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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-13526
PRICELLULAR CORPORATION
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3043811
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
45 ROCKEFELLER PLAZA
NEW YORK, NY 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(212) 459-0800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class A Common Stock, $0.01 Par Value -- 13,575,649 shares as of July 8, 1996
Class B Common Stock, $0.01 Par Value -- 17,218,621 shares as of July 8, 1996
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INDEX
PRICELLULAR CORPORATION AND SUBSIDIARIES
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -- June 30, 1996 and December 31, 1995.......... 2
Condensed Consolidated Statements of Operations -- Three and Six Months Ended June 30,
1996 and 1995...................................................................... 3
Condensed Consolidated Statements of Cash Flows -- Six Months Ended June 30, 1996
and 1995........................................................................... 4
Notes to Condensed Consolidated Financial Statements.................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations...................................................................... 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................... 13
Item 2. Changes in Securities........................................................... 13
Item 3. Defaults upon Senior Securities................................................. 13
Item 4. Submission of Matters to a Vote of Security Holders............................. 13
Item 5. Other Information............................................................... 13
Item 6. Exhibits and Reports on Form 8-K................................................ 13
Signature............................................................................... 15
</TABLE>
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRICELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.................................................. $ 54,993 $123,444
Accounts receivable (less allowance of $2,443 in 1996 and $2,076 in
1995)................................................................... 13,872 8,725
Inventory.................................................................. 1,946 1,651
Other current assets....................................................... 710 4,744
-------- --------
Total current assets......................................................... 71,521 138,564
Fixed assets -- at cost:
Cellular facilities, equipment and other................................... 66,372 58,050
Less accumulated depreciation.............................................. (10,124) (6,009)
-------- --------
Net fixed assets............................................................. 56,248 52,041
Investment in cellular operations............................................ 37,629 37,386
Cellular licenses (less accumulated amortization of $7,705 in 1996 and $3,833
in 1995)................................................................... 357,085 305,375
Cellular licenses held for sale.............................................. 33,226 --
Deferred financing costs (less accumulated amortization of $1,842 in 1996 and
$1,029 in 1995)............................................................ 10,621 11,386
Other assets................................................................. 1,831 14
-------- --------
Total assets................................................................. $ 568,161 $544,766
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses...................................... $ 15,383 $ 15,777
Long-term debt -- current portion.......................................... 389 1,971
Income taxes payable....................................................... 521 872
Other current liabilities.................................................. 3,682 3,529
-------- --------
Total current liabilities.................................................... 19,975 22,149
Long-term debt............................................................... 354,408 315,216
Other long-term liabilities.................................................. 1,528 1,673
Stockholders' equity:
Preferred stock, $0.01 par: Series A, cumulative convertible:
Authorized 10,000,000 shares issued and outstanding 96,000 shares....... 1 1
Common stock, $0.01 par:
Class A: Authorized 100,000,000 shares (1996) and 40,000,000 shares
(1995); issued and outstanding 13,575,649 (1996) and 13,572,089
(1995)................................................................. 136 136
Class B: Authorized 20,000,000 shares; issued and outstanding 17,218,621
(1996) and 17,269,624 (1995)........................................... 172 173
Additional paid-in capital................................................. 214,443 215,618
Accumulated deficit........................................................ (22,502) (10,200)
-------- --------
Total stockholders' equity.............................................. 192,250 205,728
-------- --------
Total liabilities and stockholders' equity......................... $ 568,161 $544,766
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
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PRICELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Cellular service.......................... $ 25,199 $ 7,751 $ 44,711 $ 13,097
Equipment sales........................... 791 377 1,543 564
Other..................................... 1,116 -- 2,114 --
---------- ---------- ---------- ----------
27,106 8,128 48,368 13,661
COSTS AND EXPENSES
Cost of cellular service.................. 7,085 2,039 12,520 3,733
Cost of equipment sold.................... 2,103 870 4,415 1,499
General and administrative................ 4,141 1,643 7,674 3,021
Sales and marketing....................... 3,673 1,306 7,524 2,007
Depreciation and amortization............. 5,343 2,126 9,900 3,999
---------- ---------- ---------- ----------
22,345 7,984 42,033 14,259
---------- ---------- ---------- ----------
Operating income (loss)................... 4,761 144 6,335 (598)
OTHER INCOME (EXPENSE)
Gain on sale of investment in cellular
operations.............................. -- -- -- 11,598
Interest expense, net..................... (10,365) (3,587) (19,137) (6,668)
Other income, net......................... 250 20 500 20
---------- ---------- ---------- ----------
(10,115) (3,567) (18,637) 4,950
---------- ---------- ---------- ----------
Income (loss) before income taxes......... (5,354) (3,423) (12,302) 4,352
Benefit for income taxes.................. -- 1,150 -- --
---------- ---------- ---------- ----------
Net income (loss)......................... $ (5,354) $ (2,273) $ (12,302) $ 4,352
========== ========== ========== ==========
Net income (loss) after adjustment for
accreted Preferred Stock dividend....... $ (6,888) $ (2,273) $ (15,360) $ 4,352
========== ========== ========== ==========
Net income (loss) per common share........ $ (.22) $ (.09) $ (.50) $ .17
========== ========== ========== ==========
Weighted average number of common shares
used in computation of net income (loss)
per common share........................ 30,793,000 25,054,000 30,796,000 25,086,000
</TABLE>
See notes to condensed consolidated financial statements.
3
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PRICELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
---------------------
1995 1996
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.................... $ 10,219 $ (5,416)
-------- --------
INVESTING ACTIVITIES
Redemption of short-term investments................................... -- 991
Purchase of cellular equipment......................................... (7,804) (2,770)
Purchase of cellular licenses.......................................... (1,494) (156)
Sale of investment in cellular operations.............................. -- 19,478
Acquisition of cellular operations, net of cash of $16 (1995).......... (68,497) (24,809)
Refund of escrow deposit relating to the Personal Communication System
auction.............................................................. 4,140 --
Amounts deposited in escrow to acquire cellular properties............. (1,750) (2,000)
Investment in cellular operations...................................... (264) (944)
-------- --------
Net cash used in investing activities.................................. (75,669) (10,210)
-------- --------
FINANCING ACTIVITIES
Proceeds from sale of common stock, net................................ -- 2,566
Proceeds from exercise of stock options................................ 15 --
Repayments of notes payable............................................ (1,776) (2,670)
Payments for deferred financing costs.................................. (49) (126)
Purchase of treasury stock............................................. (450) (738)
Costs incurred in connection with the registration of previously
unregistered stock and the issue of preferred and common stock....... (741) --
-------- --------
Net cash used in financing activities.................................. (3,001) (968)
-------- --------
(Decrease) in cash and cash equivalents................................ (68,451) (16,594)
Cash and cash equivalents at beginning of period....................... 123,444 45,411
-------- --------
Cash and cash equivalents at end of period............................. $ 54,993 $ 28,817
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest............................................................. $ 456 $ 398
Income taxes......................................................... 351 2,404
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Purchase of cellular equipment......................................... -- 289
Debt issued in connection with acquisition of cellular license......... 19,429 --
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Debt issued in exchange for unregistered debt.......................... -- 115,755
Conversion of Class B Common Stock to Class A Common Stock............. 1 --
</TABLE>
See notes to condensed consolidated financial statements.
4
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PRICELLULAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of PriCellular
Corporation and its subsidiaries (the "Company"). All significant intercompany
items and transactions have been eliminated.
The consolidated financial statements have been prepared by the Company
without audit, in accordance with rules and regulations of the Securities and
Exchange Commission ("SEC"). In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results for the
interim periods. The results of operations for the interim periods are not
necessarily indicative of the results for a full year. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's 1995 Annual Report on Form 10-K.
Net Income (Loss) Per Share
Net income (loss) per share for the three and six months ended June 30,
1996 and June 30, 1995 was computed by using the weighted average shares
outstanding during the periods after giving retroactive effect to the 5-for-4
Class A and Class B Common Stock Splits in March 1996 and August 1995. The net
loss per common share was increased for the impact of the accreted dividends
attributable to the Company's 6 1/4% Series A Cumulative Preferred Stock.
2. ACQUISITION OF CELLULAR OPERATIONS
New York Cluster
During April 1996, the Company consummated the acquisitions of the NY-6 RSA
and 83% of the Dutchess County, NY MSA ("Poughkeepsie, NY MSA") from United
States Cellular Corporation, boosting its New York contiguous cluster to over
750,000 Pops.
The NY-6 RSA consists of approximately 111,000 Pops in Greene and Columbia
Counties between Albany and New York City. The NY-6 RSA abuts PriCellular's
previously acquired NY-5 RSA and includes 30 miles of the New York State
Thruway, 10 miles of the Interstate connecting the New England Thruway with the
New York State Thruway in Albany and 30 miles of the Taconic State Parkway. The
acquisition price of the NY-6 RSA was approximately $19,800,000.
The Poughkeepsie, NY MSA abuts the Company's NY-6 RSA and NY-5 RSA and
extends the Company's New York cluster across the Hudson Valley from the
Connecticut and Massachusetts border 100 miles west to the Binghamton area. The
MSA has approximately 263,000 Pops of which the Company acquired 83% for $178
per Pop or $38,900,000, with one-half paid in cash and the balance in a
three-year prime note with a bullet maturity.
Mid-Atlantic Cluster
During February 1996 the Company consummated the acquisition of the
non-wireline cellular system serving the PA-9 RSA from United States Cellular
Corporation for approximately $26,100,000 or $139 per Pop. The PA-9 RSA has
approximately 188,000 Pops and abuts the Company's Ohio Cluster on the South and
McCaw/AT&T's Pittsburgh MSA on the North.
The pro forma unaudited condensed results of operations for the six months
ended June 30, 1996, assuming the above acquisitions were consummated as of the
beginning of the period, are as follows:
<TABLE>
<S> <C>
Revenues.......................................................... $ 48,182
Net loss.......................................................... (14,262)
Net loss per common share......................................... $ (.56)
</TABLE>
5
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PRICELLULAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. COMMON STOCK
The Company filed a registration statement with the SEC and is in the
process of registering for resale 3.6 million outstanding shares of Class A
Common Stock to the public. The Company requested large and founding
shareholders to register and sell a portion of their already outstanding but
privately held stock to increase liquidity of its Class A Common Stock without
creating dilution. AT&T/McCaw, Robert Price, the Thomas H. Lee Company and the
Pennsylvania Public School Employees' Retirement System have stated that they
will not participate in this sale. Aeneas Venture Corporation, Spectrum Equity
Investors, L.P., Investment Advisors, Inc. and Dominion Cellular have complied
with the Company's request to create liquidity without dilution and sell a
portion of these shares.
During 1995, the Company's Board of Directors authorized the Company to
purchase up to 750,000 shares of its Common Stock on the open market or in
private transactions from time to time. To date, the Company has repurchased and
retired 209,062 shares of its Common Stock.
On February 29, 1996, the Board of Directors authorized a 5-for-4 common
stock split in the form of a twenty-five percent stock dividend payable March
28, 1996 to shareholders of record March 11, 1996. Stockholders' equity has been
restated to give retroactive recognition to the stock split for all periods
presented. In addition, references in the financial statements to number of
shares, per share amounts and market price of the Company's common stock have
been restated.
4. PENDING TRANSACTIONS
New York Cluster
The Company has reached agreement, pursuant to which it will exchange
certain of its Systems for, among other things, the Orange County, NY MSA and an
additional 11.1% of the Company's majority-owned Poughkeepsie, NY MSA. Pursuant
to the agreement the Company will exchange an aggregate of 548,016 Net Pops
consisting of its OH-9 RSA, a portion of its OH-10 RSA (excluding Perry and
Hocking counties) and the Parkersburg, WV/Marietta, OH MSA for the Orange
County, NY MSA (324,323 Pops), 11.1% of the Poughkeepsie, NY MSA (262,663 Pops),
12.2% of the Janesville, WI MSA (147,650 Pops) and approximately 23,571
additional net Pops, including small interests in the Eau Claire, WI and Wausau,
WI MSAs (in each of which the Company currently has a majority interest). The
Orange County, NY MSA abuts the Company's NY-5 RSA to the north, the Company's
Poughkeepsie, NY MSA to the east and the New York City MSA of McCaw/AT&T
Wireless to the south and east (bordering Westchester, Putnam and Rockland
counties). The exchange is subject to, among other things, FCC approval.
Mid-Atlantic Cluster
The Company has contracted to acquire the non-wireline cellular system
serving the WV-3 RSA which has approximately 269,000 Pops for approximately
$35,000,000. The WV-3 RSA abuts the Company's PA-9 RSA and WV-2 RSA. The
acquisition is subject to certain conditions including, but not limited to, FCC
approval and is expected to close in the third quarter.
Upper Midwest Cluster
In a disputed acquisition on November 14, 1994, RFB Cellular, Inc. signed a
contract to acquire the MI-2 RSA. The Company believed it should have had the
right to purchase the property and initiated legal proceedings. In May 1995, as
a result of this litigation, the Court of Chancery of the State of Delaware
awarded the Company the right to acquire the MI-2 RSA. The defendant in the
lawsuit appealed the decision. On March 22, 1996, the Delaware Supreme Court
reversed the lower court's decision and ordered the Company to unwind the
acquisition and sell the license and operating assets to the defendant. The
Company
6
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PRICELLULAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
believes that the completion of this transaction will not result in any material
economic gain or loss and the loss of MI-2's operating results will not be
material to the Company's results of operations.
5. SUBSEQUENT EVENT
On July 1, 1996, the Company consummated the sale of its recently acquired
AL-4 RSA for approximately $27,500,000 in cash or approximately $200 per Pop.
The Company acquired this stand-alone RSA in November 1995, for $10,000,000 in
cash and $10,000,000 in a 5-year, 4% Note that was subsequently converted into
1,468,860 shares of the Company's Class A Common Stock on the closing date. For
financial reporting purposes , the sale of the AL-4 RSA will not result in a
material gain or loss.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
For the three months ending June 30, 1996, the Company continued its strong
operating performance. Net subscriber additions amounted to 15,177. Included in
the second quarter for 1996 are the two month results of the Company's newly
acquired NY-6 RSA and the Poughkeepsie MSA which abut the Company's NY-5 RSA.
For the current six month period, the Company has increased its subscriber base
by 30,123.
Since most of the 1995 acquisitions occurred after June 30, 1995, the
results of operations for the three and six months ended June 30, 1996 are not
comparable with the same period in 1995. Comparison of operating results for
such periods is neither meaningful nor indicative of the Company's results of
operations or future growth.
Although the Company expects to incur net accounting losses for the
foreseeable future due primarily to interest and amortization expenses, it
currently is experiencing increased positive earnings before interest, taxes,
depreciation and amortization (EBITDA) which it expects to grow over the next
several years.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995
Revenues for the quarter ended June 30, 1996 increased to $27,106,000
(consisting of cellular service revenues of $25,199,000, equipment sales
revenues of $791,000 and other revenues of $1,116,000) from $8,128,000
(consisting of cellular service revenues of $7,751,000 and equipment sales
revenues of $377,000).
Total operating expenses for the quarter ended June 30, 1996 increased to
$22,345,000 (consisting of cost of cellular service of $7,085000, cost of
equipment sold of $2,103,000, general and administrative expenses of $4,141,000,
sales and marketing expenses of $3,673,000 and depreciation and amortization of
$5,343,000) from $7,984,000 of operating expenses for the quarter ended June 30,
1995 (consisting of cost of cellular service of $2,039,000, cost of equipment
sold of $870,000, general and administrative expenses of $1,643,000, sales and
marketing expenses of $1,306,000 and depreciation and amortization of
$2,126,000).
The primary factors contributing to the increase in revenues, operating
expenses and operating income was the acquisition of a significant portion of
the operating systems of the Company subsequent to June 30, 1995 and the
inclusion for two months of the Company's NY-6 RSA and Poughkeepsie MSA
acquisitions. Both the acquisitions subsequent to June 30, 1995 and the recent
acquisitions are included in the current quarter but are not included for the
same period in 1995.
Interest expense, net increased to $10,365,000 from $3,587,000 due to the
Company's issuance of $205,000,000 face amount of Senior Subordinated Discount
Notes at 12 1/4% in September 1995 and $60,000,000 face amount of Senior
Subordinated Convertible Discount Notes at 10 3/4% in August 1995.
Other income for the current quarter consists of $250,000 resulting from
the Company's agreement not to compete with Western Wireless within the Lubbock,
TX MSA. The noncompete agreement was $3,000,000 over a three year period. As of
June 30, 1996, two years remain on the agreement.
The income tax benefit for the prior year's quarter was primarily due to
the Company fully utilizing its NOLs to offset the provision recorded in the
first quarter.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
Revenues for the six months ended June 30, 1996 increased to $48,368,000
(consisting of cellular service revenues of $44,711,000, equipment sales
revenues of $1,543,000 and other revenues of $2,114,000) from $13,661,000
(consisting of cellular service revenues of $13,097,000 and equipment sales
revenues of $564,000).
Total operating expenses for the six months ended June 30, 1996 increased
to $42,033,000 (consisting of cost of cellular service of $12,520,000, cost of
equipment sold of $4,415,000, general and administrative expenses of $7,674,000,
sales and marketing expenses of $7,524,000 and depreciation and amortization of
$9,900,000) from $14,259,000 (consisting of cellular service of $3,733,000, cost
of equipment sold of
8
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$1,499,000, general and administrative expenses of $3,021,000, sales and
marketing expenses of $2,007,000 and depreciation and amortization of
$3,999,000).
The principal factor contributing to the increases in revenues, operating
expenses and operating income was the company's acquisition of a significant
portion of its existing systems after June 30, 1995, results of which, are
therefor included in the results for the current six month period but not in the
same period of the prior year.
Other income (expense) includes for 1995 gain on the sale of investment in
cellular operations of $11,598,000 resulting from the disposition of the
Company's interest in the non-wireline system serving the Abilene, TX, MSA.
Interest expense, net increased to $19,137,000 from $6,668,000 due
primarily to the Company's issuance of $205,000,000 face amount of Senior
Subordinated Discount Notes at 12-1/4% in September 1995 and $60,000,000 face
amount of Senior Subordinated Convertible Discount Notes at 10-3/4% in August
1995.
Other income for the current six month period consists of $500,000
resulting from the Company's agreement not to compete with Western Wireless
within the Lubbock, TX, MSA. The noncompete agreement is $3,000,000 for a period
of three years.
There is no income tax provision for the six months ended June 30, 1995
primarily due to the Company fully utilizing its NOLs.
LIQUIDITY AND CAPITAL RESOURCES
The cellular telephone business requires substantial capital to acquire,
construct and expand cellular telephone systems and to fund operating
requirements. The Company historically has financed its acquisitions and other
capital needs through the proceeds received from the issuance of debt
securities, the sale of equity interests, borrowings, vendor credit facilities
and more recently operating cash flow. As of June 30, 1996, the Company had
$54,993,000 of cash and cash equivalents and $51,546,000 of working capital.
During February 1996, the Company acquired substantially all of the assets
of the system serving the
PA-9 RSA (which represents 188,000 Pops) for $139 per Pop or $26,100,000 in
cash. The PA-9 RSA abuts the Company's WV-2 RSA and McCaw/AT&T's Pittsburgh, PA
MSA.
During April 1996, the Company consummated the acquisition of the NY-6 RSA
consisting of approximately 111,000 Pops for approximately $19,800,000.
Additionally, the Company acquired 83% of the Poughkeepsie, NY MSA which has
approximately 263,000 Pops for approximately $38,900,000, with one-half paid in
cash and the balance in a three-year prime note with a bullet maturity.
During July 1996, the Company consummated the sale of its recently acquired
AL-4 RSA for $27,500,000 in cash or $200 per Pop.
The Company has contracted to acquire the WV-3 RSA which has approximately
269,000 Pops for approximately $35,000,000 in cash. The WV-3 abuts the Company's
PA-9 RSA and the Company's WV-2 RSA. The acquisition is subject to certain
conditions including, but not limited to, FCC approval and is expected to close
during the third quarter of 1996.
The Company has reached agreement, pursuant to which it will exchange
certain of its Systems for, among other things, the Orange County, NY MSA and an
additional 11.1% of the Company's majority-owned Poughkeepsie, NY MSA. Pursuant
to the agreement, the Company will exchange an aggregate of 548,016 Net Pops
consisting of its OH-9 RSA, a portion of its OH-10 RSA (excluding Perry and
Hocking counties) and the Parkersburg, WV/Marietta, OH MSA for the Orange
County, NY MSA (324,323 Pops), 11.1% of the Poughkeepsie, NY MSA (262,663 Pops),
12.2% of the Janesville, WI MSA (147,650 Pops) and approximately 23,571
additional net Pops, including small interests in the Eau Claire, WI and Wausau,
WI MSAs (in each of which the Company currently has a majority interest). The
Orange County, NY MSA abuts the Company's NY-5 RSA to the north, the Company's
Poughkeepsie, NY MSA to the east and the
9
<PAGE> 11
New York City MSA of McCaw/AT&T Wireless to the south and east (bordering
Westchester, Putnam and Rockland counties). The exchange is subject to, among
other things, FCC approval.
In connection with the pending disposition of the MI-2 RSA, the Company
expects to receive gross proceeds of approximately $6 million.
The Company has expanded its marketing efforts significantly over prior
periods, including but not limited to, the increased use of funds for
advertising, cellular telephone inventory purchases and other expenditures
relating to subscriber growth.
The Company has plans for future growth through acquisition which may
require additional financing. Although the Company has historically been able to
obtain such financing, there is no guarantee that such financing will continue
to be available.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In a disputed acquisition on November 14, 1994, RFB Cellular, Inc. signed a
contract to acquire the MI-2 RSA. The Company believed it should have had the
right to purchase the property and initiated legal proceedings. In May 1995, as
a result of this litigation, the Court of Chancery of the State of Delaware
awarded the Company the right to acquire the MI-2 RSA. The defendant in the
lawsuit appealed the decision. On March 22, 1996 the Delaware Supreme Court
reversed the lower court's decision and ordered the Company to unwind the
acquisition and sell the license and operating assets to the defendant. The
Company believes that the completion of this transaction will not result in any
economic gain or loss and the loss of MI-2's operating results will not be
material to the Company's results of operations.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<C> <S>
10.1 Asset Sale Agreement dated April 9, 1996 between PriCellular Corporation and
Mississippi One Cellular Telephone
10.2 Asset Purchase Agreement dated as of May 8, 1996 between PriCellular
Corporation and Horizon Cellular Telephone Company of Monongalia, L.P.
10.3 Asset Exchange Agreement dated June 17, 1996 between PriCellular Corporation
and Vanguard Cellular Systems, Inc.
</TABLE>
(b) The Company filed the following current reports on Form 8-K during the
three months ended June 30, 1996.
A current report on Form 8K dated May 8, 1996 which includes:
Audited Financial Statements of Cellular of Upstate New York, Inc.
for the year ended December 31, 1995.
Audited Financial Statements of Hudson Cellular Limited
Partnership for the year ended December 31, 1995.
Audited Financial Statements of PA Rural Service Area No. 9
Limited Partnership for the year ended December 31, 1995.
Audited Financial Statements of Dutchess County Cellular Telephone
Company, Inc., for the year ended December 31, 1995.
A current report on form 8K dated May 14, 1996 which includes:
Audited Financial Statements of Dominion Cellular, Inc. for the
year ended September 30, 1995.
Unaudited Financial statements of Dutchess County Cellular
Telephone and Hudson Cellular Limited partnership for the three months
ended March 31, 1996.
A current report on form 8K dated June 20, 1996 which includes:
Audited Financial Statements of Horizon Cellular Telephone Company
of Monongahela, L.P. for the year ended December 31, 1995.
11
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRICELLULAR CORPORATION
By: /s/ Robert Price
------------------------------------
Name: Robert Price
Title: President
By: /s/ Stuart Rosenstein
------------------------------------
Name: Stuart Rosenstein
Title: Vice President of Finance/
Chief Financial Officer
Date: July 12, 1996
12
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGES
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
10.1 Asset Sale Agreement dated April 9, 1996 between PriCellular
Corporation and Mississippi One Cellular Telephone.....................
10.2 Asset Purchase Agreement dated as of May 8, 1996 between PriCellular
Corporation and Horizon Cellular Telephone Company of Monongalia,
L.P. ..................................................................
10.3 Asset Exchange Agreement dated June 17, 1996 between PriCellular
Corporation and Vanguard Cellular Systems, Inc. .......................
27 Financial Data Schedule................................................
</TABLE>
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
PRICELLULAR CORPORATION,
PRICELLULAR WIRELESS CORPORATION AND
NORTHLAND CELLULAR CORPORATION
AND
MERCURY, INC.
DATED AS OF
APRIL 9, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION I -- DEFINITIONS................................................................ 1
1.01 Definitions..................................................................... 1
SECTION 2 -- THE PURCHASE............................................................... 5
2.01 Purchase and Sale of Assets..................................................... 5
2.02 Assumption of Liabilities....................................................... 5
2.03 Excluded Liabilities............................................................ 6
2.04 Purchase Price.................................................................. 6
2.05 Payment of Purchase Price....................................................... 6
2.06 Closing......................................................................... 6
2.07 Escrow.......................................................................... 7
2.08 Closing Balance Sheet........................................................... 7
2.09 Allocation Statement............................................................ 7
2.10 Dispute of Statements........................................................... 8
SECTION 3 -- REPRESENTATIONS AND WARRANTIES OF SELLERS.................................. 8
3.01 Corporate Existence and Power................................................... 8
3.02 Authorization................................................................... 8
3.03 Governmental Authorization...................................................... 8
3.04 Non-Contravention............................................................... 8
3.05 Required Consents............................................................... 9
3.06 Indebtedness.................................................................... 9
3.07 Litigation and Claims........................................................... 9
3.08 Insurance....................................................................... 9
3.09 Contracts....................................................................... 9
3.10 Properties...................................................................... 9
3.11 Sufficiency of and Title to the Purchased Assets................................ 10
3.12 Permits and Operations.......................................................... 10
3.13 ERISA; Employee Benefits........................................................ 10
3.14 Environmental Laws and Compliance............................................... 10
3.15 Compliance with Law............................................................. 10
3.16 Intellectual Property........................................................... 11
3.17 Representations Correct......................................................... 11
3.18 Inventories..................................................................... 11
3.19 Accounts Receivable............................................................. 11
3.20 System Coverage; Cell Sites..................................................... 11
SECTION 4 -- REPRESENTATIONS AND WARRANTIES OF BUYER.................................... 11
4.01 Corporate Existence and Power................................................... 11
4.02 Authorization................................................................... 11
4.03 Governmental Authorization...................................................... 12
4.04 Non-Contravention............................................................... 12
4.05 Accuracy of Statements.......................................................... 12
4.06 Financing; Qualifications....................................................... 12
4.07 Litigation...................................................................... 12
SECTION 5 -- COVENANTS AND AGREEMENTS OF SELLERS........................................ 12
5.01 Changes in Certificate of Incorporation......................................... 12
5.02 No Change in Representations and Warranties..................................... 12
5.03 Cooperation in Obtaining Any Approvals.......................................... 12
5.04 Access.......................................................................... 13
5.05 Maintenance of Properties....................................................... 13
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.06 Conduct of the Business......................................................... 13
5.07 Cooperation with Buyer.......................................................... 13
5.08 Billing Assistance.............................................................. 13
SECTION 6 -- ADDITIONAL COVENANTS....................................................... 14
6.01 Regulatory Approval............................................................. 14
6.02 Confidentiality................................................................. 14
6.03 Buyer Cooperation with Sellers.................................................. 14
6.04 Like-Kind Exchange.............................................................. 14
6.05 Lien Releases................................................................... 14
6.06 Documents and Records........................................................... 14
6.06 Provision of NACN Services...................................................... 15
SECTION 7 -- TAX MATTERS................................................................ 15
7.01 Tax Definitions................................................................. 15
7.02 Tax Matters..................................................................... 15
7.03 Tax Cooperation; Allocation of Taxes............................................ 15
SECTION 8 -- CONDITIONS TO CLOSING...................................................... 16
8.01 Conditions to the Obligations of Each Party..................................... 16
8.02 Conditions to Obligation of Buyer............................................... 16
8.03 Conditions to Obligation of Sellers............................................. 17
SECTION 9 -- SURVIVAL................................................................... 18
9.01 Survival of Representations and Warranties...................................... 18
9.02 Survival of Covenants and Agreements............................................ 18
SECTION 10 -- INDEMNIFICATION........................................................... 18
10.01 Indemnification................................................................. 18
10.02 Procedures...................................................................... 18
SECTION 11 -- TERMINATION............................................................... 19
11.01 Termination..................................................................... 19
SECTION 12 -- INTENTIONALLY LEFT BLANK.................................................. 19
SECTION 13 -- MISCELLANEOUS............................................................. 19
13.01 Expenses........................................................................ 19
13.02 Notices......................................................................... 20
13.03 Governing Law................................................................... 20
13.04 Specific Performance............................................................ 20
13.05 Counterparts.................................................................... 21
13.06 Headings........................................................................ 21
13.07 Entire Agreement................................................................ 21
13.08 Successors and Assigns.......................................................... 21
13.09 Invalidity of Any Provision..................................................... 21
13.10 Additional Actions and Documents................................................ 21
13.11 Severability.................................................................... 21
13.12 Employees....................................................................... 21
13.13 Bulk Transfers.................................................................. 21
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SCHEDULES
1.01(a) -- ASSETS
1.01(c) -- CONTRACTS, AGREEMENTS, LEASES, ETC.
1.01(d) -- PERMITTED LIENS
3.05 -- REQUIRED CONSENTS
3.06 -- INDEBTEDNESS
3.09 -- CONTRACTS
3.13 -- EMPLOYEE BENEFIT PLAN
3.20 -- SYSTEM COVERAGE
EXHIBITS
A -- ESCROW AGREEMENT
B -- NON-COMPETITION AGREEMENT
C -- SALES AGREEMENT
</TABLE>
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is dated as of April 9,
1996, by and among PRICELLULAR CORPORATION ("PriCellular"), a Delaware
corporation, PRICELLULAR WIRELESS CORPORATION, a Delaware corporation and
wholly-owned subsidiary of PriCellular ("Wireless"), NORTHLAND CELLULAR
CORPORATION, a Delaware corporation and wholly-owned subsidiary of PriCellular
("Northland" and, together with PriCellular and Wireless, the "Sellers"), and
MERCURY, INC., a Louisiana corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, Northland owns the non-wireline cellular operating license (the
"License") issued by the Federal Communications Commission ("FCC") for the
Alabama-4 Rural Service Area, as defined by the FCC ("RSA #4"), together with
all of the microwave facilities, equipment, property, service agreements, rights
and assets necessary for provision of cellular service to RSA #4 and operates
the non-wireline cellular telephone system in RSA #4 (the "System"); and
WHEREAS, PriCellular owns, directly or indirectly, all of the issued and
outstanding capital stock of Northland; and
WHEREAS, Sellers desire to sell the License and other Purchased Assets (as
hereinafter set forth) and Buyer desires to purchase such Purchased Assets, each
on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
SECTION I
DEFINITIONS
1.01 Definitions. (a) The following terms, as used herein, shall have the
following meanings:
"Acquisition Agreements" means this Agreement, the Sales Agreement and
the Non-Competition Agreement.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such other Person. For the purposes of this definition, "control" when
used with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning set forth in the preamble hereto and shall
include any amendments, exhibits and documents incorporated herein by
reference.
"Assumed Current Liabilities" means all current liabilities of
Northland set forth on the Balance Sheet under the following captions:
accounts payable, accrued expenses, federal excise tax payable, sales tax
payable, county sales tax payable, cellular service tax payable and
customer security deposits and does not include, among other things, the
following:
(a) liabilities for Tax arising from or with respect to the
Purchased Assets, the System or the System Operations incurred or
attributable to any period prior to (or prior to and including) the
Balance Sheet Date;
(b) liabilities relating to employee benefits, compensation or
severance arrangements existing on or prior to the Balance Sheet Date;
and
(c) liabilities or obligations relating to any asset that is not a
Purchased Asset.
2
<PAGE> 6
"Balance Sheet" means an unaudited balance sheet of the assets and
liabilities of Northland as of the close of business on the Balance Sheet
Date together with the notes thereto.
"Balance Sheet Current Assets" means the current assets of Northland
set forth on the Balance Sheet under the following captions: accounts
receivable-subscriber, accounts receivable-roamers, inventory-phones,
inventory-accessories and prepaid expenses. For purposes hereof, Balance
Sheet Current Assets shall be net of reserves for doubtful accounts
receivable equal to the sum of the following amounts measured as of the
Balance Sheet Date: (i) five percent (5%) of accounts receivable which are
0 to 30 days past due (i.e., past the due date set forth on the applicable
customer bill); (ii) twenty percent (20%) of accounts receivable 31 to 60
days past due and (iii) one hundred percent (100%) of accounts receivable
more than 60 days past due.
"Balance Sheet Date" means a date not earlier than ten (10) business
days prior to the Closing Date or such other date as the parties shall
agree.
"Contracts" has the meaning set forth in clause (c) of the definition
of Purchased Assets.
"Dominion Agreement" means the Asset Purchase Agreement dated as of
May 8, 1995, by and among PriCellular, Northland, Dominion Cellular, Inc.
and Dominion Resources, Inc.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic, radioactive or hazardous
substances or wastes into the environment including without limitation
ambient air, surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic, radioactive or
hazardous substances or wastes or the clean-up or other remediation
thereof.
"Environmental Liabilities" means any and all liabilities of or
relating to Northland or arising in connection with or in any way relating
to the System, the Purchased Assets or activities or operations occurring
or conducted at any real property constituting part of the Purchased Assets
(including, without limitation, offsite disposal), which (i) arise under or
relate to Environmental Laws and (ii) relate to actions occurring after
November 7, 1995, and on or prior to the Closing Date.
"Excluded Assets" means all contracts, agreements, leases,
non-governmental licenses, commitments and sales and purchase orders not
set forth on Exhibit 1.01(c).
"Final Order" means a written action or order issued by the FCC (a)
which has not been revised, stayed, enjoined, set aside, annulled or
suspended and (b) as to which no request for a stay is pending and no stay
is in effect, no petition for reconsideration or rehearing nor application
for review or appeal is pending and as to which the time for filing such
request petition or application (including review by the FCC on its own
motion) has expired.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, applied on a basis consistent with the most
recent audited financial statements of the Sellers.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim
of any kind in respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property
or asset which such Person has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such property or asset.
3
<PAGE> 7
"Material Adverse Effect" means a material adverse effect on the
Purchased Assets taken as a whole or on the business, assets, condition
(financial or otherwise) or results of operations of the System taken as a
whole.
"Non-Competition Agreement" means the Non-Competition Agreement among
Buyer and Sellers substantially in the form attached as Exhibit B.
"Permits" means all franchises, licenses (including the License),
permits, certificates and other authorizations required under applicable
law, ordinance or regulation of any governmental authority, federal, state
or local, and all agreements, contracts, leases, licenses, instruments and
other commitments entered into in connection therewith.
"Permitted Liens" means Liens disclosed on Exhibit 1.01(d).
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Purchased Assets" means all of the assets, properties and business,
of every kind and description (other than the Excluded Assets), wherever
located, real, personal or mixed, tangible or intangible now owned or held
by Northland or hereafter acquired by Northland on or prior to the Closing
Date and used in connection with the System or the System Operations,
including, without limitation, all assets shown on Schedule 1.01(a) as
owned by Northland and:
(a) all antennas, transmitters, switching and receiving equipment,
technical facilities, telephone units, inventory and other tangible
personal property now owned by Northland or hereafter acquired by
Northland on or prior to the Closing Date and used in connection with
the System or the System Operations;
(b) all real property and leases of, and other interests in, real
property, in each case together with all buildings, fixtures, and
improvements erected thereon now owned by Northland or hereafter
acquired by Northland on or prior to the Closing Date and used in
connection with the System or the System Operations;
(c) all rights of Northland under all contracts, agreements,
leases, non-governmental licenses, commitments, sales and purchase
orders and other instruments which relate to the System or the System
Operations and which are listed in Exhibit 1.01(c), including, but not
limited to, the Dominion Agreement (collectively, the "Contracts");
(d) Balance Sheet Current Assets;
(e) all of Northland's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the System or the
System Operations, including, without limitation, unliquidated rights
under manufacturers' and vendors' warranties;
(f) all transferable licenses, permits or other governmental
authorizations relating to the System or the System Operations,
including without limitation the License; and
(g) all records, files and papers, whether in hard copy or computer
format relating to the System or the System Operations.
"Sales Agreement" means the Assignment and Assumption Agreement by and
between the Buyer and Northland in the form attached as Exhibit C.
"System Operations" means any and all business operations of Northland
associated with the System.
4
<PAGE> 8
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<S> <C>
Accounting Referee 2.13
Allocation Statement 2.12
Assumed Liabilities 2.02
Buyer preamble
Closing 2.06
Closing Balance Sheet 2.08
Closing Date 2.06
Code 7.01
Contaminant 3.14
Escrow Agent 2.05
Escrow Agreement 2.05
Excluded Liabilities 2.03
FCC 1st recital
Indemnified Party 10.02
Indemnifying Party 10.02
License 1st recital
Loss 10.01
NACN 6.07
Post-Balance Sheet Tax Period 7.01
Pre-Balance Sheet Tax Period 7.01
Purchase Price 2.04
Purchase Price Excess Amount 2.04
Purchase Price Shortfall Amount 2.04
Required Consents 3.05
Resources preamble
RSA #4 1st recital
Sellers preamble
Statement of Adjustment 2.10
System 1st recital
Tax 7.01
</TABLE>
SECTION 2
THE PURCHASE
2.01 Purchase and Sale of Assets. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, Buyer agrees to
purchase from Northland and Northland agrees to sell, transfer, assign and
deliver to Buyer at Closing all of Northland's right, title and interest in, to
and under the Purchased Assets, free and clear of all Liens, other than
Permitted Liens.
2.02 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the time of Closing, to
assume the following liabilities (the "Assumed Liabilities") to the extent
outstanding as of the time of Closing:
(a) all Assumed Current Liabilities;
(b) all liabilities and obligations of Northland arising under
Contracts (other than liabilities or obligations attributable to any
failure by Northland to comply with the terms thereof); and
(c) any obligation or liability for Tax arising from or with respect
to the Purchased Assets, the System or the System Operations for any period
after the Closing Date.
5
<PAGE> 9
2.03 Excluded Liabilities. Buyer is assuming only the Assumed Liabilities
and is not assuming any other liability or obligation of Northland of whatever
nature whether presently in existence or arising hereafter. All such other
liabilities and obligations shall be retained by and remain obligations and
liabilities of Northland (all such liabilities and obligations not being assumed
being herein referred to as the "Excluded Liabilities"), and, notwithstanding
anything to the contrary in this Agreement, none of the following shall be
Assumed Liabilities for the purposes of this Agreement:
(a) any obligation or liability for Tax arising from or with respect
to the Purchased Assets, the System or the System Operations which is
incurred or attributable to any period prior to (or prior to and including)
the Closing Date;
(b) any liability or obligation relating to employee benefits,
compensation or severance arrangements existing on or prior to the Closing
Date;
(c) any liability or obligation relating to any asset that is not a
Purchased Asset; and
(d) any Environmental Liability.
2.04 Purchase Price. (a) Subject to adjustment as provided in paragraphs
(b) and (c) of this Section 2.04, the aggregate purchase price for the Purchased
Assets (the "Purchase Price") is Twenty-Five Million Dollars ($25,000,000) in
cash.
(b) The Purchase Price shall be adjusted as follows:
(i) If Balance Sheet Current Assets exceed Assumed Current
Liabilities, the amount payable pursuant to Section 2.05(a) shall be
increased by the amount of such excess (the "Purchase Price Shortfall
Amount"); and
(ii) If Assumed Current Liabilities exceed Balance Sheet Current
Assets, the amount payable pursuant to Section 2.05(a) shall be decreased
by the amount of such excess (the "Purchase Price Excess Amount").
(c) The Purchase Price shall be further adjusted based upon the Closing
Balance Sheet to be prepared pursuant to Section 2.08 by the amount of the
adjustments set forth on the Statement of Adjustment.
2.05 Payment of Purchase Price. (a) At the Closing, Buyer shall deliver
(i) to Northland by wire transfer of immediately available funds (or such other
form of payment acceptable to Northland) the aggregate amount of Twenty-Four
Million Seven Hundred Fifty Thousand Dollars ($24,750,000) and (ii) to Harris
Trust Company of New York or another bank mutually agreeable to Sellers and
Buyer (the "Escrow Agent") by wire transfer of immediately available funds or by
certified or official bank check the amount of Two Hundred Fifty Thousand
Dollars ($250,000) for deposit (the "Escrow Funds") pursuant to an Escrow
Agreement among Buyer, Sellers and the Escrow Agent substantially in the form
attached as Exhibit A (the "Escrow Agreement").
(b) Promptly after the Statement of Allocation has been delivered to Buyer
pursuant to Section 2.08 and any disputes with respect thereto have been
resolved in accordance with the provisions of Section 2.10, (i) Buyer shall
deliver to Northland by wire transfer of immediately available funds (or such
other form of payment acceptable to Northland) the aggregate amount of the
Purchase Price adjustment owing to Northland pursuant to Section 2.04(c) or (ii)
Northland shall deliver to Buyer by wire transfer of immediately available funds
(or such other form of payment acceptable to Buyer) the aggregate amount of the
Purchase Price adjustment owing to Buyer pursuant to Section 2.04(c).
2.06 Closing. The closing of the transactions contemplated herein (the
"Closing") will take place at the offices of PriCellular, 45 Rockefeller Plaza,
New York, New York beginning at 10 A.M. local time ten (10) business days after
the date on which all governmental and regulatory approvals necessary to
consummate the transactions contemplated herein have been obtained and the
consent of the FCC to the
6
<PAGE> 10
assignment of the License to Buyer has been obtained and becomes a Final Order
or at such other time and place as the parties hereto may agree upon (such date,
the "Closing Date"). At the Closing:
(a) Sellers shall deliver to Buyer:
(i) the Sales Agreement;
(ii) a warranty deed, in form and substance reasonably satisfactory
to Buyer, for each parcel of real estate included in the Purchased
Assets;
(iii) the Non-Competition Agreement;
(iv) all of the documents and instruments to be delivered pursuant
to Section 8.02;
(v) all licenses and other agreements relating to Northland's
right, title and interest in, and operation of, the Purchased Assets;
and
(vi) such further instruments and documents, in form and content
reasonably satisfactory to Buyer, as may be reasonably necessary or
appropriate to consummate the transactions contemplated by this
Agreement.
