement to and including the Effective Date as follows:
(a) Consummate Transactions. Each of TIM, the
Partnership, each of the Stockholders, TCC and TCLP shall use its best efforts
to cause the transactions contemplated by this Agreement to be consummated in
accordance with the terms hereof, and, without limiting the generality of the
foregoing, use its best efforts to obtain all necessary approvals, consents,
permits, licenses and other authorizations required in connection with this
Agreement and the transactions contemplated hereby of third parties including
all governmental authorities and agencies such as the FCC, and any state public
utilities or public service commission, and to make all filings with and to
give all notices to third parties which may be necessary or reasonably required
of TIM, the Partnership, the Stockholders, TCC or TCLP in order to consummate
the transactions contemplated hereby, including the Merger.
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(b) Full Access. Each of TIM, the Partnership, the
Stockholders, TCC and TCLP shall give to Western and its agents and
representatives (including its independent auditors and attorneys) reasonable
access (such access not to interfere unreasonably with the Businesses), during
normal business hours and upon reasonable notice as described below, to all of
TIM's, the Partnership's, the Stockholders', TCC's and TCLP's personnel,
premises, properties, assets, financial statements and records, books,
contracts, documents and commitments of or relating to TIM, the Partnership,
the Businesses or the assets used in the Businesses, and shall furnish Western
and its agents and representatives with all such information concerning the
affairs of TIM, the Partnership, the Stockholders, TCC and TCLP as Western may
reasonably request. In addition, each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP shall permit Western's accountants to conduct an
audit (at Western's expense) of the books and records of TIM and the
Partnership and, to the extent relating to TIM and the Partnership, the books
and records of the Stockholders, TCC and TCLP, in each case in such detail as
Western may reasonably require. Western shall contact either Lewis, Viehweg or
any other person(s) designated by TCC, on behalf of TIM, the Partnership, the
Stockholders, TCC and TCLP, to arrange for Western's personnel, agents and
representatives visiting any premises, personnel, agents or representatives of
TIM, the Partnership, the Stockholders, TCC or TCLP, such visits to be arranged
for by such persons not later than three (3) Business Days of Western's request
therefor.
(c) Ordinary Course. The Partnership and TIM shall, and
each of TIM, each of the Stockholders, TCC and TCLP shall cause the Partnership
and TIM to, conduct its Businesses only in the ordinary course and consistent
with past practices. Without limiting the foregoing, the Partnership and TIM
shall, and each of TIM, each of the Stockholders, TCC and TCLP shall cause the
Partnership and TIM to, (i) continue to expend funds for sales promotion and
marketing and to pay its bills and other obligations, all in the ordinary
course of business consistent with past practices; and (ii) make all capital
expenditures described on or set forth in Exhibit 4.01(r) annexed hereto or
which Western otherwise consents to in writing and agrees in writing to include
as Reimbursable Capital Expenditures hereunder. Without limiting the foregoing,
the Partnership and TIM shall not, and none of TIM, any of the Stockholders,
TCC or TCLP shall cause or permit the Partnership or TIM to, without the prior
written consent of Western, such consent not to be unreasonably withheld, (A)
incur any material liability, absolute or contingent, other than current
liabilities arising in the ordinary course of business or pursuant to Contracts
in existence on the date hereof and set forth or described in Exhibit 5.01(s)
annexed hereto or hereafter entered into as permitted pursuant to this
Agreement, including TIM's indebtedness to TCC in the original principal amount
of $200,000 upon TIM's acquisition of TCC's ownership interests in the
Partnership as contemplated hereby, and other than additional draws under the
Loan Agreement referenced in item 2 of Exhibit 5.01(p) hereto; (B) assume,
guarantee, change any existing guarantee, endorse or otherwise as an
accommodation become responsible for obligations of any other individual or
entity (except by endorsement for collection or deposit of negotiable
instruments received in the ordinary course of business and except pursuant to
agreements or binding commitments in existence on the date hereof and set forth
or described in Exhibit 5.01(s) annexed hereto); (C) other than in the ordinary
course of business and in amounts not exceeding $25,000 in the aggregate, make
any loans or advances to any individual or entity; (D) sell, transfer, convey,
mortgage, pledge, hypothecate or subject to any lien, claim, security interest,
charge, encumbrance, restriction, title retention agreement or any liability or
claim of any nature (all of the foregoing,
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collectively "Liens") any of the Businesses or the assets used in the
Businesses except for sales of subscriber equipment or retirements of old or
obsolete equipment (such retired equipment to be replaced with equipment of
equivalent cost and utility) in the ordinary course of business or pursuant to
agreements or binding commitments in existence on the date hereof and set forth
or described in Exhibit 5.01(s) annexed hereto or Liens which in the aggregate
are not material and have been incurred in the ordinary course of business and
which Liens will be released on or prior to the Effective Date; (E)
intentionally waive or compromise any right or claim for any amount in excess
of $25,000; (F) cancel, without fair consideration, any note, loan or other
material obligation owing to it; (G) enter into, or extend or renew, any
Contract with (1) except for Contracts having an annual cost of less than
$5,000 for any single Contract and $50,000 for all such Contracts, any Person
(as hereinafter defined) which is not terminable at will on not more than
thirty (30) days' notice and without material liability, or (2) except for
TIM's purchase of TCC's ownership interest in the Partnership (including the 1%
general partnership interest) for $200,000 as contemplated hereby, the
Partnership, TIM, any Stockholder, TCC or TCLP or any Affiliates of any of the
foregoing; (H) make any increase in the compensation payable or to become
payable by the Partnership or TIM to any of its officers, employees, agents or
consultants except for routine increases made in the ordinary course of
business consistent with past practices, which in any event shall not exceed
five (5%) percent; (I) make any arrangement for any new or additional, or amend
or extend any existing, profit-sharing plan, retirement plan, bonus plan,
severance arrangement, employee benefit plan, or any similar plan, or make or
agree to make any change to any such plan if the result thereof increases any
benefits paid or payable thereunder to any Person; (J) except as required by
law, enter into any collective bargaining agreement, or make any commitment
whatsoever to any union or other representative or party which intends to
represent any employees; (K) extend the maturity date of or renew any (1)
indebtedness for borrowed money or for the deferred purchase price of property
or services or evidenced by notes, bonds or other instruments, (2) lease
obligations which would normally be capitalized under generally accepted
accounting principles, or (3) obligations under direct or indirect guarantees
of (including obligations (contingent or otherwise) to assure a creditor
against loss in respect of) indebtedness or obligations of others of types
referred to in subclauses (1) and (2) above (the obligations specified in this
clause (K) are collectively referred to herein as "Indebtedness"), if such
Indebtedness will survive the Effective Date; (L) prior to its stated maturity
any Indebtedness or any lease or rental or any other amounts; or (M) enter into
any reseller agreements or any agent agreements other than in the ordinary
course of business consistent with past practice and only so long as such
agreements are terminable at will, without penalty, by the Partnership or TIM
upon not more than thirty (30) days' notice. As used herein the term "Person"
means any general or limited partnership, corporation, joint venture, trust,
business trust, governmental agency, cooperative, association, individual or
other entity, and heirs, executors, administrators, legal representatives,
successors and assigns of such person.
(d) TCC's and TCLP's Partnership Interests.
(i) Prior to the Effective Date, TCLP shall
transfer, assign and deliver all of its right, title and interest in and to
the Partnership Interest to TIM in exchange for and redemption of the limited
partnership interests in TCLP owned by TIM.
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(ii) Prior to the Effective Date, TCC shall
transfer , assign and deliver to TIM all of its right, title and interest in
and to its one (1%) percent general partnership interest in the Partnership in
exchange for $200,000, which amount may at TIM's election, be paid by
delivering TIM's promissory note in such principal amount, such note to be paid
and satisfied in full at or prior to the Closing Date.
(e) Preserve Goodwill. The Partnership and TIM shall, and
each of TIM, each of the Stockholders, TCC and TCLP shall cause the Partnership
and TIM to, use its diligent efforts to preserve the Businesses and the
goodwill of suppliers, subscribers and others dealing with the Partnership, and
to retain the services of the employees of the Partnership and TIM and to
maintain the goodwill of such employees.
(f) Compliance with Law. Each of TIM, the Partnership,
each of the Stockholders, TCLP and TCC shall comply in all material respects
with all applicable laws, rules, ordinances, regulations, codes, orders,
decrees, licenses and permits of all applicable jurisdictions and governmental
authorities or agencies relating to it, to its properties (including the
Businesses and the assets used in the Businesses) or to the conduct of the
Businesses.
(g) Approvals, Consents. Each of TIM, the Partnership,
each of the Stockholders, TCC and TCLP shall obtain and maintain in full force
and effect all approvals, consents, permits, licenses and other authorizations,
from all appropriate Federal, state and local governmental agencies or
authorities necessary or required for the operation of the Businesses as
presently conducted, as and when such approvals, consents, permits, licenses or
other authorizations are necessary or required except, in the case of
non-material approvals, consents, permits, licenses or other authorizations of
state and local governmental agencies and authorities, where such failure would
not have a material adverse effect on the Partnership, its financial condition,
prospects, the Businesses or the assets used in the Businesses. The parties
shall consult with one another as to the general approach to be taken with any
governmental authority or agency with respect to obtaining any necessary
consent of such governmental agency or authority to the transactions
contemplated hereby, and each of the parties shall keep each other party
reasonably informed as to the status of any such communications with any
governmental authority or agency. None of TIM, the Partnership, any of the
Stockholders, TCC or TCLP shall, with respect to the Businesses or the assets
used in connection with the Businesses, make any material commitments (other
than those typical in the wireless telephone industry) relating to any
approval, consent, permit or license to any governmental authority or agency
without the prior written consent of Western.
(h) No Transfer. Except as described herein, none of
TIM, the Partnership, the Stockholders, TCC or TCLP shall (i) sell, transfer,
assign or dispose of, or offer to, or enter into an agreement to, sell,
transfer, assign or dispose of any of the Businesses or any of the assets used
in the Businesses or negotiate therefor, other than sales of such of the assets
used in the Businesses that are immaterial or that are no longer useable in the
Businesses or which are being replaced with assets of comparable quality and
utility in the ordinary course of business consistent with past practice or
(ii) create, incur or suffer to exist any Lien of any nature whatsoever or
enter into any restriction on transfer or grant any right of first refusal
relating to the Businesses or the assets used
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in the Businesses, other than Liens not in the aggregate material to the
business or financial condition of such entity and which Liens will be
terminated on or prior to the Effective Date.
(i) Insurance. From the date hereof through the Effective
Date, the Partnership and TIM shall, and each of TIM, each of the Stockholders,
TCC and TCLP shall cause the Partnership and TIM to, maintain in full force and
effect (including necessary renewals thereof) all of the insurance policies
relating to the Partnership and TIM set forth on Exhibit 5.01(i) annexed hereto
existing on the date hereof. From and after the Effective Date, each of the
Stockholders shall take all action that may be necessary to cause the coverage
under such policies to continue in full force and effect after the Effective
Date with respect to occurrences prior to the Effective Date and shall take all
actions necessary to preserve or protect rights under any such policies with
respect to any claim against the Partnership or TIM arising out of the
Businesses or the assets used in the Businesses prior to the Effective Date.
The Partnership and TIM shall, and each of TIM, each of the Stockholders, TCC
and TCLP shall cause the Partnership and TIM to, provide Western with
information and records regarding all claims pending with respect to the
Businesses or the assets used in the Businesses and agree to provide to Western
any additional information and records Western may reasonably require regarding
such claims.
(j) No Amendments or Issuance of Additional Shares.
Neither of TIM or the Partnership shall, and none of TIM, any of the
Stockholders, TCC or TCLP shall cause or permit the Partnership or TIM to,
amend its charter, by-laws, partnership agreement, or comparable governing
instrument, which amendment would have a material adverse effect on the
Businesses, the assets used in the Businesses, or the transactions contemplated
by this Agreement or which would require any additional consents or approvals
of the transactions contemplated by this Agreement. Neither of TIM or the
Partnership shall, and none of TIM, any of the Stockholders, TCC or TCLP shall
cause or permit the Partnership or TIM to, issue or sell any shares of its
capital stock, partnership interests or other securities, or issue options,
warrants or rights of any kind to acquire, or any securities convertible into,
exchangeable for or representing a right to purchase or receive, or enter into
any contract, plan, understanding or arrangement with respect to the issuance
of, any stock-based or stock-related awards or other equity- based awards,
shares of its capital stock, partnership interests or other equity or other
securities, or enter into any arrangement or contract with respect to the
purchase or voting of shares of its capital stock, partnership interests or
other equity, or adjust, split, combine or reclassify any of its securities, or
make any other changes in its capital structure, if any such issuance, sale,
contract, plan, understanding, arrangement, adjustment, split, combination,
reclassification or changes would require any additional approvals of the
transactions contemplated by this Agreement or would otherwise adversely affect
the transactions contemplated by this Agreement.
(k) Condition of Assets. The Partnership and TIM shall,
and each of TIM, each of the Stockholders, TCC and TCLP shall cause the
Partnership and TIM to, use its diligent efforts to preserve the Partnership's
and TIM's assets intact and, from time to time, to make all necessary repairs
thereto, so that the Businesses may be conducted in the ordinary course of
business and consistent with past practices.
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(l) Books and Records. The Partnership and TIM shall,
and each of TIM, each of the Stockholders, TCC and TCLP shall cause the
Partnership and TIM to, maintain the Partnership's books, accounts and records
in the usual manner, on a basis consistent with prior years and in accordance
with generally accepted accounting principles.
(m) Notice of Claims. TCC shall give written notice to
Western promptly upon the commencement of any action, investigation,
arbitration or proceeding (including any proceeding before any governmental
agency), or promptly upon obtaining knowledge of any facts giving rise to a
threat of any such action, investigation, arbitration or proceeding (i) which
would, if adversely determined, materially and adversely affect (A) the ability
of any of the parties hereto to consummate the transactions contemplated hereby
or (B) the business or financial condition of the Partnership or TIM, any
Business or the assets used in the Businesses or (ii) where the amount involved
exceeds $25,000.
(n) Certain Actions. None of TIM, the Partnership, any
of the Stockholders, TCC or TCLP shall take any action or refrain from taking
any action which would materially interfere with or preclude the consummation
of the transactions contemplated by this Agreement, result in any of the
representations and warranties of any party hereto contained herein being
incorrect or incomplete in any material respect, or result in any of the
conditions to Western's obligation to consummate the transactions contemplated
by this Agreement as set forth in Section 6.01 hereof being unsatisfied in
accordance with the terms hereof.
(o) Distributions and Other Payments. Neither the
Partnership nor TIM shall, and none of TIM, the Stockholders, TCC or TCLP shall
cause or permit the Partnership or TIM to, declare or make any distributions or
other payments (whether of loans or otherwise) to any Stockholder or partner of
TIM or the Partnership or to any Affiliate of any thereof.
(p) Notice of Breaches. Each of TIM, the Partnership,
the Stockholders, TCC and TCLP shall, promptly after obtaining knowledge of the
occurrence of, or the impending or threatened occurrence of, any event which
would cause or constitute a breach of any warranties, representations,
covenants or agreements of any of TIM, the Partnership, any Stockholder, TCC or
TCLP contained in this Agreement, give notice in writing of such event or
occurrence or impending or threatened event or occurrence, to Western and use
its diligent efforts to prevent or promptly to remedy such breach.
(q) Material Contracts. Neither the Partnership nor TIM
shall, and none of TIM, any of the Stockholders, TCC or TCLP shall cause or
permit the Partnership or TIM to, default in any material respect under, or
breach any term or provision of, or suffer or permit to exist any condition or
event which, after notice or lapse of time, or both, would constitute a
material default under, any Contract listed on Exhibit 5.01(s) annexed hereto
or which are entered into after the date hereof and prior to the Effective Date
as permitted by Section 4.01(c) and which would have been listed on such
Exhibit if they were in effect on the date hereof.
(r) Capital Expenditures. Following the date hereof and
prior to the Effective Date, the Partnership and TIM shall, and each of TIM,
each of the Stockholders, TCC and TCLP shall cause the Partnership and TIM to,
make the capital expenditures of the type and in the
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<PAGE> 21
amounts set forth on Exhibit 4.01(r) annexed hereto and such other Capital
Expenditures to which Western shall consent in writing and agree in writing to
include as Reimbursable Capital Expenditures hereunder.
(s) Notification of Change. Each of TIM, the
Partnership, each of the Stockholders, TCC and TCLP shall advise Western
promptly in writing of (i) any event, condition or state of facts, including
any action, suit or proceeding, which has had or would have a material adverse
effect on the business or financial condition of the Partnership or TIM or on
the Businesses, on the assets used in the Businesses or on the transactions
contemplated by this Agreement or (ii) the commencement of any action, suit or
proceeding which seeks to enjoin the consummation of the transactions
contemplated hereby.
(t) Retention of Records. On the Effective Date, each of
TIM, the Partnership, each of the Stockholders, TCC and TCLP shall deliver to
Western all books, contracts and records relating to TIM, the Partnership, the
Businesses or the assets used in the Businesses; provided, however, that the
Stockholders shall be entitled to retain a copy of all books, accounting and
other records following the Effective Date for all proper purposes incidental
to the transactions contemplated hereby. Western agrees that after the
Effective Date all books, contracts and records relating to TIM, the
Partnership, the Businesses and the assets used in the Businesses prior to the
Effective Date, shall for a period of five (5) years following the Effective
Date or, if later, up to the termination of the statute of limitations for any
matter with respect to which TIM, the Partnership, the Stockholders, TCC or
TCLP are indemnifying Western and its Affiliates hereunder, be available at the
written request of and at the expense of the Stockholders, TCC and TCLP during
regular business hours to the Stockholders, TCC and TCLP and their authorized
representatives, accountants and attorneys for any reasonable business purpose.
All information so made available to, or retained by, any Stockholder, TCC or
TCLP after the Effective Date shall be held in confidence by such Person in
accordance with Section 9.11 hereof. In addition, for a period of five (5)
years after the Effective Date, at the written request and expense of Western,
each of the Stockholders, TCC and TCLP shall make available to Western copies
of any documents not theretofore delivered to Western relating to any potential
or actual tax liabilities of the Partnership or TIM for any periods ending on
or prior to the Effective Date.
(u) Interim Financial Statements and Statistical
Summaries. Between the date of this Agreement and the Effective Date, TCC
shall cause the Partnership and TIM to deliver to Western (i) as soon as
practicable but no later than forty-five (45) days after the end of each
calendar month with respect to the Partnership and TIM unaudited financial
statements ("Interim Financial Statements") for the most recent month and the
interim period then ended and (ii) within ten (10) Business Days after the end
of each calendar month with respect to the Partnership and TIM interim
statistical summaries (the "Interim Statistical Summaries") for the most recent
month and interim period then ended, which summaries will be in scope and
format substantially identical to the Statistical Summaries (as hereinafter
defined).
(v) No Termination or Settlement. Without the prior
written consent of Western, which consent shall not be unreasonably withheld,
neither the Partnership nor TIM shall, and none of TIM, the Stockholders, TCC
or TCLP shall cause or permit the Partnership or TIM to,
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terminate any agent or settle any dispute with any agent if such termination or
settlement would cause Western to have any continuing obligation after the
Effective Date with respect thereto.
(w) Training. At the request of Western, TCC shall cause
Western's employees and agents to be trained in the use of the Partnership's or
TIM's billing system, such training to be provided at the Partnership's or
TCLP's premises at mutually convenient times so as not to disrupt the
Businesses and at no cost to Western. In addition, each of TIM, the
Partnership, each of the Stockholders, TCC and TCLP shall, at the request of
Western, use all commercially reasonable efforts to assist, and shall cause its
employees, agents, officers and subcontractors to assist, Western in converting
and transferring the Partnership's or TIM's subscribers to Western's billing
system so that at the Effective Date or as soon thereafter as is reasonably
practicable all of the Partnership's or TIM's subscriber information shall have
been transferred and converted to Western's billing system.
(x) No Actions by TIM. Prior to acquiring 100% of the
ownership interests in the Partnership as contemplated hereby, TIM shall not,
and the Stockholders shall not cause or permit TIM to, enter into any
Contracts, conduct any business or operations, hire any employees, acquire any
assets (other than the Partnership Interest and TCC's interest in the
Partnership (including the 1% general partnership interest)), take any actions
whatsoever or subject itself to any liability or obligation, whether accrued,
absolute or contingent, except (i) such actions as may be necessary to
consummate the transactions contemplated herein, which actions TIM shall, and
the Stockholders shall cause TIM to, perform, including accepting the
assignment and transfer of the Partnership Interest and TCC's partnership
interest in TCLP (including the 1% general partnership interest) prior to the
consummation of the Merger, or, (ii) following the transfer to TIM of the
Partnership Interest and TCC's partnership interest in the Partnership
(including the 1% general partnership interest), such actions as the
Partnership would be permitted to take pursuant to this Agreement as such
actions relate to the Businesses or assets of the Partnership.
(y) Reimbursable Indebtedness Amount. TCLP, TCC and the
Stockholders jointly and severally represent, warrant, covenant and agree that
the Reimbursable Indebtedness Amount of the Partnership and TIM at the
Effective Date shall not exceed the amount of $35,000,000 plus the Reimbursable
Capital Expenditures of the Partnership and TIM at the Effective Date, less, if
the estimated Working Capital on the Effective Date is a negative number, such
estimated amount.
4.02 Covenants of Western and Western Sub. Western and Western Sub,
jointly and severally, covenant and agree that from and after the execution and
delivery of this Agreement to and including the Effective Date as follows:
(a) Consummate Transactions. Western shall use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated in accordance with the terms hereof, and, without limiting the
generality of the foregoing, to obtain all necessary consents and
authorizations of third parties, including the approval of this Agreement and
the transactions contemplated hereby by all governmental authorities and
agencies, including the FCC and any state public utilities or public service
commission, and to make all filings with and to give all notices to
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<PAGE> 23
third parties which may be necessary or reasonably required of Western in order
to consummate the transactions contemplated hereby.
(b) Western and Western Sub Not to Control.
Notwithstanding any provision of this Agreement that may be construed to the
contrary, pending the Effective Date, TIM, the Stockholders, TCC and TCLP shall
maintain actual (de facto) and legal (de jure) control over the Partnership,
TIM and the Businesses. Specifically, the responsibility for the operation of
the Partnership, TIM and the Businesses shall, pending the Effective Date,
reside with TIM, the Stockholders, TCC and TCLP, including responsibility for
the following matters: (i) access to and the use of the facilities of and
equipment owned by the Partnership or TIM; (ii) control of the daily operation
of the Partnership or TIM; (iii) creation and implementation of policy
decisions; (iv) employment and supervision of employees; (v) payment of
financing obligations and expenses incurred in the operation of the Partnership
or TIM; (vi) receipt and distribution of monies and profits derived from the
operation of the Partnership or TIM; and (vii) execution and approval of all
contracts and applications prepared and filed before regulatory agencies.
(c) Class A Common Stock.
(i) Western shall not, for a period of two (2)
years from the Effective Date or for so long as the Stockholders or the Selling
Securityholders own any shares of such Class A Common Stock issued to them
hereunder, whichever is shorter, deregister the Class A Common Stock registered
pursuant to Section 12(b) or 12(g) of the Exchange Act or delist the Class A
Common Stock from trading on one of any of NASDAQ, NYSE or AMEX, unless
Western is concurrently listing such stock on another such exchange; provided,
however, that nothing contained in this Section 4.02(c) shall be deemed to
prevent Western from deregistering the Class A Common Stock registered pursuant
to Section 12(b) or 12(g) of the Exchange Act or delisting the Class A Common
Stock from trading on the NASDAQ, NYSE or AMEX in connection with a "going
private" transaction pursuant to Rule 13e-3 of the Exchange Act or as a result
of a merger or consolidation of Western or other transaction in which
substantially all of the assets or capital stock of Western is acquired by a
third party.
(ii) Western further covenants and agrees that at
the time of issuance of the shares of Class A Common Stock to the Stockholders
pursuant to Section 3.02 hereof and for so long as the registration statement
contemplated by Section 3.04(b) hereof is required to remain effective, Western
shall principally be engaged in the business of mobile communications. Western
agrees to provide Selling Securityholders with such quantity of prospectuses to
which such registration statement relates (each a "Prospectus") as Selling
Securityholders shall reasonably request. Western agrees to notify Selling
Securityholders of (A) the issuance or threatened issuance of any stop order or
other order preventing or suspending the use of any Prospectus, (B) any
suspension or threatened suspension of the use of any Prospectus in any state,
(C) any proceedings commenced or threatened to be commenced by the SEC or any
state securities commission which would result in the issuance of such stop
order or other order or suspension of use, or (D) request by the SEC to
supplement or amend any Prospectus after the effectiveness of such registration
statement. Western agrees to use its best efforts to prevent or promptly
remove any stop order or other order preventing or suspending the use of any
Prospectus during the required period of
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<PAGE> 24
effectiveness for a registration statement hereunder and to comply with any
such request by the SEC to amend or supplement any Prospectus.
4.03 Governmental Filings. Each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP, jointly and severally, and Western covenant and
agree from and after the execution and delivery of this Agreement to and
including the Effective Date as follows:
(a) It is understood that the consummation of this
transaction is subject to prior approval of the FCC and may be subject to the
prior approval of one or more state regulatory commissions. The parties shall
use their best efforts to file with the FCC and any relevant state agency or
agencies, as soon as practicable following the date hereof and in no event
later than ten (10) Business Days from the date hereof, a joint application
requesting the approval of the FCC to the transactions contemplated hereby,
including the transfer of control of the Partnership. Each of the parties
hereto shall diligently take or cooperate in the taking of all steps which are
necessary or appropriate to expedite the prosecution and favorable
consideration of such applications. The parties covenant and agree to
undertake all actions reasonably requested by the FCC or other regulatory
authority and to file such material as shall be necessary or required to obtain
any necessary waivers or other authority from the FCC or such state agency or
agencies in connection with the foregoing applications.
(b) Within fifteen (15) Business Days of the date of
execution hereof, Western and the Stockholders shall file, or cause to be
filed, with the Federal Trade Commission and the Antitrust Division of the
Department of Justice any and all reports or notifications which are required
to be filed under the HSR Act or other Federal law or administrative
regulations.
4.04 Cooperation. Each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP, jointly and severally, and Western agree to
cooperate with and to take all actions reasonably requested by the other so as
to minimize, to the extent possible, any disruption to any of the Partnership's
or TIM's operations upon the Effective Date and, in connection therewith, each
of TIM, the Partnership, each of the Stockholders, TCC and TCLP shall provide,
subject to the last sentence of Section 4.01(b) hereof, Western with reasonable
access to its employees and facilities prior to the Effective Date, and shall
cause such employees, agents, advisors, subcontractors and representatives to
work with Western and its employees, agents, advisors, subcontractors and
representatives for purposes of planning for and implementing the transfer of
control of the Businesses and the assets used in the Businesses to Western on
the Effective Date.
4.05 Stockholder Liability Prior to Effective Date. The obligations
of the Stockholders hereunder to perform their obligations hereunder prior to
the Effective Date shall, prior to the Effective Date and, except for Western's
rights under Section 9.02 hereof, be nonrecourse to the Stockholders except to
the extent of their respective ownership interests in TIM; it being the
agreement of the parties that neither Western nor Western Sub shall, prior to
the Effective Date, have recourse to the assets of the Stockholders other than
their ownership interests in TIM in order to satisfy any liabilities of the
Stockholders arising hereunder prior to the Closing Date.
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<PAGE> 25
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.01 TIM's, the Partnership's, the Stockholders', TCC's and TCLP's
Representations and Warranties. Each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP, jointly and severally, represent and warrant to
Western and Western Sub, which representations and warranties shall survive the
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, as follows:
(a) Due Organization. Each of TCC and TIM is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of TCLP and the Partnership is a limited
partnership, duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of TIM, the Partnership, the Stockholders,
TCC and TCLP has all requisite corporate or partnership, as the case may be,
power and authority, or in the case of the Stockholders who are natural
persons, the capacity, to own, operate and lease its property and to carry on
its business as now conducted. Each of TIM, the Partnership, TCC and TCLP is
duly qualified to do business and is in good standing in all states where the
conduct of its business or the ownership of its properties makes such
qualification necessary, except where the failure to so qualify would not have
a material adverse effect on such Person, its financial condition or business,
or the transactions contemplated hereby. The certificates of incorporation,
by-laws, minute books, stock certificate books, stock transfer ledgers or
partnership agreements, as applicable, of TIM, the Partnership, TCC and TCLP to
be delivered to Western pursuant to this Agreement will be true, correct and
complete as of the date of delivery thereof.
(b) TIM Shares. The Stockholders are the record and
beneficial owners of all of the TIM Shares and the TIM Shares constitute all of
the issued and outstanding shares of capital stock of TIM. The TIM Shares are
duly authorized, duly issued, fully paid and non-assessable. Except for
options held by MCP and MCI to purchase in the aggregate up to 80.31% of the
issued and outstanding capital stock of TIM and except for the Securityholders'
Agreement referenced in Exhibit 5.01(p), there are no outstanding
subscriptions, options, warrants, rights or convertible or exchangeable
securities issued by the Stockholders or TIM or other agreements or commitments
to which either the Stockholders or TIM is a party of any character relating to
the issued or unissued capital stock or other securities of TIM, including any
agreement or commitment obligating either the Stockholders or TIM to issue,
deliver or sell, or cause to be issued, delivered or sold, shares of capital
stock or other securities of TIM or obligating the Stockholders or TIM to
grant, extend or enter into any subscription, option, warrant, right or
convertible or exchangeable security, right of first refusal, right to receive
notification of the transactions contemplated hereby or other similar agreement
or commitment with respect to TIM, or obligating TIM to make any payments
pursuant to any stock based or stock related plan or award.
