SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 1996
DATA TRANSMISSION NETWORK CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15405 47-0669375
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
9110 West Dodge Road, Suite 200, Omaha, Nebraska 68114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (402) 390-2328
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Item 2. Acquisition or Disposition of Assets.
On May 3, 1996, the registrant acquired substantially all of the assets
of Broadcast Partners pursuant to that certain Asset Purchase and Sale Agreement
of the same date between the registrant and Broadcast Partners, a copy of which
is filed as an Exhibit to this Form 8-K Current Report. Broadcast Partners is a
Delaware general partnership consisting of affiliated companies of Pioneer
Hi-Bred International, Inc. (NYSE: PHB), Farmland Industries, Inc., and Illinois
Agricultural Service Company. The primary business of Broadcast Partners was
providing time-sensitive information and communication services to agricultural
producers via a satellite delivery system.
The assets of Broadcast Partners acquired by the registrant include all
of the tangible and intangible property necessary to serve the customers of
Broadcast Partners (including all satellite "dishes", satellite receivers, data
boxes, phone modems, video monitors, cables, and transmission system hardware
and software), its current assets, its service agreements with customers, its
operating contracts (including agreements with information suppliers and joint
venture partners), its operating leases, its trademarks and service marks and
the goodwill of its business. The registrant intends to continue to use the
physical assets acquired from Broadcast Partners for the same purpose.
The acquisition consideration given to Broadcast Partners consisted of
$44,468,000 in cash, the registrant's secured promissory note in the amount of
$18,732,000 (which is part of the term loans used by the registrant to finance
the acquisition as described below), and the registrant's assumption of certain
liabilities of Broadcast Partners consisting generally of trade accounts
payable, accrued payroll and other accrued liabilities incurred in the ordinary
course of the business of Broadcast Partners. These liabilities are estimated at
$9,500,000. The registrant also assumed the obligations of Broadcast Partners
under various customer contracts and assignable operating agreements and leases
which become due or are to be performed after the closing of the acquisition.
The principle followed by the registrant in establishing the amount of the
acquisition consideration was to multiply the trailing annual operating cash
flow (operating income before depreciation and amortization expense) from
Broadcast Partners' operations by a multiple of seven.
As part of the acquisition, the registrant entered into separate
service agreements with each of the parent companies of the three partners of
Broadcast Partners, pursuant to which the registrant will sell to such companies
communication services over the registrant's satellite broadcast systems
(including the broadcast system acquired from Broadcast Partners). In addition,
for additional consideration of $300,000 in the aggregate, the registrant will
receive non-competition agreements from Broadcast
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Partners and the parent companies of its partners if the registrant repays in
full before December 31, 1997, the promissory note payable to Broadcast Partners
as mentioned above.
The funds used to finance the acquisition were obtained from (i) the
registrant's private placement of shares of its common stock with institutional
investors consisting of Acorn Investment Trust, Wanger Advisors Trust, the State
of Oregon, and Yost Partnership, L.P., for an aggregate sales price of
$15,010,000 and (ii) secured term loans in an aggregate principal amount of
$48,190,000 (which includes the principal amount of the promissory note of the
registrant payable to Broadcast Partners as mentioned above) borrowed by the
registrant pursuant to a 1996 Term Credit Agreement dated May 3, 1996, with
First National Bank of Omaha, First National Bank, Wahoo, Nebraska, NBD Bank,
Norwest Bank Nebraska, N.A., Farm Credit Services of the Midlands, PCA in care
of AgAmerica, FCB, and Broadcast Partners.
Details of such acquisition also are contained in the news release
issued by the registrant on May 3, 1996, a copy of which is filed as an Exhibit
to this Form 8-K Current Report.
Item 7. Financial Statements and Exhibits.
(a) The required financial statements of Broadcast Partners to be filed
with this Form 8-K Current Report were not available at the time of this filing.
Such financial statements will be filed as an amendment to this Form 8-K Current
Report not later than 60 days after the date of this filing.
(b) The pro forma financial information required to be filed with this
Form 8-K Current Report was not available at the time of this filing. Such pro
forma financial information will be filed as an amendment to this Form 8-K
Current Report not later than 60 days after the date of this filing.
(c) Exhibits
2.1 Asset Purchase and Sale Agreement dated May 3,
1996, between Data Transmission Network Corporation
and Broadcast Partners.
This exhibit does not contain the attachments
identified in the "List of Exhibits and Schedules".
The registrant agrees to furnish supplementally to
the Commission, upon request, a copy of any of the
omitted exhibits or schedules.
99.1 News release of Data Transmission Network
Corporation dated May 3, 1996.
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Signatures
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.
Date: May 16, 1996.
DATA TRANSMISSION NETWORK CORPORATION
By: /s/ Brian L. Larson
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Brian L. Larson, Vice
President, Chief Financial
Officer, Secretary and Treasurer
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DATA TRANSMISSION NETWORK CORPORATION
Exhibit Index
Form 8-K May 16, 1996
Page Number
in
Sequential
Exhibit Numbering System
2.1 Asset Purchase and Sale Agreement 6
dated May 3, 1996, between Data
Transmission Network Corporation
and Broadcast Partners.
99.1 News release of Data Transmission 64
Network Corporation dated
May 3, 1996.
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EXHIBIT 2.1
ASSET PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
BROADCAST PARTNERS
AND
DATA TRANSMISSION NETWORK CORPORATION
Dated May 3, 1996
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TABLE OF CONTENTS
Introduction.............................................................. 1
1. DEFINITIONS....................................................... 1
2. AGREEMENT TO SELL AND PURCHASE THE ASSETS......................... 4
3. LIABILITIES....................................................... 7
4. PURCHASE PRICE................................................... 10
5. CLOSING.......................................................... 11
6. CONDUCT SUBSEQUENT TO CLOSING..................................... 14
7. REPRESENTATIONS AND WARRANTIES OF SELLER.......................... 15
8. REPRESENTATIONS OF BUYER.......................................... 29
9. ABSENCE OF BROKERS................................................ 34
10. SELLERS' EMPLOYEES................................................ 34
11. RISK OF LOSS...................................................... 37
12. EXPENSES OF TRANSACTION........................................... 38
13. AMENDMENTS........................................................ 38
14. NOTICES........................................................... 38
15. SURVIVAL; INDEMNIFICATION......................................... 39
16. ADDITIONAL COVENANTS.............................................. 46
17. NONASSIGNABLE RIGHTS.............................................. 50
18. APPLICABLE LAW.................................................... 50
19. ENTIRE AGREEMENT.................................................. 50
20. BINDING EFFECT.................................................... 51
21. SECTION HEADINGS.................................................. 51
22. INCORPORATION OF EXHIBITS......................................... 51
23. WAIVERS........................................................... 52
24. COUNTERPARTS...................................................... 52
25. SEVERABILITY...................................................... 52
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
A. Balance Sheet Assets
B. Balance Sheet Liabilities
C. Intellectual Property Rights
D. Contracts and Leases
E. Licenses and Approvals
F. Form of Opinion of Seller's Counsel
G. Form of Opinion of Corporate Counsel of the Partners of
Seller
H. Form of Opinion of Buyer's Counsel
I. Insurance
J. Employee Plans
K. Partners
L. List of Employees
M. Indemnification Agreement
Schedules
2B Excluded Assets
8E Material Litigation Involving Buyer
10B List of Employees Not Retained by Buyer
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ASSET PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into as of the 3rd day of May, 1996,
by and between Broadcast Partners, a Delaware general partnership ("Seller"),
and Data Transmission Network Corporation, a Delaware corporation ("Buyer").
Introduction:
Seller desires to sell to Buyer and Buyer desires to purchase from
Seller, upon the terms and subject to the conditions contained herein, the
properties and assets of the Business, as defined below, in consideration of
certain payments by Buyer and the assumption by Buyer of certain of the
liabilities and obligations of the Business disclosed in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants
set forth in this Agreement the parties agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Asset Purchase and Sale Agreement
and all Exhibits and Schedules attached hereto.
"Assets" shall have the meaning as set forth in Section 2(A)
of this Agreement but shall not include the Excluded Assets.
"Balance Sheet Assets" shall mean those assets listed on
Exhibit "A" attached hereto subject to any changes therein which have
occurred in the Ordinary
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Course of Business between the Balance Sheet Date and
the Effective Date.
"Balance Sheet Date" shall mean February 29, 1996.
"Balance Sheet Liabilities" shall mean (i) those liabilities
and obligations of Seller in respect of the Business existing as of the
Balance Sheet Date to the extent that the same are specifically
identified on and/or those liabilities and obligations accrued or
reserved for on the Interim Balance Sheet and remain unpaid and
undischarged on the Closing date, but excluding the costs of any
deferred bonus due and payable to certain executives of Seller as a
result of the transaction contemplated by this Agreement (as such bonus
may be due under the Deferred Bonus Program for Executives adopted by
Seller effective September 1, 1993), the senior indebtedness of Seller
due to its lenders, and the subordinated indebtedness of Seller due to
its partners and (ii) all net dollar increases in trade accounts
payable, accrued payroll and other accrued liabilities of Seller to the
extent the same are incurred in the Ordinary Course of Business of
Seller between the Balance Sheet Date and the Closing date, but only if
and to the extent each remains unpaid and undischarged on the Closing
date.
"Basket Amount" shall mean the level below which no
indemnification pursuant to Section 15 of this Agreement shall be due
as such amount and further definition of the term is set forth in
Section 15 of this Agreement.
"Business" shall mean the satellite and/or electronically
distributed subscription information services of Seller and any other
business of Seller conducted as of the Closing date, which services
include but are not limited to the FarmDayta(R) information service,
the InfobeamSM messaging service and electronically delivered
advertising.
