UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One):
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended September 30, 1997
__ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number: 0-26102
AMERICAN RADIO SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-3196245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices)
Telephone Number (617)-375-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No __
Class of Common Stock Outstanding at October 31, 1997
- ------------------------------ --------------------------------
Class A Common Stock 24,656,955 shares
Class B Common Stock 3,534,280 shares
Class C Common Stock 1,295,518 shares
Total 29,486,753 shares
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements Page No.
Condensed Consolidated Balance Sheets
December 31, 1996 and September 30, 1997.................................... 1
Condensed Consolidated Statements of Operations
Three and nine months ended September 30, 1996 and 1997.................... 3
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1997.............................. 4
Notes to Condensed Consolidated Financial Statements....................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................. 27
Item 4. Submission of Matters to a Vote of Security Holders............... 27
Item 5. Other Information................................................. 27
Item 6. Exhibits and Reports on Form 8-K.................................. 28
Signatures........................................................ 30
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 1996 September 30, 1997
----------------- ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,447 $ 13,822
Accounts receivable (less allowance for doubtful
accounts of $4,560 and $8,433 in 1996 and 1997,
respectively) 51,897 84,159
Employee and other related-party receivables 249 279
Prepaid expenses and other assets 3,354 5,991
Deferred income taxes 3,370 3,370
---------- ----------
Total current assets 69,317 107,621
---------- ----------
PROPERTY AND EQUIPMENT--Net 90,247 180,657
---------- ----------
OTHER ASSETS:
Restricted cash 34,441
Station investment note receivable--related party
(less valuation allowance of $500 in 1996) 743
Investment notes receivable 69,177 25,756
Intangible assets--net:
Goodwill 232,908 415,072
FCC licenses 233,558 1,138,407
Other intangible assets 26,794 39,293
Deposits and other long-term assets 26,064 14,536
Deferred income taxes 7,142
Net assets held under exchange agreement 47,495
---------- ----------
Total other assets 636,739 1,674,647
---------- ----------
TOTAL $ 796,303 $1,962,925
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 1996 September 30, 1997
----------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Current maturities of long-term debt $ 561 $ 576
Accounts payable 7,085 7,493
Accrued compensation 3,027 3,254
Accrued expenses 16,355 26,548
Accrued interest 7,303 10,447
----------------- ------------------
Total current liabilities 34,331 48,318
----------------- ------------------
DEFERRED INCOME TAXES 33,205 203,835
----------------- ------------------
OTHER LONG-TERM LIABILITIES 2,149 11,072
----------------- ------------------
LONG-TERM DEBT 330,111 808,439
----------------- ------------------
MINORITY INTEREST IN SUBSIDIARIES 344 774
----------------- ------------------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK
Cumulative Exchangeable Preferred Stock, $0.01 par value; 10,000,000 shares
authorized; 2,105,602 shares issued and
outstanding; liquidation preference $100 per share 215,550
----------------- ------------------
STOCKHOLDERS' EQUITY
Preferred Stock; $0.01 par value; 10,000,000 shares authorized; Convertible
Exchangeable Preferred Stock; 137,500 shares issued and outstanding
(represented by 2,750,000 depositary shares);
liquidation preference $1,000 per share 1 1
Class A Common Stock; $.01 par value; 100,000,000 shares authorized;
15,101,022 and 24,364,417 shares issued and outstanding, respectively 151 244
Class B Common Stock; $.01 par value; 15,000,000 shares authorized;
4,658,096 and 3,826,818 shares issued and outstanding, respectively 47 38
Class C Common Stock; $.01 par value; 6,000,000 shares authorized;
1,295,518 shares issued and outstanding 13 13
Additional paid-in capital 390,731 675,325
Unearned compensation (297) (226)
Retained earnings 5,955 0
----------------- ------------------
Total 396,601 675,395
----------------- ------------------
Less:
Treasury stock, at cost, 18,449 and 19,019 shares at
December 31, 1996 and September 30, 1997 (438) (458)
----------------- ------------------
Total stockholders' equity 396,163 674,937
----------------- ------------------
TOTAL $ 796,303 $ 1,962,925
================= ==================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1996 1997 1996 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUES $ 52,490 $ 106,167 $ 113,582 $ 260,512
----------------- ------------ ------------ -----------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, net local marketing agreement and
corporate general and administrative expenses 35,397 67,287 78,171 172,018
Net local marketing agreement expenses 2,289 574 4,878 1,914
Depreciation and amortization 6,127 19,410 10,966 42,974
Merger expenses 300 300
Corporate general and administrative expenses 1,274 2,667 3,614 6,601
----------------- ------------ ------------ -----------
Total expenses 45,087 90,238 97,629 223,807
----------------- ------------ ------------ -----------
OPERATING INCOME 7,403 15,929 15,953 36,705
----------------- ------------ ------------ -----------
OTHER INCOME (EXPENSE):
Interest expense (6,254) (16,838) (15,217) (40,074)
Interest income 1,102 367 4,742 1,512
Gains (losses) on sale of assets and other, net 208 (183) 172 455
----------------- ------------ ------------ -----------
Total other income (expense) (4,944) (16,654) (10,303) (38,107)
----------------- ------------ ------------ -----------
INCOME (LOSS) FROM OPERATIONS BEFORE
INCOME TAXES AND EXTRAORDINARY ITEM 2,459 (725) 5,650 (1,402)
INCOME TAX BENEFIT (PROVISION) (1,525) 401 (2,961) 774
----------------- ------------ ------------ -----------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 934 (324) 2,689 (628)
EXTRAORDINARY LOSS ON EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX BENEFIT OF
$1,013 IN 1997 (1,639)
----------------- ------------ ------------ -----------
NET INCOME (LOSS) 934 (324) 2,689 (2,267)
PREFERRED STOCK DIVIDENDS (2,433) (8,479) (2,567) (22,770)
----------------- ------------ ------------ -----------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ (1,499) $ (8,803) $ 122 $ (25,037)
================= ============ ============ ===========
PER COMMON SHARE AMOUNTS:
Income (loss) before extraordinary loss $ (.07) $ (.30) $ .01 $ (.88)
Extraordinary (loss) (.06)
----------------- ------------ ------------ -----------
Net income (loss) $ (.07) $ (.30) $ .01 $ (.94)
----------------- ------------ ------------ -----------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 22,015 29,484 20,031 26,549
================= ============ ============ ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended September 30,
---------------------------------
1996 1997
---------- ----------
<S> <C> <C>
CASH FLOWS USED FROM OPERATING ACTIVITIES: $ 18,477 $ 29,594
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, equipment and intangible
assets (9,962) (31,549)
Proceeds from radio station sales 18,000 51,705
Payments for radio station acquisitions (286,171) (499,247)
Payments for tower related acquisitions (8,803) (62,804)
Issuance of station investment notes receivable (56,522) (670)
Repayment of station investment note receivable 1,243
Deposits and other long-term assets (39,281) 12,076
--------- ---------
Cash used for investing activities (382,739) (529,246)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreements and other 110,590 581,000
Repayments under credit agreements (151,500) (257,000)
Borrowings under other obligations 750
Repayments of other obligations (683) (998)
Net proceeds from equity offerings and options 248,198 363
Net proceeds from exchangeable preferred stock offering 192,089
Net proceeds from debt offering - net of discount 168,321
Additions to deferred financing costs (5,642)
Distributions to minority shareholder (314)
Dividends paid (7,221)
--------- ---------
Cash provided by financing activities 374,926 503,027
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 10,664 3,375
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,890 10,447
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,554 $ 13,822
========= =========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation - The financial statements included herein have been
prepared by American Radio Systems Corporation (American, ARS or the
Company), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, the Company
believes that the disclosures are adequate to make the information
presented not misleading and reflect all adjustments (consisting only of
normal recurring adjustments) which are necessary for a fair presentation
of results of operations for such periods. Results of interim periods may
not be indicative of results for the full year. These financial statements
should be read in conjunction with the consolidated financial statements
for the year ended December 31, 1996 and the notes thereto included in the
Company's Annual Report on Form 10-K (Form 10-K).
Restricted Cash - Restricted cash represents cash held in escrow pursuant
to Internal Revenue Code certain like-kind exchange agreements which
require the net proceeds from the sale of certain stations to be utilized
for pending acquisitions. Such agreements may be terminated at the
Company's option, in which event such cash held in escrow is required to be
utilized to reduce borrowings under the Company's credit agreement.
Reclassifications - Certain reclassifications have been made to the 1996
financial statements to conform to the 1997 presentation.
2. Pending Sale of Radio Operations and Tower Distribution: In September 1997,
ARS entered into a merger agreement with Westinghouse Electric Corporation
(Westinghouse), pursuant to which a subsidiary of Westinghouse will merge
with and into ARS, each holder of ARS common stock at the effective time of
the merger will receive $44.00 per share in cash, and ARS will become a
subsidiary of Westinghouse (the Merger). As a condition to the Merger, ARS
will distribute all of its outstanding shares of the Tower Subsidiary's
(ATS, Tower or Tower Subsidiary) common stock owned by ARS to the holders
of record of ARS common stock at or about the time of the Merger (the Tower
Distribution). As a result of the Tower Distribution, ATS will cease to be
a subsidiary of, or otherwise be affiliated with, ARS and will thereafter
operate as an independent publicly held company. ARS and ATS will enter
into certain agreements pursuant to the Merger agreement providing for,
among other things, the orderly separation of ARS and ATS, certain closing
date adjustments based on ARS' debt levels and working capital (current
assets less defined liabilities), the transfer of lease obligations to ATS
of leased space on certain towers owned or leased by ARS to ATS, and the
allocation of certain tax liabilities between ARS and ATS. The Tower
Distribution will result in a taxable gain to ARS, of which approximately
$20.0 million will be borne by Westinghouse, and the remaining obligation
currently estimated at approximately $30.0 to $40.0 million will be
required to be borne by ATS pursuant to provisions to the Merger agreement.
The Merger has been approved by the stockholders of ARS who hold sufficient
voting securities to approve such action. Consummation of the Merger is
subject to, among other things, the expiration or earlier termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (HSR Act) and the approval by the Federal
Communications Commission (FCC) of the transfer of control of ARS' FCC
licenses with respect to its radio stations to Westinghouse. Subject to the
satisfaction of such conditions, the Merger is expected to be consummated
in the second quarter of 1998.
Certain expenses incurred as a result of the Merger have been provided for
in the current period and consist primarily of professional fees.
Additional professional fees, regulatory related costs, investment banking
fees and other costs will be expensed as incurred.
5
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. Per Share Data - Earnings (loss) per common share is based on the number of
common shares outstanding during the period as adjusted for dilutive stock
options. Fully diluted earnings (loss) per share amounts are not reported
separately as the effects are not dilutive.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share," (FAS 128)
which will be effective during the fourth quarter of 1997. Had FAS 128 been
effective for the three and nine month periods ended September 30, 1997 and
1996, reported earnings (loss) per share on a pro forma basis would have
been the same as the per share amounts presented herein.
4. Income Taxes - The Company provides for income taxes at the end of each
interim period based on the estimated effective tax rate for the full
fiscal year for each tax reporting corporate entity. Cumulative adjustments
to the tax benefit (provision) are recorded in the interim period in which
a change in the estimated annual effective rate is determined.
5. Property and Equipment and Intangible Assets - Property and equipment and
intangible assets included approximately $108.7 million and $130.1 million
of assets related to radio stations held for sale or under exchange
agreements (excluding the Merger agreement) as of December 31, 1996 and
September 30, 1997, respectively. The following summary presents the
results of operations (excluding depreciation and amortization, net local
marketing agreement and corporate general and administrative expenses)
relating to these stations that are included in the accompanying unaudited
condensed consolidated financial statements for each respective period.
In thousands:
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
1996 1997 1996 1997
------- ------- ------- -------
Net operating revenues $ 6,841 $ 7,924 $14,158 $24,145
Net operating expenses 4,686 5,585 9,112 17,460
6. Offerings - In January 1997, the Company consummated a private offering of
2,000,000 shares of its 11 3/8% Cumulative Exchangeable Preferred Stock
(Exchangeable Preferred Stock) to a group of qualified institutional
investors. The Company utilized the net proceeds, which approximated $192.1
million, to repay amounts outstanding under the 1997 Credit Agreement and
fund acquisitions. The Exchangeable Preferred Stock possesses mandatory
redemption features and is classified as such in the Company's condensed
consolidated financial statements. Redemption terms and conditions of the
Exchangeable Preferred Stock are described in the Form 10-K.
In April 1997, the Company filed a registration statement on Form S-4 (No.
333-26085) and such registration statement, as amended, was declared
effective on May 13, 1997. Following effectiveness, the Company completed
an offer to exchange the shares of Series A Exchangeable Preferred Stock
for new Series B Exchangeable Preferred Stock. The offer expired in June
1997, and all Series A Exchangeable Preferred Stock was exchanged for
Series B Exchangeable Preferred Stock. The redemption terms and conditions
of the Series A and the Series B Exchangeable Preferred Stock are
essentially the same.
6
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Credit Agreements - In January 1997, the Company entered into two new
credit agreements with a syndicate of banks (the 1997 Credit Agreement),
which replaced the previously existing credit agreement. All amounts
outstanding under the previous agreement were repaid with proceeds from the
1997 Credit Agreement. The 1997 Credit Agreement consists of two separate
lending agreements, providing for facilities consisting of a $550.0 million
reducing revolver credit facility which is available through December 31,
2004, a $200.0 million revolving credit facility converting to a term loan
facility maturing December 31, 2004, and a $150.0 million term loan
facility, maturing December 31, 2004, that was available only to
repurchase, if required, certain note obligations of EZ Communications,
Inc. (EZ) that were assumed by the Company in connection with the EZ Merger
discussed in the Form 10-K and in Note 8. The $150.0 million term loan
facility was canceled in May 1997, as the Company was not required to
repurchase any of the EZ note obligations. Additional terms and conditions
of the 1997 Credit Agreement are described in the Form 10-K.
Following the closing of the 1997 Credit Agreement and repayment of amounts
outstanding under the previous agreement, the Company recognized an
extraordinary loss of approximately $1.6 million, net of a tax benefit of
$1.0 million, representing the write-off of deferred financing fees
associated with the previous agreement.
In October 1997, the Tower Subsidiary entered into a new credit agreement
with a syndicate of banks (the 1997 ATS Credit Agreement), which replaced
the previously existing credit agreement. All amounts outstanding under the
previous agreement were repaid with proceeds from the 1997 ATS Credit
Agreement. The 1997 ATS Credit Agreement provides the Tower Subsidiary with
a $250.0 million loan commitment based on ATS maintaining certain
operational ratios, and an additional $150.0 million loan at the discretion
of ATS, which is available through June 2005. Following the closing of the
1997 ATS Credit Agreement and repayment of amounts outstanding under the
previous agreement, ATS incurred an extraordinary loss in the fourth
quarter of approximately $1.1 million which will be recorded net of the
applicable income tax benefit, representing the write-off of deferred
financing fees associated with the previous agreement.
8. Acquisitions and Dispositions
General: The following acquisitions have all been accounted for by the
purchase method of accounting, and, accordingly, the operating results of
the acquired entities, to the extent that a local marketing agreement (LMA)
did not exist, have been included in consolidated operating results since
the date of acquisition. The purchase price has been allocated to the
assets acquired, principally intangible assets, and the liabilities assumed
based on their estimated fair values at the dates of acquisition. The
excess of purchase price over the estimated fair value of the net assets
acquired has been recorded as goodwill. The financial statements reflect
the preliminary allocation of certain purchase prices as the appraisals for
certain acquisitions have not yet been finalized. The Company does not
expect the final appraisals will have a material effect on the financial
position, results of operations or liquidity of the Company.
7
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Acquisitions and Dispositions - (Continued)
During the first nine months of 1997, the Company consummated the following
station and tower related transactions. See the Form 10-K for additional
information on these transactions and transactions during the nine months
of 1996.
1997 Acquisitions and Dispositions:
EZ Merger: On April 4, 1997, the Company consummated the merger of EZ into
the Company (the EZ Merger). Pursuant to the EZ Merger, the Company
acquired eighteen FM and six AM stations in eight markets: Seattle, St.
Louis, Pittsburgh, Sacramento, Charlotte, Kansas City, New Orleans and
Philadelphia, assumed approximately $222.4 million of long-term debt (of
which approximately $72.7 was paid at closing), paid approximately $108.9
million in cash and issued approximately 8,344,000 shares of Class A Common
Stock to the EZ stockholders valued at approximately $310.8 million
(excluding approximately 362,000 shares of common stock reserved for
options held by former employees of EZ valued at approximately $12.5
million). The aggregate purchase price was approximately $830.0 million,
including goodwill, approximately $7.0 million in transaction costs, and
assumed liabilities (including deferred income taxes) of approximately
$428.0 million. The EZ Merger has been accounted for using an effective
closing date of April 1, 1997, as the difference between actual and
effective closing date on the results of operations, liquidity and
financial position was not material.
As part of the EZ Merger, the Company assumed EZ's obligations with respect
to $150.0 million principal amount of the EZ 9.75% Senior Subordinated
Notes (the 9.75% Notes) and repaid all borrowings under the EZ credit
facility with borrowings from the 1997 Credit Agreement. As a consequence
of the EZ Merger, the Company was required to offer to purchase the 9.75%
Notes at 101% of their principal amount. Such offer commenced in April 1997
and expired in May 1997, with no such notes being tendered for purchase.
The 9.75% Notes have semi-annual interest payments due on June 1 and
December 1, have certain redemption terms at the option of the Company and
are due in 2005. The 9.75% Notes are general unsecured obligations of the
Company and are guaranteed by the restricted subsidiaries as described in
Note 11.
Austin: In March 1997, the Company acquired KAMX-FM, KKMJ-FM, and KJCE-AM,
for approximately $28.7 million.
Baltimore: In February 1997, the Company acquired WWMX-FM and WOCT-FM for
approximately $90.0 million.
Boston/Worcester: In January 1997, the Company acquired WAAF-FM and WWTM-AM
for approximately $24.8 million. The Company began programming and
marketing the station pursuant to an LMA agreement in August 1996.
In July 1997, the Company acquired WNFT-AM for approximately $4.5 million.
The Company began programming and marketing the station pursuant to an LMA
agreement in June 1997.
8
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Acquisitions and Dispositions - (Continued)
Charlotte and Pittsburgh: In May 1997, the Company, as successor to EZ,
consummated an asset exchange agreement pursuant to which the Company
exchanged WIOQ-FM and WUSL-FM in Philadelphia for WRFX-FM, WPEG-FM,
WBAV-FM, WGIV-AM (formerly WBAV-AM) and WFNZ-AM serving Charlotte, and also
consummated an asset purchase agreement to acquire WNKS-FM serving
Charlotte for approximately $10.0 million. In February 1997, EZ and the
seller entered into a consent decree with the U.S. Justice Department (the
Charlotte Consent Decree). Pursuant to the Charlotte Consent Decree, and in
compliance with the FCC's multiple ownership rules, EZ agreed to dispose of
WRFX-FM, which was transferred to an independent and insulated trustee upon
consummation of the exchange. In August 1997, the Company consummated an
asset exchange agreement pursuant to which it exchanged WRFX-FM for
WDSY-FM, serving Pittsburgh, and $20.0 million.
Cincinnati: In January 1997, the Company merged with an unaffiliated
corporation pursuant to which it became a party to an agreement to acquire
WGRR-FM, for approximately $30.5 million. Pursuant to such merger, the
Company issued 18,341 shares of Class A Common Stock valued at
approximately $0.5 million. In May 1997, the Company consummated the
acquisition of WGRR-FM.
Cincinnati and Rochester: In February 1997, the Company acquired WVOR-FM,
WPXY-FM, WHAM-AM and WHTK-AM for approximately $31.5 million including
working capital. In April 1997, the Company exchanged WVOR-FM, WHAM-AM and
WHTK-AM serving Rochester, together with $16.0 million, for WKRQ-FM serving
Cincinnati.
Dayton: In February 1997, the Company acquired WXEG-FM for approximately
$3.6 million and acquired WLQT-FM and WBBT-FM (formerly WDOL-FM) for
approximately $12.0 million. (See Note 9).
Detroit, Philadelphia, Sacramento: In February 1997, the Company exchanged
WFLN-FM in Philadelphia for KSFM-FM and KMJI-AM serving Sacramento and sold
WQRS-FM in Detroit for approximately $20.0 million. The net assets were
classified as net assets under exchange agreement as of December 31, 1996.
See Sacramento below.
Fresno: In April 1997, the Company acquired KOQO-AM and KOQO-FM for
approximately $6.0 million.
Omaha: In May 1997, the Company sold the assets of KGOR-FM, KFAB-AM and
Business Music Service Inc. for approximately $38.0 million. Proceeds of
the sale were initially held as restricted cash.
Portsmouth: In September 1997, the Company acquired WQSO-FM (formerly
WSRI-FM), WZNN-AM, WMYF-AM and WEZR-FM for approximately $6.0 million. The
Company began programming and marketing the stations pursuant to an LMA
agreement in July 1997.
Rochester: In April 1997, the Company acquired WZNE-FM (formerly WAQB-FM),
a newly licensed Class A FM station for approximately $3.5 million.
In July 1997, the Company sold the assets of WCMF-AM for approximately $0.7
million.
9
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Acquisitions and Dispositions - (Continued)
Sacramento: In March 1997, the Company acquired KXOA-FM, KQPT-AM (formerly
KXOA-AM) and KZZO-FM (formerly KQPT-FM) for approximately $50.0 million. In
October 1996, the Company entered into an agreement to sell KXOA-FM for
approximately $27.5 million. After the expiration of the HSR Act waiting
period, the other party to the agreement began programming and marketing
KXOA-FM pursuant to an LMA in January 1997. As a condition to consummation
of the EZ merger, KXOA-FM was transferred to an independent and insulated
trustee (under a trust for the benefit of the Company) and was held by the
trustee subject to sale pursuant to the foregoing agreement. In June 1997,
the trustee sold KXOA-FM to the ultimate purchaser.
In April 1997, the Company sold KMJI-AM for approximately $1.5 million.
Sacramento and West Palm Beach: In March 1997, the Company consummated an
agreement to exchange KSTE-AM in Sacramento and $33.0 million in cash for
WEAT-FM, WEAT-AM and WOLL-FM serving West Palm Beach. (See Note 9).
St. Louis: In July 1997, the Company sold the assets of KTRS-AM (formerly
KSD-AM) for approximately $10.0 million.
San Jose: In February 1997, the Company acquired KBAY-FM and KKSJ-AM for
approximately $31.0 million. (See Note 9).
In September 1997, the Company sold the assets of KKSJ-AM for approximately
$3.2 million. The acquirer began programming and marketing the stations
pursuant to an LMA agreement in June 1997.
Seattle and New Orleans: In April 1997, the Company exchanged WEZB-FM,
WRNO-FM and WBYU-AM, serving New Orleans, and $7.5 million for KBKS-FM
(formerly KCIN-FM) and KRPM-AM serving Seattle.
In June 1997, the Company sold the assets of KMPS-AM for approximately $1.8
million.
Tower Subsidiary: In September 1997, the Tower Subsidiary acquired nine
tower sites in Massachusetts and Rhode Island for approximately $7.2
million and land in Oklahama for approximately $0.6 million.
In August 1997, the Tower Subsidiary acquired six tower sites in
Connecticut and Rhode Island for approximately $1.5 million.
In July 1997, the Tower Subsidiary acquired the following:
(i) the assets of three affiliated entities which owned and operated
towers and a tower site management business in southern California for
an aggregate purchase price of approximately $33.5 million;
(ii) the assets of one tower site in Washington, D.C. for
approximately $0.9 million;
(iii) the assets of six tower sites in Pennsylvania for approximately
$0.3 million and
(iv) the rights to build five tower sites in Maryland for
approximately $0.5 million.
10
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Acquisitions and Dispositions - (Continued)
In May 1997, Tower Subsidiary acquired 21 tower sites and a tower site
management business in Georgia, North Carolina and South Carolina for
approximately $5.4 million. The agreement also provides for additional
payments by the Tower Subsidiary if the seller is able to arrange for the
purchase or management of tower sites presently owned by an unaffiliated
public utility in South Carolina, which payments could aggregate up to
approximately $1.2 million.
In May 1997, the Tower Subsidiary acquired the assets of two affiliated
companies engaged in the business of acquiring and developing tower sites
in various locations in the United States for approximately $13.0 million.
In May 1997, the Tower Subsidiary and an unaffiliated party formed a
limited liability corporation to own and operate communication towers which
will be constructed on over 50 tower sites in northern California. The
Tower Subsidiary paid approximately $0.8 million to the unaffiliated party
and currently owns a 70% interest in the entity, with the remaining 30%
owned by such party. The Tower Subsidiary is obligated to provide
additional financing for the construction of these and any additional
towers it may approve; the obligation for such 50 tower sites is estimated
to be approximately $5.0 million. The accounts of the limited liability
corporation are included in the consolidated financial statements with the
other party's investment reflected as minority interest in subsidiary.
In May 1997, the Tower subsidiary acquired three tower sites in
Massachusetts for approximately $0.26 million.
The following unaudited pro forma summary presents the consolidated results
of operations as if the transactions had occurred as of January 1, 1996
after giving effect to certain adjustments, including depreciation and
amortization of assets and interest expense on any debt incurred to fund
the acquisitions. These unaudited pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of what would
have occurred had the transactions actually been made as of January 1, 1996
or of results which may occur in the future.
In thousands, except per share data:
Nine Months Ended Nine Months Ended
------------------ ------------------
September 30, 1996 September 30, 1997
------------------ ------------------
Net revenues $199,476 $297,606
Loss before extraordinary loss (14,376) (7,558)
Net loss (14,376) (9,197)
Net loss applicable to common
stockholders (16,943) (31,967)
Net loss per common share $ (0.84) $ (1.09)
11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Pending Transactions - The Company has numerous pending transactions which
were described in the Form 10-K or have been entered into subsequent
thereto. The following transactions are currently pending:
Dayton and Kansas City: In June 1997, the Company entered into an asset
exchange agreement pursuant to which it will acquire WDAF-AM, KYYS-FM,
KMXV-FM and KUDL-FM serving Kansas City in exchange for WXEG-FM, WBTT-FM,
WLQT-FM, WMMX-FM, WTUE-FM and WONE-AM serving Dayton. Subject to the
receipt of FCC approval (the HSR Act waiting period was terminated early),
the transaction is expected to be consummated in the fourth quarter of 1997
or the first quarter of 1998. The Company began programming and marketing
KYYS-FM and KMXV-FM pursuant to an LMA agreement in June 1997.
Kansas City, Sacramento and St. Louis: In July 1997, the Company entered
into an agreement to acquire KLOU-FM in St. Louis in exchange for KUDL-FM
and WDAF-AM in Kansas City and approximately $7.0 million. The Company also
entered into a related agreement with the same party, pursuant to which the
Company will sell KCTC-AM serving Sacramento for approximately $4.0
million. Subject to the receipt of FCC approval, (the HSR Act waiting
period has expired), the transactions are expected to be consummated in the
fourth quarter.
Palm Springs: In September 1997, the Company entered into an agreement to
acquire KEZN-FM for approximately $5.1 million. The Company began
programming and marketing the stations pursuant to an LMA agreement in
October 1997. Subject to the receipt of FCC approval, the transaction is
expected to be consummated in the fourth quarter.
Portland, Sacramento, San Francisco and San Jose: In April 1997, the
Company entered into an asset exchange agreement pursuant to which it will
acquire KINK-FM, serving Portland, Oregon, KBRG-FM, serving Fremont/San
Francisco, California, $2.0 million in cash, and 150,000 shares of common
stock of Latin Communications, Inc., in exchange for KBAY-FM, serving San
Jose, and KSSJ-FM, serving Sacramento. The agreement also provides for the
exchange of KINK-FM for KBAY-FM in the event regulatory approval for the
exchange of KBRG-FM and KSSJ-FM cannot be obtained. Subject to certain
conditions, including the receipt of FCC approval and satisfactory
resolution of the matters in the subsequent paragraph, and, in the case of
the exchange of KSSJ-FM for KBRG-FM, Justice Department approval of the
acquisition pursuant to a consent decree, the transaction is expected to be
consummated in the fourth quarter.
In June 1997, the Company and the seller received requests for additional
information about the acquisition from the Antitrust Division of the U.S.
Department of Justice. Under the HSR Act and the regulations thereunder,
the acquisition may not be consummated until 20 days after the Company and
the seller have substantially complied with such additional information
requests. Although the Company believes the acquisition and divestiture
complied with the antitrust laws, the Department of Justice or others could
take action under the antitrust laws to enjoin or otherwise challenge such
acquisition/divestiture. (See Note 10).
Riverside/San Bernardino and Sun City: In March 1997, the Company entered
into an agreement to acquire KFRG-FM, serving the Riverside/San Bernardino
market, and KXFG-FM, serving Sun City, California, for approximately $60.0
million. The Company began programming and marketing the stations pursuant
to an LMA agreement in August 1997. FCC approval has been received and the
HSR Act waiting period was terminated early. The acquisition is expected to
be consummated in the first quarter of 1998.
St. Louis: In September 1997, the Company entered into an agreement to sell
the assets of KFNS-AM serving the St. Louis, Missouri market for
approximately $3.8 million. Subject to the receipt of FCC approval, the
transaction is expected to be consummated in the first quarter of 1998.
12
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Pending Transactions - (Continued)
San Jose and Monteray: In March 1997, the Company entered into a merger
agreement pursuant to which the Company will acquire the assets of KEZR-FM
and KLUE-FM serving Monteray, California in exchange for approximately
723,000 shares of Class A Common Stock valued at approximately $20.0
million and $4.0 million in cash. In June 1997, the Company and the seller
each received a Civil Investigative Demand from the Antitrust Division of
the Department of Justice requesting certain documentary materials
regarding the merger and the purchase, sale, or trade or other transfer of
radio stations in San Jose, California. Subject to the receipt of FCC
approval and resolution of the matters raised by the Antitrust Division
described above, the acquisition is expected to be consummated in the
fourth quarter. (See Note 10).
Temple: In May 1997, the Company entered into an agreement to acquire radio
station KKIK-FM, licensed to Temple, Texas (in the Austin area) for
approximately $3.7 million. Subject to the approval of the FCC, the
transaction is expected to be consummated in the fourth quarter.
West Palm Beach: In July 1997, the Company entered into an agreement to
acquire WTPX-FM for approximately $11.0 million. The Company began
programming and marketing the stations pursuant to an LMA in June 1997. In
October 1997, the Company entered into an agreement to terminate these
agreements.
10. Subsequent Events - Subsequent to September 30, 1997, the Company
consummated the following transactions:
Hartford: In November 1997, the Company acquired the New England Weather
Service, based in Hartford, Connecticut pursuant to the exercise of an
option which the Company acquired in connection with its acquisition of
WTIC-AM and WTIC-FM in May 1996. The transaction was financed by a $1.0
million escrow deposit which was paid at the time the stations were
acquired.
Lebanon: In October 1997, the Company acquired WMMA-FM serving the Lebanon,
Ohio market for approximately $3.0 million.
San Jose: In October 1997, the Company entered into an agreement to sell
KSJO-FM for approximately $30.0 million. Subject to the receipt of FCC
approval, and the expiration or earlier termination of the HSR Act waiting
period, the transaction is expected to be consummated in the first quarter
of 1998.
West Palm Beach: In October 1997, the Company sold the assets of WKGR-FM,
WOLL-FM, and WBZT-AM for approximately $29.0 million in cash and a tower
site which was transferred to the Tower Subsidiary.
In October 1997, the Company entered into an agreement to sell WEAT-AM
serving West Palm Beach, Florida for approximately $1.5 million. Subject to
the receipt of FCC approval, the transaction is expected to be consummated
in the first quarter of 1998.
13
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsequent Events - (Continued)
Tower Subsidiary: In October 1997, the Tower Subsidiary entered into an
agreement to merge with a company operating in Florida (the OPM
transaction) for a maximum purchase price of approximately $105.0 million.
By December 31, 1996 such company is expected to own approximately ninety
towers. The final purchase price is contingent upon the seller's ability to
build and construct tower sites and produce certain cashflows from those
towers. The Tower Subsidiary has also agreed to provide financing, on
identified sites that are in various stages of receiving site permits, to
enable the seller to construct an additional 190 towers, the aggregate
amount of such financing required to be provided cannot exceed $37.0
million.
In October 1997, the Tower Subsidiary entered into an agreement to acquire
a communications site with twelve towers in Tucson, Arizona for
approximately $12.0 million.
Consummation of these transactions is conditioned on various matters,
including, in the case of the OPM transaction, the expiration or earlier
termination of the HSR Act waiting period. Subject to the satisfaction of
such conditions, the acquisitions are expected to be consummated in the
first quarter of 1998.
In October 1997, the Tower Subsidiary acquired two affiliated entities
operating tower sites and a tower site management business located
principally in northern California for approximately $46.5 million,
including assumed liabilities. In connection therewith, the Tower
Subsidiary had also agreed to loan approximately $.65 million to the
sellers on an unsecured basis, of which approximately $0.25 million had
been advanced through September 30, 1997 and was repaid at the closing.
In October 1997, the Tower Subsidiary acquired tower sites and certain
video, voice and data transport operations for approximately $70.25
million. The acquired business owned or leased approximately 125 towers,
principally in the Mid-Atlantic region, with the remainder in California
and Texas.
The Company is also pursuing the acquisitions of radio and tower properties
and tower businesses in new and existing locations, although there are no
definitive purchase agreements with respect thereto.
14
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11. Subsidiary Guarantees:
The Company's payment obligations under the 9.00% Senior Subordinated Notes
(9.00% Notes) and the 9.75% Notes are fully and unconditionally guaranteed
on a joint and several basis (collectively, the Subsidiary Guarantees), on
a senior basis (in the case of the 9.75% Notes) and a senior subordinated
basis (in the case of the 9.00% Notes) by all of its present and any future
Restricted Subsidiaries (collectively Restricted Guarantors). The
Restricted Subsidiaries have also unconditionally guaranteed, and any
future Restricted Subsidiaries will be required to guarantee, on a joint
and several basis (collectively, the Senior Subsidiary Guarantees), all
obligations of the Company under the 1997 Credit Agreement. The Tower
Subsidiary has not guaranteed obligations under the Credit Agreements or
either series of the Senior Subordinated Notes.
The 9.00% Notes and the Subsidiary Guarantees are subordinated to all
Senior Debt (as defined) of the Company including indebtedness under the
1997 Credit Agreement and the Senior Subsidiary Guarantees. The indenture
governing each series of the Senior Subordinated Notes contains limitations
on the amount of indebtedness (including Senior Debt) which the Company may
incur.
With the intent that the Subsidiary Guarantees not constitute fraudulent
transfers or conveyances under applicable state or federal law, the
obligation of each guarantor under its Subsidiary Guarantee is also limited
to the maximum amount as will, after giving effect to any rights to
contribution of such guarantor pursuant to any agreement providing for an
equitable contribution among such guarantor and other affiliates of the
Company of payments made by guarantees by such parties, result in the
obligations of such guarantor in respect of such maximum amount not
constituting a fraudulent conveyance.
The following unaudited condensed consolidating financial data illustrates
the composition of the combined guarantors. The Company believes that
separate complete financial statements of the respective guarantors would
not provide additional material information which would be useful in
assessing the financial composition of the guarantors. No single guarantor
has any significant legal restrictions on the ability of investors or
creditors to obtain access to its assets in event of default on the
Subsidiary Guarantee, other than in the case of the 9.00% Notes its
subordination to Senior Debt described above.
Investments in subsidiaries are accounted for by the parent on the equity
method for purposes of the unaudited supplemental consolidating
presentation. Earnings (losses) of subsidiaries are therefore reflected in
the parent's investment accounts and earnings. The principal elimination
entries eliminate investments in subsidiaries and intercompany balances and
transactions.
15
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Unaudited Condensed Consolidating Balance Sheet
September 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------- --------------- ------------- -------------
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 8,856 $ 2,671 $ 2,295 $ 13,822
Accounts receivable, net 49,697 32,902 1,560 84,159
Prepaid expenses and other current assets 4,067 1,934 269 6,270
Deferred income taxes 3,201 169 3,370
------------- ------------- --------------- ------------- -------------
Total current assets 65,821 37,676 4,124 0 107,621
PROPERTY AND EQUIPMENT, NET 88,439 48,277 43,941 180,657
OTHER ASSETS:
Restricted cash 34,441 34,441
Investment in and advances to subsidiaries 1,254,013 $ (1,254,013) 0
Investment notes receivable 25,496 260 25,756
Goodwill - net 341,953 20,681 52,438 415,072
FCC licenses - net 8,609 1,129,798 1,138,407
Other intangible assets - net 29,861 2,052 7,380 39,293
Deposits and other long-term assets 11,780 2,756 14,536
Deferred income taxes 7,142 7,142
------------- ------------- --------------- ------------- --------------
Total other assets 1,713,295 1,152,531 62,834 (1,254,013) 1,674,647
------------- ------------- --------------- ------------- -------------
TOTAL ASSETS $ 1,867,555 $ 1,238,484 $ 110,899 $ (1,254,013) $ 1,962,925
============= ============= =============== ============ =============
</TABLE>
16
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Unaudited Condensed Consolidating Balance Sheet
September 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------ ----------- -------------- ------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C> <C> <C> <C>
Current maturities of long-term debt $ 468 $ 108 $ 576
Accounts payable and accrued expenses 29,619 $ 12,979 5,144 47,742
------------ ----------- -------------- ------------- -----------
Total current liabilities 30,087 12,979 5,252 0 48,318
NON-CURRENT LIABILITIES:
Deferred income taxes 181,669 21,522 644 203,835
Other long-term liabilities 10,968 75 29 11,072
Long-term debt 754,344 54,095 808,439
------------ ----------- -------------- ------------- -------
Total non-current liabilities 946,981 21,597 54,768 0 1,023,346
MINORITY INTEREST IN SUBSIDIARIES 774 774
REDEEMABLE PREFERRED STOCK 215,550 215,550
STOCKHOLDERS' EQUITY:
Preferred Stock 1 1
Common Stock 295 295
Additional paid-in capital 675,325 1,194,704 51,403 $ (1,246,107) 675,325
Unearned compensation (226) (226)
Retained earnings 9,204 (1,298) (7,906) 0
Treasury stock (458) (458)
------------ ----------- -------------- ------------- ------------
Total stockholders' equity 674,937 1,203,908 50,105 (1,254,013) 674,937
------------ ----------- ------------- ------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,867,555 $ 1,238,484 $ 110,899 $ (1,254,013) $ 1,962,925
============ =========== ============== ============= ===========
</TABLE>
17
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Unaudited Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
-------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net broadcast revenues $ 169,690 $ 83,212 $ (36) $ 252,866
Tower revenues $ 7,901 (255) 7,646
License fees charged to Parent (12,590) 12,590 0
-------------- -------------- -------------- ------------- --------------
Total net revenues 157,100 95,802 7,901 (291) 260,512
Operating expenses excluding depreciation and
amortization, net local marketing
agreement and corporate general and
administrative expenses 117,289 50,513 4,507 (291) 172,018
Net local marketing agreement expenses (revenues) 2,032 (118) 1,914
Depreciation and amortization 12,845 27,423 2,706 42,974
Merger expenses 300 300
Corporate general and administrative expenses 6,601 6,601
-------------- -------------- -------------- ------------- --------------
Operating income 18,033 17,984 688 0 36,705
Other income (expense):
Interest expense (38,756) (1,318) (40,074)
Interest income 1,415 97 1,512
Gains (losses) on sale of assets and other, net 682 (3) (224) 455
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level 7,887 (7,887) 0
-------------- -------------- -------------- ------------- --------------
Income (loss) before income taxes and
extraordinary item (10,739) 17,981 (757) (7,887) (1,402)
Benefit (provision ) for income taxes 10,111 (9,386) 49 774
-------------- -------------- -------------- ------------- --------------
Income (loss) before extraordinary loss (628) 8,595 (708) (7,887) (628)
Extraordinary loss on extinguishment of debt
- net of tax benefit (1,639) (1,639)
-------------- -------------- -------------- ------------- --------------
Net income (loss) $ (2,267) $ 8,595 $ (708) $ (7,887) $ (2,267)
============== ============== ============== ============= ==============
</TABLE>
18
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Unaudited Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 63,806 $ 37,952 $ (13) $ 101,745
Tower revenues $ 4,521 (99) 4,422
License fees charged to Parent (4,161) 4,161 0
------------- ------------- -------------- ----------- -------------
Total net revenues 59,645 42,113 4,521 (112) 106,167
Operating expenses excluding depreciation and
amortization, net local marketing agreement
and corporate general and administrative expenses 42,966 21,775 2,658 (112) 67,287
Net local marketing agreement expenses (revenues) 1,040 (466) 574
Depreciation and amortization 5,015 13,011 1,384 19,410
Merger expenses 300 300
Corporate general and administrative expenses 2,667 2,667
------------- ------------- -------------- ----------- -------------
Operating income (loss) 7,657 7,793 479 0 15,929
Other income (expense):
Interest expense (15,838) (1,000) (16,838)
Interest income 327 40 367
Gains (losses) on sale of assets and other, net (121) (62) (183)
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level 3,188 (3,188) 0
------------- ------------- -------------- ----------- -------------
Income (loss) before income taxes and extraordinary item
(4,787) 7,793 (543) (3,188) (725)
Benefit (provision ) for income taxes 4,463 (4,062) 401
------------- ------------- -------------- ----------- -------------
Net income (loss) $ (324) $ 3,731 $ (543) $ (3,188) $ (324)
============= ============= ============== =========== =============
</TABLE>
19
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11. Subsidiary Guarantees - (continued):
<TABLE>
<CAPTION>
Unaudited Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
-------------- ---------- ------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from (used for) operating activities $ (13,986) $ 40,462 $ 3,118 $ 29,594
-------------- ---------- ------------- --------------- ----------
Investing Activities:
Payments for purchase of property and
Equipment and intangible assets (23,348) (8,201) (31,549)
Proceeds from radio station sales 51,705 51,705
Payments for radio station acquisitions (499,247) (499,247)
Payments for tower related acquisitions (62,804) (62,804)
Issuance of station investment notes receivable (410) (260) (670)
Repayment for station investment notes receivable 1,243 1,243
Deposits and other long-term assets 14,453 (48) (2,329) 12,076
-------------- ---------- ------------- --------------- ----------
Cash flows used by investing activities (455,604) (48) (73,594) (529,246)
-------------- ---------- ------------- --------------- ----------
Financing Activities:
Borrowings under Credit Agreements and other 531,000 50,000 581,000
Repayment of Credit Agreements (257,000) (257,000)
Borrowings under other obligations 750 750
Repayment of other obligations (667) (331) (998)
Net proceeds from equity offerings and options 363 363
Net proceeds from exchangeable preferred stock 192,089 192,089
Additions to deferred financing costs (5,600) (42) (5,642)
Distributions to minority interest (314) (314)
Dividends paid (7,221) (7,221)
Investment in and advances to subsidiaries 16,658 (37,743) 21,085 0
-------------- ---------- ------------- --------------- ----------
Cash flows from financing activities 470,372 (37,743) 70,398 503,027
-------------- ---------- ------------- --------------- ----------
Increase (decrease) in cash and cash equivalents 782 2,671 (78) 3,375
Cash and cash equivalents at beginning
of period 8,074 2,373 10,447
-------------- ---------- ------------- --------------- ----------
Cash and cash equivalents at end of period $ 8,856 $ 2,671 $ 2,295 $ $ 13,822
============== ========== ============= =============== ==========
</TABLE>
20
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains "forward-looking statements" including statements
concerning projections, plans, objectives, future events or performance and
underlying assumptions and other statements which are other than statements of
historical fact. The Company wishes to caution readers that certain important
factors may have affected and could in the future affect the Company's actual
results and could cause the Company's actual results for subsequent periods to
differ materially from those expressed in any forward-looking statement made by
or on behalf of the Company. These important factors include among others, the
following: (i) any adverse change in the laws, regulations and policies
governing the operation, ownership and acquisition of radio stations, including,
but not limited to, those established by Congress, the Federal Communications
Commission and the Antitrust Division of the U.S. Justice Department; and (ii)
the Company's financial leverage as a result of borrowings under the Company's
credit agreements, which bear interest at variable rates, and the issuance of
the Senior Subordinated Notes could make it vulnerable to an increase in
interest rates or a downturn in the operating performance of its radio stations
or a downturn in economic conditions.
As of September 30, 1997, the Company owned and/or operated approximately 100
radio stations. See the Form 10-K and the unaudited condensed consolidated
financial statements for a description of the 1997 and 1996 station and tower
acquisitions. As of September 30, 1996, the Company owned and/or operated
approximately 70 radio stations. These transactions have significantly affected
operations for the three and nine months ended September 30, 1997 as compared to
the three and nine months ended September 30, 1996.
Three months ended September 30, 1997 and 1996
Net revenues were $106.2 million for the three months ended September 30, 1997
compared to $52.5 million for the same three months in 1996, an increase of
$53.7 million or 102.3%. This increase was attributable to revenue growth in
some of the Company's existing markets and, to a more substantial extent, the
impact of the EZ Merger and other acquisitions that occurred in the latter half
of 1996 and 1997.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $67.3 million for the three months ended September 30, 1997 compared to
$35.4 million for the same period in 1996, an increase of $31.9 million or
90.1%. This increase was due to the impact of increased costs associated with
the Company's revenue growth.
Net local marketing agreement expenses were $0.6 million for the three months
ended September 30, 1997 compared to $2.3 million for the same three months in
1996. Local marketing agreement expenses for the three months ended September
30, 1997 are presented net of approximately $0.5 million of revenues earned
under such agreements. Local marketing agreement expenses for the same period in
1996 are presented net of approximately $1.0 million of revenues earned under
such agreements. The change in the balances for each period reflects the timing
of pending station acquisitions and dispositions.
Depreciation and amortization was $19.4 million and $6.1 million for the three
months ended September 30, 1997 and September 30, 1996, respectively, an
increase of $13.3 million. This increase was primarily attributable to the
increase in depreciable and amortizable assets resulting from the 1996 and 1997
acquisitions and, to a lesser extent, the impact of increased values being
ascribed to FCC licenses in the allocation of purchase prices of 1997 station
acquisitions.
21
<PAGE>
Results of Operations - (continued):
Corporate general and administrative expenses increased to $2.7 million for the
three months ended September 30, 1997, from $1.3 million for the three months
ended September 30, 1996, an increase of $1.4 million or 107.7%. This increase
was primarily attributable to the higher personnel costs associated with
supporting the Company's greater number of stations and tower properties.
Interest expense was $16.8 million for the three months ended September 30, 1997
compared to $6.3 million for the 1996 period, an increase of $10.5 million. The
increase is related to higher borrowing levels under the Company's credit
agreements in 1997 as compared to 1996 which resulted from the 1996 and 1997
acquisitions.
Interest income was $0.4 million for the three months ended September 30, 1997
compared to $1.1 million for the three months ended September 30, 1996, a
decrease of $0.7 million. The decrease is attributable to lower investable cash
balances in 1997 and higher interest income earned on certain station investment
notes in 1996 as compared to 1997.
The income tax benefit for the three months ended September 30, 1997 was $0.4
million as compared to the tax provision of $1.5 million for three months ended
September 30, 1996. The effective tax rate for the three months ended September
30, 1997 was approximately 55.3% compared to 62.0% in 1996. The effective tax
rate for the three months ended September 30, 1997 is reflective of the
cumulative adjustment required to maintain the estimated annual effective rate
of 55.2%. The effective rate in 1996 and 1997 is reflective of the impact of
permanent differences, principally amortization of non-deductible goodwill on
certain stock acquisitions.
Preferred stock dividends for the three months ended September 30, 1997 were
$8.5 million compared to $2.4 million in 1996. The dividends for the 1997 period
include $2.4 million of dividends attributable to the Convertible Preferred
Stock issued in late June 1996 and $6.1 million of dividends attributable to the
Cumulative Exchangeable Preferred Stock issued in late January 1997. The
dividends for the 1996 dividends are attributable to the Convertible Preferred
Stock.
Net loss applicable to common stockholders was $8.8 million for the three months
ended September 30, 1997 compared to $1.5 million for the three months ended
September 30, 1996, as a result of the factors discussed above.
Nine months ended September 30, 1997 and 1996
Net revenues were $260.5 million for the nine months ended September 30, 1997
compared to $113.6 million for the same nine months in 1996, an increase of
$146.9 million or 129.3%. This increase was attributable to revenue growth in
some of the Company's existing markets and, to a more substantial extent, the
impact of the EZ Merger in 1997 and acquisitions that occurred in the latter
half of 1996 and first nine months of 1997.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $172.0 million for the nine months ended September 30, 1997 compared to
$78.2 million for the same period in 1996, an increase of $93.8 million or
119.9%. This increase was due to the impact of increased costs associated with
the Company's revenue growth.
Net local marketing agreement expenses were $1.9 million for the nine months
ended September 30, 1997 compared to $4.9 million for the same nine months in
1997, a decrease of $3.0 million. Local marketing agreement expenses for the
nine months ended September 30, 1997 and 1996 are presented net of approximately
$2.6 million and $1.3 million, respectively, of revenues earned under such
agreements. The change in the balances for each period reflect the timing of
pending station acquisitions and dispositions.
22
<PAGE>
Results of Operations - (continued):
Depreciation and amortization was $43.0 million and $11.0 million for the nine
months ended September 30, 1997 and 1996, respectively, an increase of $32.0
million. This increase was primarily attributable to the increase in depreciable
and amortizable assets resulting from the 1996 and 1997 acquisitions and, to a
lesser extent, the impact of increased values being ascribed to FCC licenses in
the allocation of purchase prices of 1997 station acquisitions.
Corporate general and administrative expenses increased to $6.6 million for the
nine months ended September 30, 1997 from $3.6 million for the nine months ended
September 30, 1996, an increase of $3.0 million or 83.3%. This increase was
primarily attributable to the higher personnel costs associated with supporting
the Company's greater number of stations and tower properties.
Interest expense was $40.1 million for the nine months ended September 30, 1997
compared to $15.2 million for the 1996 period, an increase of $24.9 million or
163.8%. The increase is related to higher borrowing levels under the Company's
credit agreements in 1997 as compared to 1996 which resulted from the 1996 and
1997 acquisitions.
Interest income was $1.5 million for the nine months ended September 30, 1997
compared to $4.7 million for the nine months ended September 30, 1996, a
decrease of $3.2 million. The decrease is attributable to lower investable cash
balances in 1997 and higher interest income earned on certain station investment
notes in 1996 as compared to 1997.
The income tax benefit for the nine months ended September 30, 1997 was $0.8
million as compared to a provision of $3.0 million for nine months ended
September 30, 1996. The effective tax rate for the nine months ended September
30, 1997 was approximately 55.2% compared to 52.4% in 1996. The higher effective
rate in 1997 is due to the effect of permanent differences, principally
amortization of non-deductible goodwill on the EZ merger.
The extraordinary loss for the nine months ended September 30, 1997 was $1.6
million, net of a $1.0 million tax benefit. The extraordinary loss was a result
of certain deferred financing costs written off in January 1997 pursuant to the
extinguishment of debt under the Company's previous credit agreement.
Preferred stock dividends for the nine months ended September 30, 1997 were
$22.8 million compared to $2.6 million for the 1996 period. The dividends for
the 1997 period include $7.2 million of dividends attributable to the
Convertible Preferred Stock issued in late June 1996 and $15.6 million of
dividends attributable to the Cumulative Exchangeable Preferred Stock issued in
late January 1997. The dividends for the 1996 dividends are attributable to the
Convertible Preferred Stock.
Net loss applicable to common stockholders was $25.0 million for the nine months
ended September 30, 1997 compared to net income applicable to common
stockholders of $0.1 million for the nine months ended September 30, 1996, as a
result of the factors discussed above.
Liquidity and Capital Resources
The Company's liquidity needs arise from its acquisition-related activities,
debt service, working capital, capital expenditures and preferred stock dividend
payments. Historically, the Company has met its operational liquidity needs with
internally generated funds and has financed the acquisition of radio
broadcasting properties and tower related properties, including related working
capital needs, with a combination of bank borrowings and proceeds from the sale
of the Company's equity and debt securities. For the nine months ended September
30, 1997, cash flows from operating activities were $29.6 million, as compared
to $18.5 million for the nine months ended September 30, 1996. The change is
primarily attributable to working capital investments related to station
acquisition and growth.
23
<PAGE>
Liquidity and Capital Resources - (continued)
Cash flows used for investing activities were $529.2 million for the nine months
ended September 30, 1997 as compared to $382.7 million for the nine months ended
September 30, 1996. The increase is attributable to the increased acquisition
activity in 1997 as compared to 1996.
Cash provided by financing activities was $503.0 million for the nine months
ended September 30, 1997 as compared to $374.9 million for the nine months ended
September 30, 1996. The increase in 1997 is due to the exchangeable preferred
stock offering described below and the impact of borrowings under the Company's
credit agreements.
Pending Sale of Radio Operations and Tower Distribution: In September 1997, ARS
entered into a merger agreement with Westinghouse, pursuant to which a
subsidiary of Westinghouse will merge with and into ARS, each holder of ARS
common stock at the effective time of the Merger will receive $44.00 per share
in cash, and ARS will become a subsidiary of Westinghouse. As a condition to the
Merger, ARS will distribute all of the outstanding shares of the Tower
Subsidiary's (ATS, Tower or Tower Subsidiary) common stock owned by ARS to the
holders of record of ARS common stock at or about the time of the Merger. As a
result of the Tower Distribution, ATS will cease to be a subsidiary of, or
otherwise be affiliated with, ARS and will thereafter operate as an independent
publicly held company. ARS and ATS will enter into certain agreements pursuant
to the Merger agreement providing for, among other things, the orderly
separation of ARS and ATS, certain closing date adjustments based on ARS' debt
levels and working capital (current assets less defined liabilities), the
transfer of lease obligations to ATS of leased space on certain towers owned or
leased by ARS to ATS, and the allocation of certain tax liabilities between ARS
and ATS. The Tower Distribution will result in a taxable gain to ARS, of which
approximately $20.0 million will be borne by Westinghouse, and the remaining
obligation currently estimated at approximately $30.0 to $40.0 million will be
required to be borne by ATS pursuant to provisions to the Merger agreement.
The Company incurred approximately $0.3 million in merger expenses in the nine
months ended September 30, 1997, principally related to professional fees.
Additional professional fees, regulatory related costs, investment banking fees
and other costs will be expensed as incurred and are expected to be
approximately $8.0 to $10.0 million for the year ended December 31, 1997.
Offering: In January 1997, the Company consummated a private offering of
2,000,000 shares of the Exchangeable Preferred Stock. Net proceeds to the
Company from the offering were approximately $192.1 million. Proceeds of the
offering were used to repay indebtedness and to fund acquisitions. Dividends on
the Exchangeable Preferred Stock are cumulative at an annual rate of 11 3/8%
(equivalent to $11.375 per share) and are payable quarterly in cash, or, at the
Company's election, on or prior to January 15, 2002, with the issuance of
additional shares. The Exchangeable Preferred Stock possesses mandatory
redemption features and has been classified accordingly in the financial
statements. See the Form 10-K for a description of the Exchangeable Preferred
Stock.
Credit Agreements: As of September 30, 1997, the Company had approximately
$809.0 million of total long-term debt (including the current portion thereof)
outstanding. This included approximately $478.0 million of borrowings
outstanding under the Company's and the Tower Subsidiary's credit agreements and
$325.0 million outstanding under Senior Subordinated Notes. In January 1997, the
Company entered into the 1997 Credit Agreement which replaced the previous
$300.0 million credit agreement. The 1997 Credit Agreement consists of two
separate agreements, providing for facilities consisting of a $550.0 million
reducing revolver credit facility, a $200.0 million revolving credit converting
to a term loan facility and a $150.0 million term loan facility, which had been
available only to repurchase, if required, certain note obligations of EZ which
were assumed by the Company in connection with the EZ Merger. As described
below, the Company was not required to repurchase any of the 9.75% Notes, and
therefore such facility was canceled in May 1997. The terms of the 1997 Credit
Agreement are described in the Form 10-K.
24
<PAGE>
Liquidity and Capital Resources - (continued):
In October 1997, the Tower Subsidiary entered into the 1997 ATS Credit
Agreement, which replaced the previously existing credit agreement. All amounts
outstanding under the previous agreement were repaid with proceeds from the 1997
ATS Credit Agreement. The 1997 ATS Credit Agreement provides the Tower
Subsidiary with a $250.0 million loan commitment based on ATS maintaining
certain operational ratios and an additional $150.0 million loan at the
discretion of ATS, which is available through June 2005. Following the closing
of the 1997 ATS Credit Agreement and repayment of amounts outstanding under the
previous agreement, ATS incurred an extraordinary loss in the fourth quarter of
approximately $1.1 million which will be recorded net of the applicable income
tax benefit, representing the write-off of deferred financing fees associated
with the previous agreement.
In order to finance acquisitions of radio stations, tower related properties and
for general corporate purposes, the Company has borrowed and expects to continue
to borrow under its credit agreements. As part of the EZ Merger, the Company
assumed EZ's obligations with respect to $150.0 million principal amount of the
9.75% Notes and repaid all borrowings under the EZ credit facility with
borrowings from the 1997 Credit Agreement. As required by the closing of the EZ
Merger, the Company was required to offer to purchase the 9.75% Notes at 101% of
their principal amount. Such offer expired in May 1997 and, no such notes were
tendered for repurchase.
A substantial portion of the Company's cash flow from operations is required for
debt service. However, the Company's leverage could make it vulnerable to a
downturn in the operating performance of its radio stations or tower properties
or a downturn in economic conditions.
The Company believes that its cash flows from operations will be sufficient to
meet its quarterly dividends, debt service requirements for interest and
scheduled payments of principal under the 1997 Credit Agreements and its other
debt obligations. If such cash flow is not sufficient to meet such debt service
requirements, the Company may be required to sell equity securities, refinance
its obligations or dispose of one or more of its properties in order to make
such scheduled payments. There can be no assurance that the Company would be
able to effect any of such transactions on favorable terms.
The Company's working capital needs fluctuate throughout the year due to the
broadcast industry-wide seasonality and its broadcast of sporting events at
different times during the year. The Company historically has had sufficient
cash from its operations to meet its working capital needs, apart from needs
generated by newly acquired properties, and believes that it has sufficient
financial resources available to it, including borrowing under the credit
agreements, to finance operations for the foreseeable future.
The Company has entered into numerous station and tower acquisition and related
agreements (see the Form 10-K and the Notes to the Condensed Consolidated
Financial Statements). The consummation of each of these agreements is subject
to, among other things, FCC approval and in some cases expiration or earlier
termination of the HSR Act waiting period and the negotiation of definitive
agreements. Unless otherwise noted, the Company intends to effect all of the
transactions as soon as the necessary approvals are obtained. The Company
intends to finance the acquisitions with available cash, borrowings under the
credit agreements, and, in certain cases, issuance of equity securities.
The Company made approximately $28.4 million in capital expenditures in the nine
months ended September 30, 1997, principally related to tower construction and
office consolidations. The Company expects capital expenditures in 1997 to be
approximately $35.0 million, consisting principally of tower site construction,
certain office consolidations and ongoing technical improvements. To the extent
that funds generated from operations, or available cash, are insufficient to
finance non-recurring capital expenditures, the Company would seek to borrow the
necessary funds under the credit agreements.
25
<PAGE>
Inflation
The impact of inflation on the Company's operations has not been significant to
date. However, there can be no assurance that a high rate of inflation in the
future would not have material adverse effect on the Company's operating
results.
Recent Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board (FASB) released
Statement of Financial Accounting Standards (FAS) No. 128, "Earnings Per Share",
(FAS 128) which the Company will adopt in the fourth quarter of 1997. FAS 128
will require the Company to restate all previously reported earnings per share
information to conform with the new pronouncement's requirements.
In June 1997, the FASB released FAS No. 130 "Reporting Comprehensive Income"
(FAS No. 130), and FAS No. 131 "Disclosures about Segments of and Enterprise and
Related Information", (FAS 131). These pronouncements will be effective in 1998.
FAS 130 establishes standards for reporting comprehensive income items and will
require that the Company provide a separate statement of comprehensive income;
reported financial statement amounts will not be affected by this adoption. FAS
131 established standards for reporting information about the operating segments
in its annual report and interim reports.
26
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
In the normal course of business, the Company is subject to certain suits and
other matters. Management believes that the eventual resolution of any pending
matters, either individually or in the aggregate, will not have a material
effect on financial position, liquidity or results of operations.
Item 4. - Submission of Matters to a Vote of Security Holders
On September 19, 1997, holders of Class A Common Stock, par value $.01 per
share, and Class B Common Stock, par value $.01 per share (collectively, the
Common Stock) of American Radio Systems Corporation (American), owning of record
shares representing in excess of 50% of the combined voting power of all the
outstanding Common Stock as of September 19, 1997, consented in writing pursuant
to Sections 228 and 251 of the Delaware General Corporation Law to (i) the
approval and adoption of the Agreement and Plan of Merger, by and among
American, Westinghouse Electric Corporation, a Pennsylvania corporation
(Westinghouse), and R Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Westinghouse (Merger Sub), dated as of September 19, 1997
(the Merger Agreement) and the transactions contemplated thereby and (ii) the
approval of the distribution by American of all of the capital stock of
American's wholly-owned subsidiary, American Tower, owned by American (or of the
net proceeds from the sale thereof) to the common stockholders of American on a
pro rata basis as contemplated by the terms of the Merger Agreement. Pursuant to
the terms of the Merger Agreement, at the Effective Time (as defined in the
Merger Agreement), Merger Sub will be merged with and into American (the Merger)
and common stockholders of American will be entitled to receive $44.00 per share
in cash for each of their shares of the Common Stock.
Because stockholders owning of record shares representing in excess of 50% of
the voting power of the outstanding Common Stock of American have given their
written consent to the approval and adoption of the Merger Agreement, their
written consent was sufficient to approve and adopt the Merger Agreement and the
transactions contemplated thereby under the Delaware General Corporation Law
without regard to the consent/vote of any other stockholder of American. For
this reason, American did not call a meeting of the stockholders to vote on the
Merger Agreement nor did American ask its stockholders for a proxy.
Item 5. - Other Information.
On October 31, 1997, the Tower Subsidiary consummated the transaction
contemplated by the Asset Purchase Agreement, dated July 8, 1997, with Suburban
Cable TV Co. Inc., and its subsidiaries, (a Pennsylvania corporation), pursuant
to which the Tower subsidiary acquired substantially all the assets of the
sellers wholly-owned subsidiary, MicroNet, Inc., an antenna site provider and
owner of towers based in Jamison, Pennsylvania for a purchase price of
approximately $70.25 million.
27
<PAGE>
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
Listed below are the exhibits which are filed as part of this Form 10-Q
(according to the number assigned to them in Item 601 of Regulation S-K). Each
exhibit market by a (*) is incorporated by reference to American's Report on
Form 10-Q for the fiscal quarter ended June 30, 1997. Exhibit numbers in
parenthesis refer to the exhibit number in the applicable filing.
<TABLE>
<CAPTION>
Exhibit
No. Description of Document
- ------- -----------------------
<S> <C> <C>
2.1 Agreement and Plan of Merger by and among the Company,
Westinghouse Electric Corporation and R Acquisition
Corp., dated September 19, 1997 Incorporated by reference herein from
the Company's Form 8-K/A dated
October 24, 1997 (2.1)
10.1 Asset Purchase Agreement by and between American Tower
Systems, Inc. ("American Tower") and Tucson
Communications Company, L.P., dated as of October 4,
1997 Filed herewith as Exhibit 10.1
10.2 Asset Purchase Agreement by and between American Tower
and Tower Sites, Inc., dated as of June 25, 1997 Filed herewith as Exhibit 10.2
10.3 Asset Purchase Agreement by and between American Tower
and Southeast Communications, Inc., dated as of July 31,
1997 Filed herewith as Exhibit 10.3
10.4 Asset Purchase Agreement by and between American Tower
and Diablo Communications, Inc. ("Diablo"), dated as of
July 8, 1997 (*10.4c)
10.5 Asset Purchase Agreement by and between American Tower
and Diablo Communications of Southern California
("DCSC"), dated as of July 8, 1997 (*10.4c)
10.6 Stock Purchase Agreement by and among American Tower,
OPM-USA-INC. ("OPM") and the Stockholders of OPM,
dated as of September 30, 1997 Filed herewith as Exhibit 10.6
10.7 Note Purchase Agreement by and between American Tower
and OPM, dated September 30, 1997 relating to Notes
due 2000 of OPM Filed herewith as Exhibit 10.7
10.8 Amendment dated August 7, 1997, to Securities Purchase
Agreement by and between American Tower, Diablo and
DCSC, dated July 8, 1997 (*10.4e)
10.9 Time Brokerage Agreement by and between the Company and
Precision Media Corporation, dated July 1, 1997 (*10.6)
10.10 Asset Exchange Agreement by and among the Company,
American Radio License Corp. ("License Corp."),
Entertainment Communications, Inc. and ECI License
Company, L.P., dated July 18, 1997 (*10.13)
10.11 Asset Purchase Agreement by and among the Company,
License Corp. and Entertainment Communications, Inc.,
dated July 18, 1997 (*10.14)
10.12 Asset Purchase Agreement by and between American Tower
and Suburban Cable T.V. Co., Inc., dated July 8, 1997 (*10.15)
10.13 Asset Purchase Agreement by and among Citicastors Co., the
Company and License Corp., dated October 9, 1997 Filed herewith as Exhibit 10.13
10.14 Asset Purchase Agreement by and between the Company and
Classic Broadcasting, Inc., dated September 24, 1997 Filed herewith as Exhibit 10.14
28
<PAGE>
<CAPTION>
Item 6. - Exhibits and Reports on Form 8-K - (Continued)
Exhibit
No. Description of Document
- ------ -----------------------
<S> <C> <C>
10.15 Agreement to Amend Asset Purchase Agreement by and
between the Company and Paxson Communciations of
West Palm Beach, Inc., dated October 3, 1997 Filed herewith as Exhibit 10.15
10.16 Asset Purchase Agreement by and among the Company,
License Corp. and James Crystal Enterprises, L.C., dated
October 24, 1997 Filed herewith as Exhibit 10.16
10.17 Amended and Restated Loan Agreement by and among
American Tower, Toronto Dominion (Texas), Inc. and the
Lenders named therein, dated as of October 15, 1997 Filed herewith as Exhibit 10.17
10.18 Asset Purchase Agreement by and among Missouri Sports
Radio L.L.C., Professional Broadcasting, Incorporated
and EZ St. Louis, Inc., dated September 30, 1997 Filed herewith as Exhibit 10.18
11 Statement Re Computation of Per Share Earnings Filed herewith as Exhibit 11
12 Statement Re Computation of Ratio of Earnings to be
Combined Fixed Charges and Preferred Stock Dividends Filed herewith as Exhibit 12
27 Financial Data Schedule Filed herewith as Exhibit 27
</TABLE>
(b) Reports on Form 8-K
1 Form 8-K (Items 5 and 7) on July 14, 1997
2 Form 8-K (Items 5 and 7) on August 22, 1997
3 Form 8-K (Items 5 and 7) on September 26, 1997
4. Form 8-K (Items 5 and 7) on October 16, 1997
5. Form 8-K/A (Items 5 and 7) on October 24, 1997
29
<PAGE>
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.
AMERICAN RADIO SYSTEMS CORPORATION
Date: November 14, 1997 BY:
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
Date: November 14, 1997 BY:
Justin D. Benincasa
Vice President & Corporate Controller
(Duly Authorized Officer)
30
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and between
AMERICAN TOWER SYSTEMS, INC.
and
TUCSON COMMUNICATIONS COMPANY, L.P.
Dated October 4, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 4th day of October, 1997 by and between AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation ("Buyer") and TUCSON COMMUNICATIONS COMPANY, a California
limited partnership ("Seller").
RECITALS
A. Seller owns, leases and operates communication towers in Tucson,
Arizona (the "Business").
B. Seller desires to sell and assign and Buyer desires to purchase
substantially all of the assets of Seller used or held for use in the operation
of the Business.
AGREEMENT
In consideration of the foregoing and of the mutual promises and
covenants set forth below, the adequacy of which are acknowledged, the parties
agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms will
have the meaning set forth below:
1.1 Affiliate. "Affiliate" means any person or entity who
directly or indirectly controls, is controlled by, or is under common control
with, such person or entity. The term "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as used
with respect to any person or entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
1.2 Assumed Contracts. "Assumed Contracts" means those
Contracts that are listed on Schedule 1.2 hereto.
1.3 Business Records. "Business Records" means all records of
Seller including, but not limited to, all Tower maintenance and compliance
records and all books of account, customer lists, supplier lists, employee
personnel files, file materials, logs, consultants' reports, budgets, financial
reports and sales, operating and business plans, relating to or used or held for
use in the operation of the Business and not pertaining solely to Seller's
internal corporate affairs.
1.4 Code. "Code" means the Internal Revenue Code of 1986, as
amended.
1.5 Contracts. "Contracts" means all contracts, agreements,
and Leases (as defined in Section 4.19 below), written or oral (including any
amendments and other modifications thereto) to which any Seller is a party or
which are binding upon any Seller and relate to the Assets or the Business, and
(i) which are in effect on the date hereof and listed on
<PAGE>
Schedule 1.2, or (ii) which are entered into by any Seller in the ordinary
course of business between the date hereof and the Closing Date.
1.6 Improvements. "Improvements" means all transmitting
buildings and related improvements and fixtures located on the Real Property.
1.7 Intangible Property. "Intangible Property" means all of
Seller's computer programs, business lists, trade secrets, sales and operating
plans and other intangible property rights used or held for use in the operation
of the Business, and all goodwill associated with the foregoing, as listed on
Schedule 1.7.
1.8 Knowledge. "Knowledge" means the actual Knowledge of such
party's partners, officers, directors, principals, Affiliates or agents after
having made a good faith effort to ascertain the fact(s) in question by inquiry
to such partners, officers or employees of such party as would be reasonably
likely to have the information relating to the fact(s) in question.
1.9 Liens. "Liens" means mortgages, deeds of trust,
collateral assignments, security interests, conditional or other sales
agreements, claims, options, restrictions, liens, pledges, hypothecations,
easements, rights of way, encumbrances and adverse interest or other defects of
title of any kind.
1.10 Material Adverse Effect. "Material Adverse Effect"
means, with respect to any person or entity, any event, fact, condition,
occurrence or effect, which is materially adverse to the business, properties,
assets, liabilities, capitalization, stockholders' equity, financial condition,
operations, licenses or other franchises or results of operations of such person
or entity, considered as a whole.
1.11 Permits. "Permits" means all licenses, permits,
franchises, approvals, authorizations, consents or orders of, or filings with,
any governmental authority, whether federal, state or local, or any other
person, necessary or desirable for the operation of the Business and/or the
construction, ownership, operation, leasing, occupancy, maintenance or use of
the Real Property and listed on Schedule 1.11.
1.12 Personal Property. "Personal Property" means all of the
machinery, equipment, tools, vehicles, furniture, leasehold improvements, office
equipment, plant, spare parts, surveys, title insurance policies, plans,
specifications and drawings, insurance policies and other tangible personal
property which are owned or leased by the Seller and used or useful as of the
date hereof in the conduct of the business or the operations of the Business,
and are identified on Schedule 1.12, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
1.13 Real Property. "Real Property" means all real property
owned or leased by Seller, as described more fully on Schedule 1.13, including
the Towers and the Improvements, together with all easements, rights,
privileges, remainders, revisions and appurtenances thereunto belonging or in
any way appertaining, and all of Seller's estate, right, title, interest, claim
and
2
<PAGE>
demand therein, in the streets and ways adjacent thereto and in the beds
thereof, either at law or in equity, in possession or expectancy.
1.14 Towers. "Towers" means all towers, ground radials, guy
anchors and related equipment located on the Real Property.
1.15 Warranties. "Warranties" means all of Seller's rights
under manufacturers' and vendors' warranties relating to (i) the Towers; (ii)
the Improvements; and (iii) the Personal Property.
2. ASSETS TO BE CONVEYED; ASSUMED LIABILITIES.
2.1 Assets to be Conveyed. Subject to the terms and
conditions of this Agreement, on the Closing Date (as defined below), Seller
will assign, transfer and deliver to Buyer and Buyer shall purchase from Seller
all of Seller's right, title and interest in and to all of the assets described
in this Section 2.1 (collectively, the "Assets"):
(a) Assumed Contracts;
(b) Business Records;
(c) Intangible Property;
(d) Permits;
(e) Personal Property;
(f) Real Property;
(g) Warranties.
2.2 Excluded Assets. The following assets are "Excluded
Assets" and are not among the Assets purchased or transferred pursuant to this
Agreement:
(a) Seller's cash, cash equivalents, certificates of
deposit, money market funds and other marketable securities on hand or in banks
or other financial institutions;
(b) Any Contracts other than the Assumed Contracts;
(c) All of the accounts receivable of the Seller arising
prior to the Closing Date; and
(d) Seller's record books and charter documents and
other books and records pertaining solely to Seller's internal partnership
affairs, including tax matters, or financing arrangements.
3
<PAGE>
2.3 Assumed Liabilities.
(a) As of the Closing Date, Buyer shall assume all
obligations and liabilities under the Assumed Contracts accruing, arising or
relating to activities, events or occurrences happening on or after the Closing
Date (collectively, the "Assumed Liabilities"). Buyer shall assume no
obligations or liabilities of Seller, its predecessors or Affiliates whatsoever,
including any taxes (the "Retained Liabilities") except for the Assumed
Liabilities.
(b) Without limiting the generality of the foregoing,
Buyer shall have no obligation to hire any employees of Seller and Seller shall
be solely responsible for all salaries, benefits, severance and other
compensation which will or may become payable to all of Seller's employees in
respect of any period of employment by Seller prior to the Closing Date and
Seller shall make such payments at or before the Closing. Buyer will not assume
any obligations under Seller's existing vacation, sick leave, severance or other
employee welfare or benefit plans or policies with respect to Seller's
employees.
3. CONSIDERATION; PRORATIONS.
3.1 Consideration. The consideration for the purchase of the
Assets (the "Purchase Price") shall consist of a cash payment by Buyer to Seller
in the amount of $12,000,000 (the "Cash Payment") payable at Closing.
3.2 Prorations and Adjustments. The operation of the Business
and the income and normal operating expenses, including without limitation
Assumed Liabilities and prepaid expenses, attributable thereto through 12:01
a.m. on the date of the Closing shall be for the account of Seller and
thereafter for the account of Buyer. Adjustments shall be made and paid at
Closing to the extent feasible. A final accounting of prorated items shall be
made by Buyer and Seller, and the sum due from one party to the other pursuant
to this Section 3.2 shall be paid in cash, within sixty (60) days after the
Closing Date.
3.3 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets in accordance with an independent appraisal to be
performed by BIA Consulting, Inc., at the expense of Buyer. Should the
independent appraisal result in an allocation of (a) not more than $1,500,000.00
to Code ss. 1231 depreciable real property, being of the class commonly
identified as buildings and other Improvements of a type requiring a capital
gain rate to Seller for the recaptured portion thereof to be taxable under the
Code at 25% nominal rates; (b) in the aggregate not more than $330,000.00 to
Code ss. 1245 or personal property, being of the class commonly identified as
Towers, fuel tanks and other similar Improvements, fixtures, appurtenances and
other property, whether personal or real, of a type requiring the recaptured
portion thereof or, with respect to personal property, the allocated amount
thereof, to be taxable under the Code to Seller at ordinary income tax rates,
and (c) the balance of the Purchase Price to be allocated to either
non-depreciable real property and/or going concern value (or goodwill) taxable
only as capital gain under the Code to Seller at 20% nominal rates, then Buyer
and Seller shall agree thereto and use such allocations as are so established by
the independent appraisal.
4
<PAGE>
Should the appraisal result in recommended allocations differing from the above
parameters, (i) Seller shall have the right to approve of such differing
allocations, or (ii) within three (3) days of notice by Seller of Seller's
unwillingness to agree to such differing allocations, or should Buyer not agree
to utilize allocations within the above parameters, then either Seller or Buyer
shall have the right to terminate this Agreement without further liability.
Buyer and Seller shall file with its respective federal income tax return for
the tax year in which the Closing occurs, IRS Form 8594 containing the
information set forth in the allocation. Buyer agrees to report the purchase of
the Assets, and Seller agrees to report the sale of such Assets, for income tax
purposes in a manner consistent with the information provided pursuant to this
Section 3.3 and contained in IRS Form 8594.
3.4 No Assignment of Accounts Receivable. On and after the
Closing Date, (i) Seller shall be responsible for collecting all of Seller's
accounts receivable arising from Seller's operation of the Business prior to the
Closing Date and (ii) Buyer shall be responsible for collecting all of Buyer's
accounts receivable arising from Buyer's operation of the Business on and after
the Closing Date.
4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Buyer as follows, which representations and warranties have been
relied upon by Buyer in entering into this Agreement.
4.1 Organization. Seller is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
California, and is qualified to do business and is qualified or registered to do
business in the State of Arizona and in each other jurisdiction where it is
required to do so. Seller has full partnership power and authority to carry on
its business as now conducted and to enter into and to perform this Agreement.
4.2 Partnership Authorization. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite partnership action of Seller.
4.3 Binding Agreement. This Agreement has been duly executed
by Seller and delivered to Buyer and constitutes the valid and binding agreement
of Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles.
4.4 No Breach. Subject to the necessity for obtaining
consents of third parties to the assignment of those Assumed Contracts listed on
Schedule 1.2, the execution, delivery and performance of this Agreement by
Seller will not violate or conflict with Seller's Certificate of Limited
Partnership or partnership agreement or any Law to which Seller or the Assets is
subject, or by which Seller or the Assets may be bound, or (with or without
giving notice or the lapse of time or both) breach or conflict with any
contract, agreement, or other commitment to which Seller is a party or by which
Seller or the Assets may be bound or result in the imposition of a Lien on the
Assets.
5
<PAGE>
4.5 Permits. Schedule 1.11 contains a true and complete list
of all Permits of Seller. Seller has all Permits required to conduct the
Business as now being conducted. All Permits of Seller are valid and in full
force and effect. Buyer will proceed, at its own expense, to obtain any Permits
and approvals necessary to consummate the transaction contemplated herein;
provided, if the transaction is not consummated, Buyer shall restore all such
filings to their original condition and reverse any filings made in order to
consummate the transaction, and Buyer shall hold Seller harmless from any
liability or expense arising from such filings. No notice to, declaration,
filing or registration with, or Permit from, any domestic or foreign
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Seller in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated hereby.
4.6 Compliance With Laws. Except as set forth in Schedule
4.6, Seller has complied in all material respects with all statutes, laws,
rules, regulations, ordinances, codes, directives, writs, injunctions, decrees,
judgments, and orders of any governmental (whether foreign, federal, state,
local, or otherwise) agency, court or other body applicable to the Business and
the Assets.
4.7 Title to and Sufficiency of Assets. Seller has good and
marketable title to all of the Assets (other than the Real Property, which is
addressed in Section 4.19) free and clear of all Liens, except for Liens
described on Schedule 4.7 (which will be removed on or before the Closing Date).
Seller has all necessary partnership authority to transfer ownership of the
Assets to Buyer free and clear of all Liens. Other than the Excluded Assets, the
Assets to be transferred hereunder constitute all of the assets, rights and
properties that are required for the operation of the Business as they are now
conducted or that are used or held by Seller for use in the operation of the
Business.
4.8 Condition of Personal Property. All Personal Property
used or useful in the operation of the Business is listed on Schedule 1.2 and,
except as specifically indicated on Schedule 1.2, is in good operating condition
and repair (reasonable wear and tear excepted), is performing satisfactorily and
is suitable for its intended use.
4.9 Intangible Property. Schedule 1.7 contains a true and
complete list of all Intangible Property. Seller has delivered to Buyer or made
available for inspection by Buyer copies of (i) all documents (if any)
establishing Seller's rights to use the Intangible Property; and (ii) all
customer lists and accounts of Seller. Seller has, and after the Closing, Buyer
will have, the right to use such Intangible Property, free and clear of any
royalty or other payment obligations. Seller's use of the Intangible Property
does not conflict with, violate or infringe upon any rights of any other Person,
and no Person is violating or infringing on any of Seller's rights with respect
to the Intangible Property.
4.10 Contracts. Schedule 1.2 identifies all of the Contracts,
and such schedule separately identifies the Assumed Contracts (including the
Leases to be assumed). Sellers shall deliver to Buyer true and complete copies
of all written Contracts and true and complete memoranda of all oral Contracts
(including any and all amendments and other modifications to such Contracts).
Other than the Assumed Contracts, Seller requires no contract or agreement to
6
<PAGE>
enable Seller to carry on the Business in all material respects as presently and
heretofore conducted. All of the Assumed Contracts are in full force and effect,
and are valid, binding, and enforceable in accordance with their terms, except
to the extent that the enforceability thereof may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally or by
court-applied equitable principles. Seller is not in material breach, nor to the
Knowledge of Seller is any other party in material breach, of the terms of any
such Assumed Contracts. Except as expressly set forth in Schedule 1.2, Seller is
not aware of any intention by any party to any Assumed Contract (i) to terminate
such contract or amend the terms thereof, (ii) to refuse to renew the same upon
expiration of its term, or (iii) to renew the same upon expiration only on terms
and conditions which are more onerous than those pertaining to such existing
contract. Except for any third party consents, which Seller agrees to obtain
from such third parties where required (in accordance with Section 6.7 hereto),
Seller has full legal power and authority to assign its rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and such assignment will
not affect the validity, enforceability, and continuation of any of the Assumed
Contracts.
4.11 Litigation. Except as described on Schedule 4.11, there
is no litigation, proceeding (arbitral or otherwise), claim or investigation of
any nature pending or, to Seller's Knowledge, threatened against Seller, the
Business or the Assets. There are no writs, injunctions, decrees, arbitration
decisions, unsatisfied judgments or similar orders outstanding against Seller,
the Business or the Assets.
4.12 Financial Statements. Schedule 4.12 sets forth true,
correct and complete copies of (i) the unaudited balance sheet and related
statements of Seller for the two (2) years ended December 31, 1996 (the "Annual
Financials"), and (ii) the unaudited monthly balance sheets and related
statements for Seller for the period January through September 1997 (the
"Monthly Financials," and together with the Annual Financials, the "Financial
Statements"). The Financial Statements are in accordance with the books and
records of Seller, and present fairly the financial condition of Seller at the
respective dates thereof.
4.13 Liabilities. Seller has no material liabilities,
obligations or commitments of any nature (whether absolute, accrued, contingent
or otherwise and whether matured or unmatured), including without limitations
tax liabilities due or to become due, except liabilities that are reflected and
reserved against on the Financial Statements.
4.14 Tax Matters. Except as disclosed on Schedule 4.14
hereto: (a) Seller has filed all tax returns and reports required to have been
filed by or for it; (b) all material information set forth in such returns or
reports is accurate and complete; (c) Seller has paid or made adequate provision
for all taxes, additions to tax, penalties, and interest payable by the Seller;
(d) no unpaid tax deficiency has been asserted against or with respect to Seller
by any taxing authority; and (e) Seller has collected or withheld all amounts
required to be collected or withheld by it for any taxes, and all such amounts
have been paid to the appropriate governmental agencies or set aside in
appropriate accounts for future payment when due.
4.15 Insolvency Proceedings. Neither Seller nor any of the
Assets is the subject of any pending or, to Seller's Knowledge, threatened,
insolvency proceedings of any character.
7
<PAGE>
Seller has not made an assignment for the benefit of creditors or taken any
action with a view to or that would constitute a valid basis for the institution
of any such insolvency proceedings. Seller is not insolvent and will not become
insolvent as a result of entering into this Agreement.
4.16 Employees; Employee Benefit Plans.
(a) Schedule 4.16 contains a true and complete list of
all of the employees of Seller, each such employee's title or capacity in which
employed, and such employee's annual salary or wages, and a complete list and
summary of Seller's employee benefit plans and any bonus compensation plans or
policies (including all retirement, pension, profit sharing, bonus, severance
pay, disability, health, vacation and sick leave benefits). Seller is not a
party to any collective bargaining agreement covering any of its employees.
There is no material dispute between Seller and any of its employees related to
compensation, severance pay, vacation or pension benefits, or discrimination.
(b) Except as set forth on Schedule 4.16, Seller does
not maintain, sponsor or contribute to, nor has Seller maintained, sponsored or
been obligated to contribute to, within the last six years, any "employee
benefit plan" which is subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and Section 412 of the Code.
4.17 Insurance. Schedule 4.17 lists all insurance policies
(by policy number, insurer, location or property insured, annual premium,
premium payment dates, expiration date and type of coverage) held by Seller
relating to the business, properties and employees of the Business, copies of
which have been provided to Buyer. All such insurance policies are in full force
and effect and in such amounts and provide coverages that are reasonable and
customary in light of the business, operations and properties of the Business.
4.18 Environmental Matters.
(a) As used in this Agreement "Hazardous Material" shall
mean: (i) any "hazardous substance" as now defined pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42
U.S.C. ss. 9601(14); (ii) any "pollutant or contaminant" as defined in 42 U.S.C.
ss. 9601(33); (iii) any material now defined as "hazardous waste" pursuant to 40
C.F.R. Part 261; (iv) any petroleum, including crude oil and any fraction
thereof; natural or synthetic crude oil and any fraction thereof; (v) natural or
synthetic gas usable for fuel; (vi) any "hazardous chemical" as defined pursuant
to 29 C.F.R. Part 1910; (vii) any asbestos, polychlorinated biphenyl ("PCB"), or
isomer of dioxin, or any material or thing containing or composed of such
substance or substances; (viii) any infectious organism or biological or medical
waste; or (ix) any other substance, regardless of physical form, that is subject
to any Environmental Laws.
(b) As used in this Agreement, "Environmental Laws"
shall mean any statutes, regulations, requirements, orders, ordinances, rules of
liability or standards of conduct of any foreign, federal, state, local
government, or common law relating to the protection of human health, plant
life, animal life, natural resources, the environment or property from the
presence in
8
<PAGE>
the environment of any solid, liquid, gas, odor or any form of energy, from
whatever source, including, without limitation, any emissions, discharges,
releases, or threatened releases of Hazardous Material into the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface or building structures), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
(c) Except as set forth on Schedule 4.18, and to the
best of Seller's Knowledge and without any independent investigation by Seller,
(i) there are no environmental conditions related to the Real Property or the
business and other assets of Seller that could have a Material Adverse Effect on
Seller, including any such conditions relating to the use, treatment, storage,
release or disposal of any Hazardous Material; (ii) Seller has not manufactured,
processed, distributed, used, treated, stored, disposed of, transported or
handled any Hazardous Material in a manner that could have a Material Adverse
Effect on such entity; (iii) there is no ambient air, surface water, groundwater
or land contamination or contamination within building structures, within,
under, originating from or relating to any Real Property or any other location
related to the Real Property such that the contamination affects such other
locations and none of such properties has been used for the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of any Hazardous Material in a manner that could have a Material
Adverse Effect on Seller; and (iv) Seller has no obligation or liability, known
or unknown, matured or not matured, absolute or contingent, assessed or
unassessed, imposed or based upon the failure to comply with any provision under
any federal, state or local law, rule, or regulation or common law, or under any
code, order, decree, judgment or injunction applicable to Seller and Seller has
not received any notice, or request for information issued, promulgated,
approved or entered thereunder, or under the common law, or any tort, nuisance
or absolute liability theory, relating to public health or safety, worker health
or safety, or pollution, damage to or protection of the environment, including,
without limitation, the Environmental Laws, where such obligation or liability
could have a Material Adverse Effect on Seller.
(d) To the best of Seller's Knowledge, Seller possesses
and is in compliance in all material respects with all permits, licenses,
certificates, franchises and other authorizations relating to the Environmental
Laws necessary to conduct their businesses or required by environmental
regulations.
4.19. Real Property.
(a) Leased Real Property. Schedule 1.2 contains a
complete and accurate list of all Contracts pursuant to which Seller is either
the lessor or lessee of Real Property, including all leases associated with the
Towers ("Leases"). All such Leases are valid, binding and enforceable in
accordance with their terms and are in full force and effect; no event of
default has occurred which (whether with or without notice, lapse of time or
both or the happening or occurrence of any other event) would constitute a
default thereunder on the part of Seller; and Seller has no Knowledge of the
occurrence of any event of default which (whether with or without notice, lapse
of time or both or the happening or occurrence of any other event) would
constitute a default thereunder by any other party. Seller has provided Buyer
with a
9
<PAGE>
complete and correct copy of all of the Leases. Seller has not received notice
of any claim for free or reduced rent or for reduction, deduction or set-off
against Seller of the rent due or to become due under any of the Leases, and
except as set forth in the Leases Seller has granted no rental concessions or
abatements. Seller has the sole right to collect the rent under the Leases and
neither such right nor any of the Leases has been assigned, pledged,
hypothecated (except Leases that would be hypothecated by Seller's, lenders, to
be cleared at or before Closing), or otherwise encumbered. Except as is
otherwise indicated on Schedule 1.2, Seller has received no payment of rent more
than 30 days in advance of the due date therefor.
(b) Owned Real Property. Schedule 1.13 contains a
complete and accurate list of all Real Property owned by Seller ("Owned Real
Property") and contains accurate and complete copies of preliminary title
reports covering all of the Owned Real Property. At the Closing, Seller has and
will transfer to Buyer good and marketable fee simple title to all Owned Real
Property subject only to the following matters (the "Permitted Liens"): (i)
liens for current taxes not yet due; (ii) Liens set forth on Schedule 1.13
(which will be removed on or before the Closing Date); and (iii) any other Liens
and other matters affecting title to the Owned Real Property, which do not in
the sole judgment of Buyer (A) breach any covenant, representation or warranty
of Seller in this Agreement, (B) adversely affect the use or value of the Owned
Real Property, (C) render title to the Owned Real Property unmarketable, (D)
constitute a Lien in the nature of a mortgage, deed of trust, UCC financing
statement, monetary encumbrance or other similar Lien or (E) constitute a lease
(other than those Leases listed in Schedule 1.2 and any Leases pending or being
negotiated by Seller with new tenants, but unconsummated prior to Closing Date),
sublease or other occupancy agreement that gives any third party any right to
occupy or use all or any portion of the Owned Real Property. Seller enjoys
peaceful and undisturbed possession of all Owned Real Property, to be evidenced
by Seller's delivery of tenant estoppel certificates.
(c) Improvements, Fixtures and Equipment. The Towers and
the Improvements, including without limitation all leasehold improvements, and
all fixtures and equipment and other tangible assets owned, leased or used by
Seller at the Real Property are (i) insured to the extent and in a manner
customary in the industry, (ii) structurally sound with no known material
defects, (iii) in good operating condition and repair, subject to ordinary wear
and tear, (iv) not in need of maintenance or repair except for ordinary routine
maintenance and repair, the cost of which would not be material, (v) sufficient
for the operation of the Business as presently conducted and (vi) in conformity
with all applicable laws, ordinances, orders, regulations and other requirements
relating thereto currently in effect. None of the Towers or the Improvements is
subject to any commitment or other arrangement for their sale or use by any
Affiliate of Seller or third parties, except with respect to leases being
negotiated in Seller's ordinary course of business. Except as disclosed on
Schedule 1.13, all of the Towers on the Real Property are located entirely on
such Real Property.
(d) Other Real Property Representations and Warranties.
(i) The Seller has no Knowledge, nor to its
Knowledge has it received notice within the past three years, of any existing or
threatened violation of any provision of any applicable building, zoning,
subdivision, environmental or other governmental ordinance,
10
<PAGE>
resolution, statute, rule, order or regulation, including but not limited to
those of environmental agencies or insurance underwriters, with respect to the
ownership, operation, use, maintenance or condition of the Owned Real Property
or any part thereof, or requiring any repairs or alterations other than those
that have been made prior to the date hereof.
(ii) Seller is the sole owner of full legal,
equitable and beneficial title to the Owned Real Property and no consent of or
joinder by any other person is required for Seller to convey the full legal,
equitable and beneficial title to and ownership of the Owned Real Property to
Buyer in accordance with this Agreement. There are no outstanding agreements
(written or oral) pursuant to which Seller (or any predecessor to or
representative of Seller) has agreed to sell or has granted an option or right
of first refusal to purchase the Owned Real Property or any part thereof
(iii) Seller has no Knowledge of, nor to its
Knowledge has it received any notice of, any special taxes or assessments
relating to the Owned Real Property or any part thereof or any planned public
improvements that may result in a special tax or assessment against the Owned
Real Property.
(iv) Seller has received no notice of any
condemnation or eminent domain proceeding pending or threatened against the
Owned Real Property or any part thereof. The Seller has no Knowledge of any
change or proposed change in the route, grade or width of, or otherwise
affecting, any street or road adjacent to or serving the Owned Real Property.
(v) The Owned Real Property complies with all zoning
and land use laws, ordinances, regulations and restrictions, and the
Improvements and Towers are permitted as a matter of right as a principal use
under all laws applicable thereto without the necessity of any special use
permit, special exception or other special permit, permission or consent.
(vi) All utilities necessary for the proper and
efficient operation of the Real Property in their current manner are installed
in and operating at the Real Property.
4.20. FAA Compliance.
(a) Prior to construction of all Towers, (i) the Federal
Aviation Administration ("FAA") issued a Determination of No Hazard to Air
Navigation ("FAA Tower Clearance"), a true and correct copy of which has been
delivered to Buyer or made available for inspection by Buyer prior to the date
hereof; and (ii) the Antenna Survey Branch of the Federal Communications
Commission ("FCC") issued a clearance (the "FCC Tower Clearance"), a true and
correct copy of which has been provided to Buyer or made available for
inspection by Buyer prior to the date hereof.
(b) The FAA Tower Clearance and the FCC Tower Clearance
are valid, in good standing, and in full force and effect, and constitutes (i)
all Permits required by the federal Communications Act of 1934, as amended, and
all rules and regulations promulgated
11
<PAGE>
thereunder (the "Communications Act"), for the construction and operation of the
Tower and (ii) all of the Permits issued by the FCC and FAA to Seller for or in
connection with the Tower.
(c) The Towers were constructed in full compliance with
all applicable municipal, state and federal laws, rules and regulations,
including, without limitation, the Communications Act, and all FAA's rules and
regulations. The Towers have at all times operated in full compliance with all
applicable municipal, state and federal laws, rules and regulations, including,
without limitation, the Communications Act, and the FAA's rules and regulations.
(d) Seller has no outstanding requests for information
from either the FAA or FCC. Seller has responded fully and timely to each past
inquiry or request for information from the FAA or the FCC. Seller has no
Knowledge of any condition imposed by the FCC or the FAA on the Towers which is
not (i) set forth on the face of the FAA Tower Clearance or the FCC Tower
Clearance as issued by the FAA or FCC or (ii) applicable to communications
towers generally. Each Tower currently is and at all relevant times has been
painted and lighted in accordance with all FAA and FCC rules, regulations and
policies, and all relevant permits and clearances issued by the FAA or the FCC.
Each Tower is not now and never has been operating under a Notice of
Extinguishment or Improper Functioning of Lights, as specified in the FCC's
rules.
4.21. No Brokers. Seller has not entered into any contract,
agreement, arrangement or understanding with any Person to act as a finder or
broker in connection with the transactions contemplated hereby.
4.22. No Other Agreements to Sell. Seller has no legal
obligation, absolute or contingent, to any other Person to sell the Assets or
the Business (in whole or in part), or effect any merger, consolidation or other
reorganization of Seller, or to enter into any agreement with respect thereto.
4.23. Financing Statements. All of the Assets to be conveyed
are and have been located in the State of Arizona since the Assets were acquired
by Seller. To Seller's Knowledge, and assuming that any current UCC filing
searches required to consummate the transaction contemplated herein have been
conducted by Buyer, all unreleased UCC financing statements filed by any person
with respect to the Assets are listed on Schedule 4.23.
4.24. Transactions with Certain Persons. No partner, officer,
director or employee of Seller nor any member of any such person's immediate
family is presently, or within the three (3) years has been, a party to any
transaction with Seller relating to the Business, including without limitation,
any contract, agreement or other arrangement (a) providing for the furnishing of
services by, (b) providing for the rental of real or personal property from, or
(c) otherwise requiring payments to (other than for services as partners,
officers, directors, consultants or employees of Seller) any such person or
corporation, partnership, trust or other entity in which any such person has an
interest as a shareholder, officer, director, trustee or partner.
12
<PAGE>
4.25. Bulk Sales. Seller represents, in accordance with
opinion of Seller's local counsel, that "bulk sales" laws do not apply to this
transaction.
4.26 Disclosure. To Seller's Knowledge and without any
independent investigation by Seller, no representations or warranties by Seller
in this Agreement, nor any document, exhibit, statement, certificate or schedule
heretofore or hereinafter furnished to Buyer pursuant hereto, or in connection
with the transactions contemplated hereby, including without limitation the
Schedules, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary to make the statements
or facts contained therein not misleading. To Seller's Knowledge and without any
independent investigation by Seller, Seller has disclosed all events, conditions
and facts materially affecting the Business, prospects and financial condition
of Seller.
5. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller as follows, which representations and warranties have been
relied upon by Seller in entering into this Agreement.
5.1 Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business and is qualified or registered to do business in
each jurisdiction where it is required to do so. Buyer has full corporate power
and authority to carry on its business as now conducted and to enter into and to
perform this Agreement.
5.2 Corporate Authorization. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by Buyer's board of directors.
5.3 Binding Agreement. This Agreement has been duly executed
by Buyer and delivered to Seller and constitutes the valid and binding
agreements of Buyer, enforceable against Buyer in accordance with its respective
terms, except as enforceability may be limited by bankruptcy, insolvency or
other laws affecting creditors' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
5.4 No Breach. The execution, delivery and performance of
this Agreement by Buyer will not violate Buyer's certificate of incorporation or
bylaws or any Law to which Buyer is subject or by which Buyer may be bound or
(with or without giving notice or the lapse of time or both) breach or conflict
with any contract, agreement, or other commitment to which Buyer is a party or
by which Buyer is or may be bound.
5.5 Litigation; Compliance with Law. There is no litigation,
proceeding (arbitral or otherwise), claim or investigation of any nature,
pending or, to Buyer's Knowledge, threatened, against Buyer that reasonably
could be expected to adversely affect Buyer's ability to perform in accordance
with the terms of this Agreement.
5.6 No Brokers. Other than a brokerage agreement with Kalil &
Company, Inc. (for which Buyer shall be responsible), Buyer has not entered into
any contract, agreement,
13
<PAGE>
arrangement or understanding with any person or entity to act as a finder or
broker in connection with the transactions contemplated hereby.
6. COVENANTS. Between the date of this Agreement and the Closing Date:
6.1 Maintenance of Business. Seller shall conduct the
operations of the Business and use the Assets only in the ordinary course of
business, consistent with past practices with the intent of preserving the
ongoing operations of the Business and the Assets, including, without
limitation, maintaining in its employ all key employees of the Business who are
performing satisfactorily. Seller shall not sell or agree to sell or otherwise
dispose of any of the Assets except in the ordinary course of business,
consistent with past practice.
6.2 Adverse Developments. Seller shall promptly notify Buyer
of any materially adverse developments that occur prior to Closing with respect
to the Assets or the operation of the Business. Seller shall keep Buyer informed
of all material operational matters and business developments with respect to
the Business and its markets.
6.3 Potential Breach. Each party will promptly notify the
other party of the occurrence of any event, or the existence of any fact, of
which such party becomes aware that is not permitted by this Agreement and that
results in the inaccuracy in any material respect of any representation or
warranty of such party in this Agreement as of any time prior to the Closing,
and such party will use its reasonable best efforts to cure such matter.
6.4 Access. Seller will provide Buyer, its counsel,
accountants, financing sources and other representatives ("Buyer's
Representatives") with access to the books and records of the Business, to the
Assets and to the officers, employees, agents and accountants of Seller with
respect to matters relating to the Business during normal business hours, upon
reasonable notice and at a mutually agreeable time, provided that such access
does not materially disrupt the operations of the Business and will provide
Buyer and Buyer's Representatives with such information concerning the Assets
and the Business as they reasonably may request.
6.5 Financial Statements and Other Reports. Between the date
of this Agreement and the Closing Date, as soon as the same are available,
Seller will provide Buyer with copies of the Business' regularly prepared sales
reports and any periodic financial statements or reports.
6.6 No Negotiations. Seller will refrain, and will cause each
other person acting for or on behalf of Seller to refrain, from taking, directly
or indirectly, any action (a) to seek or encourage any offer or proposal from
any person to acquire any assets (other than in ordinary course of business
consistent with past practices) or shares of capital stock or other securities
of Seller or any interests therein (other than in connection with intra-family
transfers for the purpose of estate-planning purposes, or in connection with
transfers to corporations or other entities wholly-owned by Sellers or its
limited partners, provided that any such transfer be made expressly subject to
this Agreement); and (b) to merge, consolidate, or combine, or to permit any
other person to merge, consolidate or combine, with Seller.
14
<PAGE>
6.7 Third Party Consents. Seller shall use its best efforts
to obtain the third party consents identified on Schedule 1.2 as being necessary
for the assignment of the Assumed Contracts to Buyer and to satisfy all other
conditions precedent thereof.
6.8 Updated Schedules. Not less than five (5) days before the
date scheduled for the Closing, Seller shall deliver to Buyer a list of any
changes to Schedule 1.2 which are necessary to reflect the termination,
expiration or entry into Contracts, or any changes to Schedule 4.16 relating to
employee matters, occurring in accordance with the provisions of this Agreement
following the date hereof.