(c) TCC's and TCLP's Partnership Interests. On the date
hereof, TCC and TCLP are the sole general and limited partners of the
Partnership. On or prior to the Effective Date, all of the general and limited
partnership interest(s) in the Partnership will be transferred to TIM and as a
result TIM will be the owner of all Businesses and all of the assets of the
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<PAGE> 26
Partnership. Each of TCC and TCLP owns its interest in the Partnership free
and clear of all Liens, voting rights agreements, restrictions on transfer and
rights of first refusal, direct or indirect, whether accrued, absolute,
contingent or otherwise except as disclosed on Exhibits annexed hereto, each of
which will be released and terminated on the Effective Date. Subject to the
approval of the FCC, the termination of the required waiting period (if any)
under the HSR Act, and the receipt of all other consents, approvals, orders or
authorizations of, or registrations, qualifications or filings with, any
governmental authority which are required to be obtained in connection with the
consummation of the transactions contemplated hereby and which are described on
Exhibits annexed hereto, TCC and TCLP have full right, power and authority
to consummate the transactions contemplated hereby. There are no outstanding
subscriptions, options, warrants, rights or convertible or exchangeable
securities issued by TCC, TCLP, TIM or the Partnership or other agreements or
commitments to which either TCC, TCLP, TIM, the Stockholders or the Partnership
is a party of any character relating to partnership interests in the
Partnership, including any agreement or commitment obligating TCC, TCLP, TIM,
the Stockholders or the Partnership to issue, deliver or sell, or cause to be
issued, delivered or sold, equity interests in the Partnership or obligating
TCC, TCLP, TIM, the Stockholders or the Partnership to grant, extend or enter
into any subscription, option, warrant, right or convertible or exchangeable
security, right of first refusal, right to receive notification of the
transactions contemplated hereby or other similar agreement or commitment with
respect to the Partnership, or obligating the Partnership to make any payments
pursuant to any equity-based plan or award. True and correct copies of (i) the
Agreement of Limited Partnership by and among Triad Cellular Corporation and
Triad Cellular L.P. dated May 3, 1993 (the "TMLP Limited Partnership
Agreement") and (ii) the Agreement of Limited Partnership by and among Triad
Cellular Corporation and Triad Investment Texas, Inc. dated September 25, 1992
(the "TCLP Limited Partnership Agreement") have heretofore been delivered to
Western.
(d) Power and Authority; No Violation. Each of TIM, the
Partnership, the Stockholders, TCC and TCLP has full power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and all
transactions contemplated hereby have been duly and validly authorized by all
necessary action on the part of each of TIM, the Partnership, each Stockholder,
TCC and TCLP and this Agreement constitutes a legal, valid and binding
obligation of each of such Persons enforceable in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally. Neither the execution, delivery or performance of
this Agreement by any of TIM, the Partnership, any Stockholder, TCC or TCLP,
nor the consummation of the transactions contemplated hereby will, with or
without the giving of notice or the passage of time, or both (i) conflict with,
result in a default or loss of rights (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any Lien, pursuant to (A) any provision of the certificate of incorporation,
by-laws or partnership agreement, stockholders agreement or other constituent
documents of any of TIM, the Partnership, any Stockholder, TCC or TCLP,
including the TMLP Limited Partnership Agreement or the TLCP Limited
Partnership Agreement; (B) any material note, bond, indenture, mortgage, deed
of trust, Contract, agreement, lease or other instrument or obligation to which
any of TIM, the Partnership, any Stockholder, TCC or TCLP or its properties may
be bound or affected; or (C) any law, order, judgment, ordinance, rule,
regulation or decree to which any of TIM, the Partnership, any Stockholder,
TCC or TCLP is
Execution - 26 -
<PAGE> 27
a party or by which its properties are bound or affected; or (ii) give rise to
any right of first refusal or similar right with respect to any interest, or
any properties or assets, of any of TIM, the Partnership, any Stockholder, TCC
or TCLP. Except as described on Exhibit 5.01(d) annexed hereto, no permit,
consent, filing or approval of any third party is required to be obtained or
made by any of TIM, the Partnership, any Stockholder, TCC or TCLP in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby in order to (A) render
this Agreement and the transactions contemplated hereby valid and effective,
(B) enable TIM, TCC and TCLP to transfer the Partnership Interest owned by TCLP
and the one (1%) percent general partnership interest of TCC in the Partnership
to TIM as contemplated hereby (except that the consent of the lenders under the
Loan Agreement referenced in item 2 of Exhibit 5.01(p) hereto is necessary in
order for TIM to acquire the partnership interests in the Partnership) and (C)
enable the parties hereto to consummate the Merger and the transactions
contemplated hereby. None of TIM, the Partnership, any Stockholder, TCC or
TCLP has granted any powers of attorney granting to any Person the right to
bind such Person other than those to be released on or prior to the Effective
Date or those which do not relate to the Businesses, the assets used in the
Businesses or the transactions contemplated hereby. .
(e) Financial Statements. Exhibit 5.01(e) annexed hereto
contains a list of audited and unaudited financial statements of each of TIM
and the Partnership for the periods indicated on such Exhibit 5.01(e) (the
"Operating Financial Statements") and a list of Key Statistical Summaries of
each of TIM and the Partnership for the periods indicated on such Exhibit
5.01(e) (the "Statistical Summaries"). True and complete copies of each item
listed thereon have previously been delivered to Western. The Operating
Financial Statements are, and the Interim Financial Statements will be, true
and correct in all material respects, have been or will be prepared from the
books and records of each of TIM and the Partnership and fairly present or will
fairly present the financial position of TIM and the Partnership in a manner
consistent with prior periods as of the dates of such statements and the
results of its operations and statements of cash flow for the year or interim
period then ended, in each case in conformity with generally accepted
accounting principles applied on a basis consistent with past practices. The
Statistical Summaries are, and the Interim Statistical Summaries will be, true
and correct in all material respects and have been or will be prepared from the
books and records of TIM and the Partnership in a manner consistent with prior
periods. Neither the Partnership nor TIM has incurred nor is it subject to any
liabilities or obligations, whether accrued, absolute or contingent, which are
in the aggregate material to the Businesses or its financial condition which
have not been (i) reflected or accrued against in the Operating Financial
Statements, (ii) incurred since the date of the latest Operating Financial
Statements as permitted by Section 4.01(c) hereof and will be reflected on the
Interim Financial Statements or the Effective Date Balance Sheet, as the case
may be, or (iii) reflected in the Exhibits annexed hereto.
(f) Legal Matters. Except as set forth on Exhibit
5.01(f) annexed hereto, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, writ, injunction, decree or judgment (collectively,
the "Legal Matters"), in progress or pending, or to the knowledge of any of
TIM, the Partnership, any of the
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<PAGE> 28
Stockholders, TCC or TCLP, threatened, against or relating to any of such
Persons or the Businesses or the assets used in the Businesses, nor does any of
TIM, the Partnership, any of the Stockholders, TCC or TCLP know or have reason
to be aware of any basis for the same, which would individually or in the
aggregate have a material adverse effect on (i) any of such Persons or the
Businesses or the assets used in the Businesses or the ability of the parties
hereto to consummate the Merger as herein contemplated, (ii) the business or
financial condition of or any of such Persons, or (iii) the transactions
contemplated by this Agreement.
(g) Accounts Receivable. The accounts receivable of the
Partnership shown on its Operating Financial Statements arose in the ordinary
course of business, are owned by the Partnership free and clear of any Lien
(other than Liens to be released on or prior to the Effective Date) and have
been collected or are collectible in the normal course at the aggregate
recorded amounts thereof, subject to no valid counter claims or set-offs, less
a reserve for uncollectible items as set forth on Exhibit 4.01(g) annexed
hereto. The accounts receivable acquired by the Partnership and shown on the
Interim Financial Statements or the Effective Date Balance Sheets, as the case
may be, will have arisen in the ordinary course of business, are or will be
owned by the Partnership free and clear of any Lien (other than Liens to be
released on or prior to the Effective Date) and have been collected or will be
collectible in the normal course of business at the aggregate recorded amounts
thereof, less a reserve for uncollectible items as set forth in Exhibit 4.01(g)
annexed hereto. Such percentage is based upon the historical collectibility of
the accounts receivable of the Partnership and represents TIM's, the
Partnership's, the Stockholders', TCC's and TCLP's good faith estimate of the
percentage of the Partnership's accounts receivable which will not be
collectible in the ordinary course of business.
(h) Title to the TIM Shares. The Stockholders have on
the date hereof and (together with MCP and MCI, if they exercise their options
to acquire TIM shares) will have on the Effective Date, good and marketable
title to the TIM Shares, free and clear of all Liens, voting rights agreements,
restrictions on transfer and rights of first refusal, direct or indirect,
whether accrued, absolute, contingent or otherwise except as disclosed on
Exhibit 5.01(h) annexed hereto, each of which will be released and terminated
on the Effective Date. Subject to the approval of the FCC, the termination of
the required waiting period (if any) under the HSR Act, and the receipt of all
other consents, approvals, orders or authorizations of, or registrations,
qualifications or filings with, any governmental authority which are required
to be obtained in connection with the consummation of the transactions
contemplated hereby and which are described on Exhibit 5.01(h) annexed hereto,
the Stockholders have full right, power and authority to consummate the Merger
and the transactions contemplated hereby.
(i) Compliance with Laws. Each of TIM, the Partnership,
the Stockholders, TCC and TCLP is in compliance with all applicable laws,
regulations and administrative orders of the United States and the states in
which such Persons transact business (including all applicable rules and
regulations of the FCC, any state public utilities or public service
commission, or any other Federal or state governmental agency or
instrumentality exercising jurisdiction over such Person or its properties or
businesses), and of each municipality, county or subdivision of any thereof, to
which any of its businesses or any of its properties may be subject, the
non-compliance with which would have a material adverse effect upon (i) the
Partnership's or TIM's ownership of the Businesses or the assets used in the
Businesses or the ability of the parties hereto to
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<PAGE> 29
consummate the Merger as herein contemplated, or (ii) the Partnership, its
financial condition or business, or the transactions contemplated hereby.
(j) Environmental Matters. There has been no
manufacture, refining, storage, disposal or treatment of Hazardous Substances
(as hereinafter defined) by the Partnership (or, to the knowledge of TIM, the
Partnership, any Stockholder, TCC and TCLP, its predecessors in interest) at
any real property currently or in the past owned, operated, used, leased or
contracted for by the Partnership or otherwise in violation of any
Environmental Laws (as hereinafter defined) or which would require remedial
action under any Environmental Law; to the knowledge of TIM, the Partnership,
any Stockholder, TCC and TCLP, none of the soil, ground water, or surface water
of such real property is contaminated by any Hazardous Substance. During the
past five years none of TIM, the Partnership, any of the Stockholders, TCC or
TCLP has received any (i) notice of any such violation with respect to any
Hazardous Substance at or by any of such real property, (ii) notice from any
governmental agency that it, or any present or former owner, lessee or operator
of such real property is a potentially responsible party for cleanup liability
with respect to the emission, discharge or release of any Hazardous Substance
or for any other matter arising under the Environmental Laws or in any
litigation, administrative proceeding, finding, order, citation, notice,
investigation or complaint under any Environmental Law, or (iii) notice of
violation, citation, complaint, request for information, order, directive,
compliance schedule, notice of claim, proceeding or litigation from any party
concerning the compliance of any of TIM, the Partnership, any Stockholder, TCC
or TCLP with any Environmental Law. To the knowledge of TIM, the Partnership,
each of the Stockholders, TCC and TCLP, there are no incinerators, septic tanks
or cesspools located on such real property, all sewage is discharged into a
public sanitary sewer system (except that at certain switch sites the
Partnership contracts with third party providers for the siting and servicing
of portable sanitary toilet facilities) and no Hazardous Substances are
emitted, discharged or released, directly or indirectly, by any of TIM, the
Partnership, any Stockholder, TCC or TCLP into the atmosphere or any body of
water. No permits, licenses or other authorizations issued pursuant to the
Environmental Laws are required for Western's ownership, use or occupancy of,
or the Partnership's present ownership, use or occupancy of, such real
property. As used herein "Environmental Laws" means the Resource Conservation
Recovery Act, the Comprehensive Environmental Responsibility Compensation and
Liability Act, the Superfund Amendments and Reauthorization Act, the Toxic
Substances Control Act, the Hazardous Materials Transportation Act, the Clean
Air Act, the Clean Water Act, and other similar Federal and state laws, as
amended, together with all regulations issued or promulgated thereunder,
relating to pollution, the protection of the environment or the health and
safety of workers or the general public. As used herein "Hazardous Substance"
means any hazardous substance, hazardous or toxic waste, hazardous material,
pollutant or contaminant, as those or similar terms are used in the
Environmental Laws, including asbestos and asbestos-related products,
chlorofluorocarbons, oils or petroleum- derived compounds, polychlorinated
biphenyls, pesticides and radon. As used in this Section 5.01(j), the term
"knowledge" refers to actual and not constructive knowledge and is not intended
to impose upon TIM, the Partnership, any of the Stockholders, TCC or TCLP any
duty to investigate the condition of any real property other than in the
ordinary course of business and consistent with past practices.
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<PAGE> 30
(k) Authorizations.
(i) The Partnership has (and upon transfer of the
Partnership Interest and the one (1%) percent general partnership interest in
the Partnership to TIM, TIM will have) (A) all requisite franchises, licenses,
authorizations, consents, permits and approvals of the FCC and of all state
public utility or public service commissions and (B) all other material
franchises, licenses, authorizations, consents, permits and approvals of
governmental agencies exercising jurisdiction over the Partnership (or TIM) or
its businesses or assets (all such franchises, licenses, authorizations,
consents, permits and approvals, as amended to the date hereof, are
collectively referred to as the "Authorizations"), required to carry on the
Businesses as now conducted or as contemplated to be conducted. All such
Authorizations are listed on Exhibit 5.01(k) annexed hereto.
(ii) The Authorizations are in full force and
effect and have not been suspended, modified in any material adverse respect,
canceled or revoked, and each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP has operated in compliance with all terms thereof or
any renewals thereof applicable to it except where failure to so comply would
not have a material adverse effect on such Person, its financial condition or
the Businesses or the assets used in the Businesses. No event has occurred
with respect to any of the Authorizations which permits, or after notice or
lapse of time or both would permit, revocation or termination thereof or would
result in any other material impairment of the rights of the holder of any such
Authorizations. Except as set forth on Exhibit 5.01(k) annexed hereto, there
is not pending as of the date hereof any application, petition, objection or
other pleading with the FCC or any public service commission or similar body
having jurisdiction or authority over the communications operations of any of
TIM, the Partnership, any of the Stockholders, TCC or TCLP which questions the
validity of or contests any Authorization or which presents a substantial risk
that, if accepted or granted, would result in the revocation, cancellation,
suspension or any materially adverse modification of any Authorization.
(iii) Except as set forth on Exhibit 5.01(k)
annexed hereto, no permit, consent, approval, authorization, qualification or
registration of, or declaration to or filing with, any governmental or
regulatory authority or agency is required to be obtained or made by any party
hereto in connection with the execution and delivery of this Agreement or with
the consummation of the transactions contemplated hereby in order to (A) render
this Agreement and the transactions contemplated hereby valid and effective and
(B) enable the parties hereto to consummate the Merger and the other
transactions as herein contemplated.
(l) Title to Property.
(i) Except as disclosed in Exhibit 5.01(l)
annexed hereto, the Partnership has good and marketable title to all property
owned (including all property and assets, real and personal, included in the
Operating Financial Statements) and a good and valid leasehold interest in all
property leased by the Partnership, free and clear of all Liens except for (A)
Liens for taxes, assessments, governmental charges or levies which shall not at
this time be due and delinquent or which hereafter can be paid without penalty
or with respect to which the Partnership
Execution - 30 -
<PAGE> 31
is currently contesting the validity thereof in good faith by appropriate
proceedings and with respect to which it has established adequate reserves, (B)
warehousemen's, mechanics', carriers', landlords', repairmen's, or other
similar Liens arising in the ordinary course of business, (none of which,
either singly or in the aggregate, is material) and (C) Liens which will be
released on or prior to the Effective Date in accordance with the provisions of
Section 3.05(a) hereof. Exhibit 5.01(l) annexed hereto correctly identifies
(A) each parcel of real property owned by the Partnership, (B) each lease by
the Partnership of any real property and each space allocation arrangement with
the Partnership covering any real or other material property used in the
Partnership's businesses, and (C) each guaranty by any Person of any such
lease. Exhibit 5.01(l) annexed hereto contains, with respect to the
Partnership, a list setting forth (1) the location of all cell and switch sites
and (2) the number of voice channels installed and operational at each site.
(ii) All of the buildings and other material
tangible personal property owned or leased by the Partnership are in good
working condition (normal wear and tear excepted), and are adequate and
suitable for the purposes for which they are presently being used. All such
property is being operated in conformity with applicable statutes, regulations,
and ordinances, the failure of which to so conform would have a material
adverse effect on the Partnership, its financial condition or business or the
transactions contemplated hereby. All such assets are, in the aggregate,
sufficient in all material respects to continue operating the business of the
Partnership as has been heretofore conducted.
(iii) Neither the whole nor any material portion of
any real property owned or leased by the Partnership has been condemned,
requisitioned or otherwise taken by any public authority, and none of TIM, the
Partnership, any of the Stockholders, TCC or TCLP has actual knowledge that any
such condemnation, requisition or taking is threatened or contemplated. None
of the real or personal properties owned, leased or operated by the
Partnership, or the ownership, occupancy or operation thereof, is in violation
in any material respect of any law or any building, zoning or other ordinance,
code, rule, regulation or requirement, and no notice from any governmental body
or other Person has been served upon any of TIM, the Partnership, any of the
Stockholders, TCC or TCLP claiming any violation of any such law, ordinance,
code, rule or regulation or requiring, or calling attention to the need for,
any work, repairs, construction, alterations or installation on or in
connection with said property which has not been complied with.
(m) Insurance. Exhibit 5.01(m) annexed hereto sets forth
a list and brief description of all policies of fire, liability and other forms
of insurance and material fidelity bonds held by the Partnership or TIM. The
Partnership's and TIM's assets, business, equipment, property and operations
are adequately insured against loss or damage and all other hazards or risks of
the character usually insured against by companies in the same or similar
business and such insurance shall be continued in full force and effect through
11:59 p.m. on the Effective Date. Each such policy and fidelity bond
referenced in such Exhibit 5.01(m) annexed hereto is in full force and effect,
all premiums due and payable under such policies and fidelity bonds have been
and on the Effective Date will be paid in full, and there are no disputed
claims arising under such policies or fidelity bonds.
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<PAGE> 32
(n) Employees. Exhibit 5.01(n) annexed hereto contains a
list setting forth the name and current annual salary and other compensation
payable to each Employee, as hereinafter defined, and the profit sharing, bonus
or other form of additional compensation paid or payable by the Partnership or
TIM to or for the benefit of each such person for the current fiscal year.
Except as set forth on Exhibit 5.01(n) annexed hereto or under the employment,
consulting or other agreements listed thereon, there are no oral or written
contracts, agreements or arrangements obligating the Partnership to increase
the compensation or benefits presently being paid or hereafter payable to any
Employees. Exhibit 5.01(n) annexed hereto sets forth summaries of all oral
employment or consulting or similar arrangements regarding any Employee which
are not terminable without liability on thirty (30) days' or less prior notice
and lists all written employment and consulting agreements with respect to any
Employee, true and complete copies of which have been provided to Western.
Except for severance obligations to Employees set forth on Exhibit 5.01(n)
annexed hereto, there is not due or owing and there will not be due and owing
at the Effective Date to any Employees, any sick pay, severance pay (whether
arising out of the termination of an Employee prior to, on, or subsequent to
the Effective Date), compensable time or pay, including salary, commission and
bonuses, personal time or pay or vacation time or vacation pay attributable to
service rendered on or prior to the Effective Date. Except as disclosed in the
Exhibits annexed hereto, there is not now, and there will not be as of the
Effective Date, any liability arising out of claims made or suits brought
(including workers' compensation claims and claims or suits for contribution
to, or indemnification of, third parties, occupational health and safety,
environmental, consumer protection or equal employment matters) for injury,
sickness, disease, discrimination, death or termination of employment of any
Employee, or other employment matter to the extent attributable to an event
occurring or a state of facts existing on or prior to the Effective Date. The
Partnership and TIM employ no Employees and maintain no Employee Plans.
(o) Intellectual Property Rights. All of the patents,
trademarks, service marks, tradenames, trade secrets, copyrights, licenses and
other intellectual property rights material to the operation of any of the
Businesses or owned or held by the Partnership are described on Exhibit 5.01(o)
annexed hereto. Except as set forth on Exhibit 5.01(o) annexed hereto, the
conduct by the Partnership of its businesses does not to the knowledge of any
of TIM, the Partnership, any of the Stockholders, TCC or TCLP infringe upon or
violate any patents, trademarks, service marks, trade names, trade secrets,
copyrights, licenses or rights of anyone, and, except as set forth on Exhibit
5.01(o) annexed hereto, no claim is pending or threatened to the effect that
the conduct by the Partnership of its businesses infringes upon or violates any
patents, trademarks, service marks, trade names, trade secrets, copyrights,
licenses or rights of anyone.
(p) Indebtedness. Exhibit 5.01(p) annexed hereto lists
generally all indentures, trust deeds, loan agreements, or other instruments
pursuant to which either of TIM or the Partnership has incurred Indebtedness or
has guaranteed the Indebtedness of any Person all of which shall be terminated
and released with respect to TIM and the Partnership on or prior to the
Effective Date. Other than as set forth in Exhibit 5.01(p) annexed hereto,
neither TIM nor the Partnership is indebted to any Affiliate, stockholder,
director, officer, employee, agent or partner of TIM or the Partnership or of
any Affiliate of TIM or the Partnership and no Affiliate, stockholder,
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<PAGE> 33
director, officer, employee, agent or partner of TIM or the Partnership or of
any Affiliate of TIM or the Partnership is indebted to any Stockholder.
(q) Tax Matters. Each of TIM, TCC, TCLP and the
Partnership has timely filed all Federal, state and local Tax (as defined in
Section 7.03(a)) returns and all information returns and reports required to be
filed by or with respect to it under the laws of the United States or any state
or other jurisdiction on or prior to the date hereof and will timely file all
such returns and reports required to be filed from the date hereof through the
Effective Date. True and complete copies of such reports and returns filed on
or before the date hereof have been or will be furnished or made available to
Western within thirty (30) days after the date hereof and true and complete
copies of all such returns and reports filed after the date hereof and on or
before the Effective Date will be furnished to Western within five (5) days
after they are filed. All such reports and returns were or will be accurately
prepared in accordance with all applicable statutes, rules and regulations and
are or will be correct as filed. Neither TCLP nor the Partnership is or was an
association taxable as a corporation for Federal, state or local tax purposes.
Each of TIM, TCC, TCLP and the Partnership has paid all Taxes (including Taxes
for which TIM, TCC, TCLP or the Partnership is a collection agent, e.g.,
withholding, excise, sales, use, Social Security and similar Taxes) which have
become due and payable (and will pay prior to the Effective Date all Taxes
which shall have become due and payable on or prior to the Effective Date) with
respect to TIM, TCC, TCLP and the Partnership for all taxable periods ending on
or prior to the Effective Date or will have set aside and reflected on the
Effective Date Balance Sheet adequate reserves therefor. None of TIM, TCC,
TCLP or the Partnership has ever been included in a consolidated Federal income
tax return or combined or unitary state tax return. None of TIM, TCC, TCLP or
the Partnership is a party to, nor has been notified that it is the subject of,
any pending, proposed or threatened action, investigation, proceeding, audit,
claim or assessment by or before the Internal Revenue Service or any other
governmental authority and no claim for assessment, deficiency or collection of
Taxes, or proposed assessment, deficiency or collection, for which TIM, TCC,
TCLP or the Partnership may be liable, has been asserted or threatened against
it. None of TIM, TCC, TCLP or the Partnership has received any notice of
deficiency, assessment or collection or proposed deficiency, assessment or
collection from the Internal Revenue Service or any other governmental
authority which has not been satisfied, nor, except as set forth on Exhibit
5.01(q) annexed hereto, does any of TIM, TCC, TCLP, the Partnership, any of the
Stockholders or TCC have any reason to believe that any such notice will be
received in the future. Except as set forth on Exhibit 5.01(q), the Internal
Revenue Service has never audited any Federal income tax return of TIM, TCC,
TCLP or the Partnership. The charges, accruals and reserves shown in the
Operating Financial Statements of the Partnership and TIM in respect of Taxes
for all fiscal periods to date are adequate. There are no material unpaid
assessments or proposals for additional Taxes for which TIM, TCC, TCLP and the
Partnership do not have adequate reserves, nor does any of TIM, TCC, TCLP, the
Partnership, any Stockholder or TCC know of any basis therefor for any such
period. There are no Tax rulings, requests for rulings or closing agreements
relating to either of TIM, TCC, TCLP or the Partnership which could affect its
liability for Taxes for any period after the Effective Date. Except as set
forth on Exhibit 5.01(q) annexed hereto (i) no power of attorney has been
granted by any of TIM, TCC, TCLP or the Partnership or any of its Affiliates
with respect to any matter relating to Taxes of such Person which is currently
in force, (ii) none of TIM, TCC, TCLP or the Partnership has filed any
agreement with the Internal Revenue Service described in Section
1.1503-2A(c)(3) of the Treasury
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<PAGE> 34
Regulations, (iii) none of TIM, TCC, TCLP or the Partnership has filed a
consent or made any agreement with the Internal Revenue Service under Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), or any
comparable provision of state revenue statutes, and (iv) none of TIM, TCC, TCLP
or the Partnership and none of the partners of any of them which is a
partnership is a "foreign person" within the meaning of Section 1445(f)(3) of
the Code. None of TIM, TCC, TCLP or the Partnership has executed or filed with
the Internal Revenue Service or any other governmental authority any agreement
which is still in effect waiving or extending the period for assessment or
collection of any Taxes. The Stockholders and not Western, Tim or the
Partnership shall be liable for any Taxes, payable by Western, TIM or the
Partnership by reason of the ownership of the Businesses or the assets used in
the Businesses on or prior to the Effective Date, the conduct of the Businesses
with respect to all periods ending on or prior to the Effective Date or payable
by Western, TIM or the Partnership by reason of the Merger.
(r) Employee Benefit Plans.
(i) Generally. Exhibit 5.01(r) annexed hereto
contains a true and complete list of each plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock- related awards or other
equity based awards, fringe benefits or other employee benefits of any kind,
whether formal or informal, proposed or final, funded or unfunded and whether
or not legally binding, including each "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") which is now, or ever has been, maintained, contributed
to, or required to be contributed to, for the benefit of any current or former
employee, independent contractor, agent or consultant of the Partnership or TIM
or engaged in the Businesses ("Employee"), or any current or former employee,
independent contractor, agent or consultant of any entity required to be
aggregated with the Partnership or TIM pursuant to Section 414(b), (c), (m), or
(o) of the Code and each management, employment, severance or consulting
agreement or contract with respect to any Employee or for which the Partnership
or TIM may have liability ("Employee Plan"). TIM, the Partnership, the
Stockholders, TCC and TCLP will provide to Western prior to the Effective Date
true and complete copies of all documents, if any, embodying each Employee
Plan, including all amendments thereto and written interpretations thereof; the
three most recent annual reports filed (Form 5500 Series with applicable
schedules) with respect to each Employee Plan required under ERISA; and the
most recent summary plan description, if any, with respect to each Employee
Plan required under ERISA.
(ii) Compliance. All obligations required to be
performed under each Employee Plan have been performed in all material respects
and each Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including ERISA or the Code. No
Employee Plan that is an employee pension benefit plan within the meaning of
Section 3(2) of ERISA is subject to Title IV of ERISA or is a multiemployer
plan within the meaning of Section 3(37) of ERISA, and the Partnership and TIM
do not have any liability with respect to a pension plan and a multi-employee
plan as a result of having been part of a "controlled group" within the meaning
of Section 414(b), (c), (m), and (o) of the Code, nor is there any basis for
such liability being imposed. There are no investigations, proceedings,
actions, suits or claims pending, or, to the
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<PAGE> 35
best knowledge of any of TIM, the Partnership, any Stockholder, TCC or TCLP,
threatened or anticipated (other than routine claims for benefits) against any
Employee Plan or the assets of any Employee Plan; each Employee Plan can be
amended, terminated, or otherwise discontinued on or after the Effective Date
in accordance with its terms, without liability to the Partnership, TIM,
Western or any of Western's Affiliates; all premiums required by any Employee
Plan have been paid thereunder; all outstanding indebtedness for services
performed by an Employee or accrued vacation, holiday pay, earned commissions,
accrued bonuses or other benefits owed to any Employee has been paid when due
or accrued on the books of the Partnership or TIM; all contributions due to and
payments from, the Employee Plans that may have been required to be made have
been made; no "prohibited transaction" within the meaning of Section 4975 of
the Code or Section 406 of ERISA for which a statutory administrative or
regulatory exemption is not available has occurred with respect to any Employee
Plan; and no action or failure to act with respect to any Employee Plan will
subject the Partnership, TIM, Western or any of Western's Affiliates to any tax
or penalty or other liability.
