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 June 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 July 31, 1997
Class A Common Stock shares 24,194,901
Class B Common Stock shares 3,993,834
Class C Common Stock shares 1,295,518
Total shares 29,484,253
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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 June 30, 1997........................................ 1
Condensed Consolidated Statements of Operations
Three and six months ended June 30, 1996 and 1997.......................... 3
Condensed Consolidated Statements of Cash Flows
Six months ended June 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........................................ 24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................ 29
Item 2. Changes in Securities............................................ 29
Item 4. Submission of Matters to a Vote of Security Holders.............. 29
Item 5. Other Information................................................ 30
Item 6. Exhibits and Reports on Form 8-K................................. 31
Signatures....................................................... 33
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PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 1996 June 30, 1997
----------------- -------------
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,447 $ 14,469
Accounts receivable (less allowance for doubtful
accounts of $4,560 and $7,297 in 1996 and 1997,
respectively) 51,897 82,284
Employee and other related-party receivables 249 377
Prepaid expenses and other assets 3,354 4,180
Deferred income taxes 3,370 3,370
---------- ----------
Total current assets 69,317 104,680
---------- ----------
PROPERTY AND EQUIPMENT-Net 90,247 153,044
---------- ----------
OTHER ASSETS:
Restricted cash 8,896
Station investment note receivable-related party
(less valuation allowance of $500 in 1996) 743
Investment notes receivable 69,177 25,750
Intangible assets-net:
Goodwill 232,149 374,776
FCC licenses 233,558 1,114,573
Other intangible assets 27,553 53,177
Deposits and other long-term assets 26,064 12,948
Deferred income taxes 7,142
Net assets held under exchange agreement 47,495
Net assets held under trust agreement 63,252
---------- ----------
Total other assets 636,739 1,660,514
---------- ----------
TOTAL $ 796,303 $1,918,238
========== ==========
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See notes to unaudited condensed consolidated financial statements.
1
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AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 1996 June 30, 1997
----------------- -------------
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 561 $ 587
Accounts payable 7,085 7,863
Accrued compensation 3,027 3,483
Accrued expenses 16,355 24,300
Accrued interest 7,303 12,704
-------- ----------
Total current liabilities 34,331 48,937
-------- ----------
DEFERRED INCOME TAXES 33,205 204,424
-------- ----------
OTHER LONG-TERM LIABILITIES 2,149 11,245
-------- ----------
LONG-TERM DEBT 330,111 759,976
-------- ----------
MINORITY INTEREST IN SUBSIDIARY 344 481
-------- ----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE STOCK
Cumulative Exchangeable Preferred Stock, $0.01 par value;
10,000,000 shares authorized; 2,047,391 shares issued and
outstanding; liquidation preference $100 per share 209,478
-------- ----------
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 24,140,137 shares issued and outstanding,
respectively 151 241
Class B Common Stock; $.01 par value; 15,000,000 shares authorized;
4,658,096 and 4,036,698 shares issued and outstanding,
respectively 47 40
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 390,731 684,089
Unearned compensation (297) (249)
Retained earnings 5,955 0
-------- ----------
Total 396,601 683,135
-------- ----------
Less:
Treasury stock, at cost, 18,449 shares at December 31, 1996
and June 30, 1997 (438) (438)
-------- ----------
Total stockholders' equity 396,163 683,697
-------- ----------
TOTAL $796,303 $1,918,238
======== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
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AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1997 1996 1997
--------- --------- --------- ---------
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NET REVENUES $ 37,444 $ 100,108 $ 61,092 $ 154,345
--------- --------- --------- ---------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, net local marketing agreement and
corporate general and administrative expenses 24,650 63,847 42,774 104,731
Net local marketing agreement (revenues) expenses 2,139 (591) 2,589 1,341
Depreciation and amortization 2,639 16,140 4,839 23,564
Corporate general and administrative 1,259 2,156 2,340 3,934
--------- --------- --------- ---------
Total expenses 30,687 81,552 52,542 133,570
--------- --------- --------- ---------
OPERATING INCOME 6,757 18,556 8,550 20,775
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (4,261) (15,732) (8,964) (23,236)
Interest income 1,523 489 3,640 1,145
Gains (losses) on sale of assets and other, net (1) 420 (35) 639
--------- --------- --------- ---------
Total other income (expense) (2,739) (14,823) (5,359) (21,452)
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS BEFORE
INCOME TAXES AND EXTRAORDINARY ITEM 4,018 3,733 3,191 (677)
INCOME TAX PROVISION (BENEFIT) 1,807 1,312 1,436 (374)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 2,211 2,421 1,755 (303)
EXTRAORDINARY LOSS ON EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX BENEFIT OF
$1,013 IN 1997 (1,639)
--------- --------- --------- ---------
NET INCOME (LOSS) 2,211 2,421 1,755 (1,942)
PREFERRED STOCK DIVIDENDS (134) (8,094) (134) (14,292)
--------- --------- --------- ---------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ 2,077 $ (5,673) $ 1,621 $ (16,234)
========= ========= ========= =========
PER COMMON SHARE AMOUNTS:
Income (loss) before extraordinary loss $ .10 $ (.20) $ .09 $ (.58)
Extraordinary loss (.07)
--------- --------- --------- ---------
Net income (loss) $ .10 $ (.20) $ .09 $ (.65)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 20,142 29,089 19,026 25,080
========= ========= ========= =========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
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AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended June 30,
-------------------------
1996 1997
--------- ---------
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CASH FLOWS USED FOR OPERATING ACTIVITIES: $ (5,523) $ (30,605)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, equipment and intangible
assets (7,336) (19,386)
Proceeds from radio station sales 18,000 47,876
Payments for radio station acquisitions (67,777) (445,719)
Payments for tower related acquisitions (5,045) (19,277)
Issuance of station investment notes receivable (27,779) (664)
Repayment of station investment note receivable 1,243
Deposits and other long-term assets (23,706) 13,364
--------- ---------
Cash used for investing activities (113,643) (422,563)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreements and other 533,000
Repayments under credit agreements (151,500) (257,000)
Repayments of other obligations (568) (692)
Net proceeds from equity offerings and options 248,198 213
Net proceeds from exchangeable preferred stock offering 192,218
Net proceeds from debt offering - net of discount 168,321
Additions to deferred financing costs (5,526)
Distributions to minority interest (210)
Dividends paid (4,813)
--------- ---------
Cash provided by financing activities 264,451 457,190
INCREASE IN CASH AND CASH EQUIVALENTS 145,285 4,022
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,890 10,447
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 149,175 $ 14,469
========= =========
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See notes to unaudited condensed consolidated financial statements.
4
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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 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 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. 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 using the provisions of Accounting Principles Board Opinion No. 15
"Earnings Per Share" (APB 15). 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 six month periods ended June 30, 1997 and 1996,
reported earnings (loss) per share on a pro forma basis would have been
consistent with the per share amounts under APB 15.
3. 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 provision (benefit) are recorded in the interim period in which
a change in the estimated annual effective rate is determined.
4. Property and Equipment and Intangible Assets - Property and equipment and
intangible assets included approximately $108.7 million and $120.6 million
of assets related to radio stations held for sale or under exchange
agreements as of December 31, 1996 and June 30, 1997, respectively. The
following summary presents the results of operations (excluding
depreciation, amortization 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:
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Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1997 1996 1997
------- ------- ------- -------
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Net operating revenues $ 4,385 $ 6,907 $ 7,312 $11,917
Net operating expenses $ 2,682 $ 4,556 $ 4,441 $ 8,879
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5
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. 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 $192.2
million, initially to repay amounts outstanding under the 1997 Credit
Agreement and thereafter to 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.
Under these terms and conditions, the Company was required to file a
registration statement and offer to exchange the shares of Series A
Exchangeable Preferred Stock for new Series B Exchangeable Preferred Stock
within ninety days of January 30, 1997. 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. 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 substantially the same.
6. 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. Terms and conditions of the 1997 Credit Agreement
are described in the Form 10-K. 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, available only to repurchase, if
required, certain note obligations of EZ Communications, Inc. (EZ) which
were assumed by the Company in connection with the EZ Merger discussed in
the Form 10-K and in Note 7 . 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.
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 $1,639,000, net of a tax benefit of
$1,013,000, representing the write-off of deferred financing fees
associated with the previous agreement.
7. 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 affect on the financial
position, results of operations or liquidity of the Company.
6
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Acquisitions and Dispositions - (Continued)
During the first six months of 1996 and 1997, the Company consummated the
following station and tower related transactions. See the Form 10-K for
additional information on these transactions.
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 which, 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 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 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 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 10.
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.
Charlotte: 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 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. The net assets and liabilities of WRFX-FM included in this
exchange agreement are carried on the consolidated balance sheet as net
assets held under trust agreement. (See Note 9).
7
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Acquisitions and Dispositions - (Continued)
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 April 1997, the Company exchanged WVOR-FM,
WHAM-AM and WHTK-AM serving Rochester, together with $16.0 million, for
WKRQ-FM serving Cincinnati. See Rochester below.
Dayton: In February 1997, the Company acquired WXEG-FM for approximately
$3.6 million and acquired WLQT-FM and WBBT-FM for approximately $12.0
million.
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. 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.
Rochester: In February 1997, the Company acquired WVOR-FM, WPXY-FM, WHAM-AM
and WHTK-AM for approximately $31.5 million including working capital. See
Cincinnati and Rochester above.
In April 1997, the Company acquired WZNE-FM (formerly WAQB-FM), a newly
licensed Class A FM station for approximately $3.5 million.
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 8).
San Jose: In February 1997, the Company acquired KBAY-FM and KKSJ-AM
serving San Jose for approximately $31.0 million. (See Note 8).
8
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Acquisitions and Dispositions - (Continued)
Seattle: 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.
In June 1997, the Company sold the assets of KMPS-AM for approximately $1.8
million.
Tower Subsidiary: In June 1997, American Tower Systems, Inc. (the Tower
Subsidiary or Tower) acquired 21 tower sites and a tower site management
business in Georgia, North Carolina and South Carolina for approximately
$5.3 million. The agreement also provides for additional payments by Tower
if the seller is able to arrange 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 companies that
are affiliated with one another and are engaged in the business of
acquiring and developing tower sites for unaffiliated third parties in
various locations in the United States for approximately $13.0 million.
In May 1997, the Tower Subsidiary entered into an agreement to own and
operate communication towers which will be constructed on over fifty tower
sites in northern California. The Tower Subsidiary advanced approximately
$0.8 million to this entity and owns a 70% interest in the entity, with the
remaining 30% owned by an unaffiliated party. The Tower Subsidiary is
obligated to provide additional financing for the construction of these and
any additional towers and such obligation is estimated to be approximately
$5.0 million.
1996 Acquisitions:
Hartford: In May 1996, the Company acquired WTIC-AM and WTIC-FM for
approximately $39.0 million.
Detroit and Philadelphia: In May 1996, the Company consummated a merger
agreement with Marlin Broadcasting, Inc. pursuant to which it acquired
WFLN-FM in Philadelphia and WQRS-FM in Detroit for approximately $58.5
million.
Tower Subsidiary: In February 1996, the Tower Subsidiary acquired Skyline
Communications and Skyline Antenna Management for approximately $3.3
million.
In April 1996, the Tower Subsidiary acquired BDS Communications, Inc. and
BRIDAN Communications Corporation for approximately $9.1 million.
9
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AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Acquisitions and Dispositions - (Continued)
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:
Six Months Ended Six Months Ended
---------------- ----------------
June 30,1996 June 30, 1997
---------------- ----------------
Net revenues $ 141,808 $ 183,842
Loss before extraordinary loss (15,528) (12,802)
Net loss (15,528) (14,442)
Net loss applicable to common
stockholders (15,661) (28,733)
Net loss per common share $ (.57) $ (.98)
8. 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.
Lebanon: In June 1997, the Company entered into an agreement to acquire
WMMA-FM serving the Lebanon, Ohio market for approximately $3.0 million.
Subject to the receipt of FCC approval, the acquisition 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 third or fourth quarter.
10
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Pending Transactions - (Continued)
In June 1997, the Company and the seller received requests for additional
information about the acquisition from the Anti Trust Division of the U.S.
Department of Justice. Under the HSR Act and the regulations thereunder,
the acquisition may not be consumated 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
hereunder complied with the anti-trust laws, the Department of Justice or
others could take action under the antitrust laws to enjoin or otherwise
challenge such acquisition/divestiture.
Portsmouth: In May 1997, the Company entered into an agreement to acquire
WSRI-FM, WZNN-AM, WMYF- AM and WEZR-FM, serving Portsmouth, New Hampshire,
for approximately $6.0 million. The Company began programming and marketing
the stations pursuant to an LMA agreement in July 1997. Subject to the
receipt of FCC approval, the acquisition is expected to be consummated in
the third quarter.
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.
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. Subject to the receipt of FCC approval,
the acquisition is expected to be consummated in the fourth quarter. In
June 1997, the Company and the seller each received a Civil Investigative
Demand from the Anti Trust 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.
In May 1997, the Company entered into an agreement to sell KKSJ-AM for
approximately $3.2 million. The acquirer began programming and marketing
the stations pursuant to an LMA agreement in June 1997. Subject to the
receipt of FCC approval, the transaction is expected to be consummated in
the fourth quarter.
Temple: In May 1997, the Company entered into an agreement to acquire radio
station KKIK-FM, licensed to Temple, Texas 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 May 1997 the Company entered into an agreement to sell
WKGR-FM, WOLL-FM, WBZT- AM, and WEAT-AM for approximately $33.0 million.
Subject to the receipt of FCC approval (the HSR Act waiting period has
expired), the transaction is expected to be consummated in the third
quarter.
9. Subsequent Events - Subsequent to June 30, 1997, the Company consummated
the following transactions:
Boston: In July 1997, the Company acquired the assets of WNFT-AM for
approximately $4.5 million. The Company began programming and marketing the
station pursuant to an LMA agreement in June 1997.
11
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Subsequent Events - (Continued)
Charlotte and Pittsburgh: In August 1997, in order to comply with the
Charlotte Consent Decree described in Note 7 and the FCC's multiple
ownership rules, the Company consummated an asset exchange agreement
pursuant to which it exchanged WRFX-FM, serving Charlotte, for WDSY-FM,
serving Pittsburgh, and $20.0 million.
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 and expiration or earlier
termination of the HSR Act waiting period, the transactions are expected to
be consummated in the fourth quarter.
Rochester: In July 1997, the Company sold the assets of WCMF-AM for
approximately $0.7 million.
St. Louis: In July 1997, the Company sold the assets of KTRS-AM (formerly
KSD-AM) for approximately $10.0 million.
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 agreement in June
1997. Subject to the receipt of FCC approval and expiration or earlier
termination of the HSR Act waiting period, the acquisition is expected to
be consummated in the fourth quarter.
Tower Subsidiary: In July 1997, the Tower Subsidiary acquired the
following:
(i) the assets of three entities which are affiliated with one another
which own and operate towers and a tower site management business in
southern California for an aggregate purchase price of approximately $32.1
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 permit rights to build five tower sites in Maryland for
approximately $0.5 million.
In July 1997, the Tower Subsidiary entered into an asset purchase agreement
with two entities affiliated with one another to acquire tower sites and a
tower site management business located in northern California for
approximately $45.0 million. In connection therewith, the Tower Subsidiary
also agreed to loan up to $1.35 million to the sellers on an unsecured
basis, of which approximately $0.25 million has been advanced. Consummation
of the transaction is dependent on, among other things, the expiration or
earlier termination of the HSR Act waiting period. The transaction is
expected to be consummated in the third quarter.
In July 1997, the Tower Subsidiary entered into an asset purchase agreement
to acquire tower sites and certain video transport operations for
approximately $70.25 million. The seller owns or leases approximately 125
towers, principally in the Mid-Atlantic region, with the remainder in
California and Texas. Consummation of the transaction is dependent on,
among other things, the expiration or earlier termination of the HSR Act
waiting period. The acquisition is expected to be consummated in the fourth
quarter of 1997 or the first quarter of 1998.
In August 1997, the Tower Subsidiary acquired six tower sites for
approximately $1.5 million.
The Company is also pursuing the acquisitions of tower properties and
additional radio stations in new and existing markets, none of which have
definitive purchase agreements.
12
<PAGE>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees:
The Company's payment obligations under the 9.00% Senior Subordinated Notes
(9% Notes) and the 9.75% Senior Subordinated Notes (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% Notes)
and a senior subordinated basis (in the case of the 9.75% 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 9.75% 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 9.75% 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.
13
<PAGE>
<TABLE>
<CAPTION>
Unaudited Condensed Consolidating Balance Sheet
June 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,095 $ 4,503 $ 1,871 $ 14,469
Accounts receivable, net 51,612 29,834 838 82,284
Prepaid expenses and other current assets 3,374 1,081 102 4,557
Deferred income taxes 3,201 169 3,370
---------- ---------- ----------- ----------- ----------
Total current assets 66,282 35,587 2,811 104,680
PROPERTY AND EQUIPMENT, NET 81,202 47,798 24,044 153,044
OTHER ASSETS:
Restricted cash 8,896 8,896
Investment in and advances to subsidiaries 1,288,346 (1,288,346) 0
Investment notes receivable 25,496 254 25,750
Goodwill - net 342,379 20,198 12,199 374,776
FCC licenses - net 1,114,573 1,114,573
Other intangible assets - net 31,672 1,938 19,567 53,177
Deposits and other long-term assets 12,502 446 12,948
Deferred income taxes 7,142 7,142
Net assets held under trust agreement 63,252 63,252
---------- ---------- ----------- ----------- ----------
Total other assets $1,716,433 1,199,961 32,466 (1,288,346) 1,660,514
---------- ---------- ----------- ----------- ----------
TOTAL ASSETS $1,863,917 $1,283,346 $ 59,321 $(1,288,346) $1,918,238
========== ========== =========== =========== ==========
14
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Balance Sheet
June 30, 1997
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 480 $ 107 $ 587
Accounts payable and accrued expenses 39,549 $ 6,959 1,842 48,350
---------- ---------- ----------- ----------- ----------
Total current liabilities 40,029 6,959 1,949 48,937
NON-CURRENT LIABILITIES:
Deferred income taxes 182,623 21,522 279 204,424
Other long-term liabilities 11,236 9 11,245
Long-term debt 736,854 23,122 759,976
---------- ---------- ----------- ----------- ----------
Total non-current liabilities 930,713 21,522 23,410 975,645
MINORITY INTEREST IN SUBSIDIARY 481 481
REDEEMABLE EXCHANGEABLE
PREFERRED STOCK 209,478 209,478
STOCKHOLDERS' EQUITY:
Preferred Stock 1 1
Common Stock 294 500 $ (500) 294
Additional paid-in capital 684,089 1,249,394 33,970 (1,283,364) 684,089
Unearned compensation (249) (249)
Retained earnings 0 5,471 (989) (4,482) 0
Treasury stock (438) (438)
---------- ---------- ----------- ----------- ----------
Total stockholders' equity 683,697 1,254,865 33,481 (1,288,346) 683,697
---------- ---------- ----------- ----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,863,917 $1,283,346 $ 59,321 $ (1,288,346) $ 1,918,238
========== ========== =========== ============ ===========
15
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Statement of Operations
For the Six Months Ended June 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 $ 105,885 $ 45,258 $ (22) $ 151,121
Tower revenues $ 3,381 (157) 3,224
License fees charged to Parent (8,428) 8,428 0
--------- ---------- ----------- ------------ -----------
Total net revenues 97,457 53,686 3,381 (179) 154,345
Operating expenses excluding
depreciation and amortization, net
local marketing agreement and
corporate general and administrative 74,325 28,736 1,849 (179) 104,731
expenses
Net local marketing agreement expense 993 348 1,341
Depreciation and amortization 7,830 14,411 1,323 23,564
Corporate general and administrative 3,934 3,934
--------- ---------- ----------- ------------ -----------
Operating income 10,375 10,191 209 20,775
Other income (expense):
Interest expense (22,918) (318) (23,236)
Interest income 1,088 57 1,145
Gain (loss) on sale of assets and other, net 803 (3) (161) 639
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level 4,465 (4,465) 0
--------- ---------- ----------- ------------ -----------
Income (loss) before income taxes and
extraordinary item (6,187) 10,188 (213) (4,465) (677)
Benefit (provision) for income taxes 5,884 (5,324) (186) 374
--------- ---------- ----------- ------------ -----------
Income (loss) before extraordinary loss (303) 4,864 (399) (4,465) (303)
Extraordinary loss on extinguishment of
debt - net of tax benefit (1,639) (1,639)
--------- ---------- ----------- ------------ -----------
Net income (loss) $ (1,942) $ 4,864 $ (399) $ (4,465) $ (1,942)
========= ========== =========== ============ ===========
16
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Statement of Operations
For the Three Months Ended June 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 $ 54,704 $ 43,486 $ (13) $ 98,177
Tower revenues $ 2,015 (84) 1,931
License fees charged to Parent (3,274) 3,274 0
--------- ---------- ----------- ------------ -----------
Total net revenues 51,430 46,760 2,105 (97) 100,108
Operating expenses excluding
depreciation and amortization, net
local marketing agreement and
corporate general and administrative 35,628 27,284 1,032 (97) 63,847
expenses
Net local marketing agreement (revenues) expenses (1,606) 1,015 (591)
Depreciation and amortization 4,406 10,916 818 16,140
Corporate general and administrative 2,156 2,156
--------- ---------- ----------- ------------ -----------
Operating income 10,846 7,545 165 18,556
Other income (expense):
Interest expense (15,510) (222) (15,732)
Interest income 457 32 489
Gain (loss) on sale of assets and other, net 504 (3) (81) 420
Equity in (loss) of subsidiaries, net of
income taxes recorded at the
subsidiary level 4,567 (4,567) 0
--------- ---------- ----------- ------------ -----------
Income (loss) before income taxes and
extraordinary item 864 7,542 (106) (4,567) 3,733
Benefit (provision) for income taxes 1,557 (2,633) (236) (1,312)
--------- ---------- ----------- ------------ -----------
Net income (loss) $ 2,421 $ 4,909 $ (342) $ (4,567) $ 2,421
========= ========== =========== ============ ===========
17
<PAGE>
<CAPTION>
Unaudited Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 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 operating activities $ (28,073) $ (3,043) $ 511 $ (30,605)
--------- ---------- ----------- ------------ -----------
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (14,497) (4,889) (19,386)
Proceeds from radio station sales 27,876 20,000 47,876
Payments for radio station acquisitions (445,719) (445,719)
Payments for tower related acquisitions (19,277) (19,277)
Repayment for station investment notes
receivable 1,243 1,243
Issuance of station investment notes
receivable (410) (254) (664)
Deposits and other long-term assets 13,431 (48) (19) 13,364
--------- ---------- ----------- -----------
Cash flows used by investing activities (437,353) 19,952 (5,162) (422,563)
--------- ---------- ----------- -----------
Financing Activities:
Borrowings under Credit Agreements and
other 514,000 19,000 533,000
Repayment of Credit Agreements (257,000) (257,000)
Repayment of other obligations (385) (307) (692)
Net proceeds from equity offerings and
options 213 213
Net proceeds from exchangeable preferred
stock 192,218 192,218
Additions to deferred financing costs (5,526) (5,526)
Distributions to minority interest (210) (210)
Dividends paid (4,813) (4,813)
Investment in and advances to subsidiaries 26,740 (12,406) (14,334) 0
--------- ---------- ----------- -----------
Cash flows from financing activities 465,447 (12,406) 4,149 457,190
--------- ---------- ----------- ------------ -----------
Increase (decrease) in cash and cash equivalents 21 4,503 (502) 4,022
Cash and cash equivalents at beginning
of period 8,074 2,373 10,447
--------- ---------- ----------- ------------ -----------
Cash and cash equivalents at end of period $ 8,095 $ 4,503 $ 1,871 $ 14,469
========= ========== =========== ============ ===========
18
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,074 $ 2,373 $ 10,447
Accounts receivable, net 49,565 $ 2,095 237 51,897
Prepaid expenses and other current assets 3,509 14 80 3,603
Deferred income taxes 3,202 168 3,370
--------- ---------- ----------- ------------ -----------
Total current assets 64,350 2,277 2,690 69,317
PROPERTY AND EQUIPMENT, NET 67,267 3,271 19,709 90,247
OTHER ASSETS:
Investment in and advances to subsidiaries 314,983 $ (314,983) 0
Station investment notes receivable 69,920 69,920
Goodwill - net 200,449 20,457 11,243 232,149
FCC licenses - net 233,558 233,558
Other intangible assets - net 24,178 327 3,048 27,553
Deposits and other long-term assets 25,589 48 427 26,064
Net assets held under exchange agreement 47,495 47,495
--------- ---------- ----------- ------------ -----------
Total other assets 635,119 301,885 14,718 (314,983) 636,739
--------- ---------- ----------- ------------ -----------
TOTAL ASSETS $ 766,736 $ 307,433 $ 37,117 $ (314,983) $ 796,303
--------- ---------- ----------- ------------ -----------
19
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 444 $ 117 $ 561
Accounts payable and accrued expenses 31,087 656 2,027 33,770
--------- ---------- ----------- ------------ -----------
Total current liabilities 31,531 656 2,144 34,331
NON-CURRENT LIABILITIES:
Deferred income taxes 11,405 21,521 279 33,205
Other long-term liabilities 2,129 20 2,149
Long-term debt 325,693 4,418 330,111
--------- ---------- ----------- ------------ -----------
Total non-current liabilities 339,227 21,521 4,717 365,465
MINORITY INTEREST IN SUBSIDIARY (185) 529 344
STOCKHOLDERS' EQUITY:
Preferred Stock 1 1
Common Stock 211 500 $ (500) 211
Additional paid-in capital 390,731 284,649 29,817 (314,466) 390,731
Unearned compensation (297) (297)
Retained earnings 5,955 607 (590) (17) 5,955
Treasury stock (438) (438)
--------- ---------- ----------- ------------ -----------
Total stockholders' equity 396,163 285,256 29,727 (314,983) 396,163
--------- ---------- ----------- ------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 766,736 $ 307,433 $ 37,117 $ (314,983) $ 796,303
========= ========== =========== ============ ===========
20
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 59,873 $ 59,873
Tower revenues 400 $ 820 1,220
License fees (1,030) $ 1,030
--------- ---------- ----------- ------------ -----------
Total net revenues 59,243 1,030 820 61,092
Operating expenses excluding depreciation and
amortization, net local marketing agreement
corporate general and administrative
expenses 42,077 4 693 42,774
Net local marketing agreement expenses 2,589 2,589
Depreciation and amortization 3,490 1,026 323 4,839
Corporate general and administrative 2,340 2,340
--------- ---------- ----------- ------------ -----------
Operating income 8,747 (196) 8,550
Other income (expense):
Interest income 3,638 2 3,640
Interest expense (8,953) (11) (8,964)
Gain (loss) on sale of assets and other (36) (36)
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level $ (113) $ 113
--------- ---------- ----------- ------------ -----------
Income (loss) before income taxes 3,283 (205) 113 3,191
Provision (benefit) for income taxes 1,528 (92) 1,436
--------- ---------- ----------- ------------ -----------
Net income $ 1,755 $ 0 $ (113) $ 113 $ 1,755
========= ========== =========== ============ ===========
21
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net broadcast revenues $ 36,704 $ 37,250
Tower revenues 194 $ 546 194
License fees (527) $ 527
--------- ---------- ----------- ------------ -----------
Total net revenues 36,371 527 546 37,444
Operating expenses excluding depreciation and
amortization, net local marketing agreement
corporate general and administrative
expenses 24,209 2 439 24,650
Net local marketing agreement expenses 2,139 2,139
Depreciation and amortization 1,902 525 212 2,639
Corporate general and administrative 1,259 1,259
--------- ---------- ----------- ------------ -----------
Operating income 6,862 (105) 6,757
Other income (expense):
Interest income 1,523 1,523
Interest expense (4,252) (9) (4,261)
Gain (loss) on sale of assets and other (1) (1)
Equity in (loss) of subsidiaries, net of income
taxes recorded at the subsidiary level $ (63) $ 63
--------- ---------- ----------- ------------ -----------
Income (loss) before income taxes 4,069 (114) 63 4,018
Provision (benefit) for income taxes 1,858 (51) 1,807
--------- ---------- ----------- ------------ -----------
Net income $ 2,211 $ 0 $ (63) $ 63 $ 2,211
========= ========== =========== ============ ===========
22
<PAGE>
<CAPTION>
AMERICAN RADIO SYSTEMS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Subsidiary Guarantees - (continued):
Unaudited Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 1996
(Dollars in thousands)
Parent and Guarantor Non-guarantor Consolidated
its Divisions Subsidiaries Subsidiaries Eliminations Totals
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities $ (6,184) $ 661 $ (5,523)
--------- ---------- ----------- ------------ -----------
Investing Activities:
Payments for purchase of property and
equipment and intangible assets (4,542) (2,795) (7,337)
Proceeds from radio station sales 18,000 18,000
Payments for radio station acquisitions (67,777) (67,777)
Payments for tower related acquisitions (5,045) (5,045)
Payment for station investment notes
receivable (27,779) (27,779)
Deposits and other long-term assets (23,651) (54) (23,705)
--------- ---------- ----------- ------------ -----------
Cash flows used by investing activities (105,749) (7,894) (113,643)
--------- ---------- ----------- ------------ -----------
Financing Activities:
Repayment of Credit Agreements (151,500) (151,500)
Repayment of other obligations (561) (7) (568)
Net proceeds from equity offerings and
options 248,198 248,198
Net proceeds from exchangeable preferred
stock 168,321 168,321
Investment in and advances to subsidiaries 7,292 (7,292)
--------- ---------- ----------- ------------ -----------
Cash flows from financing activities 264,458 7,285 (7,292) 264,451
--------- ---------- ----------- ------------ -----------
Decrease in cash and cash equivalents 152,525 52 (7,292) 145,285
Cash and cash equivalents at beginning
of period 3,890 3,890
--------- ---------- ----------- ------------ -----------
Cash and cash equivalents at end of period $ 156,415 $ 0 $ 52 $ (7,292) $ 149,175
========= ========== =========== ============ ===========
23
</TABLE>
<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 1997 Credit
Agreement, which bears 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 June 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 June 30, 1996, the Company owned and/or operated
approximately fifty radio stations. These transactions have significantly
affected operations for the three and six months ended June 30, 1997 as compared
to the three and six months ended June 30, 1996.
Three months ended June 30, 1997 and 1996
Net revenues were $100.1 million for the three months ended June 30, 1997
compared to $37.4 million for the same three months in 1996, an increase of
$62.7 million or 167.6%. 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 first half of 1997.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $63.8 million for the three months ended June 30, 1997 compared to $24.7
million for the same period in 1996, an increase of $39.1 million or 158.3%.
This increase was due to the impact of increased costs associated with the
Company's revenue growth.
Net local marketing agreement revenues were $0.6 million for the three months
ended June 30, 1997 compared to net local marketing agreement expenses of $2.1
million for the same three months in 1996. Local marketing agreement revenues
for the three months ended June 30, 1997 are presented net of approximately $0.2
million of expenses incurred under such agreements and local marketing agreement
expenses for the same period in 1996 are presented net of approximately $0.3
million of revenues earned under such agreements. The change in the balances for
each period are based on the timing of pending station acquisitions and
dispositions.
Depreciation and amortization was $16.1 million and $2.6 million for the three
months ended June 30, 1997 and June 30, 1996, respectively, an increase of $13.5
million. This increase was primarily attributable to the impact of increased
expenses associated with the increase in depreciable and amortizable assets
resulting from the 1996 and 1997 station acquisitions and, to a lesser extent,
the impact of increased values being ascribed to FCC licenses in the purchase
price allocation of 1997 station acquisitions.
24
<PAGE>
Results of Operations - (continued):
Corporate general and administrative expenses increased to $2.2 million for the
three months ended June 30, 1997, from $1.3 million for the three months ended
June 30, 1996, an increase of $0.9 million or 69.2%. This increase was primarily
attributable to the higher personnel costs associated with supporting the
Company's greater number of stations.
Interest expense was $15.7 million for the three months ended June 30, 1997
compared to $4.3 million for the 1996 period, an increase of $11.4 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 $0.5 million for the three months ended June 30, 1997
compared to $1.5 million for the three months ended June 30, 1996, a decrease of
$1.0 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 provision for the three months ended June 30, 1997 was $1.3
million as compared to $1.8 million for three months ended June 30, 1996. The
effective tax rate for the three months ended June 30, 1997 was approximately
35.2% compared to 45.0% in 1996. The effective tax rate for the three months
ended June 30, 1997 is reflective of the cumulative adjustment required to
adjust to the estimated annual effective rate of 55%. The effective rate in 1996
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 June 30, 1997 were $8.1
million compared to $0.1 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 $5.7 million of dividends attributable to the
Cumulative Exchangeable Preferred Stock issued in late January 1997. The
dividends for the 1996 period include $0.1 million of dividends attributable to
the Convertible Preferred Stock.
Net loss applicable to common stockholders was $5.7 million for the three months
ended June 30, 1997 compared to a net income applicable to common stockholders
of $2.1 million for the three months ended June 30, 1996, as a result of the
factors discussed above.
Six months ended June 30, 1997 and 1996
Net revenues were $154.3 million for the six months ended June 30, 1997 compared
to $61.1 million for the same six months in 1996, an increase of $93.2 million
or 152.5%. 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 half of 1997.
Station operating expenses excluding net local marketing agreement expenses,
depreciation and amortization and corporate general and administrative expenses
were $104.7 million for the six months ended June 30, 1997 compared to $42.8
million for the same period in 1996, an increase of $61.9 million or 144.6%.
This increase was due to the impact of increased costs associated with the
Company's revenue growth.
Net local marketing agreement expenses were $1.3 million for the six months
ended June 30, 1997 compared to $2.6 million for the same six months in 1996, an
increase of $1.3 million. Local marketing agreement expenses for the six months
ended June 30, 1997 and 1996 are presented net of approximately $2.0 million and
$0.3 million, respectively of revenues earned under such agreements. The change
in the balances for each period are based on the timing of pending station
acquisitions and dispositions.
25
<PAGE>
Results of Operations - (continued):
Depreciation and amortization was $23.6 million and $4.8 million for the six
months ended June 30, 1997 and June 30, 1997, respectively, an increase of $18.8
million. This increase was primarily attributable to the impact of increased
expenses associated with the increase in depreciable and amortizable assets
resulting from the 1996 and 1997 station acquisitions and, to a lesser extent,
the impact of increased values being ascribed to FCC licenses in the purchase
price allocation of 1997 station acquisitions.
Corporate general and administrative expenses increased to $3.9 million for the
six months ended June 30, 1997 from $2.3 million for the six months ended June
30, 1996, an increase of $1.6 million or 69.6%. This increase was primarily
attributable to the higher personnel costs associated with supporting the
Company's greater number of stations.
Interest expense was $23.2 million for the six months ended June 30, 1997
compared to $9.0 million for the 1996 period, an increase of $14.2 million or
157.8%. 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 $1.1 million for the six months ended June 30, 1997 compared
to $3.6 million for the six months ended June 30, 1996, a decrease of $2.5
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 six months ended June 30, 1997 was $0.4 million
as compared to a provision of $1.4 million for six months ended June 30, 1996.
The effective tax rate for the six months ended June 30, 1997 was approximately
55.2% compared to 45.0% 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 effective tax rate for the six months ended June
30, 1997 includes the cumulative adjustment required to adjust the estimated
annual effective rate.
The extraordinary loss for the six months ended June 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 six months ended June 30, 1997 were $14.3
million compared to $0.1 milion for the 1996 period. The dividends for the 1997
period include $4.8 million of dividends attributable to the Convertible
Preferred Stock issued in late June 1996 and $9.5 million of dividends
attributable to the Cumulative Exchangeable Preferred Stock issued in late
January 1997. The dividends for the 1996 period include $0.1 million of
dividends attributable to the Convertible Preferred Stock.
Net loss applicable to common stockholders was $16.2 million for the six months
ended June 30, 1997 compared to net income applicable to common stockholders of
$1.6 million for the six months ended June 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 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 six months ended June 30,
1997, cash flows used from operating activities was $30.6 million, as compared
to $5.5 million for the six months ended June 30, 1996. The change is primarily
attributable to working capital investments related to station acquisition and
growth.
26
<PAGE>
Liquidity and Capital Resources - (continued)
Cash flows used for investing activities were $422.6 million for the six months
ended June 30, 1997 as compared to $113.6 million for the six months ended June
30, 1996. The increase is attributable to the increased acquisition activity in
1997 as compared to 1996.
Cash provided by financing activities was $457.2 million for the six months
ended June 30, 1997 as compared to $264.5 million for the six months ended June
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.
Offering: In January 1997, the Company consummated a private offering of
2,000,000 shares of 11 3/8% Cumulative Exchangeable Preferred Stock, $100
liquidation preference per share (Exchangeable Preferred Stock). Net proceeds to
the Company from the offering were approximately $192.2 million. Proceeds of the
offering were used initially to repay indebtedness and thereafter 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 June 30, 1997, the Company had approximately $760.6
million of total long-term debt (including the current portion thereof)
outstanding. This included approximately $430.0 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 new credit agreements with a syndicate of banks (the 1997
Credit Agreement) which replaced the $300.0 million 1995 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, a
$200.0 million revolving credit converting to a term loan facility and a $150.0
million term loan facility, which was 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 agreement was canceled in
May 1997. The terms of the 1997 Credit Agreement are described in the Form 10-K.
In November 1996, the Tower Subsidiary entered into a credit agreement (Tower
Credit Agreement) that provides the Tower Subsidiary with a $70.0 million loan
commitment and an incremental $20.0 million loan, contingent upon Tower
obtaining additional equity. As of June 30, 1997 approximately $21.5 million of
borrowings were outstanding under the Tower Credit Agreement. The terms of the
Tower Credit Agreement are described in the Form 10-K. The Tower Subsidiary is
in the process of negotiating the terms of a new credit facility which will
increase the amount of available borrowings to $250.0 million. While the Tower
Subsidiary expects to execute a credit agreement in the third or fourth quarter
of 1997, there can be no assurance that such an agreement will be executed.
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, tower properties or
a downturn in economic conditions.
27
<PAGE>
Liquidity and Capital Resources - (continued):
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 Agreement 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
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 $17.1 million in capital expenditures in the six
months ended June 30, 1997, principally related to tower construction and office
consolidations. The Company expects capital expenditures in 1997 to be
approximately $30.0 million, consisting principally of tower construction,
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.
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.
28
<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 2. - Changes in Securities
On June 24, 1997, the Company issued 100 shares of Class A Common Stock shares
to Kelly Maguire as consideration, in part for the services rendered by her
father, John Maguire, a Vice President and General Manager, through March 1997.
The Company issued such shares pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act.
Item 4. - Submission of Matters to a Vote of Security Holders.
The 1996 Annual Meeting of Stockholders was held on Thursday, May 29, 1997, to
consider and act upon the following matters. The results of the stockholder
voting were as follows:
1. To elect ten Directors, including two "independent" directors to be
elected by the holders of Class A Common Stock, voting separately as a
class, for the ensuing year or until their successors are elected and
qualified;
Votes Votes
Cast For Withheld
---------- --------
Steven B. Dodge 56,658,419 98,345
Thomas H. Stoner 56,658,419 98,345
Alan L. Box 56,658,419 98,345
Joseph L. Winn 56,658,419 98,345
Charlton H. Buckley 56,658,419 98,345
Arnold L. Chavkin 56,658,419 98,345
James H. Duncan, Jr.* 13,265,409 98,345
Arthur C. Kellar 56,658,419 98,345
Charles D. Peebler, Jr.* 13,265,409 98,345
Lance R. Primis 56,658,419 98,345
* In accordance with the Company's Articles of Incorporation, the
holders of Class A Common Stock, exclusive of all other stockholders,
are entitled to elect two of the Company's independent directors.
Messrs. Duncan and Peebler were nominated as the independent
directors and elected by the holders of the Class A Common Stock.
29
<PAGE>
Item 4. - Submission of Matters to a Vote of Security Holders - (continued).
2. To approve an amendment to the Company's Amended and Restated Stock
Option Plan to increase the aggregate number of shares of Class A
and Class B Common Stock authorized for issuance thereunder from
2,000,000 to 3,000,000;
For Against Abstain
51,086,860 4,221,909 1,447,995
3. To ratify the selection by the Board of Directors of Deloitte &
Touche LLP as the Company's independent auditors for 1997;
For Against Abstain
56,677,927 20,729 58,108
Item 5. - Other Information.
On July 21, 1997, the Company and American Radio Systems License Corp.,
entered into an Asset Exchange agreement with Entertainment Communications, Inc.
(Entercom) and ECI License Company L.P. (ECI) pursuant to which the Company will
acquire substantially all the assets of KLOU-FM in St. Louis, Missouri in
exchange for substantially all the assets of KUDL-FM and WDAF-AM in Kansas City,
Missouri and $7.0 million. In addition, the Company entered into an Asset
Purchase agreement with Entercom to sell substantially all the assets of KCTC-AM
for approximately $4.0 million. Consummation of both transactions are subject
to, among other things, the approval of the FCC. For more information see the
Company's press release, dated July 21, 1997 which is attached herewith as
Exhibit 99.1
30
<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 three months ended March 31, 1997. Exhibit numbers in
parenthesis refer to the exhibit number in the applicable filing.
<TABLE>
<CAPTION>
Exhibit
No. Description of Document
<S> <C> <C>
10.1a Asset Purchase Agreement by and between American Tower
Systems, Inc. ("American Tower") and Communication
Systems Development, Inc., dated as of May 27, 1997 Filed herewith as Exhibit 10.1a
10.1b Agreement of Limited Liability Company of Communication
Systems Development, LLC, by and among American Tower
and Communication Development Corporation, Inc.,
dated as of May 30, 1997 Filed herewith as Exhibit 10.1b
10.2 Asset Purchase Agreement by and between American Tower
and B & E Associates, Inc., dated as of May 27, 1997 Filed herewith as Exhibit 10.2
10.3 Asset Purchase Agreement by and between American Tower
and Towers L.L.C., dated as of May 13, 1997 Filed herewith as Exhibit 10.3
10.4a Asset Purchase Agreement by and between American Tower
and Diablo Communications, Inc. ("Diablo"),
dated as of July 8, 1997 Filed herewith as Exhibit 10.4a
10.4b Securities Purchase Agreement by and between American
Tower and Diablo, dated as of March 20, 1997
relating to Notes due 2000 of Diablo Filed herewith as Exhibit 10.4b
10.4c Asset Purchase Agreement by and between American Tower
and Diablo Communications of Southern California, Inc.
("DCSC"), dated as of July 8, 1997 Filed herewith as Exhibit 10.4c
10.4d Securities Purchase Agreement by and between American
Tower and DCSC, dated as of March 20, 1997
relating to Notes due 2000 of DCSC Filed herewith as Exhibit 10.4d
10.4e Amendment dated August 7, 1997, to Securities Purchase
Agreement by and between American Tower, Diablo
and DCSC, dated July 8, 1997 Filed herewith as Exhibit 10.4e
10.5 Asset Purchase Agreement dated as May 27, 1997 between
the Company, Precision Media Corporation, a Delaware
corporation ("Precision Media") Filed herewith as Exhibit 10.5
10.6 Time Brokerage Agreement, dated as July 1, 1997 by and
between the Company and Precision Media Filed herewith as Exhibit 10.6
10.7 Asset Purchase Agreement, dated as June 6, 1997, by and
between the Company and Michael A. McMurray and
Marilyn A. McMurray, d/b/a McMurray Communications,
an Ohio general partnership Filed herewith as Exhibit 10.7
10.8 Time Brokerage Agreement, dated as June 1, 1997 by and
between the Company and Jupiter Radio Partners Filed herewith as Exhibit 10.8
10.9 Asset Purchase Agreement, dated May 14, 1997 by and
between the Company and Greater Boston Radio, Inc. Filed herewith as Exhibit 10.9
10.10 Time Brokerage Agreement, dated as May 14, 1997 between
Greater Boston Radio, Inc. and the Company Filed herewith as Exhibit 10.10
10.11 Asset Purchase Agreement, dated as May __, 1997 by and
between Paxson Communications of West Palm Beach, Inc.
and the Company Filed herewith as Exhibit 10.11
10.12 Asset Exchange Agreement, dated June 19, 1997, by and
among the Company, American Radio Systems License
Corp ("License Corp.") Citicasters Co., Regent
Broadcasting of Kansas City, Inc., and Regent Licensee of
Kansas City, Inc. Filed herewith as Exhibit 10.12
10.13 Asset Exchange Agreement, dated July 18, 1997 by and
among the Company, License Corp., Entertainment
Communications, Inc. and ECI License Company, L.P. Filed herewith as Exhibit 10.13
10.14 Asset Purchase Agreement by and among the Company,
License Corp. and Entertainment Communications, Inc. Filed herewith as Exhibit 10.14
31
<PAGE>
<CAPTION>
Exhibit
No. Description of Document
<S> <C> <C>
10.15 Asset Purchase Agreement, dated as July 8, 1997 by and
between American Tower and Suburban Cable TV Co. Inc. Filed herewith as Exhibit 10.15
10.16 Asset Purchase Agreement, dated as May 21, 1997, by and
between American Tower and DB Consultants, Inc. Filed herewith as Exhibit 10.16
10.17 Asset Purchase Agreement, dated as May 7, 1997, by and
between the Company, American Radio Systems License
Corp., KKSJ, Inc. and KKSJ License, Inc. * (10.18)
10.18 Asset Exchange Agreement, dated April 17, 1997 by and
among the Company, American Radio Systems License
Corp., Latin Communications, Group, Inc., EXCL
Communications, Inc., Radio Exito, Inc. and Portland
Radio, Inc. * (10.20)
10.19 Asset Purchase Agreement, dated May 6, 1997 between the
and Stellar Communications, Inc. * (10.22)
11 Statement Re Computation of Per Share Earnings Filed herewith as Exhibit 11
12 Statement Re Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends Filed herewith as Exhibit 12
27 Financial Data Schedule Filed herewith as Exhibit 27
99.1 Press Release, dated July 21, 1997 Filed herewith as Exhibit 99.1
</TABLE>
(b) Reports on Form 8-K
1. Form 8-K/A (Item 7) on April 17, 1997.
2. Form 8-K (Items 2, 5 and 7) on April 18, 1997.
3. Form 8-K (Items 5 and 7) on May 30, 1997.
4. Form 8-K/A (Items 5 and 7) on June 12, 1997.
32
<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: August 14, 1997 BY: /s/ Joseph L. Winn
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
Date: August 14, 1997 BY: /s/ Justin D. Benincasa
Justin D. Benincasa
Vice President & Corporate Controller
(Duly Authorized Officer)
33
Exhibit 10.1a
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
COMMUNICATION SYSTEMS DEVELOPMENT, INC.
Dated as of
May 27, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................2
2.1 Agreement to Sell and Buy..............................................................2
2.2 Assumption of Liabilities and Obligations. ............................................2
2.3 Closing; Purchase Price................................................................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF CSD...........................................................4
3.1 Organization and Business; Power and Authority; Effect of Transaction..................4
3.2 Materiality............................................................................5
3.3 Title to Properties; Leases............................................................5
3.4 Compliance with Private Authorizations.................................................5
3.5 Compliance with Governmental Authorizations and Applicable Law.........................6
3.6 Intangible Assets......................................................................7
3.7 Insurance..............................................................................7
3.8 Absence of Sensitive Payments..........................................................7
3.9 Inapplicability of Specified Statutes..................................................7
3.10 Material Agreements....................................................................7
3.11 Material and Adverse Restrictions......................................................7
3.12 Broker or Finder.......................................................................8
3.13 Environmental Matters..................................................................8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS...........................................................8
4.1 Organization and Business; Power and Authority; Effect of Transaction..................8
4.2 Broker or Finder.......................................................................9
4.3 Solvency...............................................................................9
4.4 No Legal Action........................................................................9
ARTICLE 5 COVENANTS.......................................................................................9
5.1 Access to Information; Confidentiality.................................................9
5.2 Agreement to Cooperate. .............................................................10
5.3 Public Announcements..................................................................11
5.4 Notification of Certain Matters.......................................................11
5.5 No Solicitation.......................................................................11
5.6 Conduct of Business by CSD Pending the Closing........................................12
ARTICLE 6 CLOSING CONDITIONS.............................................................................12
6.1 Conditions to Obligations of Each Party...............................................12
6.2 Conditions to Obligations of ATS......................................................13
6.3 Conditions to Obligations of CSD......................................................14
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................15
7.1 Termination...........................................................................15
7.2 Effect of Termination.................................................................16
ARTICLE 8 INDEMNIFICATION................................................................................17
8.1 Survival..............................................................................17
8.2 Indemnification.......................................................................17
8.3 Limitation of Liability...............................................................18
<PAGE>
8.4 Notice of Claims......................................................................18
8.5 Defense of Third Party Claims.........................................................18
8.6 Exclusive Remedy......................................................................18
ARTICLE 9 GENERAL PROVISIONS.............................................................................19
9.1 Amendment.............................................................................19
9.2 Waiver................................................................................19
9.3 Fees, Expenses and Other Payments.....................................................19
9.4 Notices...............................................................................19
9.5 Specific Performance; Other Rights and Remedies.......................................20
9.6 Severability..........................................................................20
9.7 Counterparts..........................................................................21
9.8 Section Headings......................................................................21
9.9 Governing Law.........................................................................21
9.10 Further Acts..........................................................................21
9.11 Entire Agreement......................................................................21
9.12 Assignment............................................................................21
9.13 Parties in Interest...................................................................22
9.14 Mutual Drafting.......................................................................22
</TABLE>
APPENDIX A: Definitions
SCHEDULES:
CSD Disclosure Schedule
EXHIBITS:
EXHIBIT A: Form of LLC Agreement (Section 6.2(f) and Section 6.3 (d))
EXHIBIT B: Form of Noncompetition Agreement Section 6.2(h))
-ii-
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of May 27,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and Communication Systems Development, Inc., a California corporation
("CSD").
WHEREAS, CSD leases forty-two (42) sites (the "Entitled Sites") for
which CSD has completed all activities related to the acquisition and land use
entitlements and sixteen (16) sites (the "Remaining Sites") for which zoning and
other land use approvals have not been obtained, and on all sixty (60) sites
(the "Sites") it is proposed to construct and operate communication towers (the
"CSD Central Valley Business");
WHEREAS, ATS and CSD desire to form a limited liability company under
the laws of the State of Delaware ("LLC") pursuant to an agreement of limited
liability company substantially in the form of Exhibit A attached hereto and
made a part hereof (the "LLC Agreement");
WHEREAS, ATS desires to purchase from CSD, and CSD desires to sell to
ATS, an undivided seventy percent (70%) interest in the CSD Assets on the terms
and conditions hereinafter set forth;
WHEREAS, ATS and CSD desire to transfer to LLC, and LLC shall assume,
all of their respective right, title and interest in the CSD Assets so that the
CSD Assets will be ultimately owned and operated by LLC; and
WHEREAS, prior to the execution and delivery of this Agreement, ATS and
CSD have entered into an escrow agreement (the "Escrow Agreement") with The Bank
of Stockton, Stockton, California (the "Escrow Agent"), pursuant to which ATS
has made a deposit of $100,000 (the "Escrow Deposit");
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 CSD 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 "either party" shall, unless the context otherwise requires, refer to
CSD and ATS.
<PAGE>
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, CSD hereby agrees to sell, assign, transfer and deliver
to ATS at the Closing, and ATS agrees to purchase at the Closing, an undivided
seventy percent (70%) interest in the CSD Assets, free and clear of any Liens of
any nature whatsoever except for Permitted Liens. For purposes of this
Agreement, the term "CSD Assets" shall mean all of the Entitled Sites and all of
the Remaining Sites (a true, correct and accurate list of all of which is set
forth in Section 2.1 of the CSD Disclosure Schedule), together with all
Governmental Authorizations, Private Authorizations, Material Agreements and
other Contracts related thereto (a true, correct and complete list or
description of which is set forth in the relevant sections of the CSD Disclosure
Schedule).
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, LLC shall assume and agree to pay, discharge and
perform any and all obligations and liabilities that are directly associated
with or related to the CSD Assets that become due after the Closing Date,
including, but not limited to, Pro Ratable Taxes and all lease payments that are
due and owing for any of the Entitled Sites and the Remaining Sites (the "CSD
Assumed Obligations"); provided, however, that notwithstanding the foregoing,
ATS shall not assume and agree to pay, and shall not be obligated with respect
to, the CSD Nonassumed Obligations.
(b) LLC shall not assume or become obligated to perform any debt,
liability or obligation of CSD relating to any of the following matters
(collectively, the "CSD Nonassumed Obligations"):
(i) the ownership or operation of the CSD Assets or the
conduct of the CSD Central Valley Business prior to the Closing Date,
including without limitation Taxes (other than Pro Ratable Taxes), any
Legal Actions or other Claims and any obligations or liabilities
relating to Environmental Law;
(ii) any obligations or liabilities under the CSD Assumable
Agreements relating to the period prior to the Closing; and
(iii) those required to be disclosed in the CSD Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iii) of the CSD Disclosure Schedule indicates that such
obligation or liability will not be assumed.
All CSD Nonassumed Obligations shall remain and be the obligations and
liabilities solely of CSD.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the term "CSD Nonassumed Obligations" shall not
include, and the term "CSD Assumed Obligations" shall include, any liability
arising out of the transfer or assignment to LLC of, or the use or enjoyment of
the benefits by LLC under, any Contract, Governmental Authorization or Private
Authorization the transfer or assignment of which (according to Section 2.2(c)
of the CSD Disclosure Schedule) requires or may require the consent of any
Authority or other third party (collectively, the "Nonassignable Contracts"), if
ATS has, on or prior to the Closing Date, notified CSD in writing (an
"Acceptance Notice") that ATS consents to the transfer or assignment of such
Nonassignable Contract to LLC despite the failure or inability of CSD to obtain
the approval or consent of an Authority or other Person whose approval or
consent is required pursuant to the terms of such Nonassignable Contract, or ATS
elects to have LLC receive the benefits of such
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Nonassumable Contract, in either of which events, if the approval or consent of
an Authority or other Person applicable to transfer of such Nonassignable
Contract is required to be obtained as a condition to ATS' obligations at
Closing pursuant to the provisions of Section 6.1(a), 6.2(d) or 6.2(h), ATS
shall be deemed to have waived such condition with respect to such Nonassignable
Contract. With respect to any Nonassignable Contract for which the applicable
consent of any Authority or other Person is not obtained prior to the
Termination Date and for which ATS does not timely deliver an Acceptance Notice
as described in the preceding sentence, CSD and ATS shall negotiate in good
faith to reach an equitable sharing of the rights and obligations under such
Nonassignable Contracts.
(d) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(d) of the CSD Disclosure Schedule,
all items of income and expense (including without limitation with respect to
rent, utility charges, Pro Ratable Taxes and wages, salaries and accrued but
unused vacation of CSD employees) arising from the ownership or operation of the
CSD Assets or the conduct of the CSD Central Valley Business shall be prorated
as of 12:01 a.m., Eastern time, on the Closing Date, with CSD entitled to and
responsible for any such items on or prior to the Closing Date and ATS entitled
to and responsible for any such items relating to any subsequent period. For
these purposes, Pro Ratable Taxes attributable to a period that begins before
and ends after the Closing Date shall be treated on a "closing of the books"
basis as two partial periods, one ending at the close of the Closing Date and
the other beginning on the day after the Closing Date, except that Pro Ratable
Taxes (such as property Taxes) imposed on a periodic basis shall be allocated on
a daily basis. If either party shall have received any such revenues or paid any
such expenses or charges which, pursuant to the terms hereof, the other party is
entitled to or responsible for, it shall furnish the other party with a detailed
statement of any such items as soon as practicable after receipt or payment
thereof. The parties shall use their best efforts to agree upon such items and
other adjustments prior to the Closing Date and, in any event, except as set
forth in Section 2.2(c) of the CSD Disclosure Schedule, within sixty (60) days
thereafter. If the parties are unable within such period to agree upon such
items and other adjustments, CSD and ATS shall, within the following ten (10)
days, jointly designate a nationally known independent public accounting firm to
be retained to review such items and other adjustments. The fees and other
expenses of retaining such independent public accounting firm shall be borne
equally by CSD and ATS. Such firm shall report its conclusions as to such items
and other adjustments pursuant to this Section and such report shall be
conclusive on all parties to this Agreement and not subject to dispute or
review. Upon such agreement or determination by such independent accounting
firm, CSD or ATS, as the case may be, shall promptly reimburse the other party
for any income received or expenses paid by the other party and not previously
reimbursed or any other adjustment required by this Section.
Nothing contained in this Section 2.2(c) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts 02109, at 10:00 a.m., local time, on May 29, 1997 or such
other date, prior to the Termination Date, as the parties may agree (the
"Closing Date"). At the Closing, each of the parties and LLC shall deliver such
bills of sale, assignments, assumptions of liabilities, opinions and other
instruments and documents as are described in this Agreement or as may be
otherwise reasonably requested by the parties and their respective counsel. The
purchase price for the interest in the CSD Assets being acquired by ATS (the
"Purchase Price") shall be an amount equal to the sum of (a) $790,000, subject
to adjustment as provided in Section 2.2(d), plus an amount equal to the Prepaid
Expenses and minus an amount equal to the sum of (i) the CSD Nonassumed
Obligations, if any, which ATS agrees to assume, and (ii) Prepaid Revenues (the
"Base Purchase Price"), and (b) the Entitled Site Payment. The Base Purchase
Price shall be payable by (a) ATS instructing the Escrow Agent to deliver the
Escrow Deposit (together with interest and other increments thereto) to CSD, and
(b) wire transfer of immediately available funds to CSD for the balance of the
Base Purchase Price to such account (or accounts) as CSD shall
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designate in written instructions to ATS delivered not later than two (2)
business days prior to the Closing. The CSD LLC Interest shall be deliverable by
the execution and delivery of the LLC Agreement at the Closing. ATS agrees to
pay any and all costs incurred by CSD with respect to procuring any construction
permits for each of the Entitled Sites, including, but not limited to, fees and
costs for surveys, geotechnical reports, construction drawings and permit fees.
Such costs are exclusive of and/or in addition to the Entitled Site Payment of
$5,000. The "Entitled Site Payment" shall mean an amount equal to $5,000 for
each of the Entitled Sites and shall be payable, from time to time, by ATS or
LLC within ten (10) business days of the receipt by LLC of notice from all
applicable Authorities that all Governmental Authorizations necessary to
construct a communication tower on the Entitled Site as to which payment is to
be made have been fully approved.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CSD
CSD hereby represents, warrants and covenants to, and agrees with, ATS
as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) CSD 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) CSD has all requisite corporate power and corporate authority and
has in full force and effect all Governmental Authorizations and Private
Authorizations, except for those set forth in Section 3.1(b) of the CSD
Disclosure Schedule or those the failure of which to obtain do not and will not
have, individually or in the aggregate, any material adverse effect on CSD,
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 CSD. This Agreement has been duly executed and delivered by CSD 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 CSD will constitute, legal, valid and binding obligations of
CSD, 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 CSD Disclosure
Schedule, and except for matters which would have no material adverse effect on
CSD, neither the execution and delivery by CSD of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by CSD of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by CSD:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of CSD 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
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conflict with, breach or violation of, or default under, or permit any
such acceleration in, any Contractual Obligation of CSD, other than
those constituting CSD Nonassumed Obligations; or
(ii) will require CSD to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA.
(d) CSD does not have any Subsidiaries.
3.2 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 CSD
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the CSD 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 CSD.
3.3 Title to Properties; Leases.
(a) CSD does not own any real property.
(b) Section 3.3(b) of the CSD Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the CSD Central Valley Business is leased. Except as otherwise set forth
in Schedule 3.3(b) of the CSD Disclosure Schedule, each Lease or other occupancy
or other agreement under which CSD holds real or personal property constituting
a part of the CSD Assets has been duly authorized, executed and delivered by CSD
and, to CSD's knowledge, each of the other parties thereto, and is a legal,
valid and binding obligation of CSD, and, to CSD's 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. CSD 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 CSD nor, to CSD's 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 CSD Assets is subject to contracts of sale,
and none is held by CSD 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 3.3(b) of the CSD Disclosure Schedule.
3.4 Compliance with Private Authorizations. Section 3.4 of the CSD
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
CSD Assets or the CSD Central Valley Business. CSD has obtained all Private
Authorizations which are necessary for the ownership or operation of the CSD
Assets or the conduct of the CSD Central Valley Business which, if not obtained
and maintained, could, individually or in the aggregate, materially adversely
affect CSD. All of such Private Authorizations are valid and in good standing
and are in full force and effect. CSD 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 CSD. No such
Private Authorization is the subject of any pending or, to CSD's knowledge,
threatened attack, revocation or termination.
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3.5 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.5(a) of the CSD Disclosure Schedule contains a true,
complete and accurate description of each Governmental Authorization required
under Applicable Laws (i) to own and operate the CSD Central Valley 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
CSD to execute and deliver this Agreement and to perform its obligations
hereunder. CSD has obtained all Governmental Authorizations which are necessary
for the ownership or operation of the CSD Assets or the conduct of the CSD
Central Valley Business as now conducted and which, if not obtained and
maintained, would, individually or in the aggregate, have any material adverse
effect on CSD. None of the Governmental Authorizations listed in Section 3.5(a)
of the CSD Disclosure Schedule is subject to any restriction or condition which
would limit in any material respect the ownership or operations of the CSD
Assets or the conduct of the CSD Central Valley Business as currently conducted,
except for restrictions and conditions generally applicable to Governmental
Authorizations of such type. The Governmental Authorizations listed in Section
3.5(a) of the CSD 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 CSD or its officers, directors, employees or agents, and the
ownership or operation of the CSD Assets or the conduct of the CSD Central
Valley Business are in accordance in all material respects with the Governmental
Authorizations. All material reports, forms and statements required to be filed
by CSD with all Authorities with respect to the CSD Central Valley 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 CSD's knowledge,
threatened challenge or proceeding to revoke or terminate any such Governmental
Authorization. CSD has no reason to believe that any such Governmental
Authorization would not be renewed in the name of CSD by the granting Authority
in the ordinary course.
(b) Except as otherwise specifically described in Section 3.5(b) of the
CSD Disclosure Schedule, neither CSD nor any director or officer thereof (in
connection with ownership or operation of the CSD Assets or the conduct of the
CSD Central Valley Business) is in or is charged by any Authority with or, to
CSD's knowledge, at any time since January 1, 1993 has been in or has been
charged by any Authority with, or, to CSD's 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 CSD Assets or the conduct of the CSD Central Valley Business. In particular,
but without limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions pending or, to CSD's knowledge, threatened before or
by any Authority (x) relating to the ownership or operation of the CSD Assets or
the conduct of the CSD Central Valley 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 CSD Assets or
the conduct of the CSD Central Valley Business; (y) involving charges of illegal
discrimination by CSD under any federal or state employment Laws, or (z)
involving Environmental Laws or zoning laws, except as otherwise specifically
described in Section 3.5(b) of the CSD Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.5(c) of the
CSD Disclosure Schedule, no Event exists or has occurred, which, to CSD's
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 CSD or (ii) any material
requirement of any insurance carrier, applicable to the ownership or operations
of the CSD Assets or the conduct of the CSD Central Valley Business.
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(d) With respect to matters, if any, of a nature referred to in Section
3.5(a), 3.5(b) or 3.5(c) of the CSD Disclosure Schedule, except as otherwise
specifically described in Section 3.5(d) of the CSD Disclosure Schedule, all
such information and matters set forth in the CSD Disclosure Schedule, if
adversely determined against CSD, will not, individually or in the aggregate,
have a materially adversely effect on CSD.
3.6 Intangible Assets. CSD does not own or use any Intangible Assets
(other than Governmental Authorizations and Private Authorizations) relating to
the ownership and operation of the CSD Assets or the conduct of the CSD Central
Valley Business. CSD does not, to its knowledge, wrongfully infringe upon or
unlawfully use any Intangible Assets owned or claimed by another, and CSD has
not received any notice of any claim or infringement relating to any such
Intangible Asset.
3.7 Insurance. CSD maintains, with respect to the CSD Assets and the
CSD Central Valley 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 3.7 of the CSD Disclosure
Schedule.
3.8 Absence of Sensitive Payments. Neither CSD nor, to CSD's knowledge,
any of its officers, directors, employees, agents or other representatives, has
with respect to the CSD Assets or the CSD Central Valley 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.
3.9 Inapplicability of Specified Statutes. CSD 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.
3.10 Material Agreements. Listed on Section 3.10 of the CSD Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the CSD Assets or the conduct of the business of the CSD Central Valley Business
or to which CSD is a party or to which it is bound or which any of the CSD
Assets is subject. True, accurate and complete copies of each of such Material
Agreements have been made available by CSD to ATS and CSD 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 3.10 of the CSD
Disclosure Schedule, with respect to Material Agreements comprised of site
leases and site licenses granted by CSD 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 CSD and, to CSD's 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. CSD 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 CSD,
Claim threatened in writing that CSD 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 CSD under any of such Material Agreements in any material respect.
3.11 Material and Adverse Restrictions. CSD is not a party to or
subject to, nor is any of the CSD 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
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or character, which now has or, as far as CSD can now reasonably foresee, at any
time in the future, individually or in the aggregate, is likely to have, any
material adverse effect on CSD, except as set forth in Section 3.11 of the CSD
Disclosure Schedule.
3.12 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 CSD.
3.13 Environmental Matters. Except as set forth in Section 3.13 of the
CSD Disclosure Schedule, with respect to the CSD Assets and the CSD Assets, CSD:
(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 CSD's 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 issued pursuant to any
Environmental Law;
(d) is in compliance in all material respects with all
Environmental Laws, has obtained all Environmental Permits required
under Environmental Laws, and is not the subject of or, to CSD's
knowledge, threatened with any Legal Action involving a demand for
damages or other potential liability including any Lien with respect to
material violations or material breaches of any Environmental Law; and
(e) has no knowledge of any past or present Event related to
the CSD Central Valley Business or the CSD Assets which Event,
individually or in the aggregate, will interfere with or prevent
continued material compliance with all Environmental Laws, or which,
individually or in the aggregate, will form the basis of any material
Claim for the release or threatened release into the environment, of
any Hazardous Material.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, CSD as
follows:
4.1 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
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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, 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.
4.2 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.
4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
4.4 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 of ATS to consummate the transactions contemplated
hereunder.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) CSD 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 CSD's properties, books, contracts, commitments and records (including
without limitation Tax returns) relating to the CSD Assets and the CSD Central
Valley 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 CSD Assets or the CSD Central Valley 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
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financial information possessed and controlled by CSD or its accountants deemed
by ATS or its Representatives necessary or useful for the purpose of performing
an audit of the CSD Assets and the CSD Central Valley Business and certifying
financial statements and financial information, and (iii) such other information
in the possession or control of CSD or its accountants concerning any of the
foregoing as ATS shall reasonably request; provided, however, that CSD shall not
be required to permit any such access to the extent same would unreasonably
interfere with CSD's normal business operations. All non-public information
relating to the CSD Assets or the CSD Central Valley 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 CSD, 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 CSD. 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, CSD shall not, without the prior
written consent of ATS, disclose any information with respect to the CSD Assets
or the CSD Central Valley 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 5.1(a), ATS may,
subject to prior consultation with CSD, 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, either 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 party or any
condition to the obligations of the parties hereto, except as set forth in
Section 8.3(e).
5.2 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 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(d),
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(iii) to effect all necessary registrations, filings and submissions (including
without limitation all filings necessary for ATS to own and operate the CSD
Assets and conduct the CSD Central Valley 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 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.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, CSD 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 CSD 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 CSD has a business or contractual relationship in connection
with ATS' due diligence investigation of CSD.
5.4 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 such that one or more of the conditions of Closing
might not be satisfied, 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 CSD Disclosure Schedule in any respect such that one or
more of the conditions of Closing might not be satisfied, and 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 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.
5.5 No Solicitation. CSD 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 (i) any merger or consolidation, regardless of whether CSD is the
surviving Entity unless the surviving Entity remains obligated under this
Agreement to the same extent as it was, or (ii) any sale or other disposition of
all or any substantial part of the CSD Assets or the CSD Central Valley
Business. The provisions of this Section shall apply to each of CSD's
Subsidiaries. If CSD or any of its Representatives receives any inquiry with
respect to an Alternative
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Transaction while this Agreement is in effect, CSD shall inform the inquiring
party that it is not entitled to enter into discussions or negotiations relating
to an Alternative Transaction.
5.6 Conduct of Business by CSD Pending the Closing. Except as otherwise
contemplated by this Agreement, after the date hereof and prior to the Closing
Date, unless ATS shall otherwise agree in writing, CSD shall, to the extent
relating to the CSD Central Valley Business or the CSD 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 CSD 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 CSD
Central Valley 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 CSD
Assets or the CSD Central Valley Business, and (ii) maintain in full
force and effect all such Governmental and Private Authorizations,
Leases and Material Agreements relating to the CSD Central Valley
Business; and
(f) not (i) dispose of any of the CSD Assets owned by CSD or
used in the operation of the CSD Central Valley Business or (ii) modify
or change in any material respect, or enter into, any Lease or Material
Agreement relating to any of the CSD Assets.
With respect to any transaction or act proposed to be entered into or performed
by CSD which, pursuant to Sections 5.1(a) through (f), requires the prior
approval of ATS, ATS shall be deemed to have approved same unless written notice
of disapproval is received by CSD within five (5) business days after receipt by
ATS of a written request for approval made by CSD.
ARTICLE 6
CLOSING CONDITIONS
6.1 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:
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(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;
(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 ATS and CSD 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 6.1(b) of the CSD 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 CSD Assets or the CSD
Central Valley Business; and
(c) LLC shall have executed and delivered this Agreement as
set forth below.
6.2 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) CSD 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 Taylor, Scott, Nichols and
Matteucci, counsel for CSD, with respect to the matters set forth in
Sections 3.1(a), (b) and (c), 3.5(b) and 3.9, 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;
(c) The representations and warranties of CSD 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 in all material respects 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 in all material respects as of such
date on the Closing Date (including without limitation giving effect to
any later obtained knowledge of CSD or ATS, except as otherwise
specifically provided herein); each and all of the agreements and
conditions to be performed or satisfied by CSD hereunder at or prior to
the Closing Date shall have been duly performed or satisfied in all
material respects; and CSD 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;
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(d) Except to the extent, if any, specifically set forth in
Section 6.2(d) of the CSD 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 by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
CSD Assets and the CSD Central Valley Business (including without
limitation all Private Authorizations, Leases and Material Agreements
of CSD) and the full enjoyment thereof shall have been obtained,
without the imposition, individually or in the aggregate, of any
condition or requirement which could adversely affect ATS;
(e) CSD shall have delivered or cause to be delivered to ATS
all of the Collateral Documents (including without limitation the LLC
Agreement) and other agreements, documents and instruments required to
be delivered by CSD to ATS at or prior to the Closing pursuant to the
terms of this Agreement;
(f) As of the Closing Date, except as otherwise set forth in
Section 3.7(a) of the CSD 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 CSD Assets and the CSD
Central Valley Business, 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) Each of the individuals named therein shall have executed
and delivered to ATS an agreement substantially in the form of Exhibit
B attached hereto and made a part hereof (the "ATS Noncompetition
Agreements");
(h) CSD shall have delivered to ATS all use permits, consents
or other Governmental Authorizations of and all Leases from the United
States Forest Service, if any, set forth in Section 6.2(h) of the CSD
Disclosure Schedule; and
(i) CSD shall have executed and delivered to ATS an agreement,
in form, scope and substance reasonably satisfactory to ATS (the
"Nonassignable Contracts Agreement"), pursuant to which (i) CSD will
hold (but will have no obligation to perform services thereunder) for
the account of ATS, and remit promptly to ATS all amounts received
pursuant to the provisions of, all of the Nonassignable Contracts as to
which the required approval or consent to the assignment or transfer of
which was not obtained and as to which ATS has delivered an Acceptance
Notice, and (ii) ATS will agree to (A) perform all services required to
be performed under such Nonassignable Contracts, (B) reimburse CSD for
all costs and expenses reasonably incurred pursuant to the
Nonassignable Contracts Agreement and (C) indemnify and hold harmless
CSD with respect to all actions taken by ATS pursuant thereto and all
actions, if any, taken by CSD pursuant thereto other than those
relating to the bad faith, negligence or willful misconduct of CSD or
its officers, directors, stockholders or employees.
6.3 Conditions to Obligations of CSD. The obligation of CSD 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
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substance to CSD and its counsel, and CSD 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) ATS shall have furnished CSD and, at CSD's request, any
bank of other financial institution providing credit to CSD, with
favorable opinions, dated the Closing Date of Sullivan & Worcester LLP,
counsel for ATS, with respect to the matters set forth in Section 4.1
and with respect to such other matters arising after the date of this
Agreement and incident to the Transactions, as CSD or its counsel may
reasonably request or which may be reasonably requested by any such
bank or financial institution or their respective counsel;
(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 in all material respects 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 in all material respects as of such
date on the Closing Date (including without limitation giving effect to
any later obtained knowledge of CSD 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 CSD 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 CSD or its counsel
shall have reasonably requested;
(d) ATS shall have delivered or cause to be delivered to CSD
all of the Collateral Documents (including without limitation the LLC
Agreement) and other agreements, documents and instruments required to
be delivered by ATS to CSD at or prior to the Closing pursuant to the
terms of this Agreement; and
(e) ATS shall have executed and delivered to CSD the
Nonassignable Contracts Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of CSD and ATS;
(b) by either ATS or CSD 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 CSD in the event (i) CSD 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) ATS is in material breach of this Agreement or
any of its representations or warranties
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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) CSD 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.
The term "Termination Date" shall mean July 1, 1997 or such other date
as the parties may, from time to time, mutually agree.
The right of ATS or CSD 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 either party, any Person controlling any
such party or any of their respective Representatives whether prior to or after
the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 (with respect to
confidentiality), 5.3 and 9.3 and this Section, in the event of the termination
of this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void, there shall be no liability on the part of either party, or any of their
respective shareholders, officers or directors, to the other and all rights and
obligations of either party shall cease; provided, however, that such
termination shall not relieve either 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 by CSD pursuant to the
provisions of Section 7.1(c), then CSD shall be entitled to liquidated damages
of an amount equal to the Escrow Deposit, together with interest and other
earnings thereon, it being agreed that such amount shall constitute full payment
for any and all damages suffered by CSD by reason of ATS' failure to consummate
the Transactions. ATS and CSD agree in advance that actual damages would be
difficult to ascertain and that such liquidated damages is a fair and equitable
amount to reimburse CSD for damages sustained due to ATS' failure to consummate
the Transactions for the above-stated reasons. In the event this Agreement is
terminated by ATS pursuant to the provisions of Section 7.1(d), then ATS shall
be entitled to the amount of the Escrow Deposit, together with interest and
other earnings thereon, without prejudice to ATS' right to pursue damages or
other remedies hereunder. Notwithstanding the foregoing, each party shall have
the right to seek specific performance pursuant to the provisions of Section
9.5.
(c) In the event this Agreement is terminated pursuant to the
provisions of Section 7.1(a), 7.1(b) or 7.1(e), except as provided in Section
7.2(a), neither of the parties shall have any further rights or remedies, except
that ATS shall be entitled to the Escrow Deposit, together with interest and
earnings thereon.
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ARTICLE 8
INDEMNIFICATION
8.1 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, 3.13 and 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.
8.2 Indemnification. Each of CSD and ATS (the "indemnifying party")
agrees that on and after the Closing it shall indemnify and hold harmless the
other (the "indemnified party") from and against any and all damages, claims,
losses, expenses, costs, obligations and liabilities, including without
limitation liabilities for all reasonable attorneys', accountants' and experts'
fees and expenses including those incurred to enforce the terms of this
Agreement or any Collateral Document executed by it (collectively, "Loss and
Expense"), suffered, directly or indirectly, by the indemnified party by reason
of, or arising out of:
(a) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the indemnifying party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(b) any Legal Action or other Claim by any third party
relating to the indemnifying party or, in the case of ATS, the
ownership or operations of the CSD Assets or the conduct of the
business of the CSD Central Valley Business to the extent such Legal
Action or other Claim has also resulted in a breach of representation
or warranty by the indemnifying party pursuant to this Agreement or any
Collateral Document executed by it; or
(c) in the case of CSD as the indemnifying party, the failure
of CSD to comply with Bulk Sales law of the State of California; or
(d) in the case of CSD as the indemnifying party, by reason
of, or arising out of, (i) CSD Nonassumed Obligations or (ii) the
ownership and operation of the CSD Assets and the CSD Central Valley
Business prior to the Closing Date; or
(e) in the case of ATS as the indemnifying party, by reason
of, or arising out of, (i) CSD Assumed Obligations or (ii) the
ownership and operation of the CSD Assets and the CSD Central Valley
Business from and after the Closing Date, except for Events arising
prior to or existing on the Closing Date, unless they are part of the
CSD Assumed Obligations.
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8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, each indemnified party's rights to
indemnification shall be subject to the following limitations: (i) the
indemnified party 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, $25,000, in which event the indemnified party
shall be entitled to recover all such Loss and Expense (including without
limitation such $25,000), and (ii) in no event shall the aggregate amount
required to be paid by each indemnifying party pursuant to the provisions of
this Article exceed $1,000,000, except for any Loss or Expense arising out of
matters of a nature referred to in Sections 3.1 and 4.1 as to which the
limitations set forth in this clause (ii) shall not apply. Notwithstanding
anything to the contrary contained herein, it is expressly agreed to by the
parties that any lease payments due under any Lease for any of the Sites being
acquired which comprise the CSD Assets after the Closing shall not be considered
an item of Loss and Expense for purposes of the limitation of liability set
forth herein.
(b) In the case any event shall occur which would otherwise entitle
either 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.
8.4 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 8.1, 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.
8.5 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 ATS, do not include any term or
condition which would restrict in any material manner the continued ownership or
operations of the CSD Assets or the conduct of the CSD Central Valley Business
in substantially the manner then being theretofore owned, operated and conducted
by ATS.
8.6 Exclusive Remedy. Except for fraud or willful or intentional
misrepresentation or breach of warranty, covenant or agreement or as otherwise
provided in Section 9.5, the indemnification provided in
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this Article shall be the sole and exclusive post-Closing remedy available to
either party against the other party for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, ATS or CSD may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions with respect to the Termination Date, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and waive compliance by the other
with any of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. 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 equally by CSD
and ATS. 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.
9.4 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) 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:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
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with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to CSD:
7488 Shoreline Drive - Suite B-1
Stockton, California 95219
Attention: Michael Wingo, Chief Executive Officer
Telecopier No.: (209) 951-5845
with a copy to:
Taylor, Scott, Nichols and Matteucci
120 North Hunter Street
Stockton, California 95202
Attention: Christopher P. Papas, Esq.
Telecopier No.: (209) 942-4450
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.
9.5 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 7, 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 for such breach or
threatened breach.
9.6 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 either party, the parties shall negotiate in good faith to modify this
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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.
9.7 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.
9.8 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.
9.9 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 California 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.
9.10 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.
9.11 Entire Agreement. This Agreement (together with the CSD 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, including without limitation that certain
letter of intent, dated December 19, 1996, between the parties.
9.12 Assignment. This Agreement shall not be assignable by either 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.
9.13 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of CSD 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 either party based on any presumption of that party's
involvement in the drafting thereof.
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9.15 Arbitration of Disputes. Subject to the right of the parties to
seek injunctive relief pursuant to the provisions of Section 9.5, in the event
of any dispute arising from or related to any of the terms or conditions of this
Agreement, ATS, CSD and LLC hereby agree to submit any such dispute to binding
arbitration under the Commercial Rules of the American Arbitration Association
at Sacramento, California.
IN WITNESS WHEREOF, ATS and CSD 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:
Communication Systems Development, Inc.
By:
Title:
The undersigned, Communication Systems Development, LLC, a Delaware
limited liability company, hereby executed the above agreement as of May , 1997,
and hereby agrees to be bound by, and understands that it will be entitled to
the benefits of, the above agreement with the same force and effect as though it
were an original party thereto.
Communication Systems Development, LLC
By:
Name:
Title:
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) 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 herein shall
have such meanings when used in the CSD 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 "either party" shall, unless the context otherwise requires, refer to
CSD and ATS.
Acceptance Notice shall have the meaning given to it in Section 2.2(c).
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 CSD Central
Valley Business, or (c) impair CSD'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 CSD
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.
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.
ATS shall have the meaning given to it in the Preamble.
ATS' Noncompetition Agreements shall have the meaning given to it in
Section 6.2(i).
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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.
Base Purchase Price shall have the meaning given to it in Section 2.3.
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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
Collateral Document shall mean the ATS Noncompetition Agreements, the
Nonassignable Contracts Agreement, the LLC Agreement, bills of sale, assignments
of intangibles, assumption agreements with respect to the CSD Assumed
Obligations, other instruments of conveyance and assignment sufficient to vest
in ATS title to all of the other CSD Assets and the CSD Central Valley Business,
and any other agreement, certificate, contract, instrument, notice, 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 CSD Assets or the
conduct of the CSD Central Valley 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.
CSD shall have the meaning given to it in the Preamble.
CSD Assumable Agreements shall mean all obligations and liabilities of
CSD under all Leases, Material Agreements, Governmental Authorizations, Private
Authorizations, the other Contractual Obligations not required to be listed on
Section 3.10 of the CSD Disclosure Schedule entered into in the ordinary course
of business and relating to the ownership or operation of any of the CSD Assets
or the conduct of the CSD Central Valley Business, and the letter of intent,
dated , 1997 between
CSD and .
CSD Assets shall have the meaning given to it in Section 2.1.
CSD Assumed Liabilities shall have the meaning given to it in Section
2.2(b).
CSD Central Valley Business shall have the meaning given them in the
first Whereas paragraph.
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CSD Disclosure Schedule shall mean the CSD Disclosure Schedule dated as
of the date of this Agreement delivered by CSD to ATS.
CSD Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
CSD's knowledge means the actual knowledge of any CSD officer or senior
manager, as such knowledge exists on the date of this Agreement and no later
date, after reasonable review of appropriate CSD records.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entitled Site Payment shall have the meaning given to it in Section
2.3.
Entitled Sites shall have the meaning given to it in first Whereas
paragraph.
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 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.
Escrow Agent shall have the meaning given to it in the fifth Whereas
paragraph.
Escrow Agreement shall have the meaning given to it in the fifth
Whereas paragraph.
Escrow Deposit shall have the meaning given to it in the fifth Whereas
paragraph.
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.
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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.
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 CSD Assets or the conduct of the CSD
Central Valley 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.
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.
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
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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.
LLC shall have the meaning given to it in the second Whereas paragraph.
LLC Agreement shall have the meaning given to it in the second Whereas
paragraph.
Loss and Expense shall have the meaning given to it in Section 8.2.
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 CSD, 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 CSD Central
Valley Business in any of the last three fiscal years or is likely to account
for more than three percent (3%) of revenues of the CSD Central Valley Business
during the current fiscal year, (f) is with the United States Forest Service or
any other Authority, or (g) involves the lease by CSD of any Site.
Nonassignable Contracts shall have the meaning given to it in Section
2.2(c).
Nonassignable Contracts Agreement shall have the meaning given to it in
Section 6.2(i).
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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).
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
CSD Central Valley Business, and (c) such other Liens as are permitted by the
provisions of this Agreement to be in place on the Closing Date.
Person shall mean any natural individual or any Entity.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by CSD prior to the Closing and
relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by CSD prior to the Closing
and relates to a period subsequent to the Closing.
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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 CSD as of the date hereof, in the operations of the CSD Central
Valley 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 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.
Remaining Sites shall have the meaning given to it in the first Whereas
paragraph.
Representatives shall have the meaning given to it in Section 5.1(a).
Sites shall have the meaning given to it in the first Whereas
paragraph.
A-6
<PAGE>
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.
Termination Date shall have the meaning given to it in Section 7.1.
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 interest in the CSD Assets, and the execution, delivery and
performance of the Collateral Documents.
A-7
EXHIBIT 10.1b
COMMUNICATION SYSTEMS DEVELOPMENT, LLC
AGREEMENT OF LIMITED LIABILITY COMPANY
Dated as of May 30, 1997
<PAGE>
<TABLE>
<CAPTION>
COMMUNICATION SYSTEMS DEVELOPMENT, LLC
AGREEMENT OF LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS.....................................................................................1
ARTICLE 2 FORMATION OF LIMITED LIABILITY COMPANY..........................................................1
2.1 Formation. ...........................................................................1
2.2 Company Name...........................................................................1
2.3 The Certificate, Etc...................................................................2
2.4 Principal Business Office, Registered Office and Registered Agent......................2
2.5 Term of the Company....................................................................2
2.6 Purposes...............................................................................2
2.7 Powers.................................................................................2
ARTICLE 3 CAPITALIZATION..................................................................................3
3.1 Initial Capital Contributions..........................................................3
3.2 ATS Construction Funding...............................................................3
3.3 Other Required Funds...................................................................4
3.4 Capital Accounts. .....................................................................5
3.5 Transfer of Capital Accounts...........................................................6
3.6 Deficit Capital Accounts...............................................................6
3.7 Additional Equity......................................................................6
ARTICLE 4 BOOKS; ACCOUNTING; TAX ELECTIONS; REPORTS ......................................................6
4.1 Fiscal Year............................................................................6
4.2 Method of Accounting and Taxation......................................................6
4.3 Books and Records and Inspection.......................................................6
4.4 Reports................................................................................7
4.5 Filing of Returns and Other Writings; Tax Matters Member. ............................8
ARTICLE 5 ALLOCATIONS.....................................................................................8
5.1 Allocations of Profit and Loss.........................................................8
5.2 Section 754 Election...................................................................9
5.3 Allocations for Tax and Book Purposes..................................................9
5.4 Certain Accounting Matters.............................................................9
5.5 Tax Allocations; Code Section 704(c)...................................................9
5.6 Compliance With Section 704(b).........................................................9
5.7 Curative Allocations..................................................................10
ARTICLE 6 DISTRIBUTIONS..................................................................................11
6.1 Distributions Other Than Proceeds of Any Liquidating Transaction......................11
6.2 Proceeds of Any Liquidating Transaction...............................................11
6.3 Liquidation of Member's Interest......................................................11
ARTICLE 7 RIGHTS AND OBLIGATIONS OF MEMBERS..............................................................12
7.1 Limited Liability.....................................................................12
7.2 Management and Control, Etc...........................................................12
7.3 Evidence of Authority, Etc............................................................13
7.4 Other Business, Etc...................................................................14
<PAGE>
7.5 Indemnification.......................................................................14
7.6 Agreements with Affiliates............................................................15
7.7 Payment of Expenses; Compensation.....................................................15
ARTICLE 8 TRANSFERS OF INTERESTS, ETC....................................................................15
8.1 Consent Required......................................................................15
8.2 Right of First Refusal................................................................16
8.3 Buy/Sell..............................................................................16
8.4 CSD Right/Obligation of Exchange. ...................................................18
8.5 Obligations and Rights of Transferees and Assignees...................................19
8.6 Non-Recognition of Certain Transfers..................................................19
8.7 Required Amendments; Continuation.....................................................19
8.8 Resignation...........................................................................19
ARTICLE 9 TERMINATION....................................................................................20
9.1 Events of Dissolution.................................................................20
9.2 Application of Assets.................................................................20
9.3 Distributions in Liquidation..........................................................20
ARTICLE 10 MISCELLANEOUS..................................................................................20
10.1 Notices...............................................................................20
10.2 Specific Performance; Other Rights and Remedies.......................................21
10.3 Severability..........................................................................21
10.4 Counterparts..........................................................................21
10.5 Section Headings......................................................................21
10.6 Title to Company Property.............................................................21
10.7 Governing Law.........................................................................22
10.8 Further Acts..........................................................................22
10.9 Entire Agreement......................................................................22
10.10 Assignment............................................................................22
10.11 Parties in Interest...................................................................22
10.12 Mutual Drafting.......................................................................22
10.13 Amendments; Waivers...................................................................22
10.14 Schedule..............................................................................23
</TABLE>
Member Schedule - Initial Capital Contributions of the Members
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<PAGE>
COMMUNICATION SYSTEMS DEVELOPMENT, LLC
AGREEMENT OF LIMITED LIABILITY COMPANY
THIS AGREEMENT OF LIMITED LIABILITY COMPANY of Communication Systems
Development, LLC, dated as of May 30, 1997, is entered into by and among
American Tower Systems, Inc., a Delaware corporation ("ATS"), and Communication
Development Corporation, Inc., a California corporation ("CSD").
WITNESSETH THAT:
WHEREAS, the undersigned desire, by execution of this Agreement, to
form a limited liability company pursuant to the Delaware Limited Liability
Company Act, 6 Del. C. ss.18-101 et seq. (as from time to time amended and
including any successor statute of similar import, the "Act");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
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 each document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto. The words such as "herein", "hereinafter", "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires. The singular
shall include the plural and the masculine gender shall include the feminine and
neuter, and vice versa, unless the context otherwise requires.
ARTICLE 2
FORMATION OF LIMITED LIABILITY COMPANY
2.1 Formation. The parties, by execution of this Agreement, hereby
enter into and join together in, and do hereby form, the Company as a limited
liability company under and pursuant to the Act. Each party hereto represents
and warrants that it is duly authorized to join in this Agreement and that the
Person executing this Agreement on its behalf is duly authorized to do so.
2.2 Company Name. The name of the Company shall be Communication
Systems Development, LLC. The business of the Company shall be conducted under
such name or such other names as may from time be established by a Determination
of the Members.
<PAGE>
2.3 The Certificate, Etc. One or more of the Members, as authorized
persons shall execute and file the Certificate, together with a duplicate copy
thereof, with the Secretary of State of the State of Delaware, and upon receipt
from the Secretary of State of the duplicate copy (and any certificates of
amendment thereto that may subsequently be filed) marked "Filed", the Members
executing the Certificate shall promptly deliver or mail, or caused to be
delivered or mailed, a copy of the Certificate (or any such certificate of
amendment) to any Member not so executing the Certificate (or certificate of
amendment). The Members hereby agree (or to cause one or more of the individuals
designated as managers under Section 7.2 hereof) to execute, file and record
such other certificates and documents, including amendments to the Certificate,
and to do such other acts as may be appropriate to comply with all requirements
for the formation, continuation and operation of a limited liability company,
the ownership of property, and the conduct of business under the laws of the
State of Delaware and any other jurisdiction in which the Company may own
property or conduct business.
2.4 Principal Business Office, Registered Office and Registered Agent.
The principal business office of the Company shall be located at 7488 Shoreline
Drive, Suite 1-B, Stockton, California 95219 or at such other location as may
hereafter be designated by a Determination of the Members. The registered office
of the Company shall be c/o Corporation Service Company, 1013 Centre Road,
Wilmington, New Castle County, Delaware 19805. The registered agent for service
of process on the Company shall be Corporation Service Company, whose address is
1013 Centre Road, Wilmington, New Castle County, Delaware 19805. The principal
business office, the registered office and the registered agent of the Company
may be changed from time to time upon a Determination of the Members and in
accordance with the then applicable provisions of the Act and any other
applicable laws. The Members shall be promptly notified in writing of any change
in such principal office, registered office or registered agent for service of
process.
2.5 Term of the Company. The term of the Company shall commence on the
date of the initial filing of the Certificate with the office of the Secretary
of State of the State of Delaware (the "Effective Date"), and shall continue
until December 31, 2047 unless it is sooner dissolved pursuant to the provisions
of Section 9.1.
2.6 Purposes. The purpose of the Company is to engage, whether directly
or indirectly, in the development, ownership, operation, management and
disposition of communication towers and communication tower sites and to engage
in all actions necessary, convenient or incidental to the foregoing. The Company
shall not engage in any other business or activity without a Determination of
the Members.
2.7 Powers. In furtherance of its purposes, but subject to all of the
provisions of this Agreement, the Company shall have the power and is hereby
authorized to:
(a) acquire by purchase, lease, contribution of property or
otherwise and own, hold, sell, convey, transfer or dispose of real or
personal property which may be necessary, convenient or incidental to
the accomplishment of the purposes of the Company;
(b) act as a general or limited partner of any general or
limited partnership of which the Company may be a partner and to
exercise all of the powers, duties, rights and responsibilities
associated therewith;
(c) take any and all actions necessary, convenient or
appropriate as the holder of partnership interests, including the
granting or approval of waivers, consents or amendments of rights or
powers relating thereto and the execution of appropriate documents to
evidence such waivers, consents or amendments;
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<PAGE>
(d) operate, purchase, maintain, finance, improve, own, sell,
convey, assign, mortgage, lease or demolish or otherwise dispose of any
real or personal property which may be necessary, convenient or
incidental to the accomplishment of the purposes of the Company;
(e) borrow money and issue evidences of indebtedness in
furtherance of any or all of the purposes of the Company, and secure
the same by mortgage, pledge or other lien on the assets of the
Company;
(f) invest any funds of the Company pending distribution or
payment of the same pursuant to the provisions of this Agreement;
(g) prepay in whole or in part, refinance, recast, increase,
modify or extend any indebtedness of the Company and, in connection
therewith, execute any extensions, renewals or modifications of any
mortgage or security agreement securing such indebtedness;
(h) enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any Affiliate of a
Member, necessary to, in connection with, or incidental to the
accomplishment of the purposes of the Company;
(i) establish reserves for capital expenditures, working
capital, debt service, taxes, assessments, insurance premiums, repairs,
improvements, depreciation, depletion, obsolescence, and general
maintenance of buildings and other property out of the rents, profits,
or other income received;
(j) employ or otherwise engage employees, managers, directors,
contractors, advisors and consultants (including without limitation any
Member) and pay reasonable compensation for such services;
(k) enter into partnerships or other ventures with other
Persons (including without limitation any Affiliate of any Member) in
furtherance of the purposes of the Company; and
(l) do such other things and engage in such other activities
related to the foregoing as may be necessary, convenient or advisable
with respect to the conduct of the business of the Company, and have
and exercise all of the powers and rights conferred upon limited
liability companies formed pursuant to the Act.
ARTICLE 3
CAPITALIZATION
3.1 Initial Capital Contributions. Each of the Members shall contribute
or cause to be contributed to the Company, on the Effective Date, as its Initial
Capital Contribution, the cash and other property set forth on the Member
Schedule.
3.2 ATS Construction Funding. ATS agrees to make, from time to time,
Additional Capital Contributions for the purposes of constructing communication
towers and other improvements on the sites to be acquired by the Company
pursuant to the consummation of the transactions contemplated by the
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<PAGE>
Acquisition Agreement and, in addition from time to time, for acquiring
additional sites and constructing communication towers and other improvements
thereon, subject to the following conditions:
(i) ATS shall have approved the acquisition of any such
additional site for which the Additional Capital Contribution is to be
used, such approval not to be unreasonably withheld; and
(ii) CSD shall have prepared in good faith, based on the
results of comparable sites and towers owned by the Company or any
Affiliates of any of the Members, and furnished to ATS not less than
thirty (30) days prior to the proposed acquisition of the site a
financial analysis of the costs associated with such acquisition, the
construction of the communication tower or towers thereon, the
estimated revenue to be obtained and expenses to be incurred in the
operation and maintenance of such tower or towers.
Upon receipt of such financial analysis, and such other information as
it shall have reasonably requested, ATS shall determine, in good faith, whether
it reasonably believes that the proposed project is in the best interests of the
Company. In the event it agrees that they will or is, as the case may be, it
shall be obligated to make the Additional Capital Contribution referred to in
such financial analysis in a timely manner in order to facilitate the
acquisition of the site and the construction of the communication tower or
towers. Any Additional Capital Contribution made by ATS pursuant to the
provisions of this Section will not in any way result in a change or
modification as to any Member's Company Interest as initially set forth in the
Member Schedule, but shall only be reflected as an increase in ATS' Capital
Account. In the event ATS shall not have given written notice to CSD of its
objection (an "Objection Notice") to the acquisition within ten (10) days of the
receipt of such financial analysis (and any other information with respect
thereto which it has reasonably requested), it shall be deemed to have approved
such acquisition and shall be obligated to make such Additional Capital
Contribution. In the event ATS shall have given an Objection Notice (which shall
specify in reasonable detail the basis thereof), CSD and ATS shall negotiate in
good faith in an effort to resolve their differences to the end that ATS would
be willing to make the Additional Capital Contribution. In the event ATS and CSD
are unable to resolve their differences within twenty (20) days, CSD shall have
the right, in its sole and absolute discretion, to (x) make the Additional
Capital Contribution on the same terms and conditions as ATS would otherwise
have made such Additional Capital Contribution, (ii) to advance the required
funds in the form of a Member Loan, (iii) to obtain such funds as a loan from an
Unaffiliated Person in accordance with the provisions of Section 3.3 (in which
event no Determination of the Members will be required), or (iv) to acquire such
site and construct such tower or towers for its own account or for the account
of any Affiliate of CSD.
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, ATS shall advance all funds to finance the construction of
communication towers on the initial sixty (60) sites acquired by the Company
upon its formation and the consummation of the transactions contemplated by the
Acquisition Agreement in the form of Additional Capital Contributions and not in
the form of Member Loans or loans from one or more Unaffiliated Persons.
3.3 Other Required Funds. In the event that in the judgment of Members
representing a Determination of the Members additional funds are required by the
Company for any Company purpose which ATS is not obligated to fund pursuant to
the provisions of Section 3.2, the Members may elect, upon a Determination of
the Members, but subject in any event to the provisions of Section 7.2, to
obtain such funds as a loan from any Unaffiliated Person upon such terms and
conditions as the Members, by Determination of the Members, deem appropriate or,
in the alternative, the Members may elect, by Unanimous Determination of the
Members, to cause each Member to advance, as an Additional Capital Contribution,
its proportionate share, based upon the Company Interests of all Members, or in
such other proportion as shall be fixed by a Unanimous Determination of the
Members, of the total amount so required,
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<PAGE>
it being expressly understood that no Member may be required to make an
Additional Capital Contribution and no such Additional Capital Contribution
shall be made by any Member, unless the same shall have been approved by
Unanimous Determination of the Members. CSD shall also have the right, pursuant
to the provisions of Section 3.2, to obtain funds as a loan from any
Unaffiliated Person.
In the event that additional funds are required for any Company purpose
which ATS is not obligated to fund pursuant to the provisions of Section 3.2,
and provided that the Members are unable to obtain, or agree upon terms with
respect to, a loan from an Unaffiliated Person of such funds or if the Members
fail to agree, by Unanimous Determination of the Members, to advance the same as
Additional Capital Contributions, then any Member may, by written notice to each
Member, propose that the same be advanced as loans from the Members. Any such
loan (each a "Member Loan") shall bear interest at an annual rate of interest,
compounded quarterly, equal to the Prime Rate plus two (2) percentage points and
shall be payable, on a priority basis, out of Cash Flow and at liquidation of
the Company, all as further provided in Article 6. Any such Member Loan may be
advanced by all of the Members, pro rata in proportion to Company Interests, or,
in the event that any Member declines to participate in any such Member Loan by
advancing its share thereof within ten (10) days after receipt of a written
proposal with respect to such loan, by any Member or Members who determine to
participate therein, it being expressly understood and agreed that no Member
shall have any obligation to participate in any Member Loan so proposed. To the
extent that any Member declines to participate in any Member Loan so proposed,
that Member's portion of the Member Loan so proposed shall be allocated to the
Member or Members who elect to participate therein in such proportions as such
other Members may agree or, in the absence of such agreement, pro rata among all
Members electing to participate therein in proportion to their respective
Company Interests.
3.4 Capital Accounts. A separate capital account (a "Capital Account")
shall be established and maintained for each Member in accordance with the
following provisions:
(a) To each Member's Capital Account there shall be credited
the amount of cash and fair market value of the property actually
contributed to the Company pursuant to Sections 3.1, 3.2 and 3.3, such
Member's allocable share of Profit and the amount of any Company
liabilities that are assumed by such Member or that are secured by any
Company property distributed to such Member.
(b) To each Member's Capital Account there shall be debited
the amount of cash and the fair market value of any Company property
distributed to such Member pursuant to any provision of this Agreement,
such Member's allocable share of Loss and the amount of any liabilities
of such Member that are assumed by the Company or that are secured by
any property contributed by such Member to the Company.
(c) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Section
1.704-1(b)(2)(iv) of the Treasury Regulations, and shall be interpreted
and applied in a manner consistent with such Treasury Regulations.
(d) A Member shall not be entitled to withdraw any part of its
Capital Account or to receive any distributions from the Company except
as provided in Article 6; nor shall a Member be entitled to make any
loan or Capital Contribution to the Company other than as expressly
provided herein. No loan made to the Company by any Member shall
constitute a Capital Contribution to the Company for any purpose.
(e) Except as required by the Act, no Member shall have any
liability for the return of the Capital Contribution of any other
Member. A Member who has more than one interest in the
-5-
<PAGE>
Company shall have a single Capital Account that reflects all such
interests, regardless of the class of interest owned and regardless of
the time or manner in which the interests were acquired.
3.5 Transfer of Capital Accounts. The original Capital Account
established for each substituted Member shall be in the same amount as the
Capital Account of the Member which such substituted Member succeeds, at the
time such substituted Member is admitted to the Company. The Capital Account of
any Member whose interest in the Company shall be increased by means of the
transfer to it of all or part of the interest in the Company of another Member
shall be appropriately adjusted to reflect such transfer. Any reference in this
Agreement to a Capital Contribution of or distribution to a then Member shall
include a Capital Contribution or distribution previously made by or to any
prior Member on account of the Company interest of such then Member.
3.6 Deficit Capital Accounts. No Member with a deficit in his Capital
Account shall be obligated to restore such deficit balance or make a Capital
Contribution to the Company solely by reason of such deficit.
3.7 Additional Equity. If the Members, by a Unanimous Determination of
the Members, conclude that an additional equity investment in the Company is
necessary and desirable, the Board shall determine the value of the outstanding
equity of the Company, and based on such value, shall determine the price for
the additional equity to be issued. Each Member shall be entitled to subscribe
for such Member's proportionate share (based on its Company Interest) of such
additional equity. If any Member shall subscribe for less than its proportionate
share, the excess shall then be offered to the fully-subscribing Members. Any
portion not subscribed for by Members may then be offered to Persons who are not
Members. If it is necessary to offer such equity to Persons who are not Members
on terms more favorable than the terms originally accepted by Members, all of
the equity originally subscribed for by the Members shall be issued on the terms
the equity was offered to Persons who are not Members. The Board shall establish
procedures for each equity issuance that will assure that each Member has an
equitable and fair opportunity to subscribe for such equity, exercise its right
to preserve its relative Company Interest and exercise its right of first
refusal before any equity is offered to Persons who are not Members.
3.8 Additional Members. No additional Members may be admitted to the
Company without a Unanimous Determination of the Members, other than pursuant to
the provisions of Section 3.6 or Article 8.
ARTICLE 4
BOOKS; ACCOUNTING; TAX ELECTIONS; REPORTS
4.1 Fiscal Year. The fiscal year of the Company shall be the calendar
year (the "Year"), or such other year as shall be required under the Code.
4.2 Method of Accounting and Taxation. The books of account of the
Company (other than books required to maintain Capital Accounts) shall be
maintained on an accrual basis and otherwise in accordance with GAAP. It is the
intention of the Members that the Company be taxed as a partnership for Federal
income tax purposes and the Members shall take all action and make all elections
necessary to ensure that the Company is so taxed.
4.3 Books and Records and Inspection.
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<PAGE>
(a) Books of Account and Records. Proper and complete records
and books of account of the Company's business, including all such
transactions and other matters as are usually entered into records and
books of account maintained by Persons engaged in businesses of like
character or as are required by law, shall be kept by the Company at
the Company's principal office and place of business. To the extent
required by law, the Company shall also keep, at its principal office
and place of business, all records, required by the Act.
(b) Inspection. Each Member shall have the right, at all
reasonable times and upon reasonable notice during usual business
hours, to audit, examine and make copies of or extracts from the books
of account of the Company for any purpose reasonably related to such
Member's interest as a member of the Company. Such right may be
exercised through any agent or employee of such Member designated by it
or by a certified public accountant designated by such Member. A Member
shall bear all expenses incurred in any examination made for such
Member's account.
4.4 Reports.
(a) Monthly Reports. The Company shall prepare and deliver or
cause to be delivered to each Member, within thirty (30) days after the
end of each calendar month:
(i) a management-prepared balance sheet, income
statement and cash flow statement for the Company with respect
to such calendar month just ending and the fiscal year to
date;
(ii) a management-prepared statement of income for
the Company comparing the actual results for the month and the
fiscal year to date with budgeted amounts as set forth in the
most recently approved Annual Budget; and
(iii) (A) a narrative report concerning the
operations of the Company, including the matters set forth in
the profit and loss and cash flow statements and the variance
report described above; and (B) as of the end of each calendar
quarter, the balance of each Member's Capital Account.
The monthly financial statements and other reports and
information shall be certified as accurate in all material respects by
an officer of the Company to his best knowledge and belief.
(b) Annual Report. The Company shall prepare and deliver or
cause to be delivered to each Member, within eighty (80) days after the
end of each fiscal year, an annual report for the Company containing
the following:
(i) a balance sheet for the Company as of the end of
such Year, and statements of income, Members' capital and
statement of cash flows for the Company for such year;
(ii) a general description of the activities of the
Company during the period covered by the report; and
(iii) a report of any transactions between the
Company and any Member or Affiliates with respect thereto,
including fees or compensation paid by the Company and the
services performed by the Members or any Affiliates thereof
for such fees or compensation.
The annual financial statements of the Company shall be
audited (which audit shall be conducted in accordance with GAAP) and
certified by the Accountants.
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(c) Other Information. Forthwith upon request of any Member,
the Company shall, at the cost and expense of the Company, furnish (or
cause to be furnished) to each Member such information bearing on the
financial condition and operations of the Company as any such Member
may from time to time reasonably request. Upon obtaining knowledge
thereof, the Company shall furnish to each Member prompt written notice
of any events or occurrences not otherwise provided for in this Section
4.4 which may materially and adversely affect the Company.
4.5 Filing of Returns and Other Writings; Tax Matters Member.
(a) The Tax Matters Member shall cause the preparation and
timely filing of all Company tax returns and shall, on behalf of the
Company, timely file all other writings required by any governmental
authority having jurisdiction to require such filing.
(b) Unless and until the Members shall otherwise direct by
Determination of the Members, ATS will serve as the "tax matters
partner" (as such term is defined in Section 6231(a)(7) of the Code,
the "Tax Matters Member") for purposes of Section 6231 of the Code.
(c) The Company shall, to the fullest extent permitted by law,
reimburse and indemnify the Tax Matters Member for all reasonable
expenses, including reasonable legal and accounting fees, claims,
liabilities, losses and damages incurred by the Tax Matters Member in
connection with any administrative or judicial proceeding with respect
to the tax liability of the Members.
(d) The provisions of this Section shall survive the
termination of the Company or the termination of any Member's interest
in the Company and shall remain binding on the Members for as long a
period of time as is necessary to resolve with the Internal Revenue
Service any and all matters regarding the Federal income taxation of
the Company or the Members.
(e) The Members agree to file all tax returns in a manner
consistent with all Company tax returns.
ARTICLE 5
ALLOCATIONS
5.1 Allocations of Profit and Loss.
(a) Profit. After giving effect to the special allocations set
forth in Section 5.6 and taking into account any curative allocations
in Section 5.7, Profit of the Company for each fiscal year or other
period shall be allocated among the Members as follows:
(i) first, to the Members in the amounts and proportions
necessary to reverse, on a cumulative basis and
without duplication, all allocations of Loss to the
Members pursuant to Section 5.1(b)(iii) over the life
of the Company;
(ii) second, to the Members in the amounts and proportions
necessary to reverse, on a cumulative basis and
without duplication, all allocations of Loss to the
Members pursuant to Section 5.1(b)(ii) over the life
of the Company; and
(iii) the balance, to the Members in accordance with their
Company Interests.
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(b) Loss. After giving effect to the special allocations set
forth in Section 5.6 and taking into account any curative allocations
in Section 5.7, Loss of the Company for each fiscal year or other
period shall be allocated among the Members as follows:
(i) first, to the Members in the amounts and proportions
necessary to reverse, on a cumulative basis and
without duplication, all allocations of Profit to the
Members pursuant to Section 5.1(a)(iii) over the life
of the Company;
(ii) second, to the Members with positive balances in
their Capital Accounts, in accordance with their
Company Interests until the Capital Accounts of all
Members are reduced to zero; and
(iii) the balance, to the Members in accordance with their
Company Interests.
5.2 Section 754 Election. Upon the request of any Member, the Company
shall elect, pursuant to Section 754 of the Code, to adjust the basis of Company
property as permitted and provided in Sections 734 and 743 of the Code. Such
election shall be effective solely for Federal (and, if applicable, state and
local) income tax purposes and shall not result in any adjustment to the Book
Value of any Company asset or to the Members' Capital Accounts (except as
provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(m)) or in the
determination or allocation of Profit or Loss for purposes other than such tax
purposes.
5.3 Allocations for Tax and Book Purposes. Except as otherwise provided
herein, any allocation to a Member for a fiscal year or other period of a
portion of the Profit or Loss, or of a specially allocated item, shall be
determined to be an allocation to that Member of the same proportionate part of
each item of income, gain, loss, deduction or credit, as the case may be, as is
earned, realized or available by or to the Company for Federal tax purposes.
5.4 Certain Accounting Matters. For purposes of determining Profit,
Loss or any other items allocable to any period, Profit, Loss and any such other
items shall be determined on a daily, monthly or other basis, as determined by
the Managers using any permissible method under Section 706 of the Code and the
Treasury Regulations promulgated thereunder.
5.5 Tax Allocations; Code Section 704(c). In accordance with Section
704(c) of the Code and the Treasury Regulations promulgated thereunder, income,
gain, loss, and deduction with respect to any property contributed to the
capital of the Company shall, solely for income tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted basis of
such property to the Company for Federal income tax purposes and its fair market
value at the time of contribution. In the event that the Book Value of any
Company asset is subsequently adjusted in accordance with the last sentence of
the definition of Book Value, any allocation of income, gain, loss and deduction
with respect to such asset shall thereafter take account of any variation
between the adjusted tax basis of the asset to the Company and its Book Value in
the same manner as under Section 704(c) of the Code and any Treasury Regulations
promulgated thereunder. Any elections or other decisions relating to such
allocations shall be made by the Managers in a manner that reasonably reflects
the purpose and intention of this Agreement. Allocations pursuant to this
section are solely for purposes of Federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Members' Capital
Account or share of Profit, Loss or distributions pursuant to any provision of
this Agreement.
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5.6 Compliance With Section 704(b).
(a) Qualified Income Offset. If any Member unexpectedly
receives an adjustment, allocation or distribution described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes the
Member to have, or increases the amount of a Member's, deficit Adjusted
Capital Account Balance, items of Company income and gain shall be
specially allocated to such Member in accordance with the requirements
of Regulations Section 1.704-1(b)(2)(ii)(d). This Section 5.6(a) is
intended to comply with the qualified income offset provision of such
Regulations Section, and shall be interpreted consistently therewith.
(b) Gross Income Allocation. If any Member would otherwise
have a deficit Adjusted Capital Account Balance as of the last day of
any fiscal year or other period, items of income and gain of the
Company shall be specially allocated to such Member (in the manner
specified in Section 5.6(a) hereof) so as to eliminate such deficit
Adjusted Capital Account Balance as quickly as possible, provided that
an allocation pursuant to this Section 5.6(b) shall be made only if and
to the extent that such Member would have a deficit Adjusted Capital
Account Balance after all other allocations provided for in this
Agreement have been tentatively made as if this Section 5.6(b) were not
in this Agreement.
(c) Limitation on Loss Allocations. No item of deduction or
loss of the Company shall be allocated to a Member if such allocation
would cause or increase a deficit Adjusted Capital Account Balance. In
the event that some but not all of the Members would have deficit
Adjusted Capital Account Balances as a result of an allocation of Loss
pursuant to this Article 5, the limitation set forth in this Section
5.6(c) shall be applied on a Member by Member basis so as to allocate
the maximum permissible Loss to each Member under Regulations Section
1.704-1(b)(2)(ii)(d).
(d) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 5, if there is a net decrease in "partnership
minimum gain" or "partner nonrecourse debt minimum gain" of the Company
(as such terms are defined in Regulations Section 1.704-2) during any
fiscal year or other period, prior to any other allocation pursuant
hereto, items of Company income and gain for such fiscal year or other
period (and, if necessary, for subsequent fiscal years or periods)
shall be specially allocated among the Members in accordance with
Regulations Sections 1.704-2(f) and (i). The items to be so allocated
shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and (j)(2).
(e) Allocation of "Partner Nonrecourse Deductions". "Partner
nonrecourse deductions" as defined in Section 1.704-2(i)(1) of the
Treasury Regulations for any fiscal year or other period shall be
specially allocated to the Members who bear the economic risk of loss
for the "partner nonrecourse debt" to which such "partner nonrecourse
deductions" are attributable, as provided in Section 1.704-2(i)(1) of
the Treasury Regulations.
(f) Allocation of "Nonrecourse Deductions". "Nonrecourse
deductions" as such term is defined in Section 1.704-2(b)(1) of the
Treasury Regulations for any fiscal year or other period shall be
allocated to the Members in accordance with their respective Company
Interests.
5.7 Curative Allocations. The allocations set forth in Section 5.6 (the
"Regulatory Allocations") are intended to comply with certain requirements of
Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory
Allocations may not be consistent with the manner in which the Members intend to
divide Company Profits, Losses and similar items. Accordingly, Profits, Losses
and other items will be reallocated among the Members (in the same year, and to
the extent necessary, in subsequent years) in a
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manner consistent with Treasury Regulation section 1.704-1(b) and 1.704-2 so as
to prevent the Regulatory Allocations from distorting the manner in which
Company Profits, Losses and other items are intended to be allocated among the
Members pursuant to this Article 5.
ARTICLE 6
DISTRIBUTIONS
6.1 Distributions Other Than Proceeds of Any Liquidating Transaction.
Subject to Section 18-607 of the Act, the Company shall distribute Cash Flow to
each Member, on a monthly basis, in the following manner:
(a) first, up to thirty percent (30%) of Cash Flow to the
Members in payment of any Member Loans in proportion to the outstanding
balances of such Member Loans held by each Member (amounts so paid to
be applied first to interest accrued and unpaid, and then to
outstanding principal); and
(b) the balance, to the Members in accordance with their
respective Company Interests at the time of distribution.
6.2 Proceeds of Any Liquidating Transaction. Upon the occurrence of any
transaction (a "Liquidating Transaction") involving the sale or other
disposition of all or substantially all of the assets of the Company, all
proceeds resulting therefrom (and all cash available from any other source
during the period of winding up of the Company) shall be applied as follows:
(a) first, to the payment of, or of the making of reasonable
provisions for payment of, any debts or liabilities of the Company to
creditors (other than Members as holders of Member Loans);
(b) second, to the Members in payment of any Member Loans in
proportion to the outstanding balances of such Member Loans held by
each Member (with amounts so paid to be applied first to interest and
then to principal); and,
(c) the balance, to the Members in proportion to and to the
extent of the positive balances of the Capital Accounts of the Members
(after reflecting in such Capital Accounts all adjustments thereto
necessitated by (i) all other Company transactions for the Fiscal Year
of the Company in which such Liquidating Transaction occurs prior to or
simultaneously with such Liquidating Transaction and (ii) such
Liquidating Transaction).
It is understood and agreed that all payments under this Section shall
be made as soon as reasonably practicable and in any event by the end of the
Fiscal Year in which such Liquidating Transaction occurs or, if later, within
ninety (90) days after the date of such Liquidating Transaction.
6.3 Liquidation of Member's Interest. Upon liquidation of a Member's
interest in the Company, other than in connection with a Liquidating
Transaction, liquidating distributions to such Member shall be made in
accordance with Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations.
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ARTICLE 7
RIGHTS AND OBLIGATIONS OF MEMBERS
7.1 Limited Liability. Except as otherwise provided by the Act, the
debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and the Members shall not be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a member of the
Company. The Members shall not be required to lend any funds to the Company.
Each of the Members shall only be liable to make payment of its respective
contributions as and when due hereunder and other payments as expressly provided
in this Agreement. If and to the extent a Member's contribution shall be fully
paid, such Member shall not, except as required by the express provisions of the
Act regarding repayment of sums wrongfully distributed to Members, be required
to make any further contributions.
To the extent that, at law or in equity, any Affiliate of a Member or
any manager, officer, stockholder, employee, agent or representative of a Member
or such Affiliate has duties (including fiduciary duties) and liabilities to the
Company or to the Members, no such Person shall be liable to the Company or to
any Member for its good faith reliance on the provisions of this Agreement,
including without limitation Section 7.4, which, in the event of any conflict
with any such duties, shall govern.
7.2 Management and Control, Etc. Management and control of the Company
shall be vested in the Members and all material decisions with respect to
management, control, operation and disposition of the business and assets of the
Company shall, except as otherwise specifically provided in this Agreement, be
made by Determination of the Members.
There shall be established by the Members a Board of Managers of the
Company (the "Board"), composed of five managers, designated as hereinafter set
forth. The Board shall meet on a regular basis, not less frequently than
quarterly, to review the operations of the Company, and any Determination of the
Members, required or permitted to be taken under this Agreement may be
accomplished by action of a majority of the managers (or, in the case of any
Unanimous Determination of the Members, by action of all of the managers),
either at a meeting of the Board or by written consent. The Board may also
appoint a Chairman, President, one or more Vice Presidents, a Treasurer and a
Secretary and such other officers as the Board shall deem appropriate, each of
which officers may, to the extent provided by the Board, have the powers
attendant to a similar officer of a Delaware corporation.
Each of ATS and CSD shall have the right, from time to time, to
designate three managers and two managers, respectively, to the Board. Any
manager may be removed, with or without cause, and a successor appointed at any
time by the Member or Members responsible for designation of such manager and
any Member entitled to do so may also designate one or more alternates to serve
in the place of any manager designated by such Member who may temporarily be
unavailable to act with respect to Company matters. In the event of any transfer
by any Member or by any of its successors and assigns, of any interest in the
Company in accordance with Article 8, (a) the assigning Member shall be deemed
to have assigned its right to designate a manager or managers under this Section
to its assignee in the event that such assignment is of the assignor's then
entire interest as a Member of the Company and the assignee is admitted as a
Member in accordance with Article 8, and (b) the assigning Member shall have the
right to transfer its right to designate a manager, by express statement of
exercise of such right in the applicable instrument of assignment; provided,
however, that the assignee of such right is, or will be upon completion of such
transfer, the holder of not less than ten percent (10%) of the Company Interests
and the assignee is admitted as a Member in accordance with Article 8.
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The Company shall pay the reasonable out-of-pocket expenses, including
travel and lodging, of each manager (including any manager-alternate) acting in
connection with the business of the Company.
From time to time upon request, the Company will furnish to each Member
such information regarding the business, properties, financial condition and
results of operation of the Company in such detail as may reasonably be
requested; and the Company covenants and agrees that any authorized
representative of any such Member shall have the right, reasonably exercisable,
to visit and inspect any of the properties of the Company during normal business
hours and in a manner so as to not interfere with the operations and business of
the Company, to examine and to discuss their affairs, finances and accounts
with, and be advised as to the same by, their officers, all at such reasonable
times and intervals as such Member may reasonably request.
Notwithstanding anything to the contrary in this Agreement, the Company
shall not take any of the following actions without first obtaining the
Unanimous Determination of the Members, which approval shall be given or
withheld at the absolute discretion of the Members:
(a) sell or exchange all or substantially all of the assets of the
Company;
(b) issue any additional Company Interests, or admit the
transferee of a Member's Company Interest as a substitute
Member under Section 8.2 hereof;
(c) dissolve the Company, or continue the Company after its
dissolution due to the withdrawal of a Member (or if there are
none, of any Member) as provided in Section 9.1 hereof;
(d) merge or consolidate the Company with another business entity
under the Act, unless the Members of the Company immediately
prior to such merger or consolidation own not less than a
majority of the voting interests in the survivor, whether or
not the Company, of such merger or consolidation;
(e) file any voluntary petitions for the Company under Title XI of
the United States Code, the Bankruptcy Act, or consent to the
filing of any involuntary petition for the Company thereunder,
or seek the protection of any other federal, state, bankruptcy
or insolvency law or debtor relief statutes;
(f) borrow any funds other than in the ordinary course of business
or if, as a result thereof, the aggregate principal amount of
indebtedness of the Company outstanding would exceed
seventy-five percent (75%) of the fair market value of the
assets of the Company; or
(g) establish any extraordinary reserves (i.e., reserves other
than those in the ordinary course of business which shall
include, without limitation, those with respect to capital
expenditures).
7.3 Evidence of Authority, Etc. Any Person dealing with the Company may
rely on a certificate signed by any Member:
(a) as to who are the Members or managers, officers, employees
or agents of the Company;
(b) as to the existence or nonexistence of any fact or facts
which constitute conditions precedent to acts by the Members or any
such manager, officer, employee or agent or in any other manner germane
to the affairs of the Company;
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(c) as to who is authorized to execute and deliver any
instrument or document on behalf of the Company;
(d) as to the authenticity of any copy of this Agreement and
amendments hereto;
(e) as to any act or failure to act by the Company or as to
any other matter whatsoever involving the Company, any Member or any
manager, officer, employee or agent; or
(f) as to the authority of any Member or any manager, officer,
employee or agent or other Person to act on behalf of the Company.
7.4 Other Business, Etc. Except as hereinafter set forth in this
Section (or in any separate agreement between the Company and any such Person),
any Member and any Affiliate of a Member may engage in or possess an interest in
other business ventures (unconnected with the Company) of every kind and
description, independently or with others and none of the Company or the other
Members shall have any rights in or to such independent ventures or the income
or profits therefrom by virtue of this Agreement.
To the extent that, at law or in equity, any Affiliate of a Member or
any director, officer, stockholder, employee, agent or representative of a
Member or such Affiliate has duties (including fiduciary duties) and liabilities
to the Company or to the Members, no such Person shall be liable to the Company
or to any Member for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they expand or
restrict the duties and liabilities of any such Person otherwise existing at law
or in equity, are agreed by the Members to replace such other duties and
liabilities of such Person.
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, it is the intent and understanding of the Members, and each of
ATS and CSD covenant and agree as follows:
(a) except as set forth in the Exceptions Schedule, all future
acquisition of sites, whether in fee ownership, pursuant to a leasehold
interest, or otherwise, for the construction of communication towers, and all
future construction of communication towers, by CSD or any of its Affiliates
will be offered to the Company and neither CSD nor any of its Affiliates will,
directly or indirectly (as a stockholder, member, partner, trustee or otherwise)
own, construct, operate, manage, finance or otherwise be involved with any
communication towers, unless ATS shall have failed to approve the acquisition of
site pursuant to the provisions of Section 3.2; and
(b) the Company will enter into a Management Agreement with ATS.
7.5 Indemnification. No Member, manager or officer of the Company shall
be liable to any other Member or any other Person who has an interest in the
Company for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Member, manager of officer in good faith on behalf
of the Company and in a manner reasonably believed to be within the scope of the
authority conferred on such Member, manager or officer by this Agreement, except
that a Member, manager of officer of the Company shall be liable for any such
loss, damage or claim incurred by reason of such Person's gross negligence or
willful misconduct. To the full extent permitted by applicable law, a Member,
manager or officer of the Company shall be entitled to indemnification from the
Company for any loss, damage or claim by reason of any act or omission performed
or omitted by such Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on it by
this Agreement, except that no Member, manager or officer shall be entitled to
be indemnified in respect of any loss, damage or claim incurred by it by reason
of the Person's gross negligence or willful misconduct with respect to such
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acts or omissions; provided, however, that any indemnity under this Section
shall be provided out of and to the extent of Company assets only, and no Member
shall have personal liability on account thereof.
7.6 Agreements with Affiliates. The Company may enter into agreements
with any Member or Affiliate of a Member for the acquisition of property or
rendition of services, provided that the acquisition of such property from, or
the rendition of such services by, such Member or Affiliate has previously been
approved by a Unanimous Determination of the Members. The affected Member shall
in each case disclose in advance the existence of any such affiliation to the
other Members.
7.7 Payment of Expenses; Compensation. Promptly following the Effective
Date, or as the Members may, by Determination of the Members, otherwise agree,
the Company shall reimburse each Member for such reasonable fees and costs
incurred and reasonable out-of-pocket expenditures relating to the formation of
the Company and the preparation of the associated documentation as may have been
approved by a Determination of the Members. Except as expressly set forth in
this Agreement, or as otherwise approved by a Determination of the Members, no
Member or manager shall receive any compensation for performing its duties
hereunder.
ARTICLE 8
TRANSFERS OF INTERESTS, ETC.
8.1 Consent Required. Except as otherwise contemplated by Section 8.2
or as permitted by the succeeding paragraphs of this Section, no Member shall
suffer or permit any transfer, whether direct or indirect, voluntary or
involuntary, of all or any portion of such Member's Company Interest without an
approval given by Determination of the Members representing a majority of the
Company Interests held by the non-transferring Members, which approval may be
given or withheld by the non-transferring Members in their sole and absolute
discretion. Notwithstanding the foregoing, a Member may, without the approval of
the other Members, transfer an economic Company Interest pursuant to a Permitted
Transfer, in which event the assignee shall be entitled to the share of Profit
or Loss and any distribution or return of Capital Contributions and any credit
or other item properly allocable to the Company Interest to be transferred.
However, unless and until any such transfer of an economic interest shall have
been approved by a Determination of the Members representing a majority in
interest of the Company Interests held by the non- transferring Members, which
approval may be given or withheld by the non-transferring Members in their sole
and absolute discretion, the assignee shall not be entitled to be admitted as a
Member of the Company and the assignor shall continue as a Member of the Company
for all other purposes of this Agreement. In addition, any assignee of an
economic Company Interest pursuant to the foregoing provisions of this paragraph
who has not been admitted as a Member may further assign such interest provided
that such assignment is carried out in accordance with and subject to the
provisions of this Article, in all respects as if or with the same effect as if
such assignee were a Member.
The foregoing provisions of this Section shall not be deemed to
restrict any transfer of an interest in ATS or CSD, except as otherwise
specifically provided.
Anything in this Section 8.1 or elsewhere in this Agreement to the
contrary notwithstanding, ATS may, without the approval of the other Members,
pledge all or any portion of its interests to one or more banks or other
financial institutions pursuant to any bona fide borrowing arrangements, which,
upon foreclosure, shall succeed to the interest of ATS and may become a Member
without the consent of any other Member being required.
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8.2 Right of First Refusal.
(a) If any Member (the "Offeror") desires, at any time, to transfer all
or any part of its Company Interest other than as permitted by Section 8.1 or
other than pursuant to a Permitted Transfer, it shall submit to the other
Members (the "Offerees") a true copy of an offer to purchase such Company
Interest (the "Offer"), which shall in any event disclose the price and terms of
such proposed sale and the name and address of the proposed purchaser. The
Offerees shall have the absolute right to purchase such Company Interest upon
the terms and conditions as set forth in the Offer. Each Offeree shall, within
thirty (30) days of such receipt, specify in a notice to the Offeror whether or
not it desires to accept the Offer, and upon acceptance of the Offer, the same
shall constitute a binding agreement of purchase and sale between the parties.
Failure to send such notification within thirty (30) days shall constitute an
election to reject the Offer. The Offeror may sell its Company Interest, to the
extent the Offer was not so accepted, to the proposed purchaser whose name and
address were disclosed in the Offer, but only upon the same terms and conditions
set forth therein and within sixty (60) days after the expiration of said thirty
(30) day period during which the Offeree had the right to accept the Offer;
otherwise, any such sale shall be null and void and of no force or effect
whatever.