(b) Buyer shall deliver to Sellers:
(ii) the Sales Agreement;
(iii) the Non-Competition Agreement;
(iv) all of the documents and instruments required to be delivered
under Section 8.03; and
(v) such further instruments and documents, in form and content
reasonably satisfactory to Sellers, as may be reasonably necessary or
appropriate to consummate the transactions contemplated by this
Agreement.
2.07 Escrow. Buyer agrees to deliver the Escrow Funds on the Closing Date
to the Escrow Agent for deposit in accordance with the terms of the Escrow
Agreement. All funds deposited with the Escrow Agent shall be applied by the
Escrow Agent in accordance with the terms of the Escrow Agreement to pay to
Buyer any amounts owing under Section 10.01(a). Any amounts remaining on deposit
with the Escrow Agent on December 31, 1996 shall be paid by the Escrow Agent to
Northland, except as otherwise provided in the Escrow Agreement.
2.08 Closing Balance Sheet. As promptly as practicable, but no later than
60 days, after the Closing Date unless otherwise agreed by the parties, Sellers
will prepare an unaudited balance sheet of the assets and liabilities of
Northland as of the Closing Date (the "Closing Balance Sheet") and shall deliver
the Closing Balance Sheet to Buyer together with a certificate based on such
Closing Balance Sheet setting forth Sellers' calculation of any adjustments to
the Purchase Price which would have been required pursuant to Section 2.04(b)(i)
or Section 2.04(b)(ii) if Balance Sheet Current Assets and Assumed Current
Liabilities had been calculated as of the Closing Date rather than the Balance
Sheet Date, taking into account for purposes of such calculation the Purchase
Price Shortfall Amount or the Purchase Price Excess Amount, as the case may be
(the "Statement of Adjustment"). The Closing Balance Sheet shall fairly present
in all material respects the consolidated financial position of the System as at
the close of business on the Closing Date in accordance with GAAP (except as may
be indicated in the notes thereto). Unless disputed by Buyer in accordance with
Section 2.10, Buyer shall be deemed to have agreed to the amounts set forth in
the Closing Balance Sheet and the Statement of Adjustment and such amounts shall
be final and binding on the parties hereto. Buyer shall provide Sellers, their
attorneys, auditors, agents and representatives with such access during normal
business hours to the books and records of the System as Sellers may reasonably
request in connection with the preparation of the Closing Balance Sheet,
provided that such access does not unreasonably interfere with the conduct of
the business of Buyer.
2.09 Allocation Statement. As promptly as practicable, but no later than
60 days, after the Closing Date, Sellers shall deliver to Buyer a statement (the
"Allocation Statement") setting forth the allocation of
7
<PAGE> 11
the Purchase Price and the consideration set forth in the Non- Competition
Agreement among the Purchased Assets and the covenant not to compete included in
the Non-Competition Agreement. Unless Buyer disputes the allocation set forth on
the Allocation Statement in accordance with Section 2.10, the Sellers and the
Buyer agree to report an allocation of the Purchase Price and the consideration
set forth in the Non-Competition Agreement among the Purchased Assets and the
covenant not to compete included in the Non-Competition Agreement in a manner
entirely consistent with the Allocation Statement and agree to act in accordance
with such Allocation Statement in the preparation of financial statements and
filing of all tax returns and in the course of any tax audit, tax review, or tax
litigation relating thereto.
2.10 Dispute of Statements. If Buyer disagrees with the Closing Balance
Sheet or the Allocation Statement delivered to it pursuant to Section 2.08 or
2.09, Buyer may, within 30 days after delivery of the Closing Balance Sheet or
such Allocation Statement, deliver a written notice to the Sellers disagreeing
with the Closing Balance Sheet or such Allocation Statement and setting forth
Buyer's calculation of the items and amounts set forth on the Closing Balance
Sheet or such Allocation Statement. Any such notice of disagreement shall
specify those items or amounts as to which the Buyer disagrees, and Buyer shall
be deemed to have agreed with all other items and amounts contained in the
Closing Balance Sheet or such Allocation Statement. During the 30 days following
timely delivery of any notice of disagreement, the parties shall use their best
efforts to reach agreement on the disputed items or amounts. If during such
period the parties are unable to reach such agreement, they shall promptly
thereafter cause a firm of nationally recognized public accountants mutually
agreeable to Sellers and Buyer (the "Accounting Referee"), to determine the
disputed items or amounts (and only such items or amounts). The Accounting
Referee shall deliver to the parties, as promptly as practicable, a report
setting forth its calculation of the disputed items or amounts. Such report
shall be final and binding upon the parties hereto. The cost of such review and
report shall be borne equally between the Sellers, on the one hand, and the
Buyer, on the other.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby represents and warrants to Buyer as of the date hereof
and as of the Closing Date that:
3.01 Corporate Existence and Power. Northland is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted. Northland is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
3.02 Authorization. Each Seller has full power and corporate authority to
execute, deliver and perform its obligations under the Acquisition Agreements
and to consummate the transactions contemplated thereby. The execution, delivery
and performance of the Acquisition Agreements and all transactions contemplated
thereby have been duly authorized and approved by all necessary corporate action
on the part of each Seller. This Agreement and, upon execution and delivery, the
Sales Agreement, and the Non-Competition Agreement will be, valid and binding
obligations of such Seller (if such Seller is a party thereto) enforceable
against such Seller in accordance with their terms, except as the enforceability
hereof and thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
except for limitations imposed by general principles of equity or public policy.
3.03 Governmental Authorization. The execution, delivery and performance
by such Seller of the Acquisition Agreements require no action by or in respect
of, or filing with, any governmental body, agency or official other than (i) the
filings with and approval of the FCC necessary to consummate the transactions
contemplated hereby and (ii) compliance with any applicable requirements of the
HSR Act.
3.04 Non-Contravention. The execution, delivery and performance by each
Seller of the Acquisition Agreements do not and will not (i) violate the
certificate of incorporation or bylaws of each Seller; (ii) assuming compliance
with the matters referred to in Section 3.03, violate any applicable law, rule,
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regulation, judgment, injunction, order or decree except to the extent that such
violation would not have a Material Adverse Effect; (iii) assuming the obtaining
of all Required Consents, constitute a material default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of each Seller or to a loss of any material benefit relating to the
System or the System Operations to which Northland is entitled under any
provision of any material agreement, contract or other instrument binding upon
Northland or by which any of the Purchased Assets is or may be bound or any
Permit or (iv) result in the creation or imposition of any Lien on any Purchased
Asset, other than Permitted Liens.
3.05 Required Consents. Schedule 3.05 sets forth each material agreement,
contract or other instrument binding upon Northland and any Permit (other than
the License) requiring a consent as a result of the execution, delivery and
performance of this Agreement, except such consents as would not, individually
or in the aggregate, have a Material Adverse Effect if not received by the
Closing Date (each such consent, a "Required Consent").
3.06 Indebtedness. Except as set forth on Schedule 3.06, Northland has no
indebtedness or other liabilities, whether accrued, absolute or contingent,
other than liabilities incurred in the ordinary course of business as a result
of System Operations and in the aggregate not exceeding $50,000.
3.07 Litigation and Claims. There are no judgments unsatisfied against
Northland or consent decrees or injunctions to which Northland or the Purchased
Assets are subject. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Sellers, threatened against or
affecting, Northland, the System or any Purchased Asset before any court or
arbitrator or any governmental body, agency or official which, if determined or
resolved adversely in accordance with the plaintiff's demands, would reasonably
be expected to have a Material Adverse Effect or which in any manner challenges
or seeks to prevent, enjoin, alter or materially delay the transactions
contemplated hereby.
3.08 Insurance. Northland maintains insurance (and self insurance)
coverage in such amounts and for such risks as are usually insured by entities
carrying on similar businesses.
3.09 Contracts. Except as set forth on Schedule 3.09, Northland is neither
a party to nor bound by: (i) any contract prohibiting the consummation of the
transactions contemplated by the Acquisition Agreements or impairing the value
or utility of the Purchased Assets; (ii) any contract or agreement with
(including, without limitation, any loan, note or other agreement to pay money
to) an Affiliate of Northland which will be binding upon the Purchased Assets or
which will constitute a Purchased Asset; (iii) any material loan, borrowing or
lease agreement binding on the Purchased Assets other than this Agreement; (iv)
any contract or contracts that either separately or in the aggregate have a
Material Adverse Effect or materially and adversely affect Northland's ability
to consummate the transactions contemplated by the Acquisition Agreements; or
(v) any contract that is material to the System taken as a whole.
3.10 Properties. (a) The sections of Schedule 1.01(a) captioned "Real
Property" correctly describe in all material respects all real property
(including leases thereof), and only such real property, used or held for use in
connection with the System or the System Operations, except real property
acquired by Northland after the date hereof.
(b) The sections of Schedule 1.01(a) captioned "Personal Property"
correctly describe in all material respects all personal property, and only such
personal property, used or held for use in connection with the System or the
System Operations, except for such personal property acquired by Northland after
the date hereof.
(c) (i) Northland has good and marketable, indefeasible, fee simple title
(in the case of real property that is not leased) to, or in the case of leased
real property has valid leasehold interest in, all Purchased Assets.
(ii) All leases of real property or personal property included in the
Purchased Assets are in good standing and are valid, binding and enforceable in
accordance with their respective terms, and there does not exist under any such
lease of real property or personal property any material default or any event
which with notice or lapse of time or both would constitute a material default.
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(iii) The buildings, structures and equipment included in the Purchased
Assets: (a) have no material defects; (b) are in good operating condition and
repair and have been reasonably maintained consistent with standards generally
followed in the industry (giving due account to the age and length of use of
same, ordinary wear and tear excepted); (c) are suitable for their present uses,
and (d) in the case of buildings and other structures, are structurally sound.
(iv) None of the material structures on the real property included in the
Purchased Assets encroaches upon real property of another Person, and no
material structures of any other Person encroach upon any of the real property
constituting part of the Purchased Assets or otherwise violate the rights of
Northland.
(d) No Purchased Asset is subject to any Lien other than Permitted Liens.
(e) No violation of any law, regulation or ordinance (including, without
limitation, laws, regulations or ordinances relating to zoning, city planning or
similar matters) relating to the System, the System Operations or any Purchased
Asset currently exists except for violations which have not had, and would not
reasonably be expected to have, a Material Adverse Effect. There are no
developments affecting any Purchased Asset (other than such developments
affecting the cellular telephone industry generally) pending or, to the
knowledge of Sellers, threatened, which might materially detract from the value
of any Purchased Asset, materially interfere with any present or intended use of
any Purchased Asset or materially adversely affect the marketability of any
Purchased Asset.
3.11 Sufficiency of and Title to the Purchased Assets. (a) The Purchased
Assets constitute, and on the Closing Date will constitute, all of the material
assets or property used or held for use in the System and the System Operations
and all of the assets or property necessary to operate the System as it is now
operated.
(b) Upon consummation of the transactions contemplated hereby, Buyer will
have acquired good and marketable title in and to, or have a valid leasehold
interest in, each of the Purchased Assets, respectively, free and clear of all
Liens other than Permitted Liens.
3.12 Permits and Operations. Northland has all Permits necessary to
operate the System as currently operated. The System is operating in material
compliance with the terms of all Permits necessary for its current operations
and is in material compliance with the rules and regulations of the FCC and all
other governmental and regulatory authorities. Sellers have not received any
notice, nor do Sellers have any knowledge relating to, violations or alleged
violations or defaults under governmental laws, ordinances or regulations
pertaining to or affecting any Permit necessary to operate the System as
currently operated.
3.13 ERISA; Employee Benefits. Northland does not maintain, and has never
maintained, an "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, nor, except as set
forth on Schedule 3.13, any other type of employee benefit plan. Northland is
neither bound by, nor obligated to contribute to, any severance, pension,
retirement or profit sharing plan. The transactions contemplated by the
Acquisition Agreements shall not create any material obligation on the part of
Buyer for severance payment or similar payment to any employee of Northland.
3.14 Environmental Laws and Compliance. Since November 7, 1995, Northland
has not violated any Environmental Law and has no Environmental Liability and
has no knowledge of any such violation or liability by or of any other Person
with respect to the System or the Purchased Assets. Since November 7, 1995,
Northland has not generated, manufactured, refined, transported, treated,
stored, handled, disposed, transferred, produced or processed any Contaminant in
any reportable quantity at or in the vicinity of the properties of Northland
(excluding from the foregoing the storage (but not the releasing, spilling,
leaking or discharging) of petroleum-based products intended to power standby
backup generators at Northland's cell sites). For purposes of this Section,
"Contaminant" means any waste, pollutant, hazardous or toxic substance or waste,
petroleum, petroleum-based substance or waste, special waste, or any constituent
of any such substance of waste as defined in or pursuant to any Environmental
Law.
3.15 Compliance with Law. Northland is not in violation of, since November
7, 1995, has not violated, and to Sellers' knowledge is not under investigation
with respect to and has not been threatened to be charged
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with or given notice of, any violation of, any material law, rule, regulation,
judgment, injunction, order or decree applicable to the Purchased Assets, the
System or the System Operations.
3.16 Intellectual Property. To Sellers' knowledge, the conduct by
Northland of its business does not infringe upon or violate, and since November
7, 1995, has not infringed upon or violated, any patents, trademarks, service
marks, trade names, trade secrets, copyrights, license or rights of any Person,
and no claim is pending or, to the best knowledge of Sellers, threatened to the
effect that the conduct by such Seller of its business infringes upon or
violates any patents, trademarks, service marks, trade names, trade secrets,
copyrights, licenses or rights of any Person.
3.17 Representations Correct. No representation or warranty made by
Sellers, no statement made by Sellers and no document, certificate or instrument
furnished or to be furnished to Buyer pursuant to this Agreement or in
connection with the transactions contemplated herein contains or will contain
any untrue statement of a material fact, or omits or will omit any material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading. All copies of agreements
and documents delivered and to be delivered to either Buyer have been and will
be true, correct and complete.
3.18 Inventories. The inventories reflected on the Balance Sheet or the
Closing Balance Sheet will be usable or saleable in the ordinary course of
business, except for obsolete materials and materials of below standard quality,
which have either been written down in the accounts and records of Northland
(with such write-down reflected on the Balance Sheet or the Closing Balance
Sheet) to realizable market value or for which adequate reserves have been
provided for in such accounts and such inventories will not be excessive in
light of past experience or current projections.
3.19 Accounts Receivable. All accounts receivable reflected on the Balance
Sheet or the Closing Balance Sheet will have arisen in bona fide transactions in
the ordinary course of the business.
3.20 System Coverage; Cell Sites. Pursuant to Section 22.911 of the FCC's
Rules, Northland is entitled to protection from co-channel and first-adjacent
channel interference and from capture of subscriber traffic within its Cellular
Geographic Service Area ("CGSA"). This CGSA currently includes all areas within
RSA #4 covered by 32 dBu contours as depicted in the FCC Form 600 application
filed by Dominion Cellular, Inc., on June 26, 1995, and granted by the FCC on
August 28, 1995. In addition, Dominion Cellular, Inc., filed with the FCC on
June 29, 1995, a System Information Update map for the call sign KNKN708, the
call sign assigned to the area designated by the FCC as the "Alabama 4 -- Bibb
RSA" (FCC Market No. 310A) and the "A" frequency. Northland covenants and agrees
that, prior to the Closing Date, it will file an updated System Information
Update map with the FCC for the call sign KNKN708 and will provide a copy of
such map to Buyer. Schedule 3.20 sets forth all material agreements known by
Seller which authorize any incursions or extensions into the area of Northland's
32 dBu contours within RSA #4 by the 32 dBu contours of any adjacent provider of
cellular service operating in the same frequency band. Schedule 3.20 also
reflects the cells constructed to date under call sign KNKN708.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as of the date hereof and as
of the Closing Date that:
4.01 Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, will be, prior to the Closing Date, duly
qualified to conduct business in the State of Alabama and has all corporate
powers and all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted and as will be
required after the consummation of the transactions contemplated hereunder.
4.02 Authorization. Buyer has full power and authority to execute, deliver
and perform its obligations under the Acquisition Agreements and to consummate
the transactions contemplated thereby. The execution, delivery and performance
of the Acquisition Agreements and all transactions contemplated thereby have
been
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duly authorized and approved by all necessary corporate action on the part of
Buyer. This Agreement is, and upon execution and delivery the Sales Agreement
and the Non-Competition Agreement will be, valid and binding obligations of
Buyer, enforceable against it in accordance with their terms, except as the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and except for limitations imposed by general principles of
equity or public policy.
4.03 Governmental Authorization. The execution, delivery and performance
by Buyer of the Acquisition Agreements require no action by or in respect of, or
filing with, any governmental body, agency or official other than (i) the
filings with and approval of the FCC necessary to consummate the transactions
contemplated hereby and (ii) compliance with any applicable requirements of the
HSR Act.
4.04 Non-Contravention. The execution, delivery and performance by Buyer
of the Acquisition Agreements do not and will not (i) violate the certificate of
incorporation or bylaws of Buyer or (ii) assuming compliance with the matters
referred to in Section 4.03, violate any applicable law, rule, regulation,
judgment, injunction, order or decree. Buyer is not a party to or bound by any
contract prohibiting the consummation of the transactions contemplated hereby
nor any contract or contracts that either separately or in the aggregate
materially and adversely affect such Buyer's ability to consummate the
transactions contemplated by the Acquisition Agreements.
4.05 Accuracy of Statements. No representation or warranty made by Buyer,
no statement made by Buyer and no document or certificate or instrument
furnished or to be furnished to any of the Sellers pursuant to this Agreement 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 any
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which such statements were made, not misleading.
4.06 Financing; Qualifications. Buyer has, or will have prior to Closing,
sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to purchase the Purchased Assets as provided
herein. Buyer has no knowledge of any fact that would, under existing law,
disqualify Buyer as an assignee of the License.
4.07 Litigation. There is no action, suit, investigation or proceeding
pending against, or to Buyer's knowledge, threatened against or affecting Buyer
before any court or arbitrator or any governmental body, agency or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated hereby.
SECTION 5
COVENANTS AND AGREEMENTS OF SELLERS
Each Seller covenants and agrees that:
5.01 Changes in Certificate of Incorporation. From the date hereof until
the Closing Date, there shall be no change in the certificate of incorporation
or by-laws of Northland which would, or would reasonably be expected to, have a
Material Adverse Effect or which would prevent, enjoin, alter or materially
delay the transactions contemplated hereby. Northland shall maintain its
corporate existence and powers.
5.02 No Change in Representations and Warranties. From the date hereof
until the Closing Date, except with the prior written consent of Buyer, the
Sellers shall not (a) take or agree or commit to take any action that would make
any representation or warranty of any of the Sellers hereunder inaccurate in any
respect at, or as of any time prior to, the Closing Date or (b) omit or agree or
commit to omit to take any action necessary to prevent any such representation
or warranty from being inaccurate in any respect at any such time.
5.03 Cooperation in Obtaining Any Approvals. From the date hereof until
the Closing Date, such Seller shall execute and file or join in the execution
and filing of any application or other document which may be
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reasonably necessary in order to obtain the authorization, approval or consent
of the FCC or any other governmental body or third party which may be required
or which Buyer may reasonably request in connection with the execution of this
Agreement or the consummation of the transactions contemplated hereby. As soon
as practicable, such Seller shall use its best efforts to assist Buyer in
obtaining the authorization, approval or consent of the FCC to the transactions
contemplated hereby.
5.04 Access. From the date hereof until the Closing Date, each Seller
shall provide Buyer, its attorneys, auditors, agents and representatives with
such information and permit such access during normal business hours to the
Purchased Assets and to the books and records of such Seller relating to the
Purchased Assets, the System, the System Operations and RSA #4 as Buyer from
time to time reasonably request, provided that such access does not unreasonably
interfere with the conduct of the business of either Seller.
5.05 Maintenance of Properties. Northland shall at all times prior to the
Closing Date maintain the License in full force and effect and shall maintain
its books, accounts and records in the usual, regular and ordinary manner on a
basis consistent with prior years and in accordance with GAAP consistently
applied throughout the periods covered by such statements. Prior to the Closing
Date, Northland shall not cancel any material insurance policy or other material
contract or agreement and shall maintain in effect insurance of the Purchased
Assets as is customary for entities carrying on similar businesses. Northland
will maintain the Purchased Assets in good repair, working order and condition,
except for obsolescence, ordinary wear and tear or casualty loss or damage;
provided that Northland will replace or repair prior to Closing any Purchased
Asset that is damaged or destroyed on account of casualty or provide Buyer with
all insurance proceeds received by Northland as a result of such damage or
destruction.
5.06 Conduct of the Business. From the date hereof until the Closing Date,
Northland shall:
(a) subject to paragraph (c) below, continue to own the Purchased
Assets;
(b) continue to operate the System in the ordinary course and shall
not materially deviate from established policies and practices concerning
personnel, marketing, credit verification, subscriber disconnects,
collections, agent program, roaming contracts, sales commissions, billings
and minimum term for customer contracts, except as may be required by law,
as may have previously been discussed by Buyer and Sellers or as otherwise
agreed to by Buyer;
(c) not enter into any contract to purchase, sell, mortgage, lease or
otherwise encumber any of the Purchased Assets, except for the sale or
rental of inventory or the sale of cellular telephone equipment, in each
case in the ordinary course of business consistent with past practice;
(d) not create or permit to be created any Lien on the Purchased
Assets, except for Permitted Liens; and
(e) not incur any material liabilities.
5.07 Cooperation with Buyer. Each Seller shall use its best efforts to
fulfill or obtain the fulfillment of the conditions set forth in Sections 8.01
and 8.02 of this Agreement and shall execute and deliver any and all additional
instruments of transfer and assignment reasonably necessary to consummate the
transactions contemplated hereby, whether before or after the Closing Date.
5.08 Billing Assistance. For a period of up to 90 days after the Closing,
or until such earlier date as Buyer shall specify, Northland will use its best
efforts to continue to bill customers of the System and to otherwise generally
assist Buyer in billing and collection procedures in connection with the System
Operations, and in connection therewith, Buyer shall provide Northland with
sufficient office space, facilities and access to the books and records of the
System, at no cost to Northland. Northland shall be compensated for such
services at its actual cost for billing each subscriber, as determined in good
faith by Northland. Northland shall bill in the same manner as prior to the
Closing Date except as required hereunder. Any monies received by Northland
after the Closing Date shall be for the benefit and account of Buyer and shall
be promptly remitted to Buyer.
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SECTION 6
ADDITIONAL COVENANTS
6.01 Regulatory Approval. As promptly as practicable following the
execution hereof by Buyer and each Seller, but in no event later than five (5)
business days hereafter, Sellers and Buyer shall prepare and file with any
required governmental authorities such applications as may be necessary to
transfer the Purchased Assets as contemplated by this Agreement. Sellers and
Buyer shall cooperate and use their best efforts to promptly obtain such
required regulatory approvals. All governmental fees charged in connection with
FCC or HSR Act filings necessary for the consummation of the transactions
contemplated hereby shall be paid by Buyer.
6.02 Confidentiality. Prior to the Closing Date and after any termination
of this Agreement, Buyer and its Affiliates will hold, and will use their best
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process (and then only if
Sellers have notice of the proceeding) or by other requirements of law
(including without limitation the requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended), all confidential
documents and information concerning the System or the Sellers furnished to
Buyer or its Affiliates in connection with the transactions contemplated hereby,
except to the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by Buyer, (ii) in the public domain
through no fault of Buyer, or (iii) later lawfully acquired by Buyer from
sources other than any Seller; provided that Buyer may disclose such information
to its officers, directors, employees, accountants, counsel, consultants,
advisors and agents in connection with the transactions contemplated by this
Agreement so long as such Persons are informed by Buyer of the confidential
nature of such information and are directed by Buyer to treat such information
confidentially. The obligation of Buyer and its Affiliates to hold any such
information in confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the confidentiality
of their own similar information. If this Agreement is terminated, Buyer and its
Affiliates will, and will use their best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to, destroy or deliver to Northland, upon request, all documents and
other materials, and all copies thereof, obtained by Buyer or its Affiliates or
on their behalf from Sellers in connection with this Agreement that are subject
to such confidence.
6.03 Buyer Cooperation with Sellers. Buyer shall use its best efforts to
fulfill or obtain the fulfillment of the conditions set forth in Sections 8.01
and 8.03.
6.04 Like-Kind Exchange. At Sellers' request and at no cost to Buyer,
Buyer will agree to take all actions reasonably requested by Sellers in order to
effectuate all or any part of the transactions contemplated by this Agreement as
a like-kind exchange in accordance with Section 1031 of the Code and the rules
and regulations thereunder.
6.05 Lien Releases. On or prior to the Closing Date, Northland will
provide evidence reasonably satisfactory to Buyer that all Liens affecting the
assets, other than Permitted Liens, have been or as of the Closing Date will be
terminated, released or waived, as appropriate, or original executed instruments
effecting such terminations, releases or waivers will be provided by Sellers.
6.06 Documents and Records. On or prior to the Closing Date, Northland
will provide Buyer with all (i) existing blueprints, schematics, working
drawings, plans, specifications, projections, statistics, engineering records,
original plant records, system construction and as-built maps relating to the
System; (ii) customer lists, files and records used by Northland in the
operation of the System; and (iii) personnel files and records relating to the
employees of Northland that render services to the System. Delivery of the
foregoing shall be deemed made to the extent such lists, files and records are
then located at any of the offices included in the System.
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[6.07 Provision of NACN Services.
(a) Sellers shall use their best efforts to assure that Buyer is
permitted to assume, at least through December 31, 1996, Northland's right
to access North American Cellular Network ("NACN") services, which rights
currently exist by virtue of Northland's arrangement with Airtouch
Communications, Inc.
(b) In the event that Buyer does not continue to receive NACN's
service under the arrangement currently utilized by Sellers, through at
least December 31, 1996, due either to Buyer's electing not to continue to
receive such service, or by virtue of such service not being available to
Buyer, Northland shall provide to Buyer one-half of all costs necessary for
Buyer to receive NACN's services in conjunction with, or through use of
Motorola facilities, including any and all system and other upgrades that
may be necessary; provided, that in no event shall the amount payable by
Northland pursuant to this Section 6.07 exceed $40,000. Payment for such
NACN services shall be deducted from any funds that would otherwise be due
and owing to Northland from the Escrow Account set forth herein.]
SECTION 7
TAX MATTERS
7.01 Tax Definitions. The following terms, as used herein, have the
following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Post-Balance Sheet Tax Period" means any Tax period (or portion
thereof) ending after the Balance Sheet Date.
"Pre-Balance Sheet Tax Period" means any Tax period (or portion
thereof) beginning after November 7, 1995 and ending on or before the close
of business on the Balance Sheet Date.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up
capital, profits, greenmail, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other
like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by
any governmental authority (domestic or foreign) responsible for the
imposition of any such tax.
7.02 Tax Matters. Each Seller hereby represents and warrants to each Buyer
that:
(a) Northland has timely paid or will timely pay all Taxes, and all
interest and penalties due thereon and payable by it for the Pre-Balance
Sheet Tax Period which will have been required to be paid on or prior to
the Closing Date, the non-payment of which would result in a Lien on any
Purchased Asset, would otherwise adversely affect the System or the System
Operations or would result in Buyer becoming liable or responsible
therefor.
(b) Northland has established, in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
periods, adequate reserves for the payment of, and will timely pay all Tax
liabilities, assessments, interest and penalties which arise from or with
respect to the Purchased Assets, the System or the System Operations and
are incurred in or attributable to the Pre-Balance Sheet Tax Period, the
non-payment of which would result in a Lien on any Purchased Asset, would
otherwise adversely affect the System or the System Operations or would
result in Buyer becoming liable therefor.
7.03 Tax Cooperation; Allocation of Taxes. (a) Buyer and Sellers agree to
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the Purchased Assets,
the System and the System Operations as is reasonably necessary for the filing
of all Tax returns, and making of any election related to Taxes, the preparation
for any audit by any taxing authority, and the prosecution or defense of any
claim, suit or proceeding relating to any Tax return. Sellers and Buyer shall
cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the
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System or the System Operations and each shall execute and deliver such powers
of attorney and other documents as are necessary to carry out the intent of this
paragraph (a) of Section 7.03.
(b) All real property taxes, personal property taxes and similar ad valorem
obligations levied with respect to the Purchased Assets for a taxable period
which includes (but does not end on) the Balance Sheet Date (collectively, the
"Apportioned Obligations") shall be apportioned between Northland and Buyer as
of the Closing Date based on the number of days of such taxable period included
in the Pre-Balance Sheet Tax Period and the number of days of such taxable
period included in the Post-Balance Sheet Tax Period. Northland shall be liable
for the proportionate amount of such taxes that is attributable to the
Pre-Balance Sheet Tax Period, and Buyer shall be liable for the proportionate
amount of such taxes that is attributable to the Post-Balance Sheet Tax Period.
Within 90 days after the Balance Sheet Date, Northland and Buyer shall present a
statement to the others setting forth the amount of reimbursement to which each
is entitled under this Section 7.03(b) together with such supporting evidence as
is reasonably necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within 10 days after delivery
of such statement. Thereafter, Northland shall notify Buyer upon receipt of any
bill for real or personal property taxes relating to the Purchased Assets, part
or all of which are attributable to the Post-Balance Sheet Tax Period, and shall
promptly deliver such bill to Buyer who shall pay the same to the appropriate
taxing authority, provided that if such bill covers the Pre-Balance Sheet Tax
Period, Northland shall also remit prior to the due date of assessment to Buyer
payment for the proportionate amount of such bill that is attributable to the
Pre-Balance Sheet Tax Period. In the event that either Northland or Buyer shall
thereafter make a payment for which it is entitled to reimbursement under this
Section 7.03(d), the other party shall make such reimbursement promptly but in
no event later than 30 days after the presentation of a statement setting forth
the amount of reimbursement to which the presenting party is entitled along with
such supporting evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payment required under this Section and not made within 10
days of delivery of the statement shall bear interest at the rate per annum
determined, from time to time, under the provisions of Section 6621(a)(2) of the
Code for each day until paid.
(c) Subject to Section 6.01, any transfer, documentary, sales, use or other
Taxes assessed upon or with respect to the transfer of the Purchased Assets to
Buyer and any recording or filing fees with respect thereto shall be the
responsibility of Northland.
SECTION 8
CONDITIONS TO CLOSING
8.01 Conditions to the Obligations of Each Party. The obligations of Buyer
and Sellers to consummate the Closing are subject to the satisfaction of the
following conditions:
(a) Any applicable waiting period under the HSR Act (including any
extension thereof) relating to the transactions contemplated hereby shall
have expired or been terminated.
(b) No provision of applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
(c) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially
delay the Closing shall have been instituted by any Person before any
court, arbitrator or governmental body, agency or official and be pending.
(d) All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of
the Closing have been taken.
8.02 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the Closing is subject to the following further conditions:
(a) (i) Each Seller shall have performed in all material respects all
of its obligations hereunder required to be performed by it on or prior to
the Closing Date and (ii) the representations and warranties
16
<PAGE> 20
of each Seller contained in this Agreement and in any certificate or other
writing delivered by either Seller pursuant hereto, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true at and as of the Closing Date, as if
made at and as of such date with only such exceptions as would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
(b) Buyer shall have received a corporate law opinion of Vorys, Sater,
Seymour and Pease, counsel to the Sellers, and a regulatory law opinion
from FCC counsel for Sellers, each in form and substance reasonably
satisfactory to Buyer.
(c) There shall not have occurred any Material Adverse Effect.
(d) No provision of applicable law or regulation and no judgment,
injunction, order or decree shall restrain, prohibit or otherwise interfere
with the effective operation or enjoyment by Buyer of all or any material
portion of the Purchased Assets.
(e) Northland shall have received all Required Consents, in each case
in form and substance reasonably satisfactory to Buyer, and no Required
Consent shall have been revoked.
(f) Northland shall have delivered to Buyer:
(i) a copy of the resolutions adopted by Northland's Board of
Directors, certified as of the Closing Date by Northland's Secretary,
approving the execution and delivery of the Acquisition Agreements and
the performance of Northland's obligations hereunder and thereunder;
(ii) the Sales Agreement, duly executed by Northland;
(iii) the Non-Competition Agreement, duly executed by each Seller;
(iv) a certificate, dated as of the Closing Date and executed by
the President of Northland certifying that the conditions set forth in
Sections 8.02(a), (c) and (e) have been satisfied; and
(v) such other instruments of sale, assignment and transfer in form
and substance reasonably satisfactory to Buyer and effective to transfer
to Buyer, free and clear of all Liens other than Permitted Liens, sole
ownership of the Purchased Assets and all other documentation relating
to the Purchased Assets, the System or the System Operations which is
owned by any Seller or in such Seller's possession on the Closing Date
and which relate to or affect the period after Closing.
Notwithstanding anything in this Agreement to the contrary, no condition to
Buyer's obligation to close shall be deemed to be unsatisfied by either (a) the
imposition of a condition in the FCC Final Order that relates to Buyer's
character or other qualifications of Buyer to own or operate the Purchased
Assets or the System or to be an FCC licensee, or (b) conditions to the FCC
consent or modifications to any governmental authorizations that are imposed on
an industry-wide basis.
8.03 Conditions to Obligation of Sellers. The obligation of Sellers to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or prior to the
Closing Date and (ii) the representations and warranties of Buyer contained
in this Agreement and in any certificate or other writing delivered by
Buyer pursuant hereto shall be true at and as of the Closing Date, as if
made at and as of such date.
(b) Sellers shall have received an opinion of the counsel to Buyer
reasonably satisfactory to Sellers, in form and substance reasonably
satisfactory to Sellers.
(c) Each Buyer shall have delivered to Sellers:
(i) a copy of the resolutions adopted by Buyer's Board of
Directors, certified as of the Closing Date by Buyer's Secretary,
approving the execution and delivery of the Acquisition Agreements and
the performance of Buyer's obligations hereunder and thereunder;
17
<PAGE> 21
(ii) a certificate, dated as of the Closing Date and executed by
the President of Buyer certifying that the conditions set forth in
Section 8.2(a) have been satisfied; and
(iii) the Non-Competition Agreement, duly executed by Buyer.
SECTION 9
SURVIVAL
9.01 Survival of Representations and Warranties. The representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing until the first anniversary of the Closing Date or, in
the case of the representations and warranties contained in Section 3.13 or
Section 7, until expiration of the applicable statutory period of limitations
(giving effect to any waiver, mitigation or extension thereof), if later.
Notwithstanding the preceding sentence, any representation or warranty in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence,
if notice of the inaccuracy thereof giving rise to such right to indemnity shall
have been given to the party against whom such indemnity may be sought prior to
such time.
9.02 Survival of Covenants and Agreements. The covenants and agreements
contained herein shall survive the execution, delivery and performance of this
Agreement for a period of one year after the Closing Date, except that covenants
and agreements as to delivery of good, and in the case of real estate,
marketable title to the Purchased Assets, free and clear of all Liens except
Permitted Liens, and as to cooperation with Buyer shall survive until the
expiration of the applicable statute of limitations. Notwithstanding the
preceding sentence, any covenant or agreement in respect of which an indemnity
may be sought under this Agreement shall survive the time at which is would
otherwise terminate pursuant to the preceding sentence, if notice of the breach
thereof giving rise to such right to indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.
SECTION 10
INDEMNIFICATION
10.01 Indemnification. (a) Sellers hereby jointly and severally indemnify
Buyer and its Affiliates against and agree to hold each of them harmless from
any and all damage, loss, liability and expense (including, without limitation,
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) (collectively, "Loss") incurred or suffered by such Buyer or any of
its Affiliates arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by any Seller pursuant to this
Agreement.
(b) Buyer hereby indemnifies each Seller and its Affiliates against and
agrees to hold each of them harmless from any and all Loss incurred or suffered
by any Seller or any of their Affiliates arising out of any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by Buyer
pursuant to this Agreement.
10.02 Procedures. The party seeking indemnification under Section 10.01
(the "Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion of any claim, or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought under such Section. The Indemnifying Party may, and at the request
of the Indemnified Party shall, participate in and control the defense of any
such suit, action or proceeding at its own expense. The Indemnifying Party shall
not be liable under Section 10.01 for any settlement effected without its
consent of any claim, litigation or proceeding in respect of which indemnity may
be sought hereunder.
(b) Sellers' obligation for any indemnifiable Loss shall, to the extent the
Escrow Agent holds cash sufficient to satisfy Sellers' obligations in respect
thereof, be satisfied pursuant to the procedures established in
18
<PAGE> 22
the Escrow Agreement. To the extent the Escrow Agent does not hold sufficient
cash to satisfy Sellers' obligations, Sellers will remain liable for the
shortfall as provided herein.
SECTION 11
TERMINATION
11.01 Termination. (a) Notwithstanding anything in this Agreement to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby abandoned at any time on or prior to the Closing:
(i) By agreement of the parties in writing;
(ii) By Buyer if any of the conditions set forth in Sections 8.01 and
8.02 are not satisfied on the Closing Date;
(iii) By Sellers if any of the conditions set forth in Sections 8.01
and 8.03 are not satisfied on the Closing Date; or
(iv) By any party if all governmental authorizations referred to in
Section 3.03 and all Required Consents are not obtained within nine (9)
months following the date hereof.
(v) By either party, if the other party is in material breach or
default of its respective covenants, agreements, or other obligations
herein, or if any of its representations herein is not true and accurate in
all material respects when made or when otherwise required by this
Agreement to be true and accurate, so long as the terminating party is not
in material breach or default of its respective covenants, agreement or
other obligations hereunder; provided, however, that (A) the breaching
party is given prompt written notice providing a reasonable detailed
explanation of the facts and circumstances surrounding such breach, and (B)
the breaching party fails to cure such breach to the reasonable
satisfaction of the non-breaching party within thirty (30) days of
receiving such notice of its breach or, if such breach cannot be cured, to
agree to fairly compensate the non-breaching party for such breach to the
reasonable satisfaction of the non-breaching party.
(b) If this Agreement is terminated and the transactions contemplated
hereby are not concluded as described above, this Agreement will become void and
of no further force and effect. Notwithstanding any other provision of this
Agreement, the Sellers or Buyer, as the case may be, may waive in writing any
default or breach of any other party hereto and demand specific performance
hereunder; provided, that the party seeking specific performance has fully
complied with the terms of this Agreement.
SECTION 12
[INTENTIONALLY LEFT BLANK]
SECTION 13
MISCELLANEOUS
13.01 Expenses. Regardless of whether or not the transactions contemplated
hereby are consummated, each Seller and Buyer will pay, except as otherwise
provided herein, its own expenses, income and other taxes, and costs (including,
without limitation, the fees, disbursements and expenses of their attorneys,
accountants and consultants) incurred by each of them in negotiating, preparing,
closing, and carrying out this Agreement, the transactions contemplated by this
Agreement. In the event litigation arises between the parties concerning this
Agreement, the prevailing party shall be entitled, in addition to any other
award or relief awarded, to reasonable attorneys' fees and costs and expenses of
litigation (not limited to taxable costs).
19
<PAGE> 23
13.02 Notices. Notices hereunder will be effective upon receipt if
deposited in the official mail, postage pre-paid, certified mail return receipt
requested and addressed as follows or upon confirmation of delivery if sent by
telecopy as follows:
Notices to Buyer:
Mercury, Inc.
CM Tower, Suite 1495
One Lakeshore Drive
Lake Charles, LA 70629
Attn: Robert Piper
Fax: (318) 439-0769
With a copy to:
Lukas, McGowan, Nace & Gutierrez
1111 Nineteenth Street, NW
Suite 1200
Washington, D.C. 20036
Attn: Thomas Gutierrez
Fax: (202) 842-4485
Notices to Northland:
Northland Cellular Corporation
45 Rockefeller Plaza
New York, NY 10020
Telecopy: (212) 245-3058
Attn: Mr. Robert Price
with a copy to:
Vorys, Sater, Seymour and Pease
52 East Gay Street
Columbus, OH 43215
Attn: Ronald A. Robins, Jr.
Telecopy: (614) 464-6350
Notices to PriCellular or Wireless:
PriCellular Corporation or PriCellular Wireless Corporation
45 Rockefeller Plaza
New York, NY 10020
Telecopy: (212) 245-3058
Attn: Mr. Robert Price
with a copy to:
Vorys, Sater, Seymour and Pease
52 East Gay Street
Columbus, OH 43215
Attn: Ronald A. Robins, Jr.
Telecopy: (614) 464-6350
Any party may change the address to which notices are to be addressed by giving
the other party notice in the manner herein set forth.
13.03 Governing Law. The validity, interpretation, and performance of this
Agreement will be determined in accordance with the laws of the State of
Delaware.
13.04 Specific Performance. The parties acknowledge that their obligations
hereunder are unique, and that it would be extremely impracticable to measure
the resulting damages if any party should default in its
20
<PAGE> 24
obligations under this Agreement. Accordingly, in the event of the failure by a
party to consummate the transactions contemplated hereby, which failure
constitutes a breach hereof by such party, the nondefaulting party may, in
addition to any other available rights or remedies, sue in equity for specific
performance and, in connection with any such suit, the parties each expressly
waive the defense therein that the plaintiff has an adequate remedy at law.
13.05 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute but one and the same instrument.
13.06 Headings. The headings, subheadings, and captions in this Agreement
and in any exhibit hereto are for reference purposes only and are not intended
to affect the meaning or interpretation of this Agreement.
13.07 Entire Agreement. This Agreement and the Schedules and Exhibits here
to contain the entire agreement between the parties hereto with respect to their
subject matter and supersede all negotiations, prior discussions, agreements,
arrangements and understandings, written or oral, relating to the subject matter
of this Agreement and the Schedules and Exhibits hereto.
13.08 Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon
Sellers and Buyer and their respective successors and assigns. Nothing in
this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies under or by reason of this Agreement.
Notwithstanding the foregoing, the rights and responsibilities of Sellers
and Buyer under this Agreement may not be assigned (by operation of law or
otherwise), except as otherwise provided by paragraph (b) below, without
the prior written consent of the other party hereto which shall not be
unreasonably withheld.
(b) Buyer may assign its rights and obligations under this Agreement
to an Affiliate without the prior written consent of Sellers if Buyer makes
application with the FCC for a "minor amendment" or a pro forma assignment
of the Licenses to such Affiliate and the assignment is approved by the FCC
prior to the Closing Date; provided that no such assignment shall in any
way operate to relieve the assigning party of its obligations under this
Agreement, and provided further that the assigning party agrees to cause
such Affiliate to specifically assume and perform the Assumed Liabilities
and perform the other obligations hereunder, and shall be jointly and
severally liable for any non-performance thereof.
13.09 Invalidity of Any Provision. In case any provision of this Agreement
not material to the benefits intended to be conferred hereby is held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions will not in any way be affected or impaired thereby.