6.9 Leases; Security Interests. Seller will cooperate in all
reasonable respects with (i) Buyer's efforts to record any and all Leases in the
appropriate land records so that Buyer may seek to obtain leasehold title
insurance or grant leasehold mortgages on such Leases at Buyer's expense; (ii)
Buyer's efforts to obtain the consents of any parties to the grant by Buyer to
its lenders of a security interest in the Assumed Contracts, Real Property or
other Assets at Buyer's expense; and (iii) Buyer's efforts to obtain title
insurance and a survey with respect to the Real Property at Buyer's expense.
6.10 Tax, Lien, and Judgment Searches. No earlier than
fifteen (15) days prior to the Closing Date, Buyer shall have the right to
obtain at Buyer's expense a report on the results of a search for UCC financing
statements, tax liens, judgment liens, and similar filings in the Secretary of
State's records for the State of Arizona and in the records of those
jurisdictions where the Assets are located.
6.11 Environmental Assessments.
(a) Buyer shall be permitted to conduct an environmental
site assessment for each parcel of Real Property (the "Site Assessments"). Any
Site Assessments shall be prepared by Buyer's environmental consultant at
Buyer's expense , and Buyer shall furnish Seller with the name, address and
telephone number of its environmental consultant preparing such Site
Assessments. Buyer shall furnish Seller with a copy of any Site Assessments
within ten (10) days of Buyer's receipt of such Site Assessments.
(b) In conducting any Site Assessments, Buyer shall keep
the Real Property free of all mechanics or similar liens and shall not interfere
with the normal operation of Seller's business. Buyer shall restore the Real
Property to its former condition following the completion of any Site
Assessments. Buyer shall hold Seller harmless for any claim that may arise as a
result of the acts or omissions of Buyer's environmental consultant in
conducting any Site Assessments.
(c) If the Site Assessments conclude that environmental
remediation is required, Seller hereby agrees to pay the first $25,000 towards
remediation expense. Seller shall perform all such remediation as is required to
satisfy any Environmental Laws relating to Hazardous Materials, under the
supervision of a licensed site professional and to the reasonable satisfaction
of Buyer, provided that Seller shall not be required to expend more than
$25,000. If the cost of required remediation exceeds $25,000, then Buyer at its
option may accept a credit of
15
<PAGE>
$25,000 on the purchase price and complete remediation at its own expense, or
terminate the Agreement by giving written Notice to Buyer within ten (10) days
of receipt of the Site Assessments.
6.12 Governmental Consents. Promptly following the execution
of this Agreement, Seller and Buyer, at Buyer's expense and with Seller's
reasonable cooperation, shall proceed to prepare and file with the appropriate
governmental authorities such requests for approvals or waivers, reports or
notifications as may be required in connection with this Agreement; provided, if
the transaction is not consummated, Buyer shall restore all such filings to
their original condition and reverse any filings made in order to consummate the
transaction, and Buyer shall hold Seller harmless from any liability or expense
arising from such filings.
6.13 Confidentiality. Buyer and Seller shall each keep
confidential and not directly or indirectly reveal, report, publish, disclose or
transfer any information obtained by it with respect to the other in connection
with this Agreement and the negotiations preceding this Agreement (the
"Confidential Information"), and each will use such Confidential Information
solely in connection with the transactions contemplated by this Agreement, and
if the transactions contemplated hereby are not consummated for any reason, each
shall return to the other, without retaining any copies thereof, any schedules,
documents or other written information obtained from the other in connection
with this Agreement and the transactions contemplated hereby and shall cause all
of its officers, employees, agents, accountants, attorneys and other
representatives to whom it may have disclosed such Confidential Information to
do the same. Notwithstanding the foregoing limitation, neither party shall be
required to keep confidential or return any Confidential Information that (i) is
known or available through other lawful sources, not bound by a confidentiality
agreement with the disclosing party, (ii) is or becomes publicly known or
generally known in the industry through no fault of the receiving party or its
agents, (iii) is required to be disclosed pursuant to Law (provided the other
party is given reasonable prior notice), and (iv) is developed by the receiving
party independently of the disclosure by the disclosing party.
6.14 No Inconsistent Action. Neither Buyer nor Seller shall
take any action which is materially inconsistent with its obligations under this
Agreement or that would hinder or delay the consummation of the transaction
contemplated by this Agreement.
6.15 Audited Financials. Following execution of this
Agreement, the Financial Statements will be audited by a nationally-recognized
independent accounting firm selected by Buyer, at the expense of Buyer, and
Seller will cooperate fully in such audit.
7. CONDITIONS TO BUYER'S OBLIGATION. The obligation of Buyer to
consummate this Agreement is subject to the satisfaction of each of the
following conditions on or prior to the Closing Date:
7.1 Representations and Warranties. The representations and
warranties of Seller to Buyer contained herein and in any certificates delivered
by Seller pursuant hereto will be true and correct in all material respects as
of the Closing Date (except for representations and warranties that are
qualified as to materiality, which shall be true and correct in all respects),
in each case as if made again on and as of such date.
16
<PAGE>
7.2 Compliance with Covenants. All of the covenants to be
complied with or performed by Seller on or before the Closing Date shall have
been duly complied with and performed in all material respects.
7.3 Closing Documents. On the Closing Date, Seller shall have
delivered to Buyer duly executed closing documents as specified in Section 10.1
in a form reasonably acceptable to Buyer. Buyer shall receive a legal opinion of
Seller's counsel in form and substance reasonably satisfactory to Buyer and
substantially in the form attached hereto as Schedule 7.3.
7.4 Receipt of Third Party Consents. For each Contract that
is identified on Schedule 1.2, Seller shall have obtained all required consents
of third parties, whether actual or deemed, waived or approved by such third
parties in the absence of estoppel certificates (as indicated on Schedule 1.2),
in a form reasonably acceptable to Buyer without modification of any material
provision of any such Contract, to Buyer's assumption thereof.
7.5 Governmental Consents. Any approval required pursuant to
Section 6.12 shall have been obtained prior to Closing. Seller shall have
registered the Towers with the FCC pursuant to the Communications Act. Buyer
shall use reasonable efforts to cooperate with Seller in obtaining all approvals
required under this Section 7.5. Such approvals and registrations required to
consummate the transaction shall be Buyer's responsibility and shall be obtained
at Buyer's expense with Seller's reasonable cooperation.
7.6 Absence of Litigation. As of the Closing Date, no action,
claim, suit or proceeding seeking to enjoin, restrain, or prohibit the
consummation of this Agreement shall be pending before any court or any other
governmental authority; provided, however, that this condition may not be
invoked by Buyer if any such action, suit or proceeding was solicited or
encouraged by, or instituted as a result of any act or omission of Buyer.
7.7 No Material Adverse Development. There shall not have
been any material adverse change in the business or prospects of any of the
Business or the condition of the Assets. No material adverse development shall
have occurred with respect to the Business that results in a significant
impairment to the ability of the Business to operate as they are currently
operated or represents a substantial impairment of the aggregate value of the
Business or Assets being conveyed.
7.8 Settlement of Claims. Seller shall have settled any and
all pending or threatened claims, litigation or proceedings against Seller that
affect or concern the Assets.
7.9 Release of Liens. Buyer shall be reasonably satisfied
that all Liens on the Assets have been released and removed. Without limiting
the generality of the foregoing, Seller shall have delivered to Buyer executed
releases or terminations under the UCC and any other applicable laws of any
financing or similar statements filed against any Assets in (a) the
jurisdictions in which the Assets are and have been located since such Assets
were acquired by Seller, and (b) any other location specified or required by
applicable Law. A UCC search, as of the Closing Date, of the public records of
the State of Arizona and the counties where the Assets are located shall reveal
no inconsistencies with Seller's representations and warranties hereunder.
17
<PAGE>
7.10 Title Policy. The title insurance company shall be
irrevocably committed to issue to Buyer, at Buyer's expense, an ALTA Owner's
Policy of Title Insurance (1970 Form) at its regular rate dated as of the exact
date and time of the recording of the deed insuring Buyer's good and marketable
fee simple title to the Owned Real Property, subject only to those exceptions
permitted under this Agreement, and with such endorsements as Buyer shall
require.
7.11 Survey. Buyer shall have received, at Buyer's expense, a
survey which shall be certified to Buyer and the title company, which survey
shall show no matters which materially adversely affect the use or value of the
Owned Real Property or render title thereto unmarketable and shall show (i) no
encroachments that materially impair the value or use of the Owned Real
Property, (ii) that the Improvements are entirely located on the owned Real
Property to be conveyed to Buyer, and (iii) that the Owned Real Property has
access to all adjacent roads and that such roads are publicly dedicated.
7.12 Site Assessments. Any remediation required by Section
6.11 shall have been completed to Buyer's reasonable satisfaction or the cost of
any remediation required by Section 6.11 shall not exceed the amounts set forth
therein.
7.13 Nonforeign Affidavit. Seller shall furnish Buyer an
affidavit, stating, under penalty of perjury, the transferor's United States
taxpayer identification number and that the transferor is not a foreign person,
pursuant to Section 1445(b)(2) of the Code.
7.14 Board Approval. Buyer shall have obtained approval of
its Board of Directors to consummate the transactions contemplated by this
Agreement within five (5) business days of Seller's execution of this Agreement.
7.15 Bank Approval. Buyer shall have obtained approval of its
lenders to consummate the transactions contemplated by this Agreement within
five (5) business days of Seller's execution of this Agreement.
7.16 Audited Financials. Buyer shall have received the
audited Financial Statements contemplated by Section 6.15 and such audited
Financial Statements shall not deviate in any material respect from the
Financial Statements furnished by Seller pursuant to Section 4.12 herein.
8. CONDITIONS TO SELLER'S OBLIGATION. Buyer shall have used its best
efforts in conducting its due diligence investigations into the matters
contained herein, such that Buyer shall have acquired Knowledge (as defined
herein) of Seller's representations and warranties. The obligation of Seller to
consummate this Agreement is subject to the satisfaction of each of the
following conditions on or prior to the Closing Date:
8.1 Representations and Warranties. The representations and
warranties of Buyer to Seller contained herein and in any certificates delivered
by Buyer pursuant hereto shall be true and correct in all material respects as
of the Closing Date (except for representations and warranties that are
qualified as to materiality which shall be true and correct in all respects), in
each case as if made again on and as of such date.
18
<PAGE>
8.2 Compliance with Covenants. All of the covenants to be
complied with or performed by Buyer on or before the Closing Date shall have
been duly complied with and performed in all material respects.
8.3 Closing Documents. On the Closing Date, Buyer shall have
delivered to Seller duly executed closing documents as specified in Section 10.2
below in a form reasonably acceptable to Seller.
8.4 Governmental Consents. Any approval required pursuant to
the Section 6.12 shall have been obtained by Buyer as a condition to Seller's
obligations under this Agreement.
8.5 Absence of Litigation. As of the Closing Date, no action,
claim, suit or proceeding seeking to enjoin, restrain, or prohibit the
consummation of this Agreement shall be pending before any court or any other
governmental authority; provided, however, that this condition may not be
invoked by Seller if any such action, suit, or proceeding was solicited or
encouraged by, or instituted as a result of any act or omission of, Seller.
8.6 Payment. At the Closing, Buyer shall deliver to Seller
the Cash Payment, as provided in Section 3.1. First American Title Company, Inc.
in Tucson, Arizona shall serve as escrow agent with respect to the Cash Payment
and with respect to the general warranty deed conveying title to the Owned Real
Property to Buyer.
9. CLOSING.
9.1 Timing.
(a) The closing of the purchase and sale of the
Assets (the "Closing") shall take place on November 1, 1997 or another date
mutually agreed to by Buyer and Seller (the "Closing Date"). The Closing will
commence on the Closing Date at 10:00 (local time) at the offices of First
American Title Company, Inc., 1880 East River Road, Suite 120, Tucson, Arizona,
85718, telephone (520) 577-8707, telecopy (520) 577-0236, or such other place as
Buyer and Seller may agree in writing. By mutual agreement of the parties,
Closing may take place by conference call and telecopy with exchange of original
signatures by overnight mail.
(b) If, as of the Closing Date, any condition
precedent described in Section 7 or 8 has not been satisfied, the party who is
entitled to require such condition be satisfied may (in its sole discretion)
notify the other party(ies) of the absence of such condition precedent at or
before the Closing and simultaneously therewith postpone the Closing until a
date ten (10) days after all such conditions have been (or are able to be)
performed, but not later than December 31, 1997, and such postponed date shall
constitute the new Closing Date for all purposes hereunder.
9.2 Deliveries. On the Closing Date, (a) Seller shall deliver
or cause to be delivered to Buyer good and marketable title to and ownership of
the Assets, free and clear of all Liens free and clear of all Liens except for
Permitted Liens; (b) Buyer shall deliver to Seller the
19
<PAGE>
Cash Payment; and (c) the parties shall deliver to each other the closing
documents described in Section 10.
10. CLOSING DOCUMENTS.
10.1 Closing Documents To Be Delivered by Seller. On the
Closing Date, Seller shall deliver to Buyer (in form and substance reasonably
satisfactory to Buyer), and acknowledge with cross-receipts therefore:
(a) one or more bills of sale conveying to Buyer all of
the Personal Property;
(b) One or more general warranty deeds conveying the
Owned Real Property to Buyer in a form usual and customary in the jurisdiction
where such property is located; the description of the Owned Real Property shall
be by courses and distances as shown upon Buyer's survey, and shall include any
and all appurtenant easements or other beneficial appurtenant rights;
(c) One or more assignments assigning the Assumed
Contracts to Buyer, together with each consent obtained by Seller necessary for
the assignments of those Assumed Contracts identified on Schedule 1.2;
(d) Certified copies of resolutions of Seller's limited
and general partner authorizing the execution, delivery and performance of this
Agreement and of Seller's partnership agreement;
(e) One or more assignments conveying to Buyer the
Permits, Intangible Property and Business Records;
(f) A certificate executed by Seller attesting to
Seller's compliance with the matters set forth in Sections 7.1 and 7.2;
(g) The Business Records;
(h) A general assignment by Seller to Buyer of all the
Assets to be conveyed hereunder, other than the Excluded Assets;
(i) Such agreements, affidavits or other documents as
may be required by Buyer's title company to issue the title policies required
hereunder;
(j) An affidavit of the Seller under section 1445 of the
Code certifying that Seller is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the related regulations), and a certificate of Seller as to the
reporting of certain real estate transactions as required by section 6045(e) of
the Code, each in form and substance satisfactory to Buyer and its title
company;
20
<PAGE>
(k) Estoppel letters from all of the tenants under the
Leases in a form reasonably acceptable to Buyer or any document setting forth an
appropriate "deemed estoppel" or tenant waiver provision;
(l) Written notice executed by Seller notifying all
interested parties, including all tenants under the Leases, that the Real
Property has been conveyed to Buyer and directing that all payments, inquiries
and the like be forwarded to Buyer at the address to be provided by Buyer;
(m) Payoff letters for all monetary Liens at Closing
authorizing the title company to pay off all such encumbrances on behalf of
Seller and confirming the amounts required to pay off each such encumbrance;
(n) Clearance certificates or similar document(s) that
may be required by any state taxing authority in order to relieve Buyer of any
obligation to withhold any portion of the Purchase Price;
(o) Such other instruments and further assurances of
conveyance and such other certificates or other documentation as Buyer may
reasonably request; and
(p) a legal opinion of Seller's counsel in form and
substance reasonably satisfactory to Buyer and substantially in the form
attached hereto as Schedule 7.3.
10.2 Closing Documents To Be Delivered By Buyer. On the
Closing Date, Buyer shall deliver to Seller (in form and substance reasonably
satisfactory to Seller) and acknowledge with cross-receipts therefore:
(a) one or more agreements by which Buyer assumes the
Assumed Liabilities and agrees to perform, from and after the Closing Date, all
of the Assumed Liabilities;
(b) certified copies of resolutions of Buyer's Board of
Directors authorizing the execution, delivery and performance of this Agreement,
and of Buyer's bylaws and articles of incorporation;
(c) a certificate executed by Buyer attesting to Buyer's
compliance with the matters set forth in Sections 8.1 and 8.2;
(d) the Cash Payment to Seller; and
(e) a legal opinion of Buyer's counsel in form and
substance reasonably satisfactory to Seller and substantially in the form
attached hereto as Schedule 10.2.
10.3 Other Closing Documents. The parties will also execute
such other documents and perform such other acts, before and after Closing, as
may be necessary for the implementation and consummation of this Agreement.
21
<PAGE>
11 RISK OF LOSS. The risk of loss or damage to the Assets shall be upon
Seller at all times prior to the Closing Date unless caused by an act of Buyer.
In the event of such loss or damage, Seller will promptly notify Buyer and
Seller shall use its best efforts to repair, replace or restore the Assets to
their former condition as soon as possible.
12 BREACH; TERMINATION.
12.1 Breach. If either party believes the other to be in
breach hereunder, the nonbreaching party shall provide the breaching party with
notice specifying in reasonable detail the nature of such breach. If such breach
has not been cured by the earlier of: (a) the Closing Date, or (b) within seven
(7) days after delivery of such notice, then the party giving such notice may
(i) terminate this Agreement for breach; (ii) extend the Closing Date if such
breach has not been cured by the Closing Date (but no such extension shall
constitute a waiver of such nondefaulting party's right to terminate as a result
of such default) to no later than December 31, 1997; (iii) exercise the remedies
available to such party pursuant to Section 12.2, subject to the right of the
other party to contest such action through appropriate proceedings; and/or (iv)
proceed to Closing, but such Closing shall not constitute a waiver of such
breach, and the nondefaulting party may seek indemnification from the breaching
party pursuant to Section 13 of this Agreement.
12.2 Effect of Termination.
(a) If this Agreement is terminated pursuant to Section
12.1, neither Seller nor Buyer shall be relieved of any liability hereunder for
its breach of this Agreement prior to termination.
(b) Seller agrees that the Assets include unique
property that cannot be readily obtained on the open market and that Buyer would
be irreparably injured if this Agreement is not specifically enforced after
breach if a Seller shall have committed a material breach. Therefore, Buyer
shall have the right to specifically enforce Seller's obligation to convey the
Assets to Buyer under this Agreement, and Seller agrees to waive the defense in
any such suit that Buyer has an adequate remedy at law and to interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy. Buyer shall be entitled to seek to recover the damages it incurs
resulting from either Seller's default.
13. INDEMNIFICATION.
13.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties, and together with the covenants contained
herein, shall survive the Closing Date for a period of two (2) years after the
Closing Date (the "Survival Period"). No claim for indemnification may be made
under this Article 13 (except for claims under Section 13.3(b)) after the
expiration of the Survival Period. Any investigations by or on behalf of a party
hereto shall not constitute a waiver of such party's right to enforce any
representation or warranty by the other party contained herein, unless a party
shall have actual Knowledge of any misrepresentation or breach of warranty at
the Closing on the part of the other party, and such Knowledge shall (i) have
been discoverable
22
<PAGE>
during Buyer's due diligence investigation, or (ii) have been assured by third
party reports or surveys obtained by Buyer, or (iii) have been obtained by Buyer
from Buyer's physical inspection of the premises, or (iv) be documented in
writing at the Closing, in which case the party having such Knowledge shall be
deemed to have waived such misrepresentation or breach.
13.2 Indemnification by Sellers. Seller shall indemnify and
hold Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenants by Seller contained herein or in any certificate delivered to
Buyer hereunder;
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to the terms hereof;
(c) Any and all losses, liabilities, or damages
resulting from Seller's operation of the Business or ownership of the Assets
prior to the Closing Date, including any and all liabilities arising under the
Assumed Contracts which relate to events occurring or conditions existing prior
to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, and reasonable costs and expenses incident to
any of the foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof.
13.3. Indemnification by Buyer. Buyer shall indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenants by Buyer contained herein or in any certificate delivered to
Seller hereunder;
(b) Any damage to the Real Property resulting from the
Site Assessments performed by Buyer in accordance with Section 6.11(b) above;
(c) Any and all losses, liabilities, or damages
resulting from Buyer's operation of the Business or ownership of the Assets on
or after the Closing Date, including any and all liabilities or obligations
arising under the Assumed Contracts which relate to events occurring or
conditions existing on or after the Closing Date or otherwise assumed by Buyer
under this Agreement; and
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof.
23
<PAGE>
13.4. Procedures for Indemnification. The procedures for
indemnification shall be as follows:
(a) The party claiming the indemnification (the
"Indemnified Party") shall promptly give notice to the party from whom the
indemnification is claimed (the "Indemnifying Party") of any claim, whether
between the parties or brought by a third party against the Indemnified Party,
specifying (i) the factual basis for such claim, and (ii) the amount of the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against the Indemnified Party such notice shall be given by the
Indemnified Party to the Indemnifying Party within five (5) days after written
notice of such action, suit, or proceeding shall have been given to the
Indemnified Party.
(b) Following receipt of notice from the Indemnified
Party of a claim, the Indemnifying Party shall have thirty (30) days in which to
make such investigation of the claim as the Indemnifying Party shall deem
necessary or desirable. For the purposes of such investigation, the Indemnified
Party agrees to make available to the Indemnifying Party and/or its authorized
representative(s) the information relied upon by the Indemnified Party to
substantiate the claim. If the Indemnified Party and the Indemnifying Party
agree at or prior to the expiration of said thirty (30) day period (or any
agreed upon extension thereof) to the validity and amount of such claim, or if
the Indemnifying Party does not respond to such notice, the Indemnifying Party
shall immediately pay to the Indemnified Party the full amount of the claim.
Buyer shall be entitled to apply any or all of the Accounts Receivable collected
on behalf of Sellers to a claim as to which Buyer is entitled to indemnification
hereunder. If the Indemnified Party and the Indemnifying Party do not agree
within said period (or within any agreed-upon extension thereof), the
Indemnified Party may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to
which the Indemnified Party is entitled to indemnification hereunder, the
Indemnifying Party shall have the right at its own expense to participate in or
to assume control of the defense of such claim, and the Indemnified Party shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
reasonable actual out-of-pocket expense incurred by the Indemnified Party as the
result of a request by the Indemnifying Party to so cooperate. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim, the Indemnified Party shall have the right to participate in the defense
of such claim at its own expense.
(d) If a claim, whether between the parties or by a
third party, requires immediate action, the parties will make all reasonable
efforts to reach a decision with respect thereto as expeditiously as possible.
(e) If the Indemnifying Party does not elect to assume
control or otherwise participate in the defense of any third-party claim, the
Indemnifying Party shall be bound by the results obtained in good faith by the
Indemnified Party with respect to such claim.
(f) The indemnification rights provided in Sections 13.2
and 13.3 hereof shall extend to the partners, shareholders, directors, officers,
members, partners, agents, employees,
24
<PAGE>
and representatives of the Indemnified Party, although for the purpose of the
procedures set forth in this Section 13.4, any indemnification claims by such
parties shall be made by and through the Indemnified Party.
14 POST CLOSING MATTERS.
(a) Books and Records. Each party agrees that it will
cooperate with and make available (or cause to be made available) to the other
party, during normal business hours, all books and records, information and
employees (without substantial disruption of employment) retained and remaining
in existence after the Closing which are necessary or useful in connection with
any tax inquiry, audit, or dispute, any litigation or investigation or any other
matter requiring any such books and records, information or employees for any
reasonable business purpose (a "Permitted Use"). The party requesting any such
books and records, information or employees shall bear all of the out-of-pocket
costs and expenses reasonably incurred in connection with providing such books
and records, information or employees. All information received pursuant to this
Section 14(a) shall be kept confidential pursuant to Section 6.12 by the party
receiving it, except to the extent that disclosure is reasonably necessary in
connection with any Permitted Use.
(b) Cooperation and Records Retention. Seller and Buyer
shall each (i) provide the other with such assistance as may reasonably be
requested by either of them in connection with the preparation of any return,
audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to liability for any taxes; (ii) retain and
provide the other with any records or other information that may be relevant to
such return, audit or examination, proceeding or determination; and (iii)
provide the other with any final determination of any such audit or examination,
proceeding, or determination that affects any amount required to be shown on any
Tax return of the other for any period.
(c) Payments. Following the Closing Date, Seller shall
pay promptly when due all of their debts and liabilities, including any
liability for taxes with respect to periods ending on or before the Closing
Date.
15. ADDITIONAL INSURANCE. Buyer shall cause any of its employees or
agents entering the premises to conduct any Site Assessments or other due
diligence investigations to carry adequate injury/accident insurance, and Buyer
shall hold Seller harmless for any claims arising from such due diligence
investigations.
16. EXPENSES. Except as otherwise expressly set forth in this
Agreement, each party shall bear its own legal and other fees and expenses
incurred in connection with its negotiating, executing and performing this
Agreement. Buyer shall pay all expenses specifically in connection with Closing.
Buyer shall bear all applicable sales, transfer or similar taxes, if any (other
than income or capital gains taxes which shall have come due to Seller under
federal or state laws), which are due as a result of the transfer of the Assets
in accordance herewith.
17. FURTHER ASSURANCES. From time to time at or after the Closing, at
the request of the other, Seller and Buyer will execute and deliver such other
instruments of
25
<PAGE>
conveyance, assignment, transfer and delivery and take such other action as the
other reasonably may request in order to consummate, complete and carry out the
purposes of the transactions contemplated hereby, including the execution and
delivery of such instruments and agreements as may be reasonably necessary or
advisable to fully effect the transfer to Buyer of the Assets.
18. BENEFIT AND ASSIGNABILITY. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person or entity shall have any
right (whether third party beneficiary or otherwise) hereunder. This Agreement
may not be assigned by any party without the prior written consent of the other
party; provided, however, that Buyer may assign all or any portion of this
Agreement to any Affiliate of Buyer, provided that Buyer shall remain obligated
for the performance of this Agreement.
19. NOTICES. All notices demands and other communications pertaining
to this Agreement ("Notices") shall be in writing addressed as follows:
If to Seller: Tucson Communications Company, L.P.
8445 Camino Santa Fe, Suite 101
San Diego, California 92121
Telephone: (619) 558-0333
Telecopy: (619) 558-0416
Attn: Robert H. Davis
with a copy to: James McGowan, Jr., Esquire
Attorney at Law
P.O. Box 1885
La Jolla, California 92038
Telephone: (619) 454-0142
Telecopy: (619) 454-7858
and a copy to: H. Victor Sucher, Jr.
600B Clubhouse Avenue
Newport Beach, California 92663
Telephone: (714) 675-3839
Telecopy: (714) 675-3839
If to Buyer American Tower Systems, Inc.
10800 Main Street
Fairfax, Virginia 22030
Telephone: (703) 934-1215
Telecopy: (703) 934-1200
Attn: Alan Box
26
<PAGE>
with a copy to: Hunton & Williams
1751 Pinnacle Drive
Suite 1700
McLean, Virginia 22102
Telephone: (703) 714-7440
Telecopy: (703) 714-7410
Attn: Joseph W. Conroy, Esquire
Notices shall be deemed given three (3) business days after being mailed by
certified or registered United States mail, postage prepaid, return receipt
requested, or on the first business day after being sent, prepaid, by nationally
recognized overnight courier that issues a receipt or other confirmation of
delivery, or upon oral confirmation of receipt of a telecopy transmission of any
Notices. Any party may change the address to which Notices under this Agreement
are to be sent to it by giving written notice of a change of address in the
manner provided in this Agreement for giving Notice.
20. WAIVER. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of any party at any time to require performance by the
other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (ii) no waiver by any party of any default by
any other shall be valid unless in writing and acknowledged by an authorized
representative of the nondefaulting party, and no such waiver shall be taken or
held to be a waiver by such party of any other preceding or subsequent default;
and (iii) no extension of time granted by any party for the performance of any
obligation or act by any other party shall be deemed to be an extension of time
for the performance of any other obligation or act hereunder.
21. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto, which are incorporated by reference herein) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and referenced herein, and supersede and terminate any prior agreements between
the parties (written or oral) with respect to the subject matter hereof. This
Agreement may not be altered or amended except by an instrument in writing
signed by the party against whom enforcement of any such change is sought.
22. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument.
23. CONSTRUCTION. The headings of the Articles and Sections of this
Agreement are for convenience only and in no way modify, interpret or construe
the meaning of specific provisions of the Agreement.
24. EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this
Agreement are a material part of this Agreement.
25. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
will not in any way be affected or impaired. Any illegal
27
<PAGE>
or unenforceable term shall be deemed to be void and of no force and effect only
to the minimum extent necessary to bring such term within the provisions of
applicable law and such term, as so modified, and the balance of this Agreement
shall then be fully enforceable.
26. CHOICE OF LAW; VENUE. This Agreement is to be construed and
governed by the laws of the State of Arizona, without regard for the choice of
law rules utilized in that state. Subject to the provisions of Section 12.2, if
there is any dispute between the parties to this Agreement which remains
unresolved for thirty (30) days or more, either party may, upon written notice
to the other, submit such dispute to binding arbitration in Tucson, Arizona in
accordance with the commercial rules of the American Arbitration Association
("AAA") before a panel of three arbitrators Knowledgeable in the tower
communications industry, one arbitrator chosen by Buyer, one chosen by Seller
and the third as mutually agreed upon by the two arbitrators so appointed, or in
the absence of such agreement, by the President of the Arizona Chapter of the
AAA, and the decision of such panel shall, in the absence of fraud, be
conclusively binding on the parties.
27. PUBLIC STATEMENTS. Prior to the Closing Date, neither Seller nor
Buyer shall, without the prior written approval of the other party, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except (i) Seller and Buyer shall issue a
mutually agreeable press release promptly after the signing of this Agreement;
and (ii) to the extent required by law, in which case the other party shall be
so advised as far in advance as possible.
28. ATTORNEYS' FEES. If any party initiates any litigation against any
other party involving this Agreement, the prevailing party in such action shall
be entitled to receive reimbursement from the other party for all reasonable
attorneys' fees and other costs and expenses incurred by the prevailing party in
respect of that litigation, including any appeal, and such reimbursement may be
included in the judgment or final order issued in that proceeding.
29. COUNSEL. Each party has been represented by its own counsel in
connection with the negotiation and preparation of this Agreement and,
consequently, each party hereby waives the application of any rule of law that
would otherwise be applicable in connection with the interpretation of this
Agreement, including but not limited to any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the party
whose counsel drafted that provision.
30. DELIVERY OF SCHEDULES. The parties acknowledge that as of the date
of execution of this Agreement, the Seller has not delivered to the Buyer the
scheduled called for in Section 4 of this Agreement (the "Schedules"). Within
five (5) business days after the date of execution of this Agreement, the Seller
shall deliver the Schedules to the Buyer and the Buyer shall have five (5)
business days thereafter (the "Review Period") to review the Schedules. If (1)
during the Review Period, the Buyer shall notify the Seller in writing that the
Schedules are not acceptable (in the Buyer's sole discretion), or (2) the Seller
shall fail required five (5) business day period, then this Agreement shall
immediately terminate without liability to any party hereto.
[SIGNATURE PAGE FOLLOWS.]
28
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN TOWER SYSTEMS, INC.
By: /s/ Alan Box
Alan Box
President
TUCSON COMMUNICATIONS COMPANY,
a California limited partnership
By: Delta Development I, a California limited
partnership, its General Partner
By: Dyna-Plex, Inc., a California corporation,
its General Partner
By: /s/ Robert H. Davis,
Robert H. Davis,
President
By: /s/ Euphenia B. Davis
Assistant Secretary
By: /s/ H. Victor Sucher, Jr.
H. Victor Sucher, Jr.
An individual General Partner of Tuscon
Communications Company, a California limited
partnership
29
<PAGE>
SCHEDULES
Schedule 1.2 Contracts; Assumed Contracts
Schedule 1.7 Intangible Property
Schedule 1.11 Permits
Schedule 1.13 Real Property
Schedule 1.12 Personal Property
Schedule 4.6 Compliance with Laws
Schedule 4.7 Asset Liens
Schedule 4.11 Litigation
Schedule 4.12 Financial Statements
Schedule 4.14 Tax Matters
Schedule 4.16 Employees; Employee Benefit Plans
Schedule 4.17 Insurance
Schedule 4.18 Environmental Matters
Schedule 4.23 Financing Statements
Schedule 7.3 Form of Legal Opinion of Seller's Counsel
Schedule 10.2 Form of Legal Opinion of Buyer's Counsel
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 25th day of June, 1997,
by and between AMERICAN TOWER SYSTEMS, INC., a Delaware corporation (herein
called "Purchaser") and FERNAND E. PHANEUF, JR. and LORRAINE PHANEUF (herein
collectively called "Shareholders") being all of the shareholders of Tower
Sites, Inc., and TOWER SITES, INC., d/b/a TOWER SITES, INC., a Connecticut
corporation ("Company"). The Shareholders and the Company are collectively
referred to herein as the "Sellers."
Agreement
In consideration of the mutual benefits to be derived therefrom and the
mutual agreements hereinafter contained, Purchaser and Sellers approve and adopt
this Agreement and mutually covenant and agree with each other as follows:
1. Assets to Be Purchased and Purchase Price.
1.1 On the Closing Date (as hereinafter defined) the Sellers shall
transfer to Purchaser the assets of Company consisting of (a) tower leases with
existing tenants (the "Tower Leases"), (b) certain items of leased and owned
real property (the "Realty") and (c) certain items of tangible personal property
(the "Personalty"), all free and clear of any debt or liens whatsoever which in
the aggregate shall represent all of the assets of Company, but not the debt or
other liabilities. The Tower Leases, Realty and Personalty are collectively
referred to herein as the "Transferred Assets" and are described in Schedules 1
(Tower Leases), 2 (Realty), and 3 (Personalty) hereto.
1.2 As consideration for the Transferred Assets being transferred
pursuant to Subparagraph 1.1 hereof, Purchaser shall on the Closing Date and
contemporaneously with such transfer of the Transferred Assets, and except as
provided in Subparagraph 5.4 hereof, pay to Sellers U.S. $1,500,000.00
("Purchase Consideration") subject to adjustment and proration for monthly land
lease payments, monthly tenant rental income and real and personal taxes paid to
respective municipalities. Upon execution hereof, Purchaser shall deposit a
$75,000.00 earnest money deposit ("Deposit") with Moyle, Flanigan, Katz, Kolins,
Raymond & Sheehan, P.A. ("Escrow Agent"), to be held in escrow pursuant to the
terms hereof and credited toward the Purchase Price at Closing. Sellers shall be
solely responsible for allocating the Purchase Consideration among themselves
and shall give Notice of such allocation to Purchaser at least two (2) days
prior to the Closing Date.
2. Representations and Warranties of Sellers.
2.1 Ownership of Stock/Transferred Assets.
Shareholders are the record owners and holders of all of the shares of
Company's common stock as of the date hereof and will continue to own such
shares until the Closing Date. The
<PAGE>
Company is the record owner and holder of all of the Transferred Assets listed
in Schedules 1 through 3, inclusive, hereto and will continue to own such
Transferred Assets to, on and through the Closing Date. All such Transferred
Assets are or will be on the Closing Date owned free and clear of all liens,
encumbrances, charges and assessments of every nature, are subject to no
restrictions with respect to transferability, and, where applicable, all
consents of any parties to the Tower Leases required for their transfer to
Purchaser have or will be on the Closing Date obtained in writing. The Sellers
will have full power and authority to assign and transfer the Transferred Assets
in accordance with the terms hereof.
(b) Except for Tower Leases listed in Schedule 1 of this Agreement, and
repeater business to be retained by Sellers, there are no outstanding options,
contracts, calls, commitments, agreement or demands of any character relating to
the Transferred Assets.
(c) Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Connecticut, with all requisite
power and authority to own, operate and lease its properties and to carry on its
business as now being conducted, is duly qualified and in good standing in every
jurisdiction in which the property owned, leased or operated by it or the nature
of the Transferred Assets are located. The states in which Company is qualified
to do business are listed in Schedule 4.
(d) Schedule 5 contains a list of the officers, directors and
shareholders of Company; and a list of the articles of incorporation and bylaws
currently in effect of Company, copies of which have been furnished to
Purchaser.
(e) The execution and delivery of this Agreement does not, and, subject
to the approval and adoption by the Shareholders of Company contemplated hereby,
the consummation of the transaction contemplated hereby will not violate any
provision of Company's articles of incorporation or bylaws, or any provisions
of, or result in the acceleration of any obligation under, any mortgage, lien,
lease, agreement, instrument, court order, arbitration award, judgment or decree
to which Company is a party, or by which it is bound, and will not violate any
other restriction of any kind or character to which it is subject, or cause or
result in the filing of a bankruptcy or insolvency proceeding under state or
federal law.
(f) All Personalty of Company is in AS-IS, WHERE-IS condition and
repair, and Seller has no notice of any required repairs to the Personalty.
2.2 Changes since December 31, 1996.
Since December 31, 1996, there has not been:
(a) Any material adverse change in the Company's prospects, financial
condition, assets, liabilities, properties or business.
2
<PAGE>
(b) Any mortgage, pledge, lien or encumbrance made on any of the
Transferred Assets.
(c) Any sale, transfer or other disposition of assets of Company,
except in the normal course of business.
(d) Any other event or condition not in the ordinary course of
business.
2.3 Liabilities.
(a) There are no liabilities of Company, whether accrued, absolute,
contingent or otherwise, which arose or relate to any transaction of Company
occurring prior to December 31, 1996. There are no such liabilities of Company
which have arisen or relate to any transaction of Company occurring since
December 31, 1996, other than normal liabilities incurred in the normal conduct
of Company's business, and none of which have a material adverse effect on the
business or financial condition of the Company. As of the date hereof, there are
no known circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, which may hereafter give rise to liabilities, except
in the normal course of Company's business.
(b) All corporate acts required of Company have been taken and all
reports and returns required to be filed by them with any governmental agency
have been filed. Company has no notice of any claimed violation of any, and is
in compliance with, all applicable federal, state, county, local and foreign
government laws, ordinances or regulations relating to the Transferred Assets.
Company has maintained files and records which contain all correspondence,
notices, applications and other documentation relating to all federal, state,
local and foreign governmental, regulatory agency and other licenses, approvals,
clearances, and investigations, or employees of Company relating to the
Transferred Assets. All such files and records have been heretofore identified
to and made available for review by Purchaser.
(c) There are no legal, administrative or other proceedings,
investigations, inquiries, or claims, judgments, injunctions or restrictions,
either threatened, pending or outstanding against or involving Company, or the
Transferred Assets, nor does Company know, or have reasonable grounds to know,
of any basis for any such proceedings, investigations, inquiries, or claims,
judgments, injunctions or restrictions relating to the Transferred Assets.
(d) Company does not have any contract with any governmental body
relating to the Transferred Assets which is subject to renegotiation.
(e) The past and anticipated future operations of the Transferred
Assets do not infringe or violate any patents, patent rights, trademarks, trade
names, copyrights and/or licenses thereof of others.
3
<PAGE>
(f) No claim, demand or notice is pending against the Company for
breach of any of the Tower Leases or for any similar claim, nor, to the best of
Sellers' knowledge, do any facts exist which may lead to any such claim, demand
or notice being asserted in the future.
(g) All policies of insurance carried by Company are in full force and
all premiums thereon are paid to date. Schedule 6 contains a true and correct
list of all policies of insurance, relating to the Transferred Assets.
(h) All negotiations relative to this Agreement and the transaction
contemplated hereby have been carried on directly by Shareholders with Purchaser
without the intervention of any broker or third party other than Blackburn &
Company, Inc. ("Broker"). Seller shall pay Broker a commission pursuant to a
separate letter agreement between Seller and Broker. Neither Shareholders nor
Company has engaged, consented to, or authorized any other broker, investment
banker or third party to act on its behalf, directly or indirectly, as a broker
or finder in connection with the transaction contemplated by this Agreement.
(i) Neither Company nor any of its Subsidiaries has granted any license
or made any assignment of any of their patents, patent applications, invention
discoveries, trademarks, trade names or copyrights, relating to the Transferred
Assets, other than the Tower Leases and repeater business.
2.4 Taxes.
(a) All federal, state, foreign, county and local income, ad valorem,
excise, profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by Company, and there are no unpaid taxes which are, or
could become a lien on the Transferred Assets. All tax returns of any kind
required to be filed have been filed and the taxes paid or accrued.
(b) Company's federal income tax returns have never been audited.
(c) The Company has not waived restrictions on assessment or collection
of taxes or consented to the extension of any statute of limitations relating to
any tax. Company has no knowledge of any possible deficiency assessments in
respect to federal income tax returns or other tax returns filed by it.
2.5 Tower Leases and Commitments.
(a) The Company has no commitments relating to the Transferred Assets
(except the Tower Leases and repeater business themselves).
4
<PAGE>
(b) The Company has not given a power of attorney which is currently in
effect, to any person, firm or, corporation for any purpose whatsoever.
2.6 Accuracy of All Statements Made by Sellers and Company.
No representation or warranty by Sellers or Company in this Agreement,
nor any statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of Sellers or Company pursuant to this Agreement, nor
any document or certificate delivered to Purchaser pursuant to this Agreement or
in connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
3. Representations and Warranties of Purchaser.
Purchaser represents and warrants as follows:
3.1 Organization and Good Standing.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full power and authority
to enter into and perform the transactions contemplated by this Agreement.
3.2 Performance of this Agreement.
The execution and performance of this Agreement by Purchaser has been
authorized by the board of directors of Purchaser.
3.3 No Covenant as to Tax Consequences.
It is expressly understood and agreed that neither Purchaser nor its
employees, officers, counsel or agents has made any warranty or agreement,
expressed or implied, as to the tax consequences of the transactions
contemplated by this Agreement or the tax consequences of any action pursuant to
or growing out of this Agreement.
4. Covenants of Sellers.
Sellers hereby covenant and agree to cause Company to comply with the
following:
4.1 Access to Information.
Purchaser and its authorized representatives shall have full access
during normal business hours to all properties, books, records, Tower Leases and
documents of Company, and Company
5
<PAGE>
shall furnish or cause to be furnished to Purchaser and its authorized
representative all information with respect to its affairs and business of
Company as Purchaser may reasonably request.
4.2 Actions Prior to Closing.
From and after the date of this Agreement and until the Closing Date:
(a) Except with the prior written consent of Purchaser, Company shall
carry on their business diligently and substantially in the same manner as
heretofore, and the Company shall not make or institute any unusual or novel
methods of purchase, sale, management, accounting or operation, except with the
prior written consent of Purchaser.
(b) Company shall not enter into any contract or commitment or engage
in any transaction not in the usual and ordinary course of business and
consistent with Company's business practices without the prior written consent
of Purchaser.
(c) Company shall not create any indebtedness other than short term
indebtedness incurred in the usual and ordinary course of business, pursuant to
existing Tower Leases disclosed in the Schedules submitted in connection
herewith, and in doing the acts and things contemplated by this Agreement.
(d) Company shall not amend its articles of incorporation or bylaws, or
make any changes in authorized or issued capital stock interests without the
prior written consent of Purchaser.
(e) Company shall maintain current insurance and such additional
insurance in effect as may be reasonably required by increased business and
risks; and all property shall be used, operated, maintained and repaired in a
normal business manner.
(f) Company shall use is best efforts (without making any commitments
on behalf of Purchaser) to preserve for Purchaser the present Contract
relationships of Company.
(g) Company shall not do any act or omit to do any act, or permit any
act or omission to act, which will cause a material breach of any Contract.
(h) Company shall duly comply with all applicable laws as may be
required for the valid and effective transfer of the Transferred Assets
contemplated by this Agreement, except that Purchaser hereby waives compliance
with the provisions of any bulk sales act.
(i) Company shall promptly notify Purchaser of any lawsuits, claims,
proceedings or investigations that may be threatened, brought, asserted or
commenced against it, its officers or directors involving in any way the
business, properties or assets of Company.
6
<PAGE>
5. Conditions Precedent to Purchaser's Obligations.
5.1 Truth of Representations and Warranties.
The representations and warranties made by Company and Sellers in this
Agreement or given on its or their behalf hereunder, shall be true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date.
5.2 Compliance with Covenants.
Sellers shall have performed and complied with all its obligations
under this Agreement which are to be performed or complied with by it prior to
or on the Closing Date, including the delivery of the closing documents
specified in Subparagraph 8.2.
5.3 Absence of Suit.
No action, suit or proceeding before any court or any governmental or
regulatory authority shall have been commenced or threatened and, no
investigation by any governmental or regulatory authority shall have been
commenced, against Purchaser, the Sellers, the Company or any of the affiliates,
associates, officers or directors of any of them, seeking to restrain, prevent
or change the transactions contemplated hereby, or questioning the validity or
legality of any such transactions, or seeking damages in connection with any of
such transactions.
5.4 Receipt of Approvals, etc.
All approvals, consents and/or waivers that are necessary to effect the
transactions contemplated hereby shall have been received, unless the required
receipt of such approvals, consents and/or waivers is waived in writing by
Purchaser. If the consent to the assignment of a Contract has not been received
by the Closing Date, Purchaser may withhold a reasonable portion of the Purchase
Consideration -- based upon the value of that Contract -- until such consent
shall have been obtained.
5.5 No Material Adverse Change.
As of the Closing Date there shall not have occurred any material
adverse change which materially impairs the ability of Company to conduct their
business or the earning power thereof on the same basis as in the past.
7
<PAGE>
5.6 Accuracy of Financial Statement.
Purchaser and its representatives shall be satisfied as to the accuracy
of all balance sheets, statements of income and other financial statements of
Company furnished to Purchaser in connection herewith.
5.7 Noncompetition Agreements.
Noncompetition agreements referred to in Subparagraph 8.2(g) shall have
been executed.
5.8 Legal Opinion.
Purchaser shall have received an opinion of counsel for Company
referred to in Subparagraph 8.2(f).
5.9 Proceedings and Instruments Satisfactory; Certificates.
All proceedings, corporate or otherwise, to be taken in connection with
the transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Purchaser may request shall have been
delivered to Purchaser. Company and the Sellers shall have delivered
certificates in such detail as Purchaser may request as to compliance with the
conditions set forth in this Article 5.
6. Conditions Precedent to Sellers' Obligations.
6.1 Truth of Representations and Warranties.
Purchaser's representations and warranties contained in this Agreement
shall be true at and as of the Closing Date as though such representations and
warranties were made at and as of the Closing Date.
6.2 Purchaser's Compliance with Covenants.
Purchaser shall have performed and complied with its obligations under
this Agreement which are to be performed or complied with by it prior to or on
the Closing Date. Specifically, Purchaser and Sellers have executed a license or
other agreement providing for Sellers' retention of the "repeater business" and
the non-exclusive right to use and access the Transferred Assets in connection
with such repeater business, provided such repeater business does not interfere
with Purchaser's use of the Transferred Assets.
8
<PAGE>
7. Indemnification.
7.1 Requirement of Indemnification.
Seller and each Seller, jointly and severally, shall indemnify
Purchaser for any loss, cost, expense or other damage (including, without
limitation, reasonable attorneys' fees and expenses) suffered by Purchaser
resulting from, arising out of, or incurred with respect to the falsity or the
breach of any representation, warranty or covenant made by Shareholders herein,
and any claims arising from actions by Company or Subsidiaries prior to the
Closing Date. Purchaser shall indemnify and hold the Sellers harmless from and
against any loss, cost, expense or other damage (including, without limitation,
reasonable attorneys' fees and expenses) resulting from, arising out of, or
incurred with respect to, or alleged to result from, arise out of or have been
incurred with respect to, the falsity or the breach of any representation,
covenant, warranty or agreement made by Purchaser herein, and any claims arising
from actions of Company or Subsidiaries from and after the Closing Date.
7.2 Notice and Resolution of Claim.
An indemnified party hereunder shall promptly give "Notice" (as
hereinafter defined) to the indemnifying party after obtaining knowledge of any
claim against the indemnified party as to which recovery may be sought against
the indemnifying party because of the indemnity set forth above, and, if such
indemnity shall arise from the claim of a third party, shall permit the
indemnifying party to assume the defense of any such claim or any litigation
resulting from such claim. Failure by the indemnifying party to give Notice to
the indemnified party of its election to defend any such claim or action by a
third party within fifteen (15) days after Notice thereof shall have been given
to the indemnifying party shall be deemed a waiver by the indemnifying party of
its right to defend such claim or action. If the indemnifying party assumes the
defense of such claim or litigation resulting therefrom, the obligations of the
indemnifying party hereunder as to such claim shall include taking all steps
necessary in the defense or settlement of such claim or litigation resulting
therefrom and holding the indemnified party harmless from and against any and
all losses, damages and liabilities including, without limitation, attorneys'
fees and expenses, caused by or arising out of any settlement approved by the
indemnifying party or any judgment in connection with such claim or litigation
resulting therefrom. The indemnifying party shall not, in the defense of such
claim or any litigation resulting therefrom, consent to entry of any judgment
except with the prior written consent of the indemnified party, or enter into
any settlement (except with the prior written consent of the indemnified party).
Notwithstanding the foregoing, any such judgment or settlement shall contain as
an unconditional term thereof the giving by the claimant or the plaintiff to the
indemnified party a release from all liability in respect of such claim or
litigation.
9
<PAGE>
7.3 Defense of Third-Party Claim.
If the indemnifying party shall not assume the defense of any such
claim by a third party or litigation resulting therefrom, the indemnified party
may defend against such claim or litigation in such manner as it may deem
appropriate and, unless the indemnifying party shall deposit with the
indemnified party a sum equivalent to the total amount demanded in such claim or
litigation plus the indemnified party's estimate of the cost of defending the
same, the indemnified party may settle such claim or litigation on such terms as
it may deem appropriate and the indemnifying party shall within thirty (30) days
of Notice from the indemnified party reimburse the indemnified party for the
amount of such settlement and for all losses or expenses, legal or otherwise,
incurred by the indemnified party in connection with the defense against or
settlement of such claim or litigation.
7.4 Payment.
The indemnifying party shall promptly reimburse the indemnified party
for the amount of any judgment rendered with respect to any claim by a third
party in such litigation and for all losses and expenses, legal or otherwise,
incurred by the indemnified party in connection with the defense against such
claim or litigation, and for any other loss suffered or incurred with respect to
the falsity or the breach of any representation, warranty, covenant or agreement
(whether or not arising out of the claim of a third party).
7.5 Effect of Taxes.
The determination of any indemnified loss, cost or expense shall take
into account any tax benefit derived by Purchaser or any affiliated companies.
To the extent that any deficiency for state, local, or federal income taxes
which may be established against Company for any year ended on or prior to
December 31, 1997, is occasioned by a determination by the Internal Revenue
Service or state or local departments of revenue that any increase in income for
the year gives rise to a deduction or deductions from ordinary income of Company
in the same aggregate amount for a subsequent taxable year or years, such
deficiency shall be assumed by Purchaser and shall not be a breach of any of
Company or Shareholders' warranties, representations and covenants in this
Agreement.
7.6 Time Limit on Indemnification.
No claim for indemnification may be asserted by Purchaser after the
second anniversary of the Closing Date, as hereinafter defined, except for (i)
state or federal sales or income taxes for any period ending on or prior to
December 31, 1997, which may be asserted at any time the applicable State
Departments of Revenue or Internal Revenue Service may still assert a
deficiency, and which indemnification is subject to the provisions of
Subparagraph 7.5 above, and (ii) claims arising out of a representation,
warranty or covenant that a Seller knew at the date of this
10
<PAGE>
Agreement was false or which arises out of a claim later known to a
Seller which Seller failed to disclose to Purchaser prior to the Closing Date.
7.7 Amount Limit on Indemnification.
Notwithstanding any other provision to the contrary, neither
Shareholders nor Purchaser shall be charged with any such indemnified loss, cost
or expense which in the aggregate does not exceed Five Thousand dollars
($5,000.00).
8. Closing.
8.1 Time and Place.
The closing of this transaction ("Closing") shall take place by mail
with the escrow documents to be delivered to the offices of Moyle, Flanigan,
Katz, Kolins, Raymond & Sheehan, P.A., in West Palm Beach, Florida, at 10:00
a.m., Palm Beach County, Florida, time on July 1, 1997, or at such other time
and place as the parties hereto shall agree upon. Such date is referred to in
this Agreement as the "Closing Date."
8.2 Documents To Be Delivered by Sellers.
At the closing Sellers shall deliver to Purchaser the following
documents:
(a) Duly executed assignments of the Tower Leases together with all
required consents thereto, in form and substance satisfactory to Purchaser.
(b) The originals or copies of the Tower Leases.
(c) A duly executed bill of sale absolute as to the Personalty with
full warranties of title and no liens, in form and substance acceptable to
Purchaser.
(d) Statutory Warranty Deed, or its Connecticut equivalent, as to the
Realty with full warranties of title and in a form and substance acceptable to
Purchaser.
(e) A certificate signed by the Sellers that the representations and
warranties made by them in this Agreement are true and correct on and as of the
Closing Date with the same effect as through such representations and warranties
had been made on or given on and as of the Closing Date and that Sellers have
performed and complied with all its obligations under this Agreement which are
to be performed or complied with by or prior to or on the Closing Date.
(f) A written opinion from counsel for Sellers dated as of the Closing
Date addressed to the Purchaser and its counsel satisfactory in form and
substance to Purchaser to the effect that:
11
<PAGE>
(1) The corporate existence and good standing and qualification of Company
is as stated in Subparagraph 2.1;
(2) This Agreement has been duly executed and delivered by Sellers and
constitutes a legal, valid and binding obligation of them enforceable
in accordance with its terms except as generally and by the
availability of equitable remedies;
(3) The Company has all requisite power and authority to own its property
and operate its business as and where it is now being conducted (except
as to the Rhode Island tower site);
(4) The Company has title to all of the Transferred Assets free and clear
of all mortgages, liens, leases, pledges, charges, security interests,
or encumbrances of any nature whatsoever except as set forth in such
opinion;
(5) To such counsel's knowledge after due investigation, this Agreement is
the legal, valid and binding obligation of the Company enforceable in
accordance with its terms, except insofar as such enforceability may be
limited by bankruptcy and other laws affecting creditors' rights
generally and by the availability of equitable remedies;
(6) Counsel has no knowledge of any of the proceedings stated in
Subparagraph 2.3(c);
(7) To the best of counsel's actual knowledge without any investigation
required, Company is in compliance with all statutes, regulations,
rules and executive orders of all government authorities;
(8) To the best of counsel's knowledge Seller's representations and
warranties in Subparagraph 2 are true and correct; and
(9) The Noncompetition Agreement provided for herein to be entered into
between all or certain of the Sellers and Purchaser or Company, as the
case may be, are valid and binding individual obligations of the
Sellers who are parties to such agreements, enforceable against each of
them in accordance with the terms of such provisions.
(10) The transaction contemplated by this Agreement shall not cause or
result in the filing of a bankruptcy or insolvency proceeding under
state or federal law.
(g) Noncompetition agreements for a 10 year time period and within a 10
mile of radius of the Transferred Assets between each of Fernand E. Phaneuf and
Lorraine Phaneuf, and the Purchaser in satisfactory form to Purchaser, with the
exception of the repeater business.
(h) Copies of the Articles of Incorporation and good standing
certificate certified by the secretary of state.
12
<PAGE>
(i) Incumbency certificate relating to all parties executing documents
relating to any of the transactions contemplated hereby.
(j) General releases in form and substance satisfactory to Purchaser of
all claims that any officer, director or partner of Company may have to the date
of closing against Purchaser.
(k) Duly executed Assignment of Land Leases and Tower Leases, and, to
Seller's best efforts, Estoppel letters or Consents of Landlord, if needed, in a
form acceptable to Purchaser.
(l) The originals of the Land Leases.
(m) Duly executed Lease agreements for the repeaters.
(n) Such other documents of transfer, certificates of authority and
other documents as Purchaser may reasonably request.
8.3 Documents To Be Delivered by Purchaser.
At the closing Purchaser shall deliver to Sellers the following
documents:
(a) Cash, cashiers check, wire transfer of immediately available
federal funds, or Purchaser's attorneys' trust account check in the amount of
the Purchase Consideration provided for in Subparagraph 1.2 hereof.
(b) A certified copy of the duly adopted resolutions of Purchaser's
board of directors or executive committee authorizing or ratifying the execution
and performance of this agreement and authorizing or ratifying the acts of its
officers and employees in carrying out the terms and provisions thereof.
(c) A license agreement or other agreement providing for Sellers'
retention of the "repeater business" and the non-exclusive right to use and
access the Transferred Assets in connection with such repeater business,
provided such repeater business does not interfere with Purchaser's use of the
Transferred Assets.
9. Law Governing/Jurisdiction/Venue.
This Agreement and all transactions contemplated by this Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of Connecticut without regard to principles of conflicts of
laws. The parties acknowledge that a substantial portion of negotiations and
anticipated performance of this Agreement occurred or shall occur in Palm Beach
County, Florida, and that, therefore, without limiting the jurisdiction or venue
of any other federal or state courts, each of the parties irrevocably and
conditionally (i) agrees that any suit, action or other legal proceeding arising
out of or relating to this Agreement may be brought
13
<PAGE>
in the courts of record of the State of Florida in Palm Beach County, or the
courts of the United States, Southern District of Florida; (ii) consents to the
jurisdiction of each such court in any such suit, action or proceeding; and
(iii) waives any objection which it may have to the laying of venue of any such
suit, action or proceeding in any such court.
10. Assignment.
This Agreement shall not be assigned by any party without the prior
written consent of the other parties which consent may be withheld for any
reason and any attempted assignment without such written consent shall be null
and void and without legal effect, except that this Agreement may be freely
assigned by Purchaser to any corporation wholly-owned by Purchaser. This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their successors, assigns, heirs, executors, administrators,
and personal representatives (if the consent required by this Article 10 is
properly secured if required).
11. Amendment and Modification.
Purchaser and Sellers may amend, modify and supplement this Agreement
in such manner as may be agreed upon by them in writing.
12. Termination and Abandonment.
This Agreement may be terminated and the transaction provided for by
this agreement may be abandoned without liability on the part of any part to any
other, at any time before the Closing Date:
(a) By mutual consent of Purchaser and Company;
(b) By Purchaser:
(1) If any of the conditions provided for in Article 5 of this Agreement
have not been met and have not been waived in writing by Purchaser.
(c) By Sellers:
(1) If any of the conditions provided for in Article 6 of this Agreement
have not been met and have not been waived in writing by Sellers.
In the event of termination and abandonment by any party as above provided in
this Article 12, Notice shall forthwith be given to the other party, and each
party shall pay its own expenses incident to preparation for the consummation of
this Agreement and the transactions contemplated hereunder.
14
<PAGE>
13. Survival.
The covenants, agreements, indemnifications, representations and
warranties of the parties hereto shall survive the closing of the transactions
contemplated by this Agreement but shall expire when the indemnification claims
period expires pursuant to Subparagraph 7.6 hereof.
14. Default.
14.1 If this transaction does not close due to a default by Purchaser,
then Sellers may retain the Deposit as agreed upon and liquidated damages.
14.2 If this transaction does not close due to a default by Sellers or
Company, the Purchaser may receive a return of its Deposit or, in the
alternative, Purchaser may proceed in equity to specifically enforce Purchaser's
rights hereunder, including the right of specific performance.
15. Notices.
All notices, requests, demands and other communications hereunder
("Notices") shall be deemed to have been duly given, if delivered by hand or
mailed, certified or registered mail with postage prepaid:
(a) If to Sellers, to Mr. Fern E. Phaneuf, 156 Route 171, Woodstock,
Connecticut 06281, with a copy to Nicholas Longo, Esquire, 168 Main Street,
Putnam, Connecticut 06260; or to such other person and place as Sellers shall
furnish to Purchaser by Notice; or
(b) If to Purchaser, to ______________________________ at 6400 North
Congress Avenue, Suite 1750, Boca Raton, Florida 33487, with a copy to John F.
Flanigan, Esquire, Moyle, Flanigan, Katz, Kolins, Raymond & Sheehan, P.A., 625
North Flagler Drive, 9th Floor, West Palm Beach, Florida 33401, or to such other
person and place as Purchaser shall furnish to Seller by Notice.
16. Announcements.
Announcements concerning the transactions provided for in this
agreement by Company, Sellers, or Purchaser shall be subject to the approval of
the others in all essential respects, except that Company's or Sellers' approval
of form shall not be required as to any statements and other information which
Purchaser may submit to the Securities and Exchange Commission, the New York
Stock Exchange or Purchaser's shareholders or be required to make pursuant to
any rule or regulation of the Securities and Exchange Commission or the New York
Stock Exchange.
15
<PAGE>
17. Entire Agreement.
This instrument embodies the entire agreement between the parties
hereto with respect to the transactions contemplated herein, and there have been
and are no agreements, representations or warranties between the parties other
than those set forth or provided for herein.
18. Counterparts.
This Agreement may be executed in two or more partially or fully
executed counterparts, each of which shall be deemed an original and shall bind
the signatory, but all of which together shall constitute but one and the same
instrument, provided that Purchaser shall have no obligations hereunder until
all shareholders have become signatories hereto.
19. Headings.
The headings in the Articles and Paragraphs of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
20. Further Documents.
Purchaser and Sellers agree to execute any and all other documents and
to take such other action or corporate proceedings as may be necessary or
desirable to carry out the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed all as of the day and year first above written.
WITNESSES: SELLERS:
(1) /s/ Edwin C. Higgins, III /s/ Fernand E. Phaneuf, Jr.
Edwin C. Higgins, III FERNAND E. PHANEUF, JR.
(2) /s/ Jeanne B. Methot
As to Phaneuf Jeanne B. Methot
(1) /s/ Edwin C. Higgins, III /s/ Lorraine Phaneuf
Edwin C. Higgins, III LORRAINE PHANEUF
(2) /s/ Jeanne B. Methot
As to Jeanne B. Methot
16
<PAGE>
TOWER SITES, INC.
(1) /s/ Edwin C. Higgins, III By: /s/ Fernand E. Phaneuf, Jr.
Edwin C. Higgins, III Fernand E. Phaneuf, Jr., President
(2) /s/ Jeanne B. Methot
As to Tower Sites, Inc.
Jeanne B. Methot
PURCHASER:
AMERICAN TOWER SYSTEMS, INC.
(1) /s/ Jill Pontano By: /s/ James S. Eisenstein
Name: James S. Eisenstein
(2) /s/ Shelly Doolity Its: Exec. Vice President
As to Purchaser
17
<PAGE>
SCHEDULES
1. Tower Leases.
2. Realty (land leases and property owned)
3. Personalty.
4. States in which Company is qualified to do business.
5. Names of officers, directors and shareholders, of Company.
6. Insurance.
EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 31st day of July, 1997,
by and between AMERICAN TOWER SYSTEMS, INC., a Delaware corporation (herein
called "Purchaser") and JOHN C. SANTANGELO AND GERALD HARKINS (herein
collectively called "Shareholders") being all of the shareholders of Southeast
Communications, Inc., and SOUTHEAST COMMUNICATIONS, INC., a Massachusetts
corporation ("Company"). The Shareholders and the Company are collectively
referred to herein as the "Sellers."
Agreement
In consideration of the mutual benefits to be derived therefrom and the
mutual agreements hereinafter contained, Purchaser and Sellers approve and adopt
this Agreement and mutually covenant and agree with each other as follows:
1. Assets to Be Purchased and Purchase Price.
1.1 On the Closing Date (as hereinafter defined) the Sellers shall
transfer to Purchaser certain assets of Company consisting of (a) tower leases
with existing tenants (the "Tenant Leases"), (b) certain owned and leased real
property (the "Realty") and (c) certain items of tangible personal property (the
"Personalty"), all free and clear of any debt or liens whatsoever which in the
aggregate shall represent all of the assets of Company, but not the debt or
other liabilities. The Tenant Leases, Realty and Personalty are collectively
referred to herein as the "Transferred Assets" and are described in Schedules 1
(Tenant Leases), 2 (Realty), and 3 (Personalty) hereto.
1.2 As consideration for the Transferred Assets being transferred
pursuant to Subparagraph 1.1 hereof, Purchaser shall on the Closing Date and
contemporaneously with such transfer of the Transferred Assets, and except as
provided in Subparagraph 5.4 hereof, pay to Sellers U.S. $7,168,370 ("Purchase
Consideration") subject to adjustment and proration for monthly land lease
payments, monthly tenant rental income and real and personal taxes paid to
respective municipalities. Upon execution hereof, Purchaser shall deposit a
$70,000.00 earnest money deposit ("Deposit") with Perry, Hicks, Crotty and
Mitchell ("Escrow Agent"), to be held in escrow pursuant to the terms hereof and
credited toward the Purchase Price at Closing. Escrow Agent shall not disburse
the Deposit without the written consent of Purchaser or Purchaser's attorney.
Sellers shall be solely responsible for allocating the Purchase Consideration
among themselves and shall give Notice of such allocation to Purchaser at least
two (2) days prior to the Closing Date.
<PAGE>
2. Representations and Warranties of Sellers.
2.1 Ownership of Stock/Transferred Assets.
(a) Shareholders are the record owners and holders of all of
the shares of Company's common stock as of the date hereof and will continue to
own such shares until the Closing Date. The Company is the rec ord owner and
holder of all of the Transferred Assets listed in Schedules 1 through 3,
inclusive, hereto and will continue to own such Transferred Assets to, on and
through the Closing Date. All such Transferred Assets are or will be on the
Closing Date owned free and clear of all liens, encumbrances, charges and
assessments of every nature, are subject to no restrictions with respect to
transferability, and, where applicable, all consents of any parties to the
Realty and Tenant Leases required for their transfer to Purchaser have or will
be on the Closing Date obtained in writing. The Sellers will have full power and
authority to assign and transfer the Transferred Assets in accordance with the
terms hereof.
(b) Except for Tenant Leases listed in Schedule 1 of this
Agreement, there are no outstanding options, contracts, calls, commitments,
agreement or demands of any character relating to the Transferred Assets.
Sellers shall obtain written Waiver of First Right of Refusals from all Tenants
with such rights of first refusal.
(c) Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Massachusetts, with all
requisite power and authority to own, operate and lease its properties and to
carry on its business as now being conducted, is duly qualified and in good
standing in every jurisdiction in which the property owned, leased or operated
by it or the nature of the Transferred Assets are located. The states in which
Company is qualified to do business are listed in Schedule 4.
(d) Schedule 5 contains a list of the officers, directors and
shareholders of Company; and a list of the articles of incorporation and bylaws
currently in effect of Company, copies of which have been furnished to
Purchaser.
(e) The execution and delivery of this Agreement does not,
and, subject to the approval and adoption by the Shareholders of Company
contemplated hereby, the consummation of the transaction contemplated hereby
will not violate any provision of Company's articles of incorporation or bylaws,
or any provisions of, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, court order, arbitration award,
judgment or decree to which Company is a party, or by which it is bound, and
will not violate any other restriction of any kind or character to which it is
subject, or cause or result in the filing of a bankruptcy or insolvency
proceeding under state or federal law.
2
<PAGE>
(f) All Personalty of Company is in good working condition and
repair, and Seller has no notice of any required repairs to the Personalty.
2.2 Changes since December 31, 1996.
Since December 31, 1996, there has not been:
(a) Any material adverse change in the Company's prospects,
financial condition, assets, liabilities, properties or business.
(b) Any mortgage, pledge, lien or encumbrance made on any of
the Transferred Assets.
(c) Any sale, transfer or other disposition of assets of
Company, except in the normal course of business.
(d) Any other event or condition not in the ordinary course of
business.
2.3 Liabilities.
(a) There are no liabilities of Company that relate to the
Transferred Assets, whether accrued, absolute, contingent or otherwise, which
arose or relate to any transaction of Company occurring prior to December 31,
1996, other than mortgage indebtedness that will be discharged or released at
Closing, and obligations under the Tenant Leases and Realty. There are no such
liabilities of Company which have arisen or relate to any transaction of Company
occurring since December 31, 1996, other than normal liabilities incurred in the
normal conduct of Company's business, and none of which have a material adverse
effect on the business or financial condition of the Company. As of the date
hereof, there are no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may hereafter give rise to
liabilities, except in the normal course of Company's business.
(b) All corporate acts required of Company have been taken and
all reports and returns required to be filed by them with any governmental
agency have been filed. Company has no notice of any claimed violation of any,
and is in compliance with, all applicable federal, state, county, local and
foreign government laws, ordinances or regulations relating to the Transferred
Assets. Company has maintained files and records which contain all
correspondence, notices, applications and other documentation relating to all
federal, state, local and foreign governmental, regulatory agency and other
licenses, approvals, clearances, and investigations, or employees of Company
relating to the Transferred Assets. All such files and records have been
heretofore identified to and made available for review by Purchaser.
(c) There are no legal, administrative or other proceedings,
investigations, inquiries, or claims, judgments, injunctions or restrictions,
either threatened, pending or
3
<PAGE>
outstanding against or involving Company, or the Transferred Assets, nor does
Company know, or have reasonable grounds to know, of any basis for any such
proceedings, investigations, inquiries, or claims, judgments, injunctions or
restrictions relating to the Transferred Assets.
(d) Company does not have any contract with any governmental
body relating to the Transferred Assets which is subject to renegotiation.
(e) The past and anticipated future operations of the
Transferred Assets do not infringe or violate any patents, patent rights,
trademarks, trade names, copyrights and/or licenses thereof of others.
(f) No claim, demand or notice is pending against the Company
for breach of any of the Tenant Leases or for any similar claim, nor, to the
best of Sellers' knowledge, do any facts exist which may lead to any such claim,
demand or notice being asserted in the future.
(g) All policies of insurance carried by Company are in full
force and all premiums thereon are paid to date. Schedule 6 contains a true and
correct list of all policies of insurance, relating to the Transferred Assets.
(h) All negotiations relative to this Agreement and the
transaction contemplated hereby have been carried on directly by Shareholders
with Purchaser without the intervention of any broker or third party as no
broker is involved in this transaction. The parties shall indemnify each other
for any claims made by a broker or third party.
(i) Neither Company nor any of its Subsidiaries has granted
any license or made any assignment of any of their patents, patent applications,
invention discoveries, trademarks, trade names or copyrights, relating to the
Transferred Assets.
2.4 Taxes.
(a) All federal, state, foreign, county and local income, ad
valorem, excise, profits, franchise, occupation, property, sales, use, gross
receipts and other taxes (including any interest or penalties relating thereto)
and assessments which are due and payable have been duly reported, fully paid
and discharged as reported by Company, and there are no unpaid taxes which are,
or could become a lien on the Transferred Assets. All tax returns of any kind
required to be filed have been filed and the taxes paid or accrued.
(b) Company's federal income tax returns have never been
audited.
(c) The Company has not waived restrictions on assessment or
collection of taxes or consented to the extension of any statute of limitations
relating to any tax. Company has no knowledge of any possible deficiency
assessments in respect to federal income tax returns or other tax returns filed
by it.
4
<PAGE>
2.5 Tenant Leases and Commitments.
(a) The Company has no commitments relating to the Transferred
Assets (except the Tenant Leases listed in Schedule 1).
(b) The Company has not given a power of attorney which is
currently in effect, to any person, firm or, corporation for any purpose
whatsoever.
2.6 Environmental Representations.
(i) That no "Hazardous Substance" (defined below) has:
(A) been disposed of, buried beneath, or percolated
beneath the Property or any improvements thereon; or
(B) been removed from the Property and stored offsite
of the Property.
(ii) That there has been no "Release" (as used in Section
101(22) of CERCLA) of a Hazardous substance on the
Property.
(iii) That the Property and any improvements thereon have
not in the past been used and are not presently being
used for the handling, transportation or disposal of
a Hazardous Substance.
(iv) That neither the Seller, nor any lessee, licensee nor
other party acting at the direction of or with
consent of the Seller, or such lessee or licensee,
has manufactured, treated, stored or disposed of any
Hazardous Substance on the Property or any
improvements thereof.
(v) That the Seller is in material compliance with all
applicable federal, state and local laws,
administrative rulings, and regulations of any county
administrative agency or other governmental or
quasi-governmental authority, relating to the
protection of the environment (including, without
limitation, laws prohibiting the creation of a public
nuisance).
(vi) That the Seller has not received notification that it
is a potentially responsible party under, or that it
has violated, any "Environmental Laws" (defined
below).
(vii) That no Hazardous Substances or wastes contaminate
the Property above levels which exceed the allowable
levels as set forth in the Environmental Laws.
(viii) For the purpose of this paragraph, the term
"Hazardous Substance" means any one or more of the
following: (A) any substance deemed hazardous
5
<PAGE>
under Section 101(14) of CERCLA, (B) any other
substance deemed hazardous by the Environmental
Protection Agency pursuant to Section 102(a) of
CERCLA, (C) petroleum (including, without limitation,
crude oil or any fraction thereof), (D) any substance
deemed hazardous pursuant to Section 1004(5) of RCRA,
(E) any solid waste identified in Section 1004(27) of
RCA; or (F) any other hazardous or toxic substance,
material, compound, mixture, solution, element,
pollutant, or waste regulated under any federal,
state or local statute, ordinance or regulation.
2.7 Accuracy of All Statements Made by Sellers and Company.
No representation or warranty by Sellers or Company in this Agreement,
nor any statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of Sellers or Company pursuant to this Agreement, nor
any document or certificate delivered to Purchaser pursuant to this Agreement or
in connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading. Seller shall
cooperate with an audit conducted by Deloitte & Touche at Seller's expense,
whether such audit is conducted before or after the Closing Date.
3. Representations and Warranties of Purchaser.
Purchaser represents and warrants as follows:
3.1 Organization and Good Standing.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts with full power and
authority to enter into and perform the transactions contemplated by this
Agreement.
3.2 Performance of this Agreement.
The execution and performance of this Agreement by Purchaser has been
authorized by the board of directors of Purchaser.
3.3 No Covenant as to Tax Consequences.
It is expressly understood and agreed that neither Purchaser nor its
employees, officers, counsel or agents has made any warranty or agreement,
expressed or implied, as to the tax consequences of the transactions
contemplated by this Agreement or the tax consequences of any action pursuant to
or growing out of this Agreement.
6
<PAGE>
4. Covenants of Sellers.
Sellers hereby covenant and agree to cause Company to comply with the
following:
4.1 Access to Information.
Purchaser and its authorized representatives shall have full access
during normal business hours to all properties, books, records, Tenant Leases
and documents of Company, and Company shall furnish or cause to be furnished to
Purchaser and its authorized representative all information with respect to its
affairs and business of Company as Purchaser may reasonably request.
4.2 Actions Prior to Closing.
From and after the date of this Agreement and until the Closing Date:
(a) Except with the prior written consent of Purchaser,
Company shall carry on their business diligently and substantially in the same
manner as heretofore, and the Company shall not make or institute any unusual or
novel methods of purchase, sale, management, accounting or operation, except
with the prior written consent of Purchaser.
(b) Company shall not enter into any contract or commitment or
engage in any transaction not in the usual and ordinary course of business and
consistent with Company's business practices without the prior written consent
of Purchaser.
(c) Company shall not create any indebtedness other than short
term indebtedness incurred in the usual and ordinary course of business,
pursuant to existing Tenant Leases disclosed in the Schedules submitted in
connection herewith, and in doing the acts and things contemplated by this
Agreement.
(d) Company shall not amend its articles of incorporation or
bylaws, or make any changes in authorized or issued capital stock interests
without the prior written consent of Purchaser.
(e) Company shall maintain current insurance and such
additional insurance in effect as may be reasonably required by increased
business and risks; and all property shall be used, operated, maintained and
repaired in a normal business manner.
(f) Company shall use is best efforts (without making any
commitments on behalf of Purchaser) to preserve for Purchaser the present
contract relationships of Company, and Company shall notify Purchaser upon the
termination or expiration of any Tenant Leases prior to closing.
7
<PAGE>
(g) Company shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
contract.
(h) Company shall duly comply with all applicable laws as may
be required for the valid and effective transfer of the Transferred Assets
contemplated by this Agreement, except that Purchaser hereby waives compliance
with the provisions of any bulk sales act.
(i) Company shall promptly notify Purchaser of any lawsuits,
claims, proceedings or investigations that may be threatened, brought, asserted
or commenced against it, its officers or directors involving in any way the
business, properties or assets of Company.
(j) Company shall be solely responsible for payment of any
liabilities or obligations of Company to its employees, including any salary,
severance pay and/or accrued vacation pay.
This covenant shall survive the Closing.
5. Conditions Precedent to Purchaser's Obligations.
5.1 Truth of Representations and Warranties.
The representations and warranties made by Company and Sellers in this
Agreement or given on its or their behalf hereunder, shall be true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date.
5.2 Compliance with Covenants.
Sellers shall have performed and complied with all its obligations
under this Agreement which are to be performed or complied with by it prior to
or on the Closing Date, including the delivery of the closing documents
specified in Subparagraph 8.2.
5.3 Absence of Suit.
No action, suit or proceeding before any court or any governmental or
regulatory authority shall have been commenced or threatened and, no
investigation by any governmental or regulatory authority shall have been
commenced, against Purchaser, the Sellers, the Company or any of the affiliates,
associates, officers or directors of any of them, seeking to restrain, prevent
or change the transactions contemplated hereby, or questioning the validity or
legality of any such transactions, or seeking damages in connection with any of
such transactions.
5.4 Receipt of Approvals, etc.
All approvals, consents and/or waivers that are necessary to effect the
transactions contemplated hereby shall have been received, unless the required
receipt of such approvals,
8
<PAGE>
consents and/or waivers is waived in writing by Purchaser. If the consent to the
assignment of a Contract has not been received by the Closing Date, Purchaser
may withhold a reasonable portion of the Purchase Consideration -- based upon
the value of that Contract -- until such consent shall have been obtained.
5.5 No Material Adverse Change.
As of the Closing Date there shall not have occurred any material
adverse change which materially impairs the ability of Company to conduct their
business or the earning power thereof on the same basis as in the past.
5.6 Accuracy of Financial Statement.
Purchaser and its representatives shall be satisfied as to the accuracy
of all balance sheets, statements of income and other financial statements of
Company furnished to Purchaser in connection herewith.
5.7 Noncompetition Agreements.
Noncompetition agreements referred to in Subparagraph 8.2(f) shall have
been executed.
5.8 Legal Opinion.
Purchaser shall have received an opinion of counsel for Company
referred to in Subparagraph 8.2(f).
5.9 Environmental Assessment.
Purchaser shall have approved an environmental site assessment for each
Land Lease site (the "Site Assessments"). Such Site Assessments shall be
prepared by Purchaser's environmental consultant at Purchaser's sole expense. If
the Site Assessments determine that environmental remediation is required,
Seller hereby agrees to pay the first $350,000.00 toward the remediation
expense, and thereafter Purchaser, at its sole discretion, may either pay the
additional remediation cost, if any, or terminate this Agreement and receive a
full refund of its deposit and all interest earned thereon.
Seller shall perform all such remediation as is required to satisfy
Federal and Massachusetts law (or, if applicable, Rhode Island law) relating to
release of hazardous substances, under the supervision of a licensed site
professional and to the reasonable satisfaction of Purchaser, provided that
Seller shall not be required to expend more than $350,000. If the cost of
required remediation exceeds $350,000, then Purchaser at its option may accept a
credit of $350,000 on the purchase price and complete remediation at its
expense, or terminate the Agreement, in which case all deposits hereunder shall
be forthwith refunded. In the event that Seller has not completed
9
<PAGE>
remediation required by this section by the closing date, a portion of the
purchase price equal to 120% of the estimated cost of remediation shall be held
in escrow pending such completion.
5.10 Proceedings and Instruments Satisfactory; Certificates.
All proceedings, corporate or otherwise, to be taken in connection with
the transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Purchaser may request shall have been
delivered to Purchaser. Company and the Sellers shall have delivered
certificates in such detail as Purchaser may request as to compliance with the
conditions set forth in this Article 5.
6. Conditions Precedent to Sellers' Obligations.
6.1 Truth of Representations and Warranties.
Purchaser's representations and warranties contained in this Agreement
shall be true at and as of the Closing Date as though such representations and
warranties were made at and as of the Closing Date.
6.2 Purchaser's Compliance with Covenants.
Purchaser shall have performed and complied with its obligations under
this Agreement which are to be performed or complied with by it prior to or on
the Closing Date.
7. Indemnification.
7.1 Requirement of Indemnification.
Seller and each Seller, jointly and severally, shall indemnify
Purchaser for any loss, cost, expense or other damage (including, without
limitation, reasonable attorneys' fees and expenses) suffered by Purchaser
resulting from, arising out of, or incurred with respect to the falsity or the
breach of any representation, warranty or covenant made by Shareholders herein,
and any claims arising from actions by Company or Subsidiaries prior to the
Closing Date. Purchaser shall indemnify and hold the Sellers harmless from and
against any loss, cost, expense or other damage (including, without limitation,
reasonable attorneys' fees and expenses) resulting from, arising out of, or
incurred with respect to, or alleged to result from, arise out of or have been
incurred with respect to, the falsity or the breach of any representation,
covenant, warranty or agreement made by Purchaser herein, and any claims arising
from actions of Company or Subsidiaries from and after the Closing Date.
10
<PAGE>
7.2 Notice and Resolution of Claim.
An indemnified party hereunder shall promptly give "Notice" (as
hereinafter defined) to the indemnifying party after obtaining knowledge of any
claim against the indemnified party as to which recovery may be sought against
the indemnifying party because of the indemnity set forth above, and, if such
indemnity shall arise from the claim of a third party, shall permit the
indemnifying party to assume the defense of any such claim or any litigation
resulting from such claim. Failure by the indemnifying party to give Notice to
the indemnified party of its election to defend any such claim or action by a
third party within fifteen (15) days after Notice thereof shall have been given
to the indemnifying party shall be deemed a waiver by the indemnifying party of
its right to defend such claim or action. If the indemnifying party assumes the
defense of such claim or litigation resulting therefrom, the obligations of the
indemnifying party hereunder as to such claim shall include taking all steps
necessary in the defense or settlement of such claim or litigation resulting
therefrom and holding the indemnified party harmless from and against any and
all losses, damages and liabilities including, without limitation, attorneys'
fees and expenses, caused by or arising out of any settlement approved by the
indemnifying party or any judgment in connection with such claim or litigation
resulting therefrom. The indemnifying party shall not, in the defense of such
claim or any litigation resulting therefrom, consent to entry of any judgment
except with the prior written consent of the indemnified party, or enter into
any settlement (except with the prior written consent of the indemnified party).
Notwithstanding the foregoing, any such judgment or settlement shall contain as
an unconditional term thereof the giving by the claimant or the plaintiff to the
indemnified party a release from all liability in respect of such claim or
litigation.
7.3 Defense of Third-Party Claim.
If the indemnifying party shall not assume the defense of any such
claim by a third party or litigation resulting therefrom, the indemnified party
may defend against such claim or litigation in such manner as it may deem
appropriate and, unless the indemnifying party shall deposit with the
indemnified party a sum equivalent to the total amount demanded in such claim or
litigation plus the indemnified party's estimate of the cost of defending the
same, the indemnified party may settle such claim or litigation on such terms as
it may deem appropriate and the indemnifying party shall within thirty (30) days
of Notice from the indemnified party reimburse the indemnified party for the
amount of such settlement and for all losses or expenses, legal or otherwise,
incurred by the indemnified party in connection with the defense against or
settlement of such claim or litigation.
7.4 Payment.
The indemnifying party shall promptly reimburse the indemnified party
for the amount of any judgment rendered with respect to any claim by a third
party in such litigation and for all losses and expenses, legal or otherwise,
incurred by the indemnified party in connection with the defense against such
claim or litigation, and for any other loss suffered or incurred with respect
11
<PAGE>
to the falsity or the breach of any representation, warranty, covenant or
agreement (whether or not arising out of the claim of a third party).
7.5 Effect of Taxes.
The determination of any indemnified loss, cost or expense shall take
into account any tax benefit derived by Purchaser or any affiliated companies.
To the extent that any deficiency for state, local, or federal income taxes
which may be established against Company for any year ended on or prior to
December 31, 1997, is occasioned by a determination by the Internal Revenue
Service or state or local departments of revenue that any increase in income for
the year gives rise to a deduction or deductions from ordinary income of Company
in the same aggregate amount for a subsequent taxable year or years, such
deficiency shall be assumed by Purchaser and shall not be a breach of any of
Company or Shareholders' warranties, representations and covenants in this
Agreement.
7.6 Time Limit on Indemnification.
No claim for indemnification may be asserted by Purchaser after the
second anniversary of the Closing Date, as hereinafter defined, except for (i)
state or federal sales or income taxes for any period ending on or prior to
December 31, 1997, which may be asserted at any time the applicable State
Departments of Revenue or Internal Revenue Service may still assert a
deficiency, and which indemnification is subject to the provisions of
Subparagraph 7.5 above, and (ii) claims arising out of a representation,
warranty or covenant that a Seller knew at the date of this Agreement was false
or which arises out of a claim later known to a Seller which Seller failed to
disclose to Purchaser prior to the Closing Date.
7.7 Amount Limit on Indemnification.
Notwithstanding any other provision to the contrary, neither
Shareholders nor Purchaser shall be charged with any such indemnified loss, cost
or expense which in the aggregate does not exceed Five Thousand dollars
($5,000.00).
8. Closing.
8.1 Time and Place.
The closing of this transaction ("Closing") shall take place by mail
with the escrow documents to be delivered to the offices of Moyle, Flanigan,
Katz, Kolins, Raymond & Sheehan, P.A., in West Palm Beach, Florida, at 10:00
a.m., Palm Beach County, Florida, time on September 2, 1997, or at such other
time and place as the parties hereto shall agree upon. Such date is referred to
in this Agreement as the "Closing Date."
12
<PAGE>
8.2 Documents To Be Delivered by Sellers.
At the closing Sellers shall deliver to Purchaser the following
documents:
(a) Duly executed assignments of the Land Leases and Tenant
Leases, together with all required estoppels, waivers and consents thereto, in
form and substance satisfactory to Purchaser.
(b) The originals or copies of the Land Leases and Tenant
Leases.
(c) A duly executed bill of sale absolute as to the Personalty
with full warranties of title and no liens, in form and substance acceptable to
Purchaser.
(d) A certificate signed by the Sellers that the
representations and warranties made by them in this Agreement are true and
correct on and as of the Closing Date with the same effect as through such
representations and warranties had been made on or given on and as of the
Closing Date and that Sellers have performed and complied with all its
obligations under this Agreement which are to be performed or complied with by
or prior to or on the Closing Date.
(e) A written opinion from counsel for Sellers dated as of the
Closing Date addressed to the Purchaser and its counsel satisfactory in form and
substance to Purchaser to the effect that:
(1) The corporate existence and good standing and
qualification of Company is as stated in Subparagraph 2.1;
(2) This Agreement has been duly executed and
delivered by Sellers and constitutes a legal, valid and binding obligation of
them enforceable in accordance with its terms except as such enforceability may
be limited by bankruptcy and other laws affecting creditors' rights generally
and by the availability of equitable remedies;
(3) The Company has all requisite power and authority
to own its property and operate its business as and where it is now being
conducted;
(4) The Company has title to all of the Transferred
Assets free and clear of all mortgages, liens, leases, pledges, charges,
security interests, or encumbrances of any nature whatsoever except as set forth
in such opinion;
(5) To such counsel's knowledge after due
investigation, this Agreement is the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except insofar as such
enforceability may be limited by bankruptcy and other laws affecting creditors'
rights generally and by the availability of equitable remedies;
13
<PAGE>
(6) Counsel has no knowledge of any of the proceedings
stated in Subparagraph 2.3(c);
(7) To the best of counsel's actual knowledge without
any investigation required, Company is in compliance with all statutes,
regulations, rules and executive orders of all government authorities;
(8) To the best of counsel's knowledge Seller's
representations and warranties in Subparagraph 2 are true and correct; and
(9) The Noncompetition Agreement provided for herein
to be entered into between all or certain of the Sellers and Purchaser or
Company, as the case may be, are valid and binding individual obligations of the
Sellers who are parties to such agreements, enforceable against each of them in
accordance with the terms of such provisions.
(10) The transaction contemplated by this Agreement
shall not cause or result in the filing of a bankruptcy or insolvency proceeding
under state or federal law.
(f) Noncompetition agreements between the Seller, each of John
C. Santangelo and Gerald Harkins and the Purchaser, in satisfactory form to
Purchaser. Such agreements shall specify that, for a five year term after
Closing, the Seller and/or Shareholders shall not thereafter, directly or
indirectly, construct, participate in site development for, acquire any interest
in, or provide financing for an antenna site within ten (10) miles of any of the
Transferred Assets, without the prior written consent of Purchaser. Purchaser
shall not unreasonably withhold consent to development or participation in
development or financing by Seller and/or Shareholders of an antenna site, but
shall not consent if such development may, in the opinion of Purchaser, have a
potentially material adverse impact on the use of or demand for tower space for
any Transferred Asset. Purchaser shall provide Seller and/or Shareholders with
Purchaser's determination of whether Purchrchaser, Purchaser shall have the
exclusive option to purchase any tower constructed within such ten (10) mile
radius, to be exercised at any time after the twelfth (12th) month following the
commencement of construction of the tower. The purchase price of the tower shall
be the sum of the prior 12 months trailing cash flow multiplied by ten. This
Noncompetition Agreement shall exclude other interests currently constructed and
held by the Sellers and not sold hereby. Purchaser hereby consents to the
development of the Mattapoisett antenna site.
(g) Copies of the Articles of Incorporation and good standing
certificate certified by the secretary of state.
(h) Incumbency certificate relating to all parties executing
documents relating to any of the transactions contemplated hereby.
(i) General releases in form and substance satisfactory to
Purchaser of all claims that any officer, director or partner of Company may
have to the date of closing against Purchaser.
(j) Duly executed Massachusetts Quitclaim Deed for the Old
County Road site in Wareham and a title insurance commitment and final policy in
favor of Purchaser, in a form and substance acceptable to Purchaser.
14
<PAGE>
(k) Such other documents of transfer, certificates of
authority and other documents as Purchaser may reasonably request.
8.3 Documents To Be Delivered by Purchaser.
At the closing Purchaser shall deliver to Sellers the following
documents:
(a) Cash, cashiers check, wire transfer of immediately
available federal funds, or Purchaser's attorneys' trust account check in the
amount of the Purchase Consideration provided for in Subparagraph 1.2 hereof.
(b) A certified copy of the duly adopted resolutions of
Purchaser's board of directors or executive committee authorizing or ratifying
the execution and performance of this agreement and authorizing or ratifying the
acts of its officers and employees in carrying out the terms and provisions
thereof.
8.4 Closing Expenses.
All title insurance fees or premiums, state transfer taxes or other
fees payable as a result of this transaction shall be paid by Seller. Seller
shall pay all invoices, fees, charges, taxes, expenses or other obligations
which are accrued but unbilled at the Closing Date.
9. Law Governing/Jurisdiction/Venue.
This Agreement and all transactions contemplated by this Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of Massachusetts without regard to principles of conflicts of
laws. The parties acknowledge that a substantial portion of negotiations and
anticipated performance of this Agreement occurred or shall occur in Palm Beach
County, Florida, and that, therefore, without limiting the jurisdiction or venue
of any other federal or state courts, each of the parties irrevocably and
conditionally (i) agrees that any suit, action or other legal proceeding arising
out of or relating to this Agreement may be brought in the courts of record of
the State of Florida in Palm Beach County, or the courts of the United States,
Southern District of Florida; (ii) consents to the jurisdiction of each such
court in any such suit, action or proceeding; and (iii) waives any objection
which it may have to the laying of venue of any such suit, action or proceeding
in any such court, provided, however, that the parties agree that any action to
determine entitlement to the Deposit shall occur in Massachusetts.
10. Assignment.
This Agreement shall not be assigned by any party without the prior
written consent of the other parties which consent may be withheld for any
reason and any attempted assignment without such written consent shall be null
and void and without legal effect, except that this Agreement
15
<PAGE>
may be freely assigned by Purchaser to any corporation wholly-owned by
Purchaser. This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto and their successors, assigns, heirs, executors,
administrators, and personal representatives (if the consent required by this
Article 10 is properly secured if required).
11. Amendment and Modification.
Purchaser and Sellers may amend, modify and supplement this Agreement
in such manner as may be agreed upon by them in writing.
12. Termination and Abandonment.
This Agreement may be terminated and the transaction provided for by
this agreement may be abandoned without liability on the part of any part to any
other, at any time before the Closing Date:
(a) By mutual consent of Purchaser and Company;
(b) By Purchaser:
(1) If any of the conditions provided for in Article 5 of this
Agreement have not been met and have not been waived in writing by Purchaser.
(c) By Sellers:
(1) If any of the conditions provided for in Article 6 of this
Agreement have not been met and have not been waived in writing by Sellers.
In the event of termination and abandonment by any party as above
provided in this Article 12, Notice shall forthwith be given to the other party,
and each party shall pay its own expenses incident to preparation for the
consummation of this Agreement and the transactions contemplated hereunder.
13. Survival.
The covenants, agreements, indemnifications, representations and
warranties of the parties hereto shall survive the closing of the transactions
contemplated by this Agreement but shall expire when the indemnification claims
period expires pursuant to Subparagraph 7.6 hereof.
14. Default.
16
<PAGE>
14.1 If this transaction does not close due to a default by Purchaser,
then Sellers may retain the Deposit as agreed upon and liquidated damages.
14.2 If this transaction does not close due to a default by Sellers or
Company, the Purchaser may receive a return of its Deposit or, in the
alternative, Purchaser may proceed in equity to specifically enforce Purchaser's
rights hereunder, including the right of specific performance.
15. Notices.
All notices, requests, demands and other communications hereunder
("Notices") shall be deemed to have been duly given, if delivered by hand or
mailed, certified or registered mail with postage prepaid:
(a) If to Sellers, to Mr. John C. Santangelo, 258 Main Street, Unit
D-1, Buzzards Bay, Massachusetts 02532, with a copy to Daniel C. Perry, Esq.,
388 County Street, New Bedford, Massachusetts 02740 ; or to such other person
and place as Sellers shall furnish to Purchaser by Notice; or
(b) If to Purchaser, to James S. Eisenstein, Esq. at 6400 North
Congress Avenue, Suite 1750, Boca Raton, Florida 33487, with a copy to John F.
Flanigan, Esquire, Moyle, Flanigan, Katz, Kolins, Raymond & Sheehan, P.A., 625
North Flagler Drive, 9th Floor, West Palm Beach,
Florida 33401, or to such other person and place as Purchaser shall furnish to
Seller by Notice.
16. Announcements.
Announcements concerning the transactions provided for in this
agreement by Company, Sellers, or Purchaser shall be subject to the approval of
the others in all essential respects, except that Company's or Sellers' approval
of form shall not be required as to any statements and other information which
Purchaser may submit to the Securities and Exchange Commission, the New York
Stock Exchange or Purchaser's shareholders or be required to make pursuant to
any rule or regulation of the Securities and Exchange Commission or the New York
Stock Exchange.
17. Entire Agreement.
This instrument embodies the entire agreement between the parties
hereto with respect to the transactions contemplated herein, and there have been
and are no agreements, representations or warranties between the parties other
than those set forth or provided for herein.
18. Counterparts.
17
<PAGE>
This Agreement may be executed in two or more partially or fully
executed counterparts, each of which shall be deemed an original and shall bind
the signatory, but all of which together shall constitute but one and the same
instrument, provided that Purchaser shall have no obligations hereunder until
all shareholders have become signatories hereto.
19. Headings.
The headings in the Articles and Paragraphs of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
20. Further Documents.
Purchaser and Sellers agree to execute any and all other documents and
to take such other action or corporate proceedings as may be necessary or
desirable to carry out the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed all as of the day and year first above written.
WITNESSES: SELLERS:
(1)______________________________ ___________________________________
JOHN C. SANTANGELO
(2)______________________________
As to Santangelo
(1)______________________________ ___________________________________
GERALD HARKINS
(2)______________________________
As to Harkins
SOUTHEAST COMMUNICATIONS, INC.
(1)______________________________ By:________________________________
John C. Santangelo, President
(2)______________________________
As to Southeast Communications, Inc.
PURCHASER:
AMERICAN TOWER SYSTEMS, INC.
(1)______________________________ By:________________________________
Name: ________________________
(2)______________________________ Its: _________ President
As to Purchaser
18
<PAGE>
SCHEDULES
1. Tenant Leases.
2. Realty.
3. Personalty.
4. States in which Company is qualified to do business.
5. Names of officers, directors and shareholders, of Company.
6. Insurance.
7. Current or Anticipated Development Projects of Company.
EXHIBIT 10.6
STOCK PURCHASE AGREEMENT
By and Among
AMERICAN TOWER SYSTEMS, INC.,
OPM - USA - INC.
and
THE STOCKHOLDERS
of
OPM - USA - INC.
Dated as of
September 30, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF STOCK......................................................................1
2.1 Agreement to Sell and Buy the Subject Stock............................................2
2.2 Closing Purchase Price; Tax Allocation Schedule........................................4
2.3 OPM Disclosure Schedule................................................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS .............................................4
3.1 Organization and Business; Power and Authority; Effect of Transaction..................5
3.2 Financial and Other Information. .....................................................5
3.3 Changes in Condition...................................................................5
3.4 Materiality............................................................................5
3.5 Title to Properties; Leases............................................................7
3.6 Compliance with Private Authorizations.................................................7
3.7 Compliance with Governmental Authorizations and Applicable Law.........................8
3.8 Intangible Assets......................................................................8
3.9 Related Transactions...................................................................8
3.10 Insurance..............................................................................8
3.11 Tax Matters. .........................................................................9
3.12 Employee Retirement Income Security Act of 1974.......................................11
3.13 Absence of Sensitive Payments.........................................................11
3.14 Inapplicability of Specified Statutes.................................................11
3.15 Employment Arrangements...............................................................11
3.16 Material Agreements...................................................................12
3.17 Ordinary Course of Business...........................................................13
3.18 Material and Adverse Restrictions.....................................................13
3.19 Broker or Finder......................................................................13
3.20 Solvency..............................................................................13
3.21 Environmental Matters.................................................................14
3.22 Capital Stock.........................................................................14
3.23 Bank Accounts, Etc....................................................................15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
RELATING TO THE SUBJECT STOCK..................................................................15
4.1 Enforceability........................................................................15
4.2 Title to Shares.......................................................................15
4.3 No Conflict; Required Filings and Consents............................................15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ATS..........................................................16
5.1 Organization and Business; Power and Authority; Effect of Transaction.................16
5.2 Broker or Finder......................................................................16
5.3 ATS Financing.........................................................................16
5.4 Financial Information. ...............................................................17
5.5 Changes in Condition..................................................................17
5.6 No Legal Action.......................................................................17
ARTICLE 6 COVENANTS......................................................................................17
6.1 Access to Information; Confidentiality................................................18
<PAGE>
6.2 Agreement to Cooperate. .............................................................19
6.3 Public Announcements..................................................................19
6.4 Notification of Certain Matters.......................................................19
6.5 No Solicitation.......................................................................20
6.6 Conduct of Business by OPM Pending the Closing........................................20
6.7 Preliminary Title Reports.............................................................21
6.8 Environmental Site Assessments........................................................21
6.9 Certain Tax Matters...................................................................22
6.10 ATS Post-Closing Covenants. .........................................................23
ARTICLE 7 CLOSING CONDITIONS.............................................................................23
7.1 Conditions to Obligations of Each Party...............................................24
7.2 Conditions to Obligations of ATS......................................................26
7.3 Conditions to Obligations of the Stockholders.........................................27
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER..............................................................27
8.1 Termination...........................................................................28
8.2 Effect of Termination.................................................................28
ARTICLE 9 INDEMNIFICATION................................................................................28
9.1 Survival..............................................................................28
9.2 Indemnification.......................................................................29
9.3 Limitation of Liability...............................................................29
9.4 Notice of Claims......................................................................30
9.5 Defense of Third Party Claims.........................................................30
9.6 Exclusive Remedy......................................................................30
ARTICLE 10 GENERAL PROVISIONS.............................................................................30
10.1 Waivers; Amendments...................................................................31
10.2 Fees, Expenses and Other Payments.....................................................31
10.3 Notices...............................................................................32
10.4 Specific Performance; Other Rights and Remedies.......................................32
10.5 Severability..........................................................................33
10.6 Counterparts..........................................................................33
10.7 Section Headings......................................................................33
10.8 Governing Law.........................................................................33
10.9 Further Acts..........................................................................33
10.10 Entire Agreement......................................................................33
10.11 Assignment............................................................................33
10.12 Parties in Interest...................................................................33
10.13 Appointment of Representative. .......................................................33
</TABLE>
APPENDIX A: Definitions
SCHEDULES:
OPM Disclosure Schedule
ii
<PAGE>
EXHIBITS:
EXHIBIT A Form of Noncompetition Agreement (Section 7.2(i)) (to be
agreed upon)
EXHIBIT B Form of Indemnity scrow Agreement (Section 9.3(b)) (to be
agreed upon)
EXHIBIT C OPM Master Plan (Section 6.10)
EXHIBIT D Form of Employment Agreement (Section 7.2(p)) (to be agreed
upon)
EXHIBIT E: Executive summary of financial Terms (Section 2.2(b).
iii
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated as of
September 30, 1997 by and among American Tower Systems, Inc., a Delaware
corporation ("ATS"), OPM - USA - INC., a Florida corporation ("OPM"), and the
undersigned stockholders (individually, a "Stockholder" and collectively, the
"Stockholders") of OPM.
WHEREAS, the Stockholders hold in the aggregate ninety (90) shares (the
"Subject Stock") of common stock of OPM, which constitute all of the issued and
outstanding capital stock of OPM;
WHEREAS, the Buyer desires to purchase, and the Sellers desire to sell,
the Subject Stock upon the terms and subject to the conditions set forth herein;
and
WHEREAS, OPM owns and leases and operates communication towers and is
engaged in the business of managing communication sites for third parties (the
"OPM Business");
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, the parties, intending to be legally
bound, do hereby covenant and agree as follows:
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in the OPM Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. References
to "hereof", "herein" or similar terms are intended to refer to the Agreement as
a whole and not a particular Section, and references to "this Section" are
intended to refer to the entire Section and not a particular subsection thereof.
The term "any party" shall, unless the context otherwise requires, refer to OPM,
the Stockholders and ATS.