(b) In the event that two or more of the Offerees desire to accept any
Offer, and if such Offerees are unable to agree among themselves as to the
apportionment thereof, each accepting Offeree shall be entitled to acquire a
portion of the offered Company Interest based upon the ratio which the Company
Interest of each such accepting Offeree bears to the aggregate Company Interests
of all such accepting Offerees.
(c) No Offeree shall have any obligation, by reason of acceptance or
rejection of any Offer pursuant to this Section to compensate any broker
retained by any Offeror or third party with respect to any proposed transfer of
an Company Interest.
(d) Each Member shall use reasonable efforts to keep the other Members
apprised with respect to any inquiries or proposals regarding the sale of such
Member's Company Interest.
8.3 Buy/Sell. A Member (for purposes of this Section the "Initiating
Member") may (a) in the event that there shall be a transfer of majority
ownership or control of CSD to any Person in competition with the Company, at
any time within ninety (90) days after receipt of notice of such transfer of
ownership or control (in which event only another Member may be the Initiating
Member), or (b) in the event an Act of Bankruptcy occurs with respect to a
Member (in which event only another Member may be the Initiating Member), by
notice to the other Members (for purposes of this Section, "Other Members")
require the Other Members to elect either to sell their respective entire
Company Interests and any Member Loans to the Initiating Member or to purchase
the entire interest of the Initiating Member in the Company and any Member Loans
for a price computed by reference to an amount stated in the Initiating Member's
notice (the "Stated Amount"). The purchase price shall equal the amount such
Member would receive as a distribution from the Company in respect of such
Member's Company Interest and in repayment of any Member Loans if (i) all of the
assets of the Company were sold on the closing date under this Section for the
Stated Amount, (ii) the Company were dissolved in accordance with Section 9.1,
and (iii) the proceeds of sale were applied in accordance with Section 9.3, it
being understood that the applicable purchase price for such Company Interest
and Member Loans shall be determined by the affected Members if they can agree
upon the same within ten (10) days prior to the closing date and otherwise the
same shall be determined on such date by the Accountants (with any such
determination by the Accountants to be binding upon all Members in the absence
of manifest error). Each of the Other Members shall have thirty (30) after
receipt of the Initiating Member's notice within which to elect whether he shall
buy the Initiating Member's Company Interest and Member Loans or sell his
Company Interest and Member Loans based upon the Stated Amount. If any of the
Other
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Members fails to make an election within such period, he shall be deemed to have
elected to sell his Company Interest and Member Loans to the Initiating Member.
The closing pursuant to this Section shall occur on the sixtieth (60th)
day after the election (or deemed election) to purchase or sell has been made,
or at such earlier date as the purchasing Member(s) may specify on ten (10) days
prior written notice; provided, however, that each of the following (unless and
except to the extent waived by the purchasing Member(s)) shall be a condition of
the obligation of the purchasing Member(s) to proceed with any such purchase:
(a) that the Company shall have continued to be operated in accordance with this
Agreement in all material respects through the date of sale, (b) that the
purchasing Member(s) shall have obtained all lender and other third-party
consents, if any, required in connection with such sale, and (c) that there
shall be no suit, action or proceeding pending on the date of sale before or by
any court or governmental body seeking to restrain or prohibit, or material
damages or other relief in connection with, the sale; provided further, however,
the Company shall agree to indemnify and hold harmless the seller(s) with
respect to all Company obligations, whether arising before or after the date of
such sale (other than any such obligations resulting from any breach of this
Agreement by a selling Member).
The Company Interest and any applicable Member Loans shall be purchased
and the purchase price shall be paid at a closing to be held at the principal
business office of the Company. At the closing the Company Interest and Member
Loans shall be duly conveyed, free of all liens and encumbrances on the same and
the purchase price shall be paid by wire transfer of immediately available
Federal funds. At the election of the purchasing Member(s), the Company Interest
and the Member Loans to be purchased may be acquired in the name of one or more
nominees (whether or not any such nominee is an Affiliate of a purchasing
Member), provided, however, that any such nominee is designated by written
notice given at least five (5) days prior to the date of Closing.
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, (a) in the event one, but not all, of the Other Members shall
elect to purchase the Initiating Member's Company Interest and Member Loans,
such election shall take precedence over any election to sell Company Interests
and Member Loans to the Initiating Member and any such elections to sell shall
be deemed to be an election to sell such Company Interests and Member Loans to
the Other Members who have elected to purchase the Company Interests and Member
Loans of the Initiating Member, (b), such purchasing Other Members shall have
the right but not the obligation to purchase the Company Interests and Member
Loans of the non- purchasing Other Members and, after the closing under this
Section, the purchasing Other Members and, in the event the purchasing Other
Members do not elect to purchase all of the Company Interests and member Loans
of the nonpurchasing Other Members, the non-purchasing Other Members shall
continue the Company in accordance with this Agreement, and (c) if one or more
of the Other Members elect to purchase the Company Interest and Member Loans of
the Initiating Member and are unable to agree among themselves as to
apportionment thereof, each Other Member shall be entitled to acquire a portion
of the Initiating Member's Company Interest and Member Loans based upon the
ratio which the Company Interest of each such Other Member bears to the
aggregate Company Interests of all of the purchasing Other Members. In no event
shall the purchasing Other Members be entitled to purchase less than all of the
Company Interest and Member Loans of any nonpurchasing Other Member unless such
nonpurchasing Other Member so agree in writing, it being understood, however,
that the purchasing Other Members may elect to purchase Company Interests and
Member Loans from some but not all of the nonpurchasing Other Members.
In the event of the failure of a selling Member to proceed with the
sale of its Company Interest and Member Loans at the closing as herein provided
(other than any failure by reason of the non-occurrence of any condition to such
sale herein provided), the same shall constitute a default by such Member under
this Agreement and any purchasing Member shall be entitled to pursue any and all
remedies available under this Agreement or at law or equity, including specific
performance. In the event of the failure of a purchasing
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Member (or its nominee) to proceed with the purchase of a Company Interest and
Member Loans at the closing as herein provided (other than because a condition
to such Member's obligation to make such purchase has not been satisfied), each
selling Member may elect, by written notice given to the purchasing Member
within thirty (30) days after the date of such failure, either (a) to cause the
purchasing Member to sell its Company Interest and Member Loans to such selling
Member (or its nominee) at a purchase price for such Company Interest which is
ten percent (10%) less than the price which the defaulting purchasing Member
would have received if it had initially agreed to sell its Company Interest at a
price determined by reference to the Stated Amount or (b) to pursue any and all
remedies available under this Agreement or at law or in equity, including
specific performance. If a selling Member elects within the aforesaid thirty
(30) day period to cause such defaulting purchasing Member to sell the Company
Interest and Member Loans, the closing shall occur on the sixtieth (60th) day
after the election to purchase has been given, or at such earlier date as the
electing Member may specify on ten (10) days prior written notice; provided,
however, that it shall be a condition of the electing Member's obligation to
proceed, in the case of the electing Member as buyer, that the conditions set
forth in the second paragraph of this Section are satisfied and, in the case of
the former purchasing Member as seller, that the conditions set forth in the
immediately preceding paragraph are satisfied.
8.4 CSD Right/Obligation of Exchange. In conjunction with the initial
public offering of the common stock of ATS (the "ATS IPO") (including an initial
public offering which takes the form of a merger with an existing publicly
traded company), CSD shall have the right, and ATS shall have the right to
require CSD, to exchange all but not less than all of CSD's Company Interest for
shares of common stock of ATS (of the class which is the subject of the ATS IPO,
the "ATS Common Stock") on the terms and subject to the conditions of this
Section. ATS agrees that it shall give prompt written notice (which notice shall
include the estimate initial public offering price or the range thereof and
whether ATS has elected to require CSD to exchange its Company Interest for
shares of ATS Common Stock pursuant to the provisions of this Section) to CSD of
its determination to proceed with the ATS IPO. In the event ATS shall not have
elected to require CSD to exchange its Company Interest for shares of ATS Common
Stock pursuant to the provisions of this Section, CSD shall have the right,
exercisable within twenty (20) days of receipt of such notice, to elect to
exchange all but not less than all of its Company Interest for shares of ATS
Common Stock. Failure of CSD to deliver a timely notice of election to so
exchange its Company Interest shall be deemed to be an election not to exchange
its Company Interest.
In the event CSD elects to exchange its Company Interest, ATS and CSD
shall attempt in good faith to agree upon a fair market value for CSD's Company
Interest. In the event ATS and CSD are unable to agree upon such value within
ten (10) days, CSD shall have the right, but not the obligation, to submit such
matter to appraisal in accordance with the provisions of this Section. In the
event ATS and CSD agree on such fair market value or CSD elects to submit such
matter to appraisal, ATS and CSD shall be obligated to effect the exchange and
shall be conclusively bound to effect such exchange based on the results of the
appraisal. In the event CSD shall have elected not to submit, or shall have
failed within such ten (10)-day period to have submitted, such matter to binding
appraisal in accordance with the provisions of the preceding sentence, it shall
not have any further right to exchange its Company Interest for shares of common
stock of ATS, except as otherwise provided in the last paragraph of this
Section. Any appraisal of the fair market value of the Company Interest of CSD
shall be made by the managing underwriter of the ATS IPO (or, in the event the
ATS IPO shall be pursuant to a merger, by an investment banker knowledgeable in
the communications tower business mutually reasonably acceptable to ATS and CSD
or, in the absence of such agreement, by Credit Suisse First Boston). The number
of shares of ATS Common Stock to be issued in exchange for the Company Interest
of ATS shall be determined by dividing the fair market value of CSD's Company
Interest (as agreed upon by ATS and CSD or as determined by appraisal) by the
amount paid by the underwriters to ATS (or the selling stockholders in the event
ATS does not sell any shares pursuant
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thereto) in the ATS IPO (or the closing price of the common stock of the party
to the merger agreement on the date the merger agreement is executed).
To the extent permitted by the Code, ATS will use its reasonable
business efforts to effect the exchange of CSD's Company Interest for shares of
ATS Common Stock pursuant to a tax-free reorganization under the Code so long as
doing so does not subject ATS or its subsidiaries or stockholders to any risk of
tax in connection with the exchange or any related transactions.
CSD hereby appoints ATS as its agent and attorney-in-fact, which
appointment is coupled with an interest, and is irrevocable, for purposes of
executing and delivering all such agreements, instruments and documents
necessary or desirable in order to effectuate the provisions of this Section,
including without limitation the right and power to transfer the Company
Interest of CSD to ATS in accordance with the provisions of this Section, all in
the event CSD has elected to proceed with the exchange of its Company Interest
for shares of ATS Common Stock pursuant to the provisions of this Section.
In the event CSD shall have elected or been deemed to have elected not
to exchange its Company Interest for shares of ATS Common Stock pursuant to the
ATS IPO and ATS subsequently determines not to proceed with such ATS IPO or such
ATS IPO is withdrawn or is otherwise not consummated, CSD shall have the rights
set forth in this Section upon any subsequent determination of ATS to proceed
with the ATS IPO.
8.5 Obligations and Rights of Transferees and Assignees. Any Person who
acquires in any manner whatsoever the interest (or any part thereof) of any
Member in the Company, irrespective of whether such Person has accepted and
assumed in writing the terms and provisions of this Agreement, shall be deemed,
by acceptance of the benefit of the acquisition thereof, to have requested and
agreed to be subject to and bound by all of the obligations of this Agreement,
with the same force and effect as any predecessor in Company Interest, shall
have only such rights as are provided in this Agreement, and, without limiting
the generality of the foregoing, such Person shall not have the value of his
interest ascertained or receive the value of such interest, or, in lieu thereof,
profits attributable to any right in the Company, except as set forth in this
Agreement.
8.6 Non-Recognition of Certain Transfers. Notwithstanding any other
provision of this Agreement, any transfer, sale, alienation, assignment,
encumbrance or other disposition in contravention of any of the provisions of
this Article shall be void and ineffective, and shall not bind, or be recognized
by, the Company.
8.7 Required Amendments; Continuation. If and to the extent any
transfer of a Company Interest is permitted hereunder and the transferee is
admitted as a Member, this Agreement shall be amended to reflect such admission
or transfer and the elimination of the transferor Member and (if and to the
extent then required by the Act) a certificate of amendment to the Certificate
reflecting such admission and elimination shall be filed in accordance with the
Act. The admission of any substitute Member pursuant to this Article shall be
deemed effective immediately prior to the transfer of a Company Interest to such
substitute Member. If the transferor Member has transferred all of its Company
Interest pursuant to this Article, then, immediately following such transfer,
the transferor Member shall cease to be a member of the Company.
8.8 Resignation. No Member shall have the right to resign from the
Company without the prior written consent of the other Members.
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ARTICLE 9
TERMINATION
9.1 Events of Dissolution.
(a) In accordance with Section 18-801 of the Act, the Company shall be
dissolved and the affairs of the Company wound up upon the occurrence of any of
the following events:
(i) a Unanimous Determination of the Members to dissolve the
Company; or
(ii) death, retirement, resignation, expulsion, bankruptcy or
dissolution of a Member or the occurrence of any other event which,
pursuant to the Act, terminates the continued existence of a Member in
the Company, unless, if there is more than one Member remaining, the
business of the Company is continued by the consent of all the
remaining Members within ninety (90) days following the occurrence of
any such event; or
(iii) the sale, transfer or other disposition of all or
substantially all of the business and assets of the Company; or
(iv) in any event, at 12:00 midnight on December 31, 2047.
(b) Dissolution of the Company shall be effective on the day on which
the event occurs giving rise to the dissolution, but the Company shall not
terminate until the assets of the Company shall have been distributed as
provided herein and a certificate of cancellation of the Company has been filed
with the Secretary of State of the State of Delaware.
(c) If as a result of the occurrence of any event described in Section
9.1(a)(ii), a Member is the only remaining member of the Company, to the fullest
extent permitted by the Act, such Member shall have the right to admit a Person
as a new member of the Company, effective as of the date of the occurrence of
the event set forth in Section 9.1(a) (ii), on terms satisfactory to such
remaining Member. Upon such admission, the Members are hereby authorized to, and
shall, continue the business of the Company without dissolution.
9.2 Application of Assets. In the event of dissolution, the Company
shall conduct only such activities as are necessary to wind up its affairs
(including the sale of the business and assets of the Company in an orderly
manner), and the assets of the Company shall be applied in the manner, and in
the order of priority, set forth in Section 6.2.
9.3 Distributions in Liquidation. No Member shall have the right to
request or require the distribution of the assets of the Company in kind upon
the liquidation of the Company.
ARTICLE 10
MISCELLANEOUS
10.1 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form
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of rapid transmission, confirmed by mailing (by first class or express mail, or
by recognized courier service, postage prepaid) written confirmation at
substantially the same time as such rapid transmission, or (c) 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 set forth on the Member
Schedule (including any copies shown thereon) or to such other address (within
the United States of America) as any party may have designated for itself by
written notice to the others in the manner herein prescribed, except that
notices of change of address shall be effective only upon receipt. All notices,
demands, and requests to be sent hereunder shall be deemed to have been given
for all purposes of this Agreement upon the date of receipt or refusal.
10.2 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, 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 7, 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. Noth ing
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 for such breach or threatened breach.
10.3 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 Member, the Members shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Members as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that such intent is fulfilled to the maximum extent possible.
10.4 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
Members. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
10.5 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.
10.6 Title to Company Property. All property owned by the Company,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Company as an entity, and no Member, individually, shall have any ownership
of such property. The Company may hold any of its assets in its own
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name or in the name of its nominee, which nominee may be one or more
individuals, partnerships, trusts or other entities.
10.7 Governing Law. In the event of a conflict between any provision of
this Agreement and any non-mandatory provision of the Act, the provision of this
Agreement shall control and take precedence. 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 Delaware 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.
10.8 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 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.
10.9 Entire Agreement. This Agreement (together with the Member
Schedule) 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.
10.10 Assignment. This Agreement shall not be assignable by any Member,
except as otherwise provided in Section 8.1, 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.
10.11 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 10.10.
10.12 Mutual Drafting. This Agreement is the result of the joint
efforts of CSD 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 either party based on any presumption of that party's
involvement in the drafting thereof.
10.13 Amendments; Waivers.. This Agreement may be amended from time to
time with written approval of all Members. At any time or from time to time,
except to the extent not permitted by Applicable Law, the Members may extend the
time for the performance of any of the obligations or other acts of any Member,
and waive compliance by the other with any of the agreements, covenants or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by all Members.
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10.14 Schedule. The Member Schedule attached hereto shall be
incorporated into and shall be deemed a part of this Agreement. If the Member
Schedule shall not be attached hereto at the time of execution of this
Agreement, or if it shall be incomplete, it may be later attached or completed
in accordance with the provisions of this Agreement and the Member Schedule
shall, as later attached or completed, for all purposes be deemed a part of this
Agreement as if attached hereto or completed at the time of the execution
hereof. Without limiting the generality of the foregoing, the Member Schedule
shall be amended from time to time to reflect the admission of Members or the
transfer of interests of Members and the Company shall, from time to time, so
cause the Member Schedule to be amended and shall promptly notify the Members in
writing of any change in the Member Schedule.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal as of the day and year first above written.
American Tower Systems, Inc.
By:_____________________________
Name:
Title:
Communication Systems Development, Inc.
By:_____________________________
Name:
Title:
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APPENDIX A
"Accountant(s)" shall mean such firm of independent certified public
accountants as may be engaged from time to time by the Company, upon a
Determination of the Members, for purposes of reviewing or auditing the
financial statements of the Company and performing such other duties as are
imposed upon the Accountants by the express provisions of this Agreement.
"Act" shall have the meaning set forth in the recitals to this
Agreement.
"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 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
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(i) its authorization, by appropriate action of its board of
directors or other governing body, of any of the foregoing.
"Additional Capital Contribution" shall mean any Capital Contribution
made in accordance with Section 3.2 or 3.3.
"Adjusted Capital Account Balance" shall mean, with respect to any
Member, the balance in such Member's Capital Account after giving effect to the
following adjustments:
(a) credits to such Capital Account of such Member's share of
"partnership minimum gain" or a "partner nonrecourse debt minimum gain"
or any amount which such Member would be required to restore under this
Agreement or otherwise; and
(b) debits to such Capital Account of the items described in
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.
The foregoing definition of Adjusted Capital Account Balance is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
"Affiliate" shall mean, with respect to any Person, (i) in the case of
any such Person which is a Company, any Member in such Company, (ii) any other
Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect
to such Person or to one or more of the Persons referred to in the preceding
clause (i), (iii) any other Person who is an officer, director, trustee or
employee of, or Member in, such Person or any Person referred to in the
preceding clauses (i) and (ii), and (iv) any other Person who is a member of the
Immediate Family of such Person or of any Person referred to in the preceding
clauses (i) through (iii); provided, however, that such term shall not include
within its meaning the Company itself or a Subsidiary of the Company.
"Agreement" shall mean this Agreement of Limited Liability Company, as
it may be amended, restated or supplemented from time to time as herein
provided.
"Annual Budget" shall mean the detailed annual budget of all
anticipated revenues and other cash receipts and expenses and capital
expenditures associated with ownership and operation of the Company as
heretofore furnished to each of the Members, as amended and updated from time to
time as provided herein.
"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.
"ATS" shall have the meaning given to such term in the Preamble.
"ATS Common Stock" shall have the meaning given such term in Section
8.4.
"ATS IPO" shall have the meaning given such term in Section 8.4.
"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,
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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.
"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.
"Board" shall have the meaning given such term in Section 7.2.
"Book Gain" or "Book Loss" shall mean the gain or loss recognized by
the Company for book purposes in any Fiscal Year by reason of any sale or
disposition with respect to any of the assets of the Company. Such Book Gain or
Book Loss shall be computed by reference to the Book Value of such property or
assets as of the date of such sale or disposition, rather than by reference to
the tax basis of such property or assets as of such date, and each and every
reference herein to "gain" or "loss" shall be deemed to refer to Book Gain or
Book Loss, rather than to tax gain or tax loss, unless the context manifestly
otherwise requires.
"Book Value" of an asset shall mean, as of any particular date, the
value at which the asset is properly reflected on the books and records of the
Company as of such date in accordance with Section 1.704-1(b)(2)(iv) of the
Treasury Regulations. The initial Book Value of each asset shall be its cost,
unless such asset was contributed to the Company by a Member, in which case the
initial Book Value shall be the amount stated as the fair market value for such
asset on the Member Schedule (or, if no such value is stated, as reasonably
established by a Determination of the Member), and, in each case, such Book
Value shall thereafter be adjusted for Depreciation with respect to such asset
rather than for the cost recovery deductions to which the Company is entitled
for Federal income tax purposes with respect thereto. The Book Values of all
Company assets shall be adjusted to equal their respective fair market values,
as determined by the Board in its reasonably business judgment as of the
following times: (a) the acquisition of an additional Company Interest by any
new or existing Member in exchange for more than a de minimis Additional Capital
Contribution; (b) the distribution by the Company to a Member of more than a de
minimis amount of Company assets, including money, if, as a result of such
distribution, such Member's Company Interest is reduced; and (c) the termination
of the Company for Federal income tax purposes pursuant to Section 708(b)(1)(B)
of the Code.
"Capital Account" shall have the meaning set forth in Section 3.4.
"Capital Contributions" shall mean the total amount of cash and other
property contributed to the Company by the Members, whether as Initial Capital
Contributions or Additional Capital Contributions.
"Cash Flow" shall mean, for any period, the amount, computed on a cash
basis, of:
(i) the sum of:
(A) all gross receipts, all investment income of
the Company, and all cash received from
other sources, and
(B) any amounts released from reserves as
provided in the Annual Budget, reduced by:
(ii) the sum of:
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(A) disbursements of the Company for operating
expenses, principal payments on debt (other
than Member Loans), interest (other than on
Member Loans) and other expenses ,
(B) capital expenditures reasonably determined
to be necessary or appropriate by the Board,
(C) any increase in reserves as provided in the
Annual Budget, and
(D) an additional amount necessary to ensure
that the Company has funds necessary to meet
the cash requirements of the Company for the
period prior to the date on which the
Company is next anticipated to receive
income as set forth in the applicable Annual
Budget or such other date thereafter (to the
extent no such date is specified in the
Annual Budget) as determined by the Board.
"Certificate" shall mean the Certificate of Formation of Limited
Liability Company of the Company as provided for pursuant to the Act, as
originally filed with the office of the Secretary of State of the State of
Delaware, as amended and restated from time to time as herein provided.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any subsequent Federal law of similar import, and, to the
extent applicable, any Treasury Regulations promulgated thereunder.
"Company" shall mean the limited liability company hereby established
in accordance with this Agreement by the parties hereto, as such limited
liability company may from time to time be constituted.
"Company Interest" shall mean, with respect to each Member, its
interest in the Company as set forth in the Member Schedule, subject in each
instance to adjustment from time to time pursuant to the applicable provisions
of this Agreement.
"Control" shall mean, when used with respect to any Person, the power
to direct the management and policies of such Person, directly or indirectly,
whether as an officer or manager, through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing.
"Controlling Interest" shall mean, with respect to any Person, the
power to control such Person.
"CSD" shall have the meaning given such term in the Preamble.
"Depreciation" shall mean, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period; provided,
however, that if the Book Value of an asset differs from its adjusted basis for
Federal income tax purposes at the beginning of any such year or other period,
Depreciation shall be an amount that bears the same relationship to the Book
Value of such asset as the depreciation, amortization, or other cost recovery
deduction computed for tax purposes with respect to such asset for the
applicable period bears to the adjusted tax basis of such asset at the beginning
of such period, or if such asset has a zero adjusted tax basis, Depreciation
shall be an amount determined under any reasonable method selected by a
Determination of the Members.
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"Determination of the Members" shall mean the affirmative vote or
approval of Members holding at least fifty and one-tenth percent (50.1%) of the
Company Interests (or such greater or lesser percentage of Company Interests as
may otherwise in this Agreement be expressly provided). "Unanimous Determination
of the Members" shall mean the affirmative vote or approval of Members holding
one hundred percent (100%) of the Company Interests.
"Effective Date" shall have the meaning set forth in Section 2.5.
"Entity" shall mean any general partnership, limited partnership,
corporation, joint venture, trust, limited liability company, business trust,
cooperative or association.
"Exceptions Schedule" shall mean the schedule attached hereto and made
a part hereof which sets forth, as of the date hereof, existing sites and
communication towers owned, leased, operated or managed by CSD or any Affiliate
thereof and which are exceptions to the provisions of Section 7.4. The
Exceptions Schedule may be amended, from time to time, with the prior written
approval of ATS in its sole and absolute discretion.
"Fiscal year" shall mean the fiscal year of the Company and shall be
the same as its taxable year, which shall be the calendar year unless otherwise
required by the Code. Each fiscal year shall commence on the day immediately
following the last day of the immediately preceding fiscal year.
"GAAP" shall mean means, except to the extent that a deviation
therefrom is expressly required by this Agreement, 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.
"Immediate Family" shall mean, with respect to any Person, his spouse,
parents, brothers, sisters, children (natural or adopted), stepchildren,
grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-in-law,
nephews and nieces.
"Initial Capital Contribution" shall mean any Capital Contribution made
in accordance with Section 3.1.
"Initial Investment" shall mean the aggregate amount proposed to be
invested in the project or site, including for all tower and other improvements
during the initial phase of construction.
"Initiating Member" shall have the meaning set forth in Section 8.3.
"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.
A-5
<PAGE>
"Liquidating Transaction" shall have the meaning set forth in Section
6.2.
"Management Agreement" shall mean the agreement, dated as of the date
hereof, between ATS and the Company, relating to the marketing and management by
ATS on behalf of the Company of all communication towers now or hereafter owned,
leased, operated or managed by the Company.
"Member" shall mean each of the undersigned, together with any Person
who becomes a substituted or additional Member as herein provided and who is
listed as a member of the Company in the books and records of the Company, in
such Person's capacity as a member of the Company.
"Member Loan" shall have the meaning set forth in Section 3.2.
"Member Schedule" shall have the meaning set forth in Section 3.1, as
amended from time to time pursuant to the provisions of this Agreement.
"Objection Notice" shall have the meaning set forth in Section 3.2.
"Offer" shall have the meaning set forth in Section 8.2.
"Offeror" shall have the meaning set forth in Section 8.2.
"Other Member" shall have the meaning set forth in Section 8.3.
"Parent" shall mean, with respect to any Person, any Person which owns
directly, or indirectly through one or more Subsidiaries, twenty percent (20%)
or more of the voting or beneficial interest in, or otherwise has the right or
power (whether by contract, through ownership of securities or otherwise) to
control, such Person.
"Permitted Transfer" shall mean any sale, transfer, assignment or other
disposition of a Company Interest by any Member to a Permitted Transferee.
"Permitted Transferee" shall mean any of the following:
(a) any member of the Immediate Family or the estate, executors or
legal representatives of any transferor,
(b) the trustees of an inter vivos or testamentary trust for the
benefit of any transferor or any member of his Immediate
Family, or
(c) any Affiliate of the transferor effecting such transactions.
"Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
"Prime Rate" shall mean the annual floating rate of interest,
determined daily and expressed as a percentage, from time to time announced by
Toronto-Dominion (Texas), Inc. as its "prime" or "base" rate, so-called, or if
at any time such bank ceases to announce such a rate, as announced by the
largest national or state-chartered banking institution then having its
principal office in the New York City and announcing such a rate. If at any time
neither Toronto-Dominion (Texas), Inc nor any of the five largest other national
or state-chartered banking institutions having their principal offices in the
New York City is announcing such a floating rate, "Prime Rate" shall mean a rate
of interest, determined daily, which is two (2) percentage points above the
14-day moving average closing trading price of 90-day Treasury Bills.
"Profit" and "Loss" shall mean, for each Fiscal Year or other period,
an amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (provided that for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(a) Any income of the Company that is exempt from Federal income
tax and not otherwise taken into account in computing Profit
or Loss pursuant to this provision shall be added to such
taxable income or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section
705(a)(2)(B) expenditures pursuant to Section
1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account in computing Profit or Loss
pursuant to this provision, shall be subtracted from such
taxable income or loss;
(c) Book Gain or Book Loss shall be taken into account in lieu of
any tax gain or tax loss recognized by the Company by reason
of any sale or disposition of an asset of the Company; and
(d) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year, computed as provided in
this Agreement.
If the Company's taxable income or loss for such Fiscal Year, as
adjusted in the manner provided above, is a positive amount, such amount shall
be the Company's Profit for such Fiscal Year; and if a negative amount, such
amount shall be the Company's Loss for such Fiscal Year.
If the Book Value of the Company assets is adjusted pursuant to the
last sentence of the definition of Book Value, the amount of such adjustment
shall be included in computing Profit or Loss. If any Company asset is
distributed in kind (whether in connection with the liquidation of the Company
or otherwise), the Company shall be deemed to have realized Profit or Loss
thereon in the same manner as if the Company had sold such asset for an amount
equal to its fair market value on the date of distribution, as determined in
good faith by a Determination of the Members.
"Regulatory Allocations" shall have the meaning given such term in
Section 5.7.
"Stated Amount" shall have the meaning given such term in Section 8.3.
"Subsidiary" shall mean, with respect to any Person, any Entity (i) in
which such Person owns directly, or indirectly through one or more Subsidiaries,
twenty percent (20%) or more of the voting or beneficial interest or (ii) which
such Person otherwise has the right or power to control (whether by contract,
through ownership of securities or otherwise).
"Tax Matters Member" shall have the meaning given such term in Section
4.5(b).
A-6
<PAGE>
"Transfer" shall mean, in the context of a Transfer of a Membership
Interest, the sale, assignment, pledge, hypothecation, transfer or other
voluntary disposition (by gift or otherwise, and whether as security or
otherwise) by a Member of all or a portion of its Interest. For purposes of this
definition, "Transfer" of a Company Interest includes (i) the sale, assignment,
pledge, hypothecation, transfer or other voluntary disposition (by gift or
otherwise, and whether as security or otherwise) of an equity interest in any
Person substantially all of the assets of which consist, directly or indirectly,
of a Company Interest, or (ii) the merger or consolidation of a Member, or of
any Person referred to in clause (i), with another Person.
"Treasury Regulations" shall mean the Federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code, as
such Treasury Regulations may be amended from time to time (it being understood
that all references herein to specific sections of the Treasury Regulations
shall be deemed also to refer to any corresponding provisions of succeeding
Treasury Regulations).
"Unaffiliated Person" shall mean, with respect to any Person, a Person
who is not an Affiliate as to such Person.
A-7
<PAGE>
MEMBER SCHEDULE
Initial Capital Contributions of the Members
Member and Address Contribution
American Tower Systems, Inc.
6400 North Congress Avenue, Suite 1750
Boca Raton, Florida 33487
Attention: Chief Operating Officer and
Chief Financial Officer
Telecopier No.: (407) 998-2278
Communication Systems Development, Inc.
7488 Shoreline Drive, Suite B-1
Stockton, California 95219
Attention: Michael Wingo, Chief Executive Officer
Telecopier No.: (209) 951-5845
A-8
Exhibit 10.2
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
B & E ASSOCIATES, INC.
Dated as of
May 27, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................1
2.1 Agreement to Sell and Buy..............................................................1
2.2 Assumption of Liabilities and Obligations. ............................................1
2.3 Closing; Purchase Price................................................................3
2.4 Accounts Receivable....................................................................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BEA...........................................................4
3.1 Organization and Business; Power and Authority; Effect of Transaction..................4
3.2 Financial and Other Information. .....................................................5
3.3 Changes in Condition...................................................................5
3.4 Materiality............................................................................5
3.5 Title to Properties; Leases............................................................5
3.6 Compliance with Private Authorizations.................................................5
3.7 Compliance with Governmental Authorizations and Applicable Law.........................6
3.8 Intangible Assets......................................................................7
3.9 Related Transactions...................................................................7
3.10 Solvency...............................................................................7
3.12 Employee Retirement Income Security Act of 1974........................................7
3.13 Absence of Sensitive Payments..........................................................7
3.14 Inapplicability of Specified Statutes..................................................8
3.15 Employment Arrangements................................................................8
3.16 Material Agreements....................................................................8
3.17 Ordinary Course of Business............................................................8
3.18 Broker or Finder.......................................................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS...........................................................9
4.1 Organization and Business; Power and Authority; Effect of Transaction..................9
4.2 Broker or Finder......................................................................10
4.3 Solvency..............................................................................10
4.4 No Legal Action.......................................................................10
ARTICLE 5 CLOSING CONDITIONS.............................................................................10
5.1 Conditions to Obligations of Each Party to effect the Transactions....................10
5.2 Conditions to Obligations of ATS......................................................11
5.3 Conditions to Obligations of BEA......................................................11
ARTICLE 6 INDEMNIFICATION................................................................................12
6.1 Survival..............................................................................12
6.2 Indemnification.......................................................................12
6.3 Limitation of Liability...............................................................13
6.4 Notice of Claims......................................................................13
6.5 Defense of Third Party Claims.........................................................13
6.6 Exclusive Remedy......................................................................14
ARTICLE 7 GENERAL PROVISIONS.............................................................................14
7.1 Amendment.............................................................................14
7.2 Waiver................................................................................14
<PAGE>
7.3 Fees, Expenses and Other Payments.....................................................14
7.4 Notices...............................................................................14
7.5 Specific Performance; Other Rights and Remedies.......................................15
7.6 Severability..........................................................................16
7.7 Counterparts..........................................................................16
7.8 Section Headings......................................................................16
7.9 Governing Law.........................................................................16
7.10 Further Acts..........................................................................16
7.11 Entire Agreement......................................................................16
7.12 Assignment............................................................................17
7.13 Parties in Interest...................................................................17
7.14 Arbitration...........................................................................17
7.15 Mutual Drafting.......................................................................17
</TABLE>
APPENDIX A: Definitions
SCHEDULES: BEA Disclosure Schedule
-ii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of May 21,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and B & E Associates, Inc., a Massachusetts corporation ("BEA").
WHEREAS, BEA is engaged in the business of identifying and locating and
managing communication sites for third parties (the "BEA Business"); and
WHEREAS, ATS desires to purchase and BEA desires to sell the BEA Assets
and the BEA Business on the terms and conditions hereinafter set forth;
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 BEA 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 "either party" shall, unless the context otherwise requires, refer to
BEA and ATS.
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, BEA hereby agrees to sell, assign, transfer and deliver
to ATS at the Closing, and ATS agrees to purchase at the Closing, the BEA Assets
and the BEA Business, free and clear of any Liens of any nature whatsoever
except for Permitted Liens. For purposes of this Agreement, the term "BEA
Assets" shall mean all of the Assets of BEA set forth on Schedule 2.1 of the BEA
Disclosure Schedule.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of BEA (collectively, the "BEA
Assumed Obligations"): (i) all of the obligations and liabilities of BEA under
the BEA Assumable Agreements, and (ii) all obligations and liabilities of BEA
with respect to the ownership and operation of the BEA Assets and the conduct of
the BEA Business, on and
<PAGE>
after the Closing Date; provided, however, that notwithstanding the foregoing,
ATS shall not assume and agree to pay, and shall not be obligated with respect
to, the BEA Nonassumed Obligations.
(b) ATS shall not assume or become obligated to perform any debt,
liability or obligation of BEA relating to any of the following matters
(collectively, the "BEA Nonassumed Obligations"):
(i) the ownership or operation of the BEA Assets or the
conduct of the BEA Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement of BEA (including without limitation any obligation to any
BEA Employee for severance benefits, vacation time or sick leave), and
any of the following to the extent same arise from Events occurring
prior to or existing on the Closing Date: products liability, Legal
Actions or other Claims, and obligations and liabilities relating to
Environmental Law;
(ii) any obligations or liabilities under the BEA Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of BEA;
(iv) those required to be disclosed in the BEA Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the BEA Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by BEA under this Agreement or
any Collateral Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of BEA's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any asset of BEA
not included in the BEA Assets.
(viii) any obligation or liability with respect to capitalized
lease obligations or Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid by BEA pursuant to the provisions of this Agreement or any
Collateral Document; and
(x) any Contract with any Affiliate of BEA, other than those,
if any, set forth in Section 2(b)(x) of the BEA Disclosure Schedule.
All BEA Nonassumed Obligations shall remain and be the obligations and
liabilities solely of BEA.
(c) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(c) of the BEA Disclosure Schedule,
all items of income and expense (including without limitation with respect to
rent, utility charges, Pro Ratable Taxes and wages, salaries and accrued but
unused vacation of BEA employees) arising from the ownership or operation of the
BEA Assets or the conduct of the BEA Business shall be prorated as of 12:01
a.m., Eastern time, on the Closing Date, with BEA entitled to and responsible
for any such items on or prior to the Closing Date and ATS entitled to and
responsible for any such items relating to any subsequent period. For these
purposes, Pro Ratable Taxes attributable to a period that begins before and ends
after the Closing Date shall be treated on a "closing of the books" basis
-2-
<PAGE>
as two partial periods, one ending at the close of the Closing Date and the
other beginning on the day after the Closing Date, except that Pro Ratable Taxes
(such as property Taxes) imposed on a periodic basis shall be allocated on a
daily basis. If either party shall have received any such revenues or paid any
such expenses or charges which, pursuant to the terms hereof, the other party is
entitled to or responsible for, it shall furnish the other party with a detailed
statement of any such items as soon as practicable after receipt or payment
thereof. The parties shall use their best efforts to agree upon such items and
other adjustments prior to the Closing Date and, in any event, except as set
forth in Section 2.2(c) of the BEA Disclosure Schedule, within sixty (60) days
thereafter. If the parties are unable within such period to agree upon such
items and other adjustments, BEA and ATS shall, within the following ten (10)
days, jointly designate a nationally known independent public accounting firm to
be retained to review such items and other adjustments. The fees and other
expenses of retaining such independent public accounting firm shall be borne
equally by BEA and ATS. Such firm shall report its conclusions as to such items
and other adjustments pursuant to this Section and such report shall be
conclusive on all parties to this Agreement and not subject to dispute or
review. Upon such agreement or determination by such independent accounting
firm, BEA or ATS, as the case may be, shall promptly reimburse the other party
for any income received or expenses paid by the other party and not previously
reimbursed or any other adjustment required by this Section.
Nothing contained in this Section 2.2(c) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts 02109, at 10:00 a.m., local time, on May 21 , 1997 or such
other date, prior to the Termination Date, as the parties may agree (the
"Closing Date"). At the Closing, each of the parties shall deliver such bills of
sale, assignments, assumptions of liabilities, opinions and other instruments
and documents as are described in this Agreement or as may be otherwise
reasonably requested by the parties and their respective counsel. The purchase
price for the BEA Assets and the BEA Business (the "Purchase Price") shall be an
amount equal to $4,333,000, subject to adjustment as provided in Section 2.2(d)
plus an amount equal to the Prepaid Expenses and minus an amount equal to the
sum of (i) the BEA Nonassumed Obligations, if any, which ATS agrees to assume,
and (ii) Prepaid Revenues.
2.4 Accounts Receivable. At the closing, BEA shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the BEA
Business. BEA shall deliver to ATS on or as soon as practicable after the
Closing Date a complete and detailed statement showing the name, amount and age
of each Accounts Receivable of the BEA Business. Subject to and limited by the
following, revenues relating to the Accounts Receivable relating to the BEA
Business will be for the account of BEA. ATS shall use the same procedures and
efforts which it uses with respect to its own accounts receivable to collect the
Accounts Receivable with respect to the BEA Business for a period of ninety (90)
days after the Closing Date (the "Collection Period"). Any payment received by
ATS during the Collection Period from any customer with an account which is an
Accounts Receivable with respect to the BEA Business shall first be applied in
reduction of the Accounts Receivable, unless the customer contests the validity
of such application. If the customer contests the validity of any payment
received by ATS during the Collection Period to be applied in reduction of the
Accounts Receivable, then ATS shall promptly notify BEA and any payment with
respect to which application is contested as aforesaid shall be placed in an
escrow arrangement reasonably satisfactory to ATS and BEA until the validity of
the application is determined. During the Collection Period, ATS shall furnish
BEA with a list of, and pay over to BEA, the amounts collected with respect to
the Accounts Receivable with respect to the BEA Business on a monthly basis and
forward to BEA, promptly upon receipt or delivery, as the case may be, copies of
all correspondence relating to Accounts Receivable. ATS shall provide BEA 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, the
parties shall meet to mutually
-3-
<PAGE>
and in good faith analyze any uncollected Accounts Receivable to determine if
the same, in their reasonable business judgment, are deemed to be collectable
and if ATS desires to retain such Accounts Receivable. As to each such Accounts
Receivable, the parties shall negotiate a good faith value of such Accounts
Receivable, which ATS shall pay to BEA if ATS, in its sole discretion, chooses
to retain such Accounts Receivable. BEA shall retain the right to collect any of
its Accounts Receivable as to which the parties are unable to reach agreement as
to a good faith value, and ATS agrees to turn over to BEA any payments received
against any such Accounts Receivable. ATS shall not be obligated to use any
extraordinary efforts 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 ATS shall not make any
such referral or compromise, nor settle or adjust the amount of any such
Accounts Receivable, except with the approval of BEA. ATS shall not incur any
liability to BEA for any uncollected account unless ATS shall have engaged in
willful misconduct or gross negligence in the performance of its obligations set
forth in this Section. During and after the Collection Period, without specific
agreement with ATS to the contrary, neither BEA nor its agents shall make any
direct solicitation of the Accounts Receivable for collection purposes, except
for Accounts Receivable retained by BEA after the Collection Period.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BEA
BEA hereby represents, warrants and covenants to, and agrees with, ATS
as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) BEA 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) BEA has all requisite corporate power and corporate authority and
has in full force and effect all Governmental Authorizations and Private
Authorizations, except for those set forth in Section 3.1(b) of the BEA
Disclosure Schedule or those the failure of which to obtain do not and will not
have, individually or in the aggregate, any material adverse effect on BEA,
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 either of the BEA. This Agreement has been duly executed and delivered by BEA
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 BEA will constitute, legal, valid and binding
obligations of BEA, 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 BEA Disclosure
Schedule, and except for matters which would have no material adverse effect on
the BEA, neither the execution and delivery by BEA of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by BEA of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by BEA:
-4-
<PAGE>
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of BEA or any
Applicable Law on the part of BEA, 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 BEA, other than those constituting BEA Nonassumed Obligations;
provided, however, that BEA makes no representation and warranty that
any Contractual Obligation which requires a consent to its assignment
will not be breached if such consent is not obtained prior to the
Closing and the rights of BEA thereunder are nevertheless assigned to
ATS; or
(ii) will require BEA to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA.
(d) BEA has no Subsidiaries.
3.2 Financial and Other Information. The BEA has heretofore furnished
to ATS copies of the internally prepared cash basis income and expense
statements of the BEA Business listed in Section 3.2 of the BEA Disclosure
Schedule (the "BEA Statements"). The BEA Statements are true, accurate and
complete cash basis income and expense statements in all material respects, do
not contain any untrue statement of a material fact, and fairly present the cash
flow of the BEA Business for the respective periods covered thereby, subject to
normal nonmaterial adjustments. ATS acknowledges that no representations have
been made by BEA that (a) the past financial performance of BEA as reflected in
the BEA Statements (and on the Tax Returns furnished pursuant to the provisions
of Section 3.11) are in any way reflective of future financial performance and
(b) that certain amounts of income included in the BEA Statements (and on the
Tax Returns furnished pursuant to the provisions of Section 3.11) are derived
from sources other than the BEA Assets.
3.3 Changes in Condition. Since the date of the most recent statements
constituting a part of the BEA Statements, except to the extent specifically
described in Section 3.3 of the BEA Disclosure Schedule, there has been no
material adverse change in the BEA Assets or the BEA Business. There is no Event
known to BEA which materially adversely affects, or (so far as BEA can now
reasonably foresee) is likely to materially adversely affect, the BEA Assets or
the BEA Business, except to the extent specifically described in Section 3.3 of
the BEA 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 BEA
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the BEA 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 the BEA Assets or the BEA
Business.
3.5 Title to Properties; Leases. BEA does not own or lease any real
property or lease any personal property that is part of the BEA Assets or own
any material items of tangible personal property and, therefore, no real
property or any material items of tangible personal property or any interest
therein is being transferred.
3.6 Compliance with Private Authorizations. Section 3.6 of the BEA
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
BEA Assets or the BEA Business. BEA has obtained all Private Authorizations
which are necessary for the ownership or operation of the BEA Assets or the
conduct of the BEA Business which, if not obtained and maintained, could,
individually or in the aggregate, materially adversely affect BEA;
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provided, however, that the representations and warranties set forth in this
Section are not intended to apply to (a) any of the consents required in order
to assign the BEA Assets to ATS pursuant to the provisions of this Agreement,
and (b) the failure of BEA to obtain any or all of the consents required in
order to assign the BEA Assets to ATS pursuant to the provisions of this
Agreement. All of such Private Authorizations are valid and in good standing and
are in full force and effect. BEA 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 BEA; provided,
however, that the foregoing representation and warranty is not intended to apply
to the failure of BEA to obtain all consents required in order to assign the BEA
Assets to ATS pursuant to the provisions of this Agreement. No such Private
Authorization is the subject of any pending or, to BEA's knowledge, threatened
attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Except as otherwise specifically described in Section 3.7(a) of the
BEA Disclosure Schedule, there is no Governmental Authorization required under
Applicable Laws (i) to own and operate the BEA Business, as currently conducted
or proposed to be conducted on or prior to the Closing Date, or (ii) that is
necessary to permit BEA to execute and deliver this Agreement and to perform its
obligations hereunder; provided, however, that the foregoing representation and
warranty is not intended to apply to consents of Persons (other than
Authorities) required in order to assign the BEA Assets to ATS pursuant to the
provisions of this Agreement.
(b) Except as otherwise specifically described in Section 3.7(b) of the
BEA Disclosure Schedule, neither BEA nor any director or officer thereof (in
connection with ownership or operation of the BEA Assets or the conduct of the
BEA Business) is in or is charged by any Authority with or, to BEA's knowledge,
at any time since January 1, 1993 has been in or has been charged by any
Authority with, or, to BEA's 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 Applicable Law relating to the
ownership and operation of the BEA Assets or the conduct of the BEA Business. In
particular, but without limiting the generality of the foregoing, there are no
applications, complaints or Legal Actions pending or, to BEA's knowledge,
threatened before or by any Authority (x) relating to the ownership or operation
of the BEA Assets or the conduct of the BEA Business which, individually or in
the aggregate, are reasonably likely to result in the imposition of any
restriction of such a nature as would adversely affect the ownership or
operation of the BEA Assets or the conduct of the BEA Business; (y) involving
charges of illegal discrimination by BEA 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 BEA Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
BEA Disclosure Schedule, no Event exists or has occurred, which, to BEA's
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 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 the BEA Assets or the BEA Business.
(d) With respect to matters, if any, of a nature referred to in Section
3.7(b) or 3.7(c) of the BEA Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the BEA Disclosure Schedule, all
such information and matters set forth in the BEA Disclosure Schedule, if
adversely determined against BEA, will not, individually or in the aggregate,
have a materially adverse effect on the BEA Assets or the BEA Business.
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3.8 Intangible Assets. There are no Intangible Assets (other than
Private Authorizations) required for the ownership or operation of the BEA
Assets or the conduct of the BEA Business as currently owned, operated and
conducted or proposed to be owned, operated and conducted on or prior to the
Closing Date. BEA, to its knowledge, does not wrongfully infringe upon or
unlawfully use any Intangible Assets owned or claimed by another, and BEA has
not received any notice of any claim or infringement relating to any such
Intangible Asset.
3.9 Related Transactions. BEA is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the BEA Assets
or the conduct of the BEA Business between BEA and any of its officers,
directors, shareholders, employees or, to the knowledge of BEA, 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 BEA Disclosure Schedule, (ii) Contractual Obligations between BEA and any of
its directors, shareholders, officers, employees or Affiliates of BEA or any of
the foregoing, which constitute assets other than BEA Assets or BEA Nonassumed
Obligations, or (iii) as specifically set forth in Section 3.9 of the BEA
Disclosure Schedule.
3.10 Solvency. As of the execution and delivery of this Agreement, BEA
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
3.11 Tax Matters.
(a) BEA is not a "consenting corporation" within the meaning of Section
341(f) of the Code. BEA has at all times been taxable as a Subchapter C
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
BEA Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of BEA for
each of the most recent four tax years (true and complete copies of which have,
to the extent requested by ATS, been furnished by BEA to ATS) is true, accurate
and complete in all material respects and fairly and accurately reflects the
information purported to be shown. Federal Tax Returns of BEA have not been
examined by the Internal Revenue Service, and BEA has not been notified of any
proposed examination, except as shown in Section 3.11(b) of the BEA Disclosure
Schedule.
(c) BEA is not a party to any tax sharing agreement or arrangement.
3.12 Employee Retirement Income Security Act of 1974. BEA (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 which is
subject to ERISA.
3.13 Absence of Sensitive Payments. Neither BEA nor, to BEA's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the BEA Assets or the BEA 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.
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3.14 Inapplicability of Specified Statutes. BEA 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 BEA Disclosure
Schedule contains a true, accurate and complete list of all employees and
consultants of BEA involved in the ownership or operation of the BEA Assets or
the conduct of the BEA Business (the "BEA Employees"), together with each such
employee's title or the capacity in which he or she is employed and the basis
for the BEA Employees' compensation. BEA has no obligation or liability,
contingent or other, under any Employment Arrangement with any BEA Employee,
other than those listed or described in Section 3.15 of the BEA Disclosure
Schedule. Except as described in Section 3.15 of the BEA Disclosure Schedule,
(a) none of the BEA Employees is now, or since January 1, 1993 has been,
represented by any labor union or other employee collective bargaining
organization, and BEA is not and never has been a party to any labor or other
collective bargaining agreement with respect to any of the BEA Employees, (b)
there are no pending grievances, disputes or controversies with any union or any
other employee or collective bargaining organization of the BEA 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 BEA
nor any of the BEA Employees is now, or has since January 1, 1993 been, subject
to or involved in or, to BEA's knowledge, threatened with, any union elections,
petitions therefore or other organizational or recruiting activities, in each
case with respect to the BEA Employees, and (d) none of the BEA Employees has
notified BEA that he or she does not intend to continue employment with BEA
until the Closing or with ATS following the Closing. BEA 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 BEA Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the BEA Assets or the conduct of the business of the BEA Business or to which
BEA is a party or to which it is bound or which any of the BEA Assets is
subject. True, accurate and complete copies of each of such Material Agreements
have been made available by BEA to ATS and BEA has provided ATS with photocopies
of all such Material Agreements requested by ATS. All of such Material
Agreements are valid, binding and legally enforceable obligations of BEA and, to
BEA's 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. BEA 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 BEA, Claim threatened in writing that BEA 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 BEA under any of such Material Agreements in
any material respect.
3.17 Ordinary Course of Business. BEA, from the date of the most recent
BEA Financial Statements to the date hereof, except (i) as may be described on
Section 3.17 of the BEA Disclosure Schedule, or (ii) as may be required or
expressly contemplated by the terms of this Agreement, with respect to the BEA
Assets and the BEA 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;
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(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 increased the compensation payable or to become
payable to any of the BEA Employees other than in the ordinary course
of business or otherwise materially altered, modified or changed the
terms of their employment, except for its officers;
(e) has not waived any rights of material value under any
Contractual Obligation constituting a part of the BEA Assets without
fair and adequate consideration;
(f) has not experienced any work stoppage; and
(g) except in the ordinary course of business, has not entered
into, amended or terminated any Private Authorizations or Material
Agreement constituting a part of the BEA Assets.
3.18 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 BEA.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, BEA as
follows:
4.1 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
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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 no material adverse effect on
ATS, 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.
4.2 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.
4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
4.4 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 of ATS to consummate the transactions contemplated
hereunder.
ARTICLE 5
CLOSING CONDITIONS
5.1 Conditions to Obligations of Each Party to effect the Transactions.
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;
(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
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made by ATS and BEA 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 the
failure to obtain or make would not, in the reasonable business
judgment of ATS, have a material adverse effect on the BEA Assets or
the BEA Business; and
(c) The transactions contemplated by the Other Agreement shall
be consummated simultaneously with the Closing.
5.2 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) BEA 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 Bernkopf, Goodman &
Baseman LP, counsel for BEA, or other counsel to BEA reasonably
acceptable to ATS, with respect to the matters set forth in Sections
3.1(a), (b) and (c) and 3.7(b) (to such counsel's knowledge);
(c) BEA shall have furnished ATS with such certificates and
other documents evidencing the truth of its representations,
warranties, covenants and agreements and the performance of its
agreements or conditions as ATS or its counsel shall have reasonably
requested;
(d) BEA 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 BEA to ATS at or prior to the
Closing pursuant to the terms of this Agreement;
(e) ATS shall have received advice from its independent
accountants to the effect that, if requested by ATS, 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 three years in the period ended December 31, 1996) of
the BEA Business in conformity with GAAP and Regulation S-X under the
Securities Act could be prepared; and
(f) Each of the individuals named therein shall have executed
and delivered to ATS an indemnity agreement (the "Indemnity
Agreement"), in form, scope and substance reasonably satisfactory to
ATS.
5.3 Conditions to Obligations of BEA. The obligation of BEA 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:
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(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 BEA
and its counsel, and BEA 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) ATS shall have furnished BEA and, at BEA's request, any
bank of other financial institution providing credit to BEA, with
favorable opinions, dated the Closing Date of Sullivan & Worcester LLP,
counsel for ATS, with respect to the matters set forth in Sections 4.1
and 4.4;
(c) ATS shall have furnished BEA with such certificates and
other documents evidencing the truth of its representations,
warranties, covenants and agreements and the performance of its
agreements or conditions as BEA or its counsel shall have reasonably
requested; and
(d) ATS shall have delivered or cause to be delivered to BEA
all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by ATS to BEA at or prior to the
Closing pursuant to the terms of this Agreement.
ARTICLE 6
INDEMNIFICATION
6.1 Survival. The representations and warranties of the parties
contained in or made pursuant to Sections 3 and 4 of 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) one (1) year 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, 4.1 and 4.4, 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 all of the other Sections of 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. Any Claim for indemnification, no matter how arising,
not asserted by written notice to the Indemnifying Party prior to the expiration
of the applicable Indemnity Period and for which arbitration for such Claim
pursuant to Section 7.14 of this Agreement is not commenced within sixty (60)
days of said written notice shall be waived and of no force and effect.
6.2 Indemnification. Each of BEA and ATS (the "Indemnifying Party")
agrees that on and after the Closing it shall, subject to survival periods set
forth in Section 6.1, indemnify and hold harmless the other (the "Indemnified
Party") from and against any and all damages, claims, losses, expenses, costs,
obligations and liabilities, including without limitation liabilities for all
reasonable attorneys', accountants' and experts' fees and expenses including
those incurred to enforce the terms of this Agreement or any Collateral Document
executed by it (collectively, "Loss and Expense" provided, however, that Loss
and Expense shall, in the case of damages, be limited to actual damages and
shall not include any type of punitive, consequential (including without
limitation loss of anticipated profits) or any other measure of damages
permitted by Applicable Law or otherwise), suffered directly by the Indemnified
Party by reason of, or arising out of:
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(a) any breach of representation or warranty made by the
Indemnifying Party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the Indemnifying Party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(b) any Legal Action or other Claim by any third party
relating to the Indemnifying Party or, in the case of ATS, the
ownership or operations of the BEA Assets or the conduct of the
business of the BEA Business to the extent such Legal Action or other
Claim has also resulted in a breach of representation or warranty by
the Indemnifying Party pursuant to this Agreement or any Collateral
Document executed by it; or
(c) in the case of BEA as the Indemnifying Party, by reason
of, or arising out of, (i) BEA Nonassumed Obligations or (ii) the
ownership and operation of the BEA Assets and the BEA Business prior to
the Closing Date; or
(d) in the case of ATS as the Indemnifying Party, by reason
of, or arising out of, (i) BEA Assumed Obligations or (ii) the
ownership and operation of the BEA Assets and the BEA Business from and
after the Closing Date, except for Events arising prior to or existing
on the Closing Date, unless they are part of the BEA Assumed
Obligations.
6.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 6.2, after the Closing,
except as otherwise provided in Section 6.6, each Indemnified Party's rights to
indemnification shall be subject to the following limitations: (i) the
Indemnified Party 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, $25,000, in which event the Indemnified Party
shall be entitled to recover all such Loss and Expense (including without
limitation such $25,000), and (ii) in no event shall the aggregate amount
required to be paid by an Indemnifying Party pursuant to the provisions of this
Article exceed $500,000, except for any Loss or Expense arising out of matters
of a nature referred to in Sections 3.1 and 4.1 as to which the limitations set
forth in this clause (ii) shall not apply.
(b) In the case any event shall occur which would otherwise entitle
either 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.
6.4 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 6.1, 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.
6.5 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
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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 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 ATS, do not include any term or
condition which would restrict in any material manner the continued ownership or
operations of the BEA Assets or the conduct of the BEA Business in substantially
the manner then being theretofore owned, operated and conducted by ATS.
6.6 Exclusive Remedy. Except for (a) fraud constituting dishonesty or
willful or intentional gross misrepresentation or willful or intentional gross
breach of warranty, covenant or agreement; provided, however, that any Claim
with respect to fraud constituting dishonesty or willful or intentional gross
misrepresentation or willful or intentional gross breach of warranty, covenant
or agreement, no matter how arising, not asserted by written notice to the party
alleged to have committed the same prior to May 21, 1999 and for which
arbitration with respect to such Claim pursuant to Section 7.14 of this
Agreement is not commenced within sixty (60) days of said written notice shall
be waived and of no force and effect; or (b) specific performance and injunctive
relief as provided in Section 7.5, the indemnification provided in this Article
shall be the sole and exclusive post-Closing remedy available to either party
against the other party for any Claim under this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
7.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, ATS or BEA may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions with respect to the Termination Date, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and waive compliance by the other
with any of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
7.3 Fees, Expenses and Other Payments. All 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.
7.4 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 (a) mailed by first-class or express
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mail, or by recognized courier service, postage prepaid, (b) sent by telex,
telegram, telecopy or other form of rapid transmission, confirmed by mailing (by
first class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) 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:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to BEA:
23 Hampden Drive
Norwood, Massachusetts 02062
Attention: David Burnett or Paul Ehrlich
Telecopier No.: (617) 551-0546
with a copy to:
D'Agostine, Levine & Gordon, P.C.
268 Main Street
Acton, Massachusetts 01720
Attention: Louis N. Levine, Esq.
Telecopier No.: (508) 264-4868
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.
7.5 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, be entitled to injunctive relief and to enforce its rights
by an action for specific performance to the extent permitted by Applicable Law.
The parties agree that the dispute underlying Claims of any action for specific
performance shall be decided by arbitration in accordance with the provisions of
Section 7.14. All actions for injunctive relief, specific performance or other
relief shall be determined in accordance with the governing law provisions of
Section 7.9. 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
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contained in this Agreement for such breach or threatened breach.
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, after the Closing Date ATS shall not be entitled to specific
performance or any other remedy to the extent that the cost to BEA arising from
the enforcement or exercise of such remedy would exceed the amount of the
indemnification required by Section 6.3, for all costs and expenses incurred in
connection with its performance of or compliance with the remedy exercised or
enforced.
7.6 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 either 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.
7.7 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.
7.8 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.
7.9 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
Commonwealth of Massachusetts 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 6, 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. In the event of any Legal Action among the parties
arising out of this Agreement, the parties agree to submit the matter to the
appropriate state or federal court sitting in Suffolk County, Massachusetts and
the parties agree to submit to the jurisdiction of such courts.
7.10 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.
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7.11 Entire Agreement. This Agreement (together with the BEA 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, including without limitation that certain
letter of intent, dated March 6, 1997, between the parties. The parties have not
made or relied upon any warranties or representations except those specifically
set forth in this Agreement.
7.12 Assignment. This Agreement shall not be assignable by either 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.
7.13 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 7.12.
7.14 Arbitration. Subject to the provisions of Section 2.2(d) and the
right to seek injunctive relief and specific performance in accordance with the
provisions of Section 7.5 which shall take precedence over the provisions of
this Section, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be determined by arbitration in
accordance with the governing law provisions of Section 7.9 and the then
existing commercial arbitration rules of the American Arbitration Association
before a panel of three (3) arbitrators in Boston, Massachusetts, selected
within thirty (30) days of the commencement of such arbitration, with each
participant selecting one arbitrator and the two so selected selecting the third
(or the third being selected by the American Arbitration Association if
agreement on a third is not reached within thirty (30) days); and the parties
hereto agree that any judgment or award rendered by such arbitrators shall be a
final and binding determination as to such matter or matters and may be entered
in any court having jurisdiction thereof; provided, however, that in the case of
damages, the parties shall, except in the case of a fraud constituting
dishonesty or willful or intentional gross misrepresentation or willful or
intentional gross breach of warranty, covenant or agreement, be limited to
actual damages and shall not be entitled to any type of punitive, consequential
(including without limitation loss of anticipated profits) or any other measure
of damages permitted by Applicable Law or otherwise. The arbitrators shall award
fees and expenses (including reasonable attorney fees and expenses) to the
prevailing party or, if they determine there is no prevailing party, as they may
otherwise determine.
7.15 Mutual Drafting. This Agreement is the result of the joint efforts
of BEA 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 either party based on any presumption of that party's
involvement in the drafting thereof.
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IN WITNESS WHEREOF, ATS and BEA 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:
B & E Associates, Inc.
By:______________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) 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 herein shall
have such meanings when used in the BEA 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 "either party" shall, unless the context otherwise requires, refer to
BEA and ATS.
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 BEA attributable to the ownership or operation of the
BEA 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 BEA'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 BEA
Business, or (c) impair BEA'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.
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Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the BEA
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.
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.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the BEA
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, which are the following:
(a) the Private Authorizations;
(b) the Contracts (other than the BEA Nonassumed Obligations);
(c) all Intellectual Property and other proprietary
information, which relate to the BEA Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the BEA Business;
(d) all claims, choses in action and rights under warranties
relating to the BEA Business or any of the BEA Assets;
(e) all books and records relating to the ownership or
operation of the BEA Assets or the conduct of the BEA Business,
including executed copies of Material Agreements and other written
Contracts, and all records required by Applicable Law to be kept,
subject to the right of the conveying party to have such books and
records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate business purposes. The records described herein
shall not include corporate seals, certificates of incorporation,
minute books, stock books, tax returns or other records having to do
with the corporate organization of BEA; and
(f) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
ATS shall have the meaning given to it in the Preamble.
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.
BEA shall have the meaning given to it in the Preamble.
BEA Assets shall have the meaning given to it in Section 2.1.
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BEA Assumable Agreements shall mean all obligations and liabilities of
BEA under all Leases, Material Agreements, Governmental Authorizations, Private
Authorizations and other Contractual Obligations not required to be listed on
Section 3.16 of the BEA Disclosure Schedule entered into in the ordinary course
of business and relating to the ownership or operation of any of the BEA Assets
or the
conduct of the BEA Business.
BEA Assumed Obligations shall have the meaning given to it in Section
2.2(b).
BEA Business shall have the meaning given them in the first Whereas
paragraph.
BEA Disclosure Schedule shall mean the BEA Disclosure Schedule dated as
of the date of this Agreement delivered by BEA to ATS.
BEA Employees shall have the meaning given it in the Section 3.15.
BEA Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
BEA Statements shall have the meaning given to it in Section 3.2(b).
BEA's knowledge means the actual knowledge of any officer or senior
manager of BEA, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of BEA's records.
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 BEA Business.
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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
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 Document shall mean the Indemnity Agreement, bills of sale,
assignments of intangibles, assumption agreements with respect to the BEA
Assumed Obligations, other instruments of conveyance and assignment sufficient
to vest in ATS title to all of the other BEA Assets and the BEA Business, and
any other
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agreement, certificate, contract, instrument, notice, opinion or other document
delivered pursuant to the provisions of this Agreement or any Collateral
Document.
Collection Period shall have the meaning given to it in Section 2.4.
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 BEA Assets or the
conduct of the BEA 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.
Employment Arrangement shall mean, with respect to BEA, 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 BEA 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 BEA Assets or the conduct of the BEA 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
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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.
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 BEA 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.
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.
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, 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.
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 BEA Assets or the conduct of the BEA
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.
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
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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 BEA, 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.
Indemnity Agreement shall have the meaning given to it in Section
5.2(h).
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 the following, but solely and
exclusively to the extent it relates to the BEA Business, and not otherwise: 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
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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 6.2.
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 BEA, 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 BEA Business
in any of the last three fiscal years or is likely to account for more than
three percent (3%) of revenues of the BEA Business during the current fiscal
year, (f) is with the United States Forest Service or any other Authority, or
(g) involves the management by BEA of any communication tower of any other
Person.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
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).
A-7
<PAGE>
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
BEA Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
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
BEA and used or useful as of the date hereof in the conduct of the business or
operations of the BEA 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 BEA Business.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by BEA prior to the Closing and
relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by BEA prior to the Closing
and relates to a period subsequent to the Closing.
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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 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.
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.
A-8
<PAGE>
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 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.
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 BEA Assets and the BEA Business and the execution, delivery and
performance of the Collateral Documents.
A-9
Exhibit 10.3
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
TOWERS L.L.C.
Dated as of
May 13, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................1
2.1 Agreement to Sell and Buy..............................................................1
2.2 Assumption of Liabilities and Obligations. ............................................2
2.3 Closing; Purchase Price................................................................4
2.4 Accounts Receivable....................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER........................................................7
3.1 Organization and Business; Power and Authority; Effect of Transaction..................7
3.2 Financial and Other Information. .....................................................8
3.3 Changes in Condition...................................................................8
3.4 Materiality............................................................................8
3.5 Title to Properties; Leases............................................................8
3.6 Compliance with Private Authorizations.................................................9
3.7 Compliance with Governmental Authorizations and Applicable Law........................10
3.8 Intangible Assets.....................................................................11
3.9 Related Transactions..................................................................11
3.10 Insurance.............................................................................11
3.11 Tax Matters. ........................................................................11
3.12 Employee Retirement Income Security Act of 1974.......................................12
3.13 Absence of Sensitive Payments.........................................................12
3.14 Inapplicability of Specified Statutes.................................................12
3.15 Employment Arrangements...............................................................12
3.16 Material Agreements...................................................................13
3.17 Ordinary Course of Business...........................................................13
3.18 Material and Adverse Restrictions.....................................................14
3.19 Broker or Finder......................................................................14
3.20 Solvency..............................................................................14
3.21 Environmental Matters.................................................................14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS..........................................................15
4.1 Organization and Business; Power and Authority; Effect of Transaction.................15
4.2 Broker or Finder......................................................................15
4.3 Solvency..............................................................................16
4.4 No Legal Action.......................................................................16
4.5 Financing.............................................................................16
4.6 ATS Due Diligence Investigation.......................................................16
ARTICLE 5 COVENANTS......................................................................................16
5.1 Access to Information; Confidentiality................................................16
5.2 Agreement to Cooperate. .............................................................17
5.3 Public Announcements..................................................................18
5.4 Notification of Certain Matters.......................................................18
5.5 No Solicitation.......................................................................18
5.6 Conduct of Business by Seller Pending the Closing.....................................19
<PAGE>
ARTICLE 6 CLOSING CONDITIONS.............................................................................20
6.1 Conditions to Obligations of Each Party to effect the Transactions....................20
6.2 Conditions to Obligations of ATS......................................................20
6.3 Conditions to Obligations of Seller...................................................22
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................23
7.1 Termination...........................................................................23
7.2 Effect of Termination.................................................................24
ARTICLE 8 INDEMNIFICATION................................................................................24
8.1 Survival..............................................................................24
8.2 Indemnification.......................................................................25
8.3 Limitation of Liability...............................................................25
8.4 Notice of Claims......................................................................26
8.5 Defense of Third Party Claims.........................................................26
8.6 Exclusive Remedy......................................................................27
ARTICLE 9 GENERAL PROVISIONS.............................................................................27
9.1 Amendment.............................................................................27
9.2 Waiver................................................................................27
9.3 Fees, Expenses and Other Payments.....................................................27
9.4 Notices...............................................................................27
9.5 Specific Performance; Other Rights and Remedies.......................................28
9.6 Severability..........................................................................29
9.7 Counterparts..........................................................................29
9.8 Section Headings......................................................................29
9.9 Governing Law; Venue..................................................................29
9.10 Further Acts..........................................................................29
9.11 Entire Agreement......................................................................30
9.12 Assignment............................................................................30
9.13 Parties in Interest...................................................................30
9.14 WAIVER OF TRIAL BY JURY...............................................................30
9.15 Mutual Drafting.......................................................................30
</TABLE>
APPENDIX A: Definitions
SCHEDULES:
Seller Disclosure Schedule
EXHIBITS:
EXHIBIT A Escrow Agreement (Third Whereas Paragraph)
EXHIBIT B Form of Noncompetition Agreement (Section 6.2(i))
EXHIBIT C Form of Employment Agreement (Section 6.2(i))
EXHIBIT D Form of Escrow Indemnity Agreement (Section 6.2(j))
-ii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of May 13,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), on the one hand, and Towers L.L.C. , a South Carolina limited liability
company (the "Seller" ) on the other hand.
WHEREAS, Seller owns and leases and operates communication towers in
South Carolina and Georgia and is engaged in the business of managing
communication sites for third parties in South Carolina (the "Seller Business");
WHEREAS, ATS desires to purchase and Seller desires to sell the Seller
Assets and the Seller Business on the terms and conditions hereinafter set
forth; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, ATS and Seller have entered into an escrow agreement (the "Escrow
Agreement") with Sullivan & Worcester LLP, counsel for ATS, and Willoughby &
Hoefer, P.A., counsel for Seller (the "Escrow Agent"), pursuant to which ATS has
made a deposit of $100,000 (the "Escrow Deposit");
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 Seller 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 "either party" shall, unless the context otherwise requires, refer to
Seller and ATS.
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, Seller hereby agrees to sell, assign, transfer and
deliver to ATS at the Closing, and ATS agrees to purchase at the Closing, the
Seller Assets and the Seller Business, free and clear of any Liens of any nature
whatsoever except for Permitted Liens. For purposes of this Agreement, the term
"Seller Assets" shall mean all of the Assets of Seller, other than the Excluded
Assets, and shall include without limitation the Utility Assets or any right to
acquire the Utility Assets (as defined in Section 2.3), or manage the Utility
Assets pursuant to the
<PAGE>
Santee Cooper Contract (as defined in Section 2.3), as the case may be. For
purposes of this Agreement, the term "Excluded Assets" shall mean the following
Assets:
(i) all cash and cash equivalents;
(ii) all Accounts Receivable;
(iii) all books and records which Seller is required by
Applicable Law to retain, subject to the right of ATS to have access
and to copy for a period of three (3) years from the Closing Date; the
records described herein shall further include without limitation all
corporate seals, certificates of incorporation, minute books, stock
books, Tax Returns or other records having to do with the corporate
organization of Seller;
(iv) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts; and
(v) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of Seller (collectively, the
"Seller Assumed Obligations"): (i) all of the obligations and liabilities of
Seller under the Seller Assumable Agreements, and (ii) all obligations and
liabilities of Seller with respect to the ownership and operation of the Seller
Assets and the conduct of the Seller Business, on and after the Closing Date;
provided, however, that notwithstanding the foregoing, ATS shall not assume and
agree to pay, and shall not be obligated with respect to, the Seller Nonassumed
Obligations.
(b) ATS shall not assume or become obligated to perform any debt,
liability or obligation of Seller relating to any of the following matters
(collectively, the "Seller Nonassumed Obligations"):
(i) the ownership or operation of the Seller Assets or the
conduct of the Seller Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement of Seller (including without limitation any obligation to
any Seller Employee for severance benefits, vacation time or sick
leave), and any of the following to the extent same arise from Events
occurring prior to or existing on the Closing Date: products liability,
Legal Actions or other Claims, and obligations and liabilities relating
to Environmental Law;
(ii) any obligations or liabilities under the Seller Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of Seller;
(iv) those required to be disclosed in the Seller Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the Seller Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by Seller under this Agreement or
any Collateral Document;
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<PAGE>
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of Seller's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any Excluded
Asset;
(viii) any obligation or liability with respect to or
Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid by Seller pursuant to the provisions of this Agreement or any
Collateral Document; and
(x) any Contract with any Affiliate of Seller, other than
those, if any, set forth in Section 2(b)(x) of the Seller Disclosure
Schedule.
All Seller Nonassumed Obligations shall remain and be the obligations and
liabilities solely of Seller.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the term "Seller Nonassumed Obligations" shall not
include, and the term "Seller Assumed Obligations" shall include, any liability
arising out of the transfer or assignment to ATS of, or the use or enjoyment of
the benefits by ATS under, any Contract, Governmental Authorization or Private
Authorization the transfer or assignment of which (according to Section 2.2(c)
of the Seller Disclosure Schedule) requires or may require the consent of any
Authority or other third party (collectively, the "Nonassignable Contracts"), if
ATS has, on or prior to the Closing Date, notified Seller in writing (an
"Acceptance Notice") that ATS consents to the transfer or assignment of such
Nonassignable Contract despite the failure or inability of ATS and Seller to
obtain the approval or consent of an Authority or other Person whose approval or
consent is required pursuant to the terms of such Nonassignable Contract, or
elects to receive the benefits of such Nonassumable Contract, in either of which
events, if the approval or consent of an Authority or other Person applicable to
transfer of such Nonassignable Contract is required to be obtained as a
condition to ATS' obligations at Closing pursuant to the provisions of Section
6.1(a) or 6.2(d), ATS shall be deemed to have waived such condition with respect
to such Nonassignable Contract. With respect to any Nonassignable Contract for
which the applicable consent of any Authority or other Person is not obtained
prior to the Termination Date and for which ATS does not timely deliver an
Acceptance Notice as described in the preceding sentence, Seller and ATS shall
negotiate in good faith to reach an equitable sharing of the rights and
obligations under such Nonassignable Contracts.
(d) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(d) of the Seller Disclosure
Schedule, all items of income and expense (including without limitation with
respect to rent, utility charges, Pro Ratable Taxes and wages, salaries and
accrued but unused vacation of Seller employees) arising from the ownership or
operation of the Seller Assets or the conduct of the Seller Business shall be
prorated as of 12:01 a.m., Eastern time, on the Closing Date, with Seller
entitled to and responsible for any such items on or prior to the Closing Date
and ATS entitled to and responsible for any such items relating to any
subsequent period. For these purposes, Pro Ratable Taxes attributable to a
period that begins before and ends after the Closing Date shall be treated on a
"closing of the books" basis as two partial periods, one ending at the close of
the Closing Date and the other beginning on the day after the Closing Date,
except that Pro Ratable Taxes (such as property Taxes) imposed on a periodic
basis shall be allocated on a daily basis. If either party shall have received
any such revenues or paid any such expenses or charges which, pursuant to the
terms hereof, the other party is entitled to or responsible for, it shall
furnish the other party with a detailed statement of any such items as soon as
practicable after receipt or payment thereof. The parties shall use their best
efforts to agree upon such items and other adjustments prior to the Closing Date
and, in any event, except as set forth in Section 2.2(c) of the Seller
Disclosure Schedule, within
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<PAGE>
sixty (60) days thereafter. If the parties are unable within such period to
agree upon such items and other adjustments, Seller and ATS shall, within the
following ten (10) days, jointly designate a nationally known independent public
accounting firm to be retained to review such items and other adjustments. The
fees and other expenses of retaining such independent public accounting firm
shall be borne equally by Seller and ATS. Such firm shall report its conclusions
as to such items and other adjustments pursuant to this Section and such report
shall be conclusive on all parties to this Agreement and not subject to dispute
or review. Upon such agreement or determination by such independent accounting
firm, Seller or ATS, as the case may be, shall promptly reimburse the other
party for any income received or expenses paid by the other party and not
previously reimbursed or any other adjustment required by this Section.
Nothing contained in this Section 2.2 is intended or shall be deemed to
amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price.
(a) The closing of the Transactions (the "Closing") shall take place at
Willoughby & Hoefer, P.A., 1022 Calhoun Street, Suite 302, Columbia, South
Carolina 29202, at 10:00 a.m., local time, on May 30, 1997 or such other date,
prior to the Termination Date, as the parties may agree (the "Closing Date"). At
the Closing, each of the parties shall deliver such bills of sale, assignments,
assumptions of liabilities, opinions and other instruments and documents as are
described in this Agreement or as may be otherwise reasonably requested by the
parties and their respective counsel. The purchase price for the Seller Assets
and the Seller Business (the "Purchase Price") shall be an amount equal to
$5,000,000, subject to adjustment as provided in Sections 2.2(d), 2.3(b) and
2.3(c), plus an amount equal to the sum of (x) the Debt Adjustment and (y) the
Prepaid Expenses and minus an amount equal to the sum of (i) the Seller
Nonassumed Obligations, if any, which ATS agrees to assume, and (ii) Prepaid
Revenues. The Purchase Price shall be payable (a) by ATS instructing the Escrow
Agent to deliver the Escrow Deposit (together with interest and other increments
thereto) to Seller and, (b) by wire transfer of immediately available funds to
Seller for the balance of the Purchase Price to such account (or accounts) as
Seller shall designate in written instructions to ATS delivered not later than
two (2) business days prior to the Closing.
(b) In the event that as of the Closing Seller has completed
negotiations (the "Negotiations") for ATS to acquire from The South Carolina
Public Service Authority ("Santee Cooper") (or from Seller as the Direct
transferee from Santee Cooper) certain tower assets (the "Utility Assets"), and
Santee Cooper is ready, willing and able to consummate the transactions required
to transfer the Utility Assets, at a price and upon the terms and conditions
reasonably satisfactory to ATS, then in consideration of the opportunity to
acquire the Utility Assets, the Purchase Price shall be the Purchase Price as
calculated pursuant to Section 2.3(a) plus the Utility Assets Price.
(c) In the event that as of the Closing Seller is unable to acquire or
enter into an agreement to acquire (or to enable ATS to do either of the
foregoing) the Utility Assets but instead enters into contracts, assignable to
ATS upon terms and conditions reasonably satisfactory to, ATS to manage the
Utility Assets (the "Santee Cooper Contract"), then, upon satisfaction of the
condition specified in Section 2.3(d), the Purchase Price shall be the Purchase
Price as calculated pursuant to Section 2.3(a) plus the Utility Management
Price.
(d) In the event that Seller, on behalf of ATS, completes the
Negotiations or presents to ATS for its execution and delivery the Santee Cooper
Contract pursuant to Sections 2.3(b) or 2.3(c), respectively, at any time
between the Closing and the one (1) year anniversary of the Closing, Buyer shall
be entitled to the Utility Assets Price or the Utility Management Price, as the
case may be. ATS shall wire the Utility Asset
-4-
<PAGE>
Price or the Utility Management Price, as the case maybe, to the Seller's
account(s) as designated by Seller pursuant to written instructions within ten
(10) business days of receipt of such instructions.
(e) For purposes of this Section 2.3 "Utility Asset Price" shall mean
cash in an amount calculated as follows:
(i) First calculate the purchase price for which Seller
would be acquiring the Utility Assets from Santee
Cooper and divide that number by the annualized
running rate of cash flow from the Utility Assets as
of the date that Seller would acquire the Utility
Assets or as of the first full month that Santee
Cooper makes full payment under the sale-leaseback
arrangement. For example, if the purchase price of
the Utility Assets were $3,250,000 and the annualized
running rate of cash flow were $480,000, the cash
flow multiple for which the Seller would be acquiring
the Utility Assets would be 6.77 (the "Utility Cash
Flow Multiple").
(ii) ATS will then compensate Seller by taking the
difference between (x) the Utility Cash Flow Multiple
and (y) the cash flow multiple which ATS is paying
Seller for the Seller Assets, based upon Seller's
estimated 1997 year end running rate of cash flow
(which the parties have heretofore agreed will be
$45,000 for December 1997, or $540,000 on an
annualized basis), and adding that number to the
Utility Cash Flow Multiple. By way of example, ATS
would be paying Seller approximately 9.87 times year
end 1997 running rate of cash flow ($5,330,000
divided by $540,000) and the difference would be 9.87
less 6.77, or 3.10.
(iii) This differential of 3.10 would then be multiplied by
the percentage of Utility Assets being acquired by
Seller (currently expected to be 19) which can be
utilized as lease towers, as determined by good faith
negotiations of Seller and ATS at the time of
purchase of the Utility Assets. Thus, for example, if
15 of the Utility Assets are useable, ATS would pay
Seller a cash flow multiple of 6.77 plus 3.10
multiplied by fifteen-nineteenths (15/19), or 6.77
plus 2.45, or 9.22.
(iv) Therefore, ATS would pay 9.22 times the cash flow of
the Utility Assets (9.22 times $480,000, or
$4,424,337) for the Utility Assets. Seller would have
a gain of $1,174,337 (over and above its $3,250,000)
purchase price) for the Utility Assets opportunity.
(f) For purposes of this Section 2.3 "Utility Management Price" shall
mean cash in an amount calculated as follows:
The number of tower sites being managed (estimated currently at 64 in
number), multiplied by the estimated annual revenue per site (estimated
currently at $12,000), multiplied by the percentage of sites actually
useable as lease sites (currently estimated at between 65% to 75%) and
multiplied by the management fee percentage negotiated by Seller with
Santee Cooper (estimated at between 25% to 30%). ATS and Seller would
then negotiate in good faith to determine (i) a reasonable multiple of
this estimated cash flow and, (ii) since there is presently no cash
flow from these towers, the schedule of payments to be paid by ATS to
Seller for the management opportunity, based in part on payments from
Santee Cooper under the Santee Cooper Contract.
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<PAGE>
(g) Except as set forth in this Section 2.3 with respect to the
adjustment of the Purchase Price, all efforts of Seller with respect to the
Negotiations whether prior or subsequent to the Closing, including without
limitation, the acquisition of the Utility Assets or execution and delivery of
the Santee Cooper Contract, as the case may be, shall, be for the sole and
exclusive benefit of ATS. If executed and delivered prior to the Closing the
Santee Cooper Contract shall be considered part of Seller's Assets. If acquired
by Seller prior to the Closing the Utility Assets shall be considered part of
Seller's Assets.
(h) In the event that Seller acquires the Utility Assets or enters into
the Santee Cooper Contract, but the terms and conditions thereof are not
reasonably satisfactory to ATS, Seller shall, within ten (10) business days from
ATS' rejection of the acquisition of the Utility Assets or refusal to enter into
the Santee Cooper Contract, as the case may be, notify ATS of its election
either (i) to offer the Utility Assets or the Santee Cooper Contract to a third
party which is not Affiliated with Kenneth E. Hall, or (ii) submit to binding
arbitration in accordance with the Commercial Rules of the American Arbitration
Association the issue of ATS' reasonableness in rejecting the purchase of the
Utility Assets or the execution and delivery of the Santee Cooper Contract.
(i) Notwithstanding anything in this Agreement to the contrary, the
parties acknowledge that the employees, including the President, of Seller will
be employed by ATS following the Closing. These persons will continue to be
involved in the Negotiations and/or procurement of the Santee Cooper Contract.
ATS agrees to allow these persons to pursue the Negotiations and the Santee
Cooper Contract, for the benefit of ATS or, upon its rejection of the purchase
of the Utility Assets or refusal to enter into the Santee Copper Contract,
Seller, during normal business hours while these persons are employees of ATS.
2.4 Accounts Receivable. At the closing, Seller shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the
Seller Business. Seller shall deliver to ATS on or as soon as practicable after
the Closing Date a complete and detailed statement showing the name, amount and
age of each Accounts Receivable of the Seller Business. Subject to and limited
by the following, revenues relating to the Accounts Receivable relating to the
Seller Business will be for the account of Seller. ATS shall use the same
procedures and efforts which it uses with respect to its own accounts receivable
to collect the Accounts Receivable with respect to the Seller Business for a
period of ninety (90) days after the Closing Date (the "Collection Period"). Any
payment received by ATS during the Collection Period from any customer with an
account which is an Accounts Receivable with respect to the Seller Business
shall first be applied in reduction of the Accounts Receivable, unless the
customer contests the validity of such application. During the Collection
Period, ATS shall furnish Seller with a list of, and pay over to Seller, the
amounts collected with respect to the Accounts Receivable with respect to the
Seller Business on a monthly basis and forward to Seller, promptly upon receipt
or delivery, as the case may be, copies of all correspondence relating to
Accounts Receivable. ATS shall provide Seller 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, the parties shall meet to
mutually and in good faith analyze any uncollected Accounts Receivable to
determine if the same, in their reasonable business judgment, are deemed to be
collectable and if ATS desires to retain such Accounts Receivable. As to each
such Accounts Receivable, the parties shall negotiate a good faith value of such
Accounts Receivable, which ATS shall pay to Seller if ATS, in its sole
discretion, chooses to retain such Accounts Receivable. Seller shall retain the
right to collect any of its Accounts Receivable as to which the parties are
unable to reach agreement as to a good faith value, and ATS agrees to turn over
to Seller any payments received against any such Accounts Receivable. ATS shall
not be obligated to use any extraordinary efforts 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 ATS shall not make any such referral or compromise, nor settle or adjust the
amount of any such Accounts Receivable, except with the approval of Seller. ATS
shall not incur any liability to Seller for any uncollected account unless ATS
shall have engaged in willful misconduct or gross negligence in the performance
of its obligations
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set forth in this Section. During and after the Collection Period, without
specific agreement with ATS to the contrary, neither Seller nor its agents shall
make any direct solicitation of the Accounts Receivable for collection purposes,
except for Accounts Receivable retained by Seller after the Collection Period.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to, and agrees with,
ATS as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all requisite limited liability company power and authority to
own or hold under lease its properties and to conduct its business as now
conducted.
(b) Seller has all requisite limited liability company power and
authority and has in full force and effect all Governmental Authorizations
(which, for purposes of this Section 3.1(b), relate only to the sale of the
Seller Assets and the Seller Business generally and not to "site-specific"
Governmental Authorizations or those required by local Applicable Law) and
Private Authorizations, except for those set forth in Section 3.1(b) of the
Seller Disclosure Schedule or those the failure of which to obtain do not and
will not have, individually or in the aggregate, any material adverse effect on
Seller, 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 Seller. This Agreement has been duly executed and
delivered by Seller 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 Seller will constitute, legal, valid
and binding obligations of Seller, enforceable in accordance with their
respective terms.
(c) Except as set forth in Section 3.1(c) of the Seller Disclosure
Schedule, and except for matters which would have no material adverse effect on
Seller, neither the execution and delivery by Seller of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by Seller of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by Seller:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Seller or any
Applicable Law (which, for purposes of this Section 3.1(c)(i), relates
only to the sale of the Seller Assets and the Seller Business generally
and not to local 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 Seller, other than those constituting Seller Nonassumed Obligations;
or
(ii) will require Seller to make or obtain any Governmental
Authorization (which, for purposes of this Section 3.1(c)(ii)), relate
only to the sale of the Seller Assets and Seller Business
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generally and not to "site-specific" Governmental Authorizations or
those required by local Applicable Law), or Private Authorization
including without limitation under the FCA.
(d) Seller does not have any Subsidiaries.
3.2 Financial and Other Information. Seller has heretofore furnished to
ATS copies of the financial statements of the Seller Business listed in Section
3.2 of the Seller Disclosure Schedule (the "Seller Financial Statements"). To
the best of Seller's knowledge, the Seller 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 Seller 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 the Seller Business, 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.
The parties recognize that Seller was issued a qualified opinion with
respect to its 1996 financial statements. A copy of these statements has been
provided to ATS.
3.3 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the Seller Financial Statements, except to the
extent specifically described in Section 3.3 of the Seller Disclosure Schedule,
there has been no material adverse change in Seller. There is no Event known to
Seller which materially adversely affects, or is likely to materially adversely
affect, Seller, except to the extent specifically described in Section 3.3 of
the Seller 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 Seller
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the Seller 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 Seller.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Seller Disclosure Schedule contains a true,
accurate and complete description of all real property owned by Seller that is
part of the Seller Assets. Seller has 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 Seller Assets, in
each case free and clear of all Liens, except (i) Permitted Liens, (ii) Liens
set forth on Section 3.5(a) of the Seller 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 Seller Disclosure Schedule), no
financing statements under the Uniform Commercial Code and no other filing which
names Seller as debtor or which covers or purports to cover any of the Seller
Assets is on file in any state or other jurisdiction, and Seller 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. To the best of Seller's knowledge, except as disclosed in Section 3.5(a)
of the Seller Disclosure Schedule, all improvements on the real property owned
or leased by Seller are 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
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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. To the best of Seller's
knowledge, except as disclosed in Section 3.5(a) of the Seller 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 Seller 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 Seller are
located entirely on such real property. There is no pending and, to Seller's
knowledge, threatened or contemplated action to take by eminent domain or
otherwise to condemn any part of any real property owned or leased by Seller.
Except as set forth in Section 3.5(a) of the Seller Disclosure Schedule, such
real property (other than land), fixtures, fixed assets and other material items
of personal property, including equipment, have, in Seller's reasonable business
judgment, been maintained in a manner consistent with generally accepted
standards of sound engineering practice and, to the best of Seller's knowledge,
currently permit the Seller 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 Seller Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the Seller Business is leased. Except as otherwise set forth in Schedule
3.5(b) of the Seller Disclosure Schedule, each Lease or other occupancy or other
agreement under which Seller holds real or personal property constituting a part
of the Seller Assets has been duly authorized, executed and delivered by Seller
and, to Seller's knowledge, each of the other parties thereto, and is a legal,
valid and binding obligation of Seller, and, to Seller's knowledge, each of the
other parties thereto, enforceable in accordance with its terms. Seller 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. To the best of Seller's knowledge, all of such Leases are
valid and subsisting and in full force and effect; neither Seller nor, to
Seller's 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 Seller Assets is subject to contracts of sale, and none is held by
Seller 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 Seller Disclosure Schedule.
(c) Section 3.5(c) of the Seller Disclosure Schedule contains a true,
accurate and complete description of all material items of Sellers Personal
Property. Seller owns and has good and merchantable title to all of the Sellers
Personal Property relating to the Sellers Business (the "Sellers 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 Seller Disclosure
Schedule (which Liens shall be released prior to Closing). Except as set forth
in Section 3.5(c) of the Seller Disclosure Schedule, all of the Seller Personal
Property is in a state of good repair and maintenance and is in good 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 Seller 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 Seller
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which Seller currently holds. To the
best of Seller's knowledge, Seller has obtained all Private Authorizations which
are necessary for the ownership or operation of the Seller Assets or the conduct
of the Seller Business which, if not obtained and maintained, could,
individually or in the aggregate, materially adversely affect Seller. All of
such Private Authorizations, to Seller's knowledge, are valid and in good
standing and are in full force and effect. To the best of Seller's knowledge,
Seller is not in breach or violation of, or in default in the performance,
observance or fulfillment of, any such Private Authorization, and, to the best
of Seller's knowledge, no Event exists or has occurred, which constitutes, or
but for any requirement of giving of notice or passage of time or both
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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 Seller. No such
Private Authorization is the subject of any pending or, to Seller's knowledge,
threatened attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the Seller Disclosure Schedule contains a true,
complete and accurate description of each Governmental Authorization which
Seller currently holds. To the best of Seller's knowledge, these are the only
Governmental Authorizations (i) required under Applicable Laws to own and
operate the Seller Business, as currently conducted or proposed to be conducted
on or prior to the Closing Date, or (ii) necessary to permit Seller to execute
and deliver this Agreement and to perform its obligations hereunder. To the best
of Seller's knowledge, Seller has obtained all Governmental Authorizations which
are necessary for the ownership or operation of the Seller Assets or the conduct
of the Seller Business as now conducted and which, if not obtained and
maintained, would, individually or in the aggregate, have any material adverse
effect on Seller. None of the Governmental Authorizations listed in Section
3.7(a) of the Seller Disclosure Schedule, to Seller's knowledge, is subject to
any restriction or condition which would limit in any material respect the
ownership or operations of the Seller Assets or the conduct of the Seller
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 Seller Disclosure
Schedule are, to Seller's knowledge, 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 Seller or its officers, directors, employees or agents, and, to the
best of Seller's knowledge, the ownership or operation of the Seller Assets or
the conduct of the Seller Business are in accordance in all material respects
with the Governmental Authorizations. All material reports, forms and statements
required to be filed by Seller with all Authorities with respect to the Seller
Business have, to Seller's knowledge, been filed and are true, complete and
accurate in all material respects. No such Governmental Authorization is the
subject of any pending or, to Seller's knowledge, threatened challenge or
proceeding to revoke or terminate any such Governmental Authorization. Seller
does not believe that any such Governmental Authorization will not be renewed in
the name of Seller by the granting Authority in the ordinary course.
(b) Except as otherwise specifically described in Section 3.7(b) of the
Seller Disclosure Schedule, neither Seller nor any director or officer thereof
(in connection with ownership or operation of the Seller Assets or the conduct
of the Seller Business) is in or is charged by any Authority with or, to
Seller's knowledge, at any time since January 1, 1993 has been in or has been
charged by any Authority with, or, to Seller's 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 Seller Assets or the conduct of the Seller Business. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions pending or, to Seller's knowledge, threatened before
or by any Authority (x) relating to the ownership or operation of the Seller
Assets or the conduct of the Seller 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 Seller Assets
or the conduct of the Seller Business; (y) involving charges of illegal
discrimination by Seller 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 Seller Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
Seller Disclosure Schedule, no Event exists or has occurred, which, to Seller's
knowledge, constitutes, or but for any requirement of
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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 Seller or
(ii) any material requirement of any insurance carrier, applicable to the
ownership or operations of the Seller Assets or the conduct of the Seller
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 Seller Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the Seller Disclosure Schedule, all
such information and matters set forth in the Seller Disclosure Schedule, if
adversely determined against Seller, will not, individually or in the aggregate,
have a materially adversely effect on Seller.
3.8 Intangible Assets. Section 3.8 of the Seller 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 Seller Assets or the conduct of the Seller
Business held or used by Seller, including without limitation the nature of
Seller's interest in each and the extent to which the same have been duly
registered in the offices as indicated therein. To the best of Seller's
knowledge, except as set forth in Section 3.8 of the Seller 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 Seller Assets or the conduct of the Seller
Business as currently owned, operated and conducted or proposed to be owned,
operated and conducted on or prior to the Closing Date. Seller does not, to its
knowledge, wrongfully infringe upon or unlawfully use any Intangible Assets
owned or claimed by another, and Seller has not received any notice of any claim
or infringement relating to any such Intangible Asset.
3.9 Related Transactions. Seller is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the Seller
Assets or the conduct of the Seller Business between Seller and any of its
officers, directors, shareholders, employees or, to the knowledge of Seller, 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 Seller Disclosure Schedule, (ii) Contractual
Obligations between Seller and any of its directors, shareholders, officers,
employees or Affiliates of Seller or any of the foregoing, which constitute
Excluded Assets or Seller Nonassumed Obligations, or (iii) as specifically set
forth in Section 3.9 of the Seller Disclosure Schedule.
3.10 Insurance. Seller maintains, with respect to the Seller Assets and
the Seller 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 Seller Disclosure Schedule.
3.11 Tax Matters.
(a) Seller has in accordance with all Applicable Laws filed all federal
and state and, to the best of Seller's knowledge, local 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 Seller
Financial Statements. To the best of Seller's knowledge, the Tax Returns of
Seller 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 Seller is required by law to withhold and
collect
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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. Seller 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 Seller for the fiscal years prior to and
including the most recent fiscal year. Adequate provision has, to Seller's
knowledge, been made on the most recent balance sheet forming part of Seller
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 Seller's knowledge, no
past transactions or matters which could result in additional Taxes of a
material nature to Seller for which an adequate reserve has not been provided on
such balance sheet. Seller is not a "consenting corporation" within the meaning
of Section 341(f) of the Code.
(b) Seller is not a party to any tax sharing agreement or arrangement.
3.12 Employee Retirement Income Security Act of 1974.
(a) Seller (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.
3.13 Absence of Sensitive Payments. Neither Seller nor, to Seller's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the Seller Assets or the Seller 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. Seller 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 Seller Disclosure
Schedule contains a true, accurate and complete list of all Seller employees
involved in the ownership or operation of the Seller Assets or the conduct of
the Seller Business (the "Seller 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. Seller has no obligation or liability, contingent or
other, under any Employment Arrangement with any Seller Employee, other than
those listed or described in Section 3.15 of the Seller Disclosure Schedule.
Except as described in Section 3.15 of the Seller Disclosure Schedule, (a) none
of the Seller Employees is now, or since January 1, 1993 has been, represented
by any labor union or other employee collective bargaining organization, and
Seller is not, and never has been, a party to any labor or other collective
bargaining agreement with respect to any of the Seller 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 Seller nor any
of such employees is now, or has since January 1, 1993 been, subject to or
involved in or, to Seller's knowledge, threatened with, any union elections,
petitions therefore or other organizational or recruiting activities, in each
case with respect to the Seller Employees, and (d) none of the Seller Employees
has notified Seller that he or she does not intend to continue employment with
Seller until the Closing or with ATS following the Closing. Seller has performed
in all material respects all obligations
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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 Seller
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Seller Assets or the conduct of the business of the Seller
Business or to which Seller is a party or to which it is bound or which any of
the Seller Assets is subject. True, accurate and complete copies of each of such
Material Agreements have been made available by Seller to ATS and Seller has
provided ATS with photocopies of all such Material Agreements requested by ATS.
All of such Material Agreements are valid, binding and legally enforceable
obligations of Seller and, to Seller's 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. To
Seller's knowledge Seller 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 Seller,
Claim threatened in writing that Seller 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 Seller under any of such Material Agreements in any
material respect.
3.17 Ordinary Course of Business. Seller, 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 Seller Disclosure Schedule, or (ii) as may be required or
expressly contemplated by the terms of this Agreement, with respect to the
Seller Assets and the Seller 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 $25,000;
(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 $25,000;
(iii) has not entered into any individual commitment
having a value in excess of $25,000; 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 and has not incurred any Indebtedness from Money
Borrowed;
(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 Seller Employees other than in the ordinary
course of business or otherwise materially altered, modified or changed
the terms of their employment;
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(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;
(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 Seller,
except for Seller Nonassumed Obligations; and
(j) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is material
to the Seller Assets or the Seller Business.
3.18 Material and Adverse Restrictions. To the best of Seller's
knowledge, Seller is not a party to or subject to, nor is any of the Seller
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,
individually or in the aggregate, now has or is likely to have any material
adverse effect on Seller, except as set forth in Section 3.18 of the Seller
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 Seller.
3.20 Solvency. As of the execution and delivery of this Agreement,
Seller 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
Seller Disclosure Schedule, with respect to the Seller Assets, Seller:
(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 Seller's 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, to Seller's knowledge, in
default under any judgment, order, writ, injunction or decree of any
Final Order issued pursuant to any Environmental Law;
(d) to Seller's knowledge, is in compliance in all material
respects with all Environmental Laws, has obtained all Environmental
Permits required under Environmental Laws, and is not the subject of or
threatened with any Legal Action involving a demand for damages or
other potential liability including any Lien with respect to material
violations or material breaches of any Environmental Law; and
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(e) has no knowledge of any past or present Event related to
the Seller Business or the Seller Assets which Event, individually or
in the aggregate, will materially interfere with or prevent continued
material compliance with all Environmental Laws, or which, individually
or in the aggregate, will form the basis of any material Claim for the
release or threatened release into the environment, of any Hazardous
Material.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, Seller as
follows:
4.1 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 not have a material adverse effect
on ATS, 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.
4.2 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.
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4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
4.4 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 of ATS to consummate the transactions contemplated
hereunder.
4.5 Financing. ATS has available, and as of the Closing Date will have
available, sufficient funds to enable it to pay the Purchase Price in full in
accordance with the terms and provisions of Section 2.3.
4.6 ATS Due Diligence Investigation. ATS and its Representatives have
performed a thorough, complete and comprehensive due diligence investigation of
Seller, including without limitation an investigation of Seller's businesses,
operations, properties, fixtures, title to properties, assets (tangible and
intangible), equipment, prospects, personnel, employment arrangements, Seller
Financial Statements, condition (financial or other), books, accounts, financial
records, ledgers, commitments and records (including Tax Returns), work papers
and other sources of financial information possessed or controlled by Seller or
its accountants, contracts, agreements, leases, business environment, the Seller
Disclosure Schedule, and compliance with Governmental Authorizations, Applicable
Laws and Private Authorizations (the "Due Diligence Investigation"). The Due
Diligence Investigation has not revealed to ATS any information, issues, or
concerns which, in its reasonable business judgment, individually or in the
aggregate, materially adversely affects, or is likely to materially adversely
affect, the Seller. ATS and its Representatives represent that Seller fully
cooperated with ATS as it conducted the Due Diligence Investigation and Seller
did not interfere with, limit or impede the Due Diligence Investigation in any
manner whatsoever. ATS also represents that the Due Diligence Investigation has
been performed to its complete satisfaction.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Seller 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 Seller's properties, books, contracts, commitments and records (including
without limitation Tax Returns) relating to the Seller Assets and the Seller
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 Seller Assets or the Seller 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 Seller or
its accountants deemed by ATS or its Representatives necessary or useful for the
purpose of performing an audit of the Seller Assets and the Seller Business and
certifying financial statements and financial information, and (iii) such other
information in the possession or control of Seller or its accountants concerning
any of the foregoing as ATS shall reasonably request; provided, however, that
Seller shall not be required to permit any such access to the extent same would
unreasonably interfere with Seller's normal business operations. All non-public
information relating to the Seller Assets or the Seller 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 Seller, be disclosed by ATS in any manner
whatsoever, in whole or in part, and shall not be used for any purposes, other
than in
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connection with the Transactions. In no event shall ATS or any of its
Representatives use such information to the detriment of Seller. 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, Seller shall not, without the prior
written consent of ATS, disclose any information with respect to the Seller
Assets or the Seller 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 5.1(a), ATS may,
subject to prior consultation with Seller, 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, either 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 party or any
condition to the obligations of the parties hereto, except as set forth in
Section 8.3(e).
5.2 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 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(d), (iii) to
effect all necessary registrations, filings and submissions (including without
limitation all filings necessary for ATS to own and operate the Seller Assets
and conduct the Seller 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 in the preparation,
execution and filing of all Tax Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains,
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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.
(c) Seller 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 Seller Business described in Section
6.2(g). Without limiting the generality of the foregoing, Seller 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.
(d) Seller shall use its best efforts to diligently conduct and
conclude the Negotiations for the benefit of ATS, or to enter into or present to
ATS for execution and delivery the Santee Cooper Contract, as the case may be,
and conduct the Negotiations or the negotiations with respect to the Santee
Cooper Contract in at least a manner as if the Negotiations or execution and
delivery of the Santee Cooper Contract were for the sole and exclusive benefit
of Seller. ATS agrees to cooperate and support, both before and after the
Closing Date, Seller's efforts with respect to the foregoing.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, and except as required to obtain third party
consents pursuant to this Agreement, Seller 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
Seller 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 Seller has a business or contractual relationship in
connection with ATS' due diligence investigation of Seller.
5.4 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 such that one or more of the conditions of Closing
might not be satisfied, 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 Seller Disclosure Schedule in any respect such that one
or more of the conditions of Closing might not be satisfied, and 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 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.
5.5 No Solicitation. Seller 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 for the purposes of, or otherwise cooperate
in any way with or
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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 (i) any
merger or consolidation, regardless of whether Seller is the surviving Entity
unless the surviving Entity remains obligated under this Agreement to the same
extent as it was, or (ii) any sale or other disposition of all or any
substantial part of the Seller Assets or the Seller Business. The provisions of
this Section shall apply to each of Seller's Subsidiaries. If Seller or any of
its Representatives receives any inquiry with respect to an Alternative
Transaction while this Agreement is in effect, Seller shall inform the inquiring
party that it is not entitled to enter into discussions or negotiations relating
to an Alternative Transaction.
5.6 Conduct of Business by Seller 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, Seller shall, to the extent relating to the Seller
Business or the Seller 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 Seller 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 Seller
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 Seller Assets
or the Seller Business, and (ii) maintain in full force and effect all
such Governmental and Private Authorizations, Leases and Material
Agreements relating to the Seller Business;
(f) not (i) dispose of any of the Seller Assets owned by
Seller or used in the operation of the Seller Business (other than for
the disposition in the ordinary course of business of immaterial assets
that are of no further use to the Seller Business) or (ii) modify or
change in any material respect, or enter into, any Material Agreement
relating to the Seller Business; and
(g) not voluntarily take 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 Seller Disclosure Schedule.
With respect to any transaction or act proposed to be entered into or performed
by Seller which, pursuant to Sections 5.6(a) through 5.6(g), requires the prior
approval of ATS, ATS shall be deemed to have approved
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same unless written notice of disapproval is received by Seller within five (5)
business days after receipt by ATS of a written request for approval made by
Seller.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to effect the Transactions.
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 ATS and Seller 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 or the
failure to obtain or make would not, in the reasonable business
judgment of ATS, have a material adverse effect on the Seller Assets or
the Seller Business.
6.2 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) Seller 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 Willoughby & Hoefer, P.A.,
counsel for Seller, or other counsel reasonably acceptable to ATS, with
respect to the matters set forth in Sections 3.1(a), (b) and (c),
3.7(b) and 3.14, 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;
(c) The representations and warranties of Seller 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 in all material respects at and as of the
Closing Date with
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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 in all material respects as of such date on the Closing
Date (including without limitation giving effect to any later obtained
knowledge of Seller or ATS, except as otherwise specifically provided
herein); each and all of the agreements and conditions to be performed
or satisfied by Seller hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and
Seller 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) 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 by the
provisions of this Agreement in order to vest fully in ATS all right,
title and interest in and to all of the Seller Assets and the Seller
Business (including without limitation all Private Authorizations,
Leases and Material Agreements of Seller and, at the cost and expense
of Seller, all modifications of Leases and other Contractual
Obligations heretofore requested by ATS and set forth in Section 6.2(d)
of the Seller Disclosure Schedule) and the full enjoyment thereof shall
have been obtained, without the imposition, individually or in the
aggregate, of any condition or requirement which could adversely affect
ATS;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in Seller from that reflected in the most recent Seller
Financial Statements; as of the Closing Date, the Governmental
Authorizations with respect to the ownership or operation of the Seller
Assets or the conduct of the Seller Business shall not have been
materially and adversely affected by any act, or failure to act, of
Seller;
(f) Seller 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 Seller to ATS at or prior to
the Closing pursuant to the terms of this Agreement;
(g) ATS shall have received from Seller such documentation as
shall be reasonably satisfactory to ATS indicating that an unqualified
report with respect to the financial statements of Seller 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 Seller 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 Seller Assets
and the Seller Business, 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) Kenneth E. Hall, Seller and Tower, Inc. shall have
executed and delivered to ATS an agreement substantially in the form of
Exhibit B attached hereto and made a part hereof (the "ATS
Noncompetition Agreement"), and Kenneth E. Hall shall have executed and
delivered to ATS an agreement substantially in the form of Exhibit C
attached hereto and made a part hereof (the "ATS Employment
Agreement");
(j) The Phase I Environmental Reports received by ATS with
respect to real property owned or leased by Seller that is part of the
Seller Assets shall not indicate any exceptions which
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would indicate a breach of warranty or misrepresentation (without
regard to the knowledge qualification) of Seller set forth in Section
3.21;
(k) Seller and each of the escrow agents named therein (the
"Indemnity Escrow Agents") shall have executed and delivered to ATS an
indemnity agreement (the "Indemnity Escrow Agreement") substantially in
the form of Exhibit D attached hereto and made a part hereof;
(l) The title reports and/or CTLA title insurance policies
received by ATS with respect to real property owned by Seller that is
part of the Seller Assets shall not indicate any exceptions which would
indicate a breach of warranty or misrepresentation (without regard to
the knowledge qualification) of Seller set forth in Section 3.5; and
(m) Seller shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
(the "Nonassignable Contracts Agreement"), pursuant to which (i) Seller
will hold (but will have no obligation to perform services thereunder)
for the account of ATS, and remit promptly to ATS all amounts received
pursuant to the provisions of, all of the Nonassignable Contracts as to
which the required approval or consent to the assignment or transfer of
which was not obtained and as to which ATS has delivered an Acceptance
Notice, and (ii) ATS will agree to (A) perform all services required to
be performed under such Nonassignable Contracts, (B) reimburse Seller
for all costs and expenses reasonably incurred pursuant to the
Nonassignable Contracts Agreement and (C) indemnify and hold harmless
Seller with respect to all actions taken by ATS pursuant thereto and
all actions, if any, taken by Seller pursuant thereto other than those
relating to the bad faith, negligence or willful misconduct of Seller
or its officers, directors, stockholders or employees.
6.3 Conditions to Obligations of Seller. The obligation of Seller 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 Seller
and its counsel, and Seller 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) ATS shall have furnished Seller and, at Seller's request,
any bank of other financial institution providing credit to Seller,
with favorable opinions, dated the Closing Date of Sullivan & Worcester
LLP, counsel for ATS, with respect to the matters set forth in Section
4.1 and with respect to such other matters arising after the date of
this Agreement and incident to the Transactions, as Seller or its
counsel may reasonably request or which may be reasonably requested by
any such bank or financial institution or their respective counsel;
(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 in all material respects 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 in all material respects as of such
date on the Closing Date (including without limitation giving effect to
any later obtained knowledge of Seller or ATS, except as otherwise
specifically provided herein); each and all of the agreements and
conditions to
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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 Seller 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 Seller or its counsel shall have reasonably
requested;
(d) ATS shall have delivered or cause to be delivered to
Seller all of the Collateral Documents and other agreements, documents
and instruments required to be delivered by ATS to Seller at or prior
to the Closing pursuant to the terms of this Agreement;
(e) ATS shall have executed and delivered to Seller a
counterpart of the ATS Employment Agreement; and
(f) ATS shall have executed and delivered to Seller the
Nonassignable Contracts Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Seller and ATS;
(b) by either ATS or Seller 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 Seller in the event (i) Seller 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) 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) Seller 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
The term "Termination Date" shall mean May 31, 1997 or such other date
as the parties may, from time to time, mutually agree.
The right of ATS or Seller 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 either party, any Person
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controlling any such party or any of their respective Representatives whether
prior to or after the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 (with respect to
confidentiality), 5.3 and 9.3 and this Section, in the event of the termination
of this Agreement pursuant to Section 7.1, 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 either party, or any of their respective shareholders, officers or
directors, to the other and all rights and obligations of either party shall
cease; provided, however, that such termination shall not relieve either 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 by Seller or ATS pursuant
to the provisions of Section 7.1(c) or 7.1(d), respectively, then Seller or ATS,
as the terminating party, shall be entitled to liquidated damages of an amount
equal to the Escrow Deposit, together with interest and other earnings thereon,
or $100,000, as the case may be, it being agreed that such amount shall
constitute full payment for any and all damages suffered by Seller or ATS by
reason of the other's failure to consummate the Transactions. ATS and Seller
agree in advance that actual damages would be difficult to ascertain and that
such liquidated damages is a fair and equitable amount to reimburse Seller for
damages sustained due to ATS' failure to consummate the Transactions for the
above-stated reasons. In addition, in the event this Agreement is terminated by
ATS pursuant to the provisions of Section 7.1(d), then ATS shall be entitled to
a return of the Escrow Deposit, together with interest and other earnings
thereon, together with without prejudice to ATS' right to pursue specific
performance hereunder. Notwithstanding the foregoing, each party shall have the
right to seek specific performance pursuant to the provisions of Section 9.5.
(c) In the event this Agreement is terminated pursuant to the
provisions of Section 7.1(a) or 7.1(b), except as provided in Section 7.2(a),
neither of the parties shall have any further rights or remedies, except that
ATS shall be entitled to the Escrow Deposit, together with interest and earnings
thereon.
ARTICLE 8
INDEMNIFICATION
8.1 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 ending on the later of (i) one (1) year from the Closing Date or (ii)
the earlier of (x) the termination of all negotiations with Santee Cooper or (y)
the acquisition by ATS (or Seller) of the Utility Assets or the execution and
delivery of the Santee Cooper Contract, irrespective of the application of any
applicable statute of limitations. 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.
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8.2 Indemnification. Each of Seller and ATS (the "indemnifying party")
agrees that on and after the Closing it shall indemnify and hold harmless the
other (the "indemnified party") from and against any and all damages, claims,
losses, expenses, costs, obligations and liabilities, including without
limitation liabilities for all reasonable attorneys', accountants' and experts'
fees and expenses including those incurred to enforce the terms of this
Agreement or any Collateral Document executed by it (collectively, "Loss and
Expense"), suffered, directly or indirectly, by the indemnified party by reason
of, or arising out of:
(a) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the indemnifying party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(b) any Legal Action or other Claim by any third party
relating to the indemnifying party or, in the case of ATS, the
ownership or operations of the Seller Assets or the conduct of the
business of the Seller Business to the extent such Legal Action or
other Claim has also resulted in a breach of representation or warranty
by the indemnifying party pursuant to this Agreement or any Collateral
Document executed by it; or
(c) in the case of Seller as the indemnifying party, the
failure of Seller to comply with Bulk Sales law of the South Carolina;
or
(d) in the case of Seller as the indemnifying party, by reason
of, or arising out of, (i) Seller Nonassumed Obligations or (ii) the
ownership and operation of the Seller Assets and the Seller Business
prior to the Closing Date; or
(e) in the case of ATS as the indemnifying party, by reason
of, or arising out of, (i) Seller Assumed Obligations or (ii) the
ownership and operation of the Seller Assets and the Seller Business
from and after the Closing Date, except for Events arising prior to or
existing on the Closing Date, unless they are part of the Seller
Assumed Obligations.
8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, each indemnified party's rights to
indemnification shall be subject to the following limitations: (i) the
indemnified party 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, $25,000, in which event the indemnified party
shall be entitled to recover all such Loss and Expense (including without
limitation such $25,000), and (ii) in no event shall the aggregate amount
required to be paid by each indemnifying party pursuant to the provisions of
this Article exceed the sum of (x) $100,000 plus (y) in the event ATS acquires
the Utility Assets or enters into the Santee Cooper Contract, an amount equal to
the lesser of (I) $200,000 or (II) the Utility Asset Price or the Utility
Management Price, as the case may be, except for any Loss or Expense arising out
of matters of a nature referred to in Sections 3.1(b), 3.1(c) and 4.1 as to
which the limitations set forth in this clause (ii) shall not apply.
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, except as
provided in Section 8.6, (i) the exclusive recourse of ATS after the Closing
with respect to the liability of Seller pursuant to Section 8.2 or any other
provision of this Agreement or Applicable Law which requires Seller to defend,
indemnify or hold harmless ATS from or against any Claim, Loss or Expense shall
be (x) the Escrow Indemnity Funds (including interest or other
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earnings thereon) and (y) in the event ATS acquires the Utility Assets or enters
into the Santee Cooper Contract, the Utility Asset Price or the Utility
Management Price, as the case may be, to the extent provided in clause (y) of
Section 8.3(a); and (ii) ATS' remedies for any such liability of Seller, or for
any Claim arising under this Agreement, shall be limited to its right to recover
from (x) the Escrow Indemnity Funds in accordance with the provisions of the
Escrow Indemnity Agreement and (y) the Utility Asset Price or the Utility
Management Price, as the case may be, to the extent provided in clause (y) of
Section 8.3(a), and neither ATS nor any of its officers, directors,
shareholders, agents or Affiliated Entities shall have any right of recovery
against Seller or any of its officers, directors, shareholders, agents or
Affiliated Entities or against the assets of any of them for any such liability.
(c) In the event there shall be no Claims pursuant to the provisions of
this Agreement with respect to the Escrow Indemnity Funds, if any, existing at
the expiration of one (1) year after the Closing, the Escrow Indemnity Funds
then remaining (together with any then existing interest or earnings) shall be
distributed to the Persons entitled thereto. In the event one or more such
Claims with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Indemnity Period, funds in an amount equal to the sum of (i)
the aggregate amount of such Claims and (ii) the amount reasonably determined by
ATS to be necessary to cover the fees, expense and other costs which will be
required to resolve such Claims shall be retained as part of the Escrow
Indemnity Funds and the balance thereof, if any, shall be distributed to the
Persons entitled thereto. Upon the resolution of all such Claims and the payment
of all such fees, expenses and costs out of the Escrow Indemnity Funds, the
remainder of the Escrow Indemnity Funds, if any, shall be distributed to the
Persons entitled thereto.
(d) In the case any event shall occur which would otherwise entitle
either 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.
8.4 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 8.1, 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.
8.5 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 be unreasonably 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
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Proposal, and (b) if the indemnified party is ATS, do not include any term or
condition which would restrict in any material manner the continued ownership or
operations of the Seller Assets or the conduct of the Seller Business in
substantially the manner then being theretofore owned, operated and conducted by
ATS.
8.6 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 9.5, the indemnification provided
in this Article shall be the sole and exclusive post-Closing remedy available to
either party against the other party for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, ATS or Seller may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions with respect to the Termination Date, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and waive compliance by the other
with any of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. 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 up to
an aggregate of $15,000 and, any amount in excess thereof, equally by Seller and
ATS. 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.
9.4 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) 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:
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(a) If to ATS:
6400 North Congress Avenue, Suite 1750
Boca Raton, Florida 33487
Attention: Chief Operating Officer and
Chief Financial Officer
Telecopier No.: (407) 998-2278
with copies to:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
and
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to Seller:
124 Winding Road
Irmo, South Carolina 29063
Attention: Kenneth E. Hall
Telecopier No.: (803) 749-9727
with a copy to:
Willoughby & Hoefer, P.A.
1022 Calhoun Street, Suite 302
P.O. Box 8416
Columbia, SC 29202-8416
Attention: Alvis Bynum, Esq.
Telecopier No.: (803) 256-8062
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.
9.5 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 7, 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,
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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 for such breach or threatened breach. Notwithstanding the foregoing or
any provision of this Agreement to the contrary, after the Closing Date ATS
shall not be entitled to specific performance or any other remedy to the extent
that the cost to Seller arising from the enforcement or exercise of such remedy
would exceed the amount of the Escrow Indemnity Funds, in accordance with the
provisions of the Escrow Indemnity Agreement, for all costs and expenses
incurred in connection with its performance of or compliance with the remedy
exercised or enforced.
9.6 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 either 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.
9.7 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.
9.8 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.
9.9 Governing Law; Venue. 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 South Carolina 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. Venue for all actions
arising hereunder shall be in the Federal District Court sitting in Columbia,
South Carolina, and the parties agree to submit to the jurisdiction of such
court.
9.10 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
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transactions contemplated hereby or to facilitate the enjoyment of any of the
rights created hereby or to be created hereunder.
9.11 Entire Agreement. This Agreement (together with the Seller
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, including without limitation that
certain letter of intent, dated December 19, 1996, between the parties.
9.12 Assignment. This Agreement shall not be assignable by either 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.
9.13 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 9.12.
9.14 WAIVER OF TRIAL BY JURY. SELLER AND ATS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN.
9.15 Mutual Drafting. This Agreement is the result of the joint efforts
of Seller 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 either party based on any presumption of that party's
involvement in the drafting thereof.
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IN WITNESS WHEREOF, ATS and Seller 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:
Towers L.L.C.
By:
Name:
Title:
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) 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 herein shall
have such meanings when used in the Seller 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 "either party" shall, unless the context otherwise
requires, refer to Seller and ATS.
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 Seller attributable to the ownership or operation of the
Seller 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 Seller'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 Seller
Business, or (c) impair Seller'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.
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Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the Seller
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.
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.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the Seller
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, including without including without limitation the
following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Private Authorizations;
(e) the Contracts (other than the Seller Nonassumed
Obligations);
(f) the corporate name of Seller and all variations thereof;
(g) all Intellectual Property and other proprietary
information, which relate to the Seller Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the Seller Business;
(h) all claims, choses in action and rights under warranties
relating to the Seller Business or any of the Seller Assets;
(i) all books and records relating to the ownership or
operation of the Seller Assets or the conduct of the Seller Business,
including executed copies of Leases, Material Agreements and other
written Contracts, and all records required by Applicable Law to be
kept, subject to the right of the conveying party to have such books
and records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate business purposes. The records described herein
shall not include corporate seals, certificates of incorporation,
minute books, stock books, tax returns or other records having to do
with the corporate organization of Seller; and
(j) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets shall not
include any of the Excluded Assets.
ATS shall have the meaning given to it in the Preamble.
A-2
<PAGE>
ATS Employment Agreement shall have the meaning given to it in Section
6.2(i).
ATS Noncompetition shall have the meaning given to it in Section
6.2(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 Seller Business.
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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
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 Document shall mean the Escrow Agreement, the Indemnity
Escrow Agreement, the ATS Employment Agreement(s), the Nonassignable Contracts
Agreement, bills of sale, assignments of intangibles, assumption agreements with
respect to the Seller Assumed Obligations, other instruments of conveyance and
assignment sufficient to vest in ATS title to all of the other Seller Assets and
the Seller Business, and any other agreement, certificate, contract, instrument,
notice, opinion or other document delivered pursuant to the provisions of this
Agreement or any Collateral Document.
Collection Period shall have the meaning given to it in Section 2.4.
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 Seller Assets or the
conduct of the Seller Business.
A-3
<PAGE>
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 Adjustment shall mean an amount equal to the amount owed by Seller
on the Closing Date to First Community Bank, Lexington, South Carolina, which is
estimated to equal approximately $340,000.
Due Diligence Investigation shall have the meaning given to it in
Section 4.6.
Employment Arrangement shall mean, with respect to Seller, 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 Seller 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 Seller Assets or
the conduct of the Seller 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 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.
A-4
<PAGE>
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
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 Seller under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Escrow Agent shall have the meaning given to it in the third Whereas
paragraph.
Escrow Agreement shall have the meaning given to it in the third
Whereas paragraph.
Escrow Deposit shall have the meaning given to it in the third Whereas
paragraph.
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.
Excluded Assets shall have the meaning given to it in Section 2.1.
Existing Asset Cost Flow Multiple shall have the meaning given to it in
Section 2.3(e).
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.
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, 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-5
<PAGE>
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the Federal
Aviation Administration, in connection with the ownership or operation of the
Seller Assets or the conduct of the Seller 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.
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 Seller,
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.
Indemnity Escrow Agent shall have the meaning given to it in Section
6.2(k).
Indemnity Escrow Agreement shall have the meaning given to it in
Section 6.2(k).
Indemnity Escrow Fund shall have the meaning given to it in Section
2.3.
A-6
<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 8.2.
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.
A-7
<PAGE>
Material Agreement shall mean, with respect to Seller, 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 Seller
Business in any of the last three fiscal years or is likely to account for more
than three percent (3%) of revenues of the Seller Business during the current
fiscal year, (f) is with any Authority, or (g) involves the management by Seller
of any communication tower of any other Person.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Negotiations shall have the meaning given in Section 2.3.
Nonassignable Contracts shall have the meaning given to it in Section
2.2(c).
Nonassignable Contracts Agreement shall have the meaning given to it in
Section 6.2(m).
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).
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
Seller Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
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
Seller and used or useful as of the date hereof in the conduct of the business
or operations of the Seller 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 Seller Business.
A-8
<PAGE>
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by Seller prior to the Closing
and relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by Seller prior to the Closing
and relates to a period subsequent to the Closing.
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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 Seller as of the date hereof, in the operations of the Seller
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 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 5.1(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.
Santee Cooper shall have the meaning given to it in Section 2.3(b).
Santee Cooper Contract shall have the meaning given to it in Section
2.3(c).
Seller shall have the meaning given to it in the Preamble.
Seller Assumable Agreements shall mean all obligations and liabilities
of Seller under all Leases, Material Agreements, Governmental Authorizations,
Private Authorizations and other Contractual Obligations not required to be
listed on Section 3.16 of the Seller Disclosure Schedule entered into in the
ordinary course of business and relating to the ownership or operation of any of
the Seller Assets or the
conduct of the Seller Business.
Seller Assets shall have the meaning given to it in Section 2.1.
Seller Assumed Liabilities shall have the meaning given to it in
Section 2.2(b).
A-9
<PAGE>
Seller Business shall have the meaning given them in the first Whereas
paragraph.
Seller Disclosure Schedule shall mean the Seller Disclosure Schedule
dated as of the date of this Agreement delivered by Seller to ATS.
Seller Employees shall have the meaning given it in the Section 3.15.
Seller Financial Statements shall have the meaning given to it in
Section 3.2(b).
Seller Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
Seller's knowledge means the actual knowledge of any Seller officer or
senior manager, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of appropriate Seller records.
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 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.
Termination Date shall have the meaning given to it in Section 7.1.
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 Seller Assets and the Seller Business and the execution, delivery
and performance of the Collateral Documents.
Utility Assets Price shall have the meaning given to it in Section
2.3(e).
Utility Cash Flow Multiple shall have the meaning given to it in
Section 2.3(e).
Utility Management Price shall have the meaning given to it in Section
2.3(f).
A-10
Exhibit 10.4a
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
DIABLO COMMUNICATIONS, INC.
Dated as of
July 8, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................2
2.1 Agreement to Sell and Buy..............................................................2
2.2 Assumption of Liabilities and Obligations. ............................................2
2.3 Closing; Purchase Price................................................................5
2.4 Accounts Receivable....................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF DIABLO........................................................8
3.1 Organization and Business; Power and Authority; Effect of Transaction..................8
3.2 Financial and Other Information. .....................................................9
3.3 Changes in Condition...................................................................9
3.4 Materiality............................................................................9
3.5 Title to Properties; Leases............................................................9
3.6 Compliance with Private Authorizations................................................11
3.7 Compliance with Governmental Authorizations and Applicable Law........................11
3.8 Intangible Assets.....................................................................12
3.9 Related Transactions..................................................................12
3.10 Insurance.............................................................................12
3.11 Tax Matters. ........................................................................13
3.12 Employee Retirement Income Security Act of 1974.......................................13
3.13 Absence of Sensitive Payments.........................................................15
3.14 Inapplicability of Specified Statutes.................................................15
3.15 Employment Arrangements...............................................................15
3.16 Material Agreements...................................................................16
3.17 Ordinary Course of Business...........................................................16
3.18 Material and Adverse Restrictions.....................................................17
3.19 Broker or Finder......................................................................17
3.20 Solvency..............................................................................17
3.21 Environmental Matters.................................................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS..........................................................18
4.1 Organization and Business; Power and Authority; Effect of Transaction.................18
4.2 Broker or Finder......................................................................18
4.3 Solvency..............................................................................18
4.4 No Legal Action.......................................................................19
ARTICLE 5 COVENANTS......................................................................................19
5.1 Access to Information; Confidentiality................................................19
5.2 Agreement to Cooperate. .............................................................20
5.3 Public Announcements..................................................................20
5.4 Notification of Certain Matters.......................................................21
5.5 No Solicitation.......................................................................21
5.6 Conduct of Business by Diablo Pending the Closing.....................................21
5.7 Preliminary Title Reports.............................................................22
5.8 Environmental Site Assessments........................................................23
5.9 Post-Closing Covenants and Agreements of the Parties..................................24
ARTICLE 6 CLOSING CONDITIONS.............................................................................24
<PAGE>
6.1 Conditions to Obligations of Each Party to effect the Transactions....................24
6.2 Conditions to Obligations of ATS......................................................25
6.3 Conditions to Obligations of Diablo...................................................28
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................29
7.1 Termination...........................................................................29
7.2 Effect of Termination.................................................................29
ARTICLE 8 INDEMNIFICATION................................................................................30
8.1 Survival..............................................................................30
8.2 Indemnification.......................................................................31
8.3 Limitation of Liability...............................................................31
8.4 Notice of Claims......................................................................33
8.5 Defense of Third Party Claims.........................................................33
8.6 Exclusive Remedy......................................................................34
ARTICLE 9 GENERAL PROVISIONS.............................................................................34
9.1 Amendment.............................................................................34
9.2 Waiver................................................................................34
9.3 Fees, Expenses and Other Payments.....................................................34
9.4 Notices...............................................................................34
9.5 Specific Performance; Other Rights and Remedies.......................................35
9.6 Severability..........................................................................36
9.7 Counterparts..........................................................................36
9.8 Section Headings......................................................................36
9.9 Governing Law; Venue..................................................................36
9.10 Further Acts..........................................................................36
9.11 Entire Agreement......................................................................36
9.12 Assignment............................................................................37
9.13 Parties in Interest...................................................................37
9.14 Mutual Drafting.......................................................................37
9.15 Arbitration...........................................................................37
9.16 Disclosure Schedule...................................................................37
</TABLE>
APPENDIX A: Definitions
SCHEDULES:
Diablo Disclosure Schedule
EXHIBITS:
EXHIBIT A Form of Noncompetition Agreement (Section 6.2(j))
EXHIBIT B Form of Indemnity Escrow Agreement (Section 6.2(k))
-ii-
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of July 8,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and Diablo Communications, Inc., a California corporation ("Diablo").