13.10 Additional Actions and Documents. Each of the parties hereto hereby
agrees to take or cause to be taken such further actions, to execute, deliver
and file or cause to be executed, delivered and filed such further documents and
instruments, and to obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement, whether before or after the Closing Date.
13.11 Severability. The invalidity or unenforceability of any particular
provision of the Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
13.12 Employees. Buyer has no obligation to employ any of the employees of
Northland. Northland shall not make any representations to the contrary to any
such employees, provided, however, Buyer intends and shall be permitted, to
interview or otherwise contact such employees regarding any future employment.
Northland shall use its best efforts to maintain staffing at current levels and
with existing employees through Closing except as previously disclosed by
Sellers and as otherwise agreed to by the parties.
13.13 Bulk Transfers. Buyer and Sellers agree to waive compliance with any
bulk transfer and bulk sales laws, and Sellers agree to indemnify Buyer from any
liability arising from such noncompliance.
21
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NORTHLAND CELLULAR CORPORATION
By: /s/
------------------------------------
Name:
Title:
PRICELLULAR WIRELESS CORPORATION
By: /s/
------------------------------------
Name:
Title:
PRICELLULAR CORPORATION
By: /s/
------------------------------------
Name:
Title:
MERCURY, INC.
By: /s/ WILLIAM L. HENNING, JR.
------------------------------------
Name: William L. Henning, Jr.
Title: President
22
<PAGE> 1
EXHIBIT 10.2
ASSET ACQUISITION AGREEMENT
AMONG
HORIZON CELLULAR TELEPHONE COMPANY OF MONONGALIA, L.P.
EASTERN WIRELESS CELLULAR CORPORATION
AND
PRICELLULAR CORPORATION
MAY 8, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Certain Definitions; Purchase and Sale of Assets; Assumption of Liabilities...... 1
1.1 Certain Definitions.................................................... 1
1.2 Purchased Assets....................................................... 2
1.3 Excluded Assets........................................................ 3
1.4 Assumption of Liabilities by Purchaser................................. 4
1.5 Excluded Liabilities................................................... 4
1.6 Assets Not Assignable.................................................. 4
2. Escrow, Acquisition Price and Closing............................................ 5
2.1 Escrows................................................................ 5
2.2 Acquisition Price...................................................... 5
2.3 Manner of Payment...................................................... 5
2.4 Acquisition Price Adjustment........................................... 6
2.5 Allocation of Acquisition Price........................................ 7
2.6 The Closing............................................................ 7
2.7 Rescission............................................................. 7
2.8 Closing Costs; Transfer Taxes and Fees................................. 7
3. Representations and Warranties of Seller......................................... 8
3.1 Organizational Status.................................................. 8
3.2 Qualification.......................................................... 8
3.3 Authorization; No Conflict............................................. 8
3.4 Financial Statements................................................... 8
3.5 Compliance with Laws................................................... 9
3.6 Permits; FCC Licenses.................................................. 9
3.7 Litigation............................................................. 9
3.8 Real Property.......................................................... 10
3.9 Personal Property Leases............................................... 10
3.10 Contracts and Other Agreements......................................... 10
3.11 Consents............................................................... 10
3.12 Title; Condition...................................................... 11
3.13 No Material Adverse Change............................................ 11
3.14 Taxes................................................................. 11
3.15 Environmental Matters................................................. 11
3.16 ERISA; Employee Benefits.............................................. 11
3.17 Intellectual Property................................................. 12
3.18 Representations Correct............................................... 12
3.19 Inventories........................................................... 12
3.20 Condition of Cellular Assets.......................................... 12
4. Representations and Warranties of Purchaser and PriCellular...................... 12
4.1 Organizational Status.................................................. 12
4.2 Qualification......................................................... 12
4.3 Authorization; No Conflict............................................. 12
4.4 Compliance with Laws................................................... 13
4.5 Litigation............................................................. 13
4.6 Consents.............................................................. 13
4.7 FCC and PSC Matters................................................... 13
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.8 Financial Ability to Close............................................ 13
4.9 Representations of PriCellular........................................ 13
5. Covenants of Seller, PriCellular and Purchaser.................................... 14
5.1 Continuance of Business............................................... 14
5.2 Access to Information; Notice of Breach............................... 15
5.3 Governmental Permits and Approvals; Consents.......................... 15
5.4 Employees; Employee Compensation...................................... 15
5.5 HSR Act............................................................... 15
5.6 Regulatory Approvals.................................................. 15
5.7 Restrictions on Certain Actions....................................... 16
5.8 Casualty or Condemnation.............................................. 16
5.9 Tax Cooperation; Allocation of Taxes.................................. 16
5.10 Environmental Audits.................................................. 17
5.11 Release of Liens...................................................... 17
5.12 Accounts Receivable................................................... 17
5.13 Disclaimer of Other Representations and Warranties.................... 18
5.14 Guaranty by PriCellular of Purchaser's Obligations.................... 18
5.15 Excluded Leases....................................................... 18
6. Conditions Precedent to Purchaser's Obligations.................................. 18
6.1 Regulatory Approvals................................................... 19
6.2 Premerger Notification Compliance..................................... 19
6.3 Representations and Warranties on Closing Date........................ 19
6.4 Terms, Covenants and Conditions....................................... 19
6.5 No Material Adverse Change............................................ 19
6.6 Absence of Litigation................................................. 19
6.7 Absence of Restricted Interests....................................... 19
6.8 Closing Deliveries.................................................... 19
7. Conditions Precedent to Seller's Obligations..................................... 19
7.1 Regulatory Approvals.................................................. 19
7.2 Premerger Notification Compliance..................................... 19
7.3 Representations and Warranties on Closing Date........................ 19
7.4 Terms, Covenants and Conditions....................................... 20
7.5 Absence of Litigation................................................. 20
7.6 Closing Deliveries.................................................... 20
8. Deliveries at the Closing........................................................ 20
8.1 Seller's Deliveries................................................... 20
8.2 Purchaser's Deliveries................................................ 20
9. Confidentiality................................................................. 21
10. Survival of Representations and Warranties...................................... 21
11. Indemnification................................................................. 21
11.1 Obligation to Indemnify by Seller.................................... 21
11.2 Obligation to Indemnify by Purchaser................................. 22
11.3 Procedures for Claims Between the Parties............................ 22
11.4 Defense of Third-Party Actions....................................... 22
11.5 Limitations.......................................................... 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
12. Breaches and Defaults; Termination; Remedies..................................... 23
12.1 Breaches and Defaults; Opportunity to Cure........................... 23
12.2 Termination.......................................................... 23
12.3 Effect of Termination................................................ 24
13. Miscellaneous.................................................................... 24
13.1 Resolution of Disputes............................................... 24
13.2 Expenses............................................................. 24
13.3 Further Assurances................................................... 24
13.4 Access to Records.................................................... 25
13.5 Indemnification of Brokerage......................................... 25
13.6 Severability......................................................... 25
13.7 Notices.............................................................. 25
13.8 Entire Agreement..................................................... 26
13.9 Amendments and Waivers............................................... 26
13.10 Governing Law........................................................ 26
13.11 Assignment; Binding Effect........................................... 26
13.12 Beneficiaries of Agreement........................................... 27
13.13 Counterparts; Facsimile Signatures................................... 27
13.14 Exhibits and Schedules............................................... 27
13.15 Computation of Days; Holidays........................................ 27
13.16 Headings............................................................. 27
13.17 Limited Recourse..................................................... 27
</TABLE>
iii
<PAGE> 5
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<S> <C> <C>
EXHIBITS
2.1 Form of Escrow Agreement
2.3(a) Form of Instrument of Assumption
8.1(b)(i) Form of Opinion of Seller's Corporate Counsel
8.1(b)(ii) Form of Opinion of Seller's FCC Counsel
8.2(f) Form of Opinion of Purchaser's Counsel
SCHEDULES
1.1(m) Certain Permitted Encumbrances
1.2 Purchased Assets
1.2(e) Excluded Leases
1.2(g) Prepaid Expenses
1.2(i) Excluded Contracts
1.3(h) Certain Affiliate Assets Not Used Exclusively for the Systems
1.3(i) Other Excluded Assets
1.4 Assumed Liabilities
2.3(c) Capital Expenditures
2.4(a)(ii) Targeted Subscribers
3.4 Unaudited Financial Statements
3.6(b) FCC Licenses
3.6(c) PSC Licenses
3.8(b) Real Property Leases
3.9 Material Personal Property Leases
3.10 Material Contracts
3.11 Seller's Material Consents
3.14 Taxes
3.16 Employee Benefit Plans
4.6 Purchaser's Consents
</TABLE>
iv
<PAGE> 6
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT (this "Agreement") is made as of May 8,
1996 among HORIZON CELLULAR TELEPHONE COMPANY OF MONONGALIA, L.P., a Delaware
limited partnership ("Seller"), PRICELLULAR CORPORATION, a Delaware corporation
("PriCellular"), and EASTERN WIRELESS CELLULAR CORPORATION, a Delaware
corporation and wholly-owned subsidiary of PriCellular ("Purchaser").
WITNESSETH
WHEREAS, Seller is the sole holder of certain licenses, including the
cellular licenses granted by the Federal Communications Commission (the "FCC")
for the West Virginia Non-Wireline Cellular Rural Service Area No. 3 ("RSA");
WHEREAS, Seller is the owner and operator of the cellular telephone
communication system in the RSA (the "System") and, in connection therewith, is
engaged in the business of marketing, selling and providing cellular telephone
service in the RSA (the "Business");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
acquire from Seller, all of the Purchased Assets (as hereinafter defined) in
accordance with the terms and conditions hereinafter set forth; and
WHEREAS, the parties acknowledge that the terms and conditions set forth in
this Agreement and the performance by the parties of their respective
obligations hereunder are subject to and are intended to be in compliance with
all FCC and other state and local governmental rules and regulations governing
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Certain Definitions; Purchase and Sale of Assets; Assumption of
Liabilities.
1.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
(a) "affiliate", with respect to any person, means any other person
controlling, controlled by or under common control with such person. For
the purposes of this definition, "control" when used with respect to any
person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
person whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(b) "business day" means any day other than a Saturday, Sunday,
legal holiday in the Commonwealth of Pennsylvania or the State of New
York or other day of the year on which banks are authorized or required
by law to close.
(c) "Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating to the
environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic, radioactive or
hazardous substances or wastes into the environment including without
limitation ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, petroleum or petroleum products, chemicals or industrial,
toxic, radioactive or hazardous substances or wastes or the clean-up or
other remediation thereof.
<PAGE> 7
(d) "Environmental Liabilities" means any and all liabilities of or
relating to Seller or any of its affiliates (including any entity which
is, in whole or in part, a predecessor of Seller or any such affiliate)
or arising in connection with or in any way relating to the System, the
Purchased Assets or activities or operations occurring or conducted at
any real property constituting part of the Purchased Assets (including,
without limitation, offsite disposal), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which (i)
arise under or relate to Environmental Laws and (ii) relate to actions
occurring or conditions existing on or prior to the Closing Date.
(e) "Executive Officers" shall mean Messrs. Michael E. Kalogris,
Steven R. Skinner, Bruce M. Hernandez, J. C. Calhoun and Robin Barnett.
(f) "GAAP" means United States generally accepted accounting
principles as in effect from time to time, applied on a basis consistent
with the most recent financial statements of Seller.
(g) "governmental or regulatory body" means any government or
political subdivision thereof, whether federal, state, local or foreign,
or any agency or instrumentality of any such government or political
subdivision.
(h) "herein", "hereby", "hereunder", "hereof" or other equivalent
words refer to this Agreement and not solely to the particular section
or portion of this Agreement in which any such word is used.
(i) "includes", "including" or other equivalent words mean
"including, without limitation".
(j) "lien or other encumbrance" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any stockholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.
(k) "Material Adverse Change" means a material adverse change in
the Purchased Assets or in the Business, condition (financial or
otherwise) or results of operations of the System, taken as a whole,
excluding any such material adverse change resulting solely from
changes, developments or circumstances that adversely affect the
cellular telephone or telecommunications industry generally.
(l) "Material Adverse Effect" means an effect that would result in
a Material Adverse Change.
(m) "Permitted Encumbrances" means any lien or other encumbrance
set forth on Schedule 1.1(m).
(n) "person" means any individual, corporation, limited liability
company, partnership, limited liability partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.
(o) "to Seller's knowledge" or any similar phrase means the actual
knowledge of one of the Executive Officers after due inquiry.
1.2 Purchased Assets. On the terms and subject to the conditions
contained in this Agreement, Seller agrees to sell, assign, transfer and
deliver to Purchaser all of the right, title and interest of Seller in or
to all of the assets, properties and business, of every kind and
description (other than the Excluded Assets), wherever located, real,
personal or mixed, tangible or intangible, now owned or held by Seller or
hereafter acquired by Seller on or prior to the Closing Date and used in
connection with the System or the Business, including all assets shown on
Schedule 1.2 as owned by Seller and the following assets in existence as of
the Closing Date (as hereinafter defined) (collectively referred to herein
as the "Purchased Assets"):
(a) all negotiable instruments or other instruments and chattel
paper generated in the conduct of the Business;
(b) all new inventory in original packaging, including cellular
mobile telephones and related accessories (collectively, the
"Inventory");
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(c) all furniture, fixtures, transmitters, switching and receiving
equipment, cellular systems and other equipment and machinery, cellular
switches, cell site equipment, electrical power units, antennas,
transmission lines, microwave equipment, test equipment, tools,
vehicles, office equipment, computers, improvements, parts and other
tangible personal property other than Inventory, whether or not
obsolete;
(d) all those certain lots and pieces of ground now owned by Seller
or acquired hereafter by Seller on or prior to the Closing Date together
with the buildings, structures and improvements erected thereon, and
together with all easements, rights and privileges appurtenant thereto
(the "Owned Real Property");
(e) except as set forth on Schedule 1.2(e), all leasehold interests
created by all leases of personal property (the "Personal Property
Leases") or real property (the "Real Property Leases") under which
Seller is a lessee or lessor or under which Seller becomes a lessee or
lessor hereafter on or prior to the Closing Date;
(f) all of Seller's interest in all buildings, towers, facilities
and other structures and improvements located on the Owned Real Property
and the real property subject to a Real Property Lease (the "Leased Real
Property", and together with the Owned Real Property, the "Real
Property"), together with Seller's interest in all fixtures,
furnishings, installations, machinery, equipment and appliances used in
connection with the operation, maintenance or occupancy of the Real
Property and Seller's interest in all leasehold improvements;
(g) all prepaid expenses set forth on Schedule 1.2(g);
(h) all licenses, permits, franchises, registrations, certificates
of public convenience and necessity, approvals and operating rights to
the extent transferable under applicable law or with any required
consent relating to the Business, including all licenses, permits and
authorizations issued by the FCC (the "FCC Licenses") and the West
Virginia Public Service Commission ("PSC") (the "PSC Licenses") and
pending applications with the FCC and PSC, any interim operating
authority, or other regulatory authority, in connection with the
Business and the construction and operation of the System, and all
planning, zoning, building, environmental, occupancy and other permits
and licenses used in connection with the System (collectively, and
including the FCC Licenses and the PSC Licenses, the "Permits");
(i) except as set forth on Schedule 1.2(i), all rights of Seller
under all contracts, agreements, commitments, sales and purchase orders
and other instruments relating to the Business (collectively, and
including the Personal Property Leases and the Real Property Leases, the
"Contracts");
(j) originals or copies (at the option and expense of Seller) of
all books and records, including manuals, files, tax returns and
operating data relating to the Business or the Purchased Assets; and
(k) all intangibles, including all rights to the "MOUNTAINEER
MOBILE" trade name.
1.3 Excluded Assets. Notwithstanding anything to the contrary
contained herein or otherwise, the Purchased Assets do not include the
following:
(a) all cash on hand and in financial institutions, cash
equivalents, marketable securities and bonds ("Cash and Cash
Equivalents");
(b) all accounts receivable billed and unbilled;
(c) all federal, state and local income and franchise tax credits
and tax refund claims;
(d) partnership record books and tax returns of Seller;
(e) any insurance policies maintained by Seller with respect to the
Business;
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(f) all claims, causes of action and rights of recovery arising out
of, or relating to, events or occurrences prior to the Closing Date
relating to the System or the Business, whether asserted or commenced
before, on or after the Closing Date;
(g) Seller's rights under this Agreement;
(h) those assets set forth on Schedule 1.3(h), which assets are
used by affiliates of Seller and do not relate to the operation of the
System;
(i) obligations of any of Seller's affiliates to Seller;
(j) all inventory other than the Inventory;
(k) all prepaid expenses not set forth on Schedule 1.2(g); and
(l) the personal effects, memorabilia and other assets described on
Schedule 1.3(i).
1.4 Assumption of Liabilities by Purchaser. On the Closing Date,
Purchaser shall assume and agree to discharge and perform, as and when due,
the liabilities and obligations of Seller set forth on Schedule 1.4 (which
shall be prepared by Purchaser), except for the Excluded Liabilities (as
hereinafter defined) (collectively the "Assumed Liabilities").
1.5 Excluded Liabilities. Purchaser is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of Seller
of whatever nature whether presently in existence or arising hereafter. All
such other liabilities and obligations shall be retained by and remain
obligations and liabilities of Seller (all such liabilities and obligations
not being assumed herein referred to as the "Excluded Liabilities"), and,
notwithstanding anything to the contrary in this Agreement, none of the
following shall be Assumed Liabilities for the purposes of this Agreement:
(a) any obligations of Seller to any of Seller's affiliates;
(b) any liabilities for legal, accounting and audit fees and any
other expenses incurred by Seller in connection with the preparation of,
negotiation of, and performance under, this Agreement (and the
transactions and other agreements contemplated hereby);
(c) any obligation or liability for Tax arising from or with
respect to the Purchased Assets, the System or the Business incurred or
attributable to any period prior to (or prior to and including) the
Closing Date;
(d) any liabilities of Seller to pay severance benefits, if any, to
any employees of Seller whose employment is terminated by Seller prior
to or in connection with the sale of the Business or otherwise relating
to employee benefits or compensation arrangements existing on or prior
to the Closing Date;
(e) any liabilities of Seller as a borrower under any loan
agreements, subordinated debt agreements or other credit facilities;
(f) any liabilities or obligations relating to any asset that is
not a Purchased Asset; and
(g) any Environmental Liability.
1.6 Assets Not Assignable. To the extent that any interest in the
Contracts, Permits or other Purchased Assets is not capable of being
assigned, transferred or conveyed without the consent, waiver or
authorization of a third person (including a governmental or regulatory
body), or if such assignment, transfer or conveyance or attempted
assignment, transfer or conveyance would constitute a breach of any of the
Contracts, Permits or other Purchased Assets, or a violation of any law,
statute, decree, rule, regulation or other governmental edict or is not
immediately practicable, this Agreement shall not constitute an assignment,
transfer or conveyance of such interest, or an attempted assignment,
transfer or conveyance of such interest (any such interest being referred
to herein as a "Restricted Interest"). Anything in this Agreement to the
contrary notwithstanding, Seller shall not be obligated to transfer to
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Purchaser any Restricted Interest without first having obtained the
required consent, waiver or authorization necessary for such transfer.
2. Escrow, Acquisition Price and Closing.
2.1 Escrows.
(a) Concurrently with the execution of this Agreement, Purchaser
has delivered to CoreStates Bank, N.A., Philadelphia, Pennsylvania, as
escrow agent (the "Escrow Agent"), the amount of One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000), which amount (including,
unless otherwise stated herein, any interest earned on such sum
thereafter, the "Escrow Amount") shall be held by the Escrow Agent
pursuant to the terms of a certain escrow agreement of even date
herewith (the "Escrow Agreement") in the form of Exhibit 2.1. In the
event of a termination of this Agreement by Seller in accordance with
the terms of Section 12.2(c)(ii), Seller shall be entitled to retain the
entire Escrow Amount.
(b) As security for the indemnification covenants of Seller
contained in this Agreement, Four Million Dollars ($4,000,000)
(including, unless otherwise stated herein, any interest earned thereon,
the "Indemnification Escrow") shall be held and released by the Escrow
Agent pursuant to the terms of the Escrow Agreement. The Indemnification
Escrow shall be funded at the Closing, as set forth in Section 2.3(b),
through the retention of the Escrow Amount (excluding interest thereon)
by the Escrow Agent and, as set forth in Section 2.3(d), by the delivery
by the Purchaser to the Escrow Agent of $2,250,000 of the Preliminary
Acquisition Price. Purchaser shall be entitled to draw upon the
Indemnification Escrow for payment of all indemnification claims made by
Purchaser to the extent, but only to the extent, provided in the Escrow
Agreement. Notwithstanding anything to the contrary contained herein or
in the Escrow Agreement, the Indemnification Escrow shall constitute
Purchaser's sole recourse for recovery of Seller's indemnification
covenants contained in this Agreement.
2.2 Acquisition Price. The aggregate acquisition price for the
Purchased Assets shall be Thirty-Five Million Dollars ($35,000,000) (the
"Preliminary Acquisition Price"), subject to adjustment as provided herein
(as so adjusted, the "Acquisition Price").
2.3 Manner of Payment. Subject to adjustment as provided in this
Agreement, at Closing:
(a) Purchaser shall assume the Assumed Liabilities by written
instrument of assumption in the form of Exhibit 2.3(a) (the "Instrument
of Assumption");
(b) Purchaser and Seller shall provide joint written instructions
to Escrow Agent (the "Escrow Agent Instructions") instructing Escrow
Agent to retain $1,750,000 of the Escrow Amount as a portion of the
Indemnification Escrow and to deliver the balance thereof (i.e., the
interest earned thereon) to Purchaser;
(c) Purchaser shall pay to Seller (or to any other person as Seller
may direct in writing) by wire transfer of immediately available funds
to such banks and accounts thereat as shall be specified in writing by
Seller, the following:
(i) the Preliminary Acquisition Price; minus
(ii) Four Million Dollars ($4,000,000); minus
(iii) the amount of Seller's budgeted capital expenditures as
set forth on Schedule 2.3(c) (the "Budgeted Capital Expenditures");
plus
(iv) an amount equal to the sum of (A) the Budgeted Capital
Expenditures actually paid by Seller prior to the Closing Date;
provided that to the extent the amount actually paid by Seller with
respect to any of the Budgeted Capital Expenditures is less than the
amount so budgeted, such difference will be credited to Seller and
(B) any other capital expenditures that are made by Seller with the
prior consent of the Purchaser; plus
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(v) the amount obtained (the "Accretion Factor Payment") by
multiplying (A) the Preliminary Acquisition Price times (B) seven
percent (7%) times (C) the number of days elapsed between receipt of
the Effective Orders (as defined in Section 5.6(b)) and the earlier
to occur of (x) the date on which Purchaser delivers written notice
to Seller that it is waiving the condition that the Regulatory
Approvals shall have become Final Orders, as permitted by Section
5.6(b) and (y) the Closing Date, divided by 365; plus or minus
(vi) the Initial Adjustments Amount (as hereinafter defined), as
the case may be; and
(d) Purchaser shall deliver to the Escrow Agent Two Million Two
Hundred Fifty Thousand Dollars ($2,250,000) by wire transfer of
immediately available funds, which amount represents a portion of the
Indemnification Escrow.
2.4 Acquisition Price Adjustment.
(a) The Preliminary Acquisition Price shall be increased or
decreased (the "Acquisition Price Adjustment") on a dollar-for-dollar
basis for the cumulative net adjustment required by the following: (i)
the Preliminary Acquisition Price shall be adjusted by dollar amount
(positive or negative) of the Net Working Capital of Seller on the
Closing Date. As used herein, the term "Net Working Capital" shall mean
Seller's current assets (other than Cash and Cash Equivalents and
Accounts Receivable) minus current liabilities (other than Excluded
Liabilities), as such amounts are reflected on the Closing Date Balance
Sheet (as hereinafter defined); and (ii) if at Closing the number of
actual ending subscribers (excluding demos, loaners and employee
accounts) for the System on the last day of the month prior to Closing
("Actual Subscriber Number") is less than the minimum ending number of
subscribers for the System as of the month prior to Closing (as
reflected on Schedule 2.4(a)(ii) (the "Minimum Subscriber Number"), then
there shall be deducted from the Preliminary Acquisition Price an amount
equal to $300 times the difference between the budgeted number of
subscribers for the System as of the month prior to Closing (the
"Budgeted Subscriber Number") and the Actual Subscriber Number. If at
Closing the Actual Subscriber Number is greater than the maximum ending
number of subscribers for the System as of the month prior to Closing
(as reflected on Schedule 2.4(a)(ii) (the "Maximum Subscriber Number"),
then there shall be added to the Preliminary Acquisition Price an amount
equal to $300 times the difference between the Maximum Subscriber Number
and the Actual Subscriber Number.
(b) The initial adjustments to the Preliminary Acquisition Price
will be made at the Closing based upon a good faith estimate by Seller
of the dollar amounts of such adjustment (the "Initial Adjustments
Amount") based upon an unaudited balance sheet to be prepared by Seller
as of the end of the month immediately preceding the Closing Date, such
estimate to be delivered by Seller to Purchaser at least three (3)
business days prior to Closing along with such balance sheet.
(c) As promptly as practicable after the Closing Date (but in no
event later than ninety (90) days thereafter) Seller shall prepare and
deliver to Purchaser for its review and comment (i) a balance sheet
dated as of the close of business on the Closing Date (the "Closing Date
Balance Sheet") and (ii) an accompanying closing statement (the "Closing
Statement") reasonably detailing as of the close of business on the
Closing Date Seller's determination of each element of the Acquisition
Price Adjustment. The Closing Date Balance Sheet shall fairly present
the financial position of the Seller as at the close of business on the
Closing Date in accordance with GAAP (except for the omission of certain
footnotes and other presentation items required by GAAP with respect to
such financial statements). If Purchaser objects to any amounts
reflected on the Closing Date Balance Sheet or the Closing Statement,
Purchaser must, within thirty (30) days after Purchaser's receipt of the
Closing Date Balance Sheet and Closing Statement, give written notice
(the "Notice") to Seller specifying in reasonable detail its objections,
or Seller's determination of the Acquisition Price Adjustment shall be
final, binding and conclusive on the parties. With respect to any
disputed amounts, the parties shall meet in person and negotiate in good
faith during the thirty (30) day period (the "Resolution Period") after
the date of Seller's receipt of the Notice to resolve any such disputes.
If the parties are unable to resolve all such disputes within the
Resolution
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Period, then within five (5) business days after the expiration of the
Resolution Period, all disputes shall be submitted to Arthur Anderson &
Co. or, if such firm is unavailable or unwilling to resolve such
disputes, to another nationally recognized accounting firm mutually
acceptable to Purchaser and Seller (the "Independent Accountant") who
shall be engaged to provide a final and conclusive resolution of all
unresolved disputes within forty-five (45) days after such engagement.
The determination of the Independent Accountant shall be final, binding
and conclusive on the parties hereto, and the fees and expenses of the
Independent Accountant shall be borne by the party who, in the
Independent Accountant's determination, submitted a disputed amount that
differs more significantly from the amount finally determined by the
Independent Accountant. From and after the Closing Date, Purchaser will
provide Seller with access to the books, records and personnel of
Purchaser that Seller reasonably requests.
(d) If the Acquisition Price Adjustment (as finally determined in
accordance with the provisions set forth above) less the Initial
Adjustments Amount is a positive (negative) amount, then, within five
(5) business days after such final determination, Purchaser (Seller)
shall pay to Seller (Purchaser) such amount in immediately available
funds.
2.5 Allocation of Acquisition Price. On the Closing Date, Purchaser
and Seller shall mutually agree in writing upon the allocation of the
Acquisition Price among the Purchased Assets. Such allocation shall be
adjusted as necessary in connection with the final determination of the
Acquisition Price Adjustment. The parties agree that such allocation shall
be made based upon the relative fair market values of the Purchased Assets
as of the Closing Date conforming with the requirements of Section 1060 of
the Internal Revenue Code of 1986, as amended. The parties will agree as to
the fair market value of the tangible personal property of Seller to be
transferred to Purchaser on the Closing Date. The parties agree to file
with their respective federal income tax returns for the tax year in which
the Closing occurs IRS Form 8594 containing the information agreed upon by
the parties pursuant to this Section 2.5. Seller and Purchaser agree not to
assert for income tax purposes (including in connection with any tax
return, tax audit or similar proceeding) any allocation of the Acquisition
Price that differs from that determined pursuant to this section and
contained in IRS Form 8594.
2.6 The Closing. Unless this Agreement shall have been earlier
terminated in accordance with the terms hereof, the transactions
contemplated by this Agreement shall be consummated (the "Closing") at the
offices of Kleinbard, Bell & Brecker, 1900 Market Street, Philadelphia,
Pennsylvania 19103, on the tenth (10th) business day after receipt of the
Regulatory Approvals (as hereinafter defined) in accordance with Section
5.6, or at such other place or on such other date as Purchaser and Seller
may agree in writing. The date on which the Closing shall occur is referred
to in this Agreement as the "Closing Date". The Closing shall be deemed to
have occurred as of 11:59 p.m. on the Closing Date.
2.7 Rescission. In the event that the transactions contemplated
hereby are consummated prior to the receipt of the Final Orders and an
initial FCC approval is subsequently withdrawn and if at such time or
thereafter the parties are legally obligated to rescind, the parties shall
rescind the transaction in a manner that puts each party in the position it
would have been as of the Closing Date, had the transactions contemplated
hereby not been consummated. Purchaser further covenants and agrees that in
the event of a rescission pursuant to this Section 2.7, Purchaser will
transfer, assign and deliver the Purchased Assets to Seller in
substantially the same condition as the Purchased Assets existed on the
Balance Sheet Date, except for (i) ordinary wear and tear, (ii) Purchased
Assets sold, transferred or otherwise disposed of in the ordinary course of
business and (iii) changes in any Purchased Assets (including the loss or
destruction thereof) after the Balance Sheet Date to the extent such
changes are not due to the acts or omissions of Purchaser or would have
occurred absent the consummation of the transactions contemplated hereby;
provided, that in the event of the loss or destruction of any Purchased
Assets, Purchaser shall deliver to Seller all insurance proceeds, if any,
Purchaser receives with respect thereto.
2.8 Closing Costs; Transfer Taxes and Fees. Seller and Purchaser
shall be equally responsible for (i) any documentary and transfer taxes and
any sales, use or other taxes imposed by reason of the
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transfers of Purchased Assets provided hereunder and any deficiency,
interest or penalty asserted with respect thereto; (ii) any fees and costs
of recording or filing all applicable conveyancing instruments described in
Section 8.1(a) or otherwise; (iii) all costs of applying for new Permits
and obtaining the transfer of existing Permits that may be lawfully
transferred; (iv) the filing fee required under the HSR Act (as hereinafter
defined) and (v) the costs and expenses of the environmental audits that
are conducted pursuant to Section 5.10.
3. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that:
3.1 Organizational Status. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has all requisite partnership power and
authority to own, lease and operate its assets, properties, and its
Business, and to carry on its Business as now being conducted.
3.2 Qualification. Seller is duly qualified to do business and is
in good standing as a foreign partnership in all jurisdictions where
such qualification is required except for those jurisdictions where the
failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.
3.3 Authorization; No Conflict. Seller has the full legal right
and all partnership power and authority required to enter into, execute
and deliver this Agreement and the documents and other agreements
required to be executed and delivered hereunder and to perform fully its
obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary partnership action on the part of Seller. This Agreement has
been duly executed and delivered and constitutes, and each of the other
agreements and documents to be delivered by Seller hereunder when
executed and delivered by Seller will constitute, the valid and binding
obligation of Seller, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect affecting creditors' rights
generally. The execution, delivery and performance of this Agreement and
the documents and other agreements to be delivered hereunder by Seller
and the consummation of the transactions contemplated hereby and thereby
by Seller will not (i) violate any provision of Seller's certificate of
limited partnership or partnership agreement, (ii) violate, conflict
with or result in the breach of any of the terms of result in a
modification of the effect of otherwise give any other contracting party
the right to terminate, or constitute (or with notice or lapse of time
or both constitute) a default under, any contract to which Seller is a
party or by or to which it or any of its assets or properties may be
bound or subject, excluding in any case such violations, conflicts,
breaches or defaults that would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect, (iii) violate
any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body by which Seller, or the
assets, properties or Business of Seller are bound, (iv) violate any
statute, law or regulation, excluding in any case such violations that
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect, or (v) violate or cause any revocation
of or limitation on any Permit the violation, revocation or limitation
of which could reasonably be expected to have a Material Adverse Effect.
3.4 Financial Statements. Seller has delivered to Purchaser copies
of the audited annual financial statements of Horizon Cellular Telephone
Company, L.P. ("Horizon") as of December 31, 1995, 1994 and 1993 and for
the years then ended (collectively, the "Financial Statements"). The
Financial Statements (i) are true and correct in all material respects,
(ii) fairly present the financial condition of Horizon as of such dates
and the results of its operations and changes in its cash flows for the
periods covered thereby, and (iii) were prepared in accordance with
GAAP. Seller has also delivered to Purchaser copies of Seller's
unaudited financial statements as of March 31, 1996 (the "Balance Sheet
Date") and for the period then ended (the "Unaudited Financial
Statements"). The Unaudited Financial Statements (i) are true and
correct in all material respects, (ii) fairly present the financial
condition of Seller as of such date and the results of its operations
for the period covered thereby, and (iii) were prepared in accordance
with GAAP (subject to year-end adjust-
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ments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements).
3.5 Compliance with Laws. Seller is in, and has operated in,
compliance in all material respects with all applicable federal (including
the Communications Act of 1934, as amended, and the rules, regulations,
orders, policies and procedures of the FCC promulgated thereunder (the
"Communications Act")), state and local laws, regulations and ordinances
and any applicable requirements of any governmental or regulatory body,
court or arbitrator affecting its Business or its assets, except for
noncompliance that individually or in the aggregate has not and would not
reasonably be expected to have a Material Adverse Effect.
3.6 Permits; FCC Licenses.
(a) Seller has all of the Permits necessary to operate the System
as now operated, except for those Permits the absence of which
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect. Such Permits are in full force and
effect, and are unimpaired by any acts or omissions of Seller.
(b) Seller applied for and obtained the FCC Licenses in compliance
with the Communications Act, and Seller is, and on the Closing Date will
be, the exclusive holder of the FCC Licenses. The consents of the FCC to
the assignment or transfer of control of the FCC Licenses to Seller have
been granted by Final Order (as hereinafter defined). A list of the FCC
Licenses is set forth on Schedule 3.6(b). The FCC Licenses are in full
force and effect. There are no existing or, to Seller's knowledge,
threatened proceedings by or before the FCC that could reasonably be
expected to result in the revocation, cancellation, suspension, or
material adverse modification of the FCC Licenses, except for
proceedings that affect the cellular industry generally. Subject to
obtaining the Regulatory Approvals, Seller will transfer to Purchaser at
Closing all of Seller's right, title and interest in and to the FCC
Licenses free and clear of any lien or other encumbrance other than
Permitted Encumbrances.
(c) Seller applied for and obtained the PSC Licenses in compliance
with the laws of the State of West Virginia, and Seller is, and on the
Closing Date will be, the exclusive holder of the PSC Licenses. The
consents of the PSC to the assignment or transfer of control of the PSC
Licenses to Seller have been granted by Final Order. A list of the PSC
Licenses is set forth on Schedule 3.6(c). The PSC Licenses are in full
force and effect. There are no existing or, to Seller's knowledge,
threatened proceedings by or before the PSC that individually or in the
aggregate could reasonably be expected to result in the revocation,
cancellation, suspension, or material adverse modification of the PSC
Licenses, except for proceedings that affect the cellular industry
generally. Subject to obtaining the Regulatory Approvals, Seller will
transfer to Purchaser at Closing all of Seller's right, title and
interest in and to the PSC Licenses free and clear of any lien or other
encumbrance other than Permitted Encumbrances.
(d) A "Final Order", as used in this Agreement, means an action by
the FCC or PSC (i) that is not reversed, stayed, enjoined, set aside,
annulled or suspended within the deadline, if any, provided by
applicable statute or regulation, (ii) with respect to which no request
for stay, motion or petition for reconsideration or rehearing,
application or request for review, or notice of appeal or other judicial
petition for review that is filed within such period is pending, and
(iii) as to which the deadline, if any, for filing any such request,
motion, petition, application, appeal or notice, and for the entry of
orders staying, reconsidering or reviewing on the FCC's or PSC's own
motion have expired.
(e) Seller is in material compliance with all requirements imposed
upon it by the National Radio Astronomy Observatory (the "NROA") at
Green Bank, West Virginia, and with all requirements of the FCC related
to the NROA.
3.7 Litigation. Except for legal or administrative proceedings
affecting the cellular telephone industry generally, there is no action,
suit, claim, arbitration, investigation or other legal or administrative
proceeding (collectively, "Actions") pending or, to Seller's knowledge,
threatened against Seller with
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respect to the Business or any of the Purchased Assets, excluding in any
case such Actions that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
3.8 Real Property.
(a) Seller owns no Owned Real Property.
(b) Schedule 3.8(b) sets forth a list of all of the Real Property
Leases. There have been made available to Purchaser true and complete
copies of all of the Real Property Leases. All of the Real Property
Leases are valid, in full force and effect and binding upon Seller, and
to Seller's knowledge, the other parties thereto, enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter
in effect affecting creditors' rights generally. Seller is not in
default under any of them, nor does any condition exist that, with
notice or lapse of time or both, would constitute such a default,
excluding in any case such defaults that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect.
3.9 Personal Property Leases. Set forth on Schedule 3.9 is a list of
all Personal Property Leases, copies of which have been previously made
available to Purchaser. Each Personal Property Lease is valid, binding and
enforceable against Seller in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally. Seller is not in
default of any Personal Property Lease nor, to Seller's knowledge, has any
event occurred that constitutes, or with notice or lapse of time or both
may constitute, a default under any Personal Property Lease, excluding in
any case such defaults that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
3.10 Contracts and Other Agreements.
(a) Schedule 3.10 lists the following contracts and other
agreements relating to the Business to which Seller is a party:
(i) those contracts and other agreements that involve, as of the
date hereof, the receipt or payment by Seller of more than $25,000
annually; and
(ii) those contracts and other agreements that involve the
receipt or payment after the date hereof by Seller of more than
$10,000 annually (but less than $25,000 annually) that are not
terminable by Seller on thirty (30) or fewer days' notice at any time
without penalty.
(b) There have been made available to Purchaser true and complete
copies of all of the contracts and other agreements set forth on
Schedule 3.10. Except as disclosed on Schedule 3.10, all of such
contracts and other agreements are valid, in full force and effect,
binding upon Seller, and, to Seller's knowledge, the other parties
thereto and enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect affecting creditors' rights generally.
Seller is not in default under any of them, nor, to Seller's knowledge,
does any condition exist that, with notice or lapse of time or both,
would constitute such a default, excluding in any case such defaults
that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.
3.11 Consents.
(a) Except for (i) the consent of such governmental or regulatory
body or third parties as are separately identified on Schedule 3.11 (the
"Material Consents"), (ii) the consent of the FCC to the assignment of
the FCC Licenses from Seller to Purchaser, (iii) the consent of the PSC
to the assignment of the PSC Licenses from Seller to Purchaser, and (iv)
the expiration of the waiting period under the HSR Act, no consent,
approval or authorization of, or registration or filing with any person
is required by Seller in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby, excluding in any case such consents, approvals, authorizations,
registrations or filings, the failure of which to obtain or make, as the
case
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may be, individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(b) Without independent investigation by any of the Executive
Officers, Seller knows of no reason why Easterbrooke Cellular
Corporation will not consent to an extension or extensions of the July
7, 1995 dual licensing agreements regarding the Pumpkintown and Elkins
cell sites, as such agreements have been modified prior to the date
hereof, beyond their current termination date of July 7, 1998.
3.12 Title; Condition. Seller has good and marketable title to all of
the Purchased Assets. Notwithstanding anything to the contrary contained
herein or otherwise, Seller confirms that its assets are generally subject
to a security interest that has been granted by Seller and its affiliates
to Citicorp North America, as collateral agent ("Lender"), which security
interest will be released simultaneously with the Closing upon payment by
Seller to Lender of certain amounts owed thereto in accordance with the
provisions of Section 5.11 herein. Subject to such Section 5.11, Seller
will at Closing convey to Purchaser good and marketable title to all
Purchased Assets, in each case free and clear of any lien or other
encumbrance other than Permitted Encumbrances, subject to the recording
after Closing of the Releases (as defined in Section 5.12) to be delivered
by Lender upon payment thereto.
3.13 No Material Adverse Change. Since the Balance Sheet Date, there
has been no Material Adverse Change.
3.14 Taxes. Except as set forth on Schedule 3.14, (i) Seller has
timely filed or caused to be filed with the appropriate taxing authorities
all true, correct and complete tax returns for any net income, alternative
or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or
other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by
any governmental authority (domestic or foreign) responsible for the
imposition of any such tax (collectively, "Taxes"), (ii) all Seller's
Taxes, in respect of periods beginning before the Closing Date, have been
timely paid or an adequate reserve has been established therefor in the
Financial Statements and (iii) there are no pending or, to Seller's
knowledge, threatened audits, investigations or claims for or relating to
any additional liability in respect of Seller's Taxes.
3.15 Environmental Matters. Neither the Business nor the operation
thereof by Seller, nor the ownership or use of the Purchased Assets by
Seller or any of its Affiliates, violates any applicable Environmental Law,
and no condition or event has occurred with respect to the Business or
Purchased Assets that, with the giving of notice, lapse of time, or both,
would constitute a violation of any such Environmental Law, excluding in
any event such violations, conditions and events that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. To Seller's knowledge, no other person has violated any
Environmental Law with respect to the Business or the Purchased Assets.
Seller has never generated, manufactured, refined, transported, treated,
stored, handled, disposed, transferred, produced or processed any
Contaminant in any reportable quantity at or in the vicinity of any Real
Property. For purposes of this Section, "Contaminant" means any waste,
pollutant, hazardous or toxic substance or waste, petroleum,
petroleum-based substance or waste, special waste, or any constituent of
any such substance of waste as defined in or pursuant to any Environmental
Law.
3.16 ERISA; Employee Benefits. Except as set forth on Schedule 3.16,
Seller does not maintain, and has never maintained, an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, nor any other type of employee benefit
plan. Except as set forth on Schedule 3.16, all contributions required by
law or contract to be made to fund the employee benefit plans for any plan
year, or other period on the basis of which contributions are required
ending before the date hereof, have been made as of the date hereof. The
transactions contemplated by this Agreement shall not create any material
obligation on the part of Purchaser for any severance payment or similar
payment to any employee of Seller or any of its affiliates.