"Closing" shall mean the time at which Seller consummates the
sale of Assets to Buyer against payment by Buyer of the Purchase Price
and assumption of the Buyer of specified liabilities of Seller, which
Closing shall occur simultaneously with the execution and delivery of
this Agreement by Buyer and Seller on May 3, 1996, or on such other
date as the parties mutually agree.
"Effective Date" shall mean 12:01 a.m. on the day
immediately after Closing.
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"Employee Plans" means any pension or retirement plan, any
disability, medical, dental, or other health insurance plan, any life
insurance or other death benefit plan, any profit sharing, deferred
compensation, stock option, bonus, or other incentive plan, any
vacation benefit plan, any severance pay plan, or any other employee
benefit plan or arrangement.
"Excluded Assets" shall have the meaning as defined in Section
2(B) of this Agreement.
"Interim Balance Sheet" means the balance sheet of Seller as
of February 29, 1996, the liability portion of which is attached as
Exhibit "B" to this Agreement.
"Material" or "Materially" shall mean of such a quality or
quantity to cause a significant effect, financially or otherwise.
"Ordinary Course of Business" means, with respect to Seller,
the ordinary operation of the Business consistent with past practices
of Seller; any actions taken by Seller pursuant to the requirements of
law or the contracts, leases and agreements listed on Exhibit "D" shall
be deemed to be an action in the Ordinary Course of Business.
"Permitted Encumbrances" shall mean: (a) any liens which arise
in connection with inventory leases, equipment leases or maintenance
leases which are assigned to Buyer pursuant to this Agreement; (b) in
connection with real property leased by Seller, any easements,
rights-of-way, covenants, consents, reservations, encroachments,
variations, and other similar restrictions, charges or encumbrances
which do not Materially interfere with or Materially affect the use of
such leased premises and which, by their existence alone, does not
impose liability on Buyer; (c) liens for taxes or governmental fees
which are not yet due or payable or which are being contested in good
faith and by appropriate proceedings if adequate reserves thereto are
set forth in Seller's books in accordance with generally accepted
accounting principles and enforcement thereof is stayed, or (d) liens
which do not and would not, individually or in the aggregate, detract
in a Material manner from the value of the Assets or with the use of
such Assets in a manner consistent with their use by Seller as of the
date of execution of this Agreement.
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"Person" shall mean and include any individual, partnership,
joint venture, corporation, limited liability company, trust,
unincorporated organization, government or department or agency thereof
or other form of entity.
"Purchase Price" shall have the meaning as defined in Section
4(A) of this Agreement.
"Subscription Agreements" shall mean all of the customer
agreements of Seller, whether written or oral, relating to the delivery
of services offered or to be offered by the Business to paying end-user
subscribers.
2. Agreement to Sell and Purchase the Assets.
A. Assets. Upon the terms and subject to the conditions
of this Agreement and in reliance on the representations, warranties and
covenants of the parties contained herein, upon the Closing Seller shall sell,
convey, set over, deliver, assign and transfer (or cause to be so sold,
conveyed, set over, delivered, assigned and transferred) to Buyer all of
Seller's right, title and interest in and to the Business and all of the
properties and assets of Seller of every kind, nature and description, tangible
or intangible, wherever situated, belonging to or used in the Business as of the
Closing (the "Assets"), and Buyer shall purchase and acquire, pay for and accept
from Seller the Assets. All tangible Assets shall be transferred in as is, where
is condition unless otherwise provided in this Agreement. The Assets include,
without limitation, the following:
(1) The Business and goodwill as a going concern
of Seller;
(2) The Balance Sheet Assets;
(3) All rights of Seller under the Subscription
Agreements;
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(4) All trade names, trademarks, service marks, copyrights,
patents (and all applications for any of the foregoing and all rights
in any thereof), whether foreign or domestic, together with the right
to sue for past infringement thereof, all inventions or discoveries
(whether patentable or unpatentable) and all software and associated
documentation, formulae, production outlines and product development
records listed on Exhibit "C" attached hereto;
(5) All rights of Seller under contracts, leases and
agreements, including without limitation those contracts, leases and
agreements listed on Exhibit "D" attached hereto (except to the extent
otherwise indicated on Exhibit "D") representing all Material contracts
relating to the Business other than Subscription Agreements;
(6) All licenses, permits, approvals, qualifications,
certificates or the like issued or to be issued or held by Seller with
respect to the Business, including without limitation those listed on
Exhibit "E" attached hereto;
(7) All warranties held by Seller with respect to the Assets
to the extent that such warranties are assignable;
(8) All of Seller's know-how, trade secrets and other
technology or procedures relating to the conduct of the Business;
(9) All of Seller's customer lists, books, records,
engineering data, procedures, systems, models, ratios, instructions,
prescriptions, drawings, blueprints, plans, designs, specifications,
equipment lists, parts lists, descriptions, data, artwork, advertising
material, dealer and distributor lists, customer and trade vendor
correspondence, telephone logs, microfilm, recordings of customer
conversations, bank reconciliations and telephone numbers;
(10) All rights of Seller to any casualty insurance proceeds
payable as a result of any loss or damage to any of Seller's tangible
property occurring prior to the Effective Date which remains unpaid on
the Closing date; and
(11) All tangible and intangible personal property owned by
Seller, wherever situated.
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B. Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, there shall be excluded from the Assets and retained by Seller, to
the extent in existence at the Closing, the following assets (collectively, the
"Excluded Assets"):
(1) Employee Plans and Assets.
All employee benefit plans, benefit arrangements, qualified
benefit or medical plans and welfare plans and the assets
thereof, to the extent the liabilities for such plans are not
fully assumed by Buyer.
(2) Certain Books and Records.
All of (a) Seller's partnership and steering committee minute
books, partnership interest transfer books, partnership
records and partnership books, and originals of account books
of original entry, (b) duplicated copies of any books,
records, accounts, checks, payment records, tax records
(including payroll, unemployment, real estate and other tax
records) and other similar books, records and information of
Seller relating to Seller's operation of the Business and/or
ownership of the Assets prior to the Closing, (c) all records
prepared by or on behalf of Seller in connection with the sale
of the Business and the Assets, and (d) all records and
documents relating to any Excluded Assets.
(3) Rights Under this Agreement.
All of Seller's rights under or pursuant to this Agreement or
any other rights in favor of Seller pursuant to the other
agreements with Buyer contemplated hereby.
(4) Certain Contracts and Unrelated Assets.
(a) The contracts and agreements listed on
Schedule 2B.
(b) Any other assets identified on Schedule 2B.
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(5) The right to use the name "Broadcast Partners" in connection with
the windup and dissolution of the general partnership of Seller.
3. Liabilities
A. Buyer assumes and unconditionally agrees to pay and discharge when
due the following debts, obligations, and liabilities of Seller:
(1) The Balance Sheet Liabilities;
(2) All obligations of Seller associated with the Subscription
Agreements with respect to the period from and after the Effective
Date; and
(3) All obligations of Seller associated with the contracts,
leases and agreements listed on Exhibit "D" (except to the extent
otherwise indicated on Exhibit "D") with respect to the period from and
after the Effective Date.
Buyer hereby agrees to indemnify and hold Seller harmless from any cost or
expense arising out of or relating to any such debts, obligations, or
liabilities assumed by Buyer and any such indemnity shall be without right of
set-off and shall not be subject to any Basket Amount, maximum amount, time
limitation, or any other obligation, limitation, restriction, notice provision
or modification imposed on Seller by Section 15 of this Agreement.
B. Buyer and Seller agree that Buyer is not assuming and shall have no
responsibility for any of the debts, obligations, or liabilities of Seller not
expressly assumed herein, all of which shall remain the responsibility of and
shall be discharged by Seller as they become due, and Seller hereby agrees to
indemnify and hold Buyer harmless from any cost or expense
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arising out of or relating to any such debts, obligations, or liabilities not
expressly assumed by Buyer and any such indemnity shall be without right of
set-off and shall not be subject to any Basket Amount, maximum amount, time
limitation, or any other obligation, limitation, restriction, notice provision
or modification imposed on Buyer by Section 15 of this Agreement. The debts,
obligations and liabilities not to be assumed by Buyer include, without limiting
the generality of the foregoing:
(1) Any liability or obligation of Seller, its partners or
agents, arising out of or in connection with this Agreement or the
transactions contemplated hereby, whether incurred prior to, at, or
subsequent to the Effective Date, including without limitation, any
dissolution, winding up or liquidation of Seller and including any and
all fees and expenses of any attorneys and accountants of Seller;
(2) Any liability or obligation of Seller, its partners or
agents, which have been or may be asserted by the Internal Revenue
Service or any other taxing authority, federal, state or local, with
respect to any tax liability (including all liabilities for interest,
fines or penalties) of Seller, its partners or agents, including,
without limitation, any such liability arising out of or in connection
with this Agreement or the transactions contemplated hereby, unless
specifically assumed by Buyer pursuant to Section 3(C) of this
Agreement;
(3) Any liability or obligation of Seller whether incurred
prior to, at, or subsequent to the Effective Date for any amounts due
or which may be due to any person or entity who is or has been a holder
of any debt or equity security or partnership interest of Seller except
as and to the extent that Buyer has specifically assumed the obligation
to repay the liabilities of Seller identified in this Agreement;
(4) Any liability or obligation incurred by Seller or its
partners or agents after the Effective Date;
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(5) Any liability or obligation specifically stated in this
Agreement or the Exhibits attached hereto as not to be assumed by
Buyer;
(6) Any liability or obligation arising out of any litigation,
suit, proceeding, action, claim or investigation, at law, in equity or
in arbitration, related to Seller's operation of the Business prior to
the Effective Date, except as and to the extent that Buyer has
specifically assumed the obligation to repay the liabilities of Seller
identified in this Agreement.