ARTICLE 2
SALE AND PURCHASE OF STOCK
2.1 Agreement to Sell and Buy the Subject Stock. Upon the terms and
subject to the conditions set forth in this Agreement, each of the Stockholders
agrees to sell, assign, and transfer and deliver to ATS, and ATS agrees to
purchase and accept the assignment, transfer and delivery of, the Subject Stock,
in consideration of the payment to the Stockholders of the Purchase Price
specified in Section 2.2.
<PAGE>
2.2 Closing Purchase Price; Tax Allocation Schedule.
(a) The closing of the transaction (the "Closing") shall take place at
Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts 02109,
at 10:00 a.m., local time, on January 6, 1998 or such other date, prior to the
Termination Date, as the parties may agree (the "Closing Date"). At the Closing,
(A) the Stockholders will deliver original certificates representing all of the
Subject Stock, duly endorsed (or accompanied by duly executed stock powers), for
transfer to ATS, and (B) ATS will make or cause to be made the initial
installment of the purchase price (the "Initial Installment") in the amount of
eleven (11) times the forward looking twelve (12) months Cash Flow of OPM
Communication Towers beginning December 31, 1997 as reflected in the Master
Plan. The purchase Price for the Subject Stock (the "Purchase Price") shall be
an amount equal to (i) $105,000,000, less (ii) the amount of liabilities and
obligations with respect to all Indebtedness of Money Borrowed or Purchase Money
Indebtedness (other than Indebtedness owed to ATS or incurred subsequent of
October 6, 1997 with the prior written consent of ATS) and all Liens (other than
Permitted Liens) on any of the OPM Assets or the OPM Business (the "Debt
Reduction"), all but the Initial Installment being payable in accordance with
the provisions of, and subject to satisfaction of the conditions set forth in,
Section 2.2(b). The Purchase Price shall be payable by wire transfer of
immediately available funds to the Stockholders, in accordance with their
respective holdings of the Subject Stock for the Initial Installment to such
account (or accounts) as the Stockholders shall designate (including accounts of
individuals other than the Stockholders in order to satisfy obligations of OPM
pursuant to employment agreements with such individuals) in written instructions
to ATS delivered not less than two (2) business days prior to the Closing.
Anything in this agreement to the contrary notwithstanding, ATS will
make quarterly installment payments to the Stockholders for the balance of the
Purchase Price to in accordance with the following schedule:
<TABLE>
<CAPTION>
Payment Date Date of Record Amount Due
<S> <C> <C> <C>
April 30,1998 March 31, 1998 See "Formula" below
July 30, 1998 June 30, 1998 "
October 30, 1998 September 30, 1998 "
January 31, 1998 December 31, 1998 "
April 30, 1999 March 31, 1999 "
August 31, 1999 June 30, 1999 "
</TABLE>
For the purposes of the above calculations the "Formula" is the following:
"Amount Due" is equal to:
The Cash Flow as of the "Date of Record" divided by
$9,600,000. This percentage is then averaged with the
percentage of permits of the total number of permits required,
the denominator of this percentage calculation is 250 and the
percentage of towers completed, the denominator of this
percentage calculation is 200. The resultant amount is the
amount from which the previous payments are subtracted. The
balance after deducting an amount equal to the Debt Reduction
(in the case of the April 30, 1998 Payment Date) and the Debt
Reduction not previously deducted (in the case of all
subsequent Payment Dates) is the "Amount Due".
-2-
<PAGE>
For example:
Assume as of March 31, 1998:
"Cash Flow" is $8,000,000
125 towers are permitted
133 towers are completed
$8,000,000 / $9,600,000 = 83%
125 permits / 250 permits = 50%
133 towers / 200 towers = 66.5%
The average of the completions are 66.5%
The "Purchase Price" is x $105,000,000
------------
The amount earned is $69,825,000
Less previous payments $30,000,000
------------
The amount due April 30, 1998 = $39,825,000
(b) For the purposes of determining the Initial Installment and the
quarterly amount due, "Cash Flow" shall be determined for the twelve (12) months
beginning immediately subsequent to the determination thereof, and shall mean,
the gross lease revenues attributable to the OPM Communications Towers, minus
the annual taxes on the site, the utility expense on the site, repairs and
maintenance to the site, insurance on the site and the lease payments on the
site. Sales taxes collected by OPM are not included in the revenue.
Cash Flow shall be determined jointly by ATS with the Stockholders
Representative based on the above formula. In the event of disagreement, ATS and
the Stockholders Representative shall negotiate to resolve the disagreement and,
in the event they are unable to resolve their disagreement within thirty (30)
days, the matter shall be referred to a recognized national accounting firm
which does not serve as such for ATS, reasonably acceptable to ATS and the
Stockholders Representative, whose determination of cash flow in accordance with
the above formula shall be final, determinative, nonappealable and binding on
ATS and the Stockholders, and whose fees and expenses shall be borne equally by
ATS, on the one hand, and the Stockholders, on the other. ATS shall cause any
payment required to be made pursuant to the provisions of this Section to be
made promptly to the Stockholders after agreement of ATS and the Stockholders
Representative or the determination of the accounting firm, as the case may be.
(c) The parties hereto have heretofore agreed that (i) the aggregate
value of all Real Property of OPM (including without limitation the OPM
Communication Towers constructed as of the date hereof or between the date
hereof and the Closing Date) does not exceed 150% of the original cost thereof,
and (ii) on the basis thereof, BIA Consulting, Inc. shall promptly conduct an
appraisal of the OPM Assets which shall be the basis for an allocation schedule
(the "Tax Allocation Schedule") pursuant to which the Purchase Price and the
liabilities of OPM shall be allocated among the OPM Assets as follows: initially
to the Real Property and tangible Personal Property and the balance to
intangible Personal Property (including without limitation Governmental
Authorizations, Private Authorizations, Leases (pursuant to which OPM acts as
lessor) and other Contracts, collectively Section 197 assets of the Code). Each
of OPM, the Stockholders and ATS shall report the purchase and sale of the
Subject Stock and the other Transactions in accordance with the Tax Allocation
Schedule for purposes of all federal, state and local Tax Returns (including
amended returns and claims for refund) and information reports and shall not
take, and shall cause their respective Affiliates, representatives, successors
and assigns not to take, any position on any federal, state or local Tax Return
or
-3-
<PAGE>
report, inconsistent with such reporting position. Each of the Stockholders and
ATS shall promptly give the other notice of any disallowance of or challenge to
such reporting by any Taxing Authority.
2.3 OPM Disclosure Schedule. The Stockholders will deliver to ATS, on
or before thirty (30) days from the execution and delivery of this Agreement,
the OPM Disclosure Schedule and all related documents required to be delivered
by OPM or the Stockholders pursuant to the provisions of Article 3 of this
Agreement. ATS shall be permitted, for a period of ten (10) business days
commencing upon its receipt of the completed OPM Disclosure Schedule and related
documents to terminate this Agreement, if (a) the OPM Disclosure Schedule
reveals any condition of which ATS is unaware as of the date of this Agreement
and/or any breaches of the Stockholders' representations, warranties, covenants
and agreements hereunder (without regard to matters set forth in the OPM
Disclosure Schedule), which unknown conditions and/or breaches in the aggregate
would have a material adverse effect on OPM or on ability of OPM to continue to
operate or ATS to operate the OPM Business as it is currently being operated, or
(b) the parties are unable to agree upon which Private Authorizations, Material
Agreements and Leases with respect to which a third-party consent to the
consummation of the Transactions or modifications thereof will be a condition to
Closing. In the event ATS terminates this Agreement pursuant to the provisions
of this Section, none of the parties shall have any further rights or remedies,
except as provided in Sections 6.1 (with respect to confidentiality), 6.3 and
10.3.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders, jointly and severally, hereby represents,
warrants and covenants to, and agrees with, ATS as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) OPM is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, has all requisite
power and authority (corporate and other) to own or hold under lease its
properties and to conduct its business as now conducted.
(b) OPM has all requisite power and authority (corporate and other) and
has in full force and effect all Governmental Authorizations and Private
Authorizations necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto or to consummate the
Transactions; and the execution, delivery and performance of this Agreement and
each Collateral Document executed or required to be executed by it pursuant
hereto or thereto have been duly authorized by all requisite corporate or other
action on the part of OPM. This Agreement has been duly executed and delivered
by OPM and constitutes, and each Collateral Document executed or required to be
executed by it pursuant hereto or thereto or to consummate the Transactions when
executed and delivered by OPM will constitute, legal, valid and binding
obligations of OPM, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, moratorium,
insolvency and similar laws affecting the rights and remedies of creditors and
obligations of debtors generally and by general principles of equity.
(c) Except as set forth in Section 3.1(c) of the OPM Disclosure
Schedule, neither the execution and delivery by OPM of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by OPM:
-4-
<PAGE>
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of OPM or any
Applicable Law, or will conflict with, or result in a breach or
violation of, or constitute a default under, or permit the acceleration
of any obligation or liability in, or but for any requirement of giving
of notice or passage of time or both would constitute such a conflict
with, breach or violation of, or default under, or permit any such
acceleration in, any Contractual Obligation of OPM; or
(ii) will require OPM to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA.
(d) OPM does not have any Subsidiaries.
3.2 Financial and Other Information. OPM has heretofore furnished to
ATS copies of the financial statements of OPM listed in Section 3.2 of the OPM
Disclosure Schedule (the "OPM Financial Statements"). The OPM Financial
Statements, including in each case the notes thereto, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, except as otherwise noted therein or as set forth in Section
3.2 of the OPM Disclosure Schedule, are true, accurate and complete in all
material respects, do not contain any untrue statement of a material fact or
omit to state a material fact required by GAAP to be stated therein or necessary
in order to make the statements contained therein not misleading, and fairly
present the financial condition and the results of operations and cash flow of
OPM, on the bases therein stated, as of the respective dates thereof, and for
the respective periods covered thereby subject, in the case of unaudited
financial statements, to normal nonmaterial year-end audit adjustments and
accruals. Without limiting the generality of the foregoing, all accounts and
notes receivable reflected on the OPM Financial Statements and all accounts and
notes receivable arising subsequent to the issuance of the OPM Financial
Statements have or will have arisen in the ordinary course of business,
represent or will represent valid obligations to OPM, and will be collected in
the aggregate amounts thereof recorded on the books of OPM, net of the reserve
for bad debts reflected on the most recent OPM Financial Statements.
3.3 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the OPM Financial Statements, except to the
extent specifically described in Section 3.3 of the OPM Disclosure Schedule,
there has been no material adverse change in OPM. There is no Event known to OPM
which materially adversely affects, or (so far as OPM can now reasonably
foresee) is likely to materially adversely affect, OPM, except to the extent
specifically described in Section 3.3 of the OPM Disclosure Schedule.
3.4 Materiality. The representations and warranties set forth in this
Article would in the aggregate be true and correct even without the materiality
exceptions or qualifications contained therein or set forth in the OPM
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the OPM Disclosure Schedule which, in the
aggregate for all such representations and warranties, are not and could not
reasonably be expected to be materially adverse to OPM.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the OPM Disclosure Schedule contains a true,
accurate and complete description of all real property owned by OPM that is part
of the OPM Assets. OPM has, to the Stockholders' knowledge, good indefeasible,
marketable and insurable title to all real property (other than leasehold real
property) and good indefeasible and merchantable title to all other assets
(other than real property), tangible and intangible, constituting a part of the
OPM Assets; all of such real property and other assets is so owned,
-5-
<PAGE>
in each case, free and clear of all Liens, except (i) Permitted Liens, (ii)
Liens set forth on Section 3.5(a) of the OPM Disclosure Schedule and (iii)
Approved Title Conditions. Except for financing statements evidencing Liens
referred to in the preceding sentence (a true, accurate and complete list and
description of which is set forth in Section 3.5(a) of the OPM Disclosure
Schedule), no financing statements under the Uniform Commercial Code and no
other filing which names OPM as debtor or which covers or purports to cover any
of the OPM Assets is on file in any state or other jurisdiction, and OPM has not
signed or agreed to sign any such financing statement or filing or any agreement
authorizing any secured party thereunder to file any such financing statement or
filing. Except as disclosed in Section 3.5(a) of the OPM Disclosure Schedule,
all improvements on the real property owned or leased by OPM are, to the
Stockholders' knowledge, in compliance with applicable zoning, wetlands and land
use laws, ordinances and regulations and applicable title covenants, conditions,
restrictions and reservations in all respects necessary to conduct the
operations as presently conducted, except for any instances of non-compliance
which do not and will not in the aggregate have a material adverse effect on the
owner or lessee, as the case may be, of such real property. Except as disclosed
in Section 3.5(a) of the OPM Disclosure Statement, all such improvements comply
in all material aspects with all Applicable Laws, Governmental Authorizations
and Private Authorizations. Except as disclosed in Section 3.5(a) of the OPM
Disclosure Statement, all of the transmitting towers, ground radials, guy
anchors, transmitting buildings and related improvements located on the real
property owned or leased by OPM are located entirely on such real property.
There is no pending and, to Stockholders' knowledge, threatened or contemplated
action to take by eminent domain or otherwise to condemn any part of any real
property owned or leased by OPM. Except as set forth in Section 3.5(a) of the
OPM Disclosure Schedule, such real property (other than land), fixtures, fixed
assets and other material items of personal property, including equipment, have,
in OPM's reasonable business judgment, been maintained in a manner consistent
with generally accepted standards of sound engineering practice and currently
permit the OPM Business to be operated in all material respects in accordance
with the terms and conditions of all Applicable Laws, Governmental
Authorizations and Private Authorizations.
(b) Section 3.5(b) of the OPM Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the OPM Business is leased. Except as otherwise set forth in Schedule
3.5(b) of the OPM Disclosure Schedule, each Lease or other occupancy or other
agreement under which OPM holds real or personal property constituting a part of
the OPM Assets has been duly authorized, executed and delivered by OPM and, to
Stockholders' knowledge, each of the other parties thereto, and is a legal,
valid and binding obligation of OPM, and, to Stockholders' knowledge, each of
the other parties thereto, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, moratorium, insolvency and
similar laws affecting the rights and remedies of creditors and obligations of
debtors generally and by general principles of equity. OPM has a valid leasehold
interest in and enjoys peaceful and undisturbed possession under all Leases
pursuant to which it holds any such real property or tangible personal property.
All of such Leases are valid and subsisting and in full force and effect;
neither OPM nor, to Stockholders' knowledge, any other party thereto, is in
material default in the performance, observance or fulfillment of any
obligation, covenant or condition contained in any such Lease. None of the fixed
assets or equipment comprising a part of the OPM Assets is subject to contracts
of sale, and none is held by OPM as lessee or as conditional sales vendee under
any Lease or conditional sales contract and none is subject to any title
retention agreement, except as set forth in Section 3.5(b) of the OPM Disclosure
Schedule.
(c) Section 3.5(c) of the OPM Disclosure Schedule contains a true,
accurate and complete description of all material items of OPM Personal
Property. OPM owns and has good and merchantable title to all of the OPM
Personal Property (the "OPM Personal Property"), in each case, free and clear of
all Liens, except (i) Permitted Liens and (ii) Liens set forth on Section 3.5(c)
of the OPM Disclosure Schedule (which Liens shall be released prior to Closing).
Except as set forth in Section 3.5(c) of the OPM Disclosure Schedule, all of the
OPM Personal Property is in a state of good repair and maintenance and is in
good
-6-
<PAGE>
operating condition, normal wear and tear excepted, has been maintained in a
manner consistent with generally accepted standards of good engineering practice
and currently permits the OPM Business to be operated in accordance with the
terms and conditions of all Applicable Laws.
3.6 Compliance with Private Authorizations. Section 3.6 of the OPM
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
OPM Assets or the OPM Business. OPM has obtained all Private Authorizations
which are necessary for the ownership or operation of the OPM Assets or the
conduct of the OPM Business which, if not obtained and maintained, could,
individually or in the aggregate, materially adversely affect OPM. All of such
Private Authorizations are valid and in good standing and are in full force and
effect. OPM is not in breach or violation of, or in default in the performance,
observance or fulfillment of, any such Private Authorization, and no Event
exists or has occurred, which constitutes, or but for any requirement of giving
of notice or passage of time or both would constitute, such a breach, violation
or default, under any such Private Authorization, except for such defaults,
breaches or violations as do not and will not have in the aggregate any material
adverse effect on OPM. No such Private Authorization is the subject of any
pending or, to Stockholders' knowledge, threatened attack, revocation or
termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the OPM Disclosure Schedule contains a true,
complete and accurate description of each Governmental Authorization required
under Applicable Laws (i) to own and operate the OPM Business, as currently
conducted or proposed to be conducted on or prior to the Closing Date, all of
which are in full force and effect or (ii) that is necessary to permit OPM to
execute and deliver this Agreement and to perform its obligations hereunder. OPM
has obtained all Governmental Authorizations which are necessary for the
ownership or operation of the OPM Assets or the conduct of the OPM Business as
now conducted and which, if not obtained and maintained, would, individually or
in the aggregate, have any material adverse effect on OPM. None of the
Governmental Authorizations listed in Section 3.7(a) of the OPM Disclosure
Schedule is subject to any restriction or condition which would limit in any
material respect the ownership or operations of the OPM Assets or the conduct of
the OPM Business as currently conducted, except for restrictions and conditions
generally applicable to Governmental Authorizations of such type. The
Governmental Authorizations listed in Section 3.7(a) of the OPM Disclosure
Schedule are valid and in good standing, are in full force and effect and are
not impaired in any material respect by any act or omission of OPM or its
officers, directors, employees or agents, and the ownership or operation of the
OPM Assets or the conduct of the OPM Business are in accordance in all material
respects with the Governmental Authorizations. All material reports, forms and
statements required to be filed by OPM with all Authorities with respect to the
OPM Business have been filed and are true, complete and accurate in all material
respects. No such Governmental Authorization is the subject of any pending or,
to Stockholders' knowledge, threatened challenge or proceeding to revoke or
terminate any such Governmental Authorization. OPM has no reason to believe that
any such Governmental Authorization would not be renewed in the name of OPM by
the granting Authority in the ordinary course.
(b) Except as otherwise specifically described in Section 3.7(b) of the
OPM Disclosure Schedule, neither OPM nor any director or officer thereof (in
connection with ownership or operation of the OPM Assets or the conduct of the
OPM Business) is in or is charged by any Authority with or, to Stockholders'
knowledge, at any time since May 1, 1995 has been in or has been charged by any
Authority with, or, to Stockholders' knowledge, is threatened or under
investigation by any Authority with respect to, breach or violation of, or
default in the performance, observance or fulfillment of, any Governmental
Authorization or any Applicable Law relating to the ownership and operation of
the OPM Assets or the conduct of the OPM Business. In particular, but without
limiting the generality of the foregoing, there are no applications, complaints
or Legal Actions pending or, to Stockholders' knowledge, threatened before or by
any Authority
-7-
<PAGE>
(x) relating to the ownership or operation of the OPM Assets or the conduct of
the OPM Business which, individually or in the aggregate, are reasonably likely
to result in the revocation or termination of any Governmental Authorization or
the imposition of any restriction of such a nature as would adversely affect the
ownership or operation of the OPM Assets or the conduct of the OPM Business; (y)
involving charges of illegal discrimination by OPM under any federal or state
employment Laws, or (z) involving Environmental Laws or zoning laws, except as
otherwise specifically described in Section 3.7(b) of the OPM Disclosure
Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
OPM Disclosure Schedule, no Event exists or has occurred, which, to
Stockholders' knowledge, constitutes, or but for any requirement of giving of
notice or passage of time or both would constitute, such a breach, violation or
default, under (i) any Governmental Authorization or any Applicable Law, except
for such breaches, violations or defaults as do not and will not have,
individually or in the aggregate, any material adverse effect on OPM or (ii) any
material requirement of any insurance carrier, applicable to the ownership or
operations of the OPM Assets or the conduct of the OPM Business.
(d) With respect to matters, if any, of a nature referred to in Section
3.7(a), 3.7(b) or 3.7(c) of the OPM Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the OPM Disclosure Schedule, all
such information and matters set forth in the OPM Disclosure Schedule, if
adversely determined against OPM, will not, individually or in the aggregate,
have a materially adversely effect on OPM.
3.8 Intangible Assets. Section 3.8 of the OPM Disclosure Schedule sets
forth a true, accurate and complete description of all Intangible Assets (other
than Governmental Authorizations and Private Authorizations) relating to the
ownership and operation of the OPM Assets or the conduct of the OPM Business
held or used by OPM, including without limitation the nature of OPM's interest
in each and the extent to which the same have been duly registered in the
offices as indicated therein. Except as set forth in Section 3.8 of the OPM
Disclosure Schedule, no Intangible Assets (except Governmental Authorizations,
Private Authorizations, and the Intangible Assets so set forth) are required for
the ownership or operation of the OPM Assets or the conduct of the OPM Business
as currently owned, operated and conducted or proposed to be owned, operated and
conducted on or prior to the Closing Date. OPM does not, to its knowledge,
wrongfully infringe upon or unlawfully use any Intangible Assets owned or
claimed by another, and OPM has not received any notice of any claim or
infringement relating to any such Intangible Asset.
3.9 Related Transactions. OPM is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the OPM Assets
or the conduct of the OPM Business between OPM and any of its officers,
directors, stockholders, employees or, to the knowledge of OPM, any Affiliate of
any thereof, including without limitation any Contractual Obligation providing
for the furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any such Person,
other than (i) Employment Arrangements listed or described in Section 3.15 of
the OPM Disclosure Schedule, (ii) Contractual Obligations between OPM and any of
its directors, stockholders, officers, employees or Affiliates of OPM or any of
the foregoing, which will be terminated, at no cost or expense to OPM, prior to
the Closing, or (iii) as specifically set forth in Section 3.9 of the OPM
Disclosure Schedule.
3.10 Insurance. OPM maintains, with respect to the OPM Assets and the
OPM Business, policies of fire and extended coverage and casualty, liability and
other forms of insurance in such amounts and against such risks and losses as
are set forth in Section 3.10 of the OPM Disclosure Schedule.
3.11 Tax Matters.
-8-
<PAGE>
(a) OPM has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, and has paid, or made adequate provision
for the payment of, all Taxes which have or may become due and payable pursuant
to said Tax Returns and all other governmental charges and assessments received
to date other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent balance sheet forming part of OPM
Financial Statements. The Tax Returns of OPM have been prepared in all material
respects in accordance with all Applicable Laws and generally accepted
principles applicable to taxation consistently applied. All Taxes which OPM is
required by law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable. OPM has not executed any waiver to extend, or otherwise
taken or failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of OPM for
the fiscal years prior to and including the most recent fiscal year. Adequate
provision has been made on the most recent balance sheet forming part of OPM
Financial Statements for all Taxes accrued through the date of such balance
sheet of any kind, including interest and penalties in respect thereof, whether
disputed or not, and whether past, current or deferred, accrued or unaccrued,
fixed, contingent, absolute or other, and there are, to Stockholders' knowledge,
no past transactions or matters which could result in additional Taxes of a
material nature to OPM for which an adequate reserve has not been provided on
such balance sheet. OPM is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. OPM has at all times been taxable as a Subchapter S
corporation under the Code, and has never been a member of any consolidated
group for Tax purposes, except as otherwise set forth in Section 3.11(a) of the
OPM Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of OPM for
each of the most recent two tax years (true and complete copies of which have,
to the extent requested by ATS, been furnished by OPM to ATS) is true, accurate
and complete in all material respects and fairly and accurately reflects the
information purported to be shown. Federal and state income Tax Returns of OPM
have not been examined by the IRS or applicable state Authority, and OPM has not
been notified of any proposed examination, except as shown in Section 3.11(b) of
the OPM Disclosure Schedule.
(c) OPM is not a party to any tax sharing agreement or arrangement.
3.12 Employee Retirement Income Security Act of 1974.
(a) OPM (which for purposes of this Section shall include any ERISA
Affiliate) is not making any contribution to or sponsoring, and has not at any
time since its organization made any contribution to or sponsored, any Plan or
Benefit Arrangement, except as set forth in Section 3.12(a) of the OPM
Disclosure Schedule. As to all Plans and Benefit Arrangements listed in Section
3.12(a) of the OPM Disclosure Schedule:
(i) all such Plans and Benefit Arrangements comply and have
been administered in form and in operation with all Applicable Laws in
all material respects, and OPM has not received any notice from any
Authority questioning or challenging such compliance;
(ii) all such Plans maintained or previously maintained by OPM
that are or were intended to comply with Sections 401 and 501 of the
Code comply and complied in form and in operation with all applicable
requirements of such sections, and no event has occurred which will or
could give rise to disqualification of any such Plan under such
sections or to a tax under Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
-9-
<PAGE>
(iv) there have been no "prohibited transactions" (as
described in Section 406 of ERISA or Section 4975 of the Code) with
respect to any such Plan and OPM has not otherwise engaged in any
prohibited transaction;
(v) there have been no acts or omissions by OPM which have
given rise to or may give rise to any material fines, penalties, taxes
or related charges under Sections 502(c), 502(i) or 4071 or ERISA or
Chapter 43 of the Code for which OPM may be liable;
(vi) there are no Claims (other than routine claims for
benefits or actions seeking qualified domestic relations orders)
pending or threatened involving such Plans or the assets of such Plans,
and, to Stockholders' knowledge, no facts exist which could give rise
to any such Claims (other than routine claims for benefits or actions
seeking qualified domestic relations orders);
(vii) no such Plan is subject to Title IV of ERISA, or, if
subject, there have been no "report able events" (as described in
Section 4043 of ERISA), and no steps have been taken to terminate any
such Plan;
(viii) all group health Plans of OPM have been operated in
compliance in all material respects with the group health plan
continuation coverage requirements of COBRA;
(ix) actuarially adequate accruals for all obligations under
the Plans are reflected in the most recent balance sheet forming part
of the OPM Financial Statements and such obligations include a pro rata
amount of the contributions which would otherwise have been made in
accordance with past practices for the Plan years which include the
Closing Date;
(x) neither OPM nor any of its respective directors, officers,
employees or any other fiduciary has committed any breach of fiduciary
responsibility imposed by ERISA or any similar Applicable Law that
would subject OPM or any of its respective directors, officers or
employees to material liability under ERISA or any similar Applicable
Law;
(xi) no such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code applied, nor would have had an
accumulated funding deficiency on such date if such year were the first
year of such Plan to which Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code applied;
(xii) no material liability to the PBGC has been or is
expected by OPM to be incurred by OPM with respect to any Plan, and
there has been no event or condition which presents a material risk of
termination of any Plan by the PBGC;
(xiii) OPM is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan;
(xiv) except as set forth in Section 3.12(a)(xiv) of the OPM
Disclosure Schedule (which entry, if applicable, shall indicate the
present value of accumulated plan liabilities calculated in a manner
consistent with FAS 106 and actual annual expense for such benefits for
each of the last two (2) years) and pursuant to the provisions of
COBRA, OPM does not maintain any Plan that provides
-10-
<PAGE>
benefits described in Section 3(1) of ERISA, except as the provisions
of COBRA may apply, to any former employees or retirees of OPM; and
(xv) OPM has made available to ATS a copy of the two most
recently filed Federal Form 5500 series and accountant's opinion, if
applicable, for each Plan (and the two most recent actuarial valuation
reports for each Plan, if any, that is subject to Title IV of ERISA),
and all information provided by OPM to any actuary in connection with
the preparation of any such actuarial valuation report was true,
accurate and complete in all material respects.
(b) The execution, delivery and performance by OPM of this Agreement
and the Collateral Documents executed or required to be executed pursuant hereto
and thereto will not involve any prohibited transaction within the meaning of
ERISA or Section 4975 of the Code.
3.13 Absence of Sensitive Payments. Neither OPM nor, to Stockholders'
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the OPM Assets or the OPM Business (a) made
any contributions, payments or gifts to or for the private use of any
governmental official, employee or agent where either the payment or the purpose
of such contribution, payment or gift is illegal under the laws of the United
States or the jurisdiction in which made or (b) established or maintained any
unrecorded fund or asset for any purpose or made any false or artificial entries
on its books.
3.14 Inapplicability of Specified Statutes. OPM is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11301 of Title 49, U.S.C.
3.15 Employment Arrangements. Section 3.15 of the OPM Disclosure
Schedule contains a true, accurate and complete list of all OPM employees (the
"OPM Employees"), together with each such employee's title or the capacity in
which he or she is employed and the basis for each such employee's compensation.
OPM has no obligation or liability, contingent or other, under any Employment
Arrangement with any OPM Employee, other than those listed or described in
Section 3.15 of the OPM Disclosure Schedule. Except as described in Section 3.15
of the OPM Disclosure Schedule, (a) none of the OPM Employees is now, or since
May 1, 1995 has been, represented by any labor union or other employee
collective bargaining organization, and OPM is not, and never has been, a party
to any labor or other collective bargaining agreement with respect to any of the
OPM Employees, (b) there are no pending grievances, disputes or controversies
with any union or any other employee or collective bargaining organization of
such employees, or threats of strikes, work stoppages or slowdowns or any
pending demands for collective bargaining by any such union or other
organization, (c) neither OPM nor any of such employees is now, or has since May
1, 1995 been, subject to or involved in or, to Stockholders' knowledge,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities, in each case with respect to the OPM
Employees, and (d) none of the OPM Employees has notified OPM that he or she
does not intend to continue employment with OPM until the Closing or with ATS
following the Closing. OPM has performed in all material respects all
obligations required to be performed under all Employment Arrangements and is
not in material breach or violation of or in material default or arrears under
any of the terms, provisions or conditions thereof.
3.16 Material Agreements. Listed on Section 3.16 of the OPM Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the OPM Assets or the conduct of the business of the OPM Business or to which
OPM is a party or to which it is bound or which any of the OPM Assets is
subject. True, accurate and complete copies of each of such Material Agreements
have been made available
-11-
<PAGE>
by OPM to ATS and OPM has provided ATS with photocopies of all such Material
Agreements requested by ATS (or true, accurate and complete descriptions thereof
have been set forth in Section 3.16 of the OPM Disclosure Schedule, with respect
to Material Agreements comprised of site leases and site licenses granted by OPM
to third parties and with respect to Material Agreements that are oral). All of
such Material Agreements are valid, binding and legally enforceable obligations
of OPM and, to Stockholders' knowledge, all other parties thereto, except as
such enforceability may be limited by bankruptcy, moratorium, insolvency and
similar laws affecting the rights and remedies of creditors and obligations of
debtors generally and by general principles of equity. OPM has duly complied
with all of the material terms and conditions of each such Material Agreement
and has not done or performed, or failed to do or perform (and there is no
pending or, to the knowledge of OPM, Claim threatened in writing that OPM has
not so complied, done and performed or failed to do and perform) any act which
would invalidate or provide grounds for the other party thereto to terminate
(with or without notice, passage of time or both) such Material Agreement or
impair the rights or benefits, or increase the costs, of OPM under any of such
Material Agreements in any material respect.
3.17 Ordinary Course of Business. OPM, from the end of its most recent
fiscal quarter to the date hereof, except (i) as may be described on Section
3.17 of the OPM Disclosure Schedule, or (ii) as may be required or expressly
contemplated by the terms of this Agreement, with respect to the OPM Assets and
the OPM Business:
(a) has operated its business in all material respects in the
normal, usual and customary manner in the ordinary and regular course
of business, consistent with prior practice;
(b) except in each case in the ordinary course of business,
consistent with prior practice:
(i) has not incurred any obligation or liability
(fixed, contingent or other) individually having a value in
excess of $20,000;
(ii) has not sold or otherwise disposed of or
contracted to sell or otherwise dispose of any of its
properties or assets having a value in excess of $20,000;
(iii) has not entered into any individual commitment
having a value in excess of $20,000; and
(iv) has not canceled any debts or claims;
(c) has not created or permitted to be created any Lien on any
of its property;
(d) has not made or committed to make any additions to its
property or any purchases of equipment, except in the ordinary course
of business consistent with past practice or for normal maintenance and
replacements;
(e) has not increased the compensation payable or to become
payable to any of the OPM Employees other than nonmaterial increases in
the ordinary course of business, or otherwise materially altered,
modified or changed the terms of their employment;
(f) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(g) has not waived any rights of material value without fair
and adequate consideration;
-12-
<PAGE>
(h) has not experienced any work stoppage;
(i) except in the ordinary course of business, has not entered
into, amended or terminated any Lease, Governmental Authorization,
Private Authorization, Material Agreement or Employment Arrangement, or
any transaction, agreement or arrangement with any Affiliate of OPM,
except for OPM Nonassumed Obligations; and
(j) has not made, paid or declared any Distribution; and
(k) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is material
to the OPM Assets or the OPM Business.
3.18 Material and Adverse Restrictions. OPM is not a party to or
subject to, nor is any of the OPM Assets subject to, any Applicable Law,
Governmental Authorization, Contractual Obligation, Employment Arrangement,
Material Agreement or Private Authorization, or any other obligation or
restriction of any kind or character, which now has or, as far as OPM can now
reasonably foresee, at any time in the future, individually or in the aggregate,
is likely to have, any material adverse effect on OPM, except as set forth in
Section 3.18 of the OPM Disclosure Schedule.
3.19 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of OPM.
3.20 Solvency. As of the execution and delivery of this Agreement, OPM
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
3.21 Environmental Matters. Except as set forth in Section 3.21 of the
OPM Disclosure Schedule, with respect to the OPM Assets and the OPM Assets, OPM:
(a) has not been notified that it is potentially liable under,
has not received any request for information or other correspondence
concerning its potential liability with respect to any site or facility
under, and, to Stockholders' knowledge, is not a "potentially
responsible party" under, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource
Conservation Recovery Act, as amended, or any similar state law;
(b) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) is not a party in interest or in default under any
judgment, order, writ, injunction or decree of any Final Order issued
pursuant to any Environmental Law;
(d) has obtained all Environmental Permits required under
Environmental Laws, and has filed all applications, notices and other
documents required to be filed prior to the date of this Agreement to
effect the timely renewal or issuance of all Environmental Permits for
the continued conduct of its business in the manner now conducted;
(e) is in compliance in all material respects with all
Environmental Laws, and is not the subject of or, to the Stockholders'
knowledge, threatened with any Legal Action involving a demand for
damages or other potential liability, including any Lien, with respect
to violations or breaches of any Environmental Law;
-13-
<PAGE>
(f) has not conducted or received any site assessment, audit
or other investigation as to material environmental matters at any
property currently owned, leased, operated or occupied by OPM;
(g) has not installed or used any above ground or underground
storage tanks, friable asbestos, polychlorinated biphenyls or urea
formaldehyde foam insulation on any property currently owned, leased or
operated by OPM and, to the Stockholders' knowledge, there are no above
ground or underground storage tanks, friable asbestos, polychlorinated
biphenyls or urea formaldehyde foam insulation or any property
currently owned, leased or operated by OPM;
(h) there has been no disposal, release, spill or burial of
any Hazardous Materials by OPM (or any Person acting on its behalf) in
violation of Environmental Laws on any property or facility owned,
leased, operated or occupied by OPM or to the Stockholders' knowledge
at any facility or site to which Hazardous Materials from or generated
by OPM may have been taken at any time in the past;
(i) to the Stockholders' knowledge, there has been no
disposal, release, spill or burial of any Hazardous Materials by OPM
(or any Person acting on its behalf) on any property which could
reasonably be expected to result or has resulted in contamination which
requires investigation, remediation or other response activity on or
beneath any properties or facilities currently owned, leased, operated
or occupied by OPM; and
(j) has no knowledge of any past or present Event related to
OPM's properties, operations or business, which Event, individually or
in the aggregate, may interfere with or prevent continued material
compliance with all Environmental Laws, or which, individually or in
the aggregate, may form the basis of any material Claim for or arising
out of the release or threatened release into the environment of any
Hazardous Material.
Section 3.21 of the Disclosure Schedule lists all off-site locations, including,
without limitation, commercial waste disposal facilities and municipal
landfills, to which OPM has directed the transport of Hazardous Materials
originating from OPM or OPM's business during the three (3) years prior to the
date hereof.
3.22 Capital Stock. The authorized and outstanding capital stock of OPM
is as set forth in Section 3.22 of the OPM Disclosure Schedule. All of such
outstanding capital stock has been duly authorized and validly issued, is fully
paid and nonassessable and is not subject to any preemptive or similar rights.
Except as described in Section 3.22 of the OPM Disclosure Schedule, OPM has not
granted or issued, nor has OPM agreed to grant or issue, any shares of its
capital stock or any Option Security or Convertible Security, and OPM is not a
party to or bound by any agreement, put or commitment pursuant to which it is
obligated to purchase, redeem or otherwise acquire any shares of capital stock
or any Option Security or Convertible Security.
3.23 Bank Accounts, Etc. Section 3.23 of the OPM Disclosure Schedule
contains a true, accurate and complete list of the date hereof of all banks,
trust companies, savings and loan associations and brokerage firms in which OPM
has an account or a safe deposit box and the names of all Persons authorized to
draw thereon, to have access thereto, or to authorize transactions therein, the
names of all Persons, if any, holding valid and subsisting powers of attorney
from OPM and a summary statement as to the terms thereof. OPM agrees that prior
to the Closing Date it will not make or permit to be made any change affecting
any bank, trust company, savings and loan association, brokerage firm or safe
deposit box or in the names of the Persons authorized to draw thereon, to have
access thereto or to authorize transactions therein or in such powers of
-14-
<PAGE>
attorney, or open any additional accounts or boxes or grant any additional
powers of attorney, without in each case first notifying ATS in writing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
RELATING TO THE SUBJECT STOCK
Each of the Stockholders, severally and not jointly, represents,
warrants and covenants to, and agrees with, ATS as follows:
4.1 Enforceability. This Agreement has been duly executed and delivered
by such Stockholder and constitutes, and each Collateral Document executed or
required to be executed by such Stockholder pursuant hereto or thereto when
executed and delivered by such Stockholder will constitute, legal, valid and
binding obligations of such Stockholder, enforceable in accordance with their
respective terms, except as such enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement, voidable preference,
fraudulent conveyance and other similar laws relating to or affecting the rights
of creditors and except as the same may be subject to the effect of general
principles of equity.
4.2 Title to Shares. Such Stockholder owns the Subject Stock set forth
opposite his name in Section 3.22 of the OPM Disclosure Schedule. Except as set
forth in Section 3.22 of the OPM Disclosure Schedule, such Stockholder owns and
has good and merchantable title to such Subject Stock as so set forth, free and
clear of all Liens.
4.3 No Conflict; Required Filings and Consents. Except for consents as
set forth in Section 4.3 of the Disclosure Schedule, neither the execution and
delivery by such Stockholder of this Agreement or any Collateral Document
executed or required to be executed by such Stockholder pursuant hereto or
thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by such Stockholder:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Applicable Law, or will conflict
with, or result in a breach or violation of, or constitute a default
under, or permit the acceleration of any obligation or liability in, or
but for any requirement of the giving of notice or passage of time or
both would constitute such a conflict with, breach or violation of, or
default under, or permit any acceleration in, any Contractual
Obligation of such Stockholder, except for such conflicts, breaches,
defaults, violations or accelerations that would not, individually or
in the aggregate, have a Material Adverse Effect;
(ii) will result in or permit the creation or imposition of
any Lien upon any property or asset of such Stockholder; or
(iii) will require any Governmental Authorization or
Governmental Filing or Private Authorization of such Stockholder.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ATS
-15-
<PAGE>
ATS represents, warrants and covenants to, and agrees with, the
Stockholders as follows:
5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) ATS is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted.
(b) ATS has all requisite corporate power and corporate authority
necessary to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each Collateral Document executed or required to be
executed by it pursuant hereto or thereto or to consummate the Transactions; and
the execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed by it pursuant hereto or thereto
have been duly authorized by all requisite corporate or other action on the part
of ATS. This Agreement has been duly executed and delivered by ATS and
constitutes, and each Collateral Document executed or required to be executed by
it pursuant hereto or thereto or to consummate the Transactions when executed
and delivered by ATS will constitute, legal, valid and binding obligations of
ATS, enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and the obligations of
debtors generally and by general principles of equity.
(c) Except for matters which would have not material adverse effect on
ATS, as of the Closing Date, neither the execution and delivery by ATS of this
Agreement or any Collateral Document executed or required to be executed by it
pursuant hereto or thereto, nor the consummation by ATS of the Transactions, nor
compliance with the terms, conditions and provisions hereof or thereof by ATS:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of ATS or any
Applicable Law on the part of ATS, or will conflict with, or result in
a breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation
of ATS; or
(ii) will require ATS to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA, except for filings under the
Hart-Scott-Rodino Act.
5.2 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of ATS.
5.3 ATS Financing. ATS has and will, at all times that the Purchase
Price remains unpaid in full, have sufficient funds available to it to pay the
Purchase Price when due in accordance with the provisions of this Agreement and
all transaction related fees and expenses payable by ATS in connection with the
consummation of the Transactions.
5.4 Financial Information. ATS has heretofore furnished to the
Stockholders copies of the audited financial statements of ATS for the fiscal
year ended December 31, 1996 and the unaudited financial statements of ATS for
the six months ended June 30, 1997 (the "ATS Financial Statements"). ATS
Financial Statements, including in each case the notes thereto, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, except as otherwise noted therein, are true, accurate
and complete in all material respects, do not contain any untrue statement of a
material fact or omit
-16-
<PAGE>
to state a material fact required by GAAP to be stated therein or necessary in
order to make the statements contained therein not misleading, and fairly
present the financial condition and the results of operations and cash flow of
ATS, on the bases therein stated, as of the respective dates thereof, and for
the respective periods covered thereby subject, in the case of unaudited
financial statements, to normal nonmaterial year-end audit adjustments and
accruals.
5.5 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the ATS Financial Statements, except to the
extent, if any, heretofore specifically disclosed in writing by ATS to the
Stockholders, there has been no material adverse change in ATS. There is no
Event known to ATS which materially adversely affects, or (so far as ATS can now
reasonably foresee) is likely to materially adversely affect, ATS, except to the
extent, if any, heretofore specifically disclosed in writing by ATS to the
Stockholders.
5.6 No Legal Action. There are no Legal Actions pending or, to the
knowledge of ATS, threatened against ATS or any of its Affiliated Entities,
officers or directors, that question or may affect the validity of this
Agreement or the right or ability of ATS to consummate the transactions
contemplated hereunder.
ARTICLE 6
COVENANTS
6.1 Access to Information; Confidentiality.
(a) OPM shall afford to ATS and its accountants, counsel, lenders,
financial advisors and other representatives (the "Representatives") full access
during normal business hours throughout the period prior to the Closing Date to
all of OPM's properties, books, contracts, commitments and records (including
without limitation Tax Returns) relating to the OPM Assets and the OPM Business
and, during such period, shall furnish promptly upon request (i) a copy of each
report, schedule and other document filed or received by any of them pursuant to
the requirements of any Applicable Law or filed by it with any Authority in
connection with the Transactions or which may have an adverse effect on the OPM
Assets or the OPM Business or the businesses, operations, properties, prospects,
personnel, condition (financial or other), or results of operations thereof,
(ii) all financial records, ledgers, work papers and other sources of financial
information possessed and controlled by OPM or its accountants deemed by ATS or
its Representatives necessary or useful for the purpose of performing an audit
of the OPM Assets and the OPM Business and certifying financial statements and
financial information, and (iii) such other information in the possession or
control of OPM or its accountants concerning any of the foregoing as ATS shall
reasonably request; provided, however, that OPM shall not be required to permit
any such access (x) to the extent same would unreasonably interfere with OPM's
normal business operations or (y) to any document, the delivery of which would,
in the opinion of OPM's counsel, have the effect of waiving any attorney-client
privilege enjoyed by OPM. All non-public information relating to the OPM Assets
or the OPM Business furnished prior to the execution, or pursuant to the
provisions, of this Agreement, including without limitation this Section, will
be kept confidential and shall not, without the prior written consent of OPM, be
disclosed by ATS in any manner whatsoever, in whole or in part, and shall not be
used for any purposes, other than in connection with the Transactions. In no
event shall ATS or any of its Representatives use such information to the
detriment of OPM. ATS agrees to reveal such information only to those of its
Representatives or other Persons who need to know such information for the
purpose of evaluating the Transactions, who are informed of the confidential
nature of such information and who shall undertake to act in accordance with the
terms and conditions of this Agreement. From and after the Closing, OPM shall
not, without the prior written consent of ATS, disclose any
-17-
<PAGE>
information with respect to the OPM Assets or the OPM Business, and no such
information shall be used for any purposes, other than in connection with the
Transactions or to the extent required by Applicable Law.
(b) Subject to the terms and conditions of Section 6.1(a), ATS may,
subject to prior consultation with OPM and to the reasonable approval of OPM
with respect to disclosure of information, disclose such information as may be
necessary in connection with seeking all Governmental and Private Authorizations
or that is required by Applicable Law to be disclosed. In the event that this
Agreement is terminated for any reason, ATS shall promptly redeliver all
non-public written material provided pursuant to this Section or any other
provision of this Agreement or otherwise in connection with the Transactions and
shall not retain any copies, extracts or other reproductions in whole or in part
of such written material, other than one copy thereof which shall be delivered
to independent counsel for ATS.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, any party may disclose information received or
retained by it in accordance with the provisions of this Agreement if it can
demonstrate (i) such information is generally available to or known by the
public from a source other than the party seeking to disclose such information
or (ii) was obtained by the party seeking to disclose such information from a
source other than the other party, provided that such source was not bound by a
duty of confidentiality to the other party or another party with respect to such
information.
(d) No investigation pursuant to this Section or otherwise shall affect
any representation or warranty in this Agreement of either ATS or the
Stockholders or any condition to the obligations of the parties hereto, except
as set forth in Section 9.3(e).
6.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use reasonable business efforts
(x) to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under Applicable Law to consummate the
Transactions, and (y) to refrain from taking, or cause to be taken, any action
and to refrain from doing or causing to be done, any thing which could impede or
impair the consummation of the Transactions, including, in all cases, without
limitation using its reasonable business efforts (i) to prepare and file with
the applicable Authorities as promptly as practicable after the execution of
this Agreement all requisite applications and amendments thereto, together with
related information, data and exhibits, necessary to request issuance of orders
approving the Transactions by all such applicable Authorities, each of which
must be obtained or become final to the extent provided in Section 7.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 7.2(d), (iii) to
effect all necessary registrations, filings and submissions (including without
limitation filings under the Hart-Scott-Rodino Act and all filings necessary for
ATS to own and operate the OPM Assets and conduct the OPM Business), (iv) to
lift any injunction or other legal bar to the Transactions (and, in such case,
to proceed with the Transactions as expeditiously as possible), and (v) to
obtain the satisfaction of the conditions specified in Article 6, including
without limitation the truth and correctness as of the Closing Date as if made
on and as of the Closing Date of the representations and warranties of such
party and the performance and satisfaction as of the Closing Date of all
agreements and conditions to be performed or satisfied by such party.
(b) The parties shall cooperate with one another (including by ATS
providing access to the Stockholders to the books and records of OPM subsequent
to the Closing Date) in the preparation, execution and filing of all Tax
Returns, questionnaires, applications, or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp Taxes, any transfer, recording, registration and other fees, and any
similar Taxes which become payable in connection with the Transactions that are
required or permitted to be filed on or before the Closing Date.
-18-
<PAGE>
(c) OPM shall cooperate and use its reasonable business efforts to
cause its independent accountants to reasonably cooperate with ATS, and at ATS'
expense, in order to enable ATS to have its independent accountants prepare
audited financial statements for the OPM Business described in Section 7.2(g).
OPM represents and warrants that any such financial statements will have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, will be true, accurate and complete in all material
respects, and will fairly present the financial condition and results of
operation of the Company on the basis therein stated, as of the respective dates
thereof and for the respective periods covered thereby. Without limiting the
generality of the foregoing, OPM agrees that after the Closing Date it will (x)
consent to the use of such audited financial statements in any registration
statement or other document filed by ATS or any Affiliate of ATS under any
applicable federal or state securities Law the Securities Act or the Exchange
Act and (y) execute and deliver, and cause its directors and officers to execute
and deliver, such "representation" letters as are customarily delivered in
connection with audits and as ATS' independent accountants may reasonably
request under the circumstances.
6.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, OPM and ATS shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the Transactions and shall not issue any such press release
or make any such public statement without the prior consent of the other.
Notwithstanding the foregoing, each party acknowledges and agrees that OPM and
ATS may, without its prior consent, issue such press releases or make such
public statements as may be required by Applicable Law, in which case, to the
extent practicable, the party proposing to make such press release or public
statement will consult with the other regarding the nature, extent and form of
such press release or public statement. In addition, subject to the terms and
conditions hereof, ATS may disclose the subject matter of this Agreement to
Persons with whom OPM has a business or contractual relationship in connection
with ATS' due diligence investigation of OPM.
6.4 Notification of Certain Matters. Each party shall give prompt
notice to the other, of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be likely to cause (i) any
representation or warranty made by it contained in this Agreement to be untrue
or inaccurate in any respect, or (ii) any covenant, condition or agreement made
by it contained in this Agreement not to be complied with or satisfied, or (iii)
any change to be made in the OPM Disclosure Schedule in any respect, or (iv) any
failure made by it to comply with or satisfy, or be able to comply with or
satisfy, any covenant, condition or agreement to be complied with or satisfied
by it hereunder, in each case in any respect such that one or more of the
conditions of Closing might not be satisfied; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
6.5 No Solicitation. OPM shall not, nor shall it knowingly permit any
of its Representatives (including, without limitation, any investment banker,
broker, finder, attorney or accountant retained by it) to, initiate, solicit or
facilitate, directly or indirectly, any inquiries or the making of any proposal
with respect to any Alternative Transaction, engage in any discussions or
negotiations concerning, or provide to any other Person any information or data
relating to, it or any Subsidiary for the purposes of, or otherwise cooperate in
any way with or assist or participate in, or facilitate any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, a proposal to seek or effect any Alternative Transaction, or agree to or
endorse any Alternative Transaction. "Alternative Transaction" means a
transaction or series of related transactions (other than the Transactions)
resulting in or likely to result in (i) any change of control of OPM, (ii) any
merger, consolidation or other business combination of OPM, regardless of
whether OPM is the surviving Entity unless the surviving Entity remains
obligated under this Agreement to the same extent as it was, (ii) any tender
offer or exchange offer for, or any acquisitions of, any securities of OPM, (iv)
any sale or other disposition of all or any substantial part of the OPM Assets
or the OPM Business, (v) any issue
-19-
<PAGE>
or sale, or any agreement to issue or sell, any capital stock, Convertible
Securities or Option Securities by OPM, or (vi) any sale, transfer, pledge,
assignment or other conveyance or any agreement to sell, transfer, pledge,
assign or otherwise convey, any Subject Stock. If OPM or any of its
Representatives receives any inquiry with respect to an Alternative Transaction
while this Agreement is in effect, OPM shall inform the inquiring party that it
is not entitled to enter into discussions or negotiations relating to an
Alternative Transaction.
6.6 Conduct of Business by OPM Pending the Closing. Except as otherwise
contemplated by this Agreement, after the date hereof and prior to the Closing
Date or earlier termination of this Agreement, unless ATS shall otherwise agree
in writing, OPM shall, to the extent relating to the OPM Business or the OPM
Assets:
(a) conduct its business in the ordinary and usual course of
business and consistent with past practice, including without
limitation the performance of such maintenance, repairs or replacements
with respect to communication towers, fixtures and Personal Property
comprising the OPM Assets as is consistent with past practice;
(b) use all reasonable business efforts to preserve intact its
business organizations and goodwill, keep available the services of its
present key employees, and preserve the goodwill and business
relationships with customers and others having business relationships
with it;
(c) confer, as and when reasonably requested, on a regular and
frequent basis with one or more representatives of ATS to report
material operational matters and the general status of ongoing
operations;
(d) maintain with financially responsible insurance companies
insurance on its assets and its business in such amounts and against
such risks and losses as are consistent with past practice;
(e) use reasonable business efforts to (i) operate the OPM
Business in conformity in all material respects with all Governmental
and Private Authorizations, Leases and Material Agreements on a basis
consistent with past practice and Applicable Law and the rules and
regulations of any Authority with jurisdiction over the OPM Assets or
the OPM Business, and (ii) maintain in full force and effect all such
Governmental and Private Authorizations, Leases and Material Agreements
relating to the OPM Business;
(f) not (i) dispose of any of the OPM Assets owned by OPM or
used in the operation of the OPM Business (other than for the
disposition in the ordinary course of business of immaterial assets
that are of no further use to the OPM Business) or (ii) modify or
change in any material respect, or enter into, any Material Agreement
relating to the OPM Business; and
(g) not voluntarily take or permit to be taken any action
which if taken between the end of its most recent fiscal quarter and
prior to the date of this Agreement would have been required to be
noted as an exception on Section 3.17 of the OPM Disclosure Schedule.
6.7 Preliminary Title Reports. As promptly as practicable after the
execution of this Agreement, OPM shall, at its sole cost and expense, deliver or
cause to be delivered to ATS a standard preliminary title report (the "Title
Reports") dated on or after the date of this Agreement issued by such title
company or companies as OPM and ATS shall mutually reasonably agree with respect
to those OPM Assets comprised of the parcels of real property owned by OPM, as
described in Section 6.7 of the OPM Disclosure Schedule.
-20-
<PAGE>
6.8 Environmental Site Assessments. As promptly as practicable after
the execution of this Agreement, ATS may at its own cost and expense obtain, and
deliver to OPM full and complete copies of, Phase I environmental site
assessment reports (the "Environmental Reports") on any or all of those certain
parcels of real property described on Section 6.8 of the OPM Disclosure
Schedule. Site assessments shall be conducted by such consultants and
professionals as ATS and OPM shall mutually agree and shall be arranged at times
mutually convenient to the parties. Each of OPM and ATS shall be entitled to
have representatives present at the time such site assessments are conducted,
and to have copies of all correspondence with the Environmental Company.
6.9 Certain Tax Matters.
(a) The Stockholders shall be responsible, at their sole cost and
expense, for the preparation and filing of all federal and state income Tax
Returns of OPM for all taxable periods ending on or before the Closing Date (the
"Pass Through Returns") and for the payment of all Taxes shown on the Pass
Through Returns or otherwise payable with respect to all such periods. The Pass
Through Returns shall be prepared in a manner which is consistent with past
practices of OPM, except as otherwise required by Applicable Law. Income, gain,
loss, deduction and credit of OPM shall be allocated between the Pass Through
Returns and any succeeding taxable period on the basis of a closing of the books
of OPM at the close of business on the date preceding the Closing Date in
accordance with Section 1362(e)(6)(D) of the Code. The Buyer shall promptly
notify the Stockholders following receipt by the Buyer of any notice of audit,
examination or other proceeding (a "Tax Proceeding") with respect to any Pass
Through Return, and the Stockholders shall retain the sole right to control any
such Tax Proceeding, provided that the Buyer may participate in such Tax
Proceeding at its own expense, and provided, further, that ATS may control any
aspects of any such Tax Proceeding relating to any item for which ATS is or may
be liable. The Stockholders shall retain the sole right to file any amended Pass
Through Return. Notwithstanding the foregoing, the Stockholders may not settle
or otherwise agree to the resolution of any Tax Proceeding or file any such
amended Pass Through Return without in each case obtaining the prior written
consent of ATS such consent will not be unreasonably conditioned or withheld,
if, as a result of such settlement or resolution or the filing of any such
amended Pass Through Return, OPM's tax basis in any of its assets for any period
after the Closing Date would be reduced or OPM's tax position after the Closing
Date would otherwise be adversely affected.
(b) After the Closing Date, ATS shall cooperate with the Stockholders,
and the Stockholders shall cooperate with ATS, in connection with all Tax
matters that may affect the Stockholders or OPM for any taxable period that ends
on or before the Closing Date, including without limitation the preparation of
income tax returns and the conduct of any Tax Proceedings for any such taxable
period.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the Stockholders shall join with ATS in making an
election under Section 338(h)(10) of the Code (and any corresponding elections
under state, local or foreign Tax Law) (collectively a "Section 338(h)(10)
Election") with respect to the purchase and sale of the Subject Stock hereunder.
ATS and the Stockholders agree to comply with all of the requirements and
conditions of Section 338(h)(10) of the Code and the Treasury Regulations
thereunder and all other applicable Code Sections and Treasury Regulations (and
state, local and foreign Tax Laws) relating thereto, including without
limitation the timely filing of Form 8023A entitled "Corporate Qualified Stock
Purchase Election." ATS and the Stockholders also agree to take all necessary
steps to effectuate such election (and any corresponding state, local or foreign
elections). None of the Stockholders or ATS will take any action, including
without limitation any action in connection with the filing of federal, state,
local or foreign Tax Returns, which would be inconsistent with or prejudice the
election under Section 338(h)(10) of the Code provided for hereunder. In the
event (i) ATS takes any action which has the effect of causing the Stockholders
not to be able to report the transactions contemplated by this Agreement as an
installment sale under the Code and (ii) the balance of the Purchase Price has
not been paid
-21-
<PAGE>
prior to April 10, 1999, ATS will advance to the Stockholders an amount equal to
the tax liability for the taxable year ended December 31, 1998 created by such
action. Such advance will be credited against the balance of the Purchase Price
and will be evidenced by a non-interest bearing promissory note of the
Stockholders secured by such balance and maturing on the earlier of (x) the
payment of the balance of the Purchase Price or (y) August 31, 1999.
6.10 ATS Post-Closing Covenants.
(a) ATS acknowledges that its obligation to make payment of the full
purchase price to the Stockholders is materially affected by the business and
financial performance of OPM subsequent to the Closing Date. OPM has previously
provided to ATS its business plan (the "Master Plan") regarding acquisition of
tower sites and construction of proposed towers, including estimates of the
financing required to: (i) compete the acquisition and development of tower
sites and towers, and (ii) meet the financial projections contained in the
Master Plan. A copy of the Master Plan is attached hereto as Exhibit C and made
a part hereof. ATS agreed that, except as hereinafter expressly limited, Mills
shall have the right, after the Closing Date, to continue to manage and direct
the OPM Business substantially in accordance with the Master Plan, in such
manner as he shall, in his reasonable business judgment, deems appropriate,
including without limitation those matters necessary or desirable to complete
the Master Plan. Notwithstanding the foregoing, ATS shall have the right to
approve the terms and conditions of any agreements with, or purchases or sales
of materials from or to, or any other business relationship with, any Affiliate
of any of the Stockholders, which approval shall be based on, among other
things, receipt of bids from Persons who are not Affiliated with any of the
Stockholders. ATS shall, within ten (10) days of receipt from OPM of any
proposal from an Affiliate and bids covering the subject of the proposal from
three (3) Persons who are not Affiliates of any of the Stockholders (at least
one of which has been selected by ATS), provide OPM with written notice of its
approval or disapproval of the proposed Affiliate transaction. In the event such
notice is not received by OPM within such ten (10) day period, ATS shall be
deemed to have approved the proposed Affiliate transaction. ATS further agrees
that it is essential that ATS provide the financing necessary to fund fully
completion of the Master Plan and its projections. Accordingly, ATS agrees that
it will, from time to time following the Closing Date, provide, upon written
request of Mills, all funds necessary to fund acquisition of tower sites,
construction of communications towers and other improvements reflected in the
Master Plan; provided, however, that such funding shall not exceed the aggregate
amount of $28,000,000 plus the amount by which (i) $9,000,000 exceeds (ii) the
aggregate principal amount borrowed by OPM from ATS prior to the Closing Date
and outstanding at such time. ATS agrees for itself, its successors and assigns
that, from and after the Closing Date until payment in full by ATS to the
Stockholders of the balance of the Purchase Price as provided in Section 2.2(b)
of this Agreement, in the absence of conduct by Mills in the operation of the
OPM Business which constitutes gross negligence, willful or intentional
misconduct, or violation of any Applicable Law, it will not in any material
fashion interfere with the operation by Mills of the OPM Business, so long as
such operation is in substantial compliance with the Master Plan. ATS
acknowledges and agrees that the members of the Board of Directors of OPM or
their successors in the event of any merger, consolidation or combination of OPM
or the sale or transfer of the OPM Business shall have satisfied all of their
fiduciary duties and responsibilities related to the OPM Business and Mills'
operation and management of the OPM Business if they shall adhere to the
provisions of this Section 6.10 and they need not take, or require to be taken,
any action in conflict with such provisions. The Stockholders acknowledge and
agree that the rights of Mills are unique to Mills and that, in the event of the
death or disability (mental or physical) of Mills, or his gross negligence or
willful or intentional misconduct in the operation of the OPM Business
substantially in accordance with the Master Plan, ATS shall not be required to
recognize as successor to him any individual nominated by the Stockholders, but
shall, in such event, use its reasonable business efforts to effect the timely
and expeditious implementation of the Master Plan, including without limitation
performance of its obligations with respect to funding set forth in this
Section. By executing this Agreement
-22-
<PAGE>
in his capacity as a Stockholder, Mills agrees that he will devote his full time
and effort to the OPM Business.
(b) The Stockholders understand and agree that, anything in this
Section or elsewhere in this Agreement to the contrary notwithstanding, ATS is
under no obligation whatsoever to finance the acquisition of any sites (other
than those reflected in the Master Plan) or the construction of communication
towers and other improvements thereon by OPM (or any successor thereto), but may
do so independently and in a manner such that the operations of such
communication towers are not included in determining Cash Flow for purposes of
determining the Purchase Price. The Stockholders agree that OPM or the OPB
Business may be merged, consolidated or combined with or sold or otherwise
transferred to ATS or any Affiliate thereof, but, in any such event, ATS agrees
to maintain or cause to be maintained separate financial books and records of
OPM or the OPM Business in such manner as to enable the determination of Cash
Flow to be made in accordance with the provisions of Section 2.2(b).
(c) ATS will provide to the Stockholders, promptly after the same
become available, unaudited quarterly (for each of the first three (3) calendar
quarters) and annual consolidated financial statements of ATS (and, so long as
it exists, consolidated with its parent American Tower Systems Holding
Corporation). The Stockholders Representative shall have the right to examine
the books and records of ATS and to discuss financial, operational and other
affairs of ATS with the officers of ATS, at such times during normal business
hours as the Stockholders Representative shall, from time to time, reasonably
request, subject to the Stockholder Representative executing and delivering a
confidentiality agreement embodying terms and conditions comparable to those of
Section 6.1.
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party. The respective obligations
of each party to effect the Transactions shall, except as hereinafter provided
in this Section, be subject to the satisfaction at or prior to the Closing Date
of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by Applicable Law:
(a) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority seeking to enjoin,
restrain, prohibit or make illegal or to impose any materially adverse
conditions in connection with, the consummation of the Transactions, it
being understood and agreed that a written request by any Authority for
information with respect to the Transactions, which information could
be used in connection with such Legal Action, shall not in itself be
deemed to be a threat of any such Legal Action; and
(b) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all filings,
submissions, registrations, notices or declarations required to be made
by any of the parties with any Authority, prior to the consummation of
the Transactions, shall have been obtained from, and made with, all
such Authorities, except for such authorizations, consents, waivers,
orders, approvals, filings, registrations, notices or declarations as
are set forth in Section 7.1(b) of the OPM Disclosure Schedule or the
failure to obtain or make would not, in the reasonable business
judgment of ATS, have a material adverse effect on the OPM Assets or
the OPM Business.
-23-
<PAGE>
7.2 Conditions to Obligations of ATS. The obligation of ATS to effect
the Transactions shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
required to be delivered pursuant to the provisions of this Agreement
shall be reasonably satisfactory in form, scope and substance to ATS
and its counsel, and ATS and its counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which they may reasonably request in connection therewith,
such documents where appropriate to be certified by proper Authorities
or corporate officers;
(b) The Stockholders shall have furnished ATS and, at ATS'
request, any bank or other financial institution providing credit to
ATS, with a favorable opinion, dated the Closing Date, of Ruden,
McClosky, Smith, Schuster & Russell, P.A., counsel for OPM and the
Stockholders, with respect to the matters set forth in Sections 3.1(a),
(b) and (c), 3.7(b), 3.14, 3.22 and Article 4, and such other matters
arising after the date of this Agreement and incident to the
Transactions, as ATS or its counsel or its counsel may reasonably
request or which may be reasonably requested by any such bank or
financial institution or their respective counsel; counsel for OPM and
the Stockholders may, in furnishing such opinion, rely on, among other
things, on the representations and warranties of the Stockholders in
Section 3.7(b), 4.2 and 4.3;
(c) The representations and warranties of the Stockholders
contained in this Agreement or otherwise made in writing by it or on
its behalf pursuant hereto or otherwise made in connection with the
Transactions shall be true and correct at and as of the Closing Date
with the same force and effect as though made on and as of such date
except those which speak as of a certain date which shall continue to
be true and correct as of such date on the Closing Date (including
without limitation giving effect to any later obtained knowledge of the
Stockholders, OPM or ATS, except as otherwise specifically provided
herein); each and all of the agreements and conditions to be performed
or satisfied by the Stockholders or OPM hereunder at or prior to the
Closing Date shall have been duly performed or satisfied in all
material respects; and the Stockholders shall have furnished ATS with
such certificates and other documents evidencing the truth of such
representations, warranties, covenants and agreements and the
performance of such agreements or conditions as ATS or its counsel
shall have reasonably requested;
(d) Except to the extent, if any, specifically set forth in
Section 7.2(d) of the OPM Disclosure Schedule, all authorizations,
consents, waivers, orders or approvals required by the provisions of
this Agreement to be obtained from all Persons (other than Authorities)
prior to the consummation of the Transactions, including without
limitation those required in order for OPM to continue to own all of
the OPM Assets and continue to operate the OPM Business as conducted
immediately prior to the Closing (including without limitation, at the
cost and expense of OPM, all modifications of Private Authorizations,
Leases and Material Agreements of OPM set forth in Section 7.2(d) of
the OPM Disclosure Schedule) shall have been obtained, without the
imposition, individually or in the aggregate, of any condition or
requirement which could adversely affect ATS or OPM;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in OPM from that reflected in the most recent OPM Financial
Statements; as of the Closing Date, the Governmental Authorizations
with respect to the ownership or operation of the OPM Assets or the
conduct of the OPM Business shall not have been materially and
adversely affected by any act, or failure to act, of OPM;
-24-
<PAGE>
(f) The Stockholders and OPM shall have delivered or cause to
be delivered to ATS all of the Collateral Documents and other
agreements, documents and instruments required to be delivered by the
Stockholders or OPM to ATS at or prior to the Closing pursuant to the
terms of this Agreement;
(g) ATS shall have received from its independent accountants
(i) an unqualified report (as to the scope of the audit, access to the
books and records and the cooperation of management) on the financial
statements (consisting of balance sheets for each of the fiscal years
ended December 31, 1995 and 1996 and statements of operations and cash
flow for each of the two years in the period ended December 31, 1996)
of the OPM, which financial statements shall have been prepared in
conformity with GAAP and Regulation S-X under the Securities Act, or
(ii) such other documentation as shall be reasonably satisfactory to
ATS indicating that such an unqualified report could be issued if
requested by ATS;
(h) As of the Closing Date, except as otherwise set forth in
Section 3.7(a) of the OPM Disclosure Schedule, no Legal Action shall be
pending before or threatened in writing by any Authority which might,
in the reasonable business judgment of ATS, based upon the advice of
counsel, have a material adverse effect on the OPM, it being understood
and agreed that a written request by any Authority for information with
respect to the Transactions, which information could be used in
connection with such Legal Action, shall not be deemed to be a threat
of any such Legal Action;
(i) Each of the individuals named therein shall have executed
and delivered to ATS an agreement mutually acceptable to the parties
which when so agreed upon shall be attached as Exhibit A hereto and
made a part hereof (the "ATS Noncompetition Agreements");
(j) The Stockholders shall have delivered to ATS all use
permits, consents or other Governmental Authorizations of and all
Leases from the United States Forest Service set forth in Section
7.2(j) of the OPM Disclosure Schedule; and
(k) The Environmental Reports shall not disclose any
exception, and no Event or Events shall have occurred subsequent to the
date hereof, which, individually or in the aggregate, would cause the
representations and warranties of the Stockholders set forth in Section
3.21 (without regard to knowledge) to be inaccurate or incomplete in
any material respect;
(l) ATS shall have received, at its expense, a copy of the
standard ALTA title insurance policy insuring OPM's fee simple or
leasehold interest, as the case may be, in the land and improvements
located at each of the locations described in Section 7.2 (l) of the
OPM Disclosure Schedule and the Title Reports shall not disclose any
exception, and no Event or Events shall have occurred subsequent to the
date hereof, which, individually or in the aggregate, would cause the
representations and warranties of the Stockholders set forth in Section
3.5 (without regard to knowledge) to be inaccurate or incomplete in any
material respect;
(m) Each of the Stockholders shall have executed and delivered
to ATS a Form 8023A entitled "Corporate Qualified Stock Purchase
Election" with respect to the Section 338(h)(10) Election;
-25-
<PAGE>
(n) All Convertible Securities and Option Securities of OPM,
if any, outstanding immediately prior to the Closing shall be canceled
and, from and after the Closing, shall no longer be of any force or
effect;
(o) Owen P. Mills, the chief executive officer of OPM and one
of the Stockholders and OPM, shall have executed and delivered to ATS
an agreement mutually acceptable to the parties which when so agreed
upon shall be attached as Exhibit D hereto and made a part hereof (the
"Mills Employment Agreement");
(p) ATS shall have received a favorable opinion of Ruden,
McClosky, Smith, Schuster & Russell, P.A., dated the Closing Date, with
respect to the validity of Section 6.10 under Florida law; and
(q) ATS shall have received the written resignations of all of
the officers and directors of OPM and of all of the trustees, if any,
under all Benefit Arrangements of OPM.
7.3 Conditions to Obligations of the Stockholders. The obligation of
the Stockholders to effect the Transactions shall be subject to the satisfaction
of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
required to be delivered pursuant to the provisions of this Agreement
shall be reasonably satisfactory in form, scope and substance to the
Stockholders and their counsel, and the Stockholders and their counsel
shall have received all information and copies of all documents,
including records of corporate proceedings, which they may reasonably
request in connection therewith, such documents where appropriate to be
certified by proper Authorities or corporate officers;
(b) ATS shall have furnished the Stockholders, with favorable
opinions, dated the Closing Date, of Sullivan & Worcester LLP, counsel
for ATS, with respect to the matters set forth in Section 5.1 and with
respect to such other matters arising after the date of this Agreement
and incident to the Transactions, as the Stockholders or their counsel
may reasonably request;
(c) The representations and warranties of ATS contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto or otherwise made in connection with the Transactions
shall be true and correct at and as of the Closing Date with the same
force and effect as though made on and as of such date except those
which speak as of a certain date which shall continue to be true and
correct as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of OPM, the
Stockholders or ATS, except as otherwise specifically provided herein);
each and all of the agreements and conditions to be performed or
satisfied by ATS hereunder at or prior to the Closing Date shall have
been duly performed or satisfied in all material respects; and ATS
shall have furnished the Stockholders with such certificates and other
documents evidencing the truth of such representations, warranties,
covenants and agreements and the performance of such agreements or
conditions as the Stockholders or their counsel shall have reasonably
requested;
(d) ATS shall have delivered or cause to be delivered to the
Stockholders all of the Collateral Documents and other agreements,
documents and instruments required to be delivered by ATS to the
Stockholders at or prior to the Closing pursuant to the terms of this
Agreement;
-26-
<PAGE>
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in ATS from that reflected in the most recent ATS Financial
Statements;
(f) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority which might, in the
reasonable business judgment of the Stockholders, based upon the advice
of counsel, have a material adverse effect on ATS' ability to operate
the OPM Assets and the OPM Business subsequent to the Closing Date, it
being understood and agreed that a written request by any Authority for
information with respect to the Transactions, which information could
be used in connection with such Legal Action, shall not be deemed to be
a threat of any such Legal Action;
(g) OPM shall have executed and delivered to the Stockholders
the Mills Employment Agreement; and
(h) The Stockholders shall have received a favorable opinion,
dated the Closing Date, of Florida counsel with respect to the binding
effect on ATS of Section 6.10.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of the Stockholders and ATS; or
(b) by either ATS or the Stockholders if any permanent
injunction, decree or judgment by any Authority preventing the
consummation of the Transactions shall have become final and
nonappealable; or
(c) by the Stockholders in the event (i) the Stockholders are
not in material breach of this Agreement and none of their
representations or warranties shall have become and continue to be
untrue in any material respect, and (ii) either (A) the Transactions
have not been consummated prior to the Termination Date, or (B) ATS is
in material breach of this Agreement or any of its representations or
warranties shall have become and continue to be untrue in any material
respect, and such a breach or untruth exists and is not capable of
being cured by and will prevent or delay consummation of the
Transactions by or beyond the Termination Date; or
(d) by ATS in the event (i) ATS is not in material breach of
this Agreement and none of its representations or warranties shall have
become and continue to be untrue in any material respect, and (ii)
either (A) the Transactions have not been consummated prior to the
Termination Date, or (B) OPM or the Stockholders are in material breach
of this Agreement or any of the Stockholders' representations or
warranties shall have become and continue to be untrue in any material
respect, and such a breach or untruth exists and is not capable of
being cured by and will prevent or delay consummation of the
Transactions by or beyond the Termination Date; or
(e) by ATS in the event of a failure of the condition set
forth in Section 7.2(k) or 7.2(l).
-27-
<PAGE>
The term "Termination Date" shall mean June 30, 1998 or such other date
as the parties may, from time to time, mutually agree.
The right of ATS or OPM to terminate this Agreement pursuant to this
Section shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party, any Person controlling any such
party or any of their respective Representatives whether prior to or after the
execution of this Agreement.
8.2 Effect of Termination.
(a) Except as provided in Sections 6.1 (with respect to
confidentiality), 6.3 and 10.3 and this Section, in the event of the termination
of this Agreement pursuant to Section 8.1, or in the event the Transactions
shall not have been consummated prior to the end of business on the Termination
Date, this Agreement shall forthwith become void, there shall be no liability on
the part of any party, or any of their respective shareholders, officers or
directors, to the other and all rights and obligations of any party shall cease;
provided, however, that such termination shall not relieve any party from
liability for any misrepresentation or breach of any of its warranties,
covenants or agreements set forth in this Agreement.
(b) In the event this Agreement is terminated pursuant to the
provisions of Section 8.1(a), 8.1(b) or 8.1(e), except as provided in Section
8.2(a), none of the parties shall have any further rights or remedies.
ARTICLE 9
INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties
contained in or made pursuant to this Agreement or any Collateral Document shall
survive the Closing and shall remain operative and in full force and effect for
a period of (a) two (2) years after the Closing Date or (b) the applicable
statute of limitations in the case of matters of a nature referred to in
Sections 3.1, 3.11, 3.12, 3.21 and 3.22, Article 4 and Section 4.1, regardless
of any investigation or statement as to the results thereof made by or on behalf
of any party hereto. The covenants and agreements of the parties contained in or
made pursuant to this Agreement or any Collateral Document shall survive the
Closing and shall remain operative and in full force and effect for the statute
of limitations applicable to contractual obligations. The term "Indemnity
Period" shall mean the applicable period with respect to which a representation,
warranty, covenant or agreement survives the Closing as provided in this
Section. No claim for indemnification, other than with respect to fraud or
intentional and willful breach or misrepresentation, may be asserted after the
expiration of the Indemnity Period. Notwithstanding anything herein to the
contrary, any representation, warranty, covenant and agreement which arises and
is the subject of a Claim which is asserted in writing prior to the expiration
of the applicable Indemnity Period shall survive with respect to such Claim or
any dispute with respect thereto until the final resolution thereof.
9.2 Indemnification.
(a) Each Stockholder, jointly and severally, agrees that on and after
the Closing he shall indemnify and hold harmless OPM, ATS and their respective
stockholders, directors, officers, employees and representatives (collectively,
the "ATS Indemnified Parties") from and against any and all damages, claims,
losses, expenses, costs, obligations, and liabilities including, without
limiting the generality of the foregoing, liabilities for all reasonable
attorneys', accountants' and experts' fees and expenses incurred, including
those
-28-
<PAGE>
incurred to enforce the terms of this Agreement or any Collateral Document
(collectively, "Loss and Expense"), suffered by the ATS Indemnified Parties by
reason of, or arising out of any breach of representation or warranty made by
the Stockholders pursuant to this Agreement or any Collateral Document or any
failure by the Stockholders (or OPM prior to the Closing) to perform or fulfill
any of their covenants or agreements set forth in this Agreement or any
Collateral Document.
(b) ATS agrees to that on and after the Closing it will indemnify each
of the Stockholders and hold each of them harmless from and against all Loss and
Expense suffered by any of them by reason of, or arising out of :
(i) any breach of representation or warranty made by ATS
pursuant to this Agreement or any Collateral Document or any failure by
ATS to perform or fulfill any of its covenants or agreements set forth
in this Agreement or any Collateral Document or any failure of OPM to
perform or fulfill any of its covenants or agreements set forth in this
Agreement or any Collateral Document required to be performed after the
Closing; or
(ii) any Legal Action or other Claim by any third party
relating to ATS or the ownership or operations of OPM's business and
properties subsequent to the Closing, including without limitation any
and all obligations and liabilities under Governmental Authorizations,
Private Authorizations, Leases, Material Agreements, Employment
Arrangements, Plans, Benefit Arrangements and
Contractual Obligations.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the parties agrees that the Stockholders shall not be
required to indemnify ATS, and ATS shall be required to indemnify the
Stockholders, if, notwithstanding the fact that OPM has not agreed to be, or
made any election to be or be treated as, a "consenting corporation" within the
meaning of Section 341(f) of the Code, the Internal Revenue Service or any other
Authority shall have determined that OPM has tax liability under Section 341 of
the Code.
9.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 9.2, after the Closing,
except as otherwise provided in Section 9.6, the ATS Indemnified Parties, on the
one hand, and the Stockholders, on the other hand, shall be entitled to recover
its Loss and Expense in respect of any Claim only in the event that the
aggregate Loss and Expense for all Claims exceeds, in the aggregate, $50,000, in
which event the indemnified party shall be entitled to recover all such Loss and
Expense (including without limitation such $50,000).
(b) In the case any event shall occur which would otherwise entitle any
party to assert a claim for indemnification hereunder, no Loss and Expense shall
be deemed to have been sustained by such party to the extent of any proceeds
received by such party from any insurance policies with respect thereto.
9.4 Notice of Claims. If an indemnified party believes that it has
suffered or incurred any Loss and Expense, it shall notify the indemnifying
party promptly in writing, and in any event within the applicable time period
specified in Section 9.1, describing such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. If any Legal Action
is instituted by a third party with respect to which an indemnified party
intends to claim any liability or expense as Loss and Expense under this
Article, such indemnified party shall promptly notify the indemnifying party of
such Legal Action, but the failure to so notify the indemnifying party shall not
relieve such indemnifying party of its obligations under this Article, except to
the extent such failure to notify prejudices such indemnifying party's ability
to defend against such Claim.
-29-
<PAGE>
9.5 Defense of Third Party Claims. The indemnifying party shall have
the right to conduct and control, through counsel of their own choosing,
reasonably acceptable to the indemnified party, any third party Legal Action or
other Claim, but the indemnified party may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that if the
indemnifying party shall fail to defend any such Legal Action or other Claim,
then the indemnified party may defend, through counsel of its own choosing, such
Legal Action or other Claim, and (so long as it gives the indemnifying party at
least fifteen (15) days' notice of the terms of the proposed settlement thereof
and permits the indemnifying party to then undertake the defense thereof) settle
such Legal Action or other Claim and to recover the amount of such settlement or
of any judgment and the reasonable costs and expenses of such defense. The
indemnifying party shall not compromise or settle any such Legal Action or other
Claim without the prior written consent of the indemnified party, which consent
shall not unreasonably be withheld, delayed or conditioned if the terms and
conditions of such compromise or settlement proposed by the indemnifying party
and agreed to in writing by the claimant in such Legal Action or other Claim
(the "Settlement Proposal") (a) include a full release of the indemnified party
from the Legal Action or other Claim which is the subject of the Settlement
Proposal, and (b) if the indemnified party is an ATS Indemnified Party, do not
include any term or condition which would restrict in any material manner the
continued ownership or operations of the OPM Assets or the conduct of the OPM
Business in substantially the manner then being theretofore owned, operated and
conducted by ATS or OPM (or any successor or assign). No matter whether an
indemnifying party defends or prosecutes any third party Legal Action or Claim,
the indemnified and indemnifying parties shall cooperate in the defense or
prosecution thereof. Such cooperation shall include access during normal
business hours afforded to the indemnifying party to, and reasonable retention
by the indemnified party of, records and information which are reasonably
relevant to such third party Legal Action or Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder, and the indemnifying party shall
reimburse the indemnified party for all its reasonable out-of-pocket expenses in
connection therewith.
9.6 Exclusive Remedy. Except for fraud, willful or intentional
misrepresentation or willful or intentional breach of warranty, covenant or
agreement or as otherwise provided in Section 10.5, the indemnification provided
in this Article shall be the sole and exclusive post-Closing remedy available to
any party against the other party for any Claim under this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 Waivers; Amendments. Changes in or additions to this Agreement may
be made, or compli ance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the consent in writing of the parties hereto. No delay on the part of
either party at any time or times in the exercise of any right or remedy shall
operate as a waiver thereof. Any consent may be given subject to satisfaction of
conditions stated therein. The failure to insist upon the strict provisions of
any covenant, term, condition or other provision of this Agreement or to
exercise any right or remedy thereunder shall not constitute a waiver of any
such covenant, term, condition or other provision thereof or default in
connection therewith. The waiver of any covenant, term, condition or other
provision thereof or default thereunder shall not affect or alter this Agreement
in any other respect, and each and every covenant, term, condition or other
provision of this Agreement shall, in such event, continue in full force and
effect, except as so waived, and shall be operative with respect to any other
then existing or subsequent default in connection therewith.
-30-
<PAGE>
10.2 Fees, Expenses and Other Payments. All Hart-Scott-Rodino filing
fees shall be borne equally by the Stockholders and ATS provided that the total
amount to be borne by Stockholders shall not exceed $25,000, all costs of
preliminary title reports to a date reasonably proximate to the Closing Date
shall be borne by the Stockholders, and all costs of environmental studies shall
be borne by ATS. All costs and expenses, incurred in connection with any
transfer taxes, sales taxes, recording or documentary taxes, stamps or other
charges levied by any Authority in connection with this Agreement and the
consummation of the Transactions shall be borne by ATS and all other costs and
expenses incurred in connection with this Agreement and the consummation of the
Transactions, including without limitation fees and disbursements of counsel,
financial advisors and accountants incurred by the parties hereto, shall be
borne solely and entirely by the party which has incurred such costs and
expenses.
10.3 Notices. All notices and other communications which by any
provision of this Agreement are required or permitted to be given shall be given
in writing and shall be effective (a) three (3) days after being mailed by
first-class or express mail, postage prepaid, (b) the next day when sent
overnight by recognized courier service, (c) upon confirmation when sent by
telex, telegram, telecopy or other form of rapid transmission, confirmed by
mailing (by first class or express mail, postage prepaid, or by recognized
courier service) written confirmation at substantially the same time as such
rapid transmission, or (d) upon delivery when personally delivered to the
receiving party (which if other than an individual shall be an officer or other
responsible party of the receiving party). All such notices and communications
shall be mailed, sent or delivered as follows:
(a) If to ATS (or OPM after the Closing):
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph B. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with copies to:
American Tower Systems, Inc.
6400 North Congress Avenue, Suite 1750
Boca Raton, Florida 33487
Attention: James S. Eisenstein
Telecopier No.: (561) 998-2278
and
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
-31-
<PAGE>
(b) If to any Stockholder or OPM (prior to the Closing):
325 Interstate Boulevard
Sarasota, Florida 34240
Attention: Owen P. Mills, President
Telecopier No.: (941) 379-4562
with a copy to:
Ruden, McClosky, Smith, Schuster & Russell, P.A.
1549 Ringling Boulevard, Suite 600
Sarasota, FL 34236
Attention: John M. Dart, Esq.
Telecopier No.: (941) 955-7590
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
10.4 Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity or as provided in Article 9, be entitled to injunctive
relief and to enforce its rights by an action for specific performance to the
extent permitted by Applicable Law. Each party hereby waives any requirement for
security or the post ing of any bond or other surety in connection with any
temporary or permanent award of injunctive, mandatory or other equitable relief.
Nothing herein contained shall be construed as prohibiting each party from
pursuing any other remedies available to it pursuant to the provisions of, and
subject to the limitations contained in, this Agreement or Applicable Law for
such breach or threatened breach. Anything in this Section or elsewhere in this
Agreement to the contrary notwithstanding, if an Authority of competent
jurisdiction shall have issued a Final Order that ATS is in material breach of
this Agreement, ATS shall pay to the Stockholders an aggregate amount to be
determined as follows: (a) the amount due as of such date in accordance with
Section 2.2(a); and (b) $5,000,000.
10.5 Severability. If any term or provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to affect materially and
adversely any party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled and consummated to the
maximum extent possible.
-32-
<PAGE>
10.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
10.7 Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
10.8 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of the
State of Florida applicable to contracts made and performed in such State and,
in any event, without giving effect to any choice or conflict of laws provision
or rule that would cause the application of domestic substantive laws of any
other jurisdiction. Anything in this Agreement to the contrary notwithstanding,
including without limitation the provisions of Article 8, in the event of any
dispute between the parties which results in a Legal Action, the prevailing
party shall be entitled to receive from the non-prevailing party reimbursement
for reasonable legal fees and expenses incurred by such prevailing party in such
Legal Action.
10.9 Further Acts. Each party agrees that at any time, and from time to
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as any other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
10.10 Entire Agreement. This Agreement (together with the OPM
Disclosure Schedule and the other Collateral Documents delivered in connection
herewith), constitutes the entire agreement of the parties and supersedes all
prior agreements and undertakings, both written and oral, between the parties,
with respect to the subject matter hereof .
10.11 Assignment. This Agreement shall not be assignable by any party
and any such assignment shall be null and void, except that it shall inure to
the benefit of and by binding upon any successor to any party by operation of
law, including by way of merger, consolidation or sale of all or substantially
all of its assets, and ATS may assign its rights and remedies hereunder to any
bank or other financial institution which has loaned funds or otherwise extended
credit to it.
10.12 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
except as otherwise provided in Section 10.11.
10.13 Appointment of Representative. Each Stockholder hereby
irrevocably appoints and authorizes to act as its agent, representative and
attorney-in-fact hereunder (the "Stockholders Representative"). Each Stockholder
irrevocably authorizes the Stockholders Representative to take such action on
behalf of such Stockholder and to exercise all such powers as are expressly
delegated to the Stockholders Representative hereunder, together with such other
powers as are reasonably incidental thereto including, but not limited to, the
execution and delivery of certificates, statements, notices, approvals,
extensions, waivers, undertakings and amendments to this Agreement required or
permitted to be made, given or determined hereunder or in connection with the
transactions contemplated hereby. The holders of a majority of the Subject Stock
may, from time to time, remove the Representative and appoint a substitute or
-33-
<PAGE>
successor Stockholders Representative. Notice of any such removal and
appointment shall be given immediately to ATS and the Stockholders.
Simultaneously with the execution of this Agreement, each Stockholder (other
than the Stockholders Representative) has delivered to the Stockholders
Representative certificates representing the Subject Stock owned by such
Stockholder duly endorsed (or accompanies by duly endorsed stock powers). The
appointment and agency created hereby is irrevocable and shall survive the death
or incompetency of any Stockholder.
10.14 Mutual Drafting. This Agreement is the result of the joint
efforts of OPM and ATS, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against any party based on any presumption of that party's
involvement in the drafting thereof.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-34-
<PAGE>
IN WITNESS WHEREOF, ATS and OPM have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
American Tower Systems, Inc.
By:_____________________________________
Name:
Title:
OPM - USA - INC.
By:______________________________________
Name:
Title:
Stockholders
_________________________________________
Owen B. Mills
_________________________________________
Sonja L. Mills
-35-
<PAGE>
APPENDIX A
DEFINITIONS
Acceptance Notice shall have the meaning given to it in Section 2.2(c).
Accounts Receivable shall mean (a) any and all rights to the payment of
money or other forms of consideration of any kind at any time now or hereafter
owing or to be owing to OPM attributable to the ownership or operation of the
OPM Business (whether classified under the Uniform Commercial Code of any state
as accounts, contract rights, chattel paper, general intangibles or otherwise),
including without limitation accounts receivable, letters of credit and the
right to receive payment thereunder, chattel paper, insurance proceeds, contract
rights, notes, drafts, instruments, documents, acceptances, and all other debts,
obligations and liabilities in whatever form now or hereafter owing from any
other Person, all guarantees, security and Liens for the payment of any thereof,
and all of OPM's rights to goods, now owned or hereafter acquired, sold
(delivered, undelivered, in transit or returned) which may be represented
thereby; and (b) all proceeds of any of the foregoing.
adverse, adversely, when used alone or in conjunction with other terms
(including without limitation "affect," "change" and "effect") shall mean any
Event which is reasonably likely, in the reasonable business judgment of ATS, to
be expected to (a) adversely affect the validity or enforceability of this
Agreement or the likelihood of consummation of the Transactions, or (b)
adversely affect the business, operations, management, properties or prospects,
or the condition, financial or other, or results of operation of the OPM
Business, or (c) impair OPM's ability to fulfill its obligations under the terms
of this Agreement, or (d) adversely affect the aggregate rights and remedies of
ATS under this Agreement. Notwithstanding the foregoing, and anything in this
Agreement to the contrary notwithstanding, any Event generally affecting the
economy or the tower communications business shall not be deemed to constitute
such a change, affect or effect.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's immediate family or a family trust.
Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the OPM
Disclosure Schedule and all exhibits hereto, and as any of the same may from
time to time be supplemented, amended, modified or restated in the manner herein
or therein provided.
Amount Due shall have the meaning given to it in Section 2.2(a).
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the FCA and all federal and state
securities and Environmental Laws, to which a Person is subject or by which it
or any of its business or operations is subject or any of its property or assets
is bound.
A-1
<PAGE>
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the OPM
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder.
ATS shall have the meaning given to it in the Preamble.
ATS' Financial Statements shall have the meaning given to it in Section
5.2
ATS' Indemnified Parties shall have the meaning given to it in Section
9.2(a)
ATS' Noncompetition Agreements shall have the meaning given to it in
Section 7.2(i).
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign., including without limitation the FCC.
Benefit Arrangement shall mean any material benefit arrangement that is
not a Plan, including (a) any employment or consulting agreement (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of the OPM Business.
Cash Flow shall have the meaning given to it in Section 2.2(b).
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 2.2.
Closing Date shall have the meaning given to it in Section 2.2.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
Code shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
Collateral Documents shall mean the Indemnity Escrow Agreement, the ATS
Noncompetition Agreements, the Mills Employment Agreement, instruments of
conveyance and assignment sufficient to vest in ATS title to all of the Subject
Stock, and any other agreement, certificate, contract, instrument, notice,
A-2
<PAGE>
opinion or other document delivered pursuant to the provisions of this Agreement
or any Collateral Document.
Contract, Contractual Obligation shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability which involves the ownership or operation of the OPM Assets or the
conduct of the OPM Business.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
Debt Reduction shall have the meaning given to it in Section 2.2(a).
Employment Arrangement shall mean, with respect to OPM, any employment,
consulting, retainer, severance or similar contract, agreement, plan,
arrangement or policy (exclusive of any which is terminable within thirty (30)
days without liability, penalty or payment of any kind by OPM or any Affiliate),
or providing for severance, termination payments, insurance coverage (including
any self-insured arrangements), workers compensation, disability benefits, life,
health, medical, dental or hospitalization benefits, supplemental unemployment
benefits, vacation or sick leave benefits, pension or retirement benefits or for
deferred compensation, profit-sharing, bonuses, stock options, stock purchase or
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or post-retirement insurance, compensation or benefits,
or any collective bargaining or other labor agreement, whether or not any of the
foregoing is subject to the provisions of ERISA, but only to the extent that it
covers or relates to any officer, employee or other Person involved in the
ownership or operation of the OPM Assets or the conduct of the OPM Business.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment, including without limitation Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials or other
chemicals or industrial pollutants, substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation or mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Federal Insecticide Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state, local
A-3
<PAGE>
or foreign, Laws, and the rules and regulations promulgated thereunder all as
from time to time in effect, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
Environmental Reports shall have the meaning given to it in Section
6.8.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is treated as a single
employer with OPM under Sections 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA.
Event shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Executive Summary shall have the meaning given to it in Section 2.2(b).
FCA shall mean the Communication Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FCC shall mean the Federal Communications Commission and shall include
any successor Authority.
Final Order shall mean, with respect to any Authority, including
without limitation the FCC, one with respect to which no appeal, no stay, no
petition or application for rehearing, reconsideration, review or stay, whether
on motion of the applicable Authority or other Person or otherwise, and no other
Legal Action contesting such consent or approval, is in effect or pending and as
to which the time or deadline for filing any such appeal, petition or
application or other Legal Action has expired or, if filed, has been denied,
dismissed or withdrawn, and the time or deadline for instituting any further
Legal Action has expired.
Formula shall have the meaning given to it in Section 2.2(a).
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement and except that OPM maintains its books
on a modified cash-accrual basis, such principles applied on a consistent basis,
(i) as set forth in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants ("AICPA") and/or in statements of the
Financial Accounting Standards Board that are applicable in the circumstances as
of the date in question, (ii) when not inconsistent with such opinions and
statements, as set forth in other AICPA publications and guidelines and/or (iii)
that otherwise arise by custom for the particular industry, all as the same
shall exist on the date of this Agreement.
A-4
<PAGE>
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the United
States Forest Service and the Federal Aviation Administration, in connection
with the ownership or operation of the OPM Assets or the conduct of the OPM
Business.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Hart-Scott-Rodino Act shall mean the Hart-Scott-Rodino Improvement Act
of 1976, as from time to time in effect, or any successor law, and any reference
to any statutory provision shall be deemed to be a reference to any successor
statutory provision.
Hazardous Materials shall mean and include any substance, material,
waste, constituent, compound, chemical, natural or man-made element or force (in
whatever state of matter): (a) the presence of which requires investigation or
remediation under any Environmental Law, or (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law; or (c) that is
toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
applicable Authority or subject to any Environmental Law; or (d) the presence of
which on the real property owned or leased by such Person causes or threatens to
cause a nuisance upon any such real property or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or about any
such real property; or (e) the presence of which on adjacent properties could
constitute a trespass by such Person; or (f) that contains gasoline, diesel fuel
or other petroleum hydrocarbons, or any by-products or fractions thereof,
natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment,
radon or other radioactive elements, ionizing radiation, electromagnetic field
radiation and other non-ionizing radiation, sonic forces and other natural
forces, lead, asbestos or asbestos-containing materials ("ACM"), or urea
formaldehyde foam insulation.
Indebtedness shall mean, with respect to any Person, (a) all items,
except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary of such Person
to the extent such interest is treated as a liability with indeterminate term on
the consolidated balance sheet of such Person, which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person, (b) all obligations secured by any Lien
to which any property or asset owned or held by such Person is subject, whether
or not the obligation secured thereby shall have been assumed, and (c) to the
extent not otherwise included, all Contractual Obligations of such Person
constituting capitalized leases and all obligations of such Person with respect
to Leases constituting part of a sale and leaseback arrangement.
Indebtedness for Money Borrowed shall mean, with respect to OPM, money
borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, the maximum amount currently or
at any time thereafter available to be drawn under all outstanding letters of
credit issued for the account of such Person, all Indebtedness upon which
interest charges are customarily paid by such Person, and all Indebtedness
(including capitalized lease obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, but shall
not include (a) trade payables, (b) expenses accrued in the ordinary course of
business, (c) customer advance payments and customer deposits received in the
ordinary course of business, or (d) conditional sales agreements not prohibited
by the terms of this Agreement.
Initial Installment shall have the meaning given to it in Section 2.2.
A-5
<PAGE>
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means, and shall include, without limitation, concessions, copyrights,
franchises, license, patents, permits, service marks, trademarks, trade names,
and applications with respect to any of the foregoing, technology and know-how.
Intellectual Property shall mean any and all research, information,
inventions, designs, procedures, developments, discoveries, improvements,
patents and applications therefor, trademarks and applications therefor, service
marks, trade names, copyrights and applications therefor, logos, trade secrets,
drawing, plans, systems, methods, specifications, computer software programs,
tapes, discs and related data processing software (including without limitation
object and source codes) owned by such Person or in which it has an ownership
interest and all other manufacturing, engineering, technical, research and
development data and know-how made, conceived, developed and/or acquired by such
Person, which relate to the manufacture, production or processing of any
products developed or sold by such Person or which are within the scope of or
usable in connection with such Person's business as it may, from time to time,
hereafter be conducted or proposed to be conducted.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ of
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
Lease shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto.
Legal Action shall mean, with respect to any Person, any and all
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information by or pursuant to
the order of any Authority or suits, at law or in arbitration, equity or
admiralty, whether or not purported to be brought on behalf of such Person,
affecting such Person or any of such Person's business, property or assets.
Lien shall mean any of the following: mortgage; lien (statutory or
other); or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
Loss and Expense shall have the meaning given to it in Section 9.2(a).
Master Plan shall have the meaning given to it in Section 6.10.
A-6
<PAGE>
material, materially or materiality for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement shall mean, with respect to OPM, any Contractual
Obligation which (a) was not entered into in the ordinary course of business,
(b) was entered into in the ordinary course of business which (i) involved the
purchase, sale or lease of goods or materials, or purchase of services,
aggregating more than $20,000 during any of the last three fiscal years, (ii)
extends for more than three (3) months, or (iii) is not terminable on thirty
(30) days or less notice without penalty or other payment, (c) involves a
capitalized lease obligation or Indebtedness for Money Borrowed, (d) is or
otherwise constitutes a written agency, broker, dealer, license,
distributorship, sales representative or similar written agreement, (e)
accounted for more than three percent (3%) of the revenues of the OPM Business
in any of the last three fiscal years or is likely to account for more than
three percent (3%) of revenues of the OPM Business during the current fiscal
year, (f) is with the United States Forest Service or any other Authority, or
(g) involves the management by OPM of any communication tower of any other
Person.
Mills shall have the meaning given to it in Section 6.10.
Mills Employment Agreement shall have the meaning given to it in
Section 7.2(b).
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Net Revenues shall have the meaning given to it in Section 2.2(b).
Objection Notice shall have the meaning given it in the Section 6.10.
OPM shall have the meaning given to it in the Preamble.
OPM Assets shall mean all of the Assets of OPM.
OPM Business shall have the meaning given them in the third Whereas
paragraph.
OPM Communication Towers shall mean all of the communication towers and
other property associated therewith (including without limitation storage
facilities, generators and other property and equipment needed to operate such
towers) located on any real property (i) owned or leased by OPM as of the date
of this Agreement, or (ii) as to which valid and binding agreements to acquire
or lease by OPM are in effect as of the date of this Agreement, or (iii)
acquired or leased, or agreed to be acquired or leased, by OPM subsequent to the
date of this Agreement and prior to the Closing with the express prior written
consent of ATS. A true, complete and accurate list of all sites referred to in
clauses (i) and (ii) of the preceding sentence is set forth as part of Section
3.5(a) or (b) of the OPM Disclosure Schedule.
OPM Disclosure Schedule shall mean the OPM Disclosure Schedule dated as
of the date of this Agreement delivered by OPM to ATS.
OPM Employees shall have the meaning given it in the Section 3.15.
OPM Financial Statements shall have the meaning given to it in Section
3.2..
A-7
<PAGE>
Organic Document shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
Pass Through Returns shall have the meaning given to it in Section 6.9.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Permitted Liens shall mean (a) Liens for current taxes not yet due and
payable, (b) such imperfections of title, easements, encumbrances and mortgages
or other Liens, if any, as are not, individually or in the aggregate,
substantial in character, amount or extent and do not materially detract from
the value, or materially interfere with the present use, of the property subject
thereto or affected thereby, or otherwise materially impair the conduct of the
OPM Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
Permitted Site shall mean that a site with respect to which notice from
all applicable Authorities has been received by OPM (or its successors and
assigns) that all Governmental Authorizations necessary to construct a
communication tower on such site have been fully approved and are in full force
and effect.
Person shall mean any natural individual or any Entity.
Personal Property shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
OPM and used or useful as of the date hereof in the conduct of the business or
operations of the OPM Business, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
Plan shall mean, with respect to any Person and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of the OPM Business.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to
Intellectual Property.
Purchase Price shall have the meaning given to it in Section 2.2.
Real Property shall mean all of the fee estates and buildings and other
fixtures and improvements thereon, leasehold interest, easements, licenses,
rights to access, right-of- way, and other real property interest which are
owned or used by OPM as of the date hereof, in the operations of the OPM
Business, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
Regulations shall mean the federal income tax regulations promulgated
under the Code, as such Regulations may be amended from time to time. All
references herein to specific sections of the Regulations
A-8
<PAGE>
shall be deemed also to refer to any corresponding provisions of succeeding
Regulations, and all references to temporary Regulations shall be deemed also to
refer to any corresponding provisions of final Regulations.
Representatives shall have the meaning given to it in Section 6.1(a).
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
Stockholders shall have the meaning given to it in the Preamble.
Stockholders' knowledge means the actual knowledge of any Stockholder
or any OPM officer or senior manager, as such knowledge exists on the date of
this Agreement and no later date, after reasonable review of appropriate OPM
records.
Stockholders Representative shall have the meaning given to it in
Section 10.14.
Subject Stock shall have the meaning given to it in the first Whereas
paragraph.
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Person,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, or other like assessment or charge of any kind whatsoever, together with
any interest, levies, assessments, charges, penalties, addition to tax or
additional amount imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a) and (c) any liability of such Person for the payment
of any amounts of the type described in (a) as a result of any express or
implied obligation to indemnify any other Person.
Tax Allocation Schedule shall have the meaning given to it in Section
2.2(c).
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
Title Reports shall have the meaning given to it in Section 6.7.
Termination Date shall have the meaning given to it in Section 8.1.