Except as listed on Exhibit 5.01(r) annexed hereto, each
Employee Plan that is intended to be qualified under the Code has received a
determination letter from the Internal Revenue Service to the effect that such
Employee Plan and related trust are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively; such determination letter
includes any new or modified requirements under the Tax Reform Act of 1986 and
subsequent legislation enacted thereafter; and no such determination letter has
been revoked, nor to the knowledge of the Seller, has revocation been
threatened. To Seller's knowledge, nothing has occurred or is expected to
occur that would adversely affect the qualified status of any Plan or any
related trust subsequent to the issuance of such determination letter.
(iii) No Post-Employment Obligations. No Employee
Plan provides, or has any liability to provide, life insurance, medical or
other employee welfare benefits (other than severance and accrued vacation and
holiday pay) to any Employee upon his retirement or termination of employment,
except as may be required by Federal or state statute and no representation,
promise or contract (orally or in writing) has been made to any Employee
(individually or as a group) that life insurance, medical or other employee
welfare benefits (other than severance and accrued vacation and holiday pay)
would be provided upon their retirement or termination of employment, except to
the extent required by Federal or state statute.
(iv) COBRA. Each "group health plan" within the
meaning of Section 4980B(g)(2) of the Code maintained or contributed to by the
Partnership, TIM or any entity with which it is considered a "single employer"
within the meaning of Section 414(b), (c), (m) and (o) of the Code, has been
administered in good faith in compliance with the continuation coverage
requirements contained in the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), as set forth at Section 4980B of the Code and any
regulations promulgated or proposed (if such proposed regulations constitute
substantial authority within the meaning of Section 6662 of the Code and any
regulations promulgated thereunder) thereunder.
(v) Effect of Transaction. Except as set forth
on Exhibit 5.01(r)(v) annexed hereto, the execution of this Agreement and the
consummation of the
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<PAGE> 36
transactions contemplated hereby will not (either alone or when taken together
with any additional or subsequent events) constitute an event under any
Employee Plan that will or may result in any payment, upon a change in control
or otherwise, whether of severance, accrued vacations or otherwise,
acceleration, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee. No payment or benefit which will or may
be made with respect to any Employee as a result of the transactions
contemplated hereby will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
(vi) Employment Matters. Each relevant entity and
person (A) is in compliance with all applicable Federal and state laws, rules
and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees, except where the failure to be in compliance would not, singly or in
the aggregate, have a material adverse effect on the Partnership or TIM, or
their financial condition or business; (B) has withheld all amounts required by
law or by agreement to be withheld from the wages, salaries and other payments
to Employees; (C) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing, except as would not
have a material adverse effect on the Partnership or TIM, or their financial
condition or business; and (D) (other than routine payments to be made in the
normal course of business and consistent with past practice) is not liable for
any payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, Social Security
or other benefits for Employees.
(vii) Labor. No work stoppage or labor strike with
respect to Employees or against the Partnership or TIM is pending or, to the
best knowledge of any of TIM, the Partnership, any of the Stockholders, TCC or
TCLP, is threatened. Except as set forth on Exhibit 5.01(r)(vii) annexed
hereto, there is no involvement nor, to the best knowledge of any of TIM, the
Partnership, any Stockholder, TCC or TCLP, is there threatened, any labor
dispute, grievance or litigation relating to labor, safety or discrimination
matters involving any Employee including charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, have a material adverse effect on the Partnership, TIM, or
their financial condition or business. There has been no engagement in any
unfair labor practices within the meaning of the National Labor Relations Act
which would, individually or in the aggregate, have a material adverse effect
on the Partnership or TIM, or their financial condition or business.
(viii) There is not presently nor has there been in
the past any collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement with respect to Employees is
at the date hereof being negotiated.
(s) Contracts.
(i) Exhibit 5.01(s) annexed hereto contains a
list of all Contracts (other than subscriber agreements and agreements having
an annual cost of less than $5,000 for any single agreement and $50,000 for all
such agreements) to which TIM or the Partnership is a party and which in any
way relate to the operations or properties of the Partnership (including the
Businesses
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<PAGE> 37
and the assets used in the Businesses) or which will be binding upon the
Surviving Corporation, its operations or properties after the Effective Date.
As used herein "Contracts" means all leases, rental agreements, insurance
policies, collective bargaining agreements, union contracts, licenses,
agreements, permits, purchase orders, sales orders, agreements with suppliers,
reseller agreements, agreements with agents, agreements with customers,
commitments and any and all other contracts, consents or binding arrangements
or understandings (including capital commitments and arrangements with respect
to construction in progress), whether written or oral, express or implied.
Except for (i) the Contracts listed on Exhibit 5.01(s) annexed hereto (true and
complete copies of which agreements have been previously delivered to Western
or, in the case of oral agreements, descriptions of which are set forth on said
Exhibit 5.01(s)), (ii) subscriber agreements and agreements having an annual
cost of less than $5,000 for any single agreement and $50,000 for all such
agreements and (iii) Contracts entered into between the date hereof and the
Effective Date as permitted by Section 4.01(c) hereof, neither TIM nor the
Partnership is a party to nor is it or any of its property bound by any
Contract.
(ii) The Partnership has performed and will
perform, in all material respects all obligations required to be performed by
it under all Contracts, and will in all material respects perform all
obligations required to be performed by it under Contracts entered into after
the date hereof as permitted by Section 4.01(c) hereof; neither the Partnership
nor, to the best of the knowledge of any of TIM, the Partnership, the
Stockholders, TCC or TCLP, any party with whom the Partnership has an
agreement, is in material default under any Contract, and no event exists which
with the giving of notice or the passage of time, or both, would create such a
default; and none of TIM, the Partnership, any of the Stockholders, TCC or
TCLP knows of a meritorious basis for any claim of any such default.
(iii) Each of the Contracts has been, and each
Contract entered into after the date hereof as permitted by Section 4.01(c)
hereof will be, lawfully entered into and is or will be valid and in full force
and effect and is or will be enforceable in accordance with its terms for the
period stated in such Contract. There are no currently threatened
cancellations of, nor are there any outstanding disputes under, any Contracts.
None of TIM, the Partnership, any of the Stockholders, TCC or TCLP will modify,
amend or waive any provisions of any Contract in a manner that would materially
adversely affect the Businesses, the assets used in the Businesses or the
financial condition of Western after the Effective Date, or terminate any
Contract prior to the Effective Date without the prior written consent of
Western, which consent will not be unreasonably withheld.
(iv) Except as set forth on Exhibit 5.01(b)
annexed hereto, the consummation of the transactions contemplated by this
Agreement does not require any consent under any Contract listed on Exhibit
5.01(s) annexed hereto, and the consummation of the transactions contemplated
by this Agreement will not require any consent under any Contract (which will
survive the Effective Date) entered into after the date hereof as permitted by
Section 4.01(c) hereof, in each case which will not have been obtained by the
Effective Date (and copies of such consents will be given to Western on or
prior to the Effective Date), and such consummation will not result in the
termination of any right or privilege under any Contract listed on Exhibit
5.01(s) annexed hereto or any other Contract (which will survive the Merger)
entered into after the date hereof as permitted by Section 4.01(c) hereof;
provided, however, that TIM, the Partnership,
Execution - 37 -
<PAGE> 38
the Stockholders, TCC and TCLP shall not be deemed to be in default of any of
their obligations under this Agreement by reason of the failure to obtain any
such individual consent so long as the failure to obtain any such consent would
not individually or together with all such other failures to obtain consents
have a material adverse effect on the Businesses, the assets used in the
Businesses or their ownership or operation by the Surviving Corporation or the
consummation of the transactions contemplated hereby. None of TIM, the
Partnership, any of the Stockholders, TCC or TCLP has received notice that any
party to any Contract listed on Exhibit 5.01(s) annexed hereto intends to
cancel such Contract nor has any party given any of TIM, the Partnership, any
Stockholder, TCC or TCLP notice of any alleged breach of any Contract or of its
intent to take any legal action in order to enforce its rights thereunder. All
liabilities and obligations of the Partnership which are due and payable or
which are to be performed on or before the Effective Date under such Contracts
have been, or will have been on the Effective Date, duly paid in full or
performed in all material respects.
(v) Exhibit 5.01(s) annexed hereto contains true
and complete copies of all forms of subscriber agreements used by the
Partnership.
(vi) The Partnership has no Contracts with any
Person (or group of Affiliated Persons) which cover more than two (2%) percent
of the Partnership's wireless telephone subscribers.
(vii) Each of the agreements between the
Partnership and its agents or dealers, including those entered into between the
date hereof and the Effective Date as permitted by Section 4.01(c) hereof,
contains or will at the Effective Date contain a provision permitting the
Partnership or its successor or its assignee, in its sole discretion, to change
the amount and rate of the fees or other consideration to be paid to such agent
or dealer upon ninety (90) days or less written notice by the Partnership to
such agent or dealer.
(viii) Except for this Agreement, the TCLP
Partnership Agreement and the agreements described herein relating to the
transfer and assignment of the Partnership Interest and TCC's one (1%) percent
general partnership interest in the Partnership to TIM immediately prior to the
consummation of the Merger, TIM is not a party to nor is it or any of its
property bound by any Contract.
(t) No Sale. None of TIM, the Partnership, any of the
Stockholders, TCC or TCLP has entered into any contract to sell, mortgage or
encumber any of the Partnership's or TIM's material assets, the TIM Shares,
TIM's 99% limited partnership interest in TCLP, the Partnership Interest or
TCC's one (1%) percent general partnership interest in the Partnership, except
as described herein.
(u) No Material Adverse Change. Since the date of the
most recent Operating Financial Statements, there has not been
(i) any material adverse change in the rate of
the Partnership's generation of cash flow from operations, as opposed to cash
flow from financing operations and investment activities, after giving effect
to customary seasonal fluctuations of cash flow generation
Execution - 38 -
<PAGE> 39
and after giving effect to agents' commissions and other marketing expenses
incurred in the ordinary course of business consistent with past practices;
(ii) any incurrence, assumption or guarantee by
the Partnership of Indebtedness other than pursuant to Contracts in existence
on the date hereof and set forth or described in Exhibit 5.01(s) annexed hereto
or as permitted pursuant to Section 4.01(c) hereof;
(iii) any creation by any of TIM, the Partnership,
the Stockholders, TCC or TCLP of any Lien on any of the assets used in the
Businesses other than pursuant to Contracts in existence on the date hereof and
set forth or described in Exhibit 5.01(s) annexed hereto or as permitted
pursuant to Section 4.01(c) hereof, each of which Liens will be terminated and
released on or prior to the Effective Date;
(iv) any making of any loan, advance or capital
contribution to or investment in any Person by the Partnership other than as
permitted pursuant to Section 4.01(c) hereof;
(v) any damage, destruction or other casualty
loss affecting any of the Businesses or the assets used in connection with the
operation of any of the Businesses which, after giving effect to payments to
the Partnership under applicable insurance policies, has had or is likely to
have a material adverse effect on the Partnership, its financial condition or
business;
(vi) any repurchase, redemption or other
acquisition by the Partnership of any outstanding interest in the Partnership;
(vii) any change by the Partnership in accounting
principles or methods; or
(viii) any other action taken by any of TIM, the
Partnership, any of the Stockholders, TCC or TCLP which, without the prior
written consent of Western, would not be permitted pursuant to Section 4.01(c)
hereof.
(v) Equipment. Except for that being replaced as set
forth on Exhibit 4.01(r) annexed hereto, substantially all of the Partnership's
(i) wireless telephone equipment, including system equipment, switch, cell site
and test equipment, (ii) mobile telephone equipment in inventory, and (iii)
equipment and software relating to any of the Partnership's billing systems are
in good working condition and are suitable for the use for which they are
intended.
(w) Bank Accounts. Exhibit 5.01(w) annexed hereto sets
forth a complete list of all bank accounts, savings deposits, money-market
accounts, certificates of deposit, safety deposit boxes, and similar investment
accounts with banks or other financial institutions maintained by or on behalf
of the Partnership showing the depository bank or institution address,
appropriate bank contact personnel, account number and names of signatories.
(x) Transactions with Affiliates. Neither the
Partnership, TIM nor any Affiliate of the Partnership, TIM nor any stockholder,
officer, director, partner, member, consultant or
Execution - 39 -
<PAGE> 40
employee of any thereof, is at the date hereof a party to any transaction with
the Partnership which would survive the Effective Date, including any contract
or arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property (including intellectual property) to or
from, or otherwise requiring payments to or from, the Partnership, TIM or any
Affiliate thereof.
(y) No Other Business; No Subsidiaries. The Partnership
has not conducted any business other than the business of owning and
operating wireless telephone companies. The Partnership does not have any
subsidiaries nor is the Partnership a partner in any other partnership or joint
venture, nor does the Partnership own any equity interest in any other entity.
(z) Securities Representation. Each of the Stockholders
acknowledges that: (i) except as may otherwise be disclosed to Western prior to
the Effective Date, it is an accredited investor (as defined in Rule 501 under
the Securities Act; (ii) it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merit and risks of the
investment in the Shares as contemplated hereby or, alternatively, that it has
engaged the services of a representative who has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of the proposed investment and who has reviewed the proposed investment
on its behalf; (iii) the Shares being delivered by Western to it have not been
registered under the Securities Act or under the securities laws of any state
in reliance upon Federal and state exemptions for transactions not involving a
public offering and are not being acquired with a view to the distribution
thereof except pursuant to a registration statement in compliance with Federal
and State securities laws or an exemption therefrom; (iv) such Shares must be
held by it indefinitely unless subsequently so registered or if an exemption
from such registration is available; and (v) it has received information
concerning Western and has had the opportunity to obtain additional information
as desired in order to evaluate the merits and risks inherent in holding such
Shares. Prior to distributing or transferring any Shares to any of its
stockholders or partners, each Stockholder agrees to obtain the representation
set forth in this paragraph (z) from the proposed transferee and to deliver
same to Western; provided, however, that any such transferee shall be a
accredited investor (as defined in Rule 501 under the Securities Act).
(aa) Investment Company Act. None of TIM, the
Partnership, any of the Stockholders, TCC or TCLP is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(bb) Truth and Correctness. No representation or warranty
by any of TIM, the Partnership, any of the Stockholders, TCC or TCLP herein,
nor any written statement or certificate or other instrument furnished to
Western or Western Sub by any of TIM, the Partnership, any of the Stockholders,
TCC or TCLP pursuant hereto or in connection with the transactions contemplated
hereby, including the Exhibits annexed hereto, contains any untrue statement of
a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
under which such statements are made, not misleading.
(cc) TCC, TCLP and the Stockholders hereby agree that on
and after the date that the Partnership Interest and TCC's partnership interest
in the Partnership (including the 1%
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<PAGE> 41
general partnership interest) are transferred to TIM, each of the
representations and warranties set forth in Section 5.01 shall, to the extent
applicable, and each of the covenants and agreements of the Partnership set
forth in Article 4 hereof shall, apply to TIM to the same extent and with the
same effect as such representations, warranties, covenants and agreements
applied or related to the Partnership.
5.02 Western's and Western Sub's Representations and Warranties.
(a) Due Incorporation. Each of Western and Western Sub
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder.
(b) Authority. This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of each of Western and Western Sub and this
Agreement constitutes a legal, valid and binding obligation of each of them
enforceable in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to enforcement of creditors' rights generally. Neither the
execution, delivery or performance of this Agreement nor the consummation of
the transactions contemplated hereby by Western or Western Sub will, with or
without the giving of notice or the passage of time, or both, conflict with,
result in a default or loss of rights (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any Lien, pursuant to (i) any provision of the certificate of incorporation or
by-laws of Western or Western Sub; (ii) any material note, bond, indenture,
mortgage, deed of trust, contract, agreement, lease or other instrument or
obligation to which Western or Western Sub is a party or by which either of
them or their respective property is bound or affected; or (iii) any law,
order, judgment, ordinance, rule, regulation or decree to which Western or
Western Sub is a party or by which either of them or their respective property
is bound or affected. Except as described on Exhibit 5.02(b) annexed hereto,
no permit, consent, approval, authorization, qualification or registration of,
or declaration to or filing with any governmental or regulatory authority or
agency or third party is required to be obtained or made by Western or Western
Sub in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby in order to (A) render
this Agreement or the transactions contemplated hereby valid and effective and
(B) enable Western and Western Sub to consummate the Merger and purchase the
Business.
(c) Legal Matters. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Western or Western Sub threatened,
against or relating to Western's or Western's Sub's right to perform their
respective obligations under this Agreement, nor does Western or Western Sub
know or have reason to be aware of any basis for the same. There is
outstanding no order, writ, injunction, judgment or decree of any court,
governmental agency or arbitration tribunal which would individually or in the
aggregate have a material adverse effect on Western's or Western Sub's
obligations hereunder or the transactions
Execution - 41 -
<PAGE> 42
contemplated by this Agreement other than orders or decrees involving the
wireless telephone industry in general.
(d) Class A Common Stock. Western represents that each
of the shares of Class A Common Stock will, upon the consummation of the
transactions contemplated hereby at the Effective Date, be duly authorized,
duly issued, fully paid and non-assessable, and free and clear of any Liens,
other than any Liens imposed as a result of any action or consent of the
Stockholders or any restrictions on transferability resulting from Federal or
state securities laws.
(e) Truth and Correctness. No representation or warranty
by Western or Western Sub, or any written statement or certificate or other
instrument furnished to the Stockholders by Western pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which such statements are made, not
misleading.
(f) Reports. Western has previously furnished to the
Stockholders true and complete copies of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, as filed with the SEC. Such Annual Report
(including all exhibits and schedules thereto and any documents incorporated by
reference therein) did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
5.03 No Brokers. Each of Western and Western Sub represents and
warrants to the Stockholders that no agent, broker, investment banker, Person
or firm is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly in connection with the
transactions contemplated by this Agreement based in any way on any
arrangements, agreements or understandings made by or on behalf of Western or
Western Sub, and Western and Western Sub, jointly and severally, hereby agree
to indemnify the Stockholders and agree to hold harmless the Stockholders
against and in respect of any claims for brokerage and other commissions
relating to such transactions based in any way on any arrangements, agreements
or understandings made by or on behalf of Western or Western Sub. Each of TIM,
the Partnership, each of the Stockholders, TCC and TCLP represent and warrant,
jointly and severally, to Western and Western Sub that, except for Columbia
Capital Corporation, no agent, broker, investment banker, Person or firm is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly in connection with the transactions
contemplated by this Agreement based in any way on any arrangements, agreements
or understandings made by or on behalf of any of TIM, the Partnership, any of
the Stockholders, TCC or TCLP and each of TCC, each of the Stockholders and
TCLP hereby agree, jointly and severally, to indemnify Western, Western Sub and
TIM and agree, jointly and severally, to hold harmless Western, Western Sub and
TIM against and in respect of any claims for brokerage and other commissions
relating to such transactions based in any way on any arrangements, agreements
or understandings made by or on behalf of any of TIM, the Partnership, any of
the Stockholders, TCC or TCLP, including those with Columbia Capital
Corporation.
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<PAGE> 43
ARTICLE 6
CONDITIONS TO OBLIGATIONS
6.01 Conditions to Western's and Western Sub's Obligation. The
obligation of Western and Western Sub to perform, fulfill or carry out their
respective agreements, undertakings and obligations herein made or expressed to
be performed, fulfilled or carried out on the Effective Date is and shall be
subject to fulfillment of or compliance with, on or prior to the Effective
Date, the following conditions precedent, any of which may be waived by Western
and Western Sub, in their sole discretion, in whole or in part:
(a) Each of the representations and warranties of each of
TIM, the Partnership, each of the Stockholders, TCC and TCLP contained in this
Agreement shall be deemed to have been made again at and as of the time of the
Effective Date and shall then be true in all material respects except for
changes contemplated by this Agreement. Each of TIM, the Partnership, each of
the Stockholders, TCC and TCLP shall have performed and complied in all
material respects, with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by each of them prior to or at
the Effective Date. Western shall have been furnished with a certificate of
each of TIM, the Partnership, each of the Stockholders, TCC and TCLP signed by
its Chairman, President, Vice Chairman or general partner, as the case may be,
dated the Effective Date, certifying to the fulfillment of the foregoing
conditions by such Person and to the truth and correctness in all material
respects, except for changes contemplated by this Agreement, as of the
Effective Date, of the representations and warranties of such Person contained
herein.
(b) There shall not then be pending by any third party
any suit or proceeding to restrain or invalidate, in whole or in part, this
Agreement or the transactions herein contemplated.
(c) Western shall have been furnished with an opinion of
Edwards & Angell, counsel for TIM, the Partnership, each of the Stockholders,
TCC and TCLP, dated the Effective Date, substantially in the form of Exhibit
6.01(c) annexed hereto.
(d) Western shall have been furnished with an opinion of
Paul, Hastings, Janofsky & Walker LLP, FCC counsel for TIM, the Partnership,
each of the Stockholders, TCC and TCLP dated the Effective Date, substantially
in the form of Exhibit 6.01(d) annexed hereto.
(e) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(f) All consents, approvals and actions of third parties
including all approvals from Federal, state and local authorities (including
the FCC and all public service commissions and public utility commissions or
comparable bodies exercising jurisdiction over the Partnership or TIM) as may
be required for the consummation of the Merger and the transactions
contemplated hereby, as of the Effective Date, shall have been obtained or made
pursuant to a Final Order, which consents and approvals shall not contain any
conditions or restrictions which, in the case of FCC approvals, are not
customary in transactions of this nature, and which in the case of third party
consents and approvals, materially adversely affect the Partnership or TIM or
their respective
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<PAGE> 44
businesses or financial condition, or the value of the Businesses or the assets
used in the Businesses, or the consummation of the transactions contemplated
hereby. "Final Order" means an action or decision as to which: (i) no request
for a stay is pending, no stay is in effect, and any deadline for filing such
request that may be designated by statute or regulation has passed; (ii) no
petition for rehearing or reconsideration or application for review is pending
and the time for filing any such petition or application has passed; (iii) the
FCC or public utility commission, public service commission (or comparable
bodies exercising jurisdiction over the Partnership, TIM or the Businesses)
does not have the action or decision under reconsideration on its own motion
and the time for initiating such reconsideration has passed; and (iv) no appeal
is pending or in effect and any deadline for filing any such appeal that may be
designated by statute or rule has passed. Notwithstanding anything to the
contrary herein contained, it shall not be a condition to Western's and Western
Sub's obligations under this Agreement for the Partnership to obtain each
individual required consent (other than any consents of the FCC, any public
utility or public service commission (or comparable bodies exercising
jurisdiction over the Partnership, TIM or the Businesses)) so long as the
failure to obtain any such individual consent would not individually or
together with all such other failures to obtain consents have a material
adverse effect on the Businesses, the assets used in the Businesses or their
ownership or operation by the Surviving Corporation or Western or the
consummation of the transactions contemplated hereby.
(g) Each of the Stockholders shall have delivered to the
Surviving Corporation stock certificates representing the TIM Shares and stock
powers, duly endorsed with signatures guaranteed relating thereto.
(h) Each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP shall deliver to Western (i) if such Person is a
corporation (A) copies of its certificate of incorporation certified by the
Secretary of State of the jurisdiction of its incorporation, (B) copies of its
by-laws certified by its secretary, and (C) certificates of good standing of
recent date from the jurisdiction of its incorporation and all jurisdictions in
which it is qualified to do business; (ii) if such Person is a partnership, (A)
a copy of its partnership agreement certified by its general partner (other
than portions thereof which disclose the relative economic interests of the
partners thereof) and (B) certificates of good standing from the jurisdiction
of its organization and all jurisdictions in which it is qualified to do
business; and (iii) a lien and judgment search in the offices of the
Secretaries of State of the states of Colorado, Kansas, Minnesota, New Mexico,
Oklahoma, Texas and Utah and in the office of the county clerk of the
appropriate counties therein, dated not earlier than fifteen (15) Business Days
prior to the Effective Date, the results of which are consistent with the
representations of TIM, the Partnership, each of the Stockholders, TCC and TCLP
contained herein.
(i) Each of the Stockholders, TCC and TCLP shall have
delivered to Western releases from such Person's officers, directors,
stockholders and partners and from each of the Stockholders, TCC, MCP, MCI and
TCLP, themselves, releasing all rights and claims, if any, they may have with
respect to TIM, the Partnership, the Businesses and the assets used in the
Businesses.
Execution - 44 -
<PAGE> 45
(j) Each of the Stockholders, TCC, MCP, MCI and TCLP, for
itself and its partners, Affiliates, officers, directors and stockholders shall
have delivered to Western documentation (including a general release) in form
reasonably satisfactory to Western evidencing the release and discharge of any
and all claims which it or its Affiliates, partners, officers, directors and
stockholders may have against TIM, the Partnership, the Businesses or the
assets used in the Businesses.
(k) Each of TIM, the Partnership, each of the
Stockholders, TCC and TCLP shall have delivered to Western a certified copy of
the resolution or resolutions duly adopted by its board of directors (and
stockholders if required) or general partner (and the consents of its partners
if required pursuant to its partnership agreement or other governing documents
or under the RULPA) authorizing the execution, delivery and performance of this
Agreement, including the Merger.
(l) The Stockholders and TIM shall have delivered to
Western all minute books, stock certificate books, stock transfer ledgers and
the corporate seal of TIM.
(m) The Stockholders shall have delivered to Western
resignations of all officers and directors of TIM.
(n) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(o) Each of the Stockholders, TCC and TCLP shall have
delivered to Western an affidavit certifying as to such Person's non-foreign
status in accordance with Section 1445(b)(2) of the Code.
(p) The transactions contemplated by the Purchase
Agreement, of even date herewith, among Buyer, Triad Texas L.P., Triad Utah
L.P., Triad Oklahoma L.P., TCC and Triad Cellular L.P. (the "Purchase
Agreement") shall have been consummated, or shall be consummated concurrently
herewith, in accordance with the terms of such agreement.
6.02 Conditions to TIM's, the Partnership's, the Stockholders', TCC's
and TCLP's Obligation. The obligation of TIM, the Partnership, the
Stockholders, TCC and TCLP to perform, fulfill or carry out their agreements,
undertakings and obligations herein made or expressed to be performed,
fulfilled or carried out on the Effective Date is and shall be subject to
fulfillment of or compliance with, on or prior to the Effective Date, the
following conditions precedent, any of which may be waived by TIM, the
Partnership, the Stockholders, TCC and TCLP in their sole discretion, in whole
or in part:
(a) Each of Western's and Western Sub's representations
and warranties contained in this Agreement shall be deemed to have been made
again at and as of the time of the Effective Date and shall then be true in all
material respects, except for changes contemplated by this Agreement. Western
and Western Sub shall have performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed
Execution - 45 -
<PAGE> 46
or complied with by Western and Western Sub prior to or at the Effective Date.
The Stockholders shall have been furnished with a certificate of Western's and
Western Sub's Chief Executive Officer, Vice Chairman or Senior Vice President,
dated the Effective Date, certifying to the fulfillment of the foregoing
conditions by Western and Western Sub and to the truth and correctness in all
material respects, except for changes contemplated by this Agreement, as of the
Effective Date, of the representations and warranties of Western and Western
Sub contained herein.
(b) There shall not then be pending by any third party
any suit or proceeding to restrain or invalidate this Agreement or the
transactions contemplated hereby; provided, however, if Western desires to
consummate the transactions contemplated hereby notwithstanding any such suit
or proceeding and agrees to indemnify and hold harmless each of, the
Stockholders, TCC and TCLP from any damages, losses, liabilities and expenses
(including reasonable attorneys' fees and expenses) incurred by such Person as
a result of such suit or proceeding, then TIM, the Partnership, the
Stockholders, TCC and TCLP shall nevertheless be obligated to consummate the
transactions contemplated hereby.
(c) Western shall have delivered to the Stockholders on
the Effective Date the Merger Consideration.
(d) All consents, approvals and actions of third parties,
including all approvals from Federal, state and local authorities (including
the FCC and all public service commission and public utilities commission or
comparable bodies exercising jurisdiction over the Partnership or TIM) as may
be required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained; provided, however, that such
consents, approvals and actions need not be Final Orders.
(e) The Stockholders shall have been furnished with an
opinion of Rubin Baum Levin Constant & Friedman, counsel for Western, dated the
Effective Date, substantially in the form of Exhibit 6.02(e) annexed hereto.
(f) The Stockholders shall have been furnished with a
certified copy of the resolution or resolutions duly adopted by the board of
directors of Western and Western Sub authorizing the execution, delivery and
performance of this Agreement.
(g) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(h) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(i) The transactions contemplated by the Purchase
Agreement shall have been consummated, or shall be consummated concurrently
herewith, in accordance with the terms of such agreement.