WHEREAS, Diablo owns and leases and operates communication towers and
is engaged in the business of managing communication sites for third parties
(the "Diablo Business");
WHEREAS, ATS desires to purchase and Diablo desire to sell the Diablo
Assets and the Diablo Business on the terms and conditions hereinafter set
forth;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, ATS and Diablo have entered into an escrow agreement (the "Escrow
Agreement") with Bank of San Francisco (the "Escrow Agent"), pursuant to which
ATS has made a deposit of $1,800,000 (the "Escrow Deposit");
WHEREAS, ATS is party to an asset purchase agreement with Diablo
Communications of Southern California, Inc., a California corporation ("DCSC"),
dated as of the date of this Agreement (the "Other Agreement"), relating to the
purchase and sale of the communication towers and the business of managing
communication sites for third parties of DCSC; and
WHEREAS, ATS and Diablo have heretofore executed and delivered a Note
Purchase Agreement, dated as of March 20, 1997 (the "Note Agreement"), pursuant
to which Diablo has issued an unsecured note in the aggregate principal amount
of up to Six Hundred Fifty Thousand Dollars ($650,000) (the "Interim Financing
Note");
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 Diablo 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. The term
"either party" shall, unless the context otherwise requires, refer to Diablo and
ATS.
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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, Diablo hereby agrees to sell, assign, transfer and
deliver to ATS at the Closing, and ATS agrees to purchase at the Closing, the
Diablo Assets and the Diablo Business, free and clear of any Liens of any nature
whatsoever except for Permitted Liens. For purposes of this Agreement, the term
"Diablo Assets" shall mean all of the Assets of Diablo, other than the Excluded
Assets. For purposes of this Agreement, the term "Excluded Assets" shall mean
the following Assets:
(a) all cash and cash equivalents;
(b) all Accounts Receivable;
(c) a certificate of deposit in the face amount of $70,000
pledged as collateral on New England Capital loan;
(d) all books and records (including without limitation, if
retained by Diablo, any financial records necessary or desirable to
enable the condition specified in Section 6.2(g) to be satisfied) which
Diablo is required by Applicable Law to retain, subject to the right of
ATS to have access and to copy for a period of three (3) years from the
Closing Date; the records described herein shall further include
without limitation all corporate seals, certificates of incorporation,
minute books, stock books, Tax Returns or other records having to do
with the corporate organization of Diablo;
(e) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(f) the miscellaneous assets of Diablo and the personal assets
of the officers, directors, shareholders and employees of Diablo, all
as more specifically described in Section 2.1(f) of the Diablo
Disclosure Schedule;
(g) any of the real property specifically described in Section
2.1(g) of the Diablo Disclosure Schedule which is covered by any
agreement executed and delivered pursuant to the provisions of Section
6.2(p); and
(h) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of Diablo (collectively, the
"Diablo Assumed Obligations"): (i) all of the obligations and liabilities of
Diablo under the Diablo Assumable Agreements, and (ii) all obligations and
liabilities of Diablo with respect to the ownership and operation of the Diablo
Assets and the conduct of the Diablo Business, on and after the Closing Date;
provided, however, that notwithstanding the foregoing, ATS shall not assume and
agree to pay, and shall not, except as provided in Section 2.2(c), be obligated
with respect to, the Diablo Nonassumed Obligations.
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(b) Except as otherwise specifically set forth in this Agreement or in
the Diablo Disclosure Schedule to the contrary, ATS shall not assume or become
obligated to perform any debt, liability or obligation of Diablo relating to any
of the following matters (collectively, the "Diablo Nonassumed Obligations"):
(i) the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement of Diablo (including without limitation any obligation to
any Diablo Employee for severance benefits or, except as provided in
Section 2.2(c), vacation time or sick leave), and any of the following
to the extent same arise from Events occurring prior to or existing on
the Closing Date: products liability, Legal Actions or other Claims,
and obligations and liabilities relating to Environmental Law;
(ii) any obligations or liabilities under the Diablo Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of Diablo;
(iv) those required to be disclosed in the Diablo Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the Diablo Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by Diablo under this Agreement or
any Collateral Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of Diablo's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any Excluded
Asset;
(viii) any obligation or liability with respect to capitalized
lease obligations or Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid by Diablo pursuant to the provisions of this Agreement or any
Collateral Document;
(x) any Contract with any Affiliate of Diablo, other than
those set forth in Section 2(b)(x) of the Diablo Disclosure Schedule;
and
(xi) any liability or obligation with respect to the U.S. Navy
Claim in excess of fifty percent (50%) of the obligation of Diablo to
the U.S. Navy, which obligation shall be determined by subtracting from
the total obligation of Diablo to the U.S. Navy that portion thereof
allocated to Watson Communications Systems, Inc.
All Diablo Nonassumed Obligations shall remain and be the obligations and
liabilities solely of Diablo.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the term "Diablo Nonassumed Obligations" shall not
include, and the term "Diablo Assumed Obligations" shall include, (i) the ATS
Assumed Vacation Liability and the ATS Accrued Sick Time Liability and (ii) any
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liability arising out of the transfer or assignment to ATS of, or the use or
enjoyment of the benefits by ATS under, any Contract, Governmental Authorization
or Private Authorization the transfer or assignment of which (according to
Section 2.2(c) of the Diablo Disclosure Schedule or according to the terms of
such Government Authorization or Private Authorization) requires or may require
the consent of any Authority or other third party (collectively, the
"Nonassignable Contracts"), if ATS has, on or prior to the Closing Date,
notified Diablo in writing (an "Acceptance Notice") that ATS consents to the
transfer or assignment of such Nonassignable Contract despite the failure or
inability of ATS and Diablo to obtain the approval or consent of an Authority or
other Person whose approval or consent is required pursuant to the terms of such
Nonassignable Contract, or receives the benefits of such Nonassignable Contract,
in either of which events, if the approval or consent of an Authority or other
Person applicable to transfer of such Nonassignable Contract is required to be
obtained as a condition to ATS' obligations at Closing pursuant to the
provisions of Section 6.1(a), 6.2(d) or 6.2(m), ATS shall be deemed to have
waived such condition with respect to such Nonassignable Contract. With respect
to any Nonassignable Contract for which the applicable consent of any Authority
or other Person is not obtained prior to the Termination Date and for which ATS
does not timely deliver an Acceptance Notice as described in the preceding
sentence, Diablo and ATS shall enter into an agreement reasonably acceptable to
each party which agreement shall to the maximum extent feasible provide ATS with
the rights, benefits and obligations under such Nonassignable Contracts. The
term "ATS Assumed Vacation Liability" shall mean the liability for Diablo
employees with respect to accrued vacation (or payment in lieu thereof), whether
accrued before or after the Closing subject to the following limitations and/or
qualifications: (i) accrued vacation for all Diablo Employees who are retained
by Diablo after the Closing will be the sole responsibility of Diablo; (ii)
accrued vacation for any Diablo Employee who elects to resign prior to close,
for reasons other than the sale to ATS, or whom Diablo chooses to terminate with
or without cause, other than by reason of the sale to ATS, will be the sole
responsibility of Diablo; (iii) accrued vacation for Diablo Employees who
terminate at Closing and who are either not rehired by ATS or who choose not to
be employed by ATS will be the sole responsibility of ATS; (iv) accrued
vacation, to the time of close, for employees who are terminated by Diablo but
rehired by ATS who terminate their employment with ATS but who ATS wishes to
remain as an employee, will be the responsibility of Diablo; any accrued
vacation after Closing for such employees will be the responsibility of ATS; and
(v) accrued vacation for any employee terminated by Diablo, rehired by ATS and
subsequently terminated by ATS, as well as accrued vacation for any employee who
is terminated by Diablo prior to close at the request of ATS, will be the sole
responsibility of ATS. The term "ATS Accrued Sick Time Liability" shall mean the
liability with respect to accrued sick time (as provided in the applicable
Diablo Benefit Arrangement or Plan), accrued on or before the Closing of Diablo
Employees who become employees of ATS after the Closing. Although ATS has not
had an opportunity to complete its evaluation of the Diablo employees, except
for the employees being retained by Diablo, it is the current intention of ATS
to hire initially all of the current Diablo employees at positions and
compensation generally comparable to those currently in effect, subject,
however, to the right of ATS, upon completion of its evaluation and to its
determination of the overall needs of ATS, particularly in light of its general
staffing patterns and of other pending or prospective acquisitions of comparable
businesses in the state of California, not to offer such employment to certain
of the Diablo employees or to alter the terms of such employment, including the
positions and compensation. In no event shall the expression of ATS' current
intention be deemed to be a covenant or agreement of ATS to so employ any
particular current Diablo employee and no rights to employment by any particular
current Diablo employee shall be created hereby.
(d) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(d) of the Diablo Disclosure
Schedule, all items of income and expense (including without limitation with
respect to rent, utility charges, Pro Ratable Taxes and wages and salaries)
arising from the ownership or operation of the Diablo Assets or the conduct of
the Diablo Business shall be prorated as of 12:01 a.m., Pacific time, on the
Closing Date, with Diablo entitled to and responsible for any such items on or
prior to the Closing Date and ATS entitled to and responsible for any such items
relating to any subsequent
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period. For these purposes, Pro Ratable Taxes attributable to a period that
begins before and ends after the Closing Date shall be treated on a "closing of
the books" basis as two partial periods, one ending at the close of the Closing
Date and the other beginning on the day after the Closing Date, except that Pro
Ratable Taxes (such as property Taxes) imposed on a periodic basis shall be
allocated on a daily basis. If either party shall have received any such
revenues or paid any such expenses or charges which, pursuant to the terms
hereof, the other party is entitled to or responsible for, it shall furnish the
other party with a detailed statement of any such items as soon as practicable
after receipt or payment thereof. The parties shall use their best efforts to
agree upon such items and other adjustments prior to the Closing Date and, in
any event, except as set forth in Section 2.2(c) of the Diablo Disclosure
Schedule, within sixty (60) days thereafter. If the parties are unable within
such period to agree upon such items and other adjustments, Diablo and ATS
shall, within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review such items and other
adjustments. The fees and other expenses of retaining such independent public
accounting firm shall be borne equally by Diablo and ATS. Such firm shall report
its conclusions as to such items and other adjustments pursuant to this Section
and such report shall be conclusive on all parties to this Agreement and not
subject to dispute or review. Upon such agreement or determination by such
independent accounting firm, Diablo or ATS, as the case may be, shall promptly
reimburse the other party for any income received or expenses paid by the other
party and not previously reimbursed or any other adjustment required by this
Section. Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, ATS shall be solely responsible for the payment of, and shall
defend, indemnify and hold harmless Diablo, its officers, directors and
shareholders from, any and all supplemental or additional real property or
personal property taxes assessed on or in connection with the Diablo Assets or
any part thereof, which arise from the transactions contemplated by this
Agreement, with respect to California or other sales and/or use taxes, and
documentary or governmental transfer or stamp taxes arising from the purchase
and sale of the Diablo Assets and the Diablo Business contemplated hereby.
Nothing contained in this Section 2.2(d) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Cooper, White & Cooper, 1333 North California
Boulevard, Suite 450, Walnut Creek, CA 94596, at 10:00 a.m., local time, on or
before September 30, 1997, (the "Closing Date"). At the Closing, each of the
parties shall deliver such bills of sale, assignments, assumptions of
liabilities, opinions and other instruments and documents as are described in
this Agreement or as may be otherwise reasonably requested by the parties and
their respective counsel. The purchase price for the Diablo Assets and the
Diablo Business (the "Purchase Price") shall be an amount equal to $40,500,000,
plus an amount equal to the sum of the Interim Adjustment and Prepaid Expenses
and deposits and minus an amount equal to the sum of (i) the Diablo Nonassumed
Obligations, if any, which ATS agrees to assume at the request of Diablo and
(ii) Prepaid Revenues. The term "Interim Adjustment" shall mean an amount equal
to the aggregate amount actually incurred by Diablo from and after November 1,
1996 and prior to the Closing Date with respect to the completion of
construction projects and site development projections (a) described in Section
2.3 of the Diablo Disclosure Schedule or (b) acquired after the date of this
Agreement in accordance with the provisions of this Agreement, including without
limitation Section 5.6, and capital improvements to, but not personnel costs,
maintenance or other expenses items of, existing communication sites, in all
cases, which ATS shall have approved in writing prior to their incurrence or
commitment by Diablo. Section 2.3(a) of the Diablo Disclosure Schedule sets
forth a description of the items constituting a part of the Interim Adjustment
for the period ended as of a date not more than five (5) days prior to the date
of this Agreement. The Purchase Price shall be payable by (a) delivery and
cancellation of the Interim Financing Note and the Additional Compensation
Certificates (as defined in the Note Agreement) (valued for such purposes at an
amount equal to the unpaid principal amount of the Interim Financing Notes, plus
accrued and unpaid interest to the Closing Date), (b) ATS instructing the Escrow
Agent to deliver the Escrow Deposit (together with interest and other increments
thereto) to
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Diablo, (c) crediting against the Purchase Price amounts paid by ATS pursuant to
the amendment included as part of the Letter of Intent, and, the balance, (d)
wire transfer of immediately available funds (i) to the Indemnity Escrow Agent
(or as it may designate) pursuant to the provisions of the Indemnity Escrow
Agreement in the amount of $900,000 (together with interest and earnings
thereon, the "Indemnity Escrow Fund") and (ii) to Diablo or, to the extent
provided in Section 2.5, the "qualified intermediary" designated pursuant to the
provisions of Section 2.5, for the balance of the Purchase Price to such account
(or accounts) as Diablo shall designate in written instructions to ATS delivered
not later than two (2) business days prior to the Closing.
Although the parties believe that the value of the tangible personal
property (other than goodwill, Governmental Authorizations, Private
Authorizations and Contracts) constituting a part of the Diablo Assets
approximate their depreciated book value, ATS shall have the right, at its sole
discretion, to engage BIA Consulting, Inc. to promptly after the execution of
this Agreement conduct and use its reasonable best efforts to complete, within
forty-five (45) days, an appraisal of the Diablo Assets which shall be the basis
for an allocation schedule (the "Tax Allocation Schedule") pursuant to which the
Purchase Price shall be allocated among the Diablo Assets. Such appraisal shall
be conducted in a manner which does not interfere with or inconvenience in any
material matter any of the landlords or tenants at any of Diablo's sites and
shall not, in any event, affect the Purchase Price. The cost of such appraisal,
if undertaken, shall be borne by ATS. Each of Diablo and ATS shall report the
purchase and sale of the Diablo Assets and the Diablo Business and the other
Transactions in accordance with the Tax Allocation Schedule for purposes of all
federal, state and local Tax Returns 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 report, inconsistent with
such reporting position. Each of Diablo and ATS shall promptly give the other
notice of any disallowance of or challenge to such reporting by any Taxing
Authority. Notwithstanding the provisions of this Section, the parties to this
Agreement will rely solely on their own advisors in determining the tax
consequences of the transactions contemplated by this Agreement and each party
is not relying, and will not rely, on any representations or assurances of any
other party regarding such consequences other than the representations,
warranties, covenants and agreements set forth in writing in this Agreement or
furnished pursuant to the provisions hereof.
2.4 Accounts Receivable. At the closing, Diablo shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the
Diablo Business. Diablo shall deliver to ATS on or as soon as practicable after
the Closing Date a complete and detailed statement showing the name, amount and
age of each Accounts Receivable of the Diablo Business. Subject to and limited
by the following, revenues relating to the Accounts Receivable relating to the
Diablo Business will be for the account of Diablo. ATS shall use its reasonable
business efforts to collect the Accounts Receivable with respect to the Diablo
Business for a period of one hundred eighty (180) days after the Closing Date
(the "Collection Period"). Any payment received by ATS during the Collection
Period from any customer with an account which is an Accounts Receivable with
respect to the Diablo Business shall first be applied in reduction of the
Accounts Receivable, unless the customer contests in writing the validity of
such application. During the Collection Period, ATS shall furnish Diablo with a
list of, and pay over to Diablo, the amounts collected with respect to the
Accounts Receivable with respect to the Diablo Business on a monthly basis and
forward to Diablo, promptly upon receipt or delivery, as the case may be, copies
of all correspondence relating to Accounts Receivable. ATS shall provide Diablo
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, the parties shall meet to mutually and in good faith analyze any
uncollected Accounts Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if ATS desires to retain
such Accounts Receivable. As to each such Accounts Receivable, the parties shall
negotiate a good faith value of such Accounts Receivable, which ATS shall pay to
Diablo if ATS, in its sole discretion, chooses to retain such Accounts
Receivable. Diablo shall retain the right to collect any of its Accounts
Receivable as to which the parties are unable to
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reach agreement as to a good faith value, and ATS agrees to turn over to Diablo
any payments received against any such Accounts Receivable. ATS shall not be
obligated to use any extraordinary efforts 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 ATS shall not make any such referral or compromise, nor settle or adjust the
amount of any such Accounts Receivable, except with the approval of Diablo. ATS
shall not incur any liability to Diablo for any uncollected account unless ATS
shall have engaged in willful misconduct or gross negligence in the performance
of its obligations set forth in this Section. During and after the Collection
Period, without specific agreement with ATS to the contrary, neither Diablo nor
its agents shall make any direct solicitation of the Accounts Receivable for
collection purposes, except for Accounts Receivable retained by Diablo after the
Collection Period. The provisions of this Section shall not apply to those
certain Accounts Receivable set forth in Section 2.4 of the Diablo Disclosure
Schedule or to any other Accounts Receivable which Diablo, in its sole business
judgment, determines will require extraordinary collection efforts or referrals
to a collection agency or attorney for collection (collectively, the "Retained
Accounts Receivable"), provided the Retained Accounts Receivable are set forth
in a written notice delivered to ATS by Diablo on or prior to the Closing Date.
Diablo shall retain the sole and exclusive right to collect, whether during or
after the Collection Period, all Retained Accounts Receivable, as Diablo in its
sole discretion may determine.
2.5 Like-Kind Exchanges. Diablo shall have the right, but not the
obligation, to effect the transfer and conveyance of the Diablo Assets, in whole
or in part, as part of one or more exchanges under Section 1031 of the Code,
including the delay in Closing of escrow for those Assets subject to the
exchange. If Diablo so elects, it shall provide notice to ATS of its election
(the "Like-Kind Notice"), setting forth in reasonable detail which portion or
portions of the Diablo Assets are to be so treated. In such event, Diablo (i)
may at any time at or prior to Closing assign its rights, in whole or in part,
under this Agreement with respect to such Diablo Assets to a "qualified
intermediary" as defined in Treas. Reg. ss.1.1031(k)-1(g)(4), subject to all of
the rights and obligations hereunder of ATS, and (ii) shall promptly provide
written notice of such assignment to ATS. No such assignment shall, however,
relieve Diablo of its obligations under this Agreement. If Diablo shall have
given a Like-Kind Notice, ATS shall (i) promptly provide Diablo with written
acknowledgment of such notice, (ii) at the Closing, convey the Purchase Price
for the Diablo Assets (or such portion of them as shall have been designated in
writing by Diablo) to the "qualified intermediary" rather than to Diablo (which
conveyance shall, to such extent, discharge the obligation of ATS to deliver
such Purchase Price (or portion thereof), and (iii) at the request of Diablo
extend the closing of escrow for all or a portion of those assets subject to the
Like-Kind Notice for a period not to exceed one year. Should the closing for any
Like-Kind Notice properties be so extended, Diablo and ATS shall enter into an
agreement reasonably acceptable to each party which agreement shall, to the
maximum extent feasible, provide ATS with the rights, benefits, and obligations
for any Like-Kind Notice property for which the closing is so extended. Without
limiting the generality of the foregoing, Diablo and ATS shall promptly after
receipt by ATS of the Like-Kind Notice, negotiate in good faith in order to
determine the portion of the Purchase Price attributable to the Diablo Assets
which are to be the subject of like-kind exchange and, in the event they are
unable to so agree on such amount, it shall be determined by arbitration in
accordance with the provisions of Section 9.15 and not materially inconsistent
with the appraisal undertaken pursuant to Section 2.3. If such determination has
not been made on or prior to the Closing, ATS shall transfer to the "qualified
intermediary" the amount proposed by Diablo in the Like-Kind Notice, subject to
an agreement by the "qualified intermediary" to remit to Diablo the excess, if
any, of the amount so transferred over the amount as finally determined by the
arbitrator.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DIABLO
Diablo hereby represents, warrants and covenants to, and agrees with,
ATS as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Diablo 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) Diablo has all requisite corporate power and corporate authority
and has in full force and effect all Governmental Authorizations (which, for
purposes of this Section 3.1(b), relate only to the sale of the Diablo Assets
and Diablo Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) and Private
Authorizations, except for those set forth in Section 3.1(b) of the Diablo
Disclosure Schedule or those the failure of which to obtain do not and will not
have, individually or in the aggregate, any material adverse effect on ATS,
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 Diablo. This Agreement has been duly executed and delivered by Diablo 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 Diablo will constitute, legal, valid and binding obligations of
Diablo, 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 Diablo Disclosure
Schedule, and except for matters which would have no material adverse effect on
ATS, neither the execution and delivery by Diablo of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by Diablo of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by Diablo:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Diablo or any
Applicable Law (which, for purposes of this Section 3.1(c)(i), relates
only to the sale of the Diablo Assets and the Diablo Business generally
and not to local Applicable Law) on the part of Diablo, 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 Diablo, other than those constituting Diablo
Nonassumed Obligations; or
(ii) will require Diablo to make or obtain any Governmental
Authorization, Governmental Filing (which, for purposes of this Section
3.1(c)(ii)), relate only to the sale of the Diablo Assets and Diablo
Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) or Private
Authorization including without limitation under the FCA, except for
filings under the Hart-Scott-Rodino Act.
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(d) Diablo does not have any Subsidiaries except as set forth in
Section 3.1(d) of the Diablo Disclosure Schedule.
3.2 Financial and Other Information. Diablo has heretofore furnished to
ATS copies of the financial statements of the Diablo Business listed in Section
3.2 of the Diablo Disclosure Schedule (the "Diablo Financial Statements"). The
Diablo Financial Statements, including in each case the notes thereto, have been
prepared in accordance with CAAP 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 Diablo 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 CAAP to be stated therein or
necessary in order to make the statements contained therein not misleading, and
fairly present the financial position and the results of operations and cash
flow of the Diablo Business, 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.
3.3 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the Diablo Financial Statements, except to the
extent specifically described in Section 3.3 of the Diablo Disclosure Schedule,
there has been no material adverse change in Diablo. There is no Event known to
Diablo which materially adversely affects, or (so far as Diablo can now
reasonably foresee) is likely to materially adversely affect, Diablo, except to
the extent specifically described in Section 3.3 of the Diablo Disclosure
Schedule.
3.4 Materiality. Other than those set forth in the Diablo Disclosure
Schedule, 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. Other than those set forth in the Diablo
Disclosure Schedule, in the aggregate all such exceptions and qualifications to
the representations and warranties are not and could not reasonably be expected
to be materially adverse to Diablo.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all real property owned or leased by Diablo
that is part of the Diablo Assets. Without limiting the generality of the
foregoing, Section 3.5 of the Diablo Disclosure Schedule will include a
description of the approximately 74 acre parcel on Black Mountain that contains
the communication site (the "Black Mountain Communication Site"); the Black
Mountain Communications Site will be encumbered with a permanent conservation
easement in favor of the Nature Conservancy that will prohibit development of
that portion of the site that contains a certain endangered flower, so long as
such easement does not interfere with access to the parcel or the use of the
parcel for a communication site. Except as set forth in Section 3.5(a) of the
Diablo Disclosure Schedule, Diablo has good indefeasible, marketable and
insurable title to all real property (other than leasehold and managed real
property) and good indefeasible and merchantable title to all other assets
(other than real property), tangible and intangible, constituting a part of the
Diablo Assets, in each case free and clear of all Liens, except (i) Permitted
Liens, (ii) Liens set forth on Section 3.5(a) of the Diablo 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 Diablo Disclosure
Schedule), no financing statements under the Uniform Commercial Code and no
other filing which names Diablo as debtor or which covers or purports to cover
any of the Diablo Assets is on file in any state or other jurisdiction, and
Diablo 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
Diablo Disclosure Schedule, to Diablo's knowledge, all improvements on the real
property owned or leased by Diablo are in compliance
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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 Diablo Disclosure
Statement, all such improvements, to Diablo's knowledge, comply in all material
aspects with all Applicable Laws, Governmental Authorizations and Private
Authorizations. Except as disclosed in Section 3.5(a) of the Diablo Disclosure
Statement, to Diablo's knowledge, all of the transmitting towers, ground
radials, guy anchors, transmitting buildings and related improvements located on
the real property owned or leased by Diablo are located entirely on such real
property. Diablo has no knowledge of any pending, threatened or contemplated
action to take by eminent domain or otherwise to condemn any part of any real
property owned or leased by Diablo. Except as set forth in Section 3.5(a) of the
Diablo Disclosure Schedule, such real property (other than land), fixtures,
fixed assets and other material items of personal property, including equipment,
have, in Diablo's reasonable business judgment, been maintained in a manner
consistent with generally accepted standards of sound engineering practice and
currently permit the Diablo 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 Diablo Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the Diablo Business is leased. Except as otherwise set forth in Schedule
3.5(b) of the Diablo Disclosure Schedule, each Lease or other occupancy or other
agreement under which Diablo holds real or personal property constituting a part
of the Diablo Assets has been duly authorized, executed and delivered by Diablo
or its predecessors in interest, as the case may be, and, to Diablo's knowledge,
each of the other parties thereto, and is a legal, valid and binding obligation
of Diablo, and, to Diablo's 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. Diablo 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 Diablo nor, to
Diablo's 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 Diablo Assets is subject to contracts of sale, and none is held by
Diablo 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 Diablo Disclosure Schedule.
(c) Section 3.5(c) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all material items of Diablo Personal
Property. Diablo owns and has good and merchantable title to all of the Diablo
Personal Property relating to the Diablo Business (the "Diablo 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 Diablo Disclosure
Schedule (which Liens shall be released prior to Closing). Except as set forth
in Section 3.5(c) of the Diablo Disclosure Schedule, all of the Diablo Personal
Property is in a state of good repair and maintenance and is in good 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 Diablo Business to be operated in accordance with the
terms and conditions of all Applicable Laws. Except for financing statements
listed in Section 3.5(c) of the Diablo Disclosure Schedule, no financing
statements under the Uniform Commercial Code and no other filing which names
Diablo as debtor or which covers or purports to cover any of the Diablo Assets
is on file in any state or other jurisdiction, and Diablo 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.
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3.6 Compliance with Private Authorizations. Section 3.6 of the Diablo
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
Diablo Assets or the Diablo Business. To Diablo's knowledge, and as set forth in
Section 3.6 of the Diablo Disclosure Schedule, Diablo has obtained all Private
Authorizations which are necessary for the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business which, if not obtained and
maintained, could, individually or in the aggregate, materially adversely affect
Diablo. All of such Private Authorizations are valid and in good standing and
are in full force and effect. Diablo 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 Diablo. No such
Private Authorization is the subject of any pending or, to Diablo's knowledge,
threatened attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) To Diablo's knowledge, Section 3.7(a) of the Diablo Disclosure
Schedule contains a true, complete and accurate description of each Governmental
Authorization required under Applicable Laws (i) to own and operate the Diablo
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 Diablo to execute and deliver this Agreement and to perform
its obligations hereunder. To Diablo's knowledge, except as otherwise set forth
in Section 3.7(a) of the Diablo Disclosure Schedule, Diablo has obtained all
Governmental Authorizations which are necessary for the ownership or operation
of the Diablo Assets or the conduct of the Diablo Business as now conducted and
which, if not obtained and maintained, would, individually or in the aggregate,
have any material adverse effect on Diablo. None of the Governmental
Authorizations listed in Section 3.7(a) of the Diablo Disclosure Schedule is
subject to any restriction or condition which would limit in any material
respect the ownership or operations of the Diablo Assets or the conduct of the
Diablo 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 Diablo 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 Diablo or its
officers, directors, employees or agents, and the ownership or operation of the
Diablo Assets or the conduct of the Diablo Business are in accordance in all
material respects with the Governmental Authorizations. To Diablo's knowledge,
all material reports, forms and statements required to be filed by Diablo with
all Authorities with respect to the Diablo 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 Diablo's knowledge,
threatened challenge or proceeding to revoke or terminate any such Governmental
Authorization. Diablo has no reason to believe that any such Governmental
Authorization would not be renewed in the name of Diablo by the granting
Authority in the ordinary course.
(b) Except as otherwise specifically described in Section 3.7(b) of the
Diablo Disclosure Schedule, neither Diablo nor any director or officer thereof
(in connection with ownership or operation of the Diablo Assets or the conduct
of the Diablo Business) is in or is charged by any Authority with or, to
Diablo's knowledge, at any time since January 1, 1993 has been in or has been
charged by any Authority with, or, to Diablo's 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 Diablo Assets or the conduct of the Diablo Business. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions pending or, to Diablo's knowledge, threatened before
or by any Authority (x) relating to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business which,
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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
operations of the Diablo Business; (y) involving charges of illegal
discrimination by Diablo 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 Diablo Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
Diablo Disclosure Schedule, no Event exists or has occurred, which, to Diablo's
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 Diablo or (ii) any material
requirement of any insurance carrier, applicable to the ownership or operations
of the Diablo Assets or the conduct of the Diablo 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 Diablo Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the Diablo Disclosure Schedule, all
such information and matters set forth in Sections 3.7(a), 3.7(b) or 3.7(c) of
the Diablo Disclosure Schedule, if adversely determined against Diablo, will
not, individually or in the aggregate, have a materially adversely effect on
Diablo.
3.8 Intangible Assets. Section 3.8 of the Diablo 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 Diablo Assets or the conduct of the Diablo
Business held or used by Diablo, including without limitation the nature of
Diablo'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 Diablo Disclosure Schedule, to Diablo's knowledge, no Intangible
Assets (except Governmental Authorizations, Private Authorizations, and the
Intangible Assets so set forth) are required for the ownership or operation of
the Diablo Assets or the conduct of the Diablo Business as currently owned,
operated and conducted or proposed to be owned, operated and conducted on or
prior to the Closing Date. To Diablo's knowledge, Diablo does not wrongfully
infringe upon or unlawfully use any Intangible Assets owned or claimed by
another, and Diablo has not received any notice of any claim or infringement
relating to any such Intangible Asset.
3.9 Related Transactions. Diablo is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business between Diablo and any of its
officers, directors, shareholders, employees or, to the knowledge of Diablo, 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 Diablo Disclosure Schedule, (ii) Contractual
Obligations between Diablo and any of its directors, shareholders, officers,
employees or Affiliates of Diablo or any of the foregoing, which constitute
Excluded Assets or Diablo Nonassumed Obligations, or (iii) as specifically set
forth in Section 3.9 of the Diablo Disclosure Schedule.
3.10 Insurance. Diablo maintains, with respect to the Diablo Assets and
the Diablo 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 Diablo Disclosure Schedule.
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3.11 Tax Matters.
(a) Except as set forth in Section 3.11(a) of the Diablo Disclosure
Schedule, Diablo has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, except with respect to failures to file
which in the aggregate would not have a material adverse effect on Diablo and,
to Diablo's knowledge, 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 Diablo Financial
Statements. The Tax Returns of Diablo have, to Diablo's knowledge, been prepared
in all material respects in accordance with all Applicable Laws and generally
accepted principles applicable to taxation consistently applied. All Taxes which
Diablo is required by law to withhold and collect have, to Diablo's knowledge,
been duly withheld and collected, and have been paid over, in a timely manner,
to the proper Authorities to the extent due and payable. Diablo 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 Diablo for the fiscal years prior to and including the
most recent fiscal year. Adequate provision has, to Diablo's knowledge, been
made on the most recent balance sheet forming part of Diablo 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 Diablo's knowledge, no past
transactions or matters which could result in additional Taxes of a material
nature to Diablo for which an adequate reserve has not been provided on such
balance sheet. Diablo is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. Diablo 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
Diablo Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of Diablo
for each of the most recent five tax years (true and complete copies of which
have, to the extent requested by ATS, been furnished by Diablo to ATS) is, to
Diablo's knowledge, 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 Diablo have not been examined by the IRS or
applicable state Authority, and Diablo has not been notified of any proposed
examination, except as shown in Section 3.11(b) of the Diablo Disclosure
Schedule.
(c) Diablo is not a party to any tax sharing agreement or arrangement,
other than those contained in certain of its leases.
3.12 Employee Retirement Income Security Act of 1974.
(a) Diablo (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 Diablo
Disclosure Schedule. As to all Plans and Benefit Arrangements listed in Section
3.12(a) of the Diablo 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 Diablo has not received any notice from any
Authority questioning or challenging such compliance;
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(ii) all such Plans maintained or previously maintained by
Diablo 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;
(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 Diablo has not otherwise engaged in any
prohibited transaction;
(v) there have been no acts or omissions by Diablo 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 Diablo 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 Diablo's 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 Diablo 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 Diablo 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 Diablo 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 Diablo 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 Diablo to be incurred by Diablo 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;
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(xiii) except as set forth in Section 3.12(xiii) of the Diablo
Disclosure Schedule, Diablo 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
Diablo 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, Diablo does not maintain any Plan that provides
benefits described in Section 3(1) of ERISA, except as the provisions
of COBRA may apply, to any former employees or retirees of Diablo; and
(xv) Diablo 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 Diablo 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 Diablo 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 Diablo nor, to Diablo's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the Diablo Assets or the Diablo 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. Diablo 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 Diablo Disclosure
Schedule contains a true, accurate and complete list of all Diablo employees
involved in the ownership or operation of the Diablo Assets or the conduct of
the Diablo Business (the "Diablo 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. Diablo has no obligation or liability, contingent or
other, under any Employment Arrangement with any Diablo Employee, other than
those listed or described in Section 3.15 of the Diablo Disclosure Schedule.
Except as described in Section 3.15 of the Diablo Disclosure Schedule, (i) none
of the Diablo Employees is now, or, to Diablo's knowledge, since January 1,
1993, has been, represented by any labor union or other employee collective
bargaining organization, and Diablo is not, and has never been, a party to any
labor or other collective bargaining agreement with respect to any of the Diablo
Employees, (ii) 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, (iii)
neither Diablo nor any of such employees is now, or, to Diablo's knowledge, has
since January 1, 1993 been, subject to or involved in or, to Diablo's knowledge,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities, in each case with respect to the Diablo
Employees and (iv) none of the Diablo Employees has notified Diablo in writing
that he or she does not intend to continue employment with Diablo until the
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Closing or with ATS following the Closing. Diablo 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 Diablo
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Diablo Assets or the conduct of the business of the Diablo
Business or to which Diablo is a party or to which it is bound or which any of
the Diablo Assets is subject. True, accurate and complete copies of each of such
Material Agreements have been provided by Diablo to ATS to the extent requested
by ATS (or true, accurate and complete descriptions thereof have been set forth
in Section 3.16 of the Diablo Disclosure Schedule, with respect to Material
Agreements that are oral). All of such Material Agreements are valid, binding
and legally enforceable obligations of Diablo and, to Diablo's 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. Diablo 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 Diablo,
Claim threatened in writing that Diablo 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 Diablo under any of such Material Agreements in any
material respect.
3.17 Ordinary Course of Business. 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 Diablo Disclosure Schedule, or (ii) as may be required or expressly
contemplated by the terms of this Agreement or the Letter of Intent, Diablo has
operated the Diablo Business in all material respects in the normal, usual and
customary manner in the ordinary and regular course of business, consistent with
prior practice, and, except in each case in the ordinary course of business,
consistent with prior practice,
(a) has not incurred any obligation or liability (fixed,
contingent or other) individually having a value in excess of $20,000;
(b) 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;
(c) has not entered into any individual commitment having a
value in excess of $20,000;
(d) has not canceled any debts or claims;
(e) has not created or permitted to be created any Lien on any
of its property;
(f) 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;
(g) has not increased the compensation payable or to become
payable to any of the Diablo Employees other than in the ordinary
course of business or otherwise materially altered, modified or changed
the terms of their employment;
(h) 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;
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(i) has not waived any rights of material value without fair
and adequate consideration;
(j) has not experienced any work stoppage;
(k) 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 Diablo, except for Diablo Nonassumed Obligations;
and
(l) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is material
to the Diablo Assets or the Diablo Business.
3.18 Material and Adverse Restrictions. To Diablo's knowledge, Diablo
is not a party to or subject to, nor are any of the Diablo 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 Diablo can now reasonably foresee, at any time in the future,
individually or in the aggregate, is likely to have, any material adverse effect
on Diablo, except as set forth in Section 3.18 of the Diablo 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 Diablo.
3.20 Solvency. As of the execution and delivery of this Agreement,
Diablo 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
Diablo Disclosure Schedule, with respect to the Diablo Assets, Diablo:
(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 Diablo's 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) is, to the knowledge of Diablo, in compliance in all
material respects with all Environmental Laws, has, to Diablo's
knowledge, obtained all Environmental Permits required under
Environmental Laws, and is not the subject of or, to Diablo's
knowledge, threatened with any Legal Action involving a demand for
damages or other potential liability including any Lien with respect to
material violations or material breaches of any Environmental Law; and
(e) has no knowledge of any past or present Event related to
the Diablo Business or the Diablo Assets which Event, individually or
in the aggregate, will interfere with or prevent continued material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will
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form the basis of any material Claim for the release or threatened
release into the environment, of any Hazardous Material.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, Diablo as
follows:
4.1 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 not have any material adverse effect
on ATS, 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.
4.2 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.
4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
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4.4 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 of ATS to consummate the transactions contemplated
hereunder.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Diablo 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 Diablo's properties, books, contracts, commitments and records (including
without limitation Tax Returns) relating to the Diablo Assets and the Diablo
Business and, during such period, shall furnish promptly upon request (i) a list
(and copies to the extent requested by ATS) of each report, schedule and other
document filed or received by Diablo pursuant to the requirements of any
Applicable Law or filed by it with any Authority in connection with the
Transactions or which may have a material adverse effect on the Diablo Assets or
the Diablo Business or the businesses, operations, properties, prospects,
personnel, condition (financial or other), or results of operations thereof,
(ii) to the extent not provided for pursuant to the preceding clause, all
financial records, ledgers, work papers and other sources of financial
information possessed and controlled by Diablo or its accountants reasonably
deemed by ATS or its Representatives necessary or useful for the purpose of
performing an audit of the Diablo Assets and the Diablo Business and certifying
financial statements and financial information, and (iii) such other information
in the possession or control of Diablo or its accountants concerning any of the
foregoing as ATS shall reasonably request; provided, however, that Diablo shall
not be required to permit any such access to the extent same would unreasonably
interfere with Diablo's normal business operations. All non-public information
relating to the Diablo Assets or the Diablo 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 Diablo, 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 Diablo. 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, Diablo shall not, without the prior
written consent of ATS, disclose any information remaining in its possession
with respect to the Diablo Assets or the Diablo 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 5.1(a), ATS may,
subject to prior consultation with Diablo, 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 (which independent counsel shall be subject to
the provisions of Section 5.1(a)), and ATS shall so certify to such effect.
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(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, either 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.
5.2 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 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(d), without
payment of any material amount of compensation, (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 Diablo Assets and conduct the Diablo 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 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.
(c) Diablo shall, at ATS' expense, cooperate and use its reasonable
business efforts to (i) prepare its financial statements for the period ended
December 31, 1996 and thereafter in accordance with GAAP and (ii) 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 Diablo Business described in Section 6.2(g).
Without limiting the generality of the foregoing, Diablo agrees that after the
Closing Date it will (x) if required by the Securities Act or the Exchange Act,
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 the
Securities Act or the Exchange Act and (y) if reasonably requested by ATS'
independent accountants, execute and deliver, and cause its officers to execute
and deliver, such "representation" letters as are customarily delivered in
connection with audits under comparable circumstances.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, Diablo 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
Diablo and ATS may, without the other's prior consent, issue such press
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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 Diablo has a business or contractual relationship
in connection with ATS' due diligence investigation of Diablo; provided,
however, that prior to (i) ATS sending any written communication to any such
Person, ATS shall secure the written approval of the form and content of such
communication, such approval not to be unreasonably withheld, delayed or
conditioned, and (ii) any verbal or in person communication with any such
Person, ATS shall provide Diablo with the opportunity to participate with ATS in
any such conversation or meeting.
5.4 Notification of Certain Matters. Diablo and ATS shall, prior to the
Closing, 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 material respect such that one or more of the
conditions of Closing might not be satisfied, 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 Diablo Disclosure Schedule in
any respect such that one or more of the conditions of Closing might not be
satisfied, and 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 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.
5.5 No Solicitation. So long as this Agreement remains in effect,
Diablo 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 (i) any merger or
consolidation, regardless of whether Diablo is the surviving Entity unless the
surviving Entity remains obligated under this Agreement to the same extent as it
was, or (ii) any sale or other disposition of all or any substantial part of the
Diablo Assets or the Diablo Business. The provisions of this Section shall apply
to each of Diablo's Subsidiaries. If Diablo or any of its Representatives
receives any inquiry with respect to an Alternative Transaction while this
Agreement is in effect, Diablo shall inform the inquiring party that it is not
entitled to enter into discussions or negotiations relating to an Alternative
Transaction.
5.6 Conduct of Business by Diablo 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, Diablo shall, to the extent relating to the Diablo
Business or the Diablo 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 Diablo Assets as is consistent with past practice;
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(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) to the extent permitted under Applicable Law, 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 Diablo
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 Diablo Assets
or the Diablo Business, and (ii) maintain in full force and effect all
such Governmental and Private Authorizations, Leases and Material
Agreements relating to the Diablo Business;
(f) except as set forth in Section 5.6(f) of the Diablo
Disclosure Schedule, not (i) dispose of any of the Diablo Assets owned
by Diablo or used in the operation of the Diablo Business (other than
for the disposition in the ordinary course of business of immaterial
assets that are of no further use to the Diablo Business) or (ii)
modify or change in any material respect, or enter into, any Material
Agreement relating to the Diablo Business; and
(g) not voluntarily take 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 Diablo Disclosure Schedule.
With respect to any transaction or act proposed to be entered into or performed
by Diablo which, pursuant to this Section 5.6, requires the prior approval of
ATS, ATS shall be deemed to have approved the same unless written notice of
disapproval is received by Diablo within five (5) business days after receipt by
ATS of a written request for approval made by Diablo.
5.7 Preliminary Title Reports. As promptly as practicable after the
execution of this Agreement, Diablo shall, at its sole cost and expense, deliver
or cause to be delivered to ATS a standard preliminary title report dated on or
after the date of this Agreement issued by such title company as Diablo and ATS
shall mutually reasonably agree (the "Title Company") with respect to those
Diablo Assets comprised of the parcels of real property described in Section 5.7
of the Diablo Disclosure Schedule (the "Insured Real Property"). Such reports,
as same may be amended or supplemented from time to time to reflect additional
title matters, are referred to herein as the "Title Reports". The rights and
obligations of the parties shall thereafter be as follows:
(a) On or before fifteen (15) business days after ATS' receipt
of the last of the Title Reports, ATS shall give to Diablo written
notice ("ATS' Title Notice") of ATS' disapproval of any matters shown
in the Title Reports. ATS' failure to give ATS' Title Notice within
such fifteen (15) business days shall be deemed to constitute ATS'
approval of all matters disclosed by the Title Reports;
(b) If ATS disapproves any title matters pursuant to ATS'
Title Notice, Diablo shall deliver written notice ("Diablo's Title
Notice") to ATS within ten (10) business days after Diablo's
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receipt of ATS' Title Notice, stating whether Diablo agrees to
eliminate such disapproved title matters from title to the Insured Real
Property prior to the Closing or, if such elimination is not feasible
prior to the Closing, to effect such elimination thereafter and to
indemnify and hold harmless ATS with respect to such remedy. If Diablo
fails to timely deliver Diablo's Title Notice, or if Diablo delivers
Diablo's Title Notice but states therein that Diablo is unwilling or
unable to eliminate such disapproved title matters, ATS and Diablo
shall negotiate in good faith in an attempt to resolve such matters
(the "Disapproved Title Sites" and, collectively with the "Disapproved
Environmental Sites", the "Disapproved Sites") from the Diablo Assets,
a reduction of the Purchase Price or an indemnification (and escrow)
from Diablo (not subject to the limitations as to time or amount
specified in Article 8). If within twenty (20) business days of the
commencement of such negotiations (or such longer period as ATS and
Diablo shall agree), the parties have been unable to resolve such
matters, either party can terminate this Agreement pursuant to the
provisions of Section 7.1(f) within ten (10) business days of the end
of such negotiation period; and
(c) If, at any time following ATS' approval of the Title
Reports, Diablo or the Title Company notifies ATS of any additional
matter affecting title to the Insured Real Property, the parties shall
have substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above.
5.8 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 Diablo 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 5.8 of the Diablo Disclosure
Schedule. Site assessments shall be conducted by such consultants and
professionals as ATS and Diablo shall mutually agree (collectively, the
"Environmental Company"), shall be arranged at times mutually convenient to the
parties, and shall be conducted in a manner which does not interfere with or
inconvenience in any material manner any of the landlords or tenants at any of
Diablo's sites. Each of Diablo 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:
(a) On or before fifteen (15) business days after ATS' receipt
of the last of the Environmental Reports, ATS shall give to Diablo
written notice ("ATS' Environmental Notice") of ATS' disapproval of any
matters shown in the Environmental Reports. ATS' failure to give ATS'
Environmental Notice within such fifteen (15) business days shall be
deemed to constitute ATS' approval of all matters disclosed by the
Environmental Reports;
(b) If ATS disapproves any environmental matters pursuant to
ATS' Environmental Notice, Diablo shall deliver written notice
("Diablo's Environmental Notice") to ATS within ten (10) business days
after Diablo's receipt of ATS' Environmental Notice, stating whether
Diablo agrees to eliminate and remedy such matter prior to the Closing
or, if such elimination or remedy is not feasible prior to the Closing,
to effect such elimination and remedy thereafter and to indemnify and
hold harmless ATS with respect to such remedy. If Diablo fails to
timely deliver Diablo's Environmental Notice, or if Diablo delivers
Diablo's Environmental Notice but states therein that Diablo is
unwilling or unable to eliminate and remedy such environmental matters,
ATS and Diablo shall negotiate in good faith in an attempt to resolve
such matters (the "Disapproved Environmental Sites") from the Diablo
Assets, a reduction of the Purchase Price or an indemnification (and
escrow) from Diablo (not subject to the limitations as to time or
amount specified in Article 8). If within twenty (20) business days of
the commencement of such negotiations (or such longer period as ATS and
Diablo shall agree), the parties have been unable to resolve such
matters, either party can
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terminate this Agreement pursuant to the provisions of Section 7.1(f)
within ten (10) business days of the end of such negotiation period;
and
(c) If, at any time following ATS' approval of the
Environmental Reports, ATS or the Environmental Company notifies Diablo
of any additional environmental matter, the parties shall have
substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above.
5.9 Post-Closing Covenants and Agreements of the Parties. From and
after the consummation of the Transactions, ATS and Diablo covenant and agree as
follows:
(a) Diablo shall have the right, if it shall have so notified
ATS not later than five (5) business days prior to the Closing, to
retain (or to cause any of its Affiliates to retain) the services of
each of the individuals named in Section 5.9(a) of the Diablo
Disclosure Schedule;
(b) ATS shall afford to Diablo, and Diablo shall afford to
ATS, access to their respective employees who were (or in the case of
Diablo who remain) employees of Diablo on the Closing Date to the end
that such employees are available to provide assistance, consultation
and historical background to the requesting party; provided, however,
that neither ATS nor Diablo shall have any such obligation after the
expiration of five (5) years from the Closing Date or to the extent
that it would exceed an average of four (4) hours per week over such
period; and
(c) ATS shall afford to Diablo, and Diablo shall afford to
ATS, access to all books and records delivered to ATS or retained by
Diablo, as the case may be, relating to periods prior to the Closing
Date, in order to enable Diablo or ATS, as the case may be, to prepare
all necessary Tax Returns, deal with Legal Actions or other Claims
(including without limitation those of the Internal Revenue Service) or
personnel matters or for any other reasonable purposes, subject,
however, in all events, to the provisions of Section 5.1 with respect
to confidentiality. Anything in this Section to the contrary
notwithstanding, Diablo and ATS shall cooperate fully in the event of
an Internal Revenue Service audit or investigation related to this
Agreement, including without limitation providing each other with full
and complete access to each other's records and employees to the extent
necessary to respond to any such audit or investigation.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to effect the Transactions.
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) 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 ATS and Diablo 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 6.1(a) of the Diablo 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 Diablo Assets
and the Diablo Business;
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(b) The transactions contemplated by the Other Agreement shall
have been consummated prior to or simultaneously with the consummation
of the Transactions; and
(c) The parties shall have entered into an escrow agreement in
form, scope and substance reasonably satisfactory to the parties with
the Title Company or any other Person reasonably acceptable to the
parties, pursuant to which, among other things, ATS shall have
deposited the portion of the Purchase Price not being delivered to the
Indemnity Escrow Agent or to a "qualified intermediary" pursuant to the
provisions of Section 2.3, and Diablo shall have delivered deeds in
customary form with respect to all of the real property to be conveyed
to ATS as part of the Diablo Assets and the parties, to the extent
required by Section 9.3, shall have deposited an amount sufficient to
pay all recording fees, transfer taxes and other fees and expenses
which must be paid as a condition of consummation of the transactions
contemplated by this Agreement.
6.2 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 corporate
officers;
(b) Diablo 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 Cooper, White & Cooper,
counsel for Diablo, with respect to the matters set forth in Sections
3.1(a), (b) and (c), 3.7(b) and 3.14, 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;
(c) The representations and warranties of Diablo contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto shall be true and correct in all material respects 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 in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Diablo or
ATS, except as otherwise specifically provided herein); each and all of
the covenants and agreements and conditions to be performed or
satisfied by Diablo hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and
Diablo 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 6.2(d) of the Diablo 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 by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
Diablo
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Assets and the Diablo Business (including without limitation all
Private Authorizations, Leases and Material Agreements of Diablo), and
the full enjoyment thereof shall have been obtained, without the
imposition, individually or in the aggregate, of any condition or
requirement which could materially adversely affect ATS;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in Diablo from that reflected in the most recent Diablo
Financial Statements; as of the Closing Date, the Governmental
Authorizations with respect to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business shall not have been
materially and adversely affected by any act, or failure to act, of
Diablo;
(f) Diablo shall have delivered or caused to be delivered to
ATS all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by Diablo 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 three years in the period ended December 31, 1996)
of the Diablo Business, 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 Diablo Disclosure Schedule, 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, or which might, in the reasonable business judgment of
ATS, based upon the advice of counsel, have a material adverse effect
on the Diablo Assets and the Diablo Business, 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) All Environmental Reports obtained by the parties prior to
the Closing Date pursuant to the provisions of Section 5.8 hereof shall
be approved or deemed approved by ATS in the manner described in
Section 5.8;
(j) Richard D. Spight ("Spight"), the chairman and principal
shareholder of Diablo, shall have executed and delivered to ATS an
agreement substantially in the form of Exhibit A attached hereto and
made a part hereof (the "Spight Noncompetition Agreement");
(k) Diablo and Spight shall have executed and delivered to ATS
and the escrow agent named therein (the "Indemnity Escrow Agent") an
escrow agreement (the "Indemnity Escrow Agreement") substantially in
the form of Exhibit B attached hereto and made a part hereof;
(l) ATS shall have received standard CLTA title insurance
policies insuring ATS' fee interests in all Insured Real Property,
subject only to Approved Title Conditions;
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(m) Diablo 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 6.2(m) of the
Diablo Disclosure Schedule;
(n) Diablo shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
(the "Nonassignable Contracts Agreement"), pursuant to which (i) Diablo
will hold (but will have no obligation to perform services thereunder)
for the account of ATS, and remit promptly to ATS all amounts received
pursuant to the provisions of, all of the Nonassignable Contracts as to
which the required approval or consent to the assignment or transfer of
which was not obtained and as to which ATS has delivered an Acceptance
Notice, and (ii) ATS will agree to (A) perform all services required to
be performed under such Nonassignable Contracts, (B) reimburse Diablo
for all costs and expenses reasonably incurred pursuant to the
Nonassignable Contracts Agreement and (C) indemnify and hold harmless
Diablo with respect to all actions taken by ATS pursuant thereto and
all actions, if any, taken by Diablo pursuant thereto other than those
relating to the bad faith, negligence or willful misconduct of Diablo
or its officers, directors, stockholders or employees;
(o) Diablo and Spight shall have delivered to ATS, an
agreement, in form, scope and substance reasonably satisfactory to ATS
and Diablo, pursuant to which (i) Diablo and Spight would, for a period
of three years, agree to offer only to ATS (and not to any other Person
regardless of whether ATS shall have accepted any such offer) all
property in California which is suitable for development as a
communication site and with respect to which they have, as broker or
otherwise, any rights, and (ii) if ATS accepts such property, it would
agree to pay Spight a percentage of net income on other compensation as
set forth in such agreement (the "Acquisition Participation
Agreement");
(p) Diablo, Spight and any other Person having any interest in
the property on Black Mountain which is contiguous to Black Mountain
Communications Site shall have executed and delivered to ATS an
agreement, in recordable form, (i) granting permanent mutual access and
permanent utility easements, without the payment of any consideration,
and (ii) agreeing not to construct any communication towers on any
portion of such property, all on terms and conditions as are reasonably
satisfactory to ATS and Diablo (the "Black Mountain Easement
Agreement");
(q) Spight (as the owner of the Drake Industrial Park) shall
have executed and delivered to ATS a lease, in form, scope and
substance reasonably satisfactory to ATS and Diablo, pursuant to which
ATS shall lease approximately 2,400 square feet, for a term of five (5)
years and at a rent of $1,200 per month (the "Drake Lease");
(r) Spight shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
and Diablo, pursuant to which (i) ATS shall have a right, for a period
of three years, of first refusal on any communication facility to be
constructed on any building in California owned or managed by Spight or
any Affiliate of Spight, (ii) in the event ATS exercises such right of
first refusal, gross revenues (after deduction for installation and
electrical expenses) from such development will be shared equally by
ATS and Spight, and (iii) in the event ATS does not exercise its right
of first refusal, Spight shall have the right to lease the facility to
any Person who is not an Affiliate of Spight (the "Exclusivity
Agreement"); and
(s) In the event an agreement or agreements have been entered
into between Diablo (or ATS) and TeleCommunications, Inc. relating to
the management of its towers, Diablo shall have executed and delivered
to ATS and agreement, in form, scope and substance reasonably
satisfactory
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to ATS, pursuant to which Diablo shall receive the initial $65,000 of
revenue (in reimbursement of its expenses) and thereafter revenue will
be shared two-thirds to ATS and one-third to Diablo (the "TCI
Agreement").
6.3 Conditions to Obligations of Diablo. The obligation of Diablo 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 Diablo
and its counsel, and Diablo 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 corporate
officers;
(b) ATS shall have furnished Diablo and, at Diablo's request,
any bank of other financial institution providing credit to Diablo,
with favorable opinions, dated the Closing Date of Sullivan & Worcester
LLP, counsel for ATS, with respect to the matters set forth in Section
4.1 and with respect to such other matters arising after the date of
this Agreement and incident to the Transactions, as Diablo or its
counsel may reasonably request or which may be reasonably requested by
any such bank or financial institution or their respective counsel;
(c) The representations and warranties of ATS contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto shall be true and correct in all material respects 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 in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Diablo or
ATS, except as otherwise specifically provided herein); each and all of
the covenants and 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 Diablo 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
Diablo or its counsel shall have reasonably requested;
(d) ATS shall have delivered or cause to be delivered to
Diablo all of the Collateral Documents and other agreements, documents
and instruments required to be delivered by ATS to Diablo at or prior
to the Closing pursuant to the terms of this Agreement;
(e) 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 be deemed to be
a threat of any such Legal Action;
(f) ATS shall have executed and delivered to Diablo, Spight
and the Indemnity Escrow Agent a counterpart of the Indemnity Escrow
Agreement;
(g) ATS shall have executed and delivered to Diablo the
Nonassignable Contracts Agreement;
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(h) ATS shall have executed and delivered to Diablo the Black
Mountain Easement Agreement and the Exclusivity Agreement; and
(i) ATS shall, if applicable, have executed and delivered to
Diablo the TCI Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Diablo and ATS;
(b) by either ATS or Diablo 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 Diablo in the event (i) Diablo 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) 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)
Diablo 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
(e) by ATS in the event of a failure of the condition set
forth in Section 6.2(i) or 6.2(l); or
(f) by ATS or Diablo pursuant to the provisions of Section
5.7(b) or 5.8(b).
The term "Termination Date" shall mean September 30, 1997 or such other
date as the parties may, from time to time, mutually agree.
The right of ATS or Diablo 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 either party, any Person controlling any
such party or any of their respective Representatives whether prior to or after
the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 (with respect to
confidentiality), 5.3, 9.3 and 9.15 and this Section, in the event of the
termination of this Agreement pursuant to Section 7.1, or in the event the
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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 either party, or any of their respective shareholders,
officers or directors, to the other and all rights and obligations of either
party shall cease; provided, however, that such termination shall not relieve
either 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 by Diablo pursuant to the
provisions of Section 7.1(c), then Diablo shall be entitled to liquidated
damages of (i) an amount equal to the Escrow Deposit, together with interest and
other earnings thereon, and (ii) delivery and cancellation of the Interim
Financing Notes, including all accrued and unpaid interest thereon, and any
Additional Compensation Certificates; the parties agree that such amounts shall
collectively constitute full payment for any and all damages suffered by Diablo
by reason of ATS' failure to consummate the Transactions. ATS and Diablo agree
in advance that actual damages would be difficult to ascertain and that such
liquidated damages is a fair and equitable amount to reimburse Diablo for
damages sustained due to ATS' failure to consummate the Transactions for the
above-stated reasons. In the event this Agreement is terminated by ATS pursuant
to the provisions of Section 7.1(d), then ATS shall be entitled to the amount of
the Escrow Deposit, together with interest and other earnings thereon, without
prejudice to ATS' right to pursue damages or other remedies hereunder.
Notwithstanding the foregoing, each party shall have the right to seek specific
performance pursuant to the provisions of Section 9.5.
(c) In the event this Agreement is terminated pursuant to the
provisions of Section 7.1(a), 7.1(b), 7.1(e), 7.1(f) or 7.1(g), except as
provided in Section 7.2(a), neither of the parties shall have any further rights
or remedies, except that ATS shall be entitled to the Escrow Deposit, together
with interest and earnings thereon.
(d) Anything in this Article or elsewhere in this Agreement to the
contrary notwithstanding, in no event shall Diablo be required to refund to ATS
the nonrefundable deposits made by ATS subsequent to March 31, 1997 pursuant to
the Amendment to Letter of Intent dated March 19, 1997.
ARTICLE 8
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements
of the parties contained in or made pursuant to this Agreement or any Collateral
Document (except as otherwise provided in 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) in the case of matters of a
nature referred to in Section 3.21, three (3) years after the Closing Date,
regardless of any investigation or statement as to the results thereof made by
or on behalf of any party hereto. 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, may be asserted after the
expiration of the Indemnity Period. ATS shall promptly advise Diablo in the
event it shall discover any fraud or alleged fraud, it being understood that, in
the event that ATS discovers such fraud or alleged fraud prior to the expiration
of the Indemnity Period and fails to so notify Diablo thereof, it shall not
thereafter be entitled to assert any Claim with respect thereto. 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 or the expiration of the applicable statute of limitation
unless arbitration or litigation has been pursued.
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8.2 Indemnification.
(a) During the Indemnity Period, each of Diablo and ATS (the
"indemnifying party") agrees that on and after the Closing it shall indemnify
and hold harmless the other (the "indemnified party") from and against any and
all damages, claims, losses, expenses, costs, obligations and liabilities,
including without limitation liabilities for all reasonable attorneys',
accountants' and experts' fees and expenses including those incurred to enforce
the terms of this Agreement or any Collateral Document executed by it
(collectively, "Loss and Expense"), suffered, directly or indirectly, by the
indemnified party by reason of, or arising out of:
(i) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the indemnifying party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(ii) any Legal Action or other Claim by any third party
relating to the indemnifying party or, in the case of ATS, the
ownership or operations of the Diablo Assets or the conduct of the
business of the Diablo Business to the extent such Legal Action or
other Claim has also resulted in a breach of representation or warranty
by the indemnifying party pursuant to this Agreement or any Collateral
Document executed by it; or
(iii) in the case of Diablo as the indemnifying party, the
failure of Diablo to comply with Bulk Sales law of the State of
California.
(b) Diablo agrees that on or after the Closing it shall indemnify and
hold harmless ATS from and against any and all Loss and Expense suffered,
directly or indirectly, by ATS by reason of, or arising out of, (i) Diablo
Nonassumed Obligations or (ii) the ownership and operation of the Diablo Assets
and the Diablo Business prior to the Closing Date.
(c) ATS agrees that on or after the Closing it shall indemnify and hold
harmless Diablo from and against any and all Loss and Expense suffered, directly
of indirectly, by Diablo by reason of, or arising out of, (i) (A) Diablo Assumed
Obligations or (B) the ownership and operation of the Diablo Assets and the
Diablo Business from and after the Closing Date, except for Events arising prior
to or existing on the Closing Date, unless they are part of the Diablo Assumed
Obligations, and (ii) any Hart-Scott-Rodino Act or other federal or state
antitrust Law filings or any Legal Action or other Claim of any Authority
relating to the Transactions based upon any of the foregoing, except, in all
cases, to the extent such filing, Legal Action or other Claim relates to or is
based upon information furnished or omitted by Diablo.
8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, each indemnified party's rights to
indemnification shall be subject to the following limitations: (i) the
indemnified party 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 (together with Claims (as defined therein) under the Other Agreement
("Other Agreement Claims")) exceeds, in the aggregate, $100,000, in which event
the indemnified party shall be entitled to recover all such Loss and Expense
(including without limitation such $100,000), and (ii) in no event shall the
aggregate amount required to be paid by each indemnifying party pursuant to the
provisions of this Article (and the comparable provision of the Other Agreement)
exceed $1,000,000, except for any Loss or Expense arising out of matters of a
nature referred
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to in Sections 3.1 and 4.1 (and the comparable provision of the Other Agreement)
as to which the dollar limitations set forth in this clause (ii) shall not
apply.
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, except as
provided in Sections 8.3(d) and 8.6, (i) the exclusive recourse of ATS after the
Closing with respect to the liability of Diablo pursuant to Section 8.2 or any
other provision of this Agreement or Applicable Law which requires Diablo to
defend, indemnify or hold harmless ATS from or against any Claim, Loss or
Expense shall be the Escrow Indemnity Funds; and (ii) ATS' remedies for any such
liability of Diablo, or for any Claim arising under this Agreement, shall be
limited to its right to recover from the Escrow Indemnity Funds in accordance
with the provisions of the Escrow Indemnity Agreement, and neither ATS nor any
of its officers, directors, shareholders, agents or Affiliated Entities shall
have any right of recovery against Diablo or any of its officers, directors,
shareholders, agents or Affiliated Entities or against the assets of any of them
for any such liability.
(c) In the event there shall be no Claims pending pursuant to the
provisions of this Agreement (or Other Agreement Claims) with respect to the
Escrow Indemnity Funds, if any, existing at the expiration of one (1) year after
the Closing, the excess of (x) the Escrow Indemnity Funds then remaining over
(y) $500,000 shall be distributed to Diablo. In the event one or more such
Claims (and/or Other Agreement Claims) with respect to the Escrow Indemnity
Funds, if any, shall exist upon the expiration of one (1) year after the
Closing, funds in an amount equal to the sum of (i) $500,000, (ii) the aggregate
amount of such Claims (and/or Other Agreement Claims), and (iii) the amount
reasonably necessary to cover the fees, expense and other costs (including
reasonable counsel fees and expenses) which will be required to resolve such
Claims (and/or Other Agreement Claims) shall be shall be retained as part of the
Escrow Indemnity Funds and the balance thereof, if any, shall be distributed to
Diablo. Upon the resolution of all such Claims (and/or Other Agreement Claims)
existing upon the expiration of one (1) year after the Closing and the payment
of all such fees, expenses and costs out of the Escrow Indemnity Funds, the
excess, if any, of (x) the Escrow Indemnity Funds then remaining over (y)
$500,000 shall be distributed to Diablo.
(d) In the event there shall be no Claims (or Other Agreement Claims)
pending pursuant to the provisions of this Agreement with respect to the Escrow
Indemnity Funds, if any, existing at the expiration of two (2) years after the
Closing, the Escrow Indemnity Funds then remaining shall be distributed to
Diablo and DCSC (in such proportion as they shall agree in writing). In the
event one or more such Claims (and/or Other Agreement Claims) with respect to
the Escrow Indemnity Funds, if any, shall exist upon the expiration of the
Indemnity Period, funds in an amount equal to the sum of (i) the aggregate
amount of such Claims (and/or Other Agreement Claims) and (ii) the amount
reasonably necessary to cover the fees, expense and other costs (including
reasonable counsel fees and expenses) which will be required to resolve such
Claims (and/or Other Agreement Claims) shall be retained as part of the Escrow
Indemnity Funds and the balance thereof, if any, shall be distributed to Diablo
and DCSC (in such proportion as they shall agree in writing). Upon the
resolution of all such Claims (and/or Other Agreement Claims) and the payment of
all such fees, expenses and costs out of the Escrow Indemnity Funds, the
remainder of the Escrow Indemnity Funds, if any, shall be distributed to Diablo
and DCSC (in such proportion as they shall agree in writing).
(e) If, following the distribution to Diablo, DCSC or any other Person
of any remaining Escrow Indemnity Funds, ATS becomes entitled to indemnification
for Loss and Expense suffered by ATS arising from breach of the warranties and
misrepresentations set forth in Section 3.21, or breach by Diablo of any
covenants or agreement by Diablo under this Agreement or any Collateral Document
to which it is a party, then ATS may pursue such Claim directly against Diablo,
its successors and assigns and Spight (but only to the extent he received any
such funds); provided, however, that the maximum amount of liability in the
aggregate of Diablo (and such successors and assigns and Spight) for any and all
such Claims shall be the amount of Escrow Indemnity Funds that were distributed
to Diablo, DCSC or any other Person (other than
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a claimant whose Claim was paid out of the Indemnity Escrow Fund) claiming by,
through or in the name of Diablo (including without limitation Spight (but only
to the extent he received any such funds) or Diablo's or his successors,
assigns, trustees, beneficiaries, heirs or executors) upon the expiration of the
Indemnity Period or thereafter.
(f) In the case any event shall occur which would otherwise entitle
either 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. No indemnifying party shall be liable under this Article for a loss
resulting from any event relating to a misrepresentation or breach of warranty,
covenant or agreement if the indemnifying party can establish that the
indemnified party had actual knowledge on or before the Closing Date of such
event and did not, on or before the Closing Date, reserve its rights with
respect thereto.
8.4 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 8.1, 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.
8.5 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' written 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; provided, however, that if the indemnified party fails or refuses to
consent in writing to any compromise of settlement proposed by the indemnifying
party and agreed to in writing by the claimant in such Legal Action or other
Claim (the "Settlement Proposal") within ten (10) business days after receipt of
written notice of all of the material terms and conditions of the Settlement
Proposal, and such terms and conditions (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 ATS, do not include
any term or condition which would restrict in any material manner the continued
ownership or operations of the Diablo Assets or the conduct of the Diablo
Business in substantially the manner then being theretofore owned, operated and
conducted by ATS, then, unless the indemnifying party forthwith withdraws the
Settlement Proposal, the indemnified party (i) shall have the right but not the
obligation to undertake the conduct of the defense of such Legal Action or other
Claim, and (ii) whether or not it shall so undertake the defense of such Legal
Action or other Claim, shall bear, and shall indemnify and hold the indemnifying
party harmless from, all Loss and Expense arising from such Legal Action or
other Claim (to the extent not theretofore (x) accrued with respect to the costs
and expenses of the defense of such Legal Action or other Claim or (y) paid with
respect to such Legal Action or other Claim) in excess of the amount contained
in the Settlement Proposal, it being understood, in such event, that the
indemnifying party shall bear all Loss and Expense, including subsequently
incurred Loss and Expense (including without limitation those attributable to
legal fees and
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expenses) up to the amount contained in the Settlement Proposal, even if the
ultimate disposition of such Legal Action or other Claim results in payments to
the claimant of less than those contained in the Settlement Proposal.
8.6 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 9.5, the indemnification provided
in this Article shall be the sole and exclusive post-Closing remedy available to
either party against the other party for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time but only by an instrument in writing signed by the
parties hereto.
9.2 Waiver. Except to the extent not permitted by Applicable Law, ATS
or Diablo may, at any time, extend the time for the performance of any of the
obligations or other acts of the other, subject, however, to the provisions with
respect to the Termination Date, waive any inaccuracies in the representations
and warranties of the other contained herein or in any document delivered
pursuant hereto, and waive compliance by the other with any of the agreements,
covenants or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. All costs and expenses, incurred
in connection with any transfer taxes, recording or documentary taxes, stamps or
other comparable charges levied by any Authority in connection with this
Agreement and the consummation of the Transactions, title insurance for Diablo's
fee-owned Real Property shall be borne equally by Diablo and ATS. All
Hart-Scott-Rodino filing fees for both this Agreement and the Other Agreement
shall be borne equally by Diablo and ATS up to the amount of $20,000 for each of
Diablo and ATS, with the balance to be borne by ATS. 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.
9.4 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) 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:
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(a) If to ATS:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to Diablo:
1220 Brickyard Cove Road, Suite 200
Point Richmond, California 94801
Attention: Richard D. Spight, Chairman
Telecopier No.: (510) 236-3799
with a copy to:
Cooper, White & Cooper
1333 North California Boulevard, Suite 450
Walnut Creek, California 94596
Attention: Keith Howard, Esq.
Telecopier No.: (510) 256-9428
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.
9.5 Specific Performance; Other Rights and Remedies. Anything in this
Agreement to the contrary notwithstanding, 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 not in
material breach of this Agreement or any Collateral Document shall, in addition
to such other remedies as may be available to it at law or in equity or as
provided in Article 7, 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
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.
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, after the Closing Date ATS shall not be entitled to specific
performance or any other remedy to the extent that the cost to Diablo arising
from the enforcement or exercise of such remedy would exceed the amount then on
deposit in the Escrow Indemnity Funds, in accordance with the provisions of the
Escrow Indemnity Agreement, for all costs and expenses incurred in connection
with its performance of or compliance with the remedy exercised or enforced.
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9.6 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 either 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.
9.7 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.
9.8 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.
9.9 Governing Law; Venue. 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 California 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. In the event of any Legal Action between the parties
arising out of this Agreement, the parties agree to submit the matter to the
appropriate municipal, state or federal court sitting in San Francisco County,
California, and the parties agree to submit to the jurisdiction of such courts.
9.10 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.
9.11 Entire Agreement. This Agreement (together with the Diablo
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, including without limitation that
certain letter of intent, dated December 19, 1996, between the parties, as
amended by the letter dated March 19, 1997 (the "Letter of Intent").
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9.12 Assignment. This Agreement shall not be assignable by either 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.
9.13 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, including without limitation Section 2.2(c), 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of Diablo 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 either party based on any presumption of that party's
involvement in the drafting thereof.
9.15 Arbitration. 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 San Francisco, California in accordance with the commercial rules
of the American Arbitration Association (the "AAA") before a panel of three (3)
arbitrators knowledgeable in the tower communications industry, one arbitrator
chosen by ATS, one by Diablo, 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 San Francisco Chapter of the AAA, and the decision of such panel shall,
in the absence of fraud, be conclusively binding on the parties.
9.16 Disclosure Schedule. Diablo has delivered to ATS prior to
execution and delivery of this Agreement the Diablo Disclosure Schedule and all
related documents required to be delivered by Diablo pursuant to Article 3 of
this Agreement. Without limiting the generality of the foregoing, the Diablo
Disclosure Schedule sets forth: (i) which authorizations, consents, waivers,
orders or approvals are a condition of Closing pursuant to the provisions of
Section 6.1(a); (ii) which Private Authorizations, Leases and Material
Agreements and other Contractual Obligations are a condition to Closing pursuant
to the provisions of Section 6.2(d); and (iii) which permits, consents or other
Governmental Authorizations of the United States Forest Service are a condition
to Closing pursuant to the provisions of Section 6.2(m). ATS has received and
hereby accepts the Diablo Disclosure Schedule and agrees to consummate the
transactions contemplated by this Agreement, subject to the satisfaction of the
conditions set forth in Sections 6.1 and 6.2 and subject to the matters
disclosed in the Diablo Disclosure Schedule.
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IN WITNESS WHEREOF, ATS and Diablo 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: James S. Eisenstein
Title: Chief Operating Officer
Diablo Communications, Inc.
By:_____________________________________
Name:
Title:
The undersigned, Richard D. Spight, the principal shareholder of
Diablo, hereby acknowledges and agrees to be bound by the provisions of Article
8, including without limitation Section 8.3(d).
----------------------------------
Richard D. Spight
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) 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 herein shall
have such meanings when used in the Diablo 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 "either party" shall, unless the context otherwise
requires, refer to Diablo and ATS.
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 Diablo attributable to the ownership or operation of the
Diablo 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 Diablo'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.
Acquisition Participation Agreement shall have the meaning given to it
in Section 6.2(o).
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 Diablo
Business, or (c) impair Diablo'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 (i)
generally affecting the economy or the tower communications business or (ii) of
a nature described in the "Definition" section of the Diablo Disclosure Schedule
shall not be deemed to constitute an adverse change, have an adverse effect or
to adversely affect or effect.
Additional Title Matter shall have the meaning given to it in Section
5.7.
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,
<PAGE>
(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 Diablo
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.
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.
Approved Title Conditions shall mean any one or more of the following:
(a) Liens for real property taxes and assessments not then delinquent; (b) the
Lien of supplemental Taxes assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, to the extent that such
supplemental Taxes are attributable to the transactions contemplated by this
Agreement; (c) matters of title approved by ATS or deemed approved in accordance
with the provisions of Section 5.7; and (d) matters of title created following
the date of this Agreement by or with the written consent of ATS.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the Diablo
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, including without including without limitation the
following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Private Authorizations;
(e) the Contracts (other than the Diablo Nonassumed
Obligations);
(f) the corporate name of Diablo and all variations thereof;
(g) all Intellectual Property and other proprietary
information, which relate to the Diablo Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the Diablo Business;
(h) all claims, choses in action and rights under warranties
relating to the Diablo Business or any of the Diablo Assets;
(i) all books and records relating to the ownership or
operation of the Diablo Assets or the conduct of the Diablo Business,
including executed copies of Leases, Material Agreements and other
written Contracts, and all records required by Applicable Law to be
kept, subject to the right of the conveying party to have such books
and records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate
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business purposes. The records described herein shall not include
corporate seals, certificates of incorporation, minute books, stock
books, tax returns or other records having to do with the corporate
organization of Diablo; and
(j) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets
shall not include any of the Excluded Assets.
ATS shall have the meaning given to it in the Preamble.
ATS Accrued Sick Time Liability shall have the meaning given to it in
Section 2.2(c).
ATS Assumed Vacation Liability shall have the meaning given to it in
Section 2.2(c).
ATS' Environmental Notice shall have the meaning given to it in Section
5.8.
ATS' Title Notice shall have the meaning given to it in Section 5.7.
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 Diablo Business.
Black Mountain Communications Site shall have the meaning given to it
in Section 3.5(a).
Black Mountain Easement Agreement shall have the meaning given to it in
Section 6.2(p).
CAAP shall mean the accounting principles used by the Company in the
preparation of the Financial Statements and described in general terms in the
Disclosure Schedule, such principles applied on a consistent basis, except as
otherwise heretofore disclosed in the Disclosure Schedule. The requirement that
such principles be consistently applied means that the accounting principles in
a current period are comparable in all material respect to those applied in
preceding period. All accounting and financial terms used in this Agreement and
the compliance with each covenant contained in this Agreement that relates to
financial matters shall be determined in accordance with the accounting
principles referred to in this paragraph (except as otherwise specifically noted
in certain of the definitions where the term GAAP is used).
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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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
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 Document shall mean the Escrow Agreement, the Indemnity
Escrow Agreement, the Acquisition Participation Agreement, the Nonassignable
Contracts Agreement, the Black Mountain Easement Agreement, the Drake Lease, the
Exclusivity Agreement, the TCI Agreement, special warranty deeds, bills of sale,
assignments of intangibles, assumption agreements with respect to the Diablo
Assumed Obligations, other instruments of conveyance and assignment sufficient
to vest in ATS title to all of the other Diablo Assets and the Diablo Business,
and any other agreement, certificate, contract, instrument, notice, opinion or
other document delivered pursuant to the provisions of this Agreement or any
Collateral Document.
Collection Period shall have the meaning given to it in Section 2.4.
Construction Adjustment shall have the meaning given to it in Section
2.3.
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 Diablo Assets or the
conduct of the Diablo 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.
DCSC shall have the meaning given to it in the fourth Whereas
paragraph.
Diablo shall have the meaning given to it in the Preamble.
Diablo Assumable Agreements shall mean all obligations and liabilities
of Diablo under all Leases, Material Agreements, Governmental Authorizations,
Private Authorizations and other Contractual Obligations not required to be
listed on Section 3.16 of the Diablo Disclosure Schedule entered into in the
ordinary course of business and relating to the ownership or operation of any of
the Diablo Assets or the
conduct of the Diablo Business.
Diablo Assets shall have the meaning given to it in Section 2.1.
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Diablo Assumed Liabilities shall have the meaning given to it in
Section 2.2(b).
Diablo Business shall have the meaning given them in the first Whereas
paragraph.
Diablo Disclosure Schedule shall mean the Diablo Disclosure Schedule
dated as of the date of this Agreement delivered by Diablo to ATS.
Diablo Employees shall have the meaning given it in the Section
3.15(a).
Diablo Financial Statements shall have the meaning given to it in
Section 3.2(b).
Diablo Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
Diablo Personal Property shall have the meaning given to it in Section
3.5(c).
Diablo's Environmental Notice shall have the meaning given to it in
Section 5.8.
Diablo's knowledge means the actual knowledge of any Diablo officer or
senior manager, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of appropriate Diablo records.
Diablo's Title Notice shall have the meaning given to it in Section
5.7.
Drake Lease shall have the meaning given to it in Section 6.2(q).
Employment Arrangement shall mean, with respect to Diablo, 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 Diablo 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 Diablo Assets or
the conduct of the Diablo 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 Company shall have the meaning given to it in Section
5.8.
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
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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 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
5.8.
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 Diablo under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Escrow Agent shall have the meaning given to it in the third Whereas
paragraph.
Escrow Agreement shall have the meaning given to it in the third
Whereas paragraph.
Escrow Deposit shall have the meaning given to it in the third Whereas
paragraph.
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.
Excluded Assets shall have the meaning given to it in Section 2.1.
Exclusivity Agreement shall have the meaning given to it in Section
6.2(r).
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.
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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.
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, 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.
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 Diablo Assets or the conduct of the
Diablo 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
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<PAGE>
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 Diablo,
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.
Indemnity Escrow Agent shall have the meaning given to it in Section
6.2(k).
Indemnity Escrow Agreement shall have the meaning given to it in
Section 6.2(k).
Indemnity Escrow Fund shall have the meaning given to it in Section
2.3.
Insured Real Property shall have the meaning given to it in Section
5.7.
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.
Interim Adjustment shall have the meaning given to it in Section 2.3.
Interim Financing Note shall have the meaning given to it in the fifth
Whereas paragraph.
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
A-8
<PAGE>
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.
Letter of Intent shall have the meaning given to it in Section 9.11.
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.
Like-Kind Notice shall have the meaning given to it in Section 2.5.
Loss and Expense shall have the meaning given to it in Section 8.2.
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 Diablo, 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, (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) is with the United States Forest Service or any other Authority,
or (f) involves the management by Diablo of any communication tower of any other
Person.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Nonassignable Contracts shall have the meaning given to it in Section
2.2(c).
Nonassignable Contracts Agreement shall have the meaning given to it in
Section 6.2(n).
Note Agreement shall have the meaning given to it in the fifth Whereas
paragraph.
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<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).
Other Agreement shall have the meaning given to it in the fourth
Whereas paragraph.
Other Agreement Claims shall have the meaning given to it in Section
8.3(a).
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 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
Diablo Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
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
Diablo and used or useful as of the date hereof in the conduct of the business
or operations of the Diablo 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 Diablo Business.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by Diablo prior to the Closing
and relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by Diablo prior to the Closing
and relates to a period subsequent to the Closing.
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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<PAGE>
Retained Accounts Receivable shall have the meaning given to it in
Section 2.4.
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 Diablo as of the date hereof, in the operations of the Diablo
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 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 5.1(a).
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the SEC 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.
Spight shall have the meaning given to it in Section 6.2(j).
Spight Noncompetition Agreement shall have the meaning given to it in
Section 6.2(j).
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
2.3.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11.
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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.
TCI Agreement shall have the meaning given to it in Section 6.2(s).
Title Company shall have the meaning given to it in Section 5.7.
Title Reports shall have the meaning given to it in Section 5.7.
Termination Date shall have the meaning given to it in Section 7.1.
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 Diablo Assets and the Diablo Business and the execution, delivery
and performance of the Collateral Documents.
U.S. Navy Claim means all obligations, liabilities and other Claims
with respect to the T.V. Hill Site and the U.S. Navy, including those of Watson
Communications Systems, Inc., a former partner of Diablo and/or Spight with
respect thereto and of Diablo to the U.S. Navy with respect to its guaranty of
the obligations and liabilities of Watson Communications Systems, Inc.
A-12
EXHIBIT 10.4b
SECURITIES PURCHASE AGREEMENT
NOTES DUE 2000
of
DIABLO COMMUNICATIONS, INC.
March 20, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. Issue and Sale of Securities.........................................................................1
1.1 Description of Securities..................................................................1
1.2 Purchase and Sale..........................................................................2
1.3 Closing....................................................................................2
2. Representations and Warranties of Company............................................................4
2.1 Organization and Business; Power and Authority.............................................4
2.2 Business; Financial Information............................................................5
2.3 Changes in Condition.......................................................................5
2.4 Title to Properties; Leases................................................................5
2.5 Compliance with Governmental Authorizations and Applicable Law.............................6
2.6 Related Transactions.......................................................................7
2.7 Tax Matters................................................................................7
2.8 Employment Arrangements....................................................................7
2.9 Ordinary Course of Business................................................................7
2.10 Private Sale..............................................................................9
2.11 Disclosure................................................................................9
2.12 Use of Proceeds..........................................................................10
2.13 Material Agreements and Private Authorizations...........................................10
2.14 Employee Retirement Income Security Act of 1974..........................................10
2.15 Authorized and Outstanding Capital Stock ................................................10
2.16 Inapplicability of Specified Statutes....................................................11
3. Representations, Warranties and Covenants of American...............................................11
3.1 Organization and Business; Power and Authority............................................11
3.2 Investment Representation.................................................................12
3.3 Covenant Regarding Transfer...............................................................12
4. Conditions of Closing...............................................................................12
4.1 Company's Officer's Certificate. ........................................................12
4.2 Company's Secretary's Certificate. ......................................................13
4.3 Opinion of Company Counsel. .............................................................13
4.4 Legality; Governmental and Other Authorizations. ........................................13
5. Payment and Exchange of Notes; Lost Notes...........................................................13
5.1 Payments..................................................................................13
5.2 Exchange..................................................................................14
5.3 Replacement of Notes......................................................................15
5.4 Transfer Office and Record of Holders of Notes............................................15
5.5 Transfer of Notes.........................................................................15
5.6 Registered Owners of Notes................................................................16
5.7 Limitation on Transfer of Notes............................................................16
6. Payment Provisions..................................................................................16
<PAGE>
Page
6.1 Required Payments.........................................................................16
6.2 Restriction on Optional Payments..........................................................16
6.3 Notice of Payment and Offers to Repurchase................................................17
6.4 Maturity; No Reissue......................................................................17
6.5 Purchase of Notes.........................................................................17
7. Special Covenants of Company........................................................................17
7.1 Payments..................................................................................18
7.2 Prompt Payment of Taxes and Indebtedness..................................................18
7.3 Conduct of Business.......................................................................18
7.4 Maintenance of Property and Leases........................................................18
7.5 Maintenance of Insurance..................................................................19
7.6 Maintenance of Accounts and Records.......................................................19
7.7 Compliance With Laws......................................................................19
7.8 Miscellaneous Information.................................................................19
7.9 Information and Reports to Be Furnished by Company........................................20
7.10 Liens....................................................................................21
7.11 Distributions............................................................................21
7.12 Consolidation, Merger and Acquisition....................................................22
7.13 Prohibited Transactions..................................................................22
7.14 Compliance with ERISA....................................................................23
7.15 Indebtedness.............................................................................23
7.16 Operation of the Business.................................................................23
7.17 Issue of Equity Securities...............................................................24
8. Defaults. .........................................................................................24
8.1 Events of Default.........................................................................24
8.2 Notice to the Holders.....................................................................26
8.3 Annulment of Defaults.....................................................................27
8.4 Waiver by Company; Severability of Remedies...............................................27
8.5 No Waiver of Rights.......................................................................27
8.6 Costs and Expenses of Collection..........................................................27
8.7 Remedies Cumulative.......................................................................28
9. Definitions.........................................................................................28
10. Miscellaneous Provisions...........................................................................39
10.1 Stamp and Other Taxes....................................................................39
10.2 Expenses.................................................................................40
10.3 Survival of Covenants; Successors and Assigns............................................40
10.4 Notices and Communications...............................................................40
10.5 Amendments and Waivers...................................................................41
10.6 Governing Law; Venue.....................................................................41
-ii-
<PAGE>
Page
10.7 Entire Agreement.........................................................................42
10.8 Saturdays, Sundays, Holidays, etc........................................................42
10.9 Brokers, etc.............................................................................42
10.10 Headings; Counterparts..................................................................42
10.11 Severability............................................................................42
10.12 Further Assurances......................................................................43
10.13 Specific Performance; Other Rights......................................................43
10.14 Non-Recourse Obligation.................................................................43
</TABLE>
SCHEDULES:
DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A: Form of Note
Exhibit B: Form of Additional Compensation Certificate
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<PAGE>
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), made as of March
20, 1997, by and between Diablo Communications, Inc., a California 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 Company are parties to a letter of intent,
dated as of December 19, 1996, as amended as of the date hereof (the "Letter of
Intent"), relating to an asset purchase agreement to be negotiated, executed and
delivered by the parties (the "Acquisition Agreement"), with respect to the
acquisition (the "Acquisition") by American of substantially all of the
communications tower and management business of the Company (the "Diablo
Business");
WHEREAS, the Company proposes to issue and sell on the date hereof a
Note in the principal amount of $650,000 and American is willing to purchase the
Initial Note in order to provide funds to the Company for corporate purposes;
WHEREAS, American and Diablo Communications of Southern California,
Inc., a California corporation ("DCSC"), are parties to a letter of intent,
dated as of December 19, 1996, as amended as of the date hereof (the "DCSC
Letter of Intent"), relating to an asset purchase agreement to be negotiated,
executed and delivered by the parties (the "DCSC Acquisition Agreement"), with
respect to the acquisition (the "DCSC Acquisition") by American of substantially
all of the property and assets and the communications tower and management
business of DCSC (collectively, the "DCSC Business"); and
WHEREAS, American and DCSC have, simultaneously executed and delivered
a Note Purchase Agreement, substantially in the form of this Agreement (the
"DCSC Note Agreement"), pursuant to which DCSC will issue up to Seven Hundred
Fifty Thousand Dollars ($750,000) in aggregate principal amount of notes of like
tenor to the Notes (the "DCSC Notes") and additional compensation certificates
of like tenor to the Additional Compensation Certificates (the "DCSC Additional
Compensation Certificates");
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 June 30, 2000, shall bear interest from the date of its
issue, at an annual rate equal to the Prime Rate on the unpaid principal
<PAGE>
balance thereof, compounded on the last day of each calendar month, commencing
January 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.
The Company has duly authorized the issuance, on the terms hereinafter
provided, of certificates representing rights to additional compensation (the
"Additional Compensation Certificates") as determined in accordance with the
provisions of the Additional Compensation Certificates. The term "Additional
Compensation Certificates" shall mean any Additional Compensation Certificates
issued and delivered in exchange or substitution therefor or on transfer thereof
as therein provided; and the term "Additional Compensation Certificate" shall
mean any of the Additional Compensation Certificates. The Additional
Compensation Certificates shall be in or substantially in the form set forth in
Exhibit B hereto. Each Additional Compensation Certificate shall be dated the
date of its issue.
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, the Note and the Additional Compensation
Certificates 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 once 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"), in accordance
with the following schedule:
Month Cumulative Advances
March 1997 $350,000
April 1997 $500,000
May 1997 $600,000
June 1997 $650,000
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. The Company and American
agree that the Purchase Price shall be allocable to the Notes and the Additional
Compensation Certificates in accordance with their respective fair market
values.
1.3 Closing. The Closing (the "Closing") shall be held at such time,
place and manner not later than January 31, 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 principal amount of $650,000 registered in the name of American, in
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<PAGE>
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.
Upon the request of American, the Company shall prepare and file an
application with the California Department of Corporations an application for
qualification of the Additional Compensation Certificates and/or the Notes (the
"California Application") under the provisions of Chapter 2 of the California
Corporate Securities Law of 1968, as amended (the "California Securities Law").
The Company shall thereafter use its best efforts to secure the qualification of
the Additional Compensation Certificates and/or the Notes under the California
Securities Law. The Company and American shall each bear fifty percent (50%) of
any and all costs and expenses of the preparation and filing of the California
Application, and securing the issuance of the qualification, including without
limitation filing and processing fees, attorneys fees, accountants fees and
other costs and expenses.
Promptly after the effective date of the qualification of the
Additional Compensation Certificates and/or the Notes, and in any event within
three (3) days after the effective date of such qualification, the Company will
issue and deliver to American one Additional Compensation Certificate registered
in the name of American, subject to the Company's and American's compliance with
such terms and requirements as may be imposed by the Commissioner of
Corporations as a condition of the qualification.
In the event that such qualification does not become effective within
six (6) weeks (or such longer period as American may, in its sole discretion,
agree) after the filing of the California Application, American shall have the
right to contribute the Notes in exchange for interests in one or more joint
ventures agreements with the Company with respect to the communication sites in
which the proceeds of the loans theretofore made or to be made pursuant to this
Agreement are used. Such joint ventures shall be on terms and conditions which
afford to American and the Company (i) substantially equivalent economic
benefits and obligations to those which they would have received had the
Additional Compensation Certificates and/or the Notes been qualified under the
California Securities Law and issued and delivered to American, and (ii)
substantially equivalent rights and obligations as contemplated in the Notes,
the Additional Compensation Certificates and this Agreement and otherwise on
terms and conditions reasonably acceptable to the Company and American.
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.
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<PAGE>
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, the
Additional Compensation Certificates and each other Related Agreement
to which it is a party, and to issue and sell the Note and the
Additional Compensation Certificates. The execution, delivery and
performance of this Agreement, the Notes, the Additional Compensation
Certificates 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 constitutes, and the Notes, the Additional Compensation
Certificates and each other Related Agreement to which it is a party
when executed and delivered by the Company 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 and the
Additional Compensation Certificates will be entitled to the rights and
benefits set forth in the Notes, the Additional Stock Certificates and
this Agreement.
(c) 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 any
interest in the assets and property or business of any of the Diablo
Assets or the Diablo Business, except as set forth in the Disclosure
Schedule.
(d) 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 Letter of Intent and the execution, delivery and performance
of the Letter of Intent has been duly authorized by all requisite
corporate action on the part of the Company.
(e) Except as set forth in the Disclosure Schedule, neither
the execution and delivery of this Agreement, the Notes, the Additional
Compensation Certificates 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
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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 CAAP 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 CAAP 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 contemplated by this Agreement and the Letter of Intent or as
otherwise specifically set forth in the Disclosure Schedule, (i) 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.
2.4 Title to Properties; Leases. The Company has good and marketable
title in fee simple to all real property owned by it and has good and
merchantable title to all other assets, tangible and intangible, owned in fee
simple by the Company in the Diablo Business (collectively, with the Real
Property, the "Diablo Assets"), in all cases free and clear of all Liens
securing Indebtedness for Money Borrowed, except such as are set forth in the
Disclosure Schedule. All buildings, structures, towers, antennae, improvements
and fixtures comprising a part of the Diablo Assets are in good and technically
sound operating condition, have no latent structural mechanical or other defects
of material significance, are reasonably suited for the purposes for which they
are being used and each has adequate rights of ingress and egress, utility
service for telephone and electric for the conduct of the business and
operations of the Diablo Business as presently conducted, except for such
exceptions which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, except as otherwise set forth in the Company
Disclosure Schedule.
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<PAGE>
Each lease or other occupancy or other agreement under which the
Company holds any of the Diablo Assets has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The Company, to the Company's
knowledge, has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all such leases. All of such leases are, to the Company's
knowledge, valid and subsisting and in full force and effect; and the Company is
not in default in the performance, observance or fulfillment in any respect of
any obligation, covenant or condition contained in any such lease, except for
such exceptions which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
2.5 Compliance with Governmental Authorizations and Applicable Law. As
of the date hereof, there are no judgments, decrees or orders issued by any
Authority presently outstanding and unsatisfied against the Company. The
Disclosure Schedule contains a brief description of
(a) all Legal Actions or other Claims which are pending or in
which the Company or its business, operations or properties, or, to the
Company's knowledge, any of its officers, directors or stockholders in
connection therewith, is engaged, or which involves the business,
operations or properties of the Company or, to the Company's knowledge,
which are threatened or contemplated against, the Company or its
business, operations or properties, or any of such officers, directors
or stockholders, in connection therewith, in all cases which
individually or in the aggregate could, if adversely determined, have a
Materially Adverse Effect on the Company; and
(b) each Governmental Authorization which, if not obtained and
maintained, could singly or in the aggregate, have any Material Adverse
Effect on the Company (a "Material Governmental Authorization").
No Governmental Authorization is the subject of any pending or, to the
Company's knowledge, threatened attack, revocation or termination except for
such attacks, revocations or terminations as do not and will not have in the
aggregate any Material Adverse Effect on the Company. Neither the Company nor,
to the Company's knowledge, any of its officers, directors or stockholders in
connection with the business, operations and properties of the Company, is
(i) in breach or violation or, or in default in the
performance of, or
(ii) charged with any such breach or violation of, or
default under, or
(iii) to the Company's knowledge, threatened with or under
investigation with respect to any such breach or
violation of, or default under,
any Governmental Authorization or any Applicable Law, 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 or violation of or
default under any such other Material Governmental Authorization or any
Applicable Law, except for such defaults, breaches or violations as do not and
will not have in the aggregate any Material Adverse Effect on the Company.
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<PAGE>
2.6 Related Transactions. The Disclosure Schedule sets forth a fair,
complete and accurate in all material respects description of any Contractual
Obligation or transaction relating to any of the Diablo Assets or the Diablo
Business between the Company and any of its officers, directors or stockholders,
or any Affiliate of any thereof (other than for services as, or loans and
advances in the ordinary course of business to, any thereof), now existing,
including without limitation any 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 officer, director or stockholder or
Affiliate, except for such as (a) will not survive the consummation of the
Acquisition or (b) are on terms at least as favorable to the Company as would be
obtained with Persons who are not Affiliated with the Company.
2.7 Tax Matters. The Company has, at all times during its existence,
been and is taxable as a Subchapter S corporation for federal and state income
Tax purposes. To the Company's knowledge, (a) all Tax Returns which in
accordance with Applicable Law are required to be filed by or on behalf of the
Company have been filed and all Taxes which have become due and payable pursuant
to said returns and all estimated Taxes due and payable and all other
governmental charges and assessments due and payable by or on behalf of the
Company have been paid, (b) such returns have been prepared in accordance with
all Applicable Laws, and (c) all Taxes which the Company 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, except as otherwise set forth in the Disclosure Schedule..
2.8 Employment Arrangements. The Company is not now and during the past
five years has not been subject to or involved in or, to the Company's
knowledge, threatened with any union elections, petitions therefor or other
organizational activities, relating to any of the Diablo Assets or the Diablo
Business, except as described in the Disclosure Schedule. Except as described in
the Disclosure Schedule, none of the employees of the Company involved in any of
the Diablo Assets or the Diablo Business is represented by any labor union or
other employee collective bargaining organization or is a party to any labor or
other collective bargaining agreement, and there are no pending grievances,
disputes or controversies with any union or any other organization of such
employees, or threats of strikes, work stoppages or any pending demands for
collective bargaining by any union or organization, or, to the Company's
knowledge, any active organizing or recruiting of such employees with respect to
becoming members of any union or other employee or collective bargaining
organization.
2.9 Ordinary Course of Business. With respect to each of the Diablo
Assets and the Diablo Business, the Company from the end of its Most Recent
Fiscal Year to the date hereof, and until the Closing Date, except as may be
described on the Disclosure Schedule or as may be required or permitted by the
terms of this Agreement or the Letter of Intent:
(a) has operated, and will continue to operate, the Diablo
Business in the normal, usual and customary manner in the ordinary and
regular course of business;
(b) has not sold or otherwise disposed of, and will not sell
or otherwise dispose of or contract to sell or otherwise dispose of,
any of the properties or assets of any of the Diablo Assets or the
Diablo Business, other than nonmaterial amounts of machinery and
equipment
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<PAGE>
sold or otherwise disposed of in the ordinary course of business and no
longer needed in the operation or business or replaced with assets of
like kind or better kind and quality;
(c) except in each case in the ordinary course of business of
each of the Diablo Assets and the Diablo Business,
(i) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other);
(ii) has not entered and will not enter into any
commitments; and
(iii) has not sold or transferred, and will not sell
or transfer, any tangible asset or canceled or cancel any
debts or claims;
(d) has not made and will not make any additions to property
or any purchases of machinery or equipment, except for normal
maintenance and replacements;
(e) has not discharged or satisfied, and will not discharge or
satisfy, any Lien or paid or pay any obligation or liability (absolute
or contingent) other than current liabilities or obligations under
contracts then existing or thereafter entered into in the ordinary
course of business, and commitments under leases existing on that date
or incurred since that date in the ordinary course of business;
(f) has not placed and will not place, or permitted to be
placed or permit to be placed, any Lien on any of the Diablo Assets or
the Diablo Business, and has not Transferred, and will not Transfer,
any of the Diablo Assets or the Diablo Business;
(g) has not committed or suffered to exist, and will not
commit or suffer to exist, any Act of Bankruptcy;
(h) has not increased and will not increase the compensation
payable or to become payable to any of its officers, employees,
advisers, consultants, salesmen or agents involved in any of the Diablo
Assets or the Diablo Business, has not and will not otherwise alter,
modify or change in any material respect the terms of their employment
or engagement, and has not entered and will not enter into new
employment arrangements with any of the foregoing, other than in the
ordinary course of business of the Diablo Business and on terms and
conditions consistent with prior practices;
(i) 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;
(j) has not waived, and will not waive, any rights of
substantial value without fair and adequate consideration;
(k) has not experienced any work stoppage;
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<PAGE>
(l) has not amended, and will not amend, in any material
respect, has not terminated or entered into, and will not terminate or
enter into, or become (or permit any of its property to be) bound by or
subject to any lease, Governmental Authorization, Private
Authorization, Material Agreement, Employment Arrangement or Plan or
any Contractual Obligation or transaction with any Affiliate;
(m) has not amended or terminated and will not amend or
terminate (unless replaced), and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, insurance policies and coverage meeting
the standards of Section 7.5;
(n) has not done any act or failed to do any act, and will not
do any act or fail to do any act, if such act or failure to act might
result in the expiration, revocation, suspension or modification of any
of its Governmental Authorizations or Material Private Authorizations;
(o) has not issued, sold or purchased or agreed to issue, sell
or purchase and will not issue, sell or purchase or agree to issue,
sell or purchase, any capital stock or any Convertible Securities or
Option Securities;
(p) has not declared, made or paid or agreed to declare, make
or pay, and will not have declared, made or paid or agreed to declare,
make or pay, any Distribution; and
(q) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to any of the Diablo Assets or the Diablo
Business.
The Company will notify American of any and all Events which would
require any material change to be made in the Disclosure Schedule insofar as it
relates to it or which could cause or result in any material breach or
inaccuracy of the Company's representations and warranties including without
limitation those set forth in this Section or which could materially impair the
likelihood that all of the conditions specified in Section 4 will be satisfied
on or prior to the Closing Date.
2.10 Private Sale. The Company has not, directly or indirectly or
through anyone acting on its behalf, offered any of the Notes, the Additional
Compensation Certificates 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 or the
Additional Compensation Certificates under the registration provisions of the
Securities Act.
2.11 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.
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<PAGE>
2.12 Use of Proceeds. The Company shall use the proceeds of the sale of
the Note and the Additional Compensation Certificates to American hereunder to
complete the development of new communication sites and capital improvements to,
but not personnel costs, maintenance or other expense items of, its existing
communication sites. At the election of the Company, such proceeds may also be
used to replenish funds used for such expenses incurred subsequent to October
31, 1996.
2.13 Material Agreements and Private Authorizations. Except as set
forth on the Disclosure Schedule:
(a) The Company has obtained all Private Authorizations and
Material Agreements which are necessary for the ownership by it of the
properties and assets constituting a part of the Diablo Assets and the
conduct of the Diablo Business as now conducted or as presently
proposed to be conducted or which, if not obtained and maintained,
could, individually or in the aggregate, have a Material Adverse Effect
on the Company;
(b) As of the date hereof, all of such Material Agreements are
valid, binding and legally enforceable obligations of the Company and,
to the knowledge of the Company, the other party thereto, and the
Company is validly and lawfully operating the business of the Diablo
Assets and the Diablo Business and owning or using the related property
under each of such Material Agreements;
(c) No such Private Authorization is the subject of any
pending or, to the Company's knowledge, threatened attack, revocation
or termination; and
(d) As of the date hereof, the Company has duly complied in
all respects with all of the terms and conditions of each such Material
Agreement and each such Private Authorization and has not done or
performed, or failed to do or perform (and there is no pending, or, to
the Company's knowledge, threatened, Claim that the Company has not so
complied, done and performed or fail 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) or
materially impair its rights or benefits of, or materially increase the
costs to, the Company, under any of such Material Agreements or Private
Authorizations, except, in all cases, for such exceptions which,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
2.14 Employee Retirement Income Security Act of 1974. The Company has
not at any time during the past five years made and is not making any
contribution to any Plans and is not bound by any Plan relating to any of its
employees involved in the ownership and operations of any of the Diablo Assets
or the Diablo Business, except as set forth in the Disclosure Schedule. As to
all such Plans and except as listed in the Disclosure Schedule, all such Plans
comply and have been administered in form and in operation in all material
respects with all Applicable Laws. The Company is not and never has been a party
to any Multiemployer Plan or made contributions to any such Plan.
2.15 Authorized and Outstanding Capital Stock . The authorized and
outstanding capital stock of the Company is as set forth in the Disclosure
Schedule. All of such outstanding capital
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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
set forth in the Disclosure Schedule, (i) there is neither outstanding nor has
the Company agreed to grant or issue any shares of capital stock or any Option
Security or Convertible Security and (ii) the Company is not a party to or is
not 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.
2.16 Inapplicability of Specified Statutes. The Company is not, to its
knowledge, 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 sections 10102 or 11301 of Title 49,
U.S.C. The Company is not engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulations G and U of the Board of Governors of the Federal Reserve System.
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 constitutes, and each other Related Agreement
to which it is a party, when executed and delivered by American 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 ap plicability.
(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:
(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
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<PAGE>
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) will 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 and the Additional Compensation
Certificates 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, subject to the provisions of Section 5.7 of the Notes and of
Section 2(d) of the Additional Compensation Certificates, to dispose of the
Notes and the Additional Compensation Certificates or any part thereof in its
sole discretion; provided, however, that notwithstanding the foregoing, American
may pledge any or all of the Notes and the Additional Compensation Certificates
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 or the Additional Compensation Certificates.
3.3 Covenant Regarding Transfer. American covenants and agrees that it
will not sell, assign, transfer or otherwise dispose of any of the Notes or the
Additional Compensation Certificates in violation of the Securities Act.
4. Conditions of Closing. American's obligation to purchase the Notes
and the Additional Compensation Certificates shall be subject to compliance by
the Company with its agreements herein contained, to the truth and accuracy in
all material respects of the certificates to be furnished to it pursuant to this
Section, the truth and accuracy in all material respects 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. Subject to the provisions of the
Letter of Intent, (a) the representations and warranties contained in Section 2
shall be true and correct in all material respects on and as of the Closing
Date; (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
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<PAGE>
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.
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 California 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 Closing 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(d) (limited to corporate power
and authority), 2.1(e) (to such counsel's knowledge), and 2.16, 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 or the Additional Compensation Certificates nor the
qualification of this Agreement under the Trust Indenture Act of 1939, as
amended to date, is required.
4.4 Legality; Governmental and Other Authorizations. Except as set
forth on the Disclosure Schedule, the purchase of and payment for the Notes and
the Additional Compensation Certificates 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.
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
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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 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. Subject to the provisions of Section 5.7, 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, subject to the provisions of Section 5.7, 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.
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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 in the Notes, if any
Note of which 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,
including without limitation Section 5.7, 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.
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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.
5.7 Limitation on Transfer of Notes. Anything in this Section 5 or
elsewhere in this Agreement to the contrary notwithstanding, prior to the
earlier of September 30, 1997 or the acceleration of the Notes by American
pursuant to the provisions of Section 6.1, the Notes shall not be transferable
by American (or any of its Affiliates) except (a) to an Affiliate of American or
(b) to one or more bona fide lenders to American or any of its Affiliates.
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 earliest to occur of (a)
consummation of the Acquisition (in which event the Company may, in its sole
discretion, elect to have the Notes assumed by American as part of such
transaction in which event the consideration to be delivered by American shall
be reduced by an amount equal to the principal amount of the Notes so assumed
and accrued and unpaid interest thereon to the date of assumption), (b) the
occurrence of the Acquisition Termination Date, and either (i) the demand by
American for payment thereof or (ii) the election of the Company to prepay the
Notes, in either case, in its sole discretion, and (c) June 30, 2000.
6.2 Restriction on Optional Payments. The Company may prepay the Notes,
in whole but not in part, either:
(a) in the event of the occurrence of the Acquisition
Termination Date, the Company may, in its sole discretion, elect, at
any time within ninety (90) days of the occurrence of the Acquisition
Termination Date, to prepay the Notes, at their principal amount,
without premium but with interest accrued and unpaid thereon to the
date of payment, either in cash or pursuant to an agreement customary
in comparable transactions and reasonably satisfactory to American
relating to the purchase and sale of the DCSC Business, free and clear
of all Liens, except as otherwise set forth in Exhibit B to the Letter
of Intent. Such agreement shall (i) provide for a purchase price for
the DCSC Business equal to (A) the sum of $4,200,000 and an amount
equal to the amount of any capital improvements made by DCSC or the
Company to the DCSC Assets since October 31, 1996, minus (B) the
principal amount of the Notes and the DCSC Notes, plus accrued and
unpaid interest on the Notes and the DCSC Notes to the date of
consummation of such purchase and sale (which shall be on such date not
earlier than December 15, 1997 and not later than December 31, 1997 as
American and the Company may agree), and (ii) contain such terms and
conditions as are customary in comparable transactions and reasonably
satisfactory to the Company and American.
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(b) except as provided in Section 6.2(a), for cash, at any
time after December 31, 1997, at their principal amount together with
interest accrued to the date of payment; provided, however, that it
shall be a condition of the Company's right to prepay the Notes
pursuant to the provisions of this Section 6.2(b) that, simultaneously
with such prepayment, DCSC shall have prepaid in their entirety the
DCSC Notes.
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 thirty
(30) nor more than sixty (60) 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 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 ac ceptance 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
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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
CAAP, 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 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 CAAP, 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. 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 (a) will, and will cause each of its
Subsidiaries to, continue to engage in the business of owning and operating the
Diablo Assets and conducting the Diablo 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. 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, and will cause each of
its Subsidiaries to: (a) keep its assets and property relating to each of the
Diablo Assets and the Diablo 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
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to each of the Diablo Assets and the Diablo Business to which it is a party or
under which it oc cupies 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. 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, and will cause each Subsidiary to:
(a) keep its assets and property relating to each of the Diablo Assets and the
Diablo 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 Diablo Assets and the conduct
of the Diablo Business, in accordance with CAAP 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 CAAP 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 occurred 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 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 Diablo Business and the ownership of the assets and property of the Diablo
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 reason ably 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
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of the Company or any of its Subsidiaries, to examine and to discuss their
affairs, finances and accounts (including without limitation any letters of
comment with respect to audits, letters to management or confidential reports
relating to financial matters submitted 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
relating to each of the Diablo Assets and the Diablo Business,
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 CAAP
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.
(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, accompanied by
supporting statements and
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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 Diablo Assets and the Diablo
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 any of the Diablo Assets or the
Diablo Business 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, other than in cash or cash equivalents and then only if, after giving
effect thereto, (a) the Company has cash or cash equivalents of not less than
$500,000, (b) no Default or Event of Default shall have occurred and be
continuing, and (d) a maximum of debt to tangible net worth of not more than
1.00 to 1.00. For purposes of this Section, "effective tangible net worth",
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"tangible net worth", "debt coverage" and "debt" shall be determine in
accordance with the provisions of the Sanwa Loan Agreement as in effect on the
date hereof.
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
(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 Diablo Assets or the Diablo
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
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Company will not, and will not permit any Subsidiary to, permit to exist or
enter into any agreement or arrangement relating to any of the Diablo Assets or
the Diablo Business 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 Diablo
Assets or the Diablo 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;
(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. 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 and each of its Subsidiaries will own
and operate the Diablo Assets and conduct the Diablo Business in the normal,
usual and customary manner in the ordinary and regular course of business.
Without limiting the generality of the foregoing, 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, and will not
permit any Subsidiary to, take any of the following actions with respect to the
Diablo Assets and the Diablo Business:
(a) Transfer or agree to Transfer any of the properties or
assets constituting a part of the Diablo Assets or the Diablo Business,
other than nonmaterial amounts of machinery and
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equipment sold or otherwise disposed of in the ordinary course of
business and no longer needed in the operation or business or replaced
with assets of like kind or better kind and quality;
(b) with prior practices, (i) incur any material obligations
or liabilities (fixed, contingent or other); (ii) make any additions to
its property or any purchases of machinery or equipment, except for
normal maintenance and replacements; (iii) or agents, and will not
otherwise alter, modify or change in any material respect the terms of
their employment or engagement, and has not entered and will not enter
into new employment arrangements; (iv) waive, any rights of substantial
value without fair and adequate consideration; (v) amend in any
material respect, terminate or enter into or become (or permit any of
its property to be) bound by or subject to any Lease, Governmental
Authorization, Private Authorization, Employment Arrangement or Plan or
any Contractual Obligation which could have a Material Adverse Effect
on the Company; (vi) do any act or fail to do any act, if such act or
failure to act might result in the expiration, revocation, suspension
or modification of any of its Material Governmental Authorizations or
Material Private Authorizations; and (vii) enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to the Company; and
(c) waive any condition set forth therein to consummation of,
or otherwise amend, modify or terminate, any Material Agreement, or
enter into any agreement or other arrangement which would constitute a
Material Agreement, except for such waivers, amendments or
modifications, or such other agreements or arrangements as do not and
will not have in the aggregate any Material Adverse Effect on the
Company.
The Company shall use reasonable business efforts to preserve the
ownership, operation, management, policies and personnel of the Diablo Assets
and the Diablo Business, and shall not alter such ownership, operation,
management, policies, or personnel in any manner that would, individually or in
the aggregate, have a Materially Adverse Effect on the Diablo Assets or the
Diablo Business.
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
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(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 in any material respect 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 (3) 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 7.18; or
(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, 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 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 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
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(i) if the Company or DCSC shall enter into an agreement,
whether or not legally binding, with respect to a Third Party Transfer
or a Third Party Transfer shall have occurred; or
(j) if any Potential Default or Event of Default (each as
defined in the DCSC Note Agreement) shall have occurred and be
continuing;
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, without being required to give
any notice (except as may be required by law), exercise their rights under the
Security Agreement whether or not they elect to accelerate payment as provided
herein; and/or in addition thereto each Holder may proceed to protect and
enforce its 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 pursuant to an Agreement customary in comparable transactions and
reasonably satisfactory to American relating to the purchase and sale of the
DCSC business, free and clear of all liens, except as otherwise set forth in
Exhibit B to the Letter of Intent. Such agreement shall be on the same terms and
conditions as are set forth in Section 6.2 of this Agreement.
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 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.
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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 Sec tion 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 which it may now or
hereafter have with respect to its liability under this Agreement or the Notes.
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, 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,
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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 CAAP consistently applied with the Financial Statements
delivered to American hereunder.
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 earlier of (a)
the failure of American and the Company to enter into a definitive agreement
with respect to the Acquisition, regardless of the reason therefor, within the
time permitted by the Letter of Intent or (b) the date on which the Acquisition
Agreement, if executed and delivered, 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 com mencing 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
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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 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 "Additional Compensation Certificates" is defined in Section
1.1.
The term "Affiliate", when used with respect to any Person, shall mean
(i) any other Person at the time directly or indirectly controlling, controlled
by or under direct or indirect common control with such Person, (ii) 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 on a consolidated basis of
the equity or beneficial interest, (iii) any other Person which at the time
owns, or has the right to acquire, directly or indirectly twenty percent (20%)
or more of the equity or beneficial interest of such Person, (iv) any executive
officer or director of such Person, or any Person of which such Person or any
executive officer or director of such Person at the time owns, or has the right
to
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acquire, directly or indirectly, twenty percent (20%) of more of the equity or
beneficial interest, and (v) when used with respect to an individual, shall
include a spouse, any ancestor or descendant, or any other relative (by blood,
adoption or marriage), within the third degree of such individual. A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power to direct or cause the direction of the
management or policies of such Person or the disposition of its assets or
property, whether by stock, equity or other ownership, contract, arrangement or
understanding, or otherwise.
The term "American" is defined in the preamble of this Agreement.
The term "Applicable Law" shall mean any Law of any Authority, whether
domestic or foreign, including without limitation all federal and state
securities Laws, to which the Person in question is subject or by which it or
any of its property is bound.
The term "Authority" shall mean any governmental or quasi-governmental
authority, whether executive, legislative, judicial, administrative 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, 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.
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 "CAAP"" shall mean the accounting principles used by the
Company in the preparation of the Financial Statements and described in general
terms in the Disclosure Schedule, such principles applied on a consistent basis,
except as otherwise heretofore disclosed in the Disclosure Schedule. The
requirement that such principles be consistently applied means that the
accounting principles in a current period are comparable in all material respect
to those applied in preceding period. All accounting and financial terms used in
this Agreement and the compliance with each covenant contained in this Agreement
that relates to financial matters shall be determined in accordance with the
accounting principles referred to in this paragraph (except as otherwise
specifically noted in certain of the definitions where the term GAAP is used).
In the event of a change in any method of accounting used by the Company or any
of its Subsidiaries 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 occurred 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
determine in good faith that any requirements of this Agreement are
substantially 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.
The term "California Application" is defined in Section 1.1.
The term "California Securities Law" is defined in Section 1.1.
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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 directly or indirectly with respect to any of
the Diablo Assets or the Diablo Business which, in accordance with CAAP, 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 CAAP 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 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 Diablo Assets or the Diablo 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 term "Claims" shall mean, with respect to any Person, any and all
debts, liabilities, obligations, losses, damages, deficiencies, assessments and
penalties of or against such Person, 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.
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The terms "Closing" and "Closing Date" are defined in Section 1.3.
The term "Code" shall mean the United States 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.
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 "Contractual Obligation" shall mean, with respect to any
Person, any term, condition, provision, representation, warranty, agreement,
covenant, undertaking, commitment, indemnity or other obligation set forth in
the organizational agreements and other documents of such Person or which is
outstanding or existing under any agreement, contract, arrangement, instrument
or understanding to which such Person is a party or by which it or any of its
business is subject or properties is bound and which, in the case of the
Company, relates to any of the Diablo Assets or the Diablo Business.
The term "Convertible Securities" shall mean, with respect to any
Person, any evidences of indebtedness, shares of any class of capital stock
(other than common stock which is not convertible into or exchangeable for any
other shares of any class of capital stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
The term "DCSC" is defined in the third whereas paragraph, preceding
Section 1.
The term "DCSC Additional Compensation Certificates" is defined in the
fourth whereas paragraph, preceding Section 1.
The term "DCSC Business" is defined in the third whereas paragraph,
preceding Section 1.
The term "DCSC Letter of Intent" is defined in the third whereas
paragraph, preceding Section 1.
The term "DCSC Notes" is defined in the fourth whereas paragraph,
preceding Section 1.
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The term "DCSC Note Agreement" is defined in the fourth whereas
paragraph, preceding Section 1.
The term "Diablo Assets" is defined in Section 2.4.
The term "Diablo Business" is defined in the first whereas paragraph,
preceding Section 1.
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 "Employment Arrangement" shall mean, with respect to the
Company, any employment, consulting, retainer, severance or similar contract,
agreement, plan, arrangement or policy (exclusive of any which is terminable
within ninety (90) days without liability, penalty or payment of any kind of the
Company or any of its Affiliates), 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 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, to the extent, in each case, it relates to,
covers or is for the benefit of any employee involved in the business or
operations of any of the Diablo Assets or the Diablo Business.
The term "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, 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 provision.
The term "Event" shall mean the occurrence or existence of any act,
action, activity, circumstance, condition, event, fact, failure to act, incident
or practice, or any set or combination of any of the foregoing.
The term "Event of Default" is defined in Section 8.1.
The term "GAAP" shall mean means, except to the extent that a deviation
therefrom is expressly required by this Agreement, 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
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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.
The term "Governmental Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, plans, registrations and
other authorizations of all Authorities relating, in the case of the Company, to
the ownership or operation of the Diablo Assets or the conduct of the Diablo
Business.
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.
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 term "Indebtedness" shall mean, with respect, to any Person, (a)
all items, except items of capital stock, partnership interests, surplus or
general contingency or deferred tax reserves or any minority interest in any
Subsidiary 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 Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease back arrangement.
The term "Indebtedness for Money Borrowed" shall mean, with respect to
any Person, (a) money borrowed, (b) 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, (c) Indebtedness upon
which interest charges are customarily paid by such Person, (d) 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, and (e)
Guarantees of any of the Indebtedness described in items (a) through (d), but
shall not include (i) trade payables, (ii) expenses accrued in the ordinary
course of business or (iii) customer advance payments and customer deposits
received in the ordinary course of business.
The term "Law" shall mean any action, code, consent decree,
constitution, decree, directive, enactment, finding, guideline, law, injunction,
interpretation, judgment, order, ordinance, policy
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statement, proclamation, promulgation, regulation, requirement, rule, rule of
law, rule of public policy, settlement agreement, statute, or writ, or the
common law, or any particular section, part or provision thereof, or any
interpretation, directive, guideline or request (whether or not having the force
of law), of any Authority, including without limitation (a) the judicial systems
thereof, or any particular section, part or provision thereof, and (b) any of
the foregoing relating to antitrust or prohibiting other anticompetitive
business practices, those relating to employment practices (such as
discrimination, health and safety), and those relating to minority business
enterprises.
The term "Legal Action" shall mean, with respect to any Person, any
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information 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 its business or
property or assets.
The term "Letter of Intent" is defined in the first whereas paragraph,
preceding Section 1.
The term "Lien" shall mean any mortgage, lien (statutory or other),
preference, priority or other security agreement, arrangement or interest,
hypothecation, pledge or other deposit arrange ment, assignment, charge, levy,
executory seizure, attachment, garnishment, encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction, building or use restriction, and the like), conditional sale, title
retention or other similar arrangement, device, agreement or restriction,
preemptive or similar right, any financing lease involving substantially the
same economic effect as any of the foregoing and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction, or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
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 such Person or such Person and
its Subsidiaries taken as a whole, which, in the case of the Company, shall mean
each of the Diablo Assets or the Diablo Business, (c) materially impair such
Person's ability to fulfill its obligations under the terms of any agreement,
instrument or other document executed or required to be executed by such Person,
(d) materially and adversely affect the aggregate rights and remedies of any
party (other than such Person) under the Agreement or any agreement, instrument
or other document executed or required to be executed pursuant hereto or
thereto, or (e) or, in the case of the Company, adversely affects its 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.
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<PAGE>
The term "Material Agreement" shall mean, with respect to the Company,
any agreement, contract, arrangement, undertaking, commitment, license or
obligation relating to the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business which (a) was not entered into in the ordinary
course of business, (b) was entered into in the ordinary course of business
which (i) involves the purchase, sale or lease of goods or materials or
performance of services aggregating more than Fifty Thousand Dollars ($50,000),
(ii) extends for more than twelve (12) months, or (iii) is not terminable on
thirty (30) days' or less notice without penalty or other payment, (c) involves
Indebtedness for Money Borrowed in excess of Fifty Thousand Dollars ($50,000),
or (d) would account for more than one percent (1%) of revenues or expenses of
the Diablo Business projected to be received or incurred by the Company during
the current fiscal year. Without limiting the generality of the foregoing, the
term "Material Agreement" shall include the Acquisition Agreement.
The term "Most Recent Balance Sheet" is defined in Section 2.3.
The term "NSR Rate" is defined in the Additional Compensation
Certificates.
The term "Net Site Revenue" is defined in the Additional Compensation
Certificates.
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 CAAP, 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 "Option Securities" shall mean all rights, options and
warrants, and calls or commitments evidencing the right, to subscribe for,
purchase or otherwise acquire shares of any class of capital stock or other
securities or Convertible Securities, whether or not the right to subscribe for,
purchase or otherwise acquire is immediately exercisable or is conditioned upon
the passage of time, the occurrence or non-occurrence or the existence or
non-existence of some other Event.
The term "PBGC" shall mean the Pension Benefit Guaranty Corporation and
any Person succeeding to any or all of its functions under ERISA.
The term "Permitted Liens" shall mean:
(e) the security interest created under the Security Agreement
in favor of the holders of the Notes;
(f) Liens for taxes if payment shall not at the time be
required to be made in accordance with the provisions of Section 7.2;
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(g) 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;
(h) 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 enforcement proceedings shall not have begun or shall have
been fully bonded or otherwise effectively stayed);
(i) 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
(j) Liens set forth in the Disclosure Schedule.
The term "Person" shall mean any natural individual, corporation, firm,
unincorporated organization, association, partnership, limited liability
company, business trust, joint stock company, joint venture, trust or other
organization, entity or business, or any governmental authority, whether acting
in an individual, fiduciary or other capacity.
The term "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 (as defined in ERISA) is (or,
if such plan were terminated at such time, would under Sec tion 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
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 "Prepayment Penalty" is defined in the Additional Compensation
Certificates.
The term "Prime Rate" is defined in Section 1.1.
The term "Private Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, and other authorizations
of all Persons (other than Authorities) other than those of a nature included
within the definition of Intellectual Property which, in the case of the
Company, relates to the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business.
The term "Purchase Price" is defined in Section 1.2.
The term "Related Agreement" shall mean this Agreement, the Notes,
Acquisition Agreement (if executed and delivered), 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,
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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 "Rental Obligations," with respect to any lease for any
period, shall mean the minimum amount of rental payments required to be made in
such period by the lessee under such Lease, including without limitation any
amounts required to be paid by such lessee, whether or not designated as rental
or additional rental: (a) on account of maintenance and repairs, insurance,
taxes, assessments, water and sewer rates and similar charges, and (b) which are
payable on the basis of profits, revenues or sales to be derived from the leased
property or any other index of performance.
The term "Sanwa Loan Agreement" shall mean the Term Loan Agreement,
dated as of January 31, 1996, by and between Sanwa Bank California and Diablo
Communications, Inc. and Richard D. Spight, Trustee of the Mary Colores Spight
Family Trust U/A/D June 16, 1983, as amended as of the date hereof.
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 "Subject Sites" is defined in Section 1.1.
The term "Subsidiary" with respect to any corporation (the "parent")
shall mean any Person of which such parent, at the time in respect of which such
term is used, (a) owns directly or indirectly more than fifty percent (50%) of
the equity or beneficial interest, on a consolidated basis,
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and (b) owns directly or controls with power to vote, indirectly through one or
more Subsidiaries, shares of capital stock or beneficial interest having the
power to cast at least a majority of the votes entitled to be cast for the
election of the directors, trustees, managers or other officials having powers
analogous to those of directors of a corporation. Unless otherwise specifically
indicated, when used herein the term Subsidiary shall refer to a direct or
indirect Subsidiary of the Company.
The term "Tax" (and with correlative meanings, "Taxes" and "Taxable"),
shall mean, with respect to any Person, (a) any net income, alternative or
add-on minimum tax, gross income, gross receipts, gains, sales, use, ad valorem,
transfer, franchise, profits, license, withholding on amounts paid to or by such
Person or any of its Subsidiaries, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any Authority (a "Taxing Authority")
responsible for the imposition of any such tax (domestic or foreign), (b) joint
or several liability of such Person or any of its Subsidiaries with any other
Person for the payment of any amounts of the type described in (a) and (c)
liability of such Person or any of its Subsidiaries 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.
The term "Tax Returns" shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed in any jurisdiction with respect to Taxes.
The term "Transfer" shall mean any sale, assignment, conveyance,
transfer or other disposition, mortgage, pledge or other Lien, lease, exchange,
abandonment, parting with control of, gift, granting of an option or proxy or
other act of alienation.
The term "Third Party Transfer" shall mean, with respect to any Person,
the Transfer of all or any substantial portion of business, property or assets
of such Person, including in the case of the Company of all or any substantial
portion of the Diablo Assets or the Diablo Business to any other Person other
than (a) any Transfer to American or one of its Affiliates or (b) any bona fide
mortgage, pledge or other Lien thereon granted to a bank or other recognized
financial institution pursuant to the incurrence of Indebtedness and not with
the intent of avoiding Section 6.1 of this Agreement.