C. Buyer shall bear sole liability for any filing fee, transfer fee,
use or sales tax or any other tax, fee, cost or expense, other than any income
tax obligations of Seller, which may be due to any governmental or
administrative body or agency arising out of, in connection with or as a result
of the sale and transfer to Buyer of the Assets and the Business, which
liability shall be treated as an obligation of Buyer as if it were a liability
assumed under Section 3(A) of this Agreement and shall not be subject to any
Basket Amount, maximum time limitation or other restriction of Section 15. If
Seller is required to advance or pay such fees or taxes, Buyer shall upon
Seller's request reimburse Seller for its payment of such fees or taxes.
D. As of the Closing, Buyer shall assume, discharge, agree to perform
and indemnify Seller from all liability arising from, out of or in connection
with or otherwise relating to Buyer's operation of the Business and/or ownership
of the Assets after the Closing and any such indemnity shall be without right of
set-off and shall not be subject to any Basket Amount, maximum amount, time
limitation, or any other obligation, limitation,
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restriction, notice provision or modification imposed by Section 15 of this
Agreement.
4. Purchase Price.
A. The Purchase Price for the Assets and the Business shall be the sum
of Sixty Three Million Two Hundred Thousand Dollars ($63,200,000).
B. The Purchase Price shall be paid by Buyer to Seller in U.S. Dollars
at the Closing as follows:
(1) Forty Four Million Four Hundred Sixty Eight Thousand Dollars
($44,468,000.00) shall be paid by wire transfer of immediately available federal
funds; and
(2) Eighteen Million Seven Hundred Thirty Two Thousand Dollars
($18,732,000.00) shall be paid through Buyer's delivery to Seller of Buyer's
senior, secured promissory note in the form of the note due to Seller from Buyer
pursuant to the 1996 Term Credit Agreement by and between Buyer and First
National Bank of Omaha, as servicing bank, and all other participating banks,
which credit agreement shall include Seller as a party (the "FNB- O Loan
Agreement".) Such note shall be referred to herein as the "Note."
C. Buyer and Seller agree that the allocation of the Purchase Price
among the Assets shall be in accordance with the fair market value as follows:
(1) with regard to Seller's subscriber equipment, the Purchase
Price shall be allocated to such equipment based upon an
average value of $825 per complete unit,
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or, in the case of incomplete units, based upon the values
listed below for each individual component: (a) Receiver -
$550; (b) Monitor - $150; (c) Dish & LNB - $120; and (d) Cable
- $5.
(2) with regard to Seller's office equipment, furniture and
fixtures, leasehold improvements, and other tangible
Assets (excluding subscriber equipment), to the extent
such Assets are carried at book value on Seller's
balance sheet as of the Balance Sheet Date, the
Purchase Price shall be allocated to those Assets at
book value; and
(3) all amounts of the Purchase Price in excess of such book value
shall be allocated to goodwill and the going concern value of
the Business, which shall include the value of all customer
relationships.
Buyer and Seller agree to prepare Internal Revenue Service ("IRS") Form 8594 in
accordance with such allocation and timely file such form with the IRS in
accordance with applicable IRS procedures and U.S. Department of Treasury
regulations.
5. Closing.
A. At the Closing, in addition to any other documents specifically
required to be delivered pursuant to this Agreement, Seller shall, in form and
substance reasonably satisfactory to Buyer and its counsel:
(1) Deliver to Buyer such bills of sale, endorsements,
assignments, and other good and sufficient instruments of sale,
assignment, conveyance, and transfer as shall be required to
effectively vest in
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Buyer all of Seller's right, title, and interest in and to all of the
Assets, free and clear of all liens, charges, claims, encumbrances and
equities except for Permitted Encumbrances and encumbrances as
otherwise disclosed in this Agreement and its exhibits and schedules;
(2) Deliver to Buyer all consents to the assignment to Buyer
of each Subscription Agreement, lease, contract, agreement, commitment
or other undertaking comprising, individually or in the aggregate, a
Material part of the Assets that requires such consent;
(3) Deliver to Buyer duly executed resolutions of Seller and
all other persons, committees, or entities required to approve the
actions of Seller, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby;
(4) Deliver to Buyer a certificate signed by an officer of
Seller, dated as of the date of Closing, stating that the
representations and warranties of Seller set forth in Section 7 hereof
are true and correct in all Material respects as of the date of Closing
and that Seller has performed and complied with all agreements,
undertakings, and obligations which were required to be performed and
complied with by it at or prior to the Closing;
(5) Deliver to Buyer an opinion of Seller's legal counsel, as
of the date of the Closing, in the form attached hereto as Exhibit "F";
(6) Deliver to Buyer opinions of corporate counsel of each of
the partners of Seller, as of the date of Closing, in the forms
attached hereto as Exhibit "G";
(7) Deliver to Buyer executed originals (where reasonably
available) of all of the Subscription Agreements, all amendments
thereto, and all extensions and renewals thereof in Seller's
possession;
(8) Deliver to Buyer all account receivable ledgers and
invoices associated with the accounts receivable of Seller, customer
service files of Seller relating to the Subscription Agreements, all
notices, claims, correspondence, performance standard reports, and
other documents, data, information and materials relating to the
Subscription Agreements, which are in Seller's possession, including
Seller's internal financial records subject to a continuing right of
reasonable access by Seller after Closing to review and
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copy such records in connection with Seller's post- Closing windup of
its partnership affairs and termination of its general partnership, its
defense of litigation or its preparation of any reports, filings or
returns to be completed by Seller after Closing;
(9) Deliver to Buyer all microfiche, microfilm, records, voice
authorization recordings, data, input forms, computer transaction
sheets and all other similar information or materials relating to the
servicing of Subscription Agreements;
(10) Deliver to Buyer possession (or in the case of Assets in
the possession of customers, suppliers or subscribers, the right to
such possession subject to the terms of assumed contracts) of the
Balance Sheet Assets together with all other tangible assets of Seller
in place at the locations specified on Exhibit "A";
(11) Deliver to Buyer executed originals (where reasonably
available) of all contracts, leases and agreements set forth on Exhibit
"D" (except to the extent otherwise indicated on Exhibit "D") together
with all Material data, documents, information or materials in Seller's
possession relating to such contracts, leases and agreements;
(12) Deliver to Buyer all Material software used by Seller in
the conduct of the Business, including all documentation and all
necessary license agreements properly assigned to Buyer; and
(13) Deliver to Buyer all Material data, documents,
information or materials theretofore delivered to Seller which are
required by the contracts, leases and agreements set forth on Exhibit
"D" to be returned upon expiration or termination of such contracts,
leases and agreements.
B. At the Closing, in addition to any other documents specifically
required to be delivered pursuant to this Agreement, Buyer shall, in form and
substance satisfactory to Seller and its counsel:
(1) Pay the Purchase Price required to be paid by Buyer at the
Closing pursuant to Section 4;
(2) Deliver to Seller such assumptions or under- takings as
may be reasonably necessary to evidence
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Buyer's agreement and obligation to pay, discharge, and
satisfy the liabilities assumed by it under this Agreement;
(3) Deliver to Seller a certified copy of a resolution of the
Board of Directors of Buyer authorizing the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby;
(4) Deliver to Seller an officer's certificate signed by Greg
T. Sloma, President of Buyer, dated as of the date of the Closing,
stating that the representations and warranties of Buyer set forth in
Section 8 hereof are true and correct in all Material respects as of
the date of the Closing and that Buyer has performed and complied with
all agreements, undertakings, and obligations which were required to be
performed or complied with by it at or prior to the Closing; and
(5) Deliver to Seller the opinion of Buyer's legal counsel,
Abrahams, Kaslow & Cassman, dated as of the date of the Closing, in the
form attached hereto as Exhibit "H".
6. Conduct Subsequent to Closing.
A. From time to time after the Closing, without further consideration,
Seller shall execute and deliver all such other instruments of sale,
assignments, conveyances, and transfers and shall take all such other actions as
are reasonable to more effectively transfer to and vest in Buyer, and to put
Buyer in possession of, any of the Assets.
B. From time to time after the Closing, without further consideration,
Buyer shall execute and deliver all such other instruments of assumption, and
shall take all such other actions as are reasonable to more effectively assume
the obligations to pay, discharge and satisfy all of the liabilities and
obligations assumed by Buyer pursuant to this Agreement.
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C. Except pursuant to a court order or as otherwise required by law,
from and after the Closing, Seller shall not make available or disclose to any
third party any proprietary information conveyed to Buyer pursuant to this
Agreement or make available to any third party any proprietary information
disclosed pursuant to this Agreement. For purposes of this Agreement
"proprietary information" shall include but not be limited to all items listed
on Exhibit "C," all of Seller's know-how, trade secrets and other technology or
procedures relating to the conduct of the Business, and all of Seller's customer
lists, books, records, financial information, engineering data, computer
software, procedures, systems, models, ratios, instructions, prescriptions,
drawings, blueprints, plans, designs, specifications, equipment lists, parts
lists, descriptions, data, artwork, advertising material, dealer and distributor
lists, correspondence, telephone logs, microfilm, recordings of customer
conversations, bank reconciliations and other similar materials except to the
extent that such information (1) is or becomes generally available to the public
other than as a result of a disclosure by Seller, (2) is available to Seller
from an outside source provided that such source is not known by Seller to have
been bound by a confidentiality agreement or other obligation of secrecy prior
to the Effective Date, or (3) is or has been developed independently by Seller
after the Effective Date.