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<PAGE> 47
ARTICLE 7
SURVIVAL; INDEMNITY
7.01 Survival of Representations and Warranties. Notwithstanding any
investigation or review made at any time by or on behalf of any party hereto,
all representations and warranties contained in this Agreement or in the
Exhibits annexed hereto or in any of the agreements, certificates or
instruments delivered in connection herewith (other than the representations
and warranties contained in Sections 5.01(b) and 5.01(l) (the "Title
Representations"), Section 5.01(k) and the first two sentences of Section
5.01(d) and the first sentence of Section 5.02(b) (the "Authorization
Representations"), Section 5.01(z) (the "Securities Representations") Section
5.01(q) (the "Tax Representations"), Sections 5.01(n) and 5.01(r) (the
"Employee Representations") and Section 5.01(j) (the "Environmental
Representations")) shall survive the Effective Date for a period of one year
and one hundred and eighty days after the Effective Date (the "Indemnification
Period") and shall thereupon expire together with any right to indemnification
(except with respect to any claim for breach of any such representation or
warranty for which written notice shall have been given prior to the
termination of the Indemnification Period to the party which made such
representation or warranty). The Environmental Representations shall survive
the Closing for a period of three (3) years after the Effective Date and the
Title Representations, the Authorization Representations, the Securities
Representations, the Tax Representations, the Employee Representations and the
liabilities and obligations of the Stockholders, TCC and TCLP under Sections
4.01(y) and 7.03 hereof and under Article 8 hereof shall survive the Merger
until the expiration of any applicable statutes of limitation (such three (3)
year period being the Indemnification Period with respect to the Environmental
Representations and such statutes of limitations period being the
Indemnification Period with respect to the Title Representations, the
Authorizations Representations, the Securities Representations, the Tax
Representations and the Employee Representations and the liabilities and
obligations of the Stockholders under Sections 4.01(y) and 7.03 hereof and
under Article 8 hereof).
7.02 Stockholders', TCC's and TCLP's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period), in addition to
any other indemnification provided for under this Agreement, each of the
Stockholders, TCC and TCLP shall jointly and severally indemnify and hold
harmless Western and its Affiliates (including the Surviving Corporation) from
and against any and all demands, claims, losses, liabilities, actions or causes
of action, assessments, actual damages (but excluding consequential damages),
fines, Taxes (including excise and penalty taxes), penalties, costs and
expenses (including interest, expenses of investigation, reasonable fees and
disbursements of counsel, accountants and other experts (whether such
reasonable fees and disbursements of counsel, accountants and other experts
relate to claims, actions or causes of action asserted by Western or its
Affiliates (including the Surviving Corporation) against any of the
Stockholders, TCC or TCLP or asserted by third parties)) (collectively
"Losses") incurred or suffered by Western and its Affiliates (including the
Surviving Corporation) and their respective
Execution - 47 -
<PAGE> 48
officers, directors, employees, stockholders, agents and representatives
arising out of, resulting from, or relating to:
(i) any breach of any of the representations or
warranties made by any of TIM, the Partnership, any of the Stockholders, TCC or
TCLP in this Agreement or in any agreement, certificate, Exhibit or other
instrument delivered by any of TIM, the Partnership, any of the Stockholders,
TCC or TCLP pursuant to this Agreement;
(ii) any failure by any of TIM, the Partnership,
any of the Stockholders, TCC or TCLP to perform any of its covenants or
agreements contained in this Agreement or in any agreement, certificate,
Exhibit or other instrument delivered by any of TIM, the Partnership, any of
the Stockholders, TCC or TCLP pursuant to this Agreement; or
(iii) any liabilities arising out of, resulting
from or relating to the liabilities of any of TIM, the Partnership, any of the
Stockholders, TCC or TCLP or any other member of any affiliated group or
"controlled group," within the meaning of Section 414(b), (c), (m) and (o) of
the Code, of which any of TIM, the Partnership, any of the Stockholders, TCC or
TCLP was a member on or prior to the Effective Date which liability exists by
reason of such Person's having been a member of such affiliated or controlled
group, including liabilities relating to (A) the funding, operation,
maintenance, administration, amendment or termination of, or the withdrawal or
partial withdrawal from, any employee plan relating to any period on or prior
to the Effective Date and including, but not limited to, losses arising under
Title IV of ERISA, Section 302 of ERISA, Section 412 or 4971 of the Code, (B)
compliance with COBRA under Section 4980B of the Code, and (C) environmental
matters with respect to any operations of, or properties owned, occupied or
operated or formerly owned, leased or operated by, any of TIM, the Partnership,
any of the Stockholders, TCC or TCLP or any other member of an affiliated group
or "controlled group" of which any of TIM, the Partnership, any of the
Stockholders, TCC or TCLP was a member prior to the Effective Date.
(b) Notwithstanding anything to the contrary contained in
Section 7.02(a), the Stockholders, TCC and TCLP shall not be required to pay or
reimburse Western or its Affiliates (including the Surviving Corporation), for
Losses pursuant to any of Stockholders', TCC's and TCLP's joint and several
indemnification obligations pursuant to Section 7.02 which (when aggregated
with any Losses paid to Western, or Western's Affiliates, by any of the
Stockholders, TCC, TCLP or their respective Affiliates pursuant to Article 7 of
(i) the Purchase Agreement, (ii) the Agreement, of even date herewith, between
Western and TCC with respect to the acquisition by Western of rights to certain
D and E Block PCS licenses, and (iii) the Agreement, of even date herewith,
between Western and TCLP with respect to the acquisition by Western of the
Texas 1 RSA; the Agreements referred to in clauses (i), (ii) and (iii) above
being referred to as the "Concurrent Agreements") are in excess of One Hundred
Million ($100,000,000) Dollars.
(c) Notwithstanding anything to the contrary contained in
this Section 7.02, neither Western nor its Affiliates shall be entitled to seek
indemnification under Section 7.02(a) for any Losses unless the aggregate
amount of Western's or its Affiliates' Losses in respect of all such matters,
when aggregated with the aggregate amount of Western's or its Affiliates'
Losses (as such
Execution - 48 -
<PAGE> 49
terms are defined in the Concurrent Agreements) arising under the Concurrent
Agreements (as more particularly set forth in Article 7 of the Concurrent
Agreements), exceeds $375,000 in which event Western and its Affiliates shall
be entitled to seek indemnification under this Section 7.02 for the amount of
such Losses in excess of $375,000; provided, however, that the limitations set
forth in this Section 7.02(c) shall not be taken into account in determining
the amount of the Estimated Capital Adjustment Amount and the Capital
Adjustment Amount determined in accordance with the procedure set forth in
Section 3.05(b) (which determination shall be made without any exclusions
whatsoever by reason of the foregoing); provided further, however, that the
foregoing limitation with respect to Western's or its Affiliates' right to
indemnification shall not be applicable to Losses arising from or relating to
(and Western and its Affiliates shall be entitled to indemnification for all
such Losses commencing with the first dollar of such Losses) (i) any breach of
the Title Representations, the Authorization Representations, the Tax
Representations, the Securities Representations, the Employee Representations
and the liabilities and obligations of any of the Stockholders, TCC and TCLP
under Sections 4.01(y) and 7.03 hereof and under Article 8 hereof; (ii) any
Losses arising by reason of or relating to any inaccuracy or omission relating
to current assets or current liabilities included on the Effective Date Balance
Sheets, which affected in any way the determination of Working Capital,
Reimbursable Capital Expenditures and Reimbursable Indebtedness Amount pursuant
to Section 3.05 hereof and which were known to, or should have been reasonably
foreseeable by, any of the Stockholders, TCC or TCLP at the time of preparation
of the Effective Date Balance Sheets; or (iii) any Losses arising by reason of
or relating to any litigation listed on Exhibit 5.01(f) annexed hereto.
(d) As collateral security for the Stockholders', TCC's
and TCLP's indemnification obligations under this Agreement, and such Person's
Affiliates indemnification obligations under the Concurrent Agreements, the
Stockholders or their Affiliates shall deliver, or cause to be delivered, to a
national bank to be mutually agreed to (the "Escrow Agent") to be held in
escrow pursuant to the terms of an Escrow Agreement, in substantially the form
of Exhibit 7.02(d) annexed hereto (the "Escrow Agreement"), to be entered into
on the Effective Date, at Stockholder's option, either Six Million ($6,000,000)
Dollars in cash or Four Hundred Eighty Thousand (480,000) shares of Class A
Common Stock issued upon consummation of the Merger (such cash or shares being
referred to herein as the "Escrow Fund"). The Escrow Fund shall be held by the
Escrow Agent pursuant to the Escrow Agreement for a period of one (1) year and
one hundred eighty (180) days after the Effective Date; provided, however, that
on the first anniversary of the Effective Date, the Escrow Fund shall be
reduced to an amount equal to the lesser of the balance of the Escrow Fund on
such first anniversary or 75% (if the Escrow Fund is originally funded with
shares of Class A Common Stock, as measured by Shares) of the original Escrow
Fund (except to the extent any claims in excess of such reduced amount have
been asserted prior to such first anniversary). The Escrow Agreement shall set
forth the procedures for Western or its Affiliates (including the Surviving
Corporation) to make any claims against the Escrow Fund, the circumstances
under which such Escrow Fund shall be distributed either to Western or its
Affiliates (including the Surviving Corporation) or to Stockholders and
procedures for the Stockholders to substitute cash in lieu of stock. Nothing
contained in this Section 7.02(d) or in the Escrow Agreement shall limit in any
way any Stockholder's, TCC's and TCLP's indemnification obligations under this
Agreement, or the indemnification obligations of any Stockholder, TCC and TCLP
or their Affiliates, as applicable, under the Concurrent Agreements; it being
understood that,
Execution - 49 -
<PAGE> 50
if the Escrow Fund is not sufficient to satisfy such indemnification
obligations, then Stockholders, TCC and TCLP and their Affiliates, as
applicable, shall (subject to Section 7.02(b) hereof) remain liable for such
indemnification obligations as set forth in this Agreement or in the Concurrent
Agreements.
7.03 Tax Indemnification.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period, each of the
Stockholders, TCC and TCLP hereby agrees, jointly and severally, to indemnify
and hold harmless Western and its Affiliates from and against (i) all liability
for Taxes of TIM, the Partnership, the Stockholders, TCC and TCLP (including
any liability for Taxes by reason of such Person's or the Partnership being
included in a Federal or state consolidated, combined or unitary return)
attributable to a taxable period ending before or on the Effective Date
(including any Tax liabilities resulting from the transactions contemplated by
this Agreement), and the portion of any taxable period that includes (but does
not end on) such day (in the case of a taxable period that includes (but does
not end on) the Effective Date, the portion of the Tax for which the
Stockholders, TCC or TCLP shall be liable shall be calculated by multiplying
the Tax for the entire period by a fraction, the numerator of which shall be
the number of days during such period prior to the Effective Date and the
denominator of which shall be the total number of days during such period) and,
in the case of any liability arising under Treasury Regulation Section
1.1502-6(a) (or any corresponding provision of state or local law),
attributable to any taxable period beginning before the Effective Date, and
amounts payable after the Effective Date with respect to liability for Taxes
arising before the Effective Date pursuant to any written or unwritten
agreement entered into before the Effective Date for the allocation or payment
of or with respect to Tax liabilities or benefits ("Tax Sharing Arrangements";
such amounts being included in the definition of "Taxes" for purposes of this
Section 7.03), to the extent such Taxes, in the aggregate, exceed the reserve
therefor on the Effective Date Balance Sheets and (ii) any liability for
out-of-pocket fees, costs and expenses (including reasonable attorney's fees)
arising out of or incident to any Tax indemnified hereunder. If any amount for
which each of the Stockholders, TCC or TCLP is to indemnify Western and its
Affiliates (including the Surviving Corporation) pursuant to the immediately
preceding sentence is, subject to the Stockholders', TCC's or TCLP's rights
under Section 7.03(b), determined to be payable (whether as a payment of
estimated tax or otherwise) after the Effective Date, the Stockholders, TCC and
TCLP shall pay or cause to be paid to Western such amount no later than the
later of (A) five (5) Business Days after Western gives notice to the
Stockholders of both the amount due and the date such amount is due and payable
(the "Due Date") and (B) three (3) Business Days before the Due Date. Amounts
described in clause (ii) shall be reimbursed as incurred. Any payment required
to be made hereunder and not made at the time specified in the preceding two
sentences shall bear interest at the prime rate of The Toronto-Dominion Bank as
in effect from time to time or such higher rate actually payable by the
indemnified party on the delayed payment of the Taxes being indemnified,
calculated from the date such payment was required to be made hereunder to the
date such payment is actually received by the indemnified party. "Taxes" shall
mean all taxes of any kind, including those on, or measured by or referred to
as income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or
Execution - 50 -
<PAGE> 51
windfall profits taxes, customs duties or similar fees, assessments or charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority, domestic or
foreign.
(b) If any claim or demand is asserted by any taxing
authority in writing with respect to a Tax indemnified hereunder, Western shall
notify the Stockholders of such claim or demand within fifteen (15) days of
receipt thereof; provided, however, that failure to give such notification
shall not affect the indemnified party's entitlement to indemnification
hereunder except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure. The indemnifying party shall have the
right to control the defense, compromise or settlement thereof; provided,
however, that the indemnifying party shall not be permitted to take any action
with respect to an issue that could adversely affect the Tax liability of the
indemnified party (with respect to liabilities not indemnified hereunder)
unless the indemnified party consents to such action. Without limiting the
indemnifying party's rights under the preceding sentence, the indemnified party
shall be permitted to participate in the defense of any such claim or demand,
at its own expense. The indemnified party shall cooperate fully in such
defense as and to the extent reasonably requested by the indemnifying party.
Such cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information
which are reasonably relevant to such claims or demand and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
(c) If any liability for Taxes with respect to which
Western or its Affiliates is entitled to indemnification hereunder results from
the disallowance of any claimed deduction or credit, or from the shifting of
any item of income from one taxable period to another taxable period, the
amount of indemnification to which Western or its Affiliates is entitled shall
be computed after taking into account any resulting tax benefit accruing to
Western or its Affiliates by reason of such disallowed claim or shift of any
item of income.
7.04 Western's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to expiration of the Indemnification Period), in addition to any
other indemnification provided for under this Agreement, from and after the
Effective Date, Western shall indemnify and hold harmless the Stockholders and
their respective Affiliates from and against any and all Losses (as defined in
Section 7.02, except that reasonable fees and disbursements of counsel,
accountants and other experts shall be included whether they relate to claims,
actions or causes of action asserted by the Stockholders, TCC or TCLP against
Western or asserted by third parties) incurred or suffered by the Stockholders
and their Affiliates and their respective officers, directors, partners,
employees, agents and representatives arising out of, resulting from, or
relating to:
(i) any breach of any of the representations or
warranties made by Western in this Agreement or in any agreement, certificate
or other instrument delivered by Western pursuant to this Agreement; and
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<PAGE> 52
(ii) any failure by Western to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Western pursuant to this
Agreement.
(b) Notwithstanding anything to the contrary contained in
this Section 7.04, none of the Stockholders, TCC, TCLP or their Affiliates
shall be entitled to seek indemnification under this Section 7.04 for any
Losses unless the aggregate amount of the Stockholders', TCC's TCLP's and their
Affiliates' Losses in respect of all such matters, when aggregated with the
aggregate amount of the Stockholders', TCC's and TCLP's or their Affiliates'
Losses (as such terms are defined in the Concurrent Agreements) arising under
the Concurrent Agreements ( as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000 in which event the Stockholders and
their Affiliates shall be entitled to seek indemnification under this Section
7.04 for the amount of such Losses in excess of $375,000; provided, however,
that the limitations set forth in this Section 7.04(b) shall not be taken into
account in determining the amount of the Estimated Capital Adjustment Amount or
the Capital Adjustment Amount determined in accordance with the procedure set
forth in Section 3.05 (which determination shall be made without any exclusions
whatsoever by reason of the foregoing); provided further, however, that the
foregoing limitation with respect to the Stockholders', TCC's and TCLP's right
to indemnification shall not be applicable to Losses arising from or relating
to (and the Stockholders shall be entitled to indemnification for all such
Losses commencing with the first dollar of such Losses) any breach of the
representation and warranty set forth in the first sentence of Section 5.02(b)
hereof.
7.05 Procedure.
(a) In the event that any party hereto shall sustain or
incur any Losses in respect of which indemnification may be sought by such
party pursuant to this Article 7, the party seeking such indemnification (the
"Indemnitee") shall assert a claim for indemnification by giving prompt (in the
event of claims arising by reason of the commencement of litigation against an
Indemnitee by third parties, in no event later than ten (10) days after service
of process, which process expressly indicates a claim for which Indemnitor (as
hereinafter defined) may be liable) written notice thereof (the "Notice"),
which shall describe in reasonable detail the facts and circumstances upon
which the asserted claim for indemnification is based, to the party providing
indemnification (the "Indemnitor") and shall thereafter keep the Indemnitor
reasonably informed with respect thereto; provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any third party claim, action or proceeding (a "Claim") is brought against any
Indemnitee, the Indemnitor shall have the right to assume, conduct and control
the defense, compromise or settlement thereof, by written notice to the
Indemnitee of its intention to do so within thirty (30) days after receipt of
the Notice, with counsel reasonably satisfactory to the Indemnitee, at the
Indemnitor's own expense, and thereupon to prosecute in the name and on behalf
of the Indemnitee any available cross-claims, counter-claims or third-party
claims arising with respect to the Claim. If the Indemnitor shall assume the
defense of such Claim, it shall not settle such Claim unless such settlement
includes as an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, reasonably
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<PAGE> 53
satisfactory to the Indemnitee, from all liability with respect to such Claim.
As long as the Indemnitor is contesting any such Claim in good faith and on a
timely basis, the Indemnitee shall not pay or settle any such Claim.
Notwithstanding the assumption by the Indemnitor of the defense of any Claim as
provided in this Section 7.05 and without limiting the Indemnitor's right to
assume, conduct and control the defense, compromise or settlement thereof, the
Indemnitee shall be permitted to join in the defense of such Claim and to
employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee
of its desire to assume the defense of any such Claim within the prescribed
30-day period set forth in Section 7.05(a), or shall notify the Indemnitee that
it will not assume the defense of any such Claim, then the Indemnitee may
assume the defense of any such Claim, in which event it may do so in such
manner as it may deem appropriate, and the Indemnitor shall be bound by any
determinations made in any litigation with respect to such Claim or any
settlement thereof effected by the Indemnitee, provided that any such
determinations or settlement shall not affect the right of the Indemnitor to
dispute the Indemnitee's claim for indemnification. The failure of the
Indemnitor to assume the defense of any Claim shall not be deemed a concession
by Indemnitor that it is required to indemnify the Indemnitee for the subject
matter of such Claim.
(c) Amounts payable by the Indemnitor to the Indemnitee
in respect of any Losses for which any party is entitled to indemnification
hereunder shall be payable by the Indemnitor as incurred by the Indemnitee.
Any payments by any Indemnitor in indemnification hereunder shall be treated as
adjustments to the Merger Consideration.
(d) The provisions of this Section 7.05 shall be subject
to the provisions of Section 7.03(b).
7.06 Indemnification Payments in Cash. All payments by the
Stockholders, TCC or TCLP to Western in respect of any indemnification
obligation to Western or its Affiliates (including the Surviving Corporation)
shall be made by such Person in cash, or at the Stockholders' option, if the
Escrow Fund contains shares of Class A Common Stock, by the delivery to Western
or its Affiliates (including the Surviving Corporation) of shares of its Class
A Common Stock from the Escrow Fund (valuing such shares so delivered at the
average closing price on NASDAQ of such shares for the six (6) Business Days
immediately preceding the date of the delivery of such shares).
7.07 Investigations; Waivers. The survival periods and rights to
indemnification provided for in this Article 7 shall remain in effect
notwithstanding any investigation at any time by or on behalf of any party
hereto or any waiver by any party hereto of any condition to such party's
obligations to consummate the transactions contemplated hereby.
7.08 Indemnity Sole Remedy. In the absence of fraud or of a suit
seeking specific performance as contemplated by this Agreement, the remedies
provided to TIM, the Partnership, the Stockholders, TCC and TCLP and to Western
by the foregoing provisions of this Article 7 shall after the Effective Date be
in lieu of any other remedies to which the respective party is entitled at law
or in equity for any breach or noncompliance by a party with the provisions of
this Agreement.
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<PAGE> 54
ARTICLE 8
EMPLOYEE BENEFIT PLANS
8.01 Employees.
(a) On or before thirty (30) days prior to the Effective
Date, Western will provide written notice to the Stockholders setting forth the
identity of the Employees the Surviving Corporation desires to employ after the
Effective Date. Each of TIM, the Partnership, each of the Stockholders, TCC
and TCLP agrees to use all reasonable efforts to assist the Surviving
Corporation in employing such Employees and, in this regard, to terminate such
Employees on or prior to the Effective Date.
(b) Upon reasonable notice, the Partnership and TIM
shall, and each of TIM, each of the Stockholders, TCC and TCLP shall cause the
Partnership and TIM to, provide Western with access to the Employees during
normal business hours throughout the period on and before the Effective Date in
accordance with the procedure established in Section 4.01(b). Such access
shall be for the purpose of interviewing the Employees and providing transition
training for those Employees continuing in employment after the Effective Date.
(c) Western and TIM, the Partnership, the Stockholders,
TCC and TCLP shall consult regarding communications with the Employees whom the
Surviving Corporation does not intend to retain after the Effective Date so as
to minimize any adverse impact on the Businesses. Upon the reasonable request
of Western, the Partnership and TIM shall, and each of TIM, each of the
Stockholders, TCC and TCLP shall cause the Partnership and TIM to, use all
commercially reasonable efforts to minimize such impact, including enforcing
the Partnership's rights under any confidential or non-compete agreement with
such Employees (other than the non-compete agreements of Barry B. Lewis or
Craig W. Viehweg).
(d) Nothing contained in this Agreement shall confer upon
any Employee any right with respect to continued employment with the Surviving
Corporation. No provision of this Agreement shall create any third-party
rights in any Employee, or beneficiary or dependent thereof, with respect to
the compensation, terms and conditions of employment and benefits that may be
provided to such Employee by Western or its Affiliates (including the Surviving
Corporation) after the Effective Date.
8.02 Employee Benefit Plans.
(a) All medical, dental, vision, travel accident,
accidental death and dismemberment, and life insurance expenses incurred by
Employees and their dependents on or before the Effective Date, pursuant to
Employee Plans, irrespective of the time at which claims are presented, are the
responsibility of the Stockholders, TCC and TCLP and shall be paid directly by
the Stockholders, TCC and TCLP or their medical, dental or life insurance
carrier to such Employees and dependents.
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<PAGE> 55
(b) The Stockholders, TCC and TCLP shall be responsible
for any medical, dental or life insurance coverage due to any Employees and
their dependents who retired on or before the Effective Date.
(c) Each of Stockholders, TCC and TCLP, jointly and
severally, agree to fulfill their obligations under continuation coverage rules
of COBRA with respect to a "qualifying event," within the meaning of Section
4980B(f) of the Code or Section 603 of ERISA, occurring on or before the
Effective Date with respect to any Employees and their dependents.
(d) All short-term, long-term and extended disability
benefits payable to Employees and their dependents who became disabled on or
before the Effective Date are the responsibility of the Stockholders, TCC and
TCLP and shall be paid directly by such Persons or their insurance carriers to
such Employees and their dependents.
(e) If any Employees are terminated from employment as a
result of the transactions contemplated by this Agreement or otherwise, any
obligations arising out of such termination of employment, including severance,
accrued vacation pay, COBRA obligations, notices or compensation required under
the Worker Adjustment and Retraining Notification ("WARN") Act, employment
discrimination complaints, unfair labor practice charges, grievance under any
collective bargaining agreement, breach of contract claims, and wrongful
termination and related tort claims shall be the sole responsibility of the
Stockholders, TCC and TCLP.
(f) All benefits payable to Employees as salary, bonus or
other compensation or benefits or under Employee Plans accrued through the
Effective Date shall be paid and administered by and be the responsibility of
the Stockholders, TCC and TCLP, and neither Western nor any of its Affiliates
shall have any liability therefor.
(g) Each of the Stockholders, TCC and TCLP hereby jointly
and severally agree, until expiration of all applicable statutes of
limitations, to indemnify, hold harmless and defend Western and its Affiliates
(including the Surviving Corporation) from and against any and all claims,
damages, liabilities and expenses including reasonable attorney's fees and
disbursements of counsel, incurred by Western or any of its Affiliates
(including the Surviving Corporation) arising from or in connection with any
failure of the Stockholders, TCC or TCLP or their Affiliates to discharge their
responsibilities under paragraphs (a) - (f) of this Section 8.02.
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<PAGE> 56
ARTICLE 9
MISCELLANEOUS
9.01 Expenses. Each party shall bear its own expenses incident to
the negotiation, preparation, authorization and consummation of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
its counsel and accountants, whether or not such transactions are consummated;
provided, however, if Western and its Affiliates shall be required under
applicable law to pay more than one filing fee under the HSR Act with respect
to the transactions contemplated hereby and by Concurrent Agreements, then TCLP
shall pay on behalf of Western the filing fee under the HSR Act required in
connection with the transaction contemplated by this Agreement.
9.02 Equitable Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with the specific terms of the provisions or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party agrees
that it will not assert, as a defense against a claim for specific performance,
that the party seeking specific performance has an adequate remedy at law.
9.03 Notices. All notices, claims and other communications hereunder
shall be in writing and shall be made by hand delivery, registered or certified
mail (postage prepaid, return receipt requested), facsimile, or overnight air
courier guaranteeing next day delivery (a) if to Western or Western Sub (or to
TIM or the Partnership after the Effective Date), to it at Western Wireless
Corporation, 2001 NW Sammamish Road, Issaquah, Washington 98027, Attention:
Alan R. Bender, Esq. (Fax No. 206-313-5547), with a copy (which shall not
constitute notice) to Rubin Baum Levin Constant & Friedman, 30 Rockefeller
Plaza, New York, New York 10112, Attention: Barry A. Adelman, Esq. (Fax No.
212-698-7825) or (b) if to any Stockholder, TCC or TCLP (or to TIM or the
Partnership prior to the Effective Date, to it at 2420 Sand Hill Road, Menlo
Park, California 94025, Attention: Barry Lewis (Fax No. 415-854-4512), with a
copy (which shall not constitute notice) to Edwards & Angell, 101 Federal
Street, Boston, Massachusetts 02110, Attention: Stephen O. Meredith, Esq. (Fax
No. 617-439-4170), or at such other address as any party may from time to time
furnish to the other parties by a notice given in accordance with the
provisions of this Section 9.03. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered; five (5) Business Days after being deposited in the mail, first
class postage prepaid, return receipt requested, if mailed; when receipt
confirmed, if sent by facsimile; and the next Business Day after timely
delivery to the courier, if sent by an overnight air courier service
guaranteeing next day delivery.
9.04 Entire Agreement. This Agreement, together with the Exhibits
annexed hereto, contains the entire understanding among the parties hereto
concerning the subject matter hereof and may not be changed, modified, altered
or terminated except by an agreement in writing executed by the parties hereto.
Any waiver by any party of any of its rights under this Agreement or of any
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<PAGE> 57
breach of this Agreement shall not constitute a waiver of any other rights or
of any other or future breach.
9.05 Remedies Cumulative. Except as otherwise provided herein, each
and all of the rights and remedies in this Agreement provided, and each and all
of the rights and remedies allowed at law and in equity in like case, shall be
cumulative, and the exercise of one right or remedy shall not be exclusive of
the right to exercise or resort to any and all other rights or remedies
provided in this Agreement or at law or in equity.
9.06 Governing Law. This Agreement shall be construed in accordance
with and subject to the laws and decisions of the State of Washington
applicable to contracts made and to be performed entirely therein.
9.07 Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
9.08 Waivers. No provision in this Agreement shall be deemed waived
by course of conduct, including the Merger, unless such waiver is in writing
signed by the parties and stating specifically that it was intended to modify
this Agreement.
9.09 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
successors and assigns. None of TIM, the Partnership, any of the Stockholders,
TCC or TCLP shall have the right to assign this Agreement or any of its rights
or obligations hereunder to any Person.
9.10 Further Assurances. Western shall, at the request of the
Stockholders, TCC and TCLP, and each of the Stockholders, TCC and TCLP shall,
at the request of Western, from time to time, execute and deliver such other
assignments, transfers, conveyances and other instruments and documents and do
and perform such other acts and things as may be reasonably necessary or
desirable for effecting complete consummation of this Agreement and the
transactions herein contemplated.
9.11 Disclosures.
(a) Each of Western and each of TIM, the Partnership,
each of the Stockholders, TCC and TCLP acknowledges and confirms in connection
with the negotiation of this Agreement and the execution hereof, during the
period from the date hereof through the Effective Date, the parties hereto will
have furnished to one another certain materials, information, data and other
documentation ("Disclosures") concerning their business, financial condition
and operations which are proprietary and confidential. Each party acknowledges
the party disclosing such Disclosures considers them secret and confidential
and asserts a proprietary interest therein. Accordingly, each of Western and
each of TIM, the Partnership, each of the Stockholders, TCC and TCLP covenants
and agrees that it shall maintain all Disclosures made by another party in
strict confidence and shall not use such Disclosures for its own benefit or
disclose them to third parties, except to its agents, representatives, bankers,
investment bankers, counsel and employees involved in evaluating the
Execution - 57 -
<PAGE> 58
transactions contemplated by this Agreement, its partners (and the partners or
other security holders thereof) or as otherwise required by law (including the
requirement of Western to disclose such terms under any Federal or state
securities laws); provided, however, that in no event shall any of TIM, the
Partnership, any of the Stockholders, TCC or TCLP be permitted to disclose the
dollar amount or number of shares of Class A Common Stock into which the TIM
Shares are to be converted in accordance with Section 3.02 or any information
concerning the calculation of such amount to any other Person (including its
employees) unless and until such time as such information otherwise becomes
public.