A-9
<PAGE>
Transactions shall mean the transactions contemplated to be consummated
on or prior to the Closing Date, including without limitation the purchase and
sale of the Subject Stock and the execution, delivery and performance of the
Collateral Documents.
A-10
EXHIBIT 10.7
NOTE PURCHASE AGREEMENT
NOTES DUE 2000
of
OPM - USA - INC.
September 30, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. Issue and Sale of Securities.........................................................................1
1.1 Description of Securities..................................................................1
1.2 Purchase and Sale..........................................................................1
1.3 Closing....................................................................................1
2. Representations and Warranties of Company............................................................2
2.1 Organization and Business; Power and Authority.............................................2
2.2 Business; Financial Information............................................................3
2.3 Changes in Condition.......................................................................3
2.4 Acquisition Representations and Warranties.................................................3
2.5 Private Sale...............................................................................4
2.6 Disclosure.................................................................................4
2.7 Use of Proceeds............................................................................4
3. Representations, Warranties and Covenants of American................................................4
3.1 Organization and Business; Power and Authority.............................................4
3.2 Investment Representation..................................................................5
3.3 Covenant Regarding Transfer................................................................5
4. Conditions of Closing................................................................................5
4.1 Company's Officer's Certificate. .........................................................5
4.2 Company's Secretary's Certificate. .......................................................6
4.3 Opinion of Company Counsel. ..............................................................6
4.4 Legality; Governmental and Other Authorizations. .........................................6
4.5 Guaranty. The Guarantor shall have executed and delivered the Guaranty to American........6
5. Payment and Exchange of Notes; Lost Notes............................................................6
5.1 Payments...................................................................................6
5.2 Exchange...................................................................................7
5.3 Replacement of Notes.......................................................................7
5.4 Transfer Office and Record of Holders of Notes.............................................8
5.5 Transfer of Notes..........................................................................8
5.6 Registered Owners of Notes.................................................................8
6. Payment Provisions...................................................................................8
6.1 Required Payments..........................................................................8
6.2 Restriction on Optional Payments...........................................................8
6.3 Notice of Payment and Offers to Repurchase.................................................8
6.4 Maturity; No Reissue.......................................................................9
6.5 Purchase of Notes..........................................................................9
7. Special Covenants of Company.........................................................................9
7.1 Payments...................................................................................9
7.2 Prompt Payment of Taxes and Indebtedness...................................................9
7.3 Conduct of Business.......................................................................10
7.4 Maintenance of Property and Leases........................................................10
7.5 Maintenance of Insurance..................................................................10
7.6 Maintenance of Accounts and Records.......................................................10
7.7 Compliance With Laws......................................................................11
<PAGE>
Page
7.8 Miscellaneous Information.................................................................11
7.9 Information and Reports to Be Furnished by Company........................................11
7.10 Liens....................................................................................12
7.11 Distributions............................................................................12
7.12 Consolidation, Merger and Acquisition....................................................12
7.13 Prohibited Transactions..................................................................13
7.14 Compliance with ERISA....................................................................13
7.15 Indebtedness.............................................................................13
7.16 Operation of the Business................................................................14
7.17 Issue of Equity Securities...............................................................14
8. Defaults. .........................................................................................14
8.1 Events of Default.........................................................................14
8.2 Notice to the Holders.....................................................................16
8.3 Annulment of Defaults.....................................................................16
8.4 Waiver by Company; Severability of Remedies...............................................16
8.5 No Waiver of Rights.......................................................................16
8.6 Costs and Expenses of Collection..........................................................17
8.7 Remedies Cumulative.......................................................................17
9. Definitions.........................................................................................17
10. Miscellaneous Provisions...........................................................................22
10.1 Stamp and Other Taxes....................................................................22
10.2 Expenses.................................................................................22
10.3 Survival of Covenants; Successors and Assigns............................................22
10.4 Notices and Communications...............................................................22
10.5 Amendments and Waivers...................................................................23
10.6 Governing Law............................................................................23
10.7 Entire Agreement.........................................................................23
10.8 Specific Performance; Other Rights and Remedies..........................................23
10.9 Saturdays, Sundays, Holidays, etc........................................................24
10.10 Brokers, etc............................................................................24
10.11 Headings; Counterparts..................................................................24
10.12 Severability............................................................................24
10.13 Further Acts............................................................................24
10.14 Specific Performance; Other Rights......................................................25
</TABLE>
SCHEDULES:
DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A: Form of Note
Exhibit B: Form of Guaranty
-ii-
<PAGE>
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), made as of September
30, 1997, by and between OPM - USA - INC., a Florida corporation (the
"Company"), and American Tower Systems, Inc., a Delaware corporation ("American"
or the "Purchaser").
W I T N E S S E T H:
WHEREAS, American and the stockholders of the Company are parties to a
stock purchase agreement, dated as of the date hereof (the "Acquisition
Agreement"), with respect to the acquisition (the "Acquisition") by American of
all of the outstanding capital stock of the Company which is engaged in the
business of owning, leasing and operating communications towers (the "OPM
Business"); and
WHEREAS, the Company proposes to issue and sell on the date hereof a
Note in the principal amount of $9,000,000 and American is willing to purchase
the Note in order to provide funds to the Company for corporate purposes;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements herein contained, and other valuable consideration, the
receipt and adequacy whereof are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby covenant and agree as follows:
1. Issue and Sale of Securities.
1.1 Description of Securities. The Company has duly authorized the
issue and sale, on the terms hereinafter provided, of the Note. As used herein,
the term "Notes" shall mean the Note together with any notes issued and
delivered in exchange or substitution therefor or for any other Notes or on
transfer of the Initial Note or any other Notes as herein provided and the term
"Note" shall mean any of the Notes. The Notes shall be in or substantially in
the form set forth in Exhibit A hereto. Each Note shall be dated the date of its
issue, shall mature on September 30, 2000, shall bear interest from the date of
its issue, on the amount outstanding from time to time, at an annual rate equal
to the greater of (a) 10% or (b) Prime Rate plus 3%, on the unpaid principal
balance thereof, compounded on the last day of each calendar month, commencing
October 31, 1997, while such Note is outstanding, and payable at maturity,
including by way of acceleration or otherwise, and interest at the rate of 2%
per annum in excess of what would otherwise have been paid on any overdue
principal and, to the extent legally enforceable, any overdue interest. Interest
on the Notes shall be computed on the basis of a 360-day year. Subject to
Section 8.1, the outstanding principal amount of the Notes shall be paid in
accordance with the provisions of Section 6.1. The term "Prime Rate" shall mean
the rate, from time to time, published in the Wall Street Journal and each
change in the Prime Rate shall effect a simultaneous change in the minimum rate
of interest payable on the Notes.
1.2 Purchase and Sale. On the basis of the representations and
warranties and on the terms and subject to the conditions set forth in this
Agreement, the Company agrees to issue and deliver to American, and American
agrees to acquire from the Company and the Note at a purchase price (the
"Purchase Price") equal to 100% of the principal amount of the Note, except that
the loans evidenced by the Note shall be advanced not more frequently than twice
a month, on such date (an "Advance Date") not less than three (3) business days
subsequent to delivery to American by the Company of a request for an advance
(an "Advance Request"). Notwithstanding the foregoing, American shall not be
obligated to make any advance (a) upon the occurrence and during the continuance
of a Potential Default or Event of Default or (b) if the Notes shall have become
due and payable pursuant to the provisions of Section 6.1.
1.3 Closing. The Closing (the "Closing") shall be held at such time,
place and manner not later than September 30, 1997 as the Company and American
shall agree (the date on which the Closing occurs being herein called the
"Closing Date"). At the Closing, the Company will deliver to American the Note
in the
<PAGE>
principal amount of $9,000,000 registered in the name of American, in exchange
for the initial advance requested by the Company in accordance with the
provisions of Section 1.2 by American in the form of bank wire transfers,
evidenced by an advice of bank credit issued by a member of the Federal Reserve
System, in the amount of such requested advance. Such wire transfers shall be
made to such account as the Company shall have designated by notice to American
at least one (1) business day in advance of the Closing.
Subsequent advances by American shall be made by American in accordance
with the provisions of Section 1.2 upon receipt by American of (a) an Advance
Request accompanied by an officer's certificate to the effect that the
representations and warranties contained in Section 2 shall be true and correct
in all material respects on and as of the Advance Date; no Material Adverse
Change affecting the Company shall be pending or, to the Company's knowledge,
threatened; no event which constitutes an Event of Default or a Potential
Default shall have occurred and be continuing on the Advance Date, (b) an
officer's certificate specifying in reasonable detail the proposed use of such
advance, and (c) American's having approved such use, such approval not to be
unreasonably withheld, delayed or conditioned.
2. Representations and Warranties of Company. The Company represents
and warrants that:
2.1 Organization and Business; Power and Authority.
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and (ii) has all requisite power and authority (corporate
and other) to own or hold under lease its properties and to conduct its
business as now conducted and as presently proposed to be conducted.
(b) The Company has adequate power and authority (corporate
and other) and all necessary franchises, permits, licenses and other
rights and privileges to allow it to execute and deliver, and to
perform its obligations under, this Agreement, the Notes and each other
Related Agreement to which it is a party, and to issue and sell the
Note. The execution, delivery and performance of this Agree ment, the
Notes and each of the other Related Agreements to which the Company is
a party have been duly authorized by all requisite corporate action,
including that, if required, of the Company's stockholders. This
Agreement has been duly and validly executed and delivered by the
Company and constitutes, and the Notes and each other Related Agreement
to which it is a party when executed and delivered by the Company will
have been duly and validly executed and delivered by the Company and
will constitute, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability. The holders from time to
time of the Notes will be entitled to the rights and benefits set forth
in the Notes and this Agreement.
(c) The Guaranty, when executed and delivered by the
Guarantor, will have been duly executed and delivered by the Guarantor
and will constitute, valid and binding obligations of the Guarantor,
enforceable in accordance with their respective terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
(d) The Company does not own any voting shares or other
equitable interest in any Person, however organized and however such
interest may be denominated or evidenced, which owns or has
-2-
<PAGE>
any interest in the assets and property or business of any of the OPM
Assets or the OPM Business, except as set forth in the Disclosure
Schedule.
(e) The Company has adequate power and authority (corporate
and other) under the laws of its jurisdiction of organization and all
necessary franchises, permits, licenses and other rights and privileges
to allow it to execute and deliver, and to perform its obligations,
under, the Acquisition Agreement and the execution, delivery and
performance of the Acquisition Agreement has been duly authorized by
all requisite corporate action on the part of the Company.
(f) Except as set forth in the Disclosure Schedule, neither
the execution and delivery of this Agreement, the Notes or any of the
other Related Agreements to which it is a party, nor the offer, issue,
sale or delivery of any or all of the Notes, nor the consummation of
the transactions herein or therein contemplated, nor compliance with
the terms, conditions and provisions hereof or thereof by the Company:
(i) will conflict with, or result in a breach or
violation of or constitute a default in the performance,
observance or fulfillment of any obligation, covenant or
condition contained in, or constitute, or but for any
requirement of giving of notice or passage of time or both
would constitute, a default or an event of default by the
Company under, any Applicable Law or, to the Company's
knowledge, any Private Authorization, Governmental
Authorization or Material Contractual Obligation;
(ii) will, to the Company's knowledge, result in the
creation or imposition of any Lien upon any of the properties
of the Company; or
(iii) will, to the Company's knowledge, require any
approval or action of, or filing with, any Authority, except
as set forth in the Disclosure Schedule.
2.2 Business; Financial Information. The Company has heretofore
furnished to American copies of the financial statements of the Company listed
in the Disclosure Schedule (the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, except as otherwise noted in the
Disclosure Schedule, are true, complete and correct in all material respects, do
not contain any untrue statement of a material fact or omit to state a material
fact required by GAAP to be stated therein or necessary in order to make the
statements contained therein not misleading, and fairly present the financial
condition of the Company and results of operations and cash flow of the Company
on the bases therein stated, as of the respective dates thereof, and for the
respective periods covered thereby subject, in the case of unaudited financial
statements, to normal year-end audit adjustments and accruals. Except as set
forth in the most recent balance sheet constituting a part of the Financial
Statements, the Company does not have any Indebtedness for Money Borrowed. As of
the Closing Date, after giving effect to all of the transactions contemplated
hereby, the Company will be Solvent.
2.3 Changes in Condition. Since the date of the most recent balance
sheet constituting a part of the Financial Statements (the "Most Recent Balance
Sheet"), except as specifically set forth in the Disclosure Schedule, there has
been no Material Adverse Change of the Company. There is, as of the date hereof,
no fact known to the Company which, in the reasonable judgment of the Company,
Materially Adversely Affects, or might, in the reasonable judgment of the
Company (so far as the Company can now foresee), Materially Adversely Affect,
the Company, except as specifically set forth in the Disclosure Schedule.
2.4 Acquisition Representations and Warranties. The representations and
warranties set forth in Section 3.5 through 3.23, both inclusive, are
incorporated herein by reference and made by the Company
-3-
<PAGE>
hereunder, except that all references to the OPM Disclosure Schedule (as defined
in the Acquisition Agreement) shall be deemed not to be applicable for purposes
of this Agreement and the Company represents and warrants, in lieu of the
specific exceptions to the representations and warranties to be set forth in the
OPM Disclosure Schedule, that such exceptions would not reveal any Event of
which American is unaware as of the date of this Agreement and/or any breaches
of the representations and warranties incorporated herein by reference (without
regard to matters set forth in the OPM Disclosure Schedule), which unknown Event
and/or breaches in the aggregate would have a Material Adverse Effect on the
Company or on ability of the Company to continue to operate the OPM Business as
it is currently being operated
2.5 Private Sale. The Company has not, directly or indirectly or
through anyone acting on its behalf, offered any of the Notes or any similar
securities for sale to, or solicited any offers to buy any thereof from, or
otherwise approached or negotiated in respect thereof with, any Person or
Persons other than American, and the Company agrees that neither it nor any
agent on its behalf will offer to sell any of the foregoing securities, or
solicit any offers to buy any thereof, or otherwise approach or negotiate with
any Person in respect thereto, or take any other action, so as to bring the
issuance and sale of any of the Notes under the registration provisions of the
Securities Act.
2.6 Disclosure. To the Company's knowledge, neither the Disclosure
Schedule nor any other document, certificate or statement furnished to American
by or behalf of the company in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
2.7 Use of Proceeds. The Company shall use the proceeds of the sale of
the Note to American hereunder to complete the development of new communication
sites and capital improvements to its existing communication sites, and for
other general corporate purposes (other than the repayment of any Indebtedness
for Money Borrowed).
3. Representations, Warranties and Covenants of American. American
represents and warrants that:
3.1 Organization and Business; Power and Authority.
(a) American (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, and (ii) has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted and as presently
proposed to be conducted.
(b) American has adequate power and authority (corporate and other) and
all necessary franchises, permits, licenses and other rights and privileges to
allow it to execute and deliver, and to perform its obligations under, this
Agreement and each other Related Agreement to which it is a party; and the
execution, delivery and performance of this Agreement and each other Related
Agreement to which it is a party have been duly authorized by all requisite
corporate action. This Agreement has been duly and validly executed and
delivered by American and constitutes, and each other Related Agreement to which
it is a party when executed and delivered by American will have been duly and
validly executed and delivered by American and will constitute, valid and
binding obligations of American, enforceable in accordance with their respective
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
-4-
<PAGE>
(c) Neither the execution and delivery of this Agreement or any of the
other Related Agreement to which it is a party, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms,
conditions and provisions hereof or thereof by American will, from and after
October 1, 1997:
(i) conflict with, or result in a breach or violation of or
constitute a default in the performance, observance or fulfillment of
any obligation, covenant or condition contained in, or constitute, or
but for any requirement of giving of notice or passage of time or both
would constitute, a default or an event of default by American under,
any Applicable Law, Private Authorization, Governmental Authorization
or Contractual Obligation, or
(ii) require any approval or action of, or filing with, any
Authority, except as United States and state securities, antitrust and
communications laws may apply.
3.2 Investment Representation.
(a) American is an "accredited investor" within the meaning of Rule 501
promulgated under the Securities Act and has been furnished with and had access
to all information, financial and other, and has the opportunity to ask
questions of the management of the Company with respect to the Company and
American's proposed investment therein.
(b) American is acquiring the Notes to be purchased by it for its own
account for investment with no present intention of distributing or reselling
the same, subject, nevertheless, to its right to dispose of the Notes or any
part thereof in its sole discretion; provided, however, that notwithstanding the
foregoing, American may pledge any or all of the Notes to any bona fide lender
to American. American understands that the Company is not and will not be
required to file a registration statement under the Securities Act in connection
with any sale, transfer or other disposition of the Notes.
3.3 Covenant Regarding Transfer. American covenants and agrees that it
will not sell, assign, transfer or otherwise dispose of any of the Notes in
violation of the Securities Act.
4. Conditions of Closing. American's obligation to purchase the Notes
shall be subject to compliance by the Company with its agreements herein
contained, to the truth and accuracy of the certificates to be furnished to it
pursuant to this Section, the truth and accuracy of the representations and
warranties made by the Company herein, and to the condition that all instruments
and corporate and legal matters incident to the transactions contemplated by
this Agreement shall be reasonably satisfactory in form, scope and substance to
American and its counsel, and American and its counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which it or its counsel may reasonably request in connection
therewith, such documents where requested or appropriate to be certified by
proper corporate or governmental authorities, and to the satisfaction on the
Closing Date of the following further conditions:
4.1 Company's Officer's Certificate. The representations and warranties
contained in Section 2 shall be true and correct on and as of the Closing Date
(without giving effect to any exceptions shown on the Disclosure Schedule with
respect to Section 2.1(f)); (b) no Material Adverse Change affecting the Company
shall be pending or, to the Company's knowledge, threatened; and (c) no event
which if the Notes had been outstanding immediately prior to the Closing Date
would constitute an Event of Default or a Potential Default shall have occurred
and be continuing on the Closing Date. American shall have received on the
Closing Date a certificate dated the Closing Date to such effect, and to the
effect that each of the conditions set forth in this Section has been satisfied
in all material respects, signed by an authorized executive officer of the
Company.
-5-
<PAGE>
4.2 Company's Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by the Company's secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by the Board of
Directors of the Company, authorizing and approving the execution of this
Agreement by the Company and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; and (ii)
providing, as attachments thereto, a certificate of good standing certified by
an appropriate Florida state official as of a date not more than fifteen (15)
days before the Closing Date and by the Company's secretary as of the Closing
Date, and a copy of the Company's Articles of Incorporation and By-Laws as in
effect on the date thereof, certified by the Company's secretary as of the
Closing Date.
4.3 Opinion of Company Counsel. American shall have received favorable
opinions, dated the Clos ing Date and reasonably satisfactory in scope, form and
substance to it and its counsel, from counsel for the Company, (i) to the
effects stated in Sections 2.1(a), 2.1(b), 2.1(c), 2.1(e) (limited to corporate
power and authority), 2.1(f) (to such counsel's knowledge), and 7.2(b) (of the
Acquisition Agreement), and (ii) to the effect that the offer, issue, sale and
delivery of the Notes under the circumstances contemplated by this Agreement
constitute transactions exempt from the registration provisions of the
Securities Act, and neither the registration thereunder of the Notes nor the
qualification of this Agreement under the Trust Indenture Act of 1939, as
amended to date, is required. Such opinion shall assume that this Agreement is
governed by Florida law.
4.4 Legality; Governmental and Other Authorizations. Except as set
forth on the Disclosure Schedule, the purchase of and payment for the Notes
shall not be prohibited by any law or governmental order or regulation
applicable to American, and shall not subject American to any penalty, tax,
liability or other onerous condition. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registration, declaration or
filing with, any Authority or any other Person, with respect to the transactions
contemplated hereby shall have been obtained or made and shall be in full force
and effect.
4.5 Guaranty. The Guarantor shall have executed and delivered the
Guaranty to American.
5. Payment and Exchange of Notes; Lost Notes.
5.1 Payments. Any other provision of this Agreement or of the Notes
notwithstanding,
(a) interest, principal and any premium to be paid in respect
of any Note held by American or its nominee shall be paid by wire
transfer of immediately available funds to such accounts as may from
time to time be designated in writing by American, or in such other
reasonable manner, or at such other address, as may from time to time
be designated in writing by American by notice given in accordance with
the provisions of this Agreement;
(b) interest, principal and any premium to be paid to any
subsequent Holder of Record that is an Institutional Investor shall be
paid by wire transfer (or such other reasonable manner as requested in
writing by such Holder of Record) of immediately available funds to
such Holder of Record at such address in the United States of America
as may from time to time be designated in writing to the Company by
such Holder of Record by notice given in accordance with the provisions
of this Agreement; and
(c) interest, principal and any premium to be paid to any
other Holder of Record shall be paid by mailing a check (in the case of
interest) and certified or bank cashier's check (in the case of
principal) to such Holder of Record, at the address of such Holder
shown on the register maintained pursuant to the provisions of this
Agreement, or such other address in the United States of America
-6-
<PAGE>
as may from time to time be designated in writing to the Company by
such Holder of Record by notice given in accordance with the provisions
of this Agreement.
Interest, principal and any premium to be paid in respect of any Note
shall be paid without any presentment or notation of payment, and the amount of
principal so paid on any Note shall be regarded as having been retired and
canceled at the time of payment. Each Holder of Record of any Note shall,
however, at any time during its regular business hours on any day when a payment
of principal is due, permit the Company at the office of the Holder of Record of
such Note to make appropriate notation on such Note of the amount of principal
which has been paid thereon, if the Company at least fifteen (15) days in
advance shall have requested in writing permission to make such notation. Before
the transfer of any Note, the Holder of Record thereof shall make a notation
thereon of the date to which interest has been paid and of all principal
payments theretofore made thereon, and shall in writing notify the Company of
the name and address of the transferee, but notwithstanding the giving of such
notice, such transferee shall not be considered a Holder of Record of such Note
until it shall have complied with the provisions of Section 5.4. Any Note with
respect to which interest, principal and any premium has been fully paid shall
be marked paid in full and surrendered to the Company and shall be retired and
canceled.
5.2 Exchange. The Holder of Record of any of the Notes may, prior to
maturity or prepayment thereof, surrender any Note held by it for exchange at
the principal office of the Company. Within a reasonable time thereafter and
without expense to such Holder of Record, the Company shall issue in exchange
therefor another Note or Notes of the same issue for the same aggregate
principal amount as the unpaid principal amount of the Note so surrendered,
having the same maturity and rate of interest, containing the same provisions
and subject to the same terms and conditions as the Note so surrendered, in such
denomination or denominations as the Holder of Record making such exchange shall
request; provided, however, that if the issue of more than one such new Note is
requested, such new Notes shall be issued only in denominations of $10,000, or
larger amounts which are integral multiples of $10,000, except that one Note so
issued shall be for the amount by which the unpaid principal amount of the Note
or Notes so surrendered exceeded an integral multiple of $10,000. Each such new
Note shall be payable to such Person or Persons, or order, as the Holder of
Record of such surrendered Note or Notes may designate in writing, and such
exchange or transfer shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom. Any Note issued and delivered in
accordance with the provisions of this Section shall be dated as of the date to
which interest has been paid on the Note exchanged therefor. The Company agrees
that it will pay shipping and insurance charges from and to the main office of
any Institutional Investor involved in any exchange or transfer of a Note or
Notes held by it. Notwithstanding the foregoing provisions of this Section, the
Company shall not be required to issue and deliver any new Notes pursuant to
this Section unless it is indemnified against and held harmless from any United
States and state documentary stamp or similar excise taxes and any transfer
taxes.
5.3 Replacement of Notes. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of any Note,
and (in case of loss, theft or destruction) of indemnity satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of any Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such Note in a principal
amount equal to the sum of the then unpaid principal amount of, together with
accrued and unpaid interest on, such lost, stolen, destroyed or mutilated Note.
Any Note made and delivered in accordance with the provisions of this Section
shall be dated as of the date to which interest has been paid on the Note lost,
stolen, destroyed or mutilated and shall indicate that it is being issued in
substitution for, but not in payment of, the lost, stolen, destroyed or
mutilated Note. The term "outstanding" when used in this Agreement with
reference to the Notes as of any particular time shall not include any Note in
lieu of which a new Note has been made and delivered by the Company in
accordance with the provisions of this Section or any Note held by the Company.
Notwithstanding any provision to the contrary herein or
-7-
<PAGE>
in the Notes, if any Note of which American or any Institutional Investor is the
holder is lost, stolen or destroyed, then the affidavit of the principal
financial officer of such Institutional Investor, setting forth the
circumstances with respect to such loss, theft or destruction, shall be accepted
as satisfactory evidence thereof, and no indemnity shall be required as a
condition to the execution and delivery of a new Note or Notes for a like
aggregate principal amount, other than a written agreement by such Institutional
Investor, in form reasonably satisfactory to the Company, to indemnify the
Company against loss on account of the making of any payment in respect of any
such lost or stolen Note to any Person legally entitled to such payment.
5.4 Transfer Office and Record of Holders of Notes. The Company will at
all times keep or cause to be kept, at the principal office of the Company,
appropriate records for the registration and transfer of the Notes, identifying
the Holders of Record, from time to time, of the Notes, and shall cause to be
recorded therein the names and addresses of the Holders of Record of the Notes
from time to time, and any and all transfers thereof; provided, however, that
the Company shall be required to record the transfer of a Note only if and when
a subsequent holder shall have (a) presented such Note to the Company for
inspection, properly endorsed or assigned and in order for transfer, (b)
delivered to the Company a written notice of its acquisition of such Note, and
(c) designated in writing an address to which payments on and notices in respect
of such Notes shall be transmitted.
5.5 Transfer of Notes. Subject to the provisions of this Agreement, any
Note may be transferred at the principal office of the Company by surrender
thereof for cancellation, endorsed or accompanied by a written instrument of
transfer, in form reasonably satisfactory to the Company, duly executed by or on
behalf of the Holder of Record, and thereupon the Company will issue and
deliver, in the name of the transferee or transferees, a new Note, for a like
aggregate principal amount, dated as of the date to which interest has been paid
on the Note so transferred.
5.6 Registered Owners of Notes. Except as provided in Section 5.1 (with
respect to places of payment designated by American or a Holder of Record) and
Section 10.4 (with respect to notices to nominees designated as such), the
Company and all other Persons may treat the registered holder, as shown on the
records maintained pursuant to Section 5.4, of any Note, for the time being, as
the owner thereof for the purposes of receiving payment of the principal of and
premium, if any, and interest on such Note and for all other purposes, and the
Company shall not be affected by any notice or knowledge to the contrary,
whether payments on the Notes shall be overdue or not; and the Company, and
every successive registered holder and assignee of a Note by accepting or
holding the same, shall be deemed to have consented to and agreed with the
provisions of this Section.
6. Payment Provisions.
6.1 Required Payments. Subject to the provisions of Section 6.2(a), the
Notes shall be paid in their entirety, without premium but with interest accrued
and unpaid thereon to the date of payment, upon the earlier to occur of (a) the
occurrence of the Acquisition Termination Date, and (b) September 30, 2000.
6.2 Restriction on Optional Payments. The Company may prepay the Notes,
in whole or from time to time in part, at their principal amount, without
premium but with interest accrued and unpaid thereon to the date of payment.
6.3 Notice of Payment and Offers to Repurchase. Notice of each required
or optional payment of Notes pursuant to Section 6.1 or 6.2 and each optional
offer to repurchase pursuant to Section 6.5 shall be given not less than ten (10
nor more than thirty (30) days before the date of payment or proposed repurchase
date, and all such notices shall be given by mailing by registered or certified
mail to each Holder of Record of Notes to be paid or repurchased a notice of
intention, or offer, to pay or repurchase, which notice shall
-8-
<PAGE>
include statements specifying (a) the date of the intended payment or the
proposed repurchase date, (b) the provision of this Agreement pursuant to which
such payment or offer is being made, (c) the aggregate principal amount of the
Notes to be paid, or to which such offer to repurchase relates, (d) the
principal amount of the Notes registered in the name of such Holder to be paid,
or to which such offer to repurchase relates, and (e) the premium, if any, and
accrued interest to be paid in respect of the principal amount so to be paid, or
to which such offer to repurchase relates.
6.4 Maturity; No Reissue. Notes or portions thereof to be paid pursuant
to any provision of this Agreement shall become due and payable on the payment
date, together with accrued interest and premium, if any, and from and after
such date (unless the Company shall default in paying the amounts then due)
interest thereon shall cease to accrue. Any Note paid in full shall be
surrendered to the Company and canceled and shall not be reissued, and no Note
shall be issued in respect of any paid principal amount of any Note, and no such
paid Note or paid portion of a Note shall be considered to be "outstanding" for
any purpose hereof.
6.5 Purchase of Notes. The Company will not, and will not permit any
Subsidiary to, purchase or otherwise acquire any Note except (a) by way of
payment in accordance with the provisions of the Notes and this Agreement, or
(b) pursuant to a repurchase offer made by the Company pro rata and on the same
terms to each Holder of Record of Notes to be repurchased at the time
outstanding, pursuant to a notice given in accordance with Section 6.3 which
notice shall state whether such offer may be accepted in part or only in full,
and shall provide that any such acceptance may be given by written notice to the
Company in accordance with the provisions of this Agreement at any time prior to
such date, not less than thirty-five (35) days from the date of the notice of
the Company's offer under this Section as shall be specified therein. Any Notes
repurchased pursuant to this Section shall be canceled by the Company, and shall
not be reissued or deemed to be "outstanding" for any purpose of this Agreement.
7. Special Covenants of Company. Without limiting any other covenant or
provision hereof, the Company covenants and agrees that so long as any of the
Notes are outstanding, it shall comply with, perform and observe the following
covenants and provisions and shall cause each Subsidiary, if any, to comply
with, perform and observe said covenants and provisions as are applicable
thereto (it being understood, in any event, that to the extent any of the
covenants of this Section refer to consolidated financial information they shall
apply to the Company only in the event that the Company has no Subsidiaries).
7.1 Payments. The Company will duly and punctually pay the principal of
and premium, if any, and interest on the Notes in accordance with the terms of
this Agreement and the Notes.
7.2 Prompt Payment of Taxes and Indebtedness. The Company will, and
will cause each of its Subsidiaries to, pay promptly, or cause to be paid
promptly, all taxes, assessments and other governmental charges or levies of
whatever nature imposed on it, or upon it or its income or profits, or upon any
of its property, real, personal or mixed; provided, however, that unless and
until foreclosure, distraint sale or other similar proceedings shall have been
commenced, nothing herein shall require the Company or any Subsidiary to pay any
such tax, assessment, charge or levy so long as the validity thereof shall be
currently contested in good faith by appropriate proceedings and if the Company
or such Subsidiary shall have set aside on its books reserves deemed adequate by
the Company's Independent Accountants with respect thereto in accordance with
GAAP, consistently with the Financial Statements delivered to American
hereunder. The Company will, and will cause each of its Subsidiaries to, (a) pay
or cause to be paid when due all payments of principal of and premium and
interest on Indebtedness for Money Borrowed and will not permit or suffer any
such Indebtedness for Money Borrowed to become or remain in default, (b) pay or
cause to be paid when due all lawful claims for labor and rents, and (c) pay or
cause to be paid in a manner consistent with prudent business practice all trade
payables and pay or cause to be paid when due all other Indebtedness upon which
it is or
-9-
<PAGE>
becomes obligated, except, in each case, other than that referred to in clause
(a), to the extent payment is being contested in good faith by appropriate
proceedings and if the Company or such Subsidiary shall have set aside on its
books reserves deemed adequate by the Company's Independent Accountants with
respect thereto in accordance with GAAP, consistently with the Financial
Statements delivered to American hereunder, unless and until foreclosure,
distraint sale or other similar proceedings shall have been commenced.
7.3 Conduct of Business. The Company (a) will, and will cause each of
its Subsidiaries to, continue to engage in the business of owning and operating
the OPM Assets and conducting the OPM Business and (b) will do or cause to be
done all things reasonably necessary to preserve, renew and keep in full force
and effect and in good standing its corporate existence and its rights and
franchises necessary to conduct such business. Notwithstanding clause (b) of the
preceding sentence, the Company may merge or cause any Subsidiary to be merged
with or into the Company or another Subsidiary, or may cause any Wholly-Owned
Subsidiary which is a Wholly-Owned Subsidiary of another Subsidiary to liquidate
and distribute its assets and liabilities to such latter Subsidiary.
7.4 Maintenance of Property and Leases. The Company will, and will
cause each of its Subsidiaries to: (a) keep its assets and property relating to
each of the OPM Assets and the OPM Business in good repair, working order and
condition, and from time to time will make all repairs, renewals, replacements,
additions and improvements thereto so that its business may be properly and
advantageously conducted at all times; and (b) comply in all material respects
with the provisions of all leases of real or personal property relating to each
of the OPM Assets and the OPM Business to which it is a party or under which it
occupies or uses property so as to prevent any loss or forfeiture thereof or
thereunder; provided, however, that the Company or any Subsidiary may cancel,
surrender or modify any such lease if such action is deemed to be advantageous
to the Company's or such Subsidiary's business.
7.5 Maintenance of Insurance. The Company will, and will cause each
Subsidiary to: (a) keep its assets and property relating to each of the OPM
Assets and the OPM Business which are of an insurable character and which are
customarily insured by companies of established reputation engaged in the same
or similar business similarly situated insured by financially sound and
reputable insurers against loss or damage by fire, explosion and hazards insured
against by extended coverage in amounts sufficient to prevent the Company or any
Subsidiary from becoming a co-insurer; and (b) maintain with financially sound
and reputable insurers insurance against other hazards and risks and liability
to persons and property, to the extent and in the manner customary for companies
of established reputation engaged in the same or similar businesses similarly
situated.
7.6 Maintenance of Accounts and Records. The Company will, and will
cause each of its Subsidiaries to, keep true records and books of account in
which full, true and correct entries will be made of dealings and transactions
in relation to the ownership and operation of the OPM Assets and the conduct of
the OPM Business, in accordance with GAAP consistently applied, except as
otherwise set forth in the Disclosure Schedule, and shall prepare the financial
statements required to be furnished pursuant to Section 7.9. The Company will,
and will cause each Subsidiary to, apply accounting principles in the
preparation of the financial statements of the Company and its Subsidiaries,
which, in the judgment of the Company, are in accordance with GAAP consistently
applied, except that no notes shall be required with respect thereto and except
as otherwise set forth in the Disclosure Schedule. In the event of a change in
any method of accounting used by the Company or any Subsidiary that is permitted
by this Agreement, such change shall not be deemed to result in an Event of
Default if, at the time of such change, an Event of Default had not oc curred
and was not then continuing, based upon the former methods of accounting used by
the Company; provided, however, that, if, after any such change in accounting
methods, either the Company or American (or the holders of the Notes) determine
in good faith that any requirements of this Agreement are substantially
-10-
<PAGE>
altered as a result of such change, the Company and American agree to negotiate
in good faith with respect to a change in such requirements.
7.7 Compliance With Laws. The Company will, and will cause each of its
Subsidiaries to, comply with all Applicable Laws in respect of the conduct of
the OPM Business and the ownership of the assets and property of the OPM Assets,
except such as are being contested in good faith and except for such
noncompliances as will not in the aggregate have a Material Adverse Effect on
the Company.
7.8 Miscellaneous Information. From time to time upon request, the
Company will furnish to each Holder of any of the Notes such information
regarding the business, properties, financial condition and results of operation
of the Company and its Subsidiaries in such detail as may reasonably be
requested; and the Company covenants and agrees that any authorized
representative of any such Holder shall have the right, reasonably exercisable,
to visit and inspect any of the properties of the Company or any of its
Subsidiaries, to examine and to discuss their affairs, finances and accounts
(including without limitation any letters of com ment with respect to audits,
letters to management or confidential reports relating to financial matters
submit ted to the Company or its Subsidiaries by independent public accountants)
with, and be advised as to the same by, their officers, all at such reasonable
times and intervals as such Holder may reasonably request.
7.9 Information and Reports to Be Furnished by Company. The Company
will furnish to each Holder of any of the Notes:
(a) Financial Statements. The following financial statements
of the Company, substantially in the form customarily prepared by the
Company:
(i) Quarterly Reports. In duplicate as soon as
available and, in any event, within forty-five (45) days after
the end of each quarter (including the last) of the Company's
fiscal year, a balance sheet, and related statements of income
and retained earnings and cash flow for such period (including
year to date), together with comparative figures as at such
date or for the same periods of the preceding year and for the
Company's budget for such fiscal year, all in reasonable
detail, accompanied by supporting statements and schedules,
normally prepared by the Company in connection therewith, and
accompanied by a certificate of the principal financial or
accounting officer of the Company (A) stating that such
statements have been properly prepared in accordance with GAAP
and are true, correct and complete in all material respects
and fairly present the financial condition of the Company at
and as of the dates thereof and the results of its operations
for the periods covered thereby subject only to normal
non-material year-end accounting adjustments, and (B) stating
that he has reviewed this Agreement and has no knowledge of
any breach of or default under the provisions of Section 7.10
through 7.15, both inclusive, or Section 7.17, or, if he has
such knowledge, specifying such breach or default and the
nature thereof and the period of existence thereof and what
action the Company has taken, is taking or proposes to take
with respect thereto.
(ii) Monthly Reports. In duplicate as soon as
available and, in any event, within forty-five (45) days after
the end of each month (including the last) of the Company's
fiscal year, a balance sheet, and related statements of income
and retained earnings and cash flow for such period (including
year to date), together with comparative figures as at such
date or for the same periods of the preceding year and for the
Company's budget for such fiscal year, all in the form
customarily prepared for management.
-11-
<PAGE>
(iii) Annual Statements. In duplicate as soon as
available and, in any event, within one hundred and twenty
(120) days after the end of each fiscal year of the Company, a
balance sheet, and related statements of income and retained
earnings and cash flow for such year, together with
comparative figures as at the end of and for the immediately
preceding fiscal year and for the Company's budget for such
fiscal year, all in reasonable detail, ac companied by
supporting statements and schedules, normally prepared by the
Company in connection therewith, and accompanied by (A) a
letter from a firm of certified public accountants to the
effect that it has reviewed (but not audited) such statements,
and (B) a certificate of the principal financial or accounting
officer of the Company with respect to the matters set forth
in clause (B) of paragraph (i) of this subdivision.
(iv) Annual Budget. in duplicate as soon as available
and, in any event, on or prior to March 1 of each year, an
annual budget with respect to the OPM Assets and the OPM
Business containing, in reasonable detail, information with
respect to the balance sheet, statements of income and retain
earnings, cash flow and Capital Expenditures for the calendar
year, all in a form substantially similar to those of the
financial statements required to be delivered pursuant to the
provisions of this Section 7.9(a); and, thereafter, promptly,
from time to time during the course of such year, amendments
to such annual budget.
(v) Reports to Stockholders or Others. In duplicate
promptly upon the sending, making available or filing of the
same, copies of all proxy statements, registration statements,
prospectuses, reports and financial statements that the
Company shall send or make available to its stockholders or
file with the Securities and Exchange Commission or any stock
exchange upon which its capital stock may be listed.
(b) Notice of Litigation, Event of Default, Potential Default,
etc. The Company will promptly give notice of any litigation or any
administrative proceeding to which it or any Subsidiary may hereafter
become a party which involves a potential liability to the Company or
any Subsidiary of at least $50,000, or which may have any Material
Adverse Effect on the Company. Forthwith upon any executive officer of
the Company obtaining knowledge of any of the following, the Company
shall give to American prompt written notice of any Change in Control
or proposed Change in Control, any Act of Bankruptcy and any Event or
Default or Potential Default, specifying the nature and period of
existence of any such Event of Default or Potential Default and what
action the Company has taken, is taking or proposes to take with
respect thereto.
7.10 Liens. The Company will not, and will not permit any Subsidiary
to, create or incur, directly or indirectly, or suffer to be created or incurred
or to exist (except in favor of the Company or a Wholly-Owned Subsidiary), any
Lien upon any of the assets or property of the Company or any Subsidiary other
than the Permitted Liens.
7.11 Distributions. The Company will not, and will not permit any
Subsidiary to, declare, order, pay or make, directly or indirectly, any
Distribution (other than dividends paid by a Subsidiary to a Wholly-Owned
Subsidiary or the Company) or set apart any sum or property therefor, or agree
to do so.
7.12 Consolidation, Merger and Acquisition. Subject to the provisions
of the Letter of Intent and, if executed and delivered, the Acquisition
Agreement (so long as it shall remain in effect), the Company will not, directly
or indirectly:
(a) voluntarily liquidate, dissolve or otherwise wind up its
business; or
-12-
<PAGE>
(b) permit any Subsidiary to merge or consolidate with any
Person (other than the Company or a Wholly-Owned Subsidiary) unless (i)
the surviving or resulting Person is a Subsidiary which is organized
under the laws of a state of the United States of America or the
District of Columbia, and (ii) no condition or event shall exist prior
to, as a result of or immediately after giving effect to such merger or
consolidation which constitutes an Event of Default or a Potential
Default, including without limitation the provisions of paragraph (c)
of this Section; or
(c) consolidate with or merge into another Person (other than
a Wholly-Owned Subsidiary) or permit another Person to consolidate or
merge into it, or acquire (x) all or any substantial part of the
assets, property or business of, or (y) any assets that constitute a
division or operating unit of the business of, any other Person, unless
such assets, property or business are or is, as the case may be,
consolidated with the Company for financial reporting purposes and
unless
(i) the Person surviving such consolidation or
merger, is either (A) the Company, or (B) an Entity which (I)
is organized under the laws of a state of the United States of
America, or the District of Columbia, and (II) shall expressly
assume the obligations of the Company under this Agreement and
under the Notes to the same extent and with the same effect as
though such surviving Person were a party hereto and thereto
and were named and defined as the "Company" herein and
therein;
(ii) no condition or event shall exist, either as a
result of, or immediately after giving effect to, such
consolidation, merger or acquisition which constitutes an
Event of Default or a Potential Default;
(iii) none of the rights, privileges or preferences
of any holder of the Notes would be adversely affected by such
consolidation, merger or acquisition; and
(iv) in the case of any such acquisition, all of the
assets, property and business to be acquired, to the extent
they relate to any of the OPM Assets or the OPM Business,
shall have been made subject to the Lien of the Security
Agreement on terms and conditions satisfactory to the holders
of the Notes.
7.13 Prohibited Transactions. Except as set forth on the Disclosure
Schedule and marked "Permitted Affiliated Transactions" or as otherwise agreed
upon by the holders of the Notes, the Company will not, and will not permit any
Subsidiary to, permit to exist or enter into any agreement or arrangement
whereby it engages in a transaction of any kind with any Subsidiary (other than
a Wholly-Owned Subsidiary), or with any other Affiliate of the Company or any
Subsidiary except on terms no less favorable to the Company as could be obtained
from Persons who are not Affiliates of the Company..
7.14 Compliance with ERISA. The Company will, and will cause each if
its Subsidiaries to, fulfill the obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan relating to any of the OPM
Assets or the OPM Business, to the extent such minimum funding standards are
applicable, and comply in all material respects with the presently applicable
provisions of ERISA and the Code, and will not, and will not permit any
Subsidiary to, incur any material liability to the PBGC or any such Plan under
Title IV of ERISA.
7.15 Indebtedness. The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness pursuant to this Agreement;
-13-
<PAGE>
(b) Indebtedness (other than Indebtedness for Money Borrowed)
arising in connection with the Permitted Liens;
(c) Indebtedness incurred in the ordinary course of business
which does not represent Indebtedness for Money Borrowed;
(d) Indebtedness existing on the date of this Agreement and
set forth in the Disclosure Schedule; and
(e) Other Indebtedness for Money Borrowed so long as, after
giving effect thereto and concurrent repayment of Indebtedness for
Money Borrowed, the aggregate principal amount of Indebtedness for
Money Borrowed to be outstanding would not exceed five (5) times
Operating Cash Flow for the most recent twelve months ending on the
calendar quarter for which financial statements are required to have
been delivered pursuant to the provisions of Section 7.9(a)(i), so long
as after giving effect to such Indebtedness for Money Borrowed no
Potential Default or Event of Default has occurred and is continuing.
7.16 Operation of the Business. The Company will, and will cause each
of its Subsidiaries to, comply with the provisions of the Acquisition Agreement
(so long as it remains in effect), including without limitation Section 6.6
thereof, and, at such time as the Acquisition Agreement no longer remains in
full force and effect, will comply with Section 6.6 thereof which is
incorporated herein by reference with the same force and effect as though set
forth hereat in its entirety.
7.17 Issue of Equity Securities. The Company will not issue, or agree
to issue, any shares of capital stock or any Convertible Securities or Option
Securities, if such issuance would result in a Change of Control of the Company.
8. Defaults.
8.1 Events of Default. If one or more of the following events (herein
termed "Events of Default") shall have occurred, that is to say:
(a) if the Company shall fail to make payment of the principal
of or premium, if any, or, for a period of five (5) business days,
interest on any of the Notes when and as the same shall become due and
payable, whether at their stated maturity, on a date fixed for payment,
by a notice of payment or offer to pay, by declaration or otherwise; or
(b) if any representation or warranty of the Company contained
in this Agreement, or any statement or certificate furnished by the
Company in connection with the issue or sale of any of the Notes or
pursuant to any provision of this Agreement, shall have been false,
incorrect or misleading when made or so certified to, and such
representation and warranty was either (i) willfully and intentionally
made as such or (ii) not so willfully and intentionally made, but the
defect giving rise to such false, incorrect or misleading
representation and warranty, to the ext curable, has not been cured
within thirty (30) days of the Company obtaining knowledge of the
defect and, whether or not curable, has, together with any other such
false, incorrect or misleading representations and warranties, resulted
in a Material Adverse Change in the Company; or
(c) if the Company or any Subsidiary shall fail to observe or
perform any of the covenants, agreements or provisions contained in
Sections 7.10 through 7.13, inclusive, 7.15, 7.16 and 7.17; or
-14-
<PAGE>
(d) if the Company or any Subsidiary shall fail duly to
observe or perform any other covenant, agreement or provision contained
in this Agreement, the Notes or any other Related Agreement, other than
those referred to in subdivisions (a), (b) or (c) above, and such
failure shall have continued for a period of thirty (30) days after
written notice to the Company from the holders of a majority in
interest of the Notes; or
(e) if the Company or any Subsidiary shall default, as
principal or as guarantor or other surety, (i) in any payment of
principal of or premium, if any, or interest on any Indebtedness for
Money Borrowed (other than the Notes), or any purchase money
Indebtedness in excess of $100,000, or (ii) with respect to any of the
terms of any evidence of such Indebtedness or of any mortgage, security
agreement, indenture or other agreement relating thereto, and such
default shall continue for more than the period of grace, if any,
specified therein; or
(f) if one or more final judgments for the payment of money in
excess of $150,000 shall be rendered against the Company or any
Subsidiary or the Guarantor, and such judgments shall not be discharged
or their discharge shall not have been provided for in accordance with
its terms, or a stay of execution thereof shall not have been procured
within thirty (30) days from the date of the entry thereof, or within
said period of thirty (30) day period (or such longer period during
which execution on such judgment shall have been stayed), the Company
or such Subsidiary or the Guarantor shall not have filed an appeal
therefrom (or from the order, decree or process upon which or pursuant
to which said judgment shall have been granted, passed or entered); or
(g) if the Company or any of its Subsidiaries or the Guarantor
shall, as a debtor, be involved in or commit an Act of Bankruptcy; or
(h) if a Change in Control with respect to the Company shall
be pending or shall have occurred; or
(i) if the occurrence of the Acquisition Termination Date;
then, except as set forth below in this Section, (I) in the case of any event
specified in subdivision (g) of this Section, there shall automatically become
forthwith due and payable the unpaid balance of all of the Notes, and (II) in
each and every other case specified in this Section, the holders of a majority
in principal amount of the Notes at the time outstanding may by notice in
writing to the Company declare to be forthwith due and payable the unpaid
balance of all of the Notes, together in any such case with interest accrued
thereon, and thereupon such balance shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived by the Company; the Holders of a majority in principal
amount of the Notes of the time outstanding may proceed to protect and enforce
their rights by suit in equity, action at law and/or other appropriate
proceeding, either for specific performance of any covenant or provision
contained in the Notes or herein or in aid of the exercise of any power granted
in the Notes or herein or in lieu thereof. Notwithstanding any provision to the
contrary in this Agreement, no events other than those described in this Section
8.1 shall constitute an Event of Default giving rise to the consequences set
forth in clause (I) or (II) of the preceding sentence; provided, however, that
should the Event of Default giving rise to the consequences set forth in clause
(I) or (II) of the preceding sentence occur prior to the consummation of the
transactions contemplated by the Acquisition Agreement, the Company may, at its
sole discretion, elect to pay the Notes at their principal amount, without
premium, but including interest accrued and unpaid thereon to the date of
payment.
8.2 Notice to the Holders. If and whenever the Company shall become
aware of the existence of any Event which constitutes, or which after giving of
notice or passage of time or both would constitute, an Event
-15-
<PAGE>
of Default, the Company shall forthwith give notice to each Holder of such
condition or event and what action the Company has taken, is taking or proposes
to take with respect thereto. If any creditor of the Company shall take any
action, of which the Company shall have actual knowledge, in respect of any
Event which constitutes, or which after giving notice or passage of time or both
would constitute, an Event of Default, then and in any such event, and whether
or not the Company shall have given a notice under the first sentence of this
Section with respect to the condition or event to which such demand or action
shall relate, the Company shall forthwith give to each Holder written notice,
specifying such action and the nature of such alleged default or Event of
Default and what actions the Company has taken, is taking or proposes to take
with respect thereto.
8.3 Annulment of Defaults. This Section is subject to the condition
that, if at any time after the principal of any or all of the Notes shall have
been declared and become due and payable, and before any judgment or decree for
the payment of the moneys so due, or any part thereof, shall be entered, all
arrears of interest upon all the Notes and all other sums payable upon the Notes
(except the principal of and interest on such Notes which by such declaration
shall have become payable) shall have been duly paid, and every other Potential
Default and Event of Default shall have been made good or cured, then and in
every such case the Holders of a majority in principal amount of the Notes at
the time outstanding may, by written instrument or instruments filed with the
Company, rescind and annul such declaration and its consequences. No rescission
or annulment under this Section shall extend to or affect any subsequent
Potential Default or Event of Default or impair any right consequent thereon.
8.4 Waiver by Company; Severability of Remedies. To the fullest extent
permitted by applicable law, the Company hereby agrees to waive, and does hereby
absolutely and irrevocably waive and relinquish, (a) the benefit and advantage
of any valuation, stay, appraisal, extension or redemption laws now existing or
which may hereafter exist, which, but for this provision, might be applicable to
any sale made under the judgment, order or decree of any court, or otherwise,
based on the Notes or any claim for interest on the Notes; (b) all presentments,
demands for performance and notices of nonperformance (except to the extent
required by the provisions hereof); (c) any requirements of diligence or
promptness on the part of any Holder, as a holder of Notes, in the enforcement
of its rights under the provisions of this Agreement or the Notes; and (d) any
and all notices of every kind and description which may be required to be given
by any statute or rule of law and any defense of any kind relating thereto which
it may now or hereafter have. In the event any remedy or other provision of this
Section is not enforceable for any reason, no other remedy or provision shall be
affected thereby, and all such other remedies and provisions shall be given full
force and effect in accordance with their terms.
8.5 No Waiver of Rights. No course of dealing between the Company or
any Subsidiary and any Holder, as a holder of Notes, and no delay or omission on
the part of any Holder in exercising any rights under the Notes or this
Agreement, shall operate as a waiver of the rights of such Holder, as a holder
of Notes. No failure to insist upon the strict provisions of any covenant, term,
condition or other provision of this Agreement or any of the Notes or to
exercise any right or remedy thereunder shall constitute a waiver by any Holder,
as a holder of Notes, of any such covenant, term, condition or other provision
or of any Potential Default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or of the
Notes or Potential Default or Event of Default hereunder on one occasion shall
not be construed as a bar to or a waiver of any right or remedy on any future
occasion and shall not affect or alter this Agreement or the Notes except to the
extent specifically provided in the instruments setting forth such waiver
delivered under Section 10.5, and every covenant, term, condition and other
provision of this Agreement and the Notes shall, in such event, continue in full
force and effect.
8.6 Costs and Expenses of Collection. Subject to the provisions of
Section 10.2, the Company covenants and agrees that if default be made in any
payment of principal of or interest on the Notes, it will,
-16-
<PAGE>
to the extent permitted under applicable law, pay to each Holder, as a holder of
Notes, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the attorneys of
each Holder for all services rendered in that connection.
8.7 Remedies Cumulative. No remedy herein conferred upon each Holder,
as a holder of Notes or otherwise, is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
9. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings. Terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa, and the reference to any gender shall be deemed to include all genders.
Unless otherwise defined or the context otherwise clearly requires, terms for
which meanings are provided in this Agreement shall have such meanings when used
in the Disclosure Schedule and in each instrument, notice, certificate,
communication, opinion or other document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto. If the Company has any Subsidiaries all financial terms shall
be deemed to apply to the Company and its Consolidated Subsidiaries, determined
in accordance with GAAP consistently applied with the Financial Statements
delivered to American hereunder. Capitalized terms used in this Agreement
without definition which are defined in the Acquisition Agreement shall have the
meaning prescribed therefor in the Acquisition Agreement.
The term "Acquisition" is defined in the first whereas paragraph,
preceding Section 1.
The term "Acquisition Agreement" is defined in the first whereas
paragraph, preceding Section 1, and shall include all amendments, modifications
and supplements thereto.
The term "Acquisition Termination Date" shall mean the date on which
the Acquisition Agreement is terminated, whether in accordance with its terms or
by American or the Company, and whether with or without cause.
The term "Act of Bankruptcy" shall mean, when used with reference to
any Person, any of the following events or occurrences:
(a) its admitting in writing its inability, or being unable
under Applicable Law, or its failing generally, to pay its debts
generally as they become due, or
(b) its filing a petition, answer or consent seeking relief as
a debtor or otherwise commencing a voluntary case under the Bankruptcy
Code as from time to time in effect, or its authorizing, by appropriate
proceedings of its board of directors or other governing body, any such
petition, answer, consent or commencement of such a voluntary case; or
(c) the filing against it or all or any substantial part of
its property of a petition commencing an involuntary case under the
Bankruptcy Code which shall remain undismissed for a period of more
than thirty (30) days or which is consented to by such Person or any
order or decree approving relief adverse to such Person thereunder
shall remain unstayed and in effect for more than forty five (45) days;
or
(d) its commencement of proceedings or filing a petition,
answer or consent seeking relief as a debtor under any Applicable Law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of
-17-
<PAGE>
creditors, or its consenting to or acquiescing in such relief or its
admitting or acquiescing in or failing promptly and in any event within
thirty (30) days of the filing thereof, in an appropriate manner, to
deny the material allegations of any petition seeking such relief, any
such involuntary petition remaining undismissed for more than thirty
(30) days or an order in any involuntary proceeding adverse to such
Person remaining unstayed and in effect for more than forty-five (45)
days; or
(e) the entry of an order or decree (whether or not final) by
a court of competent jurisdiction (i) finding it to be bankrupt or
insolvent, (ii) ordering or approving its liquidation, dissolution or
winding up, or reorganization or any modification or alteration of the
rights of its creditors, or any composition or readjustment of debts,
(iii) assuming custody of, or appointing a receiver, trustee,
sequestrator, conservator, assignee, custodian, liquidator, fiscal
agent or similar official for, such Person or all or a substantial part
of its property and any such order or decree shall continue unstayed
and in effect for a period of forty-five (45) days; or
(f) its convening a meeting of creditors for the purpose of
consummating an out-of-court arrangement, or making an assignment for
the benefit of, or entering into a composition, extension or similar
arrangement with, its creditors in respect of all or a substantial
portion of its debt; or
(g) its seeking or consenting to or acquiescing in the
appointment of a receiver, trustee, sequestrator, conservator,
liquidator, fiscal agent or other custodian of itself or of all or any
substantial part of its property; or
(h) its winding-up, liquidation or dissolution; or
(i) its authorization, by appropriate action of its board of
directors or other governing body, of any of the foregoing.
The term "American" is defined in the preamble of this Agreement.
The term "Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as
from time to time in effect, and any successor law, and any reference to any
statutory provision shall be deemed to be a reference to any successor statutory
provision.
The term "Capital Expenditures" shall mean, with respect to the
Company, for any period during which the amount thereof is to be determined,
without duplication, the amount of all expenses or liabilities (including
without limitation Capital Lease Obligations) incurred or accrued or
expenditures made by the Company which, in accordance with GAAP, would be
treated as a capital expenditure, but shall not include interest or
amortization, depreciation or the like with respect to any previous Capital
Expenditure.
The term "Capitalized Lease Obligation" shall mean the principal
portion of any lease obligation on which in accordance with GAAP would be
characterized as a capital lease.
The term "Change in Control" shall mean, with respect to any Person
(the "Target"), any of the following:
(a) the acquisition, directly or indirectly, in a transaction
or series of transactions, including without limitation by merger,
consolidation or other reorganization, by any Person (such term to
include anyone deemed a person under Section 13(d)(3) under the
Securities Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act) of a majority
or more of the capital stock or voting stock of the Target, other than
by (i) the
-18-
<PAGE>
Target or any of its Subsidiaries, (ii) any employee benefit plan or
related trust of the Target or any of its Subsidiaries, (iii) any
existing stockholder of the Target who as of the date of this Agreement
owns more than ten percent (10%) of the voting stock of the Target or
any of his Affiliates or (iv) American or any of its Affiliates (an
"Acquiring Person"); or
(b) the sale or other disposition of all or any substantial
part of the assets of the Target or, in the case of the Company, any of
the OPM Assets or the OPM Business, in one transaction or series of
related transactions, including by way of merger, consolidation or
other reorganization, other than with or to American; or
(c) the adoption of a plan relating to the liquidation or
dissolution of the Target; or
(d) the Continuing Directors cease for any reason to
constitute a majority of the directors of the Target then in office.
For purposes of this definition, any transfer of any capital stock or
other equity interest of an Entity that was formed for the purpose of acquiring
voting stock of the Target shall be deemed to be a transfer of such portion of
such voting stock as corresponds to the portion of the equity of such Entity
that has been so transferred.
The terms "Closing" and "Closing Date" are defined in Section 1.3.
The term "Company" is defined in the preamble of this Agreement.
The term "Continuing Director" shall mean any member of the Board of
Directors of a Person who (a) is a member of the Board of Directors of such
Person as of the date hereof or (b) was nominated for election by either (i) one
or more of stockholders of such Person who, as of the date of this Agreement,
owned more than ten percent (10%) of the voting stock of such Person (or an
Affiliate of such Person) or (ii) the Board of Directors, a majority of whom
were directors as of the date of this Agreement or whose election or nomination
for election was previously approved by one or more of such stockholders or such
directors.
The term "Disclosure Schedule" shall mean the Disclosure Schedule,
dated as of the date hereof, heretofore delivered by the Company to American
pursuant to the provisions of this Agreement.
The term "Distribution", when used in reference to capital stock shall
mean: (i) the declaration or payment of any distribution dividend (except
distributions payable solely in common stock of the Company) on or in respect of
any class of capital stock of the Company, (ii) the purchase, redemption or
other retirement of any shares of any class of capital stock of the Company or
any Subsidiary owned by a Person other than the Company or a Subsidiary, and
(iii) any other distribution on or in respect of any shares of any class of
capital stock of the Company or any Subsidiary owned by a Person other than the
Company or a Subsidiary.
The term "Event of Default" is defined in Section 8.1.
The terms "Guaranty" or "Guaranteed" shall mean and include all
liabilities and obligations under or by reason of any guarantee or other
contingent liability (other than endorsements of negotiable instruments for
collection or deposit in the ordinary course of business), direct or indirect,
with respect to any Indebtedness, obligation or other liability (collectively,
an "obligation") of another Person, through an agreement or otherwise.
-19-
<PAGE>
The terms "Holder" and "Holders" shall mean the holders, from time to
time, of any of the Notes. The terms "Holder of Record" and "Holders of Record"
shall mean Holders, from time to time as shown on the records of the Company
maintained for such purpose.
The terms "Material" or "Materiality" for the purposes of the
Agreement, shall, unless specifically stated to the contrary, be determined
without regard to the fact that various provisions of the Agreement set forth
specific dollar amounts.
The term "Material Adverse" when used alone or in conjunction with
other terms (including without limitation "Affect," "Change" and "Effect") shall
mean, with respect to the Company, any Event or set of Events which could be
expected to (a) have any material adverse effect upon or result in any material
adverse change in the validity or enforceability of the Agreement or any other
agreement, instrument or other document executed or required to be executed by
such Person pursuant hereto or thereto, (b) materially and adversely affect the
business, operations, management, properties or prospects, or the condition,
financial or other, or results of operation of the Company or the Company and
its Subsidiaries taken as a whole,(c) materially impair the Company's ability to
fulfill its obligations under the terms of any agreement, instrument or other
document executed or required to be executed by the Company, (d) materially and
adversely affect the aggregate rights and remedies of any party (other than the
Company) under the Agreement or any agreement, instrument or other document
executed or required to be executed pursuant hereto or thereto, or (e) or
adversely affects the Company's ability to perform this Agreement, the Notes or
any of the other Related Agreements or to pay when due, in accordance with the
terms of this Agreement and the Notes, the principal of and interest and
premium, if any, on the Notes.
The term "Most Recent Balance Sheet" is defined in Section 2.3.
The term "Notes" is defined in Section 1.1.
The term "Operating Cash Flow" shall mean, with respect to the Company,
for any period: (a) net revenues of the Company and its Subsidiaries, determined
in accordance with GAAP, for such period, less (b) operating expenses (inclusive
of taxes and corporate overhead, selling and administrative expenses). Cash Flow
shall be adjusted on a consistent basis to reflect the acquisition, sale,
exchange and disposition of property (other than tangible personal property
disposed of in the ordinary course of business). Cash Flow shall exclude all
extraordinary gains and losses and all gains and losses from acquisitions,
sales, exchanges and dispositions of assets (other than tangible personal
property disposed of in the ordinary course of business).
The term "Permitted Liens" shall mean:
(a) the security interest created under the SunTrust loan
agreement;
(b) Liens for taxes if payment shall not at the time be
required to be made in accordance with the provisions of Section 7.2;
(c) Liens of carriers, warehousemen, mechanics, laborers,
materialmen and landlords incurred in the ordinary course of business
for sums not yet due or being contested in good faith, if payment shall
not be required to be made in accordance with the provisions of Section
7.2;
(d) Liens arising out of judgments or awards, and appeal and
similar bonds incident to the conduct of legal actions, against such
Person with respect to which such Person shall then be prosecuting
appeal or other proceedings for review (and as to which any foreclosure
or other
-20-
<PAGE>
enforcement proceedings shall not have begun or shall have been fully
bonded or otherwise ef fectively stayed);
(e) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance Laws,
but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto; and
(f) Liens set forth in the Disclosure Schedule.
The term "Potential Default" shall mean any event or circumstance which
after notice, passage of time, or both, would become an Event of Default.
The term "Prime Rate" is defined in Section 1.1.
The term "Purchase Price" is defined in Section 1.2.
The term "Related Agreement" shall mean this Agreement, the Notes and
each other agreement, instrument and other document executed or required to be
executed by the Company on the Closing Date or at any time thereafter, in
connection with the transactions contemplated by this Agreement or any of the
other Related Agreements, in each case, as amended, modified or supplemented
from time to time.
The term "Securities Act" shall mean the Securities Act of 1933, and
the rules and regulations promulgated thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
The term "Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, and the rules and regulations promulgated thereunder, all as from
time to time in effect, or any successor law, rules or regulations, and any
reference to any statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
The term "Solvent" shall mean, with respect to any Person on a
particular date, that on such date (i) the fair value of the assets of such
Person (both at fair valuation and at present fair saleable value) is, on the
date of determination, greater than the total amount of liabilities, including,
without limitation, contingent and unliquidated liabilities, of such Person,
(ii) such Person is able to pay all liabilities of such Person as they mature,
and (iii) such Person does not have unreasonably small capital with which to
carry on its business. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability. For purposes of this definition, "indebtedness" shall mean any
liability on a claim, and "claim" shall mean (a) right to payment, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal equitable, secured
or unsecured, or (b) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
The term "Wholly-Owned Subsidiary" shall mean a Subsidiary of the
Company, all of the outstanding shares of every class of stock (other than
directors' qualifying shares, if required by statute, the certificates for
which, duly endorsed in blank or accompanied by a stock power duly endorsed in
blank, shall
-21-
<PAGE>
be held by such Subsidiary) and all other securities of which are at the time
owned, directly or indirectly, by the Company or another Wholly-Owned
Subsidiary.
10. Miscellaneous Provisions.
10.1 Stamp and Other Taxes. The Company covenants and agrees that it
will pay all United States and state documentary stamp or similar excise taxes,
including any interest or penalties thereon, which may be legally payable in
connection with or arising out of the issue of any of the Notes and will
indemnify each holder of any thereof against, and save it harmless from, any
liability, cost or expense in respect of any such stamp taxes or other taxes and
any interest or penalties thereon. The Company's agreement in this connection
shall survive termination of this Agreement and the payment of the Notes.
10.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, each party will pay all of its respective expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement, the Notes and the other Related Agreements to which it is a party.
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, in the event of any Legal Action between the Company and the
holders from time to time of the Notes, the prevailing party shall be entitled
to be reimbursed for the reasonable legal fees and expenses and other court
costs of such Legal Action.
10.3 Survival of Covenants; Successors and Assigns. All covenants,
agreements and representations made herein and in certificates delivered in
connection herewith shall be deemed material and relied on by American
notwithstanding any investigation made by it or in its behalf, and shall survive
the execution and delivery of the Notes, to it and its payment therefor, and
shall bind and, subject to compliance with the provisions of this Agreement
including without limitation Section 7.12, inure to the benefit of the Company's
successors and assigns, whether so expressed or not, and all such covenants,
agreements and representations shall inure to the benefit of the successors and
assigns of American, whether so expressed or not.
10.4 Notices and Communications. All notices and other communications
which by any provision of this Agreement are required or permitted to be given
shall be given in writing and shall be effective (a) three (3) days after being
mailed by first-class, express mail, postage prepaid, (b) the next day when sent
by overnight by recognized mail courier service, (c) upon confirmation when sent
by telex, telegram, telecopy or other similar form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid, or
recognized overnight mail courier service) written confirmation at substantially
the same time as such rapid transmission, or (d) upon delivery personally
delivered to an officer of the receiving party. All such communications shall be
mailed, set or delivered:
(a) if to the Company, at 325 Interstate Boulevard, Sarasota,
Florida 34240, (facsimile [941] 379-4562), attention: Owen P. Mills,
President (with a copy to Ruden, McCloskey Sarasota, Florida (facsimile
[941]365-0140), attention: John Dart, Esq.);
(b) if to American, c/o American Radio Systems Corporation,
116 Huntington Avenue, Boston, MA 02116, (facsimile [617] 375-7575),
attention: Joseph L. Winn, Chief Financial Officer (with copies to
American at 6400 North Congress Avenue, Suite 1750, Boca Raton, FL
33487, (facsimile: [407] 998-2278), attention: James S. Eisenstein,
Chief Development Officer, and Sullivan & Worcester LLP, One Post
Office Square, Boston, Massachusetts 02109, (facsimile [617] 338-2880),
attention: Norman A. Bikales, Esq.); and
-22-
<PAGE>
(c) if to any other Holders of Notes to the address set forth
in the Company's records;
or at such other addresses (including copies) as any party may designate in
writing to the other parties to this Agreement.
10.5 Amendments and Waivers. Any provision of this Agreement to the
contrary notwithstanding, changes in or additions to this Agreement and the
Notes may be made, or compliance with any term, covenant, agreement, condition
or provision set forth herein, in the Notes may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the consent in writing of the holders of a majority in
principal amount of the Notes at the time outstanding and the Company, except
that no such change, addition, omission, waiver or consent may be made with
respect to the Notes, without the consent of all of the holders of the Notes,
except as otherwise provided in Section 8.3, if it involves any change,
addition, omission, waiver or consent with respect to the provisions regarding
the amount, timing or form of payment of premium, if any, or interest on or
principal of the Notes, the maturity date thereof or which changes or amends the
provisions of this Section with respect to the requirement of unanimous consent
of the Noteholders; and each such change, addition or waiver shall be binding
upon each future holder of the Notes and, in the case of the Company, its
successors and permitted assigns. Any consent may be given subject to
satisfaction of conditions stated therein. The failure to insist upon the strict
provisions of any covenant, term, condition or other provision of this Agreement
or the Notes or to exercise any right or remedy hereunder or thereunder shall
not constitute a waiver of any such covenant, term, condition or other provision
thereof or Potential Default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or thereof or
Potential Default or Event of Default hereunder shall not affect or alter this
Agreement or the Notes in any other respect, and each and every covenant, term,
condition or other provision of this Agreement and the Notes shall, in such
event, continue in full force and effect, except as so waived, and shall be
operative with respect to any other then existing or subsequent Potential
Default or Event of Default in connection therewith.
10.6 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of the
State of New York applicable to contracts made and performed in such State and,
in any event, without giving effect to any choice or conflict of laws provision
or rule that would cause the application of domestic substantive laws of any
other jurisdiction. Anything in this Agreement to the contrary notwithstanding
in the event of any dispute between the parties which results in a Legal Action,
the prevailing party shall be entitled to receive from the non-prevailing party
reimbursement for reasonable legal fees and expenses incurred by such prevailing
party in such Legal Action.
10.7 Entire Agreement. This Agreement (which term, unless the context
otherwise specifically requires, includes all Exhibits and Schedules hereto)
constitutes the entire agreement between American and the Company with respect
to the subject matter hereof and supersedes all prior agreements, arrangements,
covenants, promises, conditions, understandings, inducements, representations
and negotiations, expressed or implied, oral or written, between them as to such
subject matter.
10.8 Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Related Document, the remedy
at law would be inadequate and agrees that for breach of such provisions, each
party shall be entitled to injunctive relief and to enforce its rights by an
action for specific performance to the extent permitted by Applicable Law. Each
party hereby waives any requirement for security or the posting of any bond or
other surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained shall be construed
as prohibiting each party from pursuing any
-23-
<PAGE>
other remedies available to it pursuant to the provisions of, and subject to the
limitations contained in, this Agreement for such breach or threatened breach.
10.9 Saturdays, Sundays, Holidays, etc. If the last or appointed day
for taking of any action required or permitted hereby or by the Notes (other
than the payment of principal of or interest or premium, if any, on the Notes)
shall be a Saturday, Sunday or legal holiday in Sarasota, Florida or Boston,
Massachusetts, or a day on which banking institutions in Sarasota, Florida or
Boston, Massachusetts, are authorized by law or executive order to close, then
such action may be taken on the next succeeding business day for banking
institutions in such cities.
10.10 Brokers, etc. No broker, finder or other person performing a
similar function has been retained by the Company in connection with the issue
and sale of the Notes or the Acquisition. The Company will pay, and will
indemnify and hold harmless American and its officers, directors, stockholders,
employees, trustees and agents from, the fees, commissions and expenses of any
Person purporting to have acted on the Company's behalf in such connection or in
connection with the issue and sale of the Notes and the Acquisition. American
will pay, and will indemnify and hold harmless the Company and its officers,
direc tors, employees, trustees and agents from, the fees, commissions and
expenses of any Person purporting to have acted on American's behalf in such
connection or in connection with the issue and sale of the Notes and the
Acquisition.
10.11 Headings; Counterparts. The headings contained in this Agreement
are for reference purposes only and shall not limit or otherwise affect the
meaning of any provision of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument, binding upon all of the parties
hereto. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
10.12 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution or statute or rule of public policy or
for any other reason, such circumstance shall not have the effect of rendering
the provision or provisions in question invalid, inoperative, illegal or
unenforceable in any other jurisdiction or in any other case or circumstance or
of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to affect materially and
adversely any party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the transactions contemplated by this Agreement are
fulfilled and consummated to the maximum extent possible.
10.13 Further Acts. Each party agrees that at any time, and from time
to time, before and after the consummation of the transactions contemplated by
this Agreement, it will do all such things and execute and deliver all such
Related Documents and other assurances, as any other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
-24-
<PAGE>
10.14 Specific Performance; Other Rights. The parties recognize that
various of the rights of the parties under this Agreement are unique and,
accordingly, the parties shall, in addition to such other remedies as may be
available to it at law or in equity, have the right to enforce its rights
hereunder by actions for injunctive relief and specific performance to the
extent permitted by Law. Nothing herein contained shall be construed as
prohibiting either party from pursuing any other remedies available to it for
such breach or threatened breach, including without limitation the recovery of
damages.
IN WITNESS WHEREOF the parties hereto have executed this Agreement, all
pursuant to authority heretofore granted, to the extent applicable, by their
respective Boards of Directors, as of the date and year first above written.
OPM - USA - INC.
By:________________________________
Name:
Title:
American Tower Systems Corporation
By:________________________________
Name:
Title:
-25-
EXHIBIT 10.13
ASSETS PURCHASE AGREEMENT
by and among
CITICASTERS CO.
and
AMERICAN RADIO SYSTEMS CORPORATION
and
AMERICAN RADIO SYSTEMS LICENSE CORP.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1
PURCHASE OF ASSETS.......................................................................................1
1.1 Transfer of Assets..............................................................................1
1.2 Excluded Assets.................................................................................3
ARTICLE 2
ASSUMPTION OF OBLIGATIONS................................................................................4
2.1 Assumption of Obligations.......................................................................4
2.2 Retained Liabilities............................................................................4
ARTICLE 3
CONSIDERATION............................................................................................5
3.1 Delivery of Consideration.......................................................................5
3.2 Escrow Deposit..................................................................................5
3.3 Proration of Income and Expenses; Trade Agreements Adjustment...................................6
3.4 Allocation of Purchase Price....................................................................7
ARTICLE 4
CLOSING..................................................................................................7
4.1 Closing.........................................................................................7
4.2 Time Brokerage Agreement........................................................................7
ARTICLE 5
GOVERNMENTAL CONSENTS....................................................................................8
5.1 FCC Consent.....................................................................................8
5.2 FCC Application.................................................................................8
5.3 HSR Application.................................................................................8
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER..................................................................9
6.1 Organization and Standing.......................................................................9
6.2 Authorization and Binding Obligation............................................................9
6.3 Qualification...................................................................................9
6.4 Absence of Conflicting Agreements or Required Consents..........................................9
6.5 Litigation.....................................................................................10
6.6 Compliance With Laws...........................................................................10
6.7 Commissions or Finder's Fees...................................................................10
6.8 Availability of Funds..........................................................................10
i
<PAGE>
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER................................................................10
7.1 Organization and Standing......................................................................10
7.2 Authorization and Binding Obligation...........................................................11
7.3 Absence of Conflicting Agreements or Required Consents.........................................11
7.4 Government Authorizations......................................................................11
7.5 Compliance with FCC Regulations................................................................13
7.6 Taxes..........................................................................................13
7.7 Personal Property..............................................................................13
7.8 Real Property..................................................................................14
7.9 Contracts......................................................................................15
7.10 Status of Contracts, etc.......................................................................15
7.11 Environmental..................................................................................15
7.12 Intellectual Property..........................................................................16
7.13 Financial Statements...........................................................................16
7.14 Personnel Information..........................................................................16
7.15 Litigation.....................................................................................17
7.16 Compliance With Laws...........................................................................17
7.17 Employee Benefit Plans.........................................................................18
7.18 Commissions or Finder's Fees...................................................................18
7.19 Conduct of Business in Ordinary Course: Adverse Change.........................................18
7.20 Instruments of Conveyance; Good Title..........................................................18
7.21 Undisclosed Liabilities........................................................................18
7.22 Full Disclosure................................................................................18
7.23 Insurance......................................................................................19
ARTICLE 8
COVENANTS OF BUYER......................................................................................19
8.1 Closing........................................................................................19
8.2 Notification...................................................................................19
8.3 No Inconsistent Action.........................................................................19
8.4 Accounts Receivable............................................................................19
ARTICLE 9
COVENANTS OF SELLER.....................................................................................20
9.1 Seller's Pre-Closing Covenants.................................................................20
9.2 Notification...................................................................................22
9.3 No Inconsistent Action.........................................................................23
9.4 Closing........................................................................................23
9.5 Other Items....................................................................................23
9.6 Exclusivity....................................................................................23
ARTICLE 10
JOINT COVENANTS.........................................................................................24
ii
<PAGE>
10.1 Confidentiality................................................................................24
10.2 Cooperation....................................................................................25
10.3 Control of Station.............................................................................25
10.4 Consents to Assignment.........................................................................25
10.5 Filings........................................................................................25
10.6 Bulk Sales Laws................................................................................26
10.7 Employee Matters...............................................................................26
10.8 Tangible Personal Property.....................................................................27
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER..........................................................................28
11.1 Representations, Warranties and Covenants......................................................28
11.2 Governmental Consents..........................................................................28
11.3 Station Licenses Renewal.......................................................................28
11.4 Governmental Authorizations....................................................................28
11.5 Adverse Proceedings............................................................................29
11.6 Third-Party Consents...........................................................................29
11.7 Closing Documents..............................................................................29
11.8 Title Insurance................................................................................29
11.9 Real Estate....................................................................................29
11.10 Building and Mechanical Inspection.............................................................30
11.11 Pre-Merger Notification........................................................................30
11.12 No Adverse Change..............................................................................30
11.13 KSJO Tower Sublease and KUFX Studio Sublease...................................................30
11.14 Time Brokerage Agreement.......................................................................30
11.15 Tangible Personal Property.....................................................................30
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER.........................................................................31
12.1 Representations................................................................................31
12.2 Governmental Consents..........................................................................31
12.3 Adverse Proceedings............................................................................31
12.4 Pre-Merger Notification........................................................................31
12.5 Closing Documents..............................................................................31
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES.......................................................................32
13.1 Expenses.......................................................................................32
13.2 Transfer Taxes and Similar Charges.............................................................32
13.3 Governmental Filing or Grant Fees..............................................................32
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING....................................................................32
14.1 Seller's Documents.............................................................................32
iii
<PAGE>
14.2 Buyer's Documents..............................................................................33
ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC..........................................................................34
15.1 Survival of Representations, Etc...............................................................34
15.2 Indemnification................................................................................35
15.3 Procedures: Third Party and Direct Indemnification Claims.....................................36
15.4 Indemnification; Sole and Exclusive Remedy.....................................................37
ARTICLE 16
TERMINATION RIGHTS......................................................................................37
16.1 Termination....................................................................................37
16.2 Liability......................................................................................38
16.3 Monetary Damages, Specific Performance and Other Remedies......................................38
16.4 Seller's Liquidated Damages....................................................................39
ARTICLE 17
MISCELLANEOUS PROVISIONS................................................................................39
17.1 Risk of Loss...................................................................................39
17.2 Certain Interpretive Matters and Definitions...................................................40
17.3 Further Assurances.............................................................................40
17.4 Benefit and Assignment.........................................................................40
17.5 Amendments.....................................................................................41
17.6 Headings.......................................................................................41
17.7 Governing Law..................................................................................41
17.8 Notices........................................................................................41
17.9 Counterparts...................................................................................42
17.10 No Third Party Beneficiaries...................................................................42
17.11 Severability...................................................................................42
17.12 Entire Agreement...............................................................................42
INDEX OF DEFINED TERMS............................................................................................I
</TABLE>
iv
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.2.8 Miscellaneous Excluded Assets
3.3.2 Trade Agreements
6.3 Buyer Qualifications
7.4 Station Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 (a) Contracts
7.9 (b) Material Contracts
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information; Employee Benefit Plans
7.15 Litigation
7.16 Compliance With Laws
9.1.5 Actions Pending Closing
10.7 Employees Not Hired
Exhibit
A Deposit Escrow Agreement
B Time Brokerage Agreement
C Assignment and Assumption Agreement
D Opinion of Seller's Counsel
E Opinion of Seller's FCC Counsel
F Opinion of Buyer's Counsel
G Form of Estoppel Certificate
H Form of Subordination and Non-Disturbance Agreement
I KSJO Tower Sublease
J KUFX Studio Sublease
v
<PAGE>
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (this "Agreement") is made and entered
this 9th day of October, 1997, by and between CITICASTERS CO., an Ohio
corporation ("Buyer"), and AMERICAN RADIO SYSTEMS CORPORATION, a Delaware
corporation ("American"). and AMERICAN RADIO SYSTEMS LICENSE CORP., a Delaware
corporation ("American License", together with American, the "Seller").
RECITALS
WHEREAS, Seller owns and operates radio station KSJO(FM), licensed to
San Jose, California (the "Station") pursuant to licenses issued by the FCC; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operation of the Station, all on the terms and subject to the conditions set
forth herein; and
WHEREAS, in order to induce Buyer to enter into this Agreement, Seller
is willing to enter into this Agreement and make certain representations and
warranties to, and covenants and agreements with, Buyer.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to all of the assets, properties, interests and rights of Seller
of whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased (to the extent of Seller's leasehold interest) by Seller as the case
may be, wherever situated, which are used or held for use in the operation of
the Station (the "Station Assets"), including but not limited to all of Seller's
right, title and interest in and to the assets, properties, interests and rights
described in this Section 1.1:
1.1.1 all licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including without limitation
those issued by the FCC (the licenses, permits and authorizations issued by the
FCC are hereafter referred to as the "Station Licenses") used or useful in
connection with the operation of the Station, including but not limited to those
described in Schedule 7.4, along with renewals or modifications of such items
between the date hereof and the Closing Date;
<PAGE>
1.1.2 all equipment, electrical devices, antennae, cables,
tools, hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and all other tangible personal property
of every kind and description, and Seller's rights therein, owned, leased (to
the extent of Seller's leasehold interest) or held by Seller and used or useful
in connection with the operation of the Station, including but not limited to
those items described or listed in Schedule 7.7, together with any replacements
thereof and additions thereto made between the date hereof and the Closing Date,
and less any retirements or dispositions thereof made between the date hereof
and the Closing Date in the ordinary course of business and consistent with past
practices of Seller; provided, however, Seller agrees that the value of all such
assets retired or disposed of and not replaced with an asset of like kind and
quality shall not exceed $10,000 in the aggregate;
1.1.3 all Time Sales Agreements (as defined in Section 2.1),
all Trade Agreements (as defined in Section 2.1), all Real Estate Contracts
listed on Schedule 7.8, and all contracts, agreements, leases and legally
binding contractual rights of any kind, written or oral, relating to the
operation of the Station listed on Schedule 7.9(a), and oral employment
agreements terminable at will without penalty or other obligation, together with
all contracts, agreements, leases and legally binding contractual rights entered
into or acquired by Seller between the date hereof and the Closing Date in the
ordinary course of business, consistent with past practices of Seller and in
accordance with this Agreement, which do not exceed $5,000 individually and
$25,000 in the aggregate and which are terminable on no more than sixty (60)
days notice without penalty or any other obligation (collectively, the
"Contracts");
1.1.4 all of Seller's rights in and to the call letters
"KSJO(FM)," as well as all of Seller's rights in and to all trademarks, trade
names, service marks, franchises, copyrights, including registrations and
applications for registration of any of them, computer software, programs and
programming material of whatever form or nature, jingles, slogans, the Station's
logos and all other logos or licenses to use same and all other intangible
property rights of Seller, which are used or useful in connection with the
operation of the Station, including but not limited to those listed in Schedule
7.12 (collectively, the "Intellectual Property") together with any associated
goodwill and any additions thereto between the date hereof and the Closing Date;
1.1.5 all programming materials and elements of whatever form
or nature owned by Seller, whether recorded on tape or other medium or intended
for live performance, and all copyrights owned by or licensed to Seller that are
used or useful in connection with the operation of the Station, including all
such programs, materials, elements and copyrights acquired by Seller between the
date hereof and the Closing Date;
1.1.6 all of Seller's rights in and to all the files,
documents, records, and books of account relating to the operation of the
Station or to the Station Assets, including, without limitation, local public
files, programming information and studies, blueprints, technical information
and engineering data, news and advertising studies or consulting reports,
marketing and demographic data, sales correspondence, lists of advertisers,
promotional materials, credit and sales reports and filings with the FCC
relating to the operation of the Station or to the Station Assets, all written
Contracts to be assigned hereunder, logs, software programs and books and
records relating to the
2
<PAGE>
Station's employees (copies only), financial, accounting and operation matters;
but excluding records relating solely to any Excluded Asset (as hereinafter
defined);
1.1.7 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Station Assets and all similar
rights against third parties relating to items included in the Station Assets;
1.1.8 all real property owned in fee by Seller used or useful
in connection with the operation of the Station together with all appurtenant
easements thereunto and all structures, fixtures and improvements located
thereon as more fully described in Schedule 7.8, together with any additions
thereto between the date hereof and the Closing Date;
1.1.9 except for Excluded Assets, such other assets,
properties, interests and rights owned by Seller that are used or useful in
connection with the operation of the Station or that are located as of the
Closing Date on the real property described on Schedule 7.8.
The Station Assets shall be transferred to Buyer free and
clear of all charges, conditions, community property interests, options,
hypothecations, attachments, conditional sales, title retentions, rights of
first refusal, debts, security interests, mortgages, trusts, claims, pledges or
other liens, liabilities, encumbrances or rights of third parties whatsoever
("Liens"), except for Permitted Liens. Except for the Station Assets listed on
the schedules to this Agreement, notwithstanding the foregoing, at or prior to
the Closing, Buyer may decide, in the exercise of its sole discretion, not to
purchase any one or more of the Station Assets (and, in such event, not to
assume any liability secured by, arising from the acquisition of, or otherwise
relating to, any such Asset); provided, that in no event shall such decision
reduce the Purchase Price.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Station Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or
in banks, including without limitation certificates of deposit, commercial
paper, treasury bills, marketable securities, asset or money market accounts and
all such similar accounts or investments;
1.2.2 all accounts receivable or notes receivable for services
performed by Seller in connection with the operation of the Station prior to the
Closing Date;
1.2.3 subject to the limitation set forth in Section 1.1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
1.2.4 all Contracts that have terminated or expired prior to
the Closing Date in the ordinary course of business consistent with the past
practices of Seller;
3
<PAGE>
1.2.5 Each of American's and American License's corporate
seal, minute books, charter documents, corporate stock record books and such
other books and records as pertain to the organization, existence or share
capitalization of American and American License and duplicate copies of such
records as are necessary to enable each of American and American License to file
its tax returns and reports as well as any other records or materials relating
to Seller generally and not involving or relating to the Station Assets or the
operation or operations of the Station;
1.2.6 contracts of insurance, and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.8 any right, property or asset described in Schedule
1.2.8.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to such obligations as may have
already been assumed pursuant to the Time Brokerage Agreement (as hereinafter
defined) and subject to the provisions of this Section 2.1, Section 2.2 and
Section 3.3, on the Closing Date Buyer shall assume the obligations of Seller
arising or to be performed on and after the Closing Date (except to the extent
such obligations arise out of or are related to activities, events or
transactions occurring, or conditions existing, on or prior to the Closing Date)
(i) under the Contracts, including (a) all agreements for the sale of
advertising time on the Station for cash and at prices consistent with Seller's
ordinary course of business pricing policies for which no payment has been
received and which do not have more than twelve (12) months remaining in their
term ("Time Sales Agreements"); and (b) all agreements relating to the Station
which are for consideration other than cash, such as merchandise, services or
promotional consideration arising in the ordinary course of business consistent
with the past practices of Seller and listed on Schedule 3.3.2 hereto ("Trade
Agreements"), or (ii) to the extent that the Purchase Price has been reduced
pursuant to Section 3.3 as a result of the proration or adjustment of such
obligations and liabilities. All of the foregoing liabilities and obligations
shall be referred to herein collectively as the "Assumed Liabilities."
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities.
4
<PAGE>
Seller will retain and pay, satisfy, discharge and perform in accordance with
the terms thereof, all liabilities and obligations of the Seller, other than the
Assumed Liabilities, including but not limited to, the obligation to assume,
perform, satisfy or pay any liability, obligation, agreement, debt, charge,
claim, judgment or expense incurred by or asserted against Seller related to
taxes, environmental matters, pension or retirement plans or trusts,
profit-sharing plans, employment contracts, employee benefits, severance of
employees, product liability or warranty, negligence, contract breach or
default, or other obligations, claims or judgments asserted against Buyer as
successor in interest to Seller. All of such liabilities, obligations and
commitments of Seller described in this Section 2.2 shall be referred to herein
collectively as the "Retained Liabilities."
ARTICLE 3
CONSIDERATION
3.1 Delivery of Consideration. In consideration for the sale of the
Station Assets to Buyer, in addition to the assumption of certain obligations of
Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as
hereinafter defined), deliver to Seller Thirty Million Dollars ($30,000,000) by
wire transfer of immediately available funds, subject to adjustment pursuant to
the provisions of Sections 3.2 and 3.3 below (the "Purchase Price").
3.2 Escrow Deposit. (a) Simultaneously with the execution and delivery
of this Agreement, Buyer, Seller and The Fifth Third Bank, as Escrow Agent (the
"Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement in the form
of Exhibit A hereto (the "Deposit Escrow Agreement") pursuant to which Buyer
shall deposit, within one (1) business day following execution of this
Agreement, the amount described below as a deposit on the amount of the Purchase
Price. Such amounts held in escrow shall be applied as set forth herein and in
the Deposit Escrow Agreement.
(b) Buyer shall wire transfer One Million Five Hundred
Thousand Dollars ($1,500,000) to the Deposit Escrow Agent's trust account
pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"), and at the
Closing, the Escrow Deposit, plus interest, shall be applied to the Purchase
Price to be paid to Seller. As more fully described in the Deposit Escrow
Agreement: (a) in the event this Agreement is terminated solely because of
Buyer's material breach of this Agreement and Seller shall at such time not be
in material breach of this Agreement, the Escrow Deposit, plus interest, shall
be paid to Seller as liquidated damages as provided in Section 16.4 hereto for
Buyer's material breach of this Agreement (the payment of such sum to Seller
shall discharge any liability Buyer may have to Seller hereunder); and (b) in
the event this Agreement is terminated under any circumstances other than those
set forth in the immediately preceding clause (a), the Escrow Deposit and the
interest accrued thereon shall be paid to Buyer.
5
<PAGE>
3.3 Proration of Income and Expenses; Trade Agreements Adjustment.
3.3.1 Subject to such prorations as may have been already been
made pursuant to the Time Brokerage Agreement (as hereinafter defined) and
except as otherwise provided herein, all deposits, reserves and prepaid and
deferred income and expenses relating to the Station Assets or the Assumed
Liabilities and arising from the conduct of the business and operations of the
Station shall be prorated between Buyer and Seller in accordance with generally
accepted accounting principles as of 12:01 a.m., eastern time, on the Closing
Date. Such prorations shall include, without limitation, all ad valorem, real
estate and other property taxes (but excluding taxes arising by reason of the
transfer of the Station Assets as contemplated hereby which shall be paid as set
forth in Section 13.2), business and license fees, music and other license fees
(including any retroactive adjustments thereof, which retroactive adjustments
shall not be subject to the ninety-day limitation set forth in Section 3.3.3),
utility expenses, amounts due or to become due under Contracts, Trade Agreements
to the extent provided in Section 3.3.2 hereof, rents, lease payments and
similar prepaid and deferred items. Real estate taxes shall be apportioned on
the basis of taxes assessed for the preceding year, with a reapportionment, if
any, as soon as the new tax rate and valuation can be ascertained.
3.3.2 Schedule 3.3.2 lists all Trade Agreements included in
the Station Assets and the contract end date for each Trade Agreement together
with an itemized statement, determined in accordance with generally accepted
accounting principles, of the aggregate value of time owed ("Barter Payable")
pursuant to each of the Trade Agreements and the aggregate value of goods and
services to be received ("Barter Receivable") pursuant to each of the Trade
Agreements, in each case as of the date hereof. Seller agrees that it will not
enter into any other Trade Agreements or similar arrangements after the
execution of this Agreement which in the aggregate exceed $10,000 without first
obtaining Buyer's written consent. Within ten (10) calendar days of the earlier
to occur of the (i) date of the commencement of the Time Brokerage Agreement
(the "Effective Date") and the Closing Date, Seller shall deliver to Buyer a
report, dated as of the date of the Effective Date or the Closing Date, as
applicable (the "Trade Report"), which report lists all Trade Agreements
included in the Station Assets and the contract end date for each Trade
Agreement together with an itemized statement, determined in accordance with
generally accepted accounting principles, of the aggregate value of the Barter
Payable and Barter Receivable pursuant to each of the Trade Agreements. To the
extent that the aggregate value as reflected on the Trade Report of the
Station's Barter Payable is greater than the aggregate value as reflected on the
Trade Report of the Barter Receivable, Buyer shall be entitled to receive the
difference at Closing as a credit against the Purchase Price.
3.3.3 Subject to such prorations as may have been already been
made pursuant to the Time Brokerage Agreement (as hereinafter defined) and
except as otherwise provided herein, the prorations and adjustments contemplated
by this Section 3.3, to the extent practicable, shall be made on the Closing
Date. As to those prorations and adjustments not capable of being ascertained on
the Closing Date, an adjustment and proration shall be made within ninety (90)
calendar days of the Closing Date.
6
<PAGE>
3.3.4 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 3.3.3 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Seller and
one-half by Buyer. Notwithstanding the foregoing, if the aggregate amount in
dispute is $10,000 or less, the disputed amount shall be shared equally by Buyer
and Seller.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Station Assets based upon an appraisal prepared by an appraiser
selected by Seller, and such appraisal and allocation shall be completed within
thirty (30) days following Closing unless otherwise agreed to by the parties.
Seller and Buyer agree to use the allocations determined by Seller for all tax
purposes, including without limitation, those matters subject to Section 1060 of
the Internal Revenue Code of 1986, as amended.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within five (5) business days after the later to occur of: (a) the
satisfaction or waiver of each condition to closing contained herein (excluding
conditions that by their terms cannot be satisfied until the Closing Date), and
provided that each party hereto shall use its commercially reasonable efforts to
cause each condition to closing to be satisfied so that the Closing may occur at
the earliest possible date; and (b) the issuance of the Final Order (as defined
below), or such other date as may be mutually agreed by the parties hereto (the
"Closing Date"); provided, however, that Buyer may in its sole discretion waive
the requirement that a Final Order be issued and elect (subject to clause (a)
above) to close at any time (upon not less than five (5) business days' notice
to Seller) after the release of initial FCC approval on public notice that it
has consented to the transaction contemplated hereby (the "Initial Approval").
For purposes of the Agreement, "Final Order" (and "Final") means a grant,
consent or authorization by the FCC which is no longer subject to
reconsideration or review by the FCC or a court of competent jurisdiction, and
pursuant to which the FCC consents to the assignments of the FCC licenses
contemplated by this Agreement, each such grant, consent or authorization being
without the imposition of any conditions adverse to Buyer or any Affiliate (as
hereinafter defined) of Buyer with respect to the assignment of the FCC Licenses
to Buyer or the continued operation of the Station or the Station Assets. In the
event that the parties close before the Initial Approval has become a Final
Order, the parties shall negotiate in good faith to enter into an Unwind
Agreement. The Closing shall be held in the offices of Graydon, Head & Ritchey,
1900 Fifth Third Center, 511 Walnut Street, Cincinnati, Ohio, or at such place
and in such manner as the parties hereto may agree.
4.2 Time Brokerage Agreement. Buyer and Seller have entered into a Time
Brokerage Agreement, in the form of Exhibit B hereto (the "Time Brokerage
Agreement"), pursuant to which Seller has agreed to make available to Buyer the
broadcasting transmission facilities of the Station
7
<PAGE>
and/or cause to be broadcast on the Station Buyer's programming from the
Effective Date (as defined in the Time Brokerage Agreement) through the Closing
Date.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that the Closing, the assignment of the Station Licenses and the transfer
of the Station Assets are expressly conditioned on and is subject to the prior
consent and approval of the FCC without the imposition of any conditions
materially adverse to Buyer or any Affiliate of Buyer (the "FCC Consent").
5.2 FCC Application. If the same has not already been filed as of the
time of the execution hereof, then within one (1) business day after the
execution of this Agreement, Buyer and Seller shall file an application with the
FCC for the FCC Consent (the "FCC Application"). Buyer and Seller shall
prosecute the FCC Application with all reasonable diligence and otherwise use
their commercially reasonable efforts to obtain the FCC Consent as expeditiously
as practicable, including the obligations set forth in the fourth sentence of
Section 17.4 (but neither Buyer nor Seller shall have any obligation to satisfy
complainants or the FCC by taking any steps which would have a material adverse
effect upon Buyer or Seller or upon any of their respective Affiliates). If the
FCC Consent imposes any condition on Buyer or Seller or any of their respective
Affiliates, such party shall use its commercially reasonable efforts to comply
with such condition; provided, however, that neither Buyer nor Seller shall be
required hereunder to comply with any condition that would have a material
adverse effect upon it or any of its Affiliates. If reconsideration or judicial
review is sought with respect to the FCC Consent, the party affected shall
vigorously oppose such efforts for reconsideration or judicial review; provided,
however, that nothing herein shall be construed to limit either party's right to
terminate this Agreement pursuant to Article 16 hereof.
5.3 HSR Application. Within ten (10) business days after the execution
of this Agreement, Buyer and Seller shall make any and all required governmental
filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") with respect to the transactions contemplated hereby,
and shall use their commercially reasonable efforts to respond as promptly as
practicable to all inquiries received from the applicable governmental agencies
or committees for additional information or documentation. Buyer and Seller will
notify each other of all correspondence, filings or communications between such
party or its representatives, on the one hand, and the applicable governmental
agencies or committees, on the other hand, with respect to this Agreement and
the transaction contemplated hereby. Buyer and Seller will furnish each other
with such necessary information and reasonable assistance as such other parties
may request in connection with their preparation of all filings pursuant to the
HSR Act.
8
<PAGE>
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing subject to the limitations provided for herein and shall be unaffected
by any investigation heretofore or hereafter made by Seller:
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio, and
on the Closing Date will be duly qualified to conduct business in each
jurisdiction in which such qualification is necessary for Buyer to own the
Station Assets and operate the Station.
6.2 Authorization and Binding Obligation. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Station Assets and to
carry on the business of the Station upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by American and American
License, this Agreement constitute the valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
6.3 Qualification. Except as set forth on Schedule 6.3, to Buyer's
knowledge Buyer is legally, financially and otherwise qualified to be the
licensee of, acquire, own and operate the Station under the Communications Act
of 1934, as amended, and the rules, regulations and policies of the FCC. Except
as set forth on Schedule 6.3, Buyer knows of no fact that would, under existing
law and the existing rules, regulations, policies and procedures of the FCC
disqualify Buyer as an assignee of the Station Licenses or as the owner and
operator of the Station. Except as set forth in Schedule 6.3, subject to the
provisions of Section 5.1 hereof, no waiver of any FCC rule or policy is
necessary to be obtained for the grant of the application for the assignment of
the Station Licenses to Buyer.
6.4 Absence of Conflicting Agreements or Required Consents. Except for
applicable requirements of the HSR Act and subject to the receipt of the FCC
Consent, the execution, delivery and performance by Buyer of this Agreement and
the documents contemplated hereby: (a) do not conflict with the provisions of
the articles of incorporation or code of regulations of Buyer; (b) do not
require the consent of any third party (including, without limitation, the
consent of any governmental, regulatory, administrative or similar authority);
(c) do not violate any applicable law, judgment, order, injunction, decree,
rule, regulation or ruling of any governmental authority to which Buyer is
bound; and (d) do not, either alone or with the giving of notice or the passage
of time, or both, conflict with, constitute grounds for termination of or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any agreement, instrument, license or permit to which Buyer is subject.
9
<PAGE>
6.5 Litigation. Except for FCC rulemaking proceedings generally
affecting the radio broadcasting industry and not particular to Buyer, there is
no claim, litigation, proceeding or investigation pending or, to the best of
Buyer's knowledge, threatened against Buyer, which could reasonably be expected,
in any material respect, to impair or hinder Buyer's ability to perform its
obligations pursuant to this Agreement and the documents contemplated hereby.
6.6 Compliance With Laws. Buyer is in compliance with all federal,
state and local laws, rules, regulations and ordinances applicable to Buyer,
except for any noncompliance by Buyer that would not have a material adverse
effect on Buyer's ability to perform its obligations pursuant to this Agreement
and the documents contemplated hereby.
6.7 Commissions or Finder's Fees. Neither Buyer nor any person or
entity acting on behalf of Buyer has agreed to pay a commission, finder's fee or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity.
6.8 Availability of Funds. Buyer will have available on the Closing
Date sufficient funds to enable it to consummate the transactions contemplated
hereby.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of American and American License makes to Buyer the
representations and warranties as set forth below in this Article 7, each of
which is true and correct on the date hereof and shall survive the Closing
subject to the limitations provided for herein; provided however, that American,
American License and Buyer have entered into the Time Brokerage Agreement and
such parties understand that any (i) actions or omissions to act taken by Buyer
(or any assignee or Affiliate of Buyer), including actions or omissions arising
out of or related to the Time Brokerage Agreement; (ii) changes in market
conditions in the radio broadcasting industry in San Jose, California following
the Effective Date; (iii) factors affecting the radio broadcasting industry
generally following the Effective Date; or (iv) general, national, regional or
local economic or financial conditions following the Effective Date
(collectively, "TBA Events"); which would cause any of American's or American
License's representations and warranties to be untrue, shall not be deemed to
result in a breach or inaccuracy of such representations or warranties:
7.1 Organization and Standing. Each of American and American License is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, is authorized to conduct business within the
State of California and has the requisite corporate power and authority to own,
lease and operate the Station Assets and to carry on the business of the Station
as now being conducted and as proposed to be conducted between the date of this
Agreement and the Closing Date.
7.2 Authorization and Binding Obligation. Each of American and American
License has the requisite corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated hereby.