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3.17 Intellectual Property. To Seller's knowledge, the conduct by
Seller of the Business does not infringe upon or violate, and has not
infringed upon or violated, any patents, trademarks, service marks, trade
names, trade secrets, copyrights, license or rights of any person,
including those of Motorola, Inc., and no claim is pending or, to Seller's
knowledge, threatened to the effect that the conduct by Seller of the
Business infringes upon or violates any patents, trademarks, service marks,
trade names, trade secrets, copyrights, licenses or rights of any person.
3.18 Representations Correct. No representation or warranty or other
statement made by Seller herein or in any other document, certificate or
instrument furnished or to be furnished to Purchaser pursuant to this
Agreement or in connection with the transactions contemplated herein
contains or will contain any untrue statement of a material fact. All
copies of agreements and documents delivered and to be delivered to
Purchaser pursuant hereto have been and will be true, correct and complete.
3.19 Inventories. The inventories reflected on the Closing Date
Balance Sheet will be usable or salable in the ordinary course of business,
except for obsolete materials and materials of below standard quality,
which have either been written down in the accounts and records of Seller
(with such write-down reflected on the Closing Date Balance Sheet) to
realizable market value or for which adequate reserves have been provided
for in such accounts and such inventories will not be excessive in light of
past experience or current projections.
3.20 Condition of Cellular Assets. The Purchased Assets are in a
state of good maintenance and repair, normal wear and tear excepted, and
are in operating condition. Seller has in operation adequage cellular base
stations required to provide 32 dBu contour coverage, as calculated under
the formula prescribed by the FCC in 47 C.F.R. Sections 22.911, to all
areas of the RSA except for coverage gaps that are less than 50 contiguous
square miles in size. All cellular base and microwave stations in operation
as of the date hereof are in accordance with the FCC licences therefor
(subject to tolerances permitted under FCC regulations), shall through the
Closing Date be maintained in a state of good maintenance and repair,
normal wear and tear excepted, and shall be maintained in operation.
4. Representations and Warranties of Purchaser and PriCellular. Purchaser
and PriCellular jointly and severally represent and warrant to Seller as
follows:
4.1 Organizational Status. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease
and operate its assets, properties, and its business, and to carry on its
business as now being and as heretofore conducted.
4.2 Qualification. Purchaser is duly qualified to do business and is
in good standing as a foreign corporation in all jurisdictions where such
qualification is required except for those jurisdictions where the failure
to be so qualified would not reasonably be expected to have a material
adverse effect on Purchaser's ability to perform its obligations hereunder.
4.3 Authorization; No Conflict. Purchaser has the full corporate
power and authority required to enter into, execute and deliver this
Agreement and the documents and other agreements required to be executed
and delivered hereunder and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary corporate action on
the part of Purchaser. This Agreement has been duly executed and delivered
and constitutes, and each of the other agreements and documents to be
delivered by Purchaser hereunder when executed and delivered by Purchaser,
will constitute, the valid and binding obligation of Purchaser, enforceable
in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting creditors' rights generally. The execution, delivery and
performance of this Agreement and the documents and other agreements to be
delivered hereunder by Purchaser and the consummation of the transactions
contemplated hereby and thereby by Purchaser will not (i) violate any
provision of Purchaser's certificate of incorporation or bylaws, (ii) to
Purchaser's knowledge, violate, conflict with or result in the breach of
any of the terms of, result in a modification of the effect of otherwise
give any other contracting party the right to terminate,
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or constitute (or with notice or lapse of time or both constitute) a
default under, any contract to which Purchaser is a party or by or to which
it or any of its assets or properties may be bound or subject, excluding in
any case such violations, conflicts, breaches or defaults that would not
reasonably be expected to have a material adverse effect on Purchaser's
ability to perform its obligations hereunder, (iii) violate any order,
judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body by which Purchaser, or the assets,
properties or business of Purchaser are bound, (iv) to Purchaser's
knowledge, violate in any respect any statute, law or regulation, excluding
in any case such violations that would not reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder, (v) violate or cause any revocation of or limitation on any
permit, the violation, revocation or limitation of which could reasonably
be expected to have a material adverse effect on Purchaser's ability to
perform its obligations hereunder.
4.4 Compliance with Laws. To Purchaser's knowledge, Purchaser is in,
and has operated in, compliance in all material respects with all
applicable federal (including the Communications Act), state and local
laws, regulations and ordinances and any applicable requirements of any
governmental or regulatory body, court or arbitrator affecting its business
or its assets, except for noncompliance that has not and would not
reasonably be expected to have a material adverse effect on Purchaser's
ability to perform its obligations hereunder.
4.5 Litigation. Except for legal or administrative proceedings
affecting the cellular telephone industry generally, there is no Action
pending or, to Purchaser's knowledge, threatened against Purchaser with
respect to its business, excluding in any case such Actions that would not
reasonably be expected to have a material adverse effect on Purchaser's
ability to perform its obligations hereunder.
4.6 Consents. Except for (i) the consent of the FCC to the assignment
of the FCC Licenses from Seller to Purchaser, (ii) the consent of the PSC
to the assignment of the PSC Licenses from Seller to Purchaser, (iii) the
expiration of the waiting period under the HSR Act, and (iv) the consent of
such other governmental or regulatory body or third parties as are
separately identified on Schedule 4.6, no approval, consent or
authorization of, or registration or filing with any person is required by
Purchaser in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
4.7 FCC and PSC Matters. Purchaser is fully qualified under the
Communications Act and any comparable West Virginia state law to be an FCC
and PSC licensee, respectively, and to be approved as the assignee of the
FCC Licenses and the PSC Licenses, respectively. Purchaser knows of no
reason why the FCC and the PSC will not grant its consent to the assignment
of the FCC Licenses and the PSC Licenses, respectively, from Seller to
Purchaser. Neither Purchaser, nor any "real party in interest" (as defined
by Section 22.13 of the FCC's rules) (i) has had the FCC or PSC deny an
application for an authorization, (ii) has had the FCC or PSC revoke an
authorization granted to it, or (iii) has been the subject of an
investigation by the FCC or PSC.
4.8 Financial Ability to Close. Purchaser presently has, and at
Closing will have, the financial ability to perform Purchaser's obligations
under this Agreement.
4.9 Representations of PriCellular.
(a) PriCellular is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate its
assets, properties, and its business, and to carry on its business as
now being and as heretofore conducted.
(b) PriCelluar has the full corporate power and authority required
to enter into, execute and deliver this Agreement and the documents and
other agreements required to be executed and delivered hereunder and to
perform fully its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement by PriCellular have been duly
authorized by all necessary corporate action on the part of PriCellular.
This Agreement has been duly executed and delivered and constitutes, and
each of the other agreements and documents to be delivered by
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PriCellular hereunder when executed and delivered by PriCellular, will
constitute, the valid and binding obligation of PriCellular, enforceable
in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter
in effect affecting creditors' rights generally. The execution, delivery
and performance of this Agreement and the documents and other agreements
to be delivered hereunder by PriCellular and the consummation of the
transactions contemplated hereby and thereby by PriCellular will not (i)
violate any provision of PriCellular's certificate of incorporation or
bylaws, (ii) to PriCellular's knowledge, violate, conflict with or
result in the breach of any of the terms of, result in a modification of
the effect of otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any contract to which PriCellular is a
party or by or to which it or any of its assets or properties may be
bound or subject, excluding in any case such violations, conflicts,
breaches or defaults that would not reasonably be expected to have a
material adverse effect on PriCellular's ability to perform its
obligations hereunder, (iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or governmental or regulatory
body by which PriCellular, or the assets, properties or business of
PriCellular are bound, (iv) to PriCellular's knowledge, violate in any
respect any statute, law or regulation, excluding in any case such
violations that would not reasonably be expected to have a material
adverse effect on PriCellular's ability to perform its obligations
hereunder, (v) violate or cause any revocation of or limitation on any
permit, the violation, revocation or limitation of which could
reasonably be expected to have a material adverse effect on
PriCellular's ability to perform its obligations hereunder.
5. Covenants of Seller, PriCellular and Purchaser. Seller, on the one
hand, and PriCellular and Purchaser, jointly and severally, on the other,
covenant and agree with the other as follows:
5.1 Continuance of Business. From the date hereof until the Closing
Date (or the earlier termination hereof), Seller agrees that it will,
unless otherwise consented to in writing by Purchaser, which consent will
not be unreasonably withheld, conditioned or delayed:
(a) use commercially reasonable efforts to carry on the Business in
the usual, regular and ordinary course in substantially the same manner
as heretofore carried on; preserve intact all material Permits and the
present business organization of the Business; and use its best efforts
to preserve its relationships with customers, suppliers and others
having business dealings with the Business to the end that its goodwill
and ongoing business shall be conducted on substantially the same basis
on the Closing Date as on the date hereof;
(b) use commercially reasonable efforts to increase its net
activations of subscribers in the usual, regular and ordinary course in
substantially the same manner as heretofore carried on and consistent
with the budget previously provided to Purchaser, provided that, in the
course thereof, Seller will not offer materially different standard rate
plans, activation terms or equipment pricing;
(c) keep in full force and effect insurance comparable to that
carried by Seller with respect to the Business and the Purchased Assets
on the date hereof;
(d) perform in all material respects all of Seller's obligations
under all contracts and other agreements relating to the Business,
including the discharge of all accounts payable of the Business in
accordance with past practices, except when the amount thereof is being
contested in good faith;
(e) not amend its certificate of limited partnership or limited
partnership agreement in any way which could reasonably be expected to
have a Material Adverse Effect or which would prevent, enjoin, alter or
materially delay the transactions contemplated hereby;
(f) not amend, terminate or waive any rights under any material
Contracts or enter into any material Contracts relating to the Business,
except in the ordinary course of business; and
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(g) shall at all times prior to the Closing Date maintain the FCC
Licenses and PSC Licenses in full force and effect and shall maintain
the books, accounts and records in the usual, regular and ordinary
manner on a basis consistent with prior years and in accordance with
GAAP.
5.2 Access to Information; Notice of Breach. From the date hereof
until the Closing Date (or the earlier termination hereof), at reasonable
times and upon reasonable advance written notice to the Executive Officers,
Purchaser shall be entitled, through its employees and representatives, to
make such investigation of the assets, properties, facilities, personnel,
business and operations of the Business and such examination of the books,
records and financial condition of the Business as Purchaser reasonably
requests; provided, however, that any such inspection shall be done in such
a manner so as not to unreasonably disrupt Seller's conduct of the Business
and shall be subject to any reasonable restrictions imposed by the
Executive Officers. Purchaser agrees to provide Seller with prompt written
notice if Purchaser determines that, based upon information provided to
Purchaser or through its own investigation, Seller is in breach of any
representation, warranty or covenant of Seller set forth in this Agreement.
Seller agrees to provide Purchaser with prompt written notice if Seller
determines that Seller is in breach of any representation, warranty or
covenant of Purchaser set forth in this Agreement. If this Agreement is
terminated, Purchaser agrees to return or cause to be returned all such
information provided to Purchaser or its representatives within five (5)
days after the date of such termination.
5.3 Governmental Permits and Approvals; Consents.
(a) Seller and Purchaser shall use commercially reasonable efforts
to obtain promptly all permits and approvals (including Material
Consents) from any governmental or regulatory body or third-party
necessary for lawful consummation of the Closing. In furtherance of the
foregoing, Purchaser agrees to provide all information (including
financial information) that is reasonably requested by any person from
whom any approval or consent (including any Material Consent) is
necessary for lawful consummation of the Closing.
(b) With respect to any Material Consent that Seller is unable to
obtain and deliver to Purchaser, Seller and Purchaser shall use
commercially reasonable efforts to (i) provide to Purchaser the benefits
of the related Restricted Interest, and (ii) cooperate in reasonable and
lawful arrangements designed to provide such benefits to Purchaser.
5.4 Employees; Employee Compensation. Seller agrees to terminate each
of its employees as of the Closing Date. Purchaser has no obligation to
re-employ any of the employees of Seller. Seller shall not make any
representations to the contrary to any such employees. At least fourteen
(14) days prior to the Closing Date, Purchaser shall provide notice to
Seller identifying any employees of Seller to whom Purchaser does not
intend to extend offers of employment; provided, that Seller agrees that it
will not disclose the contents of such notice or of any discussions between
Seller and Purchaser regarding any employees of Seller without the prior
written consent of Purchaser. Purchaser shall consult with Seller prior to
any communications with employees regarding future employment. Seller shall
use commercially reasonable efforts to maintain staffing at current levels
and with existing employees through Closing except as previously disclosed
by Seller and as otherwise agreed to by the parties.
5.5 HSR Act. Promptly (but in any event within ten (10) business
days) after the date hereof, the parties shall file all information and
documents required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act").
5.6 Regulatory Approvals.
(a) The parties agree that in order to consummate the transactions
contemplated hereby, the FCC shall have given its consent to the
assignment of the FCC Licenses from Seller to Purchaser and to the
transactions contemplated hereby (collectively, the "Regulatory
Approvals"), and, subject to Section 5.6(b), the consent of the FCC
shall have become Final Orders.
(b) Notwithstanding anything to the contrary contained herein or
otherwise, if no petitions to deny the FCC application to assign the FCC
Licenses from Seller to Purchaser have been filed
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within the applicable public comment period and the FCC thereafter
grants its consent to the assignment and such grant becomes legally
effective (the "Effective Orders"), Purchaser may, at its option by
written notice to Seller, waive on behalf of the parties the agreement
in Section 5.6 (a) that the Regulatory Approvals shall have become Final
Orders.
(c) Promptly (but in any event within five (5) business days) after
the execution hereof, the parties shall submit for filing to the FCC all
information and documents required in connection with obtaining the
approvals of the FCC to the transactions contemplated by this Agreement.
5.7 Restrictions on Certain Actions. From the date hereof until the
earlier to occur of the Closing Date or the termination of this Agreement,
Purchaser will not, and Purchaser will use commercially reasonable efforts
to ensure that all persons whose actions or ownership interests would be
attributable to Purchaser under the Communications Act or any comparable
West Virginia state law will not, in any manner, directly or indirectly,
solicit, initiate, encourage or participate in applications, bids,
purchases or negotiations with respect to the acquisition of any interest
in an FCC or PSC license that, if consummated, would have the effect under
the Communications Act or any comparable West Virginia state law of
preventing or delaying Purchaser from consummating the acquisition of the
Purchased Assets as contemplated by this Agreement.
5.8 Casualty or Condemnation. If, after the date hereof but prior to
the Closing Date, any of the Purchased Assets is damaged, destroyed or lost
by fire or other casualty, or if condemnation or eminent domain proceeding
are proposed, threatened or commenced against any of the Purchased Assets,
Seller will promptly notify Purchaser of such event. Seller shall, at its
option, (i) repair, rebuild or replace the portion of the Purchased Assets
damaged, destroyed or lost prior to the Closing Date, or (ii) assign to
Purchaser at Closing any and all insurance or condemnation proceeds, if
any, payable as the result of such casualty or condemnation.
5.9 Tax Cooperation; Allocation of Taxes. (a) Purchaser and Seller
agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the
Purchased Assets, the System and the Business as is reasonably necessary
for the filing of all Tax returns, and making of any election related to
Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax
return. Seller and Purchaser shall cooperate with each other in the conduct
of any audit or other proceeding related to Taxes involving the Purchased
Assets or the Business and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent of
this paragraph (a) of Section 5.9.
(b) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Purchased Assets for a
taxable period which includes (but does not end on) the Closing Balance
Sheet Date (collectively, the "Apportioned Obligations") shall be
apportioned between Seller and Buyer as of the Closing Date based on the
number of days of such taxable period included in the period prior to the
Closing Date and the number of days of such taxable period included in the
period after the Closing Date. Seller shall be liable for the proportionate
amount of such taxes that is attributable to the period prior to the
Closing Date, and Purchaser shall be liable for the proportionate amount of
such taxes that is attributable to the period following the Closing Date.
Within 90 days after the Closing Date, Seller and Purchaser shall present a
statement to the other setting forth the amount of reimbursement to which
each is entitled under this Section 5.9(b) together with such supporting
evidence as is reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the party owing it to the other within 10
days after delivery of such statement. Thereafter, Seller shall notify
Purchaser upon receipt of any bill for real or personal property taxes
relating to the Purchased Assets, part or all of which are attributable to
the period after the Closing Date, and shall promptly deliver such bill to
Purchaser who shall pay the same to the appropriate taxing authority,
provided that if such bill covers the period prior to the Closing Date,
Seller shall also remit prior to the due date of assessment to Purchaser
payment for the proportionate amount of such bill that is attributable to
the such pre-Closing Date period. In the event that either Seller or
Purchaser shall thereafter make a payment for
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which it is entitled to reimbursement under this Section 5.9(b), the other
party shall make such reimbursement promptly but in no event later than 30
days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payment required under this Section 5.9 and not made
within 10 days of delivery of the statement shall bear interest at the rate
per annum determined, from time to time, under the provisions of Section
6621(a) (2) of the Internal Revenue Code of 1986, as amended, for each day
until paid.
5.10 Environmental Audits.
(a) Seller will cause to be conducted preliminary environmental
site assessments (Phase Ones) AST Standard of each parcel of its Real
Property. Such Phase Ones shall be performed by licensed environmental
professionals selected by Seller with the consent of Purchaser, which
consent will not be unreasonably withheld, conditioned or delayed.
Copies of the reports of each Phase One conducted will be provided to
Purchaser at least thirty (30) days prior to the Closing.
(b) If any Phase One reveals any condition that the Purchaser
reasonably determines would be likely to require remediation under
applicable state or federal law, then Seller shall have the option of
undertaking such remediation itself at its expense or relocating the
affected cell site provided that the same coverage will be afforded in
each party's reasonable determination (in which case the affected asset
will be excluded from, and the new site and related assets shall be
included in, the Purchased Assets and the Assumed Liabilities). If the
foregoing remediation or relocation, as applicable, has not been
completed by Closing, a portion of the Acquisition Price (representing
the parties' reasonable estimation of the remaining remediation or
relocation costs to be incurred) shall be delivered into escrow, subject
to a mutually satisfactory escrow arrangement, pending completion of
such remediation or relocation after Closing. Such payments shall not
affect the amount of the Indemnification Escrow, if any, nor be subject
to Section 11.5.
(c) Notwithstanding the foregoing, if it is estimated that the
remediation costs will exceed $500,000, Seller may, at its option, elect
not to undertake such remediation or relocation, and may instead elect
to terminate this Agreement without further cost or obligation on the
part of any party hereto.
(d) Notwithstanding the foregoing, if it is estimated that the
remediation costs will exceed $500,000, then Purchaser shall have the
right, at its option, to terminate this Agreement without further cost
or obligation on the part of any party hereto.
(e) Subject to the foregoing, if any Phase One or Phase Two
uncovers an environmental condition of which Seller does not have
knowledge on the date hereof and that due to Seller's then-gained
knowledge of such condition, then comprises a breach of any of Seller's
representations or warranties herein (which were qualified as to
Seller's knowledge), Seller shall not have breached such representation
or warranty of this Agreement.
5.11 Release of Liens. Seller will deliver to Purchaser at Closing
(a) all documents, executed by Lender that are necessary to release the
security interests on the Purchased Assets ("Releases") or (b) in the
alternative and at the option of Seller, pay-off letters from Lender
("Pay-Off Letters"), in a form reasonably acceptable to Purchaser, wherein
Lender agrees to release the security interests in the Purchased Assets,
and Seller shall deliver to Purchaser proof, reasonably satisfactory to
Purchaser, of the full payment to Lender of the amounts described in the
Pay-Off Letters and the release of all such security interests.
5.12 Accounts Receivable. Purchaser and Seller acknowledge and agree
that, commencing as of the Closing, Purchaser will be entitled to all
accounts receivable with respect to services rendered or inventory sold
with respect to the System subsequent to the Closing Date. Purchaser and
Seller further acknowledge and agree that all accounts receivable with
respect to services rendered or inventory sold by Seller prior to or on the
Closing Date shall be the property of Seller. Purchaser and Seller agree to
cooperate to effectuate the intent of this Section 5.12.
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5.13 Disclaimer of Other Representations and Warranties. Purchaser
acknowledges and agrees that Seller does not make, and has not made, any
representations or warranties relating to Seller, the Business or the
Purchased Assets other than the representations and warranties of Seller
expressly set forth in this Agreement or in any agreement or certificate
delivered pursuant hereto. Without limiting the generality of the
disclaimer set forth in the preceding sentence, Seller does not make, and
Seller, its officers, employees and agents have not made, and shall not be
deemed to have made any representations or warranties in the Confidential
Offering Memorandum dated September 1995, and any supplements or addenda
thereto (collectively, the "Offering Memorandum"), any presentation
relating to Seller, the Business or the Purchased Assets given in
connection with the transactions contemplated by this Agreement, in any
filing made by or on behalf of Seller with any governmental agency or in
any other information provided to or made available to Purchaser, and no
statement contained in the Offering Memorandum, made in any such
presentation, made in any such filing or contained in any such other
information shall be deemed to be a representation or warranty of Seller
hereunder or otherwise.
5.14 Guaranty by PriCellular of Purchaser's Obligations. PriCellular
agrees to take all action necessary or appropriate to cause and enable
Purchaser to perform all of its covenants, agreements and obligations under
this Agreement. In addition, PriCellular hereby irrevocably and
unconditionally guarantees to Seller the prompt and full discharge by
Purchaser of all of Purchaser's covenants, agreements, obligations and
liabilities under this Agreement, including, without limitation, the due
and punctual payment of all amounts which are or may become due and payable
by Purchaser hereunder when and as the same shall become due and payable
(collectively, the "Purchaser Obligations"), in accordance with the terms
hereof. PriCellular acknowledges and agrees that, with respect to all
Purchaser Obligations to pay money, such guaranty shall be a guaranty of
payment and performance and not of collection and shall not be conditioned
or contingent upon the pursuit of any remedies against Purchaser. If
Purchaser shall default in the due and punctual performance of any
Purchaser Obligation, including the full and timely payment of any amount
due and payable pursuant to any Purchaser Obligation, PriCellular will
forthwith perform or cause to be performed such Purchaser Obligation and
will forthwith make full payment of any amount due with respect thereto at
its sole cost and expense.
5.15 Excluded Leases. Seller agrees to use commercially reasonable
efforts to maintain in full force and effect the leases described on
Schedule 1.2(e) and to sublet to Purchaser the facility covered by the 1390
University Avenue lease, at the rate or rates at which Seller rents such
facility as of the date hereof, on a month-to-month basis from the Closing
Date through the date which is six months after the Closing Date. Purchaser
agrees to rent such facility pursuant to such sublease for at least three
months beginning on the Closing Date and to provide Seller with at least
60-days notice of termination of such sublease.
5.16 Supplemental Disclosure. Seller shall have the right, from time
to time, prior to the Closing Date to supplement the Schedules hereto
relating to representations and warranties, Purchased Assets or Prepaid
Expenses with respect to any matter hereafter arising that was not known as
of the date hereof but that, if existing or known as of the date hereof,
would have been required to be set forth or described in the Schedules
hereto. Notwithstanding the foregoing, (i) no such supplemental disclosure
shall relieve Seller in any way from its indemnification obligations
pursuant to Section 11.1 if any such representation or warranty was
inaccurate or incorrect when given and (ii) such supplemental disclosure by
Seller shall not (unless expressly contemplated by this Agreement) alter,
amend or otherwise expand the scope of the Assumed Liabilities as described
herein on the date hereof, cause any Material Adverse Change or change any
of the financial terms hereof.
6. Conditions Precedent to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any of
which may be waived in writing by Purchaser (provided that if any condition
shall not have
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been satisfied due to the action or inaction of Purchaser or any of its
affiliates, such condition shall be deemed to have been satisfied or waived by
Purchaser):
6.1 Regulatory Approvals. All Regulatory Approvals shall have been
received in accordance with the provisions of Section 5.6.
6.2 Premerger Notification Compliance. All requirements under the HSR
Act and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including all necessary filing and
waiting requirements, and neither the United States Department of Justice
nor the Federal Trade Commission shall have raised an objection to the
transactions contemplated hereby.
6.3 Representations and Warranties on Closing Date. All
representations and warranties of Seller made in this Agreement and in any
certificate or other writing delivered by Seller pursuant hereto shall be
true and correct on and as of the Closing Date with the same force and
effect as though such representations and warranties were made on and as of
the Closing Date, except for (i) inaccuracies that, disregarding all
qualifications and exceptions contained in such representations and
warranties relating to materiality, Material Adverse Effect or Material
Adverse Change, would not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect, (ii) changes contemplated by
this Agreement, (iii) inaccuracies that have been waived in writing by
Purchaser and (iv) representations and warranties that are made as of a
specific date.
6.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller on
or prior to the Closing Date shall have been complied with and performed in
all material respects unless waived in writing by Purchaser.
6.5 No Material Adverse Change. There shall have been no Material
Adverse Change or any event or occurrence that could reasonably be expected
to have a Material Adverse Effect since the date of this Agreement.
6.6 Absence of Litigation. No Action shall have been instituted
before any court or governmental or regulatory body by any person (other
than Purchaser or any of its affiliates), or instituted or threatened by
any governmental or regulatory body, to prevent the carrying out of the
transactions contemplated hereby.
6.7 Absence of Restricted Interests. There shall be no Restricted
Interests as of the Closing Date.
6.8 Closing Deliveries. Seller shall have delivered or caused to be
delivered to Purchaser at Closing those items specified in Section 8.1.
7. Conditions Precedent to Seller's Obligations. The obligation of Seller
to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any of
which may be waived in writing by Seller (provided that if any condition shall
not have been satisfied due to the action or inaction of Seller or any of its
affiliates, such condition shall be deemed to have been satisfied or waived by
Seller):
7.1 Regulatory Approvals. All Regulatory Approvals shall have been
received in accordance with the provisions of Section 5.6.
7.2 Premerger Notification Compliance. All requirements under the HSR
Act and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including all necessary filing and
waiting requirements, and neither the United States Department of Justice
nor the Federal Trade Commission shall have raised an objection to the
transactions contemplated hereby.
7.3 Representations and Warranties on Closing Date. All
representations and warranties of Purchaser contained in this Agreement
shall be true and correct on and as of the Closing Date with the same force
and effect as though such representations and warranties were made on and
as of the Closing Date, except for (i) inaccuracies that, disregarding all
qualifications and exceptions contained in such
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representations and warranties relating to materiality, Material Adverse
Effect or Material Adverse Change, would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect, (ii)
inaccuracies that have been waived in writing by Seller and (iii)
representations and warranties that are made as of a specific date.
7.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Purchaser
on or prior to the Closing Date shall have been complied with and performed
in all material respects unless waived in writing by Seller.
7.5 Absence of Litigation. No Action shall have been instituted
before any court or governmental or regulatory body by any person (other
than Seller or any of its affiliates) or instituted or threatened by any
governmental or regulatory body, to prevent the carrying out of the
transactions contemplated hereby.
7.6 Closing Deliveries. Purchaser shall have delivered or caused to
be delivered to Seller at Closing those items specified in Section 8.2.
8. Deliveries at the Closing. The following deliveries shall be made at
the Closing, each of which shall be conditional on completion of all the others
and all of which shall be deemed to have taken place simultaneously:
8.1 Seller's Deliveries. At the Closing, Seller shall deliver or
cause to be delivered to Purchaser all of the following:
(a) all conveyances, deeds, assignments, bills of sale, and other
appropriate conveyancing instruments transferring to Purchaser the
Purchased Assets, along with any other documents that Buyer reasonably
requests;
(b) the opinions of Kleinbard, Bell & Brecker, corporate counsel to
Seller, and Latham & Watkins, FCC counsel to Seller, to be negotiated in
good faith by the parties within ten business days hereof and attached
hereto as Exhibits 8.1(b)(i) and 8.1(b)(ii), respectively;
(c) the Capital Expenditures Summary;
(d) the Escrow Agreement;
(e) a certificate executed by an executive officer of Horizon G.P.,
Inc., a Delaware corporation ("Horizon Corporate") that is the general
partner of KCCGP, L.P., a Delaware limited partnership ("KCCGP") that is
the general partner of Seller, confirming the matters contained in
Sections 6.3, 6.4 and 6.5;
(f) a certificate of the secretary of Horizon Corporate attesting
to (i) the resolutions adopted by the board of directors of Horizon
Corporate duly authorizing the execution, delivery and performance of
this Agreement by Seller and the execution and delivery by Seller of all
instruments and documents contemplated hereby, and (ii) the signatures
of the officers of Horizon Corporate who have been authorized to execute
and deliver this Agreement and any other agreement executed or to be
executed in connection herewith;
(g) good standing certificates of Seller, KCCGP and Horizon
Corporate from the Secretary of State of Delaware;
(h) the Material Consents (or, alternatively, with respect to any
Material Consent that Seller was unable to deliver to Purchaser, Seller
shall have complied with its obligations under the provisions of Section
5.3(b)); and
(i) the Releases or Pay-Off Letters from Lender.
8.2 Purchaser's Deliveries. At the Closing, Purchaser shall deliver
or cause to be delivered to Seller (or to any other person as directed by
Seller in writing) all of the following:
(a) the Instrument of Assumption;
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(b) the Closing Cash Payment plus or minus the Initial Adjustments
Amount;
(c) Accretion Factor Payment, if any;
(d) the Escrow Agent Instructions;
(e) the opinion of Vorys, Sater, Seymour and Pease, corporate
counsel to Purchaser, to be negotiated in good faith by the parties
within ten business days hereof and attached hereto as Exhibit 8.2(e);
(f) a certificate executed by an executive officer of Purchaser
confirming the matters contained in Sections 7.3 and 7.4; and
(g) a certificate of the secretary of Purchaser attesting to (i)
the resolutions adopted by the board of directors of Purchaser duly
authorizing the execution, delivery and performance of this Agreement by
Purchaser and the execution and delivery by Purchaser of all instruments
and documents contemplated hereby, and (ii) the signatures of the
officers of Purchaser who have been authorized to execute and deliver
this Agreement and any other agreement executed or to be executed in
connection herewith; and
(h) a good standing certificate of Purchaser from the Secretary of
State of Delaware.
9. Confidentiality. Prior to the Closing Date and after any termination of
this Agreement, Purchaser shall use commercially reasonable efforts to keep
secret and retain in strictest confidence, and shall use commercially reasonable
efforts to not, without the express prior written consent of one of the
Executive Officers, directly or indirectly, disclose, disseminate, publish,
reproduce, retain, use (for its benefit or for the benefit of others) or
otherwise make available in any manner whatsoever, any Confidential Information
(as hereinafter defined) regarding Seller (or this Agreement or the transactions
contemplated hereby) to anyone except (i) to Purchaser's representatives (who
shall be informed of the confidential nature of such information and who shall
agree to keep such information confidential), (ii) as otherwise required by law
(including the requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended), (iii) as required to obtain the
Regulatory Approvals and (iv) to the extent such information can be shown to
have been previously known on a nonconfidential basis by Purchaser, is in the
public domain or is later lawfully acquired by Purchaser from sources other than
Seller. As used in this Agreement, the term "Confidential Information" shall
mean all confidential and proprietary knowledge and information not readily
available to the public heretofore or hereafter conceived, learned or disclosed
(including all documents, writings, memoranda, business plans, computer
software, reports, pricing, cost and sales information, financial statements,
customer and supplier lists, trade secrets, discoveries, ideas, concepts,
models, prototypes, diagrams and marketing strategies, plans and techniques). If
Purchaser breaches, or threatens to commit a breach of, any of the provisions of
this Section 9, Seller shall have the right (in addition to any other rights and
remedies available to Seller at law or in equity) to equitable relief (including
injunctions) against such breach or threatened breach, it being acknowledged and
agreed that any such breach or threatened breach will cause irreparable harm to
Seller and that money damages would not be an adequate remedy to Seller.
10. Survival of Representations and Warranties. Unless this Agreement is
terminated as provided herein, the representations and warranties of Seller and,
except as otherwise set forth herein, Horizon, on the one hand, and Purchaser,
on the other, contained herein shall survive the consummation of the
transactions contemplated hereby and the Closing Date and shall expire eighteen
(18) months after the Closing Date. Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy thereof giving
rise to such right to indemnity shall have been given to the party against whom
such indemnity may be sought prior to such time.
11. Indemnification.
11.1 Obligation to Indemnify by Seller. Subject to the terms of
Section 10, from and after the Closing Date, Seller agrees to indemnify,
defend and hold harmless Purchaser (and its affiliates, and their
respective directors, officers, stockholders and employees), from and
against all losses, Taxes, liabilities,
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damages, lawsuits, deficiencies, claims, demands, costs or expenses,
including interest, penalties and reasonable attorneys' fees and
disbursements (collectively, "Losses"), based upon (i) any breach of any
representation or warranty of Seller contained in this Agreement, or (ii)
any breach of any covenant or agreement of Seller contained in this
Agreement.
11.2 Obligation to Indemnify by Purchaser. Subject to the terms of
Section 10, from and after the Closing Date, Purchaser agrees to indemnify,
defend and hold harmless Seller (and its partners, affiliates, and their
directors, officers, stockholders and employees) from and against all
Losses based upon (i) any breach of any representation or warranty of
Purchaser contained in this Agreement, or (ii) any breach of any covenant
or agreement of Purchaser contained in this Agreement.
11.3 Procedures for Claims Between the Parties. If a claim (a
"Claim") is to be made by the party claiming indemnification (the
"Claimant") against the other party (the "Indemnifying Party"), the
Claimant shall give written notice (a "Claim Notice") to the Indemnifying
Party as soon as practicable after the Claimant becomes aware of the facts,
condition or event that gave rise to Losses for which indemnification is
sought under this Section 11, provided that, except to the extent permitted
by Section 10, in no event shall such notice be effective if given after
the date that is eighteen (18) months after the Closing Date. Following
receipt of the Claim Notice from the Claimant, the indemnifying Party shall
have thirty (30) days to make such investigation of the Claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying
Party and/or its authorized representative(s) the information relied upon
by the Claimant to substantiate the Claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said thirty (30)
day period to the validity and amount of such Claim, the Indemnifying Party
shall pay to the Claimant the amount of such Claim. If the Claimant and the
Indemnifying Party do not agree within said period, the Claimant may seek
appropriate legal remedy in accordance with the provisions of Section 13.1.
Seller's obligation for any indemnifiable Loss shall, to the extent the
Escrow Agent holds cash sufficient to satisfy Seller's obligation in
respect thereof, be satisfied pursuant to the procedures established in the
Escrow Agreement.
11.4 Defense of Third-Party Actions. If any lawsuit or enforcement
action (a "Third Party Action") is filed against a Claimant entitled to the
benefit of indemnity hereunder, written notice thereof (the "Third-Party
Action Notice") shall be given by the Claimant to the Indemnifying Party as
promptly as practicable (and in any event within five (5) business days
after the service of the citation or summons or other manner of process),
provided, that the failure to provide such timely notice shall not relieve
the Indemnifying Party of its indemnification obligations hereunder unless
it has been unduly prejudiced thereby and provided further that, except to
the extent permitted by Section 10, in no event shall such notice be
effective if given after the date that is eighteen (18) months after the
Closing Date. After such notice, if the Indemnifying Party shall
acknowledge in writing to the Claimant that the Indemnifying Party shall be
obligated under the terms of its indemnity hereunder in connection with
such Third-Party Action, then the Indemnifying Party shall be entitled, if
it so elects, (i) to take control of the defense and investigation of such
Third-Party Action, (ii) to employ and engage attorneys of its choice
reasonably satisfactory to the Claimant to handle and defend the same, at
the Indemnifying Party's cost, risk and expense, and (iii) to compromise or
settle such Third-Party Action, which compromise or settlement shall be
made only with the written consent of the Claimant (such consent not to be
unreasonably withheld, conditioned or delayed) unless such compromise or
settlement involves only the payment of money damages and does not impose
an injunction or other equitable relief upon the Claimant. If the
Indemnifying Party fails to assume the defense of such Third-Party Action
within fifteen (15) days after receipt of the Third-Party Action Notice,
the Claimant will (upon delivering notice to such effect to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such Third-Party Action; provided, however, that such
Third-Party Action shall not be compromised or settled without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed. In the event the Claimant
assumes the defense of the Third-Party Action, the Claimant will keep the
Indemnifying Party timely informed of the progress of any such defense,
compromise or settlement.
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11.5 Limitations. The Indemnifying Party's obligations to indemnify
the Claimant pursuant to this Section 11 shall be subject to the following
limitations:
(a) No indemnification shall be required to be made by the
Indemnifying Party until the aggregate amount of the Claimant's Losses
exceeds Seventy-Five Thousand Dollars ($75,000), in which case the
Indemnifying Party shall be liable for the full amount of such Losses.
(b) No indemnification shall be required to be made by the
Indemnifying Party for the amount of Claimant's Losses that is in excess
the Indemnification Escrow. From and after the Closing Date, the
indemnification rights contained in this Section 11 shall constitute the
sole and exclusive remedies of the parties hereunder.
(c) The indemnification obligation of an Indemnifying Party shall
be reduced so as to give effect to any net reduction in federal, state,
local or foreign income or franchise tax liability realized at any time
by the Claimant in connection with the satisfaction by the Indemnifying
Party of a Claim with respect to which indemnification is sought
hereunder. The indemnification obligation of an Indemnifying Party shall
also be reduced to the extent of any available insurance proceeds.
Additionally, the Claimant shall refund to the Indemnifying Party any
amount of the Claimant's Losses that are subsequently recovered by the
Claimant pursuant to a settlement or otherwise.
12. Breaches and Defaults; Termination; Remedies.
12.1 Breaches and Defaults; Opportunity to Cure. Prior to the
exercise by a party of any termination rights afforded under this
Agreement, if either party (the "Non-Breaching Party") believes the other
(the "Breaching Party") to be in breach hereunder, the Non-Breaching Party
shall provide the Breaching Party with written notice specifying in
reasonable detail the nature of such breach, whereupon the Breaching Party
shall have thirty (30) days from the receipt of such notice to cure such
breach; provided, however, that if such breach is not capable of being
cured within such period and if the Breaching Party shall have commenced
action to cure such breach within such period and is diligently attempting
to cure such breach, then the Breaching Party shall be afforded an
additional reasonable amount of time to cure such breach; provided,
further, however, Purchaser shall have no opportunity to cure the breach of
its obligation to deliver any required portion of the Acquisition Price to
be delivered to Seller at Closing. If the breach is not cured within such
time period, then the Breaching Party shall be in default hereunder and the
Non-Breaching Party shall be entitled to terminate this Agreement (as
provided in Section 12.2). This right of termination shall be in addition
to, and not in lieu of, any legal remedies available to the Non-Breaching
Party.
12.2 Termination. This Agreement may be terminated at any time prior
to the Closing as follows:
(a) by mutual written agreement of the parties hereto;
(b) by Purchaser, provided Purchaser is not then in breach of this
Agreement, pursuant to a written notice to Seller, (i) if any one or
more of the conditions to Purchaser's obligation to close has not been
fulfilled in any material respect as of the Closing Date, (ii) subject
to Section 12.1 if Seller has breached in any material respect any
representation, warranty, covenant or agreement contained in this
Agreement, or (iii) if the Closing shall not have taken place by the
date that is twelve (12) months after the date of the execution of this
Agreement (the "Outside Date") (unless any of the foregoing events shall
have resulted primarily from Purchaser breaching any representation,
warranty, covenant or agreement contained in this Agreement); and
(c) by Seller, provided Seller is not then in breach of this
Agreement, pursuant to a written notice to Purchaser, (i) if any one or
more of the conditions to Seller's obligation to close has not been
fulfilled in any material respect as of the Closing Date, (ii) subject
to Section 12.1, if Purchaser has breached in any material respect any
representation, warranty, covenant or agreement contained in this
Agreement, or (iii) if the Closing shall not have taken place by the
Outside Date (unless any of the foregoing events shall have resulted
primarily from Seller's breach of any representation, warranty, covenant
or agreement contained in this Agreement).
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12.3 Effect of Termination. In the event of any termination of this
Agreement, all obligations of the parties hereto under this Agreement
(except for the obligations contained in Sections 9, 13.1, 13.2 and 13.5)
shall terminate as of such date of termination and this Agreement shall
thereafter become void and be of no further force and effect, and upon such
termination no party hereto shall be liable to the other party, except for
damages and expenses (including attorneys', accounting and other
professional fees and expenses) resulting from breaches of this Agreement
prior to such termination.
13. Miscellaneous.
13.1 Resolution of Disputes.
(a) Any controversy, dispute or claim (collectively, a "Dispute")
between the parties arising out of or relating to this Agreement, or the
breach, termination or validity thereof, shall be finally settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA") then obtaining. However, in all
events, these arbitration provisions shall govern over any conflicting
rules that may now or hereafter be contained in the AAA rules. The
arbitration shall be held in New York, New York unless the parties
mutually agree to have the arbitration held elsewhere, and judgment upon
the award made therein may be entered by any court having jurisdiction
in New York, New York; provided, however, that nothing contained in this
Section 13.1 shall be construed to limit or preclude a party from
bringing any action in any court of competent jurisdiction for
injunctive or other provisional relief to compel another party to comply
with its obligations under this Agreement during the pendency of the
arbitration proceedings. Any judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction over the
subject matter hereof. The arbitrator shall have the authority to grant
any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve any claim hereunder.
(b) Any such arbitration will be conducted before three (3)
arbitrators, one of which shall be chosen by Seller, one of which shall
be chosen by Purchaser, and the third chosen by the other two
arbitrators. The decision of a majority of the arbitrators will be the
decision of the arbitrators. The arbitrators shall permit such discovery
as they shall determine is appropriate in the circumstances, taking into
account the needs of the parties and the desirability of making
discovery expeditious and cost-effective. Any such discovery shall be
limited to information directly related to the controversy or claim in
arbitration and shall be concluded within thirty (30) days after
appointment of the third arbitrator.
(c) The prevailing party in any arbitration hereunder shall be
entitled to an award of its reasonable costs incurred in connection
therewith, including attorneys' fees.
(d) For any Dispute submitted to arbitration, the burden of proof
will be as it would be if the claim were litigated in a judicial
proceeding.
(e) Upon the conclusion of any arbitration proceedings hereunder,
the arbitrators will render findings of fact and conclusions of law and
a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement
along with a signed copy of the award.
(f) The arbitrators chosen in accordance with these provisions will
not have the power to alter, amend or otherwise affect the terms of
these arbitration provisions or the provisions of this Agreement.
13.2 Expenses. The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses
incurred in connection with the preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of agents, representatives, consultants,
counsel and accountants.