(b) No public announcement by any party hereto with
regard to the transactions contemplated hereby or the material terms hereof
(including the dollar amount or number of shares of Class A Common Stock into
which the TIM Shares are to be converted in accordance with Section 3.02) shall
be issued by any party without the mutual prior consent of the other parties,
except in the event the parties are unable to agree on a press release and
legal counsel for one party is of the opinion that such press release is
required by law and such party furnishes the other parties a written opinion of
outside legal counsel, or other counsel reasonably acceptable to the party
being furnished such opinion, to that effect, then such party may issue the
legally required press release.
(c) This Agreement shall not restrict any party hereto
from using information already known to it, to which it is entitled under
existing agreements, or information generally in the public domain or any
information coming into its possession after it becomes public knowledge unless
it became public knowledge through a breach of this Agreement.
9.12 Name. The Stockholders shall on or prior to the Effective Date
change the name of TIM for the purpose of deleting any reference in such name
to "Triad." Western agrees that, on and after the Effective Date, it shall not
have the right to use or make any reference to the name "Triad" with respect to
the Surviving Corporation; provided, however, that for a period of 90 days
after the Effective Date, Western shall have the right to continue to use all
existing supplies of forms, invoices, stationary, and other paper goods in the
conduct of the business of TIM and the Partnership. Western agrees to
indemnify the Stockholders for any claims arising by reason of Western's use of
such supplies.
9.13 Termination.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, without further obligation of any of
TIM, the Partnership, any of the Stockholders, TCC, TCLP or Western or Western
Sub, at any time prior to the Effective Date as follows:
(i) by mutual written consent duly authorized by
the general partners and board of directors, as applicable, of TIM, the
Partnership, the Stockholders, TCC, and TCLP and board of directors of Western
and Western Sub; or
(ii) by TIM, the Partnership, the Stockholders,
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<PAGE> 59
TCC and TCLP or by Western or Western Sub, if the Effective Date shall not have
occurred on or before the first anniversary of the date hereof, or such later
date, if any, as TIM, the Partnership, the Stockholders, TCC, TCLP, Western and
Western Sub shall agree in writing; provided, that the party exercising such
right is not in default of its obligations under this Agreement in a manner
which results in the failure to satisfy the conditions to the transactions
contemplated hereby of the other parties; or
(iii) by TIM, the Partnership, the Stockholders,
TCC and TCLP or by Western or Western Sub if the consummation of the
transactions contemplated hereby shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction or of the FCC.
(b) In the event of a termination of this Agreement, no
party hereto shall have any liability or further obligation to any other party
to this Agreement except that nothing herein will relieve any party from
liability for any breach of this Agreement.
9.14 Amendment. The boards of directors of the Constituent
Corporations and the other parties hereto may amend this Agreement at any time
prior to the Effective Date, provided that an amendment made subsequent to the
adoption of this Agreement by the stockholders of either Constituent
Corporation shall not (i) alter or change the amount or kind of shares,
securities, cash, property or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of either
Constituent Corporation, (ii) alter or change any term of the Certificate of
Incorporation of the Surviving Corporation to be effected by the Merger, or
(iii) alter or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of shares of any class
or series thereof of either Constituent Corporation.
9.15 Definitions; Etc. Unless the context otherwise requires, the
terms defined in any Section of this Agreement shall have the meanings therein
specified for all purposes of this Agreement, applicable to both the singular
and plural forms of any of the terms defined herein. When a reference is made
in this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. Whenever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation". The use of a gender herein shall be deemed
to include the neuter, masculine and feminine genders wherever necessary or
appropriate. Whenever the word "herein" or "hereof" is used in this Agreement,
it shall be deemed to refer to the Agreement and not to a particular Section of
the Agreement unless expressly stated otherwise.
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<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Merger as of the date first above written.
WESTERN WIRELESS CORPORATION
By: /s/ JOHN W. STANTON
-----------------------------
Title: Chief Executive Officer
MINNESOTA CELLULAR CORPORATION
By: /s/ BARRY B. LEWIS
-----------------------------
Title: Chief Executive Officer
TRIAD INVESTMENT MINNESOTA, INC.
By: /s/ BARRY B. LEWIS
-----------------------------
Title: President
/s/ BARRY B. LEWIS
--------------------------------
Barry B. Lewis
/s/ CRAIG W. VIEHWEG
--------------------------------
Craig W. Viehweg
/s/ TERRY E. PURVIS
--------------------------------
Terry E. Purvis
TRIAD CELLULAR CORPORATION
By: /s/ BARRY B. LEWIS
-----------------------------
Title: President
<PAGE> 61
TRIAD CELLULAR L.P.
By: Triad Cellular Corporation,
its general partner
By: /s/ BARRY B. LEWIS
----------------------------------
Title: President
TRIAD MINNESOTA, L.P.
By: Triad Cellular L.P., a
general partner
By: Triad Cellular Corporation,
its general partner
By: /s/ BARRY B. LEWIS
----------------------------------
Title: President
By: Triad Cellular Corporation,
a general partner
By: /s/ BARRY B. LEWIS
----------------------------------
Title: President
The undersigned hold options to acquire, in the aggregate, more than 50% of the
issued and outstanding voting capital stock of TIM and intend, subject to
obtaining all requisite regulatory approvals, to exercise such options
following the date hereof and on or prior to the Effective Date. In connection
therewith, each of the undersigned hereby acknowledge the foregoing Agreement
and Plan of Merger and agree to comply with, and be bound by, the provisions
thereof applicable to a "Stockholder" thereunder in the event the undersigned
exercise its options as aforesaid and to otherwise be bound by the terms hereof
to the extent expressly stated herein.
MEDIA/COMMUNICATIONS PARTNERS II
LIMITED PARTNERSHIP
By: M/C P II Limited Partnership,
its general partner
By: M/C II General Partner - J., Inc.,
a general partner
By: /s/ JAMES F. WADE
----------------------------------
Title: President
<PAGE> 62
MEDIA/COMMUNICATIONS INVESTORS
LIMITED PARTNERSHIP
By: M/C Investors General Partner -
J, Inc, a general partner
By: /s/ JAMES F. WADE
----------------------------------
Title: President
<PAGE> 1
EXHIBIT 10.56
PURCHASE AGREEMENT BY AND AMONG
WESTERN WIRELESS CORPORATION,
AND
TRIAD CELLULAR L.P.
DATED: APRIL 24, 1997
<PAGE> 2
PURCHASE AGREEMENT
TEXAS 1
AGREEMENT, dated April 24, 1997 (the "Agreement"), by and between
WESTERN WIRELESS CORPORATION, a Washington corporation ("Buyer") and TRIAD
CELLULAR L.P., a Delaware limited partnership ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is the owner of (i) the Authorizations (as hereinafter
defined) listed on Exhibit 5.01(h) annexed hereto to operate a wireless
telephone communications business in the Texas 1 RSA, the geographic area
covered by such Authorizations (the "Business"), and (ii) the Business and the
assets used in the operations of the Business; and
WHEREAS, subject to the terms and conditions hereinafter provided,
Buyer desires to purchase from Seller, and Seller desires to sell and transfer
to Buyer, the Authorizations and substantially all of the assets of Seller
relating to the wireless telephone operations covered by the Authorizations.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.01 Purchase of Assets. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties, covenants and
agreements herein contained, on the Closing Date (as defined in Article 2
hereof), Seller agrees to sell, transfer, convey, assign and deliver to Buyer,
and Buyer agrees to purchase, acquire and accept from Seller, the Business of
Seller as a going concern including all the assets, properties, claims and
rights of Seller used in or pertaining to the Business, of every type and
description, wherever located, tangible and intangible, vested or unvested,
contingent or otherwise, as the same shall exist on the Closing Date, whether
or not recorded on the books and records of Seller and whether or not described
herein or in any of the exhibits or schedules delivered or to be delivered to
Buyer hereunder (collectively the "Purchased Assets"), other than those assets
expressly excluded pursuant to the provisions of Section 1.02 hereof. Such
sale and transfer to Buyer shall be free and clear of all Liens (as hereinafter
defined).
Without in any way limiting the generality of the foregoing,
the Purchased Assets include the following:
(a) All fixed assets of Seller, including real property,
buildings and improvements to real property, furniture, furnishings, fixtures,
leasehold improvements, office or other equipment, vehicles, all machinery and
equipment of Seller, including those items referred to on Exhibit 1.01(a)
annexed hereto.
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(b) All inventory and supplies of Seller, including goods
in transit.
(c) The leasehold interests of Seller described on
Exhibit 1.01(c) annexed hereto.
(d) All prepaid property taxes, prepaid rent, prepaid
freight, prepaid insurance and other prepaid expenses, deposits and deferred
charges of Seller and any and all advances by Seller to its employees.
(e) All rights and benefits under all contracts to which
Seller is a party, including contracts of purchase or sale of goods or
services, purchase orders, warranty rights with respect to all machinery,
equipment or other personal property, patent, software and other licenses,
leases of personal property, contracts with agents, and including all Contracts
(as hereinafter defined) referred to on Exhibit 5.01(p) annexed hereto but
excluding those Contracts designated on Exhibit 5.01(p) annexed hereto and not
being assumed.
(f) All Authorizations.
(g) All patents, trademarks, trade names, service marks
and copyrights and applications for any thereof, operating data, records and
other intangible assets, including all books, records, customer and subscriber
lists and credit information, mailing lists and all other customer or
subscriber or potential customer or subscriber data, personnel records of
employees of Seller and such accounting records as Buyer may reasonably
require, slogans, processes, trade secrets, formulae, job rights, rights to
inventions, engineering data, drawings, art work, photographs and advertising
and promotional materials, suppliers' lists, goodwill and other similar
property and rights, and all claims and interests arising therefrom or relating
thereto, (other than the right, title and interests of Seller in and to its
partnership name and any and all logos related thereto) including the items
referred to or described on Exhibit 1.01(g) annexed hereto. Seller may make
and retain, or Buyer will furnish to Seller at Seller's expense copies of such
records as reasonably required by Seller.
(h) All trade accounts receivable, miscellaneous accounts
receivable, claims receivable and notes receivable of Seller.
(i) All rights and benefits under the insurance policies
described on Exhibit 1.01(i) annexed hereto, as such rights and benefits relate
to claims arising out of events occurring prior to the Closing Date.
1.02 Assets Not Purchased. Notwithstanding anything to the
contrary herein contained, there is hereby expressly excluded from the assets
of Seller which are being sold, transferred or purchased hereunder the
following:
(a) All cash on hand or in banks;
(b) The ownership interests of Seller in and to CoBank
Capital Plan;
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(c) The ownership interests of Seller in Triad Texas,
L.P., Triad Oklahoma, L.P., Triad Minnesota, L.P. and Triad Utah, L.P., each a
Delaware limited partnership;
(d) Accounts receivable of Seller from any of Triad
Texas, L.P., Triad Oklahoma, L.P., Triad Utah, L.P., Triad Minnesota, L.P. and
any limited partner of Seller as of the date hereof (including Triad Investment
Minnesota, Inc.) and any stockholder of any such limited partner (including
Barry Lewis, Craig Viehweg and Terry Purvis); and
(e) All furniture, equipment and leasehold improvements
located in Seller's Menlo Park, California offices.
1.03 Buyer's Designee. Buyer shall have the right to assign to one
or more Affiliates of Buyer any and all rights and obligations of Buyer under
this Agreement; provided, however, that, no such assignment shall delay the
Closing beyond October 31, 1997 or relieve Buyer of its obligations hereunder,
and Buyer and its assignee shall be jointly and severally liable for Buyer's
obligations hereunder. "Affiliate" shall mean, with respect to any party
hereto, any corporation, limited partnership or other business entity which
directly or indirectly through stock ownership, partnership interests or
through any other arrangement either controls, is controlled by or is under
common control with, such party. The term "control" shall mean the power to
direct the affairs of such person by reason of ownership of voting stock or
other equity interests, by contract or otherwise.
ARTICLE 2
CLOSING AND CLOSING DATE
The consummation of the transactions provided for herein (the
"Closing") shall take place at the offices of Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, 29th Floor, New York, New York or at such other
mutually agreeable location, at 11:00 A.M. local time, on the latest to occur
of (a) the last Business Day (as hereinafter defined) of the month in which all
FCC and state regulatory approvals (if any) necessary in order to consummate
lawfully the transactions contemplated hereby have been received, (b) the last
Business Day of the month in which all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), shall have expired or been terminated without objection by the Federal
Trade Commission (the events described in clauses (a) and (b) above being
hereinafter referred to as the "Regulatory Approvals" and the later of the
dates described in clauses (a) and (b) above being referred to as the
"Regulatory Approval Date"), and (c) October 31, 1997, or at such other time or
date to which the parties hereto mutually agree. The day on which the Closing
occurs is herein referred to as the "Closing Date." As used herein the term
"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday in New York, New York or in Seattle, Washington or any other day on
which commercial banks are authorized by law or governmental decree to close.
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ARTICLE 3
PURCHASE PRICE AND LIABILITIES
3.01 Calculation of Purchase Price. In consideration of the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets at the
Closing, Buyer shall pay or deliver to Seller the following (the "Purchase
Price"):
(a) Nine Million ($9,000,000) Dollars in immediately
available funds; provided, however, if the Closing Date shall occur on or prior
to December 31, 1997, an aggregate amount of Two Million ($2,000,000) Dollars
of such payment shall be deferred until, and be due and payable on, January 5,
1998 (the "Deferred Payment"). Buyer shall pay to Sellers the Deferred Payment
by delivery at the Closing of Buyer's non-negotiable, non-transferable
promissory note, in the aggregate principal amount of the Deferred Payment,
which promissory note shall bear interest at the rate of five (5%) percent per
annum and shall be secured by an irrevocable letter of credit issued by The
Toronto- Dominion Bank or its affiliates or a national bank with capital and
surplus in excess of $100,000,000 in an amount equal to the principal amount of
the Deferred Payment, such promissory note and such letter of credit to be in
form and substance reasonably satisfactory to Sellers; plus or minus (as the
case may be)
(b) the aggregate Working Capital of Seller as of the
Closing Date. As used herein "Working Capital" means the total of the current
assets (in determining Working Capital (i) the amount of the accounts
receivable of Seller shall be computed in accordance with the provisions of
Exhibit 3.03(b) annexed hereto and (ii) any assets listed in Section 1.02
hereof which are not being purchased by Buyer shall be excluded) of Seller
minus the total of the current liabilities of Seller (other than current
maturities of long-term indebtedness and all liabilities of Seller which are
not being assumed by Buyer as set forth in Section 3.05 hereof), as such terms
are used in accordance with generally accepted principles of accounting. If
the aggregate Working Capital of Seller as of the Closing Date (A) is a
positive number, the Purchase Price shall be increased by such amount, or (B)
is a negative number, the Purchase Price shall be reduced by such amount; and
plus
(c) an amount equal to the out-of-pocket capital
expenditures (excluding any capitalized labor) actually made by Seller, which
Buyer consents to in writing and agrees in writing to reimburse to Seller in
full in cash at the Closing (collectively the "Reimbursable Capital
Expenditures").
The Purchase Price shall be allocated among the Purchased Assets as
set forth in Exhibit 3.01 annexed hereto.
3.02 Delivery of Instruments of Transfer. At the Closing, Seller
shall deliver to Buyer such deeds, bills of sale, assignments and other good
and sufficient instruments of conveyance, transfer and assignment as shall be
necessary to vest in Buyer title in and to the Purchased Assets of the quality
described in Section 5.01(i) hereof.
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3.03 Payment of Purchase Price.
(a) (i) At the Closing Buyer shall pay to Seller the
portion of the Purchase Price set forth in Section 3.01 hereof.
(ii) On or prior to the Closing Date Seller shall
pay or cause to be paid all liabilities other than current liabilities
reflected in the Closing Date Balance Sheets (as hereinafter defined) of Seller
as at the Closing Date, including any and all accrued but unpaid interest,
current and long-term maturities of long-term indebtedness, prepayment
penalties and fees and expenses relating thereto (and Seller may direct Buyer
to pay all or a portion of the Purchase Price payable under Section 3.03(a)
hereof to pay such liabilities). Seller shall provide to Buyer on the Closing
Date evidence reasonably satisfactory to Buyer of Seller's payment of such
liabilities and of the release or termination of all Liens on any of the
Purchased Assets of Seller which secured such liabilities.
(b) (i) At least five (5) Business Days prior to the
Closing Date, Sellers shall deliver to Buyer (A) Sellers' bona fide written
estimate of the Working Capital of Seller and the Reimbursable Capital
Expenditures of Seller, certified by the chief financial officer of Seller,
which estimate, unless otherwise agreed in writing by Buyer, shall be, in the
case of Working Capital, the Working Capital of Seller as shown on the then
most recently prepared and available monthly balance sheet of Seller (such
balance sheet to be prepared by Seller on a basis consistent with prior
periods), and in the case of Reimbursable Capital Expenditures, the actual
amount thereof, such actual amount to be certified by Seller's chief financial
officer as of the Closing Date and such certification to be accompanied by
evidence reasonably satisfactory to Buyer as to the accuracy and completeness
of the amounts so certified, and (B) the unaudited financial statements of
Seller as of, and for such portion, as requested by Buyer, of the fiscal year
ended through, the end of the month immediately preceding the Closing Date,
certified by the Chief Financial Officer of Seller, which financial statements
shall have been prepared in accordance with generally accepted accounting
principles consistently applied. On the Closing Date (1) in the event the
aggregate of estimated Working Capital and the Reimbursable Capital
Expenditures is a positive number, the Purchase Price payable pursuant to
Section 3.01 hereof shall be the sum of the amount payable pursuant to Section
3.01(a)(i) plus an amount equal to such bona fide written estimate of the
Working Capital and the Reimbursable Capital Expenditures and shall be paid by
Buyer to Sellers in immediately available funds on the Closing Date, or (2) in
the event the aggregate of the estimated Working Capital and the Reimbursable
Capital Expenditures is a negative number, the Purchase Price payable pursuant
to Section 3.01 hereof shall be the sum of the amount payable pursuant to
Section 3.01(a)(i) minus an amount equal to such bona fide written estimate of
the Working Capital and the Reimbursable Capital Expenditures.
(ii) Seller shall deliver to Buyer within
forty-five (45) days after the end of the month in which the Closing shall have
occurred a balance sheet of Seller as of the Closing Date (the "Closing Date
Balance Sheets") prepared by Seller on a basis consistent with prior periods.
In calculating revenues and expenses for the period between the first day of
the month in which the Closing occurs and the Closing Date, items of revenue
and expense shall be calculated by multiplying the aggregate amount of each
such item realized or incurred during the month in which
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the Closing occurs by a fraction, the numerator of which shall be the day of
the month on which the Closing occurs and the denominator of which shall be the
number of days in the month in which the Closing occurs. Buyer and Seller
shall, as promptly as practicable but in no event later than ninety (90) days
following the Closing Date, determine the amount of the Working Capital and the
Reimbursable Capital Expenditures as of the close of business on the Closing
Date. Buyer and Seller shall, and shall cause their respective independent
certified public accountants to, give each other and their respective
representatives full access to each other's books and records (which relate to
or are necessary for the determination of the Working Capital and the
Reimbursable Capital Expenditures) and representatives during regular business
hours upon reasonable notice for the purpose of determining the Working Capital
and the Reimbursable Capital Expenditures. The parties shall in good faith
attempt to resolve any dispute concerning the Working Capital and the
Reimbursable Capital Expenditures. If the parties do not reach agreement
concerning the Working Capital and the Reimbursable Capital Expenditures within
ninety (90) days following the Closing Date, then the parties shall submit the
matter for resolution to a nationally recognized firm of independent certified
public accountants which has not had a material relationship with either Buyer
and its Affiliates or Seller and its Affiliates within the preceding two years
(the "Arbiter") and which is mutually agreeable to the parties. If the parties
cannot agree on the selection of the Arbiter, the Arbiter shall be selected by
mutual agreement of the parties' respective independent certified public
accountants, or, if they cannot agree, the parties shall request the American
Arbitration Association (the "AAA") to appoint the Arbiter, and such
appointment by the parties' respective independent certified public accountants
or the AAA, as the case may be, shall be conclusive and binding on the parties.
Promptly, but no later than twenty (20) days after its acceptance of its
appointment as Arbiter, the Arbiter shall determine, based solely on
presentations by Buyer and Seller, and not by independent review, only those
issues concerning the Working Capital and the Reimbursable Capital Expenditures
which are in dispute and shall render a report as to the dispute and the
resulting computation of the Working Capital and the Reimbursable Capital
Expenditures, which shall be conclusive and binding upon the parties. The
fees, costs and expenses of the Arbiter shall be paid one-half by Buyer and
one-half by Seller; provided, however, that the Arbiter shall have the right
(but not the obligation) to reapportion the fees, costs and expenses of the
Arbiter between Buyer and Seller in accordance with the Arbiter's determination
of the relative merit of the parties' respective positions on the matters in
dispute. Within five (5) Business Days of the determination of the Working
Capital and the Reimbursable Capital Expenditures, whether by mutual agreement
of the parties or by the Arbiter, and provided there is a difference between
such aggregate amount and the estimated aggregate of the Working Capital and
the Reimbursable Capital Expenditures, (A) if the aggregate of the estimated
Working Capital and the Reimbursable Capital Expenditures is greater than the
aggregate of the Working Capital and the Reimbursable Capital Expenditures,
then Seller shall pay to Buyer, or, in Buyer's discretion, to Buyer's designee,
in cash such difference, or (B) if the aggregate of the Working Capital and the
Reimbursable Capital Expenditures is greater than the aggregate of the
estimated Working Capital and the Reimbursable Capital Expenditures, Buyer
shall pay to Seller in cash such difference. Notwithstanding anything to the
contrary contained in this Agreement, Buyer and Seller agree that in
determining the Working Capital pursuant to this Section 3.03(b), the amounts
of the accounts receivable of Seller at the Closing Date shall be computed in
accordance with the provisions of Exhibit 3.03(b) annexed hereto.
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(c) Seller shall pay at the Closing or, if due
thereafter, promptly when due, all gross receipts taxes, transfer taxes, sales
taxes, stamp taxes and any other taxes (collectively, "Transfer Taxes") payable
in connection with the transfer of the Purchased Assets and the Business from
Seller to Buyer hereunder. Seller shall prepare and file any tax return with
respect to such Transfer Taxes; provided, however, that Buyer shall have the
right of reasonable review and comment prior to such filing (such right to be
exercised by Buyer within five (5) Business Days after delivery of such returns
to Buyer, and if such right is not so exercised within such five (5) day
period, Buyer shall be deemed to have waived such right).
3.04 Assumed Liabilities. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties, covenants and
agreements herein contained, at the Closing Buyer agrees to assume and perform,
according to their respective terms, the following obligations of Seller as the
same shall exist at the Closing Date:
(a) obligations under the leases listed on Exhibit
1.01(c) annexed hereto, including obligations arising under leases entered into
after the date hereof as permitted by Section 4.01(c) hereof;
(b) obligations under the Contracts listed on Exhibit
5.01(p) annexed hereto, including obligations arising under Contracts entered
into after the date hereof as permitted by Section 4.01(c) hereof; and
(c) liabilities reflected on the Closing Date Balance
Sheets (other than liabilities which are not being assumed by Buyer as set
forth in Section 3.05 hereof), including obligations arising under Contracts
and leases entered into after the date hereof as permitted by Section 4.01(c)
hereof and including sales or similar taxes which are reflected on the Closing
Date Balance Sheet and which were deducted in computing Working Capital;
provided, however, that Buyer shall not assume any such liabilities or
obligations resulting from breaches of or defaults by Seller under any of such
leases or Contracts attributable to any period ending prior to or on the
Closing Date unless reflected on the Closing Date Balance Sheets and unless
such liabilities are not excluded liabilities pursuant to Section 3.05 hereof.
3.05 Excluded Liabilities. Notwithstanding anything to the
contrary herein contained, Buyer shall not assume any liabilities of any Seller
other than as expressly set forth in Section 3.04 hereof. Any liabilities or
obligations of any Seller not specifically assumed by Buyer hereunder shall
continue to be the liabilities and obligations of Seller and Seller shall
indemnify and hold harmless Buyer from and against all such liabilities and
obligations. The liabilities and obligations of Seller not assumed by Buyer
hereunder include the following:
(a) Liabilities or obligations of Seller arising out of
the indemnification agreements contained in Article 7 hereof;
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(b) Any claim, liability or obligation, known or unknown,
whether absolute, contingent or otherwise, the existence of which is a breach
of any representation, warranty or covenant of Seller set forth in this
Agreement;
(c) Liabilities or obligations of Seller arising on or
after the Closing;
(d) Liabilities or obligations of Seller arising out of
this Agreement or the transactions contemplated hereby or incurred in respect
of any transaction occurring after the Closing;
(e) Liabilities for all taxes (other than taxes which are
reflected on the Closing Date Balance Sheet and which were deducted in
computing Working Capital) whatsoever, whether income, gross receipts,
property, sales, use, franchise or any other taxes whatsoever, including taxes,
if any, attributable to the sale of the Business and Purchased Assets
hereunder, any liquidation and dissolution of Seller or the distribution of its
assets to its equity holders;
(f) Liabilities for breach of representations or
warranties to any person and liabilities arising out of product liability,
negligence or willful misconduct claims; and
(g) Liabilities, claims, obligations, judgments, orders,
duties or responsibilities of any kind or nature whatsoever, whether arising
before, on or after the Closing Date, relating to amounts payable to Employees
(as hereinafter defined) as salary, bonus, severance or other compensation or
benefits and with respect to any Employee Plans (as hereinafter defined) which
are now or ever have been maintained, contributed to or required to be
contributed to for the benefit of any Employee.
Seller covenants and agrees to pay all liabilities and to
fulfill all obligations of Seller not assumed by Buyer hereunder as and when
the same become due, except those being contested in good faith by appropriate
proceedings and for which adequate reserves have been established.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.01 Covenants of Seller. Seller covenants and agrees from and
after the execution and delivery of this Agreement to and including the Closing
Date as follows:
(a) Consummate Transactions. Seller shall use all
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated in accordance with the terms hereof, and, without
limiting the generality of the foregoing, use all commercially reasonable
efforts to obtain all necessary approvals, consents, permits, licenses and
other Authorizations required in connection with this Agreement and the
transactions contemplated hereby of third parties including all governmental
authorities and agencies such as the FCC, and any state public utilities or
public service commission, and to make all filings with and to give all notices
to third parties which may be necessary or reasonably required of Seller, in
order to
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consummate the transactions contemplated hereby, including the transfer and
delivery from Seller to Buyer of the Business and the Purchased Assets.
(b) Full Access. Seller shall give to Buyer and its
agents and representatives (including its independent auditors and attorneys)
reasonable access (such access not to interfere unreasonably with Seller's
Business) during normal business hours and upon reasonable notice as described
below to all of Seller's personnel, premises, properties, assets, financial
statements and records, books, contracts, documents and commitments of or
relating to the Business or the Purchased Assets, and shall furnish Buyer and
its agents and representatives with all such information concerning the affairs
of Seller as Buyer may reasonably request. In addition, Seller shall permit
Buyer's accountants to conduct an audit (at Buyer's expense) of the books and
records of Seller in such detail as Buyer may reasonably require. Buyer shall
contact either Barry B. Lewis, Craig W. Viehweg or any other person(s)
designated by Seller, on behalf of Seller, to arrange for Buyer's personnel,
agents and representatives visiting any of Seller's premises or personnel,
agents or representatives, such visits to be arranged for by Seller not later
than three (3) Business Days of Buyer's request therefor.