American's and American License's execution,
10
<PAGE>
delivery and performance of this Agreement and the documents contemplated hereby
has been duly authorized by all necessary corporate action on the part of Seller
and, assuming the due authorization, execution and delivery of this Agreement by
Buyer, this Agreement constitutes the valid and binding obligation of each of
American and American License enforceable against each in accordance with its
terms, except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
by judicial discretion in the enforcement of equitable remedies.
7.3 Absence of Conflicting Agreements or Required Consents. Except for
applicable requirements of the HSR Act and subject to the receipt of the FCC
Consent, and except as set forth in Article 5 with respect to governmental
consents and in Schedule 7.8 or Schedule 7.9(a) with respect to consents
required in connection with the assignment of certain Contracts, the execution,
delivery and performance by Seller of this Agreement and the documents
contemplated hereby: (a) do not require the consent of any third party
(including, without limitation, the consent of any governmental, regulatory,
administrative or similar authority); (b) do not conflict in any material
respect with the provisions of each of American's and American License's
certificate of incorporation and bylaws (or other charter documents); (c) do not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Seller or any of the
Station Assets are bound; (d) do not either alone or with the giving of notice
or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any Contract, agreement, instrument, license or
permit to which Seller or any of the Station Assets is subject; and (e) other
than Permitted Liens, will not result in the creation of any Liens on any of the
Station Assets. For purposes of this Agreement, "Permitted Liens" means (a)
liens for taxes not yet due and payable; (b) statutory liens that were created
in the ordinary course of business for amounts not delinquent; (c) restrictions
or rights granted to governmental authorities under applicable law; (d) zoning,
building or similar restrictions relating to or affecting property; (e) all
matters of record disclosed on Schedule 7.8 as "continuing," including leasehold
interests in real property owned by others and operating leases for personal
property and leased interests in property leased to others; (f)(1) liens or
encumbrances on the real property listed in Schedule 7.8 currently of record
(excluding, however, any mortgage, deed to secure debt, deed of trust, security
agreement, judgment, lien or statutory claim of any nature, Seller hereby
agreeing to pay and satisfy of record any such title defect or exception) and
(2) other Liens on the real property listed in Schedule 7.8 that do not
materially affect the current use and enjoyment thereof in the operation of the
Station Assets as presently operated; and (g) the Assumed Liabilities.
7.4 Government Authorizations.
7.4.1 Schedule 7.4 hereto contains a true and complete list of
the Station Licenses and other licenses, permits or other authorizations from
governmental and regulatory authorities which are required for the lawful
conduct of the business and operations of the Station in the manner and to the
extent they are presently conducted (including, without limitation, auxiliary
licenses associated with the Station). Seller has delivered to Buyer true and
complete copies of the Station Licenses and the other licenses, permits and
authorizations listed in Schedule 7.4, including any and all amendments and
other modifications thereto.
11
<PAGE>
7.4.2 American License is the authorized legal holder of the
Station Licenses and the other licenses, permits and authorizations listed in
Schedule 7.4, which are in full force and effect, and none of which is subject
to any restrictions or conditions which would be reasonably expected to limit
the operation of the Station as now operated.
7.4.3 Except as set forth in Schedule 7.4, and except for
investigations or other proceedings affecting the radio broadcasting industry
generally and not particular to Seller or the Station, there are no
applications, complaints, petitions or proceedings pending or, to Seller's
knowledge, threatened as of the date hereof before the FCC or any other
governmental or regulatory authority relating to the business or operations of
the Station that would reasonably be expected to (a) impair or hinder the
ability of Seller to perform its obligations under this Agreement or (b) affect
the business or operations of the Station. The operations of the Station are in
accordance with the Station Licenses and the underlying construction permits and
the other licenses, permits and authorizations listed in Schedule 7.4. Except as
set forth on Schedule 7.4, to Seller's knowledge, no proceedings are pending or
threatened, and there has not been any act or omission of Seller which may
reasonably be expected to result in the revocation, adverse modification,
non-renewal or suspension of the Station Licenses or the other licenses, permits
and authorizations listed in Schedule 7.4, the denial of any pending
applications, the issuance of any cease and desist order, the imposition of any
administrative actions by the FCC or any other governmental or regulatory
authority with respect to the Station Licenses or the other licenses, permits
and authorizations listed in Schedule 7.4 or which would reasonably be expected
to affect Buyer's ability to continue to operate the Station as it is currently
operated.
7.4.4 Except as set forth on Schedule 7.4, the Station is
licensed by the FCC to operate and is operating with the facilities designated
in its Station Licenses.
7.4.5 Except as set forth on Schedule 7.4, to Seller's knowledge the
Station is not causing objectionable interference to the transmissions of any
other broadcast station or communications facility nor has the Station received
any complaints with respect thereto. Except as set forth on Schedule 7.4, to
Seller's knowledge, no other broadcast station or communications facility is
causing objectionable interference to transmissions of the Station or the
public's reception of such transmissions.
7.4.6 All material reports, forms, and statements required to
be filed by Seller with the FCC with respect to the Station since the
acquisition of the Station by Seller have been filed and are substantially
complete and accurate.
7.4.7 Except as set forth on Schedule 7.4, to the knowledge of
Seller, there are no facts, conditions or events relating to Seller which, under
the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify American License as assignor of the
Station Licenses or cause the Station Licenses and the other licenses, permits
and authorizations listed in Schedule 7.4 not to be renewed in their ordinary
course.
12
<PAGE>
7.4.8 The operation of the Station and all of the Station
Assets are in compliance in all respects with ANSI Radiation Standards C95.1 -
1992.
7.5 Compliance with FCC Regulations. The operation of the Station and
all of the Station Assets are in compliance with: (a) all applicable engineering
standards required to be met under applicable FCC rules; and (b) all other
applicable federal, state and local rules, regulations, requirements and
policies, including, but not limited to, equal employment opportunity policies
of the FCC, and all applicable painting and lighting requirements of the FCC and
the Federal Aviation Administration to the extent required to be met under
applicable FCC rules and regulations, and to the best of Seller's knowledge,
there are no existing claims to the contrary.
7.6 Taxes. Except where the failure to file, pay or accrue any taxes
does not result in a Lien on the Station Assets or in the imposition of
transferee or other liability on Buyer for the payment of taxes, Seller has
filed all federal, state, local and foreign income, franchise, sales, use,
property, excise, payroll and other tax returns required by law to be filed by
it and has properly accrued or paid in full all taxes, estimated taxes,
interest, assessments, and penalties due and payable by it. There are no present
disputes as to taxes of any nature payable by Seller which in any event could
adversely affect the Station Assets or the operation of the Station by Buyer,
and Seller has not been advised that any of its returns, federal, state, local
or foreign, have been or are being audited. Seller does not have any liability,
fixed or contingent, for any unpaid federal, state or local taxes or other
governmental or regulatory charges whatsoever (including without limitation
withholding and payroll taxes) which could result in any Liens on the Station
Assets after conveyance thereof to Buyer or in any other form of transferee
liability to Buyer, except for Permitted Liens.
7.7 Personal Property. Schedule 7.7 hereto contains a list of all
material items of tangible personal property included in the Station Assets
owned by Seller and used in the conduct of the business and operations of the
Station. Schedule 7.7 also separately lists any material tangible personal
property leased by Seller pursuant to leases included within the Contracts.
Except as disclosed in Schedule 7.7, Seller has good title to all of the Station
Assets (other than those subject to lease) and none of the Station Assets is
subject to any Liens or title defects, except for Permitted Liens. The
properties listed in Schedule 7.7, including those properties subject to lease
and included among the Contracts, constitute all tangible personal property
necessary to operate the Station as the same is now being operated. All items of
tangible personal property included in the Station Assets are in good operating
condition and repair, are free from all material defect and damage and are
suitable for the purposes for which they are now being used (given the age of
such property and the use to which such property is put, and ordinary wear and
tear excepted).
7.8 Real Property.
7.8.1 Schedule 7.8 hereto contains a complete and accurate
list and description of all real property (including without limitation, real
property relating to the towers, transmitters, studio sites and offices of the
Station) not owned by Seller and used by Seller in connection with the
operations of the Station pursuant to agreements, leases and other contracts
(the "Real Estate Con-
13
<PAGE>
tracts"). Seller owns no real estate used or held for use in connection with the
operation of the Station.
7.8.2 Except as set forth on Schedule 7.8, the Real Estate
Contracts listed on Schedule 7.8 and Schedule 7.9(a) are in full force and
effect and are valid, binding and enforceable in accordance with their terms
subject, if Seller has no knowledge of the following, to: (a) the assumption
that the contracting parties (other than Seller) had the authority to enter into
the Real Estate Contracts, (b) relief resulting from bankruptcy or equitable
principles, or (c) unenforceability of non-material provisions contained in the
Real Estate Contracts. Seller enjoys quiet possession of all real property
subject to the Real Estate Contracts. Seller is not in default under any Real
Estate Contract nor, to Seller's knowledge, is any other party thereto, and
except as set forth in Schedule 7.8, there are no present disputes or claims
with respect to offsets or defenses by any party against the other under any of
the Real Estate Contracts. Seller has delivered to Buyer true and complete
copies of all Real Estate Contracts. Except as expressly set forth in Schedule
7.8 hereto, the assignment of the Real Estate Contracts to Buyer will not permit
the other party to accelerate the rent, cause the terms thereof to be
renegotiated or constitute a default thereunder, and will not require the
consent of any such party to the assignment thereof to Buyer.
7.8.3 Seller has previously delivered to Buyer: (a) a complete
and correct copy of each title insurance policy in Seller's possession, if any,
insuring title to the real estate subject to the Real Estate Contracts; and (b)
a true and correct copy of each survey in Seller's possession, if any, of the
real estate subject to the Real Estate Contracts.
7.8.4 Seller has full legal and practical access to all of the
real property described in Schedule 7.8 and, to Seller's knowledge, all
easements, rights of way, and real property licenses relating thereto have been
properly recorded in the appropriate public recording offices. The real estate
subject to the Real Estate Contracts includes all the real property, easements,
rights of way, and other real property interests necessary to conduct the
business and operations of the Station as now conducted. To Seller's knowledge,
none of the buildings, structures, improvements or fixtures constructed on any
real estate subject to the Real Estate Contracts, including, but not limited to,
all towers, guy wires and guy anchors and ground radials, encroach upon
adjoining real property, and all such buildings, structures, improvements and
fixtures are constructed and are operated and used in conformance with all "set
back" lines, easements, covenants, restrictions and all applicable building,
fire, zoning, health and safety laws and codes. To Seller's knowledge, no
utility lines serving the real estate subject to the Real Estate Contracts pass
over the lands of a third party except where appropriate easements have been
obtained. All buildings, structures, towers, antennae, improvements and fixtures
comprising part of the real properties leased by Seller and used by Seller in
the operation of the Station are in good operating condition, have no latent
structural mechanical or other defects of material significance, are reasonably
suitable for the purposes for which they are being used and each has adequate
rights of ingress and egress, utility service for water and sewer, telephone,
electric and/or gas, and sanitary service for the conduct of the business and
operations of the Station as presently conducted (ordinary wear and tear
excepted). There is no pending or, to the knowledge of Seller, threatened
condemnation or other legal proceeding or action of any kind relating to the
real estate subject to the Real Estate Contracts and/or title thereto.
14
<PAGE>
7.9 Contracts. Schedule 7.9(a) lists all Contracts relating to the
Station or the Station Assets to which Seller is a party, or which are binding
on Seller, as of the date of this Agreement, except (a) Time Sales Agreements
and (b) oral employment contracts terminable at will without penalty or other
obligation. Those Contracts, if any, requiring the consent of a third party to
assignment are identified with an asterisk in Schedule 7.9(a). Except as
specifically described on Schedule 7.9(a), Seller has not entered into any
arrangements with ASCAP, BMI, radio representatives, vendors of goods and
services or any other entities pursuant to which Seller enjoys a significant
discount or other significant benefit. Those Contracts, if any, that Seller and
Buyer have agreed are material to the operation of the Station Assets and the
valid assignment of which is a condition to the consummation of the transactions
contemplated hereby (the "Material Contracts") are listed on Schedule 7.9(b).
7.10 Status of Contracts, etc. Seller has delivered to Buyer true and
complete copies of all written Contracts, and true and complete descriptions of
all oral Contracts (except oral employment contracts which are terminable at
will), and any and all amendments and other modifications thereto. All of the
Contracts are in full force and effect and are valid, binding and enforceable in
accordance with their respective terms, except as limited by laws affecting
creditors' rights or equitable principles generally. Seller has complied with
all written and oral Contracts, and is not in default beyond any applicable
grace periods under any thereof and, to Seller's knowledge, no other contracting
party is in default under any thereof.
7.11 Environmental. Except as set forth in Schedule 7.11, Seller has
complied with all federal, state and local environmental laws, rules and
regulations as in effect on the date hereof applicable to the Station and its
operations, including but not limited to the FCC's guidelines regarding RF
radiation. Except as set forth in Schedule 7.11, the technical equipment
included in the Station Assets does not contain a level of PCBs which would
result in the violation of any Environmental Laws. No hazardous or toxic waste,
substance, material or pollutant (as those or similar terms are defined under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. ss.ss. 9601 et seq., Toxic Substances Control Act,
15 U.S.C. ss.ss. 2601 et seq., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss.ss. 6901 et seq. or any other applicable federal, state and
local environmental law, statute, ordinance, order, judgment, rule or regulation
relating to the environment or the protection of human health ("Environmental
Laws")), including but not limited to, any asbestos or asbestos related
products, oils or petroleum-derived compounds, CFCs, PCBs, or underground
storage tanks, have been released, emitted or discharged by Seller or are
currently located in, on, under, or about the real property on which the Station
Assets are situated, including the transmitter sites, or contained in the
tangible personal property included in the Station Assets which would result in
the violation of any Environmental Laws. The Station Assets and Seller's use
thereof are not in violation of any Environmental Laws or any occupational,
safety and health or other applicable law now in effect.
7.12 Intellectual Property. Schedule 7.12 hereto is a true and complete
list of all Intellectual Property applied for, registered or issued to, and
owned by Seller or under which Seller is a licensee and which is used in the
conduct of the Seller's business and operations of the Station, and except as
set forth on Schedule 7.12: (a) Seller's right, title and interest in the
Intellectual
15
<PAGE>
Property as owner or licensee, as applicable, is free and clear of all Liens,
except for Permitted Liens and, to the extent any of the Intellectual Property
is licensed to Seller, such interest is valid and uncontested by the licensor
thereof or any third party; (b) all computer software located at any of Seller's
premises or used in Seller's business or operations or the Station is properly
licensed to Seller, and all of Seller's uses of such computer software are
authorized under such licenses; (c) all of Seller's right, title and interest in
and to the Intellectual Property and computer software shall be assignable to
Buyer at Closing; and (d) are no infringements or unlawful use of such
Intellectual Property. Other than with respect to matters generally affecting
the radio broadcasting industry and not particular to Seller, except as set
forth on Schedule 7.12, Seller has not received any notice or demand alleging
that Seller is infringing upon any trademarks, trade names, service marks,
service names, copyrights or similar Intellectual Property owned by any third
party.
7.13 Financial Statements. Set forth in Schedule 7.13 are complete
copies unaudited (i) monthly profit and loss statements of the Station from
August 1, 1996 through August 31, 1997 ("Seller Financial Statements"), and the
financial statements in Seller's possession relating to all periods prior to
August 1, 1996 (the "Prior Financial Statements," together with the Seller
Financial Statements, the "Financial Statements"). The Seller Financial
Statements are (and the Interim Financial Statements (as hereinafter defined in
Section 9.1.8) provided pursuant to the terms hereof will be) true, correct and
complete and have been (and in the case of the Interim Financial Statements,
will be) prepared in accordance with the books and records of Seller. The Seller
Financial Statements present (and the Interim Financial Statements will present)
fairly the cash flow of the Station for the periods indicated. The financial
information within the Seller Financial Statements does not include (and the
financial information to be within the Interim Financial Statements will not
include) financial information unrelated to the operations of the Station. None
of the Seller Financial Statements understates (and none of the Interim
Financial Statements will understate) the true costs and expenses of conducting
the business and operations of the Station, fails (or will fail) to disclose any
material liability, or inflates (or will inflate) the revenues of the Station
for any reason. August 31, 1997 is hereinafter referred to as the "Financial
Statement Date."
7.14 Personnel Information.
7.14.1 Schedule 7.14 contains a true and complete list of all
persons employed at the Station, including date of hire, a description of
material compensation arrangements (other than employee benefit plans set forth
in Schedule 7.17) and a list of other terms of any and all agreements affecting
such persons and their employment by Seller. Seller has received no notice that,
and Seller is not aware of, any employee who shall or is likely to terminate his
or her employment relationship with the Station upon the execution of this
Agreement or after the Closing.
7.14.2 Seller is not a party to any contract or agreement with
any labor organization, nor has Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any employees of Seller employed at the
Station. Seller has no knowledge of any organizational effort currently being
made or threatened by or on behalf of any labor union with respect to employees
of Seller.
16
<PAGE>
7.14.3 Except as disclosed in Schedule 7.14, Seller has
complied with all laws relating to the employment of labor at the Station,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
7.15 Litigation. Except as set forth in Schedule 7.15 and except for
any FCC rulemaking proceedings generally affecting the radio broadcasting
industry generally and not particular to Seller, the Station or the Station
Assets, Seller is not subject to any judgment, award, order, writ, injunction,
arbitration decision or decree relating to the conduct of the business or the
operation of the Station or any of the Station Assets. Except as set forth in
Schedule 7.15 and except for any FCC rulemaking proceedings generally affecting
the radio broadcasting industry generally and not particular to Seller, there is
no litigation, administrative action, arbitration, proceeding or investigation
pending or, to the knowledge of Seller, threatened against Seller, the Station
or the Station Assets in any federal, state or local court, or before any
administrative agency or arbitrator (including, without limitation, any
proceeding which seeks the forfeiture of, or opposes the renewal of, any of the
Station Licenses), or before any other tribunal duly authorized to resolve
disputes which would reasonably be expected to adversely impair the ability of
Seller to perform its obligations under this Agreement or the documents
contemplated hereby, or adversely affect the business or operations of the
Station.
7.16 Compliance With Laws. Except as set forth in Schedule 7.16, Seller
is in compliance with all federal, state and local laws, rules, regulations and
ordinances applicable to Seller, the Station and the Station Assets, except for
any noncompliance by Seller that would not have an adverse effect on Seller's
ability to perform its obligations pursuant to this Agreement or the documents
contemplated hereby. Except as set forth in Schedule 7.16, Seller has not
received any notice asserting any non-compliance by it in connection with the
operation of the Station or use or ownership of any of the Station Assets with,
any applicable statute, rule or regulation, whether federal, state or local.
Seller is not in default with respect to any judgment, order, injunction or
decree of any court, administrative agency or other governmental authority or
any other tribunal duly authorized to resolve disputes which relate to the
transactions contemplated hereby.
7.17 Employee Benefit Plans. Schedule 7.17 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Station. Seller does not maintain any
other employee benefit plan as the term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, applicable to the
employees of Seller employed at the Station.
7.18 Commissions or Finder's Fees. Neither Seller, nor any person or
entity acting on behalf of Seller, has agreed to pay a commission, finder's fee
or similar payment in connection with this Agreement or any matter related
hereto to any person or entity.
7.19 Conduct of Business in Ordinary Course: Adverse Change. Except as
set forth on Schedule 7.19, since the Financial Statement Date: (i) except as
otherwise permitted under this
17
<PAGE>
Agreement, Seller has conducted the business of the Station only in the ordinary
course consistent with past practices; (ii) there has not been any material
adverse change in the business, assets, properties or condition (financial or
otherwise) of Seller or the Station unless caused due to the occurrence of any
TBA Events; (iii) no damage, destruction or loss of the Station Assets has
occurred that interferes in any material respect with the normal operation of
the Station except as contemplated by Section 17.1(b); and (iv) Seller has not
created, assumed, or suffered any Liens on any of the Station Assets, except for
those in existence on the date of this Agreement and disclosed in Schedule 7.7
or Schedule 7.8 and Permitted Liens.
7.20 Instruments of Conveyance; Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Station
Assets to Buyer, will transfer good title to the Station Assets free and clear
of all liabilities (absolute or contingent), Liens, except for liens
attributable to taxes not yet due and payable as of the Closing Date (and which
will be subject to the proration described in Section 3.3), Permitted Liens, and
the Assumed Liabilities.
7.21 Undisclosed Liabilities. No liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, relating to Seller, the
Station or the Station Assets exists which could, after the Closing result in
any form of transferee liability against Buyer or subject the Station Assets to
any Liens or otherwise affect the full, free and unencumbered use of the Station
Assets by Buyer, except for Permitted Liens.
7.22 Full Disclosure. No representation or warranty made by Seller
contained in this Agreement or any Exhibit or Schedule hereto or any other
document referenced in the representations and warranties of Seller hereunder as
having been provided to Buyer pursuant to such representations and warranties or
delivered pursuant to the covenants of Seller hereunder contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein, in
light of the circumstances under which they were made, not misleading. Seller is
not aware of any impending or contemplated event or occurrence that would cause
any of the foregoing representations not to be true and complete on the date of
such event or occurrence as if made on that date.
7.23 Insurance. Seller now has in force adequate fire and other risk
insurance covering the full replacement value of the Station Assets and shall
cause such insurance to be maintained in full force until the Closing Date.
Seller also shall maintain in full force until the Closing Date, adequate
general public liability insurance in amounts consistent with broadcasting
industry standards for similar stations. None of the Station Assets have been
materially and adversely affected in any way as a result of fire, explosion,
earthquake, accident, fraud, rain, storm, drought, riot, Act of God or public
enemy or any other casualty, whether or not covered by insurance.
********
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to Seller's knowledge, it shall mean to the best of
such party's actual knowledge after having made due inquiry of the directors,
officers, employees, representatives and agents of Seller
18
<PAGE>
who would be expected to have knowledge of the matter, and with respect to the
condition of any Station Assets, records or other object, if such person
inspected it.
ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Station Assets from Seller as provided in Article 1 hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 Notification. Buyer will provide Seller prompt written notice of
any change in any of the information contained in the representations and
warranties made in Article 6. Buyer shall also notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any action which (i)
is materially inconsistent with its obligations under this Agreement, (ii) would
cause any representation or warranty of Buyer contained herein to be or become
false or invalid, or (iii) could unreasonably hinder or delay the consummation
of the transactions contemplated by this Agreement.
8.4 Accounts Receivable. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation of
the Station, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed prior to the Closing Date and
other broadcast revenues for services performed prior to the Closing Date, shall
remain the property of Seller (the "Seller Accounts Receivable") and that Buyer
shall not acquire any beneficial right or interest therein or responsibility
therefor. For a period of ninety (90) days from the Closing Date ("Collection
Period"), Buyer agrees to use commercially reasonable efforts to assist Seller
in collection of the Seller Accounts Receivable in the normal and ordinary
course of Buyer's business and will apply all such amounts collected to the
debtor's oldest account receivable first, except that any such accounts
collected by Buyer from persons who are also indebted to Buyer may be applied to
Buyer's account if so directed by the debtor if there is a bona fide dispute
between Seller and such account debtor with respect to such account and in which
case the Buyer shall notify the Seller of such dispute and after such
notification Seller shall have the right to pursue collection of such account
and to avail itself of all legal remedies available to it. Buyer's obligation
and authority shall not extend to the institution of litigation, employment of
counsel or a collection agency or any other extraordinary means of collection.
During the Collection Period, neither Seller, nor its agents, shall make any
direct solicitation of any account debtor for collection purposes or institute
litigation for the collection of amounts due. After the Collection Period, Buyer
agrees to reasonably cooperate with Seller, at Seller's expense, as to any
litigation or other collection efforts instituted by Seller to collect any
delinquent Seller Accounts Receivable. Any amounts relating to the Seller
Accounts Receivable that are paid directly to the Seller shall be retained by
the Seller (less any commissions and/or other expenses due thereon, which Seller
agrees to timely pay), but Seller shall provide Buyer with prompt notice of any
such payment. Every thirty (30) days
19
<PAGE>
during the Collection Period, Buyer shall make a payment to Seller equal to the
amount of all collections of Seller Accounts Receivable during such thirty (30)
day period less any commissions and/or other expenses due thereon (which Buyer
is hereby directed to pay on Seller's behalf). Within fifteen (15) days after
the end of the 90-day collection period, any remaining Seller Accounts
Receivable shall be returned to Seller for collection.
ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Subject to Buyer's time brokering
of the Station pursuant to the Time Brokerage Agreement, Seller covenants and
agrees with respect to the Station that, between the date hereof and the Closing
Date, except as expressly permitted by this Agreement or with the prior written
consent of Buyer, Seller shall act in accordance with the following; provided
however, that American, American License and Buyer acknowledge that concurrent
with the execution of this Agreement Buyer, American and American License have
entered into the Time Brokerage Agreement and such parties understand that any
TBA Events which would cause any of American's or American License's covenants
and agreements to be breached by American or American License, shall not be
deemed to result in a breach or nonperformance of such covenants and agreements
by American or American License:
9.1.1 Seller shall conduct the business and operations of the
Station in the ordinary and prudent course of business consistent with past
practice and with the intent of preserving the ongoing operations and assets of
the Station, including but not limited to maintaining the independent identity
of the Station, retaining the current format and programming (including the
content thereof) of the Station and using its commercially reasonable efforts to
retain the services of all active employees, consultants and agents.
9.1.2 Seller shall use commercially reasonable efforts to
preserve the operation of the Station intact and use commercially reasonable
efforts to preserve the business of the Station's advertisers, customers,
suppliers and others having business relations with the Station and continue to
conduct financial operations of the Station, including their credit and
collection and pricing policies and practices, in the ordinary course of
business consistent with past practices.
9.1.3 Seller shall operate the Station in all respects in
accordance with FCC rules and regulations and the Station Licenses and with all
other laws, regulations, rules and orders, and shall not cause or permit by any
act, or failure to act, any of the Station Licenses listed in Schedule 7.4 to
expire, be surrendered, adversely modified, or otherwise terminated, or the FCC
to institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses, or fail to prosecute with due
diligence any pending applications to the FCC.
9.1.4 Should any fact relating to Seller which would cause the
FCC to deny its consent to the transactions contemplated by this Agreement come
to Seller's attention, Seller will promptly notify Buyer thereof and will use
its commercially reasonable efforts to take such steps
20
<PAGE>
as may be necessary to remove any such impediment to the FCC's consent to the
transactions contemplated by this Agreement.
9.1.5 Except as set forth on Schedule 9.1.5 and in Section
10.7, Seller shall not: (a) sell, lease or dispose of or commit to sell, lease
or dispose of any of the Station Assets, except as permitted pursuant to Section
1.1.2 hereof and except in connection with any American Sale); (b) sell
broadcast time on a prepaid basis (other than in the course of existing credit
practices); (c) except as required by applicable law, grant or agree to grant
any general increases in the rates of salaries or compensation payable to
employees of the Station; (d) grant or agree to grant any specific bonus or
increase in compensation to any executive or management employee of the Station;
(e) provide for any new pension, retirement or other employment benefits for
employees of the Station or any increases in any existing benefits; (f) modify,
change or terminate any Contract; (g) change the advertising rates in effect as
of the date hereof except in accordance with ordinary course of business pricing
policies; (h) create, assume or permit to exist any Liens or rights affecting
any of the Station Assets, except for those in existence on the date of this
Agreement and disclosed in Schedule 7.7 or Schedule 7.8 which shall be released
at Closing, and Permitted Liens; (i) change the call letters of the Station; or
(j) take any action which would cause any representation or warranty contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.1.6 Except for changes resulting from the Time Brokerage
Agreement, Seller shall provide Buyer prompt written notice of any change in any
of the information contained in the representations and warranties made in
Article 7 or any Schedule.
9.1.7 In order that Buyer may have full opportunity to make
such investigation as it desires of the affairs of the Station, including the
right to audit the Financial Statements and Interim Financial Statements of
Seller, Seller shall give or cause the Station to give Buyer and Buyer's
counsel, accountants, engineers and other representatives, at Buyer's reasonable
request and upon reasonable notice, full and reasonable access during normal
business hours to all of Seller's personnel, properties, books, Contracts,
reports and records (including, without limitation, financial information and
tax returns relating to the Station, and environmental audits in existence with
respect to the Station Assets), real estate, buildings and equipment relating to
the Station and to the Station's employees, and to furnish Buyer with
information and copies of all documents and agreements relating to the Station
and the operation thereof (including but not limited to financial and operating
data and other information concerning the financial condition, results of
operations and business of the Station) that Buyer may reasonably request. The
rights of Buyer under this Section 9.1.7 shall not be exercised in such a manner
as to interfere unreasonably with the business of the Station. Any investigation
by Buyer in accordance with the foregoing shall not diminish or negate, in any
way, any of the representations or warranties of Seller set forth in this
Agreement or in connection herewith.
9.1.8 Until the Effective Date, within thirty (30) days of the
end of each calendar month, Seller shall deliver to Buyer profit and loss
statements of Seller for the month then ended (collectively, the "Interim
Financial Statements"). Seller shall also furnish to Buyer any and all
21
<PAGE>
information customarily prepared by Seller concerning the financial condition
and results of operations of the Station.
9.1.9 Seller shall cooperate and shall permit Buyer's
independent accountants to prepare, at Buyer's expense, audited financial
statements for the Station for the most recently completed fiscal year-end.
9.1.10 Seller shall use its commercially reasonable efforts to
obtain (i) any third party consents necessary for the assignment of any Contract
(which shall not require any payment to any such third party except for such
amounts contemplated by the Contract to be assigned, any amount then owing by
Seller to such third party or the reasonable expenses incurred by such third
party in connection with such assignment), (ii) Estoppel Certificates, in the
form of Exhibit G, from any and all lessors who are party to the Real Estate
Contracts, and the tower lease by and between the County of Santa Clara, as
lessor, and Seller, as lessee (the "Tower Lease"), and (iii) Subordination and
Non-Disturbance Agreement, if any, in the form of Exhibit H, obtained from all
secured parties and/or mortgage holders with: (a) an interest in the real estate
subject to the Real Estate Contracts, or (b) an interest in the Real Estate
Contracts ("SNDA");.
9.1.11 Seller shall use its commercially reasonable efforts to
transfer to Buyer any discounts or other benefits which it enjoys under any
arrangement as described in Section 7.9 of this Agreement.
9.2 Notification. Seller agrees to notify Buyer, and Buyer
agrees to notify Seller, of any litigation, arbitration or administrative
proceeding pending or, to the best of its knowledge, threatened, which
challenges the transactions contemplated hereby. Seller shall promptly notify
Buyer if any of the normal broadcast transmissions of the Station are
interrupted, interfered with or in any way impaired, and shall provide Buyer
with prompt written notice of the problem and the measures being taken to
correct such problem. Notwithstanding anything else contained in this Agreement,
if the Station is not restored so that operation is resumed to full licensed
power and antenna height within five (5) days of such event, or if more than
five (5) such events occur within any thirty (30) day period, or the Station
shall be off the air for more than seventy-two (72) consecutive hours, then
Buyer shall have the right to terminate this Agreement, unless such interruption
or impairment of the Station's normal broadcast transmissions is a result of a
TBA Event.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement, or take any
action which would cause any representation or warranty of Seller contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Station Assets and the
Assumed Liabilities as provided in Articles 1 and 2 of this Agreement.
22
<PAGE>
9.5 Other Items. Except as otherwise specifically contemplated by this
Agreement, until the Closing Date, Seller shall not: (a) waive or release any
right relating to the business or operations of the Station, except for
adjustments or settlements made in the ordinary course of business consistent
with past practices; (b) transfer or grant any material rights under any of the
Station Licenses; (c) enter into any commitment for capital expenditures for
which Buyer would become liable after the Closing Date; (d) subject to the
rights and obligations of the parties set forth in, and actions taken by the
parties pursuant to the Time Brokerage Agreement, introduce any material changes
in the broadcast hours or in the format of the Station or any other material
change in the Station's programming policies; and (e) enter into any transaction
or make or enter into any contract or commitment with respect to the Station or
the Station Assets which by reason of its size or otherwise is not in the
ordinary course of business consistent with past practices.
9.6 Exclusivity. Except for the execution and/or consummation of that
certain Agreement and Plan of Merger (the "American Sale Agreement") by and
among American, Westinghouse Electric Corporation and R Acquisition Corp., dated
as of September 19, 1997 (the "American Sale"), Seller agrees that, commencing
on the date hereof through the Closing or earlier termination of this Agreement,
Buyer shall have the exclusive right to consummate the transactions contemplated
herein, and during such exclusive period, Seller agrees that neither Seller, nor
any officer, employee or other representative or agent of Seller: (a) will
initiate, solicit or encourage, directly or indirectly, any inquiries, or the
making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
all or any portion of the Station Assets (any such inquiry, proposal or offer
being hereinafter referred to as an "Acquisition Proposal" and any such
transaction being hereinafter referred to as an "Acquisition"); (b) will engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; or (c) will continue any existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal or Acquisition and will take the necessary steps to inform
the individuals or entities referred to above of the obligations undertaken by
them in this Section 9.6.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller hereby covenant and agree that between the date hereof
and the Closing Date, each shall act in accordance with the following:
10.1 Confidentiality.
10.1.1 Subject to the requirements of applicable law, Buyer
and Seller shall each keep confidential all information obtained by it with
respect to the other parties hereto in connection with this Agreement and the
negotiations preceding this Agreement ("Confidential Information"); provided
that, the parties hereto may furnish such Confidential Information to its
employees, agents
23
<PAGE>
and representatives who need to know such Confidential Information (including
its financial and legal advisers, its banks and other lenders) (collectively,
"Representatives"). Each party hereto shall, and shall cause each of such
party's Representatives to, use the Confidential Information solely in
connection with the transactions contemplated by this Agreement. If the
transactions contemplated hereby are not consummated for any reason, each party
shall return to such other party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such other party
in connection with this Agreement and the transactions contemplated hereby.
10.1.2 Notwithstanding anything contained in Section 10.1.1,
no party shall be required to keep confidential or return any Confidential
Information which: (a) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party; (b) is or
becomes publicly known through no fault of the receiving party or its agents;
(c) is required to be disclosed pursuant to an order or request of a judicial or
governmental authority (provided the disclosing party is given reasonable prior
notice of the order or request and the purpose of the disclosure); or (d) is
developed by the receiving party independently of the disclosure by the
disclosing party.
10.1.3 Notwithstanding anything to the contrary in this
Agreement, Buyer and its Affiliates shall, and Seller and its Affiliates shall,
in accordance with their respective legal obligations, including but not limited
to filings permitted or required by the Securities Act of 1933 and the
Securities and Exchange Act of 1934, the NASDAQ National Market and other
similar regulatory bodies, make (i) such press releases and other public
statements and announcements ("Releases") as such parties deem necessary and
appropriate in connection with this Agreement and the transactions contemplated
hereby, and (ii) any and all statements such parties deem to be necessary and
appropriate in any and all filings, prospectuses and other similar documents.
Each party shall use commercially reasonable efforts to provide the other party
with a copy of any Releases before any publication of same. The other party may
make comments to the party seeking to make the Release, provided however, that
the party seeking to make the release is not required to incorporate any such
comments into the Release.
10.1.4 Notwithstanding anything contained in this Agreement to
the contrary, any disclosures of Confidential Information in connection with any
American Sale shall not constitute a violation by Seller and its Affiliates of
the provisions of this Agreement.
10.2 Cooperation. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the satisfaction of any condition to
closing set forth herein.
10.3 Control of Station. Subject to the Time Brokerage Agreement, Buyer
shall not, directly or indirectly, control, supervise or direct the operations
of the Station prior to the Closing.
24
<PAGE>
Such operations, including complete control and supervision of all Station
programs, employees and policies, shall be the sole responsibility of Seller.
10.4 Consents to Assignment. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, transfer, delivery or sublease thereof. Subject to the
provisions of Section 11.6, in those cases where consents, assignments, releases
and/or waivers have not been obtained at or prior to the Closing to the transfer
and assignment to Buyer of the Contracts, this Agreement and any assignment
executed pursuant hereto, to the extent permitted by law, shall constitute an
equitable assignment by Seller to Buyer of all of Seller's rights, benefits,
title and interest in and to the Contracts, and where necessary or appropriate,
Buyer shall be deemed to be Seller's agent for the purpose of completing,
fulfilling and discharging all of Seller's rights and liabilities arising after
the Closing Date under such Contracts. Seller shall use its commercially
reasonable efforts to provide Buyer with the financial and business benefits of
such Contracts (including, without limitation, permitting Buyer to enforce any
rights of Seller arising under such Contracts), and Buyer shall, to the extent
Buyer is provided with the benefits of such Contracts, assume, perform and in
due course pay and discharge all debts, obligations and liabilities of Seller
under such Contracts to the extent that Buyer was to assume those obligations
pursuant to the terms hereof.
10.5 Filings. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller each shall use its commercially reasonable efforts
to obtain, and to cooperate with each other in obtaining, all authorizations,
consents, orders and approvals of any governmental authority that may be or
become necessary in connection with the consummation of the transactions
contemplated by this Agreement, and to take all reasonable actions to avoid the
entry of any order or decree by any governmental authority prohibiting the
consummation of the transactions contemplated hereby, including without
limitation, any reports or notifications that may be required to be filed with
the FCC or to be filed under the HSR Act with the Federal Trade Commission and
the Antitrust Division of the Department of Justice, and each shall furnish to
one another all such information in its possession as may be necessary for the
completion of the reports or notifications to be filed by the other.
10.6 Bulk Sales Laws. Buyer hereby waives compliance by Seller with the
provisions of the "bulk sales" or similar laws of any state. Seller agrees to
indemnify Buyer and hold it harmless from any and all loss, cost, damage and
expense (including but not limited to, reasonable attorney's fees) sustained by
Buyer as a result of any failure of Seller to comply with any "bulk sales" or
similar laws.
10.7 Employee Matters. The parties acknowledge and agree that this
Section 10.7 shall be subject to the rights and obligations of the parties set
forth in, and any prior actions taken by the
25
<PAGE>
parties pursuant to, the Time Brokerage Agreement. On the earlier to occur of
the Effective Date and the Closing Date, other than employees listed on Schedule
10.7, Buyer shall offer employment to all of the Station's employees listed on
Schedule 7.14, for job responsibilities and compensation generally comparable to
the employees' current positions as set forth on Schedule 7.14 (the "Hired
Employees"). In the event the Effective Date occurs prior to the Closing Date,
Seller shall continue to employ those persons necessary for Seller to comply
with the terms of the Time Brokerage Agreement ("Licensee Employees"), and
Seller shall terminate all other Hired Employees as of the Effective Date.
Seller shall provide Buyer access to its personnel records and personnel files,
and shall provide such other information regarding Seller's employees as Buyer
may reasonably request prior to the Effective Date of the Time Brokerage
Agreement or the Closing Date, as applicable. Seller shall be responsible for
the payment of all compensation and accrued employee benefits (except that the
liability with respect to vacation days accrued in calendar year 1997 only which
remain unused as of the last day of employment with Seller ("Accrued 1997
Vacation"), shall be the responsibility of Buyer and Buyer shall receive a
credit to the Purchase Price for such Accrued 1997 Vacation when determining
prorations pursuant to Section 3.3.1 hereof) payable to all Hired Employees
through the earlier to occur of the Effective Date and the Closing Date. Seller
also shall be responsible for providing any notice required by the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. ss.2101 et seq., or any
state statute requiring notice to any terminated or laid off employees, whether
such notice is required to be given before or after the Closing Date. All Hired
Employees shall be considered terminated employees of Seller and shall not be
entitled to receive from Buyer credit for any accrued vacation days, sick days,
personal days, paid time off or other such days; provided however, that (i) all
Hired Employees shall receive prior years' service credit for purposes of
entitlement to vacation, sick days and other similar days under Buyer's employee
benefit plans, and (ii) all Hired Employees who have 1997 Accrued Vacation shall
be entitled to receive, in Buyer's sole discretion in order to preserve the
orderly operations of the Station following the Closing: (a) payment for all
1997 Accrued Vacation, (b) days off in calendar year 1997 for such 1997 Accrued
Vacation, or (c) a combination of (a) and (b). With respect to group health
coverage, any Hired Employee and his or her dependents who are presently
participating in Seller's group health plan shall be entitled to immediately
participate in Buyer's health plan as of the earlier of the Effective Date and
the Closing Date without regard to preexisting conditions. However, Hired
Employees who are not currently participating in Seller's health plan who wish
to join Buyer's health plan, are subject to the terms and conditions under
Buyer's plan with regard to participation, including limits, if any, on coverage
for preexisting conditions. Seller acknowledges and agrees that it, and not
Buyer is, and after the earlier to occur of the Effective Date and the Closing
Date shall remain, solely responsible for any and all wages, compensation,
commission, bonuses, severance pay, insurance, supplemental pension, deferred
compensation, retirement and any other benefits, premiums and claims (other than
1997 Accrued Vacation to the extent Buyer receives a credit to the Purchase
Price for such accrued vacation), due, to become due, committed, accrued or
otherwise promised to any person who, as of the Effective Date (or the Closing
Date, as applicable), is a retiree, former employee or current employee of
Seller, relating to the period up to and including the Effective Date (or the
Closing Date, as applicable). Buyer, as purchaser of the Station Assets, shall
assume no employee benefit plans, programs, policies, or practices, whether or
not set forth in writing, maintained by Seller at any time. Seller shall be
permitted to (i) enter into "stay bonus" arrangements and agreements with
employees, provided that,
26
<PAGE>
Buyer assumes no liability for such arrangements, and (ii) grant any
compensation increases to Station employees not exceeding 5% of each employee's
current base compensation. Except as set forth on Schedule 10.7 and if the
Effective Date occurs prior to the Closing Date, as of the Closing Buyer shall
offer employment to the Licensee Employees, and such Licensee Employees shall,
as of and following the Closing, be treated in all respects as Hired Employees
pursuant to this Section 10.7. If the Closing Date occurs prior to the Effective
Date, all employees other than those set forth on Schedule 10.7 shall be treated
as Hired Employees for purposes of this Section 10.7.
10.8 Tangible Personal Property. Notwithstanding anything contained in
this Agreement to the contrary, the parties acknowledge that Schedule 7.7,
Schedule 1.2.8, Schedule 7.9(a) and Schedule 10.7 have not been finalized as of
the date of the execution of this Agreement. Within twenty (20) days immediately
following the date of this Agreement, the engineers of Seller and Buyer (or
their designated representatives), respectively, shall, acting reasonably and in
good faith, use commercially reasonable efforts to mutually determine and
designate the tangible personal property to be included in the Station Assets
and listed on Schedule 7.7, and the tangible personal property which shall be
excluded from the Station Assets and listed on Schedule 1.2.8; provided that, in
making such determinations and designations, Buyer shall be entitled to (i) all
tangible personal property currently used exclusively with respect to the
Station and (ii) pursuant to arrangements reasonably satisfactory to the
parties, all other tangible personal property necessary in order to operate the
Station as the Station is currently being operated or tangible personal property
which is comparable in nature and quality.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date or such earlier date as
specifically provided below, of each of the following conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes (i) expressly permitted or contemplated by the terms of this
Agreement, or (ii) occurring after the date of this Agreement which do not have
a material adverse effect on the Station or the Station Assets.
11.1.2 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to the Closing Date shall have
been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of
the Closing Date, from each of American and American License, executed by the
President and Chief Financial Officer of
27
<PAGE>
Seller, to the effect that: (a) except for changes expressly permitted or
contemplated by the terms of this Agreement or occurring as a result of Buyer's
actions under the Time Brokerage Agreement, the representations and warranties
of Seller contained in this Agreement are true and complete in all material
respects on and as of the Closing Date as if made on and as of that date; and
(b) Seller has complied with or performed in all material respects all terms,
covenants and conditions to be complied with or performed by it on or prior to
the Closing Date.
11.2 Governmental Consents. The FCC Consent shall have been obtained
and, subject to the provisions of Section 4.1 hereof, shall have become a Final
Order.
11.3 Station Licenses Renewal. The renewal shall have been granted by
the FCC of the Station Licenses for a full term to end no earlier than December
1, 2005, without condition materially adverse to Buyer or any of their
respective Affiliates.
11.4 Governmental Authorizations. American License shall be the holder
of the Station Licenses and all other licenses, permits and other authorizations
listed in Schedule 7.4, and there shall not have been any adverse modification
of any of such licenses, permits and other authorizations which has an adverse
effect on the Station or the operations thereof. No proceeding shall be pending
which reasonably could be expected to result in the revocation, cancellation,
failure to renew, suspension or adverse modification of the Station Licenses or
any other licenses, permits or other authorizations listed in Schedule 7.4.
11.5 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered against, any party hereto which could reasonably be expected to result
in: (a) rendering it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms; (b)
questioning the validity or legality of any transaction contemplated hereby; (c)
seeking to enjoin any transaction contemplated hereby; (d) seeking material
damages on account of the consummation of any transaction contemplated hereby;
or (e) a petition of bankruptcy by or against Seller, an assignment by Seller
for the benefit of its creditors, or other similar proceeding.
11.6 Third-Party Consents. All Material Contracts shall be in full
force and effect on the Closing Date. Seller shall have obtained and shall have
delivered to Buyer all third-party consents to the assignment of the Material
Contracts.
11.7 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Station Assets to Buyer, including, without
limitation, each of the documents required to be delivered by them pursuant to
Article 14.
11.8 Title Insurance and Surveys. Within fifteen (15) days of the date
of this Agreement, Seller shall provide Buyer with access to all buildings,
structures, improvements and fixtures
28
<PAGE>
comprising part of the real estate subject to the Real Estate Contracts, and
within thirty (30) days following the date Buyer is given such access Buyer
shall have received (at Buyer's expense): (a) commitments for ALTA title
insurance policies with respect to the real property subject to the Real Estate
Contracts which are in all material respects acceptable to Buyer in Buyer's
judgment reasonably exercised, subject to Permitted Liens (the "Titles"); and
(b) staked-on-ground boundary surveys of the real estate subject to the Real
Estate Contracts, certified current as of the date of delivery thereof, prepared
by a duly licensed and registered land surveyor, and which are in all material
respects acceptable to Buyer in Buyer's judgment reasonably exercised, subject
to Permitted Liens (the "Surveys"). The Titles and the Surveys will be ordered
by the Buyer, and shall in all material respects be acceptable to Buyer in
Buyer's judgment reasonably exercised. Buyer shall pay all costs and expenses of
obtaining the Titles and the Surveys, including without limitation, all title
insurance premiums associated therewith. The Surveys shall be made and prepared
in accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, jointly established and adopted by ALTA and ACSM in 1986.
Notwithstanding the above, if Buyer does not notify Seller within thirty-five
(35) days following the date Buyer is given access to the real estate subject to
the Real Estate Contracts that the Titles and/or Surveys are not in all material
respects acceptable to Buyer in Buyer's judgment reasonably exercised, then this
condition shall be deemed waived by Buyer.
11.9 Real Estate. Within fifteen (15) days of the date of this
Agreement, Seller shall provide Buyer with access to all buildings, structures,
improvements and fixtures comprising part of the real estate subject to the Real
Estate Contracts, and Buyer shall have determined, in its judgment reasonably
exercised, that services for utilities, including without limitation, for water
and sewer service, telephone service, electric and/or gas service, and sanitary
services are sufficient in all material respects to service the current use of
the real property subject to the Real Estate Contracts. Notwithstanding the
above, if Buyer does not notify Seller within ten (10) days following the date
Buyer is given access to the real estate subject to the Real Estate Contracts
that this condition has not been satisfied, then this condition shall be deemed
waived by Buyer.
11.10 Building and Mechanical Inspection. Within fifteen (15) days of
the date of this Agreement, Seller shall provide Buyer with access to all
buildings, structures, improvements and fixtures comprising part of the real
estate subject to the Real Estate Contracts, and subsequently Buyer shall have
ordered and received an inspection report from a reputable engineer, at Buyer's
sole expense and in Buyer's sole discretion, indicating that all buildings,
structures, improvements and fixtures comprising part of the real estate subject
to the Real Estate Contracts are (i) in all material respects in good operating
condition, (ii) have no latent structural, mechanical or other defects of
material significance, (iii) are reasonably suitable for the purposes for which
they are being used, and (iv) have reasonably adequate rights of ingress and
egress. Notwithstanding the above, if Buyer does not notify Seller within ten
(10) days following the date Buyer is given access to the real estate subject to
the Real Estate Contracts that the inspection report does not meet the standards
set forth in (i) through (iv) above, then this condition shall be deemed waived
by Buyer.
11.11 Pre-Merger Notification. If applicable, any waiting period under
the HSR Act with respect to the transactions contemplated by this Agreement
shall have elapsed or been terminated.
29
<PAGE>
11.12 No Adverse Change. No material adverse change in condition or
status of the Station or Station Assets shall have occurred, or be threatened or
be reasonably likely to occur, unless caused due to the occurrence of any TBA
Events.
11.13 KSJO Tower Sublease and KUFX Studio Sublease. Buyer and a
subsidiary of Seller shall have executed and delivered a sublease for tower
space for the Station in the form of Exhibit I ("KSJO Tower Sublease"), and
Buyer and Seller shall have executed and delivered a sublease for studio space
for KUFX(FM) in the form of Exhibit J ("KUFX Studio Sublease").
11.14 Time Brokerage Agreement. From the date hereof through the
Closing Date, the Time Brokerage Agreement shall not have been terminated by
Buyer as permitted by the Time Brokerage Agreement as a result of Seller's
material noncompliance with its obligations under the Time Brokerage Agreement.
11.15 Tangible Personal Property. Buyer and Seller shall have agreed on
the determination and designation of tangible personal property to be included
in, and excluded from, the Station Assets in accordance with Section 10.8.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
12.1.2 All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by an officer of Buyer, to the effect that: (a) the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date; and (b) that Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consent shall have been obtained
and, subject to the provisions of Section 4.1 hereof, shall have become a Final
Order.
30
<PAGE>
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other decree or judgment of any
court, agency or other governmental authority shall have been rendered (and
remain in effect) against, any party hereto which: (a) would render it unlawful,
as of the Closing Date, to effect the transactions contemplated by this
Agreement in accordance with its terms; (b) questions the validity or legality
of any transaction contemplated hereby; (c) seeks to enjoin any transaction
contemplated hereby; (d) seeks material damages on account of the consummation
of any transaction contemplated hereby; or (e) is a petition of bankruptcy by or
against Buyer, an assignment by Buyer for the benefit of its creditors, or other
similar proceeding.
12.4 Pre-Merger Notification. If applicable, any waiting period under
the HSR Act with respect to the transactions contemplated by this Agreement
shall have elapsed or been terminated.
12.5 Closing Documents. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, each of the documents and Purchase
Price required to be delivered by it pursuant to Article 14.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
13.1 Expenses. Except as set forth in Section 13.2 and 13.3 hereof or
otherwise expressly set forth in this Agreement, each party hereto shall be
solely responsible for all costs and expenses incurred by it in connection with
the negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to the costs and expenses incurred
pursuant to Article 5 hereof and the fees and disbursements of counsel and other
advisors.
13.2 Transfer Taxes and Similar Charges. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be paid according to local customs.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any govern mental authority the consent of which or the filing with
which is required for the consummation of the transactions contemplated hereby
shall be paid equally by Buyer and Seller.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
31
<PAGE>
14.1.1 Certified resolutions of American and American License
approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.1.2 A certificate of American and American License, dated
the Closing Date, in the form described in Section 11.1.3;
14.1.3 Governmental certificates showing that American and
American License are each duly organized and in good standing in the State of
Delaware, and authorized to do business in the State of California, each
certified as of a date not more than ten (10) business days before the Closing
Date;
14.1.4 Such certificates, bills of sale, assignments, general
warranty deeds, documents of title and other instruments of conveyance,
assignment and transfer (including without limitation any necessary consents to
conveyance, assignment or transfer), and Lien releases, all in form reasonably
satisfactory to Buyer and Buyer's counsel, as shall be effective to vest in
Buyer good title in and to the Station Assets, free, clear and unencumbered,
except for Permitted Liens.
14.1.5 An Assignment and Assumption Agreement in the form of
Exhibit C effectuating the assignment and assumption of the Assumed Liabilities
(the "Assignment and Assumption Agreement").
14.1.6 At the time and place of Closing, originals and all
copies of all program, operations, transmission or maintenance logs and all
other records required to be maintained by the FCC with respect to the Station,
including the public files of the Station, shall be left at the Station and
thereby delivered to Buyer;
14.1.7 A written opinion of Seller's General Counsel in the
form of Exhibit D, dated as of the Closing Date;
14.1.8 A written opinion of Seller's FCC counsel in the form
of Exhibit E, dated as of the Closing Date;
14.1.9 Estoppel certificates, if any, substantially in the
form of Exhibit G obtained from the lessors under the Real Estate Contracts and
under the Tower Lease;
14.1.10 SNDA's, if any, in the form of Exhibit H;
14.1.11 The KSJO Tower Sublease, in the form attached hereto
as Exhibit I
14.1.12 The KUFX Studio Sublease, in the form attached hereto
as Exhibit J; and
14.1.13 Such additional information, materials, agreements,
documents and instruments as Buyer and its counsel may reasonably request in
order to consummate the Closing.
32
<PAGE>
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the
form described in Section 12.1.3.
14.2.3 The Assignment and Assumption Agreement;
14.2.4 A written opinion of Buyer's counsel in the form of
Exhibit F, dated as of the Closing Date;
14.2.5 The KSJO Tower Sublease;
14.2.6 The KUFX Studio Sublease;
14.2.7 The Purchase Price in accordance with Section 3.1
hereof;
14.2.8 Such additional information, materials, agreement,
documents and instruments as Seller and its counsel may reasonably request in
order to consummate the Closing.
ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC.
15.1 Survival of Representations, Etc. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) as follows:
15.1.1 The Agreements shall survive the Closing for a period
from the Closing Date equal to the statute of limitations for written contracts
in California.
15.1.2 The Warranties in Sections 6.2, 6.6, 7.2, the third
sentence of 7.7, and 7.11 shall survive the Closing without limitation.
15.1.3 The Warranties in Section 7.6 or otherwise relating to
the federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
33
<PAGE>
15.1.4 All other Warranties shall survive for a period of
eighteen (18) months from the Closing Date.
15.1.5 The right of any party to recover Damages (as defined
in Section 15.2.1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.6 Notwithstanding any provision hereof to the contrary,
there shall be no contractual time limit in which Buyer or Seller may bring any
action for actual fraud (a "Fraud Action"), regardless of whether such actual
fraud also included a breach of any Agreement or Warranty; provided, however,
that any Fraud Action must be brought within the period of the applicable
statute of limitations plus any extensions or waivers granted or imposed with
respect thereto.
15.2 Indemnification.
15.2.1 Seller shall defend, indemnify and hold harmless Buyer
from and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer
arising out of or related to: (a) any breach of the Agreements or Warranties
given or made by Seller in this Agreement; (b) the Retained Liabilities; (c)
creditors' claims with respect to noncompliance with any bulk sales law, except
to the extent such claims are Assumed Liabilities; (d) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of the Station Assets prior to the Closing Date; and (e) the Norve vs.
Laguna Seca Raceway, et al. and Kristen Goss v. Laguna Seca Raceway, et. al.
litigation matters set forth on Schedule 7.15.
15.2.2 Buyer shall defend, indemnify and hold harmless Seller
from and against any and all Damages incurred by Seller arising out of or
related to: (a) any breach of the Agreements and Warranties given or made by
Buyer in this Agreement; (b) the Assumed Liabilities; and (c) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of any of the Station Assets on or after the Closing Date.
15.2.3 Notwithstanding the foregoing, the rights of Buyer and
Seller to obtain indemnification under this Article 15 shall be subject to the
following provisions:
(a) Seller shall not be obligated to indemnify Buyer for
Damages pursuant to Section 15.2.1 unless the aggregate amount owed by Seller to
Buyer pursuant to Section 15.2.1 exceeds $100,000 ("Seller's Threshold"), in
which event Seller shall be required to indemnify Buyer for the entire amount
owed; provided that Seller's maximum liability for the entire amount owed
pursuant to Section 15.2.1 is $3,000,000 (the "Seller's Cap").
34
<PAGE>
(b) Buyer shall not be obligated to indemnify Seller for
Damages pursuant to Section 15.2.2 unless the aggregate amount owed by Buyer to
Seller pursuant to Section 15.2.2 exceeds $100,000 ("Buyer's Threshold"), in
which event Buyer shall be required to indemnify Sellers for the entire amount
owed; provided that Buyer's maximum liability pursuant to Section 13.2.2 is
$3,000,000 ("Buyer's Cap").
(c) Notwithstanding anything contained in this Section 15.2.3,
any claims by Buyer against Seller for damages resulting from (i) a breach of
any Warranties of the Seller set forth in Section 7.2 and the third sentence of
7.7, and (ii) a breach of any Agreements of Seller, shall not be subject to the
Seller's Threshold or the Seller's Cap, as applicable.
(d) Notwithstanding anything contained in this Section 15.2.3,
any claims by Seller against Buyer for damages resulting from (i) a breach of
any Warranties of the Buyer set forth in Section 6.2, and (ii) a breach of any
Agreements of Buyer, shall not be subject to the Buyer's Threshold or the
Buyer's Cap, as applicable.
15.3 Procedures: Third Party and Direct Indemnification Claims. The
indemnified party agrees to give written notice within a reasonable time to the
indemnifying party of any demand, suit, claim or assertion of liability by third
parties or other circumstances that could give rise to an indemnification
obligation hereunder against the indemnifying party (hereinafter collectively
"Claims," and individually a "Claim"), it being understood that the failure to
give such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as set
forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced. The parties also agree that any claim for Damages arising
directly between the parties relating to this Agreement may be brought at any
time within the period specified in Section 15.1, and that the only notice
required with respect thereto shall be as specified in Section 15.1.5.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.3.2 In the event that the indemnifying party shall elect
not to undertake such defense or opposition, or within ten days after notice of
any such Claim from the indemnified party shall fail to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, compromise or settlement of
such Claim, 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 or opposition to such Claim at
any time prior to settlement, compromise or final determination thereof).
35
<PAGE>
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim; and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim, 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 Claim and the indemnifying
party and the indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such Claim.
15.3.4 The parties agree that all claims not disputed by the
indemnifying party shall be paid by the indemnifying party within thirty (30)
days after receiving notice of the Claim. "Disputed Claims" shall mean claims
for Damages by an indemnified party which the indemnifying party objects to in
writing within thirty (30) days after receiving notice of the Claim. In the
event there is a Disputed Claim with respect to any Damages, the indemnifying
party shall be required to pay the indemnified party the amount of such Damages
for which the indemnifying party has, pursuant to a final determination, been
found liable within ten (10) days after there is a final determination with
respect to such Disputed Claim. As used in this Section 15.3.4, a final
determination of a Disputed Claim shall be (i) a judgment of any court
determining the validity of a Disputed Claim, if no appeal is pending from such
judgment and if the time to appeal therefrom has elapsed; (ii) an award of any
arbitration determining the validity of such disputed claim, if there is not
pending any motion to set aside such award and if the time within which to move
to set aside such award has elapsed; (iii) a written termination of the dispute
with respect to such claim signed by all of the parties thereto or their
attorneys; (iv) a written acknowledgment of the indemnifying party that it no
longer disputes the validity of such claim; or (v) such other evidence of final
determination of a disputed claim as shall be acceptable to the parties.
15.3.5 No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
15.4 Indemnification; Sole and Exclusive Remedy. Following the Closing,
the sole and exclusive remedy for Buyer or Seller for any Claim for a breach of
any Agreement or Warranty, or any other claim which would also be a breach of an
Agreement or Warranty (whether such Claim is framed in tort, contract or
otherwise; but excluding any Fraud Action and any action arising out of Seller's
or Buyer's willful misconduct or gross negligence, as the case may be), shall be
a claim for indemnification pursuant to this Article 15. Anything in this
Agreement or any applicable law to the contrary notwithstanding, it is
understood and agreed by Buyer and Seller that no shareholder, director,
officer, employee, agent or Affiliate of Seller or Buyer, as the case may be,
shall have (i) any personal liability to the other party as a result of the
breach of any Agreement or Warranty contained herein, or any other claim which
would also be a breach of an Agreement or Warranty,
36
<PAGE>
or (ii) any personal obligation to indemnify the other party for any of such
party's claims pursuant to Section 15.2, and such party waives and releases and
shall have no recourse against any of such parties described in this Section
15.4 as a result of the breach of any Agreement or Warranty contained herein, or
any other claim which would also be a breach of an Agreement or Warranty.
ARTICLE 16
TERMINATION RIGHTS
16.1 Termination. This Agreement may be terminated at any time prior to
Closing as follows:
16.1.1 Upon the mutual written consent of Buyer and Seller,
this Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; or
16.1.4 By written notice of Buyer to Seller, or by Seller to
Buyer, if the FCC denies the FCC Application or designates it for a trial-type
hearing; or
16.1.5 By written notice of Buyer to Seller, or by Seller to
Buyer, if any court of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
16.1.6 By written notice of Buyer to Seller, or by Seller to
Buyer, if the Closing shall not have been consummated on or before the later of
(i) July 1, 1998, and (ii) sixty (60) days following the FCC's grant of the
renewal of each of the Station Licenses without condition materially adverse to
Seller or Buyer or any of their respective Affiliates, but in no event later
than December 31, 1998 ("the Drop Dead Date"); or
16.1.7 By written notice of Buyer to Seller under the
conditions set forth in Section 9.2 hereof. Notwithstanding the foregoing, no
party hereto may effect a termination hereof if such party is in material
default or breach of this Agreement.
37
<PAGE>
16.2 Liability. Except as set forth in Section 16.4 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of a default by Seller which
results in the filing of a lawsuit for damages, specific performance, or other
remedy, Buyer shall be entitled to reimbursement by Seller of reasonable legal
fees and expenses incurred by Buyer; provided that Buyer prevails in such
lawsuit.
16.4 Seller's Liquidated Damages. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due solely to Buyer's material
breach of this Agreement, and Seller is not at that time in material breach
hereof, then Seller shall be entitled to retain the Escrow Deposit, plus
interest, which amount shall constitute liquidated damages. It is understood and
agreed that such liquidated damages amount represents Buyer's and Seller's
reasonable estimate of actual damages and does not constitute a penalty.
Recovery of liquidated damages shall be the sole and exclusive remedy of Seller
against Buyer for failing to consummate this Agreement as a result of Buyer's
material breach hereof and shall be applicable regardless of the actual amount
of damages sustained and all other remedies are deemed waived by Seller. In the
event of a default by Buyer which results in the filing of a lawsuit to recover
the Escrow Deposit as liquidated damages, Seller shall be entitled to
reimbursement by Buyer of reasonable legal fees and expenses incurred by Seller;
provided that Seller prevails in such lawsuit.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Risk of Loss. (a) The risk of loss, damage or impairment of any of
the Station Assets prior to the Closing Date from any cause whatsoever shall be
upon Seller. In the event of any loss, damage or impairment, confiscation or
condemnation, the proceeds of any claim for loss payable under any insurance
policy, judgment or award with respect thereto shall be applied to repair,
replace or restore such Station Assets to their prior condition as soon as
practicable after such loss, impairment, condemnation or confiscation.
(b) In the event of any damage or destruction of the Station Assets
that interferes in a material respect with the normal operation of the Station,
if such Station Assets have not been repaired, restored or replaced in all
material respects by the Closing Date: (i) Buyer may elect, at its option, to
close this Agreement and complete the restoration, repair or replacement of such
damaged Station Assets after the Closing Date, in which event (a) Seller shall
deliver to Buyer the amount of any deductible and all remaining insurance
proceeds received, to the extent not already
38
<PAGE>
expended by Seller in connection with such damage or destruction of the Station
Assets, (b) there shall be no adjustment to the Purchase Price, and (c) Buyer
shall bear any additional costs or expenses incurred by Buyer, in excess of such
deductible, if any, and such insurance proceeds, in completing such repair,
restoration or replacement; or (ii) if Buyer does not so elect the preceding
option (i), either Buyer or Seller may elect, at its option, to postpone the
Closing for up to ninety (90) days to permit Seller to repair, restore or
replace such Station Assets in all material respects; provided that it is
understood and agreed that Seller shall have no obligation to make any repairs,
restoration or replacements if Seller concludes that such repairs, restoration
or replacements are not commercially reasonable; or (iii) if neither Buyer nor
Seller shall so elect any of the preceding options, either Buyer or Seller may
elect, at its option, to terminate this Agreement forthwith, without any further
obligation of either party hereunder (other than return of the Escrow Deposit,
plus interest), by written notice to the other party hereto. If the Closing is
postponed pursuant to this paragraph, the date of the closing shall be mutually
agreed to by Seller and Buyer after completion of restoration, replacement or
repair.
17.2 Certain Interpretive Matters and Definitions. Unless the context
otherwise requires: (a) all references to Sections, Articles, Schedules or
Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement; (b) each term defined in this Agreement has the meaning assigned to
it; (c) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect on the date hereof; (d) "or" is disjunctive but not
necessarily exclusive; (e) words in the singular include the plural and vice
versa; (f) the term "Affiliate" has the meaning given it in Rule 12b-2 of
Regulation 12B under the Securities Exchange Act of 1934, as amended; and (g)
all references to "$" or dollar amounts will be to lawful currency of the United
States of America.
17.3 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order more effectively to
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Station Assets being transferred hereunder, free, clear
and unencumbered, and Buyer shall from time to time, at the request of and
without further cost or expense to Seller, execute and deliver such other
instruments and take such other actions as may reasonably be requested in order
more effectively to relieve Seller of any obligations being assumed by Buyer
hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of Buyer;
provided that, the occurrence of the American Sale shall not constitute a
violation by Seller hereunder. Upon the consummation of the American Sale, the
successor or assignee of Seller pursuant to such American Sale shall be bound by
the terms of this Agreement and the Time Brokerage Agreement. In light of the
American Sale Agreement, Buyer shall take, at Seller's expense, actions that may
be reasonably requested by Seller in order to file a new FCC Application or
amend the existing FCC Application to reflect that the "Seller" hereunder may
become a different party from the current Seller or that a change of control of
Seller may occur as a result of the
39
<PAGE>
American Sale. The failure to obtain the FCC Consent or any other required
consent or approval by the Drop Dead Date resulting solely from a delay in the
closing of the American Sale shall not constitute a breach by Seller of this
Agreement. Buyer shall have the right to assign and/or delegate all or any
portion of its rights under this Agreement as collateral. In the event Buyer
finds it necessary or is required to provide to a third party such collateral
assignment of the Buyer's interest in this Agreement and/or any related
documents, Seller shall cooperate with the Buyer and any third party requesting
such assignment including but not limited to Seller signing a consent and
acknowledgment of such assignment. All covenants, agreements, statements,
representations, warranties and indemnities in this Agreement by and on behalf
of any of the parties hereto shall bind and inure to the benefit of their
respective successors and permitted assigns of the parties hereto.
17.5 Amendments. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.6 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.7 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of California without giving effect
to the choice of law provisions thereof. Any action, suit or proceeding brought
by any party to this Agreement relating to or arising out of this Agreement or
any other agreement, instrument, certificate or other document delivered
pursuant hereto (or the enforcement hereof or thereof) must be brought and
prosecuted as to all parties in, and each of the parties hereby consents to
service of process, personal jurisdiction and venue in, the state and Federal
courts of general jurisdiction located in Santa Clara County, California.
17.8 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch) and
shall be addressed to the following addresses, or to such other address as any
party may request, in the case of Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
40
<PAGE>
To Buyer: Randy Michaels, President
Citicasters Co.
50 East RiverCenter Boulevard
12th Floor
Covington, Kentucky 41011
Fax: (606) 655-9345
Copy to: Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attention: John J. Kropp, Esq.
Fax: (513) 651-3836
To Seller: American Radio Systems Corporation
Attn: Steven B. Dodge, President and Chief
Executive Officer
116 Huntington Avenue
Boston, Massachusetts 02116
Fax: (617) 375-7575
Copy to: Dow, Lohnes & Albertson
Attn: John T. Byrnes, Esq.
1200 New Hampshire Avenue, N.W., Suite 800
Washington, DC 20036-6802
Fax: (202) 776-2222
17.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
17.10 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.11 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.12 Entire Agreement. This Agreement, the exhibits and the schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein.
41
<PAGE>
[SIGNATURES ON FOLLOWING PAGE]
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
CITICASTERS CO.
By: _________________________________________
Name: _________________________________________
Title: _________________________________________
AMERICAN RADIO SYSTEMS CORPORATION
By: _________________________________________
Name: _________________________________________
Title: _________________________________________
AMERICAN RADIO SYSTEMS LICENSE CORP.
By: _________________________________________
Name: _________________________________________
Title: _________________________________________
43
<PAGE>
INDEX OF DEFINED TERMS
$ ..........................................................40
Accrued 1997 Vacation.......................................................26
Acquisition ..........................................................23
Acquisition Proposal........................................................23
Affiliate ..........................................................40
Agreement ...........................................................1
Agreements ..........................................................34
American ...........................................................1
American License ...........................................................1
American Sale ..........................................................23
American Sale Agreement.....................................................23
Assignment and Assumption Agreement.........................................33
Assumed Liabilities..........................................................4
Barter Payable ...........................................................6
Barter Receivable ...........................................................6
Buyer ...........................................................1
Buyer's Cap ..........................................................35
Buyer's Threshold ..........................................................35
Claim ..........................................................36
Claims ..........................................................36
Closing ...........................................................7
Closing Date ...........................................................7
Collection Period ..........................................................19
Confidential Information....................................................24
Contracts ...........................................................2
Damages ..........................................................35
Deposit Escrow Agent.........................................................5
Deposit Escrow Agreement.....................................................5
Disputed Claims ..........................................................37
Drop Dead Date ..........................................................38
Effective Date ...........................................................6
Environmental laws..........................................................15
ERISA ..........................................................17
Escrow Deposit ...........................................................5
Excluded Assets ...........................................................3
FCC Application ...........................................................8
FCC Consent ...........................................................8
Final ...........................................................7
Final Order ...........................................................7
Financial Statement Date....................................................16
Financial Statements........................................................16
I
<PAGE>
Fraud Action ..........................................................34
Hired Employees ..........................................................26
HSR Act ...........................................................8
Initial Approval ...........................................................7
Intellectual Property........................................................2
Interim Financial Statements................................................22
KSJO Tower Sublease.........................................................30
KUFX Studio Sublease........................................................30
Licensee Employees..........................................................26
Liens ...........................................................3
Material Contracts..........................................................15
Prior Financial Statements..................................................16
Purchase Price ...........................................................5
Real Estate Contracts.......................................................14
Releases ..........................................................24
Representatives ..........................................................24
Retained Liabilities.........................................................5
Seller ...........................................................1
Seller Accounts Receivable..................................................19
Seller Financial Statements.................................................16
Seller's Cap ..........................................................35
Seller's Threshold..........................................................35
SNDA ..........................................................22
Station ...........................................................1
Station Assets ...........................................................1
Station Licenses ...........................................................1
Surveys ..........................................................29
TBA Events ..........................................................10
Time Brokerage Agreement.....................................................7
Time Sales Agreements........................................................4
Titles ..........................................................29
Tower Lease ..........................................................22
Trade Agreements ...........................................................4
Trade Report ...........................................................6
Warranties ..........................................................34
II
EXHIBIT 10.14
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN RADIO SYSTEMS CORPORATION
AND
CLASSIC BROADCASTING, INC.
* * *
SEPTEMBER 24, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................1
"Accounts Receivable"...............................................1
"Assets"............................................................1
"Assumed Contracts".................................................1
"Closing"...........................................................2
"Closing Date"......................................................2
"Consents"..........................................................2
"Contracts".........................................................2
"Escrow Agent"......................................................2
"Escrow Agreement"..................................................2
"FCC"...............................................................2
"FCC Consent".......................................................2
"FCC Licenses"......................................................2
"Final Order".......................................................2
"Intangibles".......................................................2
"Licenses"..........................................................3
"Purchase Price"....................................................3
"Real Property".....................................................3
"Tangible Personal Property"........................................3
"Time Brokerage Agreement"..........................................3
SECTION 2. PURCHASE AND SALE OF ASSETS......................................3
2.1 Agreement to Sell and Buy..................................3
2.2 Excluded Assets............................................4
2.4 Payment of Purchase Price..................................6
2.5 Allocation of Purchase Price...............................6
2.6 Assumption of Liabilities and Obligations..................6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.........................7
3.1 Organization, Standing, and Authority......................7
3.2 Authorization and Binding Obligation.......................7
3.3 Absence of Conflicting Agreements..........................7
3.4 Governmental Licenses......................................7
3.5 Title to and Condition of Real Property....................8
3.6 Title to and Condition of Tangible Personal Property.......8
3.7 Assumed Contracts..........................................9
3.8 Consents...................................................9
- i -
<PAGE>
Page
3.9 Intangibles................................................9
3.10 Financial Statements.......................................9
3.11 Insurance.................................................10
3.12 Reports...................................................10
3.13 Personnel.................................................10
3.14 Taxes.....................................................11
3.15 Claims and Legal Actions..................................11
3.16 Environmental Matters.....................................12
3.17 Compliance with Laws......................................13
3.18 Conduct of Business in Ordinary Course....................13
3.19 Transactions with Affiliates..............................14
3.20 Broker....................................................14
3.21 Full Disclosure...........................................14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................15
4.1 Organization, Standing, and Authority.....................15
4.2 Authorization and Binding Obligation......................15
4.3 Absence of Conflicting Agreements.........................15
4.4 Broker....................................................15
4.5 Full Disclosure...........................................15
4.6 FCC Qualification.........................................16
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING......................16
5.1 Generally.................................................16
5.2 Compensation..............................................16
5.3 Contracts.................................................16
5.4 Disposition of Assets.....................................16
5.5 Encumbrances..............................................16
5.6 Licenses..................................................16
5.7 Rights....................................................17
5.8 No Inconsistent Action....................................17
5.9 Access to Information.....................................17
5.10 Maintenance of Assets.....................................17
5.11 Insurance.................................................17
5.12 Consents..................................................17
5.13 Books and Records.........................................17
5.14 Notification..............................................17
5.15 Compliance with Laws......................................18
5.16 Financing Leases..........................................18
- ii -
<PAGE>
Page
5.17 Programming...............................................18
5.18 Preservation of Business..................................18
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS................................18
6.1 FCC Consent...............................................18
6.2 Control of the Station....................................19
6.3 Risk of Loss..............................................19
6.4 Confidentiality...........................................19
6.5 Cooperation...............................................19
6.6 Sales Tax Filings.........................................20
6.7 FCC Applications..........................................20
6.8 Noncompetition Agreement..................................20
6.9 Studio Lease..............................................20
6.10 Time Brokerage Agreement..................................20
6.11 Accounts Receivable.......................................20
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING................................................21
7.1 Conditions to Obligations of Buyer........................21
7.2 Conditions to Obligations of Seller.......................22
SECTION 8. CLOSING AND CLOSING DELIVERIES..................................23
8.1 Closing...................................................23
8.2 Deliveries by Seller......................................23
8.3 Deliveries by Buyer.......................................24
SECTION 9. TERMINATION.....................................................25
9.1 Termination by Seller.....................................25
9.2 Termination by Buyer......................................25
9.3 Rights on Termination.....................................26
9.4 Escrow Deposit............................................26
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES........................27
10.1 Representations and Warranties............................27
10.2 Indemnification by Seller.................................27
10.3 Indemnification by Buyer..................................28
10.4 Procedure for Indemnification.............................28
10.5 Specific Performance......................................29
- iii -
<PAGE>
Page
10.6 Attorneys' Fees...........................................30
SECTION 11. MISCELLANEOUS..................................................30
11.1 Fees and Expenses.........................................30
11.2 Notices...................................................30
11.3 Benefit and Binding Effect................................31
11.4 Further Assurances........................................31
11.5 Governing Law.............................................31
11.6 Headings..................................................31
11.7 Gender and Number.........................................31
11.8 Entire Agreement..........................................32
11.9 Waiver of Compliance; Consents............................32
11.10 Press Release.............................................32
11.11 CONSENT TO JURISDICTION ..................................32
11.12 Exclusive Negotiations....................................32
11.13 Counterparts..............................................33
- iv -
<PAGE>
LIST OF SCHEDULES
Schedule 2.2 -- Excluded Assets
Schedule 2.3(c) -- Trades to be Retained by Buyer
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Financial Statements
Schedule 3.13 -- Employee Matters
Schedule 3.15 -- Litigation
Schedule 6.8 -- Form of Noncompetition Agreement
Schedule 6.9 -- Form of Studio Lease
Schedule 9.4 -- Form of Escrow Agreement
- v -
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of the 24th day of September,
1997, by and between American Radio Systems Corporation, a Delaware corporation
("Buyer"), and Classic Broadcasting, Inc., a California corporation ("Seller").
R E C I T A L S
A. Seller is the licensee of Radio Station KEZN-FM, Palm Desert,
California (the "Station") pursuant to authorizations issued by the Federal
Communications Commission.
B. Seller desires to sell, and Buyer desires to buy, substantially all
the assets that are used or useful in the operation of the Station, for the
price and on the terms and conditions set forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising or programming time run on the Station by Seller prior to
the Adjustment Time.
"Adjustment Time" means 12:01 a.m., local California time, on the
effective date of the Time Brokerage Agreement.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are specifically designated as Contracts that are to be assumed by Buyer upon
its purchase of the Station and (ii) any Contracts entered into by Seller
between the date of this Agreement and the Closing Date that Buyer agrees in
writing to assume.
<PAGE>
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"Escrow Agent" means Star Media Group, Inc.
"Escrow Agreement" means the Escrow Agreement, of even date herewith,
by and among Buyer, Seller and the Escrow Agent in the form of Schedule 9.4
hereof.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used or useful in
the operation of the Station, together with any additions thereto between the
date of this Agreement and the Closing Date.
- 2 -
<PAGE>
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities in connection with the conduct of the business or
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, rights of way, all buildings and other
improvements thereon, and other real property interests which are used or useful
in the operation of the Station, together with any additions thereto between the
date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property which is used or useful in the
operation of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of the date hereof between Seller and Buyer.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver to
Buyer on the Closing Date, and Buyer agrees to purchase on the Closing Date, all
of the tangible and intangible assets, both real and personal, used or useful in
the operation of the Station, together with any additions thereto between the
date of this Agreement and the Closing Date, but excluding the assets described
in Section 2.2, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except for current taxes not yet due and payable), including the
following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
- 3 -
<PAGE>
(e) The Intangibles and all other intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) Except for the documents described in Section 2.2(b), all
of Seller's proprietary information, technical information and data, machinery
and equipment warranties, maps, computer discs and tapes, plans, diagrams,
blueprints, and schematics (including filings with the FCC relating to the
business and operation of the Station) which are in the possession of Seller or
to which Seller has access;
(g) All choses in action of Seller relating to the Station;
and
(h) Except for the documents described in Section 2.2(b), all
books and records relating to the business or operations of the Station which
are in the possession of Seller or to which Seller has access, and all records
required by the FCC to be kept by the Station and executed copies of the Assumed
Contracts.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other cash
in any of Seller's bank or savings accounts; any insurance policies, letters of
credit, or other similar items and cash surrender value in regard thereto; and
any stocks, bonds, certificates of deposit and similar investments;
(b) All books and records of Seller that pertain to Seller's
corporate organization;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
(d) The art and furniture located in Paul Posen's office which
are listed on Schedule 2.2 hereto;
(e) The Accounts Receivable; and
(f) The Real Property of Seller which is located at the
current studio site of the Station, except to the extent Buyer acquires a
leasehold interest therein pursuant to the Studio Lease.
- 4 -
<PAGE>
2.3 Purchase Price.
(a) The Purchase Price for the Assets shall be Five Million
One Hundred Thousand Dollars ($5,100,000), adjusted as provided in Sections
2.3(b) and (c) below.
(b) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses and income of the
Station as of 12:01 a.m., local California time, on the Closing Date, except
that there shall be no proration for expenses for which Buyer is obligated to
reimburse Seller under the Time Brokerage Agreement and for income that belongs
to Buyer under the terms of the Time Brokerage Agreement which shall be governed
by the terms of the Time Brokerage Agreement. All expenses and income arising
from the operation of the Station, including business and license fees, utility
charges, real and personal property taxes and assessments levied against the
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, taxes (except for taxes arising from the transfer of
the Assets under this Agreement), FCC regulatory fees, and similar prepaid and
deferred items, shall be prorated between Buyer and Seller in accordance with
the principle that (i) Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, other than
expenses for which Buyer is obligated to reimburse Seller under the Time
Brokerage Agreement, and Buyer shall be responsible for all expenses, costs, and
obligations allocable to the period on and after the Closing Date and (ii)
Seller shall be entitled to all income allocable to the period prior to the
Closing Date, other than income to which Buyer is entitled under the Time
Brokerage Agreement, and Buyer shall be entitled to all income allocable to the
period on or after the Closing Date. Notwithstanding the preceding sentence,
there shall be no adjustment for, and Seller shall remain solely liable with
respect to, any Contracts not included in the Assumed Contracts and any other
obligation or liability not being assumed by Buyer in accordance with Section
2.6.
(c) Trade Adjustment. The Purchase Price shall be reduced to
the extent that the amount of any advertising time remaining to be run by the
Station under its trade or barter agreements as of the Adjustment Time exceeds
the value of the goods or services to be received by the Station under such
trade or barter agreements as of the Adjustment Time. For purposes of this
Section, the liability of the Station for unperformed time shall be valued
according to the Station's prevailing rates as of the Adjustment Time and the
value of the goods or services to be received by the Station shall be valued at
their fair market value as of the Adjustment Time. Effective as of the
Adjustment Time, Seller shall retain the right to receive the goods or services
under the trade or barter agreements set forth on Schedule 2.3(c) hereto and
Buyer shall be entitled to the remaining goods or services in connection with
its operation of the Station under the Time Brokerage Agreement. At Closing, all
goods or services to be received under trade or barter agreements of the Station
shall belong to Buyer, except for goods and services set forth on Schedule
2.3(c).
- 5 -
<PAGE>
(d) Manner of Determining Adjustments. Any adjustments will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment by the appropriate party occurring no later than ninety
(90) days after the Closing Date or such other date as the parties shall
mutually agree upon.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted, shall
be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two days prior to the Closing Date. The Escrow Deposit (as defined below),
together with all interest earned thereon, shall be disbursed to Seller at
Closing by the Escrow Agent and shall be applied as a credit in favor of Buyer
against the payment of the Purchase Price.
2.5 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets, including goodwill and license value, of the Station in
accordance with an appraisal conducted at the expense of Buyer by an independent
appraiser selected by Buyer. The appraisal shall be reasonably satisfactory to
Seller and Seller shall have five days from the date of delivery of the
appraisal by Buyer to Seller to notify Buyer that it disagrees with such
appraisal. If Seller fails to notify Buyer of its disagreement with such
appraisal within such five day period or if Seller notifies Buyer that it agrees
with the appraisal, such appraisal shall be binding on the parties hereto and
both Seller and Buyer agree to report for financial accounting and tax purposes
the sale and purchase of the Assets in accordance with such appraisal. The
allocation of the Purchase Price to the covenant not to compete described in
Section 6.8 of this Agreement shall in no event exceed $25,000. If Seller
reasonably disagrees with the appraisal and Buyer is unable to revise the
appraisal to the reasonable satisfaction of Seller, neither party shall be bound
by such appraisal.
2.6 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts insofar
as they relate to the time on and after the Closing Date, and arise out of
events related to Buyer's ownership of the Assets or its operation of the
Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the Station prior to the Closing, (iv) any
obligations or liabilities arising under capitalized leases or other financing
agreements, (v) any obligations or liabilities arising under agreements entered
into other than in the ordinary course of business, (vi) any obligations or
liabilities of Seller under any employee pension, retirement, or other benefit
plans or collective bargaining agreements, (vii) any obligation to any employee
of the Seller for severance benefits, vacation time, or sick leave accrued prior
to the Closing Date, or (viii) any obligations or liabilities caused by, arising
out of, or resulting from any action or omission of Seller prior to the
- 6 -
<PAGE>
Closing, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California. Seller has all requisite power and authority (i) to own, lease, and
use the Assets as now owned, leased, and used, (ii) to conduct the business and
operations of the Station as now conducted, and (iii) to execute and deliver
this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Seller hereunder. Seller is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary actions on the part of Seller and its shareholders. This Agreement has
been duly executed and delivered by Seller and constitutes the legal, valid, and
binding obligation of Seller, enforceable against it in accordance with its
terms, except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) do not require the consent of any
third party; (ii) will not conflict with any provision of the Articles of
Incorporation or Bylaws of Seller; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any agreement,
instrument, license, or permit to which Seller is a party or by which Seller may
be bound; and (v) will not create any claim, liability, mortgage, lien, pledge,
condition, charge, or encumbrance of any nature whatsoever upon any of the
Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete copies of
the Licenses (including any amendments and other modifications thereto). The
Licenses have been validly issued, and Seller is the authorized legal holder
thereof. The Licenses listed on Schedule 3.4 comprise all of the licenses,
permits, and other authorizations required from any governmental or regulatory
- 7 -
<PAGE>
authority for the lawful conduct of the business and operations of the Station
in the manner and to the full extent they are now conducted, and none of the
Licenses is subject to any restriction or condition that would limit the full
operation of the Station as now operated. The Licenses are in full force and
effect, and the conduct of the business and operations of the Station is in
accordance therewith in all material respects. Seller has no reason to believe
that any of the Licenses would not be renewed by the FCC or other granting
authority in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
complete and accurate description of all the Real Property and Seller's
interests therein. The Real Property listed on Schedule 3.5 comprises all real
property interests necessary to conduct the business and operations of the
Station as now conducted. Seller does not own any Real Property. With respect to
each leasehold or subleasehold interest included in the Real Property being
conveyed under this Agreement, so long as Seller fulfills its obligations under
the lease therefor, Seller has enforceable rights to nondisturbance and quiet
enjoyment, and, to the best of Seller's knowledge, no third party holds any
interest in the leased premises with the right to foreclose upon Seller's
leasehold or subleasehold interest. Seller holds such leasehold or subleasehold
interest free and clear of all liens, mortgages, pledges, covenants, easements,
restrictions, encroachments, charges and other encumbrances except as expressly
set forth in the underlying lease therefor and except for real estate taxes not
yet due and payable. All towers, guy anchors, and buildings and other
improvements included in the Assets are located entirely on the Real Property
listed in Schedule 3.5. Seller has delivered to Buyer true and complete copies
of all deeds, leases and easements pertaining to the Real Property. All Real
Property (including the improvements thereon) (i) is in good condition and
repair consistent with its present use, (ii) is available for immediate use in
the conduct of the business and operations of the Station, and (iii) complies in
all material respects with all applicable building or zoning codes and the
regulations of any governmental authority having jurisdiction. Seller has full
legal and practical access to the Real Property. To the best of Seller's
knowledge, all easements, rights-of-way, and real property licenses affecting or
constituting part of the Real Property have been properly recorded in the
appropriate public recording offices.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
lists all material items of Tangible Personal Property. The Tangible Personal
Property listed on Schedule 3.6 comprises all material items of tangible
personal property necessary to conduct the business and operations of the
Station as now conducted. Except as described in Schedule 3.6, Seller owns and
has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for taxes not yet due and payable. Each item of Tangible Personal
Property is available for immediate use in the business and operations of the
Station. All items of transmitting and studio equipment included in the Tangible
Personal Property (i) have been maintained in a manner consistent with generally
accepted standards of good engineering practice, and (ii) will permit the
Station and any auxiliary broadcast stations used in the operation of the
Station to operate, in all material
- 8 -
<PAGE>
respects, in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state, and local
statutes, ordinances, rules, and regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list of all
Contracts. Seller has delivered to Buyer true and complete copies of all written
Contracts, true and complete memoranda of all oral Contracts (including any
amendments and other modifications to such Contracts). Other than the Contracts
listed on Schedule 3.7 or any other Schedule to this Agreement, Seller requires
no contract, lease, or other agreement to enable it to carry on its business as
now conducted. All of the Assumed Contracts are in full force and effect, and
are valid, binding, and enforceable in accordance with their terms. There is not
under any Assumed Contract any default by any party thereto or any event that,
after notice or lapse of time or both, could constitute a default. Seller is not
aware of any intention by any party to any Assumed Contract (i) to terminate
such contract or amend the terms thereof, (ii) to refuse to renew the Assumed
Contract upon expiration of its term, or (iii) to renew the Assumed Contract
upon expiration only on terms and conditions which are more onerous than those
now existing. Except for the need to obtain the Consents listed in Schedule 3.3,
Seller has full legal power and authority to assign its rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and such assignment will
not affect the validity, enforceability, or continuation of any of the Assumed
Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1,
the other Consents described in Schedule 3.3, no consent, approval, permit, or
authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. To the best knowledge
of Seller, Seller is not infringing upon or otherwise acting adversely to any
trademarks, trade names, service marks, service names, copyrights, patents,
patent applications, know-how, methods, or processes owned by any other person
or persons, and there is no claim or action pending, or to the knowledge of
Seller threatened, with respect thereto. The Intangibles listed on Schedule 3.9
comprise all intangible property interests necessary to conduct the business and
operations of the Station as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of financial documents of the Station, including profit and loss
statements, trade sales journals and lists of accounts receivable. Seller has
also provided Buyer with a list of all advertising contracts
- 9 -
<PAGE>
existing as of the date hereof. All documents referred to in the previous two
sentences were prepared by Seller, are true and accurate in all respects to the
best of Seller's knowledge and present fairly the financial condition of the
Station.
3.11 Insurance. All policies of insurance covering the Assets are in
full force and effect and are adequate in amount with respect to, and for the
full value (subject to customary deductibles) of, the Assets, and insure the
Assets and the business of the Station against all customary and foreseeable
risks. During the past three years, no insurance policy of Seller on the Assets
or the Station has been canceled by the insurer and no application of Seller for
insurance has been rejected by any insurer.
3.12 Reports. To the best of Seller's knowledge, all Station returns,
reports, and statements required to be filed by Seller with the FCC or with any
other governmental agency have been filed, and all reporting requirements of the
FCC and other governmental authorities having jurisdiction over Seller and the
Station have been complied with by Seller in all material respects. All of such
returns, reports, and statements are substantially complete and correct as
filed. Seller has timely paid to the FCC all annual regulatory fees required to
be paid by Seller with respect to the FCC Licenses.
3.13 Personnel.
(a) Employees and Compensation. Schedule 3.13 contains a true
and complete list of all employees of Seller who are employed at the Station,
their job titles, date of hire and current salary. Schedule 3.13 also contains a
true and complete list as of the date of this Agreement of all employee benefit
plans or arrangements applicable to the employees of the Station and all fixed
or contingent liabilities or obligations of Seller with respect to any person
now or formerly employed by Seller at the Station, including pension or thrift
plans, individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance programs,
incentive plans, bonus arrangements, and vacation, sick leave, disability and
termination arrangements or policies, including workers' compensation policies.
Seller has furnished Buyer with true and complete copies of all employee
handbooks, employee rules and regulations, and summary plan descriptions of the
written plans and arrangements listed in Schedule 3.13, and with descriptions of
the unwritten plans and arrangements listed in Schedule 3.13. At Buyer's
request, Seller will furnish Buyer with true and complete copies of all
applicable plan documents, trust documents, and insurance contracts with respect
to the plans and arrangements listed on Schedule 3.13. All employee benefits and
welfare plans or arrangements listed in Schedule 3.13 were established and have
been executed, managed and administered in accordance with the Internal Revenue
Code of 1986, as amended, the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and all other laws. Seller is not aware of the existence
of any governmental audit or examination of any of such plans or arrangements or
of any facts which would lead it to believe that any such audit or examination
is pending or threatened. No action, suit, or claim with respect to any of such
plans
- 10 -
<PAGE>
or arrangements (other than routine claims for benefits) is pending or, to the
knowledge of Seller, threatened, and Seller possesses no knowledge of any facts
which could give rise to any such action, suit or claim.
(b) Labor Relations. Seller is not a party to or subject to
any collective bargaining agreements with respect to the Station. Seller has no
written or oral contracts of employment with any employee of the Station, other
than those listed in Schedule 3.7. Seller has complied with all laws, rules, and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and it has not
received any notice alleging that it has failed to comply in any material
respect with any such laws, rules, or regulations. No controversies, disputes,
or proceedings are pending or, to the best of its knowledge, threatened, between
it and any employee (singly or collectively) of the Station. No labor union or
other collective bargaining unit represents or claims to represent any of the
employees of the Station. To Seller's knowledge, there is no union campaign
being conducted to solicit cards from employees to authorize a union to request
a National Labor Relations Board certification election with respect to any
employees at the Station.
(c) Liabilities. Seller has no liability of any kind to or in
respect of any employee benefit plan, including withdrawal liability under
Section 4201 of ERISA. Seller has not incurred any accumulated funding
deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue
Code. Seller has not failed to make any required contributions to any employee
benefit plan. The Pension Benefit Guaranty Corporation has not asserted that
Seller has incurred any liability in connection with any such plan. No lien has
been attached and no person has threatened to attach a lien on any property of
Seller as a result of a failure to comply with ERISA.
3.14 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate reserves
(segregated to the extent required by generally accepted accounting principles)
with respect thereto. There are no governmental investigations or other legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the business of the Station, and,
to the best knowledge of Seller, no event has occurred that could impose on
Buyer any transferee liability for any taxes, penalties, or interest due or to
become due from Seller.
3.15 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry or as listed on
Schedule 3.15 attached hereto, there is no claim, legal action, counterclaim,
suit, arbitration, governmental investigation or other legal, administrative, or
tax proceeding, nor any order, decree or judgment, in progress or
- 11 -
<PAGE>
pending, or to the knowledge of Seller threatened, against or relating to Seller
with respect to its ownership or operation of the Station or otherwise relating
to the Assets or the business or operations of the Station, nor does Seller know
or have reason to be aware of any basis for the same. In particular, but without
limiting the generality of the foregoing, except as set forth in Schedule 3.15,
there are no applications, pending or, to the best of Seller's knowledge,
complaints or proceedings pending or threatened (i) before the FCC relating to
the business or operations of the Station other than rule making proceedings
which affect the radio industry generally, (ii) before any federal or state
agency relating to the business or operations of the Station involving charges
of illegal discrimination under any federal or state employment laws or
regulations, or (iii) before any federal, state, or local agency relating to the
business or operations of the Station involving zoning issues under any federal,
state, or local zoning law, rule, or regulation.
3.16 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and Seller has received no notice of a charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice having been filed or commenced against Seller in connection with its
ownership or operation of the Station alleging any failure to comply with any
such law, rule, or regulation.
(b) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and there is no basis related to the present operations, properties, or
facilities of Seller for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against Seller giving rise
to any such liability) under any law, rule, or regulation of any federal, state,
or local government (or agency thereof) concerning release or threatened release
of hazardous substances, public health and safety, or pollution or protection of
the environment.
(c) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and Seller has not handled or disposed of any substance, arranged for
the disposal of any substance, or owned or operated any property or facility in
any manner that could form the basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to any statute) against Seller giving rise to
any such liability) for damage to any site, location, or body of water (surface
of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material
- 12 -
<PAGE>
adverse effect on the business or operations of the Station (and there is no
basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against Seller giving rise to any such
liability) under any law, rule, or regulation of any federal, state, or local
government (or agency thereof) concerning employee health and safety.
(e) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and Seller has not exposed any employee to any substance or condition
that could form the basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand (under the common law
or pursuant to statute) against Seller giving rise to any such liability) for
any illness or personal injury to any employee.
(f) To the best of Seller's knowledge, in connection with its
ownership or operation of the Station, Seller has obtained and been in
compliance in all material respects with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all federal, state, and local laws, rules, and regulations
(including all codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety,
worker health and safety, and pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, by any other party on any Real Property.
3.17 Compliance with Laws. Seller has complied in all material respects
with the Licenses and all federal, state, and local laws, rules, regulations,
and ordinances applicable or relating to the ownership and operation of the
Station. Neither the ownership or use of the properties of the Station nor the
conduct of the business or operations of the Station conflicts with the rights
of any other person or entity.
3.18 Conduct of Business in Ordinary Course. Since December 31, 1996,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
- 13 -
<PAGE>
(a) Suffered any material adverse change in the business,
prospects, assets or properties of the Station, including any damage,
destruction, or loss affecting any assets used or useful in the conduct of the
business of the Station;
(b) Made any sale, assignment, lease, or other transfer of any
of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(c) Canceled any debts owed to or claims held by Seller with
respect to the Station, except in the normal and usual course of business;
(d) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Station other than in the normal and usual course of business;
(e) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Station; or
(f) Made any material increase in compensation or other
payment payable or to become payable to any employees of the Station, or any
material change in personnel policies, employee benefits, or other compensation
arrangements affecting the employees of the Station.
3.19 Transactions with Affiliates. Seller has not been involved in any
business arrangement or relationship relating to the Station with any affiliate
of Seller, and no affiliate of Seller owns any property or right, tangible or
intangible, which is used in the business of the Station, except that the studio
building of the Station is owned by an affiliate of Seller as described in
Schedule 3.5 hereto. As used in this paragraph, "affiliate" has the meaning set
forth in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, other than Star
Media Group, Inc. whose fees shall be paid by Seller.
3.21 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
- 14 -
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Buyer has all requisite corporate power and authority to execute and
deliver this Agreement and the documents contemplated hereby, and to perform and
comply with all of the terms, covenants, and conditions to be performed and
complied with by Buyer hereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (i) do not require the consent of any third party; (ii)
will not conflict with the Certificate of Incorporation or Bylaws of Buyer;
(iii) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, injunction, decree, rule, regulation, or ruling
of any court or governmental instrumentality; or (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to which
Buyer is a party or by which Buyer may be bound, such that Buyer could not
acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
4.6 No Waiver. As of the date hereof, it is not necessary for Buyer to
seek or obtain any waiver of Section 73.3555(a) of the FCC's rules to obtain the
FCC Consent.
- 15 -
<PAGE>
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Subject to the terms of the Time Brokerage Agreement,
Seller agrees that, between the date of this Agreement and the Closing Date,
Seller shall operate the Station diligently in the ordinary course of business
in accordance with its past practices (except where such conduct would conflict
with the following covenants or with Seller's other obligations under this
Agreement), and in accordance with the other covenants in this Section 5.
5.2 Compensation. Seller shall not increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except in
accordance with past practices.
5.3 Contracts. Seller will not, without the prior written consent of
Buyer, enter into any contract or commitment relating to the Station or the
Assets, or amend or terminate any Assumed Contract (or waive any material right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness) that will be binding on
Buyer after Closing. Prior to the Closing Date, Seller shall deliver to Buyer a
list of all Contracts entered into between the date of this Agreement and the
Closing Date, together with copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except in connection with
the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed on or prior to the Closing
Date, (ii) liens for current taxes not yet due and payable, and (iii) mechanics'
liens and other similar liens, which shall be removed on or prior to the Closing
Date.
5.6 Licenses. Seller shall not cause or permit, by any act or failure
to act, any of the Licenses to expire or to be revoked, suspended, or modified,
or take any action that could cause the FCC or any other governmental authority
to institute proceedings for the suspension, revocation, or adverse modification
of any of the Licenses. Seller shall not fail to prosecute with due diligence
any applications to any governmental authority in connection with the operation
of the Station.
5.7 Rights. Seller shall not waive any right relating to the Station or
any of the Assets.
- 16 -
<PAGE>
5.8 No Inconsistent Action. Seller shall not take any action that is
inconsistent with its obligations under this Agreement or that could hinder or
delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its authorized
representatives reasonable access to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Station for
the purpose of audit and inspection.
5.10 Maintenance of Assets. Seller shall use its best efforts and take
all reasonable actions to maintain all of the Assets in good condition (ordinary
wear and tear excepted), and use, operate, and maintain all of the Assets in a
reasonable manner and in accordance with the terms of the FCC Licenses, all
rules and regulations of the FCC and generally accepted standards of good
engineering practice. Seller shall maintain inventories of spare parts and
expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs, Seller shall repair, replace, or restore the Assets to their prior
condition as represented in this Agreement as soon thereafter as possible, and
Seller shall use the proceeds of any claim under any insurance policy solely to
repair, replace, or restore any of the Assets that are lost, damaged, impaired,
or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance policies
on the Station and the Assets through the Closing Date.
5.12 Consents. Seller shall use its best efforts to obtain the Consents
and the estoppel certificates described in Section 8.2(b), without any change in
the terms or conditions of any Contract or License that could be materially less
advantageous to the Station than those pertaining under the Contract or License
as in effect on the date of this Agreement. Seller shall promptly advise Buyer
of any difficulties experienced in obtaining any of the Consents and of any
conditions proposed, considered, or requested for any of the Consents. Upon
Buyer's request, Seller shall cooperate with Buyer and use it best efforts to
obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's lenders may reasonably request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of any
unusual or material developments with respect to the business or operations of
the Station, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Station.
- 17 -
<PAGE>
5.16 Financing Leases. Seller will satisfy at or prior to Closing all
outstanding obligations under capital and financing leases with respect to any
of the Assets and obtain good title to the Assets leased by Seller pursuant to
those leases so that those Assets shall be transferred to Buyer at Closing free
of any interest of the lessors.
5.17 Programming. Seller shall not make any material changes in the
broadcast hours or in the percentages of types of programming broadcast by the
Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.18 Preservation of Business. Seller shall use its best efforts not to
take any actions that could have an adverse effect on the preservation of the
business and organization of the Station and the Station's present relationships
with its present employees, suppliers and others having business relations with
it.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within ten (10) days of the execution of this Agreement. The parties shall
prosecute the application with all reasonable diligence and otherwise use their
commercially reasonable efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent. If the Closing shall not have occurred for any reason
within the original effective period of the FCC Consent, and neither party shall
have terminated this Agreement under Section 9, the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the FCC Consent shall limit the exercise by either party of its rights under
Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not, directly
or indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station;
- 18 -
<PAGE>
such operations, including complete control and supervision of all of the
Station programs, employees, and policies, shall be the sole responsibility of
Seller until the Closing; provided, however, that Buyer shall have such rights
and responsibilities as provided for in the Time Brokerage Agreement.