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7. Representations and Warranties of Seller. Subject to and except for
the information which is set forth in a list of exceptions contained in a
schedule attached hereto, Seller represents and warrants to Buyer that:
A. Seller is a general partnership duly organized and validly existing
under the laws of the State of Delaware.
B. Seller has all requisite partnership power and authority to own,
lease and operate the Assets and to carry on the Business as now being
conducted.
C. This Agreement constitutes a valid and legally binding agreement,
enforceable against Seller in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity and public
policy (the "Creditor Exceptions"). The execution and delivery of this Agreement
by Seller and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary partnership action on behalf of Seller and all
necessary corporate or company action of Seller's partners, as applicable.
D. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (1) violate any
provision of or result in the breach of or accelerate or permit the acceleration
of the performance required by the terms of the partnership agreement of
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the Seller, any applicable law, rule, or regulation of any governmental body
known to the Seller, any Material agreement to which the Seller is a party or by
which the Seller may be bound, or any order, judgment, or decree applicable to
the Seller, (2) result in the creation of any security interest, claim, lien,
charge, or encumbrance upon the Assets, (3) terminate or result in the
termination of any agreement described in Section 7(D)(1) above, or (4) in any
Material way affect or violate the terms or conditions of or result in the
cancellation, modification, revocation, or suspension of any of the Material
licenses, approvals, permits or authorizations required by Seller for the
conduct of the Business.
E. Seller has performed all of the obligations required to be performed
by it under any Material lease, contract, commitment, agreement, or arrangement
of any kind which it is a party or by which it is bound; and neither the Seller
nor, to the knowledge of Seller, any other party is in default under any
Material lease, contract, commitment, agreement, or arrangement of any kind
which relates to the Business or the Assets. No event has occurred which, after
the giving of notice or the lapse of time or otherwise, would constitute a
default under, or result in a breach of, any lease, contract, commitment,
agreement, or arrangement which relates to the Business or the Assets.
F. Since the Balance Sheet Date, the Business has been conducted only
in the Ordinary Course of Business and there has been no Material adverse change
in the condition of the Assets,
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the liabilities or the Business. Other than changes in the Ordinary Course of
Business, none of which singly and no combination of which in the aggregate has
been Materially adverse; there has been no damage to or destruction of any
Material asset owned or used by the Seller in the Business; and the Seller has
no knowledge of any threatened occurrence or development which would Materially
adversely affect the condition (financial or otherwise) of the Assets, the
liabilities or the Business.
G. Except for Permitted Encumbrances and except for security interests
or other encumbrances held by Seller's senior lenders, which will be released by
the senior lenders at Closing, Seller has good and marketable title to all of
the Assets (except assets disposed of in the Ordinary Course of Business since
the Balance Sheet Date) free and clear of any Material security interests,
claims, liens, charges, or encumbrances whatsoever.
H. Seller owns and has the power to transfer the trade names,
trademarks, service marks, copyrights, patents and other intellectual property
among the Assets as listed on Exhibit "C," and no trade name, trademark, service
mark, copyright, or patent or other intellectual property other than those
listed on Exhibit "C," is used in, or necessary for, the conduct of the Business
consistent with the manner Seller has conducted the Business prior to the
Closing. Seller has not received any notice of any infringement or claim of
infringement by Seller upon the right of any Person under or in respect to any
patent, license, trademark,
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trade name, service mark, copyright or similar intangible right. None of the
Material services or processes which are provided, sold or used by the Seller
and which are solely under the control or origination of Seller infringe upon
the patents, licenses, trademarks, trade names, service marks, copyrights,
techniques or other proprietary rights of any other Person and to Seller's
knowledge no other services or processes which are provided, sold or used by the
Seller infringe upon the patents, licenses, trademarks, trade names, service
marks, copyrights, techniques or other proprietary rights of any other Person.
The Seller has not received notice of and is not aware of any infringement or
assertion of infringement by any Person of the patents, licenses, trademarks,
trade names, service marks, copyrights, techniques or other proprietary rights
of the Seller listed on Exhibit "C" and to the best knowledge and belief of
Seller, there is no reason to believe that any patent, trademark, trade secret,
service mark, copyright, technique or other proprietary right of Seller listed
on Exhibit "C" is invalid.
I. The Seller has maintained and will continue to maintain until the
Closing insurance on the Assets and the Business, including but not limited to
media liability insurance, of the kinds and in the amounts currently carried by
Seller, all of which insurance and any other insurance policies or coverages
(including but not limited to employee fidelity bonds) are listed in Exhibit I
to this Agreement.
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<PAGE>
J. With respect to the Subscription Agreements, Seller
represents and warrants to Buyer that:
(1) Seller is the contracting party that provides
the services under each of the contracts, and
Seller has full right, power, and authority
to assign to Buyer all of the rights of the
service provider set forth in the contracts,
and such contracts are not subject to
termination or renegotiation as a result of
their assignment to Buyer;
(2) The contracts have all been entered into by
Seller in the Ordinary Course of Business,
and none of the contracts have been
Materially amended subsequent to the Balance
Sheet Date or provide for Seller's fees to be
Materially reduced below the charges in
effect thereunder on the Balance Sheet Date;
(3) To Seller's knowledge, the satellite delivery
system utilized by the Business is currently
capable of handling the volume of data
transmission services required by the
Subscription Agreements and no increased
volume of such services has been promised by
Seller to its customers which would exceed
such capability;
(4) Since the Balance Sheet Date, there are no
outstanding Material credits, monies, or the
like due customers on the Subscriber
Agreements;
(5) Seller has received no written notices of any
warranty or indemnity claims by customers
under the Subscription Agreements which have
not been settled to the satisfaction of the
customer claimant and which either
individually or in the aggregate are
Material;
(6) Since the Balance Sheet Date, any and all
enhancements to services required by the
Subscription Agreements to be provided to
customers have been completed and implemented
in a timely manner and no contract for other
enhancements to services have been entered by
Seller with its customers;
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<PAGE>
(7) Since the Balance Sheet Date, Seller has received no
written notice of default from any customer under any
of the Subscriber Agreements where such would result
in a Material liability; and
(8) Since the Balance Sheet Date, Seller has
received no notice of the filing by any
customer of a petition in bankruptcy,
assignment for the benefit of creditors, a
petition seeking reorganization, composition,
liquidation, dissolution or similar
arrangement where the impact of an adverse
outcome would be Material to the Assets or
the Business.
K. Except for the action captioned Thomas Crowley v. Broadcast
Partners, et al., as previously disclosed by Seller to Buyer, there are no
actions, suits, proceedings, or investigations pending or, to the knowledge of
Seller, threatened in any court or before any governmental agency or
instrumentality against or by the Seller or the Business or the Assets. There
are no actions, suits, proceedings, or investigations pending or, to the
knowledge of Seller, threatened in any court or before any governmental agency
or instrumentality against or by the Seller which would prevent the carrying out
of this Agreement or seek to declare this Agreement unlawful or cause the
rescission thereof. The Seller has not been charged with and, to the best
knowledge of Seller, is not threatened with or under any investigation with
respect to any charge concerning any violation of any federal, state, or local
law, regulation, ordinance, order, or administrative ruling; and the Seller is
not in default with respect to any order, writ, injunction, or decree of any
court, agency, or instrumentality. There are no unsatisfied judgments
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<PAGE>
against the Seller in any court. All action required by the Seller by any
applicable law known to the Seller has been taken; and all reports or returns
which, to the knowledge of Seller, are required to have been filed by the Seller
with any governmental agency or subdivision have been filed.
L. The Seller has all Material licenses, permits, authorizations, and
approvals (governmental or otherwise) which it requires to legally carry on the
Business; and all such licenses permits, authorizations, and approvals are valid
and in good standing. Neither the Seller nor any of its employees is required to
have any other licenses, permits, authorizations, or approvals to legally carry
on the Business. The Seller is not a party to, nor is the Seller subject to or
bound by, any agreement or any judgment, order, writ, injunction, or decree of
any court or governmental body which could Materially prevent or impede the
continuance of the Business. To Seller's knowledge, the Business is not now
being, and within the past three (3) years has not been, conducted in violation
of any Material law, ordinance, or regulation of any governmental entity or
agency.
M. There is no Material asset used or required by the Seller in the
conduct of the Business which is not either owned by the Seller or licensed or
leased to the Seller under one of the leases or licenses listed in Exhibit D to
this Agreement.
N. The Seller has not used any accounting practices which
are not in conformity with generally accepted accounting
principles for the purpose of incorrectly reflecting on its
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<PAGE>
financial statements or in its books of account, or for the purpose of not
reflecting on its financial statements or in its books of account, any of the
assets, liabilities, revenues, or expenses of the Seller.
O. The audited financial statements for the year ending August 31, 1995
and the unaudited financial statements for the six (6) months ended February 29,
1996 have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly represent the financial position of
Seller as of the dates thereof, except for any year-end adjustments which would
customarily be made to interim financials.