(c) Ordinary Course. Seller shall conduct its Business
only in the ordinary course and consistent with past practices. Without
limiting the foregoing, Seller shall continue to expend funds for sales
promotion and marketing and to pay its bills and other obligations, all in the
ordinary course of business consistent with past practices. Without limiting
the foregoing, Seller shall not, without the prior written consent of Buyer,
such consent not to be unreasonably withheld, (A) incur any material liability,
absolute or contingent, other than current liabilities arising in the ordinary
course of business or pursuant to Contracts in existence on the date hereof and
set forth or described in Exhibit 5.01(p) annexed hereto or hereafter entered
into as permitted pursuant to this Agreement and other than additional draws
under the Loan Agreement referenced in item 2 of Schedule 5.01(m) hereto; (B)
assume, guarantee, change any existing guarantee, endorse or otherwise as an
accommodation become responsible for obligations of any other individual or
entity (except by endorsement for collection or deposit of negotiable
instruments received in the ordinary course of business and except pursuant to
agreements or binding commitments in existence on the date hereof and set forth
or described in Exhibit 5.01(p) annexed hereto); (C) other than in the ordinary
course of business and in amounts not exceeding $25,000 in the aggregate and,
other than making loans to certain of its Affiliates with the proceeds of draws
made under the Loan Agreement referenced in item 2 of Schedule 5.01(m) hereto,
make any loans or advances to any individual or entity; (D) sell, transfer,
convey, mortgage, pledge, hypothecate or subject to any lien, claim, security
interest, charge, encumbrance, restriction, title retention agreement or any
liability or claim of any nature (all of the foregoing, collectively "Liens")
any of the Purchased Assets or the Business except for sales of subscriber
equipment or retirements of old or obsolete equipment (such retired equipment
to be replaced with equipment of equivalent cost and utility) in the ordinary
course of business or pursuant to agreements or binding commitments in
existence on the date hereof and set forth or described in Exhibit 5.01(p)
annexed hereto or Liens which in the aggregate are not material and have been
incurred in the ordinary course of business and which Liens will be released on
or prior to the Closing Date; (E) intentionally waive or compromise any right
or claim for any amount in excess of $25,000; (F) cancel, without fair
consideration, any note, loan or other material obligation owing to it; (G)
enter into or extend or renew any Contract with (1) except for
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Contracts having an annual cost of less than $5,000 for any single Contract and
$50,000 for all such Contracts, any Person (as hereinafter defined) which is
not assignable to Buyer and terminable at will on not more than thirty (30)
days notice and without material liability, or (2) Affiliates, partners,
employees, agents or assigns of Seller or of Seller's Affiliates; (H) make any
increase in the compensation payable or to become payable by Seller to any of
its officers, employees, agents or consultants except for routine increases
made in the ordinary course of business consistent with past practices, which
in any event shall not exceed five (5%) percent; (I) make any arrangement for
any new or additional, or amend or extend any existing, profit-sharing plan,
retirement plan, bonus plan, severance arrangement, employee benefit plan, or
any similar plan, or make or agree to make any change to any such plan if the
result thereof increases any benefits paid or payable thereunder to any Person;
(J) except as required by law, enter into any collective bargaining agreement,
or make any commitment whatsoever to any union or other representative or party
which intends to represent any employees; (K) extend the maturity date of or
renew any (1) indebtedness for borrowed money or for the deferred purchase
price of property or services or evidenced by notes, bonds or other
instruments, (2) lease obligations which would normally be capitalized under
generally accepted accounting principles, or (3) obligations under direct or
indirect guarantees of (including obligations (contingent or otherwise) to
assure a creditor against loss in respect of) indebtedness or obligations of
others of types referred to in subclauses (1) and (2) above (the obligations
specified in this clause (K) are collectively referred to herein as
"Indebtedness"), if such Indebtedness will survive the Closing; (L) prepay,
other than as contemplated by the provisions of Section 3.03(a)(ii) hereof,
prior to its stated maturity any Indebtedness or any lease or rental or any
other amounts; or (M) enter into any reseller agreements or any agent
agreements other than in the ordinary course of business consistent with past
practice and only so long as such agreements are assignable to Buyer and
terminable at will, without penalty, by Seller or Buyer upon not more than
thirty (30) days' notice. As used herein the term "Person" means any general
or limited partnership, corporation, joint venture, trust, business trust,
governmental agency, cooperative, association, individual or other entity, and
heirs, executors, administrators, legal representatives, successors and assigns
of such person.
(d) Preserve Goodwill. Seller shall use its diligent
efforts to preserve the Business of Seller and the goodwill of suppliers,
subscribers and others dealing with Seller, and to retain the services of the
employees of Seller and to maintain the goodwill of such employees.
(e) Compliance with Law. Seller shall comply in all
material respects with all applicable laws, rules, ordinances, regulations,
codes, orders, decrees, licenses and permits of all applicable jurisdictions
and governmental authorities or agencies relating to it, to its properties
(including the Business and the Purchased Assets) or to the conduct of its
Business.
(f) Approvals, Consents. Seller shall obtain and
maintain in full force and effect all approvals, consents, permits, licenses
and other Authorizations, from all appropriate Federal, state and local
governmental agencies or authorities necessary or required for the operation of
Seller's Business as presently conducted, as and when such approvals, consents,
permits, licenses or other Authorizations are necessary or required except, in
the case of non-material approvals, consents, permits, licenses or other
Authorizations of state and local governmental agencies and authorities, where
such failure would not have a material adverse effect on Seller, its
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financial condition, prospects, the Purchased Assets or the Business. The
parties shall consult with one another as to the general approach to be taken
with any governmental authority or agency with respect to obtaining any
necessary consent of such governmental agency or authority to the transactions
contemplated hereby, and each of the parties shall keep each other party
reasonably informed as to the status of any such communications with any
governmental authority or agency. Seller shall not with respect to the
Authorizations, the Business or the Purchased Assets, make any material
commitments (other than those typical in the wireless telephone industry)
relating to any approval, consent, permit or license to any governmental
authority or agency without the prior written consent of Buyer.
(g) No Transfer. Seller shall not (i) sell, transfer,
assign or dispose of, or offer to, or enter into an agreement to, sell,
transfer, assign or dispose of any of the Purchased Assets or the Business or
negotiate therefor, other than sales of such of the Purchased Assets that are
immaterial or that are no longer useable in the Business or which are being
replaced with assets of comparable quality and utility in the ordinary course
of business consistent with past practice or (ii) create, incur or suffer to
exist any Lien of any nature whatsoever or enter into any restriction on
transfer or grant any right of first refusal relating to the Purchased Assets
or the Business, other than Liens not in the aggregate material to the business
or financial condition of such entity and which Liens will be terminated on or
prior to the Closing Date.
(h) Insurance. From the date hereof through the Closing
Date, Seller shall maintain in full force and effect (including necessary
renewals thereof) all of the insurance policies relating to Seller set forth on
Exhibit 5.01(j) annexed hereto existing on the date hereof. From and after the
Closing Date, Seller shall take all action that may be necessary to cause the
coverage under such policies to continue in full force and effect after the
Closing Date with respect to occurrences prior to the Closing Date and shall
take all actions necessary to preserve or protect rights under any such
policies with respect to any claim against Seller arising out of the Purchased
Assets or Business of Seller prior to the Closing Date. Seller shall provide
Buyer with information and records regarding all claims pending with respect to
the Purchased Assets or Business of Seller and agrees to provide to Buyer any
additional information and records Buyer may reasonably require regarding such
claims.
(i) No Amendments or Issuance of Additional Shares.
Seller shall not amend its charter, by-laws or other constituent documents of
Seller, which amendment would have a material adverse effect on the Purchased
Assets, the Business or the transactions contemplated by this Agreement or
which would require any additional consents or approvals of the transactions
contemplated by this Agreement. Seller shall not issue or sell any shares of
its capital stock, or other securities, or issue options, warrants or rights of
any kind to acquire, or any securities convertible into, exchangeable for or
representing a right to purchase or receive, or enter into any contract, plan,
understanding or arrangement with respect to the issuance of, any stock-based
or stock-related awards or other equity-based awards, shares of its capital
stock or other equity or other securities, or enter into any arrangement or
contract with respect to the purchase or voting of shares of its capital stock
or other equity, or adjust, split, combine or reclassify any of its securities,
or make any other changes in its capital structure, if any such issuance, sale,
contract, plan, understanding, arrangement, adjustment, split, combination,
reclassification or changes would
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require any additional approvals of the transactions contemplated by this
Agreement or would otherwise adversely affect the transactions contemplated by
this Agreement.
(j) Condition of Assets. Seller shall use its diligent
efforts to preserve its assets intact and, from time to time, to make all
necessary repairs thereto, so that the Business carried on by it may be
conducted in the ordinary course of business and consistent with past
practices.
(k) Books and Records. Seller shall maintain its books,
accounts and records in the usual manner, on a basis consistent with prior
years and in accordance with generally accepted accounting principles.
(l) Notice of Claims. Seller shall give written notice
to Buyer promptly upon the commencement of any action, investigation,
arbitration or proceeding (including any proceeding before any governmental
agency), or promptly upon obtaining knowledge of any facts giving rise to a
threat of any such action, investigation, arbitration or proceeding (i) which
would, if adversely determined, materially and adversely affect (A) Seller's
ability to consummate the transactions contemplated hereby or (B) the business
or financial condition of Seller or any Business or the Purchased Assets or
(ii) where the amount involved exceeds $25,000.
(m) Certain Actions. Seller shall not take any action or
refrain from taking any action which would materially interfere with or
preclude the consummation of the transactions contemplated by this Agreement,
result in any of the representations and warranties of Seller contained herein
being incorrect or incomplete in any material respect, or result in any of the
conditions to Buyer's obligation to consummate the transactions contemplated by
this Agreement as set forth in Section 6.01 hereof being unsatisfied in
accordance with the terms hereof.
(n) Dividends, Distributions and Other Payments. Seller
shall not declare or make any dividends, distributions or other payments
(whether of loans or otherwise) to any partner of Seller or to any Affiliate of
any partner of Seller.
(o) Notice of Breaches. Seller shall promptly after
obtaining knowledge of the occurrence of, or the impending or threatened
occurrence of, any event which would cause or constitute a breach of any
warranties, representations, covenants or agreements of Seller contained in
this Agreement, give notice in writing of such event or occurrence or impending
or threatened event or occurrence, to Buyer and use its diligent efforts to
prevent or promptly to remedy such breach.
(p) Material Contracts. Seller shall not default in any
material respect under, or breach any term or provision of, or suffer or permit
to exist any condition or event which, after notice or lapse of time, or both,
would constitute a material default by Seller under, any Contract listed on
Exhibit 5.01(p) annexed hereto or which are entered into after the date hereof
and prior to the Closing as permitted by Section 4.01(c) and which would have
been listed on such Exhibit if they were in effect on the date hereof.
(q) Intentionally Omitted.
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(r) Notification of Change. Seller shall advise Buyer
promptly in writing of (i) any event, condition or state of facts, including
any action, suit or proceeding, which has had or would have a material adverse
effect on the business or financial condition of Seller, on the Business or the
Purchased Assets or on the transactions contemplated by this Agreement or (ii)
the commencement of any action, suit or proceeding which seeks to enjoin the
consummation of the transactions contemplated hereby.
(s) Retention of Records. On the Closing Date, Seller
shall deliver to Buyer all books, contracts and records of Seller relating to
the Business or to the Purchased Assets, other than Seller's minute and stock
records books, provided, however, Seller shall be entitled to retain a copy of
all books, accounting and other records following the Closing for purposes of
winding up its affairs and other proper purposes incidental to the transactions
contemplated hereby. Buyer agrees that after the Closing Date all books,
contracts and records relating to the Purchased Assets and the Business prior
to the Closing Date, shall for a period of five (5) years following the Closing
Date or, if later, up to the termination of the statute of limitations for any
matter with respect to which Seller is indemnifying Buyer and its Affiliates
hereunder, be available at the written request of and at the expense of Seller
during regular business hours to Seller and its authorized representatives,
accountants and attorneys for any reasonable business purpose. All information
so made available to Seller or retained by Seller after the Closing Date shall
be held in confidence by Seller in accordance with Section 9.11 hereof. In
addition, for a period of five (5) years after the Closing Date, at the written
request and expense of Buyer, Seller shall make available to Buyer copies of
any documents not theretofore delivered to Buyer relating to any potential or
actual tax liabilities of Seller for any periods ending on or prior to the
Closing Date.
(t) Interim Financial Statements and Statistical
Summaries. Between the date of this Agreement and the Closing Date, Seller
shall deliver to Buyer (i) as soon as practicable but no later than forty-five
(45) days after the end of each calendar month with respect to Seller unaudited
financial statements ("Interim Financial Statements") for the most recent month
and the interim period then ended and (ii) within ten (10) Business Days after
the end of each calendar month with respect to Seller interim statistical
summaries (the "Interim Statistical Summaries") for the most recent month and
interim period then ended, which summaries will be in scope and format
substantially identical to the Statistical Summaries (as hereinafter defined).
(u) No Termination or Settlement. Without the prior
written consent of Buyer, which consent shall not be unreasonably withheld,
Seller shall not terminate any agent or settle any dispute with any agent if
such termination or settlement would cause Buyer to have any continuing
obligation after the Closing with respect thereto.
(v) Training. At the request of Buyer, Seller shall
train Buyer's employees and agents in the use of Seller's billing system, such
training to be provided at Seller's premises at mutually convenient times so as
not to disrupt Seller's Business and at no cost to Buyer. In addition Seller
shall, at the request of Buyer, use all commercially reasonable efforts to
assist, and shall cause its employees, agents, officers and subcontractors to
assist, Buyer in converting and transferring Seller's subscribers to Buyer's
billing system so that at the Closing Date or as soon
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thereafter as is reasonably practicable all of Seller's subscriber information
shall have been transferred and converted to Buyer's billing system.
4.02 Covenants of Buyer. Buyer covenants and agrees that from and
after the execution and delivery of this Agreement to and including the Closing
Date:
(a) Consummate Transaction. Buyer shall use all
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated in accordance with the terms hereof, and, without
limiting the generality of the foregoing, to obtain all necessary consents and
Authorizations of third parties, including the approval of this Agreement and
the transactions contemplated hereby by all governmental authorities and
agencies, including the FCC and any state public utilities or public service
commission, and to make all filings with and to give all notices to third
parties which may be necessary or reasonably required of Buyer in order to
consummate the transactions contemplated hereby.
(b) Buyer Not to Control. Notwithstanding any provision
of this Agreement that may be construed to the contrary, pending the Closing,
Seller shall maintain actual (de facto) and legal (de jure) control over its
Business. Specifically, the responsibility for the operation of Seller's
Business shall, pending the Closing, reside with its general partners,
including responsibility for the following matters: (i) access to and the use
of the facilities of and equipment owned by Seller; (ii) control of the daily
operation of Seller; (iii) creation and implementation of policy decisions;
(iv) employment and supervision of employees; (v) payment of financing
obligations and expenses incurred in the operation of Seller; (vi) receipt and
distribution of monies and profits derived from the operation of Seller; and
(vii) execution and approval of all contracts and applications prepared and
filed before regulatory agencies.
4.03 Governmental Filings. Seller and Buyer covenant and agree
from and after the execution and delivery of this Agreement to and including
the Closing Date as follows:
(a) It is understood that the Closing of this transaction
is subject to prior approval of the FCC and may be subject to the prior
approval of one or more state regulatory commissions. The parties shall use
their best efforts to file with the FCC and any relevant state agency or
agencies, as soon as practicable following the date hereof and in no event
later than ten (10) Business Days from the date hereof, a joint application
requesting the approval of the transfer of the Authorizations, Business and
Purchased Assets to Buyer, or its designee. Each of the parties hereto shall
diligently take or cooperate in the taking of all steps which are necessary or
appropriate to expedite the prosecution and favorable consideration of such
applications. The parties covenant and agree to undertake all actions
reasonably requested by the FCC or other regulatory authority and to file such
material as shall be necessary or required to obtain any necessary waivers or
other authority from the FCC or such state agency or agencies in connection
with the foregoing applications.
(b) Within fifteen (15) Business Days of the date of
execution hereof, Buyer and Seller shall file, or cause to be filed, with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice any and all reports or notifications which are required to be filed
under the HSR Act or other Federal law or administrative regulations.
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4.04 Cooperation. (a) Seller and Buyer agree to cooperate with and
to take all actions reasonably requested by the other so as to minimize, to the
extent possible, any disruption to any of Seller's operations upon the Closing
and, in connection therewith, Seller shall provide, subject to the last
sentence of Section 4.01(b) hereof, Buyer with reasonable access to its
employees and facilities prior to the Closing Date, and shall cause Seller's
employees, agents, advisors, subcontractors and representatives to work with
Buyer and its employees, agents, advisors, subcontractors and representatives
for purposes of planning for and implementing the transfer of control of the
Business and Purchased Assets to Buyer on the Closing Date.
(b) If transactions contemplated by the Purchase Agreement (as
hereafter defined) and the Merger Agreement (as hereafter defined) are
consummated prior to the consummation of the transactions contemplated hereby,
then the parties shall negotiate in good faith to enter into a switching
services agreement and a management agreement as of the date the transactions
contemplated by the Purchase Agreement and the Merger Agreement are
consummated, pursuant to which Buyer or its Affiliates shall undertake to
provide switching services and to manage on commercially reasonable terms the
Purchased Assets and the Business on behalf of Seller through the Closing Date
or the date this Agreement shall be terminated, in accordance with applicable
law and the rules and regulations of the FCC; such agreements, among other
things to allow for subscribers of the Business to continue to roam in the
cellular RSA markets being acquired by Buyer in accordance with the Purchase
Agreement or to roam in the other Cellular RSA Markets owned by Buyer or its
Affiliates, in each case on the same relative terms and conditions as such
subscribers may roam in each of such markets on the date hereof.
Notwithstanding anything to the contrary herein or in the Purchase Agreement or
Merger Agreement Seller may, at its option, if the parties are unable to reach
a mutually acceptable switching services agreement and management agreement,
continue to employ any Triad Cellular L.P. employees whose primary
responsibilities relate to the Business.
4.01 Bulk Sales. Each of the parties hereto waives the obligation
of the other parties under the provisions of any "Bulk Sales" laws of the
uniform commercial code as in effect in any state having jurisdiction over
Seller or the transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.01 Seller's Representations and Warranties. Seller represents
and warrants to Buyer, which representations and warranties shall survive the
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, as follows:
(a) Due Organization. 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, operate and lease its property and to carry on its business as now
conducted. Seller is duly qualified to do business and is in good standing in
all states where the conduct of its business or the ownership of its properties
makes such qualification necessary, except where the failure to so qualify
would not have a material adverse effect on Seller, its financial condition or
business, or the transactions contemplated hereby. The partnership
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agreement of Seller to be delivered to Buyer pursuant to this Agreement will be
true, correct and complete as of the date of delivery thereof.
(b) Power and Authority; No Violation. Seller has full
power and authority to execute, deliver and perform its obligations under this
Agreement, and to consummate the transactions contemplated hereby. This
Agreement and all transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Seller and this Agreement
constitutes a legal, valid and binding obligation of Seller enforceable in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally. Neither the execution, delivery
or performance of this Agreement by Seller nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
the passage of time, or both (i) conflict with, result in a default or loss of
rights (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Lien, pursuant to (A) any provision of
the partnership agreement or other constituent documents of Seller; (B) any
material note, bond, indenture, mortgage, deed of trust, contract, agreement,
lease or other instrument or obligation to which Seller is a party or by which
Seller or its properties may be bound or affected; or (C) any law, order,
judgment, ordinance, rule, regulation or decree to which Seller is a party or
by which its properties are bound or affected; or (ii) give rise to any right
of first refusal or similar right with respect to any interest, or any
properties or assets, of Seller. Except as described on Exhibit 5.01(b)
annexed hereto, no permit, consent, filing or approval of any third party is
required to be obtained or made by Seller in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby in order to (A) render this Agreement and the transactions contemplated
hereby valid and effective and (B) enable Seller to sell the Purchased Assets
and Business to Buyer and to consummate the transactions contemplated hereby.
Seller has not granted any powers of attorney granting to any Person the right
to bind Seller other than those to be released on or prior to the Closing Date
or those which do not relate to the Business, the Purchased Assets or the
transactions contemplated hereby.
(c) Financial Statements. Exhibit 5.01(c) annexed hereto
contains a list of audited and unaudited financial statements of Seller for the
periods indicated on such Exhibit 5.01(c) (the "Operating Financial
Statements") and a list of Key Statistical Summaries of Seller for the periods
indicated on such Exhibit 5.01(c) (the "Statistical Summaries"). True and
complete copies of each item listed thereon have previously been delivered to
Buyer. The Operating Financial Statements are, and the Interim Financial
Statements will be, true and correct in all material respects, have been or
will be prepared from the books and records of Seller and fairly present or
will fairly present the financial position of Seller in a manner consistent
with prior periods as of the dates of such statements and the results of its
operations and statements of cash flow for the year or interim period then
ended, in each case in conformity with generally accepted accounting principles
applied on a basis consistent with past practices. The Statistical Summaries
are, and the Interim Statistical Summaries will be, true and correct in all
material respects and have been or will be prepared from the books and records
of Seller in a manner consistent with prior periods. Seller has not incurred
nor is it subject to any liabilities or obligations, whether accrued, absolute
or contingent, which are in the aggregate material to the business or financial
condition of Seller, and which have not been (i) reflected or accrued against
in the Operating Financial
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Statements of Seller, (ii) incurred since the date of the latest Operating
Financial Statements as permitted by Section 4.01(c) hereof and will be
reflected on the Interim Financial Statements or the Closing Date Balance
Sheet, as the case may be, or (iii) reflected in the Exhibits annexed hereto.
(d) Legal Matters. Except as set forth on Exhibit
5.01(d) annexed hereto, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, writ, injunction, decree or judgment (collectively,
the "Legal Matters"), in progress or pending, or to the knowledge of Seller,
threatened, against or relating to Seller or its businesses or assets including
the Business and the Purchased Assets, nor does Seller know or have reason to
be aware of any basis for the same, which would individually or in the
aggregate have a material adverse effect on (i) Seller or Seller's ownership of
the Business or the Purchased Assets or Seller's ability to sell the Business
or the Purchased Assets as herein contemplated, (ii) the business or financial
condition of Seller, or (iii) the transactions contemplated by this Agreement.
(e) Accounts Receivable. The accounts receivable of
Seller shown on its Operating Financial Statements arose in the ordinary course
of business, are owned by it free and clear of any Lien (other than Liens to be
released on or prior to the Closing Date) and have been collected or are
collectible in the normal course at the aggregate recorded amounts thereof,
subject to no valid counter claims or set-offs, less a reserve for
uncollectible items as set forth on Exhibit 5.01(e) annexed hereto. The
accounts receivable acquired by Seller and shown on the Interim Financial
Statements or the Closing Date Balance Sheets, as the case may be, will have
arisen in the ordinary course of business, are or will be owned by it free and
clear of any Lien (other than Liens to be released on or prior to the Closing
Date) and have been collected or will be collectible in the normal course of
business at the aggregate recorded amounts thereof, less a reserve for
uncollectible items as set forth on Exhibit 5.01(e) annexed hereto. Such
percentage is based upon the historical collectibility of the accounts
receivable of Seller and represents Seller's good faith estimate of the
percentage of Seller's accounts receivable which will not be collectible in the
ordinary course of business.
(f) Compliance with Laws. Seller is in compliance with
all applicable laws, regulations and administrative orders of the United States
and the states in which Seller transacts business (including all applicable
rules and regulations of the FCC, any state public utilities or public service
commission, or any other Federal or state governmental agency or
instrumentality exercising jurisdiction over Seller or its properties or
businesses), and of each municipality, county or subdivision of any thereof, to
which any of its businesses or any of its properties may be subject, the
non-compliance with which would have a material adverse effect upon (i)
Seller's ownership of the Business or the Purchased Assets or ability to sell
the Business or the Purchased Assets as herein contemplated, or (ii) Seller,
its financial condition or business, or the transactions contemplated hereby.
(g) Environmental Matters. There has been no
manufacture, refining, storage, disposal or treatment of Hazardous Substances
(as hereinafter defined) by Seller (or, to the knowledge of Seller, its
predecessors in interest) at any real property currently or in the past owned,
operated, used, leased or contracted for by Seller or otherwise in violation of
any Environmental
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Laws (as hereinafter defined) or which would require remedial action under any
Environmental Law; to the knowledge of Seller, none of the soil, ground water,
or surface water of such real property is contaminated by any Hazardous
Substance. During the past five years Seller has not received any (i) notice
of any such violation with respect to any Hazardous Substance at or by any of
such real property, (ii) notice from any governmental agency that it, or any
present or former owner, lessee or operator of such real property is a
potentially responsible party for cleanup liability with respect to the
emission, discharge or release of any Hazardous Substance or for any other
matter arising under the Environmental Laws or in any litigation,
administrative proceeding, finding, order, citation, notice, investigation or
complaint under any Environmental Law, or (iii) notice of violation, citation,
complaint, request for information, order, directive, compliance schedule,
notice of claim, proceeding or litigation from any party concerning the
compliance of Seller with any Environmental Law. To the knowledge of Seller,
there are no incinerators, septic tanks or cesspools located on such real
property, all sewage is discharged into a public sanitary sewer system (except
that at certain switch sites Seller contracts with third party providers for
the siting and servicing of portable sanitary toilet facilities) and no
Hazardous Substances are emitted, discharged or released, directly or
indirectly, by Seller into the atmosphere or any body of water. No permits,
licenses or other Authorizations issued pursuant to the Environmental Laws are
required for Buyer's ownership, use or occupancy of, or Seller's present
ownership, use or occupancy of, such real property. As used herein
"Environmental Laws" means the Resource Conservation Recovery Act, the
Comprehensive Environmental Responsibility Compensation and Liability Act, the
Superfund Amendments and ReAuthorizations Act, the Toxic Substances Control
Act, the Hazardous Materials Transportation Act, the Clean Air Act, the Clean
Water Act, and other similar Federal and state laws, as amended, together with
all regulations issued or promulgated thereunder, relating to pollution, the
protection of the environment or the health and safety of workers or the
general public. As used herein "Hazardous Substance" means any hazardous
substance, hazardous or toxic waste, hazardous material, pollutant or
contaminant, as those or similar terms are used in the Environmental Laws,
including asbestos and asbestos-related products, chlorofluorocarbons, oils or
petroleum-derived compounds, polychlorinated biphenyls, pesticides and radon.
As used in this Section 5.01(g), the term "knowledge" refers to actual and not
constructive knowledge and is not intended to impose upon Seller any duty to
investigate the condition of any real property other than in the ordinary
course of business and consistent with past practices.
(h) Authorizations.
(i) Seller has (A) all requisite franchises,
licenses, Authorizations, consents, permits and approvals of the FCC and of all
state public utility or public service commissions and (B) all other material
franchises, licenses, Authorizations, consents, permits and approvals of
governmental agencies exercising jurisdiction over Seller or its businesses or
assets (all such franchises, licenses, Authorizations, consents, permits and
approvals, as amended to the date hereof, are collectively referred to as the
"Authorizations"), required to carry on the Business of Seller as now conducted
or as contemplated to be conducted. All such Authorizations are listed on
Exhibit 5.01(h) annexed hereto.
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(ii) The Authorizations are in full force and
effect and have not been suspended, modified in any material adverse respect,
canceled or revoked, and Seller has operated in compliance with all terms
thereof or any renewals thereof applicable to it except where failure to so
comply would not have a material adverse effect on Seller, its financial
condition or Business or the Purchased Assets. No event has occurred with
respect to any of the Authorizations which permits, or after notice or lapse of
time or both would permit, revocation or termination thereof or would result in
any other material impairment of the rights of the holder of any such
Authorizations. Except as set forth on Exhibit 5.01(h) annexed hereto, there
is not pending as of the date hereof any application, petition, objection or
other pleading with the FCC or any public service commission or similar body
having jurisdiction or authority over the communications operations of Seller
which questions the validity of or contests any Authorizations or which
presents a substantial risk that, if accepted or granted, would result in the
revocation, cancellation, suspension or any materially adverse modification of
any Authorizations.
(iii) Except as set forth on Exhibit 5.01(h)
annexed hereto, no permit, consent, approval, Authorizations, qualification or
registration of, or declaration to or filing with, any governmental or
regulatory authority or agency is required to be obtained or made by Seller in
connection with the execution and delivery of this Agreement or with the
consummation of the transactions contemplated hereby in order to (A) render
this Agreement and the transactions contemplated hereby valid and effective and
(B) enable Seller to sell the Business and Purchased Assets to Buyer as herein
contemplated.
(i) Title of Seller to Purchased Assets.
(i) Except as disclosed in Exhibit 5.01(i)
annexed hereto, Seller has good and marketable title to all property owned
(including all property and assets, real and personal, included in the
Operating Financial Statements) and a good and valid leasehold interest in all
property leased by Seller, free and clear of all Liens except for Liens for
taxes, assessments, governmental charges or levies which shall not at this time
be due and delinquent or which hereafter can be paid without penalty or with
respect to which Seller is currently contesting the validity thereof in good
faith by appropriate proceedings and with respect to which it has established
adequate reserves, and except for warehousemen's, mechanics', carriers',
landlords', repairmen's, or other similar Liens arising in the ordinary course
of business, (none of which, either singly or in the aggregate, is material).
Exhibit 5.01(i) annexed hereto correctly identifies (A) each parcel of real
property owned by Seller, (B) each lease by Seller of any real property and
each space allocation arrangement with Seller covering any real or other
material property used in Seller's businesses and(C) each guaranty by Seller of
any such lease. Exhibit 5.01(i) annexed hereto contains, with respect to
Seller, a list setting forth (1) the location of all cell and switch sites and
(2) the number of voice channels installed and operational at each site.
(ii) All of the buildings and other material
tangible personal property owned or leased by Seller are in good working
condition (normal wear and tear excepted), and are adequate and suitable for
the purposes for which they are presently being used. All such property is
being operated in conformity with applicable statutes, regulations, and
ordinances, the failure of which to so conform would have a material adverse
effect on Seller, its financial condition or
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business or the transactions contemplated hereby. All such assets are, in the
aggregate, sufficient in all material respects to continue operating the
business of Seller as has been heretofore conducted.
(iii) Neither the whole nor any material portion of
any real property owned or leased by Seller has been condemned, requisitioned
or otherwise taken by any public authority, and Seller has no actual knowledge
that any such condemnation, requisition or taking is threatened or
contemplated. None of the real or personal properties owned, leased or
operated by Seller, or the ownership, occupancy or operation thereof, is in
violation in any material respect of any law or any building, zoning or other
ordinance, code, rule, regulation or requirement, and no notice from any
governmental body or other Person has been served upon Seller claiming any
violation of any such law, ordinance, code, rule or regulation or requiring, or
calling attention to the need for, any work, repairs, construction, alterations
or installation on or in connection with said property which has not been
complied with.
(j) Insurance. Exhibit 5.01(j) annexed hereto sets forth
a list and brief description of all policies of fire, liability and other forms
of insurance and material fidelity bonds held by Seller. Seller's assets,
business, equipment, property and operations are adequately insured against
loss or damage and all other hazards or risks of the character usually insured
against by companies in the same or similar business and such insurance shall
be continued in full force and effect through 11:59 p.m. on the Closing Date.