6.3 Risk of Loss.
(a) Except for any loss, damage, impairment, confiscation or
condemnation caused solely by Buyer's actions under the Time Brokerage
Agreement, the risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any other
event occurs which (i) causes the Station to cease broadcasting operations for a
period of twenty or more days or (ii) prevents in any material respect signal
transmission by the Station in the normal and usual manner and Seller fails to
restore or replace the Assets so that normal and usual transmission is resumed
within 30 days of the damage, destruction or other event, Buyer, in its sole
discretion, may (x) terminate this Agreement forthwith without any further
obligations hereunder upon written notice to Seller or (y) proceed to consummate
the transaction contemplated by this Agreement and complete the restoration and
replacement of the Assets after the Closing Date, in which event Seller shall
deliver to Buyer all insurance proceeds received in connection with such damage,
destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, except in connection with the negotiation, execution
and performance of any proposed Merger Agreement (as defined below), and except
as and to the extent required by law, including, without limitation, disclosure
requirements of federal or state securities laws and the rules and regulations
of securities markets, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Agreement. If this Agreement is terminated, each party will return to
the other party all information obtained by such party from the other party in
connection with the transactions contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their commercially reasonable efforts to consummate
the transaction contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, Buyer shall have no obligation (i) to
expend funds to obtain any of the Consents or (ii) to agree to any adverse
change in any License or Assumed Contract to
- 19 -
<PAGE>
obtain a Consent required with respect thereto. Seller shall use commercially
reasonable efforts to assist and cooperate with Buyer at Buyer's request and
expense to obtain any title policy, survey or environmental audit of the Real
Property or any engineering study of the Station.
6.6 Sales Tax Filings. Through the Closing Date, Seller shall continue
to file California sales tax returns with respect to the Station, if and to the
extent such returns are required to be filed by applicable law, and shall
concurrently deliver copies of all such returns to Buyer.
6.7 FCC Applications. Seller shall use its best efforts to prosecute
and obtain as soon as possible after the date hereof a grant by the FCC of the
renewal application for the Station's FCC Licenses and a grant by the FCC of the
pending form 302 application described on Schedule 3.15 hereto.
6.8 Noncompetition Agreement. At Closing, Buyer, Seller and Paul Posen
shall enter into a Noncompetition Agreement in the form of Schedule 6.8 (the
"Noncompetition Agreement").
6.9 Studio Lease. On the date hereof, Buyer and Seller shall enter into
the Studio Lease in the form of Schedule 6.9 hereto (the "Studio Lease").
6.10 Time Brokerage Agreement. On the date hereof, Buyer and Seller
shall enter into the Time Brokerage Agreement. The rights and obligations of
Seller and Buyer under the Time Brokerage Agreement shall terminate
simultaneously with the Closing hereunder, except for such rights and
obligations which have accrued prior to the termination of the Time Brokerage
Agreement.
6.11 Accounts Receivable.
(a) Collection. Seller hereby designates Buyer as its agent
solely for the purpose of collecting the Accounts Receivable. Seller shall
deliver to Buyer as soon as practicable after the Adjustment Time a complete and
detailed statement showing the name, amount and age of each Account Receivable.
Buyer shall make commercially reasonable efforts in accordance with Buyer's
customary business practices to collect the Accounts Receivable for a period of
120 days following the Adjustment Time (the "Collection Period"). Buyer shall
not be obligated to use any efforts to collect any of the Accounts Receivable
that are more extensive than the efforts that Buyer uses to collect its own
accounts receivable. Buyer shall not refer any Accounts Receivable to a
collection agency or attorney for collection, and Buyer shall not make any such
referral or compromise, nor settle or adjust the amount of any of the Accounts
Receivable, except with the approval of Seller. During the Collection Period,
neither Seller nor its agents shall make any direct solicitation with respect to
any of the Accounts Receivable. Buyer shall incur no liability to Seller for any
uncollected account unless Buyer shall have
- 20 -
<PAGE>
engaged in wilful misconduct or gross negligence in the collection of such
account. Collections by Buyer of the Station's receivables shall be applied
first to the oldest unpaid billing of an account debtor. Buyer shall cooperate
with Seller in the collection by Seller of the goods and services under the
trade and barter agreements described in Schedule 2.3(c), provided that in no
event shall Buyer be required to disburse any funds with respect thereto.
(b) Payments to Sellers. On or before the fifteenth day after
the end of each full calendar month during the Collection Period, Buyer shall
deliver to Seller (i) a list of the amounts collected before the end of such
month with respect to the Accounts Receivable, and (ii) the amount collected
during such month with respect to the Accounts Receivable, less normal sales
commissions earned thereon. On or before the fifteenth day after the end of the
Collection Period, Buyer shall furnish Seller with a list of all of the Accounts
Receivable which remain uncollected at the end of the Collection Period.
(c) Further Obligations. After the expiration of the
Collection Period, Buyer shall have no further obligation hereunder other than
to make the payment under Section 6.11(b) and to remit to Seller any payments
with respect to any of the Accounts Receivable that Buyer subsequently receives,
and Seller may act to collect any of the Accounts Receivables that continue to
remain uncollected.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) Consents. All Consents designated as "material" on
Schedule 3.3 shall have been obtained and delivered to Buyer without any adverse
change in the terms or conditions of any agreement or any governmental license,
permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied with
by Buyer under
- 21 -
<PAGE>
Section 6.1 hereof, Seller shall have complied with any conditions imposed on it
by the FCC Consent, and the FCC Consent shall have become a Final Order.
(e) Governmental Authorizations. Seller shall be the holder of
all Licenses and there shall not have been any modification of any License that
could have a material adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending the effect of which
could be to revoke, cancel, fail to renew, suspend, or modify adversely any
License.
(f) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement and the
Closing Date, there shall have been no material adverse change in the Tangible
Personal Property or the Real Property, including any damage, destruction, or
loss affecting the Tangible Personal Property or the Real Property, except for
any loss resulting solely from actions taken by Buyer under the Time Brokerage
Agreement.
(h) Time Brokerage Agreement. Subject to Section 6.10, the
Time Brokerage Agreement shall be in full force and effect, and Seller shall
have complied, in all material respects, with its obligations thereunder.
(i) Studio Lease. The Studio Lease shall be in full force and
effect, and Seller shall have complied, in all material respects, with its
obligations thereunder.
(j) FCC Applications. The renewal application for the
Station's FCC Licenses and the form 302 application described on Schedule 3.15
hereto shall have been granted without any conditions or modifications which
could be materially adverse to Buyer or the Station and the renewal of the
Station's FCC Licenses and the grant of the form 302 application shall have
become Final Orders.
7.2 Conditions to Obligations of Seller. All obligations of Seller at
the Closing are subject at Seller's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
- 22 -
<PAGE>
(c) Deliveries. Buyer shall have made or stand willing to make
all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
(e) Time Brokerage Agreement. Subject to Section 6.10, the
Time Brokerage Agreement shall be in full force and effect, and Buyer shall have
complied, in all material respects, with its payment obligations thereunder.
(f) Studio Lease. The Studio Lease shall be in full force and
effect, and Buyer shall have complied, in all material respects, with its
payment obligations thereunder.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. Subject to the satisfaction or waiver of all
of the conditions precedent to the holding of the Closing, the Closing shall
take place at 10:00 a.m. on a date to be set by Buyer on at least ten days'
written notice to Seller, that is (1) not earlier than the first business day
after the FCC Consent is effective, and (2) not later than ten business days
following the date upon which the FCC Consent has become a Final Order. If Buyer
fails to specify the date for the Closing pursuant to the preceding sentence
prior to the fifth day after the date upon which the FCC Consent has become a
Final Order, the Closing shall take place on the tenth business day after the
date upon which the FCC Consent has become a Final Order subject to the
satisfaction or waiver of all of the conditions precedent to the holding of the
Closing; provided, however, that in the event that the Closing Date as
determined pursuant to the previous sentences is to take place on a date prior
to January 1, 1998, the Closing Date shall be automatically extended to the
first business day after January 1, 1998.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington,
D.C. 20036, or any other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of sale,
deeds, motor vehicle titles, assignments, and other transfer documents which
shall be sufficient to vest good
- 23 -
<PAGE>
and marketable title to the Assets in the name of Buyer, free and clear of all
mortgages, liens, restrictions, encumbrances, claims, and obligations except for
liens for current taxes not yet due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property;
(c) Consents. An executed copy of any instrument evidencing
receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by a duly authorized officer of
Seller, certifying (1) that the representations and warranties of Seller
contained in this Agreement are true and complete in all material respects as of
the Closing Date as though made on and as of that date; and (2) that Seller has
in all material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering records, and all files and records used by Seller in
connection with its operations;
(f) Opinion of Counsel. An Opinion of Seller's corporate
counsel and communications counsel; and
(g) Lenders Certificates. Such certificates and confirmations
to Buyer's lenders executed by Seller as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder;
(h) Noncompetition Agreement. The Noncompetition Agreement in
the form of Schedule 6.8 duly executed by Seller and Paul Posen;
(i) Tax, Lien and Judgment Searches. Results of searches
against Seller for tax, lien and judgment filings in the records of the
Secretary of State of the State of California and the counties where the Assets
are located, such searches having been made no earlier than fifteen days prior
to the Closing.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price, as adjusted pursuant
to Section 2.3;
- 24 -
<PAGE>
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts as provided in Section 2.6;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by a duly authorized officer of Buyer,
certifying (1) that the representations and warranties of Buyer contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date, and (2) that Buyer has in all
material respects performed and complied with all of its obligations, covenants,
and agreements set forth in this Agreement to be performed and complied with on
or prior to the Closing Date; and
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller,
if Seller is not then in material default, upon written notice to Buyer, upon
the occurrence of any of the following:
(a) Conditions. If, on the date that would otherwise be the
Closing Date, Seller shall have notified Buyer in writing that one or more of
the conditions precedent to the obligations of Seller set forth in Section 7.2
of this Agreement have not been satisfied by Buyer or waived in writing by
Seller and such conditions shall not have been satisfied by Buyer or waived in
writing by Seller within ten (10) days following such notice.
(b) Judgments. If, on the date that would otherwise be the
Closing Date, there is in effect any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the FCC Consent has not been obtained by
September 30, 1998.
(d) Breach. If Buyer has failed to cure any material breach of
any of its representations, warranties or covenants under this Agreement within
fifteen (15) days after Buyer receives written notice of such breach from
Seller.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer, if
Buyer is not then in material default, upon written notice to Seller, upon the
occurrence of any of the following:
- 25 -
<PAGE>
(a) Conditions. If, on the date that would otherwise be the
Closing Date, Buyer shall have notified Seller in writing that one or more of
the conditions precedent to the obligations of Buyer set forth in Section 7.1 of
this Agreement have not been satisfied by Seller or waived in writing by Buyer
and such conditions shall not have been satisfied by Seller or waived in writing
by Buyer within ten (10) days following such notice.
(b) Judgments. If, on the date that would otherwise be the
Closing Date, there is in effect any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the FCC Consent has not been obtained by
September 30, 1998.
(d) Breach. If Seller has failed to cure any material breach
of any of its representations, warranties or covenants under this Agreement
within fifteen (15) days after Seller received written notice of such breach
from Buyer.
(e) Interruption of Service. If any event shall have occurred
that prevented signal transmission of the Station in the normal and usual manner
for a continuous period of twenty days.
9.3 Rights on Termination. If this Agreement is terminated pursuant to
Section 9.1 or Section 9.2 and neither party is in material breach of this
Agreement, the parties hereto shall not have any further liability to each other
with respect to the purchase and sale of the Assets and Buyer shall be entitled
to the return of the Escrow Deposit (as defined below), together with all
interest earned thereon. If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement, then the payment to Seller of Five
Hundred Thousand Dollars ($500,000) pursuant to Section 9.4 below shall be
liquidated damages and shall constitute full payment and the exclusive remedy
for any damages suffered by Seller by reason of Buyer's material breach of this
Agreement. Seller and Buyer agree in advance that actual damages would be
difficult to ascertain and that the amount of Five Hundred Thousand Dollars
($500,000) is a fair and equitable amount to reimburse Seller for damages
sustained due to Buyer's material breach of this Agreement. If this Agreement is
terminated by Buyer due to Seller's material breach of this Agreement, Buyer
shall have all rights and remedies available at law or equity except as provided
in Section 10.5 hereof.
9.4 Escrow Deposit. Buyer has deposited on the date hereof with the
Escrow Agent the sum of Five Hundred Thousand Dollars ($500,000) (the "Escrow
Deposit") in accordance with the Escrow Agreement. All such funds deposited with
the Escrow Agent shall be held and disbursed in accordance with the terms of the
Escrow Agreement and the following provisions:
- 26 -
<PAGE>
(a) At the Closing, the Escrow Deposit together with any
interest or other proceeds from the investment thereof shall be disbursed to
Seller as a credit in favor of Buyer against the payment of the Purchase Price.
(b) If this Agreement is terminated pursuant to Section 9.1 or
9.2 for any reason other than as provided in Section 9.4(c), the Escrow Deposit
together with any interest or other proceeds from the investment thereof shall
be disbursed to or at the direction of Buyer; and
(c) If this Agreement is terminated by Seller due to Buyer's
material breach of this Agreement, then the Escrow Deposit shall be disbursed to
or at the direction of Seller as liquidated damages under Section 9.3 above and
any interest or other proceeds from the investment thereof shall be disbursed by
the Escrow Agent to or at the direction of Buyer.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of twenty-four months. Any
investigations by or on behalf of any party hereto shall not constitute a waiver
as to enforcement of any representation, warranty, or covenant contained in this
Agreement. No notice or information delivered by Seller shall affect Buyer's
right to rely on any representation or warranty made by Seller or relieve Seller
of any obligations under this Agreement as the result of a breach of any of its
representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller hereby agrees to indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Seller contained in this Agreement or in any certificate, document, or
instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to this Agreement, including any liabilities arising at any time under
any Contract not included in the Assumed Contracts.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station prior to the Closing, including any
liabilities arising under the Licenses
- 27 -
<PAGE>
or the Assumed Contracts which relate to events occurring prior the Closing
Date, except for losses, liabilities or damages resulting from the operation of
the Station by Buyer under the Time Brokerage Agreement.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Buyer contained in this Agreement or in any certificate, document, or
instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities or damages resulting from
the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within ten days after
written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such
- 28 -
<PAGE>
investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party and/or its authorized representatives the
information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of the
thirty-day period (or any mutually agreed upon extension thereof) to the
validity and amount of such claim, the Indemnifying Party shall immediately pay
to the Claimant the full amount of the claim. If the Claimant and the
Indemnifying Party do not agree within the thirty-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate remedy at law
or equity.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement. If any action is brought by Buyer to enforce this
Agreement, Seller shall waive the defense that there is an adequate remedy at
law. Specific performance shall be the exclusive remedy of Buyer for a breach of
this Agreement by Seller prior to the Closing, so long as specific performance
is available as a remedy to Buyer for such breach and that the enforcement of
this Agreement would not have an adverse effect on Buyer as a result of Seller's
breach. Except to the extent set forth in the preceding sentence, Seller shall
be entitled to any other remedy that may be available, including money damages.
- 29 -
<PAGE>
10.6 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Buyer. Buyer and Seller shall each
pay one-half of all filing fees required by the FCC and of any other
governmental filing fees. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives. Each party
shall be responsible for all fees or commissions payable to any finder, broker,
advisor, or similar person retained by or on behalf of such party. Seller shall
pay all fees and commissions of Star Media Group, Inc.
11.2 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
If to Seller: Classic Broadcasting, Inc.
c/o Paul Posen
82231 Johnson Drive
Indio, California 92201
With a copy (which shall not
constitute notice) to: Christopher D. Imlay, Esq.
Booth, Freret, Imlay & Tepper, P.C.
5101 Wisconsin Avenue, N.W., Suite 307
Washington, D.C. 20016
If to Buyer: American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
- 30 -
<PAGE>
With a copy (which shall not
constitute notice) to: John T. Byrnes, Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign its rights and obligations under this Agreement,
in whole or in part, to another party without seeking or obtaining Seller's
prior approval, provided that such assignment shall not constitute a release of
Buyer's obligations hereunder, and Buyer may collaterally assign its rights and
interests hereunder to its lenders without seeking or obtaining Seller's prior
approval. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Notwithstanding the foregoing, a sale of control, merger, consolidation or
similar transaction involving, or any purchase of all or substantially all of
the assets of, Buyer (a "Merger") shall be expressly authorized hereunder and
upon such Merger, the successor or assignee of Buyer pursuant to such Merger
shall be bound by the terms of this Agreement and the Time Brokerage Agreement
and Buyer shall be released from any liability hereunder and thereunder. If an
agreement providing for a Merger is entered into (a "Merger Agreement"), Seller
shall take at Buyer's expense all actions that may be reasonably requested by
Buyer to effectuate the terms of the Merger Agreement, including, without
limitation, filing a new FCC assignment application or amending the existing FCC
assignment application to reflect that the "Buyer" hereunder may become a
different party from the current Buyer or that a change of control of Buyer may
occur as a result of the Merger. Neither the execution of a Merger Agreement,
nor the consummation of a Merger shall constitute a breach or default hereunder
and without limiting any party's rights under Section 9.1(c) or 9.2(c) hereof,
any delay in obtaining the FCC Consent as a result of a proposed Merger shall
not constitute a breach or default hereunder.
11.4 Further Assurances. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement, including, in the case of Seller, any additional
bills of sale, deeds, or other transfer documents that, in the reasonable
opinion of Buyer, may be necessary to ensure, complete, and evidence the full
and effective transfer of the Assets to Buyer pursuant to this Agreement.
11.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
- 31 -
<PAGE>
11.6 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.7 Gender and Number. Words used in this Agreement, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine, or neuter, and any other number, singular
or plural, as the context requires.
11.8 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.9 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.9.
11.10 Press Release. Prior to the Closing, neither party shall publish
any press release, make any other public announcement or otherwise communicate
with any news media concerning this Agreement or the transactions contemplated
hereby without the prior written consent of the other party; provided, however,
that nothing contained herein shall prevent either party from promptly making
all filings with governmental authorities as may, in its judgement be required
or advisable in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
11.11 Exclusive Negotiations. During the term of this Agreement, Seller
shall not discuss or negotiate with any other possible buyer of the Station or
the Assets, or invite or solicit any inquiries or proposals relating to the
possible sale of all or a material portion of the Station or the Assets.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
- 32 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By:________________________________________
Name:
Title:
CLASSIC BROADCASTING, INC.
By:________________________________________
Name:
Title:
- 33 -
EXHIBIT 10.15
AGREEMENT TO AMEND
ASSET PURCHASE AGREEMENT
This Agreement to Amend Asset Purchase Agreement is made as of this 3rd
day of October by and between American Radio Systems Corporation, a Delaware
corporation ("Seller"), and Paxson Communications of West Palm Beach, Inc., a
Florida corporation ("Buyer").
Reference is hereby made to that certain Asset Purchase Agreement dated
May 27, 1997 by and between Seller and Buyer (the "Agreement"). In consideration
of the mutual covenants and promises herein contained, Seller and Buyer hereby
agree to amend the Agreement as set forth in this Agreement to Amend.
1. Paragraph A of the Premises of the Agreement is hereby amended by
deleting "WEAT (AM), West Palm Beach" from the definition of Stations contained
therein. Further, all other references to WEAT(AM), if any, are hereby deleted
from the Agreement.
2. Section 2.3(a) of the Agreement is hereby amended to replace
"Thirty-Three Million Dollars ($33,000,000)" with "Twenty-Nine Million Dollars
($29,000,000)."
3. Section 2.3(b) of the Agreement is hereby amended to add the phrase
"or its designated subsidiary, American Tower Systems, Inc." after the word
"Seller" in the second line thereof.
4. The first sentence of Section 2.4 is hereby deleted.
5. Section 6.10 of the Agreement is hereby amended by (i) replacing
"Exhibit 6.10(a) WOLL Main Antenna Lease Terms" with "Exhibit 6.10(a) Option
Agreement" and (ii) deleting therefrom references to "Exhibit 6.10(f) WOLL
Rental Sharing Agreement." Furthermore, "Exhibit 6.10(a) WOLL Main Antenna Lease
Terms" to the Agreement is hereby replaced in its entirety with "Exhibit 6.10(a)
Option Agreement") which is attached hereto as Exhibit A, and "Exhibit 6.10(f)
Rental Sharing Agreement" to the Agreement is hereby deleted in its entirety.
Buyer hereby waives the condition of Closing that Seller enter into the
lease contemplated by Section 6.10 and attached as Exhibit 6.10(e) of the
Agreement on or before the Closing Date. Notwithstanding the foregoing sentence,
Seller and Buyer hereby agree to enter into (or in the case of Buyer, cause
Paxson Communications Corporation, a Delaware corporation ("PCC"), or an
affiliate thereof to enter into) the lease contemplated by Section 6.10 and
attached as Exhibit 6.10(e) of the Agreement after the Closing in substantially
the form set forth on Exhibit 6.10(e) of the Agreement and to negotiate the
terms of such lease not set forth therein in good faith.
6. Section 7.1(G) of the Agreement is hereby deleted in its entirety.
<PAGE>
- 2 -
7. Section 7.1(I) of the Agreement is hereby amended by deleting it in
its entirety and replacing it with the following new Section 7.1(I): "New
Transmitter Site for WKGR. Radio Station WKGR shall be fully operational from
Hobe Sound Tower in the manner contemplated by the lease to be entered into in
accordance with Exhibit 6.10(b)."
8. Buyer hereby acknowledges that the FCC has granted License Corp. a
construction permit (File No. BMPH-970225IA) to construct a new transmitter for
WOLL(FM) at the Hobe Sound Tower site (the "Construction Permit"). Seller shall
cause License Corp. to assign the Construction Permit to Buyer at Closing
together with the main station license for WOLL(FM). Except as otherwise
provided in the Agreement, upon such assignment of the Construction Permit,
neither License Corp. nor Seller shall have any liability to Buyer with respect
to the extension of the Construction Permit after the time of the Closing.
9. The Schedules to the Agreement are hereby amended and restated in
their entirety as set forth on Exhibit B hereto.
10. Seller hereby consents to Buyer's assignment of its rights,
interests and obligations under the Agreement, as amended hereby, and the Escrow
Agreement to Paxson Communications Corporation, a Delaware corporation, and the
assignment of any or all of its rights, interests and obligations under such
documents by PCC to LWP Radio, Inc., a Delaware corporation ("LWPR"), and by
LWPR to Clear Channel Metroplex, Inc., a Nevada corporation ("CCM"), and Clear
Channel Metroplex Licenses, Inc., a Nevada corporation ("CCML").
11. Buyer and Seller hereby acknowledge that upon receipt of any
required regulatory consent, and the satisfaction of certain other conditions,
Buyer shall sell substantially all the assets of the Stations acquired from
Seller to CCM and CCML pursuant to an Asset Purchase Agreement dated as of
August 25, 1997 (the "Clear Channel Agreement"), by and among PCC, L. Paxson,
Inc., CCM, CCML, and Clear Channel Communications, Inc.
Buyer and Seller further acknowledge that upon the closing of the sale
of the assets of the Stations from Buyer to CCM and CCML pursuant to the Clear
Channel Agreement, Buyer has agreed to assign all of its rights, liabilities and
obligations (except for Buyer's indemnification obligations under Section 10.3
which relate to a breach or failure of Buyer to perform under the Purchase
Agreement prior to Closing, any obligations under the Purchase Agreement to pay
FCC and HSR Act filing fees, and any obligations described in the second
paragraph of Section 5 hereof) under the Purchase Agreement arising after the
closing of the Clear Channel Agreement to CCM and CCML, and CCM and CCML have
agreed to accept such assignment and assume such liabilities and obligations.
Buyer and Seller hereby agree that such assignment and assumption shall
constitute a novation of the Agreement, and that from and after such assignment
and assumption, Seller shall not have any remedies against PCC, LWP Radio, Inc.
and their affiliates under Section 10.3 of the Agreement.
<PAGE>
- 3 -
12. The Agreement, as amended hereby, is hereby ratified, approved and
confirmed in all respects.
13. From and after the date hereof, each reference in the Agreement to
"this Agreement", "hereof", or "hereunder" or words of like import, and all
references to the Agreement in any and all agreements, instruments, documents,
notes, certificates and other writings of every kind and nature shall be deemed
to mean the Agreement, as amended hereby.
14. This Agreement to Amend shall be governed in all respects by the
laws of the State of Florida (without giving effect to the provisions thereof
relating to conflicts of law).
15. Any capitalized terms not defined herein shall have the meaning
given to such terms in the Agreement, as amended hereby.
16. This Agreement to Amend may be signed in counterparts with the same
effect as if the signature on each counterpart were upon the same instrument.
<PAGE>
- 4 -
IN WITNESS WHEREOF, the Seller and Buyer have executed this Agreement
to Amend as of the date first written above.
AMERICAN RADIO PAXSON COMMUNICATIONS
SYSTEMS CORPORATION OF WEST PALM BEACH, INC.
By: By:
Name: Name:
Title: Title:
EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
BY AND AMONG
AMERICAN RADIO SYSTEMS CORPORATION,
AMERICAN RADIO SYSTEMS LICENSE CORP.
AND
JAMES CRYSTAL ENTERPRISES, L.C.
* * *
OCTOBER 24, 1997
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................1
"Accounts Receivable"...............................................1
"Assets"............................................................1
"Closing"...........................................................1
"Closing Date"......................................................1
"Communications Act"................................................2
"Consents"..........................................................2
"Contracts".........................................................2
"Escrow Agent"......................................................2
"Escrow Agreement"..................................................2
"FCC"...............................................................2
"FCC Consent".......................................................2
"FCC Licenses"......................................................2
"Final Order".......................................................2
"Intangibles".......................................................2
"Licenses"..........................................................2
"Permitted Liens"...................................................3
"Purchase Price"....................................................3
"Real Property".....................................................3
"Tangible Personal Property"........................................3
SECTION 2. PURCHASE AND SALE OF ASSETS......................................3
2.1 Agreement To Sell and Buy..................................3
2.2 Excluded Assets............................................3
2.3 Purchase Price. ..........................................4
2.4 Payment of Purchase Price..................................5
2.5 Assumption of Liabilities and Obligations..................5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.........................5
3.1 Organization, Standing, and Authority......................5
3.2 Authorization and Binding Obligation.......................5
3.3 Absence of Conflicting Agreements..........................6
3.4 Governmental Licenses......................................6
3.5 Title to and Condition of Real Property....................6
3.6 Title to and Condition of Tangible Personal Property.......6
3.7 Insurance..................................................7
3.8 Reports....................................................7
- i -
<PAGE>
3.9 Taxes......................................................7
3.10 Claims and Legal Actions...................................7
3.11 Compliance with Laws.......................................7
3.12 Broker.....................................................7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER..........................8
4.1 Organization, Standing, and Authority......................8
4.2 Authorization and Binding Obligation.......................8
4.3 Absence of Conflicting Agreements..........................8
4.4 Broker.....................................................8
4.5 Availability of Funds......................................8
4.6 Qualification..............................................8
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING.......................9
5.1 Generally..................................................9
5.2 Disposition of Assets......................................9
5.3 Encumbrances...............................................9
5.4 Licenses...................................................9
5.5 Access to Information......................................9
5.6 Maintenance of Assets......................................9
5.7 Insurance..................................................9
5.8 Consents..................................................10
5.9 Notification..............................................10
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS................................10
6.1 FCC Consent...............................................10
6.2 Control of the Station....................................10
6.3 Risk of Loss..............................................11
6.4 Confidentiality...........................................11
6.5 Cooperation...............................................11
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING..............................................12
7.1 Conditions to Obligations of Buyer........................12
7.2 Conditions to Obligations of Seller.......................13
SECTION 8. CLOSING AND CLOSING DELIVERIES..................................13
8.1 Closing...................................................13
8.2 Deliveries by Seller......................................14
- ii -
<PAGE>
8.3 Deliveries by Buyer.......................................15
SECTION 9. TERMINATION.....................................................15
9.1 Termination by Seller.....................................15
9.2 Termination by Buyer......................................16
9.3 Rights on Termination.....................................16
9.4 Escrow Deposit............................................16
9.5 Procedure and Effect of Termination.......................17
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES........................17
10.1 Survival..................................................17
10.2 Indemnification by Seller.................................17
10.3 Indemnification by Buyer..................................18
10.4 Procedure for Indemnification.............................19
10.5 Attorneys' Fees...........................................21
SECTION 11. MISCELLANEOUS..................................................21
11.1 Fees and Expenses.........................................21
11.2 Notices...................................................21
11.3 Benefit and Binding Effect................................22
11.4 Further Assurances........................................22
11.5 Governing Law.............................................23
11.6 Headings..................................................23
11.7 Entire Agreement..........................................23
11.8 Waiver of Compliance; Consents............................23
11.9 Press Release.............................................23
11.10 Exclusive Negotiations....................................23
11.11 Counterparts..............................................24
- iii -
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedule 2.2 -- Excluded Assets
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Insurance Policies
Schedule 3.10 -- Litigation
Schedule 9.4 -- Form of Escrow Agreement
- iv -
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of the 24th day of October,
1997, by and among James Crystal Enterprises, L.C., a Florida limited liability
company ("Buyer"), American Radio Systems Corporation, a Delaware corporation
("ARSC"), and American Radio Systems License Corp., a Delaware corporation
("ARSLC" and collectively with ARSC, "Seller").
R E C I T A L S
A. ARSC is the owner of and operator of, and its wholly owned
subsidiary ARSLC is the licensee of, radio station WEAT(AM), West Palm Beach,
Florida (the "Station") pursuant to authorizations issued by the Federal
Communications Commission.
B. Seller desires to sell, and Buyer desires to buy, certain of the
assets that are used in the operation of the Station, for the price and on the
terms and conditions set forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising or programming time run on the Station by Seller prior to
the Adjustment Time (as defined in Section 2.3(b)).
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
<PAGE>
"Communications Act" means the Communications Act of 1934, as amended.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts (except the tower Lease described in
Schedule 3.5), leases, non-governmental licenses, and other agreements
(including leases for personal or real property and employment agreements),
written or oral (including any amendments and other modifications thereto) to
which Seller is a party and which relate to the Assets or the business or
operations of the Station, and (i) which are in effect on the date of this
Agreement or (ii) which are entered into by Seller between the date of this
Agreement and the Closing Date.
"Escrow Agent" means ________________________.
"Escrow Agreement" means the Escrow Agreement, of even date herewith,
by and among Buyer, Seller and the Escrow Agent in the form of Schedule 9.4
hereof.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement, which
action need not have become a Final Order.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used in the
operation of the Station, including, without limitations, the call letters WEAT,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Licenses" means all licenses, permits, and other authorizations issued
to Seller by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental
- 2 -
<PAGE>
authorities in connection with the conduct of the business or operations of the
Station, together with any additions thereto between the date of this Agreement
and the Closing Date.
"Permitted Liens" means (a) liens for taxes not yet due and payable;
(b) landlord's liens created by statute or agreement for amounts not yet
delinquent; (c) liens or encumbrances on the Real Property that do not
materially affect the current use, enjoyment and value thereof; and (d)
mechanics' liens and other similar liens not yet delinquent which shall be
removed prior to Closing.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means the tower lease described in Schedule 3.5.
"Tangible Personal Property" means the antenna, transmitting equipment,
and other tangible personal property which are located at the transmitting site
of the Station and used in the operation of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date, but
excluding any excluded assets described in Section 2.2.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement To Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver to
Buyer on the Closing Date, and Buyer agrees to purchase on the Closing Date, the
tangible assets, both real and personal, described below and used in the
operation of the Station, but excluding the assets described in Section 2.2,
free and clear of any claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges, or encumbrances of any nature whatsoever (except
for Permitted Liens), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses; and
(d) Except for the documents described in Section 2.2(b), all
records relating to the Assets including all records required by the FCC to be
kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other cash
in any of Seller's bank or savings accounts; any insurance policies, letters of
credit, or other similar items and cash
- 3 -
<PAGE>
surrender value in regard thereto; and any stocks, bonds, certificates of
deposit and similar investments;
(b) All books and records of Seller that pertain to Seller's
corporate organization and other internal matters not relating to the operations
of the Station and Seller's financial records;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
(d) The Accounts Receivable;
(e) The real property and tangible personal property of Seller
which is located at the current office and studio site of the Station;
(f) The items set forth in Schedule 2.2 hereto;
(g) All Contracts;
(h) All Intangible Property; and
(i) Any assets and property of Seller which relate to radio
stations of Seller other than the Station.
2.3 Purchase Price.
(a) The Purchase Price for the Assets shall be One Million
Five Hundred Thousand Dollars ($1,500,000), adjusted as provided in Section
2.3(b).
(b) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses and income of the
Station as of 12:01 a.m., Eastern time, on the Closing Date (the "Adjustment
Time"). All expenses and income arising from the operation of the Station,
including business and license fees, utility charges, real and personal property
taxes and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except for
taxes arising from the transfer of the Assets under this Agreement), FCC
regulatory fees, and similar prepaid and deferred items, shall be prorated
between Buyer and Seller in accordance with the principle that (i) Seller shall
be responsible for all expenses, costs, and liabilities allocable to the period
prior to the Closing Date, and Buyer shall be responsible for all expenses,
costs, and obligations allocable to the period on and after the Closing Date and
(ii) Seller shall be entitled to all income allocable to the period prior to the
Closing Date, and Buyer shall be entitled to all income allocable to the period
on or after the Closing Date.
- 4 -
<PAGE>
(c) Manner of Determining Adjustments. Any adjustments will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment by the appropriate party occurring no later than ninety
(90) days after the Closing Date or such other date upon which the parties shall
mutually agree.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted pursuant
to Section 2.3(b), shall be paid by Buyer to Seller at Closing by wire transfer
of same-day funds pursuant to wire instructions which shall be delivered by
Seller to Buyer, at least two (2) days prior to the Closing Date. The Escrow
Amount (as defined in Section 9.3 below) shall be disbursed to Seller at Closing
by the Escrow Agent and shall be applied as a credit in favor of Buyer against
the payment of the Purchase Price.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge and perform any obligation or
liability of Seller relating to the Assets or the Station to the extent that
either (1) the obligations and liabilities relate to the period after the
Adjustment Time or (2) the Purchase Price was reduced pursuant to Section 2.3(b)
as a result of the proration or adjustment of such obligations and liabilities
(the "Assumed Liabilities"). Buyer shall not be required to assume any of the
following: (i) any obligations or liabilities under any Contract, (ii) any
liability or obligation arising out of any litigation, proceeding or claim
relating to the business or operations of the Station or any of the Assets with
respect to any events or circumstances that occur or exist prior to the Closing
Date, and (iii) any credit agreements, note purchase agreements, indentures, or
other financing arrangements of Seller. Seller shall retain all liabilities of
Seller not assumed by Buyer.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Seller has all requisite corporate power and authority (i) to own,
lease, and use the Assets as now owned, leased, and used by it, (ii) to conduct
the business and operations of the Station as now conducted, and (iii) to
execute and deliver this Agreement and the documents contemplated hereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Seller hereunder. Seller is not a participant in
any joint venture or partnership with any other person or entity with respect to
any part of the operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. Assuming the due
authorization, execution and delivery of this Agreement by
- 5 -
<PAGE>
Buyer, this Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against it in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, including, without limitation, the FCC Consent,
the execution, delivery, and performance of this Agreement by Seller and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) do not require the consent of any third party (including,
without limitation, the consent of any governmental, regulatory, administrative
or similar authority); (ii) do not conflict with any provision of the
Certificate of Incorporation or Bylaws of Seller; (iii) do not violate any law,
judgment, order, injunction, decree, rule, regulation, or ruling of any court or
governmental authority to which Seller is bound; (iv) do not conflict with,
constitute grounds for termination of, result in a material breach of,
constitute a material default under, or accelerate or permit the acceleration of
any performance required by the terms of, any agreement, instrument, license, or
permit to which Seller is a party or by which Seller may be bound; and (v) will
not create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 identifies the FCC Licenses
used in the current operations of the Station and all other material Licenses
used in the current operation of the Station. Each FCC License is in full force
and effect, and ARSLC is the authorized legal holder thereof. The conduct of the
business and operations of the Station is in accordance with the FCC Licenses in
all material respects. The FCC Licenses listed on Schedule 3.4 constitute all of
the licenses and authorizations required under the Communications Act or the
current rules, regulations and policies of the FCC in connection with the
business and operations of the Station as currently operated.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains an
accurate description as of the date of this Agreement of the Real Property and
Seller's interests therein. The lease included in the Real Property is valid and
binding and enforceable in accordance with its terms. Except as set forth in
Schedule 3.5, Seller holds such leasehold interest free and clear of all liens,
mortgages, pledges, covenants, easements, restrictions, encroachments, charges
and other encumbrances except as expressly set forth in the underlying lease
therefor and except for Permitted Liens.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
lists as of the date of this Agreement all material items of Tangible Personal
Property included in the Assets. Except as described in Schedule 3.6, Seller
owns and has good title to each item of Tangible Personal Property listed in
Schedule 3.6, and none of the Tangible Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other
- 6 -
<PAGE>
lien or encumbrance, except for Permitted Liens. The material items of Tangible
Personal Property are in good operating condition and adequate repair (given the
age of such property and the use to which such property is put and ordinary wear
and tear excepted).
3.7 Insurance. Schedule 3.7 is a true and complete list as of the date
of this Agreement of all insurance policies of Seller covering the Assets of the
Station. All such policies of insurance are in full force and effect as of the
date of this Agreement.
3.8 Reports. To Seller's knowledge, the material returns, reports, and
statements required to be filed by Seller with the FCC with respect to the
Station or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
over Seller and the Station have been complied with by Seller in all material
respects. All of such material returns, reports, and statements are
substantially complete and correct as filed. Seller has timely paid to the FCC
all annual regulatory fees required to be paid by Seller with respect to the FCC
Licenses.
3.9 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has properly accrued or paid or caused to
be properly accrued or paid all taxes shown on those returns or on any tax
assessment received by it to the extent that such taxes have become due, or has
set aside on its books adequate reserves (segregated to the extent required by
generally accepted accounting principles) with respect thereto.
3.10 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the radio broadcasting industry and not
particular to Seller, and except as may be listed on Schedule 3.10 attached
hereto, as of the date of this Agreement, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative, or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Seller threatened, against or
relating to Seller with respect to its ownership or operation of the Station or
otherwise relating to the Assets or the business or operations of the Station.
3.11 Compliance with Laws. Seller has complied in all material respects
with the Licenses and all federal, state, and local laws, rules, regulations,
and ordinances applicable or relating to the ownership and operation of the
Station.
3.12 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
- 7 -
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Florida. Buyer has all requisite limited liability company power
and authority to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Buyer hereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer have been duly authorized by all
necessary limited liability company actions on the part of Buyer. Assuming the
due authorization, execution and delivery of this Agreement by Seller, this
Agreement constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, including, without limitation, the FCC Consent,
the execution, delivery, and performance by Buyer of this Agreement by Buyer and
the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (i) do not require the consent of any third party
(including, without limitation, the consent of any governmental, regulatory,
administrative or similar authority); (ii) do not conflict with any provision of
the organizational documents of Buyer; (iii) do not violate in any material
respect any law, judgment, order, injunction, decree, rule, regulation, or
ruling of any court or governmental authority to which Buyer is bound; or (iv)
do not conflict with, constitute grounds for termination of, result in a
material breach of, constitute a material default under, or accelerate or permit
the acceleration of any performance required by the terms of, any material
agreement, material instrument, material license, or material permit to which
Buyer is a party or by which Buyer may be bound, such that Buyer could not
acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Availability of Funds. Buyer will have available on the Closing
Date sufficient funds to enable it to consummate the transactions contemplated
hereby.
4.6 Qualification. Buyer is legally, financially and otherwise
qualified to be the licensee of, acquire, own and operate the Station under the
Communications Act and the rules, regulations and policies of the FCC. Buyer
knows of no fact that would, under existing law and
- 8 -
<PAGE>
the existing rules, regulations, policies and procedures of the FCC (a)
disqualify Buyer as an assignee of the Licenses or as the owner and operator of
the Station or (b) cause the FCC to fail to approve in a timely fashion any of
the applications for FCC Consent. No waiver of any FCC rule or policy is
necessary to be obtained for the grant of the applications for the assignment of
the Licenses to Buyer, nor will processing pursuant to any exception to a rule
of general applicability be requested or required in connection with the
consummation of the transactions contemplated hereby.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement
and the Closing Date, Seller shall operate the Station in all material respects
in the ordinary course of business in accordance with its past practices (except
where such conduct would conflict with the following covenants or with Seller's
other obligations under this Agreement, including, without limitation, Seller's
obligations under Section 6.6), and in accordance with the other covenants in
this Section 5.
5.2 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except in connection with
the acquisition of replacement property of equivalent kind and value or where no
longer used in the operations of the Station.
5.3 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for Permitted Liens and liens
that will be removed on or prior to the Closing Date.
5.4 Licenses. Seller shall continue to operate the Station in all
material respects in accordance with the terms of its FCC Licenses and all
applicable laws and FCC rules and regulations.
5.5 Access to Information. Seller shall give Buyer and its authorized
representatives during normal business hours and with reasonable prior notice,
access to the Assets for the purpose of audit and inspection.
5.6 Maintenance of Assets. Seller shall use its commercially reasonable
efforts to maintain all of the Assets in the same condition as on the date
hereof (wear and tear excepted).
5.7 Insurance. Seller shall maintain the existing insurance policies or
other policies providing substantially similar coverage on the Station and the
Assets through the Closing Date.
5.8 Consents. Seller and Buyer shall each cooperate with the other in
making all commercially reasonable efforts to obtain or cause to be obtained
prior to the Closing Date the
- 9 -
<PAGE>
Consents, without any change in the terms or conditions of any License that
could be materially less advantageous to the Station than those pertaining under
the License as in effect on the date of this Agreement. Seller shall promptly
advise Buyer of any difficulties experienced in obtaining any of the Consents
and of any conditions proposed, considered, or requested for any of the
Consents.
5.9 Notification. Seller shall promptly notify Buyer in writing of any
unusual or material developments with respect to the business or operations of
the Station, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within two (2) business days of the execution of this Agreement. The parties
shall prosecute the application with all commercially reasonable diligence and
otherwise use their commercially reasonable efforts to obtain a grant of the
application as expeditiously as practicable. Each party agrees to comply with
any condition imposed on it by the FCC Consent, except that no party shall be
required to comply with a condition if (1) the condition was not imposed on it
as the result of a breach by such party of any of its representations,
warranties, or covenants under this Agreement, and (2) compliance with the
condition would have a material adverse effect upon it. Buyer and Seller shall
oppose any requests for reconsideration or judicial review of the FCC Consent.
If the Closing shall not have occurred for any reason within the original
effective period of the FCC Consent, and neither party shall have terminated
this Agreement under Section 9, the parties shall jointly request an extension
of the effective period of the FCC Consent. No extension of the FCC Consent
shall limit the exercise by either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not, directly
or indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station; such operations, including complete
control and supervision of all of the Station's programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
- 10 -
<PAGE>
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any other
event occurs which (i) causes the Station to cease broadcasting operations for a
period of thirty (30) or more days or (ii) prevents in any material respect
signal transmission by the Station in the normal and usual manner and Seller
fails to restore or replace the Assets so that normal and usual transmission is
resumed within thirty (30) days of the damage, destruction or other event,
Buyer, in its sole discretion, may (x) terminate this Agreement forthwith
without any further obligations of either party (other than return of the Escrow
Amount) hereunder upon written notice to Seller or (y) proceed to consummate the
transaction contemplated by this Agreement and complete the repair, restoration
or replacement of the Assets after the Closing Date, in which event (A) Seller
shall deliver to Buyer all insurance proceeds received in connection with such
damage, destruction or other event; and (B) Seller shall have no further
liability or responsibility in connection with such repair, restoration or
replacement.
6.4 Confidentiality. Except as necessary for the consummation of the
transactions contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, except in connection with the American Sale (as
defined in Section 11.10 below) and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, the parties
will keep confidential any information (including, without limitation, financial
information and information regarding program contracts and revenue) obtained
from the other party in the course of investigating, negotiating and performing
the transactions contemplated by this Agreement. If this Agreement is
terminated, each party will return to the other party all written information
(including all documents, work papers and other written confidential material)
and any written record of all oral information obtained by such party from the
other party in connection with the transactions contemplated by this Agreement,
and all copies thereof, including corporate data files with respect thereto.
Subject to applicable FCC and other legal requirements, no public announcement
regarding this Agreement and the transactions contemplated hereby shall be made
without the express written approval of both Buyer and Seller.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their commercially reasonable efforts to consummate
the transaction contemplated hereby and to fulfill their obligations under this
Agreement.
- 11 -
<PAGE>
6.6 Time Brokerage Agreement. Buyer and Seller shall use good faith
efforts to negotiate a Time Brokerage Agreement which shall become effective no
later than December 15, 1997. The Time Brokerage Agreement shall contain terms
and conditions which are customary in the radio broadcasting industry.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and accurate in
all material respects at and as of the Closing Date as though made at and as of
that time except to the extent any such representation or warranty is expressly
stated only as of a specified earlier date or dates and for changes that are
permitted or contemplated pursuant to this Agreement.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) Consents. All Consents designated with an asterisk as
"material" on Schedule 3.3 shall have been obtained and delivered to Buyer
without the imposition of any condition that would be materially adverse to
Buyer in any such agreement or any such governmental license, permit, or other
authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied with
by Buyer under Section 6.1 hereof, and Seller shall have complied with any
conditions imposed on it by the FCC Consent.
(e) Governmental Authorizations. Seller shall be the holder of
the main station FCC License and there shall not have been any modification of
such License that could reasonably be expected to have a material adverse effect
on the Station. Other than proceedings generally affecting the radio
broadcasting industry, no proceeding shall be pending the effect of which could
reasonably be expected to result in the revocation, cancellation, failure to
renew, suspension, or material adverse modification of such License.
(f) Legal Proceedings. No injunction, restraining order or
decree of any nature of any court or governmental authority of competent
jurisdiction shall be in effect that
- 12 -
<PAGE>
restrains or prohibits Buyer from consummating the transactions contemplated by
this Agreement.
(g) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
7.2 Conditions to Obligations of Seller. All obligations of Seller at
the Closing are subject at Seller's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and accurate in
all material respects at and as of the Closing Date as though made at and as of
that time except to the extent any such representation or warranty is expressly
stated only as of a specified earlier date or dates or for changes that are
permitted or contemplated pursuant to this Agreement.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof, and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
(d) Legal Proceedings. No injunction, restraining order or
decree of any nature of any court or governmental authority of competent
jurisdiction shall be in effect that restrains or prohibits Seller from
consummating the transactions contemplated by this Agreement.
(e) Deliveries. Buyer shall have made or stand willing to make
all the deliveries to Seller set forth in Section 8.3.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. Subject to the satisfaction or waiver (by
the party for whose benefit the closing condition is imposed) on the date
scheduled for Closing of all of the conditions precedent to the holding of the
Closing set forth in Section 7 hereof, the Closing shall take place at 10:00
a.m., Eastern time, on a date to be set by Buyer on at least five (5) business
days' written notice to Seller, that is (1) not earlier than ten (10) business
days after the FCC
- 13 -
<PAGE>
Consent shall have been granted, and (2) not later than (20) twenty business
days following the date upon which the FCC Consent shall have been granted. If
Buyer fails to specify the date for the Closing pursuant to the preceding
sentence prior to the tenth (10th) business day after the date upon which the
FCC Consent has been granted, the Closing shall take place on the twentieth
(20th) business day after the date upon which the FCC Consent has been granted
subject to the satisfaction or waiver of all of the conditions precedent to the
holding of the Closing. Notwithstanding the foregoing and subject to the
satisfaction or waiver of all of the conditions precedent to the holding of the
Closing, in the event that the FCC's consent to the American Sale (as defined in
Section 11.10) requires the prior or contemporaneous consummation of this
Agreement as a condition precedent to the consummation of the American Sale,
Seller shall have the right to set or delay the Closing Date on or to a date
selected by Seller on at least five (5) business days written notice to Buyer
which date shall not be later than the earlier of (i) October 15, 1998 or (ii)
the closing date under the American Sale Agreement (as defined in Section
11.10).
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed bill of sale,
assignments, and other transfer documents which shall be sufficient to vest good
title to the Assets in the name of Buyer, free and clear of all mortgages,
liens, restrictions, encumbrances, claims, and obligations except for Permitted
Liens;
(b) Consents. An executed copy of any instrument evidencing
receipt of any material Consent and any other consent obtained by Seller;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by a duly authorized officer of
Seller, certifying as to the fulfillment of the conditions set forth in Sections
7.1(a) and (b);
(d) Releases. Any mortgage discharges or releases of liens
that are necessary in order for the Assets to be free and clear of all liens,
mortgages or security interests, other than the Permitted Liens;
(e) Good Standing Certificates. A certificate as to the
existence and good standing of Seller issued by the Secretary of State of the
State of Delaware, dated not more than ten (10) days before the Closing Date.
- 14 -
<PAGE>
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price, as adjusted pursuant
to Section 2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations with respect to the Assets as provided in Section 2.5;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by a duly authorized officer of Buyer,
certifying as to the fulfillment of the conditions set forth in Sections 7.2(a)
and (b);
(d) Good Standing Certificates. A certificate as to the
existence and good standing of Buyer issued by the Secretary of State of the
State of Florida, dated not more than ten (10) days before the Closing Date.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller,
if Seller is not then in material default of the obligations under this
Agreement, upon written notice to Buyer, upon the occurrence of any of the
following:
(a) Conditions. If, on the date that would otherwise be the
Closing Date, Seller shall have notified Buyer in writing that one or more of
the conditions precedent to the obligations of Seller set forth in Section 7.2
of this Agreement have not been satisfied by Buyer or waived in writing by
Seller and such condition shall not have been satisfied by Buyer or waived in
writing by Seller within fifteen (15) days following such notice.
(b) Upset Date. If the Closing has not occurred by July 1,
1998 (the "Upset Date"); provided, however, that if the Closing has not occurred
on or prior to the Upset Date, Seller shall have the right at its sole option to
extend the Upset Date to a date required to permit consummation of the American
Sale Agreement but in no event shall such date be later than October 15, 1998.
(c) Breach. If Buyer has failed to cure any material breach of
any of its representations, warranties or covenants under this Agreement within
fifteen (15) days after Buyer receives written notice of such breach from
Seller.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer, if
Buyer is not then in material default of the obligations under this Agreement,
upon written notice to Seller, upon the occurrence of any of the following:
- 15 -
<PAGE>
(a) Conditions. If, on the date that would otherwise be the
Closing Date, Buyer shall have notified Seller in writing that one or more of
the conditions precedent to the obligations of Buyer set forth in Section 7.1 of
this Agreement have not been satisfied by Seller or waived in writing by Buyer
and such conditions shall not have been satisfied by Seller or waived in writing
by Buyer within fifteen (15) days following such notice.
(b) Upset Date. If the Closing has not occurred by the Upset
Date; provided, however, that if the Closing has not occurred on or prior to the
Upset Date, Seller shall have the right at its sole option to extend the Upset
Date to a date required to permit consummation of the American Sale Agreement
but in no event shall such date be later than October 15, 1998.
(c) Breach. If Seller has failed to cure any material breach
of any of its representations, warranties or covenants under this Agreement
within fifteen (15) days after Seller received written notice of such breach
from Buyer.
9.3 Rights on Termination. If this Agreement is terminated pursuant to
Section 9.1 or Section 9.2 and neither party is in material breach of this
Agreement, the parties hereto shall not have any further liability to each other
with respect to the purchase and sale of the Assets and Buyer shall be entitled
to the return of the Escrow Deposit (as defined below), together with all
interest earned thereon (the "Escrow Amount"). If this Agreement is terminated
by Seller pursuant to Section 9.1 and Buyer shall be in material breach of its
obligations, representations, warranties or covenants under this Agreement, then
the payment to Seller of the Escrow Amount shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered by
Seller by reason of Buyer's material breach of this Agreement. Seller and Buyer
agree in advance that actual damages for Seller would be difficult to ascertain
and that the Escrow Amount is a fair and equitable amount to reimburse Seller
for damages sustained due to Buyer's material breach of its obligations,
representations, warranties or covenants under this Agreement. If this Agreement
is terminated by Buyer pursuant to Section 9.2 due to Seller's material breach
of this Agreement, Buyer shall have all rights and remedies available at law;
provided, however, that damages shall not exceed Five Hundred Thousand Dollars
($500,000). If this Agreement is terminated and Buyer is not in material breach
of its obligations, representations, warranties and covenants, Buyer shall be
entitled to the return of the Escrow Amount.
9.4 Escrow Deposit. Buyer shall deposit on the first business day
following the date hereof with the Escrow Agent the sum of Seventy-Five Thousand
Dollars ($75,000) (the "Escrow Deposit") in accordance with the Escrow
Agreement. All such funds deposited with the Escrow Agent shall be held and
disbursed in accordance with the terms of the Escrow Agreement and this
Agreement and at the Closing, the Escrow Amount shall be disbursed to Seller as
a credit in favor of Buyer against the payment of the Purchase Price.
- 16 -
<PAGE>
9.5 Procedure and Effect of Termination.
(a) In the event of termination of this Agreement by either or
both of Buyer and/or Seller pursuant to Sections 9.1 and/or 9.2, prompt written
notice thereof shall forthwith be given to the other party and this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without further action by any of the parties hereto, but subject to and without
limiting any of the rights of the parties specified herein in the event a party
is in default or breach in any material respect of its obligations under this
Agreement.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival. The representations and warranties contained in this
Agreement shall not survive the Closing. Any claim for indemnification in
respect of a covenant or agreement of Buyer or Seller hereunder to be performed
before the Closing shall be made before the expiration of the twelve-month
anniversary of the Closing Date. The covenants and agreements of Buyer and
Seller contained herein to be performed in any respect after the Closing Date
shall survive the Closing Date until fully discharged and performed.
10.2 Indemnification by Seller. After the Closing, and regardless of
any investigation made at any time by or on behalf of Buyer or any information
Buyer may have, Seller hereby agrees to indemnify and hold Buyer harmless
against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
nonfulfillment of any covenant by Seller contained in this Agreement or in any
certificate, document, or instrument prepared by Seller and delivered to Buyer
under this Agreement.
(b) Any failure by Seller to pay, perform or discharge any and
all obligations of Seller not assumed by Buyer pursuant to this Agreement.
(c) Any litigation, proceeding or claim by any third party
arising from the business or operations of the Assets by Seller prior to the
Closing Date.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
(e) Seller's obligation to indemnify Buyer pursuant to this
Section 10.2 shall be subject to all of the following limitations:
- 17 -
<PAGE>
(i) No indemnification shall be required to be made by
Seller under this Section 10.2 until the aggregate amount of damages of Buyer
exceeds Fifty Thousand Dollars ($50,000) and then only with respect to the
amount of such damages in excess of Fifty Thousand Dollars ($50,000) (the
prorations under Section 2.3(b) shall not be subject to this limitation);
provided that Seller's maximum liability for the entire amount owed pursuant to
this Section 10.2 is One Hundred Fifty Thousand Dollars ($150,000).
(ii) Buyer shall be entitled to indemnification only for
those damages arising with respect to any claim as to which Buyer has given
Seller written notice within the appropriate time period set forth in Section
10.1 hereof for such claim.
(iii) Following the Closing, the sole and exclusive remedy
for Buyer for any claim against Seller (whether such claim is framed in tort,
contract or otherwise) arising out of a breach of any covenant or other
agreement herein or otherwise arising out of or in connection with the
transactions contemplated by this Agreement or the operations of the Station
shall be a claim for indemnification pursuant to this Section 10.2.
(iv) Anything in this Agreement or any applicable law to
the contrary notwithstanding, it is understood and agreed by Buyer that no
director, officer, employee, agent or affiliate of Seller shall have any
personal liability to Buyer as a result of the breach of any representation,
warranty, covenant or agreement of Seller contained herein or otherwise arising
out of or in connection with the transactions contemplated hereby or the
operations of the Station and Buyer waives and releases and shall have no
recourse against any of such parties.
10.3 Indemnification by Buyer. After the Closing, and regardless of any
investigation made at any time by or on behalf of Seller or any information
Seller may have, Buyer hereby agrees to indemnify and hold Seller harmless
against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting from
nonfulfillment of any covenant by Buyer contained in this Agreement or in any
certificate, document, or instrument delivered to Seller under this Agreement.
(b) Any failure by Buyer to pay, perform or discharge any and
all obligations of Seller assumed by Buyer pursuant to this Agreement.
(c) Any litigation, proceeding or claim arising from the
business or operations of the Assets on or after the Closing Date.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of
- 18 -
<PAGE>
the foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
(e) Buyer's obligation to indemnify Seller pursuant to this
Section 10.3 shall be subject to all of the following limitations:
(i) No indemnification shall be required to be made by
Buyer under this Section 10.3 until the aggregate amount of damages of Seller
exceeds Fifty Thousand Dollars ($50,000) and then only with respect to the
amount of such damages in excess of Fifty Thousand Dollars ($50,000) (the
prorations under Section 2.3(b) shall not be subject to this limitation);
provided that Buyer's maximum liability for the entire amount owed pursuant to
this Section 10.3 is One Hundred Fifty Thousand Dollars ($150,000).
(ii) Seller shall be entitled to indemnification only for
those damages arising with respect to any claim as to which Seller has given
Buyer written notice within the appropriate time period set forth in Section
10.1 hereof for such claim.
(iii) Following the Closing, the sole and exclusive remedy
for Seller for any claim against Buyer (whether such claim is framed in tort,
contract or otherwise) arising out of a breach of any covenant or other
agreement herein or otherwise arising out of or in connection with the
transactions contemplated by this Agreement or the operations of the Station
shall be a claim for indemnification pursuant to this Section 10.3.
(iv) Anything in this Agreement or any applicable law to
the contrary notwithstanding, it is understood and agreed by Seller that no
director, officer, employee, agent, member or affiliate of Buyer shall have any
personal liability to Seller as a result of the breach of any representation,
warranty, covenant or agreement of Buyer contained herein or otherwise and
Seller waives and releases and shall have no recourse against any of such
parties.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within ten days after
written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty (30) days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the
- 19 -
<PAGE>
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representatives the information relied
upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of the thirty-day period
(or any mutually agreed upon extension thereof) to the validity and amount of
such claim, the Indemnifying Party shall immediately pay to the Claimant the
full amount of the claim, subject to the terms hereof (including Sections
10.2(e) and 10.3(e)). If the Claimant and the Indemnifying Party do not agree
within the thirty-day period (or any mutually agreed upon extension thereof),
the Claimant may seek appropriate remedy at law or equity, subject to the terms
hereof.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, then the Claimant may defend through counsel of its own choosing
and (so long as it gives the Indemnifying Party at least fifteen (15) days'
notice of the terms of the proposed settlement thereof and permits the
Indemnifying Party to then undertake the defense thereof) settle such claim,
action or suit, and to recover from the Indemnifying Party the amount of such
settlement or of any judgment and the costs and expenses of such defense. The
Indemnifying Party shall not compromise or settle any third party claim, action
or suit without the prior written consent of the Claimant, which consent will
not be unreasonably withheld or delayed.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) Subject to the terms hereof, the indemnification rights
provided in Sections 10.2 and 10.3 shall extend to the shareholders, directors,
officers, employees, and representatives of any Claimant although for the
purpose of the procedures set forth in this Section 10.4, any indemnification
claims by such parties shall be made by and through the Claimant.
10.5 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
- 20 -
<PAGE>
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax and document stamps, or other charges levied by any governmental entity
arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Buyer. Buyer and Seller shall each
pay one-half of all filing fees required by the FCC and of any other
governmental filing fees. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives. Each party
shall be responsible for all fees or commissions payable to any finder, broker,
advisor, or similar person retained by or on behalf of such party.
11.2 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, (c) deemed to have been given on the
date telecopied with receipt confirmed, the date of personal delivery, or the
date set forth in the records of the delivery service or on the return receipt,
and (d) addressed as follows:
If to Seller:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Michael B. Milsom, General Counsel
Telecopy: (617) 375-7575
Telephone: (617) 375-7510
With a copy (which shall not
constitute notice) to: Dow, Lohnes & Albertson,
PLLC 1200 New Hampshire Avenue, N.W.
Suite 800
Washington, DC 20036-6802
Attention: John R. Feore, Esquire
Telecopy: (202) 776-2222
Telephone: (202) 776-2518
If to Buyer:
James Crystal Enterprises, L.C.
4401 South Ocean Boulevard, Suite 7
Highland Beach, Florida 33487
Attention: James C. Hilliard
Telecopy: (561) 842-5855
Telephone: (561) 844-5330
- 21 -
<PAGE>
With a copy (which shall not
constitute notice) to:
Haley, Bader & Potts, P.L.C.
4350 North Fairfax Drive
Suite 900
Arlington, Virginia 22203-1633
Attention: John W. King, Esquire
Telecopy: (703) 841-2345
Telephone: (703) 841-0606
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Seller may assign its rights hereunder if such assignment would
not cause a delay in a grant of the FCC application filed pursuant to Section
6.1(b). This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Notwithstanding the foregoing, the American Sale (as defined in Section 11.10
below) shall be expressly authorized hereunder and upon such American Sale, the
successor or assignee of Seller pursuant to such American Sale shall be bound by
the terms of this Agreement and Seller shall be released from any liability
hereunder and thereunder. In light of the American Sale Agreement (as defined in
Section 11.10 below), Buyer shall take at Seller's expense all actions that may
be reasonably requested by Seller to effectuate the terms of the American Sale
Agreement, including, without limitation, filing a new FCC assignment
application or amending the existing FCC assignment application to reflect that
the "Seller" hereunder may become a different party from the current Seller or
that a change of control of Seller may occur as a result of the American Sale.
Neither the execution of the American Sale Agreement, nor the consummation of
the American Sale shall constitute a breach or default hereunder and without
limiting any party's rights under Section 9.1(b) or 9.2(b) hereof, any delay in
obtaining the FCC Consent as a result of the American Sale shall not constitute
a breach or default hereunder.
11.4 Further Assurances. The parties shall use their commercially
reasonable efforts to take any actions and execute any other documents that may
be necessary or desirable under applicable laws and regulations to the
implementation and consummation of this Agreement, including any additional
bills of sale, assignments and assumptions, or other transfer documents that, in
the reasonable opinion of the requesting party being advised by counsel, may be
necessary to ensure, complete and evidence the full and effective transfer of
the Assets pursuant to this Agreement.
11.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
- 22 -
<PAGE>
11.6 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.7 Entire Agreement. This Agreement, the Schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.8 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.8.
11.9 Press Release. Prior to the Closing, neither party shall publish
any press release, make any other public announcement or otherwise communicate
with any news media concerning this Agreement or the transactions contemplated
hereby without the prior written consent of the other party; provided, however,
that nothing contained herein shall prevent either party from promptly making
all filings with governmental authorities, including but not limited to filings,
prospectuses and other similar documents permitted or required by the Securities
Act of 1933 and the Securities and Exchange Act of 1934, the Nasdaq National
Market and other similar regulatory bodies as may, in its judgment, be required
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.10 Exclusive Negotiations. During the term of this Agreement, except
for the execution and/or consummation of that certain Agreement and Plan of
Merger (the "American Sale Agreement") by and among Seller, Westinghouse
Electric Corporation and R Acquisition Corp., dated as of September 19, 1997
(the "American Sale"), Seller shall not discuss or negotiate with any other
possible buyer of the Station or the Assets, or invite or solicit any inquiries
or proposals relating to the possible sale of all or a material portion of the
Station or the Assets.
11.11 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
- 23 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
Buyer:
JAMES CRYSTAL ENTERPRISES, L.C.
By:_______________________________________
Name:
Title:
Seller:
AMERICAN RADIO SYSTEMS CORPORATION
By:_______________________________________
Name:
Title:
AMERICAN RADIO SYSTEMS LICENSE CORP.
By:_______________________________________
Name:
Title:
- 24 -
EXHIBIT 10.17
AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, INC.;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS BANKS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS
Dated as of October 15, 1997
Powell, Goldstein, Frazer & Murphy
Atlanta, Georgia
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1 DEFINITIONS.................................................................................2
ARTICLE 2 LOANS......................................................................................20
Section 2.1 The Loans..........................................................................20
Section 2.2 Manner of Borrower and Disbursement................................................21
Section 2.3 Interest...........................................................................23
Section 2.4 Commitment Fees....................................................................25
Section 2.5 Mandatory Commitment Reductions....................................................26
Section 2.6 Voluntary Commitment Reductions....................................................28
Section 2.7 Prepayments and Repayments.........................................................29
Section 2.8 Notes; Loan Accounts...............................................................30
Section 2.9 Manner of Payment..................................................................30
Section 2.10 Reimbursement......................................................................31
Section 2.11 Pro Rata Treatment.................................................................32
Section 2.12 Capital Adequacy...................................................................32
Section 2.13 Bank Tax Forms.....................................................................33
ARTICLE 3 CONDITIONS PRECEDENT.......................................................................33
Section 3.1 Conditions Precedent to Effectiveness of this Amendment and Restatement
Section 3.2 Conditions Precedent to Each Advance...............................................35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.............................................................36
Section 4.1 Representations and Warranties.....................................................36
Section 4.2 Survival of Representations and Warranties, Etc....................................43
ARTICLE 5 GENERAL COVENANTS..........................................................................43
Section 5.1 Preservation of Existence and Similar Matters......................................43
Section 5.2 Business; Compliance with Applicable Law...........................................43
Section 5.3 Maintenance of Properties..........................................................44
Section 5.4 Accounting Methods and Financial Records...........................................44
Section 5.5 Insurance..........................................................................44
Section 5.6 Payment of Taxes and Claims........................................................45
Section 5.7 Compliance with ERISA..............................................................45
Section 5.8 Visits and Inspections.............................................................47
Section 5.9 Payment of Indebtedness; Loans.....................................................47
Section 5.10 Use of Proceeds....................................................................47
Section 5.11 Real Estate........................................................................48
Section 5.12 Indemnity..........................................................................48
Section 5.13 Interest Rate Hedging..............................................................49
Section 5.14 Covenants Regarding Formation of Restricted Subsidiaries and
Acquisitions; Partnership, Subsidiaries............................................49
<PAGE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
Page
<S> <C>
Section 5.15 Payment of Wages...................................................................50
Section 5.16 Further Assurances.................................................................50
ARTICLE 6 INFORMATION COVENANTS......................................................................51
Section 6.1 Quarterly Financial Statements and Information.....................................51
Section 6.2 Annual Financial Statements and Information........................................51
Section 6.3 Performance Certificates...........................................................52
Section 6.4 Copies of Other Reports............................................................52
Section 6.5 Notice of Litigation and Other Matters.............................................53
Section 6.6 Real Estate........................................................................54
ARTICLE 7 NEGATIVE COVENANTS.........................................................................54
Section 7.1 Indebtedness of the Borrower and its Subsidiaries..................................54
Section 7.2 Limitation on Liens................................................................55
Section 7.3 Amendment and Waiver...............................................................55
Section 7.4 Liquidation, Merger or Disposition of Assets.......................................55
Section 7.5 Limitation on Guaranties...........................................................56
Section 7.6 Investments and Acquisitions.......................................................57
Section 7.7 Restricted Payments................................................................58
Section 7.8 Leverage Ratio.....................................................................58
Section 7.9 Interest Coverage Ratio............................................................59
Section 7.10 Annualized Operating Cash Flow to Pro Forma Debt Service...........................59
Section 7.11 Limitation on Capital Expenditures.................................................60
Section 7.12 Affiliate Transactions.............................................................60
Section 7.13 Real Estate........................................................................60
Section 7.14 ERISA Liabilities..................................................................61
Section 7.15 Sales and Leasebacks...............................................................61
ARTICLE 8 DEFAULT...................................................................................61
Section 8.1 Events of Default..................................................................61
Section 8.2 Remedies...........................................................................64
Section 8.3 Payments Subsequent to Declaration of Event of Default.............................66
ARTICLE 9 THE ADMINISTRATIVE AGENT...................................................................67
Section 9.1 Appointment and Authorization......................................................67
Section 9.2 Interest Holders...................................................................67
Section 9.3 Consultation with Counsel..........................................................67
Section 9.4 Documents..........................................................................67
Section 9.5 Administrative Agent and Affiliates................................................68
Section 9.6 Responsibility of the Administrative Agent.........................................68
Section 9.7 Action by the Administrative Agent.................................................68
- ii -
<PAGE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
Page
<S> <C>
Section 9.8 Notice of Default or Event of Default..............................................69
Section 9.9 Responsibility Disclaimed..........................................................69
Section 9.10 Indemnification....................................................................70
Section 9.11 Credit Decision....................................................................70
Section 9.12 Successor Administrative Agent.....................................................71
Section 9.13 Delegation of Duties...............................................................71
ARTICLE 10 CHANGES IN CIRCUMSTANCES AFFECTING LIBOR ADVANCES..........................................72
Section 10.1 LIBOR Basis Determination Inadequate or Unfair.....................................72
Section 10.2 Illegality.........................................................................72
Section 10.3 Increased Costs....................................................................73
Section 10.4 Effect On Other Advances...........................................................74
ARTICLE 11 MISCELLANEOUS..............................................................................74
Section 11.1 Notices............................................................................74
Section 11.2 Expenses...........................................................................76
Section 11.3 Waivers............................................................................76
Section 11.4 Set-Off............................................................................77
Section 11.5 Assignment.........................................................................77
Section 11.6 Accounting Principles..............................................................80
Section 11.7 Counterparts.......................................................................80
Section 11.8 Governing Law......................................................................80
Section 11.9 Severability.......................................................................81
Section 11.10 Interest ...................................................................81
Section 11.11 Table of Contents and Headings.....................................................81
Section 11.12 Amendment and Waiver...............................................................81
Section 11.13 Entire Agreement...................................................................82
Section 11.14 Other Relationships................................................................82
Section 11.15 Directly or Indirectly.............................................................82
Section 11.16 Reliance on and Survival of Various Provisions.....................................82
Section 11.17 Senior Debt........................................................................83
Section 11.18 Obligations........................................................................83
Section 11.19 Confidentiality....................................................................83
ARTICLE 12 WAIVER OF JURY TRIAL.......................................................................83
Section 12.1 Waiver of Jury Trial...............................................................83
</TABLE>
- iii -
<PAGE>
EXHIBITS
Exhibit A Form of Activation Notice
Exhibit B Form of Borrower's Pledge Agreement
Exhibit C Form of Borrower's Security Agreement
Exhibit D Form of Certificate of Financial Condition
Exhibit E Form of Promissory Note
Exhibit F Form of Parent Pledge Agreement
Exhibit G - Form of Request for Advance
Exhibit H - Form of Subsidiary Guaranty
Exhibit I - Form of Subsidiary Pledge Agreement
Exhibit J - Form of Subsidiary Security Agreement
Exhibit K - Form of Use of Proceeds Letter
Exhibit L - Form of Borrower's Loan Certificate
Exhibit M - Form of Subsidiary Loan Certificate
Exhibit N - Form of Performance Certificate
Exhibit 0 - Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - List of Unrestricted Subsidiaries on the
Agreement Date
Schedule 4. 1 (a) - Exceptions to Representations and Warranties
Schedule 4. 1 (c) - Subsidiaries
Schedule 4. 1 (i) - Litigation
Schedule 4. 1 (s) - Affiliate Transactions
Schedule 4. I (v) - Indebtedness
- iv -
<PAGE>
AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, INC.;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS BANKS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS
WHEREAS, the Borrower, the Administrative Agent and the Banks are all
parties to that certain Loan Agreement dated as of November 22, 1996 (the "Prior
Loan Agreement"); and
WHEREAS, the Borrower has requested that the Administrative Agent and
the Banks consent to certain amendments to the Prior Loan Agreement, as more
fully set forth in this Amended and Restated Loan Agreement; and
WHEREAS, the Administrative Agent and the Banks have agreed to amend
and restate the Prior Loan Agreement in its entirety as set forth herein; and
WHEREAS, the Borrower acknowledges and agrees that the security
interest granted to the Administrative Agent, for itself and on behalf of the
Banks pursuant to the Prior Loan Agreement and the Loan Documents (as defined in
the Prior Loan Agreement) executed in connection therewith shall remain
outstanding and in full force and effect in accordance with the Prior Loan
Agreement and shall continue to secure the Obligations (as defined therein); and
WHEREAS, the Borrower acknowledges and agrees that (i) the Obligations
(as defined herein) represent, among other things, the amendment, restatement,
renewal, extension, consolidation and modification of the Obligations (as
defined in the Prior Loan Agreement) arising in connection with the Prior Loan
Agreement and the other Loan Documents (as defined in the Prior Loan Agreement)
executed in connection therewith; (ii) the parties hereto intend that the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith and the collateral pledged
thereunder shall secure, without interruption or impairment of any kind, all
existing Indebtedness under the Prior Loan Agreement and the other Loan
Documents (as defined in the Prior Loan Agreement) executed in connection
therewith as so amended, restated, restructured, renewed, extended, consolidated
and modified hereunder, together with all other Obligations hereunder; (iii) all
Liens evidenced by the Prior Loan Agreement and the
<PAGE>
other Loan Documents (as defined in the Prior Loan Agreement) executed in
connection therewith are hereby ratified, confirmed and continued; and (iv) the
Loan Documents (as defined herein) are intended to restructure, restate, renew,
extend, consolidate, amend and modify the Prior Loan Agreement and the other
Loan Documents (as defined in the Prior Loan Agreement) executed in connection
therewith; and
WHEREAS, the parties hereto intend that (i) the provisions of the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith, to the extent restructured,
restated, renewed, extended, consolidated, amended and modified hereby, are
hereby superseded and replaced by the provisions hereof and of the Loan
Documents (as defined herein); and (ii) the Notes (as hereinafter defined)
amend, renew, extend, modify, replace, are substituted for and supersede in
their entirety, but do not extinguish the indebtedness arising under the
promissory notes issued pursuant to the Prior Loan Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby amend and restate the Prior Loan Agreement as follows:
ARTICLE 1 Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, lease, exchange,
issuance of stock or other equity or debt securities, merger, reorganization or
any other method) (i) any acquisition by the Borrower or any Restricted
Subsidiary of any other Person, which Person shall then become consolidated with
the Borrower or any such Restricted Subsidiary in accordance with GAAP; (ii) any
acquisition by the Borrower or any Restricted Subsidiary of all or any
substantial part of the assets of any other Person; or (iii) any acquisition by
Borrower or any Restricted Subsidiary of any communications tower facilities,
communications tower management businesses or related contracts, other than any
such Acquisition which shall be made by, or of, any Person which shall have been
designated and approved as an Unrestricted Subsidiary.
"Acquisition Operating Cash Flow" shall mean in the case of an
Acquisition permitted hereunder, Operating Cash Flow of the Borrower and its
Restricted Subsidiaries for the period during which such Acquisition occurs,
adjusted (A) to give effect to such Acquisition, as if such Acquisition had
occurred on the first day of such period, by excluding the Operating Cash Flow
of such Acquisition during such period prior to the date of such Acquisition and
adding to the Operating Cash Flow of the Borrower, if positive, or subtracting
from such Operating Cash Flow, if negative, the product of (i) the actual
Operating Cash Flow of such Acquisition for that portion of such period from the
date of
-2-
<PAGE>
such Acquisition to the last day of such period, multiplied by (ii) a fraction
the numerator of which is the number of calendar days in such period and the
denominator of which is the number of days in such period from and including the
date of such Acquisition through the last day of such period.
"Activation Notice" shall be a notice from the Borrower to the
Administrative Agent in substantially the form of Exhibit A attached hereto
pursuant to which the Borrower notifies the Administrative Agent on or prior to
October 15, 1998, that it is activating the Commitment Increase.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in
its capacity as Administrative Agent for the Banks or any successor
Administrative Agent appointed pursuant to Section 9.12 hereof.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at 909 Fannin Street, Suite 1700, Houston Texas
77010, or such other office as may be designated pursuant to the provisions of
Section 11.1 hereof.
"Advance" shall mean amounts advanced by the Banks to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
than one Advance.
"Affiliate" shall mean, with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control" when used with
respect to any Person includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise. For
purposes of this Agreement, American Radio Systems and its Affiliates shall be
deemed to be Affiliates of the Borrower.
"Agreement" shall mean this Amended and Restated Loan Agreement, as
amended, supplemented, restated or otherwise modified from time to time.
"Agreement Date" shall mean October 15, 1997.
"American Radio Systems" shall mean American Radio Systems Corporation,
a Delaware corporation.
"Annualized Operating Cash Flow" shall mean (a) for any calculation
date up to and including September 30, 1998, the sum of (i) the product of (A)
Operating Cash Flow (Towers) for the calendar month-end being tested or the most
recently completed calendar
-3-
<PAGE>
month immediately preceding such calculation date, as the case may be, times (B)
twelve (12) and (ii) the product of (A) Operating Cash Flow (Other Business) for
the fiscal quarter end being tested or the most recently completed fiscal
quarter immediately preceding such calculation date, times (B) four (4); and (b)
for any calculation date after September 30, 1998, the product of (i) Operating
Cash Flow for the fiscal quarter-end being tested or the most recently completed
fiscal quarter immediately preceding such calculation date, as the case may be,
times (ii) four (4).
"Applicable Law" shall mean, in respect of any Person, all provisions
of constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limiting
the foregoing, the Licenses, the Communications Act, zoning ordinances and all
Environmental Laws, and all orders, decisions, judgments and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.
"Applicable Margin" shall mean the interest rate margin applicable to
Base Rate Advances and LIBOR Advances, as the case may be, in each case
determined in accordance with Section 2.3(f) hereof.
"Applicable Margin Ratio" shall mean, as of any date, the ratio of (a)
the Total Debt of the Borrower and its Restricted Subsidiaries on a consolidated
basis on such date to (b) the product of (i) Operating Cash Flow of the Borrower
and its Restricted Subsidiaries, for the most recently completed fiscal quarter
times (ii) four (4).
"Authorized Signatory" shall mean such senior personnel of a Person as
may be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Available Commitment" shall mean the lesser of (i) the Existing
Commitment and (ii) the maximum amount of the Loans that could be outstanding
hereunder on such date without resulting in a breach of Section 7.8 or Section
7.10 hereof.
"Banks" shall mean the Persons whose names appear as "Banks" on the
signature pages hereof and any other Person which becomes a "Bank" hereunder
after the Agreement Date; and "Bank" shall mean any one of the foregoing Banks.
"Base Rate" shall mean, at any time, a fluctuating interest rate per
annum equal to the higher of (a) the rate of interest quoted from time to time
by the Administrative Agent as its "prime rate" or "base rate" or (b) the
Federal Funds Rate plus one-half of one percent (1/2%). The Base Rate is not
necessarily the lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit.
-4-
<PAGE>
"Base Rate Advance" shall mean an Advance which the Borrower requests
to be made as a Base Rate Advance or is reborrowed as a Base Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000, and in an integral multiple of
$500,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of
(i) the Base Rate and (ii) the Applicable Margin applicable to Base Rate
Advances. The Base Rate Basis shall be adjusted automatically as of the opening
of business on the effective date of each change in the Base Rate to account for
such change, and shall also be adjusted to reflect changes of the Applicable
Margin applicable to Base Rate Advances.
"Borrower" shall mean American Tower Systems, Inc., a Delaware
corporation.
"Borrower's Pledge Agreement" shall mean that certain Amended and
Restated Borrower's Pledge Agreement dated as of even date herewith between the
Borrower and the Administrative Agent, substantially in the form of Exhibit B
attached hereto, pursuant to which the Borrower has pledged to the
Administrative Agent for the ratable benefit of the Banks all of the Borrower's
stock ownership and/or any partnership interests in each of its Subsidiaries.
"Borrower's Security Agreement" shall mean that certain Amended and
Restated Security Agreement dated as of even date herewith, made by the Borrower
in favor of the Administrative Agent for the ratable benefit of the Banks,
substantially in the form of Exhibit C attached hereto.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
Houston, Texas, New York, New York and London, England, as relevant to the
determination to be made or the action to be taken.
"Capital Expenditures" shall mean, for any period, expenditures
(including the aggregate amount of Capitalized Lease Obligations required to be
paid during such period) incurred by any Person to acquire or construct fixed
assets, plant and equipment (including renewals, improvements and replacements,
but excluding repairs and maintenance) during such period, which would be
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital stock
of such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
-5-
<PAGE>
"Capitalized Lease Obligation" shall mean that portion of any
obligation of a Person as lessee under a lease which at the time would be
required to be capitalized on the balance sheet of such lessee in accordance
with GAAP.
"Certificate of Financial Condition" shall mean a certificate,
substantially in the form of Exhibit D attached hereto, signed by the chief
financial officer of the Borrower, together with any schedules, exhibits or
annexes appended thereto.
"Change of Control" shall mean (a) any change in the ownership of, or
lien upon, the stock of the Borrower that results in less than fifty-one percent
(51%) of all voting rights with respect to the Capital Stock of the Borrower
(including, without limitation, warrants, options, conversion rights, voting
rights and calls or claims of any character with respect thereto, to the extent
exercisable prior to repayment in full of the Obligations) being owned, directly
or indirectly, by the Parent, the senior management of American Radio Systems,
or Affiliates of American Radio Systems, the Parent or the Borrower or (b) after
any acquisition of all or substantially all of the assets or voting control of
the Capital Stock of American Radio Systems (whether by merger or other business
combination), any event that results in Steven B. Dodge ceasing to have one of
the following: (i) ownership of a material amount of the voting Capital Stock of
the Borrower, (ii) ownership of a material amount of the economic ownership
interests of the Borrower or (iii) the position of Chairman of the Board of
Directors and Chief Executive Officer.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean any property of any kind constituting
collateral for the Obligations under any of the Security Documents.
"Commitment" shall mean the several obligations of the Banks to fund
their respective portion of the Loans to the Borrower in accordance with their
respective Commitment Ratios in the aggregate sum of up to $400,000,000,
pursuant to the terms hereof, as such obligations may be reduced from time to
time pursuant to the terms hereof.
"Commitment Increase" shall mean the pro rata increase to each Bank's
portion of the Existing Commitment from $250,000,000 to $400,000,000.
"Commitment Ratios" shall mean the percentages in which the Banks are
severally bound to fund their respective portion of Advances to the Borrower
under the Commitment, which are set forth below (together with dollar amounts)
(and which may change from time to time in accordance with Section 11.5 hereof):
-6-
<PAGE>
<TABLE>
<CAPTION>
Approximate Dollar
Bank Percentage Commitment
<S> <C> <C>
Toronto Dominion (Texas), Inc. 8.750000000% $ 35,000,000
Banque Paribas 6.750000000% $ 27,000,000
Barclays Bank PLC 6.750000000% $ 27,000,000
Bank of Montreal, Chicago Branch 6.750000000% $ 27,000,000
The Chase Manhattan Bank 6.750000000% $ 27,000,000
Fleet National Bank 6.750000000% $ 27,000,000
GE Capital Corporation 6.750000000% $ 27,000,000
The Bank of New York 6.750000000% $ 27,000,000
Credit Suisse First Boston 6.750000000% $ 27,000,000
SunTrust Bank, Central Florida, National 6.750000000% $ 27,000,000
Association
Union Bank of California, N.A. 6.750000000% $ 27,000,000
Credit Lyonnais New York Branch 6.250000000% $ 25,000,000
Lehman Commercial Paper Inc. 6.250000000% $ 25,000,000
The Bank of Nova Scotia 3.750000000% $ 15,000,000
The Sumitomo Bank, Limited 3.750000000% $ 15,000,000
Bank of Scotland 3.750000000% $ 15,000,000
TOTAL 100.00% $ 400,000,000
</TABLE>
"Communications Act" shall mean the Communications Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as the same may be in effect from time to time.
"Default" shall mean any Event of Default, and any of the events
specified in Section 8.1 hereof, regardless of whether there shall have occurred
any passage of time or giving of notice, or both, that would be necessary in
order to constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of (a) the Base Rate, plus (b) the Applicable Margin for Base Rate Advances
plus (c) two percent (2%).
"Diablo" shall mean Diablo Communications, Inc., a California
corporation, and Diablo Communications of Southern California, Inc., a
California corporation.
"Employee Pension Plan" shall mean any Plan which is maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate.
"Environmental Laws" shall mean all applicable federal, state or local
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees,
-7-
<PAGE>
judgments or injunctions issued, promulgated, approved or entered thereunder
relating to public health, safety or the pollution or protection of the
environment, including, without limitation, those relating to releases,
discharges, emissions, spills, leaching, or disposals to air, water, land or
ground water, to the withdrawal or use of ground water, to the use, handling or
disposal of polychlorinated biphenyls, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances (including,
without limitation, petroleum, crude oil or any fraction thereof, or other
hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or
other controlled, prohibited, or regulated substances, including, without
limitation, any such provisions under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.),
or the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. ss.
6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect from time to time.
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
Affiliate of the Borrower, that is a member of any group of organizations of
which the Borrower is a member and which is covered by a Plan.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Bank
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section
8.1 hereof, provided that any requirement for notice or lapse of time, or both,
has been satisfied.
"Existing Commitment" shall mean (a) prior to receipt by the
Administrative Agent of an Activation Notice and from and after October 15,
1998, if no such Activation Notice has been received by the Administrative
Agent, and after giving effect to reductions in the Existing Commitment under
Section 2.5 and Section 2.6 hereof and repayments of the Loans under Section 2.7
hereof, $250,000,000, and (b) thereafter, after giving effect to reductions in
the Existing Commitment under Section 2.5 and Section 2.6 hereof and repayments
of the Loans under Section 2.7 hereof, the Commitment.
"Excess Cash Flow" shall mean, as of the end of any fiscal year of the
Borrower based on the audited financial statements provided under Section 6.2
hereof for such fiscal year, the excess, if any, of (a) Operating Cash Flow for
such fiscal year, minus (b) the sum of the following: (i) payments made with
respect to Capital Expenditures incurred by
-8-
<PAGE>
the Borrower and its Restricted Subsidiaries during such fiscal year; (ii)
repayments of the Loans resulting from reductions of the Commitment (which shall
include any reductions set forth in Section 2.5(a) hereof); (iii) cash taxes
paid by the Borrower and its Restricted Subsidiaries (including any paid to
American Radio Systems pursuant to the Tax Sharing Agreement) during such fiscal
year; (iv) Interest Expense during such fiscal year; and (v) principal payments
made in respect of Indebtedness for Money Borrowed (other than with respect to
the Loans) paid by the Borrower and its Restricted Subsidiaries during such
fiscal year.
"FCC" shall mean the Federal Communications Commission, or any other
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the weighted average
of the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles in the United States, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements.
"Indebtedness" shall mean, with respect to any Person, and without
duplication, (a) all items, except items of shareholders' and partners' equity
or capital stock or surplus or general contingency or deferred tax reserves,
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person, including,
without limitation, with respect to any secured non-recourse obligations of such
Person, the higher of the book value or fair market value of the property or
asset securing such obligation (if less than the amount of such obligation), (b)
all direct or indirect obligations of any other Person secured by any Lien to
which any property or asset owned by such Person is subject, but only to the
extent of the higher of the fair market value or the book value of the property
or asset subject to such Lien (if less than the amount of such obligation), if
the obligation secured thereby shall not have been assumed, (c) to the extent
not otherwise included, all Capitalized Lease Obligations of such Person and all
obligations
-9-
<PAGE>
of such Person with respect to leases constituting part of a sale and lease-back
arrangement, (d) all reimbursement obligations with respect to outstanding
letters of credit, and (e) to the extent not otherwise included, all obligations
subject to Guaranties of such Person or its Subsidiaries, and (f) all
obligations of such Person under Interest Hedge Agreements.
"Indebtedness for Money Borrowed" shall mean, with respect to any
Person, Indebtedness for money borrowed and Indebtedness represented by notes
payable and drafts accepted representing extensions of credit, all obligations
evidenced by bonds, debentures, notes or other similar instruments, all
Indebtedness upon which interest charges are customarily paid (other than trade
payables arising in the ordinary course of business, but only if and so long as
such accounts are payable on customary trade terms), all Capitalized Lease
Obligations, all reimbursement obligations with respect to outstanding letters
of credit, all Indebtedness issued or assumed as full or partial payment for
property or services (other than trade payables arising in the ordinary course
of business, but only if and so long as such accounts are payable on customary
trade terms), whether or not any such notes, drafts, obligations or Indebtedness
represent Indebtedness for money borrowed, and, without duplication, Guaranties
of any of the foregoing. For purposes of this definition, interest which is
accrued but not paid on the scheduled due date for such interest shall be deemed
Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed thereto in Section 5.12
hereof.
"Interest Coverage Ratio" shall mean, for any period, the ratio of (a)
Annualized Operating Cash Flow as of (i) the calendar quarter end being tested,
or (ii) the most recently completed calendar quarter, as the case may be, to (b)
Interest Expense for (i) the four (4) calendar quarter period then ended or (ii)
the most recently completed four (4) calendar quarter period, as the case may
be, in each case calculated in accordance with GAAP.
"Interest Expense" shall mean, for any period, all cash interest
expense (including imputed interest with respect to Capitalized Lease
Obligations) with respect to any Indebtedness for Money Borrowed of the Borrower
and its Restricted Subsidiaries on a consolidated basis during such period
pursuant to the terms of such Indebtedness for Money Borrowed, together with all
fees payable in respect thereof, all as calculated in accordance with GAAP.
"Interest Hedge Agreements" shall mean the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
-10-
<PAGE>
"Interest Period" shall mean (a) in connection with any Base Rate
Advance, the period beginning on the date such Advance is made and ending on the
last day of the calendar quarter in which such Advance is made, provided,
however, that if a Base Rate Advance is made on the last day of any calendar
quarter, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar quarter, and (b) in connection with
any LIBOR Advance, the term of such Advance selected by the Borrower or
otherwise determined in accordance with this Agreement. Notwithstanding the
foregoing, however, (i) any applicable Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless, with respect to LIBOR Advances only, such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (ii) any applicable Interest Period, with
respect to LIBOR Advances only, which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end shall (subject to clause (i) above) end on the last day of such
calendar month, and (iii) the Borrower shall not select an Interest Period which
extends beyond the Maturity Date or such earlier date as would interfere with
the Borrower's repayment obligations under Section 2.5, Section 2.6 or Section
2.7 hereof. Interest shall be due and payable with respect to any Advance as
provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the LIBOR
Basis, as appropriate.
"known to the Borrower" or "to the knowledge of the Borrower" shall
mean known by or reasonably should have been known by the executive officers of
the Borrower (which shall include, without limitation, the chief executive
officer, the chief operating officer, if any, the chief financial officer and
the general counsel, or any vice president of the Borrower).
"Leverage Ratio" shall mean, as of any date, the ratio of (a) the Total
Debt of the Borrower and its Restricted Subsidiaries on a consolidated basis on
such date, to (b) Annualized Operating Cash Flow of the Borrower and its
Restricted Subsidiaries on a consolidated basis.
"LIBOR" shall mean, for any Interest Period, the average of the
interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to the Administrative Agent in the Eurodollar market
at approximately 11:00 a.m. (London time) two (2) Business Days before the first
day of such Interest Period, in an amount approximately equal to the principal
amount of, and for a length of time approximately equal to the Interest Period
for, the LIBOR Advance sought by the Borrower.
-11-
<PAGE>
"LIBOR Advance" shall mean an Advance which the Borrower requests to be
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance
with the provisions of Section 2.2 hereof, and which shall be in a principal
amount of at least $5,000,000 and in an integral multiple of $1,000,000.
"LIBOR Basis" shall mean a simple per annum interest rate (rounded
upward, if necessary, to the nearest one-hundredth (1/100th) of one percent)
equal to the sum of (a) the quotient of (i) the LIBOR divided by (ii) one minus
the Eurodollar Reserve Percentage, if any, stated as a decimal, plus (b) the
Applicable Margin. The LIBOR Basis shall apply to Interest Periods of one (1),
two (2), three (3), or six (6) months, and, once determined, shall remain
unchanged during the applicable Interest Period, except for changes to reflect
adjustments in the Eurodollar Reserve Percentage and the Applicable Margin as
adjusted pursuant to Section 2.3(f) hereof. The LIBOR Basis for any LIBOR
Advance shall be adjusted as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Licenses" shall mean any telephone, microwave, radio transmissions,
personal communications or other license, authorization, certificate of
compliance, franchise, approval or permit, whether for the construction, the
ownership or the operation of any communications tower facilities, granted or
issued by the FCC and held by the Borrower or any of its Restricted
Subsidiaries, all of which as of the Agreement Date are listed on Schedule 1
attached hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Borrower's
Pledge Agreement, the Borrower's Security Agreement, the Subsidiary Security
Agreement, the Subsidiary Guaranty, the Subsidiary Pledge Agreement, the Parent
Pledge Agreement, all fee letters, all Requests for Advance, all Interest Hedge
Agreements between the Borrower, on the one hand, and the Administrative Agent
and the Banks, or any of them, on the other hand, and all other documents and
agreements executed or delivered by the Borrower or its Restricted Subsidiaries
in connection with or contemplated by this Agreement.
"Loans" shall mean, collectively, the amounts advanced by the Banks to
the Borrower under the Commitment, not to exceed the Commitment, and evidenced
by the Notes.
"Majority Banks" shall mean (i) at any time that no Loans are
outstanding hereunder, Banks the total of whose Commitment Ratios equals or
exceeds sixty percent (60%) of the Commitment Ratios of all Banks entitled to
vote hereunder, or (ii) at any time that there are
-12-
<PAGE>
Loans outstanding hereunder, Banks the total of whose Loans outstanding equals
or exceeds sixty percent (60%) of the total principal amount of the Loans then
outstanding of all Banks entitled to vote hereunder.
"Materially Adverse Effect" shall mean (a) any material adverse effect
upon the business, assets, business prospects, liabilities, financial condition,
results of operations or properties of the Borrower and its Restricted
Subsidiaries on a consolidated basis, taken as a whole, or (b) a material
adverse effect upon the binding nature, validity, or enforceability of this
Agreement and the Notes, or upon the ability of the Borrower and its Restricted
Subsidiaries to perform the payment obligations or other material obligations
under this Agreement or any other Loan Document, or upon the value of the
Collateral or upon the rights, benefits or interests of the Banks in and to the
Loans or the rights of the Administrative Agent and the Banks in the Collateral;
in either case, whether resulting from any single act, omission, situation,
status, event or undertaking, or taken together with other such acts, omissions,
situations, statuses, events or undertakings.
"Maturity Date" shall mean June 30, 2005, or, as the case may be, such
earlier date as payment of the Obligations shall be due (whether by
acceleration, reduction of the Commitment to zero or otherwise).
"MicroNet" shall mean Suburban Cable TV Co., Inc., a Pennsylvania
corporation.
"Multiemployer Plan" shall mean a multiemployer pension plan as defined
in Section 3(37) of ERISA to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is or has been required to contribute.
"Necessary Authorizations" shall mean all approvals and licenses from,
and all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under the Communications Act,
necessary in order to enable the Borrower and its Restricted Subsidiaries to
own, construct, maintain, and operate communications tower facilities and to
invest in other Persons who own, construct, maintain, manage and operate
communications tower facilities.
"Net Income" shall mean, for the Borrower and its Restricted
Subsidiaries on a consolidated basis, for any period, net income determined in
accordance with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer or
other disposition of assets by the Borrower or any of its Restricted
Subsidiaries, the aggregate amount of cash received for such assets (including,
without limitation, any payments received for noncompetition covenants,
consulting or management fees in connection with such sale, and any portion of
the amount received evidenced by a promissory note or other
-13-
<PAGE>
evidence of Indebtedness issued by the purchaser), net of (i) amounts reserved,
if any, for taxes payable with respect to any such sale (after application
(assuming application first to such reserves) of any available losses, credits
or other offsets), (ii) reasonable and customary transaction costs properly
attributable to such transaction and payable by the Borrower or any of its
Restricted Subsidiaries (other than to an Affiliate) in connection with such
sale, lease, transfer or other disposition of assets, including, without
limitation, commissions, and (iii) until actually received by the Borrower or
any of its Restricted Subsidiaries, any portion of the amount received held in
escrow or evidenced by a promissory note or other evidence of Indebtedness
issued by a purchaser or non-compete, consulting or management agreement or
covenant or otherwise for which compensation is paid over time. Upon receipt by
the Borrower or any of its Restricted Subsidiaries of (A) amounts referred to in
item (iii) of the preceding sentence, or (B) if there shall occur any reduction
in the tax reserves referred to in item (i) of the preceding sentence resulting
in a payment to the Borrower, such amounts shall then be deemed to be "Net
Proceeds."
"Notes" shall mean, collectively, those certain promissory notes in the
aggregate original principal amount of $400,000,000, and issued to each of the
Banks by the Borrower, each one substantially in the form of Exhibit E attached
hereto, any other promissory note issued by the Borrower to evidence the Loans
pursuant to this Agreement, and any extensions, renewals, or amendments to, or
replacements of, the foregoing.
"Obligations" shall mean all payment and performance obligations of
every kind, nature and description of the Borrower, its Restricted Subsidiaries,
and any other obligors to the Banks, or the Administrative Agent, or any of
them, under this Agreement and the other Loan Documents (including any interest,
fees and other charges on the Loans or otherwise under the Loan Documents that
would accrue but for the filing of a bankruptcy action with respect to the
Borrower, whether or not such claim is allowed in such bankruptcy action and
including Obligations to the Banks pursuant to Section 5.13 hereof) as they may
be amended from time to time, or as a result of making the Loans, whether such
obligations are direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing or hereafter arising.
"Operating Cash Flow" shall mean, with respect to the Borrower and its
Restricted Subsidiaries on a consolidated basis as of the end of any period, (a)
the sum of (i) operating revenues of the Borrower and its Restricted
Subsidiaries plus (ii) Unrestricted Subsidiary Distributions during such period
less (b) the sum of (i) operating expenses for such period plus (ii) corporate
overhead (exclusive of amortization and depreciation) for such period. In the
case of determining Operating Cash Flow under Sections 2.3, 7.8, 7.9 and 7.10
hereof following an Acquisition permitted hereunder, Operating Cash Flow of the
Borrower and its Restricted Subsidiaries shall include the Acquisition Operating
Cash Flow. For purposes of calculating Operating Cash Flow in connection with
any Advance for an Acquisition, Operating Cash Flow for the Borrower and its
Restricted Subsidiaries as of the last day of the
-14-
<PAGE>
immediately preceding calendar quarter and/or calendar month end, as the case
may be, shall include "operating cash flow" for the Acquisition for the same
period after giving effect to pro forma adjustments reasonably satisfactory to
the Administrative Agent.
"Operating Cash Flow (Towers)" shall mean, with respect to the Borrower
and its Restricted Subsidiaries on a consolidated basis as of the end of any
period, (a) the sum of (i) operating revenues of the Borrower and its Restricted
Subsidiaries in connection with the Tower Operation Business of the Borrower and
its Restricted Subsidiaries plus (ii) Unrestricted Subsidiary Distributions with
respect to the Tower Operation Business during such period less (b) the sum of
(i) operating expenses attributable to such Tower Operation Business for such
period plus (ii) corporate overhead (exclusive of amortization and depreciation)
attributable to such Tower Operation Business for such period. In the case of
determining Operating Cash Flow under Sections 2.3, 7.8, 7.9 and 7.10 hereof
following an Acquisition permitted hereunder, Operating Cash Flow of the
Borrower and its Restricted Subsidiaries shall include the Acquisition Operating
Cash Flow. For purposes of calculating Operating Cash Flow in connection with
any Advance for an Acquisition, Operating Cash Flow for the Borrower and its
Restricted Subsidiaries as of the last day of the immediately preceding calendar
month end shall include "operating cash flow" for the Acquisition for the same
period after giving effect to adjustments reasonably satisfactory to the
Administrative Agent.
"Operating Cash Flow (Other Business)" shall mean, with respect to the
Borrower and its Restricted Subsidiaries on a consolidated basis as of the end
of any period, (a) the sum of (i) operating revenues of the Borrower and its
Restricted Subsidiaries in connection with the Other Operations of the Borrower
and its Restricted Subsidiaries plus (ii) Unrestricted Subsidiary Distributions
with respect to the Other Operations during such period less (b) the sum of (i)
operating expenses attributable to such Other Operations for such period plus
(ii) corporate overhead (exclusive of amortization and depreciation)
attributable to such Other Operations for such period. In the case of
determining Operating Cash Flow under Sections 2.3, 7.8, 7.9 and 7.10 hereof
following an Acquisition permitted hereunder, Operating Cash Flow of the
Borrower and its Restricted Subsidiaries shall include the Acquisition Operating
Cash Flow. For purposes of calculating Operating Cash Flow in connection with
any Advance for an Acquisition, Operating Cash Flow for the Borrower and its
Restricted Subsidiaries as of the last day of the immediately preceding calendar
month end shall include "operating cash flow" for the Acquisition for the same
period after giving effect to adjustments reasonably satisfactory to the
Administrative Agent.
"Other Operations" shall mean all businesses of the Borrower (other
than the Tower Operations Business), including, without limitation, the video
and data transmission and the site acquisition business.
-15-
<PAGE>
"Parent" shall mean American Tower Systems Holding Corporation, a
Delaware corporation.