P. Except in the Ordinary Course of Business, since the
Balance Sheet Date, the Seller has not:
(1) Mortgaged, pledged, subjected to any lien, granted
a security interest in, or otherwise encumbered
any of the Assets;
(2) Waived any rights in excess of $25,000 in
value in the aggregate;
(3) Made any capital expenditures or capital additions
or betterments, or commitments therefor, which
individually exceeded $25,000 in value;
(4) Sold or otherwise disposed of any of its
assets, tangible or intangible, except in the
Ordinary Course of Business;
(5) Created or incurred any liability (absolute or
contingent) for borrowed money which will (a) not be
released prior to Closing, or (b) become a liability
assumed by Buyer;
(6) With respect to liabilities and/or contracts to be
assumed by Buyer as of Closing, made or become a
party to any contract, commitment, or other
arrangement or renewed, extended,
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<PAGE>
amended, or modified any contract, commitment, or
other arrangement relating to the Business, which in
any one case involved an amount in excess of $25,000,
other than Subscription Agreements entered into in
the Ordinary Course of Business in a manner
consistent with the Seller's normal business
practices, or except as approved by Buyer;
(7) Increased the compensation or fringe benefits
payable or to become payable to any of the
employees or agents of the Seller; or
(8) Except for interest due on subordinated debt held by
Seller's partners, made or agreed to make any
distributions of cash or property to any of its
partners; provided, however, any interest paid on
such subordinated debt will not cause Seller to have
a negative cash balance at Closing.
Q. No representation or warranty of Seller in this Agreement and the
Exhibits and Schedules hereto, and no written statement or certificate furnished
or to be furnished by or on behalf of Seller to Buyer pursuant to this Agreement
or in connection with the transaction contemplated by this Agreement contains or
will contain any untrue statement of a Material fact or omits or will omit to
state a Material fact necessary in order to make the statements contained in
this Agreement or in such other written statement or certificate not misleading.
R. To Seller's knowledge, the Assets are as of the date of Closing,
generally sufficient for and usable in carrying on the Business and represent
all of the assets necessary to the conduct of the Business in the manner Seller
has conducted the Business prior to the Closing.
S. The Seller has timely filed all federal and applicable
state and local tax assessment reports and returns of every kind
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<PAGE>
required to be filed by it and has duly paid all taxes and other charges due or
claimed to be due by federal, state, or local taxing authorities.
T. Proper and accurate amounts have been withheld by the Seller from
the compensation of its employees for all periods prior to the Closing in full
compliance with the tax withholding provisions of applicable federal, state and
local laws. Proper and accurate federal, state and local returns have been filed
by the Seller for all periods for which returns have become due with respect to
employee income tax and social security withholding and FICA and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full or, if not paid, accrued on the books and records of Seller (and in such
case assumed by Buyer). The hours worked by, and payments made to, employees of
the Seller have not been in violation of the Fair Labor Standards Act or any
applicable laws dealing with such matters. All payments due from the Seller on
account of employee health and welfare insurance have been paid by the Seller or
will be paid prior to their due dates.
U. Except for Subscription Agreements and contracts,
commitments, leases, or arrangements listed on Exhibit D to this
Agreement, the Seller is not a party to or bound by any;
(1) Employment or labor union contracts;
(2) Material advertising contracts;
(3) Contract, commitment, or arrangement for capital
expenditures having a remaining balance in excess
of $25,000;
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<PAGE>
(4) Lease with respect to any property, real or
personal, whether as lessor or lessee;
(5) Contract, commitment, or arrangement
containing covenants by the Seller not to
compete in any lines of business or with any
person or business entity;
(6) Material franchise agreement, distributor
agreement, or other similar arrangement;
(7) Material contract or commitment relating to the
sale, lease, or other disposition of any of the
Assets; or
(8) Any other Material contract, commitment, or
arrangement of any kind relating to the conduct of
the Business.
V. So long as the representations and warranties of Buyer in Section 8
are true and correct as of the Closing, no consent, approval, or authorization
of, or filing with, any governmental authority on the part of the Seller is
required in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, except as
provided in this Agreement and except where the failure to obtain the same would
not have a Material effect on the Assets or Business.
W. All of the present Employee Plans of the Seller and compensation
arrangements of the Seller with the Seller's employees are listed or set forth
in Exhibit "J" attached to this Agreement. The Seller is not under any
obligation to make any payments or contributions to a multiemployer plan, as
that term is defined in Section 3(37) of Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), nor does the Seller have any actual or potential
withdrawal liability to any such
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<PAGE>
multiemployer plan. Each Employee Plan has been maintained in Material
compliance with its terms and with the requirements prescribed by applicable
statutes and regulations, including without limitation, ERISA. The Seller does
not maintain or contribute to any funded or unfunded medical, health or life
insurance plans or arrangements for retirees or terminated employees.
X. The partners of the Seller are named on Exhibit "K" to this
Agreement, with their respective partnership interests as set forth in such
Exhibit "K".
Y. The Seller has no direct or indirect equity interest by stock
ownership or otherwise in any corporation, firm, association, partnership, or
other business enterprise and owns no investment securities of any kind.
Z. The provisions for taxes shown in the balance sheet of the Seller as
of the Balance Sheet Date are adequate to cover the liability of the Seller to
such date for all taxes based on the income, purchases, sales, payroll,
business, capital contributions, or assets of the Seller. No unexpired waivers
executed by the Seller of the statute of limitations with respect to federal or
state income, sales, use, or other taxes are in effect. The Seller has not
received any deficiency letter or similar notice from any federal, state, or
other taxing authority for any open tax year.
AA. Seller owns no real property. To Seller's knowledge all real
property leased by the Seller and all improvements on
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<PAGE>
such real estate conform in all respects to applicable federal, state, local and
foreign laws and regulations (including applicable environmental and
occupational safety and health laws and regulations) and zoning and building
ordinances, and the properties are zoned for the various purposes for which such
real estate is presently being used. To Seller's knowledge, all improvements on
such real estate are generally in good operating condition and repair, and there
does not exist any condition which interferes with the economic value or use
thereof. To Seller's knowledge, none of the buildings and structures located on
real property leased by the Seller, nor any appurtenances thereto or equipment
therein, nor the operation therein nor the operation or maintenance thereof,
violates in any manner any restrictive covenants or encroaches on any property
owned by others nor does any building or structure owned by third parties
encroach upon the property leased by the Seller. To Seller's knowledge, no
condemnation proceeding is pending or threatened which would preclude or impair
the use of any such property by the Seller for the uses for which it was
intended. All real estate leased by Seller has never been used by Seller to
manufacture, store, or dispose of toxic or hazardous substances, materials or
waste covered by the Resources Conservation Recovery Act or the Comprehensive
Environmental Response Compensation and Liability Act of 1980, or any similar
state or local laws, ordinances and regulations except for those not Material to
the Assets or the Business.
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<PAGE>
BB. For purposes of determining whether the transactions contemplated
by this Agreement are subject to the Hart-Scott- Rodino Antitrust Improvements
Act of 1976, as amended, Seller is the "ultimate parent entity" of the "acquired
entity" as such terms are defined in the rules promulgated under such act.
EXCEPT AS PROVIDED IN THIS SECTION 7, SELLER SPECIFICALLY DISCLAIMS ALL
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Seller further makes no
warranties, representations, conditions or guaranties except as expressly set
forth in this Agreement and, except as provided in Section 7(BB), specifically
disclaims any representations or warranties on matters relating to antitrust
laws. Buyer acknowledges and agrees that it has not relied upon any warranty,
representation, condition or guarantee of Seller except as the same is expressly
set forth in this Agreement and that, subject to the accuracy of Seller's
representation and warranty contained in Section 7(BB), it has satisfied itself
that the transactions contemplated by this Agreement do not violate the
antitrust laws.
8. REPRESENTATIONS OF BUYER. Buyer represents and warrants to Seller
that:
A. Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware, and is duly licensed or qualified to
transact business in all jurisdictions where the character of the property owned
or leased or to be acquired by it pursuant to this Agreement or the nature
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<PAGE>
of the business transacted by it makes such licensing or qualification necessary
and where failure to obtain such licensing or qualification would have a
Material adverse effect on Buyer, its assets, properties or businesses. Buyer
has all requisite power and authority, corporate or otherwise, to conduct its
business and to own its properties.
B. Buyer has all requisite corporate power and authority to enter into
this Agreement, to consummate the transactions contemplated by this Agreement,
and to fulfill its obligations under this Agreement.
C. This Agreement has been duly authorized and approved by the Board of
Directors of Buyer and all necessary corporate action. Each of this Agreement
and its Schedules and Exhibits, including but not limited to the Note, has been
duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligations and agreements of Buyer, enforceable against Buyer in
accordance its terms except as the same may be limited by the Creditor
Exceptions.
D. The execution, delivery and performance by Buyer of this Agreement
and its Schedules and Exhibits, including but not limited to the Note, do not
and will not (1) require any consent or approval which has not been obtained
prior to the date hereof, (2) require any authorization, consent or approval by,
or registration, declaration or filing (other than filing of financing
statements and recording of mortgages as contemplated by the FNB-O Loan
Agreement) with, or notice to, any governmental
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<PAGE>
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any third party, except such authorization, consent, approval,
registration, declaration, filing or notice as has been obtained, accomplished
or given prior to the date hereof, (3) violate any provision of any law, rule or
regulation or of any order, writ, injunction or decree presently in effect
having applicability to Buyer or of the certificate of incorporation or bylaws
of Buyer, (4) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other Material agreement, lease or instrument
to which Buyer is a party or by which it or its assets or properties may be
bound or affected, or (5) result in, or require, the creation or imposition of
any Material mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by Buyer (other than as required
hereunder in favor of Seller).
E. Except as set forth in Schedule 8(E), there are no Material actions,
suits, proceedings or investigations pending, or to the knowledge of Buyer,
threatened in any court or before any governmental agency or instrumentality
against or by Buyer, its stock, assets or business. There are no actions, suits,
proceedings or investigations pending or, to the knowledge of Buyer, threatened
in any court or before any governmental agency or instrumentality against or by
Buyer which would prevent the carrying out of this Agreement or seek to declare
this Agreement
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<PAGE>
unlawful or cause the rescission thereof. Buyer is not in default with respect
to any judgment, order or decree of any court or any governmental agency or
instrumentality.