Each such policy and fidelity bond referenced in such Exhibit 5.01(j) annexed
hereto is in full force and effect, all premiums due and payable under such
policies and fidelity bonds have been and on the Closing Date will be paid in
full, and there are no disputed claims arising under such policies or fidelity
bonds.
(k) Employees. Exhibit 5.01(k) annexed hereto contains a
list setting forth the name and current annual salary and other compensation
payable by Seller to each Employee (as hereinafter defined), and the profit
sharing, bonus or other form of additional compensation paid or payable by
Seller to or for the benefit of each Employee for the current fiscal year.
Except as set forth on Exhibit 5.01(k) annexed hereto or under the employment,
consulting or other agreements listed thereon, there are no oral or written
contracts, agreements or arrangements obligating Seller to increase the
compensation or benefits presently being paid or hereafter payable to any of
its Employees. Exhibit 5.01(k) annexed hereto sets forth summaries of all oral
employment or consulting or similar arrangements between Seller and any Person
which are not terminable without liability on thirty (30) days' or less prior
notice and lists all written employment and consulting agreements between
Seller and any Employees, true and complete copies of which have been provided
to Buyer. Except for severance obligations to Employees of Seller set forth on
Exhibit 5.01(k) annexed hereto, there is not due or owing and there will not be
due and owing at the Closing to any of Seller's Employees, any sick pay,
severance pay (whether arising out of the termination of Employees of Seller
prior to, on, or subsequent to the Closing), compensable time or pay, including
salary, commission and bonuses, personal time or pay or vacation time or
vacation pay attributable to service rendered on or prior to the Closing Date.
Except as disclosed in the Exhibits annexed hereto, there is not now, and there
will not be as of the Closing Date, any liability of Seller arising out of
claims made or suits brought (including workers' compensation claims and claims
or suits for contribution to, or indemnification of, third parties,
occupational health and safety, environmental, consumer protection or equal
employment matters) for injury, sickness,
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<PAGE> 22
disease, discrimination, death or termination of employment of any Employee or
other employment matter to the extent attributable to an event occurring or a
state of facts existing on or prior to the Closing.
(l) Intellectual Property Rights. All of the patents,
trademarks, service marks, tradenames, trade secrets, copyrights, licenses and
other intellectual property rights material to the operation of any of the
Business or owned or held by Seller are described on Exhibit 5.01(l) annexed
hereto. Except as set forth on Exhibit 5.01(l) annexed hereto, the conduct by
Seller of its businesses does not to the knowledge of Seller infringe upon or
violate any patents, trademarks, service marks, trade names, trade secrets,
copyrights, licenses or rights of anyone, and, except as set forth on Exhibit
5.01(l) annexed hereto, no claim is pending or threatened to the effect that
the conduct by Seller of its businesses infringes upon or violates any patents,
trademarks, service marks, trade names, trade secrets, copyrights, licenses or
rights of anyone.
(m) Indebtedness. Exhibit 5.01(m) annexed hereto lists
generally all indentures, trust deeds, loan agreements, or other instruments
pursuant to which Seller has incurred Indebtedness or has guaranteed the
Indebtedness of any Person all of which shall be terminated and released with
respect to Seller on or prior to the Closing Date. Other than as set forth in
Exhibit 5.01(m) annexed hereto, Seller is not indebted to any Affiliate,
shareholder, partner, director, officer, employee, agent of Seller or of any
Affiliate of Seller and no Affiliate, shareholder, partner, director, officer,
employee, agent of Seller or of any Affiliate of Seller is indebted to Seller.
(n) Tax Matters. Seller has timely filed all Federal,
state and local Tax (as defined in Section 7.03(a)) returns and all information
returns and reports required to be filed by or with respect to it under the
laws of the United States or any state or other jurisdiction on or prior to the
date hereof and will timely file all such returns and reports required to be
filed from the date hereof through the Closing Date. True and complete copies
of such reports and returns filed on or before the date hereof have been or
will be furnished or made available to Buyer within thirty (30) days after the
date hereof and true and complete copies of all such returns and reports filed
after the date hereof and on or before the Closing Date will be furnished to
Buyer within five (5) days after they are filed. All such reports and returns
were or will be accurately prepared in accordance with all applicable statutes,
rules and regulations and are or will be correct as filed. Seller is not, nor
has ever been, an association taxable as a corporation for Federal, state or
local tax purposes. Seller has paid all Taxes (including Taxes for which
Seller is a collection agent, e.g., withholding, excise, sales, use, Social
Security and similar Taxes) which have become due and payable (and will pay
prior to the Closing Date all Taxes which shall have become due and payable on
or prior to the Closing Date) with respect to Seller for all taxable periods
ending on or prior to the Closing Date or will have set aside and reflected on
the Closing Date Balance Sheets adequate reserves therefor. Seller has never
been included in a consolidated Federal income tax return or combined or
unitary state tax return. Seller is not a party to nor has Seller been
notified that it is the subject of any pending, proposed or threatened action,
investigation, proceeding, audit, claim or assessment by or before the Internal
Revenue Service or any other governmental authority and no claim for
assessment, deficiency or collection of Taxes, or proposed assessment,
deficiency or collection, for which Seller may be liable, has been asserted or
threatened against it. Seller has not received any notice of deficiency,
assessment or collection or proposed deficiency, assessment or collection from
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<PAGE> 23
the Internal Revenue Service or any other governmental authority which has not
been satisfied, nor, except as set forth on Exhibit 5.01(n) annexed hereto,
does Seller have any reason to believe that any such notice will be received in
the future. The Internal Revenue Service has never audited any Federal income
tax return of Seller. The charges, accruals and reserves shown in the
Operating Financial Statements of Seller in respect of Taxes for all fiscal
periods to date are adequate. There are no material unpaid assessments or
proposals for additional Taxes for which Seller does not have adequate
reserves, nor does Seller know of any basis therefor for any such period.
There are no Tax rulings, requests for rulings or closing agreements relating
to Seller which could affect its liability for Taxes for any period after the
Closing Date. Except as set forth on Exhibit 5.01(n) annexed hereto (i) no
power of attorney has been granted by Seller or any of its Affiliates with
respect to any matter relating to Taxes of Seller which is currently in force,
(ii) Seller has not filed any agreement with the Internal Revenue Service
described in Section 1.1503-2A(c)(3) of the Treasury Regulations, (iii) Seller
has not filed a consent or made any agreement with the Internal Revenue Service
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), or any comparable provision of state revenue statutes, and (iv) Seller
is not a "foreign person" within the meaning of Section 1445(f)(3) of the Code.
Seller has not executed or filed with the Internal Revenue Service or any other
governmental authority any agreement which is still in effect waiving or
extending the period for assessment or collection of any Taxes. Seller, and
not Buyer, shall be liable for any Taxes, payable by Buyer or Seller by reason
of the ownership of the Business or the Purchased Assets on or prior to the
Closing Date, the conduct of Seller's Business with respect to all periods
ending on or prior to the Closing Date or payable by Seller by reason of the
sale of the Business and the Purchased Assets.
(o) Employee Benefit Plans.
(i) Generally. Exhibit 5.01(o) annexed hereto
contains a true and complete list of each plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock-related awards or other
equity based awards, fringe benefits or other employee benefits of any kind,
whether formal or informal, proposed or final, funded or unfunded and whether
or not legally binding, including each "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") which is now, or ever has been, maintained, contributed
to, or required to be contributed to, for the benefit of any current or former
employee, independent contractor, agent or consultant of Seller or engaged in
the Business ("Employee"), or any current or former employee, independent
contractor, agent or consultant of any entity required to be aggregated with
Seller pursuant to Section 414(b), (c), (m) or (o) of the Code and each
management, employment, severance or consulting agreement or contract between
Seller or any of its Affiliates and any Employee for which Seller may have
liability or between Seller and any Employee ("Employee Plan"). Seller will
provide to Buyer prior to the Closing true and complete copies of all
documents, if any, embodying each Employee Plan, including all amendments
thereto and written interpretations thereof; the three most recent annual
reports filed (Form 5500 Series with applicable schedules) with respect to each
Employee Plan required under ERISA; and the most recent summary plan
description, if any, with respect to each Employee Plan required under ERISA
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(ii) Compliance. Seller has performed in all
material respects all obligations required to be performed by it under each
Employee Plan and each Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including ERISA or
the Code. No Employee Plan that is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA is subject to Title IV of ERISA or is a
multiemployer plan within the meaning of Section 3(37) of ERISA, and Seller has
no liability with respect to any such plan as a result of having been part of a
"controlled group" within the meaning of Section 414(b), (c), (m) and (o) of
the Code, nor is there any basis for such liability being imposed. There are
no investigations, proceedings, actions, suits or claims pending, or, to the
best knowledge of Seller, threatened or anticipated (other than routine claims
for benefits) against any Employee Plan or the assets of any Employee Plan;
each Employee Plan can be amended, terminated, or otherwise discontinued on or
after the Closing in accordance with its terms, without liability to Seller,
Buyer or any of Buyer's Affiliates; all premiums required by any Employee Plan
have been paid thereunder; all outstanding indebtedness for services performed
for Seller or accrued vacation, holiday pay, earned commissions, accrued
bonuses or other benefits owed to any Employee has been paid when due or
accrued on the books of Seller; all contributions due to and payments from, the
Employee Plans that may have been required to be made have been made; no
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA for which a statutory, administrative or regulatory
exemption is not available has occurred with respect to any Employee Plan; and
no action or failure to act with respect to any Employee Plan will subject
Seller, Buyer or any of Buyer's Affiliates to any tax or penalty or other
liability.
Except as listed on Exhibit 5.01(o) annexed hereto, each
Employee Plan that is intended to be qualified under the Code has received a
determination letter from the Internal Revenue Service to the effect that such
Employee Plan and related trust are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively; such determination letter
includes any new or modified requirements under the Tax Reform Act of 1986 and
subsequent legislation enacted thereafter; and no such determination letter has
been revoked, nor to the knowledge of Seller, has revocation been threatened.
To Seller's knowledge, nothing has occurred or is expected to occur that would
adversely affect the qualified status of any Plan or any related trust
subsequent to the issuance of such determination letter.
(iii) No Post-Employment Obligations. Seller does
not maintain or contribute to any Employee Plan which provides, or has any
liability to provide, life insurance, medical or other employee welfare
benefits (other than severance and accrued vacation and holiday pay) to any
Employee upon his retirement or termination of employment, except as may be
required by Federal or state statute and Seller has ever represented, promised,
or contracted (orally or in writing) to any Employee (individually or as a
group) that life insurance, medical or other employee welfare benefits (other
than severance and accrued vacation and holiday pay) would be provided upon
their retirement or termination of employment, except to the extent required by
Federal or state statute.
(iv) COBRA. Each "group health plan" within the
meaning of Section 4980B(g)(2) of the Code maintained by Seller or any entity
with which it is considered a "single
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employer" within the meaning of Section 414(b), (c), (m) and (o) of the Code,
has been administered in good faith in compliance with the continuation
coverage requirements contained in the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), as set forth at Section 4980B
of the Code and any regulations promulgated or proposed (if such proposed
regulations constitute substantial authority within the meaning of Section 6662
of the Code and any regulations promulgated thereunder) thereunder.
(v) Effect of Transaction. Except as set forth
on Exhibit 5.01(o)(v) annexed hereto, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
when taken together with any additional or subsequent events) constitute an
event under any Employee Plan that will or may result in any payment, upon a
change in control or otherwise, whether of severance, accrued vacations or
otherwise, acceleration, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee. No payment or
benefit which will or may be made by Seller with respect to any Employee as a
result of the transactions contemplated hereby will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
(vi) Employment Matters. Seller (A) is in
compliance with all applicable Federal and state laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees, except where the
failure to be in compliance would not, singly or in the aggregate, have a
material adverse effect on Seller, its financial condition or business; (B) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (C) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing, except as would not have a material adverse effect on Seller,
its financial condition or business; and (D) (other than routine payments to be
made in the normal course of business and consistent with past practice) is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
Social Security or other benefits for Employees.
(vii) Labor. No work stoppage or labor strike with
respect to Employees or against Seller is pending or, to the best knowledge of
Seller, threatened. Except as set forth on Exhibit 5.01(o)(vii) annexed
hereto, Seller is not involved in or, to the best knowledge of Seller,
threatened with, any labor dispute, grievance or litigation relating to labor,
safety or discrimination matters involving any Employee including charges of
unfair labor practices or discrimination complaints, which, if adversely
determined, would, individually or in the aggregate, have a material adverse
effect on Seller, its financial condition or business. Seller has not engaged
in any unfair labor practices within the meaning of the National Labor
Relations Act which would, individually or in the aggregate, have a material
adverse effect on Seller, its financial condition or business.
(viii) Seller is neither presently nor has been in
the past a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is at
the date hereof being negotiated by or on behalf of Seller.
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<PAGE> 26
(p) Contracts.
(i) Exhibit 5.01(p) annexed hereto contains a
list of all Contracts (other than subscriber agreements and agreements having
an annual cost of less than $5,000 for any single agreement and $50,000 for all
such agreements) to which Seller is a party and which in any way relate to the
operations or properties of Seller or which will be binding upon Buyer, its
operations or properties (including the Business or the Purchased Assets) after
the Closing Date. As used herein "Contracts" means all leases, rental
agreements, insurance policies, collective bargaining agreements, union
contracts, licenses, agreements, permits, purchase orders, sales orders,
agreements with suppliers, reseller agreements, agreements with agents,
agreements with customers, commitments and any and all other contracts,
consents or binding arrangements or understandings (including capital
commitments and arrangements with respect to construction in progress), whether
written or oral, express or implied, to which Seller is a party and which in
any way relate to the operations of the Business or the Purchased Assets of
Seller or which will be binding upon Buyer, its operations or properties
(including the Business or the Purchased Assets) after the Closing Date.
Except for (i) the Contracts listed on Exhibit 5.01(p) annexed hereto (true and
complete copies of which agreements have been previously delivered to Buyer or,
in the case of oral agreements, descriptions of which are set forth on said
Exhibit 5.01(p)), (ii) subscriber agreements and agreements having an annual
cost of less than $5,000 for any single agreement and $50,000 for all such
agreements and (iii) Contracts entered into between the date hereof and the
Closing Date as permitted by Section 4.01(c) hereof, Seller is not a party to
nor is it or any of its property bound by any Contract.
(ii) Seller has performed and will perform in all
material respects all obligations required to be performed by it under all
Contracts, and will in all material respects perform all obligations required
to be performed by it under Contracts entered into after the date hereof as
permitted by Section 4.01(c) hereof; neither Seller nor, to the best of
Seller's knowledge, any party with whom Seller has an agreement is in material
default under any Contract, and no event exists which with the giving of notice
or the passage of time, or both, would create such a default; and Seller knows
of no meritorious basis for any claim of any such default.
(iii) Each of the Contracts has been, and each
Contract entered into after the date hereof as permitted by Section 4.01(c)
hereof will be, lawfully entered into and is or will be valid and in full force
and effect and is or will be enforceable in accordance with its terms for the
period stated in such Contract. There are no currently threatened
cancellations of, nor are there any outstanding disputes under, any Contracts.
Seller will not modify, amend or waive any provisions of any Contract in a
manner that would materially adversely affect the Business, the Purchased
Assets or, financial condition of Buyer after the Closing Date, or terminate
any Contract prior to the Closing without the prior written consent of Buyer,
which consent will not be unreasonably withheld.
(iv) Except as set forth on Exhibit 5.01(b)
annexed hereto, the consummation of the transactions contemplated by this
Agreement does not require any consent under any Contract listed on Exhibit
5.01(p) annexed hereto, and the consummation of the transactions contemplated
by this Agreement will not require any consent under any Contract
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<PAGE> 27
(which will survive the Closing) entered into after the date hereof as
permitted by Section 4.01(c) hereof, in each case which will not have been
obtained by the Closing (and copies of such consents will be given to Buyer on
or prior to the Closing Date), and such consummation will not result in the
termination of any right or privilege under any Contract listed on Exhibit
5.01(p) annexed hereto or any other Contract (which will survive the Closing)
entered into after the date hereof as permitted by Section 4.01(c) hereof;
provided, however, that Seller shall not be deemed to be in default of any of
its obligations under this Agreement by reason of the failure to obtain any
such individual consent so long as the failure to obtain any such consent would
not individually or together with all such other failures to obtain consents
have a material adverse effect on the Business, the Purchased Assets or their
ownership or operation by Buyer or the consummation of the transactions
contemplated hereby. Seller has not received notice that any party to any
Contract listed on Exhibit 5.01(p) annexed hereto intends to cancel such
Contract nor has any party given Seller notice of any alleged breach of any
Contract or of its intent to take any legal action in order to enforce its
rights thereunder. All liabilities and obligations of Seller which are due and
payable or which are to be performed on or before the Closing Date under such
Contracts have been, or will have been on the Closing Date, duly paid in full
or performed in all material respects.
(v) Exhibit 5.01(p) annexed hereto contains true
and complete copies of all forms of subscriber agreements used by Seller.
(vi) Seller has no Contracts with any Person (or
group of Affiliated Persons) which cover more than 2% of Seller's wireless
telephone subscribers.
(vii) Each of the agreements between Seller and
its agents or dealers, including those entered into between the date hereof and
the Closing Date as permitted by Section 4.01(c) hereof, contains or will at
the Closing Date contain a provision permitting Seller, in its sole discretion,
to change the amount and rate of the fees or other consideration to be paid to
such agent or dealer upon ninety (90) days or less written notice by Seller to
such agent or dealer.
(q) No Sale. Seller has not entered into any contract to
sell, mortgage or encumber any of its material assets.
(r) No Material Adverse Change. Since the date of the
most recent Operating Financial Statements, there has not been
(i) any material adverse change in the rate of
Seller's generation of cash flow from operations, as opposed to cash flow from
financing operations and investment activities, after giving effect to
customary seasonal fluctuations of cash flow generation and after giving effect
to agents' commissions and other marketing expenses incurred in the ordinary
course of business consistent with past practices;
(ii) any incurrence, assumption or guarantee by
Seller of Indebtedness other than pursuant to Contracts in existence on the
date hereof and set forth or described in Exhibit 5.01(p) annexed hereto or as
permitted pursuant to Section 4.01(c) hereof;
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(iii) any creation by Seller of any Lien on any of
the Purchased Assets other than pursuant to Contracts in existence on the date
hereof and set forth or described in Exhibit 5.01(p) annexed hereto or as
permitted pursuant to Section 4.01(c) hereof, each of which Liens will be
terminated and released on or prior to the Closing Date;
(iv) any making of any loan, advance or capital
contribution to or investment in any Person by Seller other than as permitted
pursuant to Section 4.01(c) hereof;
(v) any damage, destruction or other casualty
loss affecting the Business or the Purchased Assets of Seller which, after
giving effect to payments to Seller under applicable insurance policies, has
had or is likely to have a material adverse effect on Seller, its financial
condition or business;
(vi) any repurchase, redemption or other
acquisition by Seller of any outstanding interest in Seller;
(vii) any change by Seller in accounting principles
or methods; or
(viii) any other action taken by Seller which,
without the prior written consent of Buyer, would not be permitted pursuant to
Section 4.01(c) hereof.
(s) Equipment. Substantially all of Seller's (i)
wireless telephone equipment, including system equipment, switch, cell site and
test equipment, (ii) mobile telephone equipment in inventory, and (iii)
equipment and software relating to any of Seller's billing systems are in good
working condition and are suitable for the use for which they are intended.
(t) Transactions with Affiliates. Neither Seller nor any
Affiliate of Seller, nor any shareholder, officer, director, partner, member,
consultant or employee of any thereof, is at the date hereof a party to any
transaction with Seller which would survive the Closing Date, including any
contract or arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property (including intellectual
property) to or from, or otherwise requiring payments to or from, any Seller or
Affiliate.
(u) No Other Business; No Subsidiaries. Seller has not
conducted any business other than the business of owning and operating
wireless telephone companies. Seller has no subsidiaries nor is Seller a
partner in any partnership or joint venture, nor does Seller own any equity
interest in any other entity.
(v) Investment Company Act. Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(w) Truth and Correctness. No representation or warranty
by Seller herein, nor any written statement or certificate or other instrument
furnished to Buyer by Seller pursuant hereto or in connection with the
transactions contemplated hereby, including the Exhibits annexed hereto,
contains any untrue statement of a material fact or omits or will omit to state
a material fact
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necessary to make the statements contained herein or therein, in light of the
circumstances under which such statements are made, not misleading.
5.02 Buyer's Representations and Warranties. Buyer represents and
warrants to Seller as follows:
(a) Due Incorporation. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and has all requisite partnership power and authority to enter into
this Agreement and to perform its obligations hereunder.
(b) Authority. This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all necessary
partnership action on the part of Buyer and this Agreement constitutes a legal,
valid and binding obligation of Buyer enforceable in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally. Neither the execution, delivery or performance of
this Agreement nor the consummation of the transactions contemplated hereby by
Buyer will, with or without the giving of notice or the passage of time, or
both, conflict with, result in a default or loss of rights (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to (i) any provision of the certificate of
incorporation or by-laws of Buyer; (ii) any material note, bond, indenture,
mortgage, deed of trust, contract, agreement, lease or other instrument or
obligation to which Buyer is a party or by which it or its property is bound or
affected; or (iii) any law, order, judgment, ordinance, rule, regulation or
decree to which Buyer is a party or by which it or its property is bound or
affected. Except as described on Exhibit 5.02(b) annexed hereto, no permit,
consent, approval, Authorizations, qualification or registration of, or
declaration to or filing with any governmental or regulatory authority or
agency or third party is required to be obtained or made by Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby in order to (A) render this Agreement or the
transactions contemplated hereby valid and effective and (B) enable Buyer to
purchase the Business and the Purchased Assets as herein contemplated.
(c) Legal Matters. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Buyer threatened, against or
relating to Buyer's right to perform its obligations under this Agreement, nor
does Buyer know or have reason to be aware of any basis for the same. There is
outstanding no order, writ, injunction, judgment or decree of any court,
governmental agency or arbitration tribunal which would individually or in the
aggregate have a material adverse effect on Buyer's obligations hereunder or
the transactions contemplated by this Agreement other than orders or decrees
involving the wireless telephone industry in general.
(d) Truth and Correctness. No representation or warranty
by Buyer, or any written statement or certificate or other instrument furnished
to Seller by Buyer pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the
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<PAGE> 30
statements contained herein or therein, in light of the circumstances under
which such statements are made, not misleading.
5.03 No Brokers. Buyer represents and warrants to Seller that no
agent, broker, investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly in connection with the transactions contemplated by this Agreement
based in any way on any arrangements, agreements or understandings made by or
on behalf of Buyer, and Buyer hereby agrees to indemnify Seller and agrees to
hold harmless Seller against and in respect of any claims for brokerage and
other commissions relating to such transactions based in any way on any
arrangements, agreements or understandings made by or on behalf of Buyer.
Seller represents and warrants to Buyer that, except for Columbia Capital
Corporation, no agent, broker, investment banker, Person or firm is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions contemplated by this
Agreement based in any way on any arrangements, agreements or understandings
made by or on behalf of Seller and Seller hereby agrees to indemnify Buyer and
agrees to hold harmless Buyer against and in respect of any claims for
brokerage and other commissions relating to such transactions based in any way
on any arrangements, agreements or understandings made by or on behalf of
Seller, including those with Columbia Capital Corporation.
ARTICLE 6
CONDITIONS TO OBLIGATIONS
6.01 Conditions to Buyer's Obligation. The obligation of Buyer to
perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Buyer, in its sole discretion, in whole or in part:
(a) Each of the representations and warranties of Seller
contained in this Agreement shall be deemed to have been made again at and as
of the time of the Closing and shall then be true in all material respects
except for changes contemplated by this Agreement. Seller shall have performed
and complied in all material respects, with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by each
of them prior to or at the Closing. Buyer shall have been furnished with a
certificate of Seller signed by its Chairman, President or Vice Chairman dated
the Closing Date, certifying to the fulfillment of the foregoing conditions by
Seller and to the truth and correctness in all material respects, except for
changes contemplated by this Agreement, as of the Closing Date, of the
representations and warranties of Seller contained herein.
(b) Buyer shall have been furnished with an opinion of
Edwards & Angell, counsel for Seller, dated the Closing Date, substantially in
the form of Exhibit 6.01(c) annexed hereto.
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(c) Buyer shall have been furnished with an opinion of
Paul, Hastings, Janofsky & Walker LLP, FCC counsel for Seller, dated the
Closing Date, substantially in the form of Exhibit 6.01(d) annexed hereto.
(d) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(e) All consents, approvals and actions of third parties
including all approvals from Federal, state and local authorities (including
the FCC and all public service commissions and public utility commissions or
comparable bodies exercising jurisdiction over Seller) as may be required for
the valid assignment and transfer to Buyer, as of the Closing Date, of all
right, title and interest in and to the Business and the Purchased Assets,
shall have been obtained or made, which consents and approvals shall not
contain any conditions or restrictions which, in the case of FCC approvals, are
not customary in transactions of this nature (other than a condition imposed by
the FCC making the assignment of the Authorizations subject or without
prejudice to the outcome of the ongoing proceedings before the FCC arising out
of or relating to the Memorandum Opinion and Order, DA94-106, released February
24, 1994, 9 FCC 986 (1994)), and which in the case of third party consents and
approvals, materially adversely affect Seller or its business or financial
condition, or the value of the Business or the Purchased Assets, or the
consummation of the transactions contemplated hereby. Notwithstanding anything
to the contrary herein contained, it shall not be a condition to Buyer's
obligations under this Agreement for Seller to obtain each individual required
consent (other than any consents of the FCC, any public utility or public
service commission (or comparable bodies exercising jurisdiction over Seller or
the Business)) so long as the failure to obtain any such individual consent
would not individually or together with all such other failures to obtain
consents have a material adverse effect on the Business, the Purchased Assets
or their ownership or operation by Buyer or the consummation of the
transactions contemplated hereby.
(f) Seller shall have delivered to Buyer such deeds,
bills of sale and other good and sufficient instruments of conveyance, transfer
and assignment, all in form and substance reasonably satisfactory to Buyer's
counsel, as shall be effective to vest in Buyer good and marketable title in
and to the Business and the Purchased Assets, free and clear of any Liens,
restrictions on transfer and rights of first refusal.
(g) Seller shall deliver to Buyer (i) if Seller is a
corporation (A) copies of its certificate of incorporation certified by the
Secretary of State of the jurisdiction of its incorporation, (B) copies of its
by-laws certified by its secretary, and (C) certificates of good standing of
recent date from the jurisdiction of its incorporation and all jurisdictions in
which it is qualified to do business; (ii) if Seller is a partnership, (A) a
copy of its partnership agreement certified by its general partner (other than
portions thereof which disclose the relative economic interests of the partners
thereof) and (B) certificates of good standing from the jurisdiction of its
organization and all jurisdictions in which it is qualified to do business; and
(iii) a lien and judgment search in the offices of the Secretaries of State of
the states of Colorado, Kansas, Minnesota, New Mexico, Oklahoma, Texas and Utah
and in the office of the county clerk of the appropriate counties therein,
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dated not earlier than fifteen (15) Business Days prior to the Closing Date,
the results of which are consistent with the representations of Seller
contained herein.
(h) Seller, for itself and its Affiliates, officers,
directors and partners shall have delivered to Buyer documentation (including a
general release) in form reasonably satisfactory to Buyer evidencing the
release and discharge of any and all claims which it or its Affiliates,
partners, officers, directors and shareholders may have against the Business or
the Purchased Assets.
(i) Seller shall have delivered to Buyer a certified copy
of the resolution or resolutions duly adopted by its partners authorizing the
execution, delivery and performance of this Agreement.
(j) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(k) Seller shall have delivered to Buyer an affidavit
certifying as to Seller's non-foreign status in accordance with Section
1445(b)(2) of the Code.
(l) The transactions contemplated by each of (i) the
Purchase Agreement, of even date herewith, among Buyer, Seller, Triad Texas,
L.P., Triad Utah, L.P., Triad Oklahoma, L.P., Triad Cellular, L.P. and Triad
Cellular Corporation (the "Purchase Agreement"), and (ii) the Agreement and
Plan of Merger, of even date herewith, among Buyer, Seller, Minnesota Cellular
Corporation, Triad Investment Minnesota, Inc., Barry B. Lewis, Craig Viehweg,
Terry E. Purvis, , Triad Cellular Corporation ("TCC") and Triad Minnesota L.P.
(the "Merger Agreement") shall have been consummated, or shall be consummated
concurrently herewith, in accordance with the terms of such agreements;
provided, however, if such Agreement and Plan of Merger shall have been
terminated by reason of a Stockholder's Failure (as defined in such Agreement
and Plan of Merger), the consummation of the Agreement and Plan of Merger shall
not be a condition to the consummation of the transactions contemplated hereby.
6.02 Conditions to Seller's Obligation. The obligation of Seller
to perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Seller, in its sole discretion, in whole or in part:
(a) Each of Buyer's representations and warranties
contained in this Agreement shall be deemed to have been made again at and as
of the time of the Closing and shall then be true in all material respects,
except for changes contemplated by this Agreement. Buyer shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by Buyer
prior to or at the Closing. Seller shall have been furnished with a
certificate of Buyer's Chief Executive Officer, Vice Chairman or Senior Vice
President, dated the Closing Date, certifying to the fulfillment of the
foregoing conditions by Buyer and to the truth and correctness in all material
respects, except for
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changes contemplated by this Agreement, as of the Closing Date of the
representations and warranties of Buyer contained herein.