"Parent Pledge Agreement" shall mean that certain Amended and Restated
Parent Pledge Agreement dated as of even date herewith, made by Parent in favor
of the Administrative Agent for the ratable benefit of the Banks, substantially
in the form of Exhibit F attached hereto.
"Payment Date" shall mean the last day of any Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" shall mean, as applied to any Person:
(a) any Lien in favor of the Administrative Agent given to
secure the Obligations;
(b) (i) Liens on real estate or other property for taxes,
assessments, governmental charges or levies not yet delinquent and (ii) Liens
for taxes, assessments, judgments, governmental charges or levies or claims the
non-payment of which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside on such Person's
books, but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, vendors,
(solely to the extent arising by operation of law) laborers and materialmen
incurred in the ordinary course of business for sums not yet due or being
diligently contested in good faith, if reserves or appropriate provisions shall
have been made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance, social
security obligations, assessments or government charges which are not overdue
for more than sixty (60) days;
(e) restrictions on the transfer of the Licenses or assets of
the Borrower or its Restricted Subsidiaries imposed by any of the Licenses as
presently in effect or by the Communications Act and any regulations thereunder;
(f) easements, rights-of-way, zoning restrictions, licenses,
reservations or restrictions on use and other similar encumbrances on the use of
real property which do not materially interfere with the ordinary conduct of the
business of such Person or the use of such property;
-16-
<PAGE>
(g) liens arising by operation of law in favor of purchasers
in connection with any asset sale permitted hereunder; provided that such lien
only encumbers the property being sold.
(h) Liens reflected by Uniform Commercial Code financing
statements filed in respect of Capitalized Lease Obligations permitted pursuant
to Section 7.1 hereof and true leases of the Borrower or any of its
Subsidiaries;
(i) Liens to secure performance of statutory obligations,
surety or appeal bonds, performance bonds, bids, tenders or escrow deposits in
connection with permitted Acquisitions;
(j) judgment Liens which do not result in an Event of Default
under Section 8.1 (h) hereof;
(k) Liens in connection with escrow deposits made in
connection with Acquisitions permitted hereunder; and
(l) additional Liens securing Indebtedness which does not in
the aggregate outstanding at any time exceed $500,000.
"Person" shall mean an individual, corporation, limited liability
company, association, partnership, joint venture, trust or estate, an
unincorporated organization, a government or any agency or political subdivision
thereof, or any other entity.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other employee benefit plan maintained for
employees of any Person or any affiliate of such Person.
"Pro Forma Debt Service" shall mean with respect to the Borrower and
its Restricted Subsidiaries, on a consolidated basis, with respect to the next
succeeding complete twelve (12) month period following the calculation date, and
after giving effect to any Interest Hedge Agreements and LIBOR Advances, the sum
of the amount of all (i) scheduled payments of principal on Indebtedness for
Money Borrowed (determined with respect to the Loans only, as the difference
between the outstanding principal amount of the Loans on the calculation date
and the amount the Commitment will be after the reductions thereof set forth in
Section 2.5 hereof for such four calendar quarter period have taken effect) for
such period, (ii) Interest Expense for such period, (iii) fees payable under
this Agreement for such period, and (iv) other payments payable by such Persons
during such period in respect of Indebtedness for Money Borrowed (other than
voluntary repayments under Section 2.7 hereof. For purposes of this definition,
where interest payments for the twelve (12) month
-17-
<PAGE>
period immediately succeeding the calculation date are not fixed by way of
Interest Hedge Agreements, LIBOR Advances, or otherwise for the entire period,
interest shall be calculated on such Indebtedness for Money Borrowed for periods
for which interest payments are not so fixed at the lesser of (a) the LIBOR
Basis (based on the then current adjustment under Section 2.3(f) hereof) for a
LIBOR Advance having an Interest Period of six (6) months as determined on the
date of calculation and (b) the Base Rate Basis as in effect on the date of
calculation; provided, however, that if such LIBOR Basis cannot be determined in
the reasonable opinion of the Administrative Agent, such interest shall be
calculated using the Base Rate Basis as then in effect.
"Reportable Event" shall mean, with respect to any Employee Pension
Plan, an event described in Section 4043(b) of ERISA.
"Request for Advance" shall mean a certificate designated as a "Request
for Advance," signed by an Authorized Signatory of the Borrower requesting an
Advance hereunder, which shall be in substantially the form of Exhibit G
attached hereto, and shall, among other things, (i) specify the date of the
Advance, which shall be a Business Day, the amount of the Advance, the type of
Advance (Eurodollar or Base Rate), and, with respect to LIBOR Advances, the
Interest Period selected by the Borrower, (ii) state that there shall not exist,
on the date of the requested Advance and after giving effect thereto, a Default,
as of the date of such Advance and after giving effect thereto, and (iii) the
Applicable Margin then in effect.
"Restricted Payment" shall mean any direct or indirect distribution,
dividend or other payment to any Person (other than to the Borrower or any
Restricted Subsidiary of the Borrower) on account of any general or limited
partnership interest in, or shares of Capital Stock or other securities of, the
Borrower or any of its Restricted Subsidiaries (other than dividends payable
solely in stock of such Person and stock splits), including, without limitation,
any direct or indirect distribution, dividend or other payment to any Person
(other than to the Borrower or any Restricted Subsidiary of the Borrower) on
account of any warrants or other rights or options to acquire shares of Capital
Stock of the Borrower or any of its Restricted Subsidiaries.
"Restricted Subsidiary" shall mean any Subsidiary of the Borrower other
than an Unrestricted Subsidiary.
"Security Documents" shall mean the Borrower's Pledge Agreement, the
Subsidiary Guaranty, the Subsidiary Pledge Agreement, the Borrower's Security
Agreement, the Subsidiary Security Agreement, the Parent Pledge Agreement, any
other agreement or instrument providing collateral for the Obligations whether
now or hereafter in existence, and any filings, instruments, agreements, and
documents related thereto or to this Agreement,
-18-
<PAGE>
and providing the Administrative Agent, for the benefit of the Banks, with
Collateral for the Obligations.
"Security Interest" shall mean all Liens in favor of the Administrative
Agent, for the benefit of the Banks, created hereunder or under any of the
Security Documents to secure the Obligations.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean that certain Subsidiary Guaranty dated
as of even date herewith, in favor of the Administrative Agent and the Banks,
given by each Restricted Subsidiary of the Borrower, substantially in the form
of Exhibit H hereof, and shall include any similar agreements executed pursuant
to Section 5.14 hereof.
"Subsidiary Pledge Agreement" shall mean that certain Subsidiary Pledge
Agreement dated as of even date herewith made by each Restricted Subsidiary of
the Borrower having one or more of its own Subsidiaries, on the one hand, in
favor of the Administrative Agent, on the other hand, substantially in the form
of Exhibit I hereof, and shall include any similar agreements executed pursuant
to Section 5.14 hereof.
"Subsidiary Security Agreement" shall mean that certain Subsidiary
Security Agreement dated as of even date herewith between each of the Borrower's
Restricted Subsidiaries, on the one hand, and the Administrative Agent, (on
behalf of itself and the Banks), on the other hand, substantially in the form of
Exhibit J hereof, and shall include any similar agreements executed pursuant to
Section 5.14 hereof.
"Tax Sharing Agreement" shall mean that certain Tax Sharing Agreement,
dated as of October 15, 1996, among Borrower, American Radio Systems and certain
other Subsidiaries of American Radio Systems.
"Total Debt" shall mean, for the Borrower and its Restricted
Subsidiaries on a consolidated basis as of any date, the sum (without
duplication) of (i) the outstanding
-19-
<PAGE>
principal amount of the Loans, (ii) the aggregate amount of Capitalized Lease
Obligations and Indebtedness for Money Borrowed, and (iii) the aggregate amount
of all Guarantees.
"Tower Operation Business" shall mean the ownership, leasing and tower
management businesses of the Borrower and its Restricted Subsidiaries.
"Unavailable Commitment" shall mean $150,000,000 of the Commitment.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Borrower or
any joint venture (which may represent a minority interest) between the Borrower
and/or any Subsidiary of the Borrower and any other Person, in each case, which
the Borrower has heretofore designated or hereafter designates as an
Unrestricted Subsidiary by written notice to the Administrative Agent and the
Banks prior to the formation or acquisition of such Subsidiary or joint venture.
Notwithstanding the foregoing, no Restricted Subsidiary may be re-designated as
an Unrestricted Subsidiary without the prior consent of the Majority Banks. The
Unrestricted Subsidiaries as of the Agreement Date are as set forth on Schedule
2 attached hereto.
"Unrestricted Subsidiary Distributions" shall mean the amount of cash
distributions received during such period by the Borrower and its Restricted
Subsidiaries from any Unrestricted Subsidiary (other than in connection with the
repayment of intercompany Indebtedness).
"Use of Proceeds Letter" shall mean that certain Use of Proceeds
Letter, substantially in the form of Exhibit K attached hereto, to be delivered
to the Administrative Agent and the Banks on the date of any Advance hereunder.
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended or supplemented from time to time in accordance
herewith.
ARTICLE 2 Loans
Section 2.1 The Loans. The Banks agree, severally, in accordance with
their respective Commitment Ratios and not jointly, upon the terms and subject
to the conditions of this Agreement and provided there exists no Default or
Event of Default hereunder, to lend to the Borrower, prior to the Maturity Date,
an amount not at any one time outstanding to exceed, in the aggregate, the
Available Commitment. Subject to the terms and conditions hereof and provided
there exists no Default or Event of Default hereunder, Advances hereunder may be
repaid and reborrowed from time to time on a revolving basis.
-20-
<PAGE>
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. Any Advance hereunder shall,
at the option of the Borrower, be made as a Base Rate Advance or a LIBOR
Advance; provided, however, that at such time as there shall have occurred and
be continuing a Default hereunder, the Borrower shall not have the right to
receive a LIBOR Advance. Any notice given to the Administrative Agent in
connection with a requested Advance hereunder shall be given to the
Administrative Agent prior to 11:00 a.m. (New York time) in order for such
Business Day to count toward the minimum number of Business Days required.
(b) Base Rate Advances.
(i) Advances. The Borrower shall give the
Administrative Agent in the case of Base Rate Advances at least one (1)
Business Day's irrevocable prior telephonic notice followed immediately
by a Request for Advance; provided, however, that the Borrower's
failure to confirm any telephonic notice with a Request for Advance
shall not invalidate any notice so given if acted upon by the
Administrative Agent. Upon receipt of such notice from the Borrower,
the Administrative Agent shall promptly notify each Bank by telephone
or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. The Borrower may
repay or prepay a Base Rate Advance without regard to its Payment Date
and (A) upon at least one (1) Business Day's irrevocable prior
telephonic notice followed by written notice, reborrow all or a portion
of the principal amount thereof as a Base Rate Advance, (B) upon at
least three (3) Business Days' irrevocable prior telephonic notice
followed by written notice, reborrow all or a portion of the principal
thereof as one or more LIBOR Advances, or (C) not reborrow all or any
portion of such Base Rate Advance. On the date indicated by the
Borrower, such Base Rate Advance shall be so repaid and, as applicable,
reborrowed. The failure to give timely notice hereunder with respect to
the Payment Date of any Base Rate Advance shall be considered a request
for a Base Rate Advance.
(c) LIBOR Advances.
(i) Advances. Upon request, the Administrative Agent,
whose determination in absence of manifest error shall be conclusive,
shall determine the available LIBOR Bases and shall notify the Borrower
of such LIBOR Bases to apply for the applicable LIBOR advance. The
Borrower shall give the Administrative Agent in the case of LIBOR
Advances at least three (3) Business Days' irrevocable prior telephonic
notice followed immediately by a Request for Advance; provided,
however, that the Borrower's failure to confirm any telephonic notice
with a Request
-21-
<PAGE>
for Advance shall not invalidate any notice so given if acted upon by
the Administrative Agent. Upon receipt of such notice from the
Borrower, the Administrative Agent shall promptly notify each Bank by
telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3)
Business Days prior to the Payment Date for each LIBOR Advance, the
Borrower shall give the Administrative Agent telephonic notice followed
by written notice specifying whether all or a portion of such LIBOR
Advance (A) is to be repaid and then reborrowed in whole or in part as
one or more LIBOR Advances, (B) is to be repaid and then reborrowed in
whole or in part as a Base Rate Advance, or (C) is to be repaid and not
reborrowed. The failure to give such notice shall preclude the Borrower
from reborrowing such Advance as a LIBOR Advance on its Payment Date
and shall be considered a request for a Base Rate Advance. Upon such
Payment Date such LIBOR Advance will, subject to the provisions hereof,
be so repaid and, as applicable, reborrowed.
(d) Notification of Banks. Upon receipt of a Request for
Advance, or a notice from the Borrower with respect to any outstanding Advance
prior to the Payment Date for such Advance, the Administrative Agent shall
promptly but no later than the close of business on the day of such notice
notify each Bank by telephone or telecopy of the contents thereof and the amount
of such Bank's portion of the Advance. Each Bank shall, not later than 12:00
noon (New York time) on the date of borrowing specified in such notice, make
available to the Administrative Agent at the Administrative Agent's Office, or
at such account as the Administrative Agent shall designate, the amount of its
portion of any Advance which represents an additional borrowing hereunder in
immediately available funds.
(e) Disbursement.
(i) Prior to 2:00 p.m. (New York time) on the date of
an Advance hereunder, the Administrative Agent shall, subject to the
satisfaction of the conditions set forth in Article 3 hereof, disburse
the amounts made available to the Administrative Agent by the Banks in
like funds by (A) transferring the amounts so made available by wire
transfer pursuant to the Borrower's instructions, or (B) in the absence
of such instructions, crediting the amounts so made available to the
account of the Borrower maintained with the Administrative Agent.
(ii) Unless the Administrative Agent shall have
received notice from a Bank prior to 12:00 noon (New York time) on the
date of any Advance that such Bank will not make available to the
Administrative Agent such Bank's ratable portion of such Advance, the
Administrative Agent may assume that such Bank has
-22-
<PAGE>
made or will make such portion available to the Administrative Agent on
the date of such Advance and the Administrative Agent may in its sole
discretion and in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent the
Bank does not make such ratable portion available to the Administrative
Agent, such Bank agrees to repay to the Administrative Agent on demand
such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the
date such amount is repaid to the Administrative Agent, at the Federal
Funds Rate.
(iii) If such Bank shall repay to the Administrative
Agent such corresponding amount, such amount so repaid shall constitute
such Bank's portion of the applicable Advance for purposes of this
Agreement. If such Bank does not repay such corresponding amount
immediately upon the Administrative Agent's demand therefor, the
Administrative Agent shall notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Administrative Agent,
with interest at the Federal Funds Rate. The failure of any Bank to
fund its portion of any Advance shall not relieve any other Bank of its
obligation, if any, hereunder to fund its respective portion of the
Advance on the date of such borrowing, but no Bank shall be responsible
for any such failure of any other Bank.
(iv) In the event that, at any time when the Borrower
is not in Default and has otherwise satisfied each of the conditions in
Section 3.2 hereof, a Bank for any reason fails or refuses to fund its
portion of an Advance and such failure shall continue for a period in
excess of thirty (30) days, then, until such time as such Bank has
funded its portion of such Advance (which late funding shall not
absolve such Bank from any liability it may have to the Borrower), or
all other Banks have received payment in full from the Borrower
(whether by repayment or prepayment) or otherwise of the principal and
interest due in respect of such Advance, such non-funding Bank shall
not have the right (A) to vote regarding any issue on which voting is
required or advisable under this Agreement or any other Loan Document,
and such Bank's portion of the Loans shall not be counted as
outstanding for purposes of determining "Majority Banks" hereunder, and
(B) to receive payments of principal, interest or fees from the
Borrower, the Administrative Agent or the other Banks in respect of its
portion of the Loans.
Section 2.3 Interest.
(a) On Base Rate Advances. Interest on each Base Rate Advance
shall be computed on the basis of a year of 365/366 days for the actual number
of days elapsed and shall be payable at the Base Rate Basis for such Advance, in
arrears on the applicable Payment Date. Interest on Base Rate Advances then
outstanding shall also be due and payable on the Maturity Date.
-23-
<PAGE>
(b) On LIBOR Advances. Interest on each LIBOR Advance shall be
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the LIBOR Basis for such Advance, in arrears on the
applicable Payment Date, and, in addition, if the Interest Period for a LIBOR
Advance exceeds three (3) months, interest on such LIBOR Advance shall also be
due and payable in arrears on every three-month anniversary of the beginning of
such Interest Period. Interest on LIBOR Advances then outstanding shall also be
due and payable on the Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis.
If the Borrower fails to give the Administrative Agent timely notice of its
selection of a LIBOR Basis, or if for any reason a determination of a LIBOR
Basis for any Advance is not timely concluded, the Base Rate Basis shall apply
to such Advance.
(d) Interest Upon Default. Immediately upon the occurrence of
an Event of Default hereunder, the outstanding principal balance of the Loans
shall bear interest at the Default Rate. Such interest shall be payable on
demand by the Majority Banks and shall accrue until the earlier of (i) waiver or
cure of the applicable Event of Default, (ii) agreement by the Majority Banks
(or, if applicable to the underlying Event of Default, the Banks) to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
Obligations.
(e) LIBOR Contracts. At no time may the number of outstanding
LIBOR Advances exceed six (6).
(f) Applicable Margin. With respect to any Advance, the
Applicable Margin shall be as set forth in a certificate of the chief financial
officer of the Borrower delivered to the Administrative Agent based upon the
Applicable Margin Ratio for the most recent fiscal quarter end for which
financial statements are furnished by the Borrower to the Administrative Agent
and each Bank for the fiscal quarter most recently ended as follows:
-24-
<PAGE>
<TABLE>
<CAPTION>
Applicable Margin Ratio Base Rate LIBOR Advance
Advance Applicable Applicable
Margin Margin
<S> <C> <C>
A. Greater than or equal to 5.50:1 1.000% 2.250%
B. Greater than or equal to 5.00:1, but less than 5.50: 1 0.875% 2.125%
C. Greater than or equal to 4.50:1, but less than 5.00:1 0.625% 1.875%
D. Greater than or equal to 4.00:1, but less than 4.50:1 0.375% 1.625%
E. Greater than 3.50: 1, but less than 4.00:1 0.000% 1.250%
F. Less than 3.50:1 0.000% 1.000%
</TABLE>
Changes to the Applicable Margin shall be effective (i) with respect to an
increase in the Applicable Margin, as of the second (2nd) Business Day after the
day on which the financial statements are required to be delivered to the
Administrative Agent and the Banks pursuant to Section 6.1 or Section 6.2
hereof, as the case may be; provided, however, if such financial statements are
not delivered to the Administrative Agent and the Banks on or before the date
specified in such Section, such increase shall be effective as of the date
specified in such Section for delivery of the financial statements, and (ii)
with respect to a decrease in the Applicable Margin, as of the later of (A) the
second (2nd) Business Day after the day on which such financial statements are
required to be delivered pursuant to Section 6.1 or Section 6.2 hereof, as the
case may be, and (B) the date on which such financial statements are actually
delivered to the Administrative Agent and the Banks. The Applicable Margin on
the Agreement Date shall be based on the Borrower's financial statements with
respect to June 30, 1997 and the Total Debt as of the Agreement Date.
Upon the occurrence and during the continuance of an Event of Default,
the Applicable Margins shall not be subject to downward adjustment and shall
automatically revert to the Applicable Margins set forth in part A of the above
table until such time as such Event of Default is cured or waived.
Section 2.4 Commitment Fees.
(a) Unavailable Commitment. Commencing on the Agreement Date,
and continuing until the earlier to occur of (i) the date of the effective date
of the Commitment Increase (if any) and (ii) the first anniversary of the
Agreement Date, the Borrower agrees to pay to the Administrative Agent for the
account of each of the Banks, in accordance with such Bank's respective
Commitment Ratio, a commitment fee on the amount of the
-25-
<PAGE>
Unavailable Commitment at a rate of one-eighth of one percent (0.125%) per
annum, which fee shall be computed on the basis of a year of 365/366 days for
the actual number of days elapsed, shall be payable quarterly in arrears on the
last Business Day of each calendar quarter and on the earliest to occur of the
above dates, and shall be fully earned when due and non-refundable when paid.
(b) Available Commitment. Commencing on the Agreement Date and
of all times thereafter, the Borrower agrees to pay to the Administrative Agent
for the account of each of the Banks in accordance with such Bank's respective
Commitment Ratio, a commitment fee on the aggregate unborrowed balance of the
Commitment (less, if applicable, the Unavailable Commitment) for each day from
the date of the Agreement Date until the Maturity Date, at a rate of (i)
one-half of one percent (0.500%) per annum when the Applicable Margin Ratio is
greater than or equal to 4.00: 1; and (ii) three-eighths of one percent (0.375%)
per annum when the Applicable Margin Ratio is less than 4.00: 1. Such commitment
fee shall be computed on the basis of a year of 365/366 days for the actual
number of days elapsed, shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, and shall be fully earned when due and
non-refundable when paid. A final payment of any commitment fee then payable
shall also be due and payable on the Maturity Date.
Section 2.5 Mandatory Commitment Reductions
(a) Scheduled Reductions. Commencing on September 30, 2000 and
at the end of each calendar quarter thereafter, the Existing Commitment as of
September 29, 2000 shall be automatically and permanently reduced as set forth
below (which reductions are in addition to those set forth in Sections 2.5(b),
2.5(c), 2.5(d) and 2.6 hereof):
-26-
<PAGE>
<TABLE>
<CAPTION>
Quarterly Percentage of Reduction
of Existing Commitment
Dates of Existing Commitment Reduction As Of September 29, 2000
-------------------------------------- ---------------------------------
<S> <C>
September 30, 2000 and December 31, 2000 3.750%
March 3 1, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001 3.125%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 3.750%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 5.000%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 5.625%
March 31, 2005 7.500%
</TABLE>
The Borrower shall make a repayment of the Loans outstanding, together with
accrued interest thereon, on or before the effective date of each reduction in
the Existing Commitment under this Section 2.5(a), such that the aggregate
principal amount of the Loans outstanding at no time exceeds the Existing
Commitment as so reduced. Any remaining unpaid principal and interest under the
Existing Commitment shall be due and payable in full on the Maturity Date, and
the Existing Commitment shall thereupon terminate.
(b) Reduction From Excess Cash Flow. On April 15, 2001, and on
each April 15 thereafter during the term of this Agreement, the Existing
Commitment shall be permanently reduced by an amount equal to fifty percent
(50%) of Excess Cash Flow for the fiscal year immediately preceding the
calculation date. Reductions to the Existing Commitment under this Section shall
be applied to the reductions set forth in Section 2.5(a) hereof in inverse order
of the reductions set forth therein.
(c) Reduction From Permitted Asset Sales. On the Business Day
following the date of receipt by the Borrower or any of its Restricted
Subsidiaries of the Net Proceeds of any asset sale permitted pursuant to Section
7.4 hereof, the Existing Commitment shall be automatically and permanently
reduced by an amount equal to such Net Proceeds; provided, however, that the
Existing Commitment shall not be required to be reduced by such Net Proceeds
until the amount of such unapplied Net Proceeds exceeds $1,000,000 in the
aggregate during the term hereof; provided, further, however, that the Borrower
may notify the Administrative Agent in writing that it intends to use any or all
of
-27-
<PAGE>
such Net Proceeds to acquire fixed or capital assets permitted by Section 7.6
hereof within six (6) months of the date of receipt of such Net Proceeds, in
which case, the reduction in the Existing Commitment up to the amount of the Net
Proceeds intended to be used which is otherwise required by this Section 2.5(c)
need not be made, but if all or part of such Net Proceeds are not used or
irrevocably committed to be used within such six (6)-month period, the Existing
Commitment shall be permanently reduced by an amount equal to such Net Proceeds
on the earlier of (i) the first day following the end of such six (6)-month
period and (ii) the date on which the Borrower has reasonably determined that
such Net Proceeds shall not be so used. Reductions to the Existing Commitment
under this Section shall be applied to the reductions set forth in Section
2.5(a) hereof in inverse order of the reductions set forth therein.
(d) Reduction From Sale of Capital Stock and Debt Instruments.
On the Business Day following the date of receipt by the Borrower of the net
proceeds of any sale its Capital Stock or debt instruments or other securities
(other than an amount not to exceed $2,000,000 in the aggregate from the sale of
securities in connection with any employee stock option plan of the Borrower),
the Existing Commitment shall automatically and permanently be reduced by an
amount equal (i) 100% of such net proceeds to the extent the Leverage Ratio is
greater than or equal to 4.0: 1; or (ii) 50% of such net proceeds to the extent
the Leverage Ratio is less than 4.0: 1; provided, however, the provisions of
this Section 2.5(d) shall not apply to equity contributions by the Parent or
American Radio Systems which are made with the proceeds to Indebtedness for
Money Borrowed issued in accordance with Section 8.1(p) hereof and which do not
exceed $50,000,000 in the aggregate. Reductions to the Existing Commitment under
this Section shall be applied to the reductions set forth in Section 2.5(a)
hereof in inverse order of the reductions set forth therein.
Section 2.6 Voluntary Commitment Reductions. The Borrower shall have
the right, at any time and from time to time after the Agreement Date and prior
to the Maturity Date, upon at least three (3) Business Days' prior written
notice to the Administrative Agent, without premium or penalty, to cancel or
reduce permanently all or a portion of the Existing Commitment, on a pro rata
basis among the Banks, provided, however, that any such partial reduction shall
be made in an amount not less than $5,000,000 and in integral multiples of not
less than $1,000,000. As of the date of cancellation or reduction set forth in
such notice, the Existing Commitment shall be permanently reduced to the amount
stated in the Borrower's notice for all purposes herein, and the Borrower shall
pay to the Administrative Agent for the Banks the amount necessary to reduce the
principal amount of the Loans then outstanding under the Existing Commitment to
not more than the amount of the Existing Commitment as so reduced, together with
accrued interest on the amount so prepaid and commitment fees accrued through
the date of the reduction with respect to the amount reduced. Reductions in the
Existing Commitment pursuant to this Section shall be applied pro rata to the
then remaining reductions set forth in Section 2.5(a) hereof.
-28-
<PAGE>
Section 2.7 Prepayments and Repayments.
(a) Prepayment. The principal amount of any Base Rate Advance
may be prepaid in full or ratably in part at any time, without penalty and
without regard to the Payment Date for such Advance. LIBOR Advances may be
prepaid prior to the applicable Payment Date, upon three (3) Business Days'
prior written notice to the Administrative Agent, provided that the Borrower
shall reimburse the Banks and the Administrative Agent, on demand by the
applicable Bank or the Administrative Agent, for any loss or reasonable
out-of-pocket expense incurred by any Bank or the Administrative Agent in
connection with such prepayment, as set forth in Section 2.10 hereof. Any
prepayment hereunder shall be in amounts of not less than $500,000 and in
integral multiples of $100,000.
(b) Repayments.
(i) Loans in Excess of Commitment. If, at any time,
the amount of the Loans then outstanding shall exceed the
Available Commitment, the Borrower shall, on such date and
subject to Sections 2.10 and 2.11 hereof, make a repayment of
the principal amount of the Loans in an amount equal to such
excess, together with any accrued interest and fees with
respect thereto.
(ii) From Excess Cash Flow. On April 15, 2000, and on
each April 15 thereafter during the term of this Agreement,
the Borrower shall make a repayment of the Loans then
outstanding in an amount equal to fifty percent (50%) of the
Excess Cash Flow for the fiscal year immediately preceding the
calculation date.
(iii) From Permitted Asset Sales. On the Business Day
following the date of receipt by the Borrower or any of its
Restricted Subsidiaries of the Net Proceeds of any asset sale
permitted pursuant to Section 7.4 hereof, and to the extent
that the Borrower is required to reduce the Existing
Commitment pursuant to Section 2.5(c) hereof, the Borrower
shall make a repayment of the Loans by an amount equal to the
amount of such reduction.
(iv) From Capital Stock and Debt Instruments. On the
Business Day following the receipt by the Borrower of the Net
Proceeds of any sale of its Capital Stock or debt instruments
or other securities, and to the extent that the Borrower is
required to reduce the Existing Commitment pursuant to Section
2.5(d) hereof, the Borrower shall make a repayment of the
Loans by an amount equal to the amount of such reduction.
(v) Maturity Date. In addition to the foregoing, a
final payment of all Obligations then outstanding shall be due
and payable on the Maturity Date.
-29-
<PAGE>
Section 2.8 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms
and provisions set forth herein and shall be evidenced by the Notes. One Note
shall be payable to the order of each Bank, in accordance with such Bank's
respective Commitment Ratio. The Notes shall be issued by the Borrower to the
Banks and shall be duly executed and delivered by one or more Authorized
Signatories.
(b) Each Bank may open and maintain on its books in the name
of the Borrower a loan account with respect to its portion of the Loans and
interest thereon. Each Bank which opens such a loan account shall debit such
loan account for the principal amount of its portion of each Advance made by it
and accrued interest thereon, and shall credit such loan account for each
payment on account of principal of or interest on its Loans. The records of a
Bank with respect to the loan account maintained by it shall be prima facie
evidence of its portion of the Loans and accrued interest thereon absent
manifest error, but the failure of any Bank to make any such notations or any
error or mistake in such notations shall not affect the Borrower's repayment
obligations with respect to such Loans.
Section 2.9 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans, commitment fees and any
other amount owed to the Banks or the Administrative Agent or any of them under
this Agreement or the Notes shall be made not later than 1:00 p.m. (New York
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Banks or the Administrative Agent, as the case may be, in lawful money of
the United States of America in immediately available funds. Any payment
received by the Administrative Agent after 1:00 p.m. (New York time) shall be
deemed received on the next Business Day. Receipt by the Administrative Agent of
any payment intended for any Bank or Banks hereunder prior to 1:00 p.m. (New
York time) on any Business Day shall be deemed to constitute receipt by such
Bank or Banks on such Business Day. In the case of a payment for the account of
a Bank, the Administrative Agent will promptly, but no later than the close of
business on the date such payment is deemed received, thereafter distribute the
amount so received in like funds to such Bank. If the Administrative Agent shall
not have received any payment from the Borrower as and when due, the
Administrative Agent will promptly notify the Banks accordingly. In the event
that the Administrative Agent shall fail to make distribution to any Bank as
required under this Section 2.9, the Administrative Agent agrees to pay such
Bank interest from the date such payment was due until paid at the Federal Funds
Rate.
-30-
<PAGE>
(b) The Borrower agrees to pay principal, interest, fees and
all other amounts due hereunder or under the Notes without set-off or
counterclaim or any deduction whatsoever.
(c) Prior to the declaration of an Event of Default under
Section 8.2 hereof, if some but less than all amounts due from the Borrower are
received by the Administrative Agent with respect to the Obligations, the
Administrative Agent shall distribute such amounts in the following order of
priority, all on a pro rata basis to the Banks: (i) to the payment on a pro rata
basis of any fees or expenses then due and payable to the Administrative Agent
or the Banks, or any of them; (ii) to the payment of interest then due and
payable on the Loans; (iii) to the payment of all other amounts not otherwise
referred to in this Section 2.9(c) then due and payable to the Administrative
Agent or the Banks, or any of them, hereunder or under the Notes or any other
Loan Document; and (iv) to the payment of principal then due and payable on the
Loans.
(d) Subject to any contrary provisions in the definition of
Interest Period, if any payment under this Agreement or any of the other Loan
Documents is specified to be made on a day which is not a Business Day, it shall
be made on the next Business Day, and such extension of time shall in such case
be included in computing interest and fees, if any, in connection with such
payment.
Section 2.10 Reimbursement.
(a) Whenever any Bank shall sustain or incur any losses or
reasonable out-of-pocket expenses in connection with (i) failure by the Borrower
to borrow any LIBOR Advance after having given notice of its intention to borrow
in accordance with Section 2.2 hereof (whether by reason of the Borrower's
election not to proceed or the non-fulfillment of any of the conditions set
forth in Article 3), or (ii) prepayment (or failure to prepay after giving
notice thereof) of any LIBOR Advance in whole or in part for any reason, the
Borrower agrees to pay to such Bank, upon such Bank's demand, an amount
sufficient to compensate such Bank for all such losses and out-of-pocket
expenses. Such Bank's good faith determination of the amount of such losses or
out-of-pocket expenses, as set forth in writing and accompanied by calculations
in reasonable detail demonstrating the basis for its demand, shall be
presumptively correct absent manifest error.
(b) Losses subject to reimbursement hereunder shall include,
without limiting the generality of the foregoing, lost margins, expenses
incurred by any Bank or any participant of such Bank permitted hereunder in
connection with the re-employment of funds prepaid, paid, repaid, not borrowed,
or not paid, as the case may be, and will be payable whether the Maturity Date
is changed by virtue of an amendment hereto (unless such amendment expressly
waives such payment) or as a result of acceleration of the Obligations.
-31-
<PAGE>
Section 2.11 Pro Rata Treatment.
(a) Advances. Each Advance from the Banks hereunder, shall be
made pro rata on the basis of the respective Commitment Ratios of the Banks.
(b) Payments. Each payment and prepayment of principal of the
Loans, and, except as provided in Section 2.2(e) and Article 10 hereof, each
payment of interest on the Loans, shall be made to the Banks pro rata on the
basis of their respective unpaid principal amounts outstanding under the Notes
immediately prior to such payment or prepayment. If any Bank shall obtain any
payment (whether involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Loans in excess of its ratable share of the Loans
under its Commitment Ratio, such Bank shall forthwith purchase from the other
Banks such participations in the portion of the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Bank, such purchase from
each Bank shall be rescinded and such Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery. The Borrower agrees that any
Bank so purchasing a participation from another Bank pursuant to this Section
2.11(b) may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Bank were the direct creditor of the Borrower in the amount of
such participation.
Section 2.12 Capital Adequacy. If after the date hereof, the adoption
of any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank (or the
bank holding company of such Bank) with any directive regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on any Bank's capital as a consequence of its obligations
hereunder with respect to the Loans and the Commitment to a level below that
which it could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies with respect to capital adequacy
immediately before such adoption, change or compliance and assuming that such
Bank's (or the bank holding company of such Bank) capital was fully utilized
prior to such adoption, change or compliance) by an amount reasonably deemed by
such Bank to be material, then, upon demand by such Bank, the Borrower shall
promptly pay to such Bank such additional amounts as shall be sufficient to
compensate such Bank for such reduced return, together with interest on such
amount from the fourth (4th) Business Day after the date of demand or the
Maturity Date, as applicable, until payment in full thereof at the Default Rate.
A certificate of such Bank setting forth the amount to be paid to such Bank by
the Borrower as a result of any event referred to in this
-32-
<PAGE>
paragraph and supporting calculations in reasonable detail shall be
presumptively correct absent manifest error.
Section 2.13 Bank Tax Forms. On or prior to the Agreement Date and on
or prior to the first Business Day of each calendar year thereafter, each Bank
which is organized in a jurisdiction other than the United States shall provide
each of the Administrative Agent and the Borrower with a properly executed
originals of Forms 4224 or 1001 (or any successor form) prescribed by the
Internal Revenue Service or other documents satisfactory to the Borrower and the
Administrative Agent, and properly executed Internal Revenue Service Forms W-8
or W-9, as the case may be, certifying (i) as to such Bank's status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to such Bank hereunder and under the Notes or (ii) that
all payments to be made to such Bank hereunder and under the Notes are subject
to such taxes at a rate reduced to zero by an applicable tax treaty. Each such
Bank agrees to provide the Administrative Agent and the Borrower with new forms
prescribed by the Internal Revenue Service upon the expiration or obsolescence
of any previously delivered form, or after the occurrence of any event requiring
a change in the most recent forms delivered by it to the Administrative Agent
and the Borrower.
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of this Amendment and
Restatement. The effectiveness of this amendment and restatement to the Prior
Loan Agreement is subject to the prior or contemporaneous fulfillment of each of
the following conditions:
(a) The Administrative Agent and the Banks shall have received
each of the following:
(i) this Agreement duly executed;
(ii) the loan certificate of the Borrower dated as of
the Agreement Date, in substantially the form attached hereto
as Exhibit L, including a certificate of incumbency with
respect to each Authorized Signatory of such Person, together
with the following items: (A) a true, complete and correct
copy of the Certificate of Incorporation and By-laws of the
Borrower as in effect on the Agreement Date, (B) certificates
of good standing for the Borrower issued by the Secretary of
State or similar state official for the state of incorporation
of the Borrower and for each state in which the Borrower is
required to qualify to do business, (C) a true, complete and
correct copy of the corporate resolutions of the Borrower
authorizing the Borrower to execute, deliver and perform this
Agreement and the other Loan Documents, and (D)
-33-
<PAGE>
a true, complete and correct copy of any shareholders'
agreements or voting trust agreements in effect with respect
to the stock of the Borrower;
(iii) duly executed Notes;
(iv) duly executed Security Documents;
(v) copies of insurance binders or certificates
covering the assets of the Borrower and its Restricted
Subsidiaries, and otherwise meeting the requirements of
Section 5.5 hereof, together with copies of the underlying
insurance policies;
(vi) legal opinion of Sullivan & Worcester LLP,
counsel to the Borrower; addressed to each Bank and the
Administrative Agent and dated as of the Agreement Date;
(vii) duly executed Certificates of Financial
Condition for the Borrower and its Restricted Subsidiaries on
a consolidated and consolidating basis, given by the chief
financial officer of the Borrower;
(viii) copies of the most recent quarterly financial
statements of the Borrower and its Restricted Subsidiaries
provided to each Bank and each Administrative Agent, certified
by the chief financial officer of the Borrower;
(ix) duly executed Master Assignment and Assumption
Agreement dated as of the Agreement Date, among the Banks and
Signet Bank, N.A. in form and substance satisfactory to the
Banks; and
(x)all such other documents as the Administrative
Agent may reasonably request, certified by an appropriate
governmental official or an Authorized Signatory if so
requested.
(b) The Administrative Agent and the Banks shall have
received evidence satisfactory to them that all Necessary Authorizations,
including all necessary consents to the closing of this Agreement, have been
obtained or made, are in full force and effect and are not subject to any
pending or, to the knowledge of the Borrower, threatened reversal or
cancellation, and the Administrative Agent and the Banks shall have received a
certificate of an Authorized Signatory so stating.
(c) The Borrower shall certify to the Administrative Agent
and the Banks that each of the representations and warranties in Article 4
hereof are true and correct in all material respects as of the Agreement Date
and that no Default or Event of Default then exists or is continuing.
-34-
<PAGE>
(d) The Borrower shall have paid to the Administrative Agent
for the account of each Bank the facility fees set forth in those letter
agreements dated the Agreement Date in favor of each Bank.
(e) The Administrative Agent shall have received copies of
executed asset purchase agreements for certain acquistions from Diablo and
Micronet for an aggregate purchase price of not greater than $120,000,000 and in
form and substance satisfactory to the Banks.
(f) The Administrative Agent shall have received evidence
reasonably satisfactory to it that no real property owned by the Borrower is
located in a Federal or state designated flood zone or, to the extent that any
such real property is located in a Federal or state designated flood zone,
evidence satisfactory to it that such real property is sufficiently insured
against flood related losses.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
Banks to make each Advance on or after the Agreement Date is subject to the
fulfillment of each of the following conditions immediately prior to or
contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrower
under this Agreement and the other Loan Documents (including, without
limitation, all representations and warranties with respect to the Borrower's
Restricted Subsidiaries), which, pursuant to Section 4.2 hereof, are made at and
as of the time of such Advance, shall be true and correct at such time in all
material respects, both before and after giving effect to the application of the
proceeds of such Advance, and after giving effect to any updates to information
provided to the Banks in accordance with the terms of such representations and
warranties, and no Default hereunder shall then exist or be caused thereby;
(b) With respect to Advances which, if funded, would increase
the aggregate principal amount of Loans outstanding hereunder, the
Administrative Agent shall have received a duly executed Request for Advance;
(c) The Administrative Agent and the Banks shall have
received all such other certificates, reports, statements, opinions of counsel
(if such Advance is in connection with an Acquisition) or other documents as the
Administrative Agent or any Bank may reasonably request;
(d) With respect to any Advance relating to any Acquisition
or the formation of any Subsidiary which is permitted hereunder, the
Administrative Agent and the Banks shall have received such documents and
instruments relating to such Acquisition or
-35-
<PAGE>
formation of a new Restricted Subsidiary as are described in Section 5.14 hereof
or otherwise required herein.
ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby agrees,
represents and warrants, upon the Agreement Date, in favor of the Administrative
Agent and each Bank that:
(a) Organization; Ownership; Power; Qualification. The
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Borrower has the corporate power
and authority to own its properties and to carry on its business as now being
and as proposed hereafter to be conducted. Except as set forth on Schedule
4.l(a) attached hereto, each Restricted Subsidiary of the Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has the corporate power and authority to
own its properties and to carry on its business as now being and as proposed
hereafter to be conducted. The Borrower and each of its Restricted Subsidiaries
are duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of their respective properties or the nature
of their respective businesses requires such qualification or authorization,
except where failure to be so qualified, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(b) Authorization; Enforceability. The Borrower has the
corporate power and has taken all necessary corporate action to authorize it to
borrow hereunder, to execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party in accordance with their respective
terms, and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Borrower and is, and each
of the other Loan Documents to which the Borrower is party is, a legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity.
(c) Subsidiaries: Authorization; Enforceability. The
Borrower's Restricted Subsidiaries and the Borrower's direct and indirect
ownership thereof as of the Agreement Date are as set forth on Schedule 4.1(c)
attached hereto, and to the extent such Restricted Subsidiaries are
corporations, the Borrower has the unrestricted right to vote the issued and
outstanding shares of the Restricted Subsidiaries shown thereon and such shares
of such Restricted Subsidiaries have been duly authorized and issued and are
fully paid and
-36-
<PAGE>
nonassessable. Each Restricted Subsidiary of the Borrower has the corporate
power and has taken all necessary corporate action to authorize it to execute,
deliver and perform each of the Loan Documents to which it is a party in
accordance with their respective terms and to consummate the transactions
contemplated by this Agreement and by such Loan Documents. Each of the Loan
Documents to which any Restricted Subsidiary of the Borrower is party is a
legal, valid and binding obligation of such Restricted Subsidiary enforceable
against such Restricted Subsidiary in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity. The Borrower's ownership interest in each of its
Restricted Subsidiaries represents a direct or indirect controlling interest of
such Restricted Subsidiary for purposes of directing or causing the direction of
the management and policies of each Restricted Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance, in accordance with their
respective terms, by the Borrower of this Agreement and the Notes, and by the
Borrower and its Restricted Subsidiaries of each of the other Loan Documents to
which they are respectively party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) require any consent or
approval, governmental or otherwise, not already obtained, (ii) violate any
Applicable Law respecting the Borrower or any Restricted Subsidiary of the
Borrower, (iii) conflict with, result in a breach of, or constitute a default
under the certificate or articles of incorporation or by-laws or partnership
agreements, as the case may be, as amended, of the Borrower or of any Restricted
Subsidiary of the Borrower, or under any material indenture, agreement, or other
instrument, including without limitation the Licenses, to which the Borrower or
any of its Restricted Subsidiaries is a party or by which any of them or their
respective properties may be bound, or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any of its Restricted Subsidiaries, except
for Permitted Liens.
(e) Business. The Borrower, together with its Subsidiaries, is
engaged in the business of owning, constructing, managing, operating, and
investing in communications tower facilities.
(f) Licenses, etc. The Licenses have been duly issued and are
in full force and effect. The Borrower and its Restricted Subsidiaries are in
compliance in all material respects with all of the provisions thereof. The
Borrower and its Restricted Subsidiaries have secured all Necessary
Authorizations and all such Necessary Authorizations are in full force and
effect. Neither any License nor any Necessary Authorization is the subject of
any pending or, to the best of the Borrower's knowledge, threatened revocation.
-37-
<PAGE>
(g) Compliance with Law. The Borrower and its Restricted
Subsidiaries are in compliance with all Applicable Law, except where the failure
to be in compliance would not individually or in the aggregate have a Material
Adverse Effect.
(h) Title to Assets. As of the Agreement Date, the Borrower
and its Restricted Subsidiaries have good, legal and marketable title to, or a
valid leasehold interest in, all of its assets. None of the properties or assets
of the Borrower or any of its Restricted Subsidiaries is subject to any Liens,
except for Permitted Liens. Except for financing statements evidencing Permitted
Liens, no financing statement under the Uniform Commercial Code as in effect in
any jurisdiction and no other filing which names the Borrower or any of its
Restricted Subsidiaries as debtor or which covers or purports to cover any of
the assets of the Borrower or any of its Restricted Subsidiaries is currently
effective and on file in any state or other jurisdiction, and neither the
Borrower nor any of its Restricted Subsidiaries has signed any such financing
statement or filing or any security agreement authorizing any secured party
thereunder to file any such financing statement or filing.
(i) Litigation. As of the date hereof, there is no action,
suit, proceeding or investigation pending against, or, to the knowledge of the
Borrower, threatened against or in any other manner relating adversely to, the
Borrower or any of its Restricted Subsidiaries or any of their respective
properties, including without limitation the Licenses, in any court or before
any arbitrator of any kind or before or by any governmental body (including
without limitation the FCC) except as set forth on Schedule 4.1(i) attached
hereto (as such schedule may be updated from time to time). No such action,
suit, proceeding or investigation (i) calls into question the validity of this
Agreement or any other Loan Document, or (ii) individually or collectively
involves the possibility of any judgment or liability not fully covered by
insurance which, if determined adversely to the Borrower or any of its
Restricted Subsidiaries, would have a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the
Borrower and each of its Restricted Subsidiaries required by law to be filed
have been duly filed and all federal, state and other taxes, including, without
limitation, withholding taxes, assessments and other governmental charges or
levies required to be paid by the Borrower or any of its Restricted Subsidiaries
or imposed upon the Borrower or any of its Restricted Subsidiaries or any of
their respective properties, income, profits or assets, which are due and
payable, have been paid, except any such taxes (i) (x) the payment of which the
Borrower or any of its Restricted Subsidiaries is diligently contesting in good
faith by appropriate proceedings, (y) for which adequate reserves have been
provided on the books of the Borrower or the Restricted Subsidiary of the
Borrower involved, and (z) as to which no Lien other than a Permitted Lien has
attached and no foreclosure, distraint, sale or similar proceedings have been
commenced, or (ii) which may result from audits not yet conducted. The charges,
accruals and reserves
-38-
<PAGE>
on the books of the Borrower and each of its Restricted Subsidiaries in respect
of taxes are, in the judgment of the Borrower, adequate.
(k) Financial Statements. The Borrower has furnished or caused
to be furnished to the Administrative Agent and the Banks as of the Agreement
Date, the audited financial statements for American Radio Systems and its
Subsidiaries on a consolidated basis for the fiscal year ended December 31,
1996, and unaudited financial statements for the Borrower and its Restricted
Subsidiaries for the fiscal quarter ended June 30, 1997, all of which have been
prepared in accordance with GAAP and present fairly in all material respects the
financial position of the Borrower and its Restricted Subsidiaries on a
consolidated basis, on and as at such dates and the results of operations for
the periods then ended (subject, in the case of unaudited financial statements,
to normal year-end and audit adjustments). Neither the Borrower nor any of its
Restricted Subsidiaries has any material liabilities, contingent or otherwise,
other than as disclosed in the financial statements referred to in the preceding
sentence or as set forth or referred to in this Agreement.
(l) No Material Adverse Change. There has occurred no event
since December 31, 1996 which has or which could reasonably be expected to have
a Materially Adverse Effect.
(m) ERISA. The Borrower and each Subsidiary of the Borrower
and each of their respective Plans are in compliance with ERISA and the Code and
neither the Borrower nor any of its ERISA Affiliates, including its
Subsidiaries, has incurred any accumulated funding deficiency with respect to
any such Plan within the meaning of ERISA or the Code. The Borrower, each of its
Subsidiaries, and each other ERISA Affiliate have complied in all material
respects with all requirements of ERISA. Neither the Borrower nor any of its
Subsidiaries has made any promises of retirement or other benefits to employees,
except as set forth in the Plans, in written agreements with such employees, or
in the Borrower's employee handbook and memoranda to employees. Neither the
Borrower nor any of its ERISA Affiliates, including its Subsidiaries, has
incurred any material liability to PBGC in connection with any such Plan. The
assets of each such Plan which is subject to Title IV of ERISA are sufficient to
provide the benefits under such Plan, the payment of which PBGC would guarantee
if such Plan were terminated, and such assets are also sufficient to provide all
other "benefit liabilities" (within the meaning of Section 4041 of ERISA) due
under the Plan upon termination. No Reportable Event has occurred and is
continuing with respect to any such Plan. No such Plan or trust created
thereunder, or party in interest (as defined in Section 3(14) of ERISA), or any
fiduciary (as defined in Section 3(21) of ERISA), has engaged in a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) which would subject such Plan or any other Plan of the Borrower or any
of its Subsidiaries, any trust created thereunder, or any such party in interest
or fiduciary, or any party dealing with any such Plan or any such trust, to the
tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or
-39-
<PAGE>
Section 4975 of the Code. Neither the Borrower nor any of its ERISA Affiliates,
including its Subsidiaries, is or has been obligated to make any payment to a
Multiemployer Plan.
(n) Compliance with Regulations G, T, U and X. Neither the
Borrower nor any of the Borrower's Restricted Subsidiaries is engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying, and neither the Borrower nor
any of the Borrower's Restricted Subsidiaries owns or presently intends to
acquire, any "margin security" or "margin stock" as defined in Regulations G, T,
U, and X (12 C.F.R. Parts 207, 220, 221 and 224) of the Board of Governors of
the Federal Reserve System (herein called "margin stock"). None of the proceeds
of the Loans will be used, directly or indirectly, for the purpose of purchasing
or carrying any margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry margin stock or
for any other purpose which might constitute this transaction a "purpose credit"
within the meaning of said Regulations G, T, U, and X. The Borrower has not
taken, caused or authorized to be taken, and will not take any action which
might cause this Agreement or the Notes to violate Regulation G, T, U, or X or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934, in each case as now in effect or
as the same may hereafter be in effect. If so requested by the Administrative
Agent, the Borrower will furnish the Administrative Agent with (i) a statement
or statements in conformity with the requirements of Federal Reserve Forms G-3
and/or U-I referred to in Regulations G and U of said Board of Governors and
(ii) other documents evidencing its compliance with the margin regulations,
reasonably requested by the Administrative Agent. Neither the making of the
Loans nor the use of proceeds thereof will violate, or be inconsistent with, the
provisions of Regulation G, T, U, or X of said Board of Governors.
(o) Investment Company Act. Neither the Borrower nor any of
its Restricted Subsidiaries is required to register under the provisions of the
Investment Company Act of 1940, as amended, and neither the entering into or
performance by the Borrower and its Restricted Subsidiaries of this Agreement
and the Loan Documents nor the issuance of the Notes violates any provision of
such Act or requires any consent, approval or authorization of, or registration
with, the Securities and Exchange Commission or any other governmental or public
body or authority pursuant to any provisions of such Act.
(p) Governmental Regulation. Neither the Borrower nor any of
its Restricted Subsidiaries is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the execution
and delivery of this Agreement or any other Loan Document. Neither the Borrower
nor any of its Restricted Subsidiaries is required to obtain any consent,
approval, authorization, permit or license which has not already been obtained
from, or effect any filing or registration which has not already been effected
with, any federal, state or local
-40-
<PAGE>
regulatory authority in connection with the performance, in accordance with
their respective terms, of this Agreement or any other Loan Document, other than
filing of appropriate UCC financing statements and mortgages.
(q) Absence of Default, Etc. The Borrower and its Restricted
Subsidiaries are in compliance in all respects with all of the provisions of
their respective partnership agreements, Certificates or Articles of
Incorporation and By-Laws, as the case may be, and no event has occurred or
failed to occur (including, without limitation, any matter which could create a
Default hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, (i) a Default or (ii) a
material default by the Borrower or any of its Restricted Subsidiaries under any
indenture, agreement or other instrument relating to Indebtedness of the
Borrower or any of its Restricted Subsidiaries in the amount of $1,000,000 or
more in the aggregate, any material License, or any judgment, decree or order to
which the Borrower or any of its Restricted Subsidiaries is a party or by which
the Borrower or any of its Restricted Subsidiaries or any of their respective
properties may be bound or affected.
(r) Accuracy and Completeness of Information. All information,
reports, prospectuses and other papers and data relating to the Borrower or any
of its Restricted Subsidiaries and furnished by or on behalf of the Borrower or
any of its Restricted Subsidiaries to the Administrative Agent or the Banks,
taken as a whole, were, at the time furnished, true, complete and correct in all
material respects to the extent necessary to give the Administrative Agent and
the Banks true and accurate knowledge of the subject matter, and all
projections, consisting of a consolidated projected cash flow statement, an
income statement, and a balance sheet for Borrower and its Restricted
Subsidiaries (the "Projections") (i) disclose all assumptions made with respect
to costs, general economic conditions, and financial and market conditions
formulating the Projections; (ii) are based on reasonable estimates and
assumptions; and (iii) reflect, as of the date prepared, and continue to
reflect, as of the date hereof, the reasonable estimate of Borrower of the
results of operations and other information projected therein for the periods
covered thereby.
(s) Agreements with Affiliates. Except for agreements or
arrangements with Affiliates wherein the Borrower or one or more of its
Restricted Subsidiaries provides services to such Affiliates for fair
consideration or which are set forth on Schedule 4.l(s) attached hereto, neither
the Borrower nor any of its Restricted Subsidiaries has (i) any written
agreements or binding arrangements of any kind with any Affiliate or (ii) any
management or consulting agreements of any kind with any Affiliate, other than
those between the Borrower and its Restricted Subsidiaries.
(t) Payment of Wages. The Borrower and each of its Restricted
Subsidiaries are in compliance with the Fair Labor Standards Act, as amended, in
all material respects, and to the knowledge of the Borrower and each of its
Subsidiaries, such Persons
-41-
<PAGE>
have paid all minimum and overtime wages required by law to be paid to their
respective employees.
(u) Priority. The Security Interest is a valid and, upon
filing of appropriate UCC financing statements and/or mortgages, will be a
perfected first priority security interest in the Collateral in favor of the
Administrative Agent, for the benefit of itself and the Banks, securing, in
accordance with the terms of the Security Documents, the Obligations, and the
Collateral is subject to no Liens other than Permitted Liens. The Liens created
by the Security Documents are enforceable as security for the Obligations in
accordance with their terms with respect to the Collateral subject, as to
enforcement of remedies, to the following qualifications: (i) an order of
specific performance and an injunction are discretionary remedies and, in
particular, may not be available where damages are considered an adequate remedy
at law, and (ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar laws affecting
enforcement of creditors' rights generally (insofar as any such law relates to
the bankruptcy, insolvency or similar event of the Borrower or any of its
Subsidiaries, as the case may be).
(v) Indebtedness. Except as shown on the financial statements
of Borrower for the fiscal quarter ended June 30, 1997, or as described on
Schedule 4.l(v) attached hereto neither the Borrower nor any of its Restricted
Subsidiaries has outstanding, as of the Agreement Date, and after giving effect
to the initial Advances hereunder on the Agreement Date, any Indebtedness for
Money Borrowed.
(w) Solvency. As of the Agreement Date and after giving effect
to the transactions contemplated by the Loan Documents (i) the property of the
Borrower, at a fair valuation, will exceed its debt; (ii) the capital of the
Borrower will not be unreasonably small to conduct its business; (iii) the
Borrower will not have incurred debts, or have intended to incur debts, beyond
its ability to pay such debts as they mature; and (iv) the present fair salable
value of the assets of the Borrower will be greater than the amount that will be
required to pay its probable liabilities (including debts) as they become
absolute and matured. For purposes of this Section, "debt" means any liability
on a claim, and "claim" means (i) the right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (ii)
the right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured
or unsecured.
Section 4.2 Survival of Representations and Warranties, Etc. All
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct in all
material respects, at and as of the Agreement Date and on the date of each
Advance except to the extent relating specifically to the Agreement Date. All
representations and warranties made under this Agreement and the
-42-
<PAGE>
other Loan Documents shall survive, and not be waived by, the execution hereof
by the Banks and the Administrative Agent, any investigation or inquiry by any
Bank or the Administrative Agent, or the making of any Advance under this
Agreement.
ARTICLE 5 General Covenants
So long as any of the Obligations is outstanding and unpaid or the
Banks have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have been or can be fulfilled), and unless the Majority
Banks, or such greater number of Banks as may be expressly provided herein,
shall otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. Except as
permitted under Section 7.4 hereof, the Borrower will, and will cause each of
its Restricted Subsidiaries to:
(a) preserve and maintain its existence, and its material
rights, franchises, licenses and privileges in the state of its incorporation,
including, without limiting the foregoing, the Licenses and all other Necessary
Authorizations; and
(b) qualify and remain qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization, except for
such failure to so qualify and be so authorized as could not reasonably be
expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower
will, and will cause each of its Restricted Subsidiaries to, (a) engage in the
business of owning, constructing, managing, operating and investing in
communications tower facilities and related businesses and no unrelated
activities, and (b) comply in all material respects with the requirements of all
Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will, and will
cause each of its Restricted Subsidiaries to, maintain or cause to be maintained
in the ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), other than obsolete equipment or
unused assets and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower
will, and will cause each of its Restricted Subsidiaries on a consolidated and
consolidating basis to, maintain a system of accounting established and
administered in accordance with GAAP,
-43-
<PAGE>
keep adequate records and books of account in which complete entries will be
made in accordance with GAAP and reflecting all transactions required to be
reflected by GAAP and keep accurate and complete records of their respective
properties and assets. The Borrower and its Restricted Subsidiaries will
maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrower will, and will cause each of its
Restricted Subsidiaries to:
(a) Maintain insurance including, but not limited to,
business interruption coverage and public liability coverage insurance from
responsible companies in such amounts and against such risks to the Borrower and
each of its Restricted Subsidiaries as is prudent for similarly situated
companies engaged in the communications tower industry.
(b) Keep their respective assets insured by insurers on terms
and in a manner reasonably acceptable to the Administrative Agent against loss
or damage by fire, theft, burglary, loss in transit, explosions and hazards
insured against by extended coverage, in amounts which are prudent for the
communications tower management and operation industry and reasonably
satisfactory to the Administrative Agent, all premiums thereon to be paid by the
Borrower and its Restricted Subsidiaries.
(c) Require that each insurance policy provide for at least
thirty (30) days' prior written notice to the Administrative Agent of any
termination of or proposed cancellation or nonrenewal of such policy, and name
the Administrative Agent as additional named lender loss payee and, as
appropriate, additional insured, to the extent of the Obligations.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
cause each of its Restricted Subsidiaries to, pay and discharge all taxes,
including, without limitation, withholding taxes, assessments and governmental
charges or levies required to be paid by them or imposed upon them or their
income or profits or upon any properties belonging to them, prior to the date on
which penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; except that no such tax, assessment, charge, levy or claim need be
paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced.
The Borrower will, and will cause each of its Restricted Subsidiaries to, timely
file all information returns required by federal, state or local tax
authorities.
-44-
<PAGE>
Section 5.7 Compliance with ERISA.
(a) The Borrower shall, and shall cause its Subsidiaries to,
make all contributions to any Employee Pension Plan when such contributions are
due and not incur any "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code, whether or not waived, and will otherwise comply
with the requirements of the Code and ERISA with respect to the operation of all
Plans, except to the extent that the failure to so comply could not have a
Materially Adverse Effect.
(b) The Borrower shall, and shall cause its Subsidiaries to,
comply in all respects with the requirements of ERISA with respect to any Plans
subject to the requirements thereof, except to the extent that the failure to so
comply could not have a Materially Adverse Effect.
(c) The Borrower shall furnish to Administrative Agent (i)
within 30 days after any officer of the Borrower obtains knowledge that a
"prohibited transaction" (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Plan of the Borrower or its
ERISA Affiliates, including its Subsidiaries, that any Reportable Event has
occurred with respect to any Employee Pension Plan or that PBGC has instituted
or will institute proceedings under Title IV of ERISA to terminate any Employee
Pension Plan or to appoint a trustee to administer any Employee Pension Plan, a
statement setting forth the details as to such prohibited transaction,
Reportable Event or termination or appointment proceedings and the action which
it (or any other Employee Pension Plan sponsor if other than the Borrower)
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to PBGC if a copy of such notice is available to the
Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly
after receipt thereof, a copy of any notice the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives
from PBGC, or the Internal Revenue Service or the Department of Labor which sets
forth or proposes any action or determination with respect to such Plan, (iii)
promptly after the filing thereof, any annual report required to be filed
pursuant to ERISA in connection with each Plan maintained by the Borrower or any
of its ERISA Affiliates, including the Subsidiaries, and (iv) promptly upon the
Administrative Agent's request therefor, such additional information concerning
any such Plan as may be reasonably requested by the Administrative Agent.
(d) The Borrower will promptly notify the Administrative
Agent of any excise taxes which have been assessed or which the Borrower, any of
its Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the Department of Labor with
respect to any Plan of the Borrower or its ERISA Affiliates, including its
Subsidiaries.
-45-
<PAGE>
(e) Within the time required for notice to the PBGC under
Section 302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent
of any lien arising under Section 302(f) of ERISA in favor of any Plan of the
Borrower or its ERISA Affiliates, including its Subsidiaries.
(f) The Borrower will not, and will not permit any of its
Subsidiaries or any of its ERISA Affiliates, to take any of the following
actions or permit any of the following events to occur if such action or event
together with all other such actions or events would subject the Borrower, any
of its Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or
other liabilities which could have a Materially Adverse Effect:
(i) engage in any transaction in connection with
which the Borrower, any of its Subsidiaries or any ERISA
Affiliate could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code;
(ii) terminate any Employee Pension Plan in a manner,
or take any other action, which could result in any liability
of the Borrower, any of its Subsidiaries or any ERISA
Affiliate to the PBGC;
(iii) fail to make full payment when due of all
amounts which, under the provisions of any Plan, the Borrower,
any of its Subsidiaries or any ERISA Affiliate is required to
pay as contributions thereto, or permit to exist any
accumulated funding deficiency within the meaning of Section
412(a) of the Code, whether or not waived, with respect to any
Employee Pension Plan; or
(iv) permit the present value of all benefit
liabilities under all Employee Pension Plans which are subject
to Title IV of ERISA to exceed the present value of the assets
of such Plans allocable to such benefit liabilities (within
the meaning of Section 4041 of ERISA), except as may be
permitted under actuarial funding standards adopted in
accordance with Section 412 of the Code.
Section 5.8 Visits and Inspections. The Borrower will, and will cause
each of its Restricted Subsidiaries to, permit representatives of the
Administrative Agent and any of the Banks, upon reasonable notice, to (a) visit
and inspect the properties of the Borrower or any of its Restricted Subsidiaries
during business hours, (b) inspect and make extracts from and copies of their
respective books and records, and (c) discuss with their respective principal
officers their respective businesses, assets, liabilities, financial positions,
results of operations and business prospects. The Borrower and each of its
Restricted Subsidiaries will also permit representatives of the Administrative
Agent and any of the Banks to discuss with their respective accountants the
Borrower's and the Borrower's Restricted Subsidiaries' businesses, assets,
liabilities, financial positions, results of operations and business prospects.
-46-
<PAGE>
Section 5.9 Payment of Indebtedness; Loans. Subject to any provisions
herein or in any other Loan Document, the Borrower will, and will cause each of
its Restricted Subsidiaries to, pay any and all of their respective Indebtedness
when and as it becomes due, other than amounts diligently disputed in good faith
and for which adequate reserves have been set aside in accordance with GAAP.
Section 5.10 Use of Proceeds. The Borrower will use the aggregate
proceeds of all Advances under the Loans directly or indirectly:
(a) to fund Acquisitions permitted by Section 7.6 hereof;
(b) to fund Capital Expenditures to the extent permitted under
Section 7.11 hereof; and
(c) for working capital needs and other corporate purposes of
the Borrower and its Restricted Subsidiaries (including, without limitation, the
fees and expenses incurred in connection with the execution and delivery of this
Agreement) which do not otherwise conflict with this Section 5.10.
No proceeds of Advances hereunder shall be used for the purchase or carrying or
the extension of credit for the purpose of purchasing or carrying, any margin
stock within the meaning of Regulations G, T, U, and X of the Board of Governors
of the Federal Reserve System.
Section 5.11 Real Estate. The Borrower shall, and shall cause its
Restricted Subsidiaries to, within ninety (90) days from the Agreement Date,
and, thereafter, within thirty (30) days of the acquisition of any real estate
permitted under Section 7.13 hereof and within thirty (30) days after the
reports produced pursuant to Section 6.6 hereof, grant a mortgage to the
Administrative Agent securing the Obligations (or such amount thereof as is
equal to the fair market value of such real estate if the Majority Banks so
permit), in form and substance reasonably satisfactory to the Administrative
Agent, covering the parcels of real estate owned by the Borrower or any of its
Restricted Subsidiaries which in the aggregate account for not less than
seventy-five percent (75%) of the revenues generated by all such parcels of real
estate based upon the reports required pursuant to Section 6.6 hereof. The
Borrower shall, and shall cause its Restricted Subsidiaries to, deliver to the
Administrative Agent all documentation, including opinions of counsel and
policies of title insurance, which in the reasonable opinion of the
Administrative Agent are appropriate with each such grant, including any phase I
environmental audit requested by the Majority Banks.
Section 5.12 Indemnity. The Borrower agrees to indemnify and hold
harmless each Bank, the Administrative Agent, and each of their respective
affiliates, employees,
-47-
<PAGE>
representatives, shareholders, officers and directors (any of the foregoing
shall be an "Indemnitee") from and against any and all claims, liabilities,
losses, damages, actions, reasonable attorneys' fees and expenses (as such fees
and expenses are incurred) and demands by any party, including the costs of
investigating and defending such claims, whether or not the Borrower, any
Restricted Subsidiary or the Person seeking indemnification is the prevailing
party (a) resulting from any breach or alleged breach by the Borrower or any
Restricted Subsidiary of the Borrower of any representation or warranty made
hereunder or under any Loan Document; or (b) otherwise arising out of (i) the
Commitment or otherwise under this Agreement, any Loan Document or any
transaction contemplated hereby or thereby, including, without limitation, the
use of the proceeds of Loans hereunder in any fashion by the Borrower or the
performance of their respective obligations under the Loan Documents by the
Borrower or any of its Restricted Subsidiaries, (ii) allegations of any
participation by the Banks, the Administrative Agent, or any of them, in the
affairs of the Borrower or any of its Subsidiaries, or allegations that any of
them has any joint liability with the Borrower or any of its Restricted
Subsidiaries for any reason, (iii) any claims against the Banks, the
Administrative Agent, or any of them, by any shareholder or other investor in or
lender to the Borrower or any Restricted Subsidiary, by any brokers or finders
or investment advisers or investment bankers retained by the Borrower or by any
other third party, arising out of the Commitment or otherwise under this
Agreement; or (c) in connection with taxes (not including federal or state
income or franchise taxes or other taxes based solely upon the revenues or
income of such Persons), fees, and other charges payable in connection with the
Loans, or the execution, delivery, and enforcement of this Agreement, the
Security Documents, the other Loan Documents, and any amendments thereto or
waivers of any of the provisions thereof, unless the Person seeking
indemnification hereunder is determined in such case to have acted with gross
negligence or willful misconduct, in any case, by a final, non-appealable
judicial order. The obligations of the Borrower under this Section 5.12 are in
addition to, and shall not otherwise limit, any liabilities which the Borrower
might otherwise have in connection with any warranties or similar obligations of
the Borrower in any other Loan Document.
Section 5.13 Interest Rate Hedging. Within sixty (60) days of the
Agreement Date and forty-five (45) days after each Advance, the Borrower shall
enter into (and shall at all times thereafter maintain for a period of not less
than two (2) years) one or more Interest Hedge Agreements with respect to the
Borrower's interest obligations on not less than fifty percent (50%) of the
principal amount of the Loans outstanding from time to time. Such Interest Hedge
Agreements shall provide interest rate protection in conformity with
International Swap Dealers Association standards and for an average period of at
least two (2) years from the date of such Interest Hedge Agreements or, if
earlier, until the Maturity Date on terms reasonably acceptable to the
Administrative Agent, such terms to include consideration of the
creditworthiness of the other party to the proposed Interest Hedge Agreement.
All Obligations of the Borrower to either Administrative Agent or any of the
Banks pursuant to any Interest Hedge Agreement and all Liens granted to secure
such
-48-
<PAGE>
Obligations shall rank pari passu with all other Obligations and Liens securing
such other Obligations; and any Interest Hedge Agreement between the Borrower
and any other Person shall be unsecured.
Section 5.14 Covenants Regarding Formation of Restricted Subsidiaries
and Acquisitions; Partnership, Subsidiaries. At the time of (i) any Acquisition
permitted hereunder, (ii) the purchase by the Borrower or any of its Restricted
Subsidiaries of any interests in any Restricted or Unrestricted Subsidiary of
the Borrower, or (iii) the formation of any new Restricted or Unrestricted
Subsidiary of the Borrower or any of its Restricted Subsidiaries which is
permitted under this Agreement, the Borrower will, and will cause its Restricted
Subsidiaries, as appropriate, to (a) provide to the Administrative Agent an
executed Subsidiary Security Agreement for any new Restricted Subsidiary, in
substantially the form of Exhibit J attached hereto, together with appropriate
UCC-1 financing statements, as well as an executed Subsidiary Guaranty for such
new Restricted Subsidiary, in substantially the form of Exhibit H attached
hereto, which shall constitute both Security Documents and Loan Documents for
purposes of this Agreement, as well as a loan certificate for such new
Restricted Subsidiary, substantially in the form of Exhibit M attached hereto,
together with appropriate attachments; (b) pledge to the Administrative Agent
all of the stock or partnership interests (or other instruments or securities
evidencing ownership) of such Subsidiary or Person which is acquired or formed,
beneficially owned by the Borrower or any of the Borrower's Restricted
Subsidiaries, as the case may be, as additional Collateral for the Obligations
to be held by the Administrative Agent in accordance with the terms of the
Borrower's Pledge Agreement, or a new Subsidiary Pledge Agreement in
substantially the form of Exhibit I attached hereto, and execute and deliver to
the Administrative Agent all such documentation for such pledge as, in the
reasonable opinion of the Administrative Agent, is appropriate; and (c) with
respect to any Acquisition or Restricted Subsidiary, provide revised financial
projections for the remainder of the fiscal year and for each subsequent year
until the Maturity Date which reflect such Acquisition or formation, certified
by the Chief Financial Officer of the Borrower, together with a statement by
such Person that no Default exists or would be caused by such Acquisition or
formation, and all other documentation, including one or more opinions of
counsel, reasonably satisfactory to the Administrative Agent which in their
reasonable opinion is appropriate with respect to such Acquisition or the
formation of such Subsidiary. Notwithstanding the foregoing, the Borrower shall
not be required to pledge any of the stock or other ownership interests for any
Unrestricted Subsidiary which (x) was not formed or created in anticipation of
the Borrower's direct or indirect investment therein and (y) at the time such
stock or ownership interest was acquired by the Borrower or its Restricted
Subsidiaries is subject to a restriction on any such Lien (whether such
restriction is in such Person's formation documents or otherwise), but shall be
required to grant the Administrative Agent (for the benefit of the Banks) a Lien
upon any right to receive distributions from such Unrestricted Subsidiary. Any
document, agreement or instrument (other than the Projections) executed or
issued pursuant to this Section 5.14 shall be a "Loan Document" for purposes of
this Agreement.
-49-
<PAGE>
Section 5.15 Payment of Wages. The Borrower shall, and shall cause each
of its Restricted Subsidiaries to, at all times comply, in all material
respects, with the material requirements of the Fair Labor Standards Act, as
amended, including, without limitation, the provisions of such Act relating to
the payment of minimum and overtime wages as the same may become due from time
to time.
Section 5.16 Further Assurances. The Borrower will promptly cure, or
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including this Agreement),
resulting from any acts or failure to act by the Borrower or any of the
Borrower's Restricted Subsidiaries or any employee or officer thereof. The
Borrower at its expense will promptly execute and deliver to the Administrative
Agent and the Banks, or cause to be executed and delivered to the Administrative
Agent and the Banks, all such other and further documents, agreements, and
instruments in compliance with or accomplishment of the covenants and agreements
of the Borrower in the Loan Documents, including this Agreement, or to correct
any omissions in the Loan Documents, or more fully to state the obligations set
out herein or in any of the Loan Documents, or to obtain any consents, all as
may be necessary or appropriate in connection therewith and as may be reasonably
requested.
ARTICLE 6 Information Covenants
So long as any of the Obligations is outstanding and unpaid or the
Banks have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have been or can be fulfilled) and unless the Majority
Banks shall otherwise consent in writing, the Borrower will furnish or cause to
be furnished to each Bank and the Administrative Agent, at their respective
offices:
Section 6.1 Quarterly Financial Statements and Information Within
forty-five (45) days after the last day of each of the first three (3) quarters
of each fiscal year of the Borrower, the balance sheets of the Borrower on a
consolidated basis with its Restricted Subsidiaries and a consolidating basis
with its Unrestricted Subsidiaries as at the end of such quarter and as of the
end of the preceding fiscal year, and the related statements of operations and
the related statements of cash flows of the Borrower on a consolidated basis
with its Restricted Subsidiaries and a consolidating basis with its Unrestricted
Subsidiaries for such quarter and for the elapsed portion of the year ended with
the last day of such quarter, which shall set forth in comparative form such
figures as at the end of and for such quarter and appropriate prior period and
shall be certified by the chief financial officer of the Borrower to have been
prepared in accordance with GAAP and to present fairly in all material respects
the financial position of the Borrower on a consolidated basis with its
Restricted Subsidiaries and a consolidating basis with its Unrestricted
Subsidiaries as at the end of such period and
-50-
<PAGE>
the results of operations for such period, and for the elapsed portion of the
year ended with the last day of such period, subject only to normal year-end and
audit adjustments.
Section 6.2 Annual Financial Statements and Information. Within ninety
(90) days after the end of each fiscal year of the Borrower, the audited
consolidated balance sheet of the Borrower and its Restricted Subsidiaries (and
unaudited consolidating balance sheet of the Borrower and its Unrestricted
Subsidiaries) as of the end of such fiscal year and the related audited
consolidated and unaudited consolidating statements of operations for such
fiscal year and for the previous fiscal year, the related audited consolidated
statements of cash flow and stockholders' equity for such fiscal year and for
the previous fiscal year, which shall be accompanied by an opinion which shall
be in scope and substance reasonably satisfactory to the Administrative Agent of
Deloitte & Touche, LLP, or other independent certified public accountants of
recognized national standing reasonably acceptable to the Administrative Agent,
together with a statement of such accountants that in connection with their
audit, nothing came to their attention that caused them to believe that the
Borrower was not in compliance with the terms, covenants, provisions or
conditions of Sections 7.8, 7.9, 7.10 and 7.11 hereof insofar as they relate to
accounting matters.
Section 6.3 Performance Certificates. At the time the financial
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, a certificate
of the president or chief financial officer of the Borrower as to its financial
performance, in substantially the form attached hereto as Exhibit N:
(a) setting forth as and at the end of such quarterly period
or fiscal year, as the case may be, the arithmetical calculations required to
establish (i) any adjustment to the Applicable Margins, as provided for in
Section 2.3(f) hereof, and (ii) whether or not the Borrower was in compliance
with the requirements of Sections 7.7, 7.8, 7.9, 7.10 and 7.11 hereof;
(b) stating that, to the best of his or her knowledge, no
Default has occurred as at the end of such quarterly period or year, as the case
may be, or, if a Default has occurred, disclosing each such Default and its
nature, when it occurred, whether it is continuing and the steps being taken by
the Borrower with respect to such Default;
(c) containing a list of all Acquisitions, Investments,
Restricted Payments and dispositions of assets from the Agreement Date through
the date of such certificate, together with the total amount for each of the
foregoing categories; and
(d) setting forth the amount of distributions received from
Unrestricted Subsidiaries for such period.
-51-
<PAGE>
Section 6.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Borrower by the Borrower's independent public accountants
regarding the Borrower, including, without limitation, any management report
prepared in connection with the annual audit referred to in Section 6.2 hereof.
(b) Promptly upon receipt thereof, copies of any material
adverse notice or report regarding any License from the FCC.
(c) From time to time and promptly upon each request, such
data, certificates, reports, statements, documents or further information
regarding the business, assets, liabilities, financial position, projections,
results of operations or business prospects of the Borrower or any of its
Restricted Subsidiaries, as Administrative Agent or any Bank may reasonably
request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to January 31 of each year, the annual budget for
the Borrower and the Borrower's Restricted Subsidiaries, including forecasts of
the income statement, the balance sheet and a cash flow statement for such year,
on a quarter by quarter basis.
(f) Promptly after the sending thereof, copies of all
statements, reports and other information which the Borrower or any of its
Restricted Subsidiaries sends to public security holders of the Borrower
generally or files with the Securities and Exchange Commission or any national
securities exchange.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying
the nature and status of any of the following events, promptly, but in any event
not later than fifteen (15) days after the occurrence of any of the following
events becomes known to the Borrower:
(a) the commencement of all proceedings and investigations by
or before any governmental body and all actions and proceedings in any court or
before any arbitrator against the Borrower or any Restricted Subsidiary, or, to
the extent known to the Borrower, which could have a Material Adverse Effect;
(b) any material adverse change with respect to the business,
assets, liabilities, financial position, results of operations or business
prospects of the Borrower and its Restricted Subsidiaries, taken as a whole,
other than changes in the ordinary course of
-52-
<PAGE>
business which have not had and would not reasonably be expected to have a
Materially Adverse Effect and other than changes in the industry in which
Borrower or any of its Restricted Subsidiaries operate which would not
reasonably be expected to have a Material Adverse Effect;
(c) any material adverse amendment or change to the
projections or annual budget provided to the Banks by the Borrower;
(d) any Default or the occurrence or non-occurrence of any
event (i) which constitutes, or which with the passage of time or giving of
notice or both would constitute, a default by the Borrower or any Restricted
Subsidiary of the Borrower under any material agreement other than this
Agreement and the other Loan Documents to which the Borrower or any Restricted
Subsidiary of the Borrower is party or by which any of their respective
properties may be bound, or (ii) which could have a Materially Adverse Effect,
giving in each case a description thereof and specifying the action proposed to
be taken with respect thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower or any of its Subsidiaries or
the institution or threatened institution by PBGC of proceedings under ERISA to
terminate or to partially terminate any such Plan or the commencement or
threatened commencement of any litigation regarding any such Plan or naming it
or the trustee of any such Plan with respect to such Plan or any action taken by
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the
Borrower to withdraw or partially withdraw from any Plan or to terminate any
Plan; and
(f) the occurrence of any event subsequent to the Agreement
Date which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(m) of
this Agreement.
Section 6.6 Real Estate. Within seventy (70) days from closing, and
thereafter at the time the Borrower delivers its financial statements under
Sections 6.1 and 6.2 hereof, the Borrower shall provide to the Administrative
Agent a schedule setting forth the annual revenues generated by each owned
parcel of real estate and indicating that parcels representing not less than
seventy-five percent (75%) of such revenues are encumbered by mortgages in favor
of the Administrative Agent and the Banks.
ARTICLE 7 Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the
Banks have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have
-53-
<PAGE>
been or can be fulfilled) and unless the Majority Banks, or such greater number
of Banks as may be expressly provided herein, shall otherwise give their prior
consent in writing:
Section 7.1 Indebtedness of the Borrower and its Subsidiaries. The
Borrower shall not, and shall not permit any of its Subsidiaries to, create,
assume, incur or otherwise become or remain obligated in respect of, or permit
to be outstanding, any Indebtedness except:
(a) the Obligations;
(b) accounts payable, accrued expenses (including taxes) and
customer advance payments incurred in the ordinary course of business;
(c) Indebtedness secured by Permitted Liens;
(d) obligations under Interest Hedge Agreements with respect
to the Loans;
(e) Indebtedness of the Borrower or any of its Restricted
Subsidiaries to the Borrower or any other Restricted Subsidiary so long as the
corresponding debt instruments are pledged to the Administrative Agent as
security for the Obligations and such Indebtedness is expressly permitted
pursuant to Section 7.5 hereof;
(f) Indebtedness incurred by any Unrestricted Subsidiary;
provided that such Indebtedness is non-recourse to the Borrower or any of its
Restricted Subsidiaries and no Lien is placed on the Borrower's or any of its
Restricted Subsidiaries' equity interests in such Unrestricted Subsidiary;
(g) Capitalized Lease Obligations not to exceed in the
aggregate at any one time outstanding $1,000,000; and
(h) Indebtedness of the Borrower or any of its Restricted
Subsidiaries incurred in connection with an Acquisition; provided that (i) such
Indebtedness (A) is owed to the seller thereof, (B) is unsecured, (C) has no
scheduled payment of principal prior to the full payment of the Obligations, (D)
is subject to terms and conditions and subordination provisions which are
acceptable to the Majority Banks on the date of incurrence, (E) when added to
all other Indebtedness outstanding under this Section 7.1(h) does not exceed
$5,000,000 and (ii) the Borrower is, at the time of incurrence of such
Indebtedness (and after giving effect thereto) in pro forma compliance with all
of the covenants contained in this Agreement.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, create, assume, incur or permit to
exist or to be created,
-54-
<PAGE>
assumed, incurred or permitted to exist, directly or indirectly, any Lien on any
of its properties or assets, whether now owned or hereafter acquired, except for
Permitted Liens.
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, enter into any amendment of, or
agree to or accept or consent to any waiver of any of the material provisions of
its articles or certificate of incorporation or partnership agreement, as
appropriate, if the effect thereof would be to adversely affect the rights of
the Banks hereunder or under any Loan Document.
Section 7.4 Liquidation, Merger or Disposition of Assets.
(a) Disposition of Assets. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time sell, lease,
abandon, or otherwise dispose of any assets (other than assets disposed of in
the ordinary course of business) without the prior written consent of the Banks;
provided, however, that the prior written consent of the Banks shall not be
required for (i) the transfer of assets (including cash or cash equivalents)
among the Borrower and its Restricted Subsidiaries (excluding Subsidiaries
described in clause (b) of the definition of "Subsidiary") or for the transfer
of assets (including cash or cash equivalents) between or among Restricted
Subsidiaries (excluding Subsidiaries described in clause (b) of the definition
of "Subsidiary") of the Borrower, (ii) the disposition of communications tower
facilities that contribute in the aggregate, less than (A) five percent (5%) of
the Operating Cash Flow of Borrower for the twelve calendar month period
immediately preceding such disposition, and (B) fifteen percent (15%) of the
Operating Cash Flow of the Borrower for the period from the Agreement Date
through the date of such disposition, or (iii) subject to Section 2.5(c) hereof,
any other property (real or personal) not used or useful in Borrower's or such
Restricted Subsidiary's business; provided that, in each case, no Default or
Event of Default exists and none shall be caused to occur as a result thereof.
Upon any sale or disposition of a Restricted Subsidiary permitted hereunder, the
Administrative Agent and the Banks shall, at Borrower's expense, take such
actions as the Borrower reasonably requests to cause such Restricted Subsidiary
to be released from its obligations under the Subsidiary Guaranty.
(b) Liquidation or Merger. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time, liquidate or
dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up,
or enter into any merger, other than (i) a merger or consolidation among the
Borrower and one or more Restricted Subsidiaries, provided the Borrower is the
surviving corporation, or (ii) a merger between or among two or more Restricted
Subsidiaries, or (iii) in connection with an Acquisition permitted hereunder
effected by a merger in which the Borrower or, in a merger in which the Borrower
is not a party, a Restricted Subsidiary is the surviving corporation or the
surviving corporation becomes a Restricted Subsidiary; provided that, in each
case, no Default or Event of Default exists and none shall be caused to occur as
a result thereof.
-55-
<PAGE>
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time Guaranty, assume,
be obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
obligations under agreements of the Borrower or any of its Restricted
Subsidiaries entered into in connection with Acquisitions permitted under this
Agreement leases of real property or the acquisition of services, supplies and
equipment in the ordinary course of business of the Borrower or any of its
Restricted Subsidiaries, or (c) Guaranties of Indebtedness incurred as permitted
pursuant to Section 7.1 hereof, or (d) as may be contained in any Loan Document
including, without limitation, any Subsidiary Guaranty.
Section 7.6 Investments and Acquisitions. The Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly
make any loan or advance, or otherwise acquire for consideration evidences of
Indebtedness, capital stock or other securities of any Person or other assets or
property (other than assets or property in the ordinary course of business), or
make any Acquisition, except that so long as no Default then exists or would be
caused thereby:
(a) The Borrower and its Restricted Subsidiaries may, directly
or through a brokerage account (i) purchase marketable, direct obligations of
the United States of America, its agencies and instrumentalities maturing within
three hundred sixty-five (365) days of the date of purchase, (ii) purchase
commercial paper, money-market funds and business savings accounts issued by
corporations, each of which shall have a combined net worth of at least
$100,000,000 and each of which conducts a substantial part of its business in
the United States of America, maturing within two hundred seventy (270) days
from the date of the original issue thereof, and rated "P-2" or better by
Moody's Investors Service, Inc. or "A-2" or better by Standard and Poor's
Ratings Group, a division of McGraw-Hill, (iii) purchase repurchase agreements,
bankers' acceptances, and domestic and Eurodollar certificates of deposit
maturing within three hundred sixty-five (365) days of the date of purchase
which are issued by, or time deposits maintained with, a United States national
or state bank the deposits of which are insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance Corporation and having
capital, surplus and undivided profits totaling more than $100,000,000 and rated
"A" or better by Moody's Investors Service, Inc. or Standard and Poor's Ratings
Group, a division of McGraw-Hill, Inc.;
(b) Subject to compliance with Section 5.14 hereof, the
Borrower or any of its Restricted Subsidiaries may (i) make Acquisitions; (ii)
initiate construction of new communications tower facilities; and (iii) make
investments in Unrestricted Subsidiaries so long as (A) the maximum amount
expended to acquire tower management businesses and site acquisitions does not
exceed $25,000,000 in the aggregate, (B) the maximum amount of
-56-
<PAGE>
the proceeds of the Loans invested in or used to acquire interests in any
Unrestricted Subsidiary does not exceed the sum of (1) $13,500,000 in the
aggregate during the term hereof and (2) to the extent not used for Restricted
Payments, funds permitted to be used for Restricted Payments pursuant to
Sections 7.7(a) and (b) hereof, provided that proceeds from the disposition of
any such investment permitted by this clause (b)(iii), shall be available to be
used for Restricted Payments or to make additional investments permitted
hereunder; provided, further, that Borrower may, subject to Section 2.5(d)
hereof, use the Net Proceeds of any issuance of equity interests to invest in
any Unrestricted Subsidiary over and above the limitations set forth in this
clause (b) and (C) the contribution to the Operating Cash Flow of the Borrower
at the time of such investment of all such Unrestricted Subsidiaries does not
exceed fifteen percent (15%) of the Operating Cash Flow of the Borrower; and
(c) Loans or advances to OPM-USA-Inc., as contemplated by
that Stock Purchase Agreement between the Borrower and OPM-USA-Inc. not to
exceed $9,000,000 (so long as such loans and advances are evidenced by a
promissory note).
Section 7.7 Restricted Payments. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly declare or
make any Restricted Payment; provided, however, that so long as no Default
hereunder then exists or would be caused thereby, the Borrower may make (a)
subject to Section 2.5(b) hereof, (i) cash distributions in an amount not to
exceed fifty percent (50%) of Excess Cash Flow for the immediately preceding
calendar year, on or after April 15 of each calendar year commencing on April
15, 2000 less (ii) any portion thereof used for purposes of investing in
Unrestricted Subsidiaries; (b) (i) cash distributions from fifty percent (50%)
of the net proceeds of any equity offering less (ii) any portion thereof used
for purposes of investing in Unrestricted Subsidiaries, subject to Section
2.5(d) hereof and so long as the Leverage Ratio on such date is less than 4.0 to
1 after giving effect to any payment pursuant to Section 2.7(b)(iv) hereof; and
(c) interest payments on Indebtedness incurred pursuant to Section 7.1(h)
hereof.
Section 7.8 Leverage Ratio.
(a) As of the end of any calendar quarter, and (b) at the
time of any Advance hereunder (after giving effect to such Advance), the
Borrower shall not permit its Leverage Ratio to exceed the ratios set forth
below during the periods indicated:
-57-
<PAGE>
Period Ratio
------ -----
Agreement Date through September 29, 1999 6.00:1
September 30, 1999 through March 30, 2000 5.50:1
March 31, 2000 through September 29, 2000 5.00:1
September 30, 2000 through March 30, 2001 4.50:1
March 31, 2001 through December 30, 2001 4.00:1
December 31, 2001 through December 30, 2002 3.50:1
December 31, 2002 and thereafter 3.00:1
Section 7.9 Interest Coverage Ratio. The Borrower and its consolidated
Restricted Subsidiaries shall maintain, on a consolidated basis, at all times
during the applicable periods set forth below, an Interest Coverage Ratio for
such fiscal quarter of not less than the ratio set forth below opposite each
such period:
Period Ratio
------ -----
Agreement Date through September 29, 2000 2.00:1
September 30, 2000 and thereafter 2.50:1
Section 7.10 Annualized Operating Cash Flow to Pro Forma Debt Service.
(a) As of the end of any calendar quarter, and (b) at the
time of any Advance hereunder (after giving effect to such Advance), the
Borrower shall not permit the ratio of (i) its Annualized Operating Cash Flow
(for the calendar quarter/month end being tested in the case of Section 7.10(a)
hereof, or for the most recently completed calendar quarter/month end, in the
case of Section 7.10(b) hereof) to (ii) its Pro Forma Debt Service to be less
than the ratio set forth below opposite each such period:
Period Ratio
------ -----
Agreement Date through September 29, 2000 1.10:1
September 30, 2000 and thereafter 1.15:1
-58-
<PAGE>
Section 7.11 Limitation on Capital Expenditures. The Borrower, on a
consolidated basis with its Restricted Subsidiaries, shall not permit its
Capital Expenditures to exceed the amounts set forth below for the periods
indicated:
Period Dollar Amount
------ -------------
From January 1, 1997 through December 31, 1997 $15,000,000
From January 1, 1998 through December 31, 1998 $22,000,000
From January 1, 1999 through December 31, 1999 $10,000,000
From January 1, 2000 through December 31, 2000 $ 5,000,000
and each calendar year period thereafter
To the extent not used in any calendar year, an amount equal to the lesser of
(a) the unused amounts permitted for Capital Expenditures for such calendar year
and (b) fifteen percent (15%) of the maximum Capital Expenditure availability
for such calendar year may (exclusive of any carryforwards from prior periods)
be carried forward to the next calendar year, and may be spent in addition to
the otherwise applicable limitations for such year.
Section 7.12 Affiliate Transactions. Except as specifically provided
herein (including, without limitation, Sections 7.4 and 7.7 hereof) and as may
be described on Schedule 4.1(s) attached hereto, the Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, at any time engage in
any transaction with an Affiliate, or make an assignment or other transfer of
any of its properties or assets to any Affiliate, on terms less advantageous to
the Borrower or such Restricted Subsidiary than would be the case if such
transaction had been effected with a non-Affiliate.
Section 7.13 Real Estate. Subject to Section 5.11 hereof, the Borrower
and its Restricted Subsidiaries may purchase real estate solely for use in the
business of the Borrower and its Restricted Subsidiaries unless incidental to an
Acquisition permitted hereunder.
Section 7.14 ERISA Liabilities. The Borrower shall not, and shall cause
each of its ERISA Affiliates not to, (a) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans, or (b) enter into any Multiemployer Plan.
Section 7.15 Sales and Leasebacks. The Borrower will not and will not
permit any of its Restricted Subsidiaries to enter into, any arrangement,
directly or indirectly, with any third party whereby the Borrower or a
Restricted Subsidiary shall sell or transfer any
-59-
<PAGE>
property, real or personal, whether now owned or hereafter acquired, and whereby
the Borrower or such Restricted Subsidiary shall then or thereafter rent or
lease as lessee such property or any part thereof or other property which the
Borrower or such Restricted Subsidiary intends to use for substantially the same
purpose or purposes as the property sold or transferred.
ARTICLE 8 Default
Section 8.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement
shall prove incorrect or misleading in any material respect when made or deemed
to be made pursuant to Section 4.2 hereof;
(b) The Borrower shall default in the payment of (i) any
interest under any of the Notes or fees or other amounts payable to the Banks
and the Administrative Agent under any of the Loan Documents, or any of them,
when due, and such Default shall not be cured by payment in full within three
(3) Business Days from the due date or (ii) any principal under any of the Notes
when due;
(c) The Borrower shall default in the performance or
observance of any agreement or covenant contained in Sections 5.2(a) or 5.10
hereof, or Sections 7.1, 7.2, 7.4, 7.5, 7.7, 7.8, 7.9, 7.10 and 7.11 hereof;
(d) The Borrower shall default in the performance or
observance of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 8.1, and such default shall
not be curable within a period of thirty (30) days (or with respect to Sections
5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.14, 5.15, 5.16, 6.4, 6.5, 7.3, 7.12, 7.13
and 7.14 hereof, such longer period not to exceed sixty (60) days if such
default is curable within such period and the Borrower is proceeding in good
faith with all diligent efforts to cure such default) from the later of (i)
occurrence of such Default and (ii) the date on which such Default became known
to the Borrower;
(e) There shall occur any default in the performance or
observance of any agreement or covenant or breach of any representation or
warranty contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in Section 8.1 of this Agreement) by the Borrower, any of its
Restricted Subsidiaries, or any other obligor thereunder, which shall not be
cured within a period of thirty (30) days (or such longer period not to exceed
sixty (60) days if such default is curable within such period and the
-60-
<PAGE>
Borrower is proceeding in good faith with all diligent efforts to cure such
default) from the later of (i) occurrence of such Default and (ii) date on which
such default became known to the Borrower;
(f) There shall be entered and remain unstayed a decree or
order for relief in respect of the Borrower or any of the Borrower's Restricted
Subsidiaries under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official of the Borrower or any of the
Borrower's Restricted Subsidiaries, or of any substantial part of their
respective properties, or ordering the winding-up or liquidation of the affairs
of the Borrower, or any of the Borrower's Restricted Subsidiaries; or an
involuntary petition shall be filed against the Borrower or any of the
Borrower's Restricted Subsidiaries and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested, or (ii) any such petition
and stay shall continue undismissed for a period of ninety (90) consecutive
days;
(g) The Borrower or any of the Borrower's Restricted
Subsidiaries shall file a petition, answer or consent seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable Federal or state bankruptcy law or other similar law, or the
Borrower or any of the Borrower's Restricted Subsidiaries shall consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Borrower or
any of the Borrower's Restricted Subsidiaries or of any substantial part of
their respective properties, or the Borrower or any of the Borrower's Restricted
Subsidiaries shall fail generally to pay their respective debts as they become
due or shall be adjudicated insolvent; the Borrower shall suspend or discontinue
its business; the Borrower or any of the Borrower's Restricted Subsidiaries
shall have concealed, removed any of its property with the intent to hinder or
defraud its creditors or shall have made a fraudulent or preferential transfer
under any applicable fraudulent conveyance or bankruptcy law, or the Borrower or
any of the Borrower's Restricted Subsidiaries shall take any action in
furtherance of any such action;
(h) A judgment not covered by insurance or indemnification,
where the indemnifying party has agreed to indemnify and is financially able to
do so, shall be entered by any court against the Borrower or any of the
Borrower's Restricted Subsidiaries for the payment of money which exceeds
singly, or in the aggregate with other such judgments, $1,000,000, or a warrant
of attachment or execution or similar process shall be issued or levied against
property of the Borrower or any of the Borrower's Restricted Subsidiaries which,
together with all other such property of the Borrower or any of the Borrower's
Restricted Subsidiaries subject to other such process, exceeds in value
$1,000,000 in the aggregate, and if, within thirty (30) days after the entry,
issue or levy thereof, such judgment, warrant or process shall not have been
paid or discharged or stayed pending appeal or
-61-
<PAGE>
removed to bond, or if, after the expiration of any such stay, such judgment,
warrant or process shall not have been paid or discharged or removed to bond;
(i) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with respect to
any Plan maintained by the Borrower or any of its Subsidiaries or any ERISA
Affiliate, or to which the Borrower or any of its Subsidiaries or any ERISA
Affiliate has any liabilities, or any trust created thereunder; or a trustee
shall be appointed by a United States District Court to administer any such
Plan; or PBGC shall institute proceedings to terminate any such Plan; or the
Borrower or any of its Subsidiaries or any ERISA Affiliate shall incur any
liability to PBGC in connection with the termination of any such Plan; or any
Plan or trust created under any Plan of the Borrower or any of its Subsidiaries
or any ERISA Affiliate shall engage in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject any such Plan, any trust created thereunder, any trustee or
administrator thereof, or any party dealing with any such Plan or trust to the
tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code;
(j) There shall occur (i) any acceleration of the maturity of
any Indebtedness of the Borrower or any of the Borrower's Restricted
Subsidiaries in an aggregate principal amount exceeding $1,000,000, or, as a
result of a failure to comply with the terms thereof, such Indebtedness shall
otherwise have become due and payable; (ii) any event or condition the
occurrence of which would permit such acceleration of such Indebtedness, or
which, as a result of a failure to comply with the terms thereof, would make
such Indebtedness otherwise due and payable, and which event or condition has
not been cured within any applicable cure period or waived in writing prior to
any declaration of an Event of Default or acceleration of the Loans hereunder;
or (iii) any material default under any Interest Hedge Agreement which would
permit the obligation of the Borrower to make payments to the counterparty
thereunder to be then due and payable;
(k) The Borrower and its Restricted Subsidiaries are for any
reason no longer able to operate or manage the related communications tower
facilities or portions thereof and retain the revenue received therefrom, and
the overall effect of such loss, destruction, termination, revocation or failure
to renew would be to reduce Operating Cash Flow (determined as at the last day
of the most recently ended fiscal year of the Borrower) by ten percent (10%) or
more;
(1) Any material Loan Document, or any material provision
thereof, shall at any time and for any reason be declared by a court of
competent jurisdiction to be null and void, or a proceeding shall be commenced
by the Borrower or any of the Borrower's Restricted Subsidiaries or by any
governmental authority having jurisdiction over the Borrower or any of the
Borrower's Restricted Subsidiaries seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof),
-62-
<PAGE>
or the Borrower or any of the Borrower's Subsidiaries shall deny that it has any
liability or obligation for the payment of principal or interest purported to be
created under any Loan Document;
(m) Any material Security Document shall, for any reason,
fail or cease (except by reason of lapse of time) to create a valid and
perfected and first-priority Lien on or Security Interest in any material
portion of the Collateral purported to be covered thereby;
(n) There shall occur any Change of Control; provided,
however, that if such Change of Control is solely a result of American Radio
Systems no longer owning 51% of the Capital Stock of the Borrower, no Event of
Default shall occur hereunder, if the Borrower has, on or prior to such date,
received equity contributions of not less than $125,000,000 (of which not less
than $100,000,000 must be in cash or cash equivalents) in the aggregate;
(o) Borrower or any of its Restricted Subsidiaries shall be
indicted under the Racketeer Influenced and Corrupt Organizations Act of 1970
(18 U.S.C.ss.1961 et seq.); or
(p) The Parent shall incur or suffer to exist any Indebtedness
for Money Borrowed other than Indebtedness for Money Borrowed which (i) does not
exceed $50,000,000 in principal amount outstanding (ii) has no scheduled
principal repayment prior to the Maturity Date, (iii) has a scheduled maturity
not earlier than the second anniversary of the Maturity Date, (iv) does not
cause the ratio of Indebtedness of the Borrower and the Parent to Annualized
Operating Cash Flow to exceed 7.0:1 and (v) is approved in all respects by the
Majority Banks.
Section 8.2 Remedies.
(a) If an Event of Default specified in Section 8.1 (other
than an Event of Default under Section 8.1(f) or Section 8.1(g) hereof) shall
have occurred and shall be continuing, the Administrative Agent, at the request
of the Majority Banks subject to Section 9.8(a) hereof, shall (i) terminate the
Commitment, and/or (ii) declare the principal of and interest on the Loans and
the Notes and all other amounts owed to the Banks and the Administrative Agent
under this Agreement, the Notes and any other Loan Documents to be forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, anything in this Agreement, the Notes
or any other Loan Document to the contrary notwithstanding, and the Commitment
shall thereupon forthwith terminate.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or Section 8.1(g) hereof, all principal, interest
and other amounts due
-63-
<PAGE>
hereunder and under the Notes, and all other Obligations, shall thereupon and
concurrently therewith become due and payable and the Commitment shall forthwith
terminate and the principal amount of the Loans outstanding hereunder shall bear
interest at the Default Rate, all without any action by the Administrative Agent
or the Banks or the Majority Banks or any of them and without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement or in the other Loan Documents to the contrary
notwithstanding.
(c) Upon acceleration of the Notes, as provided in subsection
(a) or (b) of this Section 8.2, the Administrative Agent and the Banks shall
have all of the post-default rights granted to them, or any of them, as
applicable under the Loan Documents and under Applicable Law.
(d) Upon acceleration of the Notes, as provided in subsection
(a) or (b) of this Section 8.2, the Administrative Agent shall have the right
(but not the obligation) upon the request of the Banks to operate the
communications tower facilities of the Borrower and its Restricted Subsidiaries
in accordance with the terms of the Licenses and pursuant to the terms and
subject to any limitations contained in the Security Documents and, within
guidelines established by the Majority Banks, to make any and all payments and
expenditures necessary or desirable in connection therewith, including, without
limitation, payment of wages as required under the Fair Labor Standards Act, as
amended, and of any necessary withholding taxes to state or federal authorities.