13.3 Further Assurances. Each of the parties shall execute such
agreements and documents and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and
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the transactions contemplated hereby. Each such party shall use its best
efforts (which shall not include the payment of money) to fulfill or obtain
the fulfillment of the conditions to the Closing, including the execution
and delivery of any other agreement or document, the execution and delivery
of which are conditions precedent to the Closing.
13.4 Access to Records. From and after the Closing Date, Seller shall
allow Purchaser, and its counsel, accountants and other representatives,
such access to Seller's records that after the Closing are in the custody
or control of Seller as Purchaser reasonably requires in order to comply
with its obligations under law or under contracts constituting Assumed
Liabilities or Purchased Assets. From and after the Closing Date, Purchaser
shall allow Seller, and its counsel, accountants and other representatives,
such access to records that after the Closing are in the custody or control
of Purchaser as Seller reasonably require in order to comply with their
obligations under law (including with respect to tax matters and the
preparation of the Closing Date Balance Sheet and the Closing Statement).
13.5 Indemnification of Brokerage. Seller agrees to indemnify and
save Purchaser harmless from any claim or demand for commissions or other
compensation by any broker, finder, agent or similar intermediary claiming
to have been employed by or on behalf of Seller or any affiliate (including
Morgan Stanley & Co. Incorporated), and to bear the cost of reasonable
legal fees and expenses incurred in defending against any such claim.
Purchaser agrees to indemnify and save Seller harmless from any claim or
demand for commissions or other compensation by any broker, finder, agent
or similar intermediary claiming to have been employed by or on behalf of
Purchaser or any affiliate and to bear the cost of reasonable legal fees
and expenses incurred in defending against such claim.
13.6 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any court
determines that any covenant, or any part of any covenant is invalid or
unenforceable, such covenant shall be enforced to the extent permitted by
such court, and all other covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
13.7 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given
when received if delivered personally against receipt; when transmitted if
transmitted by telecopy, electronic or digital transmission method; the
next day if sent for next day delivery by a nationally recognized overnight
courier service; or upon receipt if sent by
25
<PAGE> 31
certified, registered or express mail, return receipt requested, postage
prepaid. In each case notice shall be sent as follows:
(a) if to Seller, to:
Horizon Cellular Group
101 Lindenwood Drive/Suite 125
Malvern, PA 19355
Telecopy No.: 610-993-2683
Attention: Mr. Bruce M. Hernandez
with a required copy to:
Kleinbard Bell & Brecker
1900 Market Street/Suite 700
Philadelphia, Pennsylvania 19103
Telecopy No.: 215-568-0140
Attention: Howard J. Davis, Esquire
(b) if to Purchaser, to:
PriCellular Corporation
45 Rockefeller Plaza/Suite 3200
New York, NY 10020
Telecopy No.: 212-245-3058
Attention: Mr. Robert Price
with a required copy to:
Vorys, Sater, Seymour and Pease
52 East Gay Street
Columbus, OH 43216
Telecopy No.: 614-464-6350
Attention: Ronald A. Robins, Jr.
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices
hereunder.
13.8 Entire Agreement. This Agreement (including the Schedules and
Exhibits) and the agreements (including the Escrow Agreement), certificates
and other documents delivered hereunder contain the entire agreement
between the parties with respect to the transactions described herein, and,
except as provided in the next sentence, supersede all prior agreements,
written or oral, with respect thereto. This Agreement and that certain
Confidentiality Agreement dated September 8, 1995 between Purchaser and
Horizon shall be construed as integrated and complementary of each other.
13.9 Amendments and Waivers. This Agreement may be modified or
amended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any such right, power or privilege,
nor any single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such
right, power or privilege.
13.10 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law.
13.11 Assignment; Binding Effect. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned (including by operation
of law) by any party without the prior written consent of the other party
which consent shall not be unreasonably delayed, conditioned or withheld.
Subject to
26
<PAGE> 32
the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
13.12 Beneficiaries of Agreement. The representations, warranties,
covenants and agreements expressed in this Agreement are for the sole
benefit of the other party hereto and are not intended to benefit, and may
not be relied upon or enforced by, any other party as a third-party
beneficiary or otherwise.
13.13 Counterparts; Facsimile Signatures. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but
together signed by all of the parties hereto. Facsimile signatures on this
Agreement and any of the agreements and documents executed in connection
herewith shall be deemed original signatures.
13.14 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall
otherwise require.
13.15 Computation of Days; Holidays. Whenever this Agreement provides
for a period of time that is expressed in terms of a numbers of days prior
to or within which actions or events are to occur or not occur, such time
period shall be measured in calendar days unless otherwise expressly
provided. Whenever this Agreement provides for a date, day or period of
time on or prior to which actions or events are to occur or not occur, and
if such date, day or last day of such period of time falls on a Saturday,
Sunday, or legal holiday, then the same shall be deemed to fall on the
immediately following business day.
13.16 Headings. The headings in this Agreement are for reference
only, and shall not affect the meaning or interpretation of this Agreement.
13.17 Limited Recourse. Except as provided in this Section 13.17,
this Agreement and all of the agreements and documents executed in
connection herewith shall be non-recourse to the partners, affiliates and
officers of Seller and its partners, affiliates, officers, directors and/or
stockholders. If Seller is in default hereunder or under any such other
agreement or document, Purchaser's recourse shall be limited solely to (a)
the Indemnification Escrow or (b) in the case of claims for fraud or
intentional tort by Seller, to Horizon and Horizon's equity in its assets
without any recourse to Horizon's partners, affiliates or officers or to
their partners, affiliates, officers, directors and/or stockholders.
27
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
HORIZON CELLULAR TELEPHONE
COMPANY OF MONONGALIA, L. P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general
partner
By:
--------------------------------------
Name:
Title:
EASTERN WIRELESS CELLULAR
CORPORATION
By:
--------------------------------------
Name: Robert Price
Title: President
PRICELLULAR CORPORATION
By:
--------------------------------------
Name: Robert Price
Title: President
28
<PAGE> 1
EXHIBIT 10.3
ASSET EXCHANGE AGREEMENT
BY AND BETWEEN
PRICELLULAR CORPORATION,
EASTERN WIRELESS CELLULAR CORPORATION,
CHILL CELLULAR CORPORATION,
OHIO RIVER CELLULAR CORPORATION, AND
PARKERSBURG CELLULAR TELEPHONE CO., INC.
COLLECTIVELY, "PRICELLULAR"
AND
VANGUARD CELLULAR FINANCIAL CORP.,
ORANGE COUNTY CELLULAR TELEPHONE CORP.,
VANGUARD CELLULAR OPERATING CORP., AND
WARREN AND LEWIS, LTD.
COLLECTIVELY, "VANGUARD"
DATED AS OF JUNE 17, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Recitals................................................................................ 1
ARTICLE I............................................................................... 1
1.1 Defined Terms................................................................ 1
ARTICLE II EXCHANGE BETWEEN THE PARTIES; CLOSING ADJUSTMENTS........................... 10
2.1 Exchange and Consideration................................................... 10
2.2 Assumption of Liabilities.................................................... 10
2.3 Excluded Liabilities......................................................... 10
2.4 Post-Closing Adjustments..................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PRICELLULAR.............................. 13
3.1 Organization of PriCellular.................................................. 13
3.2 Authorization................................................................ 13
3.3 Absence of Certain Changes or Events......................................... 13
3.4 Title to Assets.............................................................. 14
3.5 Sufficiency of PriCellular Systems Assets.................................... 14
3.6 Real Property................................................................ 14
3.7 Equipment.................................................................... 15
3.8 Contracts.................................................................... 15
3.9 No Conflict or Violation..................................................... 15
3.10 Consents and Approvals....................................................... 15
3.11 Authorizations............................................................... 16
3.12 Licensee Qualifications...................................................... 16
3.13 Financial Statements......................................................... 16
3.14 Litigation................................................................... 16
3.15 Labor Matters................................................................ 16
3.16 Compliance with Law.......................................................... 17
3.17 No Brokers................................................................... 17
3.18 No Other Agreements to Sell.................................................. 17
3.19 Intentionally omitted........................................................ 17
3.20 Employee Benefit Plans....................................................... 17
3.21 Transactions with Certain Persons............................................ 17
3.22 Tax Matters.................................................................. 18
3.23 Deposits..................................................................... 18
3.24 Subscribers and Suppliers.................................................... 18
3.25 Insolvency Proceedings....................................................... 18
3.26 Environmental Matters........................................................ 18
3.27 32 Dbu Contour............................................................... 19
3.28 Material Misstatements Or Omissions.......................................... 19
3.29 FCC and Other Governmental Reports........................................... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF VANGUARD.................................. 19
4.1 Organization of Vanguard..................................................... 19
4.2 Authorization................................................................ 20
4.3 Absence of Certain Changes or Events......................................... 20
4.4 Title to Assets.............................................................. 21
4.5 Sufficiency of NYOC System Assets............................................ 21
4.6 Real Property................................................................ 21
4.7 Equipment.................................................................... 21
</TABLE>
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<TABLE>
<CAPTION>
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4.8 Contracts.................................................................... 22
4.9 No Conflict or Violation..................................................... 22
4.10 Consents and Approvals....................................................... 22
4.11 Authorizations............................................................... 22
4.12 License Qualifications....................................................... 23
4.13 Financial Statements......................................................... 23
4.14 Litigation................................................................... 23
4.15 Labor Matters................................................................ 23
4.16 Compliance with Law.......................................................... 23
4.17 No Brokers................................................................... 24
4.18 No Other Agreements to Sell.................................................. 24
4.19 Intentionally omitted........................................................ 24
4.20 Employee Benefit Plans....................................................... 24
4.21 Transactions with Certain Persons............................................ 24
4.22 Tax Matters.................................................................. 24
4.23 Deposits..................................................................... 25
4.24 Subscribers and Suppliers.................................................... 25
4.25 Insolvency Proceedings....................................................... 25
4.26 Environmental Matters........................................................ 25
4.27 32 Dbu Contour............................................................... 26
4.28 Minority Interests........................................................... 26
4.29 Material Misstatements Or Omissions.......................................... 26
4.30 FCC and Other Governmental Reports........................................... 26
4.31 Preparation of Schedule 3.7.................................................. 26
ARTICLE V ACTIONS PRIOR TO THE CLOSING................................................. 27
5.1 Maintenance of Systems....................................................... 27
5.2 Certain Prohibited Transactions.............................................. 27
5.3 Investigations............................................................... 28
5.4 Consents and Best Efforts.................................................... 28
5.5 Notification of Certain Matters.............................................. 29
5.6 No Negotiations.............................................................. 30
5.7 Parkersburg Equipment........................................................ 30
5.8 PriCellular Employees........................................................ 30
5.9 Vanguard Employees........................................................... 31
5.10 Roaming and Toll Arrangements................................................ 31
5.11 Monthly Financials........................................................... 31
5.12 Capital Contributions With Respect to Minority Interests..................... 32
5.13 Like-Kind Exchange Treatment................................................. 32
5.14 Payments to Columbia Capital Corporation..................................... 32
5.15 PriCellular Merger........................................................... 32
5.16 Environmental Correction and Remediation..................................... 32
5.17 AT&T Switch Sharing Agreement................................................ 33
5.18 Wilkes-Barre Switch Sharing Agreement........................................ 33
5.19 Subscriber Lists............................................................. 34
5.20 Warwick Lease; Cronomer Lease................................................ 34
5.21 Other Parkersburg Equipment.................................................. 34
ARTICLE VI CONDITIONS TO PRICELLULAR'S OBLIGATIONS..................................... 34
6.1 Representations, Warranties and Covenants.................................... 34
</TABLE>
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<TABLE>
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6.2 Consents..................................................................... 34
6.3 Closing Documents............................................................ 34
6.4 No Governmental Proceeding or Litigation..................................... 34
6.5 Opinion of Counsel........................................................... 35
6.6 HSR Act...................................................................... 35
6.7 Delivery of the Wilkes-Barre Switch Sharing Agreement........................ 35
6.8 Audited Financial Statements................................................. 35
6.9 Failure of Condition......................................................... 35
ARTICLE VII CONDITIONS TO VANGUARD'S OBLIGATIONS....................................... 35
7.1 Representations, Warranties and Covenants.................................... 35
7.2 Consents..................................................................... 35
7.3 Closing Documents............................................................ 35
7.4 No Governmental Proceeding or Litigation..................................... 35
7.5 Opinion of Counsel........................................................... 35
7.6 Opinion of FCC Counsel....................................................... 36
7.7 HSR Act...................................................................... 36
7.8 Delivery of the AT&T Switch Sharing Agreement................................ 36
7.10 Failure of Condition......................................................... 36
ARTICLE VIII CLOSING................................................................... 36
8.1 Deliveries by PriCellular.................................................... 36
8.2 Deliveries by Vanguard....................................................... 37
8.3 Form of Instruments.......................................................... 38
8.4 Consents to Assignment....................................................... 38
8.5 Allocation................................................................... 38
ARTICLE IX ACTIONS BY PRICELLULAR AND VANGUARD AFTER THE CLOSING....................... 39
9.1.... Books and Records............................................................ 39
9.2 Billing and Other Transition Matters......................................... 39
9.3 Further Assurances........................................................... 39
ARTICLE X INDEMNIFICATION.............................................................. 39
10.1 Survival of Representations, Etc............................................. 39
10.2 Indemnification.............................................................. 40
10.3 Notice of Claims............................................................. 41
10.4 Third Person Claims.......................................................... 41
10.5 Bulk Sales................................................................... 41
ARTICLE XI DEFAULT AND REMEDIES........................................................ 42
11.1 Opportunity to Cure.......................................................... 42
11.2 Remedies..................................................................... 42
11.3 Absence of FCC Consent....................................................... 43
11.4 Designation for Hearing...................................................... 43
11.5 Failure of Condition Precedent to Closing.................................... 43
11.6 Damage to Assets............................................................. 43
11.7 No Limitation of Damages or Remedies......................................... 44
ARTICLE XII MISCELLANEOUS.............................................................. 44
12.1 Assignment................................................................... 44
12.2 Notices...................................................................... 44
12.3 Choice of Law................................................................ 45
12.4 Entire Agreement, Amendments and Waivers..................................... 45
12.5 Counterparts................................................................. 45
</TABLE>
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<TABLE>
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12.6 Invalidity................................................................... 45
12.7 Headings..................................................................... 45
12.8 Responsibility for Certain Taxes and Expenses................................ 45
12.9 Schedules and Exhibits....................................................... 46
12.10 Publicity.................................................................... 46
12.11 Confidential Information..................................................... 46
12.12 Relationship of Parties...................................................... 46
12.13 Consent to Jurisdiction...................................................... 46
</TABLE>
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<PAGE> 6
ASSET EXCHANGE AGREEMENT
This Asset Exchange Agreement (this "Agreement") is entered into as of this
17th day of June, 1996, by and between PriCellular (as defined below) and
Vanguard (as defined below). Capitalized terms used in the recitals and not
defined therein have the meanings set forth in Article I of this Agreement.
RECITALS
A. WHEREAS, PriCellular holds, among other assets, the licenses listed on
Schedule 1 hereto issued by the Federal Communications Commission ("FCC") to
operate the non-wireline cellular telephone systems in the MSAs and RSAs listed
on Schedule 1 attached hereto (collectively, the "PriCellular Systems");
B. WHEREAS, Vanguard holds, among other assets, the licenses listed on
Schedule 2 attached hereto issued by the FCC to operate a non-wireline cellular
telephone system in the Orange County, New York MSA (NY MSA #144) (the "NYOC
System") and also owns shares in certain corporations (the "Minority Interest
Corporations"), and partnership interests in certain general partnerships (the
"Minority Interest Partnerships"), in each case listed on Schedule 2 hereto
which corporations and partnerships hold FCC licenses to operate non-wireline
cellular telephone systems in the markets listed on Schedule 2 attached hereto
(Vanguard's ownership interests in the Minority Interest Corporations and the
Minority Interest Partnerships are hereinafter collectively referred to as the
"Minority Interests");
C. WHEREAS, PriCellular desires to transfer, assign and convey to Vanguard
substantially all of the assets of the PriCellular Systems in exchange for the
Minority Interests and substantially all of the assets of the NYOC System, and
Vanguard desires to transfer, assign and convey to PriCellular the Minority
Interests and substantially all of the assets of the NYOC System in exchange for
substantially all of the assets of the PriCellular Systems; and
D. WHEREAS, Vanguard and PriCellular intend that the exchange of assets
contemplated hereby be a tax deferred transaction of "like-kind" property to the
maximum extent permissible under Section 1031 of the Internal Revenue Code of
1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
1.1 Defined Terms. As used herein, the terms below have the following
meanings:
"Action" means any claim, suit, litigation or proceeding.
"Adjustment Amount" has the meaning set forth in Section 2.4(a).
"Affiliate" of a Person means any Person who directly or indirectly
controls, is controlled by, or is under common control with, such Person.
The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Assignment Applications" has the meaning set forth in Section 5.4(a).
"Balance Sheet Date" means December 31, 1995.
"Benefit Arrangement" means any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment
benefits, vacation benefits, retirement benefits, life, health, disability
or accident benefits (including without limitation any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the
Code providing for the same
<PAGE> 7
or other benefits) or for deferred compensation, profit-sharing bonuses,
stock options, stock appreciation rights, stock purchases or other forms of
incentive compensation or post-retirement insurance, compensation or
benefits which:
(A) is not a Welfare Plan, Pension Plan or Multiemployer Plan,
(B) is entered into, maintained, contributed to or required to be
contributed to, as the case may be, by PriCellular or Vanguard (as
appropriate) or any ERISA Affiliate of either or under which PriCellular
or Vanguard (as appropriate) or any ERISA Affiliate of either may incur
any Liability, and
(C) covers any employee or former employee of PriCellular or
Vanguard (as appropriate) or any ERISA Affiliate of either (with respect
to their relationship with such entities).
"Cell Site" means a location that contains, among other things, a
low-power transmitter-receiver that communicates by radio signal with
cellular telephones located in a designated geographic region.
"Claim Notice" has the meaning set forth in Section 10.3(a).
"Closing" means the consummation of the transactions contemplated by
this Agreement on the Closing Date.
"Closing Date" means the first business day beginning after the date
on which all FCC Consents have been obtained and each of such consents has
become a Final Order, and any other governmental consents required by any
other governmental body have been granted and have become final and
nonappealable, and the appropriate waiting period under the HSR Act has
expired or has been terminated, or such other date as is mutually agreed
upon by the parties.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
"Communications Act" means the Communications Act of 1934, as amended,
and the written rules, regulations, orders and policies of the FCC.
"Damages" has the meaning set forth in Section 10.2.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Encumbrance" means any contract for sale (except for the sale of
cellular telephone service), claim, lien, pledge, option, charge, easement,
security interest, mortgage, deed of trust, right-of-way, encumbrance or
adverse interest of any kind or character of any other Person.
"Environmental Laws" means any and all federal, state, local or
foreign statutes, rules, laws, regulations, ordinances, codes, orders,
licenses, franchises, permits and authorizations relating to health, safety
or the environment, including without limitation the Handling of
Substances, the presence of Substances at an Operating Site or any
antipollution requirements, in effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity which is (or at any relevant time
was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group" with,
PriCellular or Vanguard (as appropriate) as defined in Section 414(b), (c),
(m) or (o) of the Code.
"Excluded Liabilities" has the meaning set forth in Section 2.3.
"FCC" has the meaning set forth in the recitals.
2
<PAGE> 8
"FCC Consents" means the action of the FCC granting its consent to (i)
the PriCellular Partition Application, (ii) the PriCellular Assignment
Applications, and (iii) the NYOC Assignment Application.
"FCC Counsel" has the meaning provided in Section 7.6.
"Final Order" means an order, action or decision of the FCC (or
subsequent court order or judgment) that has not been reversed, stayed,
enjoined, modified or amended and as to which the time to appeal, petition
for certiorari or seek reargument or rehearing or administrative
reconsideration or review has expired and as to which no appeal,
reargument, petition for certiorari or rehearing or petition for
reconsideration or application for review is pending or as to which any
right to appeal, reargue, petition for certiorari or rehearing or
reconsideration or review has been waived in writing by each party having
such a right or, if any appeal, reargument, petition for certiorari or
rehearing or reconsideration or review thereof has been sought, the order
or judgment of the court or FCC has been affirmed by the highest court (or
the administrative entity or body) to which the order was appealed or from
which the argument or rehearing or reconsideration or review was sought, or
certiorari has been denied, and the time to take any further appeal or to
seek certiorari or further reargument or rehearing, or reconsideration or
review, has expired.
"Handling" has the meaning set forth in the definition of NYOC
Pre-Closing Environmental Matters.
"Hocking College Lease" means that certain Land Lease Agreement, dated
as of May 16, 1995, by and between Hocking College Foundation, Inc. and
PriCellular, as successor in interest to Cellular 10 Inc.
"Hocking College Premises" has the meaning set forth in Section
5.16(d).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" has the meaning set forth in Section 10.3(a).
"Indemnitor" has the meaning set forth in Section 10.3(a).
"Inventory" means all merchandise owned and intended for resale,
whether or not located on the premises, on consignment to a third party, or
in transit or storage.
"Liabilities" means liabilities, obligations or commitments of any
nature, absolute, accrued, contingent or otherwise, known or unknown,
whether matured or unmatured.
"Minority Interest Corporations" has the meaning set forth in the
recitals.
"Minority Interest Partnership Interests" means the partnership
interests owned by Vanguard in certain general partnerships as set forth on
Schedule 2 attached hereto.
"Minority Interest Partnerships" has the meaning set forth in the
recitals.
"Minority Interest Percentage Interests" means (i) as to any Minority
Interest Partnership Interest, the percentage equity ownership interest
represented by such Minority Interest Partnership Interest in the issuing
partnership, and (ii) as to any Minority Interest Shares, the percentage
equity ownership interest represented by such Minority Interest Shares in
the issuing corporation, in each case as set forth on Schedule 2 hereto.
"Minority Interest Shares" means those Minority Interests that consist
of shares owned by Vanguard in certain corporations as set forth on
Schedule 2 attached hereto.
"Minority Interests" has the meaning set forth in the recitals.
"Multiemployer Plan" means any "multiemployer plan," as defined in
Section 400(a)(3) of ERISA, (A) which PriCellular or Vanguard (as
appropriate) or any ERISA Affiliate of either maintains, administers,
contributes to or is required to contribute to, or after September 25,
1980, maintained, administered, contributed to or was required to
contribute to, or under which PriCellular or
3
<PAGE> 9
Vanguard (as appropriate) or any ERISA Affiliate of either may incur any
Liability and (B) which covers any employee or former employee of
PriCellular or Vanguard (as appropriate) or any ERISA Affiliate of either
(with respect to their relationship with such entities).
"National Agency Agreements" means agreements to allow agents on a
national or regional basis to enter into Subscriber Agreements with respect
to the NYOC System or the PriCellular Systems, as appropriate.
"NYOC Assignment Application" has the meaning set forth in Section
5.4(a).
"NYOC Audited Financial Statements" means the financial statements of
Vanguard relating to the NYOC System for the fiscal year ended December 31,
1995, to be provided pursuant to Section 6.8.
"NYOC Authorizations" means all authorizations, permits or licenses
issued by any governmental authority to Vanguard in respect of
construction, modification, ownership or operation of the NYOC System and
all applications for modification, extension or renewal thereof.
"NYOC Books and Records" means all of the books and records of
Vanguard pertaining to the construction and operation of the NYOC System,
including without limitation, (i) books and records relating to the
purchase of materials and supplies, invoices, customer lists, supplier
lists, personnel records, and subscriber information, (ii) public file
materials, logs and engineering records, (iii) plans, diagrams, blueprints,
schematics, filings with governmental agencies and executed copies of all
NYOC Contracts and Subscriber Agreements, and (iv) computer software discs,
tapes and data in computer readable and/or human readable form used to
maintain any of the foregoing together with the media on which such
software and data are stored and all documentation relating thereto.
"NYOC Capital Budget" means the capital budget of Vanguard pertaining
to the NYOC System for fiscal year 1996, attached as Schedule 1.1.1.
"NYOC Cell Sites" means the nine (9) Cell Sites providing cellular
telephone service to the NYOC System.
"NYOC Closing Balance Sheet" means the unaudited balance sheet as of
the Closing Date of Vanguard pertaining to the NYOC System, prepared in
accordance with generally accepted accounting principles, consistently
applied.
"NYOC Contracts" means all leases (for real or personal property),
contracts, non-governmental licenses, commitments, understandings and
agreements to which Vanguard is a party (whether written or oral) that
relate to the operation of the NYOC System, including all amendments,
modifications and renewals thereof, but excluding insurance policies,
employment agreements, Subscriber Agreements, Resale Agreements, Roaming
Agreements and National Agency Agreements.
"NYOC Deposit Liabilities" has the meaning set forth in Section
2.4(a).
"NYOC Employees" means all persons employed by Vanguard in connection
with the NYOC System on a full- or part-time basis together with all
persons retained as "independent contractors."
"NYOC Environmental Expenses" means any Liability, loss, cost or
expense, other than any internal administrative costs of PriCellular,
arising from any NYOC Pre-Closing Environmental Matters, whether incurred
before or after the Closing Date, including without limitation, reasonable
costs of investigation, cleanup, remedial or response action, the costs
associated with posting financial assurances for the completion of
response, remedial or corrective actions, the preparation of any closure or
other necessary or required plans or analyses, or other reports or analyses
submitted to or prepared by regulating agencies, including the cost of
health assessments, epidemiological studies and the like, the retention of
engineers and other expert consultants, and legal counsel, capital
improvements, operation and maintenance testing and monitoring costs, power
and utility costs, and administrative costs or damages.
"NYOC Equipment" means all of the furniture, fixtures, furnishings,
machinery, computer hardware, radios, towers, lines, test equipment, tools,
antennas, transmitters, inventory, office equipment,
4
<PAGE> 10
and other tangible personal property used or useful in the construction or
operation of the NYOC System, or located at any of the NYOC Real Property,
including all replacements, improvements, and additions thereto in the
ordinary course of business between the date hereof and the Closing Date,
but specifically excludes the Vanguard Excluded Assets.
"NYOC Estoppel Certificates" shall have the meaning set forth in
Section 5.4(f).
"NYOC FCC Authorizations" means those NYOC Authorizations that are
issued by the FCC and identified as such on Schedule 4.11.
"NYOC Financial Statements" means the NYOC Unaudited Financial
Statements, the NYOC Audited Financial Statements, and the NYOC March 1996
Balance Sheet.
"NYOC Intellectual Property" means all patents, trademarks, service
marks, trade names, copyrights, licenses, formulas, computer software,
advertising slogans, advertising technology, advertising techniques,
merchandising techniques, operating procedures, know-how, technical
equipment, equipment warranties, data and other intellectual property
rights or intangible property rights of Vanguard which are used or intended
for use in connection with the NYOC System.
"NYOC March 1996 Balance Sheet" has the meaning set forth in Section
2.4(b).
"NYOC Operating Site" has the meaning set forth in the definition of
NYOC Pre-Closing Environmental Matters.
"NYOC Pre-Closing Environmental Matters" means (i) the production,
use, generation, storage, treatment, recycling, disposal, discharge,
release, or other handling or disposition of any kind at any time on or
prior to the Closing Date (collectively "Handling") of any, toxic,
hazardous, or other wastes, substances, products, pollutants or materials
of any kind regulated under Environmental Laws (including without
limitation, petroleum and petroleum products, asbestos, and radon)
(collectively "Substances"), either in, on, or under any real property or
facility owned, leased or used at any time by Vanguard (or an Affiliate of
Vanguard) in connection with the NYOC System (a "NYOC Operating Site"),
including without limitation the effects of such Handling of Substances on
resources, persons, or property within or outside the boundaries of any
NYOC Operating Site, (ii) the presence as of the Closing Date of Substances
in, on or under any NYOC Operating Site regardless of how the Substances
came to rest in, on or under the NYOC Operating Site, (iii) the release of
any Substances on or prior to the Closing Date in, on or under any off-site
disposal or treatment facility to which Substances in connection with the
NYOC System or any NYOC Operating Site or NYOC System Assets were sent,
(iv) the failure on or prior to the Closing Date of any NYOC Operating Site
or any operations of the NYOC System to be in compliance with any
Environmental Laws, and (v) any other act, omission or condition existing
on or prior to the Closing Date in connection with the NYOC System or any
NYOC Operating Site or NYOC System Assets which gives rise to Liability or
potential Liability under any Environmental Laws.
"NYOC Real Property" means all real property owned or leased by or
used, or intended by Vanguard or its Affiliates for use, in connection with
the NYOC System, together with all buildings, improvements, fixtures,
easements, licenses, options, insurance proceeds and condemnation awards
and all other rights of Vanguard or its Affiliates in or appurtenant
thereto, used, or intended by Vanguard or its Affiliates to be used, in the
NYOC System, but excluding the Vanguard Excluded Assets.
"NYOC Real Property Leases" means all leases pursuant to which
Vanguard holds an interest in any portion of the NYOC Real Property.
"NYOC System" has the meaning provided in the recitals.
"NYOC System Assets" means all assets, properties and rights in
existence of whatever kind or nature, which are used or acquired for use in
whole or in part in connection with the NYOC System, whether or not
reflected on the books and records of Vanguard, including, without
limitation, the Transferred Current Assets relating to the NYOC System, all
goodwill and other intangible property
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relating to the NYOC System, the NYOC Real Property, NYOC Equipment, NYOC
Authorizations, NYOC Contracts and NYOC Books and Records, but excluding
the Vanguard Excluded Assets.
"NYOC Unaudited Financial Statements" means the balance sheets and
related statements of income attached hereto as Schedule 1.1.2 relating to
the NYOC System as of and for the twelve-month period ended as of the
Balance Sheet Date.
"Operating Site" means an NYOC Operating Site or a PriCellular
Operating Site, as applicable.
"Other Parkersburg Equipment" means the Ericsson cellular radios and
the equipment that can be used only with such Ericsson radios within each
Cell Site in the Parkersburg, WV MSA. The parties shall agree on a list of
equipment that constitutes the Other Parkersburg Equipment pursuant to
Section 5.21.
"Parkersburg Equipment Arrangement" shall have the meaning set forth
in Section 5.7.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which
PriCellular or Vanguard (as appropriate) or any ERISA Affiliate of either
maintains, administers, contributes to or is required to contribute to, or,
within the five years prior to the Closing Date, maintained, administered,
contributed to or was required to contribute to, or under which PriCellular
or Vanguard (as appropriate) or any ERISA Affiliate of either may incur any
Liability and (B) which covers any employee or former employee of
PriCellular or Vanguard (as appropriate) or any ERISA Affiliate of either
(with respect to their relationship with such entities).
"Permitted Encumbrance" means (i) an Encumbrance for Taxes,
assessments, or other government charges or levies that are not yet due and
payable or which are being contested in good faith in appropriate
proceedings, (ii) any easements, rights of way or restrictions of record
that do not materially impair the value or use as presently used of, in the
case of Vanguard, the NYOC Real Property or, in the case of PriCellular,
the PriCellular Real Property, (iii) in the case of the Minority Interest
Partnership Interests, restrictions imposed by the issuer's partnership
agreement, (iv) any liens arising from that Pledge of Partnership Interests
dated September 28, 1993 by Masters Cellular Partnership in favor of NDB
Bank, N.A., and (v) the pledge of the Minority Interest Shares relating to
the Poughkeepsie, NY market as security for Vanguard senior credit
facility, which pledge shall be removed on or prior to the Closing Date.
"Person" means any person or entity, whether an individual, trustee,
corporation, general partnership, limited partnership, limited Liability
company, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority.
"PriCellular" means PriCellular Corporation, a Delaware corporation,
Eastern Wireless Cellular Corporation, a Delaware corporation, Chill
Cellular Corporation, a Delaware corporation, and Ohio River Cellular
Corporation, a Delaware corporation, and Parkersburg Cellular Telephone
Co., Inc., a Delaware corporation, each of which are signatories to this
Agreement and all of which are jointly and severally liable for the
representations, warranties and obligations of "PriCellular" hereunder.
"PriCellular Assignment Applications" has the meaning set forth in
Section 5.4(a).
"PriCellular Assumed Liabilities" has the meaning set forth in Section
2.2(a).
"PriCellular Authorizations" means all authorizations, permits or
licenses issued by any governmental authority to PriCellular in respect of
the construction, modification, ownership or operation of the PriCellular
Systems and all applications for modification, extension or renewal
thereof.
"PriCellular Books and Records" means all of the books and records of
PriCellular pertaining to construction and operation of the PriCellular
Systems, including without limitation, (i) books and records relating to
the purchase of materials and supplies, invoices, customer lists, supplier
lists, personnel records, and subscriber information, (ii) public file
materials, logs and engineering records, (iii) plans, diagrams, blueprints,
schematics, filings with governmental agencies and executed copies of all
PriCellu-
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lar Contracts and Subscriber Agreements, and (iv) computer software discs,
tapes and data in computer readable and/or human readable form used to
maintain any of the foregoing together with the media on which such
software and data are stored and all documentation relating thereto.
"PriCellular Capital Budget" means the aggregate capital budgets of
PriCellular pertaining to the PriCellular Systems for fiscal year 1996,
attached as Schedule 1.1.3.
"PriCellular Cell Sites" means the thirteen (13) Cell Sites providing
cellular telephone service to the PriCellular Systems.
"PriCellular Closing Balance Sheet" means the unaudited balance sheet
as of the Closing Date of PriCellular pertaining to the PriCellular
Systems, prepared in accordance with generally accepted accounting
principles, consistently applied.
"PriCellular's Closing Certificate" has the meaning set forth in
Section 7.1.
"PriCellular Consents" means any and all consents, approvals,
authorizations or waivers of any public, governmental or regulatory body or
authority or any other party (including, without limitation, the FCC, state
agencies, and any parties to any PriCellular Contracts identified on
Schedule 3.8 as requiring the consent of any counterparty prior to its
transfer to Vanguard) that are required for the consummation of the
transactions contemplated by this Agreement.
"PriCellular Contracts" means all leases (for real and personal
property), non-governmental licenses, contracts, commitments,
understandings and agreements to which PriCellular is a party (whether
written or oral), that relate to the operation of the PriCellular Systems,
including all amendments, modifications, and renewals thereof, but
excluding insurance policies, employment agreements, Subscriber Agreements,
Resale Agreements, Roaming Agreements and National Agency Agreements.
"PriCellular Deposit Liabilities" has the meaning set forth in Section
2.4(a).
"PriCellular Employees" means all persons employed by PriCellular in
connection with the PriCellular Systems on a full- or part-time basis
together with all persons retained as "independent contractors."
"PriCellular Environmental Expenses" means any Liability, loss, cost
or expense, other than internal administrative costs of Vanguard, arising
from any PriCellular Pre-Closing Environmental Matters, whether incurred
before or after the Closing Date, including without limitation, reasonable
costs of investigation, cleanup, remedial or response action, the costs
associated with posting financial assurances for the completion of
response, remedial or corrective actions, the preparation of any closure or
other necessary or required plans or analyses, or other reports or analyses
submitted to or prepared by regulating agencies, including the cost of
health assessments, epidemiological studies and the like, the retention of
engineers and other expert consultants, and legal counsel, capital
improvements, operation and maintenance testing and monitoring costs, power
and utility costs, and administrative costs or damages.
"PriCellular Equipment" means all of the furniture, fixtures,
furnishings, machinery, computer hardware, radios, towers, lines, test
equipment, tools, antennas, transmitters, inventory, office equipment and
other tangible personal property used or useful in the construction or
operation of the PriCellular Systems, or located at or on any of the
PriCellular Real Property, including all replacements, improvements, and
additions thereto in the ordinary course of business between the date
hereof and the Closing Date, but specifically excludes the PriCellular
Excluded Assets.
"PriCellular Estoppel Certificates" shall have the meaning set forth
in Section 5.4(f).
"PriCellular Excluded Assets" means (i) all current assets (including
without limitation Inventory) other than the Transferred Current Assets
relating to the PriCellular Systems; (ii) PriCellular's books, records, and
documents that pertain to the organization, existence and financial and tax
accounts of PriCellular and duplicate copies of such other records as may
be necessary to enable PriCellular to file its tax returns and reports;
(iii) rights to use the service marks "Cellular One," "Easy Talk" and any
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variations of any of the foregoing; (iv) the Other Parkersburg Equipment;
(v) the PriCellular Intellectual Property and (vi) all other assets listed
on Schedule 1.1.4.
"PriCellular FCC Authorizations" means those PriCellular
Authorizations that are issued by the FCC and identified as such on
Schedule 3.11.
"PriCellular Financial Statements" means the balance sheets and
related statements of income for PriCellular pertaining to the PriCellular
Systems as of and for the twelve-month period ended on the Balance Sheet
Date, which are attached as Schedule 1.1.5, and the PriCellular March 1996
Balance Sheet.
"PriCellular Intellectual Property" means all patents, trademarks,
service marks, trade names, copyrights, licenses, formulas, computer
software, advertising slogans, advertising technology, advertising
techniques, merchandising techniques, operating procedures, know-how,
technical equipment, equipment warranties, data and other intellectual
property rights or intangible property rights of PriCellular which are
used, or intended for use, in connection with the PriCellular Systems.
"PriCellular March 1996 Balance Sheet" has the meaning set forth in
Section 2.4(b).
"PriCellular Operating Site" has the meaning sent forth in the
definition of PriCellular Pre-Closing Environmental Matters.
"PriCellular Ownership Period" means the period during which
PriCellular owned or leased the PriCellular Systems Assets.
"PriCellular Partition Application" has the meaning set forth in
Section 5.4(b).
"PriCellular Pre-Closing Environmental Matters" means (i) the Handling
of Substances either in, on, or under any real property or facility owned,
leased or used at any time by PriCellular (or an Affiliate of PriCellular)
in connection with the PriCellular Systems ("PriCellular Operating Site"),
including without limitation the effects of such Handling of Substances on
resources, persons, or property within or outside the boundaries of any
PriCellular Operating Site, (ii) the presence as of the Closing Date of
Substances in, on or under the PriCellular Operating Site regardless of how
the Substances came to rest in, on or under any PriCellular Operating Site,
(iii) the release of any Substances on or prior to the Closing Date in, on
or under any off-site disposal or treatment facility to which Substances in
connection with the PriCellular Systems or any PriCellular Operating Site
or PriCellular Systems Assets were sent, (iv) the failure on or prior to
the Closing Date of any PriCellular Operating Site or any operations of the
PriCellular Operating Systems to be in compliance with any Environmental
Laws, and (v) any other act, omission or condition existing on or prior to
the Closing Date in connection with the PriCellular Systems or any
PriCellular Operating Site or PriCellular Systems Assets which gives rise
to Liability or potential Liability under any Environmental Laws.
"PriCellular Real Property" means all real property owned or leased by
or used, or intended by PriCellular or its Affiliates for use, in
connection with the PriCellular Systems, together with all buildings,
improvements, fixtures, easements, licenses, options, insurance proceeds
and condemnation awards and all other rights of PriCellular or its
Affiliates in or appurtenant thereto, used, or intended by PriCellular or
its Affiliates to be used in the PriCellular Systems, but excluding the
PriCellular Excluded Assets.
"PriCellular Real Property Leases" means all leases pursuant to which
PriCellular holds an interest in any portion of the PriCellular Real
Property.
"PriCellular Systems" has the meaning provided in the recitals.
"PriCellular Systems Assets" means all assets, properties and rights
in existence of whatever kind or nature, which are used or acquired for use
in whole or in part in connection with the PriCellular Systems, whether or
not reflected on the books and records of PriCellular, including, without
limitation, all Transferred Current Assets relating to the PriCellular
Systems, all goodwill and other intangible property relating to the
PriCellular Systems, the PriCellular Real Property, PriCellular Equipment,
PriCellular
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Authorizations, PriCellular Contracts and PriCellular Books and Records,
but excluding the PriCellular Excluded Assets.
"Property" means any kind of property, right or asset, whether real,
personal or mixed, and whether tangible or intangible.
"PSCNY" means the Public Service Commission of New York.
"PSCWV" means the Public Service Commission of West Virginia.
"PUCO" means the Public Utility Commission of Ohio.
"Representative" means any officer, director, principal, partner,
attorney, agent, employee, or other representative of any Person.
"Resale Agreements" means agreements to either (i) resell cellular
telephone service provided by other Persons or (ii) provide cellular
telephone service for other Persons to resell.
"Retained Counties" has the meaning set forth in Section 3.13.
"Roaming Agreements" means agreements either (i) to provide cellular
telephone service within the provider's system to subscribers of other
systems who are travelling through the provider's system, or (ii) to have
another system provide cellular service to subscribers of either Vanguard
or PriCellular (as appropriate) who are travelling outside the NYOC System
or the PriCellular Systems (as appropriate).
"Subscriber" means a bona fide active subscriber who provides revenue
to the applicable system not inconsistent with the average subscriber of
such system (excluding test and demonstration telephones or other telephone
numbers for which payment is not expected, including agent and employee
telephones), as determined in good faith by the parties within ninety (90)
days after the Closing Date
"Subscriber Agreements" means agreements for the provision of cellular
telephone service and/or cellular telephone equipment.
"Substances" has the meaning set forth in the definition of NYOC
Pre-Closing Environmental Matters.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, income, excise, use, transfer, payroll,
occupancy, property, sales, franchise, unemployment and withholding taxes,
imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, and any assessments against
NYOC Real Property or PriCellular Real Property, as the case may be,
together with any interest, penalties or additional taxes attributable to
such taxes and other assessments.
"To the best knowledge" or "knowledge" of a party (or similar phrases)
means to the extent of matters (i) which are actually known by such party
or (ii) which, based on facts of which such party is aware, would be known
to a reasonable Person in similar circumstances.
"Transferred Current Assets" means (i) accounts receivables, except
for intercompany accounts receivables and accounts receivables arising
pursuant to Roaming Agreements, (ii) prepaid rent, and (iii) such other
prepaid expenses as the parties may mutually agree upon, in each case
relating to the applicable NYOC System or PriCellular Systems.
"Vanguard" means Vanguard Cellular Financial Corp., a North Carolina
corporation, Orange County Cellular Telephone Corp., a North Carolina
corporation, Vanguard Cellular Operating Corp., a Delaware corporation, and
Warren and Lewis, Ltd., a Virginia corporation, each of which are
signatories to this Agreement and each of which are jointly and severally
liable for the representations, warranties and obligations of "Vanguard"
hereunder.
"Vanguard Assumed Liabilities" has the meaning set forth in Section
2.2(b).
"Vanguard's Closing Certificate" has the meaning provided in Section
6.1.