(b) Buyer shall have delivered to Seller on the Closing
Date the Purchase Price as provided in Section 3.01(a) hereof.
(c) All consents, approvals and actions of third parties,
including all approvals from Federal, state and local authorities (including
the FCC and all public service commission and public utilities commission or
comparable bodies exercising jurisdiction over Seller) as may be required for
the valid assignment and transfer by Seller to Buyer of the Business and the
Purchased Assets shall have been obtained.
(d) Seller shall have been furnished with an opinion of
Rubin Baum Levin Constant & Friedman, counsel for Buyer, dated the Closing
Date, substantially in the form of Exhibit 6.02(e) annexed hereto.
(e) Seller shall have been furnished with a certified
copy of the resolution or resolutions duly adopted by the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement.
(f) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(g) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(h) The transactions contemplated by each of the Purchase
Agreement and the Merger Agreement shall have been consummated, or shall be
consummated concurrently herewith, in accordance with the terms of such
agreement; provided, however, if such Agreement and Plan of Merger shall have
been terminated by reason of a Stockholder's Failure (as defined in such
Agreement and Plan of Merger), the consummation of the Agreement and Plan of
Merger shall not be a condition to the consummation of the transactions
contemplated hereby.
ARTICLE 7
SURVIVAL; INDEMNITY
7.01 Survival of Representations and Warranties. Notwithstanding
any investigation or review made at any time by or on behalf of any party
hereto, all representations and warranties contained in this Agreement or in
the Exhibits annexed hereto or in any of the agreements, certificates or
instruments delivered in connection herewith (other than the representations
and warranties contained in Section 5.01(i) (the "Title Representations"),
Section 5.01(h) and the first two sentences of Section 5.01(b) and the first
sentence of Section 5.02(b) (the "Authorizations Representations"), Section
5.01(n) (the "Tax Representations"), in Sections 5.01(o) and 5.01(k) (the
"Employee Representations") and in Section 5.01(g) (the "Environmental
Representations")) shall
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survive the Closing for a period of one year and one hundred and eighty days
after the Closing Date (the "Indemnification Period") and shall thereupon
expire together with any right to indemnification (except with respect to any
claim for breach of any such representation or warranty for which written
notice shall have been given prior to the termination of the Indemnification
Period to the party which made such representation or warranty). The
Environmental Representations shall survive the Closing for a period of three
(3) years after the Closing Date and the Title Representations, the
Authorizations Representations, the Tax Representations and the Employee
Representations and the liabilities and obligations of Seller under Sections
3.05, 7.02(a)(vi) and 7.03 hereof and under Article 8 hereof shall survive the
Closing until the expiration of any applicable statutes of limitation (such
three (3) year period being the Indemnification Period with respect to the
Environmental Representation and such statutes of limitations period being the
Indemnification Period with respect to the Title Representations, the
Authorizations Representations, the Tax Representations and the Employee
Representations and the liabilities and obligations of Seller under Sections
3.05, 7.02(a)(vi) and 7.03 hereof and under Article 8 hereof).
7.02 Seller's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period), in addition to
any other indemnification provided for under this Agreement, Seller shall
indemnify and hold harmless Buyer and its Affiliates from and against any and
all demands, claims, losses, liabilities, actions or causes of action,
assessments, actual damages (but excluding consequential damages), fines, Taxes
(including excise and penalty taxes), penalties, costs and expenses (including
interest, expenses of investigation, reasonable fees and disbursements of
counsel, accountants and other experts (whether such reasonable fees and
disbursements of counsel, accountants and other experts relate to claims,
actions or causes of action asserted by Buyer against Seller or asserted by
third parties)) (collectively "Losses") incurred or suffered by Buyer and its
Affiliates and their respective partners, officers, directors, employees,
shareholders, agents and representatives arising out of, resulting from, or
relating to:
(i) any breach of any of the representations or
warranties made by Seller in this Agreement or in any agreement, certificate,
Exhibit or other instrument delivered by Seller pursuant to this Agreement;
(ii) any failure by Seller to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate, Exhibit or other instrument delivered by Seller pursuant to this
Agreement;
(iii) any and all liabilities of Seller other than
those expressly assumed by Buyer pursuant to Section 3.04 hereof;
(iv) any liabilities arising out of, resulting
from or relating to the liabilities of Seller, or any other member of any
affiliated group or "controlled group," within the meaning of Section 414(b),
(c), (m) and (o) of the Code, of which Seller was a member on or prior to the
Closing Date which liability exists by reason of Seller having been a member of
such affiliated or controlled group, including liabilities relating to (A) the
funding, operation,
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maintenance, administration, amendment or termination of, or the withdrawal or
partial withdrawal from, any employee plan relating to any period on or prior
to the Closing and including, losses arising under Title IV of ERISA, Section
302 of ERISA, Section 412 or 4971 of the Code, (B) compliance with COBRA under
Section 4980B of the Code, and (C) environmental matters with respect to any
operations of, or properties owned, occupied or operated or formerly owned,
leased or operated by, Seller or any other member of an affiliated group or
"controlled group" of which Seller was a member prior to the Closing Date;
(v) any failure by Buyer or Seller to comply with
the provisions of any applicable Bulk Sales laws of the uniform commercial code
in effect in any state having jurisdiction over Seller or the transactions
contemplated hereby; or
(vi) any action, suit or proceeding (whether
pending at the Closing Date or thereafter commenced) to restrain or invalidate
in whole or in part this Agreement or the transactions contemplated hereby; it
being understood and agreed that if any such action, suit or proceeding is
ultimately successful, then Seller, its partners and such partners' partners,
stockholders and such stockholder's partners shall be required to pay and
reimburse Buyer's Losses arising as a result thereof.
(b) Notwithstanding anything to the contrary contained in
Section 7.02(a), Seller shall not be required to pay or reimburse Buyer or its
Affiliates for Losses pursuant to Seller's indemnification obligation pursuant
to Section 7.02 which (when aggregated with any Losses paid to Buyer, or
Buyer's Affiliates, by Seller or Seller's Affiliates pursuant to Article 7 of
(i) the Merger Agreement, (ii) the Purchase Agreement and (iii) the agreement,
of even date herewith, between Buyer and TCC with respect to the acquisition by
Buyer of certain PCS licenses for which TCC was the high bidder (the "PCS
Agreement"); the Merger Agreement, the Purchase Agreement and the PCS Agreement
being referred to as the "Concurrent Agreements") are in excess of One Hundred
Million ($100,000,000) Dollars.
(c) Notwithstanding anything to the contrary contained in
this Section 7.02, neither Buyer nor its Affiliates shall be entitled to seek
indemnification under Section 7.02(a) for any Losses unless the aggregate
amount of Buyer's or its Affiliates' Losses in respect of all such matters,
when aggregated, with the aggregate amount of Buyer's or its Affiliate's Losses
(as such terms are defined in the Concurrent Agreements) arising under the
Concurrent Agreements (as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000 in which event Buyer and its
Affiliates shall be entitled to seek indemnification under this Section 7.02
for the amount of such Losses in excess of $375,000; provided, however, that
the limitations set forth in this Section 7.02(c) shall not be taken into
account in determining the amount of the Working Capital and the Reimbursable
Capital Expenditures determined in accordance with the procedure set forth in
Section 3.03(b) (which determination shall be made without any exclusions
whatsoever by reason of the foregoing); provided further, however, that the
foregoing limitation with respect to Buyer's or its Affiliates' right to
indemnification shall not be applicable to Losses arising from or relating to
(and Buyer and its Affiliates shall be entitled to indemnification for all such
Losses commencing with the first dollar of such Losses) (i) any breach of the
Title Representations, the Authorizations Representations, the Tax
Representations, the Employee Representations and the
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liabilities and obligations of Seller under Sections 3.05, 7.02(a)(vi) and 7.03
hereof and under Article 8 hereof; (ii) any Losses arising by reason of or
relating to any inaccuracy or omission relating to current assets or current
liabilities included on the Closing Date Balance Sheets, which affected in any
way the determination of Working Capital or Reimbursable Capital Expenditures
pursuant to Section 3.03 hereof and which were known to, or should have been
reasonably foreseeable by, Seller at the time of preparation of the Closing
Date Balance Sheets; or (iii) any Losses arising by reason of or relating to
any litigation listed on Exhibit 5.01(d) annexed hereto.
(d) As collateral security for Seller's indemnification
obligations under this Agreement and its indemnification obligations under the
Concurrent Agreements, Seller, or its Affiliates shall deliver, or cause to be
delivered, to a national bank to be mutually agreed upon (the "Escrow Agent")
to be held in escrow pursuant to the terms of an Escrow Agreement, in
substantially the form of Exhibit 7.02(d) annexed hereto (the "Escrow
Agreement"), to be entered into on the Closing Date, at Seller's option either
Six Million ($6,000,000) Dollars in cash or Four Hundred Eighty Thousand
(480,000) shares of Buyer's Class A Common Stock, no par value ("Shares"),
issued in accordance with the Merger Agreement (such cash or shares being
referred to herein as the "Escrow Fund"). The Escrow Fund shall be held by the
Escrow Agent pursuant to the Escrow Agreement for a period of one (1) year and
one hundred eighty (180) days after the Closing Date; provided, however, that,
on the first anniversary of the Closing Date, the Escrow Fund shall be reduced
to an amount equal to the lesser of the balance of the Escrow Fund on such
first anniversary or 75% (if the Escrow Fund is originally funded with Shares,
as measured by Shares) of the original Escrow Fund (except to the extent any
claims in excess of such reduced amount have been asserted prior to such first
anniversary). The Escrow Agreement shall set forth the procedures for Buyer to
make any claims against the Escrow Fund, the circumstances under which such
Escrow Fund shall be distributed either to Buyer or to Seller and procedures
for the Seller to substitute cash in lieu of stock. Nothing contained in this
Section 7.02(d) or in the Escrow Agreement shall limit in any way Seller's
indemnification obligations under this Agreement or the indemnification
obligations of Seller or its Affiliates, as applicable, under the Concurrent
Agreements; it being understood that, if the Escrow Fund is not sufficient to
satisfy such indemnification obligations, then Seller and its Affiliates, as
applicable, shall (subject to Section 7.02(b) hereof) remain liable for such
indemnification obligations as set forth in this Agreement or in the Concurrent
Agreements.
7.03 Tax Indemnification.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period), Seller hereby
agrees to indemnify and hold harmless Buyer and its Affiliates from and against
(i) all liability for Taxes of Seller (including any liability for Taxes by
reason of Seller being included in a Federal or state consolidated, combined or
unitary return and including any Tax liabilities resulting from the
transactions contemplated by this Agreement), and amounts with respect to
liability for Taxes pursuant to any written or unwritten agreement for the
allocation or payment of or with respect to Tax liabilities or benefits ("Tax
Sharing Arrangements"; such amounts being included in the definition of "Taxes"
for purposes of this Section 7.03), to the extent such Taxes, in the aggregate,
exceed the reserve therefor on the Closing Date Balance Sheets
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and (ii) any liability for out-of-pocket fees, costs and expenses (including
reasonable attorney's fees) arising out of or incident to any Tax indemnified
hereunder. If any amount for which Seller is to indemnify Buyer and its
Affiliates pursuant to the immediately preceding sentence is, subject to
Seller's rights under Section 7.03(b), determined to be payable (whether as a
payment of estimated tax or otherwise) after the Closing Date, Seller shall pay
or cause to be paid to Buyer such amount no later than the later of (A) five
(5) Business Days after Buyer gives notice to Seller of both the amount due and
the date such amount is due and payable (the "Due Date") and (B) three (3)
Business Days before the Due Date. Amounts described in clause (ii) shall be
reimbursed as incurred. Any payment required to be made hereunder and not made
at the time specified in the preceding two sentences shall bear interest at the
prime rate of the Toronto Dominion Bank as in effect from time to time or such
higher rate actually payable by the indemnified party on the delayed payment of
the Taxes being indemnified, calculated from the date such payment was required
to be made hereunder to the date such payment is actually received by the
indemnified party. "Taxes" shall mean all taxes of any kind, including those
on, or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
customs duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority, domestic or foreign.
(b) If any claim or demand is asserted by any taxing
authority in writing with respect to a Tax indemnified hereunder, Buyer shall
notify Seller of such claim or demand within fifteen (15) days of receipt
thereof; provided, however, that failure to give such notification shall not
affect the indemnified party's entitlement to indemnification hereunder except
to the extent the indemnifying party shall have been actually prejudiced as a
result of such failure. The indemnifying party shall have the right to control
the defense, compromise or settlement thereof; provided, however, that the
indemnifying party shall not be permitted to take any action with respect to an
issue that could adversely affect the Tax liability of the indemnified party
(with respect to liabilities not indemnified hereunder) unless the indemnified
party consents to such action. Without limiting the indemnifying party's
rights under the preceding sentence, the indemnified party shall be permitted
to participate in the defense of any such claim or demand, at its own expense.
The indemnified party shall cooperate fully in such defense as and to the
extent reasonably requested by the indemnifying party. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such claims or demand and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
7.04 Buyer's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to expiration of the Indemnification Period), in addition to any
other indemnification provided for under this Agreement, from and after the
Closing, Buyer shall indemnify and hold harmless Seller and its respective
Affiliates from and against any and all Losses (as defined in Section 7.02,
except that reasonable fees and
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disbursements of counsel, accountants and other experts shall be included
whether they relate to claims, actions or causes of action asserted by Seller
against Buyer or asserted by third parties) incurred or suffered by Seller and
its Affiliates and their respective officers, directors, partners, employees,
agents and representatives arising out of, resulting from, or relating to:
(i) any breach of any of the representations or
warranties made by Buyer in this Agreement or in any agreement, certificate or
other instrument delivered by Buyer pursuant to this Agreement; and
(ii) any failure by Buyer to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Buyer pursuant to this Agreement.
(b) Notwithstanding anything to the contrary contained in
this Section 7.04, neither Seller nor its Affiliates shall be entitled to seek
indemnification under this Section 7.04 for any Losses unless the aggregate
amount of Seller's Losses and its Affiliates' Losses in respect of all such
matters, when aggregated with the aggregate amount of Seller's or its
Affiliates' Losses (as such terms are defined in the Concurrent Agreements)
arising under the Concurrent Agreements (as more particularly set forth in
Article 7 of the Concurrent Agreements), exceeds $375,000, in which event
Seller and its Affiliates shall be entitled to seek indemnification under this
Section 7.04 for the amount of such Losses in excess of $375,000; provided,
however, that the limitations set forth in this Section 7.04(b) shall not be
taken into account in determining the amount of the Working Capital and
Reimbursable Capital Expenditures determined in accordance with the procedure
set forth in Section 3.03(b) (which determination shall be made without any
exclusions whatsoever by reason of the foregoing); provided further, however,
that the foregoing limitation with respect to Seller's right to indemnification
shall not be applicable to Losses arising from or relating to (and Seller shall
be entitled to indemnification for all such Losses commencing with the first
dollar of such Losses) any breach of the representation and warranty set forth
in the first sentence of Section 5.02(b) hereof.
7.05 Procedure.
(a) In the event that any party hereto shall sustain or
incur any Losses in respect of which indemnification may be sought by such
party pursuant to this Article 7, the party seeking such indemnification (the
"Indemnitee") shall assert a claim for indemnification by giving prompt (in the
event of claims arising by reason of the commencement of litigation against an
Indemnitee by third parties, in no event later than ten (10) days after service
of process, which process expressly indicates a claim for which Indemnitor (as
hereinafter defined) may be liable) written notice thereof (the "Notice"),
which shall describe in reasonable detail the facts and circumstances upon
which the asserted claim for indemnification is based, to the party providing
indemnification (the "Indemnitor") and shall thereafter keep the Indemnitor
reasonably informed with respect thereto; provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any third party claim, action or proceeding (a "Claim") is brought against any
Indemnitee, the Indemnitor shall have the right to
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assume, conduct and control the defense, compromise or settlement thereof, by
written notice to the Indemnitee of its intention to do so within thirty (30)
days after receipt of the Notice, with counsel reasonably satisfactory to the
Indemnitee, at the Indemnitor's own expense, and thereupon to prosecute in the
name and on behalf of the Indemnitee any available cross-claims, counter-claims
or third-party claims arising with respect to the Claim. If the Indemnitor
shall assume the defense of such Claim, it shall not settle such Claim unless
such settlement includes as an unconditional term thereof the giving by the
claimant or the plaintiff of a release of the Indemnitee, reasonably
satisfactory to the Indemnitee, from all liability with respect to such Claim.
As long as the Indemnitor is contesting any such Claim in good faith and on a
timely basis, the Indemnitee shall not pay or settle any such Claim.
Notwithstanding the assumption by the Indemnitor of the defense of any Claim as
provided in this Section 7.05 and without limiting the Indemnitor's right to
assume, conduct and control the defense, compromise or settlement thereof, the
Indemnitee shall be permitted to join in the defense of such Claim and to
employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee
of its desire to assume the defense of any such Claim within the prescribed
30-day period set forth in Section 7.05(a), or shall notify the Indemnitee that
it will not assume the defense of any such Claim, then the Indemnitee may
assume the defense of any such Claim, in which event it may do so in such
manner as it may deem appropriate, and the Indemnitor shall be bound by any
determinations made in any litigation with respect to such Claim or any
settlement thereof effected by the Indemnitee, provided that any such
determinations or settlement shall not affect the right of the Indemnitor to
dispute the Indemnitee's claim for indemnification. The failure of the
Indemnitor to assume the defense of any Claim shall not be deemed a concession
by Indemnitor that it is required to indemnify the Indemnitee for the subject
matter of such Claim.
(c) Amounts payable by the Indemnitor to the Indemnitee
in respect of any Losses for which any party is entitled to indemnification
hereunder shall be payable by the Indemnitor as incurred by the Indemnitee.
Any payments by any Indemnitor in indemnification hereunder shall be treated as
adjustments to the Purchase Price.
(d) The provisions of this Section 7.05 shall be subject
to the provisions of Section 7.03(b).
7.06 Indemnification Payments in Cash. All payments by Seller to
Buyer or its Affiliates in respect of any indemnification obligation to Buyer
or its Affiliates shall be made by Seller in cash or, at Seller's option, if
the Escrow Fund contains shares of Buyer's Class A Common Stock, by the
delivery to Buyer of shares of Class A Common Stock from the Escrow Fund,
(valuing such shares so delivered at the average closing price on NASDAQ of
such shares for the six (6) Business Days immediately preceding the date of
delivery of such shares).
7.07 Investigations; Waivers. The survival periods and rights to
indemnification provided for in this Article 7 shall remain in effect
notwithstanding any investigation at any time by or on behalf of any party
hereto or any waiver by any party hereto of any condition to such party's
obligations to consummate the transactions contemplated hereby.
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7.08 Indemnity Sole Remedy. In the absence of fraud or of a suit
seeking specific performance as contemplated by this Agreement, the remedies
provided to Seller and to Buyer by the foregoing provisions of this Article 7
shall after the Closing Date be in lieu of any other remedies to which the
respective party is entitled at law or in equity for any breach or
noncompliance by a party with the provisions of this Agreement.
ARTICLE 8
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
8.01 Employees.
(a) On or before thirty (30) days prior to the Closing
Date, Buyer will provide written notice to Seller setting forth the identity of
the Employees it desires to employ after the Closing Date. Seller agrees to
use all reasonable efforts to assist Buyer in employing such Employees and, in
this regard, to terminate such Employees on or prior to the Closing Date.
(b) Upon reasonable notice, Seller shall provide Buyer
with access to the Employees during normal business hours throughout the period
on and before the Closing Date in accordance with the procedure established in
Section 4.0 1(b). Such access shall be for the purpose of interviewing the
Employees and providing transition training for those Employees continuing in
employment after the Closing Date.
(c) Buyer and Seller shall consult regarding
communications with the Employees whom Buyer does not intend to retain after
the Closing so as to minimize any adverse impact on the Business. Upon the
reasonable request of Buyer, Seller shall use all commercially reasonable
efforts to minimize such impact, including enforcing Seller's rights under any
confidential or non-compete agreement with such Employees (other than the
non-compete agreements of Barry B. Lewis or Craig W. Viehweg).
(d) Nothing contained in this Agreement shall confer upon
any Employee any right with respect to continued employment with Buyer. No
provision of this Agreement shall create any third-party rights in any
Employee, or beneficiary or dependent thereof, with respect to the
compensation, terms and conditions of employment and benefits that may be
provided to such Employee by the Buyer after the Closing Date.
8.02 Employee Benefit Plans.
(a) All medical, dental, vision, travel accident,
accidental death and dismemberment, and life insurance expenses incurred by
Employees and their dependents on or before the Closing Date, pursuant to
Employee Plans, irrespective of the time at which claims are presented, are the
responsibility of Seller and shall be paid directly by Seller or its medical,
dental or life insurance carrier to such Employees and dependents.
(b) Seller shall be responsible for any medical, dental
or life insurance coverage due to any Employees and their dependents who
retired on or before the Closing Date.
Execution - 39 -
<PAGE> 41
(c) Seller agrees to fulfill its obligations under
continuation coverage rules of COBRA with respect to a "qualifying event,"
within the meaning of Section 4980B(f) of the Code or Section 603 of ERISA,
occurring on or before the Closing Date with respect to any Employees and their
dependents.
(d) All short-term, long-term and extended disability
benefits payable to Employees and their dependents who became disabled on or
before the Closing Date are the responsibility of Seller and shall be paid
directly by Seller or its insurance carriers to such Employees and their
dependents.
(e) If any Employees are terminated from employment by
Seller as a result of the transactions contemplated by this Agreement or
otherwise, any obligations arising out of such termination of employment,
including severance, accrued vacation pay, COBRA obligations, notices or
compensation required under the Worker Adjustment and Retraining Notification
("WARN") Act, employment discrimination complaints, unfair labor practice
charges, grievance under any collective bargaining agreement, breach of
contract claims, and wrongful termination and related tort claims shall be the
sole responsibility of Seller.
(f) Seller hereby agrees, until expiration of all
applicable statutes of limitations, to indemnify, hold harmless and defend
Buyer and its Affiliates from and against any and all claims, damages,
liabilities and expenses including reasonable attorney's fees and disbursements
of counsel, incurred by Buyer or any of its Affiliates arising from or in
connection with any failure of Seller or its Affiliates to discharge their
responsibilities to pay benefits under paragraphs (a) - (e) of this Section
8.01.
ARTICLE 9
MISCELLANEOUS
9.01 Expenses. Each party shall bear its own expenses incident to
the negotiation, preparation, authorization and consummation of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
its counsel and accountants, whether or not such transactions are consummated.
9.02 Equitable Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with the specific terms of the provisions or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party agrees
that it will not assert, as a defense against a claim for specific performance,
that the party seeking specific performance has an adequate remedy at law.
9.03 Notices. All notices, claims and other communications
hereunder shall be in writing and shall be made by hand delivery, registered or
certified mail (postage prepaid, return receipt requested), facsimile, or
overnight air courier guaranteeing next day delivery (a) if to Buyer,
Execution - 40 -
<PAGE> 42
to it at Western Wireless Corporation, 2001 NW Sammamish Road, Issaquah,
Washington 98027, Attention: Alan R. Bender, Esq. (Fax No. 206-313- 5547),
with a copy (which shall not constitute notice) to Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, New York, New York 10112, Attention: Barry A.
Adelman, Esq. (Fax No. 212-698-7825) or (b) if to Seller , to it at 2420 Sand
Hill Road, Menlo Park, California 94025, Attention: Barry Lewis (Fax No.
415-854-4512), with a copy (which shall not constitute notice) to Edwards &
Angell, 101 Federal Street, Boston, Massachusetts 02110, Attention: Stephen O.
Meredith, Esq. (Fax No. 617-439-4170), or at such other address as any party
may from time to time furnish to the other parties by a notice given in
accordance with the provisions of this Section 9.03. All such notices and
communications shall be deemed to have been duly given at the time delivered by
hand, if personally delivered; five (5) Business Days after being deposited in
the mail, first class postage prepaid, return receipt requested, if mailed;
when receipt confirmed, if sent by facsimile; and the next Business Day after
timely delivery to the courier, if sent by an overnight air courier service
guaranteeing next day delivery.
9.04 Entire Agreement. This Agreement, together with the Exhibits
annexed hereto, contains the entire understanding among the parties hereto
concerning the subject matter hereof and may not be changed, modified, altered
or terminated except by an agreement in writing executed by the parties hereto.
Any waiver by any party of any of its rights under this Agreement or of any
breach of this Agreement shall not constitute a waiver of any other rights or
of any other or future breach.
9.05 Remedies Cumulative. Except as otherwise provided herein,
each and all of the rights and remedies in this Agreement provided, and each
and all of the rights and remedies allowed at law and in equity in like case,
shall be cumulative, and the exercise of one right or remedy shall not be
exclusive of the right to exercise or resort to any and all other rights or
remedies provided in this Agreement or at law or in equity.
9.06 Governing Law. This Agreement shall be construed in
accordance with and subject to the laws and decisions of the State of
Washington applicable to contracts made and to be performed entirely therein.
9.07 Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
9.08 Waivers. No provision in this Agreement shall be deemed
waived by course of conduct, including the act of Closing, unless such waiver
is in writing signed by the parties and stating specifically that it was
intended to modify this Agreement.
9.09 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
successors and assigns. Seller shall not have the right to assign this
Agreement or any of its rights or obligations hereunder to any Person;
provided, however, that Buyer shall have the right to assign this Agreement and
its rights and obligations hereunder in accordance with Section 1.03 hereof.
Execution - 41 -
<PAGE> 43
9.10 Further Assurances. Buyer shall, at the request of Seller,
and Seller shall, at the request of Buyer, from time to time, execute and
deliver such other assignments, transfers, conveyances and other instruments
and documents and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting complete consummation of this
Agreement and the transactions herein contemplated.
9.11 Disclosures.
(a) Each of Buyer and Seller acknowledges and confirms in
connection with the negotiation of this Agreement and the execution hereof,
during the period from the date hereof through the Closing Date, the parties
hereto will have furnished to one another certain materials, information, data
and other documentation ("Disclosures") concerning their business, financial
condition and operations which are proprietary and confidential. Each party
acknowledges the party disclosing such Disclosures considers them secret and
confidential and asserts a proprietary interest therein. Accordingly, each of
Buyer and Seller covenants and agrees that it shall maintain all Disclosures
made by another party in strict confidence and shall not use such Disclosures
for its own benefit or disclose them to third parties, except to its agents,
representatives, bankers, investment bankers, counsel and employees involved in
evaluating the transactions contemplated by this Agreement, its partners (and
the partners or other securityholders thereof) or as otherwise required by law
(including the requirement of Buyer to disclose such terms under any Federal or
state securities laws); provided, however, that in no event shall Seller be
permitted to disclose the Purchase Price or any information concerning the
calculation of the Purchase Price to any other Person (including its employees)
unless and until such time as such information otherwise becomes public.
(b) No public announcement by any party hereto with
regard to the transactions contemplated hereby or the material terms hereof
(including the Purchase Price) shall be issued by any party without the mutual
prior consent of the other parties, except in the event the parties are unable
to agree on a press release and legal counsel for one party is of the opinion
that such press release is required by law and such party furnishes the other
parties a written opinion of outside legal counsel, or other counsel reasonably
acceptable to the party being furnished such opinion, to that effect, then such
party may issue the legally required press release.
(c) This Agreement shall not restrict any party hereto
from using information already known to it, to which it is entitled under
existing agreements, or information generally in the public domain or any
information coming into its possession after it becomes public knowledge unless
it became public knowledge through a breach of this Agreement.
9.12 Termination.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, without further obligation of either
Seller or Buyer, at any time prior to the Closing Date as follows:
(i) by mutual written consent duly authorized by
the board of directors of Buyer and the partners of Seller;
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<PAGE> 44
(ii) by Seller or by Buyer if the Closing shall
not have occurred on or before the fourth anniversary of the date hereof, or
such later date, if any, as Seller and Buyer shall agree in writing; provided,
that the party exercising such right is not in default of its obligations under
this Agreement in a manner which results in the failure to satisfy the
conditions to Closing of the other parties; or
(iii) by Seller or by Buyer if the consummation of
the transactions contemplated hereby shall be prohibited by a final,
non-appealable order, decree or injunction of a court of competent jurisdiction
or of the FCC.
In the event of a termination of this Agreement, no
party hereto shall have any liability or further obligation to any other party
to this Agreement except that nothing herein will relieve any party from
liability for any breach of this Agreement.
9.13 Definitions; etc.
Unless the context otherwise requires, the terms defined in
any Section of this Agreement shall have the meanings therein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The use of a gender herein shall be deemed to include
the neuter, masculine and feminine genders wherever necessary or appropriate.
Whenever the word "herein" or "hereof" is used in this Agreement, it shall be
deemed to refer to the Agreement and not to a particular Section of the
Agreement unless expressly stated otherwise.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WESTERN WIRELESS CORPORATION
By: /s/ JOHN W. STANTON
----------------------------------
Title: Chief Executive Officer
TRIAD CELLULAR L.P.
By: Triad Cellular Corporation, its
general partner
By: /s/ BARRY B. LEWIS
---------------------------------
Title: President
Execution - 43 -