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 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
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<PAGE>
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, the Company will pay all of the following expenses in
connection with such transactions and in con nection 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:
(a) the cost and expenses of its counsel, including the furnishing of all
opinions by such counsel and all certificates on behalf of the Company, and of
the Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with; (b) the taxes
specified in Section 10.1; (c) the costs and expenses specified in Sections 8.6
and 10.9; and (d) the out-of-pocket expenses incurred by each holder of any
Notes in connection with any amendments or waivers or in connection with or
arising out of any litigation, investigation or proceeding instituted by any
Authority or any other Person with respect to this Agreement, the Notes or the
other Related Agreements to which it is a party or the transactions contemplated
hereby and requiring such holder's participation or involvement, except as
otherwise provided in the Acquisition Agreement.
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 (i) mailed by first-class, express mail
or other overnight mail service, postage prepaid, or Federal Express or other
overnight mail courier service, (ii) sent by telex, telegram, telecopy or other
similar form of rapid transmission, confirmed by mailing (by first class or
express mail, postage prepaid, or Federal Express or other overnight mail
courier service) written confirmation at substantially the same time as such
rapid transmission, or (iii) personally delivered to an officer of the receiving
party. All such communications shall be mailed, set or delivered:
(a) if to the Company, at 1220 Brickyard Cove Road, Suite 200,
Point Richmond, CA 94801, (facsimile [510] 236-3799), attention:
Richard Spight, Chairman (with a copy to Cooper, White & Cooper, 1333
North California Boulevard, Suite 450, Walnut Creek, CA 94596,
(facsimile [510] 256-9428), attention: Keith Howard, Esq.);
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<PAGE>
(b) if to American, at 6400 North Congress Avenue, Suite 1750,
Boca Raton, FL 33487, (facsimile: [407] 998-2278), attention: James S.
Eisenstein, Chief Operating Officer (with copies to American Radio
Systems Corporation, 116 Huntington Avenue, Boston, MA 02116,
(facsimile [617] 375-7575), attention: Joseph L. Winn, Chief Financial
Officer, and Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, (facsimile [617] 338-2880), attention: Norman A.
Bikales, Esq.); and
(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.
A notice delivered in person shall be effective when received or upon
refusal to accept receipt; a notice sent by mail shall not become effective
until received by the Person to whom it is given, unless it is mailed by
registered or certified mail, in which case it shall be deemed effective on the
date of receipt or refusal to accept receipt as indicated by postal records; a
notice sent by rapid transmission shall be deemed to be given when receipt of
such transmission is acknowledged.
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 compli ance 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; Venue. This Agreement is and shall be deemed to be
a contract made under, and the validity, interpretation, construction and
performance of this Agreement shall be governed by, the applicable laws of the
United States of America and the domestic substantive laws of the State of New
York without giving effect to any choice or conflict of laws provision or rule
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that would cause the application of domestic substantive laws of any other
jurisdiction. In the event of any Legal Action between the parties arising out
of this Agreement, the parties agree to submit the matter to the appropriate
municipal, state or federal court sitting in San Francisco, California, and the
parties agree to submit to the jurisdiction of such courts.
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 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 Boca Raton, Florida or San
Francisco, California, or a day on which banking institutions in Boca Raton,
Florida or San Francisco, California, 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.
10.9 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,
directors, 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.
10.10 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.
10.11 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
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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.
10.12 Further Assurances Each of the parties hereto agrees to execute
and deliver those writings and documents reasonably required to more fully carry
out the acts contemplated hereby, and each party hereby agrees, at the written
request of any other party, to advise any Person of the status of this
Agreement, the Notes or any of the other Related Agreements and to the effect
that any of the same is or is not in default.
10.13 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.
10.14 Non-Recourse Obligation. The obligations of the Company
represented by the Notes are nonrecourse to the stockholders of the Company,
and, notwithstanding any provision to the contrary in this Agreement, the Note
or any of the other Related Agreements, American agrees for itself, and its
successors and assigns that (a) neither any stockholder of the Company nor his
successors and assigns shall be personally liable on the Notes, and (b) in the
event that one or more Events of Defaults has occurred or any other default
whatsoever has occurred under this Agreement or the Notes, American, or any of
its successors and assigns, shall look solely to the Company and its property
and assets, including without limitation the Diablo Assets and the Diablo
Business, of the Company for payment of the indebtedness represented by the
Notes and will not make any claim or institute any action or proceeding against
any stockholder of the Company, or any of his successors and assigns, for
payment of such indebtedness (or for any deficiency).
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.
Diablo Communications, Inc.
By:________________________________
Name:
Title:
American Tower Systems Corporation
By:________________________________
Name:
Title:
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EXHIBIT 10.4C
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
Dated as of
July 8, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................2
2.1 Agreement to Sell and Buy..............................................................2
2.2 Assumption of Liabilities and Obligations. ............................................2
2.3 Closing; Purchase Price................................................................5
2.4 Accounts Receivable....................................................................6
2.5 Like-Kind Exchanges....................................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF DIABLO........................................................7
3.1 Organization and Business; Power and Authority; Effect of Transaction..................7
3.2 Financial and Other Information. .....................................................8
3.3 Changes in Condition...................................................................9
3.4 Materiality............................................................................9
3.5 Title to Properties; Leases............................................................9
3.6 Compliance with Private Authorizations................................................10
3.7 Compliance with Governmental Authorizations and Applicable Law........................11
3.8 Intangible Assets.....................................................................12
3.9 Related Transactions..................................................................12
3.10 Insurance.............................................................................12
3.11 Tax Matters. ........................................................................12
3.12 Employee Retirement Income Security Act of 1974.......................................13
3.13 Absence of Sensitive Payments.........................................................15
3.14 Inapplicability of Specified Statutes.................................................15
3.15 Employment Arrangements...............................................................15
3.16 Material Agreements...................................................................15
3.17 Ordinary Course of Business...........................................................16
3.18 Material and Adverse Restrictions.....................................................16
3.19 Broker or Finder......................................................................17
3.20 Solvency..............................................................................17
3.21 Environmental Matters.................................................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS..........................................................17
4.1 Organization and Business; Power and Authority; Effect of Transaction.................17
4.2 Broker or Finder......................................................................18
4.3 Solvency..............................................................................18
4.4 No Legal Action.......................................................................18
ARTICLE 5 COVENANTS......................................................................................18
5.1 Access to Information; Confidentiality................................................18
5.2 Agreement to Cooperate. .............................................................19
5.3 Public Announcements..................................................................20
5.4 Notification of Certain Matters.......................................................20
5.5 No Solicitation.......................................................................21
5.6 Conduct of Business by Diablo Pending the Closing.....................................21
5.7 Preliminary Title Reports.............................................................22
5.8 Environmental Site Assessments........................................................23
5.9 Post-Closing Covenants and Agreements of the Parties..................................23
<PAGE>
ARTICLE 6 CLOSING CONDITIONS.............................................................................24
6.1 Conditions to Obligations of Each Party to effect the Transactions....................24
6.2 Conditions to Obligations of ATS......................................................24
6.3 Conditions to Obligations of Diablo...................................................27
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................28
7.1 Termination...........................................................................28
7.2 Effect of Termination.................................................................28
ARTICLE 8 INDEMNIFICATION................................................................................29
8.1 Survival..............................................................................29
8.2 Indemnification.......................................................................29
8.3 Limitation of Liability...............................................................30
8.4 Notice of Claims......................................................................31
8.5 Defense of Third Party Claims.........................................................32
8.6 Exclusive Remedy......................................................................32
ARTICLE 9 GENERAL PROVISIONS.............................................................................32
9.1 Amendment.............................................................................32
9.2 Waiver................................................................................32
9.3 Fees, Expenses and Other Payments.....................................................33
9.4 Notices...............................................................................33
9.5 Specific Performance; Other Rights and Remedies.......................................34
9.6 Severability..........................................................................34
9.7 Counterparts..........................................................................35
9.8 Section Headings......................................................................35
9.9 Governing Law; Venue..................................................................35
9.10 Further Acts..........................................................................35
9.11 Entire Agreement......................................................................35
9.12 Assignment............................................................................35
9.13 Parties in Interest...................................................................35
9.14 Mutual Drafting.......................................................................35
9.15 Arbitration...........................................................................36
9.16 Disclosure Schedule...................................................................36
</TABLE>
APPENDIX A: Definitions
SCHEDULES:
Diablo Disclosure Schedule
EXHIBITS:
EXHIBIT A Form of Noncompetition Agreement (Section 6.2(j))
EXHIBIT B Form of Indemnity Escrow Agreement (Section 6.2(k))
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of July 8,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and Diablo Communications of Southern California, Inc., a California
corporation ("Diablo").
WHEREAS, Diablo owns and leases and operates communication towers and
is engaged in the business of managing communication sites for third parties
(the "Diablo Business");
WHEREAS, ATS desires to purchase and Diablo desire to sell the Diablo
Assets and the Diablo Business on the terms and conditions hereinafter set
forth;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, ATS and Diablo have entered into an escrow agreement (the "Escrow
Agreement") with Bank of San Francisco (the "Escrow Agent"), pursuant to which
ATS has made a deposit of $200,000 (the "Escrow Deposit");
WHEREAS, ATS is party to an asset purchase agreement with Diablo
Communications, Inc., a California corporation ("DCI"), dated as of the date of
this Agreement (the "Other Agreement"), relating to the purchase and sale of the
communication towers and the business of managing communication sites for third
parties of DCI; and
WHEREAS, ATS and Diablo have heretofore executed and delivered a Note
Purchase Agreement, dated as of March 20, 1997 (the "Note Agreement"), pursuant
to which Diablo has issued an unsecured note in the aggregate principal amount
of up to Seven Hundred Fifty Thousand Dollars ($750,000) (the "Interim Financing
Note");
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 Diablo 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. The term
"either party" shall, unless the context otherwise requires, refer to Diablo and
ATS.
<PAGE>
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, Diablo hereby agrees to sell, assign, transfer and
deliver to ATS at the Closing, and ATS agrees to purchase at the Closing, the
Diablo Assets and the Diablo Business, free and clear of any Liens of any nature
whatsoever except for Permitted Liens. For purposes of this Agreement, the term
"Diablo Assets" shall mean all of the Assets of Diablo, other than the Excluded
Assets. For purposes of this Agreement, the term "Excluded Assets" shall mean
the following Assets:
(a) all cash;
(b) all cash equivalents;
(c) all Accounts Receivable;
(d) all books and records (including without limitation, if
retained by Diablo, any financial records necessary or desirable to
enable the condition specified in Section 6.2(g) to be satisfied) which
Diablo is required by Applicable Law to retain, subject to the right of
ATS to have access and to copy for a period of three (3) years from the
Closing Date; the records described herein shall further include
without limitation all corporate seals, certificates of incorporation,
minute books, stock books, Tax Returns or other records having to do
with the corporate organization of Diablo;
(e) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(f) the miscellaneous assets of Diablo and the personal assets
of the officers, directors, shareholders and employees of Diablo, all
as more specifically described in Section 2.1(f) of the Diablo
Disclosure Schedule;
(g) any of the real property specifically described in Section
2.1(g) of the Diablo Disclosure Schedule which is covered by any
agreement executed and delivered pursuant to the provisions of Section
6.2(p); and
(h) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of Diablo (collectively, the
"Diablo Assumed Obligations"): (i) all of the obligations and liabilities of
Diablo under the Diablo Assumable Agreements, and (ii) all obligations and
liabilities of Diablo with respect to the ownership and operation of the Diablo
Assets and the conduct of the Diablo Business, on and after the Closing Date;
provided, however, that notwithstanding the foregoing, ATS shall not assume and
agree to pay, and shall not, except as provided in Section 2.2(c), be obligated
with respect to, the Diablo Nonassumed Obligations.
(b) Except as otherwise specifically set forth in this Agreement or in
the Diablo Disclosure Schedule to the contrary, ATS shall not assume or become
obligated to perform any debt, liability or
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obligation of Diablo relating to any of the following matters (collectively, the
"Diablo Nonassumed Obligations"):
(i) the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement of Diablo (including without limitation any obligation to
any Diablo Employee for severance benefits or, except as provided in
Section 2.2(c), vacation time or sick leave), and any of the following
to the extent same arise from Events occurring prior to or existing on
the Closing Date: products liability, Legal Actions or other Claims,
and obligations and liabilities relating to Environmental Law;
(ii) any obligations or liabilities under the Diablo Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of Diablo;
(iv) those required to be disclosed in the Diablo Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the Diablo Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by Diablo under this Agreement or
any Collateral Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of Diablo's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any Excluded
Asset;
(viii) any obligation or liability with respect to capitalized
lease obligations or Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid by Diablo pursuant to the provisions of this Agreement or any
Collateral Document; and
(x) any Contract with any Affiliate of Diablo, other than
those set forth in Section 2(b)(x) of the Diablo Disclosure Schedule.
All Diablo Nonassumed Obligations shall remain and be the obligations and
liabilities solely of Diablo.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the term "Diablo Nonassumed Obligations" shall not
include, and the term "Diablo Assumed Obligations" shall include, (i) the ATS
Assumed Vacation Liability and the ATS Accrued Sick Time Liability and (ii) any
liability arising out of the transfer or assignment to ATS of, or the use or
enjoyment of the benefits by ATS under, any Contract, Governmental Authorization
or Private Authorization the transfer or assignment of which (according to
Section 2.2(c) of the Diablo Disclosure Schedule or according to the terms of
such Government Authorization or Private Authorization) requires or may require
the consent of any Authority or other third party (collectively, the
"Nonassignable Contracts"), if ATS has, on or prior to the Closing Date,
notified Diablo in writing (an "Acceptance Notice") that ATS consents to the
transfer or assignment of such Nonassignable Contract despite the failure or
inability of ATS and Diablo to obtain the approval or consent
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of an Authority or other Person whose approval or consent is required pursuant
to the terms of such Nonassignable Contract, or receives the benefits of such
Nonassignable Contract, in either of which events, if the approval or consent of
an Authority or other Person applicable to transfer of such Nonassignable
Contract is required to be obtained as a condition to ATS' obligations at
Closing pursuant to the provisions of Section 6.1(a), 6.2(d) or 6.2(m), ATS
shall be deemed to have waived such condition with respect to such Nonassignable
Contract. With respect to any Nonassignable Contract for which the applicable
consent of any Authority or other Person is not obtained prior to the
Termination Date and for which ATS does not timely deliver an Acceptance Notice
as described in the preceding sentence, Diablo and ATS shall enter into an
agreement reasonably acceptable to each party which agreement shall to the
maximum extent feasible provide ATS with the rights, benefits and obligations
under such Nonassignable Contracts. The term "ATS Assumed Vacation Liability"
shall mean the liability for Diablo employees with respect to accrued vacation
(or payment in lieu thereof), whether accrued before or after the Closing
subject to the following limitations and/or qualifications: (i) accrued vacation
for all Diablo Employees who are retained by Diablo after the Closing will be
the sole responsibility of Diablo; (ii) accrued vacation for any Diablo Employee
who elects to resign prior to close, for reasons other than the sale to ATS, or
whom Diablo chooses to terminate with or without cause, other than by reason of
the sale to ATS, will be the sole responsibility of Diablo; (iii) accrued
vacation for Diablo Employees who terminate at Closing and who are either not
rehired by ATS or who choose not to be employed by ATS will be the sole
responsibility of ATS; (iv) accrued vacation, to the time of close, for
employees who are terminated by Diablo but rehired by ATS who terminate their
employment with ATS but who ATS wishes to remain as an employee, will be the
responsibility of Diablo; any accrued vacation after Closing for such employees
will be the responsibility of ATS; and (v) accrued vacation for any employee
terminated by Diablo, rehired by ATS and subsequently terminated by ATS, as well
as accrued vacation for any employee who is terminated by Diablo prior to close
at the request of ATS, will be the sole responsibility of ATS. The term "ATS
Accrued Sick Time Liability" shall mean the liability with respect to accrued
sick time (as provided in the applicable Diablo Benefit Arrangement or Plan),
accrued on or before the Closing of Diablo Employees who become employees of ATS
after the Closing. Although ATS has not had an opportunity to complete its
evaluation of the Diablo employees, except for the employees being retained by
Diablo, it is the current intention of ATS to hire initially all of the current
Diablo employees at positions and compensation generally comparable to those
currently in effect, subject, however, to the right of ATS, upon completion of
its evaluation and to its determination of the overall needs of ATS,
particularly in light of its general staffing patterns and of other pending or
prospective acquisitions of comparable businesses in the state of California,
not to offer such employment to certain of the Diablo employees or to alter the
terms of such employment, including the positions and compensation. In no event
shall the expression of ATS' current intention be deemed to be a covenant or
agreement of ATS to so employ any particular current Diablo employee and no
rights to employment by any particular current Diablo employee shall be created
hereby.
(d) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(d) of the Diablo Disclosure
Schedule, all items of income and expense (including without limitation with
respect to rent, utility charges, Pro Ratable Taxes and wages and salaries)
arising from the ownership or operation of the Diablo Assets or the conduct of
the Diablo Business shall be prorated as of 12:01 a.m., Pacific time, on the
Closing Date, with Diablo entitled to and responsible for any such items on or
prior to the Closing Date and ATS entitled to and responsible for any such items
relating to any subsequent period. For these purposes, Pro Ratable Taxes
attributable to a period that begins before and ends after the Closing Date
shall be treated on a "closing of the books" basis as two partial periods, one
ending at the close of the Closing Date and the other beginning on the day after
the Closing Date, except that Pro Ratable Taxes (such as property Taxes) imposed
on a periodic basis shall be allocated on a daily basis. If either party shall
have received any such revenues or paid any such expenses or charges which,
pursuant to the terms hereof, the other party is entitled to or responsible for,
it shall furnish the other party with a detailed statement of any such items as
soon as practicable after receipt or payment thereof. The parties shall use
their best efforts to
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agree upon such items and other adjustments prior to the Closing Date and, in
any event, except as set forth in Section 2.2(c) of the Diablo Disclosure
Schedule, within sixty (60) days thereafter. If the parties are unable within
such period to agree upon such items and other adjustments, Diablo and ATS
shall, within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review such items and other
adjustments. The fees and other expenses of retaining such independent public
accounting firm shall be borne equally by Diablo and ATS. Such firm shall report
its conclusions as to such items and other adjustments pursuant to this Section
and such report shall be conclusive on all parties to this Agreement and not
subject to dispute or review. Upon such agreement or determination by such
independent accounting firm, Diablo or ATS, as the case may be, shall promptly
reimburse the other party for any income received or expenses paid by the other
party and not previously reimbursed or any other adjustment required by this
Section. Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, ATS shall be solely responsible for the payment of, and shall
defend, indemnify and hold harmless Diablo, its officers, directors and
shareholders from, any and all supplemental or additional real property or
personal property taxes assessed on or in connection with the Diablo Assets or
any part thereof, which arise from the transactions contemplated by this
Agreement, with respect to California or other sales and/or use taxes, and
documentary or governmental transfer or stamp taxes arising from the purchase
and sale of the Diablo Assets and the Diablo Business contemplated hereby.
Nothing contained in this Section 2.2(d) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Cooper, White & Cooper, 1333 North California
Boulevard, Suite 450, Walnut Creek, CA 94596, at 10:00 a.m., local time, on or
before September 30, 1997, (the "Closing Date"). At the Closing, each of the
parties shall deliver such bills of sale, assignments, assumptions of
liabilities, opinions and other instruments and documents as are described in
this Agreement or as may be otherwise reasonably requested by the parties and
their respective counsel. The purchase price for the Diablo Assets and the
Diablo Business (the "Purchase Price") shall be an amount equal to $4,500,000,
plus an amount equal to the sum of the Interim Adjustment and Prepaid Expenses
and deposits and minus an amount equal to the sum of (i) the Diablo Nonassumed
Obligations, if any, which ATS agrees to assume at the request of Diablo and
(ii) Prepaid Revenues. The term "Interim Adjustment" shall mean an amount equal
to the aggregate amount actually incurred by Diablo from and after November 1,
1996 and prior to the Closing Date with respect to the completion of
construction projects and site development projections (a) described in Section
2.3 of the Diablo Disclosure Schedule or (b) acquired after the date of this
Agreement in accordance with the provisions of this Agreement, including without
limitation Section 5.6, and capital improvements to, but not personnel costs,
maintenance or other expenses items of, existing communication sites, in all
cases, which ATS shall have approved in writing prior to their incurrence or
commitment by Diablo. Section 2.3(a) of the Diablo Disclosure Schedule sets
forth a description of the items constituting a part of the Interim Adjustment
for the period ended as of a date not more than five (5) days prior to the date
of this Agreement. The Purchase Price shall be payable by (a) delivery and
cancellation of the Interim Financing Note and the Additional Compensation
Certificates (as defined in the Note Agreement) (valued for such purposes at an
amount equal to the unpaid principal amount of the Interim Financing Notes, plus
accrued and unpaid interest to the Closing Date), (b) ATS instructing the Escrow
Agent to deliver the Escrow Deposit (together with interest and other increments
thereto) to Diablo, (c) crediting against the Purchase Price amounts paid by ATS
pursuant to the amendment included as part of the Letter of Intent, and, the
balance, (d) wire transfer of immediately available funds (i) to the Indemnity
Escrow Agent (or as it may designate) pursuant to the provisions of the
Indemnity Escrow Agreement in the amount of $100,000 (together with interest and
earnings thereon, the "Indemnity Escrow Fund") and (ii) to Diablo or, to the
extent provided in Section 2.5, the "qualified intermediary" designated pursuant
to the provisions of Section 2.5, for the balance of the Purchase Price to such
account (or accounts)
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as Diablo shall designate in written instructions to ATS delivered not later
than two (2) business days prior to the Closing.
Although the parties believe that the value of the tangible personal
property (other than goodwill, Governmental Authorizations, Private
Authorizations and Contracts) constituting a part of the Diablo Assets
approximate their depreciated book value, ATS shall have the right, at its sole
discretion, to engage BIA Consulting, Inc. to promptly after the execution of
this Agreement conduct and use its reasonable best efforts to complete, within
forty-five (45) days, an appraisal of the Diablo Assets which shall be the basis
for an allocation schedule (the "Tax Allocation Schedule") pursuant to which the
Purchase Price shall be allocated among the Diablo Assets. Such appraisal shall
be conducted in a manner which does not interfere with or inconvenience in any
material matter any of the landlords or tenants at any of Diablo's sites and
shall not, in any event, affect the Purchase Price. The cost of such appraisal,
if undertaken, shall be borne by ATS. Each of Diablo and ATS shall report the
purchase and sale of the Diablo Assets and the Diablo Business and the other
Transactions in accordance with the Tax Allocation Schedule for purposes of all
federal, state and local Tax Returns 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 report, inconsistent with
such reporting position. Each of Diablo and ATS shall promptly give the other
notice of any disallowance of or challenge to such reporting by any Taxing
Authority. Notwithstanding the provisions of this Section, the parties to this
Agreement will rely solely on their own advisors in determining the tax
consequences of the transactions contemplated by this Agreement and each party
is not relying, and will not rely, on any representations or assurances of any
other party regarding such consequences other than the representations,
warranties, covenants and agreements set forth in writing in this Agreement or
furnished pursuant to the provisions hereof.
2.4 Accounts Receivable. At the closing, Diablo shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the
Diablo Business. Diablo shall deliver to ATS on or as soon as practicable after
the Closing Date a complete and detailed statement showing the name, amount and
age of each Accounts Receivable of the Diablo Business. Subject to and limited
by the following, revenues relating to the Accounts Receivable relating to the
Diablo Business will be for the account of Diablo. ATS shall use its reasonable
business efforts to collect the Accounts Receivable with respect to the Diablo
Business for a period of one hundred eighty (180) days after the Closing Date
(the "Collection Period"). Any payment received by ATS during the Collection
Period from any customer with an account which is an Accounts Receivable with
respect to the Diablo Business shall first be applied in reduction of the
Accounts Receivable, unless the customer contests in writing the validity of
such application. During the Collection Period, ATS shall furnish Diablo with a
list of, and pay over to Diablo, the amounts collected with respect to the
Accounts Receivable with respect to the Diablo Business on a monthly basis and
forward to Diablo, promptly upon receipt or delivery, as the case may be, copies
of all correspondence relating to Accounts Receivable. ATS shall provide Diablo
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, the parties shall meet to mutually and in good faith analyze any
uncollected Accounts Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if ATS desires to retain
such Accounts Receivable. As to each such Accounts Receivable, the parties shall
negotiate a good faith value of such Accounts Receivable, which ATS shall pay to
Diablo if ATS, in its sole discretion, chooses to retain such Accounts
Receivable. Diablo shall retain the right to collect any of its Accounts
Receivable as to which the parties are unable to reach agreement as to a good
faith value, and ATS agrees to turn over to Diablo any payments received against
any such Accounts Receivable. ATS shall not be obligated to use any
extraordinary efforts 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 ATS shall not make any
such referral or compromise, nor settle or adjust the amount of any such
Accounts Receivable, except with the approval of Diablo. ATS shall not incur any
liability to Diablo for any uncollected account unless ATS shall have
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engaged in willful misconduct or gross negligence in the performance of its
obligations set forth in this Section. During and after the Collection Period,
without specific agreement with ATS to the contrary, neither Diablo nor its
agents shall make any direct solicitation of the Accounts Receivable for
collection purposes, except for Accounts Receivable retained by Diablo after the
Collection Period. The provisions of this Section shall not apply to those
certain Accounts Receivable set forth in Section 2.4 of the Diablo Disclosure
Schedule or to any other Accounts Receivable which Diablo, in its sole business
judgment, determines will require extraordinary collection efforts or referrals
to a collection agency or attorney for collection (collectively, the "Retained
Accounts Receivable"), provided the Retained Accounts Receivable are set forth
in a written notice delivered to ATS by Diablo on or prior to the Closing Date.
Diablo shall retain the sole and exclusive right to collect, whether during or
after the Collection Period, all Retained Accounts Receivable, as Diablo in its
sole discretion may determine.
2.5 Like-Kind Exchanges. Diablo shall have the right, but not the
obligation, to effect the transfer and conveyance of the Diablo Assets, in whole
or in part, as part of one or more exchanges under Section 1031 of the Code,
including the delay in Closing of escrow for those Assets subject to the
exchange. If Diablo so elects, it shall provide notice to ATS of its election
(the "Like-Kind Notice"), setting forth in reasonable detail which portion or
portions of the Diablo Assets are to be so treated. In such event, Diablo (i)
may at any time at or prior to Closing assign its rights, in whole or in part,
under this Agreement with respect to such Diablo Assets to a "qualified
intermediary" as defined in Treas. Reg. ss.1.1031(k)-1(g)(4), subject to all of
the rights and obligations hereunder of ATS, and (ii) shall promptly provide
written notice of such assignment to ATS. No such assignment shall, however,
relieve Diablo of its obligations under this Agreement. If Diablo shall have
given a Like-Kind Notice, ATS shall (i) promptly provide Diablo with written
acknowledgment of such notice, (ii) at the Closing, convey the Purchase Price
for the Diablo Assets (or such portion of them as shall have been designated in
writing by Diablo) to the "qualified intermediary" rather than to Diablo (which
conveyance shall, to such extent, discharge the obligation of ATS to deliver
such Purchase Price (or portion thereof), and (iii) at the request of Diablo
extend the closing of escrow for all or a portion of those assets subject to the
Like-Kind Notice for a period not to exceed one year. Should the closing for any
Like-Kind Notice properties be so extended, Diablo and ATS shall enter into an
agreement reasonably acceptable to each party which agreement shall, to the
maximum extent feasible, provide ATS with the rights, benefits, and obligations
for any Like-Kind Notice property for which the closing is so extended. Without
limiting the generality of the foregoing, Diablo and ATS shall promptly after
receipt by ATS of the Like-Kind Notice, negotiate in good faith in order to
determine the portion of the Purchase Price attributable to the Diablo Assets
which are to be the subject of like-kind exchange and, in the event they are
unable to so agree on such amount, it shall be determined by arbitration in
accordance with the provisions of Section 9.15 and not materially inconsistent
with the appraisal undertaken pursuant to Section 2.3. If such determination has
not been made on or prior to the Closing, ATS shall transfer to the "qualified
intermediary" the amount proposed by Diablo in the Like-Kind Notice, subject to
an agreement by the "qualified intermediary" to remit to Diablo the excess, if
any, of the amount so transferred over the amount as finally determined by the
arbitrator.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DIABLO
Diablo hereby represents, warrants and covenants to, and agrees with,
ATS as follows:
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3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Diablo 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) Diablo has all requisite corporate power and corporate authority
and has in full force and effect all Governmental Authorizations (which, for
purposes of this Section 3.1(b), relate only to the sale of the Diablo Assets
and Diablo Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) and Private
Authorizations, except for those set forth in Section 3.1(b) of the Diablo
Disclosure Schedule or those the failure of which to obtain do not and will not
have, individually or in the aggregate, any material adverse effect on ATS,
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 Diablo. This Agreement has been duly executed and delivered by Diablo 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 Diablo will constitute, legal, valid and binding obligations of
Diablo, 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 Diablo Disclosure
Schedule, and except for matters which would have no material adverse effect on
ATS, neither the execution and delivery by Diablo of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by Diablo of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by Diablo:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Diablo or any
Applicable Law (which, for purposes of this Section 3.1(c)(i), relates
only to the sale of the Diablo Assets and the Diablo Business generally
and not to local Applicable Law) on the part of Diablo, 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 Diablo, other than those constituting Diablo
Nonassumed Obligations; or
(ii) will require Diablo to make or obtain any Governmental
Authorization, Governmental Filing (which, for purposes of this Section
3.1(c)(ii)), relate only to the sale of the Diablo Assets and Diablo
Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) or Private
Authorization including without limitation under the FCA, except for
filings under the Hart-Scott-Rodino Act.
(d) Diablo does not have any Subsidiaries except as set forth in
Section 3.1(d) of the Diablo Disclosure Schedule.
3.2 Financial and Other Information. Diablo has heretofore furnished to
ATS copies of the financial statements of the Diablo Business listed in Section
3.2 of the Diablo Disclosure Schedule (the "Diablo Financial Statements"). The
Diablo Financial Statements, including in each case the notes thereto,
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have been prepared in accordance with CAAP 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 Diablo 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 CAAP to be stated
therein or necessary in order to make the statements contained therein not
misleading, and fairly present the financial position and the results of
operations and cash flow of the Diablo Business, 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.
3.3 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the Diablo Financial Statements, except to the
extent specifically described in Section 3.3 of the Diablo Disclosure Schedule,
there has been no material adverse change in Diablo. There is no Event known to
Diablo which materially adversely affects, or (so far as Diablo can now
reasonably foresee) is likely to materially adversely affect, Diablo, except to
the extent specifically described in Section 3.3 of the Diablo Disclosure
Schedule.
3.4 Materiality. Other than those set forth in the Diablo Disclosure
Schedule, 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. Other than those set forth in the Diablo
Disclosure Schedule, in the aggregate all such exceptions and qualifications to
the representations and warranties are not and could not reasonably be expected
to be materially adverse to Diablo.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all real property owned or leased by Diablo
that is part of the Diablo Assets. Except as set forth in Section 3.5(a) of the
Diablo Disclosure Schedule, Diablo has good indefeasible, marketable and
insurable title to all real property (other than leasehold and managed real
property) and good indefeasible and merchantable title to all other assets
(other than real property), tangible and intangible, constituting a part of the
Diablo Assets, in each case free and clear of all Liens, except (i) Permitted
Liens, (ii) Liens set forth on Section 3.5(a) of the Diablo 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 Diablo Disclosure
Schedule), no financing statements under the Uniform Commercial Code and no
other filing which names Diablo as debtor or which covers or purports to cover
any of the Diablo Assets is on file in any state or other jurisdiction, and
Diablo 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
Diablo Disclosure Schedule, to Diablo's knowledge, all improvements on the real
property owned or leased by Diablo are 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 Diablo Disclosure
Statement, all such improvements, to Diablo's knowledge, comply in all material
aspects with all Applicable Laws, Governmental Authorizations and Private
Authorizations. Except as disclosed in Section 3.5(a) of the Diablo Disclosure
Statement, to Diablo's knowledge, all of the transmitting towers, ground
radials, guy anchors, transmitting buildings and related improvements located on
the real property owned or leased by Diablo are located entirely on such real
property. Diablo has no knowledge of any pending, threatened or contemplated
action to take by eminent domain or otherwise to condemn any part of any real
property owned or leased by Diablo. Except as set forth in Section 3.5(a) of the
Diablo Disclosure Schedule, such real property (other than land),
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fixtures, fixed assets and other material items of personal property, including
equipment, have, in Diablo's reasonable business judgment, been maintained in a
manner consistent with generally accepted standards of sound engineering
practice and currently permit the Diablo 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 Diablo Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the Diablo Business is leased. Except as otherwise set forth in Schedule
3.5(b) of the Diablo Disclosure Schedule, each Lease or other occupancy or other
agreement under which Diablo holds real or personal property constituting a part
of the Diablo Assets has been duly authorized, executed and delivered by Diablo
or its predecessors in interest, as the case may be, and, to Diablo's knowledge,
each of the other parties thereto, and is a legal, valid and binding obligation
of Diablo, and, to Diablo's 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. Diablo 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 Diablo nor, to
Diablo's 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 Diablo Assets is subject to contracts of sale, and none is held by
Diablo 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 Diablo Disclosure Schedule.
(c) Section 3.5(c) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all material items of Diablo Personal
Property. Diablo owns and has good and merchantable title to all of the Diablo
Personal Property relating to the Diablo Business (the "Diablo 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 Diablo Disclosure
Schedule (which Liens shall be released prior to Closing). Except as set forth
in Section 3.5(c) of the Diablo Disclosure Schedule, all of the Diablo Personal
Property is in a state of good repair and maintenance and is in good 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 Diablo Business to be operated in accordance with the
terms and conditions of all Applicable Laws. Except for financing statements
listed in Section 3.5(c) of the Diablo Disclosure Schedule, no financing
statements under the Uniform Commercial Code and no other filing which names
Diablo as debtor or which covers or purports to cover any of the Diablo Assets
is on file in any state or other jurisdiction, and Diablo 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.
3.6 Compliance with Private Authorizations. Section 3.6 of the Diablo
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
Diablo Assets or the Diablo Business. To Diablo's knowledge, and as set forth in
Section 3.6 of the Diablo Disclosure Schedule, Diablo has obtained all Private
Authorizations which are necessary for the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business which, if not obtained and
maintained, could, individually or in the aggregate, materially adversely affect
Diablo. All of such Private Authorizations are valid and in good standing and
are in full force and effect. Diablo 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
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any material adverse effect on Diablo. No such Private Authorization is the
subject of any pending or, to Diablo's knowledge, threatened attack, revocation
or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) To Diablo's knowledge, Section 3.7(a) of the Diablo Disclosure
Schedule contains a true, complete and accurate description of each Governmental
Authorization required under Applicable Laws (i) to own and operate the Diablo
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 Diablo to execute and deliver this Agreement and to perform
its obligations hereunder. To Diablo's knowledge, except as otherwise set forth
in Section 3.7(a) of the Diablo Disclosure Schedule, Diablo has obtained all
Governmental Authorizations which are necessary for the ownership or operation
of the Diablo Assets or the conduct of the Diablo Business as now conducted and
which, if not obtained and maintained, would, individually or in the aggregate,
have any material adverse effect on Diablo. None of the Governmental
Authorizations listed in Section 3.7(a) of the Diablo Disclosure Schedule is
subject to any restriction or condition which would limit in any material
respect the ownership or operations of the Diablo Assets or the conduct of the
Diablo 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 Diablo 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 Diablo or its
officers, directors, employees or agents, and the ownership or operation of the
Diablo Assets or the conduct of the Diablo Business are in accordance in all
material respects with the Governmental Authorizations. To Diablo's knowledge,
all material reports, forms and statements required to be filed by Diablo with
all Authorities with respect to the Diablo 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 Diablo's knowledge,
threatened challenge or proceeding to revoke or terminate any such Governmental
Authorization. Diablo has no reason to believe that any such Governmental
Authorization would not be renewed in the name of Diablo by the granting
Authority in the ordinary course.
(b) Except as otherwise specifically described in Section 3.7(b) of the
Diablo Disclosure Schedule, neither Diablo nor any director or officer thereof
(in connection with ownership or operation of the Diablo Assets or the conduct
of the Diablo Business) is in or is charged by any Authority with or, to
Diablo's knowledge, at any time since January 1, 1993 has been in or has been
charged by any Authority with, or, to Diablo's 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 Diablo Assets or the conduct of the Diablo Business. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions pending or, to Diablo's knowledge, threatened before
or by any Authority (x) relating to the ownership or operation of the Diablo
Assets or the conduct of the Diablo 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 operations of the Diablo
Business; (y) involving charges of illegal discrimination by Diablo 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 Diablo
Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
Diablo Disclosure Schedule, no Event exists or has occurred, which, to Diablo's
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
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on Diablo or (ii) any material requirement of any insurance carrier, applicable
to the ownership or operations of the Diablo Assets or the conduct of the Diablo
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 Diablo Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the Diablo Disclosure Schedule, all
such information and matters set forth in Sections 3.7(a), 3.7(b) and 3.7(c) of
the Diablo Disclosure Schedule, if adversely determined against Diablo, will
not, individually or in the aggregate, have a materially adversely effect on
Diablo.
3.8 Intangible Assets. Section 3.8 of the Diablo 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 Diablo Assets or the conduct of the Diablo
Business held or used by Diablo, including without limitation the nature of
Diablo'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 Diablo Disclosure Schedule, to Diablo's knowledge, no Intangible
Assets (except Governmental Authorizations, Private Authorizations, and the
Intangible Assets so set forth) are required for the ownership or operation of
the Diablo Assets or the conduct of the Diablo Business as currently owned,
operated and conducted or proposed to be owned, operated and conducted on or
prior to the Closing Date. To Diablo's knowledge, Diablo does not wrongfully
infringe upon or unlawfully use any Intangible Assets owned or claimed by
another, and Diablo has not received any notice of any claim or infringement
relating to any such Intangible Asset.
3.9 Related Transactions. Diablo is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business between Diablo and any of its
officers, directors, shareholders, employees or, to the knowledge of Diablo, 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 Diablo Disclosure Schedule, (ii) Contractual
Obligations between Diablo and any of its directors, shareholders, officers,
employees or Affiliates of Diablo or any of the foregoing, which constitute
Excluded Assets or Diablo Nonassumed Obligations, or (iii) as specifically set
forth in Section 3.9 of the Diablo Disclosure Schedule.
3.10 Insurance. Diablo maintains, with respect to the Diablo Assets and
the Diablo 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 Diablo Disclosure Schedule.
3.11 Tax Matters.
(a) Except as set forth in Section 3.11(a) of the Diablo Disclosure
Schedule, Diablo has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, except with respect to failures to file
which in the aggregate would not have a material adverse effect on Diablo and,
to Diablo's knowledge, 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 Diablo Financial
Statements. The Tax Returns of Diablo have, to Diablo's knowledge, been prepared
in all material respects in accordance with all Applicable Laws and generally
accepted principles applicable to taxation consistently applied. All Taxes which
Diablo is required by law to withhold and collect have, to Diablo's knowledge,
been duly withheld and collected, and have been paid over, in a timely manner,
to the proper Authorities to the extent due and payable. Diablo has not
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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 Diablo for the fiscal years prior to and
including the most recent fiscal year. Adequate provision has, to Diablo's
knowledge, been made on the most recent balance sheet forming part of Diablo
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 Diablo's knowledge, no
past transactions or matters which could result in additional Taxes of a
material nature to Diablo for which an adequate reserve has not been provided on
such balance sheet. Diablo is not a "consenting corporation" within the meaning
of Section 341(f) of the Code. Diablo 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 Diablo Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of Diablo
for each of the most recent five tax years (true and complete copies of which
have, to the extent requested by ATS, been furnished by Diablo to ATS) is, to
Diablo's knowledge, 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 Diablo have not been examined by the IRS or
applicable state Authority, and Diablo has not been notified of any proposed
examination, except as shown in Section 3.11(b) of the Diablo Disclosure
Schedule.
(c) Diablo is not a party to any tax sharing agreement or arrangement,
other than those contained in certain of its leases.
3.12 Employee Retirement Income Security Act of 1974.
(a) Diablo (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 Diablo
Disclosure Schedule. As to all Plans and Benefit Arrangements listed in Section
3.12(a) of the Diablo 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 Diablo has not received any notice from any
Authority questioning or challenging such compliance;
(ii) all such Plans maintained or previously maintained by
Diablo 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;
(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 Diablo has not otherwise engaged in any
prohibited transaction;
(v) there have been no acts or omissions by Diablo 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 Diablo may be liable;
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(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 Diablo's 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 Diablo 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 Diablo 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 Diablo 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 Diablo 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 Diablo to be incurred by Diablo 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) except as set forth in Section 3.12(xiii) of the Diablo
Disclosure Schedule, Diablo 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
Diablo 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, Diablo does not maintain any Plan that provides
benefits described in Section 3(1) of ERISA, except as the provisions
of COBRA may apply, to any former employees or retirees of Diablo; and
(xv) Diablo 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 Diablo to any actuary in connection
with the preparation of any such actuarial valuation report was true,
accurate and complete in all material respects.
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(b) The execution, delivery and performance by Diablo 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 Diablo nor, to Diablo's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the Diablo Assets or the Diablo 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. Diablo 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 Diablo Disclosure
Schedule contains a true, accurate and complete list of all Diablo employees
involved in the ownership or operation of the Diablo Assets or the conduct of
the Diablo Business (the "Diablo 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. Diablo has no obligation or liability, contingent or
other, under any Employment Arrangement with any Diablo Employee, other than
those listed or described in Section 3.15 of the Diablo Disclosure Schedule.
Except as described in Section 3.15 of the Diablo Disclosure Schedule, (i) none
of the Diablo Employees is now, or, to Diablo's knowledge, since January 1,
1993, has been, represented by any labor union or other employee collective
bargaining organization, and Diablo is not, and has never been, a party to any
labor or other collective bargaining agreement with respect to any of the Diablo
Employees, (ii) 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, (iii)
neither Diablo nor any of such employees is now, or, to Diablo's knowledge, has
since January 1, 1993 been, subject to or involved in or, to Diablo's knowledge,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities, in each case with respect to the Diablo
Employees and (iv) none of the Diablo Employees has notified Diablo in writing
that he or she does not intend to continue employment with Diablo until the
Closing or with ATS following the Closing. Diablo 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 Diablo
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Diablo Assets or the conduct of the business of the Diablo
Business or to which Diablo is a party or to which it is bound or which any of
the Diablo Assets is subject. True, accurate and complete copies of each of such
Material Agreements have been provided by Diablo to ATS to the extent requested
by ATS (or true, accurate and complete descriptions thereof have been set forth
in Section 3.16 of the Diablo Disclosure Schedule, with respect to Material
Agreements that are oral). All of such Material Agreements are valid, binding
and legally enforceable obligations of Diablo and, to Diablo's 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. Diablo 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 Diablo,
Claim threatened in writing
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that Diablo 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 Diablo
under any of such Material Agreements in any material respect.
3.17 Ordinary Course of Business. 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 Diablo Disclosure Schedule, or (ii) as may be required or expressly
contemplated by the terms of this Agreement or the Letter of Intent, Diablo has
operated the Diablo Business in all material respects in the normal, usual and
customary manner in the ordinary and regular course of business, consistent with
prior practice, and, except in each case in the ordinary course of business,
consistent with prior practice,
(a) has not incurred any obligation or liability (fixed,
contingent or other) individually having a value in excess of $20,000;
(b) 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;
(c) has not entered into any individual commitment having a
value in excess of $20,000;
(d) has not canceled any debts or claims;
(e) has not created or permitted to be created any Lien on any
of its property;
(f) 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;
(g) has not increased the compensation payable or to become
payable to any of the Diablo Employees other than in the ordinary
course of business or otherwise materially altered, modified or changed
the terms of their employment;
(h) 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;
(i) has not waived any rights of material value without fair
and adequate consideration;
(j) has not experienced any work stoppage;
(k) 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 Diablo, except for Diablo Nonassumed Obligations;
and
(l) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is material
to the Diablo Assets or the Diablo Business.
3.18 Material and Adverse Restrictions. To Diablo's knowledge, Diablo
is not a party to or subject to, nor are any of the Diablo Assets subject to,
any Applicable Law, Governmental Authorization, Contractual Obligation,
Employment Arrangement, Material Agreement or Private Authorization, or any
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other obligation or restriction of any kind or character, which now has or, as
far as Diablo can now reasonably foresee, at any time in the future,
individually or in the aggregate, is likely to have, any material adverse effect
on Diablo, except as set forth in Section 3.18 of the Diablo 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 Diablo.
3.20 Solvency. As of the execution and delivery of this Agreement,
Diablo 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
Diablo Disclosure Schedule, with respect to the Diablo Assets, Diablo:
(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 Diablo's 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) is, to the knowledge of Diablo, in compliance in all
material respects with all Environmental Laws, has, to Diablo's
knowledge, obtained all Environmental Permits required under
Environmental Laws, and is not the subject of or, to Diablo's
knowledge, threatened with any Legal Action involving a demand for
damages or other potential liability including any Lien with respect to
material violations or material breaches of any Environmental Law; and
(e) has no knowledge of any past or present Event related to
the Diablo Business or the Diablo Assets which Event, individually or
in the aggregate, will interfere with or prevent continued material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will form the basis of any material Claim for the
release or threatened release into the environment, of any Hazardous
Material.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, Diablo as
follows:
4.1 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.
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(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 not have any material adverse effect
on ATS, 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.
4.2 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.
4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
4.4 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 of ATS to consummate the transactions contemplated
hereunder.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Diablo 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 Diablo's properties, books, contracts, commitments and records (including
without limitation Tax Returns) relating to the Diablo Assets and the Diablo
Business and, during such period, shall furnish promptly upon request (i) a list
(and copies to the extent requested by ATS) of each
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report, schedule and other document filed or received by Diablo pursuant to the
requirements of any Applicable Law or filed by it with any Authority in
connection with the Transactions or which may have a material adverse effect on
the Diablo Assets or the Diablo Business or the businesses, operations,
properties, prospects, personnel, condition (financial or other), or results of
operations thereof, (ii) to the extent not provided for pursuant to the
preceding clause, all financial records, ledgers, work papers and other sources
of financial information possessed and controlled by Diablo or its accountants
reasonably deemed by ATS or its Representatives necessary or useful for the
purpose of performing an audit of the Diablo Assets and the Diablo Business and
certifying financial statements and financial information, and (iii) such other
information in the possession or control of Diablo or its accountants concerning
any of the foregoing as ATS shall reasonably request; provided, however, that
Diablo shall not be required to permit any such access to the extent same would
unreasonably interfere with Diablo's normal business operations. All non-public
information relating to the Diablo Assets or the Diablo 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 Diablo, 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 Diablo. 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, Diablo shall not, without the prior
written consent of ATS, disclose any information remaining in its possession
with respect to the Diablo Assets or the Diablo 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 5.1(a), ATS may,
subject to prior consultation with Diablo, 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 (which independent counsel shall be subject to
the provisions of Section 5.1(a)), and ATS shall so certify to such effect.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, either 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.
5.2 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
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must be obtained or become final to the extent provided in Section 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(d), without
payment of any material amount of compensation, (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 Diablo Assets and conduct the Diablo 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 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.
(c) Diablo shall, at ATS' expense, cooperate and use its reasonable
business efforts to (i) prepare its financial statements for the period ended
December 31, 1996 and thereafter in accordance with GAAP and (ii) 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 Diablo Business described in Section 6.2(g).
Without limiting the generality of the foregoing, Diablo agrees that after the
Closing Date it will (x) if required by the Securities Act or the Exchange Act,
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 the
Securities Act or the Exchange Act and (y) if reasonably requested by ATS'
independent accountants, execute and deliver, and cause its officers to execute
and deliver, such "representation" letters as are customarily delivered in
connection with audits under comparable circumstances.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, Diablo 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
Diablo and ATS may, without the other's 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 Diablo has a business or contractual relationship
in connection with ATS' due diligence investigation of Diablo; provided,
however, that prior to (i) ATS sending any written communication to any such
Person, ATS shall secure the written approval of the form and content of such
communication, such approval not to be unreasonably withheld, delayed or
conditioned, and (ii) any verbal or in person communication with any such
Person, ATS shall provide Diablo with the opportunity to participate with ATS in
any such conversation or meeting.
5.4 Notification of Certain Matters. Diablo and ATS shall, prior to the
Closing, 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 material respect such that one or more of the
conditions of Closing might not be satisfied, 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 Diablo Disclosure Schedule in
any respect
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such that one or more of the conditions of Closing might not be satisfied, and
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 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.
5.5 No Solicitation. So long as this Agreement remains in effect,
Diablo 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 (i) any merger or
consolidation, regardless of whether Diablo is the surviving Entity unless the
surviving Entity remains obligated under this Agreement to the same extent as it
was, or (ii) any sale or other disposition of all or any substantial part of the
Diablo Assets or the Diablo Business. The provisions of this Section shall apply
to each of Diablo's Subsidiaries. If Diablo or any of its Representatives
receives any inquiry with respect to an Alternative Transaction while this
Agreement is in effect, Diablo shall inform the inquiring party that it is not
entitled to enter into discussions or negotiations relating to an Alternative
Transaction.
5.6 Conduct of Business by Diablo 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, Diablo shall, to the extent relating to the Diablo
Business or the Diablo 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 Diablo 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) to the extent permitted under Applicable Law, 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 Diablo
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 Diablo Assets
or the Diablo Business, and (ii) maintain in full force and effect all
such Governmental and Private Authorizations, Leases and Material
Agreements relating to the Diablo Business;
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(f) except as set forth in Section 5.6(f) of the Diablo
Disclosure Schedule, not (i) dispose of any of the Diablo Assets owned
by Diablo or used in the operation of the Diablo Business (other than
for the disposition in the ordinary course of business of immaterial
assets that are of no further use to the Diablo Business) or (ii)
modify or change in any material respect, or enter into, any Material
Agreement relating to the Diablo Business; and
(g) not voluntarily take 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 Diablo Disclosure Schedule.
With respect to any transaction or act proposed to be entered into or performed
by Diablo which, pursuant to this Section 5.6, requires the prior approval of
ATS, ATS shall be deemed to have approved the same unless written notice of
disapproval is received by Diablo within five (5) business days after receipt by
ATS of a written request for approval made by Diablo.
5.7 Preliminary Title Reports. As promptly as practicable after the
execution of this Agreement, Diablo shall, at its sole cost and expense, deliver
or cause to be delivered to ATS a standard preliminary title report dated on or
after the date of this Agreement issued by such title company as Diablo and ATS
shall mutually reasonably agree (the "Title Company") with respect to those
Diablo Assets comprised of the parcels of real property described in Section 5.7
of the Diablo Disclosure Schedule (the "Insured Real Property"). Such reports,
as same may be amended or supplemented from time to time to reflect additional
title matters, are referred to herein as the "Title Reports". The rights and
obligations of the parties shall thereafter be as follows:
(a) On or before fifteen (15) business days after ATS' receipt
of the last of the Title Reports, ATS shall give to Diablo written
notice ("ATS' Title Notice") of ATS' disapproval of any matters shown
in the Title Reports. ATS' failure to give ATS' Title Notice within
such fifteen (15) business days shall be deemed to constitute ATS'
approval of all matters disclosed by the Title Reports;
(b) If ATS disapproves any title matters pursuant to ATS'
Title Notice, Diablo shall deliver written notice ("Diablo's Title
Notice") to ATS within ten (10) business days after Diablo's receipt of
ATS' Title Notice, stating whether Diablo agrees to eliminate such
disapproved title matters from title to the Insured Real Property prior
to the Closing or, if such elimination is not feasible prior to the
Closing, to effect such elimination thereafter and to indemnify and
hold harmless ATS with respect to such remedy. If Diablo fails to
timely deliver Diablo's Title Notice, or if Diablo delivers Diablo's
Title Notice but states therein that Diablo is unwilling or unable to
eliminate such disapproved title matters, ATS and Diablo shall
negotiate in good faith in an attempt to resolve such matters (the
"Disapproved Title Sites" and, collectively with the "Disapproved
Environmental Sites", the "Disapproved Sites") from the Diablo Assets,
a reduction of the Purchase Price or an indemnification (and escrow)
from Diablo (not subject to the limitations as to time or amount
specified in Article 8). If within twenty (20) business days of the
commencement of such negotiations (or such longer period as ATS and
Diablo shall agree), the parties have been unable to resolve such
matters, either party can terminate this Agreement pursuant to the
provisions of Section 7.1(f) within ten (10) business days of the end
of such negotiation period; and
(c) If, at any time following ATS' approval of the Title
Reports, Diablo or the Title Company notifies ATS of any additional
matter affecting title to the Insured Real Property, the
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parties shall have substantially the same rights and obligations as are
set forth in paragraphs (a) and (b) above.
5.8 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 Diablo 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 5.8 of the Diablo Disclosure
Schedule. Site assessments shall be conducted by such consultants and
professionals as ATS and Diablo shall mutually agree (collectively, the
"Environmental Company"), shall be arranged at times mutually convenient to the
parties, and shall be conducted in a manner which does not interfere with or
inconvenience in any material manner any of the landlords or tenants at any of
Diablo's sites. Each of Diablo 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:
(a) On or before fifteen (15) business days after ATS' receipt
of the last of the Environmental Reports, ATS shall give to Diablo
written notice ("ATS' Environmental Notice") of ATS' disapproval of any
matters shown in the Environmental Reports. ATS' failure to give ATS'
Environmental Notice within such fifteen (15) business days shall be
deemed to constitute ATS' approval of all matters disclosed by the
Environmental Reports;
(b) If ATS disapproves any environmental matters pursuant to
ATS' Environmental Notice, Diablo shall deliver written notice
("Diablo's Environmental Notice") to ATS within ten (10) business days
after Diablo's receipt of ATS' Environmental Notice, stating whether
Diablo agrees to eliminate and remedy such matter prior to the Closing
or, if such elimination or remedy is not feasible prior to the Closing,
to effect such elimination and remedy thereafter and to indemnify and
hold harmless ATS with respect to such remedy. If Diablo fails to
timely deliver Diablo's Environmental Notice, or if Diablo delivers
Diablo's Environmental Notice but states therein that Diablo is
unwilling or unable to eliminate and remedy such environmental matters,
ATS and Diablo shall negotiate in good faith in an attempt to resolve
such matters (the "Disapproved Environmental Sites") from the Diablo
Assets, a reduction of the Purchase Price or an indemnification (and
escrow) from Diablo (not subject to the limitations as to time or
amount specified in Article 8). If within twenty (20) business days of
the commencement of such negotiations (or such longer period as ATS and
Diablo shall agree), the parties have been unable to resolve such
matters, either party can terminate this Agreement pursuant to the
provisions of Section 7.1(f) within ten (10) business days of the end
of such negotiation period; and
(c) If, at any time following ATS' approval of the
Environmental Reports, ATS or the Environmental Company notifies Diablo
of any additional environmental matter, the parties shall have
substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above.
5.9 Post-Closing Covenants and Agreements of the Parties. From and
after the consummation of the Transactions, ATS and Diablo covenant and agree as
follows:
(a) Diablo shall have the right, if it shall have so notified
ATS not later than five (5) business days prior to the Closing, to
retain (or to cause any of its Affiliates to retain) the services of
each of the individuals named in Section 5.9(a) of the Diablo
Disclosure Schedule;
(b) ATS shall afford to Diablo, and Diablo shall afford to
ATS, access to their respective employees who were (or in the case of
Diablo who remain) employees of Diablo on the Closing Date to the end
that such employees are available to provide assistance, consultation
and historical
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background to the requesting party; provided, however, that neither ATS
nor Diablo shall have any such obligation after the expiration of five
(5) years from the Closing Date or to the extent that it would exceed
an average of four (4) hours per week over such period; and
(c) ATS shall afford to Diablo, and Diablo shall afford to
ATS, access to all books and records delivered to ATS or retained by
Diablo, as the case may be, relating to periods prior to the Closing
Date, in order to enable Diablo or ATS, as the case may be, to prepare
all necessary Tax Returns, deal with Legal Actions or other Claims
(including without limitation those of the Internal Revenue Service) or
personnel matters or for any other reasonable purposes, subject,
however, in all events, to the provisions of Section 5.1 with respect
to confidentiality. Anything in this Section to the contrary
notwithstanding, Diablo and ATS shall cooperate fully in the event of
an Internal Revenue Service audit or investigation related to this
Agreement, including without limitation providing each other with full
and complete access to each other's records and employees to the extent
necessary to respond to any such audit or investigation.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to effect the Transactions.
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) 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 ATS and Diablo 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 6.1(a) of the Diablo 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 Diablo Assets
and the Diablo Business;
(b) The transactions contemplated by the Other Agreement shall
have been consummated prior to or simultaneously with the consummation
of the Transactions; and
(c) The parties shall have entered into an escrow agreement in
form, scope and substance reasonably satisfactory to the parties with
the Title Company or any other Person reasonably acceptable to the
parties, pursuant to which, among other things, ATS shall have
deposited the portion of the Purchase Price not being delivered to the
Indemnity Escrow Agent or to a "qualified intermediary" pursuant to the
provisions of Section 2.3, and Diablo shall have delivered deeds in
customary form with respect to all of the real property to be conveyed
to ATS as part of the Diablo Assets and the parties, to the extent
required by Section 9.3, shall have deposited an amount sufficient to
pay all recording fees, transfer taxes and other fees and expenses
which must be paid as a condition of consummation of the transactions
contemplated by this Agreement.
6.2 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:
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(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 corporate
officers;
(b) Diablo 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 Cooper, White & Cooper,
counsel for Diablo, with respect to the matters set forth in Sections
3.1(a), (b) and (c), 3.7(b) and 3.14, 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;
(c) The representations and warranties of Diablo contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto shall be true and correct in all material respects 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 in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Diablo or
ATS, except as otherwise specifically provided herein); each and all of
the covenants and agreements and conditions to be performed or
satisfied by Diablo hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and
Diablo 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 6.2(d) of the Diablo 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 by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
Diablo Assets and the Diablo Business (including without limitation all
Private Authorizations, Leases and Material Agreements of Diablo), and
the full enjoyment thereof shall have been obtained, without the
imposition, individually or in the aggregate, of any condition or
requirement which could materially adversely affect ATS;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in Diablo from that reflected in the most recent Diablo
Financial Statements; as of the Closing Date, the Governmental
Authorizations with respect to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business shall not have been
materially and adversely affected by any act, or failure to act, of
Diablo;
(f) Diablo shall have delivered or caused to be delivered to
ATS all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by Diablo 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
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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 three years in the period
ended December 31, 1996 or such shorter period since its organization)
of the Diablo Business, 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 Diablo Disclosure Schedule, 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, or which might, in the reasonable business judgment of
ATS, based upon the advice of counsel, have a material adverse effect
on the Diablo Assets and the Diablo Business, 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) All Environmental Reports obtained by the parties prior to
the Closing Date pursuant to the provisions of Section 5.8 hereof shall
be approved or deemed approved by ATS in the manner described in
Section 5.8;
(j) Richard D. Spight ("Spight"), the chairman and principal
shareholder of Diablo, shall have executed and delivered to ATS an
agreement substantially in the form of Exhibit A attached hereto and
made a part hereof (the "Spight Noncompetition Agreement");
(k) Diablo and Spight shall have executed and delivered to ATS
and the escrow agent named therein (the "Indemnity Escrow Agent") an
escrow agreement (the "Indemnity Escrow Agreement") substantially in
the form of Exhibit B attached hereto and made a part hereof;
(l) ATS shall have received standard CLTA title insurance
policies insuring ATS' fee interests in all Insured Real Property,
subject only to Approved Title Conditions;
(m) Diablo 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 6.2(m) of the
Diablo Disclosure Schedule; and
(n) Diablo shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
(the "Nonassignable Contracts Agreement"), pursuant to which (i) Diablo
will hold (but will have no obligation to perform services thereunder)
for the account of ATS, and remit promptly to ATS all amounts received
pursuant to the provisions of, all of the Nonassignable Contracts as to
which the required approval or consent to the assignment or transfer of
which was not obtained and as to which ATS has delivered an Acceptance
Notice, and (ii) ATS will agree to (A) perform all services required to
be performed under such Nonassignable Contracts, (B) reimburse Diablo
for all costs and expenses reasonably incurred pursuant to the
Nonassignable Contracts Agreement and (C) indemnify and hold harmless
Diablo with respect to all actions taken by ATS pursuant thereto and
all actions, if any, taken by Diablo pursuant thereto other than those
relating to the bad faith, negligence or willful misconduct of Diablo
or its officers, directors, stockholders or employees.
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6.3 Conditions to Obligations of Diablo. The obligation of Diablo 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 Diablo
and its counsel, and Diablo 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 corporate
officers;
(b) ATS shall have furnished Diablo and, at Diablo's request,
any bank of other financial institution providing credit to Diablo,
with favorable opinions, dated the Closing Date of Sullivan & Worcester
LLP, counsel for ATS, with respect to the matters set forth in Section
4.1 and with respect to such other matters arising after the date of
this Agreement and incident to the Transactions, as Diablo or its
counsel may reasonably request or which may be reasonably requested by
any such bank or financial institution or their respective counsel;
(c) The representations and warranties of ATS contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto shall be true and correct in all material respects 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 in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Diablo or
ATS, except as otherwise specifically provided herein); each and all of
the covenants and 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 Diablo 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
Diablo or its counsel shall have reasonably requested;
(d) ATS shall have delivered or cause to be delivered to
Diablo all of the Collateral Documents and other agreements, documents
and instruments required to be delivered by ATS to Diablo at or prior
to the Closing pursuant to the terms of this Agreement;
(e) 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 be deemed to be
a threat of any such Legal Action;
(f) ATS shall have executed and delivered to Diablo, Spight
and the Indemnity Escrow Agent a counterpart of the Indemnity Escrow
Agreement;
(g) ATS shall have executed and delivered to Diablo the
Nonassignable Contracts Agreement; and
(h) ATS shall have executed and delivered to Diablo the
Exclusivity Agreement.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Diablo and ATS;
(b) by either ATS or Diablo 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 Diablo in the event (i) Diablo 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) 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)
Diablo 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
(e) by ATS in the event of a failure of the condition set
forth in Section 6.2(i) or 6.2(l); or
(f) by ATS or Diablo pursuant to the provisions of Section
5.7(b) or 5.8(b).
The term "Termination Date" shall mean September 30, 1997 or such other
date as the parties may, from time to time, mutually agree.
The right of ATS or Diablo 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 either party, any Person controlling any
such party or any of their respective Representatives whether prior to or after
the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 (with respect to
confidentiality), 5.3, 9.3 and 9.15 and this Section, in the event of the
termination of this Agreement pursuant to Section 7.1, 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 either party, or any of their respective shareholders,
officers or directors, to the other and all rights and obligations of either
party shall cease; provided, however, that such termination shall not relieve
either party from liability for any misrepresentation or breach of any of its
warranties, covenants or agreements set forth in this Agreement.
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(b) In the event this Agreement is terminated by Diablo pursuant to the
provisions of Section 7.1(c), then Diablo shall be entitled to liquidated
damages of (i) an amount equal to the Escrow Deposit, together with interest and
other earnings thereon, and (ii) delivery and cancellation of the Interim
Financing Notes, including all accrued and unpaid interest thereon, and any
Additional Compensation Certificates; the parties agree that such amounts shall
collectively constitute full payment for any and all damages suffered by Diablo
by reason of ATS' failure to consummate the Transactions. ATS and Diablo agree
in advance that actual damages would be difficult to ascertain and that such
liquidated damages is a fair and equitable amount to reimburse Diablo for
damages sustained due to ATS' failure to consummate the Transactions for the
above-stated reasons. In the event this Agreement is terminated by ATS pursuant
to the provisions of Section 7.1(d), then ATS shall be entitled to the amount of
the Escrow Deposit, together with interest and other earnings thereon, without
prejudice to ATS' right to pursue damages or other remedies hereunder.
Notwithstanding the foregoing, each party shall have the right to seek specific
performance pursuant to the provisions of Section 9.5.
(c) In the event this Agreement is terminated pursuant to the
provisions of Section 7.1(a), 7.1(b), 7.1(e), 7.1(f) or 7.1(g), except as
provided in Section 7.2(a), neither of the parties shall have any further rights
or remedies, except that ATS shall be entitled to the Escrow Deposit, together
with interest and earnings thereon.
(d) Anything in this Article or elsewhere in this Agreement to the
contrary notwithstanding, in no event shall Diablo be required to refund to ATS
the nonrefundable deposits made by ATS subsequent to March 31, 1997 pursuant to
the Amendment to Letter of Intent dated March 19, 1997.
ARTICLE 8
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements
of the parties contained in or made pursuant to this Agreement or any Collateral
Document (except as otherwise provided in 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) in the case of matters of a
nature referred to in Section 3.21, three (3) years after the Closing Date,
regardless of any investigation or statement as to the results thereof made by
or on behalf of any party hereto. 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, may be asserted after the
expiration of the Indemnity Period. ATS shall promptly advise Diablo in the
event it shall discover any fraud or alleged fraud, it being understood that, in
the event that ATS discovers such fraud or alleged fraud prior to the expiration
of the Indemnity Period and fails to so notify Diablo thereof, it shall not
thereafter be entitled to assert any Claim with respect thereto. 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 or the expiration of the applicable statute of limitation
unless arbitration or litigation has been pursued.
8.2 Indemnification.
(a) During the Indemnity Period, each of Diablo and ATS (the
"indemnifying party") agrees that on and after the Closing it shall indemnify
and hold harmless the other (the "indemnified party") from and against any and
all damages, claims, losses, expenses, costs, obligations and liabilities,
including without
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limitation liabilities for all reasonable attorneys', accountants' and experts'
fees and expenses including those incurred to enforce the terms of this
Agreement or any Collateral Document executed by it (collectively, "Loss and
Expense"), suffered, directly or indirectly, by the indemnified party by reason
of, or arising out of:
(i) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the indemnifying party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(ii) any Legal Action or other Claim by any third party
relating to the indemnifying party or, in the case of ATS, the
ownership or operations of the Diablo Assets or the conduct of the
business of the Diablo Business to the extent such Legal Action or
other Claim has also resulted in a breach of representation or warranty
by the indemnifying party pursuant to this Agreement or any Collateral
Document executed by it; or
(iii) in the case of Diablo as the indemnifying party, the
failure of Diablo to comply with Bulk Sales law of the State of
California.
(b) Diablo agrees that on or after the Closing it shall indemnify and
hold harmless ATS from and against any and all Loss and Expense suffered,
directly or indirectly, by ATS by reason of, or arising out of, (i) Diablo
Nonassumed Obligations or (ii) the ownership and operation of the Diablo Assets
and the Diablo Business prior to the Closing Date.
(c) ATS agrees that on or after the Closing it shall indemnify and hold
harmless Diablo from and against any and all Loss and Expense suffered, directly
of indirectly, by Diablo by reason of, or arising out of, (i) (A) Diablo Assumed
Obligations or (B) the ownership and operation of the Diablo Assets and the
Diablo Business from and after the Closing Date, except for Events arising prior
to or existing on the Closing Date, unless they are part of the Diablo Assumed
Obligations, and (ii) any Hart-Scott-Rodino Act or other federal or state
antitrust Law filings or any Legal Action or other Claim of any Authority
relating to the Transactions based upon any of the foregoing, except, in all
cases, to the extent such filing, Legal Action or other Claim relates to or is
based upon information furnished or omitted by Diablo.
8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, each indemnified party's rights to
indemnification shall be subject to the following limitations: (i) the
indemnified party 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 (together with Claims (as defined therein) under the Other Agreement
("Other Agreement Claims")) exceeds, in the aggregate, $100,000, in which event
the indemnified party shall be entitled to recover all such Loss and Expense
(including without limitation such $100,000), and (ii) in no event shall the
aggregate amount required to be paid by each indemnifying party pursuant to the
provisions of this Article (and the comparable provision of the Other Agreement)
exceed $1,000,000, except for any Loss or Expense arising out of matters of a
nature referred to in Sections 3.1 and 4.1 (and the comparable provision of the
Other Agreement) as to which the dollar limitations set forth in this clause
(ii) shall not apply.
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, except as
provided in Sections 8.3(c) and 8.6, (i) the exclusive recourse of ATS after the
Closing with respect to the liability of Diablo pursuant to Section 8.2 or any
other provision of this Agreement or Applicable Law which requires Diablo to
defend, indemnify or hold harmless
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ATS from or against any Claim, Loss or Expense shall be the Escrow Indemnity
Funds; and (ii) ATS' remedies for any such liability of Diablo, or for any Claim
arising under this Agreement, shall be limited to its right to recover from the
Escrow Indemnity Funds in accordance with the provisions of the Escrow Indemnity
Agreement, and neither ATS nor any of its officers, directors, shareholders,
agents or Affiliated Entities shall have any right of recovery against Diablo or
any of its officers, directors, shareholders, agents or Affiliated Entities or
against the assets of any of them for any such liability.
(c) In the event there shall be no Claims pending pursuant to the
provisions of this Agreement (and/or Other Agreement Claims) with respect to the
Escrow Indemnity Funds, if any, existing at the expiration of two (2) years
after the Closing, the Escrow Indemnity Funds then remaining shall be
distributed to Diablo and DCI (in such proportion as they shall agree in
writing). In the event one or more such Claims (and/or Other Agreement Claims)
with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Indemnity Period, funds in an amount equal to the sum of (i)
the aggregate amount of such Claims (and/or Other Agreement Claims) and (ii) the
amount reasonably necessary to cover the fees, expense and other costs
(including reasonable counsel fees and expenses) which will be required to
resolve such Claims (and/or Other Agreement Claims) shall be retained as part of
the Escrow Indemnity Funds and the balance thereof, if any, shall be distributed
to Diablo and DCI (in such proportion as they shall agree in writing). Upon the
resolution of all such Claims (and/or Other Agreement Claims) and the payment of
all such fees, expenses and costs out of the Escrow Indemnity Funds, the
remainder of the Escrow Indemnity Funds, if any, shall be distributed to Diablo
and DCI (in such proportion as they shall agree in writing).
(d) If, following the distribution to Diablo, DCI or any other Person
of any remaining Escrow Indemnity Funds, ATS becomes entitled to indemnification
for Loss and Expense suffered by ATS arising from breach of the warranties and
misrepresentations set forth in Section 3.21, or breach by Diablo of any
covenants or agreement by Diablo under this Agreement or any Collateral Document
to which it is a party, then ATS may pursue such Claim directly against Diablo,
its successors and assigns and Spight (but only to the extent he received any
such funds); provided, however, that the maximum amount of liability in the
aggregate of Diablo (and such successors and assigns and Spight) for any and all
such Claims shall be the amount of Escrow Indemnity Funds that were distributed
to Diablo, DCI or any other Person (other than a claimant whose Claim was paid
out of the Indemnity Escrow Fund) claiming by, through or in the name of Diablo
(including without limitation Spight (but only to the extent he received any
such funds) or Diablo's or his successors, assigns, trustees, beneficiaries,
heirs or executors) upon the expiration of the Indemnity Period or thereafter.
(e) In the case any event shall occur which would otherwise entitle
either 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. No indemnifying party shall be liable under this Article for a loss
resulting from any event relating to a misrepresentation or breach of warranty,
covenant or agreement if the indemnifying party can establish that the
indemnified party had actual knowledge on or before the Closing Date of such
event and did not, on or before the Closing Date, reserve its rights with
respect thereto.
8.4 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 8.1, 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
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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.
8.5 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' written 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; provided, however, that if the indemnified party fails or refuses to
consent in writing to any compromise of settlement proposed by the indemnifying
party and agreed to in writing by the claimant in such Legal Action or other
Claim (the "Settlement Proposal") within ten (10) business days after receipt of
written notice of all of the material terms and conditions of the Settlement
Proposal, and such terms and conditions (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 ATS, do not include
any term or condition which would restrict in any material manner the continued
ownership or operations of the Diablo Assets or the conduct of the Diablo
Business in substantially the manner then being theretofore owned, operated and
conducted by ATS, then, unless the indemnifying party forthwith withdraws the
Settlement Proposal, the indemnified party (i) shall have the right but not the
obligation to undertake the conduct of the defense of such Legal Action or other
Claim, and (ii) whether or not it shall so undertake the defense of such Legal
Action or other Claim, shall bear, and shall indemnify and hold the indemnifying
party harmless from, all Loss and Expense arising from such Legal Action or
other Claim (to the extent not theretofore (x) accrued with respect to the costs
and expenses of the defense of such Legal Action or other Claim or (y) paid with
respect to such Legal Action or other Claim) in excess of the amount contained
in the Settlement Proposal, it being understood, in such event, that the
indemnifying party shall bear all Loss and Expense, including subsequently
incurred Loss and Expense (including without limitation those attributable to
legal fees and expenses) up to the amount contained in the Settlement Proposal,
even if the ultimate disposition of such Legal Action or other Claim results in
payments to the claimant of less than those contained in the Settlement
Proposal.
8.6 Exclusive Remedy. Except for fraud or willful or intentional
misrepresentation or breach of warranty, covenant or agreement or as otherwise
provided in Section 9.5, the indemnification provided in this Article shall be
the sole and exclusive post-Closing remedy available to either party against the
other party for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time but only by an instrument in writing signed by the
parties hereto.
9.2 Waiver. Except to the extent not permitted by Applicable Law, ATS
or Diablo may, at any time, extend the time for the performance of any of the
obligations or other acts of the other, subject,
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however, to the provisions with respect to the Termination Date, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and waive compliance by the other
with any of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. All costs and expenses, incurred
in connection with any transfer taxes, recording or documentary taxes, stamps or
other comparable charges levied by any Authority in connection with this
Agreement and the consummation of the Transactions, title insurance for Diablo's
fee-owned Real Property shall be borne equally by Diablo and ATS. All
Hart-Scott-Rodino filing fees for both this Agreement and the Other Agreement
shall be borne equally by Diablo and ATS up to the amount of $20,000 for each of
Diablo and ATS, with the balance to be borne by ATS. 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.
9.4 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) 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:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
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(b) If to Diablo:
1220 Brickyard Cove Road, Suite 200
Point Richmond, California 94801
Attention: Richard D. Spight, Chairman
Telecopier No.: (510) 236-3799
with a copy to:
Cooper, White & Cooper
1333 North California Boulevard, Suite 450
Walnut Creek, California 94596
Attention: Keith Howard, Esq.
Telecopier No.: (510) 256-9428
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.
9.5 Specific Performance; Other Rights and Remedies. Anything in this
Agreement to the contrary notwithstanding, 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 not in
material breach of this Agreement or any Collateral Document shall, in addition
to such other remedies as may be available to it at law or in equity or as
provided in Article 7, 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
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.
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, after the Closing Date ATS shall not be entitled to specific
performance or any other remedy to the extent that the cost to Diablo arising
from the enforcement or exercise of such remedy would exceed the amount then on
deposit in the Escrow Indemnity Funds, in accordance with the provisions of the
Escrow Indemnity Agreement, for all costs and expenses incurred in connection
with its performance of or compliance with the remedy exercised or enforced.
9.6 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 either 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
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by Applicable Law in an acceptable manner to the end that the Transactions are
fulfilled and consummated to the maximum extent possible.
9.7 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.
9.8 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.
9.9 Governing Law; Venue. 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 California 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. In the event of any Legal Action between the parties
arising out of this Agreement, the parties agree to submit the matter to the
appropriate municipal, state or federal court sitting in San Francisco County,
California, and the parties agree to submit to the jurisdiction of such courts.
9.10 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.
9.11 Entire Agreement. This Agreement (together with the Diablo
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, including without limitation that
certain letter of intent, dated December 19, 1996, between the parties, as
amended by the letter dated March 19, 1997 (the "Letter of Intent").
9.12 Assignment. This Agreement shall not be assignable by either 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.
9.13 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, including without limitation Section 2.2(c), 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of Diablo and ATS, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties
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and there shall be no construction against either party based on any presumption
of that party's involvement in the drafting thereof.
9.15 Arbitration. 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 San Francisco, California in accordance with the commercial rules
of the American Arbitration Association (the "AAA") before a panel of three (3)
arbitrators knowledgeable in the tower communications industry, one arbitrator
chosen by ATS, one by Diablo, 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 San Francisco Chapter of the AAA, and the decision of such panel shall,
in the absence of fraud, be conclusively binding on the parties.
9.16 Disclosure Schedule. Diablo has delivered to ATS prior to
execution and delivery of this Agreement the Diablo Disclosure Schedule and all
related documents required to be delivered by Diablo pursuant to Article 3 of
this Agreement. Without limiting the generality of the foregoing, the Diablo
Disclosure Schedule sets forth: (i) which authorizations, consents, waivers,
orders or approvals are a condition of Closing pursuant to the provisions of
Section 6.1(a); (ii) which Private Authorizations, Leases and Material
Agreements and other Contractual Obligations are a condition to Closing pursuant
to the provisions of Section 6.2(d); and (iii) which permits, consents or other
Governmental Authorizations of the United States Forest Service are a condition
to Closing pursuant to the provisions of Section 6.2(m). ATS has received and
hereby accepts the Diablo Disclosure Schedule and agrees to consummate the
transactions contemplated by this Agreement, subject to the satisfaction of the
conditions set forth in Sections 6.1 and 6.2 and subject to the matters
disclosed in the Diablo Disclosure Schedule.
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IN WITNESS WHEREOF, ATS and Diablo 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: James S. Eisenstein
Title: Chief Operating Officer
Diablo Communications of Southern California, Inc.
By:______________________________________
Name:
Title:
The undersigned, Richard D. Spight, the principal shareholder of
Diablo, hereby acknowledges and agrees to be bound by the provisions of Article
8, including without limitation Section 8.3(d).
----------------------------------
Richard D. Spight
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) 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 herein shall
have such meanings when used in the Diablo 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 "either party" shall, unless the context otherwise
requires, refer to Diablo and ATS.
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 Diablo attributable to the ownership or operation of the
Diablo 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 Diablo'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 Diablo
Business, or (c) impair Diablo'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 (i)
generally affecting the economy or the tower communications business or (ii) of
a nature described in the "Definition" section of the Diablo Disclosure Schedule
shall not be deemed to constitute an adverse change, have an adverse effect or
to adversely affect or effect.
Additional Title Matter shall have the meaning given to it in Section
5.7.
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
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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 Diablo
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.
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.
Approved Title Conditions shall mean any one or more of the following:
(a) Liens for real property taxes and assessments not then delinquent; (b) the
Lien of supplemental Taxes assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, to the extent that such
supplemental Taxes are attributable to the transactions contemplated by this
Agreement; (c) matters of title approved by ATS or deemed approved in accordance
with the provisions of Section 5.7; and (d) matters of title created following
the date of this Agreement by or with the written consent of ATS.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the Diablo
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, including without including without limitation the
following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Private Authorizations;
(e) the Contracts (other than the Diablo Nonassumed
Obligations);
(f) the corporate name of Diablo and all variations thereof;
(g) all Intellectual Property and other proprietary
information, which relate to the Diablo Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the Diablo Business;
(h) all claims, choses in action and rights under warranties
relating to the Diablo Business or any of the Diablo Assets;
(i) all books and records relating to the ownership or
operation of the Diablo Assets or the conduct of the Diablo Business,
including executed copies of Leases, Material Agreements and other
written Contracts, and all records required by Applicable Law to be
kept, subject to the right of the conveying party to have such books
and records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate business purposes. The records described herein
shall not include corporate seals, certificates of
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incorporation, minute books, stock books, tax returns or other records
having to do with the corporate organization of Diablo; and
(j) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets shall not
include any of the Excluded Assets.
ATS shall have the meaning given to it in the Preamble.
ATS Accrued Sick Time Liability shall have the meaning given to it in
Section 2.2(c).
ATS Assumed Vacation Liability shall have the meaning given to it in
Section 2.2(c).
ATS' Environmental Notice shall have the meaning given to it in Section
5.8.
ATS' Title Notice shall have the meaning given to it in Section 5.7.
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 Diablo Business.
CAAP shall mean the accounting principles used by the Company in the
preparation of the Financial Statements and described in general terms in the
Disclosure Schedule, such principles applied on a consistent basis, except as
otherwise heretofore disclosed in the Disclosure Schedule. The requirement that
such principles be consistently applied means that the accounting principles in
a current period are comparable in all material respect to those applied in
preceding period. All accounting and financial terms used in this Agreement and
the compliance with each covenant contained in this Agreement that relates to
financial matters shall be determined in accordance with the accounting
principles referred to in this paragraph (except as otherwise specifically noted
in certain of the definitions where the term GAAP is used).
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 2.3.
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Closing Date shall have the meaning given to it in Section 2.3.
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 Document shall mean the Escrow Agreement, the Indemnity
Escrow Agreement, the Nonassignable Contracts Agreement, special warranty deeds,
bills of sale, assignments of intangibles, assumption agreements with respect to
the Diablo Assumed Obligations, other instruments of conveyance and assignment
sufficient to vest in ATS title to all of the other Diablo Assets and the Diablo
Business, and any other agreement, certificate, contract, instrument, notice,
opinion or other document delivered pursuant to the provisions of this Agreement
or any Collateral Document.
Collection Period shall have the meaning given to it in Section 2.4.
Construction Adjustment shall have the meaning given to it in Section
2.3.
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 Diablo Assets or the
conduct of the Diablo 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.
DCI shall have the meaning given to it in the fourth Whereas paragraph.
Diablo shall have the meaning given to it in the Preamble.
Diablo Assumable Agreements shall mean all obligations and liabilities
of Diablo under all Leases, Material Agreements, Governmental Authorizations,
Private Authorizations and other Contractual Obligations not required to be
listed on Section 3.16 of the Diablo Disclosure Schedule entered into in the
ordinary course of business and relating to the ownership or operation of any of
the Diablo Assets or the
conduct of the Diablo Business.
Diablo Assets shall have the meaning given to it in Section 2.1.
Diablo Assumed Liabilities shall have the meaning given to it in
Section 2.2(b).
Diablo Business shall have the meaning given them in the first Whereas
paragraph.
Diablo Disclosure Schedule shall mean the Diablo Disclosure Schedule
dated as of the date of this Agreement delivered by Diablo to ATS.
Diablo Employees shall have the meaning given it in the Section
3.15(a).
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Diablo Financial Statements shall have the meaning given to it in
Section 3.2(b).
Diablo Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
Diablo Personal Property shall have the meaning given to it in Section
3.5(c).
Diablo's Environmental Notice shall have the meaning given to it in
Section 5.8.
Diablo's knowledge means the actual knowledge of any Diablo officer or
senior manager, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of appropriate Diablo records.
Diablo's Title Notice shall have the meaning given to it in Section
5.7.
Employment Arrangement shall mean, with respect to Diablo, 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 Diablo 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 Diablo Assets or
the conduct of the Diablo 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 Company shall have the meaning given to it in Section
5.8.
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
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Control and Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any
analogous federal, state, local 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
5.8.
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 Diablo under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Escrow Agent shall have the meaning given to it in the third Whereas
paragraph.
Escrow Agreement shall have the meaning given to it in the third
Whereas paragraph.
Escrow Deposit shall have the meaning given to it in the third Whereas
paragraph.
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.
Excluded Assets shall have the meaning given to it in Section 2.1.
Exclusivity Agreement shall have the meaning given to it in Section
6.2(r).
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.
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GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, 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.
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 Diablo Assets or the conduct of the
Diablo 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 Diablo,
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,
A-7
<PAGE>
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.
Indemnity Escrow Agent shall have the meaning given to it in Section
6.2(k).
Indemnity Escrow Agreement shall have the meaning given to it in
Section 6.2(k).
Indemnity Escrow Fund shall have the meaning given to it in Section
2.3.
Insured Real Property shall have the meaning given to it in Section
5.7.
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.
Interim Adjustment shall have the meaning given to it in Section 2.3.
Interim Financing Note shall have the meaning given to it in the fifth
Whereas paragraph.
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
A-8
<PAGE>
be brought on behalf of such Person, affecting such Person or any of such
Person's business, property or assets.
Letter of Intent shall have the meaning given to it in Section 9.11.
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.
Like-Kind Notice shall have the meaning given to it in Section 2.5.
Loss and Expense shall have the meaning given to it in Section 8.2.
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 Diablo, 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, (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) is with the United States Forest Service or any other Authority,
or (f) involves the management by Diablo of any communication tower of any other
Person.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Nonassignable Contracts shall have the meaning given to it in Section
2.2(c).
Nonassignable Contracts Agreement shall have the meaning given to it in
Section 6.2(n).
Note Agreement shall have the meaning given to it in the fifth Whereas
paragraph.
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).
Other Agreement shall have the meaning given to it in the fourth
Whereas paragraph.
Other Agreement Claims shall have the meaning given to it in Section
8.3(a).
A-9
<PAGE>
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 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
Diablo Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
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
Diablo and used or useful as of the date hereof in the conduct of the business
or operations of the Diablo 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 Diablo Business.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by Diablo prior to the Closing
and relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by Diablo prior to the Closing
and relates to a period subsequent to the Closing.
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
Retained Accounts Receivable shall have the meaning given to it in
Section 2.4.
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 Diablo as of the date hereof, in the operations of the Diablo
Business, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
A-10
<PAGE>
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 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 5.1(a).
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the SEC 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.
Spight shall have the meaning given to it in Section 6.2(j).
Spight Noncompetition Agreement shall have the meaning given to it in
Section 6.2(j).
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
2.3.
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 Company shall have the meaning given to it in Section 5.7.
Title Reports shall have the meaning given to it in Section 5.7.
A-11
<PAGE>
Termination Date shall have the meaning given to it in Section 7.1.
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 Diablo Assets and the Diablo Business and the execution, delivery
and performance of the Collateral Documents.
U.S. Navy Claim means all obligations, liabilities and other Claims
with respect to the T.V. Hill Site and the U.S. Navy, including those of Watson
Communications Systems, Inc., a former partner of Diablo and/or Spight with
respect thereto and of Diablo to the U.S. Navy with respect to its guaranty of
the obligations and liabilities of Watson Communications Systems, Inc.
A-12
EXHIBIT 10.4d
SECURITIES PURCHASE AGREEMENT
NOTES DUE 2000
of
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
March 20, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. Issue and Sale of Securities.........................................................................1
1.1 Description of Securities..................................................................1
1.2 Purchase and Sale..........................................................................2
1.3 Closing....................................................................................3
2. Representations and Warranties of Company............................................................4
2.1 Organization and Business; Power and Authority.............................................4
2.2 Business; Financial Information............................................................5
2.3 Changes in Condition.......................................................................5
2.4 Title to Properties; Leases................................................................5
2.5 Compliance with Governmental Authorizations and Applicable Law.............................6
2.6 Related Transactions.......................................................................7
2.7 Tax Matters................................................................................7
2.8 Employment Arrangements....................................................................7
2.9 Ordinary Course of Business................................................................8
2.10 Private Sale.............................................................................10
2.11 Disclosure...............................................................................10
2.12 Use of Proceeds..........................................................................10
2.13 Material Agreements and Private Authorizations...........................................10
2.14 Employee Retirement Income Security Act of 1974..........................................11
2.15 Authorized and Outstanding Capital Stock ................................................11
2.16 Inapplicability of Specified Statutes....................................................11
3. Representations, Warranties and Covenants of American...............................................11
3.1 Organization and Business; Power and Authority............................................12
3.2 Investment Representation.................................................................12
3.3 Covenant Regarding Transfer...............................................................13
4. Conditions of Closing...............................................................................13
4.1 Company's Officer's Certificate. ........................................................13
4.2 Company's Secretary's Certificate. ......................................................13
4.3 Opinion of Company Counsel. .............................................................14
4.4 Legality; Governmental and Other Authorizations. ........................................14
5. Payment and Exchange of Notes; Lost Notes...........................................................14
5.1 Payments..................................................................................14
5.2 Exchange..................................................................................15
5.3 Replacement of Notes......................................................................15
5.4 Transfer Office and Record of Holders of Notes............................................16
5.5 Transfer of Notes.........................................................................16
5.6 Registered Owners of Notes................................................................16
5.7 Limitation on Transfer of Notes............................................................17
6. Payment Provisions..................................................................................17
<PAGE>
Page
6.1 Required Payments.........................................................................17
6.2 Restriction on Optional Payments..........................................................17
6.3 Notice of Payment and Offers to Repurchase................................................18
6.4 Maturity; No Reissue......................................................................18
6.5 Purchase of Notes.........................................................................18
7. Special Covenants of Company........................................................................18
7.1 Payments..................................................................................18
7.2 Prompt Payment of Taxes and Indebtedness..................................................19
7.3 Conduct of Business.......................................................................19
7.4 Maintenance of Property and Leases........................................................19
7.5 Maintenance of Insurance..................................................................20
7.6 Maintenance of Accounts and Records.......................................................20
7.7 Compliance With Laws......................................................................20
7.8 Miscellaneous Information.................................................................20
7.9 Information and Reports to Be Furnished by Company........................................21
7.10 Liens....................................................................................22
7.11 Distributions............................................................................22
7.12 Consolidation, Merger and Acquisition....................................................23
7.13 Prohibited Transactions..................................................................24
7.14 Compliance with ERISA....................................................................24
7.15 Indebtedness.............................................................................24
7.16 Operation of the Business.................................................................24
7.17 Issue of Equity Securities...............................................................25
8. Defaults. .........................................................................................25
8.1 Events of Default.........................................................................25
8.2 Notice to the Holders.....................................................................27
8.3 Annulment of Defaults.....................................................................28
8.4 Waiver by Company; Severability of Remedies...............................................28
8.5 No Waiver of Rights.......................................................................28
8.6 Costs and Expenses of Collection..........................................................29
8.7 Remedies Cumulative.......................................................................29
9. Definitions.........................................................................................29
10. Miscellaneous Provisions...........................................................................41
10.1 Stamp and Other Taxes....................................................................41
10.2 Expenses.................................................................................41
10.3 Survival of Covenants; Successors and Assigns............................................42
10.4 Notices and Communications...............................................................42
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<PAGE>
Page
10.5 Amendments and Waivers...................................................................43
10.6 Governing Law; Venue.....................................................................43
10.7 Entire Agreement.........................................................................43
10.8 Saturdays, Sundays, Holidays, etc........................................................44
10.9 Brokers, etc.............................................................................44
10.10 Headings; Counterparts..................................................................44
10.11 Severability............................................................................44
10.12 Further Assurances......................................................................44
10.13 Specific Performance; Other Rights......................................................45
10.14 Non-Recourse Obligation.................................................................45
</TABLE>
SCHEDULES:
DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A: Form of Note
Exhibit B: Form of Additional Compensation Certificate
-iii-
<PAGE>
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), made as of March
20, 1997, by and between Diablo Communications of Southern California, Inc., a
California 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 Company are parties to a letter of intent,
dated as of December 19, 1996, as amended as of the date hereof (the "Letter of
Intent"), relating to an asset purchase agreement to be negotiated, executed and
delivered by the parties (the "Acquisition Agreement"), with respect to the
acquisition (the "Acquisition") by American of substantially all of the
communications tower and management business of the Company (the "Diablo
Business");
WHEREAS, the Company proposes to issue and sell on the date hereof a
Note in the principal amount of $750,000 and American is willing to purchase the
Initial Note in order to provide funds to the Company for corporate purposes;
WHEREAS, American and Diablo Communications, Inc., a California
corporation ("DCSC"), are parties to a letter of intent, dated as of December
19, 1996, as amended as of the date hereof (the "DCI Letter of Intent"),
relating to an asset purchase agreement to be negotiated, executed and delivered
by the parties (the "DCI Acquisition Agreement"), with respect to the
acquisition (the "DCI Acquisition") by American of substantially all of the
property and assets and the communications tower and management business of DCI
(collectively, the "DCI Business"); and
WHEREAS, American and DCI have, simultaneously executed and delivered a
Note Purchase Agreement, substantially in the form of this Agreement (the "DCI
Note Agreement"), pursuant to which DCI will issue up to Seven Hundred Fifty
Thousand Dollars ($650,000) in aggregate principal amount of notes of like tenor
to the Notes (the "DCI Notes") and additional compensation certificates of like
tenor to the Additional Compensation Certificates (the "DCI Additional
Compensation Certificates");
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 June 30, 2000, shall bear
<PAGE>
interest from the date of its issue, at an annual rate equal to the Prime Rate
on the unpaid principal balance thereof, compounded on the last day of each
calendar month, commencing January 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.
The Company has duly authorized the issuance, on the terms hereinafter
provided, of certificates representing rights to additional compensation (the
"Additional Compensation Certificates") as determined in accordance with the
provisions of the Additional Compensation Certificates. The term "Additional
Compensation Certificates" shall mean any Additional Compensation Certificates
issued and delivered in exchange or substitution therefor or on transfer thereof
as therein provided; and the term "Additional Compensation Certificate" shall
mean any of the Additional Compensation Certificates. The Additional
Compensation Certificates shall be in or substantially in the form set forth in
Exhibit B hereto. Each Additional Compensation Certificate shall be dated the
date of its issue.
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, the Note and the Additional Compensation
Certificates 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 once 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"), in accordance
with the following schedule:
Month Cumulative Advances
March 1997 $350,000
April 1997 $550,000
May 1997 $700,000
June 1997 $750,000
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. The Company and American
agree that the Purchase Price shall be allocable to the Notes and the Additional
Compensation Certificates in accordance with their respective fair market
values.
-2-
<PAGE>
1.3 Closing. The Closing (the "Closing") shall be held at such time,
place and manner not later than January 31, 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 principal amount of $650,000 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.
Upon the request of American, the Company shall prepare and file an
application with the California Department of Corporations an application for
qualification of the Additional Compensation Certificates and/or the Notes (the
"California Application") under the provisions of Chapter 2 of the California
Corporate Securities Law of 1968, as amended (the "California Securities Law").
The Company shall thereafter use its best efforts to secure the qualification of
the Additional Compensation Certificates and/or the Notes under the California
Securities Law. The Company and American shall each bear fifty percent (50%) of
any and all costs and expenses of the preparation and filing of the California
Application, and securing the issuance of the qualification, including without
limitation filing and processing fees, attorneys fees, accountants fees and
other costs and expenses.
Promptly after the effective date of the qualification of the
Additional Compensation Certificates and/or the Notes, and in any event within
three (3) days after the effective date of such qualification, the Company will
issue and deliver to American one Additional Compensation Certificate registered
in the name of American, subject to the Company's and American's compliance with
such terms and requirements as may be imposed by the Commissioner of
Corporations as a condition of the qualification.
In the event that such qualification does not become effective within
six (6) weeks (or such longer period as American may, in its sole discretion,
agree) after the filing of the California Application, American shall have the
right to contribute the Notes in exchange for interests in one or more joint
ventures agreements with the Company with respect to the communication sites in
which the proceeds of the loans theretofore made or to be made pursuant to this
Agreement are used. Such joint ventures shall be on terms and conditions which
afford to American and the Company (i) substantially equivalent economic
benefits and obligations to those which they would have received had the
Additional Compensation Certificates and/or the Notes been qualified under the
California Securities Law and issued and delivered to American, and (ii)
substantially equivalent rights and obligations as contemplated in the Notes,
the Additional Compensation Certificates and this Agreement and otherwise on
terms and conditions reasonably acceptable to the Company and American.
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
-3-
<PAGE>
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, the
Additional Compensation Certificates and each other Related Agreement
to which it is a party, and to issue and sell the Note and the
Additional Compensation Certificates. The execution, delivery and
performance of this Agreement, the Notes, the Additional Compensation
Certificates 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 constitutes, and the Notes, the Additional Compensation
Certificates and each other Related Agreement to which it is a party
when executed and delivered by the Company 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 and the
Additional Compensation Certificates will be entitled to the rights and
benefits set forth in the Notes, the Additional Stock Certificates and
this Agreement.
(c) 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 any
interest in the assets and property or business of any of the Diablo
Assets or the Diablo Business, except as set forth in the Disclosure
Schedule.
(d) 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 Letter of Intent and the execution, delivery and performance
of the Letter of Intent has been duly authorized by all requisite
corporate action on the part of the Company.
-4-
<PAGE>
(e) Except as set forth in the Disclosure Schedule, neither
the execution and delivery of this Agreement, the Notes, the Additional
Compensation Certificates 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 CAAP 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 CAAP 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 contemplated by this Agreement and the Letter of Intent or as
otherwise specifically set forth in the Disclosure Schedule, (i) 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.
2.4 Title to Properties; Leases. The Company has good and marketable
title in fee simple to all real property owned by it and has good and
merchantable title to all other assets, tangible and
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intangible, owned in fee simple by the Company in the Diablo Business
(collectively, with the Real Property, the "Diablo Assets"), in all cases free
and clear of all Liens securing Indebtedness for Money Borrowed, except such as
are set forth in the Disclosure Schedule. All buildings, structures, towers,
antennae, improvements and fixtures comprising a part of the Diablo Assets are
in good and technically sound operating condition, have no latent structural
mechanical or other defects of material significance, are reasonably suited for
the purposes for which they are being used and each has adequate rights of
ingress and egress, utility service for telephone and electric for the conduct
of the business and operations of the Diablo Business as presently conducted,
except for such exceptions which, individually or in the aggregate, would not
have a Material Adverse Effect on the Company, except as otherwise set forth in
the Company Disclosure Schedule.
Each lease or other occupancy or other agreement under which the
Company holds any of the Diablo Assets has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The Company, to the Company's
knowledge, has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all such leases. All of such leases are, to the Company's
knowledge, valid and subsisting and in full force and effect; and the Company is
not in default in the performance, observance or fulfillment in any respect of
any obligation, covenant or condition contained in any such lease, except for
such exceptions which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
2.5 Compliance with Governmental Authorizations and Applicable Law. As
of the date hereof, there are no judgments, decrees or orders issued by any
Authority presently outstanding and unsatisfied against the Company. The
Disclosure Schedule contains a brief description of
(a) all Legal Actions or other Claims which are pending or in
which the Company or its business, operations or properties, or, to the
Company's knowledge, any of its officers, directors or stockholders in
connection therewith, is engaged, or which involves the business,
operations or properties of the Company or, to the Company's knowledge,
which are threatened or contemplated against, the Company or its
business, operations or properties, or any of such officers, directors
or stockholders, in connection therewith, in all cases which
individually or in the aggregate could, if adversely determined, have a
Materially Adverse Effect on the Company; and
(b) each Governmental Authorization which, if not obtained and
maintained, could singly or in the aggregate, have any Material Adverse
Effect on the Company (a "Material Governmental Authorization").
No Governmental Authorization is the subject of any pending or, to the
Company's knowledge, threatened attack, revocation or termination except for
such attacks, revocations or terminations as do not and will not have in the
aggregate any Material Adverse Effect on the Company. Neither the Company nor,
to the Company's knowledge, any of its officers, directors or stockholders in
connection with the business, operations and properties of the Company, is
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(i) in breach or violation or, or in default in the
performance of, or
(ii) charged with any such breach or violation of, or
default under, or
(iii) to the Company's knowledge, threatened with or under
investigation with respect to any such breach or
violation of, or default under,
any Governmental Authorization or any Applicable Law, 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 or violation of or
default under any such other Material Governmental Authorization or any
Applicable Law, except for such defaults, breaches or violations as do not and
will not have in the aggregate any Material Adverse Effect on the Company.
2.6 Related Transactions. The Disclosure Schedule sets forth a fair,
complete and accurate in all material respects description of any Contractual
Obligation or transaction relating to any of the Diablo Assets or the Diablo
Business between the Company and any of its officers, directors or stockholders,
or any Affiliate of any thereof (other than for services as, or loans and
advances in the ordinary course of business to, any thereof), now existing,
including without limitation any 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 officer, director or stockholder or
Affiliate, except for such as (a) will not survive the consummation of the
Acquisition or (b) are on terms at least as favorable to the Company as would be
obtained with Persons who are not Affiliated with the Company.
2.7 Tax Matters. The Company has, at all times during its existence,
been and is taxable as a Subchapter S corporation for federal and state income
Tax purposes. To the Company's knowledge, (a) all Tax Returns which in
accordance with Applicable Law are required to be filed by or on behalf of the
Company have been filed and all Taxes which have become due and payable pursuant
to said returns and all estimated Taxes due and payable and all other
governmental charges and assessments due and payable by or on behalf of the
Company have been paid, (b) such returns have been prepared in accordance with
all Applicable Laws, and (c) all Taxes which the Company 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, except as otherwise set forth in the Disclosure Schedule..
2.8 Employment Arrangements. The Company is not now and during the past
five years has not been subject to or involved in or, to the Company's
knowledge, threatened with any union elections, petitions therefor or other
organizational activities, relating to any of the Diablo Assets or the Diablo
Business, except as described in the Disclosure Schedule. Except as described in
the Disclosure Schedule, none of the employees of the Company involved in any of
the Diablo Assets or the Diablo Business is represented by any labor union or
other employee collective bargaining organization or is a party to any labor or
other collective bargaining agreement, and there are no pending grievances,
disputes or controversies with any union or any other organization of such
employees, or threats of strikes, work stoppages or any pending demands for
collective bargaining
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by any union or organization, or, to the Company's knowledge, any active
organizing or recruiting of such employees with respect to becoming members of
any union or other employee or collective bargaining organization.
2.9 Ordinary Course of Business. With respect to each of the Diablo
Assets and the Diablo Business, the Company from the end of its Most Recent
Fiscal Year to the date hereof, and until the Closing Date, except as may be
described on the Disclosure Schedule or as may be required or permitted by the
terms of this Agreement or the Letter of Intent:
(a) has operated, and will continue to operate, the Diablo
Business in the normal, usual and customary manner in the ordinary and
regular course of business;
(b) has not sold or otherwise disposed of, and will not sell
or otherwise dispose of or contract to sell or otherwise dispose of,
any of the properties or assets of any of the Diablo Assets or the
Diablo Business, other than nonmaterial amounts of machinery and
equipment sold or otherwise disposed of in the ordinary course of
business and no longer needed in the operation or business or replaced
with assets of like kind or better kind and quality;
(c) except in each case in the ordinary course of business of
each of the Diablo Assets and the Diablo Business,
(i) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other);
(ii) has not entered and will not enter into any
commitments; and
(iii) has not sold or transferred, and will not sell
or transfer, any tangible asset or canceled or cancel any
debts or claims;
(d) has not made and will not make any additions to property
or any purchases of machinery or equipment, except for normal
maintenance and replacements;
(e) has not discharged or satisfied, and will not discharge or
satisfy, any Lien or paid or pay any obligation or liability (absolute
or contingent) other than current liabilities or obligations under
contracts then existing or thereafter entered into in the ordinary
course of business, and commitments under leases existing on that date
or incurred since that date in the ordinary course of business;
(f) has not placed and will not place, or permitted to be
placed or permit to be placed, any Lien on any of the Diablo Assets or
the Diablo Business, and has not Transferred, and will not Transfer,
any of the Diablo Assets or the Diablo Business;
(g) has not committed or suffered to exist, and will not
commit or suffer to exist, any Act of Bankruptcy;
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(h) has not increased and will not increase the compensation
payable or to become payable to any of its officers, employees,
advisers, consultants, salesmen or agents involved in any of the Diablo
Assets or the Diablo Business, has not and will not otherwise alter,
modify or change in any material respect the terms of their employment
or engagement, and has not entered and will not enter into new
employment arrangements with any of the foregoing, other than in the
ordinary course of business of the Diablo Business and on terms and
conditions consistent with prior practices;
(i) 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;
(j) has not waived, and will not waive, any rights of
substantial value without fair and adequate consideration;
(k) has not experienced any work stoppage;
(l) has not amended, and will not amend, in any material
respect, has not terminated or entered into, and will not terminate or
enter into, or become (or permit any of its property to be) bound by or
subject to any lease, Governmental Authorization, Private
Authorization, Material Agreement, Employment Arrangement or Plan or
any Contractual Obligation or transaction with any Affiliate;
(m) has not amended or terminated and will not amend or
terminate (unless replaced), and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, insurance policies and coverage meeting
the standards of Section 7.5;
(n) has not done any act or failed to do any act, and will not
do any act or fail to do any act, if such act or failure to act might
result in the expiration, revocation, suspension or modification of any
of its Governmental Authorizations or Material Private Authorizations;
(o) has not issued, sold or purchased or agreed to issue, sell
or purchase and will not issue, sell or purchase or agree to issue,
sell or purchase, any capital stock or any Convertible Securities or
Option Securities;
(p) has not declared, made or paid or agreed to declare, make
or pay, and will not have declared, made or paid or agreed to declare,
make or pay, any Distribution; and
(q) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to any of the Diablo Assets or the Diablo
Business.
The Company will notify American of any and all Events which would
require any material change to be made in the Disclosure Schedule insofar as it
relates to it or which could cause or result
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in any material breach or inaccuracy of the Company's representations and
warranties including without limitation those set forth in this Section or which
could materially impair the likelihood that all of the conditions specified in
Section 4 will be satisfied on or prior to the Closing Date.
2.10 Private Sale. The Company has not, directly or indirectly or
through anyone acting on its behalf, offered any of the Notes, the Additional
Compensation Certificates 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 or the
Additional Compensation Certificates under the registration provisions of the
Securities Act.
2.11 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.
2.12 Use of Proceeds. The Company shall use the proceeds of the sale of
the Note and the Additional Compensation Certificates to American hereunder to
complete the development of new communication sites and capital improvements to,
but not personnel costs, maintenance or other expense items of, its existing
communication sites. At the election of the Company, such proceeds may also be
used to replenish funds used for such expenses incurred subsequent to October
31, 1996.
2.13 Material Agreements and Private Authorizations. Except as set
forth on the disclosure Schedule:
(a) the Company has obtained all Private Authorizations and
Material Agreements which are necessary for the ownership by it of the
properties and assets constituting a part of the Diablo Assets and the
conduct of the Diablo Business as now conducted or as presently
proposed to be conducted or which, if not obtained and maintained,
could, individually or in the aggregate, have a Material Adverse Effect
on the Company;
(b) As of the date hereof, all of such Material Agreements are
valid, binding and legally enforceable obligations of the Company and,
to the knowledge of the Company, the other party thereto, and the
Company is validly and lawfully operating the business of the Diablo
Assets and the Diablo Business and owning or using the related property
under each of such Material Agreements;
(c) No such Private Authorization is the subject of any
pending or, to the Company's knowledge, threatened attack, revocation
or termination; and
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(d) As of the date hereof, the Company has duly complied in
all respects with all of the terms and conditions of each such Material
Agreement and each such Private Authorization and has not done or
performed, or failed to do or perform (and there is no pending, or, to
the Company's knowledge, threatened, Claim that the Company has not so
complied, done and performed or fail 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) or
materially impair its rights or benefits of, or materially increase the
costs to, the Company, under any of such Material Agreements or Private
Authorizations, except, in all cases, for such exceptions which,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
2.14 Employee Retirement Income Security Act of 1974. The Company has
not at any time during the past five years made and is not making any
contribution to any Plans and is not bound by any Plan relating to any of its
employees involved in the ownership and operations of any of the Diablo Assets
or the Diablo Business, except as set forth in the Disclosure Schedule. As to
all such Plans and except as listed in the Disclosure Schedule, all such Plans
comply and have been administered in form and in operation in all material
respects with all Applicable Laws. The Company is not and never has been a party
to any Multiemployer Plan or made contributions to any such Plan.
2.15 Authorized and Outstanding Capital Stock . The authorized and
outstanding capital stock of the Company is as set forth in the 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 set forth in the Disclosure Schedule,
(i) there is neither outstanding nor has the Company agreed to grant or issue
any shares of capital stock or any Option Security or Convertible Security and
(ii) the Company is not a party to or is not 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.
2.16 Inapplicability of Specified Statutes. The Company is not, to its
knowledge, 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 sections 10102 or 11301 of Title 49,
U.S.C. The Company is not engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulations G and U of the Board of Governors of the Federal Reserve System.
3. Representations, Warranties and Covenants of American. American
represents and warrants that:
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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 constitutes, and each other Related Agreement
to which it is a party, when executed and delivered by American 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 ap plicability.
(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:
(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 American
under, any Applicable Law, Private Authorization, Governmental
Authorization or Contractual Obligation, or
(ii) will 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 and the Additional Compensation
Certificates 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, subject to the provisions of Section 5.7 of the Notes and of
Section 2(d) of the Additional Compensation Certificates, to dispose of the
Notes and
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the Additional Compensation Certificates or any part thereof in its sole
discretion; provided, however, that notwithstanding the foregoing, American may
pledge any or all of the Notes and the Additional Compensation Certificates 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 or
the Additional Compensation Certificates.
3.3 Covenant Regarding Transfer. American covenants and agrees that it
will not sell, assign, transfer or otherwise dispose of any of the Notes or the
Additional Compensation Certificates in violation of the Securities Act.
4. Conditions of Closing. American's obligation to purchase the Notes
and the Additional Compensation Certificates shall be subject to compliance by
the Company with its agreements herein contained, to the truth and accuracy in
all material respects of the certificates to be furnished to it pursuant to this
Section, the truth and accuracy in all material respects 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. Subject to the provisions of the
Letter of Intent, (a) the representations and warranties contained in Section 2
shall be true and correct in all material respects on and as of the Closing
Date; (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.
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 California 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.
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4.3 Opinion of Company Counsel. American shall have received favorable
opinions, dated the Closing 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(d) (limited to corporate power
and authority), 2.1(e) (to such counsel's knowledge), and 2.16, 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 or the Additional Compensation Certificates nor the
qualification of this Agreement under the Trust Indenture Act of 1939, as
amended to date, is required.
4.4 Legality; Governmental and Other Authorizations. Except as set
forth on the Disclosure Schedule, the purchase of and payment for the Notes and
the Additional Compensation Certificates 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.
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 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.
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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. Subject to the provisions of Section 5.7, 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, subject to the provisions of Section 5.7, 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,
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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 in the Notes, if any Note of which 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,
including without limitation Section 5.7, 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.
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5.7 Limitation on Transfer of Notes. Anything in this Section 5 or
elsewhere in this Agreement to the contrary notwithstanding, prior to the
earlier of September 30, 1997 or the acceleration of the Notes by American
pursuant to the provisions of Section 6.1, the Notes shall not be transferable
by American (or any of its Affiliates) except (a) to an Affiliate of American or
(b) to one or more bona fide lenders to American or any of its Affiliates.
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 earliest to occur of (a)
consummation of the Acquisition (in which event the Company may, in its sole
discretion, elect to have the Notes assumed by American as part of such
transaction in which event the consideration to be delivered by American shall
be reduced by an amount equal to the principal amount of the Notes so assumed
and accrued and unpaid interest thereon to the date of assumption), (b) the
occurrence of the Acquisition Termination Date, and either (i) the demand by
American for payment thereof or (ii) the election of the Company to prepay the
Notes, in either case, in its sole discretion, and (c) June 30, 2000.
6.2 Restriction on Optional Payments. The Company may prepay the Notes,
in whole but not in part, either:
(a) in the event of the occurrence of the Acquisition
Termination Date, the Company may, in its sole discretion, elect, at
any time within ninety (90) days of the occurrence of the Acquisition
Termination Date, to prepay the Notes, at their principal amount,
without premium but with interest accrued and unpaid thereon to the
date of payment, either in cash or pursuant to an agreement customary
in comparable transactions and reasonably satisfactory to American
relating to the purchase and sale of the DCSC Business, free and clear
of all Liens, except as otherwise set forth in Exhibit B to the Letter
of Intent. Such agreement shall (i) provide for a purchase price for
the DCSC Business equal to (A) the sum of $4,200,000 and an amount
equal to the amount of any capital improvements made by DCSC or the
Company to the DCSC Assets since October 31, 1996, minus (B) the
principal amount of the Notes and the DCSC Notes, plus accrued and
unpaid interest on the Notes and the DCSC Notes to the date of
consummation of such purchase and sale (which shall be on such date not
earlier than December 15, 1997 and not later than December 31, 1997 as
American and the Company may agree), and (ii) contain such terms and
conditions as are customary in comparable transactions and reasonably
satisfactory to the Company and American.
(b) except as provided in Section 6.2(a), for cash, at any
time after December 31, 1997, at their principal amount together with
interest accrued to the date of payment; provided, however, that it
shall be a condition of the Company's right to prepay the Notes
pursuant to the provisions of this Section 6.2(b) that, simultaneously
with such prepayment, DCI shall have prepaid in their entirety the DCI
Notes.
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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 thirty
(30) nor more than sixty (60) 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 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 ac ceptance 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.
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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
CAAP, 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 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 CAAP, 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. 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 (a) will, and will cause each of its
Subsidiaries to, continue to engage in the business of owning and operating the
Diablo Assets and conducting the Diablo 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. 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, and will cause each of
its Subsidiaries to: (a) keep its assets and property relating to each of the
Diablo Assets and the Diablo 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 Diablo Assets and the Diablo Business to which it is a party or under
which it oc cupies 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.
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7.5 Maintenance of Insurance. 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, and will cause each Subsidiary to:
(a) keep its assets and property relating to each of the Diablo Assets and the
Diablo 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 Diablo Assets and the conduct
of the Diablo Business, in accordance with CAAP 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 CAAP 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 occurred 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 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 Diablo Business and the ownership of the assets and property of the Diablo
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 reason ably 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 comment with respect to audits,
letters to management or confidential reports relating to financial matters
submitted to the Company or its
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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
relating to each of the Diablo Assets and the Diablo Business,
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 CAAP
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.
(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, accompanied by
supporting statements and schedules, normally prepared by the
Company in connection therewith, and
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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 Diablo Assets and the Diablo
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 any of the Diablo Assets or the
Diablo Business 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, other than in cash or cash equivalents and then only if, after giving
effect thereto, (a) the Company has cash or cash equivalents of not less than
$500,000, (b) no Default or Event of Default shall have occurred and be
continuing, and (d) a maximum of debt to tangible net worth of not more than
1.00 to 1.00. For purposes of this Section, "effective tangible net worth",
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"tangible net worth", "debt coverage" and "debt" shall be determine in
accordance with the provisions of the Sanwa Loan Agreement as in effect on the
date hereof.
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
(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 Diablo Assets or the Diablo
Business, shall have been made subject to the Lien of the
Security Agreement on terms and conditions satisfactory to the
holders of the Notes.
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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
relating to any of the Diablo Assets or the Diablo Business 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 Diablo
Assets or the Diablo 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;
(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. 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 and each of its Subsidiaries will own
and operate the Diablo Assets and conduct the Diablo Business in the normal,
usual and customary manner in the ordinary and regular course of business.
Without limiting the generality of the foregoing, subject to the provisions of
the Letter of Intent and, if executed and delivered, the Acquisition Agreement
(so long as it shall remain in
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effect), the Company will not, and will not permit any Subsidiary to, take any
of the following actions with respect to the Diablo Assets and the Diablo
Business:
(a) Transfer or agree to Transfer any of the properties or
assets constituting a part of the Diablo Assets or the Diablo Business,
other than nonmaterial amounts of machinery and equipment sold or
otherwise disposed of in the ordinary course of business and no longer
needed in the operation or business or replaced with assets of like
kind or better kind and quality;
(b) with prior practices, (i) incur any material obligations
or liabilities (fixed, contingent or other); (ii) make any additions to
its property or any purchases of machinery or equipment, except for
normal maintenance and replacements; (iii) or agents, and will not
otherwise alter, modify or change in any material respect the terms of
their employment or engagement, and has not entered and will not enter
into new employment arrangements; (iv) waive, any rights of substantial
value without fair and adequate consideration; (v) amend in any
material respect, terminate or enter into or become (or permit any of
its property to be) bound by or subject to any Lease, Governmental
Authorization, Private Authorization, Employment Arrangement or Plan or
any Contractual Obligation which could have a Material Adverse Effect
on the Company; (vi) do any act or fail to do any act, if such act or
failure to act might result in the expiration, revocation, suspension
or modification of any of its Material Governmental Authorizations or
Material Private Authorizations; and (vii) enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to the Company; and
(c) waive any condition set forth therein to consummation of,
or otherwise amend, modify or terminate, any Material Agreement, or
enter into any agreement or other arrangement which would constitute a
Material Agreement, except for such waivers, amendments or
modifications, or such other agreements or arrangements as do not and
will not have in the aggregate any Material Adverse Effect on the
Company.
The Company shall use reasonable business efforts to preserve the
ownership, operation, management, policies and personnel of the Diablo Assets
and the Diablo Business, and shall not alter such ownership, operation,
management, policies, or personnel in any manner that would, individually or in
the aggregate, have a Materially Adverse Effect on the Diablo Assets or the
Diablo Business.
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:
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(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 in any material respect 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 (3) 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 7.18; or
(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, 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 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
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(g) if the Company or any of its Subsidiaries 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 Company or DCI shall enter into an agreement,
whether or not legally binding, with respect to a Third Party Transfer
or a Third Party Transfer shall have occurred; or
(j) if any Potential Default or Event of Default (each as
defined in the DCI Note Agreement) shall have occurred and be
continuing;
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, without being required to give
any notice (except as may be required by law), exercise their rights under the
Security Agreement whether or not they elect to accelerate payment as provided
herein; and/or in addition thereto each Holder may proceed to protect and
enforce its 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 pursuant to an Agreement customary in comparable transactions and
reasonably satisfactory to American relating to the purchase and sale of the DCI
business, free and clear of all liens, except as otherwise set forth in Exhibit
B to the Letter of Intent. Such agreement shall be on the same terms and
conditions as are set forth in Section 6.2 of this Agreement.
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 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
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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 Sec tion 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 which it may now or
hereafter have with respect to its liability under this Agreement or the Notes.
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
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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, 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 CAAP consistently applied with the Financial Statements
delivered to American hereunder.
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 earlier of (a)
the failure of American and the Company to enter into a definitive agreement
with respect date to the Acquisition, regardless of the reason therefor, within
the time permitted by the Letter of Intent or (b) the date on which the
Acquisition Agreement, if executed and delivered, 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:
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(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 com mencing 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 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
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(i) its authorization, by appropriate action of its board of
directors or other governing body, of any of the foregoing.
The term "Additional Compensation Certificates" is defined in Section
1.1.
The term "Affiliate", when used with respect to any Person, shall mean
(i) any other Person at the time directly or indirectly controlling, controlled
by or under direct or indirect common control with such Person, (ii) 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 on a consolidated basis of
the equity or beneficial interest, (iii) any other Person which at the time
owns, or has the right to acquire, directly or indirectly twenty percent (20%)
or more of the equity or beneficial interest of such Person, (iv) any executive
officer or director of such Person, or any Person of which such Person or any
executive officer or director of such Person at the time owns, or has the right
to acquire, directly or indirectly, twenty percent (20%) of more of the equity
or beneficial interest, and (v) when used with respect to an individual, shall
include a spouse, any ancestor or descendant, or any other relative (by blood,
adoption or marriage), within the third degree of such individual. A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power to direct or cause the direction of the
management or policies of such Person or the disposition of its assets or
property, whether by stock, equity or other ownership, contract, arrangement or
understanding, or otherwise.
The term "American" is defined in the preamble of this Agreement.
The term "Applicable Law" shall mean any Law of any Authority, whether
domestic or foreign, including without limitation all federal and state
securities Laws, to which the Person in question is subject or by which it or
any of its property is bound.
The term "Authority" shall mean any governmental or quasi-governmental
authority, whether executive, legislative, judicial, administrative 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, 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.
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 "CAAP"" shall mean the accounting principles used by the
Company in the preparation of the Financial Statements and described in general
terms in the Disclosure Schedule, such principles applied on a consistent basis,
except as otherwise heretofore disclosed in the Disclosure Schedule. The
requirement that such principles be consistently applied means that the
accounting principles in a current period are comparable in all material respect
to those applied in
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preceding period. All accounting and financial terms used in this Agreement and
the compliance with each covenant contained in this Agreement that relates to
financial matters shall be determined in accordance with the accounting
principles referred to in this paragraph (except as otherwise specifically noted
in certain of the definitions where the term GAAP is used). In the event of a
change in any method of accounting used by the Company or any of its
Subsidiaries 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 occurred 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 determine
in good faith that any requirements of this Agreement are substantially 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.
The term "California Application" is defined in Section 1.1.
The term "California Securities Law" is defined in Section 1.1.
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 directly or indirectly with respect to any of
the Diablo Assets or the Diablo Business which, in accordance with CAAP, 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 CAAP 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 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 Diablo Assets or the Diablo Business, in
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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 term "Claims" shall mean, with respect to any Person, any and all
debts, liabilities, obligations, losses, damages, deficiencies, assessments and
penalties of or against such Person, 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.
The terms "Closing" and "Closing Date" are defined in Section 1.3.
The term "Code" shall mean the United States 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.
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 "Contractual Obligation" shall mean, with respect to any
Person, any term, condition, provision, representation, warranty, agreement,
covenant, undertaking, commitment, indemnity or other obligation set forth in
the organizational agreements and other documents of such Person or which is
outstanding or existing under any agreement, contract, arrangement, instrument
or understanding to which such Person is a party or by which it or any of its
business is subject or properties is bound and which, in the case of the
Company, relates to any of the Diablo Assets or the Diablo Business.
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The term "Convertible Securities" shall mean, with respect to any
Person, any evidences of indebtedness, shares of any class of capital stock
(other than common stock which is not convertible into or exchangeable for any
other shares of any class of capital stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
The term "DCI" is defined in the third whereas paragraph, preceding
Section 1.
The term "DCI Additional Compensation Certificates" is defined in the
fourth whereas paragraph, preceding Section 1.
The term "DCI Business" is defined in the third whereas paragraph,
preceding Section 1.
The term "DCI Letter of Intent" is defined in the third whereas
paragraph, preceding Section 1.
The term "DCI Notes" is defined in the fourth whereas paragraph,
preceding Section 1.
The term "DCI Note Agreement" is defined in the fourth whereas
paragraph, preceding Section 1.
The term "Diablo Assets" is defined in Section 2.4.
The term "Diablo Business" is defined in the first whereas paragraph,
preceding Section 1.
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 "Employment Arrangement" shall mean, with respect to the
Company, any employment, consulting, retainer, severance or similar contract,
agreement, plan, arrangement or policy (exclusive of any which is terminable
within ninety (90) days without liability, penalty or payment of any kind of the
Company or any of its Affiliates), or providing for severance, termination
payments, insurance coverage (including any self-insured arrangements), workers
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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 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, to the extent, in each case, it relates to,
covers or is for the benefit of any employee involved in the business or
operations of any of the Diablo Assets or the Diablo Business.
The term "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, 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 provision.
The term "Event" shall mean the occurrence or existence of any act,
action, activity, circumstance, condition, event, fact, failure to act, incident
or practice, or any set or combination of any of the foregoing.
The term "Event of Default" is defined in Section 8.1.
The term "GAAP" shall mean means, except to the extent that a deviation
therefrom is expressly required by this Agreement, 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.
The term "Governmental Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, plans, registrations and
other authorizations of all Authorities relating, in the case of the Company, to
the ownership or operation of the Diablo Assets or the conduct of the Diablo
Business.
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.
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.
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The term "Indebtedness" shall mean, with respect, to any Person, (a)
all items, except items of capital stock, partnership interests, surplus or
general contingency or deferred tax reserves or any minority interest in any
Subsidiary 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 Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease back arrangement.
The term "Indebtedness for Money Borrowed" shall mean, with respect to
any Person, (a) money borrowed, (b) 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, (c) Indebtedness upon
which interest charges are customarily paid by such Person, (d) 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, and (e)
Guarantees of any of the Indebtedness described in items (a) through (d), but
shall not include (i) trade payables, (ii) expenses accrued in the ordinary
course of business or (iii) customer advance payments and customer deposits
received in the ordinary course of business.
The term "Law" shall mean any 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, or the common law, or any particular
section, part or provision thereof, or any interpretation, directive, guideline
or request (whether or not having the force of law), of any Authority, including
without limitation (a) the judicial systems thereof, or any particular section,
part or provision thereof, and (b) any of the foregoing relating to antitrust or
prohibiting other anticompetitive business practices, those relating to
employment practices (such as discrimination, health and safety), and those
relating to minority business enterprises.
The term "Legal Action" shall mean, with respect to any Person, any
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information 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 its business or
property or assets.
The term "Letter of Intent" is defined in the first whereas paragraph,
preceding Section 1.
The term "Lien" shall mean any mortgage, lien (statutory or other),
preference, priority or other security agreement, arrangement or interest,
hypothecation, pledge or other deposit arrange ment, assignment, charge, levy,
executory seizure, attachment, garnishment, encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction,
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building or use restriction, and the like), conditional sale, title retention or
other similar arrangement, device, agreement or restriction, preemptive or
similar right, any financing lease involving substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction, or any
option, equity, claim or right of or obligation to, any other Person, of
whatever kind and character.
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 such Person or such Person and
its Subsidiaries taken as a whole, which, in the case of the Company, shall mean
each of the Diablo Assets or the Diablo Business, (c) materially impair such
Person's ability to fulfill its obligations under the terms of any agreement,
instrument or other document executed or required to be executed by such Person,
(d) materially and adversely affect the aggregate rights and remedies of any
party (other than such Person) under the Agreement or any agreement, instrument
or other document executed or required to be executed pursuant hereto or
thereto, or (e) or, in the case of the Company, adversely affects its 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 "Material Agreement" shall mean, with respect to the Company,
any agreement, contract, arrangement, undertaking, commitment, license or
obligation relating to the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business which (a) was not entered into in the ordinary
course of business, (b) was entered into in the ordinary course of business
which (i) involves the purchase, sale or lease of goods or materials or
performance of services aggregating more than Fifty Thousand Dollars ($50,000),
(ii) extends for more than twelve (12) months, or (iii) is not terminable on
thirty (30) days' or less notice without penalty or other payment, (c) involves
Indebtedness for Money Borrowed in excess of Fifty Thousand Dollars ($50,000),
or (d) would account for more than one percent (1%) of revenues or expenses of
the Diablo Business projected to be received or incurred by the Company during
the current fiscal year. Without limiting the generality of the foregoing, the
term "Material Agreement" shall include the Acquisition Agreement.
The term "Most Recent Balance Sheet" is defined in Section 2.3.
The term "NSR Rate" is defined in the Additional Compensation
Certificates.
The term "Net Site Revenue" is defined in the Additional Compensation
Certificates.
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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 CAAP, 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 "Option Securities" shall mean all rights, options and
warrants, and calls or commitments evidencing the right, to subscribe for,
purchase or otherwise acquire shares of any class of capital stock or other
securities or Convertible Securities, whether or not the right to subscribe for,
purchase or otherwise acquire is immediately exercisable or is conditioned upon
the passage of time, the occurrence or non-occurrence or the existence or
non-existence of some other Event.
The term "PBGC" shall mean the Pension Benefit Guaranty Corporation and
any Person succeeding to any or all of its functions under ERISA.
The term "Permitted Liens" shall mean:
(e) the security interest created under the Security Agreement
in favor of the holders of the Notes;
(f) Liens for taxes if payment shall not at the time be
required to be made in accordance with the provisions of Section 7.2;
(g) 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;
(h) 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 enforcement proceedings shall not have begun or shall have
been fully bonded or otherwise effectively stayed);
(i) 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
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(j) Liens set forth in the Disclosure Schedule.
The term "Person" shall mean any natural individual, corporation, firm,
unincorporated organization, association, partnership, limited liability
company, business trust, joint stock company, joint venture, trust or other
organization, entity or business, or any governmental authority, whether acting
in an individual, fiduciary or other capacity.
The term "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 (as defined in ERISA) is (or,
if such plan were terminated at such time, would under Sec tion 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
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 "Prepayment Penalty" is defined in the Additional Compensation
Certificates.
The term "Prime Rate" is defined in Section 1.1.
The term "Private Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, and other authorizations
of all Persons (other than Authorities) other than those of a nature included
within the definition of Intellectual Property which, in the case of the
Company, relates to the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business.