F. All action required by the Buyer by any applicable law known to the
Buyer has been taken; and all reports or returns which, to the knowledge of
Buyer, are required to have been filed by the Buyer with any governmental agency
or subdivision have been filed.
G. So long as the representations and warranties of Seller in Section 7
are true and correct as of the Closing, no consent, authorization, approval,
permit or order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement, except as provided in this Agreement and except where the
failure to obtain the same would not have a Material effect on the transaction
contemplated by this Agreement.
H. Buyer has sufficient funds to pay at Closing the Purchase Price.
I. No consent, approval, vote or other authorization is necessary from
the shareholders of Buyer in order for Buyer to execute, deliver and perform its
obligations under this Agreement and Buyer has no parent or holding company from
whom such consent, approval or authorization is necessary.
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<PAGE>
J. Neither Buyer's annual net sales for the period ended December 31,
1995, nor Buyer's total assets as shown on the last regularly prepared balance
sheet of Buyer prepared prior to the Closing (each as shown in the financial
statements provided to Seller), equal or exceed $100 million, so as to subject
the transactions contemplated by this Agreement to the filing and notice
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. Seller and each of its partners is and shall be entitled to rely on the
representations and warranties of this Section 8(J).
K. No representation or warranty of Buyer in this Agreement and the
Schedules and Exhibits hereto, and no written statement or certificate furnished
or to be furnished by or on behalf of Buyer to Seller pursuant to this Agreement
or in connection with the transaction contemplated by this Agreement contains or
will contain any untrue statement of a Material fact or omits or will omit to
state a Material fact necessary in order to make the statements contained in
this Agreement or in such other written statement or certificate not misleading.
L. Buyer has not used any accounting practices which are not in
conformity with generally accepted accounting principles for the purpose of
incorrectly reflecting on its financial statements or in its books of account,
or for the purpose of not reflecting on its financial statements or in its books
of account, any of the assets, liabilities, revenues or expenses of Buyer.
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<PAGE>
M. Buyer has no subsidiaries.
N. Buyer incorporates by this reference all of the representations and
warranties made by it in the FNBO Loan Agreement, including but not limited to
those stated in Section IV of the FNBO Loan Agreement, and states that all such
representations are true, accurate and complete, subject to any exceptions
disclosed therein or thereto.
Buyer makes no warranties, representations, conditions or guaranties
except as set forth in this Agreement and, except as provided in Sections 8(J)
and (L), specifically disclaims any representations or warranties on matters
relating to antitrust laws. Seller acknowledges and agrees that it has not
relied upon any warranty, representation, condition or guarantee of Buyer except
as the same is expressly set forth in this Agreement and that, subject to the
accuracy of the Buyer's representations and warranties contained in Section 8(J)
and (L), it has satisfied itself that the transaction contemplated by this
Agreement does not violate the antitrust laws.
9. ABSENCE OF BROKERS. Each of the parties hereto represents to the
other that it has not retained or incurred any liability to any other Person,
for a broker's, finder's, or agent's fee for services rendered in connection
with the transaction contemplated by this Agreement; and each of the parties
hereto agrees to indemnify the other against and to hold the other harmless from
any claim made by any Person, claiming to
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<PAGE>
have been employed by such party as a broker, finder, or agent in connection
with the transaction contemplated by this Agreement.
10. SELLER'S EMPLOYEES.
A. To the extent such obligations are not Balance Sheet Liabilities,
Seller shall be responsible for any obligation which arose prior to the
Effective Date to pay any salaries, bonuses, vacation pay, retirement benefits,
sick pay, insurance premiums, and other fringe benefits to Seller's employees.
Seller hereby agrees to pay all such obligations directly to or on behalf of the
employees involved when due; except that Buyer shall reimburse Seller for such
amounts which comprise part of the liabilities to be assumed by Buyer and
provided that Seller may elect to have Buyer pay certain liabilities directly to
such employees on its behalf. Seller agrees to pay in a timely manner all
amounts (including but not limited to any and all withholding and unemployment
compensation insurance payments) required to be paid with respect to the
compensation and benefits of Seller's employees for services rendered prior to
the Effective Date and due by Seller under this Section 10(A).
B. Buyer shall be obligated to offer to employ as Buyer's own common
law employees (that are terminable at will) all of the persons actively
participating in the Business at the time of the Closing, except for those
persons listed by name in Schedule 10(B). Buyer further represents and warrants
to Seller that Schedule 10(B) will not contain more than forty-nine (49) names
so that at least all but forty-nine (49) of Seller's full-time
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employees at the time of the Closing will be offered employment by Buyer. Seller
shall remain solely responsible for all of Seller's employees who are not
offered employment with Buyer or who do not accept employment with Buyer. All
employees accepting employment under the employment conditions offered by Buyer
shall be eligible for those employee benefit plans which Buyer has in effect for
its similarly situated existing employees as of the Effective Date, except that
the length of service of such employees with Seller shall be recognized by Buyer
for the purpose of determining accrued and future vacation and sick days under
Buyer's vacation and sick leave policies and for any other policy or benefit of
Buyer based on seniority or length of employment. Further, if permitted by
Buyer's employee plans, all waiting periods for eligibility for health, dental,
life and other benefits, if any, under Buyer's employee plans and all waiting
periods for pre-existing conditions shall be waived for employees of Seller who
are hired by Buyer. Buyer also agrees that if permitted by applicable law and
plan language, it will allow each of Seller's employees which it hires to
transfer to Buyer's 401(k) plan their respective pre-tax balances under Seller's
401(k) plan provided such plan is a tax-qualified plan under Section 401(a) and
401(k) of the IRS Code and that the transfer of any such pre-tax account balance
will not affect the tax-qualified status of Buyer's 401(k) plan.
C. Buyer shall have no obligation under the provisions of this Section
10 to continue the employment of any person
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previously employed by Seller for any fixed period after the Effective Date, it
being the intention of Buyer that all of Seller's employees who are hired by
Buyer shall constitute employees terminable at will in the absence of a specific
agreement between Buyer and any individual employee to the contrary.
D. Attached as Exhibit "L" is a list of the names of Seller's
employees, their current salaries and time in service with Seller as of the
Closing.
E. Subject to Section 15 of this Agreement, Seller shall indemnify and
hold Buyer harmless with respect to any and all claims made by Seller's
employees with respect to any and all benefits plans in effect prior to the
Effective Date except for any liability of Seller with respect to such plans
which is specifically assumed by Buyer hereunder.
F. Buyer agrees that if either Larry Kline or J.D. Geneser are offered
and accept employment with Buyer, Buyer will allow each of them from time to
time through December 31, 1996 to assist Seller with its post-Closing wind-up
and dissolution, so long as such assistance does not have a Material adverse
effect on their ability to timely perform their employment duties with Buyer.
11. RISK OF LOSS. Seller shall bear all risk of loss prior to the
Closing, and Buyer shall bear all risk of loss after the Closing with respect to
the tangible personal property and any interests (leasehold or otherwise) in
real property being sold or transferred by Seller to Buyer pursuant to this
Agreement. In
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the event of any such loss prior to the Closing, Buyer and Seller may agree to
an equitable adjustment in the Purchase Price or, if the loss is of a Material
portion of the Assets being purchased by Buyer, either Buyer or Seller may elect
to terminate this Agreement.
12. Expenses of Transaction. The parties hereto each shall bear all of
the expenses respectively incurred by them in con- nection with this Agreement
and the consummation of the trans- actions contemplated hereby.
13. Amendments. This Agreement may be amended by letter or other
document which by its terms specifically states that it is an amendment to this
Agreement; provided, that such letter or other document shall be signed by both
parties or their successors and assigns, if any.
14. Notices. Any notice which may be permitted or required to be given
pursuant to this Agreement shall be delivered personally or shall be sent by
United States registered or certified mail or a nationally recognized overnight
carrier, postage prepaid, addressed as set forth below:
If to Seller: Thomas M. Hanigan
Pioneer Hi-Bred International, Inc.
7200 N.W. 62nd Avenue
P.O. Box 184
Johnston, Iowa 50131-0184
With copies to: Kent G. Nunn
Farmland Industries, Inc.
3315 North Oak Trafficway
P.O. Box 7305, Dept. 316
Kansas City, Missouri 64116-0005
David A. Magers, Controller
Illinois Agricultural Service Company
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1701 Towanda Avenue
P.O. Box 2901
Bloomington, Illinois 61702-2901
Office of the General Counsel
Farmland Industries, Inc.
P.O. Box 7305, Dept. 62
Kansas City, Missouri 64116-0005
Jerome P. Weiss, General Counsel
Illinois Agricultural Service Company
1701 Towanda Avenue
P.O. Box 2901
Bloomington, Illinois 61702-2901
Jeanne Foster, Esquire
Pioneer Hi-Bred International, Inc.
700 Capital Square
400 Locust Street
Des Moines, Iowa 50309
If to Buyer: Data Transmission Network Corporation
9110 West Dodge Road, Suite 200
Omaha, NE 68114
Attn: Greg T. Sloma, President
With a copy to: Abrahams, Kaslow & Cassman
8712 West Dodge Road, Suite 300
Omaha, NE 68114
Attn: R. Craig Fry
or to any other address as any party may, by notice to the other parties in
accordance with this paragraph designate.