In the event the Majority Banks fail to agree upon the guidelines referred to in
the preceding sentence within six (6) Business Days' after the Administrative
Agent has begun to operate the communications tower facilities, the
Administrative Agent may, after giving three (3) days' prior written notice to
the Banks of its intention to do so, make such payments and expenditures as it
deems reasonable and advisable in its sole discretion to maintain the normal
day-to-day operation of such communications tower facilities. Such payments and
expenditures in excess of receipts shall constitute Advances under the
Commitment, not in excess of the amount of the Commitment. Advances made
pursuant to this Section 8.2(d) shall bear interest as provided in Section
2.3(d) hereof and shall be payable on demand. The making of one or more Advances
under this Section 8.2(d) shall not create any obligation on the part of the
Banks to make any additional Advances hereunder. No exercise by the
Administrative Agent of the rights granted to it under this Section 8.2(d) shall
constitute a waiver of any other rights and remedies granted to the
Administrative Agent and the Banks, or any of them, under this Agreement or at
law. The Borrower hereby irrevocably appoints the Administrative Agent as agent
for the Banks, the true and lawful attorney of the Borrower, in its name and
stead and on its behalf, to execute, receipt for or otherwise act in connection
with any and all contracts, instruments or other documents in connection with
the completion and operation of the communications tower facilities in the
exercise of the Administrative Agent's and the Banks' rights under this Section
8.2(d). Such power of attorney is coupled with an interest and is irrevocable.
The rights of the Administrative Agent under this Section 8.2(d) shall be
-64-
<PAGE>
subject to its prior compliance with the Communications Act and the FCC rules
and policies promulgated thereunder to the extent applicable to the exercise of
such rights.
(e) Upon acceleration of the Notes, as provided in subsection
(a) or (b) of this Section 8.2, the Administrative Agent, upon request of the
Majority Banks, shall have the right to the appointment of a receiver for the
properties and assets of the Borrower and its Restricted Subsidiaries, and the
Borrower, for itself and on behalf of its Restricted Subsidiaries, hereby
consents to such rights and such appointment and hereby waives any objection the
Borrower or any Restricted Subsidiary may have thereto or the right to have a
bond or other security posted by the Administrative Agent on behalf of the
Banks, in connection therewith. The rights of the Administrative Agent under
this Section 8.2(e) shall be subject to its prior compliance with the
Communications Act and the FCC rules and policies promulgated thereunder to the
extent applicable to the exercise of such rights.
(f) The rights and remedies of the Administrative Agent and
the Banks hereunder shall be cumulative, and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to the Administrative Agent and the
Banks or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the Administrative Agent's reasonable costs and expenses,
if any, incurred in connection with the collection of such payment or
prepayment, including, without limitation, any reasonable costs incurred by it
in connection with the sale or disposition of any Collateral for the Obligations
and all amounts under Section 11.2(b) and (c) hereof; second, to the Banks or
the Administrative Agent for any fees hereunder or under any of the other Loan
Documents then due and payable; third, to the Banks pro rata on the basis of
their respective unpaid principal amounts (except as provided in Section 2.2(e)
hereof), to the payment of any unpaid interest which may have accrued on the
Obligations; fourth, to the Banks pro rata until all Loans have been paid in
full (and, for purposes of this clause, obligations under Interest Hedge
Agreements with the Banks or any of them shall be paid on a pro rata basis with
the Loans); fifth, to the Banks pro rata on the basis of their respective unpaid
amounts, to the payment of any other unpaid Obligations; and sixth, to the
Borrower or as otherwise required by law.
ARTICLE 9 The Administrative Agent
Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Loans and in its Note irrevocably
to appoint and authorize, the
-65-
<PAGE>
Administrative Agent to take such actions as its agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
delegated by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Neither the Administrative Agent, nor any of its
respective directors, officers, employees or agents, shall be liable for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent may treat each
Bank, or the Person designated in the last notice filed with the Administrative
Agent, as the holder of all of the interests of such Bank in its portion of the
Loans and in its Note until written notice of transfer, signed by such Bank (or
the Person designated in the last notice filed with the Administrative Agent)
and by the Person designated in such written notice of transfer, in form and
substance satisfactory to the Administrative Agent, shall have been filed with
the Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
consult with Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
and shall not be liable for any action taken or suffered by it in good faith in
consultation with the Majority Banks and in reasonable reliance on such
consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty
to examine, inquire into, or pass upon the validity, effectiveness or
genuineness of this Agreement, any Note, any other Loan Document, or any
instrument, document or communication furnished pursuant hereto or in connection
herewith, and the Administrative Agent shall be entitled to assume that they are
valid, effective and genuine, have been signed or sent by the proper parties and
are what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
Commitment and the Loans, the Administrative Agent shall have the same rights
and powers hereunder as any other Bank and the Administrative Agent and
Affiliates of the Administrative Agent may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower, any of its
Subsidiaries or any Affiliates of, or Persons doing business with, the Borrower,
as if they were not affiliated with the Administrative Agent and without any
obligation to account therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
obligations of the Administrative Agent under this Agreement are only those
expressly set forth in this Agreement. The Administrative Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge, or has been notified in writing by
the Borrower, of such fact, or has been notified by a Bank in writing that such
-66-
<PAGE>
Bank considers that a Default or an Event of Default has occurred and is
continuing, and such Bank shall specify in detail the nature thereof in writing.
The Administrative Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The Administrative Agent shall provide each Bank with copies of
such documents received from the Borrower as such Bank may reasonably request.
Section 9.7 Action by the Administrative Agent.
(a) The Administrative Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, and with respect to taking or refraining from
taking any action or actions which it may be able to take under or in respect
of, this Agreement, unless the Administrative Agent shall have been instructed
by the Majority Banks to exercise or refrain from exercising such rights or to
take or refrain from taking such action; provided that the Administrative Agent
shall not exercise any rights under Section 8.2(a) of this Agreement without the
request of the Majority Banks (or, where expressly required, all the Banks),
unless time is of the essence, in which case, such action can be taken at the
request of the Administrative Agent. The Administrative Agent shall incur no
liability under or in respect of this Agreement with respect to anything which
it may do or refrain from doing in the reasonable exercise of its judgment or
which may seem to it to be necessary or desirable in the circumstances, except
for its gross negligence or willful misconduct as determined by a final,
non-appealable judicial order of a court having jurisdiction over the subject
matter.
(b) The Administrative Agent shall not be liable to the Banks
or to any Bank or the Borrower or any of the Borrower's Subsidiaries in acting
or refraining from acting under this Agreement or any other Loan Document in
accordance with the instructions of the Majority Banks (or, where expressly
required, all the Banks), and any action taken or failure to act pursuant to
such instructions shall be binding on all Banks, except for its gross negligence
or willful misconduct as determined by a final, non-appealable judicial order of
a court having jurisdiction over the subject matter. The Administrative Agent
shall not be obligated to take any action which is contrary to law or which
would in its reasonable opinion subject it to liability.
Section 9.8 Notice of Default or Event of Default. In the event that
the Administrative Agent or any Bank shall acquire actual knowledge, or shall
have been notified, of any Default or Event of Default, the Administrative Agent
or such Bank shall promptly notify the Banks (provided failure to give such
notice shall not result in any liability on the part of such Bank or
Administrative Agent), and the Administrative Agent shall take such action and
assert such rights under this Agreement and the other Loan Documents as the
Majority Banks shall request in writing, and the Administrative Agent
-67-
<PAGE>
shall not be subject to any liability by reason of its acting pursuant to any
such request. If the Majority Banks shall fail to request the Administrative
Agent to take action or to assert rights under this Agreement or any other Loan
Documents in respect of any Default or Event of Default within ten (10) days
after their receipt of the notice of any Default or Event of Default from the
Administrative Agent or any Bank, or shall request inconsistent action with
respect to such Default or Event of Default, the Administrative Agent may, but
shall not be required to, take such action and assert such rights (other than
rights under Article 8 hereof) as it deems in its discretion to be advisable for
the protection of the Banks, except that, if the Majority Banks have instructed
the Administrative Agent not to take such action or assert such right, in no
event shall the Administrative Agent act contrary to such instructions, unless
time is of the essence, in which case, the Administrative Agent may act in
accordance with its reasonable discretion.
Section 9.9 Responsibility Disclaimed. The Administrative Agent shall
not be under any liability or responsibility whatsoever as Administrative Agent:
(a) To the Borrower or any other Person as a consequence of
any failure or delay in performance by, or any breach by, any Bank or Banks of
any of its or their obligations under this Agreement;
(b) To any Bank or Banks as a consequence of any failure or
delay in performance by, or any breach by, (i) the Borrower of any of its
obligations under this Agreement or the Notes or any other Loan Document, or
(ii) any Restricted Subsidiary of the Borrower or any other obligor under any
other Loan Document;
(c) To any Bank or Banks, for any statements, representations
or warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Notes, any other Loan Document, or any other document contemplated by this
Agreement; or
(d) To any Person for any act or omission other than that
arising from gross negligence or willful misconduct of the Administrative Agent
as determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.10 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower) pro rata
according to their respective Commitment Ratios, from and against any and all
liabilities, obligations, losses (other than the loss of principal and interest
hereunder in the event of a bankruptcy or out-of-court 'work-out' of the Loans),
damages, penalties, actions, judgments, suits, costs, expenses (including fees
and expenses of experts, agents, consultants and counsel), or disbursements
-68-
<PAGE>
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement, any other Loan Document, or any other document contemplated
by this Agreement or any other Loan Document or any action taken or omitted by
the Administrative Agent under this Agreement, any other Loan Document, or any
other document contemplated by this Agreement, except that no Bank shall be
liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent as determined by a final, non-appealable
judicial order of a court having jurisdiction over the subject matter.
Section 9.11 Credit Decision. Each Bank represents and warrants to each
other and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to
make its portion of the Loans it has independently taken whatever steps it
considers necessary to evaluate the financial condition and affairs of the
Borrower, and that it has made an independent credit judgment, and that it has
not relied upon the Administrative Agent or information provided by the
Administrative Agent (other than information provided to the Administrative
Agent by the Borrower and forwarded by the Administrative Agent to the Banks);
and
(b) So long as any portion of the Loans remains outstanding
or such Bank has an obligation to make its portion of Advances hereunder, it
will continue to make its own independent evaluation of the financial condition
and affairs of the Borrower.
Section 9.12 Successor Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving written notice thereof to
the Banks and the Borrower and may be removed at any time for cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Administrative Agent which appointment
shall, prior to a Default, be subject to the consent of the Borrower, acting
reasonably. If (a) no successor Administrative Agent shall have been so
appointed by the Majority Banks or (b) if appointed, no successor Administrative
Agent shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent gave notice of resignation or the Majority Banks
removed the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
which shall be any Bank or a commercial bank organized under the laws of the
United States of America or any political subdivision thereof which has combined
capital and reserves in excess of $250,000,000 and which shall be reasonably
acceptable to the Borrower. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent
-69-
<PAGE>
shall thereupon succeed to and become vested with all the rights, powers,
privileges, duties and obligations of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent
the provisions of this Article shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent. In the event that the Administrative Agent or any of
its respective affiliates ceases to be a Bank hereunder, such Person shall
resign its agency hereunder.
Section 9.13 Delegation of Duties. The Administrative Agent may execute
any of its duties under the Loan Documents by or through agents or attorneys
selected by it using reasonable care, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
ARTICLE 10 Changes in Circumstances
Affecting LIBOR Advances
Section 10.1 LIBOR Basis Determination Inadequate or Unfair. If with
respect to any proposed LIBOR Advance for any Interest Period, the
Administrative Agent determines after consultation with the Banks that deposits
in dollars (in the applicable amount) are not being offered to each of the Banks
in the relevant market for such Interest Period, the Administrative Agent shall
forthwith give notice thereof to the Borrower and the Banks, whereupon until the
Administrative Agent notifies the Borrower that the circumstances giving rise to
such situation no longer exist, the obligations of any affected Bank to make its
portion of such LIBOR Advances shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank
with any directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Bank to make, maintain or fund its portion of LIBOR Advances,
such Bank shall so notify the Administrative Agent, and the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Borrower. Before
giving any notice to the Administrative Agent pursuant to this Section 10.2,
such Bank shall designate a different lending office if such designation will
avoid the need for giving such notice and will not, in the sole reasonable
judgment of such Bank, be otherwise materially disadvantageous to such Bank.
Upon receipt of such notice, notwithstanding anything contained in Article 2
hereof, the Borrower shall repay in full the then outstanding principal amount
of such Bank's portion of each affected LIBOR Advance, together with accrued
interest thereon, on either (a) the last
-70-
<PAGE>
day of the then current Interest Period applicable to such affected LIBOR
Advances if such Bank may lawfully continue to maintain and fund its portion of
such LIBOR Advance to such day or (b) immediately if such Bank may not lawfully
continue to fund and maintain its portion of such affected LIBOR Advances to
such day. Concurrently with repaying such portion of each affected LIBOR
Advance, the Borrower may borrow a Base Rate Advance from such Bank, whether or
not it would have been entitled to effect such borrowing and such Bank shall
make such Advance, if so requested, in an amount such that the outstanding
principal amount of the affected Note held by such Bank shall equal the
outstanding principal amount of such Note or Notes immediately prior to such
repayment.
Section 10.3 Increased Costs.
(a) If after the date hereof, the adoption of any Applicable
Law, or any change in any Applicable Law (whether adopted before or after the
Agreement Date), or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank with any directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(1) shall subject any Bank to any tax, duty or other
charge with respect to its obligation to make its portion of LIBOR
Advances, or its portion of existing Advances, or shall change the
basis of taxation of payments to any Bank of the principal of or
interest on its portion of LIBOR Advances or in respect of any other
amounts due under this Agreement, in respect of its portion of LIBOR
Advances or its obligation to make its portion of LIBOR Advances
(except for changes in the rate or method of calculation of tax on the
revenues or net income of such Bank); or
(2) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding any included in
an applicable Eurodollar Reserve Percentage), special deposit, capital
adequacy, assessment or other requirement or condition against assets
of, deposits with or for the account of, or commitments or credit
extended by, any Bank or shall impose on any Bank or the London
interbank borrowing market any other condition affecting its obligation
to make its portion of such LIBOR Advances or its portion of existing
Advances;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any of its portion of LIBOR Advances, or to reduce the
amount of any sum received or receivable by such Bank under this Agreement or
under its Note with respect thereto, then, within ten (10) days after demand by
such Bank, the Borrower agrees to pay to such Bank such additional amount or
amounts as will compensate such Bank for such
-71-
<PAGE>
increased costs. Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section 10.3 and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole reasonable judgment of such Bank made in good faith, be
otherwise disadvantageous to such Bank.
(b) Any Bank claiming compensation under this Section 10.3
shall provide the Borrower with a written certificate setting forth the
additional amount or amounts to be paid to it hereunder and calculations
therefor in reasonable detail. Such certificate shall be presumptively correct
absent manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. If any Bank demands compensation
under this Section 10.3, the Borrower may at any time, upon at least five (5)
Business Days' prior notice to such Bank, prepay in full such Bank's portion of
the then outstanding LIBOR Advances, together with accrued interest and fees
thereon to the date of prepayment, along with any reimbursement required under
Section 2.10 hereof and this Section 10.3. Concurrently with prepaying such
portion of LIBOR Advances the Borrower may, whether or not then entitled to make
such borrowing, borrow a Base Rate Advance, or a LIBOR Advance not so affected,
from such Bank, and such Bank shall, if so requested, make such Advance in an
amount such that the outstanding principal amount of the affected Note or Notes
held by such Bank shall equal the outstanding principal amount of such Note or
Notes immediately prior to such prepayment.
Section 10.4 Effect On Other Advances. If notice has been given
pursuant to Section 10.1, 10.2 or 10.3 hereof suspending the obligation of any
Bank to make its portion of any type of LIBOR Advance, or requiring such Bank's
portion of LIBOR Advances to be repaid or prepaid, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such repayment
no longer apply, all amounts which would otherwise be made by such Bank as its
portion of LIBOR Advances shall, unless otherwise notified by the Borrower, be
made instead as Base Rate Advances.
ARTICLE 11 Miscellaneous
Section 11.1 Notices.
(a) Except as otherwise expressly provided herein, all notices
and other communications under this Agreement and the other Loan Documents
(unless otherwise specifically stated therein) shall be in writing and shall be
deemed to have been given three (3) Business Days after deposit in the mail,
designated as certified mail, return receipt requested, postage-prepaid, or one
(1) Business Day after being entrusted to a reputable commercial overnight
delivery service for next day delivery, or when sent on a Business Day
-72-
<PAGE>
prior to 5:00 p.m. (New York time) by telecopy addressed to the party to which
such notice is directed at its address determined as provided in this Section
11.1. All notices and other communications under this Agreement shall be given
to the parties hereto at the following addresses:
(i) If to the Borrower, to it at:
American Tower Systems, Inc.
116 Huntington Avenue
Boston, Massachusetts 02111
Attn: Joseph B. Winn, Chief Financial Officer
with copies to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02110
Attn: Norman A. Bikales, Esq.
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Agency Department
with a copy to:
The Toronto-Dominion Bank
Toronto Dominion Securities, Inc.
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attn: Managing Director, Communications Finance
and with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Douglas S. Gosden, Esq.
-73-
<PAGE>
(iii) If to the Banks, to them at the addresses set
forth beside their names on the signature pages hereof.
The failure to provide copies shall not affect the validity of the notice given
to the primary recipient.
(b) Any party hereto may change the address to which notices
shall be directed under this Section 11.1 by giving ten (10) days' written
notice of such change to the other parties.
Section 11.2 Expenses. The Borrower will promptly pay, or reimburse:
(a) all reasonable out-of-pocket expenses of the
Administrative Agent in connection with the preparation, negotiation, execution
and delivery of this Agreement and the other Loan Documents, and the
transactions contemplated hereunder and thereunder and the making of the initial
Advance hereunder (whether or not such Advance is made), including, but not
limited to, the reasonable fees and disbursements of Powell, Goldstein, Frazer &
Murphy LLP, special counsel for the Administrative Agent; and
(b) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Banks of enforcement under this Agreement or the
other Loan Documents and all reasonable out-of-pocket costs and expenses of
collection if an Event of Default occurs in the payment of the Notes, which in
each case shall include reasonable fees and out-of-pocket expenses of counsel
for the Administrative Agent and the Banks.
Section 11.3 Waivers. The rights and remedies of the Administrative
Agent and the Banks under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent, the Majority
Banks, or the Banks, or any of them, in exercising any right, shall operate as a
waiver of such right. The Administrative Agent and the Banks expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any future funding of a Request for Advance. In the event the
Banks decide to fund a Request for Advance at a time when the Borrower is not in
strict compliance with the terms of this Agreement, such decision by the Banks
shall not be deemed to constitute an undertaking by the Banks to fund any
further Request for Advance or preclude the Banks or the Administrative Agent
from exercising any rights available under the Loan Documents or at law or
equity. Any waiver or indulgence granted by the Administrative Agent, the Banks,
or the Majority Banks, shall not constitute a modification of this Agreement or
any other Loan Document, except to the extent expressly provided in such waiver
or indulgence, or constitute a course of dealing at variance with the terms of
this Agreement or any other Loan
-74-
<PAGE>
Document such as to require further notice of their intent to require strict
adherence to the terms of this Agreement or any other Loan Document in the
future.
Section 11.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default and during the continuation thereof,
the Administrative Agent and each of the Banks are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by any Bank or Administrative Agent, to or for the
credit or the account of the Borrower or any of its Restricted Subsidiaries,
against and on account of the obligations and liabilities of the Borrower to the
Banks and the Administrative Agent, including, but not limited to, all
Obligations and any other claims of any nature or description arising out of or
connected with this Agreement, the Notes or any other Loan Document,
irrespective of whether (a) any Bank or Administrative Agent shall have made any
demand hereunder or (b) any Bank or Administrative Agent shall have declared the
principal of and interest on the Loans and other amounts due hereunder to be due
and payable as permitted by Section 8.2 hereof and although such obligations and
liabilities or any of them shall be contingent or unmatured. Upon direction by
the Administrative Agent with the consent of all of the Banks each Bank holding
deposits of the Borrower or any of its Restricted Subsidiaries shall exercise
its set-off rights as so directed; and, within one (1) Business Day following
any such setoff, the Administrative Agent shall give notice thereof to the
Borrower. Notwithstanding anything to the contrary contained in this Section
11.4, no Bank shall exercise any right of offset without the prior consent of
the Majority Banks so long as the Obligations shall be secured by any real
property or real property interest including leaseholds located in the State of
California, it being understood and agreed that the provisions of this sentence
are for the exclusive benefit of the Banks, may be amended, modified or waived
by the Majority Banks without notice to or consent of the Borrower or any
Subsidiary of the Borrower and shall not constitute a waiver of any rights
against the Borrower or any Subsidiary or against any Collateral.
Section 11.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights
or obligations hereunder, under the Notes or under any other Loan Document
without the prior written consent of each Bank.
(b) Each Bank may sell (i) assignments of any amount of its
interest hereunder to any Bank, or (ii) assignments or participations of one
hundred percent (100%) (or, with the consent of the Borrower, a smaller
percentage) of its interest hereunder to (A)
-75-
<PAGE>
one (1) or more wholly-owned Affiliates of such Bank (provided that, if such
Affiliate is not a financial institution, such Bank shall be obligated to
repurchase such assignment if such Affiliate is unable to honor its obligations
hereunder), or (B) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank (no assignment shall
relieve such Bank from its obligations hereunder).
(c) Each of the Banks may at any time enter into assignment
agreements or participations with one or more other banks or other Persons
pursuant to which each Bank may assign or participate its interest under this
Agreement and the other Loan Documents, including, its interest in any
particular Advance or portion thereof; provided, that (1) all assignments (other
than assignments described in clause (b) hereof) shall be in minimum principal
amounts of the lesser of (X) $5,000,000, and (Y) the amount of such Bank's
Commitment (in a single assignment only), and (2) all assignments (other than
assignments described in clause (b) hereof) and participations hereunder shall
be subject to the following additional terms and conditions:
(i) No assignment (except assignments permitted in
Section 11.5(b) hereof) shall be sold without the prior
consent of the Administrative Agent and prior to the
occurrence and continuation of an Event of Default, the
consent of the Borrower, which consents shall not be
unreasonably withheld;
(ii) Any Person purchasing a participation or an
assignment of any portion of the Loans from any Bank shall be
required to represent and warrant that its purchase shall not
constitute a "prohibited transaction" (as defined in Section
4.1(m) hereof);
(iii) The Borrower, the Banks, and the Administrative
Agent agree that assignments permitted hereunder (including
the assignment of any Advance or portion thereof) may be made
with all voting rights, and shall be made pursuant to an
Assignment and Assumption Agreement substantially in the form
of Exhibit O attached hereto. An administrative fee of $3,500
shall be payable to the Administrative Agent by the assigning
Bank at the time of any assignment under this Section 11.5(c);
(iv) No participation agreement shall confer any
rights under this Agreement or any other Loan Document to any
purchaser thereof, or relieve any issuing Bank from any of its
obligations under this Agreement, and all actions hereunder
shall be conducted as if no such participation had been
granted; provided, however, that any participation agreement
may confer on the participant the right to approve or
disapprove decreases in the interest rate, increases in the
principal amount of the Loans participated in by such
participant, decreases in fees, extensions of the
-76-
<PAGE>
Maturity Date or other principal payment date for the Loans or
of the scheduled reduction of the Commitment and releases of
Collateral;
(v) Each Bank agrees to provide the Administrative
Agent and the Borrower with prompt written notice of any
issuance of participations in or assignments of its interests
hereunder;
(vi) No assignment, participation or other transfer
of any rights hereunder or under the Notes shall be effected
that would result in any interest requiring registration under
the Securities Act of 1933, as amended, or qualification under
any state securities law;
(vii) No such assignment may be made to any bank or
other financial institution (x) with respect to which a
receiver or conservator (including, without limitation, the
Federal Deposit Insurance Corporation, the Resolution Trust
Company or the Office of Thrift Supervision) has been
appointed or (y) that is not "adequately capitalized" (as such
term is defined in Section 131(b)(1)(B) of the Federal Deposit
Insurance Corporation Improvement Act as in effect on the
Agreement Date); and
(viii) If applicable, each Bank shall, and shall
cause each of its assignees to, provide to the Administrative
Agent on or prior to the effective date of any assignment an
appropriate Internal Revenue Service form as required by
Applicable Law supporting such Bank's or assignee's position
that no withholding by the Borrower or the Administrative
Agent for U.S. income tax payable by such Bank or assignee in
respect of amounts received by it hereunder is required. For
purposes of this Agreement, an appropriate Internal Revenue
Service form shall mean Form 1001 (Ownership Exemption or
Reduced Rate Certificate of the U.S. Department of Treasury),
or Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business
in the United States), or any successor or related forms
adopted by the relevant U.S. taxing authorities.
(d) Except as specifically set forth in Section 11.5(b) or
(c) hereof, nothing in this Agreement or the Notes, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or the Notes.
(e) In the case of any participation, all amounts payable by
the Borrower under the Loan Documents shall be calculated and made in the manner
and to the parties hereto as if no such participation had been sold.
-77-
<PAGE>
(f) The provisions of this Section 11.5 shall not apply to
any purchase of participations among the Banks pursuant to Section 2.11 hereof.
Section 11.6 Accounting Principles. All references in this Agreement to
GAAP shall be to such principles as in effect from time to time. All accounting
terms used herein without definition shall be used as defined under GAAP. All
references to the financial statements of the Borrower and to its Operating Cash
Flow, Total Debt, Fixed Charges, Pro Forma Debt Service, and other such terms
shall be deemed to refer to such items of the Borrower and its Restricted
Subsidiaries, on a fully consolidated basis. The Borrower shall deliver to the
Banks at the same time as the delivery of any quarterly or annual financial
statements required pursuant to Section 6.1 or 6.2 hereof, as applicable, (a) a
description in reasonable detail of any material variation between the
application of GAAP employed in the preparation of such statements and the
application of GAAP employed in the preparation of the next preceding quarterly
or annual financial statements, as applicable, and (b) reasonable estimates of
the differences between such statements arising as a consequence thereof. If,
within thirty (30) days after the delivery of the quarterly or annual financial
statements referred to in the immediately preceding sentence, the Majority Banks
shall object in writing to the Borrower's determining compliance hereunder on
such basis, (1) calculations for the purposes of determining compliance
hereunder shall be made on a basis consistent with those used in the preparation
of the latest financial statements as to which such objection shall not have
been made, or (2) if requested by the Borrower, the Majority Banks will
negotiate in good faith to amend the covenants herein to give effect to the
changes in GAAP in a manner consistent with this Agreement (and so long as the
Borrower complies in good faith with the provisions of this Section 11.6, no
Default or Event of Default shall occur hereunder solely as a result of such
changes in GAAP).
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Notes shall be
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed in New York. If any
action or proceeding shall be brought by the Administrative Agent or any Bank
hereunder or under any other Loan Document in order to enforce any right or
remedy under this Agreement or under any Note or any other Loan Document, the
Borrower hereby consents and will, and the Borrower will cause each Restricted
Subsidiary to, submit to the jurisdiction of any state or federal court of
competent jurisdiction sitting within the area comprising the Southern District
of New York on the date of this Agreement. The Borrower, for itself and on
behalf of its Restricted Subsidiaries, hereby agrees that, to the extent
permitted by Applicable Law, service of the summons and complaint and all other
process which may be served in any such suit, action or proceeding may be
effected by mailing by registered mail a copy of such process to the
-78-
<PAGE>
offices of the Borrower at the address given in Section 11.1 hereof and that
personal service of process shall not be required. Nothing herein shall be
construed to prohibit service of process by any other method permitted by law,
or the bringing of any suit, action or proceeding in any other jurisdiction. The
Borrower agrees that final judgment in such suit, action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
(a) In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrower or inadvertently received by the Administrative Agent or any Bank, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the Administrative Agent or such Bank, in writing, that it elects
to have such excess sum returned forthwith. It is the express intent hereof that
the Borrower not pay and the Administrative Agent and the Banks not receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may legally be paid by the Borrower under Applicable Law.
(b) Notwithstanding the use by the Banks of the Base Rate and
the LIBOR as reference rates for the determination of interest on the Loans, the
Banks shall be under no obligation to obtain funds from any particular source in
order to charge interest to the Borrower at interest rates related to such
reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any Loan
Document nor any term hereof or thereof may be amended orally, nor may any
provision hereof or thereof be waived orally but only by an instrument in
writing signed by or at the direction of the Majority Banks and, in the case of
an amendment, by the Borrower, except that in the event of (a) any increase in
the amount of any Bank's portion of the Commitment, (b) any delay or extension
in the terms of repayment of the Loans provided in Section 2.5 or 2.7 hereof,
(c) any reduction in principal, interest or fees due hereunder or postponement
of the payment thereof without a corresponding payment of such principal,
interest or fee
-79-
<PAGE>
amount by the Borrower, (d) any release of any portion of the Collateral for the
Loans, except under Section 7.4 hereof, (e) any waiver of any Default due to the
failure by the Borrower to pay any sum due to any of the Banks hereunder, (f)
any release of any Guaranty of all or any portion of the Obligations, except in
connection with a merger, sale or other disposition otherwise permitted
hereunder (in which case, such release shall require no further approval by the
Banks), (g) any amendment to the pro rata treatment of the Banks set forth in
Section 2.11 hereof, or (h) any amendment of this Section 11.12, of the
definition of Majority Banks, or of any Section herein to the extent that such
Section requires action by all Banks, any amendment or waiver or consent may be
made only by an instrument in writing signed by each of the Banks and, in the
case of an amendment, by the Borrower. Any amendment to any provision hereunder
governing the rights, obligations, or liabilities of the Administrative Agent in
its capacity as such, may be made only by an instrument in writing signed by
such affected Person and by each of the Banks.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
will embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Bank to enter into or maintain business
relationships with the Borrower or any of its Affiliates beyond the
relationships specifically contemplated by this Agreement and the other Loan
Documents.
Section 11.15 Directly or Indirectly. If any provision in this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person, whether or not
expressly specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto (a) shall be deemed to have been
relied upon by the Administrative Agent and each of the Banks notwithstanding
any investigation heretofore or hereafter made by them, and (b) shall survive
the execution and delivery of the Notes and shall continue in full force and
effect so long as any Note is outstanding and unpaid. Any right to
indemnification hereunder, including, without limitation, rights pursuant to
Sections 2.10, 2.12, 5.12, 10.3 and 11.2 hereof, shall survive the termination
of this Agreement and the payment and performance of all Obligations.
-80-
<PAGE>
Section 11.17 Senior Debt. The Obligations are secured by the Security
Documents and are intended by the parties hereto to be in parity with the
Interest Hedge Agreements and senior in right of payment to all other
Indebtedness of the Borrower.
Section 11.18 Obligations. The obligations of the Administrative Agent
and each of the Banks hereunder are several, not joint.
Section 11.19 Confidentiality. The Banks shall hold all non-public,
proprietary or confidential information (which has been identified as such by
the Borrower) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices;
provided, however, the Banks may make disclosure of any such information to
their examiners, Affiliates, outside auditors, counsel, consultants, appraisers
and other professional advisors in connection with this Agreement or as
reasonably required by any proposed syndicate member or any proposed transferee
or participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental authority
or representative thereof or in connection with the enforcement hereof or of any
Loan Document or related document or pursuant to legal process or with respect
to any litigation between or among the Borrower and any of the Banks, so long as
the person (other than any examiners) receiving such information is advised of
the provisions of this Section 11.19 and agrees to be bound thereby. In no event
shall any Bank be obligated or required to return any materials furnished to it
by the Borrower. The foregoing provisions shall not apply to a Bank with respect
to information that (i) is or becomes generally available to the public (other
than through such Bank), (ii) is already in the possession of such Bank on a
nonconfidential basis, or (iii) comes into the possession of such Bank in a
manner not known to such Bank to involve a breach of a duty of confidentiality
owing to the Borrower.
ARTICLE 12 Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER, FOR ITSELF AND ON
BEHALF OF ITS RESTRICTED SUBSIDIARIES, AND THE ADMINISTRATIVE AGENT AND THE
BANKS, HEREBY AGREE, TO THE EXTENT PERMITTED BY LAW, TO WAIVE AND HEREBY WAIVE
THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY
TYPE IN WHICH THE BORROWER, ANY OF THE BORROWER'S RESTRICTED SUBSIDIARIES, ANY
OF THE BANKS, THE ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE SUCCESSORS OR
ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY
OUT OF THIS AGREEMENT, ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS AND THE
RELATIONS AMONG THE PARTIES LISTED IN THIS SECTION 12.1. EXCEPT AS PROHIBITED BY
LAW, EACH
-81-
<PAGE>
PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THIS SECTION, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH PARTY TO THIS AGREEMENT (A) CERTIFIES THAT NEITHER ANY
REPRESENTATIVE, AGENT OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR ANY BANK
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY
DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWER: AMERICAN TOWER SYSTEMS, INC., a
Delaware corporation
By: /s/ Joseph J. Winn
Its: Chief Financial Officer
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Kimberly Burleson
Its: Vice President
BANKS: TORONTO DOMINION (TEXAS), INC., as a
Bank
Address:
909 Fannin Street, Suite 1700 By:/s/ Kimberly Burleson
Houston, Texas 77010 Its: Vice President
Telecopy: (713) 951-9921
BANQUE PARIBAS, as a Bank
Address:
The Equitable Tower By:
787 Seventh Avenue
New York New York 10022 Its: Vice President
Telecopy: (212) 841-2369
By: /s/ Lynne S. Randall
Its: Director
<PAGE>
BARCLAYS BANK PLC, as a Bank
Address:
75 Wall Street, 12th Floor By:
New York, New York 10015
Telecopy: (212) 412-5308 Its: Associate Director
BANK OF MONTREAL, CHICAGO BRANCH,
as a Bank
Address:
430 Park Avenue, 15th Floor By: /s/ W.T. Calder
New York, New York 10022 Its: Director
Telecopy: (212) 605-1648
THE CHASE MANHATTAN BANK, as a Bank
Address:
270 Park Avenue, 37th Floor By: /s/ Mitchell J. Gervis
New York, New York 10017 Its: Vice President
Telecopy: (212) 270-4584
FLEET NATIONAL BANK, as a Bank
Address:
MA/OF/DO3D By:
One Federal Street Its: Vice President
Boston, Massachusetts 02110
Telecopy: (617) 346-4356
GE CAPITAL CORPORATION, as a Bank
Address:
120 Longridge Road, 3rd Floor By: /s/ Molly S. Fergurson
Stamford, Connecticut 06927 Its: Manager, Operations
Telecopy: (203) 357-6828
<PAGE>
THE BANK OF NEW YORK, as a Bank
Address:
One Wall Street, 16th Floor By:
New York, New York 10286 Its: Vice President
Telecopy: (212) 635-8593
CREDIT SUISSE FIRST BOSTON, as a Bank
Address:
11 Madison Avenue, 20th Floor By: /s/ Todd C. Morgan
New York, New York 10010 Its: Vice President
Telecopy: (212) 325-8314
By: /s/ Judit E. Smith
Its: Director
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as a Bank
Address:
200 S. Orange Avenue By:
Orlando, Florida 32801 Its: Vice President
Telecopy: (407) 237-4253
UNIOBANK OF CALIFORNIA, N.A.,
as a Bank
Address:
445 S. Figueroa, 15th Floor By: /s/ Peter C. Connoy
Los Angeles, California 90071 Its: Assistant Vice President
Telecopy: (213) 236-5747
<PAGE>
THE BANK OF NOVA SCOTIA, as a Bank
Address:
One Liberty Plaza By: /s/ Margot C. Bright
New York, New York 10006 Its: Authorized Signatory
Telecopy: (212) 225-5090
CREDIT LYONNAIS NEW YORK BRANCH,
as a Bank
Address:
1301 Avenue of the Americas By: /s/ Stephen C. Levi
18th Floor Its: Vice President
New York, New York 10019
Telecopy: (212) 261-3288
THE SUMITOMO BANK, LIMITED, acting
through its Chicago Branch, as a Bank
Address:
1 Post Office Square, Suite 3820 By:
Boston, Massachusetts 02109 Its: Vice President & Manager
Telecopy: (617) 423-4884
and
Lending Office Address:
233 South Wacker, Suite 5400 By: /s/ Jean Robert
Chicago, Illinois 60606 Its: Executive Officer
BANK OF SCOTLAND, as a Bank
Address:
565 Fifth Avenue By: /s/ Annie Chin Tat
New York, New York 10017 Its: Vice President
Telecopy: (212) 557-9460
<PAGE>
LEHMAN COMMERCIAL PAPER INC., as a Bank
Address:
3 World Financial Center, 10th Floor By: /s/ Dennis J. Lee
New York, New York 10285 Its: Authorized Signatory
Telecopy: (212) 528-0819
EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and entered into as of September
30, 1997 by and among Missouri Sports Radio, L.L.C., a Missouri limited
liability company, ("Buyer"), Professional Broadcasting, Incorporated
("Professional"), a Virginia corporation, and EZ St. Louis, Inc., a Virginia
corporation ("EZ," and together with Professional, individually a "Seller" and
collectively the "Sellers").
RECITALS
WHEREAS, EZ holds a license from the Federal Communications Commission
(the "FCC") to operate AM radio broadcast station KFNS in Wood River, Illinois
(the "Station").
WHEREAS, EZ is a wholly owned subsidiary of Professional, and
Professional owns many of the other assets used or useful in the operation of
the Station.
NOW, THEREFORE, Sellers desire to sell, and Buyer wishes to buy,
certain of Sellers' assets used or useful in the operation of the Station for
the price and on the terms and conditions hereafter set forth.
AGREEMENT
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Sellers agree as follows:
ARTICLE 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1. "Accounts Receivable" means the rights of Sellers to
payment for the sale of advertising time or talent on the Station for cash by
Sellers prior to the Closing Date as reflected on the billing records of Sellers
relating to the Station.
1.2. "Assets" means the specific tangible and intangible
assets owned and used or useful in connection with the conduct of the business
or the operations of the Station, which assets are being sold, transferred, or
otherwise conveyed to Buyer hereunder, as specified in detail in Section 2.1.
1.3. "Assumed Contracts" means (i) all Contracts listed in
Schedule 3.6 hereto, and (ii) any Contracts entered into by Sellers in the
ordinary course of business between the date hereof and the Closing Date which
would have been listed on Schedule 3.6 had they been in existence on the date
hereof.
1.4. "Closing" means the consummation of the transaction
contemplated by this Agreement in accordance with the provisions of Article 8
hereof.
<PAGE>
1.5. "Closing Date" means the date of the Closing specified in
Section 8.1 hereof.
1.6. "Consents" means all of the consents, permits, or
approvals of government authorities and other third parties necessary in order
to transfer the Assets to Buyer or otherwise to consummate the transaction
contemplated hereby, including without limitation the consents of the parties to
those Contracts designated in Schedule 3.6 hereto with an asterisk.
1.7. "Contracts" means all material contracts, agreements, and
leases, written or oral (including any amendments and other modifications
thereto) to which any Seller is a party or which are binding upon any Seller and
relate to the assets or the business or the operations of the Station, and (i)
which are in effect on the date hereof, or (ii) which are entered into by any
Seller in the ordinary course of business between the date hereof and the
Closing Date.
1.8. "Escrow Deposit" shall mean the sum of Three Hundred
Seventy-Five Thousand Dollars ($375,000.00) held by The George Mason Bank as
Escrow Agent pursuant to an Escrow Agreement of even date herewith by and among
Buyer, Sellers, and Escrow Agent in the form of Schedule 1.8 hereto.
1.9. "Excluded Assets" shall mean those assets described or
set forth in Section 2.2 hereof and on Schedule 2.2 hereto.
1.10. "FCC Consent" means action by the FCC granting its
consent to the assignment of the FCC licenses to Buyer as contemplated by this
Agreement.
1.11. "FCC Licenses" means all of the licenses, permits, and
other authorizations issued by the FCC to Sellers in connection with the conduct
of the business or the operations of the Station.
1.12. "Final Order" means a written action, order, or public
notice issued by the FCC setting forth the FCC Consent (a) which shall not have
been reversed, stayed, enjoined, set aside, annulled, or suspended, and (b) with
respect to which (i) no request shall have been filed for administrative or
judicial review, reconsideration, rehearing, appeal, or stay, and with respect
to which the time for filing any such requests and for the FCC to have reviewed
the action on its own motion shall have expired, or (ii) in the event of review,
reconsideration, rehearing, or appeal that does not result in the FCC consent
being reversed, stayed, enjoined, set aside, annulled, or suspended, the time
for further review, reconsideration, rehearing, or appeal shall have expired.
1.13. "Lease Agreement" means the Communications Site Lease
Agreement entered into by and between Seller and Buyer in substantially the form
set forth in Schedule 6.4 hereto.
1.14 "Licenses" means all of the licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration (the "FAA"), and any other federal, state, or local
governmental authorities to Sellers in connection with the conduct of the
business or the operations of the Station.
1.15. "Knowledge" in the case of any Seller for purposes of
this Agreement, the
2
<PAGE>
Schedules attached hereto, and the representations and warranties made herein,
means the actual knowledge of such Seller's officers, directors, principals or
agents after having made a good faith effort to ascertain the fact(s) in
question by inquiry to such officers or employees of such Seller as would be
reasonably likely to have the information relating to the fact(s) in question.
1.16. "Personal Property" means all of the machinery,
equipment, tools, vehicles, furniture, leasehold improvements, office equipment,
plant, spare parts, and other tangible personal property which are owned or
leased by any of the Sellers and used or useful as of the date hereof in the
conduct of the business or the operations of the Station, including without
limitation the towers, transmission lines, phasing equipment, ground system,
studio transmitter link antennas, guy anchors and transmitter building, and are
identified on Schedule 3.5, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
1.17. "Purchase Price" means the purchase price specified in
Section 2.3 hereof.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Sellers hereby agree to transfer and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of the
Assets, free and clear of any claims, liabilities, mortgages, liens, pledges,
conditions, charges or encumbrances of any nature whatsoever (except for those
permitted in accordance with Sections 2.5 or 3.5, hereof), more specifically
described as follows:
(a) The Personal Property;
(b) The Licenses;
(c) The Assumed Contracts;
(d) All trademarks, trade names, service marks, and all other
intellectual property and similar intangible assets relating to the Station,
listed in Schedule 3.8 hereto;
(e) All of Sellers' proprietary information which relates to
the Station, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, schematics, and filings with the FCC which relate to the
Station, if any;
(f) All choses in action and rights under warranties of
Sellers relating to the Station or the Assets, if any;
(g) All books and records relating to the business or the
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept, subject to the right of Sellers
to have such books and records made available to Sellers for a reasonable
period, not to exceed three (3) years after the Closing; and
(h) All intangible assets of Sellers relating to the Station
not specifically
3
<PAGE>
described above.
2.2. Excluded Assets. The Assets shall exclude the following
assets, in addition to those listed on Schedule 2.2 hereto:
(a) Sellers' cash on hand as of the Closing Date and all other
cash in any of Sellers' bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items, and any cash surrender
value in regard thereto; and any stocks, bonds, certificates of deposit, and
similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Sellers, other than those
provided for in Section 2.1(g) hereof, subject to the right of Buyer to have
reasonable access thereto during normal business hours and to copy therefrom for
a period of three (3) years from the Closing Date, and Sellers' corporate
records and other books and records related to internal corporate matters of
Sellers and financial relationships with Sellers' lenders;
(d) Any claims, rights, and interests in and to any refund of
federal, state, or local franchise, income, or other taxes or fees of any nature
whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing, or employee benefit plans,
and any employment or collective bargaining agreement, except to the extent that
any of the same shall be specifically assumed by Buyer pursuant to Sections 2.4,
2.5, or 6.9 hereof;
The Accounts Receivable;
Any real estate owned by Sellers; and
(h) Any other asset of Sellers not located at either the
studios and offices or at the transmitter site of Sellers.
2.3. Purchase Price. The Purchase Price shall be Three Million
Seven Hundred Fifty Thousand Dollars ($3,750,000.00) in cash or in immediately
available funds. The Purchase Price shall be adjusted to reflect any adjustments
or prorations made and agreed to as of the Closing Date as provided in Section
2.4 hereof.
2.4. Adjustments and Prorations.
(a) All revenues arising from the business and the operations
of the Station up until midnight on the day prior to the Closing Date, and all
expenses arising from the business and the operations of the Station up until
midnight on the day prior to the Closing Date, including business and licenses
fees (including any retroactive adjustments thereto), utility charges, real and
personal property taxes and assessments levied against the Assets, accrued
employee benefits such as vacation time and sick leave, property and equipment
rentals, applicable copyright or other fees, sales and service charges, taxes
(except for taxes arising from the transfer of the Assets hereunder), deposits,
and similar prepaid and deferred items, shall be prorated between Buyer and
Sellers in
4
<PAGE>
accordance with the principle that Sellers shall receive all revenues, all
refunds, and all returns of deposits held by third parties, and Sellers shall be
responsible for all expenses, costs, and liabilities allocable to the conduct of
the business or the operations of the Station for the period prior to the
Closing Date, and Buyer shall receive all revenues and shall be responsible for
all expenses, costs, and obligations allocable to the conduct of the business or
the operations of the Station on the Closing Date and for the period thereafter.
Buyer shall receive credit to the extent of the value (as calculated in Sellers'
financial statements consistent with past practice) of any and all advertising
time to be broadcasted following the Closing Date for which consideration in
cash, goods, or services shall have been received by Sellers prior to the
Closing Date.
(b) Notwithstanding the foregoing, there shall be no
adjustment for, and Sellers shall remain solely liable with respect to, any
Contracts not included in the Assumed Contracts, any and all employee benefits
including, without limitation, vacation time and sick leave, and any other
obligation or liability not being expressly assumed by Buyer in accordance with
Section 2.5 hereof.
(c) Any adjustment or prorations will be determined and paid
in accordance with the procedures set forth in Section 2.4 (d) hereof.
(d) Within sixty (60) days after the Closing Date, Buyer shall
deliver to Sellers a certificate (the "Adjustment Certificate"), signed by a
senior officer of Buyer after due inquiry by such officer, but without any
personal liability on the part of such officer, providing a compilation of the
adjustments and prorations to be made pursuant to this Section 2.4, including
any adjustments and prorations made at the Closing Date, together with a copy of
any working papers relating to such Adjustment Certificate and such other
supporting evidence as Sellers may reasonably request. If Sellers shall conclude
that the Adjustment Certificate does not accurately reflect the adjustments and
prorations to be made pursuant to this Section 2.4, Sellers shall, within thirty
(30) days after its receipt of the Adjustment Certificate, provide to Buyer its
written statement of any discrepancies believed to exist (the "Sellers'
Discrepancy Statement"). Harold T. Bohlmann, C.P.A. on behalf of Buyer, and
Chris Maguire on behalf of Sellers, or their respective designees, shall attempt
jointly to resolve the discrepancies within fifteen (15) days after Buyer's
receipt of Sellers' Discrepancy Statement, which resolution, if achieved, shall
be binding upon all parties to this Agreement and not subject to dispute or
review. If the above-named representatives or their designees shall not have
resolved the discrepancies in the Sellers' Discrepancy Statement to their common
satisfaction within such fifteen (15) day period, Buyer and Sellers shall,
within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained in order to review the
Adjustment Certificate together with Sellers' Discrepancy Statement and any
other relevant documents. The cost of retaining such independent public
accounting firm shall be borne equally by Buyer and Sellers. Such independent
public accounting firm shall report its conclusions as to adjustments pursuant
to this Section 2.4, which report shall be conclusive on all parties to this
Agreement and not subject to dispute or review. If, after adjustment as
appropriate with respect to the amount of the aforesaid adjustments paid or
credited at the Closing Date, Buyer shall be determined to owe an amount to
Sellers, Buyer shall pay such amount to Sellers forthwith in cash, and if
Sellers shall be determined to owe an amount to Buyer, Sellers shall pay such
amount to Buyer forthwith in cash.
2.5. Assumption of Liabilities and Obligations. As of the
Closing Date, Buyer shall pay, discharge, and perform (i) all of the obligations
and liabilities of Sellers under the Licenses and the Assumed Contracts insofar
as they relate to the time period on and after the Closing
5
<PAGE>
Date, and arising out of events occurring on or after the Closing Date, (ii) all
obligations and liabilities arising out of events occurring on or after the
Closing Date related to Buyer's ownership of the Assets or its conduct of the
business or the operations of the Station on or after the Closing Date, and
(iii) all obligations and liabilities for which Buyer receives a proration
adjustment hereunder. All other obligations and liabilities of Sellers,
including (i) any obligations under any Contract not included in the Assumed
Contract, (ii) any obligations under the Assumed Contracts relating to the time
period prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the business or the operations of the Station prior to
the Closing Date, and (iv) any claims or pending litigation or proceedings
related to employees as set forth in Section 6.9 hereof, shall remain and shall
be the obligations and liabilities solely of Sellers.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1. Organization, Standing and Authority.
(a) Professional is a corporation duly incorporated, validly
existing, and in good standing under the laws of the Commonwealth of Virginia.
Professional has all requisite corporate power and authority (i) to own, lease,
and use the Assets as presently owned, leased, and used, and (ii) to conduct the
business or the operations of the Station as presently conducted. Professional
has all requisite corporate power and authority to execute and deliver this
Agreement and the documents and instruments contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by Professional hereunder and thereunder. Professional is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Station's business or operations or with respect
to the Assets.
(b) EZ is a corporation duly incorporated, validly existing,
and in good standing under the laws of the Commonwealth of Virginia. EZ has all
requisite corporate power and authority (i) to own, lease, and use the Assets as
presently owned, leased, and used, and (ii) to conduct the business or the
operations of the Station as presently conducted. EZ has all requisite corporate
power and authority to execute and deliver this Agreement and the documents and
instruments contemplated hereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by EZ
hereunder and thereunder. EZ is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
Station's business or operations or with respect to the Assets.
3.2. Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by each Seller has been duly
authorized by all necessary corporate action on the part of each Seller. This
Agreement has been duly executed and delivered by each Seller and constitutes
the legal, valid, and binding obligation of each Seller, enforceable against
each Seller in accordance with its terms, except to the extent that the
enforceability hereof may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, or by court-applied equitable principles.
3.3. Absence of Conflicting Agreements. Except as set forth in
Schedule 3.3, subject to obtaining the Consents, the execution, delivery, and
performance of this Agreement and
6
<PAGE>
of the instruments and documents contemplated hereby by Sellers (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with any provision of the
Articles of Incorporation or By-Laws of any Seller; (iii) will not conflict
with, result in a breach of, or constitute a default under, any law, judgment,
order, ordinance, decree, rule, regulation, or ruling of any court or
governmental instrumentality which is applicable to any Seller; (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any material agreement, instrument,
license, or permit to which any Seller is a party or by which any Seller or any
substantial portion of any Seller's property may be bound; or (iv) will not
create any claim, liability, mortgage, lien, pledge, condition, charge or,
encumbrance of any nature whatsoever upon the Assets.
3.4. Licenses. Schedule 3.4 hereto include a true and complete
list of the Licenses. Sellers shall deliver to Buyer true and complete copies of
the Licenses (including any and all amendments and other modifications thereto).
The Licenses are valid and issued with EZ, with Sellers being the authorized
legal holder thereof. The Licenses comprise all of the licenses, permits, and
other authorizations required from any governmental or regulatory authority for
the lawful conduct of the business or the operations of the Station as presently
operated.
3.5. Title to and Condition of Personal Property. Schedule 3.5
hereto identifies all of the Personal Property, which comprises all personal
property necessary to conduct the business or the operations of the Station as
now and heretofore conducted. Sellers own and have good title to all Personal
Property. None of the Personal Property owned by Sellers is subject to any
security interest, mortgage, pledge, conditional sales agreement, or other lien
or encumbrance, except for (i) liens for current taxes not yet due and payable,
and (ii) any other claims or encumbrances described in Schedule 3.5 that will be
removed prior to or at Closing. Except as shown in Schedule 3.5, the Personal
Property is in good operating condition and repair in all material respects
(ordinary wear and tear excepted) and is available for immediate use in the
business or the operations of the Station, and the transmitting and studio
equipment included in the Personal Property (i) has been maintained in all
material respects consistent with FCC rules and regulations, and (ii) will
permit the Station and any auxiliary broadcasting facilities associated with the
Station to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC, and with all other applicable federal, state,
and local statutes, ordinances, rules, and regulations.
3.6. Contracts. Schedule 3.6 identifies all the Contracts,
including Contracts separately identified as the Assumed Contracts, except (i)
contracts with advertisers for the sale of advertising the time or talent on the
Station for cash and substantially at Sellers' established rates for the sale of
such time or talent, which are not prepaid, and which may be canceled by the
Station without penalty upon not more than thirty (30) days notice, (ii)
employment contracts and miscellaneous service contracts terminable at will
without penalty, and (iii) other contracts not involving either aggregate
liabilities under all such contracts exceeding Five Thousand Dollars ($5,000.00)
or any material non-monetary obligation. Sellers shall deliver to Buyer true and
complete copies of all written Contracts and true and complete memoranda of all
oral Contracts (including any and all amendments and other modifications to such
Contracts). Other than the Assumed Contracts, the Sellers require no contract or
agreement to enable Sellers to carry on the business or operations of the
Station in all material respects as presently and heretofore conducted. All of
the Assumed Contracts are in full force and effect, and are valid, binding, and
enforceable in accordance with their terms, except to the extent that the
enforceability thereof may be affected by
7
<PAGE>
bankruptcy, insolvency, or similar laws affecting creditors' rights generally or
by court-applied equitable principles. Sellers are not in material breach, nor
to the knowledge of any Seller is any other party in material breach, of the
terms of any such Assumed Contracts. Except as expressly set forth in Schedule
3.6, no Seller is aware of any intention by any party to any Assumed Contract
(i) to terminate such contract or amend the terms thereof, (ii) to refuse to
renew the same upon expiration of its term, or (iii) to renew the same upon
expiration only on terms and conditions which are more onerous than those
pertaining to such existing contract. Except for the Consents, Sellers have full
legal power and authority to assign their respective rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and such assignment will
not affect the validity, enforceability, and continuation of any of the Assumed
Contracts.
3.7. Consents. Except for the FCC Consent provided for in
Section 6.1 hereof and the other Consents described in Schedules 3.6 or 3.7
hereto, no consent, approval, permit, or authorization of, or declaration to or
filing with, any governmental or regulatory authority or any other third party
is required in order (i) for Sellers to consummate this Agreement and the
transaction contemplated hereby, or (ii) to permit Sellers to assign or transfer
the Assets and Licenses to Buyer.
3.8. Trademarks, Trade Names, and Copyrights. Schedule 3.8
hereto identifies all material copyrights, trademarks, trade names, licenses,
patents, permits, jingles, privileges, and other similar intangible property
rights and interests (exclusive of those required to be listed in Schedule 3.4
hereto) applied for, issued to, or owned by Sellers, or under which Sellers are
licensed or franchised, and used or useful in the conduct of the business or the
operations of the Station, all of which are valid and in good standing and
uncontested. Sellers shall deliver to Buyer copies of all documents establishing
such rights, licenses, or other authority. To the knowledge of each Seller,
neither Seller is infringing upon or otherwise acting adversely to any
trademarks, trade names, copyrights, patents, patent applications, knowhow,
methods, or processes owned by any other person or persons, and there is no
claim or action pending, or to the knowledge of any Seller, threatened, with
respect thereto.
3.9. Financial Statements. Attached hereto are certain
financial statements (collectively the "Financial Statements"). The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of each Seller as of such dates and the
results of operations of each Seller for such periods, are correct and complete,
and are consistent with the books and records of each Seller (which books and
records are correct and complete).
3.10. Insurance. All of the tangible property included in the
Assets is insured against loss or damage in amounts generally customary in the
broadcast industry. Schedule 3.10 hereto identifies all insurance policies of
Sellers which insure any part of the Assets. All policies of insurance listed in
Schedule 3.10 are in full force and effect. During the threeyear period ending
on the date hereof, no insurance policy of any Seller covering the Assets or the
Station has been canceled by the insurer, and no application on the part of any
Seller for insurance relating to the Assets or the Station has been rejected by
any insurer.
3.11. Reports. All returns, reports, and statements which any
Seller is currently required to file in connection with the business or the
operations of the Station, with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
8
<PAGE>
governmental authorities having jurisdiction over Sellers, the Station, or the
Assets have been materially complied with; all of such reports, returns, and
statements are substantially complete and correct as filed; and the Station's
public inspection file is located in its community of license and is in material
compliance with the FCC's rules and regulations.
3.12. Employee Benefit Plans. Schedules 3.6 or 3.12 hereto
identifies all employee benefit plans or arrangements applicable to the
employees of Sellers at the Station, and all material fixed or contingent
liabilities or obligations of Sellers with respect to any person now or formerly
employed by Sellers at the Station, including pension or thrift plans,
individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance programs,
incentive plans, bonus arrangements, and vacation, sick leave, disability, and
termination arrangements or policies, including workers' compensation policies.
Sellers shall furnish or make available to Buyer true and complete copies of all
written documents or information with respect to employee matters and
arrangements at the Station, including without limitation all employee
handbooks, rules, policies, plan documents, trust agreements, employment
agreements, summary plan descriptions, and descriptions of any unwritten plans
identified in Schedule 3.12. Any employee benefits and welfare plans or
arrangements identified in Schedule 3.12 were established and have been
executed, managed, and administered without material exception in accordance
with all applicable requirements of the Internal Revenue Code of 1986, as
amended, and the Employee Retirement Income Security Act of 1974, as amended,
and other applicable laws. There is no governmental audit or examination of any
of such plans or arrangements pending, nor, to the knowledge of any Seller,
threatened. There exists no action, suit, or claim (other than routine claims
for benefits) with respect to any of such plans or arrangements pending, or, to
the knowledge of any Seller, threatened, against any of such plans or
arrangements, and no Seller knows of any facts which could give rise to any such
action, suit, or claim.
3.13. Labor Relations. No Seller is a party to or subject to
any collective bargaining agreement with respect to the Station. No Seller has
any written or oral contracts of employment with any employee of the Station,
other than those listed in Schedule 3.6. Sellers shall provide Buyer with true
and complete copies of all such written contracts of employment and true and
complete memoranda of any such oral contracts. Each Seller, in the operation of
the Station, has complied in all material respects with all applicable laws,
rules, and regulations relating to the employment of labor, including those
related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payrollrelated
taxes, and no Seller has received any notice alleging that it has failed to
comply in any material respect with any such laws, rules, us regulations. No
material controversies, disputes, or proceedings are pending, or, to the best of
each Seller's knowledge, threatened, involving any employee or the employees
(collectively) of the Station. No labor union or other collective bargaining
unit represents any of the employees of the Station. To the best of each
Seller's knowledge there is no union campaign being conducted to solicit cards
from employees in order to authorize a union to request a National Labor
Relations Board certification election with respect to any employees of any
Seller at the Station.
3.14. Taxes. Except where the failure to do so would not have
a material adverse effect on the business or operations of the Station, each
Seller has filed or caused to be filed all federal income tax returns and all
other federal, state, county, local, or city tax returns which are required to
be filed, and each Seller has paid or caused to be paid all taxes shown on said
returns or on any tax assessment received by such Seller to the extent that such
taxes have become due, or has
9
<PAGE>
set aside on its books reserves (segregated to the extent required by sound
accounting practice) that are adequate with respect thereto. No events have
occurred which could impose upon Buyer any transferee liability for any taxes,
penalties, or interest due or to become due from any Seller.
3.15. Claims, Legal Actions. Except as set forth in Schedule
3.15 hereto, and except for any investigations and rule making proceedings
generally affecting the broadcasting industry, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to the knowledge of any Seller, threatened, against or
relating to any Seller, the Assets, or the business or the operations of the
Station, nor does any Seller know of any basis for the same. In particular,
except as set forth in Schedule 3.15, but without limiting the generality of the
foregoing, there are no applications, complaints, or proceedings pending, or, to
the best of each Seller's knowledge, threatened, (i) before the FCC relating to
the business or the operations of the Station, other than applications,
complaints, or proceedings which affect the broadcasting industry generally,
(ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal, state, or other employment laws
or regulations, or (iii) against any Seller or the Station before any federal,
state, or local agency involving environmental or zoning laws or regulations.
3.16. Compliance with Laws. Each Seller has complied in all
material respects with (i) the Licenses, and (ii) all applicable federal, state,
and local laws, rules, regulations, and ordinances relating to the Station.
Neither the ownership or use, nor the conduct of the business or the operations
of the Station conflicts with the rights of any other person, firm, or
corporation in any material respect.
3.17. Conduct of Business in Ordinary Course. Since the date
of the most recent Financial Statements, Sellers have conducted the business and
the operations of the Station only in the ordinary course and have not:
(a) Suffered any material adverse change in the business
assets or properties or condition (financial or otherwise) of Sellers or of the
Station, including without limitation any damage, destruction, or loss affecting
the Assets and any material decreases in operating cash flow;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of any Seller, or any bonus payment made
or promised to any employee of any Seller, or any material change in personnel
policies, employee benefits, or other compensation arrangements affecting the
employees of any Seller; or
(c) Made any sale, assignment, lease, or other transfer of any
of the properties of any Seller relating to the Station, other than in the
normal and usual course of business with suitable replacements being obtained
therefor.
(d) Reduced the advertising rates or provided any "bonus"
spots without Buyer's prior written consent.
3.18. Full Disclosure. No representation or warranty made by
any Seller herein, nor in any certificate, document, or other instrument
furnished or to be furnished by any Seller pursuant hereto, contains or will
contain any untrue statement of a material fact or omits or will omit
10
<PAGE>
to state any material fact known to any Seller and required to make the
statements herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1. Organization, Standing and Authority. Buyer is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Missouri. Buyer has all requisite power and authority
to execute and deliver this Agreement and the documents and instruments
contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Buyer hereunder and
thereunder.
4.2. Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except to the extent that the enforceability hereof may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
or by courtapplied equitable principles.
4.3. Absence of Conflicting Agreements. Except as set forth on
Schedule 4.3, subject to obtaining the Consents, the execution, delivery, and
performance of this Agreement and the documents and instruments contemplated
hereby by Buyer (with or without the giving of notice, the lapse of time, or
both): (i) does not require the consent of any third party; (ii) will not
conflict with the organizational documents of Buyer; (iii) to the best of
Buyer's knowledge will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance, decree, rule or regulation,
or ruling of any court or governmental instrumentality which is applicable to
Buyer; will not conflict with, constitute grounds for termination of, result in
a breach of, constitute a default under or accelerate or permit the acceleration
of any performance required by the terms of, any material agreement, instrument,
license, or permit to which Buyer is a party or by which Buyer may be bound.
4.4. FCC Qualification. Buyer has no knowledge of any facts
which would, under present law (including the Communications Act of 1934, as
amended) and the present rules, regulations, and policies of the FCC, disqualify
Buyer as an assignee of the FCC Licenses listed on Schedule 3.4 hereto, or as an
owner and operator of the Station's Assets, and Buyer will not take, nor
unreasonably fail to take, any action which Buyer knows or has reason to know
would cause such disqualification (it being understood that Buyer has an active
duty to attempt to ascertain what would cause such disqualification). Should
Buyer become aware of any such facts, it will promptly notify Sellers in writing
thereof and use its best efforts to prevent or remove any such disqualification,
as the case may be. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions, and undertakings contemplated by this
Agreement.
4.5. Condition of Assets. Buyer acknowledges that it has been
given full opportunity to examine the condition of the Assets, and Buyer accepts
all assets in their current condition, except as otherwise set forth on Schedule
4.5.
11
<PAGE>
ARTICLE 5
COVENANTS OF SELLERS
5.1. Pre-Closing Covenants. Except as contemplated by this
Agreement or with the prior written consent of Buyer, which consent may be
withheld in Buyer's sole discretion, between the date hereof and the Closing
Date, Sellers shall operate the Station in the ordinary course of business in
material accordance with Sellers' past practices (except where such would
conflict with the following covenants or with Sellers' other express obligations
hereunder), and shall abide by the following negative and affirmative covenants:
A. Negative Covenants. No Seller shall do any of the
following:
(1) Compensation. Increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or the operations of the
Station, except in accordance with past practices;
(2) Contracts. Enter into any new Contracts, except
in the ordinary course of business and in accordance with past
practices, or with prior notice to Buyer;
(3) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except (i) for
assets consumed or disposed of in the ordinary course of business, or
(ii) where such assets are no longer used or useful in the business or
the operations of the Station, and, in the event of either (i) or (ii),
in connection with the acquisition by Sellers of replacement property
of equivalent kind and value.
(4) Encumbrances. Create, assume, or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i)
those in existence on the date of this Agreement disclosed in Schedule
3.5 hereto, (ii) those permitted by Sections 2.5 or 3.5, hereof, and
(iii) mechanics' liens and other similar liens which will be removed
prior to the Closing Date;
(5) Licenses. Do any act or fail to do any act which
might result in the expiration, revocation, suspension, or adverse
modification of any of the Licenses, or fail to prosecute with due
diligence any applications to any governmental authority in connection
with the operation of the Station;
(6) Rights. Waive any material right relating to the
Station or the Assets; or
(7) No Inconsistent Action. Take any action which is
inconsistent with any Seller's obligations hereunder or which could
hinder or delay the consummation of the transaction contemplated by
this Agreement.
B. Affirmative Covenants. Sellers shall do the following:
(1) Access to Information. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at mutually
agreeable times at Buyer's expense during normal business hours to the
Assets and to all other properties, equipment, books,
12
<PAGE>
records, Contracts, and documents relating to the Station for the
purpose of audit and inspection, and furnish or cause to be furnished
to Buyer or to its authorized representatives all information with
respect to the affairs and business of the Station as Buyer may
reasonably request, it being understood that the rights of Buyer
hereunder shall not be exercised in such a manner as to interfere with
the operations of the business of Sellers; provided that neither the
furnishing of such information to Buyer or its representatives, nor any
investigation made heretofore or hereafter by Buyer, shall affect
Buyer's rights to rely on any representation or warranty made by any
Seller in this Agreement, each of which shall survive any furnishing of
information or any investigation;
(2) Maintenance of Assets. Maintain all of the Assets or
replacements thereof and improvements thereon in their current
condition (ordinary wear and tear excepted), and use, operate, and
maintain all of the Assets in a reasonable manner, with inventories of
spare parts and expendable supplies being maintained at levels
consistent with past practices;
(3) Insurance. Maintain the existing insurance policies on the
Station and the Assets;
(4) Consents. Use its best efforts to obtain the Consents;
(5) Notification. Promptly notify Buyer in writing of any
unusual or material developments with respect to the Assets or the
Station, and of any material change in any of the information contained
in Sellers' representations and warranties contained in Article 3
hereof or in the schedules hereto, provided that such notification
shall not relieve Sellers of any obligations hereunder;
(6) Contracts. Prior to the Closing Date, deliver to Buyer a
list of all Contracts entered into between the date hereof and the
Closing Date of the type required to be listed is Schedule 3.6 hereto,
together with the copies of such Contracts;
(7) Compliance with Laws. Comply in all material respects with
all rules and regulations of the FCC, and all other laws, rules, and
regulations to which any Seller, the Station, and the Assets are
subject;
5.2. Post-Closing Covenants. After the Closing, Sellers will
take such actions, and execute and deliver to Buyer such further deeds, bills of
sale, or other transfer documents as, in the reasonable opinion of counsel for
Buyer, may be necessary to ensure, complete, and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
6.1. FCC Consent.
(a) The assignment of the FCC Licenses as contemplated by this
Agreement is subject to the prior consent and approval of the FCC. Within twenty
(20) business days after the execution of this Agreement, Buyer and Sellers
shall file with the FCC an appropriate application for the FCC Consent approving
the assignment of the FCC Licenses from Sellers to Buyer. The
13
<PAGE>
parties shall prosecute said application with all reasonable diligence and
otherwise use their commercially reasonable best efforts to obtain the grant of
such application by the FCC as expeditiously as practicable. If the FCC Consent
shall impose any condition on any party hereto, such party shall use its best
efforts to comply with such condition, unless compliance would be unduly
burdensome or would have a material adverse effect upon such party. If
reconsideration or judicial review is sought with respect to the FCC Consent,
Buyer and Sellers shall oppose such reconsideration or judicial review (but
nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Article 9 of this Agreement).
(b) The consummation of this Agreement and the transfer of the
Assets and Licenses hereunder is expressly conditioned upon (i) the grant of the
FCC Consent without any materially adverse conditions on Sellers or Buyer, (ii)
compliance by the parties hereto with the conditions (if any) imposed in the FCC
Consent, and (iii) the FCC Consent, through the passage of time or otherwise,
having become a Final Order; provided, however, that the condition that the FCC
Consent shall have become a Final Order may be waived by Buyer, in its sole
discretion.
6.2. Taxes, Fees, and Expenses. Sellers, on the one hand, and
Buyer, on the other, shall each pay onehalf of all sales, transfer, documentary,
recording, and similar taxes and fees, if any, arising out of the transfer of
the Assets pursuant to this Agreement. All filing fees required by the FCC shall
be paid onehalf by Sellers, on the one hand, and onehalf by Buyer, on the other.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and other representatives.
6.3. Brokers. Buyer, on the one hand, and Sellers, on the
other, each represents and warrants to the other that neither such warrantor,
nor any person or entity acting on its behalf, has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement, except for Sunbelt Media, Inc., whose fee shall
be solely the responsibility of Buyer.
6.4. Lease Agreement. Concurrently with the Closing, Buyer and
Sellers shall enter into a Tower Site Lease Agreement, substantially in the form
set forth in Schedule 6.4 hereto, providing for the lease by Buyer from Sellers
of the use of the land on which the Station's towers, guy anchors and related
equipment, and transmitter building are located.
6.5. Confidentiality. Except as necessary for the consummation
of the transaction contemplated hereby, including Buyer's obtaining financing in
any form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby, and will not divulge such information to any third party, except
pursuant to subpoena and thereupon only after providing written notice to the
other party and allowing the other party seven (7) business days to quash the
subpoena or obtain other appropriate judicial remedy. In the event that this
Agreement shall be terminated and the purchase and sale contemplated hereby
shall be abandoned, each party will return to the other party all documents,
work papers, and other written material obtained by it in connection with the
transaction contemplated hereby.
14
<PAGE>
6.6. Cooperation. Buyer and Sellers shall cooperate fully with
each other and with their respective counsel and accountants in connection with
any actions required to be taken as a part of their respective obligations under
this Agreement, and Buyer and Sellers shall execute such other documents and
instruments as may be necessary and desirable to the implementation and
consummation of the transaction contemplated in this Agreement, and shall
otherwise use their best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations hereunder. Notwithstanding the
foregoing, except as otherwise set forth herein, Buyer shall have no obligation
(i) to expend funds in order to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract in order to obtain a Consent
required with respect thereto.
6.7. Risk of Loss.
(a) The risk of loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Sellers at all times prior to the completion of the Closing.
(b) In the event that any damage or destruction of the Assets
or any other event shall occur which shall prevent signal transmission by the
Station in the normal and usual manner, and if Sellers shall not have restored
or replaced the Assets so damaged or destroyed such that the condition of damage
and destruction shall have been cured and the normal and usual signal
transmission by the Station shall have been resumed prior to the Closing Date,
the Closing Date shall be postponed for a period of up to one hundred and twenty
(120) days, in order to permit the repair or replacement of the damage or loss
and the restoration of the normal and usual signal transmission by the Station.
(c) In the event of any damage or destruction of the Assets
described above, if such Assets shall not have been restored or replaced and the
Station's normal and usual signal transmission resumed within the one hundred
and twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder (except for liability for any
pre-termination breaches of this Agreement on the part of Buyer), by delivering
written notice thereof to Sellers, in which event the Escrow Deposit plus all
interest or other proceeds from the investment thereof shall be immediately
returned to Buyer. Alternatively, Buyer may, at its option, proceed to close the
transaction contemplated by this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event
Sellers shall deliver to Buyer all insurance proceeds received by any Seller in
connection with such damage or destruction, to the extent not already expended
by Sellers toward such restoration and replacement.
(d) Notwithstanding the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder, except for
liability for any pre-termination breaches of this Agreement on the part of
Buyer, by delivering written notice thereof to Sellers, if any event occurs
which shall prevent signal transmission by the Station in a manner generally
equivalent to the Station's current signal transmission for a consecutive period
of five (5) days or for a cumulative period of fourteen (14) days after the date
hereof, in which event the Escrow Deposit plus all interest or other proceeds
from the investment thereof shall be immediately returned to Buyer.
6.8. Employee Matters.
15
<PAGE>
(a) Sellers shall provide to Buyer an accurate list of all
current employees of the Station, together with a description of the terms and
conditions of their employment (including salary, bonus, and other benefit
arrangements) and their duties as of the date of this Agreement. Sellers shall
promptly notify Buyer of any material changes that occur prior to Closing with
respect to such information.
(b) Nothing contained in this Agreement shall confer upon any
employee of any Seller any right with respect to continued employment by Buyer,
nor shall anything herein interfere with any right the Buyer may have after
Closing Date to (i) terminate the employment of any of the employees of any
Seller at the Station at any time, with or without cause, or (ii) establish or
modify any of the terms and conditions of the employment of the employees of
Sellers at the Station, in the exercise of Buyer's independent business
judgment.
(c) Except as otherwise set forth herein, Buyer will not incur
any liability on account of any Seller's employees in connection with the
transaction contemplated by this Agreement, including without limitation, any
liability on account of unemployment insurance contributions, termination
payments, retirement, pension, profitsharing, bonus, severance pay, disability,
health, accrued vacation, accrued sick leave or other employee benefit plans,
practices, agreements, or understandings. It is hereby expressly agreed and
understood that Sellers shall be solely responsible for payments to their
respective employees relating to vacation and sick leave and that there shall be
no pro-rated adjustment with respect to such items.
6.9. Accounts Receivable. At Closing, Sellers shall assign to
Buyer, for collection purposes only, all Accounts Receivable. Sellers shall
deliver to Buyer on or as soon as practicable after Closing a complete and
detailed statement showing the name, amount, and age of each Account Receivable.
Subject to and limited by the following, collections of the Accounts Receivable
by Buyer following Closing will be for the account of Sellers. Buyer shall
endeavor in the ordinary course of business to collect the Accounts Receivable
for a period of ninety (90) days after Closing (the "Collection Period"). Any
payment received by Buyer during the Collection Period from any customer with an
account which is an Account Receivable shall first be applied in reduction of
the Account Receivable, unless the customer otherwise directs in writing. During
the Collection Period, on a monthly basis, Buyer shall furnish Sellers with a
list of, and shall pay over to Sellers, the amounts collected during the
preceding month with respect to the Accounts Receivable. Buyer shall provide
Sellers with a final accounting on or before the fifteenth (15th) day following
the end of the Collection Period. Upon the request of either party at and after
such time, Buyer and Sellers shall meet to analyze in good faith any uncollected
Account Receivable in order to determine if the same, in their reasonable
business judgment, is deemed to be collectible and if Buyer desires to retain a
business relationship with the customer carrying such Account Receivable. As to
each such customer carrying an Account Receivable with whom Buyer, in its sole
discretion, elects to retain a business relationship, Buyer and Sellers shall
negotiate a goodfaith value of the Account Receivable, which Buyer shall pay to
Sellers. Sellers shall retain the right to collect any Account Receivable as to
which the parties are unable to reach agreement as to a goodfaith value, and
Buyer agrees to turn over to Sellers any payments received against any such
Account Receivable. As Sellers' agent, Buyer shall not be obligated to use any
extraordinary efforts or expend any sums to collect any of the Accounts
Receivable assigned to it for collection hereunder or to refer any of such
Accounts Receivable to a collection agency or to any attorney for collection,
and Buyer shall not make any such referral, nor compromise, settle, or adjust
the amount of any such Account Receivable, except with the approval of Sellers.
Buyer shall incur no liability to Sellers for any
16
<PAGE>
uncollected Account Receivable, unless Buyer shall have engaged in willful
misconduct or gross negligence in the collection of such Account Receivable.
During and after the Collection Period, without specific agreement with Buyer to
the contrary, no Seller nor any agent of any Seller shall make any direct
contact for purposes of collection with any customer carrying an Account
Receivable, except for Accounts Receivable retained by any Seller after the
Collection Period.
6.10. Audit Cooperation. Sellers agree to cooperate fully, and
to use reasonable efforts to cause its accounting firm to cooperate fully, with
Buyer and at Buyer's expense, to the extent required for Buyer to prepare
audited financial statements for the Station for the period of Sellers'
ownership thereof.
6.11. Allocation of Purchase Price. On or before the Closing,
Buyer and Sellers will endeavor in good faith to agree to an allocation of the
Purchase Price paid by Buyer to Sellers for the Assets, in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended by Temporary
Treasury Regulation Section 1.1060-1T. Such allocation shall include allocation
of Seven Hundred Fifty Thousand Dollars ($750,000.00) of the Purchase Price to a
pre-paid consultancy agreement. Buyer and Sellers further agree to file with
their respective Federal income tax returns an initial asset acquisition
statement and any supplemental statement on Internal Revenue Service Form 8594
required by Temporary Treasury Regulation Section 1.1060-1T, all in accordance
with and accurately reflecting any agreed upon allocation of the Purchase Price
as described above.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1. Conditions to Obligations of Buyer. All obligations of
Buyer at the Closing hereunder are subject to the fulfillment as of the Closing
Date of each of the following conditions, any of which may be waived by Buyer in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of each Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement as though such representations and warranties were made at and
as of the Closing Date.
B. Covenants and Conditions. Each Seller shall have in all
material respects performed and complied with the covenants, agreements, and
conditions required by this Agreement to have been performed or complied with by
such Seller prior to or on the Closing Date.
C. Consents. Each of the Consents marked as "material" on
Schedule 3.6 hereto shall have been duly obtained and delivered to Buyer, with
no material adverse change to the terms of the License or Assumed Contract with
respect to which such Consent shall have been obtained.
D. Licenses. Sellers shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which shall
have a material adverse effect on the Station or on the conduct of its business
or its operations. No proceeding shall be pending, the effect of which would be
to revoke, cancel, fail to renew, suspend, or modify adversely any of the
Licenses.
17
<PAGE>
E. Deliveries. Sellers shall have made, or shall stand ready,
willing, and able to make, all of the deliveries to Buyer set forth in Section
8.2 hereof.
F. Approval of Documents. Sellers shall have delivered to
Buyer for inspection all documents, statements and information required to be
delivered pursuant to this Agreement, and Buyer shall have approved in form and
content such documents, statements and information, which approval shall not be
unreasonably withheld.
G. No Material Change. No material adverse change shall have
occurred (whether or not covered by insurance) in the assets, financial
condition or prospects of the business and operations of the Station.
H. No Suit. No suit, action or other proceeding or
investigation shall, to the knowledge of any party to this Agreement, be
threatened or pending before or by any governmental agency or by any third party
questioning the legality of this Agreement or the consummation of the
transactions contemplated hereby in whole or in part.
I. Final Order. The FCC shall have issued its Final Order
evidencing final approval of the transfer of the Licenses from Sellers to Buyer.
J. Easements. In the event any of Sellers' ground system (i.e.
as set forth in the definition of Personal Property above), extends beyond the
boundaries of Sellers' real property pursuant to the Lease Agreement ("Leased
Premises"), then in such case, Sellers shall provide Buyer with any and all
easements and/or other agreements allowing for the encroachment of said ground
system onto to property adjoining said Leased Premises.
7.2. Conditions to Obligations of Sellers. The obligations of
Sellers at the Closing hereunder are subject to the fulfillment as of the
Closing Date of each of the following conditions, any of which may be waived by
Sellers in whole or in part in their sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date, except for changes
contemplated by this Agreement as though such representations and warranties
were made at and as of the Closing Date.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to have been performed or complied with by Buyer
prior to or on the Closing Date.
C. Deliveries. Buyer shall have made, or shall stand ready,
willing, and able to make, all of the deliveries set forth in Section 8.3
hereof.
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1. Closing. The Closing shall take place on a date to be set
by Buyer, upon five (5) days' advance written notice to Sellers, no later than
ten (10) days following the date upon which the FCC Consent shall have become a
Final Order (the "Closing Date"); provided, however, that
18
<PAGE>
Buyer may waive the requirement for a Final Order and may schedule the Closing
Date, upon five (5) days' advance written notice to Sellers, at any time after
the receipt of the FCC Consent. Notwithstanding the foregoing, Seller may, at
its sole option, delay Closing until January 5, 1998. Closing shall be conducted
by facsimile and wire transmission, and shall be coordinated from the offices of
Sellers' attorneys at 1751 Pinnacle Drive, McLean, Virginia 22102, or from such
other place as shall be agreed to by Buyer and Sellers.
8.2. Deliveries By Sellers. On the Closing Date, Sellers shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
A. Transfer Documents. Duly executed bills of sale, motor
vehicle titles, assignments, and other transfer documents which shall be
sufficient to vest good and marketable title to the Assets in the name of Buyer
or its permitted assigns, free and clear of any claims, liabilities, mortgages,
liens, pledges, conditions, charges, or encumbrances of any nature whatsoever
(except for those permitted in accordance with Sections 2.5 or 3.5, hereof);
B. Consents. The original of each Consent marked as "material"
on Schedule 3 .6 hereto;
C. Officer's Certificate. A certificate, dated as of the
Closing Date, executed by a duly authorized officer of each Seller, certifying:
(i) that the representations and warranties of such Seller contained in this
Agreement are true and complete in all material respects as of the Closing Date,
except for changes contemplated by this Agreement as though made on and as of
such date, and (ii) that such Seller has, in all material respects, performed
its obligations and complied with its covenants set forth in this Agreement to
have been performed and complied with prior to or on the Closing Date;
D. Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by each Seller's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by such Seller's
Board of Directors and shareholders, authorizing, ratifying, and approving the
execution and delivery of this Agreement by such Seller and the consummation of
the transaction contemplated hereby, and that such resolutions remain in full
force and effect, and (ii) providing, as attachments thereto, a certificate of
good standing certified by an appropriate state official of the state of such
Seller's incorporation, as of a date not more than fifteen (15) days prior to
the Closing Date, and further certified by such Seller's Secretary as of the
Closing Date, and a copy of such Seller's Articles and By-Laws as in effect on
the date thereof, certified by such Seller's Secretary as of the Closing Date;
E. Tax, Lien, and Judgment Searches. A report on the results
of a search for Uniform Commercial Code financing statements, tax liens,
judgment liens, and similar filings in the Secretary of State's records for the
State of Missouri and in the records of those jurisdictions where the Assets are
located, such searches having been made no earlier than fifteen (15) days prior
to the Closing Date;
F. Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, statistics, engineering records, and all material files and records
used by Sellers in connection with the business and the operations of the
Station;
19
<PAGE>
G. Reserved
H. Opinions of Counsel. Opinions of Sellers' counsel and of
Sellers' special federal communications legal and regulatory counsel, dated as
of the Closing Date, addressed to Buyer and, at Buyer's directions, to Buyer's
lenders, substantially in the form of Schedule 8.2(h) hereto;
I. Escrow Instructions. Joint instructions with Buyer to
Escrow Agent with respect to the payment of the Escrow Deposit to Sellers as a
portion of the Purchase Price.
8.3. Deliveries by Buyer. Prior to or on the Closing Date,
Buyer shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
A. Purchase Price. The Purchase Price as provided in Section
2.3 hereof, reduced by the amount of the Escrow Deposit, by wire transfer of
same day funds to an account designated in writing by Sellers.
B. Assumption Agreement. An Assumption Agreement, pursuant to
which Buyer shall assume and undertake to perform Sellers' obligations under the
Licenses and the Assumed Contracts arising on or after the Closing Date;
C. Officer's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Managing Member, (i) certifying that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date, except for changes
contemplated by this Agreement, as though made on and as of such date, (ii)
certifying that Buyer has, in all material respects, performed its obligations
and complied with its covenants set forth in this Agreement to have been
performed or complied with on or prior to the Closing Date, (iii) a resolution,
duly adopted by Buyer authorizing, ratifying, and approving the execution and
delivery of this Agreement and the consummation of the transaction contemplated
hereby, and that such resolution remains in full force and effect, and (iv)
providing a copy of the Articles of Organization and Operating Agreement of
Buyer as in effect on the date thereof, certified as of the Closing Date;
D. Opinion of Counsel. An opinion of Buyer's counsel and of
Buyer's FCC counsel dated as of the Closing Date, substantially in the form of
Schedule 8.3(d) hereto; and
E. Escrow Instructions. Joint instructions with Sellers to
Escrow Agent with respect to the payment of the Escrow Deposit to Sellers as a
portion of the Purchase Price.
ARTICLE 9
RIGHTS OF BUYER AND SELLERS UPON TERMINATION OR BREACH
9.1. Termination Right
(a) This Agreement may be terminated by either Buyer or
Sellers, if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
20
<PAGE>
(1) If on the Closing Date, (i) any of the conditions
precedent to the obligations of the terminating party set forth in
Article 7 of this Agreement shall not have been materially satisfied,
and (ii) satisfaction of such condition(s) shall not have been waived
by the terminating party;
(2) If the application for the FCC Consent shall be
designated for an evidentiary hearing by the FCC for any reason;
If the Closing shall not have occurred on or
before May 31, 1998;
If the nonterminating party shall have
breached any of its representations or
warranties, or shall have defaulted with
respect to its or their covenants,
obligations, or required undertakings set
forth in this Agreement, and if such
nonterminating party shall have failed to
cure such breach or default within fifteen
(15) days after having received notice of
such breach or default from the terminating
party.
(b) Upon termination: (i) if neither party hereto shall be in
breach of any material provision of this Agreement, the parties hereto shall not
have any further liability to each other, except as set forth in Sections 6.2
and 6.6 hereof; (ii) if any Seller shall be in breach of any material provision
of this Agreement, Buyer shall have the rights and remedies provided in Section
9.3 hereof; and (iii) if Buyer shall be in breach of any material provision of
this Agreement, Sellers shall be entitled only to liquidated damages as provided
in Section 9.2 hereof. If, upon termination, Buyer shall not be in breach of any
material provision of this Agreement, the Escrow Deposit, plus all interest or
other proceeds from the investment thereof shall be paid to Buyer.
9.2. Liquidated Damages. In the event that this Agreement
shall be terminated by Sellers due to a material breach by Buyer of its
representations, warranties, covenants, or other obligations under this
Agreement then the Escrow Deposit shall be paid to Sellers as liquidated damages
and as Sellers' sole and exclusive remedy for such breach, it being agreed that
actual damages to Sellers on account of such breach would be difficult if not
impossible to ascertain and that the amount of the Escrow Deposit is a fair and
equitable amount to reimburse Sellers for any injury sustained by Sellers due to
Buyer's breach of its obligations under this Agreement. All interest or other
proceeds from the investment of the Escrow Deposit shall be paid to Sellers.
9.3. Specific Performance. The parties recognize that in the
event that Sellers should breach or refuse to perform its material obligations
under the provisions of this Agreement, monetary damages alone would not be
adequate to compensate Buyer for Buyer's injury sustained as a result of such
breach or refusal, inasmuch as the Assets and the Station are unique and there
are no readily available substitutes for such Assets and for such Station that
Buyer could purchase on the open market. Buyer shall therefore be entitled, in
addition to any other remedies which may be available by statute, at law, or in
equity, to obtain a decree of specific performance of the terms of this
Agreement from a court of competent jurisdiction. In the event of any action to
enforce this Agreement, Sellers hereby waive the defense that there is an
adequate remedy at law.
9.4. Expenses Upon Default. In the event of a default by a
party hereto (the "Defaulting Party") which results in the filing of a lawsuit
for damages, specific performance, or
21
<PAGE>
other remedy, the other party (the "Nondefaulting Party") shall be entitled to
reimbursement by the Defaulting Party of any and all reasonable legal fees and
expenses incurred by the Nondefaulting Party in the event that the Nondefaulting
Party shall prevail in such lawsuit.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
AND INDEMNIFICATION
10.1. Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties, and together with the covenants contained
herein, shall survive the Closing Date for a period of twelve (12) months after
the Closing Date (the "Survival Period"). No claim for indemnification may be
made under this Article 10 (except for claims under Section 10.3(b)) after the
expiration of the Survival Period. Any investigations by or on behalf of a party
hereto shall not constitute a waiver of such party's right to enforce any
representation or warranty by the other party contained herein, unless a party
shall have actual knowledge of any misrepresentation or breach of warranty at
the Closing on the part of the other party, and such knowledge shall be
documented in writing at the Closing, in which case the party having such
knowledge shall be deemed to have waived such misrepresentation or breach.
10.2. Indemnification by Sellers. Sellers, jointly and
severally, shall indemnify and hold Buyer harmless against and with respect to,
and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenants by any Seller contained herein or in any certificate delivered to
Buyer hereunder;
(b) Any and all obligations of any Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities, or damages resulting from
Sellers' operation or ownership of the Station prior to Closing, including any
and all liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring or conditions existing prior to Closing; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses incident to any of the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof.
10.3. Indemnification by Buyer. Buyer shall indemnify and hold
Sellers harmless against and with respect to, and shall reimburse Sellers for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to Sellers
hereunder;
(b) Any and all losses, liabilities, or damages resulting from
Buyer's operation or ownership of the Station on or after Closing, including any
and all liabilities or obligations arising under the Licenses or the Assumed
Contracts which relate to events occurring or conditions existing
22
<PAGE>
on or after Closing or otherwise assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof.
10.4. Procedures for Indemnification. The procedures for
indemnification shall be as follows:
(a) The party claiming the indemnification (the "Indemnified
Party") shall promptly give notice to the party from whom the indemnification is
claimed (the "Indemnifying Party") of any claim, whether between the parties or
brought by a third party against the Indemnified Party, specifying (i) the
factual basis for such claim, and (ii) the amount of the claim. If the claim
relates to an action, suit, or proceeding filed by a third party against the
Indemnified Party such notice shall be given by the Indemnified Party to the
Indemnifying Party within five (5) days after written notice of such action,
suit, or proceeding shall have been given to the Indemnified Party.
(b) Following receipt of notice from the Indemnified Party of
a claim, the Indemnifying Party shall have thirty (30) days in which to make
such investigation of the claim as the Indemnifying Party shall deem necessary
or desirable. For the purposes of such investigation, the Indemnified Party
agrees to make available to the Indemnifying Party and/or its authorized
representative(s) the information relied upon by the Indemnified Party to
substantiate the claim. If the Indemnified Party and the Indemnifying Party
agree at or prior to the expiration of said thirty (30) day period (or any
agreed upon extension thereof) to the validity and amount of such claim, or if
the Indemnifying Party does not respond to such notice, the Indemnifying Party
shall immediately pay to the Indemnified Party the full amount of the claim.
Buyer shall be entitled to apply any or all of the Accounts Receivable collected
on behalf of Sellers to a claim as to which Buyer is entitled to indemnification
hereunder. If the Indemnified Party and the Indemnifying Party do not agree
within said period (or within any agreedupon extension thereof), the Indemnified
Party may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the
Indemnified Party is entitled to indemnification hereunder, the Indemnifying
Party shall have the right at its own expense to participate in or to assume
control of the defense of such claim, and the Indemnified Party shall cooperate
fully with the Indemnifying Party, subject to reimbursement for reasonable
actual out-of-pocket expense incurred by the Indemnified Party as the result of
a request by the Indemnifying Party to so cooperate. If the Indemnifying Party
elects to assume control of the defense of any third-party claim, the
Indemnified Party shall have the right to participate in the defense of such
claim at its own expense.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
(e) If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third-party claim, the
Indemnifying Party shall be bound by the results obtained in good faith by the
Indemnified Party with respect to such claim.
23
<PAGE>
(f) The indemnification rights provided in Sections 10.2 and
10.3 hereof shall extend to the shareholders, directors, officers, members,
partners, agents, employees, and representatives of the Indemnified Party,
although for the purpose of the procedures set forth in this Section 10.4, any
indemnification claims by such parties shall be made by and through the
Indemnified Party.
10.5. Limitation on Indemnification. Notwithstanding the
foregoing, no Indemnifying Party shall have any indemnification payment
obligations hereunder unless and until all such obligations exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate, at which point all amounts to be
paid hereunder shall be due and owing. Each Indemnifying Party's indemnification
obligations hereunder shall be limited to in the aggregate, One Million Eight
Hundred Seventy-Five Thousand Dollars ($1,875,000.00). The foregoing limitation
shall not apply to indemnification obligations arising from fraudulent or
willful misrepresentations.
ARTICLE 11
MISCELLANEOUS
11.1. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) delivered by personal delivery, or sent by a nationally recognized
commercial delivery service, or by registered or certified U.S. mail, return
receipt requested, or by facsimile transmission, with receipt confirmation,
(iii) deemed to have been given on the date of personal delivery, the date set
forth in the records of the delivery service for delivery to the addressee, the
date set forth on the return receipt, or the date set forth on the facsimile
transmission confirmation, and (iv) addressed as follows:
If to Sellers: Professional Broadcasting, Incorporated
c/o American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Michael B. Milsom, Vice President
Fax: (617) 375-7550
with a copy to (which shall not constitute notice to Sellers):
Joseph W. Conroy, Esq.
Hunton & Williams
1751 Pinnacle Drive, Suite 1700
McLean, VA 22102
Fax: (703) 714-7410
24
<PAGE>
If to Buyer: Missouri Sports Radio, L.L.C.
7000 Chippewa Avenue
Suite 200
St. Louis, MO 63119
Tele. (314) 352-2100
Fax. (314) 352-2555
Attn: Mr. Greg Marecek
with a copy to (which shall not constitute notice to Buyer):
Harold T. Bohlmann, C.P.A.
Harold C.W. Bohlmann & Company
9200 Watson Road
Suite 120
St. Louis, MO 63126
Tele. (314) 843-7700
Fax. (314) 843-4357
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2. Benefit and Binding Effect. Neither party hereto may
assign its rights or delegate its duties under this Agreement without the prior
written consent of the other party hereto, except that Buyer may assign its
rights and delegate its duties under this Agreement to any affiliated or
unaffiliated entity; provided, however, that following such assignment, Buyer
shall remain liable to Sellers for all of Buyer's obligations hereunder; and
provided further, that no such assignment shall cause a material delay in the
Closing Date. Upon such assignment, Buyer shall give notice thereof in writing
to Sellers, and Buyer's assignee shall provide to Sellers a certificate in
writing of such assignee, acknowledging such assignee's receipt of true,
correct, and complete copies of this Agreement, all Schedules, Exhibits, and
Appendices hereto and thereto, and agreeing to be bound hereby and thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
11.3. Governing Law. This Agreement shall be governed,
construed, and enforced in accordance with the laws of the State of Missouri
with respect to contracts made in, and to be performed entirely within, such
State, without reference to the choiceoflaw principles of such State.
11.4. Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.5. Gender and Number. Words used herein, regardless of the
gender and number
25
<PAGE>
specifically used, shall be deemed and construed to include any other gender,
masculine, feminine, or neuter, and any other number, singular or plural, as the
context may require.
11.6. Entire Agreement. This Agreement, all Schedules,
Exhibits, and Appendices hereto and thereto, and all documents and certificates
specifically referred to herein and therein collectively represent the entire
understanding and agreement between Buyer and Sellers with respect to the
subject matter hereof and thereof. All Schedules, Exhibits, and Appendices
attached to this Agreement shall be deemed to be a part of this Agreement and
shall be deemed to be incorporated herein as if fully set forth herein. This
Agreement supersedes all prior negotiations between Buyer and Sellers, and all
letters of intent and other writings related to such negotiations, and cannot be
amended, supplemented, augmented, or modified except by an instrument in writing
which makes specific reference to this Agreement and which is signed by the
party against whom enforcement of any such amendment, supplement, augmentation,
or modification is sought.
11.7. Waiver of Compliance: Consents. Except as otherwise
provided in this Agreement, any failure on the part of any party at any time to
comply with any obligation, representation, warranty, covenant, agreement, or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver shall not operate as a waiver of, or an estoppel with respect to, any
subsequent or other failure on the part of the other party. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.7.
11.8. Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts, with the same effect as if the
execution of each such counterpart were upon the same instrument. If this
Agreement is executed and transmitted by facsimile, the original signature page
shall thereupon be provided to all parties by regular mail.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Sellers as of the date first above written.
SELLERS: PROFESSIONAL BROADCASTING, INCORPORATED
By:
Print Name:
Title:
EZ ST. LOUIS, INC.
28
<PAGE>
By:
Print Name:
Title:
BUYER: MISSOURI SPORTS RADIO, L.L.C.
By:
Print Name:
Title:
29
<PAGE>
SCHEDULES TO KFNS ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.2 Excluded Assets
3.3 Conflicting Agreements of Sellers
3.4 Licenses
3.5 Personal Property
3.6 Contracts
3.7 Consents
3.8 Trademarks, Trade Names and Copyrights
3.9 Financial Statements
3.10 Insurance
3.12 Employee Benefit Plans
3.13 Labor Relations
3.15 Claims, Legal Actions
4.3 Conflicting Agreements of Buyer
4.5 Condition of Assets
6.4 Lease Agreement
8.2(h) Legal Opinions of Sellers' Counsel
8.3(d) Legal Opinion of Buyer's Counsel
30
<TABLE>
<CAPTION>
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
American Radio Systems Corporation
EXHIBIT 11
In thousands, except per share data
Three Months Threee Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1997 1996 1997
---- ---- ---- ----
PRIMARY:
<S> <C> <C> <C> <C>
Weighted average shares of common stock 20,993 29,484 19,055 26,549
Add common stock equivalents in the form of stock options
and warrants (using treasury stock method) 1,022 976
--------------- --------------- -------------- -------------
Weighted average common stock and common stock equivalents 22,015 29,484 20,031 26,549
=============== =============== ============== =============
Net income (loss):
Income (loss) before extraordinary loss after dividends $ (1,499) $ (8,803) $ 122 $ (23,398)
Extraordinary (loss) (1,639)
--------------- --------------- -------------- -------------
Net income (loss) applicable to common stockholders $ (1,499) $ (8,803) $ 122 $ (25,037)
=============== =============== ============== =============
Primary per common share amounts:
Income (loss) before extraordinary loss $ (.07) $ (.30) $ .01 $ (.88)
Extraordinary loss (.06)
--------------- --------------- -------------- -------------
Net income (loss) applicable to common stockholders $ (.07) $ (.30) $ .01 $ (.94)
=============== =============== ============== =============
FULLY DILUTED (Not presented due to anti-dilution):
Weighted average shares of common stock 20,993 29,484 19,055 26,549
Add common stock equivalents in the form of stock
options and warrants (using treasury stock method) 1,022 976
Assumed conversion of preferred stock 3,235 3,235 3,235 3,235
--------------- --------------- -------------- -------------
Weighted average common stock and common stock equivalents 25,250 32,719 23,266 29,784
=============== =============== ============== =============
Net income (loss):
Income (loss) before extraordinary loss after dividends $ (1,499) $ (8,803) $ 122 $ (23,398)
Add convertible preferred dividends 2,433 2,406 2,567 7,218
--------------- --------------- -------------- -------------
Income (loss) after redeemable stock dividends
before extraordinary 934 (6,397) 2,689 (16,180)
Extraordinary loss (1,639)
--------------- --------------- -------------- -------------
Net income (loss) applicable to common stockholders $ 934 $ (6,397) $ 2,689 $ (17,819)
=============== =============== ============== =============
Fully diluted per common share amounts:
Income (loss) before extraordinary loss $ .04 $ (.20) $ .12 $ (.54)
Extraordinary loss (.06)
Net income (loss) applicable to common stockholders $ .04 $ (.20) $ .12 $ (.60)
</TABLE>
<TABLE>
<CAPTION>
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
American Radio Systems Corporation
EXHIBIT 12
The following table reflects the computation of the ratio of earnings to fixed charges and preferred
stock dividends for the periods indicated. (In thousands, except ratio data)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Computation of Earnings:
Income (loss) from continuing operations before
extraordinary loss and income taxes........... $ 2,459 $ (725) $ 5,650 $ (1,402)
Add:
Interest expense (1)............................. 6,254 16,838 15,217 40,074
Rent expense (2)................................. 372 816 800 1,958
------------- --------- ------------- ---------
Earnings as adjusted............................. 9,085 16,929 21,667 40,630
============= ========= ============= =========
Computation of Fixed Charges:
Interest expense (1)............................. 6,254 16,838 15,217 40,074
Rent expense (2)................................. 372 816 800 1,958
Preferred dividends.............................. 2,433 8,479 2,567 22,770
------------- --------- ------------- ---------
Fixed charges.................................... 9,059 26,133 18,584 64,802
============= ========= ============= =========
Ratio of earnings to combined fixed charges (3) 1.0x ----- 1.17x -----
<FN>
- -----------------------------------
(1) Interest expense includes amortization of deferred financing costs.
(2) Rent expense fixed charge is assumed to be 30% of gross operating rent
charges.
(3) Earnings were insufficient to cover fixed charges for the three and nine
months ended September 30, 1997 by approximately $9,204 and $24,172,
respectively.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,822
<SECURITIES> 0
<RECEIVABLES> 84,159
<ALLOWANCES> 8,433
<INVENTORY> 0
<CURRENT-ASSETS> 107,621
<PP&E> 180,657
<DEPRECIATION> 16,106
<TOTAL-ASSETS> 1,962,925
<CURRENT-LIABILITIES> 48,318
<BONDS> 809,015
215,550
1
<COMMON> 295
<OTHER-SE> 674,641
<TOTAL-LIABILITY-AND-EQUITY> 1,962,925
<SALES> 0
<TOTAL-REVENUES> 260,512
<CGS> 0
<TOTAL-COSTS> 223,807
<OTHER-EXPENSES> 38,107
<LOSS-PROVISION> 3,380
<INTEREST-EXPENSE> 40,074
<INCOME-PRETAX> (1,402)
<INCOME-TAX> 774
<INCOME-CONTINUING> (628)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,639)
<CHANGES> 0
<NET-INCOME> (2,267)
<EPS-PRIMARY> (.94)
<EPS-DILUTED> (.94)
</TABLE>