The term "Purchase Price" is defined in Section 1.2.
The term "Related Agreement" shall mean this Agreement, the Notes,
Acquisition Agreement (if executed and delivered), 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 "Rental Obligations," with respect to any lease for any
period, shall mean the minimum amount of rental payments required to be made in
such period by the lessee under such Lease, including without limitation any
amounts required to be paid by such lessee, whether or not designated as rental
or additional rental: (a) on account of maintenance and repairs, insurance,
taxes, assessments, water and sewer rates and similar charges, and (b) which are
payable on the basis of profits, revenues or sales to be derived from the leased
property or any other index of performance.
The term "Sanwa Loan Agreement" shall mean the Term Loan Agreement,
dated as of January 31, 1996, by and between Sanwa Bank California and Diablo
Communications, Inc. and Richard D. Spight, Trustee of the Mary Colores Spight
Family Trust U/A/D June 16, 1983, as amended as of the date hereof.
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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 "Subject Sites" is defined in Section 1.1.
The term "Subsidiary" with respect to any corporation (the "parent")
shall mean any Person of which such parent, at the time in respect of which such
term is used, (a) owns directly or indirectly more than fifty percent (50%) of
the equity or beneficial interest, on a consolidated basis, and (b) owns
directly or controls with power to vote, indirectly through one or more
Subsidiaries, shares of capital stock or beneficial interest having the power to
cast at least a majority of the votes entitled to be cast for the election of
the directors, trustees, managers or other officials having powers analogous to
those of directors of a corporation. Unless otherwise specifically indicated,
when used herein the term Subsidiary shall refer to a direct or indirect
Subsidiary of the Company.
The term "Tax" (and with correlative meanings, "Taxes" and "Taxable"),
shall mean, with respect to any Person, (a) any net income, alternative or
add-on minimum tax, gross income, gross receipts, gains, sales, use, ad valorem,
transfer, franchise, profits, license, withholding on amounts paid to or by such
Person or any of its Subsidiaries, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any Authority (a "Taxing
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Authority") responsible for the imposition of any such tax (domestic or
foreign), (b) joint or several liability of such Person or any of its
Subsidiaries with any other Person for the payment of any amounts of the type
described in (a) and (c) liability of such Person or any of its Subsidiaries 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.
The term "Tax Returns" shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed in any jurisdiction with respect to Taxes.
The term "Transfer" shall mean any sale, assignment, conveyance,
transfer or other disposition, mortgage, pledge or other Lien, lease, exchange,
abandonment, parting with control of, gift, granting of an option or proxy or
other act of alienation.
The term "Third Party Transfer" shall mean, with respect to any Person,
the Transfer of all or any substantial portion of business, property or assets
of such Person, including in the case of the Company of all or any substantial
portion of the Diablo Assets or the Diablo Business to any other Person other
than (a) any Transfer to American or one of its Affiliates or (b) any bona fide
mortgage, pledge or other Lien thereon granted to a bank or other recognized
financial institution pursuant to the incurrence of Indebtedness and not with
the intent of avoiding Section 6.1 of this Agreement.
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 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, the Company will pay all of the following expenses in
connection with such transactions and in con nection 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:
(a) the cost and expenses of its counsel, including the furnishing of all
opinions by such counsel and all certificates on behalf of the Company, and of
the Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with; (b) the taxes
specified in Section 10.1; (c) the costs and expenses specified in Sections 8.6
and 10.9; and
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(d) the out-of-pocket expenses incurred by each holder of any Notes in
connection with any amendments or waivers or in connection with or arising out
of any litigation, investigation or proceeding instituted by any Authority or
any other Person with respect to this Agreement, the Notes or the other Related
Agreements to which it is a party or the transactions contemplated hereby and
requiring such holder's participation or involvement, except as otherwise
provided in the Acquisition Agreement.
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 (i) mailed by first-class, express mail
or other overnight mail service, postage prepaid, or Federal Express or other
overnight mail courier service, (ii) sent by telex, telegram, telecopy or other
similar form of rapid transmission, confirmed by mailing (by first class or
express mail, postage prepaid, or Federal Express or other overnight mail
courier service) written confirmation at substantially the same time as such
rapid transmission, or (iii) personally delivered to an officer of the receiving
party. All such communications shall be mailed, set or delivered:
(a) if to the Company, at 1220 Brickyard Cove Road, Suite 200,
Point Richmond, CA 94801, (facsimile [510] 236-3799), attention:
Richard Spight, Chairman (with a copy to Cooper, White & Cooper, 1333
North California Boulevard, Suite 450, Walnut Creek, CA 94596,
(facsimile [510] 256-9428), attention: Keith Howard, Esq.);
(b) if to American, at 6400 North Congress Avenue, Suite 1750,
Boca Raton, FL 33487, (facsimile: [407] 998-2278), attention: James S.
Eisenstein, Chief Operating Officer (with copies to American Radio
Systems Corporation, 116 Huntington Avenue, Boston, MA 02116,
(facsimile [617] 375-7575), attention: Joseph L. Winn, Chief Financial
Officer, and Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, (facsimile [617] 338-2880), attention: Norman A.
Bikales, Esq.); and
(c) if to any other Holders of Notes to the address set forth
in the Company's records;
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or at such other addresses (including copies) as any party may designate in
writing to the other parties to this Agreement.
A notice delivered in person shall be effective when received or upon
refusal to accept receipt; a notice sent by mail shall not become effective
until received by the Person to whom it is given, unless it is mailed by
registered or certified mail, in which case it shall be deemed effective on the
date of receipt or refusal to accept receipt as indicated by postal records; a
notice sent by rapid transmission shall be deemed to be given when receipt of
such transmission is acknowledged.
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 compli ance 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; Venue. This Agreement is and shall be deemed to be
a contract made under, and the validity, interpretation, construction and
performance of this Agreement shall be governed by, the applicable laws of the
United States of America and the domestic substantive laws of the State of New
York 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. In the event of any Legal Action between the parties arising out
of this Agreement, the parties agree to submit the matter to the appropriate
municipal, state or federal court sitting in San Francisco, California, and the
parties agree to submit to the jurisdiction of such courts.
10.7 Entire Agreement. This Agreement (which term, unless the context
otherwise specifically requires, includes all Exhibits and Schedules hereto)
constitutes the entire agreement
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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 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 Boca Raton, Florida or San
Francisco, California, or a day on which banking institutions in Boca Raton,
Florida or San Francisco, California, 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.
10.9 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,
directors, 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.
10.10 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.
10.11 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.
10.12 Further Assurances Each of the parties hereto agrees to execute
and deliver those writings and documents reasonably required to more fully carry
out the acts contemplated hereby,
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and each party hereby agrees, at the written request of any other party, to
advise any Person of the status of this Agreement, the Notes or any of the other
Related Agreements and to the effect that any of the same is or is not in
default.
10.13 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.
10.14 Non-Recourse Obligation. The obligations of the Company
represented by the Notes are nonrecourse to the stockholders of the Company,
and, notwithstanding any provision to the contrary in this Agreement, the Note
or any of the other Related Agreements, American agrees for itself, and its
successors and assigns that (a) neither any stockholder of the Company nor his
successors and assigns shall be personally liable on the Notes, and (b) in the
event that one or more Events of Defaults has occurred or any other default
whatsoever has occurred under this Agreement or the Notes, American, or any of
its successors and assigns, shall look solely to the Company and its property
and assets, including without limitation the Diablo Assets and the Diablo
Business, of the Company for payment of the indebtedness represented by the
Notes and will not make any claim or institute any action or proceeding against
any stockholder of the Company, or any of his successors and assigns, for
payment of such indebtedness (or for any deficiency).
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.
Diablo Communications of Southern California, Inc.
By:________________________________
Name:
Title:
American Tower Systems Corporation
By:________________________________
Name:
Title:
-45-
EXHIBIT 10.4e
Amendment to Securities Purchase Agreement
This Amendment is made as of August 7, 1997, by and among American
Tower Systems, Inc, a Delaware corporation ("ATS"), Diablo Communications, Inc.,
a California corporation ("Diablo"), and Diablo Communications of Southern
California, Inc., a California corporation ("DCSC").
W I T N E S E T H:
WHEREAS, ATS and Diablo, and ATS and DCSC have, heretofore, entered
into separate Securities Purchase Agreements dated as of March 20, 1997 (the
"Securities Purchase Agreements") and separate Assets Purchase Agreements dated
as of July 8, 1997 ("Purchase Agreements"); and
WHEREAS, ATS, Diablo and DCSC are desirous of amending the terms and
conditions of the Securities Purchase Agreements;
NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00), and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledge, the parties hereto, intending to be legally bound,
do covenant and agree as follows:
1. Definitions. Terms not otherwise defined shall have the respective
meaning prescribed therefor in the Securities Purchase Agreements and
Purchase Agreements.
2. Referenced Documents. The Securities Purchase Agreements and Purchase
Agreements are incorporated herein by reference.
3. Advances to Date. Pursuant to the term of the Securities Purchase
Agreement between ATS and DCSC, the sum of $248,751.00 has been
advanced to DCSC by ATS as of the date of this amendment. No sums have
been advanced to date under the Securities Purchase Agreement between
ATS and Diablo.
4. Amendment of Securities Purchase Agreements. Notwithstanding anything
to the contrary in the Securities Purchase Agreements and/or the
Purchase Agreements, any and all advances made by ATS to Diablo or by
ATS to DCSC pursuant to the Securities Purchase Agreements, from and
after the date of this Amendment, shall be deemed advances of the
purchase price under the respective Purchase Agreement and shall be a
credit against the purchase price at close of the Purchase Agreement.
Any and all such advances made from and after the date of this
Amendment shall not be subject to additional compensation certificates
nor shall they accrue any interest, except as provided below. All
advances made from and after the date of this Amendment shall be
utilized by Diablo and/or DCSC for completion of construction projects
and site development projects and such expenditures shall be included
in the Interim Adjustment referred to in Section 2.3 of the Purchase
Agreements. The maximum amounts to be advanced by ATS to Diablo and
DCSC in the aggregate pursuant to this Amendment is the sum of three
hundred thousand dollars ($300,000).
<PAGE>
5. Conversion to Loan. In the event that the Purchase Agreements do not
close, any and all advances made pursuant to this Amendment shall
automatically become loans made by ATS to Diablo and/or DCSC, as the
case may be. Such loans shall be in the principal amount of all
advances made under this Amendment to Diablo and or DCSC, respectively,
shall bear interest and be due and payable as provided in the
applicable Securities Purchase Agreement, but ATS shall not, except as
provided in the next sentence, be entitled to Additional Compensation
Certificates with respect thereto. Upon termination of the Purchase
Agreement or Agreements, Diablo and/or DCSC, as applicable, will issue
a note evidencing the loan or loans in a form, which, except for any
provisions in this Amendment to the contrary, will be the form of note
attached as Exhibit A to the Securities Purchase Agreements, except
that, if the reason for such termination was the default or breach of
Diablo and/or DCSC, such notes shall be dated as of the date of the
respective advances pursuant hereto and the provisions of this
Amendment shall not apply.
6. Prior Agreements. Except as specifically provided herein to the
contrary, the terms and conditions of the Securities Purchase
Agreements and the Purchase Agreements shall remain in full force and
effect.
IN WITNESS WHEREOF, ATS, Diablo and DCSC have caused this Amendment to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
American Tower Systems, Inc.
By:______________________
Name: Justin D. Benincasa
Title: Vice President
Diablo Communications, Inc.
By:________________________
Name:_____________________
Title:______________________
Diablo Communications of Southern California, Inc.
By:_________________________
Name:_______________________
Title:________________________
2
Exhibit 10.5
ASSET PURCHASE AGREEMENT
AGREEMENT (this "Agreement") dated as of May 27, 1997, between American
Radio Systems Corporation, a Delaware corporation (the "Buyer") and Precision
Media Corporation, a Delaware corporation (the "Seller").
WHEREAS, the Seller is (i) the owner, licensee and operator of four
radio stations, WMYF-AM, broadcasting at a frequency of 1540 khz in and licensed
to Exeter, New Hampshire, WERZ-FM, broadcasting at a frequency of 107.1 mhz in
and licensed to Exeter, New Hampshire, WZNN-AM, broadcasting at a frequency of
930 khz in and licensed to Rochester, New Hampshire and WSRI-FM, broadcasting at
a frequency of 96.7 mhz in and licensed to Rochester, New Hampshire
(collectively, the "Stations") and (ii) the owner of certain land (the
"Premises") and the buildings, structures and improvements (the "Buildings")
thereon located in Exeter, New Hampshire and described in more detail on Exhibit
A attached hereto; and
WHEREAS, the Seller wishes to sell and the Buyer wishes to purchase the
Premises, the Buildings and certain other assets of the Seller relating to the
Seller's operation of the Stations; and
WHEREAS, the purchase and sale of such assets may not be consummated
unless and until the Federal Communications Commission (the "FCC") approves the
transfer to the Buyer of the Seller's FCC licenses to operate the Stations.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. The following terms shall have the meanings
respectively assigned to them below in this Section 1 or in the other provisions
of this Agreement referred to below:
Acquired Assets. As defined in Section 2.
Appurtenant Rights. Shall mean the rights, easements and other
interests appurtenant to the Premises which are described on Exhibit A.
Assumption Agreement. An Assumption Agreement, to be executed and dated
as of the Closing Date, substantially in the form of Exhibit B.
Buildings. See preamble hereto.
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Closing. As defined in Section 5.1.
Closing Date. The date to be designated by notice from the Buyer to the
Seller, or such other date as the parties may mutually agree for the closing of
this transaction; provided, however, that the Closing Date shall not be more
than fifteen (15) days after the date on which there is an effective FCC
Consent; provided, further, in no event shall the Closing Date occur later than
seven (7) months following the date of this Agreement.
Contracts. As defined in Section 2.3.
Deed. A good and sufficient special warranty deed transferring good and
clear record and marketable title to the Premises, the Buildings and the
Appurtenant Rights, subject only to Permitted Encumbrances.
Encumbrances. As defined in Section 7.4.
Escrow Agent. Citizens Bank of Rhode Island, a Rhode Island banking
corporation.
Escrow Deposit. The sum of $600,000 held by the Escrow Agent pursuant
to the Escrow Agreement.
Escrow Agreement. The Escrow Agreement of even date by and among
Seller, Buyer and Escrow Agent, in substantially the form attached hereto as
Exhibit C.
Excluded Assets. As defined in Section 2.4.
Farmington Lease. The Ground Lease dated November 10, 1991 between Lois
Glidden and the Seller (as successor-in-interest to Bear Broadcasting Company)
regarding the Farmington Property, in the form attached hereto as Exhibit E-1.
Farmington Property. The land located on Elm Street, Farmington, New
Hampshire and described in more detail in the Farmington Lease.
FCC. As defined in the preamble.
duly granted by the FCC approving the transfer of the Licenses to the Buyer and
approving thereby the control and operation of the Stations by the Buyer on and
after the Closing Date under conditions that are not less favorable final, that
is, one with respect to which no appeal or petition or motion for rehearing and
no reconsideration or review is pending, and as to which the time for filing or
initiating such an appeal or petition or motion or reconsideration or review has
expired, or, if filed or initiated, has been denied,
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dismissed or withdrawn and the time for any further administrative or legal
proceedings has expired.
FTC. Federal Trade Commission.
HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Leases. Collectively, the Farmington Leases, the Rochester Lease and
the Stratham Lease.
Licenses. As defined in Section 7.5.
Materially Adverse Effect. Any materially adverse effect on the ability
of the Seller to operate the Stations in accordance with applicable law or to
pay its debts as they become due and payable.
Non-Competition Agreement. The Non-Competition Agreement between the
Buyer and the Seller, to be dated as of the Closing Date, substantially in the
form of Exhibit D.
Occupancy Permit. The certificate of use and occupancy issued by the
Town of Exeter, New Hampshire.
Permitted Encumbrances. As defined in Section 5.2.
Purchase Price. As defined in Section 3.1.
Premises. See preamble hereto.
Rochester Lease. The Lease and Option Agreement dated October 9, 1987
between Marcia L. Nescot and the Seller (as successor-in-interest to Bear
Broadcasting Company, successor-in-interest to Salmanson Communications, Inc.)
regarding the Rochester Property, in the form attached hereto as Exhibit E-2.
Rochester Property. The land, buildings and transmitting tower thereon
located at Rochester Hill Road, Rochester, New Hampshire and described in more
detail in the Rochester Lease.
Real Estate. Collectively, the Premises, the Buildings, the Appurtenant
Rights, the Farmington Property, the Rochester Property and the Stratham
Property.
Service Agreements. All service agreements with third parties, whether
written or oral, relating to the operation, maintenance, security, finance or
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insurance of the Premises and Building Service Equipment, including but not
limited to those described on Exhibit F.
Stations. As defined in the preamble.
Station Records. As defined in Section 11.3.
Stratham Lease. The Lease dated July 9, 1982 between Long Hill
Associates Partnership (as successor-in-interest to Gowen Farms, Inc.) and the
Seller (as successor-in-interest to Porter Communications, Inc.) regarding the
Stratham Property, in the form attached hereto as Exhibit E-3.
Stratham Property. The land and transmitting tower thereon located on
Long Hill Road, Stratham, New Hampshire and described in more detail in the
Stratham Lease.
Time Brokerage Agreement. The Time Brokerage Agreement of even date
herewith, in substantially the form of Exhibit G hereof.
Title Policy. An ATLA standard form title insurance policy issued by
the Title Insurance Company in an amount equal to the Purchase Price insuring
that Buyer or its nominee holds good, record and marketable fee simple title to
the Premises, the Buildings and the Appurtenant Rights, subject only to
Permitted Encumbrances, which policy shall not include any exceptions for (i)
mechanics liens or (ii) persons in possession or occupancy.
SECTION 2. PURCHASE AND SALE; NON-COMPETITION AGREEMENT. Subject to the
terms and conditions set forth in this Agreement, at the Closing the Seller
shall sell and transfer to the Buyer, and the Buyer shall purchase and acquire
from the Seller, all of the assets described in Sections 2.1, 2.2 and 2.3 below
(collectively, the "Acquired Assets") and all of the Seller's interests in and
rights under the contracts and agreements described in Section 2.4 below (the
"Contracts"):
2.1. Tangible Assets. The transmission tower housings on certain of
the Real Estate, the guy wires relating thereto and stanchions or other supports
for the guy wires, and all transmission, studio and other equipment, furniture,
fixtures, motor vehicles, promotional blimps and balloons and other tangible
personal properties located in Farmington, Stratham, Rochester and Exeter, New
Hampshire and environs that are used, necessary or useful in connection with the
operation of the Stations and that the Seller either owns or has the power to
transfer including, without limitation, those listed on Schedule 2.1 (which
schedule shall indicate which assets are owned and which assets are leased or
otherwise held), together with any replacements or modifications thereof and
additions thereto made between the date hereof and
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the Closing Date in the ordinary course of business and in accordance with the
provisions of this Agreement.
2.2. All rights, permits, trade names, service marks, slogans,
customer lists, logos, jingles, goodwill and other intangible property used,
necessary or useful in connection with the operation of the Stations and that
the Seller either owns or has the power to transfer, including, without
limitation, the Licenses and any renewals or modifications thereof between the
date hereof and the Closing Date, the call signs "WMYF-AM," "WERZ-FM,"
"WZNN-AM," and "WSRI-FM", all logos and artwork associated therewith and the
Licenses, including, without limitation, those listed on Schedule 2.2, together
with any replacements thereof and additions thereto made between the date hereof
and the Closing Date in the ordinary course of business and in accordance with
the provisions of this Agreement.
2.3. Real Property and Related Assets. The Buildings, the Premises
and the Appurtenant Rights.
2.4. Contracts, etc. All of the Seller's right, title and interest
in and to those particular agreements, whether written or oral, and any and all
extensions thereof that are used, necessary or useful in connection with the
operation are entered into subsequent to the date of this Agreement and prior to
the Closing Date in the ordinary course of the Seller's business and
consistently with the Seller's customary operation of the Stations, subject to
the are entered into subsequent to the date of this Agreement and prior to the
Closing Date outside of the ordinary course of the Seller's business if the
Buyer on the Closing Date elects to assume such agreements pursuant to the
Assumption Agreement, including, without limitation, the Service Agreements and
the Leases.
2.5. Excluded Assets. The Acquired Assets being sold to the Buyer do
not include (a) the Stations' cash on hand and in banks, (b) the Stations' cash
equivalents, (c) the Stations' accounts receivable, and (d) the rights of the
Seller under this Agreement and the Escrow Agreement (collectively, the
"Excluded Assets").
2.6. Non-Competition Agreement. The Buyer and the Seller shall enter
into the Non-Competition Agreement.
2.7. Employee Matters. Buyer shall have the right, but not the
obligation, to hire substantially all of the employees of the Stations
immediately following the Closing. Except as expressly provided for in the Time
Brokerage Agreement, Seller shall be responsible for all salary and benefits of
the employees of the Stations for the period prior to the Closing Date. All
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employees of the Stations shall cease active participation in all of Seller's
employee benefit plans on the Closing Date, in accordance with the terms of such
plans.
SECTION 3. PAYMENTS.
3.1. Purchase price for Acquired Assets and Contracts. On the date
hereof the Buyer has delivered the Escrow Deposit to the Escrow Agent pursuant
to the Escrow Agreement. At the Closing, the Buyer shall pay to the Seller, as
the aggregate purchase price for the Acquired Assets and Contracts an amount
equal to $6,000,000 (the "Purchase Price"), plus or minus, as the case may be,
the amount of any proration adjustment required by Section 6. The Purchase Price
will be paid by delivery by the Buyer to the Seller of a bank wire transfer or
other immediately available funds to a bank or banks designated by Seller in
writing. In addition to the payment of the Purchase Price, the Buyer shall pay
to the Seller $32,500 each month under the terms of the Time Brokerage
Agreement.
3.2. Allocation of Purchase Price. The Purchase Price shall be
allocated, for tax purposes, in accordance with the results of an appraisal of
the Acquired Assets that is prepared by Broadcast Investments Analysts, Inc.
SECTION 4. ASSUMPTION OF CERTAIN OBLIGATIONS. At the Closing, the Buyer
shall assume and agree to pay, perform fulfill and discharge, pursuant to the
Assumption Agreement, those obligations of the Seller under the Contracts that
accrue after the Closing and that relate to events that transpire subsequent to
the Closing. Anything in this Agreement to the contrary notwithstanding, the
Buyer shall not assume, shall not be deemed to have assumed, and shall not be
responsible for any liability or obligation of the Seller other than those
obligations assumed pursuant to the Assumption Agreement. Schedule 4 attached
hereto sets forth all barter and other trade obligations of the Seller
outstanding on the date hereof.
SECTION 5. CLOSING.
5.1. Time and Place. The closing (the "Closing") of the purchase and
sale transactions contemplated by this Agreement shall take place on the Closing
Date at the offices of Bingham, Dana & Gould at 150 Federal Street, Boston,
Massachusetts at the time designated in the Buyer's notice to the Seller, or at
such other time and place as the parties mutually agree.
5.2. Transactions at Closing. At the Closing: (a) the Seller shall
duly execute and deliver to the Buyer the Deed and such bills of sale,
certificates of title and other instruments of assignment or transfer with
respect to the Acquired Assets and the Contracts as the Buyer may reasonably
request and as may be reasonably necessary to vest in the Buyer title to all of
the
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Acquired Assets and rights to enjoy and enforce the Contracts, in each case
subject to no Encumbrance except for the Encumbrances specified in Schedule 5.2
(the "Permitted Encumbrances"); (b) with respect to any agreements entered into
subsequent to the date of this Agreement and which were not entered into (i) in
the ordinary course of the Seller's business consistent with the Seller's
customary operation of the Stations or (ii) with the Buyer's written consent,
the Buyer shall notify the Seller which of such agreements the Buyer elects to
assume as Contracts; (c) the Buyer shall deliver to the Seller by bank wire
transfer or other immediately available funds the Purchase Price; (d) the Seller
and Buyer shall execute and deliver the Non-Competition Agreement; and (f) the
Seller shall deliver the Station Records to the Buyer at the Stations.
SECTION 6. ADJUSTMENTS. Except as expressly set forth in the Time
Brokerage Agreement, the operation of the Stations, the Acquired Assets and the
Contracts and the income and the expense attributable thereto, including, but
not limited to, utilities, rent, deposits, prepaid and accrued items, payroll,
vacation and severance pay earned but not paid, and property or other taxes and
assessments applicable to the Acquired Assets and Contracts up to 12:01 a.m.
current local time on the Closing Date shall be for the account of the Seller
and thereafter for the account of the Buyer, and such income and expenses shall
be prorated between the account of the Seller and Buyer and net settlement made
on the Closing Date as far as feasible, by means of an addition to or, as the
case may be, subtraction from the Purchase Price. If the amount of any such
items cannot be readily ascertained on the Closing Date, proration of all such
items shall be made on one occasion as soon after the Closing Date as the amount
thereof is ascertainable, and in any event within ninety (90) days following the
Closing Date. All prorations and adjustments made pursuant to this Section 6
shall be made in accordance with generally accepted accounting principles.
Nothing in this Section 6 shall be deemed to apply to accountants fees,
appraisal costs and legal expenses incurred by either party hereto in connection
with the transactions contemplated hereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer as follows:
7.1. Organization Authority; Binding Effect. The Seller is a
corporation duly organized and validly existing under the laws of the State of
Delaware and is duly qualified and authorized to do business as a foreign
corporation in the State of New Hampshire. The Seller has the power to own and
hold the Acquired Assets, to carry on the business of the Stations as now
carried on by it and to enter into and perform this Agreement, the
Non-Competition Agreement and the Assumption Agreement. This Agreement has been
duly executed and delivered by the Seller and constitutes, and when
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executed and delivered, each of the Non-Competition Agreement and the Assumption
Agreement will have been duly executed and delivered and will constitute, the
legal, valid and binding obligation of the Seller, enforceable against it in
accordance with their respective terms.
7.2. Financial Statements, etc. The Seller has furnished to the
Buyer complete and correct copies of its audited balance sheets and profit and
loss statements for the Stations as at December 31, 1996, for the period then
ended and its unaudited balance sheets and profit and loss statements for the
Stations at March 31, 1997, for the calendar year then ended. Such financial
statements have been prepared in accordance with generally accepted accounting
principles on a consistent basis throughout the periods indicated and fairly
present the financial condition of the Stations as at the date specified therein
and the results of their operations for the period then ended, subject to audit
and normal year-end adjustments.
7.3. Title to Acquired Assets, etc. The Acquired Assets constitute
all of the Seller's assets (other than the Excluded Assets) used, necessary or
useful in connection with the operation of the Stations. Except for Permitted
Encumbrances, the Seller has good and valid title to all of the Acquired Assets,
free and clear of all leases, mortgages, restrictions, liens, options, pledges,
charges, security interests, encumbrances or title retention agreements
(collectively, "Encumbrances"). Each of the Contracts is valid and subsisting
and no event or condition exists that constitutes, or after notice or lapse of
time or both would constitute, a material default thereunder or other event
which would allow cancellation or early termination by the other party or
parties thereto. All of the Acquired Assets are transferable by the Seller by
the Seller's sole act and deed and at the Closing Date no certain of the
Contracts described in Schedule 2.3 may be assigned only with the consent of
third parties, each of such required consents being specified in Schedule 2.3.
All of the Acquired Assets are in good operating condition and repair, ordinary
wear and tear excepted, are suitable for the purposes for which they are used
and comply with all requirements of the FCC.
7.4. FCC Licenses. The Seller is the holder of unrestricted licenses
and other authorizations issued by the FCC, copies of which licenses and
authorizations are attached hereto as Schedule 7.4 (collectively, the
"Licenses"), that authorize the Seller to operate the Stations in accordance
with those specifications also set forth in the Licenses. The Licenses have been
duly and validly issued, are in full force and effect, and are transferable with
the consent of the FCC. The Licenses are valid through the dates indicated
thereon. There are no orders, complaints, proceedings or investigations pending
or, to the Seller's knowledge, threatened that would affect the validity of the
Licenses,
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other than FCC rulemaking procedures of general application. The Stations and
the Real Estate are in compliance in all material respects with the terms of the
Licenses and all material statutes, rules, regulations and policies of the FCC
or any federal, state or local agencies having jurisdiction over the Stations,
including all applicable radio signal transmission, electromagnetic radiation,
zoning, building and environmental laws, rules and regulations. All transmitters
used or useful in the operation of the Stations now operate in a manner such
that any FCC action for which environmental factors must be considered would not
constitute a major action as defined in 47 C.F.R. 1.1305 as in effect on the
date hereof.
7.5. Intellectual Property. Except as otherwise disclosed on
Schedule 2.2, the Seller owns or licenses all trade names, service marks, logos,
slogans, jingles and other intellectual property used for the operation of the
Stations, all of which are being assigned to the Buyer hereunder. To the best of
the Seller's knowledge after due diligence and inquiry, none of such
intellectual property infringes any intellectual property or related rights of
third parties nor is any third party infringing on the Seller's rights with
respect to such intellectual property.
7.6. Employees of the Seller. Attached hereto as Schedule 7.6 is a
complete and accurate list of all of the officers and employees of the Seller
employed primarily in connection with the operation of the Stations, their
respective monthly rates of compensation as of the date hereof and their accrued
vacation entitlement, if any.
7.7. Approval by Governmental Agencies. Except for the FCC Consent
and the filings required pursuant to the HSR Act (if any) and the rules and
regulations issued thereunder, no approval of or filing with any governmental
administrative agency or authority is required for the execution or delivery of
this Agreement by the Seller or the consummation of the transactions
contemplated herein.
7.8. No Unlisted Agreement. The Seller is not a party to or subject
to or covered by any other material agreement or plan or policy relating to the
operation of the Stations or the employment of the Stations' employees. Any
unfunded liabilities of the Seller with respect to any such agreements, plans or
policies comprising pension or other employee benefits are set forth in Schedule
7.8. Each of Schedule 2.3 and Schedule 4 accurately sets forth all of the
material terms of the Seller's barter and other trade agreements assigned to the
Seller pursuant to this Agreement and in existence on the date hereof, which
terms, including, without limitation, the rates at which station radio time of
any of the Stations is traded, are consistent with the Seller's historic
practice with respect to such barter or other trade agreements.
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7.9. Labor Laws. The Seller has complied with all applicable laws,
rules, collective bargaining agreements, and regulations pertaining to the
employment of labor or the provision of personnel benefits in connection with
the Stations. The Seller has paid all taxes and withheld all amounts required by
law or agreement to be withheld from compensation of the Stations' employees and
is not liable for arrears of wages or for tax or penalty for failure to comply
with the foregoing. There are no controversies pending or, to the best of the
Seller's knowledge, threatened between the Seller and the employees of the
Stations which would have a Materially Adverse Effect.
7.10. Records and Reports. Except to the extent that the failure to
comply with such rules of the FCC has, and will have, no material impact on the
ownership, operation or transfer of the Stations; (a) all statements relating to
the Stations currently required to be filed by the Seller with the FCC or any
governmental instrumentality have been filed and complied with and are complete
and correct as filed; (b) all such statements shall be continued to be filed on
a current basis until the Closing Date, and will be complete and correct as
filed; (c) all items required by the FCC to be placed in the local public record
files of the Stations have been placed in such files and are in possession of
the Seller, and all such documents are complete and correct; and (d) all
required logs and business records relating to the operation of the Stations
have been maintained in accordance with the rules of the FCC and are in
possession of the Seller. The Seller's local public files will be transferred to
the Buyer at the Closing and will be complete and up-to-date.
7.11. Insurance. The Seller currently maintains, with respect to all
of the insurable assets of the Stations, the insurance policies listed and
described on Schedule 7.11.
7.12. Brokers. Seller has neither employed nor is liable to any
broker, finder or any other third party in connection with the transactions
contemplated by this Agreement.
7.13. Disclosure. No representation or warranty by the Seller in
this Agreement or in any other document delivered or to be delivered to the
Buyer in connection herewith contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or necessary in order to provide a prospective purchaser of the
business of the Seller with proper and complete information as to the Seller and
the identity and character of the Acquired Assets and the Contracts. There is no
material fact known to the Seller relating to the Acquired Assets, the
Contracts, the operation of the Stations with the Acquired Assets and the
Contracts or liabilities arising therefrom that may materially adversely affect
the same and that has not been disclosed to the Buyer in writing.
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7.14. Environmental Matters. In the course of any activities
conducted by the Seller in connection with the Real Estate, Seller has complied
in all material respects with all federal, state and local environmental laws,
rules and regulations applicable to the Stations and its operations, including
but not limited to the FCC's guidelines regarding RF radiation, and Seller has
actual knowledge of no facts which would constitute a material violation of such
laws, rules and regulations with respect to the Real Estate or the Stations.
7.15. Litigation. Except as set forth in Schedule 7.15 hereto, there
are no actions, suits, proceedings or investigations of any kind pending or, to
the best knowledge of the Seller, threatened against the Seller before any
court, tribunal or administrative agency or board that, if adversely determined,
would, either in any case or in the aggregate, have a Materially Adverse Effect.
7.16. Authorization. The execution, delivery and performance of this
Agreement, the Non-Competition Agreement and the Assumption Agreement and the
performance by the Seller of all of its agreements and obligations under each of
such documents (a) are within the corporate authority of the Seller, (b) have
been duly authorized by all necessary corporate proceedings, (c) do not conflict
with or result in any breach or contravention of any provision of law, statute,
rule or regulation to which the Seller is subject or any judgment, statute, rule
or regulation to which the Seller is subject or any judgment, order, writ,
injunction, license or permit applicable to such Person and (d) do not conflict
with any provision of the corporate charter or bylaws of, any agreement or other
instrument binding upon the Seller.
SECTION 8. REPRESENTATION, WARRANTIES AND COVENANTS BY THE BUYER. The
Buyer represents and warrants to the Seller as follows:
8.1. Organization; Authority; Approvals; Binding Effect. The Buyer
is a corporation duly organized and validly existing under the laws of the State
of Delaware. The Buyer has the power to enter into and perform this Agreement,
the Non-Competition Agreement and the Assumption Agreement. This Agreement has
been duly executed and delivered by the Buyer and constitutes, and when executed
and delivered hereunder by the Buyer, each of the Non-Competition Agreement and
the Assumption Agreement, will have been duly executed by the Buyer and will
constitute, the legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms.
8.2. Authorization. The execution, delivery and performance of this
Agreement, the Non-Competition Agreement and the Assumption Agreement and the
performance by the Buyer of all of its agreements and obligations under each of
such documents (a) are within the corporate authority of the Buyer, (b) have
been duly authorized by all necessary corporate proceedings, (c) do not conflict
with or result in any breach or contravention of
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any provision of law, statute, rule or regulation to which the Buyer is subject
or any judgement, order, writ, injunction, license or permit applicable to the
Buyer and (d) do not conflict with any provision of the corporation charter or
bylaws of, any agreement or other instrument binding upon the Buyer.
8.3. Governmental Consent. Except for the FCC Consent and filings
required by the HSR Act, if any, and the rules and regulations issued
thereunder, no approval of or filing with any governmental administrative agency
or authority is required for the execution or delivery of this Agreement by the
Buyer or the consummation of the transactions contemplated herein.
8.4. Brokers. Buyer has neither employed nor is liable to any
broker, finder or any other third party in connection with the transactions
contemplated by this Agreement.
8.5. Disclosure. No representation or warranty by the Buyer in this
Agreement or in any other document delivered or to be delivered to the Seller in
connection herewith contains or will contain any untrue statement of material
fact or omits or will omit to state a material fact required to be stated
therein.
SECTION 9. AGREEMENTS BY THE SELLER PENDING CLOSING DATE.
9.1. Affirmative Covenants. Between the date hereof and the Closing
Date, the Seller shall:
(a) subject to the terms of the Time Brokerage Agreement,
maintain the Stations Records in accordance with the Seller's current
practice, and, from time to time, upon reasonable notice and during
regular business hours, give to representatives of the Buyer full
access to the Stations Records and cooperate in discussing the business
and affairs of the Seller with the representatives of the Buyer;
(b) subject to the terms of the Time Brokerage Agreement, keep
in good repair and maintain all of the property related to or used in
the Stations in good operating condition and in accordance with FCC
regulations and the Seller's current practice;
(c) maintain at all times with respect to all of the Stations'
insurable assets the insurance policies currently in effect or
substantially similar policies with other financially sound and
reputable insurers;
(d) subject to the terms of the Time Brokerage Agreement,
conduct continuously the broadcast programs and the business of the
Stations with due diligence in accordance with the terms and
requirements of the Licenses and use the Seller's commercially
reasonable
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efforts to preserve and maintain the Stations' business organization
and the goodwill and support of the Stations' listeners, advertisers,
employees and other persons having business relations with the
Stations;
(e) employ the Seller's commercially reasonable efforts to
secure, before the Closing Date, the consent, in form and substance
satisfactory to the Buyer, to the consummation of the transactions
contemplated by this Agreement by each party to any agreement,
including, without limitation, any Contract listed in Schedule 2.3 and
any Contract entered into after the date hereof, under which such
transactions would constitute a material default, would accelerate
obligations of the Seller or would permit cancellation or early
termination of any such agreement;
(f) between the date hereof and for a period of one (1) year
from the Closing Date, Seller shall not, directly or indirectly,
through any agent or otherwise, hire or solicit the employment of any
of the employees listed on Schedule 7.7 who are hired by Buyer at or
after the Closing or who are subject to non-competition agreements with
Buyer (but only to the extent limited by such non-competition
agreements), except as agreed to in writing by Buyer and Seller; and
(g) comply in all material respects with the terms of the Time
Brokerage Agreement.
9.2. Negative Covenants. Between the date hereof and the Closing
Date, the Seller shall operate the Stations only in the ordinary course, and
shall not, without the consent of the Buyer, do any of the following: (a)
create, incur or permit the creation of any Encumbrance on the Seller's
business, property or assets now owned or hereafter acquired in connection with
the Stations; (b) except for contracts for the sale of advertising for cash for
which no prepayment has been received and with not more than twelve (12) months
remaining in their term, and except for such other contracts or leases that
involve commitments by the Seller not in excess of $50,000 in any one case nor
more than $100,000 in the aggregate, make or become a party to any contract,
lease or commitment, or renew, extend, amend or modify any contract, lease or
commitment without the prior written consent of the Buyer; (c) agree to pay,
conditionally or otherwise, any bonus (other than bonuses in amounts or
calculated according to methods disclosed to the Buyer and payable as a reward
for continued satisfactory performance during the period from the date of this
Agreement to the Closing Date, which bonuses shall be payable by the Seller),
extra compensation, pension or severance pay to any agent, officer or employee
or increase the rate of compensation of any of the officers or employees of the
Seller above the rates shown on Schedule 7.6 except for certain regularly
scheduled annual raises noted on Schedule 7.6 which would normally be made
between the date of this Agreement and the Closing Date and which are in
<PAGE>
-14-
amounts consistent with the Seller's prior practices; (d) permit, either in
violation of the FCC's rules and regulations or contrary to the Seller's past
practices relating to record retention, the removal from the Stations, or the
destruction, or the Stations' Records; or (e) except to the extent that FCC
rules and regulations require that such matters be left to the discretion of the
Seller, change materially the manner in which the Seller operates the Stations
or the Seller's practices with respect to the Stations, including, without
limitation, the type, quality and amount of promotional support which the Seller
has historically provided to the Stations.
9.3. Control of Stations. Except as expressly provided for in the
Time Brokerage Agreement, the Buyer shall not directly or indirectly control,
supervise or direct, or attempt to control, supervise or direct the operations
of the Stations; such operations, including complete control and supervision of
all programs and employees, shall be the sole responsibility of the Seller.
Without limiting the foregoing, the Buyer shall not induce any of the employees
of the Seller to leave their employment with the Seller or employ or otherwise
contract for the services of any person who is now employed by the Seller at the
time of the commencement of employment discussions between the Buyer and such
person.
SECTION 10. BEST EFFORTS TO SECURE REGULATORY AUTHORIZATION AND FCC
CONSENT.
(a) If necessary, the Seller and the Buyer shall proceed to
file, not later than fifteen (15) business days following the date
hereof, with the FTC and the Antitrust Division of the United States
Department of Justice notification and report forms and documentary
material which comply with the provisions of the HSR Act and the rules
and regulations issued thereunder, and will promptly file any
additional information requested as soon as practicable after receipt
of the request. Neither of the Buyer or the Seller will take any action
which will have the effect of delaying, impairing or impeding the
receipt of any required approvals and both such parties will use their
best efforts to secure such approvals as promptly as possible.
(b) The Seller and Buyer shall proceed to file, not later than
ten (10) business days following the date hereof, proper applications
with the FCC requesting the FCC Consent, and shall file with the FCC
thereafter any other instruments necessary to obtain the FCC Consent,
including additional information or amendments to the application, and
shall cooperate fully with one another and shall otherwise use their
best efforts to procure the FCC Consent at the earliest possible date.
Without limiting the foregoing, neither the Buyer nor the Seller will
take any action which will have the effect of delaying, impairing or
impeding the
<PAGE>
-15-
receipt of the FCC Consent. All costs of obtaining such consents shall
be borne equally by the Seller and the Buyer.
SECTION 11. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. Each and
every obligation of the Buyer to be performed at the Closing shall be subject to
the satisfaction of the following conditions (to the extent noncompliance is not
waived in writing by the Buyer):
11.1. Representations, Warranties and Covenants of the Seller. The
representations and warranties of the Seller set forth in Section 7 shall be
true and correct in all material respects as of the Closing Date with the same
force and effect as though made again at and as of the Closing Date, except for
changes contemplated and permitted or required by this Agreement. The Seller
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by
the Seller prior to or at the Closing. The Seller shall have executed and
delivered, in substantially the forms attached hereto, the Deed, the Assumption
Agreement, Bill of Sale, assignments of the Licenses and the Non-Competition
Agreement. The Seller shall have delivered to the Buyer the Seller's
certificate, dated as of the Closing Date, stating that the conditions set forth
in this Section 11.1 have been satisfied, together with a good standing
certificate relating to the Seller and issued by each of the Secretaries of
State of Delaware and New Hampshire, respectively.
11.2. Governmental Agency Approvals. The FCC Consent shall have
become effective and each other governmental agency the approval of which is
required prior to the consummation of any of the transactions contemplated by
this Agreement shall have approved such transaction on the terms contemplated by
this Agreement and the applicable (if any) waiting periods under the HSR Act and
the rules and regulations issued thereunder shall have expired; provided that
the parties hereto shall have complied with the provisions of Section 10(a)
hereof.
<PAGE>
-16-
11.3. Public Records File; Other Books and Records; Barter and Other
Trade Agreements. The Seller shall have delivered to the Buyer on the Closing
Date all books and records (or copies thereof) of the Seller relating to the
Seller's operation of the Stations (collectively, the "Stations' Records"), as
of the Closing Date. The Seller shall deliver at the Closing a schedule of all
of its current barter and other trade agreements and a statement of its
outstanding net barter and other trade balances as of the Closing Date. For a
period of not less than one (1) year after Closing, the Buyer agrees to retain
any Stations' Records in its possession. If required by the Seller for
regulatory, audit, tax or other reasonable and similar purposes, the Buyer will
grant the Seller reasonable access to, or make copies of the Stations' Records
relating to the pre-closing operations of the Stations as are in its possession.
The Seller will pay the Buyer the costs of copying such Stations' Records. The
Buyer will not destroy any of the Stations' Records relating to the pre-closing
operations of the Stations prior to six (6) years after the Closing Date without
notifying the Seller and allowing the other party to take possession of and
preserve such Stations' Records.
11.4. Consents. Each other party to each of the Leases, and each
other party to any Service Agreement or any other Contract or would constitute a
default giving rise to a claim for damages or injunctive relief which would have
a Materially Adverse Effect) shall have given such consent, at no expense to the
Buyer, in a form and substance approved by the Buyer (which approval shall not
be unreasonably withheld), as may be necessary to permit the consummation of the
transactions contemplated by this Agreement, all without default or acceleration
under or early termination or cancellation of such agreement and without charge.
11.5. No Materially Adverse Change. No action or proceeding shall
have been instituted, and no order, decree or judgment of any court or
governmental authority shall be subsisting, against the Buyer or the Seller that
would render it unlawful, as of the Closing Date, to effect the transactions
contemplated hereunder in accordance with the terms hereof or that would affect,
as of the Closing Date, the validity of the Licenses.
11.6. Opinion of Counsel. The Seller shall have delivered to the
Buyer on the Closing Date (a) a reasonable satisfactory opinion from Bingham,
Dana & Gould, special counsel for the Seller, dated as of the Closing Date, and
(b) a reasonably satisfactory opinion of Kaye, Scholer, Fierman, Hays & Handler
LLP, special FCC counsel to the Seller, dated as of the Closing Date, as to the
matters set forth in Section 7.4 and the validity of the FCC Consent.
11.7. Condition of Property. The Premises and Buildings as of the
Closing Date shall be in the same condition they are on the date of this
<PAGE>
-17-
Agreement subject to the terms of this Agreement, reasonable wear and tear and
physical damage the repair of which can be effected for not more than $5,000
only excepted, and free of all tenants and occupants except as permitted by the
terms of this Agreement, and in conformity with the terms of all recorded
Permitted Encumbrances.
11.8. Title Insurance Affidavits, Etc. Seller shall have delivered
such standard parties-in-possession and mechanics' lien affidavits, corporate
votes and the like as may be reasonably required by the Title Insurance Company
for it to issue the Title Policy as provided above. In addition, the Title
Policy shall have been issued to Buyer at standard rates by the Title Insurance
Company.
11.9. Non-Foreign Affidavit. Seller shall have delivered (a) a
transferor's certification of non-foreign status as required by Section
1445(b)(2) of the Internal Revenue Code and (b) a currently operative Occupancy
Permit.
11.10. Additional Certificates and Other Documents. On or before the
Closing Date, the Seller shall have furnished to the Buyer such additional
certificates and other documents as the Buyer may have reasonably requested as
to any of the conditions or other matters set forth in this Section 11,
including, without limitation, as to compliance with Section 11.1.
SECTION 12. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS. Each and
every obligation of the Seller to be performed at the Closing shall be subject
to the satisfaction of the following conditions (to the extent noncompliance is
not waived in writing by the Seller):
12.1. Representations, Warranties and Covenants of the Buyer. The
representations and warranties of the Buyer set forth in Section 8 shall be true
and correct as to all material matters as of the Closing Date with the same
force and effect as though made again at and as of the Closing Date, except for
changes contemplated and permitted or required by this Agreement. The Buyer
shall have tendered to the Seller the Purchase Price, executed and delivered the
Non-Competition Agreement and performed and complied with all other agreements
and conditions required by this Agreement to be performed or complied with by
the Buyer prior to or at the Closing. The Buyer shall have delivered to the
Seller a certificate, dated as of the Closing Date, stating that the conditions
set forth in this Section 12.1 have been satisfied.
12.2. Governmental Agency Approvals. The FCC Consent shall have
become effective and each other government agency the approval of which is
required prior to the consummation of any of the transactions contemplated by
this Agreement shall have approved such transaction on the terms contemplated by
this Agreement and the applicable waiting periods under
<PAGE>
-18-
the HSR Act and the rules and regulations issued thereunder shall have expired;
provided that the parties hereto shall have complied with the provisions of
Section 10(a) hereof.
12.3. No Obstructive Proceeding. No action or proceeding shall have
been instituted, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting, against the Buyer or
the Seller that would render it unlawful, as of the Closing Date, to effect the
transactions contemplated hereunder in accordance with terms hereof.
12.4. Opinion of Counsel. The Buyer shall have delivered to the
Seller on the Closing Date an opinion from Michael Milsom, General Counsel for
the Buyer, that is in form and detail reasonably satisfactory to the Seller.
SECTION 13. INDEMNIFICATION BY BUYER.
13.1. Indemnification of Seller. The Buyer agrees to indemnify and
hold the Seller harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses (including reasonable
attorney's fees) arising from or related to any of the following: (a) any
material inaccuracies in any representation or warranty made by the Buyer herein
or in any document delivered by the Buyer in connection herewith, or any
material failure by the Buyer to comply with any covenant made by the Buyer in
this Agreement or any such document; (b) any and all claims, liabilities and
obligations arising out of the ownership or operation following the Closing Date
of the Stations or the Acquired Assets or the performance following the Closing
Date of the Contracts; provided that such claims, liabilities and obligations
are not based solely on facts existing prior to the Closing Date; (c) any
claims, liability or obligation with respect to any employee of the Buyer in
connection with his or her employment by the Buyer following the Closing Date;
or (d) any loss, cost or expense of the Seller relating to the failure of the
Buyer to comply in any material respect with the provisions of this Section 13,
provided that Buyer shall have no liability under this 13.1 until the
aggregate for all claims hereunder exceeds the sum of $20,000 (the "Threshold
Amount"), in which event Buyer shall then be liable for all claims for
indemnification hereunder, including the Threshold Amount.
13.2. Claims. In the event that the Seller desires to make a claim
against the Buyer under Section 13.1, the Seller shall notify the Buyer within
ninety (90) days of the date on which Seller becomes aware of all of the facts
and circumstances giving rise to such claim. Upon receipt of such notice from
the Seller of any claim made by a third party, the Buyer shall be entitled to
assume the defense of such claim, and in the case of such an assumption the
Buyer shall have the authority to negotiate, compromise and settle such claim at
its sole expense and cost, provided, that any such settlement shall include as
an
<PAGE>
-19-
unconditional term thereof the giving by such third party to the Seller of a
release from all liability in respect of such claim.
13.3. Limitation. No claim may be made pursuant to this Section 13
unless notice thereof pursuant to Section 13.2 has been given on or prior to the
second anniversary of the Closing Date; provided that if and to the extent that
the Seller continues to be liable directly to the third parties under any
Contract such time limitation shall not apply with respect to claims made
pursuant to this Section 13 and relating to the performance after the Closing
Date of such Contracts. No claim may be made in respect of any matter covered by
Section 13.1, including but not limited to any claim by the Seller based on any
inaccuracy of any representation or warranty made by the Buyer, except pursuant
to the provisions of this Section 13.
SECTION 14. INDEMNIFICATION BY SELLER.
14.1. Indemnification of Buyer. The Seller agrees to indemnify and
hold the Buyer harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses (including reasonable
attorney's fees) arising from or related to any of the following: (a) any
material inaccuracies in any representation or warranty made by the Seller
herein or in any document delivered by the Seller in connection herewith, or any
material failure by the Seller to comply with any covenant made by the Seller in
this Agreement or any such document; (b) any and all claims, liabilities and
obligations arising out of the ownership or operation on or prior to the Closing
Date of the Stations or the Acquired Assets or the performance on or prior to
the Closing Date of the Contracts; provided that such claims, liabilities and
obligations are based on facts which came into existence after the Closing Date;
(c) any claim or liability arising under the bulk sales or related tax laws of
any jurisdiction in connection with transactions contemplated by this Agreement
(in view of such indemnification obligation the Buyer hereby waives the Seller's
compliance with any such bulk sales and related tax laws as a condition to the
Closing hereunder); (d) any claims, liability or obligation with respect to any
employee of the Seller in connection with his or her employment and/or
termination of employment on or prior to the Closing Date by the Seller; (e) any
and all claims or counterclaims arising in connection with the Excluded Assets;
or (f) any loss, cost or expense of the Buyer relating to the failure of the
Seller to comply in any material respect with the provisions of this Section 14,
provided that Seller shall have no liability under this 14.1 until the
aggregate for all claims hereunder exceeds the Threshold Amount, in which event
Seller shall be liable for all claims for indemnification hereunder, including
the Threshold Amount.
14.2. Claims. In the event that the Buyer desires to make a claim
against the Seller under Section 14.1, the Buyer shall notify the Seller
<PAGE>
-20-
within ninety (90) days of the date on which Buyer becomes aware of all of the
facts and circumstances giving rise to such claim. Upon receipt of such notice
from the Buyer of any claim made by a third party, the Seller shall be entitled
to assume the defense of such claim, and in the case of such an assumption the
Seller shall have the authority to negotiate, compromise and settle such claim
at its sole expense and cost; provided, that any such settlement shall include
as an unconditional term thereof the giving by such third party to the Buyer of
a release from all liability with respect to such claim.
14.3. Limitations. No claim may be made pursuant to this Section 14
unless notice thereof pursuant to Section 14.2 has been given on or prior to the
second anniversary of the Closing Date, or, if the claim relates to any tax
liability or claim, the third anniversary of the Closing Date. No claim may be
made in respect of any matter covered by Section 14.1, including but not limited
to any claim by the Buyer based on any inaccuracy of any representation or
warranty made by the Seller, except pursuant to the provisions of this Section
14.
SECTION 15. TERMINATION OF AGREEMENT.
15.1. Termination. This Agreement may be terminated by either Buyer
or Seller (as long as such party has complied in all material respects with its
covenants and agreements under this Agreement) upon the occurrence of any of the
following:
(a) if, on or prior to the Closing Date, the other party
hereto 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 default shall not be cured within thirty (30) days
of the date of notice of default served by the party claiming such
default; or
(b) on ten (10) days written notice if the FCC denies any
application requesting the FCC Consent, or if the FCC fails to grant
the FCC Consent within six (6) months following the date of this
Agreement, provided, that Seller shall extend such time limit an
additional one (1) month at the request of Buyer so long as Buyer shall
be diligently prosecuting the FCC Application in good faith and the FCC
has not issued any ruling or decision denying the FCC Application; or
(c) if there shall be in effect any judgment, decree or order
that would prevent or make unlawful the Closing of this Agreement; or
(d) by Buyer only, if between the date hereof and the Closing
Date the Stations for any reason (other than the failure of the Buyer
to comply with the terms of the Time Brokerage Agreement) does not
broadcast at substantially full licensed power and antenna heights
<PAGE>
-21-
as described in the License (an "Off Air Event") for a continuous
period of five (5) days or if all Off Air Events result in an aggregate
of five (5) days wherein the Stations does not broadcast at full
licensed power and antenna height or if there are more than four (4)
Off Air Events, each lasting six (6) hours or more.
15.2. Drawdown of Escrowed Amounts. The Buyer and the Seller hereby
agree that upon the termination of this Agreement as a result of the failure by
or inability of the Buyer to comply in any material respect with the terms of
this Agreement, the Escrow Deposit shall be paid to Seller. Seller acknowledges
and agrees that the Escrow Deposit shall be the sole and exclusive remedy of
Seller against Buyer in connection with such default and termination.
SECTION 16. GENERAL.
16.1. Expenses. Except as otherwise expressly provided in this
Agreement, all expenses of the preparation, execution and consummation of this
Agreement and of the transactions contemplated hereby shall be borne by the
party incurring such expenses.
16.2. Notices. All notices, demands and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if mailed by certified
mail, return receipt requested, postage prepaid, or sent by written
telecommunication, as follows: (a) if to the Seller, to: Precision Media
Corporation, 36 Bay State Road, Cambridge, Massachusetts 02138 , Attention:
Donald F. Law, Jr. and (b) if to the Buyer, to: American Radio Systems, 116
Huntington Avenue, Boston, Massachusetts 02116, Attention: Steven B. Dodge, CEO.
16.3. Further Assurances. From time to time, at the request of the
Buyer and without further consideration, the Seller shall execute and deliver
such further instruments of conveyance and transfer and take such other actions
as the Buyer may reasonably require more effectively to convey and transfer any
of the Acquired Assets and to assign any of the Contracts to the Buyer. The
Seller and the Buyer shall also execute and deliver to the appropriate other
party such other instruments as may be reasonably required in connection with
the performance of this Agreement and each shall take all such further actions
as may be reasonably required to carry out the transactions contemplated by this
Agreement.
16.4. Full Consideration; Risk of Loss. Except as otherwise
expressly provided in this Agreement, the Seller shall be responsible to deliver
the Acquired Assets and to assign the Contracts upon the terms of this Agreement
without further cost or expense to the Buyer and shall be responsible
<PAGE>
-22-
for satisfying any and all costs and expenses payable to any third parties
arising as a result of the Seller's delivery of the Acquired Assets and the
assignment of the Contracts to the Buyer. The risk of loss, damage or
destruction to any Acquired Asset from any cause whatsoever prior to the Closing
shall be borne by the Seller, who shall, prior to the Closing and at the
Seller's own expense, repair, rebuild or replace any Acquired Asset so lost,
damaged or destroyed (but only to the extent of available insurance proceeds).
16.5. Public Statements or Releases. The parties hereto each agree
that neither party to this Agreement will make any public announcement of the
existence of, or reveal the status of, the transactions provided for herein,
without the prior approval of the other party hereto. Each party hereto agrees
that it will not unreasonably withhold or delay any such approval. Nothing
contained in this Section 16.5 shall prevent any party from making such public
announcements as such party may consider necessary in order to satisfy such
party's legal or contractual obligations.
16.6. NonRecourse Obligations. Notwithstanding any contrary
provision contained in this Agreement, the Non-Competition Agreement, the
Assumption Agreement or any other agreement, document or instrument delivered in
connection herewith or therewith, none of the shareholders, officers, directors
or employees of the Buyer or the Seller nor any legal representative, heir,
successor or assignee of any shareholder, officer, director or employee of the
Buyer or the Seller shall have any personal liability for any misrepresentation
or breach of warranty made by the Buyer or the Seller hereunder or thereunder,
or any failure by the Buyer or the Seller to perform or observe any of the
terms, covenants or conditions to be performed or observed by the Buyer
hereunder or thereunder or any other obligation arising hereunder or thereunder.
In the event of any such misrepresentation, breach or failure, the Seller or the
Buyer, as the case may be, shall be entitled to proceed solely against the Buyer
or the Seller, as the case may be.
16.7. Specific Performance. Seller recognizes that, in the event
Seller refuses to perform the provisions of this Agreement, monetary damages
alone will not be adequate. Buyer shall, therefore, be entitled in such event,
in addition to bringing suit at law or equity for money or other damages, to
obtain specific performance of the terms of this Agreement. In any action to
enforce the provisions of this Agreement, Seller shall waive the defense that
there is an adequate remedy at law or equity and agrees that Buyer shall have
the right to obtain specific performance of the terms of this Agreement without
being required to prove actual damages, post bond or furnish other security.
16.8. Miscellaneous. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and understandings
relating to the subject matter hereof and shall not be amended
<PAGE>
-23-
except by a written instrument hereafter signed by each of the parties hereto.
The validity and construction of this Agreement shall be governed by the laws of
the State of Connecticut. The headings of sections are for reference only and
shall not limit or control the meaning thereof. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Neither party may assign its interests under this
Agreement without the prior consent of the other, except that Buyer may assign
its interests to a wholly-owned subsidiary of the Buyer without the Seller's
prior consent (but only if American Radio Systems Corporation remains liable for
all of the obligations of such assignee arising hereunder or in connection
herewith). The representations and warranties of each party contained in this
Agreement or otherwise made in writing in connection with the transactions
contemplated hereby shall be deemed material and, notwithstanding any
investigation by the other party hereto, shall be deemed to have been relied
upon by such other party and shall survive the Closing and the consummation of
the transactions contemplated hereby. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any person, other than the Seller and the Buyer, any
rights or remedies under or by reason of this Agreement. 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.
<PAGE>
-24-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRECISION MEDIA CORPORATION
By:_______________________
Title:
AMERICAN RADIO SYSTEMS
CORPORATION
By:_______________________
Title:
<PAGE>
EXHIBIT A
Premises
<PAGE>
EXHIBIT B
Assumption Agreement
<PAGE>
EXHIBIT C
Escrow Agreement
<PAGE>
EXHIBIT D
Non-Competition Agreement
<PAGE>
EXHIBIT E-1
Farmington Lease
<PAGE>
EXHIBIT E-2
Rochester Lease
<PAGE>
EXHIBIT E-3
Stratham Lease
<PAGE>
EXHIBIT F
Service Agreements
<PAGE>
EXHIBIT G
Time Brokerage Agreement
<PAGE>
SCHEDULE 2.1
Tangible Assets
<PAGE>
SCHEDULE 2.2
Intangible Assets
Call Signs
1. "WMYF-AM"
2. "WERZ-FM"
3. "WZNN-AM"
4. "WSRI-FM"
<PAGE>
SCHEDULE 2.3
Contracts
<PAGE>
SCHEDULE 4
TRADE ACCOUNTS
See Attached
<PAGE>
SCHEDULE 5.2
Permitted Encumbrances
(i) Liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties to
secure claims for labor, material or supplies in respect of obligations
not overdue;
(ii) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(iii) Encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which the Seller is a
party, and other minor liens or encumbrances none of which in the
opinion of the Seller interferes materially with the use of the
property affected in the ordinary conduct of the business of the Seller
which defects do not individually or in the aggregate have a materially
adverse effect on the business of the Seller; and
<PAGE>
SCHEDULE 7.4
Licenses
FCC license for WMYF, WERZ, WZNN and WSRI attached hereto as Attachment
7.4.
<PAGE>
SCHEDULE 7.6
Employees
The attached list contains payroll information for bi-monthly pay
period ending May 11, 1997 for employees of Stations WMYF, WERZ, WZNN and WSRI.
<PAGE>
SCHEDULE 7.8
Unfunded Liabilities
None.
<PAGE>
SCHEDULE 7.11
Insurance
<PAGE>
SCHEDULE 7.15
Litigation
Exhibit 10.6
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made as of this _____ day of __________, 1997
by and between American Radio Systems Corporation, a Delaware corporation (the
"Programmer") and Precision Media Corporation, a Delaware corporation (the
"Licensee").
WHEREAS Licensee owns and operates Broadcast Stations WSRZ-FM, WZNN-AM,
WMYF-AM and WERZ-FM (collectively referred to herein as the "Stations") pursuant
to a license issued by the Federal Communications Commission ("FCC").
WHEREAS Programmer is involved in radio Stations ownership and
operation.
WHEREAS the Licensee wishes to retain Programmer to provide programming
for the Stations that is in conformity with the Stations' and FCC policies for
time brokerage arrangements and as set forth herein.
WHEREAS Programmer agrees to use the Stations exclusively to broadcast
such programming of its selection that is in conformity with all rules,
regulations and policies of the FCC and subject to Licensee's full authority to
control the operation of the Stations.
WHEREAS Programmer and Licensee agree to work in a cooperative fashion
to make their time brokerage agreement work to the benefit of both parties and
as contemplated in this Agreement.
WHEREAS, Programmer and Licensee have entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") under which Licensee has agreed to
sell the Stations to Programmer, and have filed an application for FCC consent
to assign the Stations license from Licensee to
Programmer.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be bound
legally, agree as follows:
Section 1
Use of Stations Air Time
1.1 Representations. Both Licensee and Programmer represent that they
are authorized to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of each, enforceable against it in
accordance with its terms.
1.2 Effective Date; Term. The Effective Date of this Agreement shall be
July 1, 1997. It shall continue in force until December 31, 1997, or until
consummation of the assignment of the Stations license from Licensee to
Programmer pursuant to the Asset Purchase Agreement, whichever event occurs
earlier, unless otherwise extended or terminated by the parties hereto in
writing.
1.3 Scope. During the term hereof, Licensee shall make available to
Programmer time on the Stations as set forth in this Agreement. Programmer shall
deliver such programming, at its expense, to the Stations' transmitter
facilities or other authorized remote control point as reasonably designated by
Licensee. Subject to Licensee's reasonable approval, as set forth in this
Agreement, Programmer shall provide entertainment
<PAGE>
programming of its selection complete with commercial matter, news, public
service announcements and other suitable programming to the Licensee up to one
hundred sixty-four (164) hours per week. The Licensee may use the remaining four
hours per broadcast week for the broadcast of its own regularly scheduled news,
public affairs and other non-entertainment programming and shall provide
Programmer with advance written notice of such hours of programming. All time
not reserved by or designated for Licensee shall be available for use by
Programmer and no other party.
1.4 Consideration. As consideration for the air time made available
hereunder, Programmer shall pay to Licensee a monthly fee of Thirty-Two Thousand
Five Hundred Dollars ($32,500), payable no later than the fifteenth (15th) day
of the month to which such fee pertains, and Programmer shall reimburse Licensee
for certain Stations expenses as set forth in Section 1.7 hereof.
1.5 Licensee Operation of the Stations. Licensee will have full
authority, power and control over the operations of the Stations during the term
of this Agreement. Licensee will bear all responsibility for the Stations'
compliance with all applicable provisions of the Communications Act of 1934, as
amended, the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for all non-capital, ordinary and
customary operating expenses of the Stations, including but not limited to
maintenance of the studio and transmitting facility and costs of electricity
except that Licensee shall be entitled to reimbursement pursuant to Section
1.7(b) and Programmer shall be responsible for the costs of its programming and
personnel as provided in Sections 1.7(a) and 2.3 hereof, and shall pay directly,
or reimburse Licensee for, all other non-capital, ordinary and customary
operating expenses of the Stations. Licensee shall employ at its expense
employees consisting of, at a minimum, those personnel required pursuant to FCC
regulations, who will report to and be accountable to the Licensee. Licensee
shall be responsible for the salaries, taxes, insurance and related costs for
all personnel it employs at the Stations and shall maintain insurance at its
present levels covering the Stations' transmission facilities. During the term
of the Agreement, Programmer agrees to perform, without charge, routine
monitoring of Licensee's transmitter performance and tower lighting if and when
requested by Licensee.
1.6 Licensee Representations and Warranties. Licensee represents
and warrants as follows:
Licensee holds the licenses and other permits and authorizations
necessary for the present operation of the Stations as set forth in Attachment
I. There is not now pending, or to Licensee's best knowledge, threatened, any
action by the FCC or by any other party to revoke, cancel, suspend, refuse to
renew or modify adversely any of such licenses, permits or authorizations except
as previously revealed in writing to Programmer. To the Licensee's best
knowledge, after due inquiry, Licensee, with respect to the Stations, is not in
material violation of any statute, ordinance, rule, regulation, policy, order or
decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Stations, which would have a material adverse effect
upon the Licensee, its assets utilized in the operation of the Stations, the
Stations or upon Licensee's ability to perform this Agreement. Licensee shall
not knowingly take any action or omit to take any action which would have a
material adverse impact upon the Licensee, its assets utilized in the operation
of the Stations, the Stations or upon Licensee's ability to perform this
Agreement. To Licensee's best
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knowledge, all reports, annual regulatory fees and applications required to be
filed with the FCC or any other governmental body have been, and during the
course of the term of this Agreement or any extension thereof, will be filed in
a timely and complete manner. The facilities of the Stations are and will
continue to comply in all material respects with the engineering requirements
set forth in the FCC licenses of the Stations. Licensee shall, during the term
of this Agreement, not dispose of, transfer or assign any of such assets and
properties except with the prior written consent of the Programmer or in the
ordinary course of the Licensee's business.
1.7 Programmer Responsibility.
(a) Programmer shall be solely responsible for any expenses
incurred in the origination and/or delivery of programming fro any remote
location and for any publicity or promotional expenses incurred by Programmer,
including, without limitation, ASCAP, BMI, SESAC music license fees for all
programming provided by Programmer.
(b) Upon presentation to Programmer by Licensee of a
certificate outlining in reasonable detail (with invoices attached thereto to
the extent such invoices exist) the non-capital, ordinary and customary expenses
incurred by Licensee in operating the Stations including lease payments,
utilities, taxes, etc., Programmer shall reimburse Licensee for all such
payments within five (5) business days after presentation of any and each
certificate of payment.
1.8 Contracts. Programmer will be required to assume performance of any
of the Contracts (as defined in the Asset Purchase Agreement) pertaining to the
Stations, except as indicated on Attachment III hereof. Programmer will enter
into no third-party contracts, leases or agreements which will bind Licensee in
any way except with Licensee's prior written approval. Licensee will enter into
no third-party contracts, leases or agreements which will bind Programmer in any
way except with Programmer's prior written approval. Programmer shall assume the
obligations of Licensee, of all existing trade and barter agreements as listed
on Attachment III-A and Licensee shall assign all of its rights under those
trade and barter agreements to Programmer.
1.9 Hourly Credit. Programmer shall receive from Licensee, as a refund
consisting of a flat rate credit of $55.00 per hour ("Hourly Credit"), for any
part of the weekly one hundred sixty-four (164) hours of programming time that
Licensee uses to broadcast its own programming including periods during which
Licensee is unable, for any reason (except for Programmer's failure to deliver
its programming to Licensee), to broadcast the Programmer's programming. Such
refunds to Programmer shall be paid within ten (10) days of the end of each
month.
1.10 Stations Operation. Licensee shall notify Programmer in writing at
least five (5) business days prior to (i) making any changes in management
personnel, (ii) entering into any material contractual obligations, (iii)
purchasing equipment for a purchase price in excess of $5,000, or (iv) making
any other material changes in the operation of the Stations. Licensee agrees to
purchase such equipment or other material or services which are reasonably
required for the Stations' operations provided that Programmer agrees to
reimburse (in accordance with (1.7) the Licensee for all costs associated with
such purchases including, without limitation, installation, wiring and similar
related costs.
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1.11 Use of Stations Studios. Licensee agrees to provide Programmer
with access to the Stations' complete facilities including the studios and
broadcast equipment for use by Programmer, if it so desires, in providing
programming for the Stations; provided, however, that Licensee shall maintain,
for its sole use, sufficient space at the Stations' studios for its management
level employees. Under the overall supervision of Licensee, Programmer shall and
may peacefully and quietly have the full use of and enjoy the use of the
Stations' facilities, studios and equipment free from any material hindrance
from any person or persons whomsoever claiming by, through or under Licensee.
Programmer shall use the studios and equipment only for the purpose of producing
programming for the Stations or for any other Stationss owned or time-brokered
by the Programmer within the same market and shall at all times be subject to
the good faith oversight of the Licensee.
Section 2
Stations Obligations to the Community of License
2.1 Licensee Authority. Notwithstanding any other provision of this
Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of the community of
license for the Stations. On a regular weekly basis the Licensee shall air
specific programming on issues of importance to the local community. Nothing in
this Agreement shall abrogate the unrestricted authority of the Licensee to
discharge its obligations to the public and to comply with the law, rules and
policies of the FCC with respect to meeting the ascertained needs and interests
of the public.
2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Stations, Licensee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the reasonable good faith judgment of
Licensee, is of overriding public importance. Such interruption shall not
entitle Programmer to any credits on fees. Licensee shall also coordinate with
Programmer the Stations' hourly Stations identification announcements to be
aired in accord with FCC rules. Licensee shall continue to maintain a main
studio, as that term is defined by the FCC, within the Stations' principal
community contour, shall maintain its local public inspection file within the
community of license and shall prepare and place in such inspection file its
quarterly issues and program lists on a timely basis. Programmer shall, upon
request by Licensee, provide Licensee with information with respect to certain
of Programmer's programs which should be included in Licensee's quarterly issues
and programs lists. Licensee shall also maintain the Stations logs, receive and
respond to the telephone inquiries, control and oversee any remote control point
for the Stations.
2.3 Responsibility for Employees and Expenses. Programmer shall employ
and be solely responsible for the salaries, taxes, insurance and related costs
for all personnel employed by Programmer (including, without limitation,
salespeople, traffic personnel, board operators and programming staff). Licensee
will provide and be responsible for the Stations personnel employed by Licensee
and necessary to fulfill Licensee's obligations hereunder, and will be
responsible for the salaries, taxes, insurance and related costs for all the
personnel it employs. All personnel shall be subject to the overall supervision
of Licensee, consistent with Programmer's right to the use of the Stations
facilities pursuant to Section 1.12 hereof.
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Section 3
Stations Programming Policies
3.1 Broadcast Stations Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Stations Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment IV hereto and which
may be amended from time to time by Licensee upon notice to Programmer.
Programmer agrees and covenants to comply in all material respects with the
Policy Statement, with all rules and regulations of the FCC, and with all
reasonable changes subsequently made by Licensee or the FCC. If Licensee
reasonably determines that a program supplied by Programmer does not comply with
the Policy Statement it may suspend or cancel such program and shall provide
written notice to Programmer of such decision. Programmer shall furnish or cause
to be furnished the Artistic personnel and material for the programs as provided
by this Agreement and all programs shall be in accordance with the Policy
Statement and FCC requirements. All advertising spots and promotional material
or announcements shall comply with applicable federal, state and local
regulations and policies, the Policy Statement, and shall be produced in
accordance with quality standards established by Programmer.
3.2 Licensee Control of Programming. Programmer recognizes that the
Licensee has full authority to control the operation of the Stations. The
parties agree that Licensee's authority includes but is not limited to the right
to reject or refuse such portions of the Programmer's programming which Licensee
reasonably believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming elements
and/or format of the programming supplied to Licensee by giving Licensee at
least forty-eight (48) hours notice of such changes.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to Licensee that Programmer has full authority to broadcast its
programming on the Stations, and that Programmer shall not broadcast any
material in violation of any law, rule, regulation or the Copyright Act. All
music supplied by Programmer shall be: (i) licensed by ASCAP, SESAC or BMI; (ii)
in the public domain; or (iii) cleared at the source by Programmer. Consistent
with Section 1.7 hereof, Licensee will maintain ASCAP, BMI and SESAC licenses as
necessary. The right to use the programming and to authorize its use in any
manner shall be and remain vested in Programmer.
3.4 Sales.
(a) Programmer shall retain all revenues from the sale of
advertising time within the programming it provides to the Licensee.
Programmer may sell advertising, consistent with applicable rules,
regulations and the Policy Statement, on the Stations in combination
with any other broadcast Stations of its choosing. Programmer shall be
responsible for payment of the commissions due to any sales (national
or otherwise) representative engaged by it for the purpose of selling
advertising (national or otherwise) which is carried during the
programming it provides to Licensee. Licensee shall retain all revenues
from the sale of Stations' advertising during the hours each week in
which the Licensee airs its own non-entertainment programming, with the
exception provided for certain political advertising as set forth in
Section 5.2 herein.
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(b) Programmer acknowledges that all accounts receivable
arising in connection with the operation of the Stations, including but
not limited to accounts receivable for advertising revenues for
programs and announcements performed at the tations prior to the
Effective Date and other broadcast revenues for services performed at
the Stations prior to the Effective Date shall remain the property of
Licensor and that, except as provided for below, Programmer shall not
acquire any beneficial right or interest therein or responsibility
therefor.
(c) Programmer is hereby designated as agent for Licensor for
the purposes of billing, if unbilled, and collecting accounts
receivable of the Stations existing on or before the Effective Date and
arising out of the operations of the Stations on or before the
Effective Date, togerther with advertising broadcast by the Stations
prior to the Effective Date and not yet billed to advertisers, and
Programmer shall account for all monies attributable to all of the
Stations' accounts receivable collected. On the last day of each
calendar month following the Effective Date, Programmer shall render
and deliver to Licensor any monies collected with respect to the
Stations' accounts receivable, its written account of such billing and
collection efforts, together with copies of such bills, correspondence,
documents, instruments, and such other information as the Licensor
shall reasonably request. On the day which is one hundred eighty (180)
days after the Effective Date, or if such day is not a business day,
the next preceding business day, Programmers shall deliver to Licensor
one hundred percent (100%) of all monies actually collected by
Programmer on Licensor's behalf and any additional bills,
correspondance, documents, instruments, files and other
information concerning the billing of the accounts receivable of the
Stations to which such monies relate and which have not yet been
delivered to Licensor. Notwithstanding the foregoing, Licensor and
Programmer hereby agree that Programmer shall in no way be obligated to
pay Licensor any amounts received by Programmer as payments on accoutns
receivable which arise after the Effective Date (the "Post-Effective
Date Accounts Receivable").
(d) Programmer shall receive no remuneration for services
rendered pursuant to this Section 3.4 and shall not be liable in any
way for non-collection or failure of any such collection of accounts
receivable ( except for liability arising in connection with the gross
negligence or willful misconduct of the Programmer in connection with
such accounts receivable.). On or before the Effective Date, Licensor
shall deliver Programmer a list of the Stations' accounts receivable
existing on or before the Effective Date, as well as its unbilled
broadcast advertising, existing as of the Effective Date, as well as
its unbilled broadcast advertising, existing as of the Effective Date
("Pre-Effective Date Accounts Receivable") which shall be attached
hereto as Schedule 3.4. Any cash received by Programmer as payments on
such accounts receivable after the Effective Date from customers
included in the Pre-Effective Date Accounts Receivable will be applied
first to Pre-Effective Date Accounts Receivable and then to
Post-Effective Date Accounts Receivable. If a customer, in writing,
disputes all or any portion of the Pre-Effective Date Account
Receivable, Programmer may credit any cash payment to the
Post-Effective Date Account Receivable from the same customer. The
disputed Pre-Effective Date Accounts Receivable shall be
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returned for Licensor for it to collect. Any Pre-Effective Date Account
Receivable which is outstanding one hundred eighty (180) days after the
Effective Date shall be returned to Licensor on such one hundred and
eightieth (180th) day for it to collect. The obligations of Programmer
under this Section 3.4(d) shall survivor the termination of this
Agreement.
(e) Programmer and Licensor hereby agree that (i) the
provisions of the (3.4 apply only to accounts receivable of the
Licensor arising in connection with the operations of the Stations on
or before the Effective Date and (ii) nothing set forth herein shall
affect or refer to in any way any other accounts receivable of the
Licensor.
3.5 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, material, supplies or other merchandise, services or labor (collectively
"Consideration"), whether or not pursuant to written contracts or agreements
between Programmer and merchants or advertisers, unless the payer is identified
in the program for which Consideration was provided as having paid for or
furnished such Consideration, in accordance with the Communications Act and FCC
requirements. Programmer agrees to quarterly, or more frequently at the request
of the Licensee, execute and provide Licensee with a Payola Affidavit,
substantially in the form attached hereto as Attachment V.
3.6 Staffing Requirements. Licensee shall comply with the main
studio staff requirements as specified by the FCC.
Section 4
Indemnification
4.1 Programmer's Indemnification. Programmer shall indemnify and hold
harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, including but not limited to, slander or defamation or otherwise
arising out of Programmer's broadcasts and sale of advertising time under this
Agreement to the extent permitted by law.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable legal fees and other
expenses incidental thereto) of every kind, nature and description, arising out
of Licensee' broadcasts to the extent permitted by law.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled
to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Stations' license renewal
application, counsel for the Licensee and counsel for the Programmer shall, at
the sole control and expense of the Programmer, jointly defend the Agreement and
the parties' performance thereunder throughout all FCC proceedings at the sole
expense of the Programmer. If portions of this Agreement do not receive the
approval of the FCC staff, then the parties shall reform the
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Agreement or, at Programmer's option and expense, seek reversal of the staff
decision and approval from the full Commission on appeal.
Section 5
Access to Programmer Materials and Correspondence
5.1 Confidential Review. At least two (2) business days prior to the
provision of any programming by Programmer to Licensee under this Agreement,
Programmer shall acquaint the Licensee with the nature and type of the
programming to be provided. Licensee, solely for the purpose of ensuring
Programmer's compliance with the law, FCC rules and the Stations' policies,
shall be entitled to review at its discretion from time to time on a
confidential basis any programming material it may reasonably request.
Programmer shall promptly provide Licensee with copies of all correspondence and
complaints received from the public (including any telephone logs of complaints
called in), copies of all program logs and promotional materials. However,
nothing in this section shall entitle Licensee to review the internal corporate
or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with Licensee to
assist Licensee in complying with all rules of the FCC regarding political
advertising. Programmer shall supply such information promptly to Licensee as
may be necessary to comply with the lowest unit rate, equal opportunities and
reasonable access requirements of federal law. In the event that Programmer
fails to meet its political time obligations under the Communications Act of
1934, as amended, and the rules and regulations of the FCC and such failure
inhibits Licensee in the performance of its political time obligations, then to
the extent reasonably necessary to assure the Licensee's performance, Programmer
shall release advertising availabilities to Licensee; provided, however, that
all revenues realized by Licensee as a result of such a release of advertising
time shall be immediately paid to Programmer.
Section 6
Termination and Remedies Upon Default
6.1 Termination. In addition to other remedies available at law or
equity and the provisions of Section 1.2 hereof, this Agreement may be
terminated as set forth below by either Licensee or Programmer by written notice
to the other if the party seeking to terminate is not then in material default
or breach hereof, upon the occurrence of any of the following:
(a) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court of
competent jurisdiction and such order or decree has become final and no longer
subject to further administrative or judicial review;
(b) the other party is in material breach of its obligations
hereunder and has failed to cure such breach within thirty (30) days of notice
from the non-breaching party;
(c) the mutual consent of both parties;
(d) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review;
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(e) the Asset Purchase Agreement is terminated in
accordance with its terms; or
(f) in accordance with (6.2 hereof
6.2 Programmer's Remedies for Operational Deficiencies.
Programmer shall have the following remedies for deficiencies in or events
related to Licensee's transmitting facility:
(a) If Programmer receives during the first thirty (30) days
of this Agreement a report of a consulting engineer, chosen by Programmer, which
concludes that the Stations is not operating substantially within the parameters
authorized by the FCC or that the Stations' actual coverage of the market is
materially less than it should be, Licensee may either (i) terminate the
Agreement or (ii) at its expense, take such steps as are reasonably necessary to
restore the effective coverage or operating parameters of the relevant Stations
or demonstrate, by the use of the report of another consulting engineer, hired
at its expense, that the coverage or operating parameters are not materially
deficient. If the Stations' effective coverage or operating parameters are not
restored within thirty (30) days of notice of the coverage or operating
deficiencies, then Programmer shall be entitled to a full refund, on a daily
basis, of the Hourly Credit amount set forth in Section 1.9 until such
deficiencies are corrected or the date of the termination of this Agreement by
the Licensee, whichever is earlier, and such refunds shall be made within ten
(10) days of the end of the month.
(b) If for a period of five consecutive days or more Licensee
reduces its transmitter output power on the Stations by fifty percent (50%) or
more, Programmer may elect a refund equal to one half of the Hourly Credit
amount set forth in Section 1.9 for so long as such power reduction continues to
occur if Programmer has, in fact, been required to ake rebates and/or other
financial accommodations to its advertisers and such refund shall be reflected
in a refund payment by Licensee to Programmer within ten (10) days of the end of
the month.
(c) If Licensee uses an auxiliary or alternate transmitter for
the Stations for a period of five (5) consecutive days or more, then the refund
for such period shall be twenty-five percent (25%) of the Hourly Credit amount
set forth in Section 1.9 for so long as such auxiliary or alternate transmitter
site is in use if Programmer has, in fact, been required to make rebates and/or
other financial accommodations to its advertisers. Should such transmitter site
move continue for more than thirty (30) days, the refund for such period shall
be equal to fifty percent (50%) of the Hourly Credit amount set forth in Section
1.9 for so long as such alternate transmitter site is in use. The refund shall
be reflected in a refund payment by Licensee to Programmer within ten (10) days
of the end of the month.
(d) If, due to damage to or failure of transmission equipment,
the Stations is off the air for five (5) consecutive days or for a total of one
hundred twenty (120) hours during any thirty (30) day period, Programmer shall
be entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.9 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Stations'
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of god, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee will not be liable to Programmer, except to the
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extent of allowing in each such case an appropriate refund for time not provided
based upon the Hourly Credit set forth under Section 1.9 calculated upon the
length of time during which the failure or impairment exists or continues.
6.4 Other Agreements. During the term of this Agreement, Licensee will
not enter into any other time brokerage, program provision, local management or
similar agreement with any third party with respect to the Stations.
Section 7
Miscellaneous
7.1 Assignment. This Agreement shall be binding upon and insure to the
benefit of the parties hereto, their successors and assignees, including
specifically any purchaser of the Stations from Licensee. Neither party may
assign its rights under this Agreement without the prior written consent of the
other party which shall not be unreasonable withheld, provided, however that
Programmer has the absolute right to assign this Agreement and all of its rights
and obligations hereunder, following written notice to the Licensee, to an
entity controlled by American Radio Systems Corporation (but only if American
Radio Systems Corporation continues to remain liable for all of the obligations
of such assignee hereunder) and Licensee has the right to assign its payments
hereunder to its Lenders upon written notification to Programmer.
7.2 Call Letters. Upon request of Programmer and at Programmer's
expense, Licensee shall apply to the FCC for authority to change the call
letters of the Stations (with the consent of the FCC) to such call letters that
Programmer shall reasonably designate. Licensee shall cooperate with Programmer
and receive Programmer's consent prior to making any change in the call letters
of the Stations.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
7.4 FCC Certification (47 C.F.R. ss. 73.3555(a) (2) (ii). The parties
shall execute a Certification in the form of Attachment VI hereto, as required
by Section 73.3555(a) (2) (ii) of the FCC's rules.
7.5 Entire Agreement. This Agreement and the Attachments hereto and the
Asset Purchase Agreement between Programmer and Licensee embody the entire
agreement and understanding of the parties and supersede any and all prior
agreements, arrangements and understandings relating to matters provided for
herein. No amendment, waiver of compliance with any provision or condition
hereof, or consent pursuant to this Agreement will be effective unless evidenced
by an instrument in writing signed by the parties.
7.6 Taxes. Licensee and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Programmer
shall pay all taxes if any, to which the consideration specified in Section 1.4
herein is subject, provided that Licensee is responsible for payment of its own
income taxes. Each party shall be responsible for any sales tax imposed on
advertising aired during the programming provided by that party.
7.7 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
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7.8 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Communications Act of 1934, as amended, and
the Rules and Regulations of the FCC. The construction and performance of the
Agreement will be governed by the laws of the Commonwealth of Massachusetts.
7.9 Notices. Any notice, demand or request required or permitted to be
given under the provisions of the Agreement shall be in writing and shall be
deemed to have been duly delivered on the date of personal delivery or on the
date of receipt if mailed by registered or certified mail, postage prepaid and
return receipt requested, and shall be deemed to have been received on the date
of personal delivery or on the date set forth on the return receipt, to the
following addresses, or to such other address as any party may request, in the
case of Licensee, by notifying Programmer, and in the case of Programmer, by
notifying Licensee.
To Licensee: Precision Media Corporation
36 Bay State Road
Cambridge, MA
Attn: Donald F. Law, President
To Programmer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge, President
Fax: (617) 375-7575
Copies To: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Michael B. Milsom, Esq.
Fax: (617) 375-7550
Dow, Lohnes and Albertson
1200 New Hampshire Ave., N.W.
Suite 800
Washington, DC 20036
John R. Feore, Jr. Esq.
Fax: (202) 776-2222
7.10 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.11 Public Announcements. The parties will coordinate and consult with
one another before making any press release or other public announcement
concerning the transaction contemplated under this Agreement. Programmer
acknowledges that announcements and direct or indirect communications concerning
any changes which Programmer may plan for the future operation of the Stations
prior to the Effective Date may have a deleterious effect on the business,
operation, and reputation of the Stations and Licensee. Accordingly, Programmer
agrees that neither it nor its employees, representatives or agents shall make
any formal or information announcements to or communication with any employees
of the Stations or to any person with whom the Stations does business without
written approval of Licensee. Programmer further agrees that neither it nor its
employees will release or publicize any such planes changes within the community
of license or service area or operations of the Stations without the written
approval of Licensee, which shall not be unreasonably with held, and which shall
be granted if necessary or appropriate to comply with the rules, regulations or
policies of the FCC.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LICENSEE:
PRECISION MEDIA CORPORATION
By: ______________________________
PROGRAMMER:
AMERICAN RADIO SYSTEMS CORPORATION
By: _____________________________
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ATTACHMENT I
Stations Coverage
WMYF(AM) and WERZ(FM), Exeter, New Hampshire and WZNN(AM) and WSRI(FM),
Rochester, New Hampshire current FCC Licenses and contour maps on file with the
FCC.
<PAGE>
ATTACHMENT II
Stations Expenses
The following expenses relating to the operation of the Stations shall be paid
by the Licensee:
a) Salary, payroll taxes, benefits and other costs relating to
the employment of the Stations' [_____________].
b) Salary, payroll taxes benefits, and other costs relating to
the employment of the Stations' [_________________].
c) Cost of tower rent electricity and other utilities directly
related to the operation of the Stations' transmitter
facilities.
<PAGE>
ATTACHMENT IV
Broadcast Stations Programming Policy Statement
<PAGE>
BROADCAST STATIONS
PROGRAMMING POLICY STATEMENT
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs.
I. No Plugola or Payola. The mention of any business activity or
"plug" for any commercial, professional, or other related
endeavor, except where contained in an actual commercial
message of a sponsor, is prohibited.
II. No Lotteries. Announcements giving any information about
lotteries or games prohibited by federal or state law or
regulation are prohibited.
III. Election Procedures. At least ninety (90) days before the
start of any primary or election campaign, Programmer will
clear with Licensee's general manager the rate Programmer will
charge for the time to be sold to candidates for the public
office and/or their supporters to make certain that the rate
charged is in conformance with the applicable law and Stations
policy.
IV. Required Announcements. Progammer shall broadcast (I) an
announcement in a form satisfactory to Licensee at the
beginning of each hour to identify the Stations, (ii) an
announcement at the beginning and end of each program to
indicate that program time has been purchased by Programmer,
and (iii) any other announcements that may be required by law,
regulation, or Stations policy.
V. Commercial Recordkeeping. Programmer shall not receive any
consideration in money, goods, services, or otherwise,
directly or indirectly (including to relatives) from any
persons or company for the presentation of any programming
over the Stations without reporting the same in advance to and
receiving the prior written consent of Licensee's general
manager. No commercial messages ("plugs") or undue references
shall be made in programming presented over Stations to any
business venture, profit making activity, or other interest
(other than noncommercial announcements for bona fide
charities, church activities or other public service
activities) in which Programmer (or anyone else) is directly
or indirectly interested without the same having been approved
in advance by the general manager/chief engineer and such
broadcast being announced and logged and sponsored.
VI. No Illegal Announcements No announcements or promotion
prohibited
<PAGE>
by federal or state law or regulation of any lottery or game
shall be made over the Stations. Any game, contest, or
promotion relating to or to be presented over the Stations
must be fully stated and explained in advance to Licensee,
which reserves the right in its sole discretion to reject any
game, contest, or promotion.
VII. Licensee Discretion Paramount In accordance with the
Licensee's responsibility under the Communications Act of
1934, as amended, and the Rules and Regulations of the Federal
Commissions, Licensee reserves the right to reject or
terminate any advertising proposed to be presented or being
presented over the Stations which is in conflict with
Licensee's policy or which in Licensee's or its general
manager/chief engineer's sole judgment would not serve the
public interest.
Licensee may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In any case where questions of policy or interpretation arise,
Programmer should submit the same to Licensee for decision before making any
commitments in connection therewith.
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ATTACHMENT V
Payola Statement
<PAGE>
FORM OF PAYOLA AFFIDAVIT
City of ____________________ )
County of __________________ ) ss.
State of ___________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
___________________________, being first duly sworn, deposes and says as
follows:
1. He is _________________________ for ________________________________.
(Position)
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Stations __________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Stations _______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted by
Stations _______ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise indicated
as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation or broadcast
matter on Stations ________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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7. He, his spouse and his immediate family do____ do not ____ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management of persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
Stationss;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Stations ______, or any other Stations owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none _______
as follows________:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
__________________________________
Affiant
Subscribed and sworn to before me
this ______ day of ________________, 199___.
__________________________________________
Notary Public
My Commission expires: __________________
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ATTACHMENT VI
FCC Certification
<PAGE>
CERTIFICATION
Pursuant to Section 73.3555(a) (2) (ii) of the FCC's Rules:
1. The licensee of the brokered Stationss affected by the foregoing Time
Brokerage Agreement hereby certifies that it will at all times maintain
ultimate control (as defined in FCC rules and regulations) over the
Stations' facilities, including specifically control over the Stations'
finances, personnel and programming; and
2. The licensee of the brokering Stationss hereby certifies that the
proposed Agreement for the time brokerage complies with the provisions
of Section 73.3555(a) (2) (ii) of the FCC's rules.
Dated this ________ day of _____________________, 199______.
LICENSEE:
By: ______________________________
Its: _____________________________
PROGRAMMER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________
Its: _____________________________
Exhibit 10.7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated June 6, 1997, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and
Michael A. McMurray and Marilyn A. McMurray, d/b/a McMurray Communications, an
Ohio general Partnership ("Seller").
P R E M I S E S:
A. Seller is the permittee/licensee of and operates radio station
WMMA(FM) Lebanon, Ohio (the "Station") pursuant to licenses issued by the
Federal Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Station and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth. AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
Section 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Station for cash) by
<PAGE>
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Station.
1.2 "Assets" means the tangible and intangible assets owned and used in
connection with the conduct of the business or operations of the Station, being
such assets as are specifically set forth in Section 2.1 herein, which 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 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts, except employment or
employee-related contracts, in existence on the Closing Date which meet the
criteria set forth in Section 3.7 (i) - (iii) for exclusion from Schedule 3.7,
and (iv) all Contracts with advertisers for the sale of time or talent on the
Station for cash entered into in the ordinary course of business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary 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 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Station, and (i) which are in effect on the date hereof, or
(ii) which are entered into by
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Seller in the ordinary course of business between the date hereto and the
Closing Date.
1.8 "Escrow Deposit" shall mean the sum of Two Hundred and Ten Thousand
Dollars ($210,000) held by Media Venture Partners. as Escrow Agent pursuant to
an Escrow Agreement of even date, by and among Buyer, Seller, and Escrow Agent
in the form set forth in Schedule 1.8 hereto.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein, in addition to any assets not specifically set forth in
Section 2.1 herein.
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 Seller in connection with the conduct of the
business or 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 and (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration 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 or appeal has expired.
1.13 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, and any other
federal, state or local governmental authorities to Seller in connection with
the conduct of the business or operations of the Station.
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<PAGE>
1.14 "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 Seller
and used as of the date hereof in the conduct of the business or operations of
the Station, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date all as
specifically set forth in Section 3.6 hereof and in Schedule 3.6 hereto.
1.15 "Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Property" means all of the fee estates and buildings and
other improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interests owned by Seller and
used in the conduct of the business or operations of the Station which are
identified on Schedule 3.5 hereof plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees 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 Section 2.5, 3.5 or 3.6 below), more specifically described as
follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
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<PAGE>
(d) The Assumed Contracts;
(e) Goodwill and all trademarks, trade names, service marks
and all other information and similar intangible assets relating to the
Station, including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate
to the Station, including without limitation, technical information and
data, machinery and equipment warranties, maps, computer discs and
tapes, plans, diagrams, blueprints, and schematics, including filings
with the FCC which relate to the Station, if any;
(g) All choses in action and rights under warranties of Seller
relating to the Station or the Assets, if any;
(h) All books and records relating exclusively to the business
or 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 Seller to have such books and records made available to
Seller for a reasonable period, not to exceed four (4) years.
2.2 Excluded Assets. The Assets shall exclude the following assets,
in addition to those listed on Schedule 2.2:
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's 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 Seller, subject to the right of
Buyer to have access to and to copy for a period of four (4) years from
the Closing Date any information dealing exclusively with the business
and operations of
5
<PAGE>
the Station, and Seller's other books and records related to internal
matters and financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds 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
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement.
(f) The Accounts Receivable.
2.3 Purchase Price.
(a) The Purchase Price shall be Three Million
Dollars($3,000,000). The Purchase Price shall be adjusted to reflect
any adjustments or prorations made and agreed to at Closing as provided
in Section 2.4 hereof. Payment of the Purchase Price at Closing will be
by direct wire transfer of funds, by Buyer to the account of Seller.
The Escrow Deposit may, at Buyer's discretion, either be applied at
Closing to the Purchase Price, or returned to Buyer.
(b) No later than forty-five (45) days after the Closing Date,
Buyer shall deliver to Seller a reasonable allocation of the Purchase
Price prepared by BIA Consulting, Inc. among the various Assets, and if
such schedule is reasonably satisfactory to Seller it shall be attached
to this Agreement as Schedule 2.3. The parties hereby agree that the
allocation of the Purchase Price, as agreed to by Buyer and Seller and
set forth in Schedule 2.3, shall be controlling for tax purposes and
shall be utilized in preparing Internal Revenue Service Form 8594.
2.4 Adjustments and Prorations. All income and expenses arising from
the conduct of the business or operations of the Stations shall be prorated
between Buyer and Seller in accordance with generally accepted accounting
principles as of 11:59 p.m.,
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<PAGE>
local time, on the date immediately preceding the Closing Date. Seller shall
receive all revenues and refunds to Seller and deposits of Seller hald by third
parties and shall be responsible for all liabilities and obligations incurred or
accrued in connection with the operation of the Station through 11:59 p.m.,
local time, of the date immediately preceding the Closing Date, and Buyer shall
receive all revenues and be responsible for such liabilities and obligations
incurred or accruing thereafter. Such prorations shall include all business and
license fees (including any retroactive adjustments thereof), utility charges,
real and personal property taxes and assessments levied against the Assets,
accrued employee benefits such as vacation time and sick time, 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), and similar prepaid and deferred items. Buyer shall receive credit
to the extent of value (as calculated in Seller's financial statements
consistent with past practice) of any and all advertising time to be run
following the Closing for which trade or barter consideration has been received
by the Seller prior to the Closing which exceeds Five Thousand Dollars ($5,000),
in the aggregate.
Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall
deliver to Seller a certificate (the "Closing Certificate"), signed by a senior
officer of Buyer after due inquiry by such officer but without any personal
liability to such officer, providing a compilation of the adjustments and
prorations to be made pursuant to this
7
<PAGE>
Section 2.4, including any adjustments and prorations made at Closing, together
with a copy of any working papers relating to such Closing Certificate and such
other supporting evidence as Seller may reasonably request. If Seller shall
conclude that the Closing Certificate does not accurately reflect the
adjustments and prorations to be made pursuant to this Section 2.4, Seller
shall, within thirty (30) days after its receipt of the Closing Certificate,
provide to Buyer its written statement of any discrepancies believed to exist.
Joseph L. Winn on behalf of Buyer, and Stephen L. Hood on behalf of Seller, or
their respective designees, shall attempt jointly to resolve the discrepancies
within fifteen (15) days after receipt of Seller's discrepancy statement, which
resolution, if achieved, shall be binding upon all parties to this Agreement and
not subject to dispute or review. If such representatives cannot resolve the
discrepancy to their mutual satisfaction within such fifteen (15) day period,
Buyer and Seller shall, within the following ten (10) days, jointly designate a
regional or local branch of a nationally known independent public accounting
firm to be retained to review the Closing Certificate together with Seller's
discrepancy statement and any other relevant documents. The cost of retaining
such independent public accounting firm shall be borne equally by Buyer and
Seller. Such firm shall report its conclusions as to adjustments pursuant to
this Section 2.4, within thirty (30) days after it is retained, 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, Buyer is determined to
owe an amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer, in each case within ten (10) days of such determination.
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 Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period
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on and after the Closing 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 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 Seller, including (i) any obligations under any Contract not included in the
Assumed Contracts, (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 operation of the Station prior to the
Closing Date, and (iv) those related to employees as set forth in Section 6.9
herein 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 General
Partnership duly formed, validly existing and in good standing under the laws of
the State of Ohio and is duly qualified to conduct its business in the State of
Ohio, which is the only jurisdiction where the conduct of the business or
operations of the Station requires such qualification. Seller has all requisite
power and authority (i) to own, lease, and use the Assets as presently owned,
leased, and used, and (ii) to conduct the business or operations of the Stations
as presently conducted. Seller has all requisite 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 Seller, hereunder and thereunder. Seller is not a
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participant in any joint venture or partnership with any other person or entity
with respect to any part of the Station's operations or 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 action on the part of Seller. This Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid, and binding obligation
of Seller, enforceable against Seller in accordance with its terms except as the
enforceability hereof may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, or by court-applied equitable remedies.
3.3 Absence of Conflicting Agreements. To Seller's knowledge and
subject to obtaining the Consents, 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) does not require the consent of any
third party; (ii) will not conflict with any provision of the Partnership
Agreement of 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 either 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 either Seller is a
party or by which either may be bound; or (v) 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 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). As described
in Schedule 3.4, the Licenses were validly issued with the Seller designated
thereon being the
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<PAGE>
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 operations of the Station as
presently operated. Seller has no reason to believe that the Licenses will 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
descriptions of all the Real Property, which comprises all real property
interests necessary to conduct the business or operations of the Station as now
conducted. Seller has delivered to Buyer true and complete copies of all leases
or other material instruments pertaining to the Real Property (including any and
all amendments and other modifications of such instruments), all of which
instruments are valid, binding and enforceable in accordance with their terms.
To Seller's knowledge, Seller is not in material breach, nor is any other party
in material breach, of the terms of any of such leases or other instruments. All
Real Property (i) is available for immediate use in the conduct of the business
or operations of the Station, and (ii) to Seller's best knowledge materially
complies as described in Schedule 3.5 with all applicable building, electrical
and zoning codes and all regulations of any governmental authority having
jurisdiction. Seller has full legal and practical access to the Real Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which comprises all
personal property used to conduct the business or operations of the Station as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller 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 which are described in
Schedule 3.6 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing.
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Except as shown in Schedule 3.6, to Seller's knowledge the Personal Property
taken as a whole is in good operating condition and repair (ordinary wear and
tear excepted), and is available for immediate use in the business or operations
of the Station, and the transmitting and studio equipment included in the
Personal Property (i) has been maintained consistent with FCC rules and
regulations, and (ii) will permit the Station and any unit auxiliaries thereto
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.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Station for cash and substantially at rate card and which are not prepaid and
which may be cancelled by the Station without penalty on 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 contacts exceeding Five Thousand
Dollars ($5,000) or any material nonmonetary obligation. Seller has delivered 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 Contracts, to Seller's
knowledge the Seller requires no contract or agreement to enable it to carry on
its business as presently conducted. To Seller's knowledge, all of the Assumed
Contracts are in full force and effect, and are valid, binding and enforceable
in accordance with their terms, except as the enforceability thereof may be
affected by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, or by court-applied equitable remedies. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any such Contracts. Except as expressly set forth in Schedule 3.7, the
Seller is not aware of any intention by any party to any Assumed Contract (i) to
terminate such contract or amend the
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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, 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.
3.8 Consents. To Seller's knowledge, except for the FCC Consent
provided for in Section 6.1 and the other Consents indicated in Schedule 3.7 or
described in Schedule 3.8, 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
transaction contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer, or (iii) to enable Buyer to conduct the business or operations
of the Station in essentially the same manner as such business or operations are
presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all 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) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used in the conduct of the business or operations of the
Station, all of which are valid and in good standing and, to Seller's knowledge,
uncontested. Seller has delivered to Buyer copies of all documents establishing
such rights, licenses, or other authority. Seller is not aware that it is
infringing upon or otherwise acting adversely to any trademarks, trade 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.
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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 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.10 are in full force and effect.
3.11 Reports. To Seller's knowledge, except where failure to do so
would not have a material adverse effect on the ownership or operation of the
Station: all returns, reports and statements which the Station is currently
required to file 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 thereof have been 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 at the main studio and is in
compliance with the FCC's rules and regulations.
3.12 Employee Benefit Plans. There are no employee benefit plans or
arrangements applicable to the employees of Seller employed at the Stations.
Seller has furnished or made 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 and policies, plan documents, trust agreements, employment
agreements, summary plan descriptions, and descriptions of any unwritten plans,
if any, as listed in Schedule 3.12. 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 Seller, threatened against any of
such plans or arrangements, and Seller possesses no knowledge of any facts which
could give rise to any such action, suit or claim.
3.13 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station except as described
in Schedule 3.7 hereto. Seller has no written or oral contracts of employment
with any employee
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of the Station, other than those listed in Schedule 3.7. Seller has provided
Buyer with true and complete copies of all such written contracts of employment
and true and complete memoranda of any such oral contracts. To Seller's
knowledge, 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 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 employees
(collectively) of the Station. No labor union or other collective bargaining
unit represents any of the employees of the Station. To the best knowledge of
Seller, 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 of Seller's employees at the Station.
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 said 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 reserves (segregated
to the extent required by sound accounting practice) deemed by it to be adequate
with respect thereto. No events have occurred which could impose on Buyer any
transferee liability for any taxes, penalties or interest due or to become due
from Seller.
3.15 Claims, Legal Actions. Except as set forth in Schedule 3.15, 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
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order, decree or judgment, in progress or pending, or to the knowledge of Seller
threatened, against or relating to Seller, the Assets, or the business or
operations of the Station, nor does 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 its knowledge, threatened (i) before the
FCC relating to the business or operations of the Station other than
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal or state employment laws or
regulations, or (iii) against Seller or the Station before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.16 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Station conflicts with rights of any other
person, firm or corporation.
3.17 Environmental Matters. During Seller's tenancy under the leases
described in Schedule 3.5 there has been no production, storage, treatment,
recycling, disposal, use, generation, discharge, release or other handling or
disposition of any kind by Seller of any toxic or hazardous wastes, substances,
products, pollutants or materials of any kind, including, without limitation,
petroleum and petroleum products and asbestos, or any other wastes, substances,
products, pollutants or material regulated under any environmental laws at, in,
on, from or under the Real Property which in any event is in material violation
of environmental law. The operations of Seller are and have been conducted, as
the case may be, in material compliance with all applicable Environmental Laws.
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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:
(a) Suffered any material adverse change in the business
assets or properties, or condition (financial or otherwise) of Seller
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 Seller, or any bonus payment
made or promised to any employee of Seller, or any material change in
personnel policies, employee benefits or other compensation
arrangements affecting the employees of Seller; or
(c) Made any sale, assignment, lease or other transfer of any
of Seller's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor.
3.19 Full Disclosure. No representation or warranty made by Seller
herein nor 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 made intentionally or in bad faith, or
intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
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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, and shall be, at Closing, qualified to conduct business in the State
of Ohio. 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 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 corporate action 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 hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, 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) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
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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
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the Station's Assets, and Buyer will
not take, or 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 Seller in writing thereof and use its best efforts to prevent any such
disqualification. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions and undertakings contemplated by this
Agreement.
4.5 Full Disclosure. No representation or warranty made by Buyer herein
nor 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 made intentionally or in bad faith, or intentionally or in bad
faith omits or will omit to state any material fact known to Buyer and required
to make the statements herein or therein not misleading.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall operate the Station
in the ordinary course of business in accordance with its past practices (except
where such would
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conflict with the following covenants or with Seller's other obligations
hereunder), and abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not 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 operations of the Station, except
in accordance with past practices;
(2) Contracts. Modify or amend any of the Assumed Contracts;
enter into any new Contracts except in the ordinary course of business,
provided that all new Contracts (other than Contracts for the sale of
broadcast time) shall not involve either aggregate liabilities
exceeding Five Thousand Dollars ($5,000), or any material nonmonetary
obligation;
(3) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Station or in connection
with the acquisition 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 Schedules 3.5 and
3.6, or permitted by Section 2.5, 3.5 or 3.6 and (ii) mechanics' liens
and other similar liens which will be removed prior to the Closing
Date;
(5) Programming. Reduce the Station's programming hours below
the minimum required by the FCC, or make any other material changes in
the Station's programming policies, except such changes as in the good
faith judgment of the Seller are required by the public interest;
(6) Licenses. Do any act or fail to do any act which might
result in the expiration, revocation, suspension or 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;
(7) Rights. Waive any material right relating to the Station
or the Assets; or
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(8) No Inconsistent Action. Knowingly take any action which is
inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this
Agreement.
B. Affirmative Covenants. Seller 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, records,
Contracts and documents relating to the Station (but not relating to
Seller's other operations or business) for the purpose of audit and
inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information with respect to the affairs
and business of the Station (but not relating to Seller's other
operations or business) 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
Seller; 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 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 current condition
(ordinary wear and tear excepted), and use, operate and maintain all of
the above assets in a reasonable manner, with inventories or 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 reasonable efforts to obtain
the Consents;
(5) Preservation of Business. Use its reasonable
efforts to preserve the business and audience of the Stations, and its
present relationships with their employees, suppliers, customers and
others having business relations with it and maintain levels of
marketing and promotions efforts and expenditures during the period
prior to the Closing Date equal to or greater to such levels in the
year immediately prior to the Closing Date;
(6) Books and Records. Maintain its books and records
in accordance with past practices;
(7) Notification. Promptly notify Buyer in writing of
any unusual or material developments with respect to the assets of the
Station, and
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of any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 hereof or in the
schedules hereto, provided that such notification shall not relieve
Seller of any obligations hereunder;
(8) Personnel. Promptly notify Buyer as personnel
vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions;
(9) Trade and Barter Agreements. Provide prior to the
Closing Date the advertising time due under any trade and barter
agreements listed in Schedule 3.7;
(10) Financial Information. As may be requested,
furnish to Buyer within fifteen (15) days after the end of each month
ending between the date hereof and the Closing Date a statement of
income and expense relating to the Station's operations for the month
just ended and such other financial information (including information
on payables and receivables) as Buyer may reasonably request and which
is prepared in the ordinary course of business.
(11) 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 in Schedule 3.7,
together with the copies of such Contracts; and
(12) 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 Seller, the Station and the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Seller 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 and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
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6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within ten (10) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to obtain the grant of such
application as expeditiously as practicable. If the FCC Consent imposes 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 it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to
obtain reconsideration or judicial review (but nothing herein shall be construed
to limit any party's right to terminate this Agreement pursuant to Section 9 of
this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, (ii) compliance by the parties hereto with any reasonable
conditions imposed in the FCC Consent, and (iii) the FCC Consent, through the
passage of time or otherwise, becoming a Final Order, provided, though, that the
condition that the FCC Consent shall have become a Final Order may be waived by
Buyer, in its sole discretion.
6.2 Control of the Station. Buyer shall not, directly or indirectly,
control, supervise, direct, or attempt to control, supervise or direct, the
operations of the
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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 completion of the Closing hereunder.
6.3 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer 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
equally by Seller and Buyer. 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.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it 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 Media Venture Partners, whose fee
shall be solely the responsibility of Seller.
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. In the event this Agreement is
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terminated and the purchase and sale contemplated hereby 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,
without retaining copies of such documents, work papers or other written
material.
6.6 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 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 to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
Closing Date, the Closing
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Date shall be postponed, for a period of up to one hundred and twenty (120)
days, to permit the repair or replacement of the damage or loss.
C. In the event of any damage or destruction of the Assets
described above, if such Assets have not been restored or replaced and the
Station's normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
Alternatively, Buyer may, at its option, proceed to close this Agreement and
complete the restoration and replacement of such damaged Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.8 Employee Matters.
A. Within five (5) business days after execution of this
Agreement, Seller 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 respective employment (including salary, bonus and other benefit
arrangements) and their duties as of the date of this Agreement, as well as the
annual salaries thereof. Seller shall
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promptly notify Buyer of any changes that occur prior to Closing with respect to
such information.
B. Nothing contained in this Agreement shall confer upon any
employee of Seller any right with respect to continued employment by Buyer, nor
shall anything herein interfere with any right the Buyer may have after the
Closing Date to (i) terminate the employment of any of the employees at any
time, with or without cause, or (ii) establish or modify any of the terms and
conditions of the employment of the employees in the exercise of its independent
business judgment.
C. Except as otherwise set forth herein, Buyer will not incur
any liability on account of Seller's employees in connection with the
transaction, including, without limitation, any liability on account of
unemployment insurance contributions, termination payments, retirement, pension,
profit-sharing, bonus, severance pay, disability, health, accrued vacation,
accrued sick lease (unless a pro-rated adjustment is made as to vacation or sick
leave) or other employee benefit plans, practices, agreements, or
understandings.
6.9 Accounts Receivable. At the Closing, Seller shall assign to Buyer
for collection purposes only all Accounts Receivable. Seller shall deliver to
Buyer on or as soon as practicable after the Closing date 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
will be for the account of Seller. Buyer shall endeavor in the ordinary course
of business to collect the Accounts Receivable for a period of ninety (90) days
after the Closing Date (the "Collection
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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 has commenced legal
action specifically disputing an outstanding balance and so directs in writing
with the accompanying payment. During the Collection Period, Buyer shall, within
ten (10) days of the end of each calendar month, furnish Seller with a list of ,
and pay over to Seller, the amounts collected during such preceding calendar
month with respect to the Accounts Receivable. Buyer shall provide Seller 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 Seller shall meet to mutually and in good faith analyze any
uncollected Account Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if Buyer desires to retain
such Account in the interest of maintaining on advertising relationship. As to
each such Account, Buyer and Seller shall negotiate a good faith value of such
Account, which Buyer shall pay to Seller if Buyer, in its sole discretion,
chooses to retain such Account. Seller shall retain the right to collect any
Account as to which the parties are unable to reach agreement as to a good faith
value, and Buyer agrees to turn over to Seller any payments received against any
such Account. As Seller's 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 or compromise,
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nor settle or adjust the amount of any such Account Receivable, except with the
approval of Seller. Buyer shall incur no liability to Seller for any uncollected
account unless Buyer shall have engaged in willful misconduct or gross
negligence in the collection of such account. During and after the Collection
Period, without specific agreement with Buyer to the contrary, neither Seller
nor its agents shall make any direct solicitation of the Account Receivable for
collection purposes except for Accounts retained by Seller after the Collection
Period.
6.10 Signal Upgrade. Seller shall fully cooperate, including without
limitation consenting to FCC filings, in Buyer's efforts to upgrade the signal
of the Station to Class B1. Seller shall make available to Buyer all records,
studies and documentation related to the signal and to the proposed relocation
of the transmission site for radio station WVNU(FM), Greenfield, Ohio.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at 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 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
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Agreement, as though such representations and warranties were made at and as of
such time.
B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the 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. The FCC Consent as specified in Sections 1.10 and
6.1.B., above, and each of the Consents marked as "material" on Schedule 3.7
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 is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or 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.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the
Closing Date, there shall have been no material adverse change in the Assets or
the Stations.
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its 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
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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 such time.
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 be performed or complied with by it prior to or on
the Closing Date.
C. Consent. The FCC shall have given its Consent as spedified
in Sections 1.10 and 6.1.B., above.
D. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3.
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00am on a date, to be
set by Buyer, upon five (5) days written notice to Seller, no later than fifteen
(15) business days following the date upon which the FCC Consent has become a
Final Order (the "Closing Date"), provided, though, that Buyer may waive the
requirement for a Final Order and schedule the Closing Date, with five (5) days
written notice to Seller, at any time after the receipt of FCC Consent. Closing
shall be held at the offices of Buyer or Seller or such other place as shall be
mutually agreed to by Buyer and Seller, or by mail, facsimile and/or overnight
delivery.
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:
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(a) Transfer Documents. Duly executed warranty 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 assignees, 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, 3.5 or 3.6 hereof);
(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) Seller's Certificate. A certificate, dated as of the
Closing Date, executed by the General Partner of Seller, certifying:
(i) that the representations and warranties of 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 that date; and (ii) that Seller has, in all
material respects, performed its obligations and complied with its
covenants set forth in this Agreement to be performed and complied with
prior to or on the Closing Date;
(d) General Partner's Certificate. A certificate, dated as of
the Closing Date, executed by Seller's General Partner: (i) certifying
that the execution and delivery of this Agreement by Seller and the
consummation of the transaction contemplated hereby have been
authorized and ratified; and (ii) providing, as attachments thereto, a
certificate of legal existence certified by an appropriate Ohio state
official; as of a date not more than fifteen (15) days before the
Closing Date and a copy of Seller's limited Partnership Agreement
certified by Seller's General Partner as of the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies, if
available, of all licenses, Assumed Contracts, blueprints, schematics,
working drawings, plans, projections, statistics, engineering records,
and all files and records used by Seller in connection with its
operations of the Station;
(f) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer and at Buyer's directions, to Buyer's lenders, substantially in
the form of Schedule 8.2 hereto.
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 paid by wire transfer
to Seller as provided in Section 2.3;
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(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 arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by the President or Vice President of Buyer,
certifying (i) 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 that date, and (ii) that
Buyer has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be performed
or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution of
this Agreement and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; and
(ii) a copy of the corporate charter, articles of incorporation and
Bylaws of Buyer as in effect on the date hereof, certified by Buyer's
secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3
hereto.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller 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:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of
this Agreement
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shall not have been materially satisfied, and (ii) satisfaction of such
condition shall not have been waived by the terminating party;
(b) If the Closing shall not have occurred on or before June
1, 1998
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller 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, less any compensation
due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages would not be adequate. Buyer shall therefore be entitled, as its
exclusive remedy
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hereunder, to obtain specific performance of the terms of this Agreement. In the
event of any action to enforce this Agreement, Seller hereby waives the defense
that there is an adequate remedy at law.
9.4 Defaults. 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 other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party in the event the
Nondefaulting Party prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
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 Date for a period of fifteen (15)
months (the "Survival Period"). No claim for indemnification may be made under
this Section 10 (except for section 10.3(a) or related claims under Section
10.3(c)) after the expiration of the Survival Period. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at Closing
and such knowledge is documented in writing at Closing, such party shall be
deemed to have waived such misrepresentation or breach. As of the effective date
of this Agreement, neither party is aware of any misrepresentation or breach of
warranty under this Agreement on the part of the other party hereto.
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10.2 Indemnification by Seller. 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 or ownership of the Station prior to the Closing
Date, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring 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.
10.3 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 and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing
Date, including any and all liabilities or obligations arising under
the Licenses or the Assumed Contracts which relate to events occurring
after the Closing Date 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:
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A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third 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 Claimant, such notice shall be given by Claimant within
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. 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
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said thirty (30) day
period (or any mutually 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 Claimant the full
amount of the claim. Buyer shall be entitled to apply any or all of the Accounts
Receivable collected on behalf of Seller to a claim as to which Buyer is
entitled to indemnification hereunder. If the Claimant and the Indemnifying
Party do not agree within said period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, 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 reasonable actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects
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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.
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, it shall be
bound by the results obtained in good faith by the Claimant with respect to such
claim.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the 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.
SECTION 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 commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) 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 (iv) addressed as follows:
If to Seller: McMurray Communications
26 West Orchard
Lebanon, Ohio 45036
Attn: Mr. & Mrs. Michael McMurray
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<PAGE>
With a copy (which
shall not constitute
notice) to: John L. Tierney
Tierney and Swift
1001 Twenty-Second Street, N.W.
Suite 350
Washington, D.C. 20037
If to Buyer: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7550
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 this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, provided, however, that following which
assignment Buyer shall remain liable to Seller for all of Buyer's obligations
hereunder. This Agreement shall be binding upon and 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 Ohio.
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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 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 required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates 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. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 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
40
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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 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greater extent permitted by law.
11.9 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: MCMURRAY COMMUNICATIONS
By:
BUYER: AMERICAN RADIO SYSTEMS
CORPORATION
By:
Title:
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SCHEDULES TO ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.3 Allocation of Purchase Price
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.10 List of Insurance Policies
3.12 Employee Benefit Plans
3.15 Claims; legal actions
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
42
Exhibit 10.8
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, dated as of ____________, 1997 by and between
AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation ("ARS") and JUPITER
RADIO PARTNERS, a Florida Partnership ("Jupiter").
W I T N E S S E T H:
WHEREAS, Jupiter is the permittee of Radio Station WTPX-FM (the
"Station"), which is authorized by the Federal Communications Commission ("FCC")
to operate at 105.5 megahertz in Jupiter, Florida.
WHEREAS, ARS has expertise in radio station programming and operations.
WHEREAS, Jupiter wishes to retain ARS to provide programming for the
Station in conformity with the FCC's policies for time brokerage arrangements
and as set forth herein, and ARS wishes to avail itself of the Station's
broadcast time in conformity with such FCC policies.
WHEREAS, Jupiter has granted ARS an exclusive option to purchase the
Station, and the parties contemplate that during the term hereof, if and when
ARS exercises said option, the parties will then enter into an asset purchase
agreement and will request FCC consent to the assignment of the Station license
from Jupiter to ARS.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants herein, the parties, intending to be bound legally, agree
as follows:
Section 1
Use of Station Air Time
1.1 Term. The term of this Agreement shall be for a period commencing
on the date on which the Station begins operating under program test authority
(the "Commencement Date"), and terminating on the earliest to occur of: (a) the
closing date of the sale of the Station to ARS; (b) one year from the
Commencement Date; or (c) termination of this Agreement pursuant to Section 6.1
hereof.
1.2 Scope. During the term hereof, Jupiter shall make available to ARS
time on the Station as set forth in this Agreement. ARS shall deliver such
programming, at its expense, to the Station's transmitter facilities or other
authorized
<PAGE>
remote control point as reasonably designated by Jupiter. Subject to Jupiter's
reasonable approval, as set forth in this Agreement, ARS shall provide
entertainment programming of its selection, complete with commercial matter,
news, public service announcements and other suitable programming to the Station
up to one hundred sixty-four (164) hours per week. Jupiter may use the remaining
four hours per broadcast week for the broadcast of its own regularly scheduled
news, public affairs and other non-entertainment programming on Sunday mornings
between the hours of 7:00 a.m. and 9:00 a.m., or at such other times as Jupiter
and ARS shall mutually agree. All time not reserved by Jupiter shall be
available for use by ARS and no other party.
1.3 Consideration. In consideration for the programming time made
available to ARS hereunder, ARS shall pay Jupiter the monetary consideration
described in Attachment I hereto.
1.4 Jupiter's Operation of the Station. Jupiter will have full
authority, power and control over the operations of the Station during the term
of this Agreement. Jupiter will bear all responsibility for the Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended, the rules, regulations and policies of the FCC and all other applicable
laws. Jupiter shall maintain a main studio, as that term is defined by the FCC,
within the Station's principal community contour, and shall comply with the
FCC's requirements for staffing a main studio. Jupiter shall maintain the
Station's local public inspection file within the community of license and shall
prepare and place in such inspection file its quarterly issues and program lists
on a timely basis. Upon request by Jupiter, ARS shall provide Jupiter with
information concerning any of ARS's programs which Jupiter may desire to include
in the Station's quarterly issues and programs lists. Jupiter shall also
maintain the Station logs, receive and respond to telephone inquiries, and
control and oversee any remote control point for the Station. Jupiter shall
employ at its expense Station personnel consisting of, at a minimum, a full-time
managerial employee and a non-managerial employee, who will report to and assist
the managerial employee in the performance of his or her duties. Each of
Jupiter's employees shall report to and be accountable to Jupiter. Jupiter shall
be responsible for the salaries, taxes, insurance and related costs for all
personnel it employs at the Station and shall maintain insurance covering the
Station's transmission facilities. Except as provided in Sections 1.5 and 1.8
herein, or as the parties may otherwise agree in writing, Jupiter shall be
solely responsible for all capital and non-capital, ordinary and customary
operating expenses of the Station, including but not limited to maintenance of
the studio and transmitting facility and costs of electricity.
1.5 ARS Responsibility. ARS shall be solely responsible for any
expenses incurred in the origination and/or delivery of
2
<PAGE>
programming it provides to the Station and for any publicity or promotional
expenses, including, without limitation, ASCAP, BMI and SESAC music license fees
for all programming provided by ARS. ARS shall employ and be solely responsible
for the salaries, taxes, insurance and related costs for all personnel employed
by ARS (including, without limitation, salespeople, traffic personnel, board
operators and programming staff). All personnel shall be subject to Jupiter's
overall supervision, consistent with ARS's right to the use of the Station
facilities pursuant to Section 1.9 hereof. If and when requested by Jupiter, ARS
shall perform, without charge, routine monitoring of the Station's transmitter
performance and tower lighting.
1.6 Contracts. Jupiter will not enter into any third-party contracts,
leases or agreements which would bind ARS in any way without ARS's prior written
approval. ARS will not enter into any third-party contracts, leases or
agreements which would bind Jupiter in any way without Jupiter's prior written
approval.
1.7 Hourly Credit. ARS shall receive from Jupiter, as a refund
consisting of a flat rate credit of [$21.39] per hour ("Hourly Credit"), for any
part of the weekly one hundred sixty-four (164) hours of programming time that
Jupiter uses to broadcast its own programming including periods during which the
Station is unable, for any reason (except for ARS's failure to deliver its
programming to the Station), to broadcast ARS's programming. Such refunds to ARS
shall be paid within ten (10) days of the end of each month.
1.8 Station Operation. Jupiter shall notify ARS in writing at least
five (5) business days prior to (i) making any changes in management personnel
of the Station, (ii) entering into any material contractual obligations relating
to the Station, (iii) purchasing equipment for the Station, or (iv) making any
other material changes in the operation of the Station. Jupiter agrees to
purchase equipment and other material and services which ARS may reasonably
suggest is necessary for the Station's operations, provided that ARS agrees to
reimburse Jupiter for all costs associated with such purchases including,
without limitation, installation, wiring and similar related costs.
1.9 Use of Station Studios. Jupiter agrees to provide ARS with such
access to and use of all of the Station's facilities including the studios and
broadcast equipment, as ARS may require or reasonably need in order to provide
programming for the Station and otherwise perform its obligations hereunder;
provided, however, that Jupiter shall maintain, for its sole use, sufficient
space at the Station's studios for its employees. Under the overall supervision
of Jupiter, ARS shall and may peacefully and quietly have the full use and
enjoyment of the Station's facilities, studios and equipment free from any
hindrance from any person or persons whomsoever claiming by,
3
<PAGE>
through or under Jupiter. ARS shall use the studios and equipment only for the
purpose of producing programming for the Station and otherwise performing its
obligations hereunder and shall at all times be subject to the good faith
oversight of Jupiter.
Section 2
Station Obligations to the Community of License
2.1 Jupiter's Authority. Notwithstanding any other provision of this
Agreement, ARS recognizes that Jupiter has certain obligations to broadcast
programming to meet the needs and interests of the community of license for the
Station. On a regular weekly basis Jupiter shall air specific programming on
issues of importance to the local community. Nothing in this Agreement shall
abrogate the unrestricted authority of Jupiter to discharge its obligations to
the public and to comply with the law, rules and policies of the FCC with
respect to meeting the ascertained needs and interests of the public.
2.2 Pre-emption Rights of Jupiter. Although both parties shall
cooperate in the broadcast of emergency information over the station, Jupiter
shall also retain the right to interrupt ARS's programming in case of an
emergency or for programming which, in the reasonable good faith judgment of
Jupiter, is of overriding public importance. Such interruption shall not entitle
ARS to any credits pursuant to Section 1.7 hereof. Jupiter shall also coordinate
with ARS the Station's hourly station identification announcements to be aired
in accord with FCC rules.
Section 3
Station Programming Policies
3.1 Programming Policy Statement. Jupiter has adopted and will enforce
a Broadcast Station Programming Policy Statement (the "Policy Statement"), a
copy of which is included as Attachment II hereto. Jupiter may amend the Policy
Statement from time to time upon notice to ARS. ARS agrees and covenants that it
and the programming it will provide to the Station will comply in all material
respects with the Policy Statement and with all rules and regulations of the FCC
pertaining to radio broadcast programming. If Jupiter reasonably determines that
a program supplied by ARS does not comply with the Policy Statement, Jupiter may
suspend or cancel such program upon written notice to ARS of such decision. All
advertising spots and promotional material or announcements shall be produced in
accordance with quality standards established by Jupiter and
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<PAGE>
shall comply with applicable federal, state and local regulations and policies
and the Policy Statement.
3.2 Jupiter's Control of Programming. ARS recognizes that Jupiter has
full authority to control the operation of the Station, and that such authority
includes, but is not limited to, the right to reject or refuse such portions of
ARS's programming which Jupiter reasonably believes to be unsatisfactory,
unsuitable or contrary to the public interest. However, ARS shall have the right
to change the programming elements and/or format of the programming supplied to
the Station by giving Jupiter at least twenty-four (24) hours' notice of such
changes.
3.3 Compliance with Copyright Act. ARS represents and warrants to
Jupiter that ARS has full authority to broadcast its programming on the Station.