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"Vanguard Consents" means any and all consents, approvals,
authorizations or waivers of any public, governmental or regulatory body or
authority or any other party (including, without limitation, from the FCC,
state agencies, and any parties to NYOC Contracts identified on Schedule
4.8 as requiring the consent of any counterparty prior to its transfer to
PriCellular, and the consents necessary to transfer the Minority Interests,
identified on Schedule 4.28) that are required for the consummation of the
transactions contemplated by this Agreement.
"Vanguard Excluded Assets" means (i) all current assets (including
without limitation Inventory) other than Transferred Current Assets
relating to the NYOC System; (ii) Vanguard's books, records, and documents
that pertain to the organization, existence and financial and tax accounts
of Vanguard and duplicate copies of such other records as may be necessary
to enable Vanguard to file its tax returns and reports; (iii) the NYOC
Intellectual Property; and (iv) all other assets listed on Schedule 1.1.6.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, (A) which PriCellular or Vanguard (as appropriate)
or any ERISA Affiliate of either maintains, administers, contributes to or
is required to contribute to, or under which PriCellular or Vanguard (as
appropriate) or any ERISA Affiliate of either may incur any Liability and
(B) which covers any employee or former employee of PriCellular or Vanguard
(as appropriate) or any ERISA Affiliate of either (with respect to their
relationship with such entities).
ARTICLE II
EXCHANGE BETWEEN THE PARTIES; CLOSING ADJUSTMENTS
2.1 Exchange and Consideration. Subject to the terms and conditions set
forth herein, on the Closing Date:
(a) PriCellular shall transfer, assign, and deliver to Vanguard all of
the PriCellular Systems Assets, free and clear of all Encumbrances other
than the Permitted Encumbrances; and
(b) Vanguard shall transfer, assign, and deliver to PriCellular (i)
all of the Minority Interests and all of the NYOC System Assets, in each
case free and clear of all Encumbrances other than the Permitted
Encumbrances and (ii) $450,000 cash via federal funds wire transfer to an
account designated in writing by PriCellular.
The consideration for the assets transferred by a party shall be the assets
(and cash, if any) transferred by the other party hereunder, and the assumption
of certain Liabilities as set forth in Section 2.2.
2.2 Assumption of Liabilities.
(a) PriCellular shall not assume any Liabilities of Vanguard except
(i) Liabilities accruing, arising out of or relating to events or
occurrences happening after the Closing Date under the NYOC Contracts and
Subscriber Agreements of Vanguard relating to the NYOC System, and (ii) the
NYOC Deposit Liabilities (collectively, the "PriCellular Assumed
Liabilities").
(b) Vanguard shall not assume any Liabilities of PriCellular except
(i) Liabilities accruing, arising out of or relating to events or
occurrences happening after the Closing Date under the PriCellular
Contracts and Subscriber Agreements of PriCellular relating to the
PriCellular Systems, and (ii) the PriCellular Deposit Liabilities
(collectively, the "Vanguard Assumed Liabilities").
2.3 Excluded Liabilities. Notwithstanding any provision herein, (a)
PriCellular is assuming only the PriCellular Assumed Liabilities and is not
assuming any other liability or obligation of Vanguard (or any predecessor owner
of all or part of Vanguard's business and assets) and (b) Vanguard is assuming
only the Vanguard Assumed Liabilities and is not assuming any other liability or
obligation of PriCellular (or any predecessor owner of all or part of
PriCellular's business and assets). All such other liabilities and obligations
shall be retained by and remain obligations and liabilities of Vanguard or
PriCellular, as the case may be (all such liabilities not being assumed being
herein referred to as the "Excluded Liabilities"), and, notwithstanding anything
to the contrary in this Agreement and without limiting the foregoing, none of
the following shall
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be PriCellular Assumed Liabilities or Vanguard Assumed Liabilities for the
purposes of this Agreement but rather shall be Excluded Liabilities:
(a) any liability or obligation for Tax arising from or with respect
to the PriCellular Systems, the PriCellular Systems Assets, the NYOC System
or the NYOC System Assets which is incurred in or attributable to the
period prior to and including the Closing Date;
(b) any liability or obligation of PriCellular or Vanguard or their
respective ERISA Affiliates relating to current and former employees or
Employee Plans (including, without limitation, liabilities and obligations
under ERISA, the Code and any other applicable statutes, orders, rules and
regulations); and
(c) any liability or obligation relating to any asset that is a
PriCellular Excluded Asset or Vanguard Excluded Asset or is otherwise not a
NYOC System Asset or PriCellular Systems Asset.
2.4 Post-Closing Adjustments. Subject to the terms and conditions set
forth herein:
(a) Within ninety (90) days after the Closing Date, a cash payment
will be made by one party to the other in an amount (the "Adjustment
Amount") equal to the difference between (i) the sum of (A) all capital
expenditures made by PriCellular for the PriCellular Systems from the date
hereof through the Closing Date permitted by Section 5.2(e) (including
without limitation expenditures made with the consent contemplated in the
forepart of Section 5.2), and (B) $200 for the net Subscriber increase to
the PriCellular Systems between the Balance Sheet Date and Closing as
calculated from the lists provided pursuant to Section 5.19 and Section
2.4(d), minus (C) the amount of all Liabilities of the PriCellular Systems
for customer deposits set forth on the PriCellular Closing Balance Sheet
(the "PriCellular Deposit Liabilities"); and (ii) the sum of (A) all
capital expenditures made by Vanguard for the NYOC System from the date
hereof through the Closing Date in accordance with the NYOC Capital Budget
or permitted by Section 5.2(e), plus (B) all capital contributions made in
respect of the Minority Interests between the date hereof and Closing (less
any cash distributions made to Vanguard in respect of such Minority
Interests), plus (C) $200 for the net Subscriber increase to the NYOC
System between the Balance Sheet Date and Closing as calculated from the
lists provided pursuant to Section 5.19 and Section 2.4(d), minus (D) the
amount of all Liabilities of the NYOC System for customer deposits set
forth on the NYOC Closing Balance Sheet (the "NYOC Deposit Liabilities").
If the sum calculated pursuant to clause (i) of the preceding sentence is
greater than the sum calculated pursuant to clause (ii), the Adjustment
Amount shall be paid by Vanguard to PriCellular. If the sum calculated
pursuant to clause (ii) of the preceding sentence is greater than the sum
calculated pursuant to clause (i), the Adjustment Amount shall be paid by
PriCellular to Vanguard. In either case, the Adjustment Amount shall be
paid within ninety (90) days of the Closing Date via federal funds wire
transfer to an account designated in writing by the party entitled to such
payment.
(b) Within thirty (30) days after the Closing Date, PriCellular shall
prepare and deliver to Vanguard the PriCellular Closing Balance Sheet, and
Vanguard shall prepare and deliver to PriCellular the NYOC Closing Balance
Sheet. For purposes of preparing the PriCellular Closing Balance Sheet and
the NYOC Closing Balance Sheet, each party shall make its employees
available to the other (without charge) during normal business hours and
such employees shall cooperate in all reasonable respects with such other
party in preparing such documents. Using the PriCellular Closing Balance
Sheet, the parties shall calculate the "PriCellular Transferred Current
Asset Adjustment Amount," which shall be the amount equal to (i)
Transferred Current Assets of the PriCellular Systems set forth on the
balance sheet pertaining to the PriCellular Systems for the period ended
March 31, 1996, attached hereto as Schedule 2.4.1 (the "PriCellular March
1996 Balance Sheet"), minus (ii) the Transferred Current Assets of the
PriCellular Systems set forth on the PriCellular Closing Balance Sheet, as
adjusted pursuant to Section 2.4(e). If the PriCellular Transferred Current
Asset Adjustment Amount is a positive number, PriCellular shall pay an
amount equal to the PriCellular Transferred Current Asset Adjustment Amount
to Vanguard. If the PriCellular Transferred Current Asset Adjustment Amount
is a negative number, Vanguard shall pay an amount equal to the PriCellular
Transferred Current Asset Adjustment Amount (expressed as a positive
number) to PriCellular. The parties shall also calculate the "NYOC
Transferred Current Asset Adjustment Amount," which shall be the amount
equal to (i) the Transferred Current
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Assets of the NYOC System as set forth on the balance sheet pertaining to
the NYOC System for the period ended March 31, 1996, attached hereto as
Schedule 2.4.2 (the "NYOC March 1996 Balance Sheet"), minus (ii) the
Transferred Current Assets of the NYOC System as set forth on the NYOC
Closing Balance Sheet, as adjusted pursuant to Section 2.4(e). If the NYOC
Transferred Current Asset Adjustment Amount is a positive number, Vanguard
shall pay the NYOC Transferred Current Asset Adjustment Amount to
PriCellular. If the NYOC Transferred Current Asset Adjustment Amount is a
negative number, PriCellular shall pay the NYOC Transferred Current Asset
Adjustment Amount (expressed as a positive number) to Vanguard.
(c) Within sixty (60) days after the Closing Date, PriCellular and
Vanguard shall review the NYOC Closing Balance Sheet and the PriCellular
Closing Balance Sheet, respectively, and shall, within such sixty (60) day
period, identify in writing any discrepancy believed to exist in either
such document. If either party does not identify any such discrepancy
within such sixty (60) day period, such party will be deemed to have
accepted the other party's Closing Balance Sheet and the PriCellular
Transferred Current Asset Adjustment Amount or NYOC Transferred Current
Asset Adjustment Amount calculated pursuant thereto, and such party shall
be barred from raising any discrepancy or dispute as to such amount
thereafter. Vanguard and PriCellular shall in good faith attempt jointly to
resolve any discrepancy raised in the manner set forth above with respect
to the PriCellular Closing Balance Sheet or the NYOC Closing Balance Sheet
within seventy-five (75) days after the Closing Date, which resolution, if
achieved, shall be binding upon all parties to this Agreement and not
subject to dispute or review. If PriCellular and Vanguard cannot resolve
any such discrepancy to their mutual satisfaction within such seventy-five
(75) day period, PriCellular and Vanguard shall, within the following ten
(10) days, designate Deloitte & Touche, L.L.P. or another mutually
acceptable "Big 6" accounting firm to be retained to review the PriCellular
Closing Balance Sheet and/or the NYOC Closing Balance Sheet, as
appropriate. The cost of retaining such accounting firm shall be borne 50%
by PriCellular and 50% by Vanguard. Such firm shall report its conclusions
in writing to PriCellular and Vanguard within twenty-one (21) days or such
other time period as PriCellular, Vanguard and such accounting firm shall
mutually agree upon, and such conclusions as to the PriCellular Transferred
Current Asset Adjustment Amount or the NYOC Transferred Current Asset
Adjustment Amount shall be binding upon all parties to this Agreement and
not subject to further dispute or review. The PriCellular Transferred
Current Asset Adjustment Amount, and the NYOC Transferred Current Asset
Adjustment Amount, shall be paid within three (3) business days after the
earlier of (i) PriCellular and Vanguard mutually agree upon such amounts,
or (ii) the above-mentioned accounting firm determines such amounts.
Payments shall be made in cash via federal funds wire transfer and may be
added to, or netted against, each other as appropriate.
(d) For purposes of the net Subscriber adjustment contemplated in
Section 2.4(a), within thirty (30) days after the Closing Date (i) Vanguard
shall provide PriCellular with a list of Subscribers for the NYOC System as
of the Closing Date, and (ii) PriCellular shall provide Vanguard with a
list of Subscribers for each of the PriCellular Systems as of the Closing
Date including, with respect to the Ohio 10 RSA, the zip code of each
Subscriber. Subscribers with zip codes in the Retained Counties shall not
be included in calculating the net Subscriber adjustment contemplated in
Section 2.4(a).
(e) For purposes of calculating the PriCellular Transferred Current
Asset Adjustment Amount and the NYOC Transferred Current Asset Adjustment
Amount, all accounts receivable shall be discounted as follows: (i) 2.5%
for current accounts receivable, (ii) 10% for accounts receivable aged up
to 30 days, (iii) 35% for accounts receivable aged between 31 and 60 days,
(iv) 75% for accounts receivable aged between 60 and 90 days, and (v) 100%
for accounts receivable aged 91 days or more.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRICELLULAR
PriCellular hereby makes the following representations and warranties to
Vanguard, all of which have been relied upon by Vanguard in entering into this
Agreement:
3.1 Organization of PriCellular. Each PriCellular entity is a
corporation duly formed under the laws of the state of its incorporation.
Each PriCellular entity has all requisite corporate power and authority to
conduct its business as it is presently being conducted and to own or lease
its Property. Except for the transfer of the PriCellular Systems Assets to
Vanguard as contemplated hereunder and the transactions contemplated by
Section 5.15 hereunder, no proceeding for the dissolution, merger,
consolidation or liquidation of PriCellular is pending or threatened, and
no such proceeding is contemplated by PriCellular.
3.2 Authorization. (i) Each PriCellular entity will have all
necessary corporate power and authority and will have taken all corporate
action necessary to enter into this Agreement, consummate the transactions
contemplated hereby and perform its obligations hereunder, and (ii) this
Agreement is, and each agreement executed by a PriCellular entity in
connection with the Closing will be, duly executed and delivered by such
PriCellular entity, and is and will be a legal, valid and binding
obligation of such PriCellular entity enforceable against such PriCellular
entity in accordance with its terms, except as the enforceability hereof
and thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors
generally and except for limitations imposed by general principles of
equity.
3.3 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.3 (or other schedules as indicated herein), since the Balance
Sheet Date there has not been any:
(a) change in the condition (financial or otherwise), assets,
Liabilities, working capital, reserves, earnings or business of the
PriCellular Systems, except for changes contemplated hereby or changes
which have not, individually or in the aggregate, been material and
adverse to the PriCellular Systems Assets as a whole;
(b) (i) material increase in compensation payable or to become
payable to any PriCellular Employee or any bonus payment made or
promised to any PriCellular Employee, or (ii) material change in
personnel policies, insurance, retirement, health or other employee
benefits or any other compensation arrangements affecting PriCellular
Employees;
(c) sale, assignment or transfer of any of the PriCellular Systems
Assets, singly or in the aggregate other than (i) as set forth on
Schedule 3.3(c) or (ii) in the ordinary course of business consistent
with past practice when replaced by assets of substantially equivalent
value and function;
(d) cancellation of any indebtedness or waiver of any rights of
substantial value to PriCellular in respect of the PriCellular Systems,
except in the ordinary course of business and consistent with past
practice;
(e) amendment, cancellation or termination of any PriCellular
Contract, PriCellular Authorization, or other license, lease, contract,
agreement, understanding or instrument material to the PriCellular
Systems, or entry into any contract, lease, agreement and understanding
in respect of the PriCellular Systems except in the ordinary course of
business and consistent with past practice;
(f) change in accounting methods or practices by PriCellular which
relate to the PriCellular Systems;
(g) material revaluation by PriCellular of any of the PriCellular
Systems Assets, except in the ordinary course of business and consistent
with past practice;
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(h) damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the PriCellular Systems
Assets, the PriCellular Systems or the business prospects of the
PriCellular Systems;
(i) imposition of any Encumbrances on any of the PriCellular
Systems Assets, that are material singly or in the aggregate, except for
Permitted Encumbrances;
(j) capital expenditures by PriCellular with respect to the
PriCellular Systems, or incurrence of obligations to make any such
capital expenditures, which exceed, in the aggregate, $50,000, other
than those which are provided for in the PriCellular Capital Budget;
(k) payment, discharge or satisfaction of Liabilities, other than
in the ordinary course of business consistent with past practice;
(l) agreement (whether oral or written) by PriCellular to do any of
the foregoing; or
(m) other event or condition of any character which in any one case
or in the aggregate, has materially and adversely affected, or any event
or condition known to PriCellular (other than matters of general public
knowledge relating to general economic conditions or the cellular
telephone industry as a whole) which it is reasonable to expect will in
any one case or in the aggregate, materially and adversely affect in the
future, the condition (financial or otherwise), assets, Liabilities,
working capital, reserves, earnings, business or prospects of the
PriCellular Systems.
3.4 Title to Assets. PriCellular has good title to the PriCellular
Systems Assets except (a) as to owned real estate, as to which PriCellular
has good and marketable fee simple title, and (b) as set forth on Schedule
3.4. Except as set forth on Schedule 3.4, none of the PriCellular Systems
Assets is subject to any Encumbrance, except for Permitted Encumbrances.
Upon consummation of the transactions contemplated hereby, Vanguard will
have acquired good and marketable title in and to, or have a valid
leasehold interest in, each of the PriCellular Systems Assets, free and
clear of all Encumbrances except Permitted Encumbrances.
3.5 Sufficiency of PriCellular Systems Assets. The PriCellular
Systems Assets constitute all of the assets, rights and properties,
tangible or intangible, real or personal, which are required for the
operation of the PriCellular Systems as such operations are presently
conducted, except for the PriCellular Excluded Assets.
3.6 Real Property. Schedule 3.6 contains the complete street address
and (if available) the legal description of all of the PriCellular Real
Property, including without limitation all tower and transmitter sites.
PriCellular holds good and marketable title to the PriCellular Real
Property in fee simple absolute except for the PriCellular Real Property
that is specifically identified on Schedule 3.6 as leased pursuant to one
of the PriCellular Contracts (such agreements constitute the "PriCellular
Real Property Leases"), for such leased property, PriCellular has a valid
leasehold interest. There are no pending or threatened condemnation
proceedings relating to any of the PriCellular Real Property. All
improvements included in the PriCellular Real Property are in good
operating condition (except for ordinary wear and tear) with no known
material defects. No improvements on any PriCellular Real Property that is
utilized as a Cell Site or point-to-point microwave site in the PriCellular
Systems encroach upon adjoining real estate, and all such improvements are
constructed in conformity with all "setback" lines, easements, and other
restrictions, or rights of record, or that have been established by any
applicable building or safety code or zoning ordinances. No utility lines
serving the PriCellular Systems pass over the lands of others except where
appropriate easements have been obtained. All towers and other structures
on the PriCellular Real Property are marked in accordance with the
requirements of the PriCellular Authorizations, as the case may be, and the
FCC, Federal Aviation Administration and, all applicable state and local
laws, except where the failure to comply with such requirements or laws
would not have a material adverse effect on the PriCellular Authorizations.
PriCellular has not received any written notice for assessments for public
improvements against any PriCellular Real Property which remains unpaid.
PriCellular has not granted any lease, sublease or license granting to any
Person any right to the possession, use, occupancy or enjoyment of the
property subject to the PriCellular Real Property Leases. All PriCellular
Real Property
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is supplied with utilities (including without limitation water, sewage,
disposal, electricity, gas and telephone) and other services necessary for
the operation of such PriCellular Real Property as currently operated.
3.7 Equipment. PriCellular owns and holds good title to all of the
PriCellular Equipment, except for the PriCellular Equipment that is leased
pursuant to one of the PriCellular Contracts. All of the material
PriCellular Equipment is in good operating condition and repair (except for
ordinary wear and tear) and without material defects. The PriCellular
Equipment is sufficient to permit the PriCellular Systems to operate in all
material respects in accordance with the terms of the PriCellular
Authorizations. The PriCellular Equipment includes the equipment listed on
Schedule 3.7 hereto, except to the extent that Schedule 3.7 includes
equipment that constitutes Other Parkersburg Equipment as determined in
accordance with Section 5.21. Since September 27, 1995, PriCellular has not
removed or transferred, or permitted a third party to remove or transfer,
any assets that would have constituted PriCellular Equipment but for such
removal or transfer, except in the ordinary course of business. Vanguard
shall, at Closing, take title to and receive all PriCellular Equipment that
is omitted from Schedule 3.7 but that is part of the PriCellular Systems
Assets.
3.8 Contracts. Schedule 3.8 is a list of all PriCellular Contracts
(including PriCellular Real Property Leases). Each PriCellular Contract is
in full force and effect, binding and enforceable in accordance with its
terms, paid currently, and has not been materially impaired by any acts or
omissions of PriCellular or any of its Representatives. Except as set forth
on Schedule 3.8, no material PriCellular Contract requires the consent of
any other party to the transactions contemplated by this Agreement.
PriCellular is not (and, to the best of PriCellular's knowledge, no other
party is) in material breach or violation of, or default under any of the
PriCellular Contracts, and to the best of PriCellular's knowledge, no event
has occurred which would, with or without notice or the passage of time,
constitute such a material default. PriCellular is not aware of any intent
by any party to any PriCellular Contract to terminate or amend the terms
thereof or to refuse to renew any such PriCellular Contract upon expiration
of its term.
3.9 No Conflict or Violation. Neither the execution and delivery of
this Agreement, nor any agreements executed in connection herewith, nor the
consummation of the transactions contemplated hereby, will result in (a) a
violation of or a conflict with any provision of the Certificate of
Incorporation or By-Laws of any PriCellular entity; (b) provided the
PriCellular Consents are obtained, a breach of, or a default under, or give
rise to any right of termination, cancellation or acceleration of any right
or obligation of PriCellular or to a loss of any benefit relating to the
PriCellular Systems to which PriCellular is entitled under, any term or
provision of any PriCellular Contract, PriCellular Authorization or other
contract, agreement or obligation to which PriCellular is a party or by
which the PriCellular Systems Assets are bound or subject, or an event
which with notice, lapse of time or both, would result in any such breach
or default, (c) provided the PriCellular Consents are obtained, a violation
by PriCellular of any applicable law, statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award, of any court or
other governmental instrumentality, or an event which with notice, lapse of
time or both, would result in any such violation, or (d) an imposition of
any Encumbrance other than Permitted Encumbrances on any or all of the
PriCellular Systems Assets or any restriction or charge on the PriCellular
Systems, or an event which with notice, lapse of time or both would result
in any such imposition, or (e) create, constitute or result in an act of
bankruptcy, preference, insolvency or fraudulent conveyance under any
bankruptcy law or other law for the protection of debtors generally.
3.10 Consents and Approvals. Except as set forth on Schedule 3.8, no
consent, approval or authorization of, declaration to, or filing or
registration with, any governmental, or regulatory authority, or any other
person or entity, is required to be made or obtained in connection with the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby other than the FCC Consents,
consent by PSCNY, PSCWV and PUCO, if any, and filings that may be required
under the HSR Act.
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3.11 Authorizations. Schedule 3.11 contains a list of all of the
PriCellular Authorizations. The PriCellular Authorizations are all of the
licenses, permits and other authorizations necessary to operate each of the
PriCellular Systems, as they are now operated, and are validly issued in
the name of PriCellular, except for those licenses, permits and other
authorizations with respect to which the failure to hold would not have a
material adverse effect on the PriCellular Systems Assets as a whole.
Except as set forth in Schedule 3.11, the PriCellular Authorizations are in
full force and effect, are unimpaired by, any acts or omissions of
PriCellular, and are valid for the balance of the current license term, if
any, applicable generally to each such PriCellular Authorization. The
PriCellular FCC Authorizations have been granted by Final Order of the FCC
and PriCellular is the exclusive holder of the PriCellular FCC
Authorizations. There are no pending or, to the knowledge of PriCellular,
threatened proceedings by or before the FCC which would result in the
revocation, cancellation, suspension or adverse modification of the
PriCellular FCC Authorizations, nor to PriCellular's knowledge are there
any facts that would give rise to, or form the basis for, such a
proceeding. PriCellular has (and on the Closing Date will have) the
absolute and unrestricted right, power and authority under the
Communications Act to transfer the PriCellular Systems Assets to Vanguard
upon consummation of the transactions contemplated hereby. No renewal of
any PriCellular FCC Authorization would constitute a major environmental
action under the current rules of the FCC. The FCC actions granting the
current PriCellular FCC Authorizations (other than FCC Forms 489, if any,
filed between the date hereof and the Closing Date) together with all
underlying construction permits, are Final Orders of the FCC. PriCellular
is not aware of any reason why (i) those of the PriCellular Authorizations
subject to expiration might not be renewed in the ordinary course or (ii)
any of the PriCellular Authorizations might be revoked. The initial FCC
Form 489 to commence operation of the PriCellular Systems were filed with
the FCC on July 20, 1989, December 18, 1991 and February 24, 1992.
3.12 Licensee Qualifications. PriCellular is legally, technically and
financially qualified to secure FCC approval of the NYOC Assignment
Application and, thereafter, to hold the NYOC Authorizations and to
consummate the transactions contemplated hereby. PriCellular has no
knowledge of any fact that would, under existing law (including the
Communications Act), disqualify PriCellular as an assignee of the NYOC
Authorizations.
3.13 Financial Statements. Except as otherwise set forth therein, the
PriCellular Financial Statements fairly present the assets, Liabilities and
financial condition and results of the PriCellular Systems' operations
indicated in accordance with generally accepted accounting principles
consistently applied, and subject to normal year-end adjustments in the
case of any interim financial statements; provided that the PriCellular
Financial Statements for the Ohio 10 PriCellular System include financial
information for Perry and Hocking counties (the "Retained Counties"), which
areas are not being transferred to Vanguard pursuant to this Agreement.
3.14 Litigation. Except as set forth on Schedule 3.14, there is no
Action, order, writ, injunction, judgment or decree outstanding (other than
rulemaking proceedings affecting the cellular telephone industry
generally), pending or, to PriCellular's knowledge, threatened or
anticipated against, relating to or affecting (i) PriCellular which would
materially impair PriCellular's ability to perform its obligations
hereunder, (ii) the PriCellular Systems, (iii) the PriCellular Systems
Assets, or (iv) the transactions contemplated by this Agreement. Except as
set forth on Schedule 3.14, PriCellular is not in material default with
respect to any judgment, order, writ, injunction or decree of any court or
governmental agency, and there are no unsatisfied judgments against
PriCellular, the PriCellular Systems, the PriCellular Systems Assets, or
activities of PriCellular. There is not a reasonable likelihood of an
adverse determination of any pending Action which would, individually or in
the aggregate, have a material adverse effect on PriCellular, the
PriCellular Systems, the PriCellular Systems Assets, or the ability of
PriCellular to perform its obligations hereunder.
3.15 Labor Matters. Schedule 3.15 identifies all PriCellular
Employees and contains a brief job description for, as well as the
compensation level for, and accrued vacation, sick leave and similar
accrued benefits owed to, each such Person. Schedule 3.15 also summarizes
the vacation, sick leave, holiday and similar policies of PriCellular
applicable to the PriCellular Employees. All of the PriCellular Employees
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are employees at will. PriCellular (i) is not a party to any labor
agreement with respect to the PriCellular Employees with any labor
organization, group or association, and (ii) has not been notified at any
time during the past three years of any attempt by organized labor or its
representatives to make PriCellular conform to demands of organized labor
relating to the PriCellular Employees or to enter into a binding agreement
with organized labor that would cover the PriCellular Employees. There is
no unfair labor practice charge or complaint against PriCellular pending
before the National Labor Relations Board or any other governmental agency
arising out of PriCellular's activities, and to the best of its knowledge,
there are no facts or information that would give rise thereto. There is no
labor strike or labor disturbance pending or, to the best knowledge of
PriCellular, threatened against it nor is any grievance currently being
asserted.
3.16 Compliance with Law. PriCellular and the PriCellular Systems are
in, and the PriCellular Systems are operated in, and all actions and
omissions of PriCellular with respect to the PriCellular Systems are in,
compliance with all applicable federal, state, local and foreign laws,
statutes, orders, ordinances and regulations (including, without
limitation, those relating to zoning and land use, health and sanitation,
environmental protection, occupational safety, and the use of electrical
power) except for noncompliance which would not have a material adverse
effect on the PriCellular Systems or on PriCellular's ability to perform
its obligations hereunder. Specifically, but without limitation,
PriCellular has complied, and is in compliance in all material respects,
with the PriCellular Authorizations, as applicable, and the Communications
Act. PriCellular has not received any written notice to the effect that, or
otherwise been advised that, it is not in compliance with any of such
PriCellular Authorizations, statutes, regulations, orders, ordinances or
other laws, and has not taken any action or failed to take any action that
is a violation of any such laws, statutes, orders, ordinances and
regulations, except for actions or failures to take action which would not
have a material adverse effect on the PriCellular Systems or on
PriCellular's ability to perform its obligations hereunder.
3.17 No Brokers. PriCellular has not entered into any contract,
agreement, arrangement or understanding with any Person to act as a finder
or broker in connection with the transactions contemplated hereby, except
Columbia Capital Corporation.
3.18 No Other Agreements to Sell. PriCellular has no legal
obligation, absolute or contingent, to any other Person to sell
PriCellular, the PriCellular Systems or the PriCellular Systems Assets, or
effect any merger, consolidation or other reorganization of PriCellular, or
to enter into any agreement with respect thereto.
3.19 Intentionally omitted.
3.20 Employee Benefit Plans. All Employee Plans that cover or have
covered the PriCellular Employees are set forth on Schedule 3.20. All
Employee Plans maintained by PriCellular conform in all respects with the
provisions of ERISA and have been administered in compliance with the terms
of such plans and with all filing, reporting and disclosure requirements of
the Code and ERISA. There is no pending or threatened litigation, claim or
assessment against any such Employee Plan. Each Employee Plan that is a
"Pension Plan" is qualified under Section 401 of the Code. PriCellular has
not, and no plan fiduciary of any such Employee Plan has, engaged in any
transaction in violation of Section 406(a) or (b) of ERISA or any
"prohibited transaction" (as defined in Section 4975.145(c)(1) of the Code)
for which no exemption exists under Section 4975(d) of the Code.
PriCellular has never maintained or sponsored, or been required to
contribute to, or withdrawn from, any Multiemployer Plan. PriCellular has
not been subject to any "withdrawal Liability" (as defined in Section 4201
of ERISA) at any time assessed against PriCellular with respect to any
Multiemployer Plan. PriCellular has maintained all Employee Plans with
respect to the PriCellular Employees in a manner that will not give rise to
any successor Liability to Vanguard under ERISA.
3.21 Transactions with Certain Persons. Except as set forth on
Schedule 3.21, no officer, director or employee of PriCellular, nor any
member of any such Person's immediate family, is presently a party to any
material transaction with PriCellular relating to the PriCellular Systems,
including without limitation, any contract, agreement or other arrangement
(i) providing for the furnishing of material
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services by, (ii) providing for the rental of material real or personal
property from, or (iii) otherwise requiring material payments to (other
than for services as officers, directors or employees of PriCellular) any
such Person or any corporation, partnership, trust or other entity in which
any such Person has a substantial interest as a shareholder, officer,
director, trustee or partner.
3.22 Tax Matters.
(a) Payment of Taxes. All Taxes which could give rise to a claim,
lien or other encumbrance on or with respect to any of the PriCellular
Systems Assets, in respect of periods beginning before the Closing Date,
have been timely paid, or will be timely paid, or an adequate reserve
has been established therefor in the PriCellular Financial Statements,
and PriCellular does not have any material Liability for such Taxes in
excess of the amounts so paid or reserves so established.
(b) Lien. There are no liens for Taxes (other than for current
Taxes not yet due and payable) on the PriCellular Systems Assets.
(c) Safe Harbor Lease Property. None of the PriCellular Systems
Assets is property that is required to be treated as being owned by any
other person pursuant to the so-called safe harbor lease provisions of
former Section 168(f)(8) of the Code.
(d) Security for Tax-Exempt Obligations. None of the PriCellular
Systems Assets directly or indirectly secures any debt the interest on
which is tax-exempt under Section 103(a) of the Code.
(e) Tax-Exempt Use Property. None of the PriCellular Systems
Assets is "tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(f) Foreign Person. PriCellular is not a person other than a
United States person within the meaning of the Code.
(g) No Withholding. The disposition of the PriCellular Systems
Assets contemplated hereby is not subject to the tax withholding
provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3
of the Code or of any other provision of law.
3.23 Deposits. Schedule 3.23 contains a complete and accurate list of
all customer deposits held by PriCellular relating to the PriCellular
Systems Assets as of March 31, 1996, which list includes deposits held in
respect of the Retained Counties. Except as set forth on the PriCellular
Closing Balance Sheet, on the Closing Date there will be no customer
deposit liabilities relating to the PriCellular Systems Assets.
3.24 Subscribers and Suppliers. Copies of all written Subscriber
Agreements to which PriCellular is a party and which relate to the
PriCellular Systems are contained in the PriCellular Books and Records.
Except as provided on Schedule 3.24, PriCellular has not entered into any
Subscriber Agreements with respect to the PriCellular Systems outside the
ordinary course of business or for consideration other than cash or barter
transactions provided for in the PriCellular Financial Statements. To
PriCellular's knowledge, none of PriCellular's material subscribers or
suppliers has threatened to terminate or change in a material way its
relationship with PriCellular.
3.25 Insolvency Proceedings. Except as set forth in Schedule 3.25, no
insolvency proceedings of any character, including, without limitation,
bankruptcy, receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, directly affecting PriCellular or any
of the PriCellular Systems Assets, are pending or, to the best of
PriCellular's knowledge, threatened. PriCellular has not made an assignment
for the benefit of creditors, or taken any action with a view to, or which
would constitute a valid basis for, the institution of any such insolvency
proceedings.
3.26 Environmental Matters. Except as set forth in Schedule 3.26, to
the knowledge of PriCellular, (i) there is and has been no Handling of any
Substances in any material quantity, at, on, or from any PriCellular
Operating Site; (ii) there is and has been no presence of Substances in any
material quantity on or under any PriCellular Operating Site regardless of
how the Substance or Substances came to rest there; (iii) no underground
tanks, or asbestos-containing materials are or have been located on or
under any PriCellular Operating Site; (iv) PriCellular has no notice of any
formal or informal assertion by any
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governmental or regulatory agency or other Person that any of them or a
predecessor business or landowner may be a potentially responsible party in
connection with any Substance disposal site used in connection with the
operation of the PriCellular Systems, and there are no pending or
threatened claims or any reasonable basis for damages by any Person against
PriCellular in connection with the PriCellular Systems or any PriCellular
Operating Site or PriCellular Systems Assets under any Environmental Law;
(v) neither PriCellular, nor any Person acting on behalf of PriCellular,
has released any other Person from any claims PriCellular might have, or
might have had, for any matter relating to presence or Handling of
Substances in connection with the operation of the PriCellular Systems;
(vi) no Encumbrance has been, or is, imposed on any of the PriCellular
Systems Assets under any Environmental Law; and (vii) PriCellular has
obtained all permits, licenses, registrations, and other approvals and has
made all reports and notifications required under any Environmental Laws in
connection with the PriCellular Systems, except where a failure to do so
would not have a material adverse effect on the PriCellular Systems, and
PriCellular is in compliance in all material respects with all applicable
Environmental Laws as they apply to the PriCellular Systems; provided,
however, that the representations and warranties in this Section regarding
acts or omissions by parties other than PriCellular are made to the best
knowledge of PriCellular. Schedule 3.26 hereto also contains a list and
brief description of all material filings made by PriCellular to, and any
material notices received by PriCellular from, all governmental authorities
administering Environmental Laws within three years prior to the date
hereof, including without limitation, filings made, corrective action
taken, or citations received by PriCellular, in connection with the
operation of the PriCellular Systems. Except as set forth on Schedule 3.26
no written environmental assessments or impact statements or reports
relating to the PriCellular Real Property have been prepared for, received
by, or requested by or from PriCellular prior to the date hereof.
3.27 32 Dbu Contour. Except as set forth on Schedule 3.27, the
predicted 32 Dbu contour of each of the PriCellular Systems overlaps all of
the geographic areas covered by the MSA or RSA (as applicable) applicable
to such system.
3.28 Material Misstatements Or Omissions. No representations or
warranties by PriCellular in this Agreement, nor any document, exhibit,
statement, certificate or schedule furnished to Vanguard pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits
or will omit to state any material fact necessary to make the statements or
facts contained therein not misleading.
3.29 FCC and Other Governmental Reports. All material reports
required by the Communications Act or required to be filed with the FCC by
PriCellular and/or any of its Affiliates with respect to the PriCellular
Systems have been timely filed and are accurate and complete in all
material respects. All material reports required to be filed with all other
governmental or administrative authorities, federal, state or local, by
PriCellular and/or any of its Affiliates with respect to PriCellular or the
PriCellular Systems have been timely filed and are accurate and complete in
all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VANGUARD
Vanguard hereby makes the following representations and warranties to
PriCellular, all of which have been relied upon by PriCellular in entering into
this Agreement:
4.1 Organization of Vanguard. Each Vanguard entity is a corporation
duly formed under the laws of the state of its incorporation. Each Vanguard
entity has all requisite corporate power and authority to conduct its
business as it is presently being conducted and to own or lease its
Property. Except for the transfer of the NYOC System Assets to PriCellular
as contemplated hereunder, no proceeding for the dissolution, merger,
consolidation or liquidation of Vanguard is pending or threatened, and no
such proceeding is contemplated by Vanguard. To the best knowledge of
Vanguard, each Minority Interest Partnership and Minority Interest
Corporation is a partnership or corporation, as the case may be, duly
organized, validly existing and in good standing under the laws of its
organization and has all requisite corporate or partnership power and
authority to conduct each of its business as it is presently conducted
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and to own or lease its Property. To the best knowledge of Vanguard, except
for the transfer of the Minority Interests to PriCellular as contemplated
hereunder, no proceeding for the dissolution, merger, consolidation or
liquidation of any Minority Interest Partnership or Minority Interest
Corporation is pending or threatened, and no such proceeding is
contemplated by any Minority Interest Partnership or Minority Interest
Corporation.
4.2 Authorization. (i) each Vanguard entity will have all necessary
corporate power and authority and will have taken all corporate action
necessary to enter into this Agreement, consummate the transactions
contemplated hereby and perform its obligations hereunder, and (ii) this
Agreement is, and each agreement executed by a Vanguard entity in
connection with the Closing will be, duly executed and delivered by such
Vanguard entity, and is and will be a legal, valid and binding obligation
of such Vanguard entity enforceable against such Vanguard entity in
accordance with its terms, except as the enforceability hereof and thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and except
for limitations imposed by general principles of equity.
4.3 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.3 (or other schedules as indicated herein), since the Balance
Sheet Date there has not been any:
(a) change in the condition (financial or otherwise), assets,
Liabilities, working capital, reserves, earnings or business of the NYOC
System, except for changes contemplated hereby or changes which have
not, individually or in the aggregate, been material and adverse to the
NYOC System Assets as a whole;
(b) (i) material increase in compensation payable or to become
payable to any NYOC Employee or any bonus payment made or promised to
any NYOC Employee, or (ii) material change in personnel policies,
insurance, retirement, health, or other employee benefits, or any other
compensation arrangements affecting the NYOC Employees;
(c) sale, assignment or transfer of any of the NYOC System Assets,
singly or in the aggregate other than (i) as set forth on Schedule
4.3(c) or (ii) in the ordinary course of business consistent with past
practice when replaced by assets of substantially equivalent value and
function, or any of the Minority Interests;
(d) cancellation of any indebtedness or waiver of any rights of
substantial value to Vanguard in respect of the NYOC System, except in
the ordinary course of business and consistent with past practice;
(e) amendment, cancellation or termination of any NYOC Contract,
NYOC Authorization or other license, lease, contract, agreement,
understanding or instrument material to the NYOC System, or entry into
any contract, lease, agreement or understanding in respect of the NYOC
System, except in the ordinary course of business and consistent with
past practice;
(f) change in accounting methods or practices by Vanguard which
relate to the NYOC System;
(g) material revaluation by Vanguard of any of the NYOC System
Assets, except in the ordinary course of business and consistent with
past practice;
(h) damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the NYOC System Assets,
the NYOC System, or the business prospects of the NYOC System;
(i) imposition of any Encumbrances on any of the NYOC System
Assets, that are material singly or in the aggregate, except for
Permitted Encumbrances;
(j) capital expenditures by Vanguard with respect to the NYOC
System or incurrence of obligations to make any such capital
expenditures, which exceed, in the aggregate, $50,000, other than those
which are provided for in the NYOC Capital Budget;
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(k) payment, discharge or satisfaction of Liabilities, other than
in the ordinary course of business consistent with past practice;
(l) agreement (whether oral or written) by Vanguard to do any of
the foregoing; or
(m) other event or condition of any character which in any one case
or in the aggregate, has materially and adversely affected, or any event
or condition known to Vanguard (other than matters of general public
knowledge relating to general economic conditions or the cellular
telephone industry as a whole) which it is reasonable to expect will in
any one case or in the aggregate, materially and adversely affect in the
future, the condition (financial or otherwise), assets, Liabilities,
working capital, reserves, earnings, business or prospects of the NYOC
System.
4.4 Title to Assets. Vanguard has good title to the NYOC System
Assets except (a) as to owned real estate, as to which Vanguard has good
and marketable fee simple title, (b) as set forth on Schedule 4.4. Except
as set forth on Schedule 4.4, none of the NYOC System Assets is subject to
any Encumbrance, except for Permitted Encumbrances. Upon consummation of
the transactions contemplated hereby, PriCellular will have acquired good
and marketable title in and to, or have a valid leasehold interest in, each
of the NYOC System Assets, free and clear of all Encumbrances except
Permitted Encumbrances.
4.5 Sufficiency of NYOC System Assets. The NYOC System Assets
constitute all of the assets, rights and properties, tangible or
intangible, real or personal, which are required for the operation of the
NYOC System as it is presently conducted, except for the Vanguard Excluded
Assets.
4.6 Real Property. Schedule 4.6 contains the complete street address
and (if available) the legal description of all of the NYOC Real Property
relating to the NYOC System, including without limitation all tower and
transmitter sites. Vanguard holds good and marketable title to the NYOC
Real Property in fee simple absolute except for the NYOC Real Property that
is specifically identified on Schedule 4.6 as leased pursuant to one of the
NYOC Contracts (such agreements constitute the "NYOC Real Property
Leases"), for such leased property Vanguard has a valid leasehold interest,
except as set forth on Schedule 4.6. There are no pending or threatened
condemnation proceedings relating to any of the NYOC Real Property. All
improvements included in the NYOC Real Property are in good operating
condition (except for ordinary wear and tear) with no known material
defects. No improvements on any NYOC Real Property that is utilized as a
Cell Site or point-to-point microwave site in the NYOC System encroach upon
adjoining real estate, and all such improvements are constructed in
conformity with all "setback" lines, easements, and other restrictions, or
rights of record, or that have been established by any applicable building
or safety code or zoning ordinances. No utility lines serving the NYOC
System pass over the lands of others except where appropriate easements
have been obtained. All towers and other structures on the NYOC Real
Property are marked in accordance with the requirements of the NYOC
Authorizations, as the case may be, and the FCC, Federal Aviation
Administration and, all applicable state and local laws, except where the
failure to comply with such requirements or laws would not have a material
adverse effect on the NYOC Authorizations. Vanguard has not received any
written notice for assessments for public improvements against any NYOC
Real Property which remains unpaid. Vanguard has not granted any lease,
sublease or license granting to any Person any right to the possession,
use, occupancy or enjoyment of the property subject to the NYOC Real
Property Leases. All NYOC Real Property is supplied with utilities
(including without limitation water, sewage, disposal, electricity, gas and
telephone) and other services necessary for the operation of such NYOC Real
Property as currently operated.