15. SURVIVAL; INDEMNIFICATION.
A. SURVIVAL OF REPRESENTATIONS.
All representations and warranties of Seller contained in Sections
7(A),(B),(C) and (G), and all representations and warranties of Buyer contained
in Sections 8(A),(B) and (C) shall survive the Closing date and shall thereafter
remain in full force and effect. All other representations and warranties,
covenants and agreements of Seller and Buyer contained or
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incorporated by reference in or made pursuant to this Agreement or in any
exhibit, schedule or certificate furnished pursuant hereto shall survive the
Closing date and shall remain in full force and effect to the following extent:
(1) unless otherwise specified below or elsewhere in this Agreement,
representations and warranties shall survive until December 31, 1997; (2) the
covenants and agreements in this Section 15 shall continue in full force and
effect until fully discharged; and (3) any representation, warranty, covenant or
agreement that is the subject of a claim which is asserted in a reasonably
detailed writing prior to December 31, 1997 shall survive with respect to such
claim or dispute until the final resolution thereof. All such representations
and warranties, covenants, and agreements shall also survive and be unaffected
by (and shall not be deemed waived by) any investigation, audit, appraisal, or
inspection at any time made by or on behalf of any party hereto.
B. INDEMNIFICATION BY SELLER.
Subject to the conditions and provisions of Section 15D and Section
15E, from and after the Closing date, Seller agrees to indemnify, defend and
hold harmless Buyer from and against and in any respect of, on a net after-tax
basis, any and all losses, claims, expenses, costs, damages or liability
("Losses"), asserted against, resulting to, imposed upon or incurred by Buyer,
directly or indirectly, by reason of or resulting from: (1) the ownership of the
Assets and/or the operation of the Business during the period prior to the
Closing date, but only to
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the extent Buyer has not assumed the liability therefrom or related thereto
under the provisions of this Agreement (which indemnification shall be in
addition to that made by Seller in Section 3); (2) any Material
misrepresentation or breach of the representations and warranties of Seller
contained in or made pursuant to this Agreement or any exhibit, schedule or
certificate delivered in connection with it; (3) any Material breach by Seller
of any covenants of Seller contained in or made pursuant to this Agreement or
any exhibit, schedule or certificate delivered in connection with it; or (4) any
Losses due to Seller's failure to give notice to creditors to whom Seller will
remain liable pursuant to this Agreement under applicable bulk sales laws, if
any.
C. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of Section 15D and Section
15E, from and after the Closing date, Buyer hereby agrees to indemnify, defend
and hold harmless Seller from, against and with respect of, on a net after-tax
basis, any and all Losses asserted against, resulting to, imposed upon or
incurred by Seller, directly or indirectly, by reason of or resulting from (1)
any failure by Buyer to pay, perform or discharge any liability assumed by it
under the provisions of this Agreement (which indemnification shall be in
addition to that made by Buyer in Section 3); (2) any Material misrepresentation
or breach of the representations and warranties of Buyer contained in or made
pursuant to this Agreement or any exhibit, schedule or
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certificate delivered in connection with it; (3) any Material breach by Buyer of
any covenants of Buyer contained in or made pursuant to this Agreement or any
exhibit, schedule or certificate delivered in connection with it; or (4) the
ownership of the Assets and/or the operation of the Business by Buyer or any of
Buyer's other operations or businesses during the period on and after the
Closing date.
D. LIMITATION ON INDEMNIFICATION.
(1) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Losses include a party's incidental or consequential
damages. Except as provided elsewhere in this Agreement, neither Seller nor
Buyer shall be liable to the other in respect of any indemnification hereunder
except to the extent that (a) the aggregate Losses of the party to be
indemnified under this Agreement exceeds One Hundred Thousand Dollars ($100,000)
in the aggregate (the "Basket Amount"), and then only to the extent of the
excess over the Basket Amount, and (b) the aggregate amount of such
indemnification, together with all other indemnification by the indemnifying
party, for Losses of the party to be indemnified under this Section 15 are less
than Ten Million Dollars ($10,000,000.00). Each party (a "recipient party")
shall notify the other party (the "representing party") reasonably promptly of
any perceived breach by the representing party of which the recipient party has
knowledge of any representations and warranties, covenants, and agreements and
of any Losses (including a brief description of
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the same) of the recipient party caused thereby. In addition, each recipient
party will specify in writing to the representing party any perceived breach by
the representing party of any representations and warranties, covenants, and
agreements and of any Losses (including a brief description of the same) of the
recipient party caused thereby.
(2) Each party's sole remedy and recourse to recover for Losses caused
by a breach of a representation or warranty which is subject to the restrictions
and/or limitations of this Section 15 shall be to seek indemnification pursuant
to this Section 15. Where a breach of a representation or warranty is not
subject to the restrictions and/or limitations of this Section 15, a party may
seek indemnification under this Section 15 for Losses incurred in connection
therewith in addition to any other rights or remedies available to that party
under this Agreement and applicable law.
(3) Notwithstanding anything in this Agreement to the contrary, each
party's right to recover and seek indemnification from the other for any Losses
caused by Seller's breach of the representations and warranties of Seller
contained in Sections 7(A),(B),(C) and (G) or by Buyer's breach of the
representations and warranties of Buyer contained in Sections 8(A),(B) and (C)
shall not be subject to any Basket Amount, maximum amount, or time limitation
imposed by this Section 15.
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E. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Seller and of Buyer hereunder with
respect to their respective indemnities pursuant to this Section 15, resulting
from any Losses, shall be subject to the following terms and conditions:
(1) The party seeking indemnification (the "Indemnified Party") must
give the other party or parties, as the case may be (the "Indemnifying Party'),
notice of any such Losses promptly after the Indemnified Party receives notice
thereof, provided that the failure to give such notice shall not affect the
rights of the Indemnified Party hereunder except to the extent that the
Indemnifying Party shall have suffered actual damage by reason of such failure.
(2) The Indemnifying Party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such Losses
at the Indemnifying Party's risk and expense.
(3) In the event that the Indemnifying Party shall elect not to
undertake such defense, or, within a reasonable time after notice from the
Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses
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<PAGE>
at any time prior to settlement, compromise or final determination thereof). In
such event, the Indemnifying Party shall pay to the Indemnified Party, in
addition to the other sums required to be paid hereunder, the costs and expenses
incurred by the Indemnified Party in connection with such defense, compromise or
settlement as and when such costs and expenses are so incurred.
(4) Anything in this Section 15 to the contrary notwithstanding, (a) if
there is a reasonable probability that Losses may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right, at its own cost and
expense, to participate in the defense, compromise or settlement of the Losses,
(b) the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Losses or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
litigant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Losses in form and substance satisfactory to the
Indemnified Party, and (c) in the event that the Indemnifying Party undertakes
defense of any Losses, the Indemnified Party, by counsel or other representative
of its own choosing and at its sole cost and expense, shall have the right to
consult with the Indemnifying Party and its counsel or other representatives
concerning such Losses and the Indemnifying Party and the Indemnified Party and
their respective counsel or other
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representatives shall cooperate with respect to such Losses and (d) in the event
that the Indemnifying Party undertakes defense of any Losses, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Losses and furnish the Indemnified Party with all
documents, instruments and information that the Indemnifying party shall
reasonably request in connection therewith.
16. ADDITIONAL COVENANTS.
A. BY SELLER. (1) At the Closing, Seller shall cause each of Pioneer
Hi-Bred International, Inc., Farmland Industries, Inc., and Illinois
Agricultural Service Company (collectively, the "Partners") to execute and
deliver to Buyer indemnification agreements in the form of Exhibit "M." Such
indemnification agreements shall provide that the Partners shall indemnify,
defend and hold Buyer harmless from and against any Losses (a) incurred by Buyer
by reason of or resulting from Seller's breach of any of the representations and
warranties of Seller contained in Sections 7(A),(B),(C), and (G); and (b)
incurred by Buyer by reason of or resulting from Seller's breach of any of the
other representations and warranties of Seller contained in this Agreement if
Seller has wound up or dissolved its general partnership or if its net worth is
less than $10,000,000 and if such Losses by reason of or resulting from Seller's
breach of such other representations and warranties arise prior to the time
Seller's representations, warranties and indemnities under Section 15 of this
Agreement have expired.
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(2) Seller shall execute that certain non-competition agreement in
favor of Buyer and cause its general partners or the parent companies of such
general partners, as the case may be, to execute those certain non-competition
agreements in favor of Buyer and deliver the same at Closing to be held in
escrow. Seller shall direct the escrow agent to release the escrowed documents
to Buyer at such time as Buyer has paid, discharged and satisfied the Note and
delivered the consideration due under the escrowed documents to each of the
parties thereto. The parties shall enter into escrow agreements on mutually
acceptable terms and conditions.
B. BY BUYER. So long as the Note shall remain unpaid or outstanding,
Buyer will comply with the following requirements, unless the Seller shall
otherwise consent in writing:
(1) Buyer shall comply with all terms, conditions and provisions of the
FNB-O Loan Agreement, including but not limited to the covenants set forth in
Section V of the FNB-O Loan Agreement.
(2) Buyer shall refrain from any amendment, modification or waiver of
or under the FNB-O Loan Agreement without first receiving the written consent of
Seller except for Buyer's refinancing or extension of its 1995 Restated Loan
Agreement.