ARS agrees that it will not broadcast any material in violation of any law,
rule, regulation or the Copyright Act. All music supplied by ARS shall be: (i)
licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at
the source by ARS. Consistent with Section 1.2 hereof, Jupiter will maintain
ASCAP, BMI and SESAC licenses as necessary for programming provided by Jupiter
to the Station. ARS shall have the exclusive right to use the programming ARS
provides to the Station and to authorize its use in any manner.
3.4 Sale of Advertising. ARS shall retain all revenues from the sale of
advertising time within the programming it provides to the Station. ARS may sell
advertising on the Station in combination with any other broadcast stations of
its choosing, provided that such combination of sales activities is in
compliance with applicable governmental rules and policies. ARS shall be
responsible for payment of the commissions due to any national sales
representative engaged by it for the purpose of selling national advertising
which is carried during the programming it provides to the Station. Jupiter
shall retain all revenues from the sale of advertising during the hours each
week in which it airs its own non-entertainment programming, with the exception
provided for certain political advertising set forth in Section 5.2 herein.
3.5 Payola. ARS agrees that it will not accept any consideration,
compensation, gift or gratuity of any kind whatsoever, regardless of its value
or form, including, but not limited to, a commission, discount, bonus, material,
supplies or other merchandise, services or labor (collectively "Consideration"),
whether or not pursuant to written contracts or agreements between ARS and
merchants or advertisers, unless the payer is identified in the program for
which Consideration was provided as having paid for or furnished such
Consideration, in accordance with the Communications Act and FCC requirements.
At least once each quarter, ARS shall execute and provide Jupiter
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<PAGE>
with a Payola Affidavit substantially in the form attached hereto as Attachment
III.
Section 4
Indemnification; Challenge before FCC
4.1 ARS's Indemnification. ARS shall indemnify and hold harmless
Jupiter from and against any and all claims, losses, costs, liabilities,
damages, forfeitures and expenses (including reasonable attorney fees and other
expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) ARS's breach of any representation,
warranty, covenant or agreement contained in this Agreement, or (ii) any action
taken by ARS or its employees and agents with respect to the Station, or any
failure by ARS or its employees and agents to take any action with respect to
the Station, including, without limitation, all Damages relating to violations
of the Act or any rule, regulation or policy of the FCC, libel, slander, unfair
competition or trade practices, infringement of trademarks, trade names or
program titles, violation of rights of privacy, and infringement of copyrights
and proprietary rights resulting from the broadcast of programming furnished by
ARS and ARS's broadcast and sale of advertising time on the Station. ARS's
obligation to hold Jupiter harmless against the Damages specified above shall
survive any termination of this Agreement until the expiration of all applicable
statutes of limitation.
4.2 Jupiter's Indemnification. Jupiter shall indemnify and hold
harmless ARS from and against any and all Damages resulting from (i) Jupiter's
breach of any representation, warranty, covenant or agreement contained in this
Agreement, or (ii) any action taken by Jupiter or its employees and agents with
respect to the Station, or any failure by Jupiter or its employees and agents to
take any action with respect to the Station, including, without limitation, all
Damages relating to violations of the Act or any rule, regulation or policy of
the FCC, libel, slander, unfair competition or trade practices, infringement of
trademarks, trade names or program titles, violation of rights of privacy, and
infringement of copyrights and proprietary rights resulting from the broadcast
of programming furnished by Jupiter. Jupiter's obligation to hold ARS harmless
against the Damages specified above shall survive any termination of this
Agreement until the expiration of all applicable statutes of limitation.
4.3 Limitation. Neither party shall be entitled to indemnification
pursuant to this section unless such claim for indemnification is asserted in a
writing delivered to the other party.
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4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, counsel for Jupiter and counsel for ARS shall jointly defend the Agreement
and the parties' performance thereunder throughout all FCC proceedings, and each
party shall bear its own expenses. If portions of this Agreement do not receive
the approval of the FCC staff, then the parties shall reform the Agreement or,
at ARS's option and expense, seek reversal of the staff decision and approval
from the full Commission on appeal.
Section 5
Access to ARS Materials; Correspondence; Political Advertising
5.1 Confidential Review. Prior to the provision of any
programming by ARS to the Station under this Agreement, ARS shall acquaint
Jupiter with the nature and type of programming to be provided. Jupiter, solely
for the purpose of ensuring ARS's compliance with applicable laws, FCC rules and
the Policy Statement, shall be entitled to review at its discretion, from time
to time on a confidential basis, any programming material it may reasonably
request from ARS. ARS shall promptly provide Jupiter with copies of all
correspondence and complaints received from the public (including telephone logs
of any complaints telephoned in), copies of all program logs and, upon request,
copies of promotional materials. However, nothing in this section shall entitle
Jupiter to review the internal corporate or financial records of ARS.
5.2 Political Advertising. ARS shall cooperate with and assist Jupiter
in complying with all rules of the FCC regarding political advertising. ARS
shall promptly supply such information to Jupiter as may be necessary to comply
with the lowest unit rate, equal opportunities and reasonable access
requirements of federal law. To the extent reasonably necessary to assure that
Jupiter meets its political time obligations under the Communications Act of
1934, as amended, and the rules and regulations of the FCC, ARS shall release
advertising availabilities to Jupiter; provided, however, that all revenues
realized by Jupiter as a result of such a release of advertising time shall be
immediately paid to ARS.
Section 6
Termination and Remedies Upon Default
6.1 Termination. In addition to other remedies available at law or
equity and the provisions of Section 1.1 hereof, either party hereto may
terminate this Agreement by written notice to
7
<PAGE>
the other, provided that the party seeking to terminate is not then in material
default or breach hereof, upon the occurrence of any of the following:
(a) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative governmental agency
or court of competent jurisdiction, and such order or decree has become final
and no longer subject to further administrative or judicial review;
(b) the other party is in material breach of its obligations
hereunder and has failed to cure such breach within thirty (30) days of notice
from the non-breaching party;
(c) the mutual consent of both parties;
(d) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review.
6.2 ARS's Remedies for Operational Deficiencies. ARS shall have the
following remedies for deficiencies in or events related to equipment owned by
Jupiter:
(a) If ARS receives during the first sixty (60) days of this
Agreement a report of a consulting engineer, chosen by ARS, which concludes that
the Station is not operating within the parameters authorized by the FCC,
Jupiter shall be obligated, at its expense, to take such steps as are reasonably
necessary to restore the operating parameters of the Station or demonstrate, by
the use of the report of another consulting engineer, hired at its expense, that
the operating parameters are not materially deficient. If the Station's
operating parameters are not restored within thirty (30) days notice of the
operating deficiencies, then ARS shall be entitled to a full refund, on a daily
basis, of the Hourly Credit amount set forth in Section 1.7 hereof until such
deficiencies are corrected. All refunds due ARS hereunder shall be made within
ten (10) days of the end of the month in which the deficiency was detected.
(b) If, for a period of five consecutive days or more, Jupiter
reduces the Station's transmitter output power by fifty percent (50%) or more,
and, as a result thereof, ARS is required to make rebates and/or other financial
accommodations to its advertisers, ARS may elect to receive from Jupiter a
refund equal to one half of the Hourly Credit amount set forth in Section 1.7
for so long as such power reduction continues. Jupiter shall make the refund
payments to ARS within ten (10) days of the end of each month in which the
Station's power is reduced.
8
<PAGE>
(c) If Jupiter uses an auxiliary or alternate transmitter for
the Station for a period of five (5) consecutive days or more and, as a result,
ARS is required to make rebates and/or other financial accommodations to its
advertisers, then ARS shall be entitled to a refund which, for up to the first
30 days of such operation, shall be twenty-five percent (25%) of the Hourly
Credit amount set forth in Section 1.7 for so long as such auxiliary or
alternate transmitter is in use. Should the use of an auxiliary or alternate
transmitter continue for more than thirty (30) days, the refund for such period
shall be equal to fifty percent (50%) of the Hourly Credit amount set forth in
Section 1.7 for so long as such auxiliary or alternate transmitter is in use.
Any refunds due ARS hereunder shall be made within ten (10) days of the end of
the month in which the auxiliary or alternative transmitter is in use.
(d) If, due to damage to or failure of transmission equipment,
the Station is off the air for five (5) consecutive days or for a total of one
hundred twenty (120) hours during any thirty (30) day period, ARS shall be
entitled to a full refund, on a daily basis, of the Hourly Credit amount set
forth in Section 1.7 and such refund shall be made within ten (10) days of the
end of the month.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities, any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
acts of god, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Jupiter will not render Jupiter liable to ARS, except to
the extent of allowing in each such case an appropriate refund for time not
provided based upon the Hourly Credit set forth under Section 1.7 and calculated
upon the length of time during which the failure or impairment exists or
continues.
6.4 Other Agreements. During the term of this Agreement, Jupiter will
not enter into any other time brokerage, program provision, local marketing,
management, joint sales or similar agreement with any third party with respect
to the Station.
Section 7
Representations, Warranties and Covenants
7.1 Jupiter's Representations, Warranties and Covenants. Jupiter
represents and warrants, or, as the case may be, covenants to ARS that:
9
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7.1.1. Jupiter is a partnership duly organized, validly
existing and in good standing under the laws of the State of Florida. Jupiter
has the partnership power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated hereby and to take all other actions
required to be taken by it pursuant to the provisions hereof. This Agreement is
a legal, valid and binding obligation of Jupiter, enforceable against it in
accordance with its terms.
7.1.2. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby by Jupiter will
(with or without the giving of notice thereof, the lapse of time or both): (i)
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 Jupiter; or (ii) 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 Jupiter is a party or by which it may be bound.
7.1.3 On the Commencement Date, Jupiter will have obtained all
FCC authorizations or permits necessary for the present operation of the
Station, and, within ten days after the Commencement Date, Jupiter will file
with the FCC an application for a broadcast station license to cover the
construction permit for the Station.
7.1.4 There is not now pending or, to Jupiter's knowledge,
threatened, any action by the FCC or by any party to revoke, cancel, suspend, or
modify adversely any of such permits or authorizations.
7.1.5 To Jupiter's knowledge, after due inquiry, Jupiter is
not in material violation of any statute, ordinance, rule, regulation, policy,
order or decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Station, which would have an adverse effect upon
Jupiter, its assets utilized in the operation of the Station, the Station or
upon Jupiter's ability to perform this Agreement.
7.1.6 All reports, annual regulatory fees and applications
required to be filed with the FCC or any other governmental body have been, and
during the course of the term of this Agreement or any extension thereof, will
be in all material respects complete, accurate and timely filed.
7.1.7 The facilities of the Station are, and during the term
of this Agreement shall remain, in compliance in all material respects with the
engineering requirements set forth in the rules and regulations of the FCC and
in the licenses, permits and authorizations issued by the FCC to Jupiter in
connection with the Station.
10
<PAGE>
7.1.8 Jupiter has not disposed of, and during the term of this
Agreement, shall not dispose of, transfer or assign any material assets and
properties used and useful in connection with the operation of the Station
except with the prior written consent of ARS.
7.1.9 Jupiter shall not knowingly take any action or omit to
take any action which would have an adverse impact upon Jupiter, its assets
utilized in the operation of the Station, the Station or Jupiter's ability to
perform this Agreement.
7.1.10 Jupiter shall pay, in a timely fashion, all of the
non-capital, ordinary and customary expenses incurred in operating the Station,
including without limitation, lease payments, utilities and taxes.
7.2 ARS's Representations, Warranties and Covenants. ARS represents and
warrants, or, as the case may be, covenants to Jupiter that:
7.2.1. ARS is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. ARS has the
corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to take all other actions
required to be taken by it pursuant to the provisions hereof. This Agreement is
a legal, valid and binding obligation of ARS, enforceable against it in
accordance with its terms.
7.2.2. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby by ARS will (with
or without the giving of notice thereof, the lapse of time or both): (i)
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 ARS; or (ii) 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 ARS is a party or by which it may be bound.
Section 8
Miscellaneous
8.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and
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<PAGE>
permitted assigns. Neither party may assign its rights under this Agreement
without the prior written consent of the other party, provided, however, that
ARS has the absolute right to assign this Agreement and all of its rights and
obligations hereunder, following written notice to Jupiter, to an entity under
common control.
8.2 Call Letters. Upon request of ARS and at ARS's expense, Jupiter
shall apply to the FCC for authority to change the call letters of the Station
to such call letters as ARS shall reasonably designate. Otherwise, Jupiter shall
cooperate with ARS and notify ARS in advance of making any change in the call
letters of the Station.
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
8.4 Jupiter's Compliance with 47 C.F.R. ss.73.3555(a)(2)(ii). By
executing this Agreement, Jupiter hereby certifies that for the term of this
Agreement, it shall maintain ultimate control over the Station's facilities,
including specifically control over the Stations's finances, personnel and
programming, and nothing herein shall be interpreted as depriving Jupiter of the
power or right of such ultimate control.
8.5 ARS's Compliance with 47 C.F.R. ss.73.3555(a)(2)(ii). By executing
this Agreement, ARS hereby certifies that this Agreement complies with the FCC's
restrictions on local and national multiple station ownership set out in Section
73.3555(a)(1) and (e) (1) of the FCC's rules.
8.6 Payment of Legal Fees. Each party shall pay its own reasonable
legal fees and related expenses incurred in connection with the negotiation of
this Agreement.
8.7 Entire Agreement. This Agreement and the Attachments hereto embody
the entire agreement and understanding of the parties with respect to the
matters provided for herein and supersede any and all prior agreements,
arrangements and understandings relating to matters provided for herein. No
amendment, waiver of compliance with any provision or condition hereof, or
consent pursuant to this Agreement will be effective unless evidenced by an
instrument in writing signed by the parties.
8.8 Taxes. Jupiter and ARS shall each pay its own ad valorem taxes, if
any, which may be assessed on such party's respective personal property for the
periods that such items are owned by such party. Each party shall be responsible
for any
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<PAGE>
sales tax imposed on advertising aired during the programming provided by that
party.
8.9 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
8.10 Governing Law. The obligations of Jupiter and ARS are subject to
applicable federal, state and local law, rules and regulations, including, but
not limited to, the Communications Act of 1934, as amended, and the Rules and
Regulations of the FCC. The construction and performance of the Agreement will
be governed by, and construed and enforced in accordance with the laws of the
State of Florida, without reference to its principles of conflicts of law.
8.11 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly delivered and received (i) on
the date of personal delivery, if personally delivered; (ii) on the fifth day
after deposit in the U.S. mail, if mailed by registered or certified mail,
postage prepaid and return receipt requested; (iii) on the day after delivery to
a recognized overnight courier service, if sent for next morning delivery; or
(iv) when dispatched by facsimile transmission (with the facsimile transmission
confirmation being deemed conclusive evidence of such dispatch); if intended for
Jupiter, shall be addressed as follows:
Jupiter Radio Partners
c/o Ms. Patricia S. Dahlin
Vice President/Controller
InterMart Broadcasting
4810 Deltona Drive
Punta Gorda, FL 33950
Facsimile: 941/639-6742
with a copy to:
Howard A. Topel, Esquire
Fleischman and Walsh, L.L.P.
1400 16th Street, NW
Washington, DC 20036
Facsimile: 202/745-0916
or at such other address of which Jupiter shall have given notice to ARS in the
manner herein provided;
if intended for ARS, shall be addressed as follows:
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Michael B. Milsom, Esquire
Facsimile: 617/375-7575
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<PAGE>
with a copy to:
Howard J. Braun, Esq.
Rosenman & Colin LLP
1300 19th Street, N.W.
Suite 200
Washington, DC 20036
Facsimile: 202/429-0046
or at such other address of which ARS shall have given notice to Jupiter in the
manner herein provided.
8.12 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
8.13 Specific Performance. The parties recognize that in the event
Jupiter should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. ARS shall therefore be entitled to
seek specific performance of all terms of this Agreement. In the event of any
action to enforce this Agreement, Jupiter hereby waives the defense that there
is adequate remedy at law.
8.14 Arbitration. Any dispute arising out of or related to this
Agreement that Jupiter and ARS are unable to resolve by themselves shall be
settled by arbitration in Jupiter, Florida, by a panel of three arbitrators.
Jupiter and ARS shall each designate one disinterested arbitrator and the two
arbitrators designated shall select the third arbitrator. The persons selected
as arbitrators need not be professional arbitrators, and persons such as
lawyers, accountants and bankers shall be acceptable. The arbitration hearing
shall be conducted in accordance with the commercial arbitration rules of the
American Arbitration Association. The written decision of a majority of the
arbitrators shall be final and binding on Jupiter and ARS. The costs and
expenses of the arbitration proceeding shall be assessed between Jupiter and ARS
in a manner to be decided by a majority of the arbitrators, and the assessment
shall be set forth in the decision and award of the arbitrators. Judgment on the
award, if it is not paid within thirty days, may be entered in any court having
jurisdiction over the matter. No action at law or in equity based upon any claim
arising out of or related to this Agreement shall be instituted in any court by
Jupiter or ARS against the other except: (i) an action to compel arbitration
pursuant to this Section, (ii) an action to enforce the award of
14
<PAGE>
the arbitration panel rendered in accordance with this Section; or (iii) a suit
for specific performance pursuant to Section 8.13.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
JUPITER RADIO PARTNERS
By: InterMart Broadcasting, General
Managing Partner
By:_______________________
Patricia S. Dahlin
Vice President
AMERICAN RADIO SYSTEMS CORPORATION
By:________________________________
Name:
Title:
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<PAGE>
ATTACHMENT I
Consideration
Jupiter shall be entitled to a monthly fee of Fifteen Thousand Two
Hundred Dollars ($15,200) (the "TBA Fee") during the term of this Agreement.
However, on the Commencement Date, ARS shall pay Jupiter the sum of One Hundred
Eighty-Two Thousand Four Hundred Dollars ($182,400.00), representing payment of
the TBA Fee in advance for twelve months (the "Total TBA Fee"). ARS shall pay
the Total TBA Fee by wire transfer of federal funds to an account designated in
writing by Jupiter.
If this Agreement is terminated by either party before the end of
the twelfth month from the Commencement Date, Jupiter shall refund to ARS the
pro rata portion of the Total TBA Fee allocable to the remainder of the
twelve-month period (the "TBA Refund"). If such termination results from ARS and
Jupiter's consummation of an agreement pursuant to which ARS purchases the
assets of the Station from Jupiter, Jupiter shall pay the TBA Refund on the
closing date under said agreement. If this Agreement terminates for any other
reason prior to the end of the twelfth month, Jupiter shall pay the TBA Refund
to ARS within 30 days of the termination date.
16
<PAGE>
ATTACHMENT II
Programming Policy Statement
ARS agrees to cooperate with Jupiter in the broadcasting of programs of
the highest possible standard of excellence and for this purpose to observe the
following regulations in the preparation, writing and broadcasting of its
programs.
I. No Plugola or Payola. The mention of any business
activity or "plug" for any commercial, professional,
or other related endeavor, except where contained in
an actual commercial message of a sponsor, is
prohibited.
II. No Lotteries. Announcements giving any information
about lotteries or games prohibited by federal or
state law or regulation are prohibited.
III. Election Procedures. At least ninety (90) days before
the start of any primary or election campaign, ARS
will clear with Jupiter's general manager the rate
ARS will charge for the time to be sold to candidates
for the public office and/or their supporters to make
certain that the rate charged is in conformance with
the applicable law and station policy.
IV. Required Announcements. ARS shall broadcast (i) an
announcement in a form satisfactory to Station at the
beginning of each hour to identify WTPX, (ii) an
announcement at the beginning and end of each program
to indicate that program time has been purchased by
ARS, and (iii) any other announcements that may be
required by law, regulation, or Station policy.
V. Commercial Recordkeeping. ARS shall not receive any
consideration in money, goods, services, or
otherwise, directly or indirectly (including to
relatives) from any persons or company for the
presentation of any programming over the Station
without reporting the same in advance to and
receiving the prior written consent from Jupiter's
general manager. No commercial messages ("plugs") or
undue references shall be made in programming
presented over station to any business venture.
profit making activity, or other interest (other than
noncommercial announcements for bona fide charities,
church activities or other public service activities)
in which ARS (or anyone else) is directly or
indirectly interested without the same having been
approved in advance by the general manager/chief
engineer and such broadcast being announced and
logged and sponsored.
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<PAGE>
VI. No Illegal Announcements. No announcements or
promotion prohibited by federal or state law or
regulation of any lottery or game shall be made over
the Station. Any game, contest, or promotion relating
to or to be presented over the Station must be fully
stated and explained in advance to Jupiter, which
reserves the right in its sole discretion to reject
any game, contest, or promotion.
VII. Jupiter Discretion Paramount. In accordance with the
Jupiter's responsibility under the Communications Act
of 1934, as amended, and the Rules and Regulations of
the Federal Commissions, Jupiter reserves the right
to reject or terminate any advertising proposed to be
presented or being presented over the Station which
is in conflict with Jupiter's policy or which in
Jupiter's or its general manager/chief engineer's
sole judgment would not serve the public interest.
Jupiter may waive any of the foregoing regulations in specific
instances, if, in its opinion, good broadcasting in the public interest is
served.
In any case where questions of policy or interpretation arise,
ARS should submit the same to Jupiter for decision before making any commitments
in connection therewith.
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<PAGE>
ATTACHMENT III
FORM OF PAYOLA AFFIDAVIT
City of_________________ )
County of_______________ ) ss.
State of ________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
____________________________ being first duly sworn, deposes and
says as follows:
1. He/she is _________________ for _____________________. (Position)
2. He/she has acted in the above capacity since _________.
3. No matter has been broadcast by Station __________ for which
service, money or other valuable consideration has been directly or
indirectly paid, or promised to, or charged, or accepted, by
him/her from any person, which matter at the time so broadcast has
not been announced or otherwise indicated as paid for or furnished
by such person.
4. So far as he/she is aware, no matter has been broadcast by Station
_______ for which service, money, or other valuable consideration
has been directly or indirectly paid, or promised to, or charged,
or accepted by Station _______ in furnishing programs, from any
person, which matter at the time so broadcast has not been
announced or otherwise indicated as paid for or furnished by such
person.
5. In future, he/she will not pay, promise to pay, request, or receive
any service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of or
the attempt to influence, the preparation of presentation or
broadcast matter on Station ________.
6. Nothing contained herein is intended to, or shall prohibit receipt
or acceptance of anything with the expressed knowledge and approval
of my employer, but henceforth any such approval must be given in
writing by someone expressly authorized to give such approval.
7. He/she, his/her spouse and his/her immediate family do____ do not
____ have any present direct or indirect ownership interest in
(other than an investment in a corporation whose stock is publicly
held), serve as an officer or director of, whether with or without
compensation, or
<PAGE>
serve as an employee of, any person, firm or corporation
engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale
and retail sales outlets), manufacture or
exploitation of music, films, tapes, recordings or
electrical transcriptions of any program material
intended for radio broadcast use;
3. The exploitation, promotion, or management of
persons rendering artistic, production and/or
other services in the entertainment field;
4. The ownership or operation of one or more radio or
television stations;
5. The wholesale or retail sale of records intended
for public purchase;
6. Advertising on Station ______, or any other
station owned by its licensee (excluding nominal
stockholdings in publicly owned companies).
8. The facts and circumstances relating to such interest are
none ________ as follows_____:
_________________________________________________________
_________________________________________________________
_________________________________________________________
_______________________________
Affiant
Subscribed and sworn to before me
this _____ day of______________ 199___.
_______________________________________
Notary Public
My Commission expires: __________________
- 2 -
EXHIBIT 10.9
ASSET PURCHASE AGREEMENT
between
GREATER BOSTON RADIO, INC.
and
AMERICAN RADIO SYSTEMS CORPORATION
Dated as of May 14, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE ONE.......................................................................................................1
1.1. "Affiliate"............................................................................................1
1.2. "Ancillary Agreements".................................................................................1
1.3. "Closing Date".........................................................................................1
1.4. "Code".................................................................................................1
1.5. "Communications Act"...................................................................................1
1.6. "Environmental Laws"...................................................................................1
1.7. "Equipment"............................................................................................1
1.8. "Escrow Agreement".....................................................................................2
1.9. "FCC Application"......................................................................................2
1.10. "FCC Licenses"........................................................................................2
1.11. "Final Order".........................................................................................2
1.12. "Governmental Authorizations".........................................................................2
1.13. "Hazardous Substance".................................................................................2
1.14. "HSR Act".............................................................................................2
1.15. "Intellectual Properties".............................................................................2
1.16. "Liens"...............................................................................................3
1.17. "LMA".................................................................................................3
1.18. "Material Adverse Effect".............................................................................3
1.19. "Permitted Liens".....................................................................................3
1.20. "Station".............................................................................................3
1.21. "Tax".................................................................................................3
1.22. "Transfer Taxes"......................................................................................3
ARTICLE TWO
Purchase and Sale of Assets; Assumption of Liabilities.......................................................4
2.1. Transfer of Assets.....................................................................................4
(a) FCC Licenses and Other Governmental Authorizations.............................................4
(b) Personal Property..............................................................................4
(c) Real Property..................................................................................4
(d) Agreements.....................................................................................4
(e) Records........................................................................................4
(f) Accounts and Notes Receivable..................................................................4
(g) Prepaid Expenses...............................................................................4
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<PAGE>
Page
2.2. Excluded Assets...............................................................................5
2.3. Instruments of Conveyance and Transfer........................................................5
2.4. Further Assurances............................................................................6
2.5. Assumption of Liabilities.....................................................................6
ARTICLE THREE
Closing; Payment of Purchase Price..................................................................6
3.1. Closing Date..................................................................................6
3.2. Purchase Price and Payment....................................................................6
3.3. Appraisal, Purchase Price Allocation and Tax Reporting.........................................7
ARTICLE FOUR
Representations and Warranties......................................................................7
4.1. Representations and Warranties of Seller......................................................7
(a) Due Organization; Good Standing and Power.............................................8
(b) Authorization and Validity of Agreement...............................................8
(c) Governmental Approvals; Conflicts.....................................................8
(d) Title to Properties; Absence of Liens.................................................9
(e) Delivery and Validity of Contracts....................................................9
(f) Equipment.............................................................................9
(g) Legal Proceedings....................................................................10
(h) Insurance............................................................................10
(i) Intellectual Properties..............................................................10
(j) FCC Licenses and Other Governmental Authorizations...................................10
(k) Conduct of Business in Compliance with Regulatory Requirements.......................11
(l) Taxes................................................................................11
(m) Personnel Information................................................................11
(n) Environmental Matters................................................................11
(o) Certain Fees.........................................................................11
(p) Transactions with Affiliates.........................................................12
(q) Conduct in the Ordinary Course.......................................................12
(r) Disclosure...........................................................................12
4.2. Representations and Warranties of Buyer......................................................12
(a) Due Organization; Good Standing and Power............................................12
(b) Authorization and Validity of Agreement..............................................12
(c) Governmental Approvals; Conflicts....................................................13
(d) Legal Proceedings....................................................................13
(e) Financial Capacity...................................................................13
(f) Qualification........................................................................14
(g) Certain Fees.........................................................................14
ii
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Page
4.3. Acknowledgment of Buyer......................................................................14
4.4. Expiration of Representations and Warranties.................................................14
ARTICLE FIVE
Covenants Prior to Closing.........................................................................15
5.1. Access to Information Concerning Properties and Records......................................15
5.2. Conduct of the Business of the Station Pending the Closing...................................15
5.3. Further Actions..............................................................................16
5.4. FCC Licenses.................................................................................17
5.5. Buyer Qualification..........................................................................17
5.6. Station's Employees..........................................................................17
5.7. Environmental Due Diligence..................................................................18
5.8. Supplements to Disclosure....................................................................18
ARTICLE SIX
Conditions Precedent...............................................................................18
6.1. Conditions Precedent to Obligations of Both Parties..........................................18
(a) No Injunction, etc...................................................................18
(b) Antitrust Matters....................................................................18
(c) FCC Matters..........................................................................19
6.2. Conditions Precedent to Obligations of Buyer.................................................19
(a) Accuracy of Representations and Warranties of Seller.................................19
(b) Performance of Agreements............................................................19
(c) No Adverse Modification of FCC Licenses..............................................19
(d) Officer's Certificate................................................................20
(e) Opinions.............................................................................20
(f) Actions and Proceedings..............................................................20
(g) Third-Party Consents.................................................................20
(h) Payment of Indebtedness; Financing Statements........................................20
(i) Deliveries...........................................................................20
6.3. Conditions Precedent to Obligations of Seller................................................21
(a) Accuracy of Representations and Warranties of Buyer..................................21
(b) Performance of Agreements............................................................21
(c) Officer's Certificate................................................................21
(d) Instruments of Assumption............................................................21
(e) Opinion..............................................................................22
(f) Actions and Proceedings..............................................................22
(g) Deliveries...........................................................................22
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Page
ARTICLE SEVEN
Indemnification....................................................................................22
7.1. Indemnification by Seller....................................................................22
(a) General..............................................................................22
(b) Limitation on Indemnification........................................................23
(c) Exclusive Remedy.....................................................................23
7.2. Indemnification by Buyer.....................................................................23
(a) General..............................................................................23
(b) Limitation on Indemnification........................................................24
(c) Exclusive Remedy.....................................................................24
7.3. Indemnification Procedures...................................................................24
ARTICLE EIGHT
Termination........................................................................................25
8.1. General......................................................................................25
8.2. No Liabilities in Event of Termination.......................................................26
ARTICLE NINE
Post-Closing Covenants.............................................................................27
9.1. Access to Books and Records..................................................................27
9.2. Further Agreements...........................................................................27
9.3. Financial Statements.........................................................................27
ARTICLE TEN
Miscellaneous......................................................................................27
10.1. Public Announcements........................................................................27
10.2. Expenses....................................................................................28
10.3. Transfer Taxes..............................................................................28
10.4. Notices.....................................................................................28
10.5. Entire Agreement............................................................................29
10.6. Assignment..................................................................................29
10.7. No Third-Party Beneficiaries................................................................30
10.8. Amendment; Waiver...........................................................................30
10.9. Interpretation..............................................................................30
10.10. Severability...............................................................................30
10.11. Counterparts...............................................................................31
10.12. Governing Law; Jurisdiction................................................................31
</TABLE>
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Opinion of Barbara Burns
Exhibit B - Opinion of Schwartz, Woods & Miller
Exhibit C - Opinion of Michael B. Milsom
Schedule 2.1(a)(i) - FCC Licenses
Schedule 2.1(a)(ii) - Governmental Authorizations
Schedule 2.1(b) - Equipment
Schedule 2.1(c) - Real Property
Schedule 2.1(d) - Contracts and Agreements
Schedule 2.2(h) - Excluded Assets
Schedule 4.1(c) - Filings, Consents and Approvals
Schedule 4.1(d) - Liens
Schedule 4.1(e) - Validity of Contracts and Agreements
Schedule 4.1(f) - Equipment Not in Satisfactory Condition
Schedule 4.1(g) - Legal Proceedings
Schedule 4.1(h) - Insurance
Schedule 4.1(j) - Proceedings Against the FCC Licenses
Schedule 4.1(m) - Personnel Information
Schedule 4.1(p) - Affiliate Transactions
Schedule 4.1(q) - Certain Changes
Schedule 6.2(g) - Material Contracts
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 14, 1997, between
Greater Boston Radio, Inc., a Delaware corporation ("Seller"), and American
Radio Systems Corporation, a Delaware corporation ("Buyer").
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE ONE
1.1. "Affiliate" shall mean a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified.
1.2. "Ancillary Agreements" shall mean the LMA and the Escrow
Agreement.
1.3. "Closing Date" shall mean the actual time and date of the
Closing.
1.4. "Code" shall mean the Internal Revenue Code of 1986, as
amended, together with all regulations and rulings issued thereunder by any
govern mental authority.
1.5. "Communications Act" shall mean the Communications Act of
1934, as amended, and the published rules and regulations thereunder.
1.6. "Environmental Laws" shall mean all applicable federal,
state and local laws and regulations relating to the pollution or protection of
the environment, including laws and regulations relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic materials or wastes into ambient air, surface water,
groundwater or lands or otherwise relating to the manu facture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or waste.
1.7. "Equipment" shall mean all equipment, furniture,
furnishings, fixtures and other tangible personal property listed on Schedule
2.1(b) hereto, together
<PAGE>
with any replacements thereof or additions thereto made between the date hereof
and the Closing Date, less any items used, consumed, or expended in the ordinary
course of business consistent with past practice between the date hereof and the
Closing Date.
1.8. "Escrow Agreement" shall mean the Escrow Agreement, dated
as of the date hereof, among Buyer, Seller and the Escrow Agent.
1.9. "FCC Application" shall mean the application or
applications that Seller and Buyer must file with the Federal Communications
Commission (the "FCC") requesting its written consent to the assignment of the
FCC Licenses from Seller to Buyer.
1.10. "FCC Licenses" shall mean licenses, permits and
authorizations that have been issued by the FCC for use by the Station listed on
Schedule 2.1(a)(i) hereto.
1.11. "Final Order" shall mean action which shall have been
taken by the FCC (including action duly taken by the FCC's staff, pursuant to
delegated authority) (i) which shall not have been reversed, stayed, enjoined,
set aside, annulled or suspended, (ii) with respect to which no timely request
for stay, petition for re hearing, appeal or certiorari or sua sponte action of
the FCC with comparable effect shall be pending, and (iii) as to which the time
for filing any such request, petition, appeal, certiorari or for the taking of
any such sua sponte action by the FCC shall have expired or otherwise
terminated.
1.12. "Governmental Authorizations" shall mean all other
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities listed on Schedule 2.1(a)(ii) hereto.
1.13. "Hazardous Substance" shall mean any toxic or hazardous
substance that is regulated by or under authority of any Environmental Law,
including any asbestos or polychlorinated biphenyls.
1.14. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Im
provement Act of 1976, as amended, and the rules and regulations thereunder.
1.15. "Intellectual Properties" shall mean all trademarks,
tradenames, service marks, copyrights, patents, jingles, slogans, visual
materials, logos and existing promotional materials registered with the United
States Patent and Trademark Office or the United States Copyright Office, as the
case may be, or any similar state
2
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trademark office, or any application therefor, in connection with the business
and operation of the Station.
1.16. "Liens" shall mean all claims, liens, security
interests, charges, leases, encumbrances, licenses or sublicenses and other
restrictions of any kind and nature.
1.17. "LMA" shall mean the Time Brokerage Agreement, dated as
of the date hereof, between Seller and Buyer.
1.18. "Material Adverse Effect" shall mean a material adverse
effect on the business, financial condition or results of operations of the
Station or the ability of Seller to consummate the transactions contemplated
hereby or by the Ancillary Agreements.
1.19. "Permitted Liens" shall mean Liens for Taxes not yet due
and payable or being contested in good faith by appropriate proceedings, Liens
of landlords, carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due, Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, un employment insurance and other types of social security, or to
secure the performance of statutory obligations, surety bonds, leases and
similar obligations and such other Liens, imperfections of title, easements and
pledges, if any, as do not materially interfere with the present use of the
Assets encumbered thereby.
1.20. "Station" shall mean radio station WNFT(AM), Boston
Massachusetts.
1.21. "Tax" shall mean any tax, duty, fee, levy, impost,
charge or assessment imposed by any governmental authority (including all
interest and penalties thereon and additions thereto, whether disputed or not).
1.22. "Transfer Taxes" shall mean any sales, use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes.
3
<PAGE>
ARTICLE TWO
Purchase and Sale of Assets; Assumption of Liabilities
2.1. Transfer of Assets. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Seller shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from
Seller, all of the assets of Seller relating to the Station free and clear of
all Liens, except for Permitted Liens, except as provided in Section 2.2 hereof,
including, but not limited to, the following (collectively, the "Assets"):
(a) FCC Licenses and Other Governmental Authorizations. (i)
Subject to prior FCC approval, the FCC Licenses and (ii) the
Governmental Author izations;
(b) Personal Property. The Equipment, and all warranties and
guar antees, if any, express or implied, existing for the benefit of
Seller in connec tion with the Equipment to the extent assignable;
(c) Real Property. The real property described on Schedule
2.1(c) hereto;
(d) Agreements. All contracts, commitments and other
agreements listed on Schedule 2.1(d) hereto and all other contracts,
commitments and other agreements entered into by Seller between the
date hereof and the Closing Date in accordance with Section 5.2 hereof
or the LMA;
(e) Records. An original or a copy of all files, records, logs
and program materials maintained by Seller at the Station and all
proprietary information, technical information and data, maps, computer
discs and tapes, plans, diagrams, blueprints and schematics, including
filings with the FCC;
(f) Accounts and Notes Receivable. All accounts and notes
receivable of Seller arising out of or relating to the Station after
12:01 a.m., local time, on the date of the effectiveness of the LMA;
and
(g) Prepaid Expenses. All prepaid operating expenses,
deposits, and warranty rights of Seller arising out of or relating to
the Station after 12:01 a.m., local time, on the date of the
effectiveness of the LMA.
4
<PAGE>
2.2. Excluded Assets. Notwithstanding Section 2.1 hereof,
Buyer and Seller expressly understand and agree that Seller shall not sell,
convey, assign, transfer or deliver to Buyer the following assets (collectively,
the "Excluded Assets"):
(a) All cash, cash equivalents, bank deposits and securities
owned by or for the benefit of Seller;
(b) All accounts and notes receivable of Seller arising out of
or relating to the business and operation of the Station prior to 12:01
a.m., local time, on the date of the effectiveness of the LMA;
(c) All prepaid operating expenses, deposits, and warranty
rights of Seller arising out of or relating to the business and
operation of the Station prior to 12:01 a.m., local time, on the date
of the effectiveness of the LMA;
(d) Any rights of Seller to any refunds (and interest thereon)
of Taxes and any deposits of Seller with any governmental authority
relating to Taxes;
(e) All insurance policies of Seller relating to the Assets or
the business or operations of the Station;
(f) All books and records pertaining to the organization,
existence or capitalization of Seller and all books and records Seller
is required by law to retain;
(g) The names and marks "Greater Media", "Greater Boston" and
the "G" logo, whether alone or in combination with one or more words,
in any case including any related or similar trade names, trademarks,
service marks, call letters or logos to the extent the same may
incorporate such names, marks, logos, words or initials or any
variation thereof and all goodwill associated with the foregoing; and
(h) (i) Any contracts, commitments or other agreements of
Seller not expressly assumed by Buyer and (ii) all other assets listed
on Schedule 2.2(h) hereto.
2.3. Instruments of Conveyance and Transfer. On the Closing
Date, Seller shall: (a) deliver to Buyer such quitclaim deeds, bills of sale,
endorsements, consents, assignments, and other good and sufficient instruments
of conveyance and assignment as shall be effective to vest in Buyer all right,
title and interest of Seller in and to the Assets free and clear of all Liens,
except Permitted Liens, and (b) deliver
5
<PAGE>
to Buyer (or cause to be filed at the Station) copies of all the contracts,
commitments, agreements, files, records, books and other data included in the
Assets.
2.4. Further Assurances. From time to time after the Closing
Date, Seller shall execute and deliver such other instruments of conveyance and
assignment and take such other actions as Buyer reasonably may request in order
to convey, assign, transfer and deliver to Buyer any of the Assets.
2.5. Assumption of Liabilities. Buyer shall not assume or
undertake to pay, satisfy or discharge any liabilities (including any
liabilities arising in connection with any litigation), obligations, commitments
or responsibilities of Seller except for those arising under the contracts,
commitments and other agreements referred to in Section 2.1(d) hereof, and other
contracts, commitments and agreements assumed under the LMA, and then with
respect to any such contract, commitment or agreement only those liabilities,
obligations, commitments and responsibilities accruing after the date on which
such contract, commitment or agreement is assumed (collectively, the "Assumed
Liabilities").
ARTICLE THREE
Closing; Payment of Purchase Price
3.1. Closing Date. The closing with respect to the
transactions pro vided for in this Agreement (the "Closing") shall take place at
the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York, at
10:00 a.m., local time, no later than the fifth business day following the later
to occur of (a) the day on which the action by the FCC granting the FCC
Application shall have become a Final Order, (b) the expiration or termination
of the waiting period under the HSR Act and (c) the satisfaction of each of the
conditions specified in Article Six hereof (unless waived by the party entitled
to waive such condition), except as otherwise agreed by Buyer and Seller and
subject to the termination provisions of Article Seven hereof.
3.2. Purchase Price and Payment. In consideration for the
Assets, and subject to the terms and conditions of this Agreement, Buyer shall
assume the Assumed Liabilities on the Closing Date as provided in Section 2.5
hereof and pay an aggregate amount of $4,500,000 (the "Purchase Price") as
follows:
6
<PAGE>
(a) Deposit. Upon execution of this Agreement, Buyer shall
deposit the sum of $450,000 (the "Deposit") with Serafin Bros., Inc.
(the "Escrow Agent"), to be held in escrow pursuant to the terms of the
Escrow Agreement.
(b) Cash at Closing. On the Closing Date, Buyer and Seller
shall cause the Escrow Agent to deliver the Deposit, and all interest
accrued thereon, to Seller, which shall be credited to the Purchase
Price, and Buyer shall pay to Seller the excess of the Purchase Price
over the Deposit and all interest accrued thereon by wire transfers of
immediately available funds to such accounts of Seller as Seller shall
have designated to Buyer at least two business days before the Closing.
3.3. Appraisal, Purchase Price Allocation and Tax Reporting.
(a) Within 90 days of the Closing Date, Buyer shall have an appraisal of the
Assets prepared (the "Appraisal"), the fees and expenses of which shall be borne
by Buyer. Buyer shall cause a copy of the Appraisal to be delivered to Seller.
(b) If and to the extent that Buyer and Seller agree on an
allocation of the aggregate amount of the Purchase Price and the Assumed
Liabilities among the Assets (the "Purchase Price Allocation"), Buyer and Seller
shall, and shall cause each of their Affiliates to, (i) prepare and file all
statements or other information required to be furnished to any taxing authority
pursuant to section 1060 of the Code or other applicable tax law (including IRS
Form 8594) in a manner consistent with the Purchase Price Allocation, (ii)
prepare all tax returns and reports required to be filed by them in a manner
consistent with the Purchase Price Allocation, and (iii) not take any position
contrary to the Purchase Price Allocation with any government agency or taxing
authority.
(c) Notwithstanding any other provision of this Agreement, the
provisions of this Section 3.3 shall survive the Closing without limitation.
ARTICLE FOUR
Representations and Warranties
4.1. Representations and Warranties of Seller. Seller
represents and warrants to Buyer as follows:
(a) Due Organization; Good Standing and Power. Seller is a cor
poration duly organized, validly existing and in good standing under
the laws
7
<PAGE>
of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its assets and properties and to
conduct the business and operation of the Station as now conducted by
it. Seller has all requisite power and authority to enter into this
Agreement and the Ancillary Agreements and to perform its obligations
hereunder and thereunder. Seller is duly qualified to do business as a
foreign corporation and is in good standing in each of the
jurisdictions in which the conduct of its business requires such
qualification, except where the failure to so qualify or to be in good
standing would not reasonably be expected to have a Material Adverse
Effect.
(b) Authorization and Validity of Agreement. The execution and
delivery of this Agreement and the Ancillary Agreements by Seller and
the consummation by Seller of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
the part of Seller. This Agreement and the Ancillary Agreements have
been duly executed and delivered by Seller and constitute valid and
legally binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium, receivership or similar laws
affecting creditors' rights or remedies generally and by general
principles of equity (whether considered in a proceeding at law or in
equity).
(c) Governmental Approvals; Conflicts. Except as set forth on
Schedule 4.1(c) hereto, the execution and delivery of this Agreement
and the Ancillary Agreements by Seller and the consummation by Seller
of the trans actions contemplated hereby and thereby (i) will not
violate (with or without the giving of notice or the lapse of time or
both), or require any consent, approval, filing or notice under, any
provision of any law, rule or regulation, court order, judgment or
decree applicable to Seller and (ii) will not conflict with, or result
in the breach or termination of any provision of, or constitute a
default under, or result in the acceleration of the performance of the
obligations of Seller under, or result in the creation of a lien,
charge or encumbrance upon any portion of the Assets, or under the
articles of incorporation or by-laws of Seller or any indenture,
mortgage, deed of trust, lease, licensing agreement, contract,
instrument or other agreement to which Seller is a party or by which
Seller or any of the Assets is bound.
(d) Title to Properties; Absence of Liens. Seller (i) is the
owner of marketable fee title to the fee property listed on Schedule
2.1(c) hereto and (ii) has good title to all material Equipment
relating to the business and operation of the Station included as
Assets listed on Schedule 2.1(b) hereto.
8
<PAGE>
Such Assets are in good operating condition and repair, ordinary wear
and tear excepted. Such title is free and clear of all Liens, except
for Permitted Liens or as specifically set forth on Schedule 4.1(d)
hereto. The transmitters and towers owned by the Station, and all other
items of transmitting and studio equipment listed on Schedule 2.1(b)
hereto, (x) have been maintained in a manner consistent with generally
accepted standards of good engineering practice, (y) will permit
operation of the Station in accordance with the terms of the FCC
Licenses, the published rules and regulations of the FCC and, to the
best of Seller's knowledge, all other applicable laws and (z) are
located on real property owned by Seller.
(e) Delivery and Validity of Contracts. (i) True and complete
copies of all contracts, commitments and other agreements relating to
the business and operation of the Station (including all amendments
thereto) referred to on Schedule 2.1(d) hereto either have been
delivered or made available to Buyer, (ii) except as set forth on
Schedule 4.1(e) hereto, all contracts, commitments and other agreements
relating to the business and operation of the Station referred to in
such Schedules are in full force and effect in all material respects
and (iii) except as set forth on Schedule 4.1(e) hereto, Seller is not
in breach or default in the performance of any material obligation
thereunder and, to Seller's knowledge, no other contracting party is in
breach or default in the performance of any material obligation
thereunder. Schedule 2.1(d) hereto sets forth all contracts, leases of
personal property and commitments which involve payment to or from the
Station during the term of such contract, lease or commitment. There
are no trade or barter agreement as of the date hereof relating to the
business and operation of the Station.
(f) Equipment. Except as described on Schedule 4.1(f) hereto,
the Equipment is in good operating condition and repair, except for
equipment temporarily under repair or out of service in the ordinary
course of the business of the Station. EXCEPT AS OTHERWISE SPECIFICALLY
SET FORTH IN THIS AGREEMENT, SELLER EXPRESSLY DISCLAIMS ANY IMPLIED
WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR
SUITABILITY AS TO ANY OF THE ASSETS.
(g) Legal Proceedings. Except as described on Schedule 4.1(g)
hereto, there is no litigation, proceeding or governmental
investigation to which Seller is a party pending or, to the knowledge
of Seller, threatened against Seller relating to the Assets or the
business and operation of the Station or the trans actions contemplated
by this Agreement or the Ancillary Agreements which would reasonably be
expected to have a Material Adverse Effect.
9
<PAGE>
(h) Insurance. Schedule 4.1(h) hereto sets forth a complete
and correct list, as of the date hereof, of the policies of insurance
currently maintained by Seller with respect to the Station.
(i) Intellectual Properties. Seller has no right or title to
or interest in any Intellectual Properties.
(j) FCC Licenses and Other Governmental Authorizations. Seller
has and is the authorized legal holder of all FCC Licenses and
Governmental Authorizations set forth on Schedules 2.1(a)(i) and
2.1(a)(ii) hereto, re spectively. The FCC Licenses and Governmental
Authorizations are all of the licenses, permits and authorizations
required for the operation of the Station as it is now operated. The
FCC Licenses and the Governmental Authorizations are valid and in full
force and effect, are unimpaired by any acts or omissions of Seller,
are free and clear of any restrictions which would reasonably be
expected to limit the present operation of the Station, and are valid
for the balance of their respective license terms. Except as set forth
on Schedule 4.1(j) hereto, no application, action or proceeding is
pending for the renewal or modification of any of the FCC Licenses and,
to the knowledge of Seller, there is not now issued or outstanding any
investigation, proceeding, notice of violation or complaint against
Seller at the FCC as of the date hereof relating to the Station. The
Station is being operated in all material respects in accordance with
the terms and conditions of the FCC Licenses and Governmental
Authorizations and the published rules and regulations of the FCC. All
ownership reports, renewal applications and other reports and documents
required to be filed with the FCC by or on behalf of Seller with
respect to the Station have been timely filed with the FCC, and all
such reports, applications and other documents are true and complete.
Seller maintains an appropriate public inspection file at the Station's
studio in accordance with the published rules and regulations of the
FCC. To the knowledge of Seller, Seller has no reason to believe that
the FCC will not renew the FCC Licenses in the ordinary course for a
full term without any material qualifications.
(k) Conduct of Business in Compliance with Regulatory
Requirements. Seller is conducting the business and operation of the
Station so as to comply with all applicable laws, ordinances,
regulations and licenses in all material respects.
(l) Taxes. No event has occurred or condition exists that
could result in any liability being imposed on Buyer by any taxing
authority for any Taxes
10
<PAGE>
of Seller for any taxable period, or imposed with respect to the Assets
for any taxable period or portion thereof ending on or before the
Closing Date.
(m) Personnel Information. Except as set forth on Schedule
4.1(m) hereto, there are no employees of Seller relating to the
business of the Station ("Station's Employees").
(n) Environmental Matters. (i) Seller has all permits,
licenses and other authorizations required under Environmental Laws,
except where the failure to hold such permits, licenses and
authorizations would not reasonably be expected to have a Material
Adverse Effect. Seller is in compliance with all terms and conditions
of such permits, licenses and authorizations, except where the failure
to so comply would not reasonably be expected to have a Material
Adverse Effect.
(ii) Except as would not reasonably be expected to have a
Material Adverse Effect: (A) to the knowledge of Seller, no real
property currently or formerly owned or operated by Seller relating to
the Station is contaminated with any Hazardous Substance, (B) Seller
has not disposed or arranged for the disposal of Hazardous Substances
so as to give rise to liability for any off-site disposal or
contamination and (C) Seller has not received any claims or notices
alleging liability under any Environmental Law, and Seller has no
knowledge of any circumstances that could result in such claims.
(iii) No other representations or warranties in
this Agreement, including, but not limited to, those set forth in
Sections 4.1(c), 4.1(g) and 4.1(k) hereof, made by Seller shall be
deemed to relate to environmental matters.
(o) Certain Fees. With the exception of fees and expenses
payable to Serafin Bros., Inc., which will be paid by Seller, neither
Seller nor any of its officers, directors or employees, on behalf of
Seller, has employed any broker or finder or incurred any other
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby or by the
Ancillary Agreements.
(p) Transactions with Affiliates. Except as set forth on
Schedule 4.1(p) hereto, all real property, Equipment and contracts,
commitments and other agreements to be assumed by Buyer are owned or
held by Seller, and no Affiliate of Seller owns or leases property or
is a party to any contract affecting or relating to the operations of
the Station.
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(q) Conduct in the Ordinary Course. Except as described on
Schedule 4.1(q) hereto, since December 31, 1996, the operations and
business of the Station have been conducted in all material respects
only in the ordinary course.
(r) Disclosure. None of this Agreement or any certificate or
other document delivered in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact or omits any statement of a material fact necessary to
make any statement contained herein or therein not misleading.
4.2. Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as follows:
(a) Due Organization; Good Standing and Power. Buyer is a cor
poration 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 enter into this Agreement and the Ancillary
Agreements and to perform its obligations hereunder and thereunder.
Buyer is duly qualified to do business as a foreign corporation, and is
in good standing, in each of the jurisdictions in which the conduct of
its business requires such qualification, except where the failure to
so qualify or to be in good standing would not reasonably be expected
to have a material adverse effect on the ability of Buyer to perform
its obligations hereunder or under the Ancillary Agreements.
(b) Authorization and Validity of Agreement. The execution and
delivery of this Agreement and the Ancillary Agreements by Buyer and
the consummation by Buyer of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
the part of Buyer. This Agreement and the Ancillary Agreements have
been duly executed and delivered by Buyer and constitute valid and
legally binding obligations of Buyer, enforceable in accordance with
their respective terms, except as the same may be limited by applicable
bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium, receivership or similar laws affecting creditors' rights or
remedies generally and by general principles of equity (whether
considered at law or in equity).
(c) Governmental Approvals; Conflicts. The execution and
delivery of this Agreement and the Ancillary Agreements by Buyer and
the consummation by it of the transactions contemplated hereby and
thereby (i) will not violate (with or without the giving of notice or
the lapse of time or both), or require
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any consent, approval, filing or notice under any provision of any law,
rule or regulation, court order, judgment or decree applicable to
Buyer, except for such consents, approvals, filings and notices which
may be required under the HSR Act or the Communications Act (including
the FCC Consent) and except for such violations, the occurrence of
which, and such consents, approvals, filings or notices, the failure of
which to obtain or make, would not reasonably be expected to materially
adversely affect the ability of Buyer to consummate the transactions
contemplated hereby or by the Ancillary Agreements, and (ii) will not
conflict with, or result in the breach or termination of any pro vision
of, or constitute a default under, or result in the acceleration of the
performance of the obligations of Buyer under, the articles of
incorporation or by-laws of Buyer or any indenture, mortgage, deed of
trust, lease, licensing agreement, contract, instrument or other
agreement to which Buyer is a party or by which Buyer or any of its
assets or properties is bound, except for such conflicts, breaches,
terminations, defaults or accelerations which would not reasonably be
expected to materially adversely affect the ability of Buyer to
consummate the transactions contemplated hereby or by the Ancillary
Agreements.
(d) Legal Proceedings. There is no litigation, proceeding or
govern mental investigation to which Buyer is a party pending or, to
the knowledge of Buyer, threatened against it relating to the
transactions contemplated by this Agreement or the Ancillary Agreements
which would reasonably be expected to materially adversely affect the
ability of Buyer to consummate the trans actions contemplated hereby or
by the Ancillary Agreements.
(e) Financial Capacity. Buyer has, or will have as of the
Closing Date, all funds necessary to enable Buyer to perform this
Agreement and the Ancillary Agreements in accordance with their
respective terms.
(f) Qualification. As of the date hereof, under the
Communications Act and the present rules, regulations and practices of
the FCC, (i) Buyer is legally and technically qualified to become the
licensee of the Station and is financially qualified to consummate the
transactions contemplated hereby and by the Ancillary Agreements and
(ii) will not require any special waiver or exemption from any FCC
rule, regulation or policy to enable the FCC to find it qualified to
become the licensee of the Station. Buyer will take no action that
Buyer knows, or has reason to know, would disqualify Buyer from being
the assignee of the FCC Licenses and Governmental Authorizations or the
owner or operator of the Station under the Communications Act and the
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present rules, regulations and practices of the FCC, and will take
prompt commercially reasonable action to remove any such
disqualification.
(g) Certain Fees. Neither Buyer nor any of its officers,
directors or employees, on behalf of Buyer, has employed any broker or
finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
4.3. Acknowledgment of Buyer. Buyer has conducted to its
satisfaction an independent investigation and verification of the financial
condition, results of operations, assets, liabilities and properties of the
Station and in making its determination to proceed with the transactions
contemplated hereby, Buyer has relied on the results of such investigation;
provided, however, that such investigation shall not be deemed to constitute a
waiver of any of Buyer's rights or remedies hereunder. The representations and
warranties of Seller set forth in Section 4.1 hereof constitute the sole and
exclusive representations and warranties of Seller to Buyer in connection with
the transactions contemplated hereby, and Buyer understands, acknowledges and
agrees that all other representations and warranties of any kind or nature,
express or implied, written or oral (including, but not limited to, any relating
to the future or historical financial condition, results of operations, assets
or liabilities of the Station) are specifically disclaimed by Seller.
4.4. Expiration of Representations and Warranties. Except for
the specific representations and warranties referred to in Sections 7.1 and 7.2
hereof, all representations and warranties of Seller and Buyer shall expire
with, and be terminated and extinguished by, the Closing and thereafter Seller,
Buyer and any of their respective Affiliates, officers or directors, as the case
may be, shall have no liability whatsoever with respect to any such
representation or warranty.
ARTICLE FIVE
Covenants Prior to Closing
5.1. Access to Information Concerning Properties and Records.
Seller agrees that, during the period commencing on the date hereof and ending
on the Closing Date, (a) Seller will give or cause to be given to Buyer and its
representatives such access, during normal business hours, to the properties,
books and records of Seller relating solely to the Assets or business and
operation of the Station, as Buyer shall from time to time reasonably request
and (b) Seller will furnish or cause to be furnished to Buyer such financial and
operating data and other information which
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relates solely to the business and operation of the Station, as Buyer shall from
time to time reasonably request. Buyer and its representatives shall be
entitled, in consultation with Seller, to such access to the representatives and
employees of Seller involved in the business and operation of the Station as
Buyer may reasonably request.
5.2. Conduct of the Business of the Station Pending the
Closing. Seller agrees that, except as required or contemplated by this
Agreement or the Ancillary Agreements, or otherwise consented to or approved by
Buyer, during the period commencing on the date hereof and ending on the Closing
Date, it will:
(a) conduct the business and operations of the Station in all
material respects only in the ordinary course;
(b) upon the effectiveness of the LMA, conduct the business
and operation of the Station in accordance with Seller's obligations
under the LMA;
(c) (i) maintain the books, accounts and records relating to
the business and operation of the Station in the usual, regular and
ordinary manner and (ii) comply in all material respects with all laws
and contractual obligations applicable to the Station or to the conduct
of the business and operation of the Station;
(d) (i) operate the Station in all material respects in
accordance with the FCC Licenses and the rules and regulations of the
FCC and with all other material laws, rules, regulations and orders,
(ii) not fail to prosecute with due diligence any pending application
to the FCC, (iii) not cause or permit by any act, or failure to act,
any of the FCC Licenses to expire, be surrendered, adversely modified,
or otherwise terminated and (iv) if the Closing has not occurred by
December 31, 1997, file an application for renewal of the FCC Licenses
and use its commercially reasonable best efforts and take all steps as
may be necessary or proper to prosecute such application diligently and
expeditiously, including opposing any petition to deny or informal
objection and furnishing the FCC with whatever information it may
request. If reconsideration or judicial review of the grant is sought,
Seller shall oppose such efforts for reconsideration or judicial
review;
(e) not sell, convey, assign, transfer, deliver or otherwise
dispose of any of the Assets, except for Assets used, consumed or
expended in the or dinary course of business consistent with past
practice;
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(f) maintain the Assets in customary repair, maintenance and
condition, replace all items of Equipment at customary time intervals,
and repair or replace any Asset that may be damaged or destroyed with
items of equal or greater value and utility unless Seller determines in
good faith that such repair or replacement is not necessary for the
continued operation of the Station in substantially the same manner as
heretofore;
(g) maintain the insurance policies on the Station and the
Assets listed in Schedule 4.1(h) hereto or their equivalent;
(h) (i) not modify or change in any material respect any
material contract, lease, commitment or other agreement relating to the
business and operation of the Station, except in the ordinary course of
business consistent with past practice, and (ii) not waive any material
claims or rights relating to the business and operation of the Station,
except in the ordinary course of business consistent with past
practice; and
(i) not enter into any material contract, lease, commitment or
other agreement relating to the business and operation of the Station
except in accordance with Section 1.3 or 2.4 of the LMA, provided that
any such contract, lease, commitment or other agreement shall terminate
on or prior to the Closing Date.
5.3. Further Actions. Subject to the terms and conditions
hereof, Buyer and Seller agree to use their commercially reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated hereby and by the Ancillary Agreements in the most
expeditious manner practicable. Without limiting the generality of the
foregoing, Buyer and Seller shall use their commercially reasonable best efforts
(i) to obtain prior to the Closing Date, all consents, authorizations and
approvals from such governmental authorities and other third parties as shall be
necessary to permit the consummation of the transactions contemplated hereby and
by the Ancillary Agreements, (ii) to oppose, lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby and by the Ancillary
Agreements and (iii) to furnish to each other such information and assistance as
reasonably may be requested in connection with the foregoing. Where the consent
of any third party is required under the terms of any of the contracts, leases,
commitments or other agreements to be assumed by Buyer hereunder or under the
LMA, Buyer and Seller shall use their commercially reasonable best efforts to
obtain such consent on terms and conditions not materially less favorable than
as in
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effect on the date hereof. Subject to the terms of the LMA, Seller shall
promptly notify Buyer of all material changes in the business and operation of
the Station.
5.4. FCC Licenses. Buyer and Seller acknowledge that
assignment of the FCC Licenses by Seller to Buyer requires the prior written
consent of the FCC. Buyer and Seller shall use their commercially reasonable
best efforts and cooperate in promptly filing or causing to be filed the FCC
Application within 10 business days after the date hereof. Buyer and Seller
shall use their commercially reasonable best efforts and take all steps as may
be necessary or proper to prosecute the FCC Application diligently and
expeditiously to a favorable conclusion, including opposing any petition to deny
or informal objection to the FCC Application. Buyer and Seller mutually agree to
provide whatever additional information the FCC may reasonably request in
processing the FCC Application, and to furnish such information within the time
established by the FCC in its request and any reasonable and necessary extension
thereof. If reconsideration or judicial review is sought with respect to the
consent of the assignment of the FCC Licenses, Buyer and Seller shall oppose
such efforts for reconsideration or judicial review.
5.5. Buyer Qualification. Prior to the Closing, Buyer shall
exercise its commercially reasonable best efforts to refrain from doing any act
which would disqualify it from being the licensee of the Station.
5.6. Station's Employees. Seller agrees to be responsible for
the salary, benefits and other compensation payable to, or severance or other
termination benefits, including any benefits under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and any other liabilities
relating to the Station's Employees alleged by the Station's Employees. Buyer
shall not hire any of the Station's Employees.
5.7. Environmental Due Diligence. At Buyer's option, Buyer, at
its sole expense, shall have completed within 10 days of the date hereof an
environmental due diligence review relating to the fee property set forth on
Schedule 2.1(c) hereto, including, a Phase I environmental assessment (the
"Phase I"), and notified Seller in writing of the results of such due diligence
review within such 10-day period. If a further environmental assessment (a
"Phase II") is recommended by the Phase I, Buyer, at its sole expense, shall
have completed such Phase II within 14 days after the end of such 10-day period.
Buyer may not perform or cause to be performed any invasive review of such fee
property without giving prior written notice to Seller and affording Seller the
opportunity to observe such review, and Seller shall not delay such review by
Buyer.
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5.8. Supplements to Disclosure. From time to time prior to the
Closing, Seller may amend or supplement the Schedules attached to this Agreement
with respect to any matter that, if existing or occurring at or prior to the
Closing Date, would have been required to be set forth or described on such a
Schedule or that is necessary to complete or correct any information in any
representation or warranty contained in Section 4.1 hereof, unless Buyer objects
to any such amendment or supplement in writing within five business days of
receipt thereof.
ARTICLE SIX
Conditions Precedent
6.1. Conditions Precedent to Obligations of Both Parties. The
respec tive obligations of Buyer and Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by both Buyer and Seller) at or prior to the Closing Date of the following
conditions:
(a) No Injunction, etc. No preliminary or permanent injunction
or other order issued by any federal or state court of competent
jurisdiction in the United States or by any United States federal or
state governmental or regu latory body nor any statute, rule,
regulation or executive order promulgated or enacted by any United
States federal or state governmental authority which restrains, enjoins
or otherwise prohibits the transactions contemplated hereby shall be in
effect.
(b) Antitrust Matters. The waiting period under the HSR Act,
if applicable, shall have expired or shall have been terminated.
(c) FCC Matters. The FCC shall have released a public notice
or other written notification, including notice on FCC Form 732,
satisfactory to Buyer and Seller announcing its grant of consent to the
FCC Application and such grant shall have become a Final Order. In the
event Buyer and Seller both waive the requirement of a Final Order,
then Buyer and Seller will jointly execute a mutually acceptable unwind
agreement at Closing, which will provide that, if the grant of consent
to the FCC Application is rescinded, by the FCC or otherwise, prior to
the grant becoming a Final Order, Buyer and Seller will unwind the
Closing, the Purchase Price will be returned to Buyer, and this
Agreement will be terminated.
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6.2. Conditions Precedent to Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to the satisfaction (or
waiver by Buyer) at or prior to the Closing Date of each of the following
conditions:
(a) Accuracy of Representations and Warranties of Seller. All
repre sentations and warranties in Section 4.1 hereof shall be true and
correct in all material respects on and as of the Closing Date, as if
made on and as of the Closing Date, except to the extent that any such
representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct
as of such date.
(b) Performance of Agreements. Seller shall in all material
respects have performed all obligations and agreements, and complied
with all coven ants and conditions, contained in this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) No Adverse Modification of FCC Licenses. Seller shall be
the holder of the FCC Licenses and there shall not have been any
modification of any of such FCC Licenses which has a material adverse
effect on the business or operation of the Station as operated on the
date hereof. In the event that the FCC has not issued its consent to
the FCC Application by December 1, 1997, then by the Closing Date the
FCC shall have granted Seller's application for renewal of the FCC
Licenses for a full license term, such grant shall not impose on Seller
or the FCC Licenses any condition that would have a material adverse
effect after the Closing on the business or operations of the Station
as operated on the date hereof, except that routine EEO reporting
conditions shall not be construed as having a material adverse effect
on the business or operations of the Station, and such grant shall have
become a Final Order.
(d) Officer's Certificate. Buyer shall have received a
certificate, dated the Closing Date, of the President or a
Vice-President of Seller to the effect that, to the knowledge of such
officer, the conditions specified in subsections (a), (b) and (c) above
have been satisfied.
(e) Opinions. Buyer shall have received (i) an opinion of
Barbara Burns, Vice-President and General Counsel of Greater Media,
Inc., the sole stockholder of Greater Media Holdings, Inc. which is, in
turn, the sole stock holder of Greater Media Radio, Inc., the sole
stockholder of Seller, and (ii) an opinion of Schwartz, Woods & Miller,
special FCC counsel for Seller, each
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dated the Closing Date, substantially in the form attached hereto as
Exhibits A and B, respectively.
(f) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
Buyer.
(g) Third-Party Consents. Seller shall have obtained and shall
have delivered to Buyer the third-party consents required for
assignment of the contracts, commitments and other agreements set forth
on Schedule 6.2(g) hereto.
(h) Payment of Indebtedness; Financing Statements. Subject to
payment of the Purchase Price to Seller, Seller shall have delivered
releases or terminations under the Uniform Commercial Code and any
other applicable federal, state or local statutes or regulations of any
financing or similar statements, including mortgages, filed against any
of the Assets, except for Permitted Liens.
(i) Deliveries. Seller shall have made the following
deliveries:
(i) instruments of conveyance and transfer pursuant
to Section 2.3 hereof, effecting the sale, conveyance,
assignment and transfer of the Assets to Buyer, including, but
not limited to, the following:
(1) bargain and sale deed with guarantor's
covenants for the fee property set forth on Schedule
2.1(c) hereto, together with necessary transfer
declarations or affidavits;
(2) assignments of the FCC Licenses;
(3) bills of sale for all Equipment;
(4) assignments of the contracts,
commitments and other agreements set forth on
Schedule 2.1(d) hereto, together with any consents
obtained related thereto; and
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(ii) certified resolutions of the board of directors
of Seller, authorizing the execution, delivery and performance
of this Agreement and the Ancillary Agreements.
6.3. Conditions Precedent to Obligations of Seller. The
obligations of Seller under this Agreement are subject to the satisfaction (or
waiver by Seller) at or prior to the Closing Date of each of the following
conditions:
(a) Accuracy of Representations and Warranties of Buyer. All
repre sentations and warranties in Section 4.2 hereof shall be true and
correct in all material respects on and as of the Closing Date, as if
made on and as of the Closing Date, except to the extent that any such
representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct
as of such date.
(b) Performance of Agreements. Buyer shall in all material
respects have performed all obligations and agreements, and complied
with all coven ants and conditions, contained in this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Officer's Certificate. Seller shall have received a
certificate, dated the Closing Date, of the President or a Vice
President of Buyer to the effect that, to the knowledge of such
officer, the conditions specified in subsections (a) and (b) above have
been satisfied.
(d) Instruments of Assumption. Buyer shall have executed and
de livered to Seller such instruments, in form and substance reasonably
satisfactory to counsel to Seller, pursuant to which Buyer assumes the
Assumed Liabilities as set forth in Section 2.5 hereof.
(e) Opinion. Seller shall have received an opinion of Michael
B. Milsom, Vice President and General Counsel of Buyer, dated the
Closing Date, substantially in the form attached hereto as Exhibit C.
(f) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
Seller.
(g) Deliveries. Buyer shall have made the following
deliveries:
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(i) the Purchase Price in accordance with Section
3.2 hereof;
(ii) certified resolutions of the board of directors
of Buyer, authorizing the execution, delivery and performance
of this Agreement and the Ancillary Agreements; and
(iii) instruments, in form and substance reasonably
satisfactory to Seller and its counsel, pursuant to which
Buyer assumes the Assumed Liabilities as provided in Section
2.5 hereof.
ARTICLE SEVEN
Indemnification
7.1. Indemnification by Seller. (a) General. Seller agrees to
defend, indemnify and hold harmless Buyer, its Affiliates and the stockholders,
officers, directors, employees, agents, advisers and representatives of each
such person ("Buyer Indemnitees") from and against, and pay or reimburse each
Buyer Indemnitee for, any and all claims, liabilities, obligations, losses,
fines, costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of- pocket expenses and reasonable attorneys' and
accountants fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Seller in Section 4.1(b), (j) or (l) hereof or the first sentence of
Section 4.1(d) hereof;
(ii) the ownership of the Assets or the operation of the
Station prior to the date hereof; and
(iii) any liability of Seller or the Station not assumed by
Buyer hereunder or under the LMA.
(b) Limitation on Indemnification. Notwithstanding anything in
this Agreement to the contrary, Seller's obligation to indemnify Buyer
Indemnitees shall be subject to all of the following limitations:
(i) The amount of any Losses incurred by any Buyer Indemnitee
shall be reduced by the net amount any Buyer Indemnitee recovers (after
deducting
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all attorneys' fees, expenses and other out-of-pocket costs of
recovery) from any insurer or other party liable for such Losses, and
Buyer Indemnitees shall use commercially reasonable best efforts to
effect any such recovery.
(ii) Buyer Indemnitees shall be entitled to indemnification
only for Losses as to which Buyer Indemnitees have given Seller written
notice describing in reasonable detail the nature and basis for such
indemnification (a "Notice of Claim") on or prior to the first
anniversary of the Closing Date.
(iii) Seller shall not be required to make any indemnification
under Section 7.1(a) hereof until the aggregate amount of Losses
resulting from or arising out of the matters referred to in Section
7.1(a) hereof exceeds $45,000; provided that if the aggregate amount of
such Losses exceeds such amount, Seller shall be required to indemnify
Buyer Indemnitees for all Losses indemnifiable under Section 7.1(a)
hereof without regard to such $45,000 limitation.
(c) Exclusive Remedy. Except as provided in Article Eight,
subsequent to the Closing, indemnification under this Section 7.1 shall be the
exclusive remedy of Buyer Indemnitees with respect to any legal, equitable or
other claim for relief based upon this Agreement or arising hereunder.
7.2. Indemnification by Buyer. (a) General. Buyer agrees to
defend, indemnify and hold harmless Seller, its Affiliates and the stockholders,
officers, directors, employees, agents, advisers and representatives of each
such person ("Seller Indemnitees") from and against, any pay or reimburse each
Seller Indemnitee for, any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation or warranty made by
Buyer in Sections 4.2(b) or (f) hereof;
(ii) any Assumed Liability; and
(iii) the ownership of the Assets or the operation of the
Station subsequent to the Closing Date.
(b) Limitation on Indemnification. Notwithstanding anything in
this Agreement to the contrary, Buyer's obligation to indemnify Seller
Indemnitees shall be subject to all of the following limitations:
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(i) The amount of any Losses incurred by any Seller Indemnitee
shall be reduced by the net amount any Seller Indemnitee recovers
(after deducting all attorneys' fees, expenses and other out-of-pocket
costs of recovery) from any insurer or other party liable for such
Losses, and Seller Indemnitees shall use commercially reasonable best
efforts to effect any such recovery.
(ii) Seller Indemnitees shall be entitled to indemnification
only for Losses as to which Seller Indemnitees have given Buyer a
Notice of Claim on or prior to the first anniversary of the Closing
Date.
(iii) Buyer shall not be required to make any indemnification
under Section 7.2(a) hereof until the aggregate amount of Losses
resulting from or arising out of the matters referred to in Section
7.2(a) hereof exceeds $45,000; provided that if the aggregate amount of
such Losses exceeds such amount, Buyer shall be required to indemnify
Seller Indemnitees for all Losses indemnifiable under Section 7.2(a)
hereof without regard to such $45,000 limitation.
(c) Exclusive Remedy. Except as provided in Article Eight,
subsequent to the Closing indemnification under this Section 7.2 shall be the
exclusive remedy of Seller Indemnitees with respect to any legal, equitable or
other claim for relief based upon this Agreement or arising hereunder.
7.3. Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), a Notice of Claim shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided that the Indemnified Party may participate in such defense at such
Indemnified Party's expense and the omission by any Indemnified Party to give a
Notice of Claim shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such claim or litigation, shall consent to entry of any
judgment or order, interim or otherwise, or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or
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litigation. In the event the Indemnifying Party elects to assume the defense of
such claim or litigation, the Indemnifying Party shall not be liable to the
Indemnified Party under this Article Seven for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof, provided that the Indemnified Party shall have the right to employ
counsel to represent it if either (a) such claim or litigation involves remedies
other than monetary damages and such remedies, in the Indemnified Party's
reasonable judgment, could have a material adverse effect on such Indemnified
Party or (b) the Indemnified Party may have avail able to it one or more
defenses or counterclaims which are inconsistent with one or more of those
claims alleged by the Indemnifying Party. If the Indemnifying Party does not
elect to assume the defense of such claim or litigation, the Indemnified Party
shall act reasonably and in accordance with its good faith business judgment
with respect thereto, and shall not settle or compromise any such claim or
litigation without the consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. The parties hereto agree to render to each other
such assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such claim or litigation.
ARTICLE EIGHT
Termination
8.1. General. This Agreement may be terminated and the
transactions contemplated herein may be abandoned (a) by mutual written consent
of Buyer and Seller, (b) by any non-defaulting party if consent to the
assignment of the FCC Licenses is denied by Final Order (unless the requirement
for a Final Order is waived by Buyer and Seller), (c) by any non-defaulting
party if the other party shall have materially breached any of its material
covenants herein and such breach is not cured within 10 business days of such
party's receipt of written notice from the non-de faulting party that such
breach exists or has occurred or if such party shall have made a material
misrepresentation herein and such misrepresentation is not cured within 10
business days of such party's receipt of written notice from the non-defaulting
party that such misrepresentation has been made, (d) by any non-defaulting party
by notice to the other party if the Closing Date shall not have occurred on or
before the first anniversary of the date of this Agreement, provided, however,
that if the FCC has not issued written consent to the FCC Application by
December 1, 1997, the term of this Agreement shall be extended by an additional
nine month period following the acceptance by the FCC of the Station's license
renewal application or (e) by Buyer, if, (i) based on the results of either the
Phase I or Phase II conducted pursuant to Section 5.7 hereof, Buyer reasonably
believes that the actions required to implement
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any recommendations resulting from either such Phase I or Phase II, if any,
shall exceed $50,000 (exclusive of the costs of such Phase I and Phase II) and
(ii) Buyer gives written notice of such belief to Seller within either the
10-day or 14-day period specified in Section 5.7 hereof, as the case may be.
8.2. No Liabilities in Event of Termination. In the event of
any termination of this Agreement as provided in Section 8.1 hereof, (a) this
Agreement shall forthwith become void and of no further force and effect, (b)
the Deposit, and all interest accrued thereon, shall be delivered in accordance
with the terms of the Escrow Agreement and (c) there shall be no liability on
the part of Buyer, Seller or their respective Affiliates, officers or directors,
as the case may be; provided, however, (i) Article Eight and Sections 10.1, 10.2
and 10.12 hereof shall survive any such termination, (ii) in the event of a
termination of this Agreement pursuant to Section 8.1(c) hereof by Buyer, Seller
shall be liable for any damages sustained by Buyer and (iii) in the event of a
termination of this Agreement pursuant to Section 8.1(c) hereof by Seller, the
Deposit, and all interest accrued thereon, shall be released to Seller in
accordance with the terms of the Escrow Agreement (such amount to be liquidated
damages for any damages sustained by Seller as the nature of this transaction
being such as will not permit an exact determination of the damages which may be
suffered by Seller by reason of such default by Buyer). In the event Buyer shall
be entitled to terminate this Agreement pursuant to Section 8.1(c) hereof, Buyer
may, in lieu of exercising such right to terminate this Agreement, obtain
specific performance of the terms of this Agreement.
ARTICLE NINE
Post-Closing Covenants
9.1. Access to Books and Records. For a period of six years
following the Closing Date, Buyer shall afford, and shall cause its Affiliates
to afford, to Seller and its counsel and accountants, during normal business
hours, reasonable access to the books, records and other data of the Station
with respect to the period prior to the Closing Date to the extent that such
access may be reasonably required by Seller in connection with matters relating
to or affected by the operations of the Station prior to the Closing Date. Buyer
will not dispose of, alter or destroy any such books, records and other data
without giving 30 days' prior notice to Seller to permit it, at its expense, to
examine, duplicate or repossess such records, files, documents and
correspondence.
26
<PAGE>
9.2. Further Agreements. Seller shall promptly deliver to
Buyer any mail or other communication received by it after the Closing Date
pertaining to the business and operation of the Station or the Assets and any
cash, checks or other instruments of payment to which Buyer is entitled. Buyer
shall promptly deliver to Seller any mail or other communication received by it
after the Closing Date pertaining to the Excluded Assets, and any cash, checks
or other instruments of payment in respect of such Excluded Assets.
9.3. Financial Statements. After the date hereof and until the
sixth anniversary of the Closing Date, promptly upon request from Buyer and to
the extent reasonably available, Seller shall deliver to Buyer copies of
unaudited income and expense statements of the Station for each of the periods
ended September 30, 1996 and 1997 as prepared by Seller or an Affiliate of
Seller.
ARTICLE TEN
Miscellaneous
10.1. Public Announcements. So long as this Agreement is in
effect, Buyer and Seller agree to use their commercially reasonable best efforts
to consult with each other and obtain the prior written consent of the other
party before issuing any press release or otherwise making any public statement
with respect to the transactions contemplated hereby or by the Ancillary
Agreements unless such disclosure is required by applicable law.
10.2. Expenses. Subject to Section 10.3 hereof, whether or not
the transactions contemplated by this Agreement are consummated, Buyer and
Seller shall pay the fees and expenses incurred by it in connection with the
negotiation, preparation, execution and performance of this Agreement,
including, without limi tation, attorneys' fees and accountants' fees; provided,
however, Buyer and Seller shall share equally the cost of the FCC filing fee for
the FCC Application.
10.3. Transfer Taxes. Buyer and Seller shall share equally and
cooperate in the timely payment of all Transfer Taxes arising out of or in
connection with or attributable to the transactions effected pursuant to this
Agreement and each party shall indemnify and hold harmless the other party and
its Affiliates against the payment of its portion of Transfer Taxes. As between
Buyer and Seller, the party that has the primary responsibility under applicable
law for filing any return in respect of Transfer Taxes shall prepare such
return, subject to the other party's approval, which approval shall not be
unreasonably withheld, and timely file such return.
27
<PAGE>
10.4. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or made as follows: (a) if sent by registered or certified mail in
the United States return receipt requested, upon receipt; (b) if sent by
reputable overnight air courier (such as DHL or Federal Express), two business
days after mailing; (c) if sent by fax, with a copy mailed on the same day in
the manner provided in (a) or (b) above, when transmitted and receipt is
confirmed by telephone; or (d) if otherwise actually personally delivered, when
delivered, and shall be delivered as follows:
(a) If to Seller:
Greater Boston Radio, Inc.
c/o Greater Media, Inc.
P.O. Box 1059
Two Kennedy Boulevard
East Brunswick, New Jersey 08816
Attention: Barbara Burns
Phone: (908) 247-6161
Fax: (908) 247-4956
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm
Phone: (212) 909-6226
Fax: (212) 909-6836
(b) If to Buyer:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Michael B. Milsom
Phone: (617) 375-7500
Fax: (617) 375-7575
28
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with a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John T. Byrnes, Jr.
Phone: (202) 776-2000
Fax: (202) 776-2222
or to such other address or to such other person as the party to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
10.5. Entire Agreement. This Agreement (including the
Schedules hereto) together with the Ancillary Agreements constitute the entire
agreement between Buyer and Seller with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral and written, between
Buyer and Seller with respect to the subject matter hereof.
10.6. Assignment. (a) Neither this Agreement nor any rights or
obligations hereunder may be assigned by Seller or Buyer without the written
consent of the other party hereto, except (i) to the extent permitted under
subsection (b) of this Section 10.6, (ii) that after the Closing Date, Seller
may assign any of its rights and obligations to any Affiliate or successor in
interest of Seller and (iii) (x) that after the Closing Date, Buyer may assign
its obligations hereunder to any Affiliate or successor in interest and (y) that
Buyer may assign its rights hereunder to acquire the FCC Licenses to an
Affiliate.
(b) Buyer acknowledges that Seller may desire to effect this
transaction as an exchange of the Assets for other property of like kind and
qualifying use within the meaning of section 1031 of the Code. Seller may assign
its rights hereunder to a qualified intermediary as provided under Treasury
Regulations section 1.1031(k)- 1(g)(4) on or before the Closing Date, provided
that such assignment shall be made without any cost or expense to Buyer and
without Buyer otherwise incurring any liability thereby and provided, further,
that any such assignment shall not relieve Seller from any of its obligations
under this Agreement. Buyer shall cooperate with Seller to effectuate any such
exchange, provided that such cooperation would not result in any additional cost
or expense to Buyer and Buyer would not otherwise incur any liability thereby.
10.7. No Third-Party Beneficiaries. Except as provided in Sec
tion 10.6 hereof, nothing in this Agreement shall confer any rights upon any
person or entity other than the parties hereto and their respective permitted
successors and assigns.
29
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10.8. Amendment; Waiver. 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 amendment, waiver or consent is sought.
10.9. Interpretation. The section headings in this Agreement
are for convenience of reference only and shall not be deemed to alter or affect
the meaning or interpretation of any provision hereof. Any references to
Seller's knowledge or the knowledge of Seller shall mean the actual knowledge of
Thomas J. Milewski after due inquiry of the Station's manager.
10.10. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, and if any provision of this Agreement is interpreted by a
court of competent jurisdiction and found to be invalid or unenforceable,
neither the enforceability nor the validity of such provisions with respect to
any other facts or under any other circumstances shall thereby be impaired. The
unenforceability or invalidity of any provision shall not result in the
interpretation of the remainder of this Agreement, or any Section hereof, in a
manner inconsistent with intent of the parties as evidenced by the terms of this
Agreement, or such Section, as a whole.
10.11. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall be deemed to be one and the same agreement.
10.12. Governing Law; Jurisdiction. The construction and
perfor mance of this Agreement shall be governed by the laws of the State of New
York without regard to its principles of conflict of laws, and the state and
federal courts of New York shall have exclusive jurisdiction over any
controversy or claim arising out of or relating to this Agreement.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
GREATER BOSTON RADIO, INC.
By:
Name:
Title:
AMERICAN RADIO SYSTEMS
CORPORATION
By:
Name:
Title:
31
Exhibit 10.10
TIME BROKERAGE AGREEMENT
between
GREATER BOSTON RADIO, INC.
as Licensee
and
AMERICAN RADIO SYSTEMS CORPORATION
as Time Broker
Dated as of May 14, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE ONE...........................................................................................1
1.1. Broadcast of Programming..............................................................1
1.2. Payment...............................................................................1
1.3. Licensee's Programming................................................................2
1.4. Term..................................................................................2
ARTICLE TWO Programming and Operating Standards and Practices.........................2
2.1. Compliance with Standards.............................................................2
2.2. Political Broadcasts..................................................................3
2.3. Handling of Communications............................................................3
2.4. Preemption............................................................................3
2.5. Rights in Programs....................................................................4
2.6. "Payola" and "Plugola"................................................................4
2.7. Advertising and Programming...........................................................4
2.8. Compliance with Laws..................................................................4
2.9. Certifications........................................................................4
ARTICLE THREE Responsibility for Employees and Expenses.................................5
3.1. Time Broker's Employees...............................................................5
3.2. Licensee's Employees..................................................................5
3.3. Time Broker's Expenses................................................................5
3.4. Operating Expenses....................................................................5
ARTICLE FOUR Assignment of Certain Agreements and Rights...............................6
4.1. Assignment............................................................................6
4.2. Proration.............................................................................6
4.3. Accounts Receivable...................................................................7
ARTICLE FIVE Operation of Station......................................................7
ARTICLE SIX Facilities and License....................................................8
6.1. Facilities............................................................................8
6.2. License to Use Station Call Letters...................................................8
i
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ARTICLE SEVEN Indemnification...........................................................8
7.1. Indemnification Rights................................................................8
7.2. Procedures............................................................................9
ARTICLE EIGHT Default...................................................................9
8.1. Events of Default.....................................................................9
8.2. Cure Periods.........................................................................10
ARTICLE NINE Termination..............................................................10
9.1. Termination Upon Default.............................................................10
9.2. Certain Matters Upon Termination.....................................................11
ARTICLE TEN Remedies.................................................................11
ARTICLE ELEVEN Certain Representations, Warranties and Covenants of the Parties.........12
11.1. Representations, Warranties and Covenants of Time Broker.............................12
11.2. Covenant of Licensee.................................................................12
ARTICLE TWELVE Miscellaneous............................................................12
12.1. Notices..............................................................................12
12.2. Entire Agreement.....................................................................14
12.3. Assignment...........................................................................14
12.4. No Third Party Beneficiaries.........................................................14
12.5. Amendment; Waiver....................................................................14
12.6. Interpretation.......................................................................14
12.7. Severability.........................................................................14
12.8. Counterparts.........................................................................14
12.9. Governing Law; Jurisdiction..........................................................15
12.10. No Joint Venture.....................................................................15
12.11. Damage to Station....................................................................15
12.12. Noninterference......................................................................15
12.13. Regulatory changes...................................................................15
12.14. Publicity............................................................................15
</TABLE>
ii
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SCHEDULES
Schedule 1.1 Programming
Schedule 2.1 Programming Policy
iii
<PAGE>
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, dated as of May 14, 1997 (the "Agreement"),
between GREATER BOSTON RADIO, INC., a Delaware corporation ("Licensee"), and
AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation ("Time Broker").
Licensee is the licensee of radio station WNFT(AM), Boston, Massachusetts (the
"Station").
WHEREAS, concurrently with the execution of this Agreement, Licensee
and Time Broker are entering into an Asset Purchase Agreement (the "Purchase
Agreement") providing for the sale of the Station by Licensee to Time Broker
upon the terms and conditions set forth therein; and
WHEREAS, Licensee and Time Broker desire to enter into an agreement
providing for the sale of substantially all of the broadcast time of the Station
to Time Broker, subject to the rules and policies of the Federal Communications
Commission (the "FCC");
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties agree as
follows:
ARTICLE ONE
1.1. Broadcast of Programming. Effective as of 12:01 a.m. on June 1,
1997 (the "Commencement Date"), Licensee shall broadcast on the Station, or
cause to be broadcast on the Station, programs which are presented to it by Time
Broker as described in greater detail on Schedule 1.1 hereto (the
"Programming").
1.2. Payment. (a) In consideration of the broadcast time on the Station
provided to Time Broker pursuant to this Agreement, Time Broker shall (i) pay to
Licensee a monthly fee of $25,000 for the broadcast of Time Broker's
programming, prorated for any partial month and payable on the tenth day after
the end of each calendar month following the Commencement Date and (ii)
reimburse Licensee for certain expenses in accordance with Section 3.4 hereof.
(b) During the Term, as defined in Article 1.4, Licensee shall make
available broadcast time on the Station for the broadcast of Time Broker's
Programming for up to One Hundred Sixty Five (165) hours a week for the term of
this agreement except for (i) downtime occasioned by routine maintenance
consistent with the Station's prior practice; (ii) times when Time Broker's
Programming is not accepted or is preempted by Licensee in accordance with
Section 2.4 hereof or because such Programming does not satisfy the
<PAGE>
standards of Schedule 1.1 or 2.1 hereto; and (iii) Force Majeure Events, which
shall be defined as any failure or impairment of facilities or any delay or
interruption in broadcasting the Programming not directly or indirectly the
fault of Licensee or its employees or agents, or failure at any time to furnish
the facilities in whole or in part for broadcasting due to acts of God, strikes
or threats thereof, force majeure or any other causes beyond the control of
Licensee.
(c) Except as to actions taken in accordance to with Licensee's
rights under Section 1.2(b) hereof because Time Broker's Programming would not
comply with the rules and regulations of the FCC, in the event that Licensee
preempts, deletes, delays, suspends, cancels or fails to broadcast any of the
Programming and/or causes any of the Programming to be broadcast in a daypart
other than the daypart for which the Time Broker provided such Programming, Time
Broker shall receive a credit equal to the pro rata portion of fees paid for the
broadcast of the Programming for the month in which such preemption, deletion,
delay, suspension, cancellation or failure to broadcast occurs.
1.3. Licensee's Programming. Licensee shall present public service
programming responsive to the needs, concerns and issues of importance of the
Station's community of license, as set forth on Schedule 1.1 hereto.
1.4. Term. This Agreement shall commence on the Commencement Date and
shall terminate on the earlier of (i) 12:01 a.m. on the Closing Date under the
Purchase Agreement, (ii) the date that the Purchase Agreement is terminated and
(iii) the date this Agreement is terminated pursuant to Section 9.1 hereof.
ARTICLE TWO
Programming and Operating Standards and Practices
2.1. Compliance with Standards. All Programming delivered by Time
Broker and all programming supplied by Licensee during the term of this
Agreement shall be in accordance with applicable statutes, FCC requirements and
the programming policies set forth on Schedule 2.1 hereto. Licensee reserves the
right to refuse to broadcast any Programming containing matter which Licensee
believes is not in the public interest or may be violative of any right of any
third party, or which may constitute a "personal attack" as that term is defined
by the FCC or which Licensee reasonably determines is, or in the reasonable
opinion of Licensee may be deemed to be, indecent (and not broadcast during the
safe harbor for indecent programming established by the FCC) or obscene by the
FCC or any court or other regulatory body with authority over Licensee or the
Station. If Time Broker does not adhere to the foregoing requirements, Licensee
may refuse to broadcast any specific program, or part thereof, not so in
compliance.
2
<PAGE>
2.2. Political Broadcasts. Time Broker shall maintain and deliver to
Licensee all records and information required by the FCC to be placed in the
public inspection file of the Station pertaining to the broadcast of political
programming and advertisements, in accordance with the provisions of Sections
73.1940 and 73.3526 of the FCC's rules. Time Broker shall consult and cooperate
with Licensee and adhere to all applicable statutes and the rules, regulations
and policies of the FCC, as announced from time to time, with respect to the
carriage of political advertisements and programming (including, without
limitation, the rights of candidates and, as appropriate, others to "equal
opportunities") and the charges permitted therefor. Time Broker shall promptly
provide to Licensee such documentation relating to such programming as Licensee
is required to maintain in its public inspection file or Licensee shall
reasonably request.
2.3. Handling of Communications. Time Broker shall cooperate with
Licensee in promptly responding to all mail, cables, telegrams or telephone
calls directed to the Station in connection with the Programming provided by
Time Broker or any other matter relevant to its responsibilities hereunder. Time
Broker shall provide to Licensee copies of all such correspondence as necessary
for Licensee to comply with the rules and policies of the FCC. Promptly upon
notice thereof, Time Broker shall advise Licensee of any public or FCC complaint
or inquiry known to Time Broker concerning such Programming, and shall provide
Licensee with copies of any such letters to Time Broker from the public,
including complaints concerning such Programming. Upon Licensee's request, Time
Broker shall broadcast material responsive to such complaints and inquiries.
Notwithstanding the foregoing, Licensee shall handle all matters or inquiries
relating to FCC complaints and any other matters required to be handled by
Licensee under the rules and regulations of the FCC in accordance with the rules
and regulations of the FCC.
2.4. Preemption. Licensee may, from time to time, preempt portions of
the Programming to broadcast emergency information or programs it deems would
better serve the public interest, and shall have the absolute right to refuse to
broadcast any program or announcement of Time Broker should Licensee deem such
program or announcement to be contrary to the public interest as set forth in
Section 2.1 hereof. Time Broker shall be notified at least one week in advance
of any preemption of any of the Programming for the purpose of broadcasting
programs Licensee deems necessary to serve the public interest unless such
advance notice is impossible or impractical, in which case Licensee shall notify
Time Broker promptly upon making such determination. Licensee represents and
covenants that preemption shall only occur to the extent Licensee deems
preemption reasonably necessary to carry out its obligations as an FCC licensee,
and expressly agrees that its right of preemption shall not be exercised in an
arbitrary manner or for the commercial advantage of Licensee or others. In the
event that Licensee preempts more than 30 hours of Programming and announcements
over any consecutive 30 day period, then Time Broker
3
<PAGE>
shall be entitled at its sole option to terminate this Agreement without further
obligation to Licensee except for payments (if any) already due to Licensee.
2.5. Rights in Programs. All right, title and interest in and to the
Programming, and the right to authorize the use of the Programming in any manner
and in any media whatsoever, shall be and remain vested at all times solely in
Time Broker.
2.6. "Payola" and "Plugola". Time Broker agrees that it will take
steps, including the continuation of Licensee's system for periodic execution of
affidavits, reasonably designed to assure that neither it nor its employees or
agents will accept any gift, gratuity or other consideration, directly or
indirectly, from any person or company for the playing of records, the
presentation of any programming or the broadcast of any commercial announcement
over the Station without such broadcast being identified as sponsored and the
name of such sponsor provided. It is further understood and agreed that no
commercial message, endorsement or reference shall be made to any business
venture, profit-making activity or commercial interest without such broadcast
being identified as sponsored and the name of such sponsor provided.
2.7. Advertising and Programming. Beginning on the Commencement Date,
Time Broker shall be solely responsible for any expenses incurred in connection
with and shall be entitled to all revenue from the sale of advertising or
program time on the Station broadcast on or after the Commencement Date.
Licensee shall remain entitled to all revenue from the sale of advertising or
program time on the Station broadcast prior to the Commencement Date. Licensee
will not enter into any contract or advertising arrangement on or after the
Commencement Date except with the prior written consent of Time Broker or in
accordance with Section 1.3 or 2.4 hereof. Time Broker does not assume any
obligation of Licensee under any contract or advertising arrangement entered
into by Licensee on or after the Commencement Date. Time Broker will advise
Licensee of its lowest unit charges for political advertising.
2.8. Compliance with Laws. At all times during the term of this
Agreement, Time Broker and Licensee shall comply in all material respects with
all applicable federal, state and local laws, rules and regulations.
2.9. Certifications. Pursuant to Section 73.3555(a)(3)(ii) of the FCC's
rules, Licensee certifies that it shall maintain ultimate control over the
Station's facilities, including specifically control over station finances,
personnel and programming, and Time Broker certifies that this Agreement
complies with the provisions of Section 73.3555(a)(1) of the FCC's rules.
4
<PAGE>
ARTICLE THREE
Responsibility for Employees and Expenses
3.1. Time Broker's Employees. Time Broker shall employ and be
responsible for the payment of salaries, taxes, insurance, health benefits and
all other costs related to all personnel used in the production of the
Programming, the sale of advertising time and for personnel employed in clerical
and administrative functions incident thereto. Time Broker will not incur any
liability on account of the Licensee's employees relating to the Station,
including, without limitation, any such liability for sales commissions (except
as described in Section 4.2 hereof) and any liability on account of unemployment
insurance contributions, termination and severance payments, accrued sick leave
or accrued vacation. Whenever at the main studio or otherwise on the Station's
premises, all of Time Broker's employees shall be subject to the supervision of
the Licensee's manager and/or chief operator.
3.2. Licensee's Employees. Licensee shall continue to employ at least
two persons at the Station: a full-time, management level employee, who shall
report and be solely accountable to Licensee and shall be responsible for the
operations of the Station, and a staff- level employee who shall report to and
assist the manager in the performance of his or her duties. Licensee shall be
responsible for the compensation, taxes, insurance, health benefits and related
costs of such employees. One of the persons employed by Licensee shall be a
qualified engineer who shall be designated chief operator as that term is
defined under the rules and regulations of the FCC, and who shall be responsible
for ensuring that the Station is operated in compliance with the technical
operating and reporting requirements established by the FCC.
3.3. Time Broker's Expenses. Time Broker shall pay for all costs
associated with the production and delivery of the Programming, including, but
not limited to, (i) all ASCAP, BMI, SESAC and other copyright fees, (ii) any
expenses incurred in connection with the sale of advertising time hereunder
(including, without limitation, sales commissions) in connection with the
Programming and (iii) the salaries, taxes, insurance and related costs for all
personnel used in the production of the Programming and all sales personnel
(including salespeople, traffic personnel and programming staff).
3.4. Operating Expenses. Licensee shall be responsible for and shall
timely pay (a) all salaries and related costs for the personnel employed by
Licensee pursuant to Section 3.2 hereof and (b) all expenses related to the
transmitter facilities of the Station, including, but not limited to, rent, real
estate and personal property taxes, insurance, regulatory fees, utility fees and
maintenance and repair costs. Time Broker shall reimburse Licensee for its
ordinary and customary expenses (excluding only salary and benefits for the
persons employed by Licensee pursuant to Section 3.2 hereof and electricity at
the transmitter site for
5
<PAGE>
the Station) incurred in operating the Station arising on or after the
Commencement Date (the "Operating Expenses"), including, but not limited to,
maintenance of the tower and transmitter equipment, rent and utilities at
Licensee's studio facilities, rent and utilities other than electricity at the
transmitter site for the Station, any capital expense at the transmitter site,
insurance and insurance deductibles on claims. Licensee shall bill Time Broker
for such expenses as they are incurred by delivery of a statement in reasonable
detail with back-up invoices, payment for which shall be due within 30 days of
such billing. Licensee will consult with Time Broker before undertaking any
routine maintenance work that will require reimbursement by Time Broker in an
amount in excess of $1,000.
ARTICLE FOUR
Assignment of Certain Agreements and Rights
4.1. Assignment. On the Commencement Date, Licensee shall assign to
Time Broker all contracts, commitments and other agreements set forth on
Schedule 2.1(d) of the Purchase Agreement and any other such agreements entered
into by Licensee between the date hereof and the Commencement Date for the sale
of time on the Station (the "Time Sales Agreements", together with all other
such contracts, commitments or other agreements, collectively, the "Contracts").
Time Broker shall, on and as of the Commencement Date, assume and become fully
liable and responsible for all liabilities and obligations of Licensee arising
on or after the Commencement Date under the Contracts. Licensee has provided
Time Broker with true and complete copies, including amendments, of the
Contracts. The Contracts are freely assignable, or, if consent of the other
contracting party to the assignment is required, Licensee and Time Broker shall
use their reasonable best efforts to obtain such consent as promptly as
practicable. If Licensee is unable to obtain any consent necessary to permit the
valid assignment of a Contract, Licensee shall act as Time Broker's agent in
connection with such Contract and the parties shall cooperate to cause Time
Broker to receive the benefit of the Contract in exchange for performance by
Time Broker of all of Licensee's obligations under such Contract (including, but
not limited to, the payment by Licensee of all amounts due under such Contract).
4.2. Proration. All expenses and income arising under the Contracts
shall be prorated between Licensee and Time Broker as of the Commencement Date
in a manner such that the costs and benefits thereunder prior to the
Commencement Date shall be for the account of Licensee and, thereafter, during
the term of this Agreement, for the account of Time Broker. With respect to the
preceding, Licensee shall be responsible for paying sales commissions arising
and accruing prior to the Commencement Date, but Time Broker shall reimburse
Licensee for such sales commissions to the extent that the revenue from such
sales relates to advertising or programming broadcast on or after the
Commencement Date. If any disagreement with respect to the proration of such
income and expenses cannot be resolved
6
<PAGE>
by the parties, Licensee and Time Broker will select a certified public
accountant knowledgeable in the broadcast industry to resolve the dispute. The
parties will use their commercially reasonable best efforts in good faith to
cause to occur as expeditiously as possible the appointment of the certified
public accountant, and once appointed, the resolution of the dispute. The
decision of such accountant shall be binding on the parties and subject to
judicial enforcement. One-half of the cost of the accountant shall be paid by
each party.
4.3. Accounts Receivable. On the Commencement Date, Licensee will
deliver to Time Broker a list of Licensee's accounts receivable arising from the
operation of the Station prior to the Commencement Date (the "Receivables").
Time Broker shall use commercially reasonable best efforts to collect the
Receivables after the Commencement Date for a period of 120 days after the
Commencement Date (the "Collection Period"). All amounts received by Time Broker
from payors with accounts included among the Receivables shall be applied first
to the Receivables unless payor designates otherwise. For each calendar month
during the Collection Period, within 10 days of the end of each such calendar
month Time Broker will deliver to Licensee a monthly accounting of collections
made with respect to the Receivables and remit to Licensee all amounts collected
by Time Broker on account of the Receivables. At the conclusion of the
Collection Period, any remaining Receivables shall be reassigned to Licensee and
Time Broker shall have no further obligation with respect to any remaining
Receivables. If, during the Collection Period, a dispute arises between Time
Broker and a debtor with respect to an account included among the Receivables,
Time Broker may return that account to Licensee and collect from such account
debtor the amounts owed to Time Broker for services provided after the
Commencement Date.
ARTICLE FIVE
Operation of Station
Notwithstanding any provision of this Agreement to the contrary,
Licensee shall retain full authority and power with respect to the operation of
the Station during the term of this Agreement. The parties agree and acknowledge
that Licensee's continued control of the Station is an essential element of the
continuing validity and legality of this Agreement. Accordingly, Licensee shall
employ personnel (not less than one full-time managerial employee and the
equivalent of one full-time staff employee) as Licensee determines may be
necessary to fulfill its obligations as a licensee under the Communications Act
of 1934, as amended (the "Communications Act"). Licensee shall retain full
authority and control over the policies, programming and operations of the
Station, including, without limitation, the decision whether to preempt
programming in accordance with Section 2.4 hereof. Licensee shall have full
responsibility to effectuate compliance with the Communications Act and with FCC
rules, regulations and policies.
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ARTICLE SIX
Facilities and License
6.1. Facilities. Effective as of the Commencement Date and subject to
Section 12.11 hereof, Time Broker shall be responsible for maintaining all
studio and office space and other facilities and all equipment and furnishings
contained therein in the production and broadcasting of the Programming and
sales and administration relating thereto.
6.2. License to Use Station Call Letters. Effective as of the
Commencement Date, Licensee grants Time Broker a license to use the Station's
call letters "WNFT" in the production and broadcasting of the Programming and
sales and administration relating thereto, in accordance with the terms set
forth in this Section 6.2 (the "Call Letters License"). The Call Letters License
shall have a term beginning on the Commencement Date and ending upon the earlier
of (a) termination of this Agreement and (b) the Closing (as defined in the
Purchase Agreement).
ARTICLE SEVEN
Indemnification
7.1. Indemnification Rights. Each party will indemnify and hold
harmless the other party, and the directors, officers, employees, agents and
affiliates of such other party, from and against any and all liability,
including, without limitation, reasonable attorneys' fees arising out of or
incident to (i) any breach by such party of a representation, warranty or
covenant made herein, (ii) the programming produced or furnished by such party
hereunder, or (iii) the conduct of such party, its employees, contractors or
agents (including negligence) in performing its or their obligations hereunder.
Without limiting the generality of the foregoing, each party will indemnify and
hold harmless the other party, and the directors, officers, employees, agents
and affiliates of such other party, from and against any and all liability for
libel, slander, infringement of trademarks, trade names, or program titles,
violation of rights of privacy, and infringement of copyrights and proprietary
rights resulting from the programming produced or furnished by it hereunder. The
parties' indemnification obligations hereunder shall survive any termination or
expiration of this Agreement for a period of one year.
7.2. Procedures. In the case of any claim asserted by a third party
against a party entitled to indemnification under this Agreement (the
"Indemnified Party"), a notice of claim shall be given by the Indemnified Party
to the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any
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claim as to which indemnity may be sought, and the Indemnified Party shall
permit the Indemnifying Party (at the expense of such Indemnifying Party) to
assume the defense of any claim or any litigation resulting therefrom, provided
that the Indemnified Party may participate in such defense at such Indemnified
Party's expense and the omission by any Indemnified Party to give a notice of
claim shall not relieve the Indemnifying Party of its indemnification obligation
under this Agreement except to the extent that such Indemnifying Party is
materially damaged as a result of such failure to give notice. Except with the
prior written consent of the Indemnified Party, no Indemnifying Party, in the
defense of any such claim or litigation, shall consent to entry of any judgment
or order, interim or otherwise, or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event the Indemnifying Party elects to
assume the defense of such claim or litigation, the Indemnifying Party shall not
be liable to the Indemnified Party under this Article Seven for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof, provided that the Indemnified Party shall have the right to
employ counsel to represent it if either (a) such claim or litigation involves
remedies other than monetary damages and such remedies, in the Indemnified
Party's reasonable judgment, could have a material adverse effect on such
Indemnified Party or (b) the Indemnified Party may have available to it one or
more defenses or counterclaims which are inconsistent with one or more of those
claims alleged by the Indemnifying Party. If the Indemnifying Party does not
elect to assume the defense of such claim or litigation, the Indemnified Party
shall act reasonably and in accordance with its good faith business judgment
with respect thereto, and shall not settle or compromise any such claim or
litigation without the consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. The parties hereto agree to render to each other
such assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such claim or litigation.
ARTICLE EIGHT
Default
8.1. Events of Default. The following, after the expiration of the
applicable cure periods specified in Section 8.2 hereof, shall constitute Events
of Default under this Agreement:
(a) Default in Covenants. Time Broker's or Licensee's default in the
observance or performance of any material covenant, condition or agreement
contained herein;
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(b) Breach of Representation or Warranty. Time Broker's or Licensee's
material breach of any representation or warranty made by it herein, or in any
certificate or document furnished pursuant to the provisions hereof, which shall
prove to have been false or misleading in any material respect as of the time
made or furnished; or
(c) Default under the Purchase Agreement. At any time during the term
of this Agreement in which the Purchase Agreement is in effect, the occurrence
of an event of default under the Purchase Agreement.
8.2. Cure Periods. An Event of Default shall not be deemed to have
occurred until 15 days after the non-defaulting party has provided the
defaulting party with written notice specifying the event or events that if not
cured would constitute an Event of Default, and such event has not been cured
within such time period.
ARTICLE NINE
Termination
This Agreement shall automatically terminate upon the expiration of the
term of this Agreement as set forth in Section 1.3 hereof. In addition, this
Agreement shall terminate as provided below.
9.1. Termination Upon Default. In addition to other remedies available
to the parties hereto at law or equity, and in addition to other provisions
providing for termination herein, this Agreement may be terminated as set forth
below by either Licensee or Time Broker by written notice to the other if the
party seeking to terminate is not then in material default or breach hereof,
upon either:
(a) an uncured Event of Default; or
(b) a change in FCC rules, policies or precedent that would cause this
Agreement to be in violation thereof and such change is final, in effect and has
not been stayed, and the parties are unable, after negotiating in good faith for
at least 30 days, to modify this Agreement to comply with the change in FCC
rules, policies or precedent; provided, however, that either party's right to
terminate this Agreement pursuant to this Section 9.1(b) may be exercised
regardless of whether such party is in default hereunder.
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9.2. Certain Matters Upon Termination. (a) Upon any termination of this
Agreement (any such date, a "Termination Date"), Licensee shall have no further
obligation to provide to Time Broker any broadcast time or broadcast
transmission facilities, except that Licensee shall assume and perform Time
Broker's obligations to broadcast commercial advertising after the Termination
Date and receive all revenues attributable to all such advertising, provided,
that (i) each of the contracts or agreements relating to such advertising to be
assumed by Licensee is terminable by Licensee within 30 days of the Termination
Date and (ii) with respect to trade and barter agreements, no net negative trade
balance exists in favor of such advertisers in excess of $20,000 in the
aggregate. Except as set forth in the preceding sentence, upon any termination,
Time Broker shall be responsible for all debts and obligations of Time Broker to
third parties based upon the purchase of air time on the Station and the use of
Licensee's transmission facilities relating to the Station, including, without
limitation, accounts payable.
(b) If this Agreement terminates other than as a result of the Closing
(as defined in the Purchase Agreement), Time Broker shall (i) assign to Licensee
and Licensee shall assume the Contracts in effect on the date of such
termination or expiration; (ii) be responsible for only those obligations under
the Contracts arising on or after the Commencement Date and prior to the
termination of this Agreement; and (iii) be responsible for collecting the
accounts receivable arising from Time Broker's operation of the Station on or
after the Commencement Date ("Time Broker's Receivables"). In addition, if this
Agreement terminates other than as a result of the Closing, Licensee shall
reimburse Time Broker for sales commissions paid by Time Broker for sales
relating to Time Sales Agreements to the extent that the revenue from such sales
relates to commercial announcements to be broadcast after the termination of
this Agreement.
(c) Notwithstanding anything in Section 7.1 hereof to the contrary, no
expiration or termination of this Agreement shall terminate the obligation of
each party to indemnify the other for claims under Section 7 hereof or limit or
impair any party's rights to receive payments due and owing hereunder on or
before the date of such termination.
ARTICLE TEN
Remedies
In addition to a party's rights of termination hereunder (and in
addition to any other remedies available to it or provided under law), in the
event of an uncured Event of Default with respect to either party, the other may
seek specific performance of this Agreement, in which case the defaulting party
shall waive the defense in any such suit that the other party has an adequate
remedy at law and interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy hereunder.
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ARTICLE ELEVEN
Certain Representations, Warranties and Covenants of the Parties
11.1. Representations, Warranties and Covenants of Time Broker. Time
Broker hereby represents and warrants to Licensee that Time Broker is qualified
in accordance with the Communications Act and the published rules and policies
of the FCC to enter into this Agreement and provide Programming on the Station
in accordance with its terms. Between the date hereof and the termination of
this Agreement either by the Closing under the Purchase Agreement or the earlier
termination in accordance with Article 9 hereof, Time Broker will not take any
action that Time Broker knows, or has reason to believe, would disqualify it
from discharging its obligations pursuant to this Agreement.
11.2. Covenant of Licensee. Licensee hereby covenants to Time Broker
that during the term hereof, (i) Licensee shall take no action which will have
the effect of reducing the effective radiated power and the current coverage of
the Station, except in connection with necessary maintenance of or near the
transmission facilities of the Station and (ii) Licensee shall not enter into
any contract or advertising arrangement on or after the Commencement Date except
with the prior written consent of Time Broker or in accordance with Section 1.3
or 2.4 hereof.
ARTICLE TWELVE
Miscellaneous
12.1. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail in the United
States return receipt requested, upon receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
deposit with such courier; (c) if sent by fax, with a copy mailed on the same
day in the manner provided in (a) or (b) above, when transmitted and receipt is
confirmed by telephone; or (d) if otherwise actually personally delivered, when
delivered, and shall be addressed as follows:
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If to Licensee:
Greater Boston Radio, Inc.
c/o Greater Media, Inc.
P.O. Box 1059
Two Kennedy Boulevard
East Brunswick, New Jersey 08816
Attention: Barbara Burns
Phone: (908) 247-6161
Fax: (908) 247-4956
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm
Phone: (212) 909-6226
Fax: (212) 909-6836
If to Time Broker:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Michael B. Milsom
Phone: (617) 375-7500
Fax: (617) 375-7575
with a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John T. Byrnes, Jr.
Phone: (202) 776-2000
Fax: (202) 776-2222
or to such other address or to such other person as the party to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
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12.2. Entire Agreement. This Agreement (including the Schedules
hereto), together with the Purchase Agreement and the Schedules thereto,
constitute the entire agreement between Time Broker and Licensee with respect to
the subject matter hereof and supersede all prior agreements and understandings,
oral and written, between Time Broker and Licensee with respect to the subject
matter hereof.
12.3. Assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned by Licensee or Time Broker without the written consent
of the other party hereto.
12.4. No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective permitted successors and assigns.
12.5. Amendment; Waiver. 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 amendment, waiver or consent is sought.
12.6. Interpretation. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
12.7. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement is interpreted by a court
of competent jurisdiction and found to be invalid or unenforceable, neither the
enforceability nor the validity of such provisions with respect to any other
facts or under any other circumstances shall thereby be impaired. The
unenforceability or invalidity of any provision shall not result in the
interpretation of the remainder of this Agreement, or any Section hereof, in a
manner inconsistent with intent of the parties as evidenced by the terms of this
Agreement, or such Section, as a whole.
12.8. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
be deemed to be one and the same agreement.
12.9. Governing Law; Jurisdiction. The construction and performance of
this Agreement shall be governed by the laws of the State of New York without
regard to its principles of conflict of laws, and the state and federal courts
of New York shall have exclusive jurisdiction over any controversy or claim
arising out of or relating to this Agreement.
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12.10. No Joint Venture. The Licensee and Time Broker agree that
nothing herein shall constitute a joint venture between them.
12.11. Damage to Station. In the event of damage or destruction to the
Station (other than damage or destruction caused by Time Broker), Licensee shall
proceed to repair, replace or restore the Station to its former condition as
promptly as is commercially reasonable.
12.12. Noninterference. During the term of this Agreement, neither
Licensee nor any of its employees shall take any actions that might impair the
operations of Time Broker conducted hereunder, except to the extent expressly
contemplated by this Agreement or as otherwise required by law.
12.13. Regulatory Changes. In the event of any order or decree of an
administrative agency or court of competent jurisdiction, including, without
limitation, any material change or clarification in FCC rules, policies, or
precedent, that would cause this Agreement to be invalid or violate any
applicable law, and such order or decree has become effective and has not been
stayed, the parties will use their respective commercially reasonable best
efforts and negotiate in good faith to modify this Agreement to the minimum
extent necessary so as to comply with such order or decree without material
economic detriment to either party, and this Agreement, as so modified, shall
then continue in full force and effect. In the event that the parties are unable
to agree upon a modification of this Agreement so as to cause it to comply with
such order or decree without material economic detriment to either party, then
this Agreement shall be terminated pursuant to Section 9.1(b) hereof.
12.14. Publicity. Except as required by applicable law or with the
other party's express written consent, neither Time Broker nor Licensee nor any
of their respective affiliates shall issue any press release or make any public
statement (oral or written) regarding the transactions contemplated by this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
GREATER BOSTON RADIO, INC.
By: _____________________________
Name:
Title:
AMERICAN RADIO SYSTEMS
CORPORATION
By: _____________________________
Name:
Title:
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SCHEDULE 1.1
Programming
The Programming shall consist of up to 165 hours per week on the
Station in a format to be chosen by Time Broker, subject to Section 2 of this
Agreement. The Programming shall include (a) news and weather information; (b)
public service announcements (including, at Licensee's directive from time to
time, a reasonable number of public service announcements of local interest
supplied by Licensee or produced by Time Broker under Licensee's supervision);
(c) an announcement in form sufficient to meet the station identification
requirements of the FCC at the beginning of each hour; and (d) any other
announcement that may be required by applicable law or regulation (including,
but not limited to, EBS tests). Time Broker shall maintain and deliver to
Licensee copies of all operating and programming information, including, without
limitation, information concerning portions of the Programming that are
responsive to issues of public importance identified to Time Broker by Licensee,
EBS announcements, and station operating logs, necessary for Licensee to
maintain its FCC Public File, and all other records required to be kept by FCC
rule or policy. Time Broker shall have the sole and exclusive right to sell
advertising to be included in the Programming and shall be entitled to retain
all the revenues derived from the sale thereof, provided, however, that Licensee
shall be entitled to sell such time as it deems necessary to comply with the
political advertising rules of the FCC in the event the Programming does not
comply with such rules.
Time Broker shall produce under Licensee's supervision and present
three hours a week on the Station public affairs programming that responds to
the needs and interests of listeners in the Station's community of license. Time
Broker may present such public affairs programming between 5:00 A.M. and 8:00
A.M. on Sundays or at such other times as the public interest may require in the
reasonable judgement of Licensee.
<PAGE>
SCHEDULE 2.1
Programming Policy
Time Broker and Licensee shall cooperate with each other in the
broadcast of programming of the highest possible standard of excellence. Without
limiting the generality of the foregoing, the parties will observe the following
policies in the preparation, writing and production of their own (non-syndicated
or network) programs:
I. Respectful of Faiths. The subject of religion and
references to particular faiths and tenets shall be
treated with respect at all times.
II. Controversial Issues. Any discussion of controversial
issues of public importance shall be reasonably
balanced with the presentation of contrasting
viewpoints in the course of overall programming; no
attacks on the honesty, integrity, or like personal
qualities of any person or group of persons shall be
made; and Station programs (other than public forum
or talk features) are not to be used as a forum for
editorializing about individual candidates. If such
events occur, Licensee may require that responsive
programming be aired. In the event that a statute,
regulation or policy is adopted that requires the
airing of responsive programming, Time Broker agrees
to comply with such statute, regulation or policy and
will prepare such responsive programming.
III. Donation Solicitation. Requests for donations in the
form of a specific amount shall not be made if there
is any suggestion that such donation will result in
miracles, physical cures or life-long prosperity.
However, statements generally requesting donations to
support a broadcast or church are permitted.
IV. Treatment of Parapsychology. The advertising or
promotion of fortune telling, occultism, astrology,
phrenology, palm reading, or numerology,
mind-reading, character readings, or subjects of the
like nature will not be broadcast.
V. No Ministerial Solicitations. No invitations by a
minister or other individual appearing on the program
to have listeners come and visit him or her for
consultation or the like shall be made if such
invitation implies that the listeners will receive
consideration, monetary gain, or total physical cures
for illness.
<PAGE>
VI. No Vending of Miracles. Any exhortation to listeners
to bring money to a church affair or service shall
not contain any suggestion that miracles, physical
cures, or prosperity will result.
VII. Sale of Religious Artifacts. The offering for sale of
religious artifacts or other items for which
listeners would send money is prohibited unless such
items are normally available in ordinary commerce or
are clearly being sold for proper fund-raising
purposes.
VIII. No Miracle Solicitation. Any invitation to listeners
to meet at places other than a church and/or to
attend other than regular services of a church is
prohibited if the invitation, meeting, or service
contains any claim that miracles, physical cures or
prosperity will result.
IX. No Plugola or Payola. The mention of any business
activity or "plug" for any commercial, professional,
or other related endeavor, except where contained in
an actual commercial message of a sponsor, or
otherwise lawful, is prohibited.
X. No Gambling. References to "dream books," the
"straight line," or other direct or indirect
descriptions or solicitations relative to the
"numbers game," or the "polity game," or any other
form of gambling are prohibited.
XI. Election Procedures. At least 15 days before the
start of any lowest-unit- charge period for any
primary or general election, Time Broker will clear
with Licensee's manager the rates Time Broker will
charge for time to be sold to candidates for public
office or to any other party entitled to the lowest
unit charge to make certain the rates charged are in
conformance with applicable law and Station policy.
Time Broker shall also clear with Licensee's manager
its forms for disclosure of political time sales
practices and rates.
XII. Required Announcements. Time Broker shall broadcast
(i) an announcement in form satisfactory to Licensee
at the beginning of each hour to identify the
Station, (ii) an announcement at the beginning of
each broadcast day or appropriate broadcast period to
indicate that program time has been purchased by Time
Broker and (iii) any other announcement that may be
required by law, regulation or Station policy.
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XIII. Commercial Record Keeping. No commercial messages or
"plugs" (other than references to Time Broker's
Boston-area stations and its programs and promotion
and other activities) shall be made in programming
presented over the Station with reference to any
business venture, profit-making activity, or other
interest (other than noncommercial announcements for
bona fide charities, church activities, or other
public service activities) in which Time Broker or
its employees is or are directly or indirectly
interested without the same having been approved in
advance by Licensee's manager or such broadcast being
announced and logged as sponsored.
XIV. No Illegal Announcements. No announcement or
promotion prohibited by federal or state law or
regulation of any lottery or game shall be made over
the Station.
XV. Licensee Discretion Paramount. In accordance with
Licensee's responsibility under the Communications
Act and the rules and regulations of the FCC,
Licensee reserves the right to reject or terminate
any advertising or programming being presented over
the Station which is in conflict with Station policy
or which in Licensee's sole but reasonable judgment
would not serve the public interest.
XVI. Programming Prohibitions. Time Broker shall not
knowingly broadcast any of the following programs or
announcements:
A. False Claims. False or unwarranted claims
for any product or service.
B. Unfair Imitation. Infringements of another
advertiser's rights through plagiarism or
unfair imitation of either program idea or
copy, or any other unfair competition.
C. Commercial Disparagement. Any unfair
disparagement of competitors or competitive
goods.
D. Slander, Obscenity and Indecency. Any
programs or announcements that are
slanderous, obscene or indecent (except
during the safe harbor for indecent
programming established by the FCC).
E. Unauthenticated Testimonials. Any
testimonials which cannot be authenticated.
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F. Advertising. Any advertising matter or
announcement which may, in the opinion of
Licensee, be injurious or prejudicial to the
interests of the public or the Station, or
to honest advertising and reputable business
in general
G. Contests. Any contests or promotions which
are in any way misleading or constitute a
public nuisance or are likely to lead to
injury to persons or property.
H. Telephone Conversations. Any programming in
violation of any statute, regulation or
policy, including, without limitation,
Section 73.1206 of the FCC's rules, or any
successor regulation, dealing with the
taping and/or broadcast of telephone
conversations.
The parties may jointly waive any of the foregoing policies in
specific instances if, in their opinion, good broadcasting in the public
interest is served.
In any case where obvious questions of policy or interpretation
arise, Time Broker will attempt in good faith to submit the same to Licensee for
decision before making any commitments in connection therewith.
4
Exhibit 10.11
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated May ____, 1997, by and between
Paxson Communications of West Palm Beach, Inc., a Florida corporation ("Buyer"),
and American Radio Systems Corporation, a Delaware corporation ("Seller").
P R E M I S E S:
Seller is the owner of and operator of, and its wholly owned subsidiary
American Radio Systems License Corp., a Delaware corporation ("License Corp.")
is the licensee of, radio stations WKGR(FM), Ft. Pierce, WOLL(FM) Riviera Beach
and WEAT(AM), West Palm Beach, and WBZT(AM), West Palm Beach, Florida (the
"Stations") pursuant to licenses issued by the Federal Communications Commission
(the "FCC").
Buyer is a subsidiary of Paxson Communications Corporation, a Delaware
corporation ("Paxson").
Seller desires to sell, and Buyer wishes to buy, substantially all
assets used or useful in the operation of the Stations and the broadcast
business made possible thereby for the price and on the terms and conditions
hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
<PAGE>
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Stations for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Stations.
1.2 "Assets" means the tangible and intangible assets owned and used in
connection with the conduct of the business or operations of any of the
Stations, being such assets as are specifically set forth in Section 2.1 herein,
which are being sold, transferred, or otherwise conveyed to Buyer hereunder, as
specified in detail in Section 2.1, together with all tangible or intangible
assets that are acquired by Seller between the date of this Agreement and the
Closing Date for use in connection with the business or operation of any of the
Stations.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7
that are designated to indicate that they will be assumed by Buyer upon its
purchase of the Stations, (ii) any Contracts entered into by, or assigned to
Seller in the ordinary course of business between the date hereof and the
Closing Date that Buyer agrees in writing to assume, (iii) all Contracts, in
existence on the date of this Agreement that meet the criteria set forth in
Section 3.7 (i) - (iii) for exclusion from Schedule 3.7, and (iv) all Contracts
with advertisers for the sale of time or talent on the Stations for cash entered
into in the ordinary course of business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date on which the Closing occurs.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary 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 3.7 with an asterisk.
1.7 "Contracts" means all contracts, agreements, non-governmental
licenses and leases, written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller that relate or are used in the business or
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operations of the Stations, and (i) which are in effect on the date hereof, or
(ii) which are entered into by Seller between the date hereto and the Closing
Date.
1.8 "Escrow Deposit" shall mean the sum of One Million Five Hundred
Thousand Dollars ($1,500,000) held by First Union National Bank of Florida, N.A.
as Escrow Agent pursuant to an Escrow Agreement of even date, by and among
Buyer, Seller, and Escrow Agent in the form set forth in Schedule 1.8 hereto.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein, in addition to any assets not specifically set forth in
Section 2.1 herein.
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 Seller or License Corp. in connection with
the conduct of the business or operations of any of the Stations.
1.12 "Final Order" means action of the FCC, (a) which has not been
reversed, stayed enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration 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 or appeal has expired.
1.13 "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) held or owned by Seller in connection with
the conduct of the business or operations of any of the Stations on the date of
this Agreement, including those listed in Schedule 3.9, and all such intangible
assets that are acquired by Seller between the date of this Agreement and the
Closing Date, other than Excluded Assets.
1.14 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any
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other federal, state or local governmental authorities to Seller or License
Corp. in connection with the conduct of the business or operations of any of the
Stations.
1.15 "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 Seller
and used as of the date hereof in the conduct of the business or operations of
any of the Stations, including that listed on Schedule 3.6 plus such additions
thereto between the date hereof and the Closing Date, but excluding the Excluded
Assets.
1.16 "Purchase Price" means the purchase price specified in Section
2.3.
1.17 "Real Property" means all of the leasehold interests, easements,
licenses, rights to access, rights-of-way, and other real property interests
owned by Seller and used in the conduct of the business or operations of any of
the Stations which are identified on Schedule 3.5 hereof plus such additions
thereto between the date hereof and the Closing Date.
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SECTION 2
SALE AND PURCHASE 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 (and
to cause License Corp. to sell, 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 liens for current taxes
not yet due and payable), more specifically described as follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All intangibles and all other information and similar
intangible assets relating to any of the Stations, including those listed in
Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, that relates
to any of the Stations, including without limitation, technical information and
data, machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including filings with the FCC which
relate to the Stations, if any;
(g) All choses in action and rights under warranties of Seller
relating to any of the Stations or any of the Assets, if any;
(h) All books and records relating to the business or
operations of any of the Stations, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept.
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2.2 Excluded Assets. The Assets shall exclude the assets listed on
Schedule 2.2 and the following assets:
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's 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) Seller's books and records related to internal matters and
financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds 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;
(f) The Accounts Receivable;
(g) Subject to Section 6.10, Tthe Seller's current tower site
including real estate, improvements and personal property for radio station
WBZT(AM) located at 4763 10th Avenue North, Lake Worth, Florida; and
(h) Any assets that are disposed of between the date of this
Agreement and the Closing Date in compliance with Section 5.1(A)(3) of this
Agreement..
2.3 Purchase Price.
(a) The Purchase Price shall be Thirty-Three Million Dollars
($33,000,000), as adjusted pursuant to Section 2.4, plus the fair market value
of the assets to be conveyed to Seller pursuant to Section 2.3(b). At the
Closing, Buyer shall pay or cause to be paid to or for the account of Seller the
Purchase Price as adjusted by the estimated adjustments set forth in Seller's
preliminary settlement statement referred to in Section 2.4, less that portion
of the Purchase Price consisting of the fair market value of the assets to be
conveyed to Seller pursuant to Section 2.3(b) and less any portion of the
Purchase Price that Buyer is entitled to withhold pursuant to Section 6.10(the
"Estimated Purchase Price") by federal 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 Purchase Price shall be allocated among the
tangible and intangible assets, including goodwill and license value, of the
Stations, in accordance with an independent appraisal
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undertaken by an independent appraiser reasonably acceptable to Seller and
retained by the Buyer.