4.7 Equipment. Vanguard owns and holds good title to all of the NYOC
Equipment, except for the NYOC Equipment that is leased pursuant to one of
the NYOC Contracts. All of the material NYOC Equipment is in good operating
condition and repair (except for ordinary wear and tear) and without
material defects. The NYOC Equipment is sufficient to permit the NYOC
System to operate in all material respects in accordance with the terms of
the NYOC Authorizations. The NYOC Equipment includes the Cell Site
equipment and radio equipment listed on Schedule 4.7 hereto. Except as set
forth on Schedule 4.3, since September 27, 1995 Vanguard has not removed or
transferred any assets that
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would have constituted NYOC Equipment on the date hereof except in the
ordinary course of business. PriCellular shall, at Closing, take title to
and receive all NYOC Equipment that is omitted from Schedule 4.7 but that
is part of the NYOC System Assets.
4.8 Contracts. Schedule 4.8 is a list of all NYOC Contracts
(including NYOC Real Property Leases). Except as set forth on Schedule 4.8,
each NYOC Contract is in full force and effect, binding and enforceable in
accordance with its terms, paid currently, and has not been materially
impaired by any acts or omissions of Vanguard, or any of its
Representatives. Except as set forth on Schedule 4.8, no material NYOC
Contract requires the consent of any other party to the transactions
contemplated by this Agreement. Vanguard is not (and, to the best of
Vanguard's knowledge, no other party is) in material breach or violation
of, or default under any of the NYOC Contracts, and to the best of
Vanguard's knowledge, no event has occurred which would, with or without
notice or the passage of time, constitute such a material default. Except
as set forth on Schedule 4.8, Vanguard is not aware of any intent by any
party to any NYOC Contract to terminate or amend the terms thereof or to
refuse to renew any such NYOC Contract upon expiration of its term.
4.9 No Conflict or Violation. Neither the execution and delivery of
this Agreement, nor any agreements executed in connection herewith, nor the
consummation of the transactions contemplated hereby, will result in (a) a
violation of or a conflict with any provision of the Articles of
Incorporation or By-Laws of any Vanguard entity; (b) provided the Vanguard
Consents are obtained, a breach of, or a default under, or give rise to any
right of termination, cancellation or acceleration of any right or
obligation of Vanguard or any Minority Interest Corporation or Minority
Interest Partnership or to a loss of any benefit relating to the NYOC
System to which Vanguard is entitled under, any term or provision of any
NYOC Contract, NYOC Authorizations, or other contract, agreement or
obligation to which any of Vanguard, the Minority Interest Corporations or
the Minority Interest Partnerships is a party or by which the NYOC System
Assets are bound or subject, or an event which with notice, lapse of time
or both, would result in any such breach or default, (c) provided the
Vanguard Consents are obtained, a violation by any of Vanguard, the
Minority Interest Corporations or the Minority Interest Partnerships of any
applicable law, statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award, of any court or other
governmental instrumentality, or an event which with notice, lapse of time
or both, would result in any such violation, or (d) an imposition of any
Encumbrance other than Permitted Encumbrances on any or all of the NYOC
System Assets or any restriction or charge on the NYOC System, or an event
which with notice, lapse of time or both would result in any such
imposition, or (e) create, constitute or result in an act of bankruptcy,
preference, insolvency or fraudulent conveyance under any bankruptcy law or
other law for the protection of debtors generally.
4.10 Consents and Approvals. Except as set forth on Schedule 4.8,
Schedule 4.10 or Schedule 4.28, no consent, approval or authorization of,
declaration to, or filing or registration with, any governmental, or
regulatory authority, or any other person or entity, is required to be made
or obtained in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
other than the FCC Consents, consent by PSCNY, PSCWV and PUCO and filings
that may be required under the HSR Act.
4.11 Authorizations. Schedule 4.11 contains a list of all of the NYOC
Authorizations. The NYOC Authorizations are all of the licenses, permits
and other authorizations necessary to operate the NYOC System as it is now
operated, and are validly issued in the name of Vanguard, except for those
licenses, permits and other authorizations with respect to which the
failure to hold would not have a material adverse effect on the NYOC System
Assets as a whole. Except as set forth in Schedule 4.11, the NYOC
Authorizations are in full force and effect, are unimpaired by any acts or
omissions of Vanguard, and are valid for the balance of the current license
term, if any, applicable generally to each such NYOC Authorization. The
NYOC FCC Authorizations have been granted by Final Order of the FCC and
Vanguard is the exclusive holder of the NYOC FCC Authorizations. There are
no pending or, to the knowledge of Vanguard, threatened proceedings by or
before the FCC which would result in the revocation, cancellation,
suspension or adverse modification of the NYOC FCC Authorizations, nor to
Vanguard's knowledge are there any facts that would give rise to, or form
the basis for, such a proceeding.
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Vanguard has (and on the Closing Date will have) the absolute and
unrestricted right, power and authority under the Communications Act to
transfer the NYOC System Assets to PriCellular upon consummation of the
transactions contemplated hereby. No renewal of any NYOC FCC Authorization
would constitute a major environmental action under the current rules of
the FCC. The FCC actions granting the current NYOC FCC Authorizations
(other than FCC Forms 489, if any, filed between the date hereof and the
Closing Date) together with all underlying construction permits, are Final
Orders of the FCC. Vanguard is not aware of any reason why (i) those of the
NYOC Authorizations subject to expiration might not be renewed in the
ordinary course or (ii) any of the NYOC Authorizations might be revoked.
The initial FCC Forms 489 to commence operation of the NYOC System were
filed with the FCC on February 18, 1988.
4.12 License Qualifications. Vanguard is legally, technically and
financially qualified to secure FCC approvals of the PriCellular Assignment
Applications and, thereafter to hold the PriCellular Authorizations and to
consummate the transactions contemplated hereby. Vanguard has no knowledge
of any fact that would, under existing law (including the Communications
Act), disqualify Vanguard as an assignee of the PriCellular Authorizations.
4.13 Financial Statements. Except as otherwise set forth therein, the
NYOC Unaudited Financial Statements and the NYOC March 1996 Balance Sheet
do, and the NYOC Audited Financial Statements when delivered pursuant to
Section 6.8 will, fairly present the assets, Liabilities and financial
condition and results of the NYOC System's operations, indicated in
accordance with generally accepted accounting principles consistently
applied, and subject to normal year-end adjustments in the case of any
interim financial statements; provided, however, that Vanguard shall not be
deemed to be in breach of this Section to the extent that the NYOC Audited
Financial Statements, when delivered, contain differences from the NYOC
Unaudited Financial Statements that are not material to the financial
condition or operating results of the NYOC System in the aggregate.
4.14 Litigation. Except as set forth on Schedule 4.14, there is no
Action, order, writ, injunction, judgment or decree outstanding (other than
rulemaking proceedings affecting the cellular telephone industry
generally), pending or, to Vanguard's knowledge, threatened or anticipated
against, relating to or affecting (i) Vanguard, which would materially
impair Vanguard's ability to perform its obligations hereunder, (ii) the
NYOC System, (iii) the NYOC System Assets, or (iv) the transactions
contemplated by this Agreement. Except as set forth on Schedule 4.14,
Vanguard is not in material default with respect to any judgment, order,
writ, injunction or decree of any court or governmental agency, and there
are no unsatisfied judgments against Vanguard, the NYOC System, the NYOC
System Assets or activities of Vanguard. There is not a reasonable
likelihood of an adverse determination of any pending Action which would,
individually or in the aggregate, have a material adverse effect on the
NYOC System, the NYOC System Assets or the ability of Vanguard to perform
its obligations hereunder.
4.15 Labor Matters. Schedule 4.15 identifies all NYOC Employees and
contains a brief job description for, as well as the compensation level
for, and accrued vacation, sick leave and similar accrued benefits owed to,
each such Person. Schedule 4.15 also summarizes the vacation, sick leave,
holiday and similar policies of Vanguard applicable to the NYOC Employees.
All of the NYOC Employees are employees at will. Vanguard (i) is not a
party to any labor agreement with respect to the NYOC Employees with any
labor organization, group or association, and (ii) has not been notified at
any time during the past three years of any attempt by organized labor or
its representatives to make Vanguard conform to demands of organized labor
relating to the NYOC Employees or to enter into a binding agreement with
organized labor that would cover the NYOC Employees. There is no unfair
labor practice charge or complaint against Vanguard pending before the
National Labor Relations Board or any other governmental agency arising out
of Vanguard's activities, and to the best of its knowledge, there are no
facts or information that would give rise thereto. There is no labor strike
or labor disturbance pending or, to the best knowledge of Vanguard,
threatened against it nor is any grievance currently being asserted.
4.16 Compliance with Law. Except with respect to the tower site
located at Cronomer Hill, Orange County, New York, Vanguard and the NYOC
System are in, and the NYOC System is operated
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in, and all actions and omissions of Vanguard with respect to the NYOC
System are in, compliance with all applicable federal, state, local and
foreign laws, statutes, orders, ordinances and regulations (including,
without limitation, those relating to zoning and land use, health, and
sanitation, environmental protection, occupational safety, and the use of
electrical power) except for noncompliance which would not have a material
adverse effect on the NYOC System or on Vanguard's ability to perform its
obligations hereunder. Specifically, but without limitation, Vanguard has
complied, and is in compliance in all material respects, with the NYOC
Authorizations, as applicable, and the Communications Act (except with
respect to the Tower Site located at Cronomer Hill, Orange County, New
York). Vanguard has not received any written notice to the effect that, or
otherwise been advised, that, it is not in compliance with any of such NYOC
Authorizations, statutes, regulations, orders, ordinances or other laws,
and has not taken any action or failed to take any action that is a
violation of any such laws, statutes, orders, ordinances and regulations,
except for actions or failures to take action which would not have a
material adverse effect on the NYOC System (except with respect to the
Tower Site located at Cronomer Hill, Orange County, New York) or on
Vanguard's ability to perform its obligations hereunder.
4.17 No Brokers. Vanguard has not entered into any contract,
agreement, arrangement or understanding with any Person to act as a finder
or broker in connection with the transactions contemplated hereby, except
Columbia Capital Corporation.
4.18 No Other Agreements to Sell. Vanguard has no legal obligation,
absolute or contingent, to any other Person to sell Vanguard, the Vanguard
System or the NYOC System (in whole or in part), or the NYOC System Assets
or effect any merger, consolidation or other reorganization of Vanguard, or
to enter into any agreement with respect thereto.
4.19 Intentionally omitted.
4.20 Employee Benefit Plans. All Employee Plans that cover or have
covered the NYOC Employees are set forth on Schedule 4.20. All Employee
Plans maintained by Vanguard conform in all respects with the provisions of
ERISA and have been administered in compliance with the terms of such plans
and with all filing, reporting and disclosure requirements of the Code and
ERISA. There is no pending or threatened litigation, claim or assessment
against any such Employee Plan. Each Employee Plan that is a "Pension Plan"
is qualified by Section 401 of the Code. Vanguard has not, and no plan
fiduciary of any such Employee Plan has, engaged in any transaction in
violation of Section 406(a) or (b) of ERISA or any "prohibited transaction"
(as defined in Section 497.145(c)(1) of the Code) for which no exemption
exists under Section 4975(d) of the Code. Vanguard has never maintained or
sponsored, or been required to contribute to, or withdrawn from, any
Multiemployer Plan. Vanguard has not been subject to any "withdrawal
Liability" (as defined in Section 4201 of ERISA) at any time assessed
against Vanguard with respect to any Multiemployer Plan. Vanguard has
maintained all Employee Plans applicable to the NYOC Employees in a manner
that will not give rise to any successor Liability to PriCellular under
ERISA.
4.21 Transactions with Certain Persons. Except as set forth on
Schedule 4.21, no officer, director or employee of Vanguard, nor any member
of any such Person's immediate family, is presently a party to any material
transaction with Vanguard relating to the NYOC System, including without
limitation, any contract, agreement or other arrangement (i) providing for
the furnishing of material services by, (ii) providing for the rental of
material real or personal property from, or (iii) otherwise requiring
material payments to (other than for services as officers, directors or
employees of Vanguard) any such Person or any corporation, partnership,
trust or other entity in which any such Person has a substantial interest
as a shareholder, officer, director, trustee or partner.
4.22 Tax Matters.
(a) Payment of Taxes. All Taxes which could give rise to a claim,
lien or other encumbrance on or with respect to any of the NYOC System
Assets or the Minority Interests, in respect of periods beginning before
the Closing Date, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor in the NYOC Financial
Statements, and Vanguard does not
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have any material Liability for such Taxes in excess of the amounts so
paid or reserves so established.
(b) Lien. There are no liens for Taxes (other than for current
Taxes not yet due and payable) on the NYOC System Assets or the Minority
Interests.
(c) Safe Harbor Lease Property. None of the NYOC System Assets is
property that is required to be treated as being owned by any other
person pursuant to the so-called safe harbor lease provisions of former
Section 168(f)(8) of the Code.
(d) Security for Tax-Exempt Obligations. None of the NYOC System
Assets directly or indirectly secures any debt the interest on which is
tax-exempt under Section 103(a) of the Code.
(e) Tax-Exempt Use Property. None of the NYOC System Assets is
"tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(f) Foreign Person. Vanguard is not a person other than a United
States person within the meaning of the Code.
(g) No Withholding. The disposition of the NYOC System Assets and
the Minority Interests contemplated hereby is not subject to the tax
withholding provisions of Section 3406 of the Code, or of Subchapter A
of Chapter 3 of the Code or of any other provision of law.
4.23 Deposits. Schedule 4.23 contains a complete and accurate list of
all customer deposits held by Vanguard relating to the NYOC System Assets,
as of March 31, 1996. Except as set forth on the NYOC Closing Balance
Sheet, on the Closing Date there will be no customer deposit liabilities
relating to the NYOC System Assets.
4.24 Subscribers and Suppliers. Copies of all written Subscriber
Agreements to which Vanguard is a party and which relate to the NYOC System
are contained in the NYOC Books and Records. Except as provided in Schedule
4.24, Vanguard has not entered into any Subscriber Agreements with respect
to the NYOC System outside the ordinary course of business or for
consideration other than cash. To Vanguard's knowledge, none of Vanguard's
material subscribers or suppliers has threatened to terminate or change in
a material way its relationship with Vanguard.
4.25 Insolvency Proceedings. Except as set forth in Schedule 4.25, no
insolvency proceedings of any character, including, without limitation,
bankruptcy, receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, directly affecting Vanguard or any of
the NYOC System Assets, are pending or, to the best of Vanguard's
knowledge, threatened. Vanguard has not made an assignment for the benefit
of creditors, or taken any action with a view to, or which would constitute
a valid basis for, the institution of any such insolvency proceedings.
4.26 Environmental Matters. Except as set forth in Schedule 4.26, to
the knowledge of Vanguard (i) there is and has been no Handling of any
Substances in any material quantity, at, on, or from any NYOC Operating
Site; (ii) there is and has been no presence of Substances in any material
quantity on or under any NYOC Operating Site regardless of how the
Substance or Substances came to rest there; (iii) no underground tanks, or
asbestos-containing materials are or have been located on or under any NYOC
Operating Site; (iv) Vanguard has no notice of any formal or informal
assertion by any governmental or regulatory agency or other Person that any
of them or a predecessor business or landowner may be a potentially
responsible party in connection with any Substance disposal site used in
connection with the operation of the NYOC Systems, and there are no pending
or threatened claims or any reasonable basis for damages by any Person
against Vanguard in connection with the NYOC System or any NYOC Operating
Site or NYOC System Asset under any Environmental Law; (v) neither
Vanguard, nor any Person acting on behalf of Vanguard has released any
other Person from any claims Vanguard might have, or might have had, for
any matter relating to presence or Handling of Substances in connection
with the operation of the NYOC Systems; (vi) no Encumbrance has been, or
is, imposed on any of the NYOC System Assets under any Environmental Law;
and (vii) Vanguard has obtained all permits, licenses, registrations, and
other approvals and has made all reports and notifications required
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under any Environmental Laws in connection with the NYOC System, except
where a failure to do so would not have a material adverse effect on the
NYOC System, and Vanguard is in compliance in all material respects with
all applicable Environmental Laws as they apply to the NYOC System;
provided, however, that the, representations and warranties in this Section
regarding acts or omissions by parties other than Vanguard are made to the
best knowledge of Vanguard. Schedule 4.26 hereto also contains a list and
brief description of all material filings made by Vanguard to, and any
material notices received by Vanguard from, all governmental authorities
administering Environmental Laws within three years prior to the date
hereof, including without limitation, filings made, corrective action
taken, or citations received by Vanguard, in connection with the operation
of the NYOC Systems. Except as set forth on Schedule 4.26, no written
environmental assessments or impact statements or reports relating to the
NYOC Real Property have been prepared for, or received by, or requested by
or from, Vanguard prior the date hereof.
4.27 32 Dbu Contour. Except as set forth on Schedule 4.27, the
predicted 32 Dbu contour of the NYOC System overlaps all of the geographic
area covered by the MSA applicable to such system.
4.28 Minority Interests.
(a) Vanguard is the record and beneficial owner of the Minority
Interests free and clear of any Encumbrances, except for Permitted
Encumbrances and will transfer to PriCellular, at Closing, valid title
to such Minority Interests free and clear of any such Encumbrances,
except Permitted Encumbrances.
(b) Vanguard has made all capital contributions in respect of the
Minority Interests so as to maintain Vanguard's percentage ownership in
the Minority Interest Corporations and Minority Interests Partnerships.
(c) A transfer of the Minority Interests to PriCellular hereunder
shall not (i) require prior approval of the FCC or consent of any
Person, except as set forth in Schedule 4.10 or Schedule 4.28, (ii) in
the case of each Minority Interest Partnership Interest, violate the
partnership agreement of the partnership which issued such Minority
Interest Partnership Interest, or (iii) in the case of each block of
Minority Interest Shares, violate the articles of incorporation or
by-laws of the corporation which issued such Minority Interest Shares.
(d) Except as set forth on Schedule 4.28, no officer, director or
employee of Vanguard, nor any member of any such Person's immediate
family, is presently a party to any material transaction with any
partnership or corporation which issued any of the Minority Interests,
including, without limitation, any contract, agreement or other
arrangement (i) providing for the furnishing of material services by
(ii) providing for the rental of material real or personal property
from, or (iii) otherwise requiring material payments to any such Person
or any corporation, partnership, trust or other entity in which any such
Person has a substantial interest as a shareholder, officer, director,
trustee or partner.
(e) Each of the Minority Interest Percentage Interests set forth on
Schedule 2 hereto is true and accurate with respect to the applicable
Minority Interest. Vanguard shall provide to PriCellular documentation
reasonably sufficient to PriCellular to establish Vanguard's ownership
of the Minority Interests.
4.29 Material Misstatements Or Omissions. No representations or
warranties by Vanguard in this Agreement, nor any document, exhibit,
statement, certificate or schedule furnished to Vanguard pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits
or will omit to state any material fact necessary to make the statements or
facts contained therein not misleading.
4.30 FCC and Other Governmental Reports. All material reports
required by the Communications Act or required to be filed with the FCC by
Vanguard and/or any of its Affiliates with respect to the NYOC System and
the Minority Interests have been timely filed and are accurate and complete
in all material respects. All material reports required to be filed with
all other governmental or administrative authorities, federal, state or
local, by Vanguard and/or any of its Affiliates with respect to Vanguard,
the
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NYOC System or the Minority Interests have been timely filed and are
accurate and complete in all material respects.
4.31 Preparation of Schedule 3.7. Vanguard has prepared Schedule 3.7
to this Agreement in good faith based on Vanguard's on-site due diligence
investigations of the PriCellular Operating Sites. The parties agree that
neither Vanguard's representation in this Section nor the fact that
Schedule 3.7 was prepared by Vanguard in any way qualifies, modifies or
limits PriCellular's representation in Section 3.7 as to, among other
things, the truth and accuracy of Schedule 3.7.
ARTICLE V
ACTIONS PRIOR TO THE CLOSING
PriCellular and Vanguard covenant as follows for the period from the date
hereof through the Closing Date:
5.1 Maintenance of Systems.
(a) PriCellular shall diligently carry on its business with respect to
the PriCellular Systems in the ordinary course consistent with past
practice or the PriCellular Capital Budget. Consistent with the limitations
set forth in Section 5.2:
(1) PriCellular shall make such capital expenditures as are
appropriate in order to continue the growth and development of the
PriCellular Systems consistent with sound business practices; and
(2) PriCellular shall use its reasonable best efforts to maintain
the present character and quality of the business, and maintain in all
material respects the present customers, market share and business
relations, of the PriCellular Systems.
(b) Vanguard shall diligently carry on its business with respect to
the NYOC System in the ordinary course consistent with past practice or
the NYOC Capital Budget. Consistent with the limitations set forth in
Section 5.2:
(1) Vanguard shall make such capital expenditures as are
appropriate in order to continue the growth and development of the
NYOC System consistent with sound business practices; and
(2) Vanguard shall use its reasonable best efforts to maintain
the present character and quality of the business, and maintain in
all material respects the present customers, markets share and
business relations, of the NYOC System.
5.2 Certain Prohibited Transactions. Without limiting the generality
of Section 5.1, and except as expressly permitted or required under this
Agreement, each of PriCellular and Vanguard shall not (and shall not enter
into any agreement to), without the prior written approval of the other
(which approval shall not be unreasonably withheld):
(a) mortgage, pledge or otherwise encumber or sell, transfer or
otherwise dispose of, any of the PriCellular Systems Assets or the NYOC
System Assets except (i) for the sale or rental of Inventory in the
ordinary course of business consistent with past practice, and (ii) for
the sale of PriCellular Equipment (in the case of PriCellular) or NYOC
Equipment (in the case of Vanguard), in the ordinary course of business
and consistent with past practice when replaced by equipment of
substantially equivalent value and function;
(b) cancel, release or assign any indebtedness owed to it or any
claims or right held by it, except in the ordinary course of business
and consistent with past practice;
(c) terminate any PriCellular Contract (in the case of PriCellular)
or NYOC Contract (in the case of Vanguard) or make any change in any
PriCellular Contract (in the case of PriCellular) or
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NYOC Contract (in the case of Vanguard) other than agreements to provide
cellular telephone service to subscribers in the ordinary course of
business and consistent with past practice;
(d) make any change in any method of accounting or accounting
practice;
(e) make any capital expenditure exceeding $10,000, except that
Vanguard may make such capital expenditures as are provided for in the
NYOC Capital Budget regardless of dollar amount without the consent of
PriCellular.
(f) hire or fire any PriCellular Employees (in the case of
PriCellular) or any NYOC Employees (in the case of Vanguard) outside the
ordinary course of business;
(g) enter into any agreement or make any commitment or offer to
provide cellular telephone service to subscribers other than in the
ordinary course of business at rates and other terms consistent with
past practice;
(h) raise any rates charged to Subscribers; or
(i) do any other act (i) that would cause any representation or
warranty of such party in this Agreement to be or become untrue in any
material respect (or knowingly omit or agree or commit to omit to take
any action necessary to prevent any such representation or warranty from
being inaccurate in any material respect), or (ii) that is not either in
the ordinary course of business consistent with past practice or
consistent with the PriCellular Capital Budget (in the case of
PriCellular) or the NYOC Capital Budget (in the case of Vanguard).
5.3 Investigations.
(a) PriCellular shall allow Vanguard, and/or its nominee, and their
respective Representatives, during regular business hours and with at least
three business days advance notice, to make such investigation of its
business, properties, and the PriCellular Books and Records, and to conduct
such examination of the condition of the PriCellular Systems Assets or the
PriCellular Systems as Vanguard deems necessary or advisable to conduct a
standard due diligence review, including familiarizing itself with such
business, properties, books, records, condition and other matters and
verifying the representations any warranties of PriCellular hereunder;
provided, however, that any information obtained from PriCellular is
subject to Section 12.11 of this Agreement concerning confidential
information.
(b) Vanguard shall allow PriCellular, and/or its nominee, and their
respective Representatives, during regular business hours and with at least
three (3) business days advance notice, to make such investigation of the
business, properties, and the NYOC Books and Records and to conduct such
examination of the condition of the Minority Interests, the NYOC System
Assets or the NYOC System, as PriCellular deems necessary or advisable to
conduct a standard due diligence review, including familiarizing itself
with such business, properties book, records, condition and other matters
and verifying the representations and warranties of Vanguard hereunder;
provided, however, that any information obtained from Vanguard is subject
to Section 12.11 of this Agreement concerning confidential information.
5.4 Consents and Best Efforts.
(a) Within five (5) business days after the date of this Agreement,
PriCellular and Vanguard shall join in applications to be filed with the
FCC requesting its written consent to (i) assignment of the PriCellular FCC
Authorizations from PriCellular to Vanguard (the "PriCellular Assignment
Applications"), and (ii) the assignment of the NYOC FCC Authorizations from
Vanguard to PriCellular (the "NYOC Assignment Application") (together with
the PriCellular Assignment Applications, the "Assignment Applications") and
will each diligently and expeditiously take all steps reasonably necessary
to prosecute the Assignment Applications, to obtain the FCC's determination
that grant of the Assignment Applications will serve the public interest,
convenience and necessity, and to have such Assignment Applications granted
simultaneously. The failure by either party to timely file or diligently
prosecute its portions of the Assignment Applications as required by this
Section shall be a material breach of this
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Agreement. All fees charged by the FCC in connection with filing the
PriCellular Assignment Applications shall be paid by PriCellular. All fees
charged by the FCC in connection with filing the NYOC Assignment
Application shall be paid by Vanguard.
(b) Within five (5) business days of the date of this Agreement,
PriCellular shall file an application with the FCC to partition the Perry
and Hocking Counties out of Ohio RSA 10 (the "PriCellular Partition
Application"). PriCellular will diligently and expeditiously take all steps
reasonably necessary to prosecute the PriCellular Partition Application, to
obtain the FCC's determination that grant of the PriCellular Partition
Application will serve the public interest, convenience and necessity, and
to have such PriCellular Partition Application granted on or prior to the
Closing Date. The failure by PriCellular to timely file or diligently
prosecute the PriCellular Partition Application as required by this Section
shall be a material breach of this Agreement. All fees charged by the FCC
in connection with filing the PriCellular Partition Application shall be
paid by PriCellular.
(c) Within ten (10) days of the date of this Agreement, PriCellular
and Vanguard shall join in any applications, filings or registrations
required by any state or local governmental regulatory authority
(including, without limitation, any state public utilities or public
service commissions) to request issuance of orders approving the
transactions contemplated by this Agreement (if such orders are requisite
to the completion of these transactions) and they will diligently and
expeditiously take all steps reasonably necessary to prosecute such
applications. The failure by either party to timely file or diligently
prosecute its portion of any such applications as required by this Section
shall be a material breach of this Agreement. All filing and grant fees
charged by the state regulatory authority in connection with applications
for approvals required to consummate the transactions described herein
(exclusive of Certificates of Authority required by each party after
Closing) shall be paid one-half by Buyer and one-half by Seller.
(d) PriCellular and Vanguard shall each commence, as soon as
practicable, all action required to obtain all other consents including, in
the case of PriCellular, the PriCellular Consents, and in the case of
Vanguard, the Vanguard Consents, and to give all other notices to and make
all other filings with any third parties, including governmental
authorities, necessary to authorize, approve or permit the full and
complete exchange, assignment or transfer of the PriCellular Systems Assets
and the Minority Interests and the NYOC System Assets as herein
contemplated and the parties shall cooperate with each other, with respect
thereto; provided, however, that neither party shall be required to agree
to any materially unfavorable modification of any existing authorization,
contract or agreement in order to obtain such consent. In addition, subject
to the terms and conditions herein provided, each of the parties covenants
and agrees to use its reasonable best efforts to take, or cause to be
taken, all action or do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby and to cause the fulfillment
of such parties' respective obligations hereunder.
(e) Within thirty (30) days of the date of this Agreement, PriCellular
and Vanguard shall make any and all filings that the parties determine are
required under the HSR Act. All filing and grant fees in connection with
such HSR Act filings shall be paid by the party who is obligated to make
such filings.
(f) Vanguard shall diligently and expeditiously take all steps
reasonably necessary to obtain an estoppel certificate with respect to each
of the NYOC Real Property Leases (the "NYOC Estoppel Certificates") and
PriCellular shall diligently and expeditiously take all steps reasonably
necessary to obtain an estoppel certificate with respect to each of the
PriCellular Real Property Leases (the "PriCellular Estoppel Certificates").
The parties agree that the failure to obtain any such estoppel certificates
will not constitute a failure to fulfill a condition to closing, provided
such party shall diligently and expeditiously take all steps reasonably
necessary to obtain such estoppel certificates.
5.5 Notification of Certain Matters. PriCellular and Vanguard shall
each give prompt notice to the other party of (i) any notice or other
communication from any Person alleging that the consent of such Person is
or may be required in connection with the transactions contemplated by this
Agreement; (ii) any notice or other communication from any governmental or
regulatory agency or authority in
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connection with the transactions contemplated by this Agreement or related
to the PriCellular Systems, PriCellular Systems Assets, NYOC System, NYOC
System Assets or the Minority Interests; (iii) any Action commenced, or to
PriCellular's or Vanguard's knowledge threatened, relating to or involving
or otherwise affecting PriCellular, Vanguard, the PriCellular Systems, the
PriCellular Systems Assets, the NYOC System, the NYOC System Assets or the
Minority Interests that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Sections 3.14 or 4.14
hereof or that relate to the consummation of the transactions contemplated
by this Agreement; (iv) the damage or destruction by fire or other casualty
of any PriCellular Systems Asset or NYOC System Asset or any part thereof
or in the event that any PriCellular Systems Asset or NYOC System asset or
any part thereof becomes the subject of any proceeding or, to the knowledge
of PriCellular or Vanguard, threatened proceeding for the taking thereof or
any part thereof or of any right relating thereto by condemnation, eminent
domain or other governmental action; (v) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely to cause
any representation or warranty of such party contained in this Agreement to
be untrue or inaccurate in any material respect any time from the date
hereof to the Closing Date, and (vi) any material failure of such party to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder, and such party shall use all reasonable
efforts to remedy the same.
5.6 No Negotiations. PriCellular and Vanguard each covenant that,
from and after the date hereof and continuing until the Closing Date,
neither party (nor any of their respective partners, representatives,
employees, agents or affiliates) will, directly or indirectly, solicit,
initiate, encourage or participate in negotiations with respect to, or
furnish or cause or permit to be furnished any information to any person
(other than such parties' respective Affiliates or their representatives)
in connection with any inquiry or offer for any purchase or sale of
PriCellular, Vanguard, the PriCellular Systems, the PriCellular Systems
Assets, the NYOC System, the NYOC System Assets, the Minority Interests, or
any acquisition, combination, asset exchange or similar transactions
involving PriCellular, Vanguard or any substantial part of their respective
assets.
5.7 Parkersburg Equipment. On or prior to the Closing Date, Vanguard
and PriCellular shall both enter into an arrangement in form and substance
mutually acceptable to the parties (the "Parkersburg Equipment
Arrangement") pursuant to which Vanguard shall be provided the unencumbered
use, without additional cost or consideration to Vanguard, of the Other
Parkersburg Equipment from the Closing Date to the earlier of (i) the
second anniversary of the Closing Date and (ii) thirty (30) days after
Vanguard installs equipment replacing all of the equipment used by Vanguard
pursuant to such arrangement.
5.8 PriCellular Employees.
(a) PriCellular shall update the list of the PriCellular Employees on
Schedule 3.15 as of the Closing. Prior to such Closing, PriCellular will
not reassign or terminate any management employee, or offer employment to
any Person as a management employee, whose responsibilities include
management or oversight of the PriCellular Systems, without first notifying
Vanguard.
(b) Vanguard shall extend an offer of employment to the PriCellular
Employees (the "PriCellular Hired Employees"), which offers shall be on
terms and conditions comparable in the aggregate to the terms and
conditions of employment in effect as of the Closing. PriCellular waives
any claims against Vanguard or any of the PriCellular Hired Employees
arising from such employment, including without limitation any claims
arising from any employment agreement or non-compete agreement. If
requested to do so by Vanguard, PriCellular shall (i) cooperate with and
use reasonable best efforts to assist Vanguard in its efforts to secure
satisfactory employment arrangements with the PriCellular Hired Employees,
or (ii) assign to Vanguard PriCellular's existing employment agreements
with any of the PriCellular Hired Employees.
(c) Nothing contained in this Agreement shall confer upon any employee
of PriCellular any right with respect to continued employment by
PriCellular, nor shall anything herein interfere with the right of
PriCellular to terminate the employment of any of the employees of
PriCellular at any time, with or
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without cause, or, subject to Vanguard's consent which consent shall not be
unreasonably withheld, the PriCellular Hired Employees at any time, with or
without cause, or restrict PriCellular in the exercise of its independent
business judgment in establishing or modifying any of the terms and
conditions of the employment of the employees of PriCellular or PriCellular
Hired Employees.
(d) No provision of this Agreement shall create any third party
beneficiary rights in any PriCellular Hired Employee or any employee of
PriCellular, any beneficiary or dependents thereof, or any collective
bargaining representative thereof, with respect to the compensation, terms
and conditions of employment and benefits that may be provided to employees
by PriCellular or under any benefit plan that PriCellular may maintain.
5.9 Vanguard Employees.
(a) Vanguard shall update the list of the NYOC Employees on Schedule
4.15 as of the Closing. Prior to such Closing, Vanguard will not reassign
or terminate any management employee, or offer employment to any Person as
a management employee, whose responsibilities include management or
oversight of the NYOC System, without first notifying PriCellular.
(b) PriCellular shall extend an offer of employment to the NYOC
Employees (the "Vanguard Hired Employees"), which offers shall be on terms
and conditions comparable in the aggregate to the terms and conditions of
employment in effect as of the Closing. Vanguard waives any claims against
PriCellular or any of the Vanguard Hired Employees arising from such
employment, including without limitation any claims arising from any
employment agreement or non-compete agreement. If requested to do so by
PriCellular, Vanguard shall either (i) cooperate with and use reasonable
best efforts to assist PriCellular in its efforts to secure satisfactory
employment arrangements with the Vanguard Hired Employees; or (ii) assign
to PriCellular Vanguard's existing employment agreements with any of the
Vanguard Hired Employees.
(c) Nothing contained in this Agreement shall confer upon any employee
of Vanguard any right with respect to continued employment by Vanguard, nor
shall anything herein interfere with the right of Vanguard to terminate the
employment of any of the employees of Vanguard at any time, with or without
cause, or subject to PriCellular's consent, which consent shall not be
unreasonably withheld, the Vanguard Hired Employees at any time, with or
without cause, or restrict Vanguard in the exercise of its independent
business judgment in establishing or modifying any of the terms and
conditions of the employment of the employees of Vanguard or Vanguard Hired
Employees.
(d) No provision of this Agreement shall create any third party
beneficiary rights in any Vanguard Hired Employee or any employee of
Vanguard, any beneficiary or dependents thereof, or any collective
bargaining representative thereof, with respect to the compensation, terms
and conditions of employment and benefits that may be provided to employee
by Vanguard or under any benefit plan that Vanguard may maintain.
5.10 Roaming and Toll Arrangements. On or prior to the Closing Date,
PriCellular and Vanguard or their respective Affiliates will enter into
Roaming Agreements (i) for the markets and at the rates set forth on
Schedule 5.10 hereto, and (ii) otherwise in form and substance mutually
acceptable to the parties.
5.11 Monthly Financials.
(a) PriCellular shall provide Vanguard with a balance sheet and the
related statements of income for the PriCellular Systems for each month
from April 1996 through the Closing Date within fifteen (15) calendar days
after the end of each month, which financial statements shall fairly
present the assets, Liabilities and financial condition and results of the
PriCellular Systems' operations indicated in accordance with generally
accepted accounting principles consistently applied, subject to normal
year-end adjustments.
(b) Vanguard shall provide PriCellular with a balance sheet and the
related statements of income for the NYOC System for each month from April
1996 through the Closing Date within fifteen (15)
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calendar days after the end of each month, which financial statements shall
fairly present the assets, Liabilities and financial condition and results
of the NYOC System's operations indicated in accordance with generally
accepted accounting principles consistently applied, subject to normal
year-end adjustments.
5.12 Capital Contributions With Respect to Minority Interests. With
respect to all Minority Interests, Vanguard shall make all capital
contributions necessary to preserve the Minority Interest Percentage
Interest applicable to each Minority Interest.
5.13 Like-Kind Exchange Treatment. The parties intend this
transaction to constitute a tax-deferred like-kind exchange under Section
1031 of the Code to the maximum extent permitted under the Code, and each
party shall reasonably cooperate with the other in formulating and taking
tax reporting positions consistent with such treatment for income tax
purposes.
5.14 Payments to Columbia Capital Corporation. At Closing,
PriCellular and Vanguard shall each pay to Columbia Capital Corporation a
fee equal to one percent (1%) of the value of the total assets being
conveyed by that party to the other.
5.15 PriCellular Merger. Immediately prior to Closing, PriCellular
Corporation shall cause Ohio River Cellular Corporation ("Ohio River") and
Parkersburg Cellular Telephone Co., Inc. ("Parkersburg"), a subsidiary of
Eastern Wireless Cellular Corporation, to be merged (the "Merger") with and
into Chill Cellular Corporation ("Chill"), with Chill being the surviving
corporation thereof (the "Surviving Corporation"), under the provisions of,
and with the effect provided for under, the Delaware General Corporation
Law. The Certificate of Incorporation and By-laws of Chill immediately
prior to the Merger shall be the Certificate of Incorporation and By-laws
of the Surviving Corporation and the Directors and Officers of Chill
immediately prior to the Merger shall be the directors and officers of the
Surviving Corporation. Following the Merger, the separate corporate
existence of Parkersburg and Ohio River shall cease to exist. Subject to
the terms and condition of this Agreement, the Surviving Corporation shall
be the entity which shall at Closing exchange, transfer and convey the
PriCellular Systems Assets to Vanguard in exchange for the NYOC System
Assets, and assume the PriCellular Assumed Liabilities, all as provided in
Article II hereof. The Surviving Corporation shall succeed to all of the
assets and liabilities of each of Ohio River, Parkersburg and Chill, and no
such assets or liabilities will be transferred to any other party prior to
or in connection with the Merger.
5.16 Environmental Correction and Remediation.
(a) Prior to the Closing, PriCellular and Vanguard shall cooperate
with each other and afford the other party and its representatives access
to the PriCellular Real Property and the NYOC Real Property, respectively,
and any books, records and other materials within the control of such party
relating to such property for the purpose of completing such Phase I
environmental assessments as the other party deems necessary or
appropriate. All environmental assessments undertaken by a party hereunder
shall be at such party's sole expense.
(b) If, prior to Closing, either party wishes to conduct Phase II
environmental assessments or other environmental assessments which involve
invasive sampling on the PriCellular Real Property or the NYOC Real
Property (which assessments shall be at such party's sole cost and
expense), such party shall first obtain the consent of PriCellular (in the
case of the PriCellular Real Property) or Vanguard (in the case of the NYOC
Real Property), which consent shall not be unreasonably withheld. If
Vanguard or PriCellular does not consent to such assessment, then the
requesting party shall have the option of (i) refusing to take title to or
a leasehold or other interest in such property, or any portion thereof, in
which case both parties shall take all reasonable steps to restructure the
transaction contemplated hereby as to exclude such property or portion
thereof, from such transactions, or (ii) terminate this Agreement, in which
case neither party shall have any Liability to the other hereunder; except
that if the property in question consists of vacant land not then used in
the operation of either the PriCellular Systems or the NYOC System, then
the option set forth in clause (ii) of this sentence shall not be
available.
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(c) If any environmental assessment (Phase I or otherwise) completed
with respect to any of the PriCellular Real Property or the NYOC Real
Property reveals any Substance in an amount that would be reasonably likely
to require remediation under any applicable Environmental Laws at, on, or
under any such property (the "Affected Property") (excluding the Hocking
College Lease), then the following provisions shall apply:
(1) The party that is to receive the Affected Property upon Closing
shall have the option of refusing to take title to or a leasehold or any
other interest in such Property, or any portion thereof, in which case
both parties shall take all reasonable steps to restructure the
transactions contemplated hereby so as to exclude such Property or
portion thereof from such transactions.
(2) If the party that is to receive the Affected Property does not
make the election described in the preceding paragraph (1), then the
parties shall negotiate in good faith to determine the expected cost of
any investigation, clean-up, containment, restoration, or other remedial
work that is likely to be necessary to obtain a closure or no-action
letter or similar document from the environmental agency with primary
jurisdiction over the Affected Property. If the amount of such costs
does not exceed $100,000, then the party that owns or leases the
Affected Property prior to Closing shall deliver such amount to the
other party at Closing.
(3) If the amount of such costs exceeds $100,000, then the party
that is to receive the Affected Property upon Closing may, at its
option, either (i) terminate this Agreement, in which case neither party
shall have any Liability to the other hereunder, or (ii) consummate the
transactions contemplated hereby in which case the party that owns or
leases the Affected Property prior to Closing shall deliver $100,000 to
the other party at Closing.
(4) If the parties are unable to agree on the amount of the
expected cost of any investigation, clean-up, containment, restoration
or other remedial work that is likely to be necessary to obtain a
closure or no-action letter or similar document from the environmental
agency with primary jurisdiction over any Affected Property, then the
parties shall submit the environmental assessments relating to the
Affected Property to a nationally-recognized, independent environmental
consulting firm mutually acceptable to the parties which firm shall
determine the amount of such costs. The parties agree that the
determination of such firm shall be final and binding on the parties.
(d) The provisions of Section 5.16(c) and Section 10.2(f) shall not
apply to the premises that are the subject of the Hocking College Lease
(the "Hocking College Premises"). Instead, Vanguard may, in its sole
discretion based on the results of any environmental assessments
conducted with respect to the Hocking College Premises, refuse to take a
leasehold or any other interest in the Hocking College Premises, or any
portion thereof, in which case the Hocking College Premises will be a
PriCellular Excluded Asset and the Hocking College Lease will not be
assumed by Vanguard at Closing.
(e) The party conducting the environmental assessments hereunder
shall indemnify the other party (and its Affiliates) against, and hold
such party (and its Affiliates) harmless from, any and all Damages (as
defined in Section 10.2) arising out of the activities of such party,
its agents or contractors in performing such assessments.
(i) Copies of any environmental assessments performed hereunder
shall be delivered to the other party as promptly as possible upon
completion.