(3) Buyer shall notify Seller at the time it has agreed to secure
additional bank financing, has secured an additional bank to participate in the
FNB-O Loan Agreement or is to receive funding pursuant to any bank or other loan
agreement (other than
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the $45,300,000 revolving credit facility to result from the refinancing of the
$34,500,000 revolving credit under the 1995 Restated Loan Agreement) and agrees
that such proceeds shall first be used to pay interest then due to Seller under
the Note and then to reduce (or if sufficient, pay in full) the principal due
under the Note. Notwithstanding any provision of the FNB-O Loan Agreement to the
contrary, Seller shall not receive any prepayment penalty for payments under the
Note. If the full amount of such proceeds is not immediately paid to Seller and
applied against the Note upon receipt of such proceeds, and in any case if the
Note is not paid in full prior to August 1, 1996 (the earlier to occur of such
dates being referenced to herein as the "Due Date"), then Buyer shall
immediately authorize the release to Seller of the sum of Five Hundred Thousand
Dollars ($500,000) held in escrow pursuant to Section 16(B)(7). Additionally, if
the Note is not paid in full by the end of any calendar month, commencing on or
after the Due Date, Buyer shall issue to Seller a trade credit of $81,000 for
each such month which may be applied by Seller, its partners or their respective
affiliates and/or successors to any trade balance then or thereafter due to
Buyer. Except for any unused trade credit accumulated from prior months, Seller
will not receive such trade credit for any calendar months during or after which
the Note has been paid in full.
(4) Buyer agrees that each of its obligations under the
FNB-O Loan Agreement shall constitute a separate obligation under
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this Agreement and that any breach or default thereunder by Buyer shall
constitute a breach or default of this Agreement.
(5) The obligation of Buyer to pay any amounts due under the Note shall
be absolute, unconditional, and irrevocable, and the Buyer shall make all such
payments without offset or counterclaim of any kind. Notwithstanding any
provision in this Agreement to the contrary, Seller may use the Note as an
offset to any liability it may owe to Buyer under this Agreement or otherwise.
(6) Buyer shall indemnify, protect, defend and hold harmless Seller
from and against all losses, liabilities, claims, damages, judgments, costs and
expenses, including but not limited to all reasonable attorneys' fees and legal
expenses, incurred by the Seller or imposed upon the Seller at any time by
reason of the issuance, demand for payment of the Note or the enforcement,
protection or collection of the Seller's claims against the Buyer under this
Section 16(B)(6) and/or the Note, but excluding income taxes imposed on Seller.
This indemnification obligation is in addition to any others Buyer may have to
Seller and any such indemnity shall be without right of set-off and shall not be
subject to any Basket Amount, maximum amount, time limitation, or any other
obligation, limitation, restriction, notice provision or modification imposed by
Section 15 of this Agreement.
(7) Buyer shall place the sum of $500,000 in escrow at Closing to
secure Buyer's $500,000 cash payment to Seller under Section 16(B)(3) and shall
authorize the escrow agent to release
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said sum to Seller on the Due Date. Such escrowed funds together with any
interest earned thereon shall be returned to Buyer upon payment of the Note in
full prior to the Due Date. The parties shall enter into an escrow agreement on
mutually acceptable terms and conditions.
17. NONASSIGNABLE RIGHTS. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
contract, order, commitment, license or right if an assignment or attempted
assignment thereof without the consent of the other party thereto would
constitute a breach thereof or in any Material way affect the rights of Seller
thereunder or hereunder unless such consent is obtained. If any such consent is
not obtained, or if an attempted assignment would be ineffective and would
Materially affect Seller's rights thereunder, so that Buyer would not in fact
receive all such rights, the parties agree to cooperate in any reasonable
arrangement designed to assure that Buyer shall have all the benefits, rights,
obligations and duties under such contracts, orders, commitments, licenses and
rights.
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18. APPLICABLE LAW. This Agreement shall be governed in all respects by
the laws of the State of Iowa applicable to contracts entered into within such
State without regard to the conflicts of laws provisions thereof; provided that,
the internal rights and obligations among the partners of Seller shall be
governed by the laws of the State of Delaware. Each party irrevocably consents
to the personal jurisdiction of the state and federal courts located in the
State of Iowa with venue in Polk County, Iowa.
19. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and any other documents incorporated or referred to herein
contain the entire agreement between the parties hereto with respect to the
subject matter of this Agreement; and there are no other agreements,
representations, warranties, or covenants, written or oral, with respect to the
transaction contemplated by this Agreement which are not expressly set forth in
this Agreement or such other documents. That certain Confidentiality and
Proprietary Agreement of the parties dated February 21, 1996 shall automatically
terminate and be of no further force and effect upon the Closing under this
Agreement.
20. BINDING EFFECT. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. The parties further agree that upon the winding
up and dissolution of Seller, any and all rights of Seller hereunder,
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including but not limited to the indemnification rights provided in Section 15
hereof, may be freely assigned to and enforced by one or more of the partners of
Seller and/or the successors and assigns of such partners.
21. SECTION HEADINGS. The headings of the sections in this Agreement
are for the purpose of reference only and shall not limit or otherwise affect
the meaning of any of the provisions of this Agreement.
22. INCORPORATION OF EXHIBITS. Each of the Exhibits and Schedules
referred to herein and attached hereto are incorporated herein and shall be
deemed to be a part of this Agreement.
23. WAIVERS. The failure of either of the respective parties to comply
with any of their respective obligations, agreements or conditions as set forth
herein may be waived expressly in writing by the other party.
24. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
25. SEVERABILITY. If any one or more of the provisions (or portions
thereof) of this Agreement 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 provisions (or portions of the provisions) of this
Agreement, and the invalid, illegal or unenforceable provisions shall be deemed
replaced by a provision that is valid, legal and
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enforceable and that comes closest to expressing the intention of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase and Sale Agreement as of the day and year first above written.
BROADCAST PARTNERS, a Delaware
general partnership ("Seller")
By: /s/ Thomas M. Hanigan
----------------------------
Thomas M. Hanigan, Chairman
of the Steering Committee
DATA TRANSMISSION NETWORK
CORPORATION, a Delaware
corporation ("Buyer")
By: /s/ Brian L. Larson
-----------------------------
Brian L. Larson, Vice
President, Chief Financial
Officer, Secretary and Treasurer
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TERMS AND CONDITIONS OF
DISCLOSURE SCHEDULES AND EXHIBITS
The Schedules and Exhibits attached hereto by Seller are subject to the
following terms and conditions:
1. The inclusion of any fact or item on a schedule, which
schedule requires the listing of a "Material" item, is not deemed
to be an admission or representation that the included item is
"Material."
2. The inclusion of any fact or item on a schedule referenced by a
particular section in the Agreement shall, should the existence of the fact or
item or its contents be relevant to any other section, be deemed to be disclosed
with respect to such other section whether or not an explicit cross-reference
appears.
3. The introductory language and heading to each of the disclosure
schedules are inserted for convenience only and shall not create a different
standard for disclosure than the language set forth in the Agreement.
4. All capitalized terms used herein and not otherwise
defined shall have the meaning given such terms in the Agreement.
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EXHIBIT 99.1
May 3, 1996 Contact: Eric W. Miller
402-255-3748 (office)
402-390-7188 (FAX)
[email protected] (e-mail)
Brian Larson
402-255-3757 (office)
402-390-7188 (FAX)
[email protected] (e-mail)
DTN ANNOUNCES CLOSING OF "ASSET ACQUISITION"
OF FARM DAYTA FROM BROADCAST PARTNERS
Omaha, NE -- Data Transmission Network Corporation (DTN) (NASDAQ/NMS
Symbol: DTLN) announced the closing of the "Asset Acquisition" today and the
terms are as follows: DTN acquired substantially all the assets of Broadcast
Partners (BP) in the acquisition for $63.5 million and the assumption of certain
current liabilities estimated to be $9.5 million. These liabilities are
primarily obligations associated with the subscription agreements (unearned
revenue) and trade payables.
DTN financed the acquisition with a combination of equity and senior
debt. The equity was privately placed and included 316,000 shares of common
stock for approximately $15,000,000. The remaining debt portion of $48,500,000
is provided under DTN's senior bank credit agreement. The debt financing portion
is structured as six year term notes with interest at a rate of 8.25% through
June 30, 1999 and then adjusted to the three year treasury
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DTN ANNOUNCES CLOSING OF "ASSET ACQUISITION", PAGE 2
plus 2.00%. The principal is scheduled to be repaid in seventy-two equal monthly
installments commencing on January 31, 1997.
DTN will receive approximately 39,000 agricultural subscribers. The
acquisition will bring the total DTN subscribers in the agribusiness industry to
more than 115,000 and the total DTN subscribers for all services to over
140,000. The company will not convert Farm Dayta subscribers' systems to DTN
equipment and will continue to market the services under the "Farm Dayta" name.
DTN will maintain the current facilities in Des Moines, Iowa.
The following audited financial and operating data for Broadcast
Partners is for fiscal year ending August 31, 1995. BP had revenues of
$20,025,300 for the fiscal year ended August 31, 1995. BP had operating cash
flow $8,360,800 for fiscal year ended August 31, 1995. BP had subscribers of
36,000 as of August 31, 1995 (with average fiscal 1995 billable subscribers of
approximately 33,000). BP had total assets of $34,720,000 for fiscal year ended
August 31, 1995.
DTN Management estimates with implementation of most of the synergistic
opportunities (within 12 months) annualized operating cash flow from this
acquisition will be in the range of $13 to $14 million dollars.
Broadcast Partners, a general partnership, was formed by Farmland
Industries, Inc.; Pioneer Hi-Bred International, Inc. (NYSE:PHB); and the IAA
Communications Company pursuant to the provisions of the Delaware Uniform
Partnership Act. The
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DTN ANNOUNCES CLOSING OF "ASSET ACQUISITION", PAGE 3
partnership was formed to develop and operate a broadcast information network
system, primarily for the agricultural industry.
Data Transmission Network Corporation is an information and
communication services company with over 140,000 subscribers in the U.S. and
Canada. The company has services for the agriculture, automotive, energy, farm
implement, financial, mortgage, produce and weather-related industries.
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