(b) In addition to the am unt set forth in Section 2.3(a)
above, the Buyer shall convey or cause to be conveyed to Seller, as additional
consideration at Closing, the assets set forth in Schedule 2.3 (b) hereto.
2.4 Adjustments and Prorations. The Purchase Price shall be decreased
by the product of 17.37 times the amount, if any, by which Broadcast Cash Flow
(as defined in Section 7.1(G)) of the Stations for the period of twelve
consecutive calendar months ending immediately prior to the Closing Date is less
than $1,900,000. The Purchase Price shall be increased or decreased as required
to effectuate the proration of revenues and expenses as provided in this Section
2.4. All revenues arising from the Stations up until midnight on the day prior
to the Closing Date, and all expenses arising from the Stations up until
midnight on the day prior to the Closing Date, including business and license
fees (including any retroactive adjustments thereof), utility charges, real and
personal property taxes and assessments levied against the Assets, accrued
employee benefits such as vacation time (but excluding sick leave, which shall
not be prorated) for any employee of any of the Stations who becomes an employee
of Buyer on the Closing Date, 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), and similar prepaid and
deferred items, shall be prorated between Buyer and Seller in accordance
with the principle that Seller shall receive all revenues, and all refunds to
Seller and deposits of Seller held by third parties, and shall be responsible
for all expenses, costs and liabilities allocable in accordance with generally
accepted accounting principles to the conduct of the business or operations of
the Stations 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 in accordance with generally accepted accounting principles to the
conduct of the business or operations of the Stations on the Closing Date and
for the period thereafter. Buyer shall receive credit to the extent the value
(as calculated in Seller's financial statements consistent with past practice)
of any and all advertising time to be run following the Closing for which trade
or barter consideration has been received by the Seller prior to the Closing
exceeds Eighty Thousand Dollars ($80,000.00).
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A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall
deliver to Seller a certificate (the "Closing Certificate"), signed by Buyer,
providing a compilation of the adjustments and prorations to be made pursuant to
this Section 2.4, together with such supporting evidence as Seller may
reasonably request. If Seller shall conclude that the Closing Certificate does
not accurately reflect the adjustments and prorations to be made pursuant to
this Section 2.4, Seller shall, within thirty (30) days after its receipt of the
Closing Certificate, provide to Buyer its written statement of any discrepancies
believed to exist. If Seller notifies Buyer of its acceptance of Buyer's
calculation of the Purchase Price or if Seller fails to deliver its statement of
discrepancies within the 30-day period specified in the preceding sentence,
Buyer's determination of the Purchase Price shall be conclusive and binding on
the parties as of the last day of the 30-day period. Seller and Buyer shall
attempt jointly to resolve the discrepancies within fifteen (15) days after
receipt of Seller's discrepancy statement, which resolution, if achieved, shall
be binding upon all parties to this Agreement and not subject to dispute or
review. If the parties cannot resolve the discrepancy to their mutual
satisfaction within such fifteen (15) day period, Buyer or Seller may elect that
the parties, jointly designate a regional or local branch of a nationally known
independent public accounting firm to be retained to review the Closing
Certificate together with Seller's discrepancy statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Buyer and Seller. Such firm shall report its conclusions as
to adjustments pursuant to this Section 2.4, which report shall be conclusive on
both 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, Buyer is determined to owe an
amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer, in each case within ten (10) days of such determination, but subject to
Section 6.10.
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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 Seller under the Licenses and the Assumed Contracts insofar as
they relate to the tim period on and after the Closing Date and arise out of
events occurring after the Closing Date, (ii) all obligations and liabilities
arising out of events occurring after the Closing related to Buyer's ownership
of the Assets or its conduct of the business or operations of the Stations after
the Closing, and (iii) all obligations and liabilities for which Buyer receives
a proration adjustment under Section 2.4. All other obligations and liabilities
of Seller, including (i) any obligations under any Contract not included in the
Assumed Contracts, (ii) any obligations under the Assumed Contracts relating to
the time period prior to the Closing Date, and (iii) any claims or pending
litigation or proceedings relating to the operation of the Stations prior to the
Closing shall remain and be the obligations and liabilities solely of Seller.
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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
formed, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to conduct its business in the State of Florida,
which is the only jurisdiction where the conduct of the business or operations
of the Stations requires such qualification. Seller 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 operations of the Stations
as presently conducted. Seller 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 Seller, hereunder and thereunder. Seller is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Stations' operations or 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. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by judicial discretion
in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.8, 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 Certificate of
Incorporation or By Laws of 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 Seller; (iv) will not conflict
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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 it may be bound; and (v) 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 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). The Licenses
were validly issued and License Corp. is as of the date of this Agreement and
shall be on the Closing Date, 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
operations of the Stations as presently operated. Seller has no reason to
believe that the Licenses will 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
complete and accurate descriptions of all the Real Property, which comprises all
real property interests necessary to conduct the business or operations of the
Stations as now conducted. Seller holds no fee simple interests in any real
property necessary or used to conduct the business or operations of the Stations
as now conducted. Seller has delivered to Buyer true and complete copies of all
leases or other material instruments pertaining to the Real Property (including
any and all amendments and other modifications of such instruments), all of
which instruments are valid, binding and enforceable in accordance with their
terms. Seller is not in material breach, nor is any other party in material
breach, of the terms of any of such leases or other instruments. All Real
Property (i) is available for immediate use in the conduct of the business or
operations of the Stations, (ii) to Seller's knowledge after due investigation,
materially complies as described in Schedule 3.5 with all applicable building,
electrical and zoning codes and all regulations of any governmental authority
having jurisdiction and (iii) is in satisfactory condition and repair consistent
with its present use. Seller has full legal and practical access to the Real
Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 lists
(subject to the provisions of Section 6.16 hereof) all material items of the
Personal Property, which comprise
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all personal property used to conduct the business or operations of the Stations
as now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller 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 which are described in
Schedule 3.6. Except as shown in Schedule 3.6, the Personal Property taken as a
whole is in good operating condition and repair (ordinary wear and tear
excepted), and is available for immediate use in the business or operations of
the Stations, and the transmitting and studio equipment included in the Personal
Property (i) has been maintained consistent with FCC rules and regulations, and
(ii) will permit the Stations and any unit auxiliaries thereto 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.
3.7 Contracts. Schedule 3.7 lists all Contracts except for: (i)
contracts with advertisers for the sale of time on the Stations for cash and
substantially at rate card and which are not prepaid and which may be canceled
by the Stations without penalty on not more than thirty (30) days notice, (ii)
miscellaneous service contracts terminable at will without penalty, and (iii)
other contracts not involving either aggregate liabilities under all such
contacts exceeding Five Thousand Dollars ($5,000) or any material nonmonetary
obligation. All of the Assumed Contracts are in full force and effect, and are
valid, binding and enforceable in accordance with their terms, except as the
enforceability thereof may be affected by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, or by court-applied equitable remedies.
Seller is not in material breach, nor to Seller's knowledge is any other party
in material breach, of the terms of any such Contracts nor does there exist
under any Contract any event that, after notice or lapse of time or both, could
constitute a material breach by any party thereto. Except for the need to obtain
the Consents listed on Schedule 3.8, Seller has full legal power and authority
to assign its rights under the Assumed Contracts to Buyer in accordance with
this Agreement, and such assignments will not affect the validity,
enforceability and continuation of any of the Assumed Contracts.
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3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents listed on Schedule 3.8, 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 transaction contemplated hereby, (ii) to permit Seller to
assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the
business or operations of the Stations in essentially the same manner as such
business or operations are presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all Intangibles (exclusive of those required to be 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 the
Intangibles. Seller is not aware that it is infringing upon or otherwise acting
adversely to any trademarks, trade 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 Stations as now conducted.
3.10 Insurance. The business of the Stations and the Personal Property
included in the Assets are insured against loss or damage in amounts generally
customary in the broadcast industry. Schedule 3.10 comprises a true and complete
list of all insurance policies of Seller which insure any part of the Assets.
All policies of insurance listed in Schedule 3.10 are in full force and effect.
3.11 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Stations, all returns,
reports and statements which the Stations is currently required to file 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
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed; and the Stations' public inspection
file is located at the main studio and is in compliance with the FCC's rules and
regulations.
3.12 Employee Benefit Plans and Employees. Schedule 3.12 includes an
accurate description of all employee benefit plans and arrangements applicable
to the employees of Seller
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employed at the Stations, 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, and a
description of all fixed or contingent liabilities or obligations of Seller or
Chancellor with respect to any person employed at any of the Stations or any
person retained as an independent contractor at any of the Stations. Seller has
furnished or made available to Buyer true and complete copies of all written
documents or information with respect to employee matters and arrangements at
the Stations, including without limitation, all employee handbooks, rules and
policies, plan documents, trust agreements, employment agreements, summary plan
descriptions, and descriptions of any unwritten plans listed in Schedule 3.12.
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 Seller, threatened against any of such plans or arrangements, and Seller
possesses no knowledge of any facts which could give rise to any such action,
suit or claim. Schedule 3.12 contains a true and complete list of all employees
of any of the Stations and all persons retained as independent contractors at
any of the Stations and a description of all compensation arrangements affecting
them (including salary, bonus and other benefit arrangements) and a description
of their duties as of the date of this Agreement.
3.13 Labor Relations. Seller has provided Buyer with true and complete
copies of all written contracts of employment. Seller, and to Seller's
knowledge, after due investigation Seller's predecessors in interest, in their
operation of the Stations, have 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 payroll
related taxes, and neither Seller, not to its knowledge, after due investigation
its predecessors in interest, have 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 Seller and any employees of the
Stations. Seller is not a party to or subject to any collective bargaining
agreements with respect to the Stations except as described in Schedule 3.7
hereto. No labor union or other collective bargaining unit represents
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any of the employees of the Stations. To the best knowledge of Seller, 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 of Seller's employees at the Stations.
3.14 Claims, Legal Actions. Except as set forth in Schedule 3.14, 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 Seller threatened, against or relating to Seller, License Corp. the
Assets, or the business or operations of the Stations, nor does Seller know of
any basis for the same. In particular, except as set forth in Schedule 3.14, but
without limiting the generality of the foregoing, there are no applications,
complaints or proceedings pending or, to the best of its knowledge, threatened
(i) before the FCC relating to the business or operations of any of the Stations
other than applications, complaints or proceedings which affect the radio
industry generally, (ii) before any federal or state agency involving charges of
illegal discrimination by any of the Stations under any federal or state
employment laws or regulations, or (iii) against Seller or the Stations before
any federal, state or local agency involving environmental or zoning laws or
regulations.
3.15 Compliance with Laws. To the best knowledge of Seller, after due
investigation Seller and License Corp. have complied in all material respects
with (i) the Licenses, and (ii) all applicable federal, state and local laws,
rules, regulations and ordinances. To the best knowledge of Seller, after due
investigation neither the ownership or use, nor the conduct of the business or
operations, of the Stations conflicts with rights of any other person, firm or
corporation.
3.16 Environmental Matters. During Seller's period of ownership and, to
the best knowledge of Seller, during those of its predecessors, there has been
no production, storage, treatment, recycling, disposal, use, generation,
discharge, release or other handling or disposition of any kind by Seller or any
such predecessor of any toxic or hazardous wastes, substances, products,
pollutants or materials of any kind, including, without limitation, petroleum
and petroleum products and asbestos, or any other wastes, substances, products,
pollutants or
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material regulated under any environmental laws at, in, on, from or under the
Real Property. The operations of Seller and, to Seller's best knowledge, those
of its predecessors, are and have been conducted, as the case may be, in
material compliance with the Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and Recovery Act, the Federal Water
Pollution Control Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Refuse Act, or the Emergency Planning and Community
Right-to-Know Act (each as amended) and all other laws, rules, and regulations
of federal, state, and local governments (and agencies thereof) concerning
release or threatened release of hazardous substances, public health and safety,
or pollution or protection of the environment (collectively, "Environmental
Laws"). To the best knowledge of Seller, after due investigation, Seller has no
liability relating to its ownership and operation of any of the Stations under
any Environmental Law. No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or commenced against
Seller in connection with its ownership or operation of any of the Stations
alleging any failure to comply with any Environmental Law.
3.17 Financial Statements. Seller has furnished Buyer with true and
complete copies of operating statements regarding the Stations for the calendar
year ended December 31, 1996 (collectively, the "Financial Statements"). The
Financial Statements have been prepared from the books and records of Seller
and, as required, its predecessors-in-interest, have been prepared in accordance
with generally accepted accounting principles consistently applied and
maintained throughout the periods indicated, accurately reflect the books,
records, and accounts of the Stations (which books, records, and accounts are
complete and correct), are complete and correct in all material respects, and
present fairly the financial condition of the Stations as at their respective
dates and the results of operations for the periods then ended. None of the
Financial Statements understates the true costs and expenses of conducting the
business or operations of the Stations (except that trade and barter
transactions are not reflected in the Financial Statements), fails to disclose
any material contingent liabilities, or inflates the revenues of the Stations.
In addition, Seller has made available to Buyer operating statements regarding
the Stations prepared by their prior owners to the extent Seller has such
statements in its possession, but as to which Seller makes no representations or
warranties.
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3.18 Taxes. 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 Stations, and
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 .
3.19 Conduct of Business in Ordinary Course. Since August 1, 1996,
Seller has conducted the business and operations of the Stations only in the
ordinary course and have not:
(a) Suffered any material adverse change in the business,
assets, or properties of any of the Stations, including any damage, destruction,
or loss affecting any assets used or useful in the conduct of the business of
any of the Stations;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of the Stations, or any bonus payment
made or promised to any employee of the Stations, or any material change in
personnel policies, employee benefits, or other compensation arrangements
affecting the employees of the Stations;
(c) Made or permitted License Corp. to make any sale,
assignment, lease, or other transfer of any of the Stations' properties other
than in the normal and usual course of business with suitable replacements being
obtained therefor;
(d) Canceled any debts owed to or claims held by the owner of
any Station with respect to such Station, except in the normal and usual course
of business;
(e) Suffered any material write-down of the value of any
Assets; or
(f) 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 any of the Stations.
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3.20 Transactions with Affiliates. Except as disclosed on Schedule
3.20, Seller has not been involved in any business arrangement or relationship
relating to any of the Stations 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 any of the Stations.
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.
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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, and is qualified to conduct business in the State of Florida. 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 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 corporate action 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 hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or 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, or accelerate or permit the acceleration of any performance required by
the terms of, any material agreement, instrument, licenses, or permit to which
Buyer is a party or by which Buyer may be bound.
4.4 FCC Qualification. Except as disclosed on Schedule 4.4, Buyer has
no knowledge of any facts which would, under present law (including the
Communications Act of 1934, as amended) and present rules, regulations and
practices of the FCC, disqualify Buyer as an assignee of the licenses, permits
and authorizations listed on Schedule 3.4 hereto, or as an owner
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and/or operator of the Stations' Assets, and Buyer will not take, or
unreasonably fail to take, any action which Buyer knows would cause such
disqualification.
4.5 Paxson Tower Assets Representations and Warranties.
A. Real Property. Buyer has delivered to eller true and
complete copies of all leases or other material instruments pertaining to the
Paxson Tower Assets (including any and all amendments and other modifications of
such instruments), all of which instruments are valid, binding and enforceable
in accordance with their terms. To Buyer's knowledge, Buyer is not in material
breach, nor is any other party in material breach, of the terms of any such
leases or other instruments. All such real property to Buyer's knowledge
materially complies as described in Schedule 2.3(b) with all applicable
building, electrical and zoning codes and all regulations of any governmental
authority having jurisdiction.
B. Personal Property. Except as described on Schedule 2.3(b),
Buyer owns and has good title to all property listed thereon. None of such
personal property owned by Buyer 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 which are described in Schedule 2.3(b).
C. Consents. To Seller's knowledge, no consent, approval,
permit or authorization of, or declaration to or filing with any government or
regulatory authority, or any other third party is requ red to permit Buyer to
assign or transfer the Paxson Tower Assets to Seller.
D. Compliance with Laws. To the best knowledge of Buyer, B yer
has compiled in all material respects with all applicable federal, state and
local laws, rules, regulations and ordinances with respect to the Paxson Tower
Assets. To the best knowledge of Seller, neither the ownership or use, nor the
conduct of the business or operations of the Paxson Tower Assets conflicts with
the rights of any other person, firm or corporation.
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SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except with the prior written consent of
Buyer between the date hereof and the Closing Date, Seller covenants that it and
License Corp. shall operate the Stations in the ordinary course of business in
accordance with their respective past practices (except where such would
conflict with the following covenants or with Seller's other obligations
hereunder), and abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not 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 operations of the Stations, except
in accordance with current year budget as disclosed in Schedule 3.12;
(2) Contracts. Modify or amend any of the Assumed Contracts;
enter into any new Contracts except in the ordinary course of business,
provided that all new Contracts (other than Contracts for the sale of
broadcast time) shall not involve aggregate liabilities exceeding Five
Thousand Dollars ($5,000) or any material nonmonetary obligation; enter
into any trade or barter agreements which create obligations to be
performed subsequent to the Closing;
(3) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the material Assets, except for assets
consumed in the ordinary course of business or assets disposed of
following the acquisition of replacement property of equivalent kind
and value;
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(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 and disclosed in Schedules 3.5
and 3.6, (ii) mechanics' liens and other similar liens which will be
removed prior to the Closing Date, and (iii) liens for current taxes
not yet due and payable;
(5) Programming. Reduce the Stations' programming hours below
the minimum required by the FCC, or make any other material changes in
the Stations' programming policies, except such changes as in the good
faith judgment of the Seller are required by the public interest;
(6) Licenses. Do any act or fail to do any act which might
result in the expiration, revocation, suspension or 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 Stations;
(7) Rights. Waive any material right relating to the Stations
or the Assets; or
(8) No Inconsistent Action. Take any action which is
inconsistent with Seller's obligations hereunder or which could hinder
or delay the consummation of the transaction contemplated by this
Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow Buyer and
its authorized representatives reasonable access at mutually agreeable
times to the Assets and to all other properties, equipment, books,
records, Contracts and documents relating to the Stations (but not
relating solely to Seller's other operations or business) for the
purpose of audit and inspection including inspections incident to the
environmental study described in Section 6.11 and the engineering study
described in Section 6.12, and
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furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and
business of the Stations (but not relating solely to Seller's other
operations or business) 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
Seller; 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 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 good condition
(ordinary wear and tear excepted), and use, operate and maintain all of
the above assets in a reasonable manner, with inventories or spare
parts and expendable supplies being maintained at levels consistent
with past practices;
(3) Insurance. Maintain the existing insurance policies on the
Stations and the Assets;
(4) Consents. Use its reasonable efforts to obtain the
Consents and the estoppel certificates described in Section 8.2(f), and
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) Preservation of Business. Use its reasonable efforts to
preserve the business and audience of the Stations, and its present
relationships with their employees, suppliers, customers and others
having business relations with it and maintain levels of marketing and
promotions efforts and expenditures during the period prior to the
Closing Date equal to or greater to such levels in the year immediately
prior to the Closing Date;
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(6) Books and Records. Maintain its books and records in
accordance with past practices;
(7) Notification. Promptly notify Buyer in writing of any
unusual or material developments with respect to the assets of the
Stations, and of any material change in any of the information
contained in Seller's representations and warranties contained in
Section 3 hereof or in the schedules hereto, provided that such
notification shall not relieve Seller of any obligations hereunder;
(8) Personnel. Promptly notify Buyer as personnel vacancies
occur at the Stations and consider for employment all personnel
recommended by Buyer for such vacant positions;
(9) Trade and Barter Agreements. Provide prior to the Closing
Date the advertising time due under any trade and barter agreements
listed in Schedule 3.7 in the normal course of business;
(10) Financial Information. Furnish to Buyer within fifteen
(15) days after the end of each month ending between the date hereof
and the Closing Date a statement of income and expense relating to the
Stations' operations for the month just ended and such other financial
information (including information on payables and receivables) as
Buyer may reasonably request and which is prepared in the ordinary
course of business. All financial information delivered to Buyer
pursuant to this Section shall be prepared from the books and records
of the Stations in accordance with generally accepted accounting
principles consistently applied, shall accurately reflect the books,
records, and accounts of the Stations, shall be complete and correct in
all material respects, and shall present fairly the financial condition
of the Stations as at their respective dates and the results of
operations for the periods then ended.
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(11) 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 in Schedule 3.7,
together with copies of such Contracts; and
(12) 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 Seller, the Stations or the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Seller 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.
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SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC. Within
ten (10) days after the execution of this Agreement, Buyer and Seller shall file
with the FCC an appropriate application for FCC Consent. The parties shall
prosecute said application with all reasonable diligence and otherwise use their
best efforts to obtain the grant of such application as expeditiously as
practicable. If the FCC Consent imposes any condition on any party hereto, such
party shall use its best efforts to comply with such condition except that
neither 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.. If reconsideration or judicial review
is sought with respect to the FCC Consent, Buyer and Seller shall oppose such
efforts to obtain reconsideration or judicial review (but nothing herein shall
be construed to limit either party's right to terminate this Agreement pursuant
to Section 9 of this Agreement).
6.2 Control of the Stations. Prior to the Closing Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise or direct, the operations of the Stations; such operations, including
complete control and supervision of all of the Stations' programs, employees,
and policies, shall be the sole responsibility of Seller until the completion of
the Closing hereunder.
6.3 Taxes, Fees and Expenses. Seller and Buyer shall each pay 50% of
all sales and similar taxes and fees, if any, arising out of the transfer of the
Assets pursuant to this Agreement, provided, however, that Seller's share of
sales tax on tangible personal property shall not exceed Four Thousand Dollars
($4,000). All filing fees required by the FCC and the FTC (associated with
filings required under the HSR Act) shall be paid equally by Seller and Buyer.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in
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connection with the authorization, preparation, execution, and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents,
and other representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it 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 Blackburn and Company, Inc., whose
fee shall be solely the responsibility of Seller.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, 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. In the event this
Agreement is terminated and the purchase and sale contemplated hereby abandoned,
each party will return to the other party all documents, work papers and other
written material obtained by it from the other party in connection with the
transaction contemplated hereby.
6.6 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 best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations hereunder. Notwithstanding
the foregoing, Buyer shall have no obligation (i) to expend funds to obtain the
Consents, or (ii) to agree to any adverse change in any License or Assumed
Contract to obtain a Consent required with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing. 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.
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B. If any loss, damage or destruction of the Assets occurs and
Seller cannot restore or replace the Assets before the date otherwise provided
in this Agreement for the Closing, then, at Buyer's option, the Closing shall be
postponed, for a period of up to one hundred twenty (120) days, to permit the
repair or replacement of the damage or loss. Alternatively, Buyer may, at its
option, proceed to close this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event Seller
shall deliver to Buyer all insurance proceeds received in connection with such
damage or destruction of the Assets to the extent not already expended by Seller
arising in connection with such restoration and replacement.
C. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Stations in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.8 Employee Matters. Seller shall promptly notify Buyer of any changes
that occur prior to Closing with respect to the information set forth on
Schedule 3.13.
6.9 Accounts Receivable. At the Closing, Seller shall designate Buyer
as its agent to collect the Accounts Receivable. Seller shall deliver to Buyer
on or as soon as practicable after the Closing date 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 will be
for the account of Seller. Buyer shall endeavor in the ordinary course of
business to collect the Accounts Receivable for a period beginning on the
Closing Date and ending on the last day of the third full calendar month
beginning after the Closing Date (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 has disputed such application and directs
otherwise. On or before the 15th day after the last day of each calendar month
during the Collection Period, Buyer shall furnish Seller with a list of , and
pay over to Seller, the amounts collected during such calendar month with
respect to the Accounts Receivable. Buyer shall provide Seller with a final
accounting on or before the fifteenth (15th) day following the end of the
Collection Period.
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As Seller's agent, Buyer shall not be obligated to use any extraordinary efforts
or expend any sums to collect any of the Accounts Receivable 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 or compromise, nor settle
or adjust the amount of any such Account Receivable, except with the approval of
Seller. Buyer shall incur no liability to Seller for any uncollected account.
During the Collection Period, without specific agreement with Buyer to the
contrary, neither Seller nor its agents shall make any direct solicitation of
the Account Receivable for collection purposes.
6.10 Tower Lease Arrangements. Seller agrees that Seller, or Seller's
subsidiary, American Tower Systems, Inc., a Delaware Corporation ("ATS")hereby
agree to will enter into on or before the Closing Date the following lease
agreements, in substantially the form or substantially in accordance with the
terms, set forth in the respective Exhibit to this Agreement:
Exhibit 6.10(a) WOLL Main Antenna Sublease Lease Terms
Exhibit 6.10(b) WKGR Main Antenna Sublease Lease Terms
Exhibit 6.10(c) WHBI-TV Main Antenna Lease
Exhibit 6.10(d) WBZT Land Lease Agreement
Exhibit 6.10(e) Option Agreement (Tiger Mountain, Seattle, WA)
Exhibit 6.10(f) WOLL Rental Sharing Agreement Terms
Exhibit 6.10(g) WBZT Interim Lease Agreement
In addition, Seller hereby agrees to construct, at Seller's sole expense, a
tower site for WBZT(AM) in accordance with the specifications set forth in
Exhibit 6.10(hg) and the construction of said tower site shall be completed
prior to the Closing, if possible, but in any event as soon as practicable. If
the new transmitter site for radio station WBZT(AM) is not fully operational on
the Closing Date, Buyer shall withhold from the amount otherwise payable to
Seller at the Closing pursuant to Section 2.3(a) the sum of Six Hundred Thousand
Dollars (the "Holdback Amount"). Buyer shall pay the Holdback Amount of Seller
within five business days after the new transmitter site for radio station
WBZT(AM) is fully operational. Between the Closing Date and the date of payment
to Seller, Buyer shall not be required to hold or invest the Holdback Amount
separately from any other funds of Buyer.
6.11 Environmental Audit. Buyer may, at its option, retain an
environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of any or all
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of the Stations. If the survey discloses any material environmental hazard or
material possibility of future liability for environmental damages or clean-up
costs, Buyer shall so notify Seller as soon as practicable.
6.12 Engineering Study. Buyer may, at its option, retain an engineering
firm to conduct a proof of performance study of any or all of the Stations and
to prepare a report on any or all of the Stations' compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the survey discloses any material
deficiencies in the operations or equipment of any of the Stations, Buyer shall
so notify Seller as soon as practicable.
6.13 Bulk Sales Law. If applicable, the Bulk Sales law of the State of
Florida shall be complied with by Seller. Any loss, liability, obligation, or
cost suffered by Seller or Buyer as the result of the failure of Seller or Buyer
to comply with the provisions of any bulk sales law applicable to the transfer
of the Assets as contemplated by this Agreement shall be borne by Seller.
6.14 Access to Books and Records. Seller shall provide Buyer access and
the right to copy for a period of three years from the Closing Date any books
and records relating to the Assets but not included in the Assets. Buyer shall
provide Seller access and the right to copy for a period of three years from the
Closing Date any books and records relating to the Assets that are included in
the Assets.
6.15 HSR Act Filing. Seller and Buyer have filed with the U.S.
Department of Justice and the Federal Trade Commission appropriate filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). The waiting period under the HSR Act has expired without action by the
Department of Justice or the Federal Trade Commission to prevent the Closing.
6.16 Adjustments to Personal Property. Buyer and Seller acknowledge
that the items of Personal Property listed on Schedule 3.6 represent Seller's
good faith determination of material equipment and property associated with the
Stations, notwithstanding that certain items of the Personal Property have been
in shared use with other radio stations owned by Seller. Accordingly, Buyer and
Seller hereby agree to negotiate in good following the date of this Agreement
and prior to Closing in order to address any instances claimed Buyer where such
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division of personal property results in less than a reasonably satisfactory
allocation of equipment and facilities for Buyer to operate the Stations.
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SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at 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 Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date as though such representations
and warranties were made at and as of such time.
B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the 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. Each of the Consents marked as "material" on
Schedule 3.7 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 is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Stations or the conduct of their business or 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.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Ag eement and the
Closing Date, there shall have been no material adverse change in the business,
assets, liabilities, results of operations, condition (financial or otherwise),
or prospects of any of the Stations, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of any of the
Stations.
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G. Financial Covenant. Broadcast Cash Flow of the Stations for
the latest period of twelve consecutive calendar months ending at least fifteen
days prior to the Closing Date shall be at least $1,900,000. As used in this
Agreement, "Broadcast Cash Flow" means (i) with respect to each Station, net
income from advertising sales on such Station excluding non-cash items and after
restoring thereto amounts previously deducted for depreciation, amortization of
intangibles (other than of programming rights), interest, corporate/management
fees, income taxes, retirement benefits (excluding executive/talent deferred
income), and any other home office allocations, but in no event less than zero,
and (ii) with respect to the Stations as a whole, the sum of the Broadcast Cash
Flow of each of the Stations. All home office allocations to the individual
Stations shall be made in good faith.
H. FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied w th
by Buyer under 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.
I. New Transmitter Sites for WOLL and WKGR. Radio stations
WOLL and WKGR shall each be fully operational from Hobe Sound Tower in the
manner contemplated by the leases to be entered into in accordance with Exhibit
6.10(a) and Exhibit 6.10(b).
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its 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 as though such
representations and warranties were made at and as of such time.
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 be performed or complied with by it prior to or on
the Closing Date.
C. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3.
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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, Buyer shall have complied with any
conditions imposed on it by the FCC Consent and the FCC Consent shall have
become a Final Order.
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SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. Except as provided in the following sentence or in Section
6.7(B) or as otherwise agreed to by Buyer and Seller, the Closing shall take
place at 10:00 a.m. on a date, to be set by Buyer on at least five days' written
notice to Buyer, which shall be not earlier than the first business day after
and not later than the tenth business day after the day on which the FCC Consent
shall have become a Final Order, provided, though, that Buyer shall waive the
requirement for a Final Order and schedule the Closing, within five (5) days
notice to Seller after receipt of the FCC Consent, provided Buyer has obtained
the approval to do so from its lenders, which Buyer hereby agrees to use its
best efforts to obtain. If Buyer fails to specify the date for Closing pursuant
to the preceding sentence prior to the tenth business day after the day on which
the FCC Consent shall have become a Final Order, the Closing shall take place on
the fifteenth business day after the day on which the FCC Consent shall have
become a Final Order. The Closing shall be held at the offices of Dow, Lohnes &
Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C.
20036-6802, 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 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 assignees, free and clear of any claims, liabilities,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except for liens for current taxes not yet due and payable);
(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.8;
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(c) Seller's Certificate. A certificate, dated as of the
Closing Date, executed by Seller, certifying: (i) 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 (ii) that Seller has, in all material respects, performed its obligations
and complied with its covenants set forth in this Agreement to be performed and
complied with prior to or on the Closing Date;
(d) Secretary Certificate. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that the execution
and delivery of this Agreement by Seller and the consummation of the transaction
contemplated hereby have been authorized and ratified; and (ii) providing, as
attachments thereto, a certificates of good standing certified by appropriate
Delaware and Florida state officials; as of a date not more than fifteen (15)
days before the Closing Date and copies of Seller's Certificate of Incorporation
and By Laws certified by Seller's Secretary as of the Closing Date;
(e) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to Buyer and
at Buyer's directions, to Buyer's lenders, substantially in the form of Schedule
8.2 hereto;
(f) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(g) Tax, Lien, and Judgment Searches. Results of a search for
tax, lien, and judgment filings in the Secretary of State's records of the State
of Florida and in the records of Palm Beach and Martin Counties, Florida, such
searches having been made no earlier than fifteen days prior to the Closing
Date.
(h) Leases. The leases and other agreements described in
Section 6.10.
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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 paid to Seller or
Seller's designee as provided in Section 2.3;
(b) Paxson Tower Assets. Documents sufficient to convey good
and marketable title to the Paxson Tower Assets to Seller.
(c) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts arising on or after the
Closing Date;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer, certifying (i) 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 that date, and (ii) that Buyer has,
in all material respects, performed its obligations and complied with its
covenants set forth in this Agreement to be performed or complied with on or
prior to the Closing Date;
(e) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by Buyer's Board
of Directors, authorizing and approving the execution of this Agreement and the
consummation of the transaction contemplated hereby and that such resolutions
remain in full force and effect; and (ii) a copy of the certificate of
incorporation and Bylaws of Buyer as in effect on the date hereof, certified by
Buyer's secretary as of the Closing Date;
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(f) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3 hereto.
(The remainder of this page intentionally left blank.)
38
<PAGE>
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights.
(a)This Agreement may be terminated by either Buyer or Seller
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:
(i) If on the date that would otherwise be the
Closing Date (i) any of the conditions precedent to the obligations of the
terminating party set forth in Section 7 of this Agreement shall not have been
satisfied, and (ii) satisfaction of such condition shall not have been waived by
the terminating party;
(ii) If the Closing shall not have occurred on or
before January 1, 1998; or
(iii) There shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order that would prevent
or make unlawful the Closing.
(b) This Agreement may be terminated by Buyer, upon written
notice to Seller, upon the occurrence of any of the following:
(i) Buyer shall have notified Seller no later than
thirty (30) days after the date hereof of material environmental hazards (which
shall mean for those which, in the aggregate, costs of remediation would exceed
Fifty Thousand Dollars ($50,000) as indicated in the environmental study
described in Schedule 6.11 and the cause thereof shall not have been remedial
prior to thirty (30) days following such notice.
(ii) Buyer shall have notified Seller no later then
thirty (30) days after the date hereof of material deficiencies in the technical
operations or equipment of any of the Stations, as indicated in the engineering
study described in Section 6.12, and the cause thereof shall not have been
remedied prior to thirty (30) days following such notice.
Upon termination: (i) if neither party hereto is in breach of any provision of
this Agreement, the parties hereto shall not have any further liability to each
other; (ii) if Seller shall be in breach of any material provision of this
Agreement, Buyer shall have all rights and remedies available at
39
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law or in equity or (iii) if Buyer shall be in breach of any material provision
of this Agreement, Seller 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 this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's breach of this Agreement. All interest or other
proceeds from the investment of the Escrow Deposit, shall be paid to Buyer.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone would not be adequate. Buyer shall therefore be entitled to obtain
specific performance of the terms of this Agreement. In the event of any action
to enforce this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law.
9.4 Defaults. 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 other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party.
40
<PAGE>
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
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 Date for a period of twelve (12)
months (the "Survival Period"). 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 herein.
10.2 Indemnification by Seller. Following the Closing, 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, document or instrument
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
the operation or ownership of the Stations prior to the Closing Date, including
any and all liabilities arising under the Licenses or the Assumed Contracts
which relate to events occurring 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.
41
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10.3 Indemnification by Buyer. Following the Closing, 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 and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Stations on or after the Closing Date,
including any and all liabilities or obligations arising under the Licenses or
the Assumed Contracts which are 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 "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third 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 Claimant, such notice shall be given by Claimant within
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. 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
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the
42
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Claimant and the Indemnifying Party agree at or prior to the expiration of said
thirty (30) day period (or any mutually 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 Claimant the
full amount of the claim. Buyer shall be entitled to apply any or all of the
Accounts Receivable collected on behalf of Seller to a claim as to which Buyer
is entitled to indemnification hereunder. If the Claimant and the Indemnifying
Party do not agree within said period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, 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 reasonable 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.
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, it shall be
bound by the results obtained by the Claimant with respect to such claim.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the 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 Limitation on Indemnification. Neither party shall be entitled to
indemnification hereunder for any losses, liabilities, or damages resulting from
any untrue representation or breach of warranty by the other party unless (i) a
claim for such losses, liabilities, or damages was made during the Survival
Period and (ii) the aggregate loss, damage or expense for all such claims
exceeds $33,000, in which event the indemnified party shall be entitled to
recover all
43
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such loss, damage or expense. In no event shall the aggregate amount required to
be paid by either indemnifying party hereunder for any losses, liabilities, or
damages resulting from any untrue representation or breach of warranty by such
party exceed $3,300,000. The limitations in this Subsection 10.5 shall not apply
to any claim for indemnification for any liability of the Claimant to any third
party or to claims by Buyer arising from any defect in Seller's title to the
Assets.
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44
<PAGE>
SECTION 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 commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) 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 (iv) addressed as follows:
If to Seller: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge
Fax: (617) 375-7575
With a Copy to: American Radio Systems
116 Huntington A enue
Boston, MA 02116
Attn: Michael B. Milsom
Fax: (617) 375-7550
If to Buyer: Paxson Communications of West Palm Beach, Inc.
c/o Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, President
Fax: (561)659-4252
With a copy to: Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr.
Fax: (202) 776-2222
45
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or to such other 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 this
Agreement without prior written consent of the other party hereto, except that
Buyer may assign its rights and obligations under this Agreement to any entity
controlled by or commonly controlled with Paxson, provided, however, that
following which assignment Buyer shall remain liable to Seller for all of
Buyer's obligations hereunder. This Agreement shall be binding upon and 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 internal laws of the State of Florida (without
regard to the choice of law provisions thereof).
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 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 required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates 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. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement and is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 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,
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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 11.7.
11.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greater extent permitted by law.
11.9 Counterparts. This Agreement may be signed in two counterparts
with the same effect as if the signature on each such counterpart were upon the
same instrument.
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47
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: AMERICAN RADIO SYSTEMS CORPORATION
By: __________________________
Title:
BUYER: PAXSON COMMUNICATIONS OF WEST PALM
BEACH, INC.
By: __________________________
Title:
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SCHEDULES TO ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.3(b) Paxson Tower Assets
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.10 Insurance
3.12 Employee Benefit Plans and Employees
3.14 Claims; legal actions
3.20 Transactions with Affiliates
6.10 Tower Lease Arrangements; (a) through (h)
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
49
EXHIBIT 10.12
ASSET EXCHANGE AGREEMENT
By and Among
AMERICAN RADIO SYSTEMS CORPORATION
AMERICAN RADIO SYSTEMS LICENSE CORP.
CITICASTERS CO.
REGENT BROADCASTING OF KANSAS CITY, INC.
and
REGENT LICENSEE OF KANSAS CITY, INC.
Dated as of
June 19, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................2
ARTICLE 2 EXCHANGE OF LICENSES AND STATIONS...............................................................2
2.1 Agreement to Exchange Licenses and Stations.....................................................2
2.2 Appraisals; Tax Reporting.......................................................................3
2.3 Assumption of Liabilities and Obligations. .....................................................4
2.4 Closing Date....................................................................................8
2.5 Accounts Receivable. ..........................................................................9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE JACOR PARTIES............................................10
3.1 Organization and Business; Power and Authority; Effect of Transaction..........................10
3.2 Financial and Other Information. .............................................................11
3.3 Material Statements and Omissions; Absence of Events...........................................11
3.4 Changes in Condition...........................................................................12
3.5 Title to Properties; Leases. .................................................................12
3.6 Compliance with Private Authorizations.........................................................13
3.7 Compliance with Governmental Authorizations and Applicable Law.................................13
3.8 Intangible Assets..............................................................................14
3.9 Related Transactions...........................................................................15
3.10 Tax Matters....................................................................................15
3.11 Employee Benefit Plans; Jacor Station Employees................................................15
3.12 Material Agreements............................................................................16
3.13 Ordinary Course of Business....................................................................17
3.14 Broker or Finder...............................................................................17
3.15 Environmental Matters..........................................................................17
3.16 Trade or Barter................................................................................18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE AMERICAN.................................................18
4.1 Organization and Business; Power and Authority; Effect of Transaction..........................18
4.2 Financial and Other Information. .............................................................20
4.3 Material Statements and Omissions; Absence of Events...........................................20
4.4 Changes in Condition...........................................................................20
4.5 Title to Properties; Leases. .................................................................20
4.6 Compliance with Private Authorizations.........................................................22
4.7 Compliance with Governmental Authorizations and Applicable Law.................................22
4.8 Intangible Assets..............................................................................23
4.9 Related Transactions...........................................................................23
4.10 Tax Matters....................................................................................24
4.11 Employee Benefit Plans; American Station Employees.............................................24
4.12 Material Agreements............................................................................25
4.13 Ordinary Course of Business....................................................................25
4.14 Broker or Finder...............................................................................26
4.15 Environmental Matters..........................................................................26
4.16 Trade or Barter................................................................................27
<PAGE>
ARTICLE 5 COVENANTS......................................................................................27
5.1 Access to Information; Confidentiality.........................................................27
5.2 Agreement to Cooperate.........................................................................28
5.3 Public Announcements...........................................................................34
5.4 Notification of Certain Matters................................................................34
5.5 No Solicitation................................................................................34
5.6 Conduct of Business by the Jacor Parties Pending the Closing...................................35
5.7 Conduct of Business by American Pending the Closing............................................36
5.8 Risk of Loss...................................................................................37
5.9 American and Jacor Station Employees...........................................................38
ARTICLE 6 CLOSING CONDITIONS.............................................................................38
6.1 Conditions to Obligations of Each Party to Effect the Exchanges................................38
6.2 Conditions to Obligations of the American Parties. ...........................................39
6.3 Conditions to Obligations of the Jacor Parties ................................................41
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................42
7.1 Termination....................................................................................42
7.2 Effect of Termination..........................................................................43
ARTICLE 8 INDEMNIFICATION................................................................................44
8.1 Survival. .....................................................................................44
8.2 Indemnification................................................................................44
8.4 Notice of Claims...............................................................................45
8.5 Defense of Third Party Claims..................................................................45
8.6 Exclusive Remedy...............................................................................46
ARTICLE 9 GENERAL PROVISIONS.............................................................................46
9.1 Amendment......................................................................................46
9.2 Waiver.........................................................................................46
9.3 Fees, Expenses and Other Payments..............................................................46
9.4 Notices........................................................................................46
9.5 Specific Performance; Other Rights and Remedies................................................47
9.6 Severability...................................................................................48
9.7 Counterparts...................................................................................48
9.8 Section Headings...............................................................................48
9.9 Governing Law..................................................................................48
9.10 Further Acts...................................................................................48
9.11 Entire Agreement...............................................................................49
9.12 Assignment.....................................................................................49
9.13 Parties in Interest............................................................................49
9.14 Mutual Drafting................................................................................49
9.15 American Agent for American License............................................................49
9.16 Citicasters Agent for the Other Jacor Parties..................................................49
</TABLE>
-ii-
<PAGE>
APPENDIX A: Definitions
SCHEDULES: Jacor Disclosure Schedule
American Disclosure Schedule
-iii-
<PAGE>
ASSET EXCHANGE AGREEMENT
This ASSET EXCHANGE AGREEMENT (this "Agreement") is dated as of June
19,1997, by and among American Radio Systems Corporation, a Delaware corporation
("American" or an "American Party"), American Radio Systems License Corp, a
Delaware corporation ("American License" or an "American Party" and,
collectively with American, the "American Parties"), Citicasters Co., an Ohio
corporation ("Citicasters"), Regent Broadcasting of Kansas City, Inc., a
Delaware corporation ("Regent Broadcasting"), and Regent Licensee of Kansas
City, Inc., a Delaware corporation ("Regent Licensee" and, collectively with
Regent Broadcasting, the "Regent Parties", the Regent Parties, being herein
referred to with Citicasters, individually as a "Jacor Party" and collectively
as the "Jacor Parties" or "Jacor").
WHEREAS, Citicasters is the licensee of and operates radio stations
WDAF(AM) and KYYS(FM), Kansas City, Missouri (the "Citicasters Stations")
pursuant to licenses issued to Citicasters by the FCC (the "Citicasters FCC
Licenses"), and Regent Broadcasting operates and Regent Licensee is the licensee
of radio stations KMXV(FM), Kansas City, Missouri, and KUDL(FM), Kansas City,
Kansas (the "Regent Stations" and, collectively with the Citicasters Stations,
the "Jacor Stations") pursuant to licenses issued to Regent Licensee by the FCC
(the "Regent FCC Licenses" and, collectively with the Citicasters FCC Licenses,
the "Jacor FCC Licenses");
WHEREAS, American operates and American License is the licensee of
radio stations WMMX(FM), WTUE(FM) and WONE(AM), Dayton, Ohio, WLQT(FM),
Kettering-Dayton, Ohio, WBTT(FM), Englewood, Ohio and WXEG(FM), Beavercreek,
Ohio (the "American Stations") pursuant to licenses issued to American License
by the FCC (the "American FCC Licenses");
WHEREAS, (i) American License and Citicasters desire to exchange the
American Citicasters FCC Licenses for the Citicasters FCC Licenses, and American
and Citicasters desire to exchange the American Citicasters Assets (other than
the American Citicasters FCC Licenses) for the Citicasters Assets (other than
the Citicasters FCC Licenses) (collectively, the "Citicasters Exchange"), and
(ii) American License and Regent Licensee desire to exchange the American Regent
FCC Licenses for the Regent FCC Licenses, and American and Regent Broadcasting
desire to exchange the American Regent Assets (other than the American Regent
FCC Licenses) for the Regent Assets (other than the Regent FCC Licenses), all on
the terms and subject to the conditions hereinafter set forth (collectively, the
"Regent Exchange" and, collectively with the Citicasters Exchange, the
"Exchanges"); and
WHEREAS, the parties hereto intend the Exchanges to qualify as
Like-Kind Exchanges;
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, American, American License,
Citicasters, Regent Broadcasting and Regent Licensee intending to be legally
bound, do hereby covenant and agree as follows:
<PAGE>
ARTICLE 1
DEFINED TERMS
As used herein, 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 either 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 this 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 "either party" shall refer to the
Jacor Parties and the American Parties.
ARTICLE 2
EXCHANGE OF LICENSES AND STATIONS
2.1 Agreement to Exchange Licenses and Stations. Subject to the terms
and conditions set forth in this Agreement:
(a) Citicasters and American hereby agree to exchange,
transfer and deliver to each other, as applicable, on the Closing Date,
the Citicasters Assets (other than the Citicasters FCC Licenses) and
the American Citicasters Assets (other than the American Citicasters
FCC Licenses);
(b) Citicasters and American License hereby agree to exchange,
transfer and deliver to each other, as applicable, the Citicasters FCC
Licenses and the American Citicasters FCC Licenses,
(c) Regent Broadcasting and American hereby agree to exchange,
transfer and deliver to each other, as applicable, on the Closing Date,
the Regent Assets (other than the Regent FCC Licenses) and the American
Regent Assets (other than the American Regent FCC Licenses); and
(d) Regent Licensee and American License hereby agree to
exchange, transfer and deliver to each other, as applicable, the Regent
FCC Licenses and the American Regent FCC Licenses,
in each case, free and clear of any Liens of any nature whatsoever except
Permitted Liens and Permitted Title Exceptions.
-2-
<PAGE>
2.2 Appraisals; Tax Reporting.
(a) The Jacor Parties and the American Parties agree that the fair
market value of each asset included in the Jacor Assets and the American Assets
will be determined on the basis of the appraisals (the "Appraisals"), prepared
by the firm of Bond & Pecaro, whose fee and expenses shall be equally borne by
Citicasters and Regent Broadcasting, on the one hand, and American, on the other
hand. The parties shall direct Bond & Pecaro to deliver Appraisals within sixty
(60) days from the date hereof and to set forth in the Appraisals the fair
market value of each asset included in the Jacor Assets and the American Assets.
(b) Promptly after delivery of the Appraisals, and in any event prior
to the Closing Date, the parties shall prepare and agree upon the appraised
value of each asset included in the Jacor Assets and the American Assets (which
values shall be based upon the Appraisals) and shall set forth those values on a
schedule (the "Valuation Schedule"). The parties shall not take any position
inconsistent with the valuations set forth on the Valuation Schedule and will
prepare and file all Tax Returns and reports related to the Exchange, including
without limitation those required under Section 1060 of the Code and all
original and amended federal, state and local income Tax Returns, on a basis
consistent with such valuations. Each asset included in the Citicasters Assets,
the Regent Assets, the American Citicasters Assets and the American Regent
Assets shall be set forth in the appropriate "exchange group" and "residual
group" (each within the meaning of Treas. Reg. section 1.1031(j)-1) on the basis
set forth in the Valuation Schedule.
(c) Each of the parties intend to report the transactions contemplated
hereby as a "like-kind exchange" to the maximum extent permissible under Section
1031 of the Code, consistent with the Appraisals and the Valuation Schedule.
Each of the parties shall cooperate with the other in any and all respects
necessary to achieve like-kind exchange treatment to the maximum extent
permissible under Section 1031 of the Code and shall endeavor to give the other
notice of any disallowance of or challenge to such reporting by any Taxing
Authority; provided, however, that the failure to give such notice shall not
result in any liability of the party failing to give the notice. Without
limiting the generality of the foregoing, in order to effectuate the
transactions contemplated hereby as a like-kind exchange to the maximum extent
possible under Section 1031 of the Code, or to facilitate one or more of the
Exchanges (or any part thereof) as part of a deferred like-kind exchange, each
of American and American License, on the one hand, and Citicasters and the
Regent Broadcasting and Regent Licensee, on the other hand, (i) may at any time
at or prior to Closing assign its rights, in whole or in part, under this
Agreement (but such assignment shall not relieve it of its obligations under
this Agreement) to a "qualified intermediary" (as defined in Treas. Reg.
ss.1.1031(k)-1(g)(4)), subject to all rights and obligations hereunder of
Citicasters, Regent Broadcasting and Regent Licensee, on the one hand, and
American and American License, on the other hand, respectively, and, in such
event, (ii) shall promptly provide written notice of such assignment to the
other party. If American or American Licensee shall have given notice of such
assignment to a qualified intermediary, Citicasters, Regent Broadcasting and/or
Regent Licensee, as the case may be, shall (i) promptly provide American and
American License with written acknowledgment of such notice and (ii) at the
Closing, convey the Citicasters Assets or the Regent Assets, as the case may be,
(or such portion of them as shall have been designated in writing by American or
American License) to the "qualified intermediary" rather than to American and
American License (which conveyance shall, to such extent, discharge the
obligation of Citicasters,
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Regent Broadcasting and/or Regent Licensee, as the case may be, to deliver the
Citicasters Assets and the Citicasters Stations and/or the Regent Assets and the
Regent Stations, as the case may be, hereunder). If Citicasters, Regent
Broadcasting and/or Regent Licensee, as the case may be, shall have given notice
of such assignment to a qualified intermediary, American and American License
shall (i) promptly provide Citicasters, Regent Broadcasting and/or Regent
Licensee, as the case may be, with written acknowledgment of such notice and
(ii) at the Closing, convey the American Citicasters Assets and/or the American
Regent Assets (or such portion of them as shall have been designated in writing
by Citicasters, Regent Broadcasting and/or Regent Licensee, as the case may be)
to the "qualified intermediary" rather than to Citicasters, Regent Broadcasting
and/or Regent Licensee, as the case may be (which conveyance shall, to such
extent, discharge the obligation of American and American License to deliver the
American Citicasters Assets and/or the American Regent Assets and the
corresponding American Stations hereunder).
(d) Notwithstanding the provisions of this Section 2.2, the parties to
this Agreement will rely solely on their own advisors in determining the tax
consequences of the transactions contemplated by this Agreement and each party
is not relying, and will not rely, on any representations or assurances of any
other party regarding such consequences other than the representations,
warranties, covenants and agreements set forth in writing in this Agreement or
furnished pursuant to the provisions hereof. Notwithstanding anything in this
Agreement to the contrary, the obligations of the parties set forth in this
Section 2.2 shall survive the Closing.
2.3 Assumption of Liabilities and Obligations.
(a) The American Parties agree to assume (i) the Citicasters Assumable
Agreements at the Closing or, to the extent provided in the Citicasters Stations
TBA, upon the TBA Date of the Citicasters Stations TBA and (ii) the Regent
Assumable Agreements at the Closing or, to the extent provided in the Regent
Stations TBA, upon the TBA Date of the Regent Stations TBA. Except as expressly
provided in this Agreement, including without limitation Section 2.3(e), or in
the Citicasters Stations TBA or the Regent Stations TBA, the American Parties
shall not assume or become obligated to perform any debt, liability or
obligation of Citicasters, Regent Broadcasting or Regent Licensee or relating to
the ownership or operation of the Citicasters Assets or the Regent Assets or the
conduct of the business of the Citicasters Stations or the Regent Stations prior
to the Closing whatsoever, other than to the extent set forth in the assumption
of the Citicasters Assumable Agreements or the Regent Assumable Agreements. The
parties acknowledge and agree that the assumption of the Citicasters Assumable
Agreements and the Regent Assumable Agreements shall not, except to the extent
of any proration pursuant to the provisions of Section 2.3(e), entail the
assumption by the American Parties of any obligation or liability of
Citicasters, Regent Broadcasting or Regent Licensee with respect to (i) any
obligations or liabilities under the Citicasters Assumable Agreements or the
Regent Assumable Agreements relating to the period prior to the Cut-off Date;
(ii) any Claims to which Citicasters, Regent Broadcasting or Regent Licensee is
a party or to which any of the Citicasters Assets or the Citicasters Stations or
any of the Regent Assets or the Regent Stations is subject relating to the
ownership or operation of the Citicasters Assets or the Regent Assets or the
conduct of the business of the Citicasters Stations or the Regent Stations prior
to the Closing (other than as provided in the Citicasters Stations TBA or the
Regent Stations TBA); or (iii) any liability for any Taxes attributable to the
ownership or operation of the Citicasters Assets or the Regent Assets or the
conduct of the business of the Citicasters Stations or the Regent Stations on
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or prior to the Closing Date. All such obligations and liabilities (the
"Citicasters Nonassumed Liabilities" and the "Regent Nonassumed Liabilities",
respectively, and, collectively, the "Jacor Nonassumed Liabilities") shall
remain and be the obligations and liabilities solely of Citicasters, Regent
Broadcasting and Regent Licensee, as the case may be.
(b) Citicasters agrees to assume the American Citicasters Assumable
Agreements at the Closing or, to the extent provided in the American Citicasters
Stations TBA, upon the TBA Date of the American Citicasters Stations TBA. Except
as expressly provided in this Agreement, including without limitation Section
2.3(f), or in the American Citicasters Stations TBA, Citicasters shall not
assume or become obligated to perform any debt, liability or obligation of
either American Party or relating to the ownership or operation of the American
Assets or the conduct of the business of the American Stations prior to the
Closing whatsoever, other than to the extent set forth in the assumption of the
American Citicasters Assumable Agreements. The parties acknowledge and agree
that the assumption of the American Citicasters Assumable Agreements shall not,
except to the extent of any proration pursuant to the provisions of Section
2.3(f), entail the assumption by Citicasters of any obligation or liability of
either American Party with respect to (i) any obligations or liabilities under
the American Citicasters Assumable Agreements relating to the period prior to
the Cut-off Date; (ii) any Claims to which either American Party is a party or
to which any of the American Assets or any of the American Stations is subject
relating to the ownership or operation of the American Assets or the conduct of
the business of the American Stations prior to the Closing (other than as
provided in the American Citicasters Stations TBA); or (iii) any liability for
any Taxes attributable to the ownership or operation of the American Assets or
the American Stations on or prior to the Closing Date. All such obligations and
liabilities (the "American Citicasters Nonassumed Liabilities") shall remain and
be the obligations and liabilities solely of the American Parties.
(c) The Regent Parties agrees to assume the American Regent Assumable
Agreements at the Closing or, to the extent provided in the American Regent
Stations TBA, upon the TBA Date of the American Regent Stations TBA. Except as
expressly provided in this Agreement, including without limitation Section
2.3(g), or in the American Regent Stations TBA, the Regent Parties shall not
assume or become obligated to perform any debt, liability or obligation of
either American Party or relating to the ownership or operation of the American
Assets or the conduct of the business of the American Stations prior to the
Closing whatsoever, other than to the extent set forth in the assumption of the
American Regent Assumable Agreements. The parties acknowledge and agree that the
assumption of the American Regent Assumable Agreements shall not, except to the
extent of any proration pursuant to the provisions of Section 2.3(g), entail the
assumption by the Regent Parties of any obligation or liability of either
American Party with respect to (i) any obligations or liabilities under the
American Regent Assumable Agreements relating to the period prior to the Cutoff
Date; (ii) any Claims to which either American Party is a party or to which any
of the American Assets or any of the American Stations is subject relating to
the ownership or operation of the American Assets or the conduct of the business
of the American Stations prior to the Closing (other than as provided in the
American Regent Stations TBA); or (iii) any liability for any Taxes attributable
to the ownership or operation of the American Assets or the American Stations on
or prior to the Closing Date. All such obligations and liabilities (the
"American Regent Nonassumed Liabilities" and, collectively with the American
Citicasters Nonassumed Liabilities, the "American
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Nonassumed Liabilities") shall remain and be the obligations and liabilities
solely of the American Parties.
(d) Notwithstanding anything contained in this Agreement to the
contrary and except as otherwise provided in the Citicasters Stations TBA, the
Regent Stations TBA, the American Citicasters Stations TBA or the American
Regent Stations TBA, as the case may be, all items of income and expense
(including without limitation with respect to rent, utilities, Pro Ratable Taxes
and wages, salaries and accrued but unused vacation for employees) arising from
the conduct of the business of (i) the Citicasters Stations and the American
Citicasters Stations shall be prorated between American and Citicasters, and
(ii) the Regent Stations and the American Regent Stations shall be prorated
between American and Regent Broadcasting, in each case, as of 12:01 a.m.,
Eastern time, on the Cut-Off Date, with the transferring party responsible for
any such items prior to the Cut-off Date and the transferee party responsible
for any such items subsequent to the Cut-off Date.
(e) Within sixty (60) days after the Cut-Off Date, American shall
deliver to Citicasters and Regent Broadcasting a schedule of its proposed
prorations with respect to the American Citicasters Assets and the American
Citicasters Stations and the American Regent Assets and the American Regent
Stations, respectively, which shall set forth in reasonable detail the basis for
those determinations, and which shall account for any amount owed by American to
Citicasters or Regent Broadcasting pursuant to the provisions of Section 2.3(i)
(the "Dayton Proration Schedule"). The Dayton Proration Schedule shall be
conclusive and binding upon Citicasters and Regent Broadcasting unless
Citicasters or Regent Broadcasting provides American with written notice of
objection (the "Notice of Disagreement") within thirty (30) days after
Citicasters' and Regent Broadcasting's receipt of the Dayton Proration Schedule,
which notice shall state the prorations proposed by Citicasters or Regent
Broadcasting, as the case may be (the "Jacor Proration Schedule"). American
shall have fifteen (15) days from receipt of a Notice of Disagreement to accept
or reject the Jacor Proration Schedule. If American rejects the Jacor Proration
Schedule, and the amount in dispute exceeds Five Thousand Dollars ($5,000), the
dispute shall be submitted within ten (10) days of such rejection to the
Chicago, Illinois office of Arthur Andersen & Co., LLP (the "Referee") for
resolution, such resolution to be made within thirty (30) days after submission
to the Referee and to be final, conclusive and binding on American, Citicasters
and Regent Broadcasting. American, on the one hand, and Citicasters and Regent
Broadcasting, on the other hand, agree to share equally the cost and expenses of
the Referee, but each party shall bear its own legal and other expenses, if any.
If the amount in dispute is equal to or less than Five Thousand Dollars
($5,000), such amount shall be divided equally between Citicasters and/or Regent
Broadcasting, on the one hand, and American, on the other hand. Payment by any
party pursuant hereto of the proration amounts determined pursuant to this
Section 2.3(e) shall be due fifteen (15) days after the last to occur of (i)
Citicasters' acceptance of the Dayton Proration Schedule or failure to give
American a timely Notice of Disagreement; (ii) Regent Broadcasting's acceptance
of the Dayton Proration Schedule or failure to give American a timely Notice of
Disagreement; (iii) American's acceptance of the Jacor Proration Schedule or
failure to reject the Jacor Proration Schedule within fifteen (15) days of
receipt of a timely Notice of Disagreement; (iv) American's rejection of the
Jacor Proration Schedule in the event the amount in dispute equals or is less
than Five Thousand Dollars ($5,000); and (v) notice to American, Citicasters and
Regent Broadcasting of the resolution of the disputed
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amount by the Referee in the event that the amount in dispute exceeds Five
Thousand Dollars ($5,000).
(f) Within sixty (60) days after the Cut-Off Date, Citicasters shall
deliver to American a schedule of its proposed prorations with respect to the
Citicasters Assets and the Citicasters Stations which shall set forth in
reasonable detail the basis for those determinations, and which shall account
for any amount owed by Citicasters to American pursuant to the provisions of
Section 2.3(i) (the "Citicasters Kansas City Proration Schedule"). The
Citicasters Kansas City Proration Schedule shall be conclusive and binding upon
American unless American provides Citicasters with a Notice of Disagreement
within thirty (30) days after American's receipt of the Citicasters Kansas City
Proration Schedule, which notice shall state the prorations proposed by American
(the "American Citicasters Proration Schedule"). Citicasters shall have fifteen
(15) days from receipt of a Notice of Disagreement to accept or reject the
American Citicasters Proration Schedule. If Citicasters rejects the American
Citicasters Proration Schedule and the amount in dispute exceeds Five Thousand
Dollars ($5,000), the dispute shall be submitted within ten (10) days of such
rejection to the Referee for resolution, such resolution to be made within
thirty (30) days after submission to the Referee and to be final, conclusive and
binding on Citicasters and American. American and Citicasters agree to share
equally the cost and expenses of the Referee, but each party shall bear its own
legal and other expenses, if any. If the amount in dispute is equal to or less
than Five Thousand Dollars ($5,000), such amount shall be divided equally
between American and Citicasters. Payment by American or Citicasters, as the
case may be, of the proration amounts determined pursuant to this Section 2.3(f)
shall be due fifteen (15) days after the last to occur of (i) American's
acceptance of the Citicasters Kansas City Proration Schedule or failure to give
Citicasters a timely Notice of Disagreement; (ii) Citicasters' acceptance of the
American Citicasters Proration Schedule or failure to reject the American
Citicasters Proration Schedule within fifteen (15) days of receipt of a timely
Notice of Disagreement; (iii) Citicasters' rejection of the American Citicasters
Proration Schedule in the event the amount in dispute equals or is less than
Five Thousand Dollars ($5,000); and (iv) notice to Citicasters and American of
the resolution of the disputed amount by the Referee in the event that the
amount in dispute exceeds Five Thousand Dollars ($5,000).
(g) Within sixty (60) days after the Cut-Off Date, Regent Broadcasting
shall deliver to American a schedule of its proposed prorations with respect to
the Regent Assets and the Regent Stations which shall set forth in reasonable
detail the basis for those determinations, and which shall account for any
amount owed by Regent Broadcasting to American pursuant to the provisions of
Section 2.3(i) (the "Regent Kansas City Proration Schedule"). The Regent Kansas
City Proration Schedule shall be conclusive and binding upon American unless
American provides Regent Broadcasting with a Notice of Disagreement within
thirty (30) days after American's receipt of the Regent Kansas City Proration
Schedule, which notice shall state the prorations proposed by American (the
"American Regent Proration Schedule"). Regent Broadcasting shall have fifteen
(15) days from receipt of a Notice of Disagreement to accept or reject the
American Regent Proration Schedule. If Regent Broadcasting rejects the American
Regent Proration Schedule and the amount in dispute exceeds Five Thousand
Dollars ($5,000), the dispute shall be submitted within ten (10) days of such
rejection to the Referee for resolution, such resolution to be made within
thirty (30) days after submission to the Referee and to be final, conclusive and
binding on Regent Broadcasting and American. American and Regent Broadcasting
agree to share equally the cost and expenses of the Referee, but each party
shall bear its own legal and other expenses, if any. If the amount in
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dispute is equal to or less than Five Thousand Dollars ($5,000), such amount
shall be divided equally between American and Regent Broadcasting. Payment by
American or Regent Broadcasting, as the case may be, of the proration amounts
determined pursuant to this Section 2.3(g) shall be due fifteen (15) days after
the last to occur of (i) American's acceptance of the Regent Kansas City
Proration Schedule or failure to give Regent Broadcasting a timely Notice of
Disagreement; (ii) Regent Broadcasting's acceptance of the American Regent
Proration Schedule or failure to reject the American Regent Proration Schedule
within fifteen (15) days of receipt of a timely Notice of Disagreement; (iii)
Regent Broadcasting's rejection of the American Regent Proration Schedule in the
event the amount in dispute equals or is less than Five Thousand Dollars
($5,000); and (iv) notice to Regent Broadcasting and American of the resolution
of the disputed amount by the Referee in the event that the amount in dispute
exceeds Five Thousand Dollars ($5,000).
(h) Any payment required by American to Citicasters or Regent
Broadcasting or by Citicasters or Regent Broadcasting to American, as the case
may be, under Section 2.3(e), 2.3(f) or 2.3(g) shall be paid by wire transfer of
immediately available funds to the account of the payee with a financial
institution in the United States as designated by such party in the Citicasters
Kansas City Proration Schedule, the Regent Kansas City Proration Schedule or the
Dayton Proration Schedule, as the case may be, or the Notice of Disagreement (or
by separate notice in the event a Notice of Disagreement is not sent). If any
party fails to pay when due any amount under Section 2.3(e), 2.3(f) or 2.3(g)
interest on such amount will accrue from the date payment was due to the date
such payment is made at a per annum rate equal to the "prime rate" as published
daily in the Money Rates column of the Wall Street Journal (or the average of
such rates if more than one rate indicated) plus two percent (2%), and such
interest shall be payable upon demand.
(i) With respect to Trade Agreements American, as the assigning party,
shall be required to pay to Citicasters and Regent Broadcasting, as the assuming
party and Citicasters and Regent Broadcasting, as the assigning party, shall be
required to pay to American, as the assuming party, an amount, if any, by which
the aggregate obligations and liabilities (determined in accordance with GAAP)
for unperformed air time under all such Trade Agreements as of 12:01 a.m. on the
applicable Cut-off Date exceeds by $20,000, the fair market value of the
services or property (determined in accordance with GAAP) to be received by the
assuming party (treating Citicasters and Regent Broadcasting as one assuming
party for these purposes) under such Trade Agreements after 12:01 a.m. on the
applicable Cut-off Date under all such Trade Agreements. There shall be no
payment required by the assuming party to the assigning party with respect to
the Trade Agreements, notwithstanding that the excess, if any, of the
obligations and liabilities under the Trade Agreements over the fair market
value of the services and property to be received under such Trade Agreements
after 12:01 a.m. on the applicable Cut-off Date is less than the amount
specified in the first sentence of this paragraph.
(j) Nothing contained in this Section 2.3 is intended or shall be
deemed to amend or modify the indemnification provisions of Article 8 nor to
reallocate responsibility for the matters set forth therein.
2.4 Closing Date. The closing of the Exchanges (the "Closing") shall
take place at a mutually convenient location to be agreed upon by the parties,
at 10:00 a.m., local time, within ten
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(10) business days after the satisfaction or waiver of each of the conditions
specified in Article 6 (other than those to be satisfied at the Closing) or such
other date, prior to the Termination Date, as the parties may agree (the
"Closing Date"). At the Closing, (a) each of the parties shall deliver such
deeds (in recordable form and warrantying against matters not covered by title
insurance other than Permitted Liens and Permitted Title Exceptions), bills of
sale, assignments, assumptions of liabilities and other instruments and
documents as are described in this Agreement or as may be otherwise reasonably
requested by the parties and their respective counsel and the legal opinions
described in Sections 6.2(b) and 6.3(b), and (b) as part of the Jacor Assets,
Jacor shall pay to American an amount equal to the American Tower Adjustment by
wire transfer of immediately available funds to such account as is designated by
American in written instructions to Jacor not later than two (2) business days
prior to the Closing.
2.5 Accounts Receivable. Effective, if at all, upon the earlier to
occur of Closing or the commencement of the effectiveness of the applicable TBA,
each of Citicasters and Regent Broadcasting hereby appoints American its agent
for the purpose of collecting all Accounts Receivable relating to the
Citicasters Stations and the Regent Stations, respectively, and American hereby
appoints Citicasters and Regent Broadcasting its agent for the purpose of
collecting all Accounts Receivable relating to the American Citicasters Stations
and the American Regent Stations, respectively. Each party shall deliver to the
other on or as soon as practicable after the earlier to occur of the applicable
TBA Date or the Closing Date (but, in any event, within ten (10) days after such
earlier date) a complete and detailed statement showing the name, amount and age
of each Account Receivable of its Stations. Subject to and limited by the
following, revenues relating to the Citicasters Accounts Receivable and the
Regent Accounts Receivable will be for the account of Citicasters and Regent
Broadcasting, respectively, and revenues relating to the American Accounts
Receivable will be for the account of American. Each agent shall use the same
collection procedures as it uses with respect to its own accounts receivable to
collect the Accounts Receivable with respect to which it is acting as agent for
a period of ninety (90) days after the applicable Cut-off Date (the "Collection
Period"). Any payment received by any agent during the Collection Period from
any customer with an account which is an Account Receivable with respect to
which it is acting as agent shall first be applied in reduction of such Account
Receivable, unless the customer indicates otherwise in writing. During the
Collection Period, each agent shall furnish the other with a list of, and pay
over to the other, the amounts collected with respect to the Accounts Receivable
with respect to which it is acting as agent within five (5) days after the end
of each month during the Collection Period. Each agent shall provide the other
with a final accounting on or before the fifteenth (15th) day following the end
of the Collection Period. Upon the request of either agent at and after such
time, the parties shall meet to mutually and in good faith analyze any
uncollected Accounts Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if the party which acted as
agent with respect thereto desires to retain such Accounts Receivable in the
interest of maintaining an advertising relationship. As to each such Accounts
Receivable, the parties shall in good faith attempt to negotiate the value of
such Accounts Receivable, which the purchasing party shall pay to the other if
the purchasing party, in its sole discretion, chooses to retain such Accounts
Receivable. Each party shall retain the right to collect any of its Accounts
Receivable as to which the parties are unable to reach agreement as to such
value, and each party agrees to turn over to the other any payments received
against any such Accounts Receivable. None of the agents shall be obligated to
use any extraordinary efforts to collect any of the Accounts Receivable assigned
to it for collection hereunder or to refer any of such
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Accounts Receivable to a collection agency or to any attorney for collection,
and none of the agents shall make any such referral or compromise, nor settle or
adjust the amount of any such Accounts Receivable, except with the approval of
the party entitled to such Accounts Receivable. None of the agents shall incur
any liability to any other party for any uncollected Accounts Receivable unless
such agent shall have engaged in willful misconduct or gross negligence in the
performance of its obligations set forth in this Section. During and after the
Collection Period, without specific agreement with the agent with respect
thereto to the contrary, none of the assigning parties nor its agents shall make
any direct solicitation of the Accounts Receivable for collection purposes,
except for Accounts Receivable retained by the assigning party after the
Collection Period.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE JACOR PARTIES
The Jacor Parties, jointly and severally, represent and warrant to the
American Parties as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of the Jacor Parties is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all requisite corporate power and authority to own or hold
under lease its properties and to conduct its business as now conducted.
(b) Each of the Jacor Parties has all requisite corporate power and
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
Exchanges and the other Transactions; and the execution, delivery and
performance of this Agreement and each Collateral Document executed or required
to be executed pursuant hereto or thereto have been duly authorized by all
requisite corporate or other action on the part of the Jacor Parties. This
Agreement has been duly executed and delivered by the Jacor Parties and
constitutes, and each Collateral Document executed or required to be executed
pursuant hereto or thereto or to consummate the Exchanges and the other
Transactions when executed and delivered by a Jacor Party will constitute,
legal, valid and binding obligations of such Jacor Parties, 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 Jacor Disclosure
Schedule, neither the execution and delivery by the Jacor Parties of this
Agreement or any Collateral Document executed or required to be executed by any
of them pursuant hereto or thereto, nor the consummation by the Jacor Parties of
the Exchanges and the other Transactions, nor compliance with the terms,
conditions and provisions hereof or thereof by the Jacor Parties:
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(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of any of the Jacor
Parties or any Applicable Law on the part of any of the Jacor Parties,
or subject to obtaining any required consents, 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 Jacor Material
Agreement; or
(ii) will require any Jacor Party to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents, filings, if required, under
the Hart-Scott-Rodino Act and Private Authorizations, the failure of
which to be obtained or maintained would not, individually or in the
aggregate, have an adverse effect on Jacor.
(d) None of the Jacor Parties has any direct or indirect Subsidiaries
or other Affiliates (other than a Jacor Party) which own or have any interest in
any of the Jacor Stations or any of the Jacor Assets. The Jacor Stations
constitute all of the radio stations which any Jacor Party or any of their
Affiliates owns or operates or has the right to acquire or operate in the Kansas
City, Missouri radio market.
3.2 Financial and Other Information.
(a) The Jacor Parties have heretofore furnished to American copies of
the unaudited financial statements of the Jacor Stations for the years ended
December 31, 1995 and 1996 (the "Jacor Financial Statements"). The Jacor
Financial Statements have been prepared on a consistent basis throughout the
periods covered thereby, and fairly present the financial condition, results of
operations and cash flow of the Jacor Stations, as of the respective dates
thereof and for the respective periods covered thereby.
(b) Except solely for the obligations and liabilities to be assumed by
the American Parties pursuant to the Jacor Assumable Agreements, there will, at
the time of Closing, be no obligations or liabilities of any nature, whether
accrued, absolute, contingent or otherwise, relating to the Jacor Parties, the
Jacor Assets or the Jacor Stations which could, after the Closing, result in any
form of transferee liability against either of the American Parties or subject
any of the Jacor Assets or any of the Jacor Stations to any Lien or otherwise
affect the full, free and unencumbered use of the Jacor Assets and the ownership
and operation of the Jacor Stations by American.
3.3 Material Statements and Omissions; Absence of Events. No
representation or warranty made by the Jacor Parties contained in this
Agreement, the Jacor Disclosure Schedule or any certificate, document or other
instrument furnished or to be furnished by the Jacor Parties pursuant to the
provisions hereof 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 not misleading. None of the Jacor Parties
is aware of any impending or contemplated Event that would cause any of the
representations and warranties made by it in this Article not to be true,
correct and complete on the date of such Event as if made on that date.
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3.4 Changes in Condition. Since December 31, 1996, except to the extent
specifically described in Section 3.4 of the Jacor Disclosure Schedule, there
has been no adverse change in the Jacor Assets or the Jacor Stations. There is
no Event known to the Jacor Parties which adversely affects, or (so far as the
Jacor Parties can now reasonably foresee) is likely to adversely affect, the
Jacor Assets or the Jacor Stations, except (a) to the extent specifically
described in Section 3.4 of the Jacor Disclosure Schedule and (b) for general
business and economic conditions and matters affecting the radio broadcasting
industry generally.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Jacor Disclosure Schedule lists all Real
Property owned by any Jacor Party (the "Jacor Owned Real Property") and
describes all Leases of Real Property (the "Jacor Leases") which is used or held
for use in the operation of the Jacor Stations (the Jacor Owned Real Property
and the real property subject to the Jacor Leases, being hereinafter
collectively referred to as the "Jacor Real Property"). One of the Jacor Parties
has (and American will upon Closing obtain) good and marketable title to the
Jacor Owned Real Property and valid and subsisting leasehold interests in the
Jacor Leases, in each case free and clear of all Liens, except (i) Permitted
Liens and (ii) Liens set forth on Section 3.5(a) of the Jacor Disclosure
Schedule (which Liens shall be released prior to Closing). One of the Jacor
Parties has full legal and practical access to all of the Jacor Owned Real
Property, and all easements, rights of way, and real property licenses relating
thereto have been properly recorded in the appropriate public recording offices,
except to the extent, if any, set forth in Section 3.5(a) of the Jacor
Disclosure Schedule. The Jacor Owned Real Property, together with the real
property that is subject to the Jacor Leases, includes all the real property,
easements, rights of way, and other real property interests necessary to conduct
the business and operations of the Jacor Stations as they are now conducted.
None of the buildings, structures, improvements or fixtures constructed on any
Jacor Owned Real Property and real property that is subject to the Jacor Leases,
including without limitation 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 in all material respects with all "set back" lines, easements,
covenants, restrictions and all applicable building, fire, zoning, health and
safety laws and codes, except to the extent, if any, set forth in Section 3.5(a)
of the Jacor Disclosure Schedule. No utility lines serving such real property
pass over the lands of a third party except where appropriate easements have
been obtained or except as set forth in Section 3.5(a) of the Jacor Disclosure
Schedule. All buildings, structures, towers, antennae, improvements and fixtures
comprising the Jacor Owned Real Property or real property that is subject to the
Jacor Leases are in good and technically sound operating condition, have no
latent structural mechanical or other defects of material significance, are
reasonably suited 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 Jacor Stations as presently conducted, except to
the extent, if any, set forth in Section 3.5(a) of the Jacor Disclosure
Schedule. There is no pending or, to Jacor's knowledge, threatened condemnation
or other legal proceeding or action of any kind relating to such real property
and/or title thereto.
Except as otherwise set forth in Section 3.5(a) of the Jacor Disclosure
Schedule, each Jacor Lease included in the Jacor Real Property has been duly
authorized, executed and delivered by one
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of the Jacor Parties and, to Jacor's knowledge, each of the other parties
thereto, and is a legally valid and binding obligation of one of the Jacor
Parties, and, to Jacor's knowledge, each of the other parties thereto,
enforceable in accordance with its terms. One of the Jacor Parties enjoys
peaceful and undisturbed possession under all Jacor Leases pursuant to which it
will hold any Jacor Real Property. All of the Jacor Leases are valid and
subsisting and in full force and effect; none of the Jacor Parties nor, to
Jacor's knowledge, any other party thereto, is in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any Jacor Lease.
(b) Section 3.5(b) of the Jacor Disclosure Schedule contains a true,
accurate and complete description of all material items of Jacor Personal
Property. One of the Jacor Parties owns and has good and merchantable title to
all of the Jacor Personal Property relating to the Jacor Stations (the "Jacor
Personal Property"), in each case, free and clear of all Liens, except (i)
Permitted Liens and (ii) Liens set forth on Section 3.5(b) of the Jacor
Disclosure Schedule (which Liens shall be released prior to Closing). Except as
set forth in Section 3.5(b) of the Jacor Disclosure Schedule, all of the Jacor
Personal Property is in a state of good repair and maintenance and is in good
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 Jacor Stations to be operated in accordance with the
terms and conditions of the Jacor FCC Licenses and all Applicable Laws.
3.6 Compliance with Private Authorizations. Section 3.6 of the Jacor
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Jacor Private Authorization which, individually or when
taken together with other substantially similar Jacor Private Authorizations, is
material to the Jacor Assets or the Jacor Stations, all of which are in full
force and effect. There does not exist any breach or violation of, or in default
in the performance, observance or fulfillment of, any Jacor 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 Jacor Private
Authorization, except as set forth in Section 3.6 of the Jacor Disclosure
Schedule. No Jacor Private Authorization is the subject of any pending or, to
Jacor's knowledge, threatened attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the Jacor Disclosure Schedule contains a
description of:
(i) all Claims pending or, to Jacor's knowledge, threatened
against any Jacor Party with respect to the business, operation or
ownership of any of the Jacor Assets or any of the Jacor Stations,
including without limitation all Claims which, individually or in the
aggregate, are reasonably likely to result in the revocation or
termination of any of the Jacor FCC Licenses or the imposition of any
restriction of such a nature as would adversely affect the ownership or
operations of any of the Jacor Stations; in particular, but without
limiting the generality of the foregoing, there are no Claims pending
or, to Jacor's knowledge, threatened (x) before the FCC relating to the
business or operations of any of the Jacor Stations other than Claims
which affect the radio broadcasting industry generally, or (y) before
any Authority involving charges of illegal discrimination by any of the
Jacor Stations under any federal or state employment Laws; and
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(ii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate the Jacor Stations, as currently conducted or proposed to be
conducted on or prior to the Closing Date, all of which are in full
force and effect (the "Jacor Governmental Authorizations").
Attached to the Jacor Disclosure Schedule are true, correct and complete copies
of the Jacor Governmental Authorizations (including without limitation any and
all amendments and other modifications thereto).
(b) One of the Jacor Parties is the authorized legal holder of the FCC
Licenses listed in Section 3.7(a) of the Jacor Disclosure Schedule, none of
which is subject to any restriction or condition which would limit in any
respect the operations of the Jacor Stations as currently conducted. The Jacor
FCC Licenses are valid and in good standing, are in full force and effect and
are not impaired in any respect by any act or omission of any Jacor Party or its
officers, directors, employees or agents. The Jacor Stations are operating in
accordance with the Jacor FCC Licenses, all underlying construction permits and
the FCA. Except as disclosed in Section 3.7(b) of the Jacor Disclosure Schedule,
no application, action or proceeding is pending for the renewal or modification
of any Jacor FCC Licenses and, to Jacor's knowledge, there is not as of the date
of this Agreement issued or outstanding any investigation or complaint against
any Jacor Party at the FCC relating to any of the Jacor Stations. Except as
disclosed in Section 3.7(b) of the Jacor Disclosure Schedule, as of the date of
this Agreement, there is no proceeding pending at, or outstanding notice of
violation from, the FCC relating to any of the Jacor Stations. All fees payable
to Authorities pursuant to the Jacor Station FCC Licenses, including FCC annual
regulatory fees, have been paid and no event has occurred which, individually or
in the aggregate, and without the giving of notice or the lapse of time or both,
would constitute grounds for revocation thereof or would have an adverse effect
on any Jacor Party. Except (i) as set forth in Section 3.7(b) of the Jacor
Disclosure Schedule and (ii) for such reports, forms and statements the failure
of which to file would not, individually or in the aggregate, have an adverse
effect on the Jacor Stations, all reports, forms and statements required to be
filed by any Jacor Party with the FCC with respect to the Jacor Stations have
been filed and are true, complete and accurate in all respects. To Jacor's
knowledge, under the FCA, there are no facts that would disqualify it as the
transferee of the control of the American Stations.
The Jacor Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
Jacor Assets or the lawful conduct of the business of the Jacor Stations as now
conducted, except for Governmental Authorizations, the failure of which to
obtain and maintain, would not, individually or in the aggregate, have any
adverse effect on the Jacor Assets or Jacor Stations. No Jacor Governmental
Authorization is the subject of any pending or, to Jacor's knowledge, threatened
challenge or proceeding to revoke or terminate any Jacor Governmental
Authorization. To Jacor's knowledge, except as set forth in Section 3.7(b) of
the Jacor Disclosure Schedule, no Jacor Party has any reason to believe that any
Jacor Governmental Authorization would not be renewed in the name of one of the
Jacor Parties by the granting Authority in the ordinary course.
3.8 Intangible Assets. Section 3.8 of the Jacor Disclosure Schedule
sets forth a true, accurate and complete description of all material Intangible
Assets held or used by any Jacor Party
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(other than the Jacor Governmental Authorizations and the Jacor Private
Authorizations) relating to the ownership and operation of the Jacor Assets or
the conduct of the business of the Jacor Stations (the "Jacor Intangible
Assets"), including without limitation the nature of one of the Jacor Party's
interest in each and the extent to which the same have been duly registered in
the offices as indicated therein. One of the Jacor Parties owns or possesses or
otherwise has the right to use the Jacor Intangible Assets.
3.9 Related Transactions. No Jacor Party is a party or subject to any
Contractual Obligation relating to the ownership and operation of the Jacor
Assets or the conduct of the business of the Jacor Stations between any Jacor
Party and any of their respective officers, directors, stockholders or employees
or, to the knowledge of Jacor, 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) the Jacor
Employee Plans or Jacor Material Agreements constituting employment agreements,
(ii) Contracts between any of the Jacor Parties and its officers, directors,
stockholders or employees which will not be part of the Jacor Assets and will
constitute Jacor Excluded Assets and Jacor Nonassumed Obligations, and (iii) a
management agreement between Regent Broadcasting and Regent Licensee.
3.10 Tax Matters. Each of the Jacor Parties has in respect of the Jacor
Assets and the Jacor Stations filed all material 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. There are no unpaid Taxes which are due and
payable, or alleged to be due and payable by any Taxing Authority, the
non-payment of which is or could become a Lien on any of the Jacor Assets or any
of the Jacor Stations or result in any transferee liability against any of the
Jacor Parties. All Taxes in respect of the Jacor Assets and the Jacor Stations
which any Jacor Party is required by law to withhold and collect have, to
Jacor's knowledge, been duly withheld and collected, and have been paid over, in
a timely manner, to the proper Authorities to the extent due and payable.
3.11 Employee Benefit Plans; Jacor Station Employees..
(a) Section 3.11(a) of the Jacor Disclosure Schedule contains a true,
accurate and complete list (and brief description) as of the date of this
Agreement of all employee benefit plans which are applicable to the Jacor
Station Employees ("Jacor Employee Plans"). Neither any Jacor Party nor its
Affiliates maintains any other employee benefit plan, as that term is defined in
Section 3 of ERISA, applicable to the Jacor Station Employees.
(b) Section 3.11(b) of the Jacor Disclosure Schedule contains a true,
accurate and complete list of all persons employed by any Jacor Party in the
ownership or operation of any of the Jacor Assets or the conduct of the business
of any of the Jacor Stations (the "Jacor Station Employees"), together with each
such employee's date of hire, the title or capacity in which such person is
employed, and a description of material compensation arrangements (other than
any Jacor Employee Plans).
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(c) No Jacor Party has received any notice that, and no Jacor Party is
aware of, any Jacor Station Employee who shall or is likely to terminate his or
her employment relationship with the Jacor Stations upon the execution of this
Agreement or after the Closing, except as set forth in Section 3.11(c) of the
Jacor Disclosure Schedule.
(d) Except as described in Section 3.11(d) of the Jacor Disclosure
Schedule, with respect to the Jacor Stations, (i) none of the Jacor Station
Employees is now or, to Jacor's knowledge, has been represented by any labor
union or other employee collective bargaining organization, and no Jacor Party
is or has been a party to any labor or other collective bargaining agreement
with respect to any Jacor Station Employee, (ii) 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, and (iii) no Jacor Party nor any of such
employees is now or, to Jacor's knowledge, has been subject to, involved in or
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities, in each case with respect to any Jacor
Station Employee.
(e) Except as disclosed in Section 3.11(e) of the Jacor Disclosure
Schedule, each of the Jacor Parties have complied in all material respects with
all laws relating to the employment of labor, including, without limitation,
ERISA and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes.
3.12 Material Agreements. Listed on Section 3.12 of the Jacor
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Jacor Assets or the conduct of the business of the Jacor
Stations or to which any Jacor Party is a party or to which it is bound or to
which any of the Jacor Assets is or will, as of such time, be subject (the
"Jacor Material Agreements"). True, accurate and complete copies of each of such
Material Agreements have been made available by the Jacor Parties to American
and the Jacor Parties have provided American with photocopies of all such
Material Agreements requested by American (or true, accurate and complete
descriptions thereof have been set forth in Section 3.12 of the Jacor Disclosure
Schedule, if any such Material Agreements are oral). All of the Jacor Material
Agreements relating to the Jacor Stations are valid, binding and legally
enforceable obligations of one of the Jacor Parties, and, in all cases, to
Jacor's knowledge, all other parties thereto, and one of the Jacor Parties is
validly and lawfully conducting the business of the Jacor Stations and owning
and operating the Jacor Assets under each of the Jacor Material Agreements. Each
of the Jacor Parties has duly complied with all of the terms and conditions of
each Jacor Material Agreement and none has done or performed, or failed to do or
perform (and, to Jacor's knowledge, there is no pending or threatened Claim that
any Jacor Party 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) any of
the Jacor Material Agreements or impair the rights or benefits, or increase the
costs, of any Jacor Party under any of Jacor Material Agreement. No Jacor Party
has expressly granted any waivers or forbearance under any Jacor Material
Agreement and, to Jacor's knowledge, no third party is in material default in
the performance of any of its obligations under any Jacor Material Agreement.
Except for those consents or approvals listed in Section 3.12 of the Jacor
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Disclosure Schedule, no consents or approvals of any third party are necessary
to permit the assignment by the Jacor Parties of the Jacor Material Agreements
to American and such assignment will not affect the validity or enforceability
of any Jacor Material Agreement or cause any material change in the substantive
terms of any of them.
3.13 Ordinary Course of Business. Each of the Jacor Parties, from the
later of December 31, 1996 or the acquisition of the applicable Jacor Assets and
Jacor Stations to the date hereof, except (i) as may be described on Section
3.13 of the Jacor Disclosure Schedule, or (ii) as may be required or expressly
contemplated by the terms of this Agreement, with respect to the Jacor Assets
and the Jacor Stations, has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business, consistent with
prior practice and
(a) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of the Jacor Assets;
(b) other than in the ordinary course of business, consistent
with prior practice:
(i) has not made or committed to make any additions
to its property or any purchases of equipment, except for
normal maintenance and replacements; and
(ii) has not increased the compensation payable or to
become payable to any of its employees other than in the
ordinary course of business or otherwise altered, modified or
changed the terms of their employment;
(c) 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; and
(d) has not experienced any work stoppage.
3.14 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchanges or the subject matter of any other
Transaction in the capacity of broker, agent or finder or in any similar
capacity on behalf of any Jacor Party.
3.15 Environmental Matters. Except as set forth in Section 3.15 of the
Jacor Disclosure Schedule, solely with respect to the Jacor Assets and the Jacor
Real Property, no Jacor Party:
(a) has been notified in writing that it is potentially liable
under, has received any written request for information or other
correspondence concerning its potential liability with respect to any
site or facility under, or is 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 entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
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(c) is 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) is, to Jacor's knowledge, not in substantial compliance
with all Environmental Laws, has, to Jacor's knowledge, not obtained
all Environmental Permits required under Environmental Laws, and is the
subject of or, to Jacor's 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;
(e) has any knowledge of any past or present Event which,
individually or in the aggregate, will interfere with or prevent
continued compliance with all Environmental Laws, or which,
individually or in the aggregate, will form the basis of any Claim for
the release or threatened release into the environment, of any
Hazardous Material;
(f) has any knowledge that any Hazardous Material is or has
been located at, on, in or under, or has been released or transported
from, the Jacor Assets or the Jacor Real Property in such manner so as
to require remediation, removal or cleanup or other liability or claim
under, any Environmental Laws; and
(g) has any knowledge that any underground storage tank is or
has been located at, on, in, or under the Jacor Real Property, or that
any friable asbestos containing material or Polychlorinated biphenyl
containing electrical equipment (other than non-leaking, unitlity-owned
transformers) are located thereon.
Notwithstanding anything to the contrary contained in this Agreement,
none of the Jacor Parties makes any representation or warranty with respect to
its compliance with Environmental Laws or environmental matters generally,
except as specifically set forth in this Section.
3.16 Trade or Barter. Section 3.16 of the Jacor Disclosure Schedule
sets forth a true, complete and accurate description (including obligations and
liabilities remaining thereunder) of all Jacor Trade Agreements that
individually involve or may involve, valued in accordance with GAAP, more than
$500 in obligations remaining thereunder as of the date of this Agreement in
money, property or services or a remaining term in excess of two months.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE AMERICAN PARTIES
The American Parties, jointly and severally, represent and warrant to
the Jacor Parties as follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of the American Parties is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, has all requisite corporate power
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and authority to own or hold under lease its properties and to conduct its
business as now conducted.
(b) Each of the American Parties has all requisite corporate power and
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
Exchanges and the other Transactions; and the execution, delivery and
performance of this Agreement and each Collateral Document executed or required
to be executed pursuant hereto or thereto have been duly authorized by all
requisite corporate or other action on the part of the American Parties. This
Agreement has been duly executed and delivered by the American Parties and
constitutes, and each Collateral Document executed or required to be executed
pursuant hereto or thereto or to consummate the Exchanges and the other
Transactions when executed and delivered by an American Party will constitute,
legal, valid and binding obligations of such American Parties, 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 4.1(c) of the American Disclosure
Schedule, neither the execution and delivery by the American Parties of this
Agreement or any Collateral Document executed or required to be executed by
either of them pursuant hereto or thereto, nor the consummation by the American
Parties of the Exchanges and the other Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by the American Parties:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of either of the
American Parties or any Applicable Law on the part of either of the
American Parties, or subject to obtaining any required consents, 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
American Material Agreement; or
(ii) will require either American Party to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for the FCC Consents, filings, if required, under
the Hart-Scott-Rodino Act and Private Authorizations, the failure of
which to be obtained or maintained would not, individually or in the
aggregate, have an adverse effect on American.
(d) Neither of the American Parties has any direct or indirect
Subsidiaries or other Affiliates (other than an American Party) which own or
have any interest in any of the American Stations or any of the American Assets.
American owns all of the outstanding capital stock of American License, all of
which stock is duly authorized, validly issued, fully paid and nonassessable.
The American Stations constitute all of the radio stations which either American
Party or any of their Affiliates owns or operates or has the right to acquire or
operate in the Dayton, Ohio radio market.
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4.2 Financial and Other Information.
(a) American has heretofore furnished to one of the Jacor Parties
copies of the unaudited financial statements of the American Stations for the
years ended December 31, 1995 and 1996 (the "American Financial Statements").
The American Financial Statements have been prepared on a consistent basis
throughout the periods covered thereby, and fairly present the financial
condition, results of operations and cash flow of the American Stations, as of
the respective dates thereof and for the respective periods covered thereby.
(b) Except solely for the obligations and liabilities to be assumed by
the one of the Jacor Parties pursuant to the American Assumable Agreements,
there will, at the time of Closing, be no obligations or liabilities of any
nature, whether accrued, absolute, contingent or otherwise, relating to the
American Parties, the American Assets or the American Stations which could,
after the Closing, result in any form of transferee liability against any of the
Jacor Parties or subject any of the American Assets or any of the American
Stations to any Lien or otherwise affect the full, free and unencumbered use of
the American Assets and the ownership and operation of the American Stations by
one of the Jacor Parties.
4.3 Material Statements and Omissions; Absence of Events. No
representation or warranty made by the American Parties contained in this
Agreement, the American Disclosure Schedule or any certificate, document or
other instrument furnished or to be furnished by the American Parties pursuant
to the provisions hereof 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 not misleading. Neither American nor
American License is aware of any impending or contemplated Event that would
cause any of the representations and warranties made by it in this Article not
to be true, correct and complete on the date of such Event as if made on that
date.
4.4 Changes in Condition. Since December 31, 1996, except to the extent
specifically described in Section 4.4 of the American Disclosure Schedule, there
has been no adverse change in the American Assets or the American Stations.
There is no Event known to the American Parties which adversely affects, or (so
far as the American Parties can now reasonably foresee) is likely to adversely
affect, the American Assets or the American Stations, except (a) to the extent
specifically described in Section 4.4 of the American Disclosure Schedule and
(b) for general business and economic conditions and matters affecting the radio
broadcasting industry generally.
4.5 Title to Properties; Leases.
(a) Section 4.5(a) of the American Disclosure Schedule lists all Real
Property owned by either American Party (the "American Owned Real Property") and
describes all Leases of Real Property (the "American Leases") which is used or
held for use in the operation of the American Stations (the American Owned Real
Property and the real property subject to the American Leases, being hereinafter
collectively referred to as the "American Real Property"). American has (and one
of the Jacor Parties will upon Closing obtain) good and marketable title to the
American Owned Real Property and valid and subsisting leasehold interests in the
American Leases, in each case free and clear of all Liens, except (i) Permitted
Liens and (ii) Liens set forth on Section 4.5(a) of the
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American Disclosure Schedule (which Liens shall be released prior to Closing).
American has full legal and practical access to all of the American Owned Real
Property, and all easements, rights of way, and real property licenses relating
thereto have been properly recorded in the appropriate public recording offices,
except to the extent, if any, set forth in Section 4.5(a) of the American
Disclosure Schedule. The American Owned Real Property, together with the real
property that is subject to the American Leases, includes all the real property,
easements, rights of way, and other real property interests necessary to conduct
the business and operations of the American Stations as they are now conducted.
None of the buildings, structures, improvements or fixtures constructed on any
American Owned Real Property and real property that is subject to the American
Leases, including without limitation 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 in all material respects with all "set back" lines, easements,
covenants, restrictions and all applicable building, fire, zoning, health and
safety laws and codes, except to the extent, if any, set forth in Section 4.5(a)
of the American Disclosure Schedule. No utility lines serving such real property
pass over the lands of a third party except where appropriate easements have
been obtained or except as set forth in Section 4.5(a) of the American
Disclosure Schedule. All buildings, structures, towers, antennae, improvements
and fixtures comprising the American Owned Real Property or real property that
is subject to the American Leases are in good and technically sound operating
condition, have no latent structural mechanical or other defects of material
significance, are reasonably suited 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 American Stations as presently
conducted, except to the extent, if any, set forth in Section 4.5(a) of the
American Disclosure Schedule. There is no pending or, to American's knowledge,
threatened condemnation or other legal proceeding or action of any kind relating
to such real property and/or title thereto.
Except as otherwise set forth in Section 4.5(a) of the American
Disclosure Schedule, each American Lease included in the American Real Property
has been duly authorized, executed and delivered by American and, to American's
knowledge, each of the other parties thereto, and is a legally valid and binding
obligation of American, and, to American's knowledge, each of the other parties
thereto, enforceable in accordance with its terms. American enjoys peaceful and
undisturbed possession under all American Leases pursuant to which it will hold
any American Real Property. All of the American Leases are valid and subsisting
and in full force and effect; neither of the American Parties nor, to American's
knowledge, any other party thereto is in default in the performance, observance
or fulfillment of any obligation, covenant or condition contained in any
American Lease.
(b) Section 4.5(b) of the American Disclosure Schedule contains a true,
accurate and complete description of all material items of American Personal
Property. American owns and has good and merchantable title to all of the
American Personal Property relating to the American Stations (the "American
Personal Property"), in each case, free and clear of all Liens, except (i)
Permitted Liens and (ii) Liens set forth on Section 4.5(b) of the American
Disclosure Schedule (which Liens shall be released prior to Closing). Except as
set forth in Section 4.5(b) of the American Disclosure Schedule, all of the
American Personal Property is in a state of good repair and maintenance and is
in good operating condition, normal wear and tear excepted, has been maintained
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in a manner consistent with generally accepted standards of good engineering
practice and currently permits the American Stations to be operated in
accordance with the terms and conditions of the American FCC Licenses and all
Applicable Laws.
4.6 Compliance with Private Authorizations. Section 4.6 of the American
Disclosure Schedule sets forth a true, accurate and complete list and
description of each American Private Authorization which, individually or when
taken together with other substantially similar American Private Authorizations,
is material to the American Assets or the American Stations, all of which are in
full force and effect. There does not exist any breach or violation of, or in
default in the performance, observance or fulfillment of, any American 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 American Private
Authorization, except as set forth in Section 4.6 of the American Disclosure
Schedule. No such Private Authorization is the subject of any pending or, to
American's knowledge, threatened attack, revocation or termination.
4.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 4.7(a) of the American Disclosure Schedule contains a
description of:
(i) all Claims pending or, to American's knowledge, threatened
against either American Party with respect to the business, operation
or ownership of any of the American Assets or any of the American
Stations, including without limitation all Claims which, individually
or in the aggregate, are reasonably likely to result in the revocation
or termination of any of the American FCC Licenses or the imposition of
any restriction of such a nature as would adversely affect the
ownership or operations of any of the American Stations; in particular,
but without limiting the generality of the foregoing, there are no
Claims pending or, to American's knowledge, threatened (x) before the
FCC relating to the business or operations of any of the American
Stations other than Claims which affect the radio broadcasting industry
generally, or (y) before any Authority involving charges of illegal
discrimination by any of the American Stations under any federal or
state employment Laws; and
(ii) each Governmental Authorization (including without
limitation all FCC Licenses) required under Applicable Laws to own and
operate the American Stations, as currently conducted or proposed to be
conducted on or prior to the Closing Date, all of which are in full
force and effect (the "American Governmental Authorizations").
Attached to the American Disclosure Schedule are true, correct and complete
copies of the American Governmental Authorizations (including without limitation
any and all amendments and other modifications thereto).
(b) American License is the authorized legal holder of the FCC Licenses
listed in Section 4.7(a) of the American Disclosure Schedule, none of which is
subject to any restriction or condition which would limit in any respect the
operations of the American Stations as currently conducted. The American FCC
Licenses are valid and in good standing, are in full force and effect and are
not
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impaired in any respect by any act or omission of either American Party or its
officers, directors, employees or agents. The American Stations are operating in
accordance with the American FCC Licenses, all underlying construction permits
and the FCA. Except as disclosed in Section 4.7(b) of the American Disclosure
Schedule, no application, action or proceeding is pending for the renewal or
modification of any American FCC Licenses and, to American's knowledge, there is
not as of the date of this Agreement issued or outstanding any investigation or
complaint against either American Party at the FCC relating to any of the
American Stations. Except as disclosed in Section 4.7(b) of the American
Disclosure Schedule, as of the date of this Agreement, there is no proceeding
pending at, or outstanding notice of violation from, the FCC relating to any of
the American Stations. All fees payable to Authorities pursuant to the American
Station FCC Licenses, including FCC annual regulatory fees, have been paid and
no event has occurred which, individually or in the aggregate, and without the
giving of notice or the lapse of time or both, would constitute grounds for
revocation thereof or would have an adverse effect on either American Party.
Except (i) as set forth in Section 4.7(b) of the American Disclosure Schedule
and (ii) for such reports, forms and statements the failure of which to file
would not, individually or in the aggregate, have an adverse effect on the
American Stations, all reports, forms and statements required to be filed by
either American Party with the FCC with respect to the American Stations have
been filed and are true, complete and accurate in all respects. To American's
knowledge, under the FCA, there are no facts that would disqualify it as the
transferee of the control of the Jacor Stations.
The American Governmental Authorizations comprise all Governmental
Authorizations which are necessary for the lawful ownership or operation of the
American Assets or the lawful conduct of the business of the American Stations
as now conducted, except for Governmental Authorizations, the failure of which
to obtain and maintain, would not, individually or in the aggregate, have any
adverse effect on the American Assets or American Stations. No American
Governmental Authorization is the subject of any pending or, to American's
knowledge, threatened challenge or proceeding to revoke or terminate any
American Governmental Authorization. To American's knowledge, except as set
forth in Section 4.7(b) of the American Disclosure Schedule, American has no
reason to believe that any American Governmental Authorization would not be
renewed in the name of American License by the granting Authority in the
ordinary course.
4.8 Intangible Assets. Section 4.8 of the American Disclosure Schedule
sets forth a true, accurate and complete description of all material Intangible
Assets held or used by either American Party (other than the American
Governmental Authorizations and the American Private Authorizations) relating to
the ownership and operation of the American Assets or the conduct of the
business of the American Stations (the "American Intangible Assets"), including
without limitation the nature of one of the American Party's interest in each
and the extent to which the same have been duly registered in the offices as
indicated therein. One of the American Parties owns or possesses or otherwise
has the right to use the American Intangible Assets.
4.9 Related Transactions. Neither American Party is a party or subject
to any Contractual Obligation relating to the ownership and operation of the
American Assets or the conduct of the business of the American Stations between
either American Party and any of their respective officers, directors,
stockholders or employees or, to the knowledge of American, 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
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for the lending or borrowing of money to or from or otherwise requiring payments
to or from, any such Person, other than (i) the American Employee Plans or
American Material Agreements constituting employment agreements, (ii) Contracts
between either American Party and its officers, directors, stockholders or
employees which will not be part of the American Assets and will constitute
American Excluded Assets and American Nonassumed Obligations, and (iii) a
management agreement between American and American License.
4.10 Tax Matters. Each of the American Parties has in respect of the
American Assets and the American Stations filed all material 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. There are no unpaid Taxes
which are due and payable, or alleged to be due and payable by any Taxing
Authority, the non-payment of which is or could become a Lien on any of the
American Assets or any of the American Stations or result in any transferee
liability against any of the Jacor Parties. All Taxes in respect of the American
Assets and the American Stations which either American Party is required by law
to withhold and collect have, to American's knowledge, been duly withheld and
collected, and have been paid over, in a timely manner, to the proper
Authorities to the extent due and payable.
4.11 Employee Benefit Plans; American Station Employees..
(a) Section 4.11(a) of the American Disclosure Schedule contains a
true, accurate and complete list (and brief description) as of the date of this
Agreement of all employee benefit plans which are applicable to the American
Station Employees ("American Employee Plans"). Neither either American Party nor
its Affiliates maintains any other employee benefit plan, as that term is
defined in Section 3 of ERISA, applicable to the American Station Employees.
(b) Section 4.11(b) of the American Disclosure Schedule contains a
true, accurate and complete list of all persons employed by either American
Party in the ownership or operation of any of the American Assets or the conduct
of the business of any of the American Stations (the "American Station
Employees"), together with each such employee's date of hire, the title or
capacity in which such person is employed, and a description of material
compensation arrangements (other than any American Employee Plans).
(c) Neither American Party has received any notice that, and neither
American Party is aware of, any American Station Employee who shall or is likely
to terminate his or her employment relationship with the American Stations upon
the execution of this Agreement or after the Closing, except as set forth in
Section 4.11(c) of the American Disclosure Schedule.
(d) Except as described in Section 4.11(d) of the American Disclosure
Schedule, with respect to the American Stations, (i) none of the American
Station Employees is now or, to American's knowledge, has been represented by
any labor union or other employee collective bargaining organization, and
neither American Party is or has been a party to any labor or other collective
bargaining agreement with respect to any American Station Employee, (ii) 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
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any pending demands for collective bargaining by any such union or other
organization, and (iii) neither American Party nor any of such employees is now
or, to American's knowledge, has been subject to, involved in or threatened
with, any union elections, petitions therefore or other organizational or
recruiting activities, in each case with respect to any American Station
Employee.
(e) Except as disclosed in Section 4.11(e) of the American Disclosure
Schedule, each of the American Parties have complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, ERISA and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
4.12 Material Agreements. Listed on Section 4.12 of the American
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the American Assets or the conduct of the business of the American
Stations or to which either American Party is a party or to which it is bound or
to which any of the American Assets is or will, as of such time, be subject (the
"American Material Agreements"). True, accurate and complete copies of each of
such Material Agreements have been made available by American to one of the
Jacor Parties and American has provided one of the Jacor Parties with
photocopies of all such Material Agreements requested by one of the Jacor
Parties (or true, accurate and complete descriptions thereof have been set forth
in Section 4.12 of the American Disclosure Schedule, if any such Material
Agreements are oral). All of the American Material Agreements relating to the
American Stations are valid, binding and legally enforceable obligations of one
of the American Parties, and, in all cases, to American's knowledge, all other
parties thereto, and one of the American Parties is validly and lawfully
conducting the business of the American Stations and owning and operating the
American Assets under each of the American Material Agreements. Each of the
American Parties has duly complied with all of the terms and conditions of each
American Material Agreement and neither has done or performed, or failed to do
or perform (and, to American's knowledge, there is no pending or threatened
Claim that either American Party 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) any of the American Material Agreements or impair the rights or benefits,
or increase the costs, of either American Party under any of American Material
Agreement. Neither American Party has expressly granted any waivers or
forbearance under any American Material Agreement and, to American's knowledge,
no third party is in material default in the performance of any of its
obligations under any American Material Agreement. Except for those consents or
approvals listed in Section 4.12 of the American Disclosure Schedule, no
consents or approvals of any third party are necessary to permit the assignment
by the American Parties of the American Material Agreements to one of the Jacor
Parties and such assignment will not affect the validity or enforceability of
any American Material Agreement or cause any material change in the substantive
terms of any of them.
4.13 Ordinary Course of Business. Each of the American Parties, from
the later of December 31, 1996 or the acquisition of the applicable American
Assets and American Stations to the date hereof, except (i) as may be described
on Section 4.13 of the American Disclosure Schedule, or (ii) as may be required
or expressly contemplated by the terms of this Agreement, with respect to the
American Assets and the American Stations, has operated its business in the
normal,
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usual and customary manner in the ordinary and regular course of business,
consistent with prior practice and
(a) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of the American Assets;
(b) other than in the ordinary course of business, consistent
with prior practice:
(i) has not made or committed to make any additions
to its property or any purchases of equipment, except for
normal maintenance and replacements; and
(ii) has not increased the compensation payable or to
become payable to any of its employees other than in the
ordinary course of business or otherwise altered, modified or
changed the terms of their employment;
(c) 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; and
(d) has not experienced any work stoppage.
4.14 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Exchanges or the subject matter of any other
Transaction in the capacity of broker, agent or finder or in any similar
capacity on behalf of either American Party.
4.15 Environmental Matters. Except as set forth in Section 4.15 of the
American Disclosure Schedule, solely with respect to the American Assets and the
American Real Property, neither American Party:
(a) has been notified in writing that it is potentially liable
under, has received any written request for information or other
correspondence concerning its potential liability with respect to any
site or facility under, or is 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 entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) is 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) is, to American's knowledge, not in substantial compliance
with all Environmental Laws, has, to American's knowledge, not obtained
all Environmental Permits required under Environmental Laws, and is the
subject of or, to American's 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;
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(e) has any knowledge of any past or present Event which,
individually or in the aggregate, will interfere with or prevent
continued compliance with all Environmental Laws, or which,
individually or in the aggregate, will form the basis of any Claim for
the release or threatened release into the environment, of any
Hazardous Material;
(f) has any knowledge that any Hazardous Material is or has
been located at, on, in or under, or has been released or transported
from, the American Assets or the American Real Property in such manner
so as to require remediation, removal or cleanup or other liability or
claim under, any Environmental Laws; and
(g) has any knowledge that any underground storage tank is or
has been located at, on, in, or under the American Real Property, or
that any friable asbestos containing material or Polychlorinated
biphenyl containing electrical equipment (other than non-leaking,
unitlity-owned transformers) are located thereon.
Notwithstanding anything to the contrary contained in this Agreement,
neither American Party make any representation or warranty with respect to its
compliance with Environmental Laws or environmental matters generally, except as
specifically set forth in this Section.
4.16 Trade or Barter. Section 4.16 of the American Disclosure Schedule
sets forth a true, complete and accurate description (including obligations and
liabilities remaining thereunder) of all American Trade Agreements that
individually involve or may involve, valued in accordance with GAAP, more than
$500 in obligations remaining thereunder as of the date of this Agreement in
money, property or services or a remaining term in excess of two months.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Each party shall afford to the other party and its accountants,
counsel, financial advisors and other representatives (the "Representatives")
full access during normal business hours throughout the period prior to the
Closing Date to all of its (and its Subsidiaries') properties, books, contracts,
commitments and records (including without limitation Tax Returns) relating to
the Assets and the Stations 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 (including
without limitation the FCA) or filed by it or any of its Subsidiaries with any
Authority in connection with either of the Exchanges and the other Transactions
or any other report, schedule or documents which may have a material effect on
the businesses, operations, properties, prospects, personnel, condition,
(financial or other), or results of operations of their respective Assets or
Stations, (ii) to the extent not provided for pursuant to the preceding clause,
all financial records, ledgers, work papers and other sources of financial
information possessed or controlled by (x) any Jacor Party or its accountants
deemed by American or its Representatives necessary or useful for the purpose of
performing an audit of the business of the Jacor Stations and
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certifying financial statements and financial information pursuant to the
provisions of Section 6.2(d), and (y) American or its accountants deemed by any
Jacor Party or its Representatives necessary or useful for the purpose of
performing an audit of the business of the American Stations and certifying
financial statements and financial information pursuant to the provisions of
Section 6.3(d), and (iii) such other information concerning any of the foregoing
as American or any Jacor Party shall reasonably request. All non-public
information furnished 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 the party disclosing such information, be
disclosed by the other party in any manner whatsoever, in whole or in part, and,
except as required by Applicable Law (including without limitation in connection
with any registration statement or similar document filed pursuant to any
federal or state securities Law) shall not be used for any purposes, other than
in connection with the Exchanges and the other Transactions. Except as otherwise
herein provided, each party agrees to reveal such information only to those of
its Representatives or other Persons who need to know such the information for
the purpose of evaluating and consummating the Exchanges and the other
Transactions who are informed of the confidential nature of such information.
From and after the Closing, each of the parties shall not, without the prior
written consent of the other party, disclose any information remaining in its
possession with respect to the Assets and Stations conveyed by it pursuant to
the Exchanges and no such information shall be used for any purposes, other than
in connection with the Exchanges and the other Transactions or to the extent
required by Applicable Law.
(b) Notwithstanding the provisions of Section 5.1(a), each party may
disclose such information as it may reasonably determine to be necessary in
connection with seeking all Governmental and Private Authorizations or that is
required by Applicable Law to be disclosed, including without limitation in any
registration statement or other document required to be filed under any federal
or state securities Law. In the event that this Agreement is terminated in
accordance with its terms, each party 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 Exchanges and the other
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 such party.
(c) No investigation pursuant to this Section or otherwise shall affect
any representation or warranty in this Agreement of either party or any
condition to the obligations of the parties hereto.
5.2 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
Exchanges and make effective the other 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
Exchanges or the making effective of the other 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
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Exchanges and the other Transactions by all such applicable Authorities, each of
which must be obtained or become Final Orders in order to satisfy the condition
applicable to it set forth in Section 6.1(c), (ii) to obtain all necessary or
appropriate waivers, consents and approvals, (iii) to effect all necessary
registrations, filings and submissions (including without limitation, if
required, filings within twenty (20) business days of the date of this Agreement
under the Hart-Scott-Rodino Act and all filings necessary for the American
Parties and the Jacor Parties to own and operate the Jacor Stations and the
American Stations, respectively), (iv) to lift any injunction or other legal bar
to the Exchanges or any of the other Transactions (and, in such case, to proceed
with the Exchanges and the other 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. Without
limiting the generality of the foregoing, the parties acknowledge and agree that
the assignment of the FCC Licenses as contemplated by this Agreement is subject
to the prior consent and approval of the FCC. Within ten (10) business days
following the execution of this Agreement, the American Parties and the Jacor
Parties shall file with the FCC appropriate applications for FCC Consents. The
parties shall prosecute said applications with all reasonable diligence and
otherwise use reasonable business efforts to obtain the grant of FCC Consents to
such applications as expeditiously as practicable. If the FCC Consents, or any
of them, imposes any condition on either party hereto, such party shall use
reasonable business efforts to comply with such condition unless compliance
would have a material adverse effect upon it. If reconsideration or judicial
review is sought with respect to any FCC Consent, the American Parties and the
Jacor Parties shall oppose such efforts to obtain reconsideration or judicial
review (but nothing herein shall be construed to limit any party's right to
terminate this Agreement pursuant to the provisions of Section 7.1).
Notwithstanding anything in this Agreement to the contrary, the Exchanges are
expressly conditioned upon the grant of the Final Order as to the FCC Consents
for the assignment of the FCC Licenses for the Stations without any condition
which would have a materially adverse effect upon the party acquiring such
Stations.
(b) The parties shall cooperate with one another in the preparation of
all Returns, questionnaires, applications or other documents regarding any Taxes
or transfer, recording, registration or other fees which become payable in
connection with the Exchanges and the other Transactions that are required to be
filed on or before the Closing Date.
(c) Each of the Jacor Parties shall cooperate and use its reasonable
business efforts to cause its independent accountants to reasonably cooperate
with American, and at American's expense, in order to enable American to have
the Jacor Parties or the Jacor Parties' or American's independent accountants
prepare audited financial statements for the Jacor Stations described in Section
6.2(d). The Jacor Parties represent and warrant that such financial statements
will have been prepared in accordance with GAAP applied on a basis consistent
with past practices and will present fairly the financial condition and results
of operation of the Jacor Stations. Without limiting the generality of the
foregoing, the Jacor Parties agree that they will (i) consent to the use of such
audited financial statements in any registration statement or other document
filed by American or any of its Affiliates under the Securities Act or the
Exchange Act and (ii) execute and deliver, and cause its officers to execute and
deliver, such "representation" letters as are customarily delivered
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in connection with audits and as American's or the Jacor Parties' independent
accountants may reasonably request under the circumstances.
American shall cooperate and use its reasonable business efforts to
cause its independent accountants to reasonably cooperate with the Jacor
Parties, and at the Jacor Parties' expense, in order to enable the Jacor Parties
to have American and American's or the Jacor Parties' independent accountants
prepare audited and unaudited financial statements for the American Stations
described in Section 6.3(d). American represents and warrants that such
financial statements will have been prepared in accordance with GAAP applied on
a basis consistent with past practices and will present fairly the financial
condition and results of operation of the American Stations. Without limiting
the generality of the foregoing, American agrees that it will (i) consent to the
use of such financial statements in any registration statement or other document
filed by the Jacor Parties or any of their Affiliates under the Securities Act
or the Exchange Act and (ii) execute and deliver, and cause its officers to
execute and deliver, such "representation" letters as are customarily delivered
in connection with audits and as the Jacor Parties' or American's independent
accountants may reasonably request under the circumstances.
(d) The applicable parties acknowledge and agree that they will,
subject to the expiration or earlier termination of the Hart-Scott-Rodino Act
waiting period, execute and deliver time brokerage agreements pursuant to which
(i) American would time broker the Citicasters Stations (the "Citicasters
Stations TBA"), (ii) American would time broker the Regent Stations (the "Regent
Stations TBA"), (iii) Citicasters would time broker each of the American
Citicasters Stations (the "American Citicasters Stations TBA"), and (iv) Regent
Broadcasting would time broker each of the American Regent Stations (the
"American Regent Stations TBA"). Anything in this Agreement to the contrary
notwithstanding, including without limitation any provision of Articles 3 and 4
and Sections 6.2 and 6.3, (i) the Jacor Parties shall not be liable in any
respect to the extent (A) any of their representations and warranties contained
in Article 3 are not true and correct in any material respect on and as of the
Closing Date or (B) any of their covenants contained in Article 5 are breached
in any material respect on and as of the Closing Date, in any such case due
solely to the operation of American under the Citicasters Stations TBA or the
Regent Stations TBA, (ii) the American Parties shall not be liable in any
respect to the extent (A) any of their representations and warranties contained
in Article 4 are not true and correct in any material respect on and as of the
Closing Date or (B) any of their covenants contained in Article 5 are breached
in any material respect on and as of the Closing Date, in any such case due
solely to the operation of the Citicasters or Regent Broadcasting under the
American Citicasters Stations TBA and the American Regent Stations TBA,
respectively, (iii) the conditions set forth in Section 6.3(f) shall not be
deemed to be not satisfied as a result of any action or failure to act of
American pursuant to the provisions of the Citicasters Stations TBA or the
Regent Stations TBA, (iv) the conditions set forth in Section 6.2(f) shall not
be deemed to be not satisfied as a result of any action or failure to act of
Citicasters or Regent Broadcasting pursuant to the provisions of the American
Citicasters Stations TBA and the American Regent Stations TBA, respectively, and
(v) the certificates to be delivered to the American Parties and the Jacor
Parties pursuant to the provisions of Section 6.2(c) and 6.3(c), respectively,
shall not be required to address any of such representations and warranties that
are not true and correct in any material respect or any of such covenants that
are breached in any material respect on and as of the Closing Date due to the
operation of the other party under the TBA Agreements.
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(e) Within thirty (30) days after the execution of this Agreement, (i)
American shall, at its expense, (x) commission a qualified title company to
prepare and provide to the Jacor Parties a preliminary title report with respect
to the American Real Property (the "American Preliminary Title Report") and
promptly provide a copy of the American Preliminary Title Report to the Jacor
Parties, together with complete copies of all documents relating to the title
exceptions referred to in the American Preliminary Title Report and (y)
commission a qualified surveyor (licensed in Ohio) to prepare and provide to the
Jacor Parties hereto a survey ("American Survey") of the American Real Property
depicting the location of all title exceptions and (ii) the Jacor Parties shall,
at their expense, (x) commission a qualified title company to prepare and
provide to the American Parties a preliminary title report with respect to the
Jacor Real Property (the "Jacor Preliminary Title Report") and promptly provide
a copy of the Jacor Preliminary Title Report to American, together with complete
copies of all documents relating to the title exceptions referred to in the
Jacor Preliminary Title Report and (y) commission a qualified surveyor (licensed
in Missouri) to prepare and provide to American hereto a survey ("Jacor Survey")
of the Jacor Real Property depicting the location of all title exceptions.
The Jacor Parties shall have the right to disapprove of any title
exceptions or survey exceptions (whether nor not disclosed on the American
Preliminary Title Report) which in their reasonable business judgment have a
material adverse impact on the title to the American Real Property or its
intended use and shall notify American of any such disapproval within ten (10)
business days after its receipt of both the American Preliminary Title Report
and the American Survey]. All title exceptions set forth in the American
Preliminary Title Report and any supplemental reports or updates to the
Preliminary Title Report and not disapproved within the time periods provided
herein shall constitute "American Permitted Title Exceptions". Prior to the
Closing, American shall, at its expense, remove or cause to be removed all
disapproved exceptions relating to the American Real Property (the "Jacor
Disapproved Matters") or, in the alternative, obtain title insurance in a form
reasonably satisfactory to the Jacor Parties insuring against the effect of such
Jacor Disapproved Matters; provided, however, that American shall not be
obligated to spend more than $150,000 in its attempt to remove or insure over
any such Jacor Disapproved Matters (other than monetary Liens which shall be
required to be removed regardless of the amount thereof). American shall notify
the Jacor Parties within ten (10) days after receipt of the notice of Jacor
Disapproved Matters whether it intends to remove the same. If American is unable
to remove or endorse over any such Jacor Disapproved Matters, or if American
exercises its right not to remove one or more Jacor Disapproved Matters, the
Jacor Parties may elect (i) to terminate this Agreement or (ii) to waive such
Jacor Disapproved Matters (such Jacor Disapproved Matters shall then be deemed
to be American Permitted Title Exceptions), in which event the Jacor Parties
shall receive a credit at the Closing in the amount (up to the positive
difference, if any, between (x) $150,000 and (y) the amount theretofore expended
by American pursuant to the provisions of this Section 5.2(e)) reasonably
necessary to remove or endorse over the Jacor Disapproved Matters or, if the
Jacor Disapproved Matters cannot be removed or endorsed over, to compensate it
for the reduction in value of such American Real Property resulting from such
Jacor Disapproved Matters.
American shall have the right to disapprove of any title exceptions or
survey exceptions (whether nor not disclosed on the Jacor Preliminary Title
Report) which in its reasonable business judgment have a material adverse impact
on the title to the Jacor Real Property or its intended use and shall notify the
Jacor Parties of any such disapproval within ten (10) business days after its
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receipt of both the Jacor Preliminary Title Report and the Jacor Survey. All
title exceptions set forth in the Jacor Preliminary Title Report and any
supplemental reports or updates to the Jacor Preliminary Title Report and not
disapproved within the time periods provided herein shall constitute "Jacor
Permitted Title Exceptions". Prior to the Closing, the Jacor Parties shall, at
their expense, remove or cause to be removed all disapproved exceptions relating
to the Jacor Real Property (the "American Disapproved Matters") or, in the
alternative, obtain title insurance in a form reasonably satisfactory to
American insuring against the effect of such American Disapproved Matters;
provided, however, that the Jacor Parties shall not be obligated to spend more
than $150,000 in its attempt to remove or insure over any such American
Disapproved Matters (other than monetary Liens which shall be required to be
removed regardless of the amount thereof). The Jacor Parties shall notify
American within ten (10) days after receipt of the notice of American
Disapproved Matters whether they intend to remove the same. If the Jacor Parties
are unable to remove or endorse over any such American Disapproved Matters, or
if the Jacor Parties exercise their right not to remove one or more American
Disapproved Matters, American may elect (i) to terminate this Agreement or (ii)
to waive such American Disapproved Matters (such American Disapproved Matters
shall then be deemed to be Jacor Permitted Title Exceptions), in which event
American shall receive a credit at the Closing in the amount (up to the positive
difference, if any, between (x) $150,000 and (y) the amount theretofore expended
by the Jacor Parties pursuant to the provisions of this Section 5.2(e))
reasonably necessary to remove or endorse over the American Disapproved Matters
or, if the American Disapproved Matters cannot be removed or endorsed over, to
compensate it for the reduction in value of such Jacor Real Property resulting
from such American Disapproved Matters.
(f) Within thirty (30) days after the execution of this Agreement, each
of American and the Jacor Parties may, at its sole expense, commission a
qualified engineering firm to conduct a Phase I environmental study of the Jacor
Real Property or the American Real Property, respectively (the study done by
American on such Jacor Real Property is hereinafter called the "American Study";
and the study done by the Jacor Parties on the American Real Property is
hereinafter called the "Jacor Study"). If American promptly notifies the Jacor
Parties in writing that the American Study discloses one or more material
environmental liabilities constituting a breach of the representations and
warranties of the Jacor Parties contained in Section 3.15 without regard to any
knowledge qualifiers contained therein, the Jacor Parties shall promptly
commence remedial action at their expense to cure all conditions giving rise to
all such liabilities and shall use its reasonable business efforts to cure all
such conditions prior to the Closing. If the Jacor Parties promptly notify
American in writing that the Jacor Study discloses one or more material
environmental liabilities constituting a breach of the representations and
warranties of American contained in Section 4.15 without regard to any knowledge
qualifiers contained therein, American shall promptly commence remedial action
at its expense to cure all conditions giving rise to all such liabilities and
shall use its reasonable business efforts to cure all such conditions prior to
the Closing. Notwithstanding the foregoing, neither American nor the Jacor
Parties shall be obligated to undertake a cure which such party reasonably
determines will exceed more than $150,000 in its attempt to cure all such
conditions. If, notwithstanding the use of reasonable business efforts, American
is or the Jacor Parties are unable prior to the Closing to cure all such
conditions, the party to whom the Real Property with such material environmental
liability is to be conveyed may elect (i) to terminate this Agreement or (ii) to
waive such environmental liability, in which event the waiving party shall
receive a credit at the Closing in the amount (up to the positive difference, if
any, between (x)
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$150,000 and (y) the amount theretofore expended by the other party pursuant to
the provisions of this Section 5.2(f)) reasonably necessary to cure such
environmental liability or, if such environmental liability cannot be cured, to
compensate it for the reduction in value of such Real Property resulting from
such environmental liability.
(g) Within thirty (30) days after the execution of this Agreement, each
of American and the Jacor Parties may, at its sole expense, do a study to
determine, to such party's reasonable satisfaction, that services for utilities
including, without limitation, water and sewer service, telephone service,
electric and/or gas service and sanitary services are sufficient to service the
Jacor Real Property or the American Real Property, as the case may be, and any
Real Property subject to the American Leases. If either party notifies the other
within such thirty-day period that the utility service is not sufficient for its
reasonable needs, then the party receiving such notice shall promptly commence
remedial action at its expense to cure such insufficiency and shall use its
reasonable business efforts to cure such insufficiency prior to the Closing.
Notwithstanding the foregoing, neither American nor the Jacor Parties shall be
obligated to spend more than $150,000 in its attempt to cure such insufficiency.
If, notwithstanding the use of its reasonable business efforts, American is or
the Jacor Parties are unable prior to the Closing to cure any such
insufficiency, the party to whom the Real Property with such insufficiency is to
be conveyed may elect to waive such insufficiency in which event the waiving
party shall receive a credit at the Closing in the amount (up to the positive
difference, if any, between (i) $150,000 and (ii) the amount theretofore
expended by the other party pursuant to the provisions of this Section 5.2(g))
reasonably necessary to cure such insufficiency or, if such insufficiency cannot
be cured, to compensate it for the reduction in value of such Real Property
resulting from such insufficiency.