5.17 AT&T Switch Sharing Agreement. PriCellular and Vanguard shall
cooperate with each other and shall use all reasonable efforts to cause
AT&T Wireless to enter into a switch sharing agreement with Vanguard
commencing on the Closing Date and relating to the Parkersburg, WV RSA on
terms which shall be commercially reasonable (the "AT&T Switch Sharing
Agent").
5.18 Wilkes-Barre Switch Sharing Agreement. On or prior to the
Closing Date, Vanguard shall offer to enter into a switch-sharing agreement
between Vanguard and PriCellular relating to the switch
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located in Wilkes-Barre, PA, on terms which shall be commercially
reasonable (the "Wilkes-Barre Switch Sharing Agreement").
5.19 Subscriber Lists. Within ten days after the date hereof, (i)
Vanguard shall provide PriCellular with a list of Subscribers for NYOC
System as of the Balance Sheet Date, and (ii) PriCellular shall provide
Vanguard with a list of Subscribers for each of the PriCellular Systems
including, with respect to Ohio 10 RSA, the zip code of each Subscriber.
For purposes of the net Subscriber adjustment contemplated in Section
2.4(a), Subscribers with zip codes in the Retained Counties shall not be
included in calculating such adjustment.
5.20 Warwick Lease; Cronomer Lease. On or prior to Closing, Vanguard
shall use its reasonable efforts to either (i) transfer to PriCellular a
valid leasehold or license interest in, or (ii) cause the landlord or other
appropriate party to enter into, a lease, sublease, license or sublicense
with PriCellular for, the Cell Site located in Warwick, NY for a term of
not less than five years and on such other terms as are commercially
reasonable. On or prior to Closing, Vanguard shall use its reasonable
efforts to either (i) transfer to PriCellular a valid leasehold or license
interest in, or (ii) cause the landlord or other appropriate party to enter
into, a lease, sublease, license or sublicense with PriCellular for the
Cell Site located at Cronomer Hill Park, NY for a term of not less than
five years and on such other terms as are commercially reasonable.
5.21 Other Parkersburg Equipment. Within ten (10) business days after
the date hereof, PriCellular shall designate, based on the definition of
"Other Parkersburg Equipment" provided herein, the equipment set forth on
Schedule 3.7 that constitutes Other Parkersburg Equipment and deliver a
list of such designated equipment to Vanguard. If Vanguard disagrees with
any designation of PriCellular on such list and the parties are unable to
reach a mutually acceptable resolution of such dispute, the parties shall
submit the dispute to Mr. Mark Kington, and Mr. Kington or his designee
shall determine whether such disputed equipment constitutes Other
Parkersburg Equipment. The parties agree that the determination of Mr.
Kington or his designee shall be final and binding on all parties.
ARTICLE VI
CONDITIONS TO PRICELLULAR'S OBLIGATIONS
The obligations of PriCellular to exchange, transfer and convey the
PriCellular Systems Assets and to complete the related transactions contemplated
by this Agreement are subject, in the discretion of PriCellular, to the
satisfaction or waiver by PriCellular, on or prior to the Closing Date, of each
of the following conditions:
6.1 Representations, Warranties and Covenants. All representations
and warranties of Vanguard contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, and
Vanguard shall have performed in all material respects all agreements and
covenants required hereby to be performed by it, prior to or at the Closing
Date. There shall be delivered to PriCellular a certificate signed by an
officer of Vanguard to the foregoing effect ("Vanguard's Closing
Certificate").
6.2 Consents. Each of the FCC Consents shall have become a Final
Order and none shall contain conditions that are materially adverse to
PriCellular, and all consents of PSCNY, if any, necessary to transfer the
NYOC System Assets and the Minority Interests to PriCellular shall have
been obtained, shall be final and non-appealable, and shall contain no
provisions that are materially adverse to PriCellular. All other Vanguard
Consents shall have been obtained and, in the case of governmental
authorities, the action granting such consents shall have become final and
non-appealable.
6.3 Closing Documents. PriCellular shall have received from Vanguard
the documents and other items to be delivered by Vanguard pursuant to
Section 8.2.
6.4 No Governmental Proceeding or Litigation. No provision of any
applicable law or regulation and no judgment, injunction, order or decree
shall prohibit the consummation of the Closing. No suit, action,
investigation, inquiry or other proceeding by any governmental authority or
other Person shall
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have been instituted or threatened which questions the validity or legality
of the transactions contemplated hereby and which would reasonably be
expected materially and adversely to affect the value of the NYOC System
Assets or the Minority Interests or Vanguard's ability to perform its
obligations hereunder.
6.5 Opinion of Counsel. Vanguard shall have delivered to PriCellular
an opinion of counsel for Vanguard in form and substance mutually
acceptable to the parties (which opinion shall include corporate and FCC
opinions).
6.6 HSR Act. The applicable waiting period, related to the
transactions contemplated hereby, including any extension thereof, under
the HSR Act shall have expired.
6.7 Delivery of the Wilkes-Barre Switch Sharing Agreement. Vanguard
shall have executed and delivered the Wilkes-Barre Switch Sharing
Agreement.
6.8 Audited Financial Statements. Vanguard shall have delivered,
within thirty (30) days after the date hereof, to PriCellular audited
financial statements of Vanguard relating to the NYOC System for the fiscal
year ending December 31, 1995.
6.9 Failure of Condition. If a condition precedent to the Closing is
not satisfied, nothing contained herein shall be deemed to require a party
to terminate this Agreement, rather than to proceed with such Closing, or
to defer such Closing pending satisfaction of such condition.
ARTICLE VII
CONDITIONS TO VANGUARD'S OBLIGATIONS
The obligations of Vanguard to exchange, transfer and convey the NYOC
System Assets and the Minority Interests and to complete the related
transactions contemplated by this Agreement are subject, in the discretion of
Vanguard, to the satisfaction or waiver by Vanguard, on or prior to the Closing
Date, of each of the following conditions:
7.1 Representations, Warranties and Covenants. All representations
and warranties of PriCellular contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, and
PriCellular shall have performed in all material respects all agreements
and covenants required hereby to be performed by it, prior to or at the
Closing Date. There shall be delivered to Vanguard a certificate of an
officer of PriCellular to the foregoing effect ("PriCellular's Closing
Certificate").
7.2 Consents. Each of the FCC Consents shall have become a Final
Order and none shall contain conditions that are materially adverse to
Vanguard. All consents of PSCNY, PSCWV and PUCO, if any, necessary to
transfer the PriCellular Systems Assets to Vanguard shall have been
obtained, shall be final and non-appealable, and contain no provisions
materially adverse to Vanguard. All other PriCellular Consents shall have
been obtained and, in the case of governmental authorities, the action
granting such consents shall have become final and non-appealable.
7.3 Closing Documents. Vanguard shall have received from PriCellular
the documents and other items to be delivered by PriCellular pursuant to
Section 8.1.
7.4 No Governmental Proceeding or Litigation. No provision of any
applicable law or regulation and no judgment, injunction, order or decree
shall prohibit the consummation of the Closing. No suit, action,
investigation, inquiry or other proceeding by any governmental authority or
other Person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which
would reasonably be expected materially and adversely to affect the value
of the PriCellular Systems Assets or PriCellular's ability to perform its
obligations hereunder.
7.5 Opinion of Counsel. PriCellular shall have delivered to Vanguard
an opinion of corporate counsel for PriCellular in form and substance
mutually acceptable to the parties.
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7.6 Opinion of FCC Counsel. PriCellular shall have delivered to
Vanguard an opinion of FCC counsel in form and substance mutually
acceptable to the parties.
7.7 HSR Act. The applicable waiting period relating to the
transactions contemplated hereby, including any extension thereof, under
the HSR Act shall have expired.
7.8 Delivery of the AT&T Switch Sharing Agreement. AT&T Wireless
shall have executed and delivered the AT&T Switch Sharing Agreement.
7.9 List of Other Parkersburg Equipment. Vanguard shall have received
the list of Other Parkersburg Equipment pursuant to Section 5.21, in final
form as agreed to by the parties or as determined by Mr. Kington or his
designee.
7.10 Failure of Condition. If a condition precedent to the Closing is
not satisfied, nothing contained herein shall be deemed to require a party
to terminate this Agreement, rather than to proceed with such Closing, or
to defer such Closing pending satisfaction of such condition.
ARTICLE VIII
CLOSING
The Closing shall occur at the offices of Latham & Watkins in Washington,
D.C. At 10:00 A.M. on the Closing Date:
8.1 Deliveries by PriCellular. PriCellular shall deliver to Vanguard:
(a) any instruments of assignment reasonably required to transfer,
convey and assign the PriCellular Systems Assets to Vanguard, including,
but not limited to:
(i) one or more deeds, in a form according to local custom
conveying all PriCellular Real Property owned by PriCellular;
(ii) one or more bills of conveyance conveying in the aggregate
all of the personal property owned by PriCellular and included in the
PriCellular Systems Assets;
(iii) one or more assignments of lease with respect to the
PriCellular Real Property Leases;
(iv) one or more assignments of all PriCellular Contracts and
all Subscriber Agreements to which PriCellular is a party and all
rights thereunder;
(v) one or more assignments of the PriCellular Authorizations
(to the extent assignable); and
(vi) such other instruments as shall be reasonably requested by
Vanguard to vest in Vanguard, or its nominee, title to the
PriCellular Systems Assets free and clear from all Encumbrances
(other than Permitted Encumbrances) in accordance with the provision
hereof.
(b) the PriCellular Books and Records included in the PriCellular
Systems Assets;
(c) the PriCellular Consents;
(d) updated lists of PriCellular Real Property, and PriCellular
Contracts;
(e) certified copies of resolutions of each PriCellular entity or
other appropriate evidence of corporate action authorizing each
PriCellular entity to enter into and perform its obligations under this
Agreement;
(f) PriCellular's Closing Certificate;
(g) the opinion of PriCellular's counsel described in Section 7.5;
(h) the opinion of FCC Counsel to PriCellular described in Section
7.6;
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(i) an assumption by PriCellular of the Liabilities to be assumed
by PriCellular pursuant to Section 2.3(a);
(j) one or more instruments necessary to assign or convey to
Vanguard all of the accounts receivable relating to the PriCellular
Systems;
(k) written evidence of the Parkersburg Equipment Arrangement duly
executed by PriCellular;
(l) each of the Roaming Agreements referenced in Section 5.10, duly
executed by PriCellular;
(m) all such other documents and instruments as Vanguard or its
counsel shall reasonably request and which shall be reasonably required
to consummate the transactions contemplated hereby.
8.2 Deliveries by Vanguard. Vanguard shall deliver to PriCellular:
(a) any instruments of assignment reasonably required to transfer,
convey and assign the NYOC System Assets to PriCellular, including, but
not limited to:
(i) one or more deeds, in a form according to local custom
conveying all NYOC Real Property owned by Vanguard;
(ii) one or more bills of conveyance conveying in the aggregate
all of the personal property owned by Vanguard and included in the
NYOC System Assets;
(iii) one or more assignments of lease with respect to the NYOC
Real Property Leases;
(iv) one or more assignments of all NYOC Contracts and all
Subscriber Agreements to which Vanguard is a party and all rights
thereunder;
(v) one or more assignments of the NYOC Authorizations (to the
extent assignable); and
(vi) such other instruments as shall be reasonably requested by
PriCellular to vest in PriCellular, or its nominee, title to the NYOC
System Assets free and clear from all Encumbrances (other than
Permitted encumbrances) in accordance with the provision hereof.
(b) the NYOC Books and Records included in the NYOC System Assets;
(c) the Vanguard Consents;
(d) updated lists of NYOC Real Property, NYOC Equipment (including
Schedule 4.7) and NYOC Contracts;
(e) certified copies of resolutions of each Vanguard entity or
other appropriate evidence of corporate or partnership action
authorizing each Vanguard entity to enter into and perform its
obligations under this Agreement;
(f) Vanguard's Closing Certificate;
(g) the opinion of Vanguard's counsel described in Section 6.5;
(h) an assumption by Vanguard of the Liabilities to be assumed by
Vanguard pursuant to Section 2.3(b);
(i) one or more instruments necessary to assign and convey to
PriCellular all of the accounts receivable relating to the NYOC System;
(j) one or more instruments of assignment sufficient to transfer,
convey and assign the Minority Interests to PriCellular, including the
certificates for the Minority Interest Shares duly endorsed or
accompanied by stock powers duly endorsed in the blank, with any
required transfer stamps affixed thereto;
(k) written evidence of the Parkersburg Equipment Arrangement, duly
executed by Vanguard;
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(l) each of the Roaming Agreements referenced in Section 5.10, duly
executed by Vanguard;
(m) all such other documents and instruments as PriCellular or its
counsel shall reasonably request and which shall be reasonably required
to consummate the transaction contemplated hereby.
8.3 Form of Instruments. All of the foregoing instruments shall be in
form and substance, and executed and delivered in a manner, reasonably
satisfactory to the parties' respective counsel.
8.4 Consents to Assignment. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any contract, lease, license, agreement or understanding or any
claim or right or any benefit arising thereunder or resulting therefrom if
an attempted assignment thereof, without the consent of a third party
thereto, would constitute a breach thereof or in any way adversely affect
the rights thereunder of the party to whom such instrument is to be
assigned. PriCellular and Vanguard will each use their reasonable efforts
(but without any payment of money by either party) to obtain the consent of
the other parties to any such contract, lease, license, agreement or
understanding, claim or right or any benefit arising thereunder for the
assignment thereof to PriCellular or Vanguard, as the case may be, as such
party may request. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would materially affect the
rights thereunder so that the proposed assignee would not in fact receive
all such rights, the proposed assignor will cooperate with the proposed
assignee, in a mutually agreeable arrangement under which the proposed
assignor would provide to the proposed assignee the benefits under any such
contract, lease, license, agreement or understanding, claim or right,
including without limitation, subcontracting, sub-leasing, sub-licensing or
the enforcement for the benefit of the proposed assignee of any and all
rights of the proposed assignor against a third party hereto arising out of
the breach or cancellation by such third party or otherwise.
8.5 Allocation. Vanguard and PriCellular agree that the PriCellular
Systems Assets, the NYOC System Assets and the Minority Interests will be
appraised (which appraisal shall not be at the expense of PriCellular) by
the appraisal firm of Bond & Picaro, which appraisal, once approved and
accepted by each of Vanguard and PriCellular (which approval and acceptance
shall not be unreasonably withheld), shall be conclusive between the
parties hereto (after such acceptance and approval, the "Appraisal"). Each
of Vanguard and PriCellular shall cause to be prepared IRS Forms 8594
reflecting (x) the allocation of consideration given by it (or such other
entity, as the case may be) among the assets received, based upon the fair
market values of the relevant assets as set forth in the Appraisal, and (y)
such other information as is required by Section 1060 of the Code and IRS
Form 8594. In making such allocations of consideration given by a party and
reflecting such allocations in an IRS Form 8594, any like-kind property
given and any other property or money which is treated as given in exchange
for like-kind property received in the exchange shall be excluded from the
consideration to be allocated under Section 1060 of the Code, pursuant to
Treas. Reg. sec. 1.1060-1T(b)(4). Each of Vanguard and PriCellular shall
deliver drafts of each such form to the other party for coordination and
approval, which approval shall not be unreasonably withheld, by the date
which is 45 days prior to the earliest of the dates by which any entity
exchanging assets hereunder must file its federal income tax return for the
taxable year in which the exchange occurs. Vanguard and PriCellular, shall
each file with their respective federal income tax returns for the tax year
in which the Closing occurs, IRS Forms 8594 containing the information
agreed upon as provided above. Except as required by law or any tax
authority, each of Vanguard and PriCellular shall report, or cause to be
reported, the transactions contemplated hereby for income tax purposes
(including, but not limited to, on their respective income tax returns,
before any governmental agency charged with the collection of income tax or
in any judicial proceeding concerning the income tax consequences of the
exchange of assets hereunder) in a manner consistent with the information
agreed upon pursuant to this section and contained in the relevant IRS Form
8594. The parties further agree to calculate and report gain or loss from
property relinquished in the exchange and the basis in property received in
the exchange in accordance with the values of the relevant assets as found
in the Appraisal for income tax purposes. Notwithstanding any other
provision of this Agreement, the provisions of this Section 8.5 shall
survive the Closing without limitation.
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ARTICLE IX
ACTIONS BY PRICELLULAR
AND VANGUARD AFTER THE CLOSING
9.1 Books and Records. For a period of seven (7) years after the Closing
Date, each of PriCellular and Vanguard shall afford the other party and its
representatives, during regular business hours and with at least three (3)
business days advance notice, access to the PriCellular Books and Records and
the NYOC Books and Records, respectively, and relevant personnel that pertain to
the operations of the PriCellular Systems or the NYOC System, as the case may
be, prior to the Closing Date. The party seeking such access shall make every
reasonable effort to ensure that such activities do not interfere with the
operation of the business of the party providing access to such books and
records or personnel. The party seeking such access shall have the right to make
copies of the foregoing items for any proper purpose at their own expense.
9.2 Billing and Other Transition Matters. After the Closing Date,
(a) the parties shall cooperate with each other in good faith to
resolve all transitional matters, including the billing of customers of the
PriCellular Systems and the NYOC System;
(b) Vanguard will promptly pay to PriCellular when received all monies
received by Vanguard with respect to the Transferred Current Assets
transferred by Vanguard to PriCellular or the operation of NYOC System
Assets after the Closing or any claim or right or any benefit arising
thereunder, except to the extent the same represents a Vanguard Excluded
Asset, and PriCellular will promptly pay to Vanguard when received all
monies received by PriCellular with respect to the Transferred Current
Assets transferred by PriCellular to Vanguard or the operation of
PriCellular Systems Assets after the Closing or any claim or right or any
benefit arising thereunder, except to the extent the same represents a
PriCellular Excluded Asset. In such event, PriCellular and Vanguard shall,
to the extent the material benefits therefrom and obligations thereunder
have not been provided by alternate arrangements satisfactory to both
parties, negotiate in good faith an adjustment to the extent not otherwise
adjusted pursuant to Section 2.5 hereof; and
(c) Vanguard will promptly deliver, by fax or courier, to PriCellular
when received all bills with respect to the operation of NYOC System Assets
after the Closing that relate to PriCellular Assumed Liabilities, and
PriCellular will promptly deliver, by fax or courier, to Vanguard when
received all bills with respect to the operation of PriCellular Systems
Assets after the Closing that relate to Vanguard Assumed Liabilities.
9.3 Further Assurances. On and after the Closing Date, PriCellular and
Vanguard will take all appropriate action and execute all documents, instruments
or conveyances of any kind which may be reasonably necessary or advisable to
carry out any of the provisions hereof.
ARTICLE X
INDEMNIFICATION
10.1 Survival of Representations, Etc. All statements contained in the
Schedules hereto or in any certificate, schedule, exhibit or instrument or
conveyance delivered by or on behalf of the parties pursuant to this Agreement
or in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the parties hereunder. The representations,
warranties, covenants and agreements of PriCellular and Vanguard contained
herein shall survive the consummation of the transactions contemplated hereby
and the Closing Date, without regard to any investigation made by any of the
parties hereto (unless the damaged party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of Closing).
Except as provided in the following sentence, all such representations and
warranties and all claims and causes of action with respect thereto shall
terminate upon expiration of two years after the Closing Date. The
representations and warranties in Sections 3.20 and 4.20 (Employee Benefit
Plans), 3.22 and 4.22 (Tax Matters), Sections 3.26 and 4.26 (Environmental), and
3.28 and 4.29 (Material Misrepresentations or Omissions) shall survive until the
expiration of the applicable statute of limitations
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(with extensions) with respect to the matters addressed in such sections. The
termination of the representations and warranties provided herein shall not
affect the rights of a party in respect of any claim made by such party pursuant
to Section 10.3 in a writing received by the other party prior to the expiration
of the applicable survival period provided herein. In addition, the obligations
of the parties under Section 5.13 (Like-Kind Exchange) shall survive
indefinitely.
10.2 Indemnification.
(a) Subject to the limitations set forth in Sections 10.2(d), 10.2(e)
and 10.2(f), PriCellular shall indemnify Vanguard (and its Affiliates)
against, and hold Vanguard (and its Affiliates) harmless from any and all
damages, claims, costs, obligations, Liabilities, Taxes and expenses,
including without limitation, interest, penalties and reasonable attorneys'
fees (collectively, "Damages"), arising out of (i) the breach of any
warranty, representation, covenant or agreement of PriCellular contained in
this Agreement, (ii) the ownership and operation by PriCellular of the
PriCellular Systems Assets after September 27, 1995 and on or before the
Closing Date, including the Excluded Liabilities of PriCellular (iii) any
Encumbrances on the PriCellular Systems Assets (other than Permitted
Encumbrances); (iv) PriCellular Environmental Expenses; (v) Employee Plans
maintained by or any employment practices of PriCellular on and before the
Closing Date; and (vi) matters under the PriCellular Contracts arising on
or before the Closing Date.
(b) Subject to the limitations set forth in Sections 10.2(d), 10.2(e)
and 10.2(f), Vanguard shall indemnify PriCellular (and its Affiliates)
against, and hold PriCellular (and its Affiliates) harmless from any and
all Damages arising out of (i) the breach of any warranty, representation,
covenant or agreement of Vanguard contained in this Agreement, (ii) the
ownership and operation by Vanguard of the NYOC System Assets after
September 27, 1995 and on or before the Closing Date, including the
Excluded Liabilities of Vanguard, (iii) any Encumbrances on the NYOC System
Assets (other than Permitted Encumbrances), (iv) NYOC Environmental
Expenses, (v) Employee Plans maintained by or any employment practices of
Vanguard on and before the Closing Date, and (vi) matters under the NYOC
Contracts arising on or before the Closing Date.
(c) The term "Damages" as used in this Section 10.2 is not limited to
matters asserted by third parties against PriCellular or Vanguard, and
includes Damages incurred or sustained by PriCellular or Vanguard in the
absence of third party claims.
(d) No party shall make a claim for indemnification hereunder unless
the amount of the Damages for such claim exceeds Twenty-Five Thousand
Dollars ($25,000). Neither party shall be liable to the other under this
Section 10.2 for any Damages until the aggregate amount otherwise due the
party being indemnified exceeds an accumulated total of One Hundred
Thousand Dollars ($100,000). PriCellular shall not be liable for a breach
of the fourth sentence of Section 3.7 until the aggregate amount due to
Vanguard as a result of such breach exceeds an accumulated total value of
$175,000.
(e) If either PriCellular or Vanguard (each a "Transferor") fails to
deliver a valid leasehold or license interest in any lease, sublease,
license or sublicense for any Cell Site being transferred hereunder
(regardless of whether the reason for such invalidity became known to the
other party (the "Transferee") before or after Closing), then the
Transferor shall reimburse the Transferee for the Transferee's actual,
documented, reasonable, out-of-pocket expenses (including, without
limitation, reasonable legal fees and non-internal engineering fees, but
excluding the costs of acquiring land and purchasing new equipment)
incurred as a direct result of such relocation; provided that (a) the
Liability of each of Vanguard or PriCellular under this Section 10.2(e)
shall not exceed $400,000 per Cell Site and shall be limited to claims for
no more than two Cell Sites, (b) the Transferee shall be obligated to
mitigate the cost of such relocation and to achieve such relocation in the
least expensive manner consistent with providing adequate coverage to the
area previously served by the relevant Cell Site and to otherwise minimize
the expenses for which it will seek reimbursement hereunder, and (c) the
rights of any Transferee to obtain reimbursement hereunder shall expire
after the later of (i) two years from the Closing Date or (ii) twelve
months after the Transferee notifies the Transferor (in reasonable
specificity and detail) of its claim under this Section 10.2(e) provided
the Transferee submits such notification in writing within two years
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after the Closing Date. Except for the failure of the Transferor to obtain
the consent of a lessor or licensor necessary to transfer a leasehold or
license interest to a Transferee (regardless of whether such consent was
included on Schedule 3.8, Schedule 4.8 or Schedule 4.10) for which failure
the Transferee shall be entitled to indemnification pursuant to Section
10.2(a) or 10.2(b), reimbursement of expenses under this Section 10.2(e)
shall be the Transferee's sole remedy for the failure of the Transferor to
deliver a valid leasehold or license interest in any lease, sublease,
license or sublicense for any Cell Site to be transferred hereunder, and
neither party is entitled to indemnification for such failure and each
party hereby releases and waives any claim arising from such failure (other
than reimbursement under this Section 10.2(e)).
(f) In addition to the provisions set forth in Section 10.2(d), the
following provisions shall apply to the indemnifications provided above in
Section 10.2(a)(iv) (Pricellular Environmental Expenses) and Section
10.2(b)(iv)(NYOC Environmental Expenses):
(1) Indemnification shall not be provided thereunder for Damages
arising out of PriCellular Environmental Expenses or NYOC Environmental
Expenses that are identified with reasonable particularity and
completeness in the environmental assessments provided for in Section
5.16 hereof;
(2) The indemnifications shall cover 100 percent of Damages arising
out of PriCellular Environmental Expenses and NYOC Environmental
Expenses that relate to acts, activities, omissions, or conditions that
occurred on or after September 27, 1995;
(3) The indemnifications shall cover 50 percent of Damages arising
out of PriCellular Environmental Expenses and NYOC Environmental
Expenses that relate to acts, activities, omissions, or conditions that
occurred before September 27, 1995;
(4) With respect to Damages arising out of third-party claims,
suits, demands, or similar actions, the indemnifications shall expire
four years after the Closing Date, except as to Damages for which a
Claim Notice (as hereinafter defined) has been given to the Indemnitor
(as hereinafter defined) before the expiration of such four-year period;
(5) With respect to Damages other than those described in paragraph
(4), the indemnifications shall expire three (3) years after the Closing
Date, except as to Damages for which a Claim Notice has been given to
the Indemnitor before the expiration of such three-year period and shall
be limited to Damages that are reasonably incurred to address bona fide
environmental, health, or safety concerns; and
(6) All actions required to be taken in connection with any
PriCellular Environmental Expenses or NYOC Environmental Expenses
subject to indemnification hereunder shall be the most cost efficient to
comply with applicable Environmental Laws then in effect or as necessary
to satisfy the requirement of any applicable governmental agency and
which are consistent with the continued use of the property for the same
purposes they are being used on the Closing Date.
(g) Except as expressly provided elsewhere in this Agreement, neither
party shall have any obligation to indemnify the other party for any Taxes
or expenses that the other party may incur as a result of the transactions
contemplated by this Agreement.
(h) The indemnification provisions under this Section 10.2 constitute
the sole remedy of the parties hereunder.
10.3 Notice of Claims.
(a) Either of PriCellular or Vanguard (the "Indemnified Party")
seeking indemnification hereunder shall give to the party obligated to
provide indemnification to such Indemnified Party (the "Indemnitor") a
notice (a "Claim Notice") describing in reasonable detail the facts giving
rise to any claims for indemnification hereunder and shall include in such
Claim Notice (if then known) the amount or the method of computation of the
amount of such claim, and a reference to the provision of this Agreement or
any agreement, document or instrument executed pursuant hereto or in
connection herewith upon which such claim is based; provided, that a Claim
Notice in respect of any action at law or
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suit in equity by or against a third Person as to which indemnification
will be sought shall be given as soon as practicable after the action or
suit is commenced; and provided further, that failure to give such notice
shall not relieve the Indemnitor of its obligations hereunder except to the
extent it shall have been prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification which an Indemnified Party shall be entitled under this
Article 10 shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a judgment or decree of any
court of competent jurisdiction that has become a final order; or (iii) if
the parties agree, by arbitration.
10.4 Third Person Claims. The Indemnitor shall have the right to conduct
and control, through counsel of its choosing and at its own expense, the
defense, compromise or settlement of any third Person claim, action or suit
against an Indemnified Party as to which indemnification will be sought by any
Indemnified Party from any Indemnitor hereunder, and in any case the Indemnified
Party shall cooperate in connection therewith and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnitor in
connection therewith; provided that the Indemnified Party may participate,
through counsel chosen by it and at its own expense, in the defense of any such
claim, action or suit as to which the Indemnitor has so elected to conduct and
control the defense thereof; and provided, further, that the Indemnified Party
shall not, without the written consent of the Indemnitor (which written consent
shall not be unreasonable withheld), pay, compromise, or settle any such claim,
action or suit, except that no such consent shall be required if, following a
written request from the Indemnified Party, the Indemnitor shall fail, within
fourteen (14) days after the making of such request, to acknowledge and agree in
writing that, if such claim, action or suit shall be adversely determined, such
Indemnitor has an obligation to provide indemnification hereunder to such
Indemnified Party. Notwithstanding the foregoing, the Indemnified Party shall
have the right to pay, settle or compromise any such claim, action or suit
without such consent, provided that in such event the Indemnified Party shall
waive any right to indemnity therefor hereunder.
10.5 Bulk Sales. It may not be practicable to comply or attempt to comply
with the procedures of the "Bulk Sales Act" or similar law of any or all of the
states in which the PriCellular Systems Assets or the NYOC System Assets are
situated or of any other state which may be asserted to be applicable to the
transactions contemplated hereby. Accordingly, to induce each other to waive any
requirements for compliance with any or all of such laws, each party hereby
agrees that the indemnity provisions of Section 10.2 hereof shall apply to any
Damages of one party arising out of or resulting from the failure of the other
to comply with any such laws.
ARTICLE XI
DEFAULT AND REMEDIES
11.1 Opportunity to Cure. If either party believes the other to be in
material default or breach hereunder, the former party shall provide the other
with written notice specifying in reasonable detail the nature of such default.
If the default has not been cured by the earlier of (i) the Closing Date, or
(ii) within fourteen (14) days after delivery of that notice, then the party
giving such notice may terminate this Agreement and/or exercise the remedies
available to such party pursuant to this Article 11, subject to the right of the
other party to contest such action through appropriate proceedings, and provided
that the terminating party is not in material default hereunder.
11.2 Remedies. Each of PriCellular and Vanguard agrees that the
PriCellular Systems Assets and the Minority Interests and the NYOC System Assets
each includes unique property that cannot be readily obtained on the open market
and that PriCellular, in respect of the Minority Interests and the NYOC System
Assets, and Vanguard, in respect of the PriCellular Systems Assets, will be
irreparably injured if this Agreement is not specifically enforced. Therefore,
each party shall have the right to obtain decree(s) of specific performance
entitling it to a temporary restraining order, preliminary injunction, or
permanent injunction to specifically enforce and require specific performance of
the terms and provisions of this
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Agreement, and each other agreement, document or instrument contemplated herein.
Each party hereto agrees that notice shall be adequate for the entry of a decree
of specific performance in respect of any such matter (i) in the case of a
temporary restraining order, upon twenty-four (24) hours' prior notice of the
hearing thereof and (ii) in the case of any other proceeding, upon five (5)
days' prior notice of the hearing thereof, and hereby waives all requirements
and demands that non-breaching party give any greater notice of such hearings
and further waives all requirements and demands that the non-breaching party
post a bond or other surety arrangement in connection with the issuance of any
such decree, and further waives the defense in any such suit that the party
bringing suit has an adequate remedy at law and agrees to interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy.
11.3 Absence of FCC Consent. This Agreement may be terminated at the
option of either party upon thirty (30) days prior written notice to the other
if (i) Final Orders approving the PriCellular Partition Application and the
Assignment Applications and (ii) all consents of PSCNY, PSCWV and PUCO, if any,
necessary to effectuate the transactions contemplated hereby (such consents to
be final and non-appealable), in each case have not been obtained by June 30,
1997. Neither party may terminate this Agreement pursuant to this Section if
such party is in material default hereunder, or if a delay in any decision or
determination by the FCC respecting the Assignment Applications has been caused,
or materially contributed to, by such party's action or inaction with respect to
the Assignment Applications.
11.4 Designation for Hearing. The time for FCC Consent provided in Section
11.3 notwithstanding, either party may terminate this Agreement upon ten (10)
days written notice to the other, if, for any reason, the PriCellular Partition
Application or one or both Assignment Applications are designated for hearing by
the FCC and the terminating party is not in default hereunder; provided,
however, that such notice is given on or prior to the Closing Date. Upon
termination pursuant to this subsection, the parties shall be released and
discharged of all obligations hereunder except for damages resulting from
breaches of this Agreement occurring prior to such termination.
11.5 Failure of Condition Precedent to Closing.
This Agreement may be terminated:
(a) by PriCellular, without Liability of PriCellular or any of its
Affiliates or Representatives, if a condition to PriCellular's
performance set forth in Article 6 of this Agreement shall not have been
satisfied or waived on or before the Closing Date;
(b) by Vanguard, without Liability of Vanguard or any of its
Affiliates or Representatives, if a condition to Vanguard's performance
set forth in Article 7 of this Agreement shall not have been satisfied
or waived on or before the Closing Date; and
(c) as contemplated by Section 5.16.
11.6 Damage to Assets.
(a) Except as provided in this Section, the risk of loss or damage to,
shall be upon PriCellular (with respect to the PriCellular Systems Assets)
and Vanguard (with respect to the NYOC System Assets) at all times prior to
the Closing Date. PriCellular and Vanguard shall each maintain all-risk
insurance coverage and protection on the PriCellular Systems and the
PriCellular Systems Assets and the NYOC System and NYOC System Assets,
respectively, in accordance with their current practices. In the event of
material loss or damage prior to the Closing Date, the party experiencing
such loss or damage shall promptly notify the other party thereof and use
its best efforts, and use all available insurance proceeds, to repair,
replace or restore the lost or damaged property to its former condition as
soon as possible, provided that the Liability of the party experiencing
such loss or damage hereunder shall be limited to such insurance proceeds.
If such repair, replacement, or restoration has not been completed prior to
the Closing Date, the other party may, at its option:
(i) elect to consummate the Closing in which event the amount
necessary to restore the lost or damaged property to its former
condition shall be paid to such party at Closing; or;
43
<PAGE> 49
(ii) elect to postpone the Closing Date, with prior consent of the
FCC, if necessary, for such reasonable period of time (not to exceed
ninety (90) days) as is necessary for the party experiencing such loss
or damage, to repair, replace, or restore the lost or damaged property
to its former condition. If, after the expiration of that extension
period, the lost or damaged property has not been adequately repaired,
replaced or restored, the other party may terminate this Agreement or
elect to consummate the Closing.
(b) For purposes of this Section, loss or damage shall be deemed
material if the reasonable cost to repair, replace, or restore the lost or
damaged property exceeds Twenty-Five Thousand Dollars ($25,000).
(c) If the parties are unable to agree upon the extent of any loss or
damage, the cost to repair, replace or restore any lost or damaged
property, the adequacy of any repair, replacement, or restoration of any
lost or damaged property, or any other matter arising under this Section,
the disagreement shall be referred to a qualified consulting communications
engineer mutually acceptable to both parties who is a member of the
Association of Federal Communications Consulting Engineers, whose decision
shall be final and binding upon each party, and whose fees and expenses
shall be paid one-half by PriCellular and one-half by Vanguard.
11.7 No Limitation of Damages or Remedies. Nothing contained in this
Agreement shall operate or be interpreted as any election of remedies or
limitation on damages or remedies for breach of this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Assignment. Either party may assign its rights hereunder to any of
its Affiliates as long as such assignment does not impair the ability of the
parties to effect the Closing by the Closing Date. Either party may assign its
rights hereunder to any third party with the prior written consent of the other
party, which consent will not be unreasonably withheld. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, and no other Person
shall have any right, benefit or obligation hereunder.
12.2 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
shall be in writing and shall be deemed effective upon actual receipt if
delivered personally; on the date receipt is acknowledged or refused if mailed
by certified mail, postage prepaid, return receipt requested; or on the next
business day if sent for overnight delivery by a nationally recognized,
reputable, overnight courier; and in any such case shall be addressed as
follows:
If to Vanguard:
Vanguard Cellular Financial Corp.
2002 Pisgah Church Road
Suite 300
Greensboro, NC 27455
Attention: Richard C. Rowlenson, Vice President
with a copy to;
Eric A. Stern, Esq.
Latham & Watkins
1001 Pennsylvania Avenue
Suite 1300
Washington, D.C. 20004
44
<PAGE> 50
If to PriCellular:
PriCellular Corporation
45 Rockefeller Center
New York, New York 10020
Attention: Robert Price, President
with a copy to;
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John W. Buttrick, Esq.
or to such other place and with such other copies as either party may designate
as to it self by written notice to the others.
12.3 Choice of Law. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of New York without
regard for the conflicts of laws provided thereof.
12.4 Entire Agreement, Amendments and Waivers. This Agreement, together
with all exhibits and schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, including the letter of Intent executed by the parties
on May 13 and 14, 1996 (the "Letter") except for the confidentiality provisions
of Paragraph 11 of the Letter, which shall remain in full force and effect. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such wavier
constitute a continuing waiver unless otherwise expressly provided.
12.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.6 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
12.7 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
12.8 Responsibility for Certain Taxes and Expenses. Any transfer,
documentary, sales, use, stamp or other Taxes assessed upon or with respect to
the transfer of the PriCellular Systems Assets shall be paid by PriCellular, and
any transfer, documentary, sales, use, stamp, or other Taxes assessed upon or
with respect to the transfer of the NYOC System Assets and Minority Interests
shall be paid by Vanguard. Vanguard shall pay the real and personal property
Taxes assessed upon or with respect to the NYOC System Assets and the Minority
Interests accrued through the date of Closing, and the real and personal
property Taxes assessed upon or with respect to the PriCellular Systems Assets
accruing after the Date of Closing, in each case based upon a ratable daily
accrual of such Taxes. PriCellular shall pay the real and personal property
Taxes assessed upon or with respect to the PriCellular Systems Assets accrued
through the date of Closing, and the real and personal property Taxes assessed
upon or with respect to the NYOC System Assets and the Minority Interests
accruing after the date of Closing, in each case based upon a ratable daily
accrual of such Taxes. Except as otherwise provided in this Agreement, each
party will be liable for its own legal, engineering and other costs and
expenses, incurred in connection with the negotiation, preparation, execution or
performance of this Agreement. Neither party shall be responsible for any
broker's or finder's fee related to this transaction that is claimed through the
other.
45
<PAGE> 51
12.9 Schedules and Exhibits. The Schedules and Exhibits to this Agreement
are a material part hereof and shall be treated as is fully incorporated into
the body of the Agreement.
12.10 Publicity. Each of the parties hereto will cooperate in the
development and distribution of all news releases and other public disclosures
relating to the transactions contemplated hereby and will each ensure that no
such releases or disclosures are made without prior notice and approval of the
other, unless otherwise required by applicable law.
12.11 Confidential Information.
(a) Each of PriCellular and Vanguard on behalf of itself, and its
Representatives and Affiliates, agrees until the earlier of three years
from the date hereof or the Closing Date to maintain the confidentiality of
data and other proprietary information concerning the other and/or its
Affiliates which has been made or will be made available or disclosed to it
in connection with the transactions contemplated hereby, except (i) as
required by any party to enforce the rights of such party under this
Agreement; (ii) as required to obtain any Consent; (iii) in connection with
any disclosures required in connection with any efforts to obtain
financing; or (iv) in connection with any disclosures required by law.
Notwithstanding the foregoing, each party may disclose any such information
to its partners, employees, lenders, representatives and agents, and such
persons shall be informed of the confidential nature of such information
and shall be directed and shall agree to treat such information
confidentially.
(b) In the event of the termination of this Agreement for any reason
whatsoever, each party shall return to the other all documents, work papers
and other material (including all copies thereof) obtained in connection
with the transactions contemplated hereby and will use all reasonable
efforts, including instructing any of its employees and others who have had
access to such information, to keep confidential and not to use any such
information, unless such information is now, or is hereafter disclosed,
through no act or omission of such party, in any manner making it available
to the general public.
(c) The provisions of this Section 12.11 do not apply to information
received by one party in connection with the transactions contemplated
hereby which (i) is or becomes generally available to the public other than
as a result of a disclosure by such party or its Representatives, (ii) was
within such party's possession prior to its being furnished to such party
by or on behalf of the other party in connection with the transactions
contemplated hereby, provided that the source of such information was not
known by such party to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to the
other party or any other Person with respect to such information or (iii)
becomes available to such party on a non-confidential basis from a source
other than the other party or any of its Representatives, provided that
such source is not bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the other
party or any other Person with respect to such information.
12.12 Relationship of Parties. This Agreement does not create a
partnership or joint venture between any or all of the parties to this
Agreement.
12.13 Consent to Jurisdiction. The parties hereby irrevocably (i) submit
to the jurisdiction of the United States District Court sitting in the State of
Delaware with respect to any suit, action or proceeding relating to this
Agreement or any other agreement entered into in connection with the
transactions contemplated hereby, and agree that any such action, suit or
proceeding shall be brought only in such jurisdiction and court, (ii) waive any
objection which they may ow or hereafter have to the laying of venue of any such
suit, action or proceeding brought in such court and any claim that any such
suit action or proceeding brought in such court has been brought in an
inconvenient forum, (iii) waive the right to object that such court does not
have jurisdiction over them, and (iv) consent to the service of process in any
such suit, action or proceeding by the mailing of copies of such process to the
parties by certified mail to the addresses indicated in this Agreement or at
such other addresses of which PriCellular or Vanguard, as the case may be, shall
have received written notice. Nothing herein shall preclude any party from
enforcing any judgment obtained in the United States District Court for the
District of Columbia in any other jurisdiction.
46
<PAGE> 52
IN WITNESS WHEREOF, the parties here to have executed this Agreement, or
have caused this Agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
first above written.
PRICELLULAR CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EASTERN WIRELESS
CELLULAR CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CHILL CELLULAR CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
OHIO RIVER CELLULAR CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PARKERSBURG CELLULAR
TELEPHONE CO., INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
VANGUARD CELLULAR FINANCIAL CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
47
<PAGE> 53
ORANGE COUNTY CELLULAR
TELEPHONE CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
VANGUARD CELLULAR OPERATING CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
WARREN AND LEWIS, LTD.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
48
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 54993
<SECURITIES> 0
<RECEIVABLES> 13872
<ALLOWANCES> 2443
<INVENTORY> 1946
<CURRENT-ASSETS> 71521
<PP&E> 66372
<DEPRECIATION> 10124
<TOTAL-ASSETS> 568161
<CURRENT-LIABILITIES> 19975
<BONDS> 0
0
1
<COMMON> A 136
[COMMON] B 172
<OTHER-SE> 191941
<TOTAL-LIABILITY-AND-EQUITY> 568161
<SALES> 44711
<TOTAL-REVENUES> 48368
<CGS> 16935
<TOTAL-COSTS> 42033
<OTHER-EXPENSES> (500)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19137
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (12302)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12302)
<EPS-PRIMARY> (.50)
<EPS-DILUTED> 0
</TABLE>