(h) Within thirty (30) days after the execution of this Agreement, each
of American and the Jacor Parties may, at its sole expense, commission a
reputable engineer to conduct an inspection of the Jacor Assets and or the
American Assets, as the case may be (the inspection done by American on the
Jacor Assets is hereinafter called the "American Inspection"; and the inspection
done by the Jacor Parties on the American Assets is hereinafter called the
"Jacor Inspection"). If American notifies the Jacor Parties in writing within
such thirty-day period that the American Inspection discloses one or more
conditions that constitutes a breach of the representations of the Jacor Parties
contained in Section 3.5(b) or 3.7, the Jacor Parties shall promptly commence
remedial action at its expense to cure all such conditions and shall use its
reasonable business efforts to cure all such conditions prior to the Closing. If
the Jacor Parties notify American in writing within such thirty-day period that
the Jacor Parties inspection discloses one or more conditions that constitutes a
breach of the representations of American contained in Section 4.5(b) or 4.7,
American shall promptly commence remedial action at its expense to cure all such
conditions and, use its reasonable business efforts to cure all such conditions
prior to the Closing. Notwithstanding the foregoing, neither American nor the
Jacor Parties shall be obligated to undertake a cure which such party reasonably
determines will exceed more than $150,000 in its attempt to cure all such
conditions. If, notwithstanding the use of its reasonable business efforts,
American is or the Jacor Parties are unable prior to the Closing to cure all
such conditions, the party to whom the Assets with such conditions are to be
conveyed may elect (i) to terminate this Agreement or (ii) to waive such
conditions, in which event the waiving party shall receive a credit at the
Closing in the amount (up to the positive difference, if any, between (x)
$150,000 and (y) the amount theretofore expended by the other party pursuant to
the provisions of this Section 5.2(h)) reasonably necessary to cure such
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conditions or, if such conditions cannot be cured, to compensate it for the
reduction in value of such Real Property resulting from such conditions.
(i) Anything in Sections 5.2(e) through (h) to the contrary
notwithstanding, in the event (i) the amount required to remove or insure over
any American Disapproved Matter or Jacor Disapproved Matters or cure any
condition or insufficiency referred to in those sections would be more than
$150,000 in the aggregate, (ii) the party required to remove or insure over any
such American Disapproved Matter or Jacor Disapproved Matters or cure any such
condition or insufficiency is not willing to spend the additional amounts
required to do so, and (c) the other party is not willing to waive such matters,
the parties shall negotiate in good faith in an effort to resolve the issues
prior to terminating this Agreement.
5.3 Public Announcements. Each party shall consult with the other
before issuing any press release or otherwise making any public statements with
respect to this Agreement, the Exchanges or any other Transaction and shall not
issue any such press release or make any such public statement without the prior
consent of the other, which consent shall not be unreasonably withheld, or
delayed or conditioned. Notwithstanding anything to the contrary herein, each
party and such party's Affiliates shall, in accordance with their respective
legal obligations, including but not limited to filings permitted or required by
the Securities Act and the Exchange Act, the New York Stock Exchange, the NASDAQ
National Market and other similar regulatory bodies, make (a) such press
releases and other public statements and announcements as such party or its
Affiliates deem necessary and appropriate in connection with this Agreement and
the transactions contemplated hereby, and (b) any and all statements such party
deems in its sole judgment to be appropriate in any and all filings,
prospectuses and other similar documents. To the extent practicable, the party
proposing to make such press release or public statement will consult in advance
with the other regarding the nature, extent and form of such press release or
public statement.
5.4 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 such that one or more of the conditions of Closing
might not be satisfied, 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 Jacor Disclosure Schedule or the American Disclosure
Schedule, as the case may be, in any respect such that one or more of the
conditions of Closing might not be satisfied, and 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 (or
thereunder) 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.
5.5 No Solicitation. Neither party shall, nor shall it permit any
Affiliate or 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
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negotiations concerning, or provide to any other Person any information or data
relating to, it or any Affiliate 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. The provisions of this Section shall apply
to each of American's Subsidiaries and the Jacor Parties' Subsidiaries and
Affiliates.
5.6 Conduct of Business by the Jacor Parties Pending the Closing.
Except as otherwise contemplated by this Agreement, and subject to American's
time brokering of the Citicasters Stations pursuant to the provisions of the
Citicasters Stations TBA and the Regent Stations pursuant to the provisions of
the Regent Stations TBA, unless American shall otherwise agree in writing, the
Jacor Parties shall, and shall cause their respective Subsidiaries, to the
extent relating to the Jacor Stations or the Jacor Assets, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) use all reasonable business efforts to preserve intact
their respective business organizations and goodwill, keep available
the services of their respective present general managers, on-air
personalities and other key employees, and preserve the goodwill and
business relationships with customers and others having business
relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely affect the transactions
contemplated by this Agreement;
(c) maintain with financially responsible insurance companies
insurance on their respective tangible assets and their respective
businesses in such amounts and against such risks and losses as are
consistent with past practice;
(d) maintain levels of advertising, marketing and promotion
efforts and expenditures consistent with past practices;
(e) (i) operate each of the Jacor Stations in conformity with
the Jacor FCC Licenses on a basis consistent with past practice and any
special temporary authority or program test authority issued
thereunder, the FCA and the rules and regulations of any other
Authority with jurisdiction over any of the Jacor Stations, and (ii)
take all actions necessary to maintain the Jacor FCC Licenses;
(f) refrain from changing the frequency or format of any of
the Jacor Stations or making any material changes in any Jacor
Station's studio or other structures, except to the extent required by
the FCA or the rules and regulation of the FCC;
(g) not make any material changes in the broadcast hours or in
the percentage or types of programming broadcast by any of the Jacor
Stations, or make any other material changes in any Jacor Station's
programming policies, except such changes as in the good faith judgment
of the Jacor Parties are required by the public interest;
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(h) not (i) dispose of any of the Jacor Assets owned by any of
the Jacor Parties or used in the operation of any of the Jacor Stations
(other than for the disposition in the ordinary course of business of
immaterial assets that are of no further use to such Station or assets
that are replaced with assets of like kind and quality); (ii) modify,
change in any material respect or enter into any Material Agreement
relating to the business of any of the Jacor Stations; or (iii) fail to
maintain the Jacor Personal Property in a manner consistent with
generally accepted standards of good engineering practice and in a
state of good repair and maintenance and operating condition;
(i) notify American promptly if any Jacor Station's normal
broadcast transmissions are interrupted or impaired for (i) thirty (30)
minutes or more daily for a period of five (5) consecutive days or
during any seven (7) days within any period of thirty (30) consecutive
days (except for normal maintenance) or (ii) a period of six (6)
continuous hours or more and promptly take any actions reasonably
requested to remedy promptly the same;
(j) not create, assume or permit to exist any Lien upon any of
the Jacor Assets or any of the Jacor Stations, except for (i) Permitted
Liens and (ii) other Liens, if any, set forth on Section 3.5(a) or
3.5(b) of the Jacor Disclosure Schedule (which Liens shall be released
prior to Closing); and
(k) not waive any material right relating to the Jacor
Stations.
5.7 Conduct of Business by American Pending the Closing. Except as
otherwise contemplated by this Agreement, and subject to Citicasters' time
brokering of the American Stations pursuant to the American Citicasters Stations
TBA and Regent's time brokering of the American Regent Stations pursuant to the
American Regent Stations TBA, unless the Jacor Parties shall otherwise agree in
writing, after the date hereof and prior to the Closing Date, with respect to
the American Stations, American shall, and shall cause its Subsidiaries, to the
extent relating to any of the American Stations or the American Assets, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) use all reasonable business efforts to preserve intact
their respective business organizations and goodwill, keep available
the services of their respective present general managers, on-air
personalities and other key employees, and preserve the goodwill and
business relationships with customers and others having business
relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely affect the transactions
contemplated by this Agreement;
(c) maintain with financially responsible insurance companies
insurance on their respective tangible assets and their respective
businesses in such amounts and against such risks and losses as are
consistent with past practice;
(d) maintain levels of advertising, marketing and promotion
efforts and expenditures consistent with past practices;
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(e) (i) operate each of the American Stations in conformity
with the American FCC Licenses on a basis consistent with past practice
and any special temporary authority or program test authority issued
thereunder, the FCA and the rules and regulations of any other
Authority with jurisdiction over any of the American Stations and (ii)
take all actions necessary to maintain the American FCC Licenses;
(f) refrain from changing the frequency or format of any of
the American Stations or making any material changes in any American
Station's studio or other structures, except to the extent required by
the FCA or the rules and regulation of the FCC;
(g) not make any material changes in the broadcast hours or in
the percentage or types of programming broadcast by any of the American
Stations, or make any other material changes in any American Station's
programming policies, except such changes as in the good faith judgment
of American are required by the public interest;
(h) not (i) dispose of any of the American Assets owned by
American or used in the operation of any of the American Stations
(other than for the disposition in the ordinary course of business of
immaterial assets that are of no further use to such Station or assets
that are replaced with assets of like kind and quality); (ii) modify,
change in any material respect or enter into any Material Agreement
relating to the business of any of the American Stations; or (iii) fail
to maintain the American Personal Property in a manner consistent with
generally accepted standards of good engineering practice and in a
state of good repair and maintenance and operating condition;
(i) notify the Jacor Parties promptly if any American
Station's normal broadcast transmissions are interrupted or impaired
for (i) thirty (30) minutes or more daily for a period of five (5)
consecutive days or during any seven (7) days within any period of
thirty (30) consecutive days (except for normal maintenance) or (ii) a
period of six (6) continuous hours or more and promptly take any
actions reasonably requested to remedy promptly the same;
(j) not create, assume or permit to exist any Lien upon any of
the American Assets or any of the American Stations, except for (i)
Permitted Liens and (ii) other Liens, if any, set forth on Section
4.5(a) or 4.5(b) of the American Disclosure Schedule (which Liens shall
be released prior to Closing); and
(k) not waive any material rights relating to the American
Stations.
5.8 Risk of Loss. The risk of loss or damage to any of the Assets prior
to the Closing Date, which is not the responsibility at the time of such loss or
damage of the acquiring party under the express terms of the applicable TBA,
shall be upon the transferring party. In the event of any such loss or damage
for which a transferring party is responsible, it shall repair, replace and
restore any such damaged or lost Asset substantially to its prior condition as
soon as possible and in no event later than forty-five (45) days (or such longer
period as is reasonable under the circumstances) following the loss or damage;
provided, however, that in the event any such loss or damage of the Assets
exists on the Closing Date, then, notwithstanding any other provision of this
Agreement, the
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acquiring party at is option may extend the Closing Date for a period of up to
sixty (60) days until such time as the transferring party shall have repaired,
replaced and restored any such damaged or lost Asset substantially to its prior
condition; alternatively, at the request of the acquiring party, the parties
shall negotiate in good faith to determine an equitable adjustment in the terms
of the Exchanges (including the payment of cash by the transferring party) to
cover any such loss or damage and consummate the Exchanges on the Closing Date.
5.9 American and Jacor Station Employees.
(a) American will, during the effectiveness of the Jacor Stations TBA,
employ each Jacor Station Employee and, thereafter, simultaneously with the
consummation of the Exchange, offer employment to each such Jacor Station
Employee, in each case on terms and conditions which are not less favorable, in
the aggregate with respect to each such employee, than the terms and conditions
of such Jacor Station Employee's current employment (a true, correct and
complete in all material respects description of which is set forth in Section
5.9 of the Jacor Disclosure Schedule) or, in the event it does not so offer such
employment, assume the termination arrangements for such Jacor Station Employee
(a true, correct and complete in all material respects description of which is
set forth in Section 5.9 of the Jacor Disclosure Schedule).
(b) Jacor will, during the effectiveness of the American Stations TBA,
employ each American Station Employee and, thereafter, simultaneously with the
consummation of the Exchange, offer employment to each such American Station
Employee, in each case on terms and conditions which are not less favorable, in
the aggregate with respect to each such employee, than the terms and conditions
of such American Station Employee's current employment (a true, correct and
complete in all material respects description of which is set in Section 5.9 of
the American Disclosure Schedule) or, in the event it does not so offer such
employment, assume the termination arrangements for such American Station
Employee (a true, correct and complete in all material respects description of
which is set forth in Section 5.9 of the American Disclosure Schedule).
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to Effect the Exchanges.
The respective obligations of each party to effect the Exchanges 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 by written agreement of the parties hereto, 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 Exchanges and
the other Transactions, or which might, in the reasonable business
judgment of American or the Jacor Parties, have a material adverse
effect on the Assets and Stations to be acquired by it, it being
understood and agreed that a written request by any Authority for
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information with respect to either of the Exchanges or any other
Transaction, 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 Governmental
Filings required to be made by American and the Jacor Parties with any
Authority, prior to the consummation of the Exchanges and the other
Transactions, shall have been obtained from, and made with, the FCC and
all other required Authorities, except for such authorizations,
consents, waivers, orders, approvals, filings, registrations, notices
or declarations the failure to obtain or make would not, in the
reasonable business judgment of each of the parties, have a material
adverse effect on the Assets and Stations being acquired by such party.
Without limiting the generality of the foregoing, the FCC shall have
issued all necessary consents and approvals in connection with the
transactions contemplated by this Agreement, the same shall have become
Final Orders, and any conditions precedent to the effectiveness of such
Final Orders which are specified therein shall have been satisfied
without any materially adverse effect upon the party acquiring such
Stations.
6.2 Conditions to Obligations of the American Parties. The obligation
of the American Parties to effect the Exchanges shall be subject to the
satisfaction of the following conditions, any or all of which may be waived by
American in writing, in whole or in part, to the extent permitted by Applicable
Law:
(a) The Jacor Parties shall have delivered or cause to be
delivered to American all of the Collateral Documents required to be
delivered by the Jacor Parties to the American Parties at or prior to
the Closing pursuant to the terms of this Agreement; such Collateral
Documents 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 without
limitation lien searches and records of corporate proceedings, which
they may reasonably request in connection therewith, such documents
where appropriate to be certified by proper corporate officers;
(b) The Jacor Parties shall have furnished American and, at
American's request, any bank or other financial institution providing
credit to American, with favorable opinions, dated the Closing Date of
Graydon, Head & Ritchey, counsel for the Jacor Parties, and of Hogan &
Hartson, L.L.P., FCC counsel for the Jacor Parties, in each case, in
form, scope and substance reasonably satisfactory to the parties;
(c) The representations and warranties of the Jacor Parties
contained in this Agreement shall be true and correct in all material
respects 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; each and all of the covenants, agreements and
conditions to be performed or satisfied by the Jacor Parties hereunder
at or prior to the Closing Date shall have been duly performed or
satisfied in all material respects; and the Jacor Parties shall have
furnished American with such certificates and other documents
evidencing the truth of such
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representations and warranties and the performance or satisfaction of
the covenants, agreements and conditions as American or its counsel
shall have reasonably requested;
(d) To the extent required of American by Rule 3-05 of
Regulation S-X under the Securities Act, American shall have received
(i) from its or the Jacor Parties' independent accountants a report
(which shall be unqualified 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 three years in the period ended December 31, 1996)
of the Jacor Stations, which financial statements shall have been
prepared in conformity with GAAP and Regulation S-X under the
Securities Act, or (ii) from the Jacor Parties such documentation as
shall enable American's independent accountants to advise American in
writing that they could issue such an unqualified report;
(e) All authorizations, consents, waivers, orders or approvals
required to be obtained pursuant to the provisions of this Agreement
from all Persons (other than Authorities) prior to the consummation of
the Exchanges and the other Transactions, including without limitation
those required in order to vest fully in American all right, title and
interest in and to all of the Jacor Assets and the Jacor Stations
(including without limitation all Jacor Assumable Agreements heretofore
requested by American and set forth in Section 6.2(e) of the Jacor
Disclosure Schedule) and the full enjoyment thereof shall have been
obtained, without the imposition, individually or in the aggregate of
any condition or requirement which could materially adversely affect
the Jacor Assets or the Jacor Stations; provided, however, that with
respect to Jacor Assumable Agreements not so identified on Schedule
6.2(e) of the Jacor Disclosure Schedule, the Jacor Parties shall use
reasonable efforts to obtain any required third party consents to the
assignment thereof as requested by American, but obtaining such consent
shall not be a condition to Closing;
(f) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in the Jacor Assets or the Jacor Stations; as of the Closing
Date, the FCC Licenses with respect to the Jacor Stations shall not
have been materially and adversely affected by any act, or failure to
act, of any Jacor Party or any of their Affiliates;
(g) Withing thirty (30) days from the date of this Agreement:
(i) the Board of Directors of American shall have approved and ratified
this Agreement and the consummation of the transactions contemplated
hereby; and (ii) the lenders of American and its affiliates shall have
granted in writing their consent and any required waivers to the
transactions contemplated hereby; and
(h) From the date hereof through the Closing Date, (i) the
Citicasters Stations TBA shall not have been terminated by American as
permitted by the Citicaster Stations TBA as a result of Citicaster's
material noncompliance with its obligations under the Citicasters
Stations TBA; and (ii) the Regent Stations TBA shall not have been
terminated by Regent Broadcasting as permitted by the Regent Stations
TBA as a result of Regent's material noncompliance with its obligations
under the American Regent Stations TBA.
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6.3 Conditions to Obligations of the Jacor Parties . The obligation of
the Jacor Parties to effect the Exchanges shall be subject to the satisfaction
of the following conditions, any or all of which may be waived by the Jacor
Parties in writing, in whole or in part, to the extent permitted by Applicable
Law:
(a) The American Parties shall have delivered or cause to be
delivered to the Jacor Parties all of the Collateral Documents required
to be delivered by the American Parties to the Jacor Parties at or
prior to the Closing pursuant to the terms of this Agreement; such
Collateral Documents shall be reasonably satisfactory in form, scope
and substance to the Jacor Parties and their counsel; and the Jacor
Parties and their counsel shall have received all information and
copies of all documents, including without limitation lien searches and
records of corporate proceedings, which they may reasonably request in
connection therewith, such documents where appropriate to be certified
by proper corporate officers;
(b) The American Parties shall have furnished the Jacor
Parties and, at the Jacor Parties' request, any bank of other financial
institution providing credit to the Jacor Parties or any Subsidiary,
with favorable opinions, dated the Closing Date of Sullivan & Worcester
LLP, counsel for the American Parties, and of Dow, Lohnes & Albertson,
FCC counsel for the American Parties, in each case, in form, scope and
substance reasonably satisfactory to the parties;
(c) The representations and warranties of the American Parties
contained in this Agreement shall be true and correct in all material
respects 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 in all
material respects as of such date on the Closing Date; each and all of
the covenants, agreements and conditions to be performed or satisfied
by the American Parties hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and the
American Parties shall have furnished the Jacor Parties with such
certificates and other documents evidencing the truth of such
representations and warranties and the performance or satisfaction of
the covenants, agreements and conditions as the Jacor Parties or their
counsel shall have reasonably requested;
(d) To the extent required of American by Rule 3-05 of
Regulation S-X under the Securities Act, the Jacor Parties shall have
received (i) from their or American's independent accountants a report
(which shall be unqualified 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 three years in the period ended December 31, 1996)
of the American Stations, which financial statements shall have been
prepared in conformity with GAAP and Regulation S-X under the
Securities Act, or (ii) from the American Parties such documentation as
shall enable the Jacor Parties' independent accountants to advise the
Jacor Parties in writing that they could issue such an unqualified
report;
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(e) All authorizations, consents, waivers, orders or approvals
required to be obtained pursuant to the provisions of this Agreement
from all Persons (other than Authorities) prior to the consummation of
the Exchanges and the other Transactions, including without limitation
those required in order to vest fully in the Jacor Parties all right,
title and interest in and to all of the American Assets and the
American Stations (including without limitation all American Assumable
Agreements heretofore requested by the Jacor Parties and set forth in
Section 6.3(e) of the American Disclosure Schedule) and the full
enjoyment thereof shall have been obtained, without the imposition,
individually or in the aggregate, of any condition or requirement which
could materially adversely affect the American Assets or the American
Stations; provided, however, that with respect to American Assumable
Agreements not so identified on Schedule 6.3(e) of the American
Disclosure Schedule, American shall use reasonable efforts to obtain
any required third party consents to the assignment thereof as
requested by the Jacor Parties, but obtaining such consent shall not be
a condition to Closing;
(f) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in the American Assets or the American Stations; as of the
Closing Date, the FCC Licenses with respect to the American Stations
shall not have been materially and adversely affected by any act, or
failure to act, of the American Parties or any of their Affiliates;
(g) Withing thirty (30) days from the date of this Agreement:
(i) the Board of Directors of Jacor Communications, Inc. shall have
approved and ratified this Agreement and the consummation of the
transactions contemplated hereby; and (ii) the lenders of Jacor
Communications, Inc. and its Affiliates shall have granted in writing
their consent and any required waivers to the transactions contemplated
hereby; and
(h) From the date hereof through the Closing Date, (i) the
American Citicasters Stations TBA shall not have been terminated by
Citicasters as permitted by the American Citicaster Stations TBA as a
result of American's material noncompliance with its obligations under
the American Citicasters Stations TBA; and (ii) the American Regent
Stations TBA shall not have been terminated by Regent Broadcasting as
permitted by the American Regent Stations TBA as a result of American's
material noncompliance with its obligations under the American Regent
Stations TBA.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of the Jacor Parties and American; or
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(b) by either American or the Jacor Parties if any permanent
injunction, decree or judgment by any Authority preventing the
consummation of the Exchanges shall have become final and
nonappealable; or
(c) by the Jacor Parties in the event none of the Jacor
Parties is in material breach of its agreements and covenants set forth
in this Agreement and none of their representations or warranties shall
have become and continue to be untrue in any material respect, and
either (i) the Exchanges has not been consummated prior to the
Termination Date or (ii) either of the American Parties is in material
breach of its agreements or covenants set forth in this Agreement or
any of its representations or warranties shall have become and continue
to be untrue in any material respect and such breach or untruth exists
and is not cured within the cure period specified in this Section; or
(d) by American in the event neither of the American Parties
is in material breach of its agreements and covenants set forth in this
Agreement and none of their representations or warranties shall have
become and continue to be untrue in any material respect, and either
(i) the Exchanges has not been consummated prior to the Termination
Date or (ii) any of the Jacor Parties is in material breach of its
agreements or covenants set forth in this Agreement or any of its
representations or warranties shall have become and continue to be
untrue in any material respect and such breach or untruth exists and is
not cured within the cure period specified in this Section; or
(e) by American or the Jacor Parties pursuant to the
provisions of Section 5.2(e), 5.2(f) or (h).
Neither party shall have the right to terminate this Agreement as a result of
the other party's breach or default unless the terminating party shall have
given the defaulting party thirty (30) business days to cure the default (or
such longer period not in excess of an additional thirty (30) business days as
is, in the reasonable business judgment of the parties, reasonably necessary to
effect such cure so long as the defaulting party is proceeding with due
diligence and best efforts to effect such cure); provided, however, that such
cure period shall not extend the Termination Date.
The term "Termination Date" shall, subject to the provisions of Section
5.8, mean March 31, 1998 or such other date as the parties may, from time to
time, mutually agree.
The right of American or the Jacor Parties 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 either party, any Person
controlling any such party or any of their respective Representatives whether
prior to or after the execution of this Agreement.
7.2 Effect of Termination. Except as provided in Sections 5.1 (with
respect to confidentiality), 5.3 and 9.3 and this Section, in the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void, there shall be no liability on the part of either party,
or any of their respective Affiliates (including stockholders, officers,
directors or Representatives ), to the other and all rights and obligations of
either party shall cease; provided, however, that such termination shall not
relieve either party from liability for any
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misrepresentation or breach of any of its warranties, covenants or agreements
set forth in this Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Survival. Except as otherwise provided in Section 2.2(d) and the
last sentence of Section 5.1(a) to the effect that the provisions of Section 2.2
and of such sentence, respectively, shall survive the Closing without
limitation, and except with respect to obligations and liabilities assumed
pursuant to the American Assumable Agreements and the Jacor Assumable
Agreements, the representations, warranties, 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 a period of (a) two (2) years after the Closing Date or (b) the
applicable statute of limitations in the case of matters arising out of any
breach referred to in Sections 2.3(a), 2.3(b), 2.3(c), 3.1(a), 3.1(b), 3.10,
3.15, 4.1(a), 4.1(b), 4.10, 4.15 and 5.2(c) (the "Indemnity Period"), regardless
of any investigation or statement as to the results thereof made by or on behalf
of any party hereto. No claim for indemnification, other than with respect to
fraud, may be asserted after the expiration of the Indemnity Period.
Notwithstanding anything herein to the contrary, any representation, warranty,
covenant and agreement which is the subject of a Claim which is asserted in
writing prior to the expiration of the Indemnity Period shall survive with
respect to such Claim or any dispute with respect thereto until the final
resolution thereof.
8.2 Indemnification. Each party (the "indemnifying party") agrees that
on and after the Closing it shall indemnify and hold harmless the other party
(the "indemnified party") from and against any and all damages, claims, losses,
expenses, costs, obligations and liabilities, including without limitation
liabilities for all reasonable attorneys', accountants' and experts' fees and
expenses including those incurred to enforce the terms of this Agreement or any
Collateral Document (collectively, "Loss and Expense"), suffered, directly or
indirectly, by the indemnified party by reason of, or arising out of:
(a) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document or any failure by the indemnifying party to perform or fulfill
any of its respective covenants or agreements set forth in this
Agreement or any Collateral Document; or
(b) any Legal Action or other Claim by any third party
relating to the indemnifying party or the ownership or operations of
any of its Assets or the conduct of the business of its Stations to the
extent such Legal Action or other Claim has also resulted in a breach
of representation or warranty by the indemnifying party pursuant to
this Agreement or any Collateral Document; or
(c) the American Nonassumed Liabilities (in the case of the
American Parties being the indemnifying party) and the Jacor Nonassumed
Liabilities (in the case of the Jacor
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Parties being the indemnifying party), including without limitation any
Legal Action or other Claim brought or asserted by any third party; or
(d) the failure to comply with the Bulk Sales Law, if any, of
the State of Ohio (in the case of American being the indemnifying
party) or the State of Missouri (in the case of the Jacor Parties being
the indemnifying party).
The liability of each of the American Parties and each of the Jacor Parties
under this Article 8 shall, subject to the provisions of Section 8.3, be joint
and several. Without limiting the generality of any other provision of this
Agreement, the term "each indemnifying party" in this Article 8 shall mean the
American Parties as a group and the Jacor Parties as a group and not each member
thereof individually.
8.3 Limitation of Liability. Notwithstanding the provisions of Section
8.2, after the Closing, each indemnifying party's rights to indemnification
shall be subject to the following limitations: (i) the indemnified party 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, $150,000, in which event the indemnified party shall be entitled to
recover all such Loss and Expense, and (ii) in no event shall the aggregate
amount required to be paid by each indemnifying party pursuant to the provisions
of this Section exceed $2,000,000, except for any Loss or Expense arising out of
matters of a nature referred to in Sections 3.1(b) and 4.1(b) as to which the
limitations set forth in this clause (ii) shall not apply. The provisions of the
immediately preceding sentence of this Section with respect to the limitation on
each indemnifying party's obligation to indemnify the indemnified party in
respect of Loss and Expense shall not be applicable to any claims which are
based on fraud or willful or intentional breach of representation or warranty.
8.4 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 8.1, 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 materially prejudices such indemnifying
party's ability to defend against such Claim.
8.5 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 (a) the
indemnifying party shall fail to defend any such Legal Action or other Claim or
(b) the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party, then the indemnified
party may defend, through counsel of its own choosing, reasonably acceptable to
the indemnifying party, such Legal Action or other Claim, and (so long as it
gives the
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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 be unreasonably withheld, delayed or
conditioned.
8.6 Exclusive Remedy. Except for fraud or as otherwise provided in
Section 9.5, the indemnification provided in this Article shall be the sole and
exclusive post-Closing remedy available to either party against the other party
for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, American or the Jacor Parties may extend the
time for the performance of any of the obligations or other acts of the other,
waive any inaccuracies in the representations and warranties of the other
contained herein or in any document delivered pursuant hereto, and waive
compliance by the other with any of the agreements, covenants or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. All costs and expenses, incurred
in connection with any transfer taxes, sales taxes, document stamps or other
charges levied by any Authority in connection with this Agreement, the Exchanges
and the other Transactions, shall be borne by American insofar as they related
to the American Stations and the American Assets and by the Jacor Parties
insofar as they relate to the Jacor Stations and the Jacor Assets. All filing
and similar fees (including without limitation Hart-Scott-Rodino filings and FCC
filing fees) shall be borne equally by American, on the one hand, and the Jacor
Parties, on the other hand. All other costs and expenses incurred in connection
with this Agreement, the Exchanges and the other Transactions, and in compliance
with Applicable Law and Contracts as a consequence hereof and thereof, 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.
9.4 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially
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the same time as such rapid transmission, or (c) 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 American:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Steven B. Dodge, President
and Chief Executive Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to the Jacor Parties:
50 East Rivercenter Boulevard
Covington, Kentucky 41011
Attention: Randy Michaels, President
Telecopier No.: (606) 655-9345
with a copy to:
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, OH 45202
Attention: John Kropp, Esq.
Telecopier No.: (513) 651-3836
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.
9.5 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 7, 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
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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 for such breach or threatened breach.
9.6 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 either 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 Exchanges and the other Transactions are fulfilled
and consummated to the maximum extent possible; provided, however, that in the
event the parties are unable to reach agreement within a reasonable period of
time, under the circumstances, with respect to such modification, this Agreement
shall terminate and be of no further force and effect.
9.7 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.
9.8 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.
9.9 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,
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.
9.10 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
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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.
9.11 Entire Agreement. This Agreement (together with the Disclosure
Schedules 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.
9.12 Assignment. This Agreement shall not be assignable by either party
and any such assignment shall be null and void, except that it shall inure to
the benefit of and be 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 each party may assign its rights and remedies hereunder
to any bank or other financial institution which has loaned funds or otherwise
extended credit to it. Without limiting the generality of the immediately
preceding sentence, in the event that either party finds it necessary or is
required to provide to a third party a collateral assignment of their or its
interest in this Agreement and/or any Collateral Documents, the other party will
cooperate with either the party requesting such assignment and any third party,
including but not limited to signing a consent and acknowledgment of such
assignment.
9.13 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of the American Parties and the Jacor Parties, 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.
9.15 American Agent for American License. Anything in this Agreement to
the contrary notwithstanding, American License hereby grants American an
irrevocable power of attorney and hereby irrevocably appoints American its agent
for all purposes of this Agreement, including without limitation for the purpose
of executing and delivering extensions of the time for the performance of any of
the obligations or other acts of any of the Jacor Parties, waivers, terminations
or amendments, and any action taken by American pursuant to such power of
attorney and agency, and any such extension, waiver, termination or amendment
executed and delivered by American, shall be binding upon American License
whether or not it has specifically approved such action or executed such
extension, waiver, termination or amendment.
9.16 Citicasters Agent for the Other Jacor Parties. Anything in this
Agreement to the contrary notwithstanding, Regent Broadcasting and Regent
Licensee hereby grants Citicasters an irrevocable power of attorney and hereby
irrevocably appoints Citicasters its agent for all purposes of this Agreement,
including without limitation for the purpose of executing and delivering
extensions of the time for the performance of any of the obligations or other
acts of either of the
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American Parties, waivers, terminations or amendments, and any action taken by
Citicasters pursuant to such power of attorney and agency, and any such
extension, waiver, termination or amendment executed and delivered by American,
shall be binding upon Regent Broadcasting and Regent Licensee whether or not it
has specifically approved such action or executed such extension, waiver,
termination or amendment.
9.17 Disclosure Schedules.
(a) The Jacor Parties will deliver to American, on or before July 11,
1997, the Jacor Disclosure Schedule and all related documents required to be
delivered by Jacor pursuant to Article 3 of this Agreement. American shall be
permitted, for a period of ten (10) business days commencing upon its receipt of
the completed Jacor Disclosure Schedule and related documents to terminate this
Agreement, if (i) the Jacor Disclosure Schedule reveals any condition of which
the American Parties are unaware as of the date of this Agreement and/or any
breaches of Jacor' representations, warranties and/or covenants hereunder
(without regard to matters set forth in the Jacor Disclosure Schedule), which
unknown conditions and/or breaches in the aggregate would have a material
adverse effect on the value of the Jacor Assets or the Jacor Stations or on the
American Parties' ability to operate the Jacor Stations as they are currently
being operated, or (ii) the parties are unable to agree upon which Jacor
Material Agreements with respect to which a third-party consent to the
assignment thereof will be a condition to Closing.
(b) American will deliver to the Jacor Parties on or before July 11,
1997, the American Disclosure Schedule and all related documents required to be
delivered by American pursuant to Article 4 of this Agreement. The Jacor Parties
shall be permitted, for a period of ten (10) business days commencing upon its
receipt of the completed American Disclosure Schedule and related documents to
terminate this Agreement, if (i) the American Disclosure Schedule reveals any
condition of which Jacor is unaware as of the date of this Agreement and/or any
breaches of the American Parties' representations, warranties and/or covenants
hereunder (without regard to matters set forth in the American Disclosure
Schedule), which unknown conditions and/or breaches in the aggregate would have
a material adverse effect on the value of the American Assets or the American
Stations or on the Jacor Parties' ability to operate the American Stations as
they are currently being operated, or (ii) the parties are unable to agree upon
which American Material Agreements with respect to which a third-party consent
to the assignment thereof will be a condition to Closing.
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IN WITNESS WHEREOF, American, American License, Citicasters, Regent
Broadcasting and Regent Licensee have caused this Agreement to be executed as of
the date first written above by their respective officers thereunto duly
authorized.
American Radio Systems Corporation
By:_____________________________________
Name:
Title:
American Radio Systems License Corp.
By:_____________________________________
Name:
Title:
Citicasters Co.
By:______________________________________
Name:
Title:
Regent Broadcasting of Kansas City, Inc.
By:_____________________________________
Name:
Title:
Regent Licensee of Kansas City, Inc.
By:_____________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
Accounts Receivable shall mean 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 American or Citicasters, as the case may be,
attributable to the sale of time or talent on one of its Stations (whether
classified under the Uniform Commercial Code of any state as accounts, contract
rights, chattel paper, general intangibles or otherwise).
adverse, adversely, shall mean any Event which has, or is reasonably
likely to, (a) adversely affect the validity or enforceability of this Agreement
or the likelihood of consummation of the Exchanges, or (b) adversely affect the
ownership or operation of the Jacor Assets or the American Assets or the conduct
of the business of the Jacor Stations or the American Stations, as the case may
be, or (c) impair any American Party's or any Jacor Party's, as the case may be,
ability to fulfill its obligations under the terms of this Agreement, or (d)
adversely affect the aggregate rights and remedies of the American Parties or
the Jacor Parties, as the case may be, under this Agreement. Notwithstanding the
foregoing, and anything in this Agreement to the contrary notwithstanding,
neither any general business or economic factor nor any Event affecting the
radio broadcasting industry generally shall be deemed to constitute an adverse
change, have an adverse effect or to adversely affect or effect.
Affiliate, Affiliated shall mean, with respect to any Person, any other
Person at the time directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person.
Agreement shall mean this Agreement as originally in effect, including
this Appendix A, the American Disclosure Schedule, the Citicasters 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.
Alternative Transaction shall mean a transaction or series of related
transactions (other than the Exchanges and the other Transactions) resulting in
(a) any merger or consolidation of either party, regardless of whether it is the
surviving Entity unless the surviving Entity remains obligated under this
Agreement to the same extent as it was, or (b) any sale or other disposition of
all or any substantial part of the Assets owned by it or any of the Stations
owned by it.
American shall have the meaning given to it in the Preamble.
American Accounts Receivable shall mean the Accounts Receivables
arising in connection with the ownership or operation of any of the American
Assets or the conduct of the business of any of the American Stations prior to
the applicable Cut-off Date American Citicasters Accounts Receivable shall mean
the American Accounts Receivables arising in connection with the ownership or
operation of any of the American Citicasters Assets or the conduct of the
business of any of the American Citicasters Stations. American Regent Accounts
Receivable shall mean the American Accounts Receivables of American arising in
connection with the ownership or operation of any of the American Regent Assets
or the conduct of the business of any of the American Regent Stations.
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American Assets shall mean all assets used or held for use in the
ownership or operation of or the conduct of the business of any of the American
Stations, including without limitation the American Real Property, the American
Personal Property, the American Private Authorizations, the American
Governmental Authorizations (including without limitation the American FCC
Licenses), the American Intangible Assets and the American Assumable Agreements,
and the logs, public files and other books, records, files and documents that
relate to any of the American Stations, but excluding the American Excluded
Assets. American Citicasters Assets shall mean the American Assets used or held
for use in the ownership or operation of or the conduct of the business of any
of the American Citicasters Stations. American Regent Assets shall mean the
American Assets used or held for use in the ownership or operation of or the
conduct of the business of any of the American Regent Stations.
American Assumable Agreements shall mean the American Private
Authorizations, the American Trade Agreements, the American Leases and the
American Other Contracts. American Citicasters Assumable Agreements shall mean
the American Assumable Agreements that relate to the ownership or operation of
any of the American Citicasters Assets or the conduct of the business of any of
the American Citicasters Stations. American Regent Assumable Agreements shall
mean the American Assumable Agreements that relate to the ownership or operation
of any of the American Regent Assets or the conduct of the business of any of
the American Regent Stations.
American Disapproved Matters shall have the meaning given to it in
Section 5.2(e).
American Disclosure Schedule shall mean the American Disclosure
Schedule dated as of the date of this Agreement delivered by American and
American License to the Jacor Parties.
American Employee Plans shall have the meaning given to it in Section
4.11(a).
American Excluded Assets shall mean (i) all cash and cash equivalents
of American (ii) all American Accounts Receivable, (iii) the corporate names of
American, and its books, records and other documents that relate to its
corporate existence, organization and capitalization, (iv) all books and records
of American that relate to any of the American Stations and which American is
required by Applicable Law to retain, subject to the right of the other party to
have access and to copy for a period of three (3) years from the Closing Date,
(v) the American Employee Plans, (vi) all insurance policies that relate to the
American Assets, (vii) software programs and other assets used to provide
certain financial and accounting services for any of the American Stations, and
(viii) any and all products, profits and proceeds of, and including without
limitation any Claims with respect to, any of the foregoing.
American FCC Licenses shall have the meaning given to it in the second
Whereas paragraph. American Citicasters FCC Licenses shall mean the American FCC
Licenses with respect to the ownership and operation of the American Citicasters
Assets and the conduct of the business of the American Citicasters Stations.
American Regent FCC Licenses shall mean the American FCC Licenses with respect
to the ownership and operation of the American Regent Assets and the conduct of
the business of the American Regent Stations.
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American Financial Statements shall have the meaning given to it in
Section 4.2(a).
American Governmental Authorizations shall have the meaning given to it
in Section 4.7(a). American Citicasters Governmental Authorizations shall mean
the American Governmental Authorizations with respect to the ownership and
operation of any of the American Citicasters Assets and the conduct of the
business of any of the American Citicasters Stations. American Regent
Governmental Authorizations shall mean the American Governmental Authorizations
with respect to the ownership and operation of any of the American Regent Assets
and the conduct of the business of any of the American Regent Stations.
American Inspection shall have the meaning given to it in Section
5.2(h).
American Intangible Assets shall have the meaning given to it in
Section 4.8. American Citicasters Intangible Assets shall mean the American
Intangible Assets with respect to the ownership and operation of any of the
American Citicasters Assets and the conduct of the business of any of the
American Citicasters Stations. American Regent Intangible Assets shall mean the
American Intangible Assets with respect to the ownership and operation of any of
the American Regent Assets and the conduct of the business of any of the
American Regent Stations.
American Leases shall have the meaning given to it in Section 4.5(a).
American Citicasters Leases shall mean the American Leases with respect to the
ownership and operation of any of the American Citicasters Assets and the
conduct of the business of any of the American Citicasters Stations. American
Regent Leases shall mean the American Leases with respect to the ownership and
operation of any of the American Regent Assets and the conduct of the business
of any of the American Regent Stations.
American License shall have the meaning given to it in the Preamble.
American Material Agreements shall have the meaning given to it in
Section 4.12. American Citicasters Material Agreements shall mean the American
Material Agreements with respect to the ownership and operation of any of the
American Citicasters Assets and the conduct of the business of any of the
American Citicasters Stations. American Regent Material Agreements shall mean
the American Material Agreements with respect to the ownership and operation of
any of the American Regent Assets and the conduct of the business of any of the
American Regent Stations.
American Nonassumed Liabilities shall have the meaning given to it in
Section 2.3(c). American Citicasters Nonassumed Liabilities shall have the
meaning given to it in Section 2.3(b). American Regent Nonassumed Liabilities
shall have the meaning given to it in Section 2.3(c).
American Other Contracts shall mean (a) all American Material
Agreements set forth on Section 4.12 of the American Disclosure Schedule, (b)
all Contracts of American for the sale of time on any American Station for cash
entered into in the ordinary course of business consistent with prior practice,
and (c) Contracts not required to be listed on Section 4.12 of the American
Disclosure Schedule that have been entered into in the ordinary course of
business. American Citicasters Other
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Contracts shall mean the American Other Contracts with respect to the ownership
and operation of any of the American Citicasters Assets and the conduct of the
business of any of the American Citicasters Stations. American Regent Other
Contracts shall mean the American Other Contracts with respect to the ownership
and operation of any of the American Regent Assets and the conduct of the
business of any of the American Regent Stations.
American Owned Real Property shall have the meaning given to it in
Section 4.5(a). American Citicasters Owned Real Property shall mean the American
Owned Real Property with respect to the ownership and operation of any of the
American Citicasters Assets and the conduct of the business of any of the
American Citicasters Stations. American Regent Owned Real Property shall mean
the American Owned Real Property with respect to the ownership and operation of
any of the American Regent Assets and the conduct of the business of any of the
American Regent Stations.
American Parties shall have the meaning given to it in the Preamble.
American Permitted Title Exceptions shall have the meaning given to it
in Section 5.2(e).
American Personal Property shall mean all items of Personal Property,
used or held for use in the ownership or operation or the conduct of the
business of any of the American Stations. American Citicasters Personal Property
shall mean the American Personal Property with respect to the ownership and
operation of any of the American Citicasters Assets and the conduct of the
business of any of the American Citicasters Stations. American Regent Personal
Property shall mean the American Personal Property with respect to the ownership
and operation of any of the American Regent Assets and the conduct of the
business of any of the American Regent Stations.
American Preliminary Title Report shall have the meaning given to it in
Section 5.2(e).
American Private Authorizations shall mean all Private Authorizations
obtained or held for use in the ownership or operation or the conduct of the
business of any of the American Stations. American Citicasters Private
Authorizations shall mean the American Private Authorizations with respect to
the ownership and operation of any of the American Citicasters Assets and the
conduct of the business of any of the American Citicasters Stations. American
Regent Private Authorizations shall mean the American Private Authorizations
with respect to the ownership and operation of any of the American Regent Assets
and the conduct of the business of any of the American Regent Stations.
American Proration Schedules shall mean the American Citicasters
Proration Schedule and the American Regent Proration Schedule. American
Citicasters Proration Schedule shall have the meaning given to it in Section
2.3(f). American Regent Proration Schedule shall have the meaning given to it in
Section 2.3(g).
American Real Property shall have the meaning given to it in Section
4.5(a). American Citicasters Real Property shall mean the American Real Property
with respect to the ownership and operation of any of the American Citicasters
Assets and the conduct of the business of any of the
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American Citicasters Stations. American Regent Real Property shall mean the
American Real Property with respect to the ownership and operation of any of the
American Regent Assets and the conduct of the business of any of the American
Regent Stations.
American Survey shall have the meaning given to it in Section 5.2(e).
American Station Employees shall have the meaning given to it in
Section 4.11(b).
American Stations shall have the meaning given to it in the second
Whereas paragraph. American Citicasters Stations and American Regent Stations
shall mean the respective American Stations designated as such in the American
Disclosure Schedule.
American Stations TBA shall mean the American Citicasters Stations TBA
and the American Regent Stations TBA. American Citicasters Stations TBA shall
have the meaning given to it in Section 5.2(d). American Regent Stations TBA
shall have the meaning given to it in Section 5.2(d).
American Study shall have the meaning given to it in Section 5.2(f).
American Tower Adjustment shall mean an amount equal to the aggregate
amount of fees, expenses and other costs incurred by American in the upgrade and
improvement of its tower for WXEG-FM located in Dayton, Ohio which amount
American has advised Jacor is approximately $260,000. American will furnish to
Jacor such information as Jacor may reasonably request in order to substantiate
the aggregate amount of such fees, expenses and other costs and the parties will
agree on the exact amount thereof no later than five (5) days prior to the
Closing Date.
American Trade Agreements shall mean all Trade Agreements in effect on
the date hereof or entered into on or prior to the Cut-Off Date that relates to
the ownership or operation of any of the American Assets or the conduct of the
business of any of the American Stations. American Citicasters Trade Agreements
shall mean all American Trade Agreements that relate to the ownership or
operation of any of the American Citicasters Assets or the conduct of the
business of any of the American Citicasters Stations. American Regent Trade
Agreements shall mean all American Trade Agreements that relate to the ownership
or operation of any of the American Regent Assets or the conduct of the business
of any of the American Regent Stations.
American's knowledge (including the term "to the knowledge, information
and belief of American") means the actual knowledge of any executive officer of
either of the American Parties or any General Manager of any of the American
Stations.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation 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 legally
bound.
Appraisals shall have the meaning given to it in Section 2.2(a).
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Assets shall mean the American Assets in the case of American and the
Citicasters Assets in the case of Citicasters.
Authority shall mean any 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 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.
Citicasters shall have the meaning given to it in the Preamble.
Citicasters Kansas City Proration Schedule shall have the meaning given
to it in Section 2.3(f).
Claims shall mean any and all Legal Actions and claims, pending or
threatened, and judgments of whatever kind and nature relating debts,
liabilities, obligations, losses, damages, deficiencies, assessments and
penalties, together with thereto, and all fees, costs, expenses and
disbursements (including without limitation reasonable attorneys' and other
legal fees, costs and expenses) that relate to any of the foregoing.
Closing shall have the meaning given to it in Section 2.4.
Closing Date shall have the meaning given to it in Section 2.4.
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 Document shall mean the American Citicasters Stations TBA,
the American Regent Stations TBA, the Citicasters Stations TBA, the Regent
Stations TBA, the conveyancing documents required to vest in the acquiring party
the Assets and Stations to be acquired by it pursuant to the Exchanges
(including without limitation a General Conveyance, Bill of Sale, Assignment and
Assumption, assignments and assumptions of the Jacor Assumable Agreements and
American Assumable Agreements, assignments and assumptions of Intangible
Assets), and any agreement, certificate, contract, instrument, notice, opinion
or other document required to be delivered or delivered pursuant to the
provisions of this Agreement or any of the foregoing.
Collection Period shall have the meaning given to it in Section 2.5.
Contract, Contractual Obligation shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability which involves the ownership and operation of the American Assets or
the Citicasters Assets or the conduct of the business of any of the American
Stations or the Citicasters Stations.
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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.
Cut-off Date shall mean (i) with respect to any Contract to be assigned
and the rights and obligations to be assumed pursuant to any TBA (including all
items of revenue and expense that relate to such Contract), the applicable TBA
Date for such TBA and (ii) in all other cases, the Closing Date.
Dayton Proration Schedule shall have the meaning given to it in Section
2.3(e).
Disclosure Schedule shall mean the American Disclosure Schedule or the
Jacor Disclosure Schedule, as the case may be.
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 that relate to or otherwise
imposing liability or standards of conduct concerning pollution or protection of
the environment, including without limitation Laws that relate to emissions,
discharges, releases or threatened releases of Hazardous Materials into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise that relate 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 any analogous federal, state, local 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.
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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.
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.
Exchanges shall have the meaning given to it in the third Whereas
paragraph. Citicasters Exchange shall have the meaning given to it in the third
Whereas paragraph. Regent Exchange shall have the meaning given to it in the
third Whereas paragraph.
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.
FCA shall mean the Communications 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.
FCC Consents shall mean the written actions of the FCC (including
without limitation written actions of the FCC's Mass Media Bureau acting
pursuant to delegated authority) granting its consents to the assignment of the
Citicasters FCC Licenses to American License and the American FCC Licenses to
Citicasters.
FCC Licenses shall mean all Governmental Authorizations issued by the
FCC in connection with the ownership, operation and conduct of the business of
the Citicasters Stations and the American Stations, as the case may be.
Final Order shall mean, with respect to any consent, order or other
action of any Authority, including without limitation the FCC, one with respect
to which no appeal, no stay, no review, no petition or application for
rehearing, reconsideration, review or stay, whether on motion of the applicable
Authority or other Person or otherwise, is in effect or pending and as to which
the time or deadline for filing or taking any such stay, review, appeal,
petition or application has expired or, if filed, has been denied, dismissed or
withdrawn, and the time or deadline for instituting any further Legal Action has
expired.
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
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Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, registrations and other authorizations
of all Authorities (including without limitation the FCC Licenses) issued by the
FCC, the Federal Aviation Administration and any other Authority in connection
with the ownership or operation of any of the Assets or conduct of the business
of any of the Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, submissions, registrations, notices or declarations 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 Antitrust
Improvements Act of 1976, 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 such statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory 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" "solid waste", "pollutant", "contaminant" or "hazardous substance" under
any Environmental Law; or (c) that is toxic, explosive, corrosive, etiologic,
flam mable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is regulated by any applicable Authority or subject to any
Environmental Law; or (d) that poses or threatens to pose a hazard to the health
of persons; or (e) 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 or other
radioactive elements, ionizing radiation, radio frequency radiation, 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 any Person,
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,
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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, or (c) customer advance payments and customer deposits
received in the ordinary course of business.
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, permits and all Intellectual Property.
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.
Jacor and the Jacor Parties shall have the meaning given to it in the
Preamble.
Jacor Accounts Receivable shall mean the Accounts Receivables of
Citicasters arising in connection with the ownership or operation of any of the
Jacor Assets or the conduct of the business of any of the Jacor Stations prior
to the applicable Cut-off Date. Citicasters Accounts Receivable shall mean Jacor
Accounts Receivables arising in connection with the ownership or operation of
any of the Citicasters Assets or the conduct of the business of any of the
Citicasters Stations. Regent Accounts Receivable shall mean Jacor Accounts
Receivables arising in connection with the ownership or operation of any of the
Regent Assets or the conduct of the business of any of the Regent Stations prior
to the applicable Cut-off Date.
Jacor Assets shall mean (a) all assets used or held for use in the
ownership or operation of or the conduct of the business of the Jacor Stations
by any Jacor Party or any Entity Affiliated with any Jacor Party, including
without limitation the Jacor Personal Property, the Jacor Private
Authorizations, the Jacor Governmental Authorizations (including without
limitation the Jacor FCC Licenses), the Jacor Intangible Assets and the Jacor
Assumable Agreements, and the logs, public files and other books, records, files
and documents that relate to the Jacor Stations, but excluding the Jacor
Excluded Assets and (b) an amount of cash equal to the American Tower
Adjustment. Citicasters Assets shall mean the Jacor Assets used or held for use
in the ownership or operation of or the conduct of the business of any of the
Citicasters Stations by Citicasters or any Entity Affiliated with Citicasters.
Regent Assets shall mean the Jacor Assets used or held for use in the ownership
or operation of or the conduct of the business of any of the Regent Stations by
Regent or any Entity Affiliated with Regent.
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Jacor Assumable Agreements shall mean the Jacor Private Authorizations,
the Jacor Trade Agreements, the Jacor Leases and the Jacor Other Contracts.
Citicasters Assumable Agreements shall mean the Jacor Assumable Agreements that
relate to the ownership or operation of any of the Citicasters Assets or the
conduct of the business of any of the Citicasters Stations. Regent Assumable
Agreements shall mean the Jacor Assumable Agreements that relate to the
ownership or operation of any of the Regent Assets or the conduct of the
business of any of the Regent Stations.
Jacor Disapproved Matters shall have the meaning given to it in Section
5.2(e).
Jacor Disclosure Schedule shall mean the Jacor Disclosure Schedule
dated as of the date of this Agreement delivered by the Jacor Parties to
American.
Jacor Employee Plans shall have the meaning given to it in Section
3.11(a).
Jacor Excluded Assets shall mean (i) all cash and cash equivalents of
any of the Jacor Parties, (ii) all Jacor Accounts Receivable, (iii) the
corporate names of each of the Jacor Parties, and its books, records and other
documents that relate to its corporate existence, organization and
capitalization, (iv) all books and records of any of the Jacor Parties that
relate to the Jacor Stations and which any Jacor Party is required by Applicable
Law to retain, subject to the right of the other party to have access and to
copy for a period of three (3) years from the Closing Date, (v) the Jacor
Employee Plans, (vi) all insurance policies that relate to the Jacor Assets,
(vii) assets comprising the traffic and accounting computer systems), (viii)
software programs and other assets used to provide certain financial and
accounting services for any of the Jacor Stations, and (ix) any and all
products, profits and proceeds of, and including without limitation any Claims
with respect to, any of the foregoing.
Jacor FCC Licenses shall mean the Citicasters FCC Licenses and the
Regent FCC Licenses. Citicasters FCC Licenses shall have the meaning given to it
in the first Whereas paragraph. Jacor FCC Licenses shall have the meaning given
to it in the first Whereas paragraph.
Jacor Financial Statements shall have the meaning given to it in
Section 3.2(a).
Jacor Governmental Authorizations shall have the meaning given to it in
Section 3.7(a). Citicasters Governmental Authorizations shall mean the Jacor
Governmental Authorizations with respect to the ownership and operation of any
of the Citicasters Assets and the conduct of any of the business of the
Citicasters Stations. Regent Governmental Authorizations shall mean the Jacor
Governmental Authorizations with respect to the ownership and operation of any
of the Regent Assets and the conduct of any of the business of the Regent
Stations.
Jacor Inspection shall have the meaning given to it in Section 5.2(h).
Jacor Intangible Assets shall have the meaning given to it in Section
3.8. Citicasters Intangible Assets shall mean the Jacor Intangible Assets with
respect to the ownership and operation of any of the Citicasters Assets and the
conduct of the business of any of the Citicasters Stations.
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Regent Intangible Assets shall mean the Jacor Intangible Assets with respect to
the ownership and operation of any of the Regent Assets and the conduct of the
business of any of the Regent Stations.
Jacor Kansas City Proration Schedule shall have the meaning given to it
in Section 2.3(f).
Jacor Leases shall have the meaning given to it in Section 3.5(a).
Citicasters Leases shall mean the Jacor Leases with respect to the ownership and
operation of any of the Citicasters Assets and the conduct of the business of
any of the Citicasters Stations. Regent Leases shall mean the Jacor Leases with
respect to the ownership and operation of any of the Regent Assets and the
conduct of the business of any of the Regent Stations.
Jacor Material Agreements shall have the meaning given to it in Section
3.12. Citicasters Material Agreements shall mean the Jacor Material Agreements
with respect to the ownership and operation of any of the Citicasters Assets and
the conduct of the business of any of the Citicasters Stations. Regent Material
Agreements shall mean the Jacor Material Agreements with respect to the
ownership and operation of any of the Regent Assets and the conduct of the
business of any of the Regent Stations.
Jacor Nonassumed Liabilities shall have the meaning given to it in
Section 2.3(a). Citicasters Nonassumed Liabilities shall have the meaning given
to it in Section 2.3(a). Regent Nonassumed Liabilities shall have the meaning
given to it in Section 2.3(a).
Jacor Other Contracts shall mean (a) all Jacor Material Agreements set
forth on Section 3.12 of the Jacor Disclosure Schedule, (b) all Contracts for
the sale of time on the Jacor Stations for cash entered into in the ordinary
course of business consistent with prior practice, and (c) Contracts not
required to be listed on Section 3.12 of the Jacor Disclosure Schedule that have
been entered into in the ordinary course of business. Citicasters Other
Contracts shall mean the Jacor Other Contracts with respect to any of the
ownership and operation of any of the Citicasters Assets and the conduct of the
business of any of the Citicasters Stations. Regent Other Contracts shall mean
the Jacor Other Contracts with respect to the ownership and operation of any of
the Regent Assets and the conduct of the business of any of the Regent Stations.
Jacor Owned Real Property shall have the meaning given to it in Section
3.5(a). Citicasters Owned Real Property shall mean the Jacor Owned Real Property
with respect to the ownership and operation of any of the Citicasters Assets and
the conduct of the business of any of the Citicasters Stations. Regent Owned
Real Property shall mean the Jacor Owned Real Property with respect to the
ownership and operation of any of the Regent Assets and the conduct of the
business of any of the Regent Stations.
Jacor Permitted Title Exceptions shall have the meaning given to it in
Section 5.2(e).
Jacor Personal Property shall mean all items of Personal Property, used
or held for use in the ownership or operation or the conduct of the business of
any of the Jacor Stations. Citicasters Personal Property shall mean the Jacor
Personal Property with respect to the ownership and operation of any of the
Citicasters Assets and the conduct of the business of any of the Citicasters
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Stations. Regent Personal Property shall mean the Jacor Personal Property with
respect to the ownership and operation of any of the Regent Assets and the
conduct of the business of any of the Regent Stations.
Jacor Preliminary Title Report shall have the meaning given to it in
Section 5.2(e).
Jacor Private Authorizations shall mean all Private Authorizations
obtained or held for use in the ownership or operation or the conduct of the
business of the Citicasters Stations. Citicasters Private Authorizations shall
mean the Jacor Private Authorizations with respect to the ownership and
operation of any of the Citicasters Assets and the conduct of the business of
any of the Citicasters Stations. Regent Private Authorizations shall mean the
Jacor Private Authorizations with respect to the ownership and operation of any
of the Regent Assets and the conduct of the business of any of the Regent
Stations.
Jacor Proration Schedule shall have the meaning given to it in Section
2.3(e).
Jacor Real Property shall have the meaning given to it in Section
3.5(a). Citicasters Real Property shall mean the Jacor Real Property with
respect to the ownership and operation of any of the Citicasters Assets and the
conduct of the business of any of the Citicasters Stations. Regent Real Property
shall mean the Jacor Real Property with respect to the ownership and operation
of any of the Regent Assets and the conduct of the business of any of the Regent
Stations.
Jacor Stations shall have the meaning given to it in the first Whereas
paragraph. Citicasters Stations shall have the meaning given to it in the first
Whereas paragraph. Regent Stations shall have the meaning given to it in the
first Whereas paragraph.
Jacor Station Employees shall have the meaning given to it in Section
3.11(b).
Jacor Stations TBAs shall mean the Citicasters Stations TBA and the
Regent Stations TBA. Citicasters Stations TBA shall have the meaning given to it
in Section 5.2(d). Regent Stations TBA shall have the meaning given to it in
Section 5.2(d).
Jacor Study shall have the meaning given to it in Section 5.2(f).
Jacor Survey shall have the meaning given to it in Section 5.2(e).
Jacor Trade Agreements shall mean all Trade Agreements in effect on the
date hereof or entered into on or prior to the Cut-Off Date that relate to the
ownership or operation of any of the Jacor Assets or the conduct of the business
of any of the Jacor Stations. Citicasters Trade Agreements shall mean the Jacor
Trade Agreements that relate to the ownership or operation of any of the
Citicasters Assets or the conduct of the business of any of the Citicasters
Stations. Regent Trade Agreements shall mean the Jacor Trade Agreements that
relate to the ownership or operation of any of the Regent Assets or the conduct
of the business of any of the Regent Stations.
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Jacor' knowledge (including the term "to the knowledge, information and
belief of Jacor") means the actual knowledge of any executive officer of any
Jacor Party or any General Manager of any of the Jacor Stations.
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 (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 or equity.
Lien shall mean any 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 or capital lease involving substantially the same
economic effect as any of the foregoing; 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.
Like-Kind Exchanges shall mean an Exchanges of assets of the nature
contemplated by the provisions of Section 1031 of the Code.
Loss and Expense shall have the meaning given to it in Section 8.2.
material 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 any Person, any
Contractual Obligation which is in effect on the date hereof and (a) was not
entered into in the ordinary course of business, (b) was entered into in the
ordinary course of business which (i) involved annual consideration of more than
Ten Thousand Dollars ($10,000) 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 continuing financial
obligation, (c) involves Indebtedness for Money Borrowed, (d) is an employment
agreement, (e) is or otherwise constitutes a written agency, broker, dealer,
license, distributorship, sales representative or similar written agreement, or
(f) accounted for more than
A-14
<PAGE>
three percent (3%) of the revenues of the American Stations or the Jacor
Stations in any of the last three fiscal years or is likely to account for more
than three percent (3%) of revenues of the American Stations or the Jacor
Stations during the current fiscal year.
Notice of Disagreement shall have the meaning given to it in Section
2.3(e).
Organic Document shall mean, with respect to a Person which is a
corporation, its certificate or articles of incorporation or organization, its
by-laws and all stockholder agreements, voting trusts and similar arrangements
applicable to any of its capital stock.
Permitted Liens shall mean (a) any mechanic's or materialmen's Lien or
similar Lien with respect to amounts not yet due and payable or which are being
contested in good faith by appropriate proceedings and for which appropriate
reserves have been established, (b) Liens for taxes not yet due and payable or
which are being contested in good faith by appropriate proceeding, for which
appropriate reserves have been established, and (c) easements, licenses,
covenants, rights of way and similar Liens which, individually or in the
aggregate, would not materially and adversely affect the marketability or value
of the property encumbered thereby or materially interfere with the operations
of the Stations, it being understood that any Permitted Liens of a nature
referred to in clause (a) or (b) shall, to the extent they may involve the
payment of money, be taken into account in preparing the Citicasters Kansas City
Proration Schedule, the Regent Kansas City Proration Schedule and the Dayton
Proration Schedule.
Permitted Title Exceptions shall mean American Permitted Title
Exceptions and/or Jacor Permitted Title Exceptions, as the context may indicate.
Person shall mean any natural individual or any Entity.
Personal Property shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office and studio equipment, spare
parts and other tangible personal property, plus such additions thereto and
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date.
Preliminary Title Report shall have the meaning given to it in Section
5.2(e).
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 copyrights,
computer software programs, patents, service marks, trademarks, trade names,
technology and know-how.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
A-15
<PAGE>
Real Property shall mean all of the fee estates and buildings and other
improvements thereon, leasehold interest, easements, licenses, rights to access,
right-of- way, and other real property interest (including without limitation
any of the foregoing that relate to the towers, transmitters, studio sites and
offices of the respective Stations).
Referee shall have the meaning given to it in Section 2.3(e).
Regent Broadcasting shall have the meaning given to it in the Preamble.
Regent Kansas City Proration Schedule shall have the meaning given to
it in Section 2.3(g).
Regent Licensee shall have the meaning given to it in the Preamble.
Regent Parties shall have the meaning given to it in the Preamble.
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 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 5.1(a).
SEC shall mean the United States Securities and Exchanges Commission,
or any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the SEC 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.
Stations shall mean, collectively, the Jacor Stations and the American
Stations.
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 Taxes (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,
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<PAGE>
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 Claim shall mean any Claim which relates to Taxes, including
without limitation any Claim arising out of any breach of the representations
and warranties set forth in Section 3.10 or 4.10.
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.
TBA Date shall mean the date when operations under the TBAs shall
become effective (or in the event such date is not the same for all of the TBAs,
the applicable date of such effectiveness).
TBAs shall mean the American Citicasters Stations TBA, the American
Regent Stations TBA, the Citicasters Stations TBA and the Regent Stations TBA,
or the applicable one of such agreements.
Termination Date shall have the meaning given to it in Section 7.1.
Trade Agreements shall mean any Contract that relate to any of the
Stations pursuant to which American or any Jacor Party is required to provide
air time in exchange for property or services other than cash.
Transactions shall mean the Exchanges and all of the other transactions
contemplated by this Agreement to be consummated on or prior to the Closing
Date, including without limitation the execution, delivery and performance of
the Collateral Documents.
Valuation Schedule shall have the meaning given to it in Section
2.2(b).
A-17
EXHIBIT 10.13
ASSET EXCHANGE AGREEMENT
by and among
AMERICAN RADIO SYSTEMS CORPORATION
AMERICAN RADIO SYSTEMS LICENSE CORP.
ENTERTAINMENT COMMUNICATIONS, INC.
and
ECI LICENSE COMPANY, L.P.
Dated July 18, 1997
<PAGE>
ASSET EXCHANGE AGREEMENT
THIS AGREEMENT made and entered into this 18th day of July,
1997, by and among AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation
(hereinafter "ARS"), AMERICAN RADIO SYSTEMS LICENSE CORP., a Delaware
corporation (hereinafter "ARS License"), ENTERTAINMENT COMMUNICATIONS, INC., a
Pennsylvania corporation (hereinafter "Entercom"), and ECI LICENSE COMPANY L.P.,
a Pennsylvania limited partnership (hereinafter "ECI").
RECITALS
WHEREAS, Entercom and ECI have entered into an Asset Exchange
Agreement dated as of March 12, 1997 by and among Bonneville International
Corporation, Bonneville Holding Company, Group W Broadcasting, Inc.
("Westinghouse"), Entercom and ECI (the "Westinghouse Agreement"), pursuant to
which Entercom and ECI have, among other things, acquired the Assets and the
Authorizations used in connection with the operation of radio station KLOU(FM),
St. Louis, Missouri; and
WHEREAS, Entercom is the sole general partner of ECI and owns
a 99% interest therein; and
WHEREAS, ARS and ARS License have entered into an Asset
Exchange Agreement dated as of June 19, 1997 (the "JACOR Agreement"), pursuant
to which ARS and ARS License have, among other things, agreed to sell WMMX(FM),
WTUE(FM), WONE(AM), Dayton, Ohio, WLQT(FM), Kettering-Dayton, Ohio, WBTT(FM),
Englewood, Ohio and WXEG(FM), Beavercreek, Ohio (together, the "Relinquished
Stations") and to acquire various assets including the Assets and the
Authorizations used in connection with the operation of radio stations WDAF(AM),
Kansas City, Missouri, and KUDL(FM), Kansas City, Kansas (the "Kansas City
Stations"); and
WHEREAS, ARS desires to acquire the KLOU Property and ARS
License desires to acquire the KLOU Authorizations in a like-kind exchange
transaction; and
WHEREAS, Entercom desires to acquire the ARS Property and ECI
desires to acquire the Kansas City Authorizations in a like-kind exchange
transaction; and
WHEREAS, the parties have agreed, subject to the conditions
set forth herein, that ARS and ARS License shall assign to a "qualified
intermediary" (within the meaning of Treasury Regulation ss.
1.1031(k)-(1)(g)(4)) their rights under the JACOR Agreement to acquire the
Kansas City Assets in exchange for the relinquishment of the Relinquished
Stations and assign their rights to acquire the KLOU Assets hereunder to such
qualified intermediary such that in the aggregate ARS effects the relinquishment
of the Relinquished Stations and the ARS Cash Consideration in exchange for the
KLOU Assets in a transaction that qualifies under Section 1031 of the Internal
Revenue Code of 1986 as amended (the "Code"); and
WHEREAS, the parties have also agreed, subject to the conditions set
forth herein, that Entercom shall relinquish the KLOU Property in exchange for
the Kansas City Property, and its allocable share (if any) of the ARS Cash
Consideration, and ECI shall relinquish the KLOU
<PAGE>
Authorizations in exchange for the Kansas City Authorizations, and its allocable
share (if any) of the ARS Cash Consideration, in transactions that qualify under
Section 1031 of the Code.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained and of the representations and warranties hereinafter set forth and
for other good and valuable consideration, the parties, intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS. As used in the Recitals and herein, the following
terms shall have the following respective meanings:
"Adjustment Time" shall mean with respect to each Station,
12:01:00 a.m. current local time on the Closing Date in each of the respective
markets where the Stations are located.
"Affiliate" shall mean, with respect to any person or entity,
a person or entity controlling, controlled by or under common control with such
person or entity.
"Agreement" shall mean this Asset Exchange Agreement.
"ARS" shall mean the corporation identified as such in the
Preamble of this Agreement.
"ARS Assets" shall mean all the Assets relating to the Kansas
City Stations.
"ARS Cash Consideration" shall mean the $7 million cash
consideration to be paid by ARS and ARS License pursuant to Section 2.1.1
hereof.
"ARS License" shall mean the corporation identified as such in
the Preamble of this Agreement.
"Assets" shall mean the Property and all of the Authorizations
relating to the Station in question.
"Assignment Applications" shall have the meaning set forth in
Section 7.1 hereof.
"Authorizations" shall mean all of the licenses, permits and
authorizations granted by the Commission with respect to the operation of the
Station in question and all
2
<PAGE>
applications for Authorizations for the Station in question pending before the
Commission once such applications have been granted by the Commission.
"Closing" shall mean the event of consummation of the
transactions contemplated by this Agreement as more fully described in Article
VIII of this Agreement.
"Closing Date" shall mean the date specified for Closing in
Section 8.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the applicable regulations issued thereunder.
"Collateral Documents" shall mean the conveyancing documents
required to vest in the acquiring party the Assets and Stations to be acquired
by it and any agreement, certificate, contract, instrument, notice, opinion or
other document required to be delivered or delivered pursuant to the provisions
of this Agreement or any of the foregoing.
"Commission" shall mean the Federal Communications Commission.
"Contaminant" shall mean and include any pollutant,
contaminant, hazardous material (as defined in any of the Environmental Laws),
toxic substances (as defined in any of the Environmental Laws), asbestos or
asbestos containing material, urea formaldehyde, polychlorinated biphenyls,
regulated substances and wastes, radioactive materials, and petroleum or
petroleum by-products, including crude oil or any fraction thereof, except that
"Contaminant" shall not include small quantities of maintenance, cleaning and
emergency generator fuel supplies customary for the operation of radio stations
and maintained in compliance with all Environmental Laws in the Ordinary Course
of Business.
"Contracts" shall mean all agreements, arrangements,
commitments and undertakings, written or oral, expressed or implied, relating to
the Station in question or any of them, or to the present or future operation of
the Station in question except for any Leases, including without limitation,
cash and trade contracts for broadcast advertising.
"Default" shall mean the material breach of a representation,
warranty or covenant by a party hereto under this Agreement.
"ECI" shall mean the limited partnership identified as such in
the Preamble of this Agreement.
"Entercom" shall mean the corporation identified as such in
the Preamble of this Agreement.
"Environmental Laws" shall mean and include, but not be
limited to, any applicable federal, state or local law, statute, charter,
ordinance, rule or regulation or any governmental agency interpretation, policy
or guidance, including without limitation applicable safety/environmental/health
laws such as but not limited to the Resource Conservation and Recovery Act of
1976, Comprehensive Environmental Response Compensation and Liability
3
<PAGE>
Act, Federal Emergency Planning and Community Right-to-Know Law, the Clean Air
Act, the Clean Water Act, and the Toxic Substance Control Act, as any of the
foregoing have been amended, and any permit, order, directive, court ruling or
order or consent decree applicable to or affecting the Property or any other
property (real or personal) used by or relating to the Station in question
promulgated or issued pursuant to any Environmental Laws which pertains to,
governs, or controls the generation, storage, remediation or removal of
Contaminants or otherwise regulates the protection of health and the environment
including, but not limited to, any of the following activities, whether on site
or off site: (i) the emission, discharge, release, spilling or dumping of any
Contaminant into the air, surface water, ground water, soil or substrata; or
(ii) the use, generation, processing, sale, recycling, treatment, handling,
storage, disposal, transportation, labeling or any other management of any
Contaminant.
"Environmental Liabilities and Costs" shall mean all Losses,
whether direct or indirect, known or unknown, current or potential, past,
present or future, imposed by, under or pursuant to Environmental Laws, or
necessary to comply with the representations and warranties of a party hereunder
(without regard to any knowledge qualifier contained therein), including,
without limitation, all such Losses related to remedial actions, and all
reasonable fees, disbursements and expenses of counsel, experts, personnel and
consultants based on, arising out of or otherwise in respect of: (i) the
ownership or operation of (x) a Station through the Closing Date by the party
disposing of such Station hereunder or any of its predecessors or Affiliates or
(y) any other assets, equipment or facilities owned, leased or operated at any
time by such party or any of its predecessors or Affiliates at any time; (ii)
the environmental conditions on, under or above (x) the applicable Assets
existing on the Closing Date or (y) any other assets, equipment or facilities
owned, leased or operated at any time by such disposing party, or any of its
predecessors or Affiliates; and (iii) expenditures necessary to cause any of the
applicable Assets being disposed of hereunder to be in compliance with any and
all requirements of Environmental Laws in the most cost efficient manner as of
the Closing Date, including, without limitation, all environmental permits
issued under or pursuant to such Environmental Laws, and reasonably necessary to
make full economic use of the applicable Assets being disposed of hereunder.
"Final Order" shall mean an action by the Commission upon any
application, including without limitation the Assignment Applications, for its
consent, approval or authorization, which action has not been reversed, stayed,
enjoined, set aside, annulled or suspended, and with respect to which action, no
timely protest, petition to deny, petition for rehearing or reconsideration,
judicial or administrative appeal or request for stay is pending, and as to
which action the time for filing of any such protest, petition, judicial or
administrative appeal or request and any period during which the Commission may
reconsider or review on its own authority have expired.
"JACOR" shall mean collectively Citicasters Co., Regent
Broadcasting of Kansas City, Inc. and Regent Licensee of Kansas City, Inc.
"JACOR Agreement" shall mean the Asset Exchange Agreement
dated June 19, 1997 entered into by and among ARS, ARS License, Citicasters Co.,
Regent Broadcasting of Kansas City, Inc. and Regent Licensee of Kansas City,
Inc., as amended from time to time.
4
<PAGE>
"JACOR Closing" shall mean the closing of the transactions
contemplated by the JACOR Agreement.
"Kansas City Authorizations" shall mean all of the
Authorizations relating to the Kansas City Stations.
"Kansas City Contracts" shall mean all of the Contracts
relating to the Kansas City Stations.
"Kansas City Leases" shall mean all of the Leases relating to
the Kansas City Stations.
"Kansas City Property" shall mean all of the Property relating
to the Kansas City Stations.
"Kansas City Stations" shall mean: (i) the frequency
modulation (FM) radio broadcast station licensed by the Commission to Kansas
City, Kansas broadcasting on 98.1 Mhz and currently assigned the call letters
KUDL ("KUDL"); (ii) the amplitude modulation (AM) radio broadcast station
licensed by the Commission to Kansas City, Missouri broadcasting on 610 Khz and
currently assigned the call letters WDAF ("WDAF").
"KLOU" shall mean the frequency modulation (FM) radio
broadcast station licensed by the Commission to St. Louis, Missouri broadcasting
on 103.3 Mhz and currently assigned the call letters KLOU.
"KLOU Assets" shall mean all of the Assets relating to KLOU.
"KLOU Authorizations" shall mean all of the Authorizations
relating to KLOU.
"KLOU Contracts" shall mean all of the Contracts relating to
KLOU.
"KLOU Leases" shall mean all of the Leases relating to KLOU.
"KLOU Property" shall mean all of the Property relating to
KLOU.
"KLOU Studio Subleases" shall mean the sublease of studio and
office space entered into by Westinghouse and Entercom, effective on May 30,
1997 and having a term through and including June 29, 1998.
"Leases" shall mean all agreements, arrangements or
commitments and undertakings, written or oral, express or implied, for the use
or occupation of any real or personal property used in the operation of the
Station in question.
"Loss" shall have the meaning set forth in Section 9.4.1
hereof.
5
<PAGE>
"Ordinary Course of Business" shall mean the routine conduct
of the business of the Station in question (excluding extraordinary, irregular
or abnormal transactions) on a basis consistent with the regular practice of
such Station since December 31, 1996.
"Permitted Encumbrances" shall mean: (i) encumbrances for
taxes, assessments or governmental charges or levies which are not yet due and
payable, or that, subject to adequate security for payment, are being contested;
(ii) easements, rights of way, or other encumbrances of record or disclosed in
this Agreement that do not have a material adverse effect on the Assets or the
operation of the Station in question; and (iii) encumbrances imposed by law,
such as materialmen's, mechanic's, carrier's, workmen's or repairmen's liens or
other similar encumbrances arising in the Ordinary Course of Business, securing
obligations that are not overdue and that are not related to obligations for
borrowed money.
"Property" shall mean all of the tangible and intangible
property (other than the Authorizations), whether real, personal or mixed, and
all rights and interests which are or were at any time since May 1, 1997 used,
necessary, connected or associated with or related to the Station in question or
the present or future operation of that Station including: (i) the assets and
property listed in Schedules 4.1.4 and 4.2.4 hereto respectively as "Included
Assets"; (ii) all of the rights, titles, and interests under the Leases and the
Contracts relating to the Station in question; (iii) the call letters,
copyrights, trademarks and other intellectual property associated with the
Station in question; (iv) originals or, if unavailable, photocopies, of all
files, records, studies, data, lists, filings, general accounting records, books
of account, computer programs and software and logs, of every kind, relating to
the operations or business of the Station in question; and (v) all of the
disposing party's rights under manufacturers' and vendors' warranties relating
to items included in the Assets of the Station in question; but excluding
therefrom those assets listed on Schedules 4.1.4 and 4.2.4 hereto respectively
as "Excluded Property."
"Required Consents" shall mean the consents of third parties
to the Leases and Contracts that are required for the assignment thereof and
that are identified on the Schedules hereto as "Material Leases
(Contracts)-Consent to Assign Required."
"Station or Stations" shall mean KLOU and the Kansas City
Stations, both individually or in the aggregate.
"Westinghouse" is defined in the preamble to this Agreement.
"Westinghouse Agreement" is defined in the preamble to this
Agreement.
ARTICLE II
ASSET EXCHANGE
2.1 TRANSFER OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, at the Closing:
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2.1.1 ARS and ARS License shall (i) transfer, assign, and
deliver or cause to be transferred, assigned and delivered to Entercom and ECI
the ARS Assets free and clear of all liens and encumbrances other than Permitted
Encumbrances, and Entercom and ECI shall acquire and receive same from ARS and
ARS License; and (ii) deliver to Entercom and ECI cash in the amount of Seven
Million Dollars ($7,000,000) (the "ARS Cash Consideration") and Entercom and ECI
shall receive same from ARS and ARS License. The ARS Cash Consideration shall be
paid by wire transfer of immediately available funds at Closing to the account
designated by Entercom at or prior to Closing.
2.1.2 Entercom and ECI shall transfer, assign and deliver or
cause to be transferred, assigned and delivered to ARS and ARS License the KLOU
Assets free and clear of all liens and encumbrances other than Permitted
Encumbrances, and ARS and ARS License shall acquire and receive same from
Entercom and ECI.
2.2 ALLOCATION OF VALUES.
2.2.1 The fair market value of the ARS Assets and the KLOU
Assets shall be determined and allocated on the basis of appraisals (the
"Appraisals") prepared by Bond & Pecaro, whose fees and expenses shall be borne
equally by ARS and Entercom. The parties shall direct Bond & Pecaro to deliver
the Appraisals within 60 days from the execution hereof and to set forth in the
Appraisals the fair market value of each asset included in the ARS Assets and
the KLOU Assets.
2.2.2 Within 30 days of receipt of the Appraisals, the parties
shall prepare a schedule (the "Section 1031 Schedule") that sets forth the
"exchange groups" and "residual groups" (as each quoted term is defined by
Treas. Reg. Section 1.1031(j)), together with each asset included in the ARS
Assets and KLOU Assets that belongs to the relevant exchange group or residual
group. The parties shall cooperate in good faith to resolve any issues relating
to the Section 1031 Schedule in order to agree on a single, final Section 1031
Schedule.
2.2.3 Each party, as necessary, shall prepare IRS Form 8594
and IRS Form 8824 reflecting the fair market value of the Assets it transferred
and received as determined in accordance with the above provisions and shall
forward such form to the other parties within thirty (30) days after receipt of
the Appraisals. Each party, as necessary, shall file with their respective
federal income tax returns for the tax year in which the Closing occurs the IRS
Form 8594 and IRS Form 8824 as prepared in accordance with the foregoing. Each
party shall deliver to the other parties hereto a copy of the IRS Form 8594 and
IRS Form 8824 as filed with their respective federal income tax return within
thirty (30) days of the filing of such return. The parties hereto hereby
covenant and agree with each other that they will not take a position on any
income tax return that is in any way inconsistent with the terms of this Section
2.2.
2.2.4 Notwithstanding the foregoing, ARS and ARS License shall
meet their obligations under this Section 2.2 with respect to the Kansas City
Stations by exercising their
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rights under Section 2.2 of the JACOR Agreement, as such rights pertain to the
Kansas City Stations, for the benefit of Entercom and ECI as directed by
Entercom and ECI.
2.3 NON-ASSIGNABLE CONTRACTS.
2.3.1 Without limiting or otherwise affecting the rights of
any party hereto, to the extent that any Contract or Lease to be assigned
pursuant to this Agreement is not capable of being assigned without the consent,
approval or waiver of a third person or entity, nothing in this Agreement will
constitute an assignment or require the assignment thereof except to the extent
provided in this Section 2.3.
2.3.2 To the extent that the consents, approvals and waivers
referred to in Section 2.3.1 to the Contracts and Leases identified in the
Schedules to this Agreement as "Material Contracts (Leases) - Consent to Assign
Required" are required by such Contracts or Leases, the party seeking to assign
such Contracts or Leases hereunder shall use its best efforts to obtain such
consents, approvals and waivers prior to the Closing Date.
2.3.3 With respect to all other such consents, approvals and
waivers, each party hereto shall use its best efforts to obtain all such
consents, approvals and waivers prior to and, if the Closing occurs, after the
Closing Date.
ARTICLE III
LIABILITIES
3.1 ASSUMPTION OF LIABILITIES BY ARS AND ARS LICENSE. From and after
the Closing Date, ARS and ARS License shall assume and pay, perform and
discharge the following obligations and commitments relating to KLOU:
3.1.1 The liabilities and obligations arising with respect to
events occurring after the Adjustment Time or accruing after the Adjustment Time
with respect to the KLOU Leases that are specifically identified on Schedule
4.2.5 as being assumed by ARS;
3.1.2 The liabilities and obligations arising with respect to
events occurring after the Adjustment Time or accruing after the Adjustment Time
with respect to the KLOU Contracts that are specifically identified in Schedule
4.2.6 as being assumed by ARS and ARS License and such additional KLOU Contracts
as are permitted to be entered into in accordance with Section 6.4 hereof;
3.1.3 The liabilities and obligations which arise with respect
to events occurring after the Adjustment Time or which accrue after the
Adjustment Time with respect to the KLOU Assets and the operation of KLOU; and
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3.1.4 All taxes and assessments (other than income and
franchise taxes of Entercom or ECI) that accrue on or, with respect to the KLOU
Assets and the operation of KLOU, after the Adjustment Time.
3.2 ASSUMPTION OF LIABILITIES BY ENTERCOM AND ECI. From and after the
Closing Date, Entercom and ECI shall assume and pay, perform and discharge the
following obligations and commitments relating to the Kansas City Stations:
3.2.1 The liabilities and obligations arising with respect to
events occurring after the Adjustment Time or accruing after the Adjustment Time
with respect to the Kansas City Leases that are specifically identified on
Schedule 4.1.5 as being assumed by Entercom;
3.2.2 The liabilities and obligations with respect to events
occurring after the Adjustment Time or accruing after the Adjustment Time with
respect to the Kansas City Contracts that are specifically identified on
Schedule 4.1.6 as being assumed by Entercom and such additional Kansas City
Contracts as are permitted to be entered into in accordance with Section 6.2
hereof;
3.2.3 The liabilities and obligations which arise with respect
to events occurring after the Adjustment Time or which accrue after the
Adjustment Time with respect to the ARS Assets and the operation of the Kansas
City Stations; and
3.2.4 All taxes and assessments (other than income and
franchise taxes of ARS or ARS License) that accrue on or with respect to the ARS
Assets and the operation of the Kansas City Stations after the Adjustment Time.
3.3 ASSUMPTION OF EMPLOYEE OBLIGATIONS.
(a) For purposes of determining the amount of any entitlement
of any employee of Entercom at KLOU who is hired by ARS, on the one hand, and
any employee of JACOR at the Kansas City Stations who is hired by Entercom, on
the other hand (such employees referred to herein as the "Transferred
Employees") to vacation leave, ARS and Entercom will take into account and
credit such employee's length of service with the Station's current owner (plus,
in the case of employees of Entercom and KLOU, such employee's length of service
with Westinghouse at KLOU) as well as with the party acquiring such Station
hereunder. With respect to any accrued but unused vacation to which any
Transferred Employee is entitled under the vacation policy applicable to such
employee prior to the date such employee is hired by ARS or Entercom, then such
party, as the case may be, shall allow such employee to use such accrued
vacation; provided, however, that ARS or Entercom may disallow such employee
from taking such accrued vacation, provided, that ARS or Entercom, as the case
may be, shall be liable for and pay in cash to each such employee an amount
equal to such vacation time in accordance with the applicable vacation policy.
Neither ARS nor Entercom will assume any obligations under any sick leave or
severance policy of the other or JACOR, except for obligations set forth in the
Contracts assumed or required to be assumed hereunder.
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(b) No provisions of this Agreement shall create any third
party beneficiary rights of any employee or former employee (including any
beneficiary or dependent thereof) of Entercom, ARS or JACOR in respect of
continued employment (or resumed employment) with Entercom or ARS or in respect
of any other matter.
3.4 OTHER LIABILITIES. Except as specifically assumed by the other
parties pursuant to Section 3.1, 3.2 or 3.3 hereof, each party shall promptly
and completely pay or discharge any and all taxes, assessments, accounts
payable, commitments, agreements, undertakings, claims, debts, demands,
obligations and liabilities incurred or made by them, or caused by, arising out
of or resulting from any act or omission of its directors, officers, employees,
agents, partners or independent contractors.
3.5 LIMITATION. Except as specifically set forth in Section 3.1, 3.2 or
3.3, no party shall assume any liabilities, obligations or commitments of any
other party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 BY ARS AND ARS LICENSE. Notwithstanding anything in this Agreement
to the contrary, the representations and warranties of each of ARS and ARS
License in Sections 4.1.5 through 4.1.27 shall be deemed to be limited to the
scope of the representations and warranties of JACOR to ARS and ARS License in
the JACOR Agreement. Subject to the proceeding qualification, ARS and, to the
extent indicated below, ARS License hereby represent and warrant that:
4.1.1 CORPORATE STANDING. ARS 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 in the States of Missouri and Kansas.
ARS License is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of ARS and ARS License
has full power and authority to engage in the business in which it is presently
engaged. ARS holds all of the issued and outstanding capital stock of ARS
License.
4.1.2 AUTHORIZATION OF AGREEMENT; NO BREACH. Each of ARS and
ARS License has the necessary corporate power and authority to execute, deliver
and perform this Agreement, and such other agreements (including the Collateral
Documents) as are necessary to consummate the transactions contemplated hereby,
and, subject to the receipt of the consents and approvals required elsewhere
herein, this Agreement constitutes the valid and binding obligation of each of
ARS and ARS License enforceable against each of them in accordance with their
respective terms, except as limited by bankruptcy and insolvency laws and by
laws affecting the enforcement of creditors rights generally or equitable
principles. Assuming said consents and approvals are obtained, neither such
execution, delivery and performance nor compliance by any of ARS and ARS License
with the terms and provisions of the Agreement will conflict with or result in a
breach or violation of any of the terms, conditions or provisions of the
Articles of Incorporation or By-Laws of any of ARS or ARS License or any
judgment,
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order, injunction, decree, regulation or ruling of any court or any other
governmental authority to which any of ARS or ARS License is subject or any
material agreement or contract to which any of them is a party or to which it is
subject, or constitute a material default thereunder.
4.1.3 QUALIFICATION. To the knowledge of ARS and ARS License,
there are no facts relating to JACOR, ARS or ARS License which could reasonably
be expected to cause Commission approval of the Assignment Applications relating
to the transfer of KLOU or the Kansas City Stations to be denied or materially
delayed or which could reasonably be expected to lead to the filing of a
material objection to such Assignment Applications.
4.1.4 ARS PROPERTY. The Kansas City Property to be transferred
hereunder, listed under the heading "Included Property" on Schedule 4.1.4
hereto, constitutes all of the material tangible and intangible property,
whether real, personal or mixed, other than the Kansas City Leases and Kansas
City Contracts, that are used in and are necessary for the present operation of
the Kansas City Stations except for (i) property replaced in the Ordinary Course
of Business and (ii) those assets specifically listed on Schedule 4.1.4 under
the heading "Excluded Property."
4.1.5 KANSAS CITY LEASES. ARS has delivered to Entercom true
and correct copies of all of the Kansas City Leases listed on Schedule 4.1.5.
There are no other material Kansas City Leases for any items or interests of
real or personal property or associated with the ARS Assets or the present or
future operation of the Kansas City Stations other than those disclosed on
Schedule 4.1.5 hereto.
4.1.6 KANSAS CITY CONTRACTS. ARS has delivered to Entercom
true and correct copies of all Kansas City Contracts listed on Schedule 4.1.6
hereto, except for Contracts for the sale or trade of broadcast advertising.
There are no material Kansas City Contracts except the Contracts for the sale of
broadcast advertising now in effect, written or oral, express or implied, which
in any way affect the ARS Assets or the present or future operation of the
Kansas City Stations other than those disclosed on Schedule 4.1.6 hereto.
4.1.7 INTELLECTUAL PROPERTY. Schedule 4.1.7 hereto lists all
material trademarks and copyrights relating to the operations of the Kansas City
Stations and the extent to which the same have been duly registered with Federal
or State governmental agencies.
4.1.8 TITLE TO PROPERTY. Except for the Permitted Encumbrances
and as disclosed on Schedule 4.1.8 hereto, ARS and ARS License at Closing will
(i) have good and marketable title to the real property owned by JACOR that
comprises part of the Kansas City Property, (ii) have valid and subsisting
leasehold interests in the Leases that comprise part of the Kansas City Property
and (iii) own and have good and merchantable title to all material items of
personal property that comprise part of the Kansas City Property. Except for
Permitted Encumbrances and items disclosed on Schedule 4.1.8, none of the Kansas
City Property is subject to any mortgage, conditional sale agreement, security
interest, lease, lien, hypothecation, pledge, encumbrance, restriction,
liability, charge, claim or imperfection of title that would materially
adversely effect the continued use of the Kansas City Property. Except as
otherwise
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provided on Schedule 4.1.8, all items disclosed on such Schedule shall be
removed or satisfied by ARS or ARS License at or before Closing.
4.1.9 NO DEFAULTS. JACOR has complied in all material respects
with all of the terms of the Kansas City Contracts and the Kansas City Leases
and such Kansas City Contracts and Kansas City Leases are enforceable by JACOR,
in accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy and similar laws affecting the enforcement of
creditors' rights and general equitable principles affecting the enforcement of
equitable remedies, (including within said equitable remedies, without
limitation, the remedy of specific performance). No event has occurred which
with the passage of time or the giving of notice or both would constitute a
material default by JACOR under the Kansas City Contracts. To the knowledge of
ARS and ARS License, all other parties to the Kansas City Contracts and Kansas
City Leases have complied in all material respects with the provisions thereof
and no event has occurred which with the passage of time or the giving of notice
or both would constitute a material default by any such other party thereunder.
In addition, neither ARS nor ARS License (unless waived or consented to in
writing by JACOR) is in material breach of or has defaulted under any of the
terms of the JACOR Agreement.
4.1.10 AUTHORIZATIONS AND APPLICATIONS. All Authorizations
necessary to the lawful operations of the Kansas City Stations as they are now
conducted or proposed to be conducted on or prior to the Closing Date have been
granted and issued by the Commission to JACOR and are listed on Schedule 4.1.10
attached hereto and are now in full force and effect. Prior to Closing, except
as set forth on Schedule 4.1.10, ARS License will be entitled to have all
Authorizations necessary to the lawful operations of the Kansas City Stations as
they are now conducted or proposed to be conducted on or prior to the Closing
Date to be granted and issued by the Commission to ARS License. There are no
applications of ARS, ARS License or of JACOR relating to the Kansas City
Stations pending with the Commission except as listed on such Schedule 4.1.10.
Except as may be set forth on Schedule 4.1.10, JACOR has performed and complied
in all material respects with all of the terms and conditions of the Kansas City
Authorizations, the Communications Act and all applicable rules and regulations
of the Commission. Except as listed on Schedule 4.1.10 no proceedings are
pending or to the knowledge of ARS and ARS License threatened, which may result
in the revocation, modification, non-renewal or suspension of any of the Kansas
City Authorizations, the denial of any pending applications, the issuance of a
cease and desist order, or the imposition of any other administrative or
judicial sanction to which the Kansas City Stations or the ARS Assets are or may
be subject. Except as set forth in Schedule 4.1.10, all ownership reports,
renewal applications and other material reports and documents in respect of the
Kansas City Stations required to be filed by ARS, ARS License and JACOR with the
Commission have been filed, and all such reports, applications and documents are
true and correct in all material respects. The Kansas City Stations are
identified by their presently assigned call letters and are operated at their
maximum authorized power and height on their assigned frequency. The public
inspection files for the Kansas City Stations are in substantial compliance with
the regulations of the Commission relating thereto.
4.1.11 PERMITS AND LICENSES. In addition to the
Authorizations, ARS, and ARS License will be entitled to hold and JACOR at
Closing will hold all other
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governmental permits and licenses necessary for the lawful operation of the
Kansas City Stations as now conducted. At Closing, all terms, restrictions and
requirements of such permits and licenses have been complied with in all
material respects and none of ARS, ARS License or JACOR is in default of any of
same in any material respect, except as set forth in Schedule 4.1.11.
4.1.12 COMPLIANCE WITH LAWS. Except as disclosed on Schedule
4.1.12, JACOR has complied in all material respects with all orders (to which
JACOR is a party or is subject), and applicable laws, rules, and regulations of
all federal, state and local authorities with respect to the ARS Assets and
operation of the Kansas City Stations. ARS and ARS License are not in default
with respect to or in violation of: (a) any judgment, order, injunction or
decree to which ARS or ARS License is a party or is subject; or (b) any rule or
regulation of any court, administrative agency or other governmental authority,
in either case in any respect material to this transaction. All material
reports, returns and other documents which relate in any way to the Kansas City
Stations and which were filed by ARS or ARS License with any administrative
agency or governmental authority are true, correct and complete in all material
respects and to the knowledge of ARS and ARS License, all material report,
returns and other documents which relate in any way to the Kansas City Stations
and which were filed by JACOR with any governmental agency or governmental
authority are true, correct and complete in all material respects.
4.1.13 LITIGATION AND CLAIMS. Except as disclosed in Schedule
4.1.13 hereto and except for rulemaking proceedings applicable to radio
broadcast stations generally, no litigation, proceeding or controversy is
pending or to the knowledge of ARS and ARS License threatened, which might
materially affect any of the ARS Assets, the right or power of JACOR, ARS or ARS
License to transfer the same, the ownership, possession, use or resale of any of
the ARS Assets, or the operation of the Kansas City Stations by Entercom or by
any assignee of Entercom and neither ARS nor ARS License has knowledge of any
facts that might give rise to any such litigation, proceeding, controversy or
claim. No claim has been made or asserted against ARS, ARS License or, to the
knowledge of ARS or ARS License, against JACOR, material to this transaction.
4.1.14 LABOR RELATIONS. In all respects material to this
transaction, ARS, ARS License and JACOR have complied with all applicable laws,
rules and regulations pertaining to the employment of labor, including those
relating to wages, hours, collective bargaining, and the payment of or
withholding of taxes, and each of ARS, ARS License and, to the knowledge of ARS
and ARS License, JACOR has withheld all amounts required by law or agreement to
be withheld from the wages or salaries of their employees and are not liable for
any arrears of wages or any tax or withholding or any penalties or interest for
failure to comply with any of the foregoing; and except as disclosed on Schedule
4.1.14, there are no collective bargaining agreements relating to the
relationship between any employee of ARS, ARS License or JACOR employed at the
Kansas City Stations. In addition, except as set forth on Schedule 4.1.14, ARS
and ARS License have no knowledge of any union organizing activities in the one
year period preceding the date of this Agreement involving or targeting any
employees of ARS, ARS License or JACOR employed at the Kansas City Stations not
already covered by a collective bargaining agreement.
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4.1.15 EMPLOYMENT CONTRACTS. Except as disclosed on Schedule
4.1.15 hereto, there are no written contracts for the employment of any
personnel relating to the Kansas City Stations and, except as provided by
applicable law or in the Contracts disclosed on Schedule 4.1.15, all employees
of ARS, or ARS License or JACOR employed at the Kansas City Stations are
employed on an "at will" basis and may be terminated without cause at any time
and with not more than thirty (30) days notice.
4.1.16 DAMAGE TO ASSETS. As of the date of the JACOR Agreement
and to the knowledge of ARS and ARS License as of the date of this Agreement,
none of the Kansas City Property has been materially and adversely affected in
any way as a result of fire, explosion, earthquake, accident, fraud, rain,
storm, drought, Act of God or public enemy or any other casualty, whether or not
covered by insurance.
4.1.17 EMPLOYEE BENEFIT AND RETIREMENT PLANS. Listed
on Schedule 4.1.17 (with a brief description thereof) are the "employee pension
benefit plans" and "employee welfare benefit plans" (as defined respectively in
Sections 3(2) and 3(l) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), which JACOR maintains on behalf of employees at the
Kansas City Stations. In all respects material to this transaction, all
"employee pension benefit plans" and "employee welfare benefit plans" listed on
Schedule 4.1.17 hereto comply in all material respects with all applicable
requirements of law and regulation including ERISA. None of ARS, ARS License or
JACOR has incurred or reasonably expects to incur (either directly or
indirectly, including as a result of any of the transactions contemplated hereby
or any indemnification obligation) any liability (including, without limitation,
withdrawal liability) that could become a liability of Entercom or ECI under or
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans and
no event, transaction or condition has occurred or exists which could result in
any such liability. ARS, ARS License and JACOR have made all required
contributions to all multiemployer plans within the meaning of Section 3(37) of
ERISA.
4.1.18 EMPLOYEES. ARS and ARS License have provided to
Entercom a listing of the name, salary or compensation, and job title of all
employees employed at the Kansas City Stations, in each case as of June 30,
1997. Except as otherwise provided in Section 3.3 hereof, ARS, ARS License and
JACOR shall be responsible for and pay to their employees all accrued or earned
compensation and benefits of any kind, including without limitation severance,
accrued vacation or other termination benefits which result from the employment
with and termination thereof by ARS, ARS License or JACOR prior to the Closing.
4.1.19 TRADE OR BARTER. Schedule 4.1.19 sets forth a true,
complete and accurate description (including obligations and liabilities
remaining thereunder) of all contracts for the sale of broadcast advertising on
a trade or barter basis that individually involve, or may involve, valued in
accordance with U.S. generally accepted accounting procedures, more than $500 in
obligations remaining thereunder as of the date of this Agreement in money,
property or services or a remaining term in excess of two (2) months.
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4.1.20 ENVIRONMENTAL COMPLIANCE, POLYCHLORINATED BIPHENYLS,
ASBESTOS AND OTHER TOXIC OR HAZARDOUS SUBSTANCES. Except as disclosed on
Schedule 4.1.20, to the knowledge of ARS and ARS License, (a) none of the ARS
Property contains (i) any friable asbestos, polychlorinated biphenals or any PCB
contaminated oil; (ii) any Contaminants; or (iii) any underground storage tanks;
(b) no underground storage tank disclosed on Schedule 4.1.20 has leaked and has
not been remediated or leaks and each such tank is in substantial compliance
with all applicable Environmental Laws; and (c) all of the ARS Property is in
substantial compliance with all applicable Environmental Laws.
4.1.21 FINANCIAL AND OTHER INFORMATION. All financial
information concerning the ARS Assets provided to Entercom and listed on
Schedule 4.1.21 fairly present the financial condition of the Kansas City
Stations as of the respective dates thereof and the results of operation of the
Kansas City Stations for the respective period then ended. Except solely for the
obligations and liabilities to be assumed by Entercom and ECI pursuant to
Section 3.2, there will, at the time of Closing, be no obligations or
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
relating to ARS, ARS License, JACOR, the ARS Assets or the Kansas City Stations
which could, after the Closing, result in any form of transferee liability
against either Entercom or ECI or subject any of the ARS Assets or any of the
Kansas City Stations to any lien or otherwise affect the full, free and
unencumbered use of the ARS Assets and the ownership and operation of the Kansas
City Stations by Entercom and ECI.
4.1.22 CONDITION OF EQUIPMENT. Transmission and studio
equipment and other equipment (mechanical and electrical) included within the
Kansas City Property, is, and will be as of the Closing Date, in a state of good
repair and maintenance and is in good 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 Kansas City
Stations to be operated in accordance with all current Commission requirements.
4.1.23 REAL PROPERTY.
(a) Schedule 4.1.23 contains a true and complete list of all
owned and leased real property used in the operation of the Kansas City
Stations. Except as disclosed on Schedule 4.1.23, there are no outstanding
options or rights of first refusal to purchase or sublease such real property or
any portion thereof or interest therein. The real property identified on
Schedule 4.1.23 has vehicular access to a road and is supplied with utilities
and other services necessary for the operation of the Kansas City Stations. No
real property other than that listed on Schedule 4.1.23 or listed on Schedule
4.1.4 pertaining to Excluded Property is used in, held for use in connection
with or necessary for the conduct of, the operations of the Kansas City
Stations. The transmitting towers, related improvements, guy anchors of the
transmitting towers, and the transmitter buildings used by JACOR in the
operation of the Kansas City Stations are located entirely on such real
property. Except as may be set forth on Schedule 4.1.23, the improvements of
JACOR upon such real property and the current use and operation of such premises
by JACOR conform in all material respects to all restrictive covenants,
conditions, easements, building, subdivision and similar codes and federal,
state and local laws,
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regulations, rules, orders and ordinances and none of ARS or JACOR has received
any notice of any violation or claimed violation of any such restrictive
covenant, condition or easement, or any building, subdivision or similar code,
or any federal, state or local law, regulation, rule, order or ordinance which,
either individually or in the aggregate, could have a material adverse effect on
the assets of the Kansas City Stations. There is no pending or, to ARS's or ARS
Licenses knowledge, threatened condemnation or other legal proceeding or action
of any kind relating to such real property and/or title thereto. There are no
latent structural, mechanical or other defects of material significance in the
real property which could reasonably be expected to have a material adverse
effect on the assets, business or financial condition of the Kansas City
Stations. All improvements upon the real property identified on Schedule 4.1.23
are in good operating condition and repair, normal wear and tear excluded. ARS
has no knowledge and has received no notice (i) of any pending, threatened, or
contemplated action to take by eminent domain or otherwise to condemn any
portion of the real property or interest therein or (ii) of any levied,
threatened or proposed assessments for public improvements with respect to the
real property.
(b) The ground system for WDAF is complete and contains the
requisite number of ground radials. The ground system for WDAF is accessible and
fully contained within real property that, as of the JACOR Closing, will be
entitled to be owned by ARS and ARS License.
4.1.24 NO MATERIAL ADVERSE CONDITION. ARS and ARS License do
not know of any undisclosed condition specifically applicable to the Kansas City
Stations that exists on the date of this Agreement, including but not limited
to, pending or threatened litigation, that is likely to have a material adverse
effect on the ARS Assets or financial condition of the Kansas City Stations,
other than (i) changes in the Ordinary Course of Business, (ii) general
economic, business or financial conditions or trends, and (iii) conditions
generally affecting radio stations.
4.1.25 PAYMENT OF TAXES. ARS, ARS License and JACOR have, and
as of the Closing Date will have, paid and discharged all taxes, assessments,
excises and other levies which are due which, if due and not paid, would
interfere with Entercom's or ECI's enjoyment or use of the ARS Assets or result
in a lien, charge or encumbrance thereon, excepting those taxes being contested
in good faith and such taxes, assessments and other levies which will not be due
until or after the Closing Date and which are either to be prorated between the
parties pursuant to the provisions of Section 8.2 hereof, paid by JACOR or paid
by ARS or ARS License pursuant to Section 6.1.7.
4.1.26 REQUIRED CONSENTS. The only approvals or consents of
persons or entities not a party to this Agreement that are legally or
contractually required to be obtained by ARS or ARS License in connection with
the consummation of the transactions contemplated by this Agreement are those
that are (i) set forth on Schedules 4.1.5 and 4.1.6 and (ii) those contemplated
by Section 5.1.
4.1.27 MATERIAL STATEMENTS AND OMISSIONS; ABSENCE OF EVENTS.
No representation or warranty made by ARS or ARS License contained in this
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Agreement, any ARS or ARS License Schedule or any certificate, document or other
instrument furnished or to be furnished by ARS or ARS License pursuant to the
provisions hereof 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 not misleading. Neither ARS nor ARS
License is aware of any impending or contemplated event that would cause any of
the representations and warranties made by it in this Article not to be true,
correct and complete on the date of such event as if made on that date.
4.2 BY ENTERCOM AND ECI. Entercom and, to the extent indicated below,
ECI hereby represent and warrant that:
4.2.1 CORPORATE STANDING. Entercom is a corporation, duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and is qualified to do business in the Commonwealth
of Pennsylvania and the States of Kansas and Missouri. ECI is a limited
partnership formed in accordance with, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania. Each of Entercom and ECI has
full power and authority to engage in the business in which it is presently
engaged. Entercom is the sole general partner of ECI and holds a ninety-nine
percent (99%) interest in ECI.
4.2.2 AUTHORIZATION OF AGREEMENT; NO BREACH. Entercom has the
necessary corporate power and authority, on behalf of itself and ECI, to
execute, deliver and perform this Agreement and such other agreements (including
the Collateral Documents) as are necessary to consummate the transactions
contemplated hereby, and, subject to the receipt of the consents and approvals
required elsewhere herein, this Agreement constitutes the valid and binding
obligation of Entercom and ECI, enforceable against each of them in accordance
with their terms, except as limited by bankruptcy and insolvency laws and by
laws affecting the enforcement of creditors rights generally or equitable
principles. Assuming said consents and approvals are obtained, neither such
execution, delivery and performance nor compliance by Entercom and ECI with the
terms and provisions of the Agreement will conflict with or result in a breach
or violation of any of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of Entercom, or the Limited Partnership Agreement of
ECI, or any judgment, order, injunction, decree, regulation or ruling of any
court or any other governmental authority to which Entercom or ECI is subject or
any material agreement or contract to which Entercom or ECI is a party or to
which it is subject, or constitute a material default thereunder.
4.2.3 QUALIFICATION. To Entercom's and ECI's knowledge, there
are no facts relating to Entercom or ECI which could reasonably be expected to
cause Commission approval of the Assignment Applications relating to the
transfer of KLOU or the Kansas City Stations to be denied or materially delayed
or which could reasonably be expected to lead to the filing of a material
objection to such Assignment Applications.
4.2.4 KLOU PROPERTY. The KLOU Property to be transferred
hereunder, listed under the heading "Included Property" on Schedule 4.2.4
hereto, constitutes all of the material tangible and intangible property,
whether real, personal or mixed, other than the KLOU Leases and KLOU Contracts,
used in the operation of KLOU except for (i) property replaced
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in the Ordinary Course of Business and (ii) those assets specifically listed on
Schedule 4.2.4 under the heading "Excluded Property."
4.2.5 KLOU LEASES. Entercom has delivered to ARS true and
correct copies of all KLOU Leases listed on Schedule 4.2.5 hereto. There are no
other material KLOU Leases for any items or interests of real or personal
property or associated with the KLOU Assets or the present or future operation
of KLOU other than those disclosed on Schedule 4.2.5 hereto.
4.2.6 KLOU CONTRACTS. Entercom has delivered to ARS true and
correct copies of all KLOU Contracts listed on Schedule 4.2.6 hereto, except for
Contracts for the sale or trade of broadcast advertising. There are no material
KLOU Contracts except the Contracts for the sale or trade of broadcast
advertising now in effect, written or oral, express or implied, which in any way
affect the KLOU Assets or the present or future operation of KLOU other than
those disclosed on Schedule 4.2.6 hereto.
4.2.7 INTELLECTUAL PROPERTY. Schedule 4.2.7 hereto lists all
material trademarks and copyrights relating to the operation of KLOU and the
extent to which the same have been duly registered with Federal or State
governmental agencies.
4.2.8 TITLE TO PROPERTY. Except for the Permitted Encumbrances
and as disclosed on Schedule 4.2.8 hereto, Entercom and ECI will (i) have good
and marketable title to the real property that comprises part of the KLOU
Property, (ii) have valid and subsisting leasehold interests in the leases that
comprise part of the KLOU Property and (iii) own and have good and merchantable
title to all material items of personal property that comprise part of the KLOU
Property. Except for Permitted Encumbrances and items disclosed on Schedule
4.2.8, none of the KLOU Property is subject to any mortgage, conditional sale
agreement, security interest, lease, lien, hypothecation, pledge, encumbrance,
restriction, liability, charge, claim or imperfection of title that would
materially adversely affect the continued use of the KLOU Property as currently
used. Except as otherwise provided on Schedule 4.2.8, all items disclosed on
such Schedule shall be removed or satisfied by Entercom at or before Closing.
4.2.9 NO DEFAULTS. Except as disclosed on Schedule 4.2.9,
Entercom and ECI has complied in all material aspects with all of the terms of
the KLOU Contracts and the KLOU Leases and such KLOU Contracts and KLOU Leases
are enforceable by Entercom and ECI, as applicable, in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy and similar laws affecting the enforcement of creditors' rights and
general equitable principles affecting the enforcement of equitable remedies
(including within said equitable remedies without limitation the remedy of
specific performance). No event has occurred which with the passage of time or
the giving of notice or both would constitute a material default by Entercom or
ECI under the KLOU Contracts. To the knowledge of Entercom and ECI, all other
parties to the KLOU Contracts and KLOU Leases have complied in all material
respects with the provisions thereof and no event has occurred which with the
passage of time or the giving of notice or both would constitute a material
default by any such other party thereunder.
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4.2.10 AUTHORIZATIONS AND APPLICATIONS. All Authorizations
necessary to the lawful operations of KLOU as it is now conducted or proposed to
be conducted on or prior to the Closing Date have been granted and issued by the
Commission to ECI, which is the authorized, legal holder of such Authorization.
Such Authorizations are listed on Schedule 4.2.10 attached hereto and are now in
full force and effect. There are no applications of Entercom or ECI relating to
KLOU pending with the Commission except as listed on such Schedule 4.2.10.
Entercom and ECI have performed and complied in all material respects with all
of the terms and conditions of said KLOU Authorizations, the Communications Act
and all applicable rules, regulations, requirements and policies of the
Commission. Except as listed on Schedule 4.2.10, no proceedings are pending or,
to the knowledge of Entercom or ECI, threatened which may result in the
revocation, modification, non-renewal or suspension of any of said
Authorizations, the denial of any pending applications, the issuance of a cease
and desist order, or the imposition of any other administrative or judicial
sanction to which KLOU or the KLOU Assets may be subject. All ownership reports,
renewal applications and other material reports and documents in respect of KLOU
required to be filed by Entercom or ECI with the Commission have been filed and
all such reports, applications and documents are true and correct in all
material respects. KLOU is identified by its presently assigned call letters and
is operated at its authorized power and height on its assigned frequency. The
public inspection file for KLOU is in substantial compliance with the
regulations of the Commission relating thereto.
4.2.11 PERMITS AND LICENSES. In addition to the
Authorizations, Entercom or ECI at Closing will hold all other governmental
permits and licenses necessary for the lawful operation of KLOU. At Closing, all
terms, restrictions and requirements of such permits and licenses have been
complied with in all material respects and neither Entercom nor ECI will be in
default of any of same in any material respect.
4.2.12 COMPLIANCE WITH LAWS. Except as disclosed on Schedule
4.2.12, Entercom and ECI have complied in all material respects with all orders
(to which Entercom or ECI is a party or is subject), and applicable laws, rules,
and regulations of all federal, state and local authorities with respect to the
KLOU Assets and operation of KLOU. With respect to the operation of KLOU,
Entercom and ECI are not in default with respect to or in violation of: (a) any
judgment, order, injunction or decree to which Entercom is a party or is
subject; or (b) any rule or regulation of any court, administrative agency or
other governmental authority, in either case in any respect material to this
transaction. All material reports, returns and other documents which relate in
any way to the KLOU Assets and which were filed by Entercom with any
administrative agency or governmental authority are true, correct and complete
in all material respects.
4.2.13 LITIGATION AND CLAIMS. Except as disclosed in Schedule
4.2.13 hereto and except for rulemaking proceedings applicable to radio
broadcast stations generally, no litigation, proceeding or controversy is
pending or, to the knowledge of any officer of Entercom and ECI, threatened
which might affect any of the KLOU Assets, Entercom's or ECI's right or power to
transfer the same, the ownership, possession, use or resale of any of the KLOU
Assets, or the operation of the KLOU by ARS or by any assignee of ARS and there
is no basis known to Entercom or ECI for any such litigation, proceeding,
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controversy or claim. No claim has been made or asserted against Entercom or ECI
material to this transaction.
4.2.14 LABOR RELATIONS. In all respects material to this
transaction, Entercom has complied with all applicable laws, rules and
regulations pertaining to the employment of labor, including those relating to
wages, hours, collective bargaining and the payment of or withholding of taxes,
and Entercom and ECI with respect to the operation of KLOU, have withheld all
amounts required by law or agreement to be withheld from the wages or salaries
of their employees and are not liable for any arrears of wages or any tax or
withholding or any penalties or interest for failure to comply with any of the
foregoing; and except as disclosed on Schedule 4.2.14, there are no collective
bargaining agreements relating to the relationship between any employee of KLOU
and Entercom or ECI. In addition, Entercom and ECI have no knowledge of any
union organizing activities in the one year period preceding the date of this
Agreement involving or targeting any employees employed at KLOU not already
covered by a collective bargaining agreement.
4.2.15 EMPLOYMENT CONTRACTS. Except as disclosed on
Schedule 4.2.15 hereto, there are no written contracts for the employment of any
personnel at KLOU and, except as provided by applicable law or in the Contracts
disclosed on Schedule 4.2.15, all employees of Entercom or ECI employed at KLOU
are employed on an "at will" basis and may be terminated in accordance with the
procedures set forth on Schedule 4.2.15.
4.2.16 DAMAGE TO ASSETS. As of the date of this Agreement,
none of the KLOU Property has been materially and adversely affected in any way
as a result of fire, explosion, earthquake, accident, fraud, rain, storm,
drought, Act of God or public enemy or any other casualty, whether or not
covered by insurance.
4.2.17 EMPLOYEE BENEFIT AND RETIREMENT PLANS. Listed
on Schedule 4.2.17 (with a brief description thereof) are the material "employee
pension benefit plans" and "employee welfare benefit plans" (as defined
respectively in Sections 3(2) and 3(l) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) which Entercom and ECI maintain on
behalf of its employees employed at KLOU. In all respects material to this
transaction, all "employee pension benefit plans" and "employee welfare benefit
plans" listed on Schedule 4.2.17 hereto comply in all material respects with all
applicable requirements of law and regulation including ERISA. Neither Entercom
nor ECI has incurred or reasonably expects to incur (either directly or
indirectly, including as a result of any of the transactions contemplated hereby
or any indemnification obligation) any liability (including, without limitation,
withdrawal liability) that could become a liability of Entercom or ECI under or
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans and
no event, transaction or condition has occurred or exists which could result in
any such liability. Entercom and ECI have made all required contributions to all
multiemployer plans within the meaning of Section 3(37) of ERISA.
4.2.18 EMPLOYEES. Entercom and ECI have provided to ARS a
listing of the name, salary or compensation, and job title of all employees
employed at KLOU as of June 30, 1997. Except as otherwise provided in Section
3.3 hereof, Entercom and ECI shall be
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responsible for and pay to their employees all accrued and earned compensation
and benefits of any kind, including without limitation, severance, accrued
vacation or other termination benefits which result from the employment with and
termination thereof by Entercom and ECI.
4.2.19 TRADE OR BARTER. Schedule 4.2.19 sets forth a true,
complete and accurate description (including obligations and liabilities
remaining thereunder) of all contracts for the sale of broadcast advertising on
a trade or barter basis that individually involve, or may involve, valued in
accordance with U.S. generally accepted accounting procedures, more than $500 in
obligations remaining thereunder as of the date of this Agreement in money,
property or services or a remaining term in excess of two (2) months.
4.2.20 ENVIRONMENTAL COMPLIANCE, POLYCHLORINATED BIPHENYLS,
ASBESTOS AND OTHER TOXIC OR HAZARDOUS SUBSTANCES. Except as disclosed on
Schedule 4.2.20, and to the knowledge of Entercom and ECI (a) none of the
Entercom Property contains (i) any friable asbestos, polychlorinated biphenals
or any PCB contaminated oil; (ii) any Contaminants; or (iii) any underground
storage tanks; (b) no underground storage tank disclosed on Schedule 4.1.20 has
leaked and has not been remediated or leaks or has leaked and has not been
remediated and each such tank is in substantial compliance with all applicable
Environmental Laws; and (c) all of the Entercom Property is in substantial
compliance with all applicable Environmental Laws.
4.2.21 FINANCIAL AND OTHER INFORMATION. All financial
information concerning KLOU provided to ARS and listed on Schedule 4.2.21 fairly
present the financial condition of KLOU as of the respective dates thereof and
the results of operation of KLOU for the respective period then ended. Except
solely for the obligations and liabilities to be assumed by ARS and ARS License
pursuant to Section 3.1, there will, at the time of Closing, be no obligations
or liabilities of any nature, whether accrued, absolute, contingent or
otherwise, relating to Entercom, ECI or the KLOU Assets which could, after the
Closing, result in any form of transferee liability against either ARS or ARS
License or subject any of the KLOU Assets to any lien or otherwise affect the
full, free and unencumbered use of the KLOU Assets and the ownership and
operation of KLOU by ARS or ARS License.
4.2.22 CONDITION OF EQUIPMENT. All transmission and studio
equipment and other equipment (mechanical and electrical) included within the
KLOU Property, is, and will be as of the Closing Date, in a state of good repair
and maintenance and is in good 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 Kansas City
Stations to be operated in accordance with all current Commission requirements.
4.2.23 REAL PROPERTY. Schedule 4.2.23 contains a true and
complete list of all owned and leased real property used in the operation of
KLOU. There are no outstanding options or rights of first refusal to purchase or
sublease such real property or any portion thereof or interest therein. The real
property identified on Schedule 4.2.23 has vehicular access to a road and is
supplied with utilities and other services necessary for the operation of that
portion of the business of KLOU conducted there. No real property other than
that listed on Schedule 4.2.23 or listed on Schedule 4.2.4 pertaining to
Excluded Property, is used in, held
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for use in connection with or necessary for the conduct of, the business or
operations of KLOU. The transmitting towers, related improvements, guy anchors
of the transmitting towers, and the transmitter buildings used by Entercom in
the operation of KLOU are located entirely on such real property. The
improvements of Entercom upon such real property and the current use and
operation of such premises by Entercom conform in all material respects to all
restrictive covenants, conditions, easements, building, subdivision and similar
codes and federal, state and local laws, regulations, rules, orders and
ordinances and Entercom has not received any notice of any violation or claimed
violation of any such restrictive covenant, condition or easement, or any
building, subdivision or similar code, or any federal, state or local law,
regulation, rule, order or ordinance which, either individually or in the
aggregate, could have a material adverse effect on the assets, business or
financial condition of KLOU. There is no pending or, to Entercom's or ECI's
knowledge, threatened condemnation or other legal proceeding or action of any
kind relating to such real property and/or title thereto. There are no latent
structural, mechanical or other defects of material significance in the real
property which could reasonably be expected to have a material adverse effect on
the assets, business or financial condition of KLOU. All improvements upon the
real property on Schedule 4.2.23 are in good operating condition and repair,
normal wear and tear excluded. Entercom has no knowledge and has received no
notice (i) of any pending, threatened, or contemplated action to take by eminent
domain or otherwise to condemn any portion of the real property or interest
therein, or (ii) of any levied, threatened or proposed assessments for public
improvements with respect to the real property.
4.2.24 NO MATERIAL ADVERSE CONDITION. Entercom and ECI
do not know of any undisclosed condition specifically applicable to KLOU that
exists on the date of this Agreement, including but not limited to, pending or
threatened litigation, that is likely to have a material adverse effect on the
KLOU Assets or financial condition of KLOU, other than (i) changes in the
Ordinary Course of Business, (ii) economic, business or financial conditions or
trends, and (iii) conditions generally affecting radio stations.
4.2.25 PAYMENT OF TAXES. Entercom and ECI have, and as of the
Closing Date will have, paid and discharged all taxes, assessments, excises and
other levies which are due, including but not limited to any such taxes,
assessments, excises and levies which, if due and not paid, would interfere with
ARS's or ARS License's enjoyment or use of the KLOU Assets or result in a lien,
charge or encumbrance thereon, excepting those taxes being contested in good
faith and such taxes, assessments and other levies which will not be due until
or after the Closing Date and which are either to be prorated between the
parties pursuant to the provisions of Section 8.2 hereof or paid by Entercom or
ECI pursuant to Section 6.3.6.
4.2.26 REQUIRED CONSENTS. The only approvals or consents of
persons or entities not a party to this Agreement that are legally or
contractually required to be obtained by Entercom or ECI in connection with the
consummation of the transactions contemplated by this Agreement are those that
are (i) set forth on Schedules 4.2.5 and 4.2.6 hereto and (ii) those
contemplated by Section 5.1.
4.2.27 MATERIAL STATEMENTS AND OMISSIONS; ABSENCE OF EVENTS.
No representation or warranty made by Entercom and ECI contained in this
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Agreement, any Entercom or ECI Schedule or any certificate, document or other
instrument furnished or to be furnished by Entercom or ECI pursuant to the
provisions hereof 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 not misleading. Neither Entercom or ECI is
aware of any impending or contemplated event that would cause any of the
representations and warranties made by it in this Article not to be true,
correct and complete on the date of such event as if made on that date.
ARTICLE V
CONDITIONS
5.1 COMMISSION CONSENT AND APPROVAL AND HSR ACT WAITING PERIOD.
Performance of the obligations of the parties with respect to the Stations that
each such party is transferring and/or acquiring under this Agreement and the
Closing are and shall be subject to the occurrence and concurrence of the
express condition precedent that the Commission has granted its consent and
approval in writing to the assignment to the parties hereto of the respective
Authorizations issued by the Commission for the Stations as contemplated hereby,
such consent to be free of any material adverse condition, and such grants shall
have become Final Orders and the waiting periods (as they may be extended)
applicable to the transfer of the ARS Assets and the KLOU Assets under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
shall have expired or been earlier terminated.
5.2 CONDITIONS OF ARS AND ARS LICENSE. Performance of the obligations
of ARS and ARS License under this Agreement and the Closing of the transactions
provided for herein are and shall be subject to the occurrence and concurrence
of the express conditions precedent, any of which may be waived by ARS or ARS
License that:
5.2.1 No order, decree or judgment of any court, agency or
other governmental authority shall have been rendered against ARS or ARS License
which would render it unlawful as of the Closing Date for ARS or ARS License to
effect the transactions contemplated by this Agreement in accordance with its
terms.
5.2.2 The representations and warranties of Entercom and ECI
contained in Section 4.2 shall be true and correct at and as of the Closing Date
as if made on and as of such date except for changes expressly permitted or
contemplated by the terms of this Agreement and for such breaches of
representations and warranties that, in the aggregate, will not have a material
adverse effect on the KLOU Assets or the operation of KLOU (in each case,
without taking into account any qualification as to the materiality or material
adverse effect contained in such representations and warranties).
5.2.3 All of the terms, covenants and conditions to be
complied with and performed by Entercom and ECI hereunder on or prior to the
Closing Date shall have been
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complied with or performed except for such failures to comply that, in the
aggregate, will not have a material adverse effect on the KLOU Assets or the
operation of KLOU.
5.2.4 All Required Consents have been obtained from the other
parties to the KLOU Leases and the KLOU Contracts identified on Schedules 4.2.5
and 4.2.6 respectively as "Material Leases (or Contracts)-Consent to Assign
Required."
5.2.5 The conditions to closing the JACOR Agreement shall have
been satisfied or waived, and the parties thereto shall be prepared to close the
JACOR Agreement immediately.
5.3 CONDITIONS OF ENTERCOM AND ECI. Performance of the obligations of
Entercom and ECI under this Agreement and the Closing of the transactions
provided for herein are and shall be subject to the occurrence and concurrence
of the express conditions precedent, any of which may be waived by Entercom or
ECI that:
5.3.1 No order, decree or judgment of any court, agency or
other governmental authority shall have been rendered against Entercom or ECI
which would render it unlawful as of the Closing Date for Entercom or ECI to
effect the transactions contemplated by this Agreement in accordance with its
terms.
5.3.2 The representations and warranties of each of ARS and
ARS License contained in Section 4.1 shall be true and correct at and as of the
Closing Date as if made on and as of such date except for changes expressly
permitted or contemplated by the terms of this Agreement and for such breaches
of representations and warranties that, in the aggregate, will not have a
material adverse effect on the ARS Assets or the operation of the Kansas City
Stations (in each case, without taking into account any qualification as to the
materiality or material adverse effect and any qualifications to ARS's or ARS
License's knowledge contained in such representations and warranties).
5.3.3 All of the terms, covenants and conditions to be
complied with and performed by ARS and ARS License hereunder on or prior to the
Closing Date shall have been complied with or performed except for such failures
to comply that, in the aggregate, will not have a material adverse effect on the
ARS Assets or the operation of the Kansas City Stations.
5.3.4 All Required Consents have been obtained from the other
parties to the Kansas City Leases and the Kansas City Contracts identified on
Schedules 4.1.5 and 4.1.6 respectively as "Material Leases (or
Contracts)-Consent to Assign Required."
ARTICLE VI
COVENANTS AND OPERATIONS PRIOR TO CLOSING.
6.1 AFFIRMATIVE COVENANTS OF ARS and ARS LICENSE. During the period
from the date of this Agreement to the Closing Date (unless a different period
is specified), ARS and ARS License shall:
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6.1.1 CONDUCT OF BUSINESS. During the period from the date of
the JACOR Agreement to the Closing Date unless Entercom and ECI shall otherwise
agree in writing, ARS and ARS License shall use their reasonable best efforts to
cause JACOR to act in conformity with the JACOR Agreement and to cause JACOR to
conduct the business of the Kansas City Stations in the Ordinary Course of
Business in accordance with sound and prudent operating practices and all
requirements of law and regulation, except such requirements of law and
regulation which would not have a material adverse effect on the business and
operations of such Stations, and, to the extent consistent with the foregoing,
in the same manner in which the same have heretofore been conducted with the
intent of preserving the ongoing operations and business of the Kansas City
Stations.
6.1.2 ENTERCOM CONSENT AND REVIEW; NOTIFICATION OF CERTAIN
MATTERS. Cooperate with Entercom in connection with its review, analysis and
monitoring of the ARS Assets and the operations of the Kansas City Stations to
the end that an efficient transfer of the ARS Assets may be made at Closing and
the business of the Kansas City Stations may continue on an uninterrupted basis.
Furthermore, ARS and ARS License shall obtain Entercom's consent prior to the
exercise of any of ARS's or ARS License's rights under the JACOR Agreement as
such rights pertain to the Kansas City Stations. In addition to providing
information required hereunder or reasonably requested by the other parties
hereto, ARS and ARS License agree promptly to notify the other parties of any
unusual problems or developments of which ARS or ARS License becomes aware with
respect to the ARS Assets or the business of the Kansas City Stations.
6.1.3 MATERIAL OPERATIONAL CHANGES. Consult with Entercom
regarding any proposed material changes to the operation of any of the Kansas
City Stations (during any period that ARS or its affiliates are entitled to own
or operate such Kansas City Stations), to insure the continued operation of the
Kansas City Stations as they are now operated and cooperate with Entercom to
insure a smooth transfer of ownership and continuity of operations at Closing.
6.1.4 ENVIRONMENTAL ASSESSMENT. Allow Entercom to obtain, at
its expense, Phase I Environmental Assessments of all or any of the ARS Property
it is acquiring hereunder and any real property used by the Kansas City Stations
in their operations or for which Entercom could be held responsible under any
Environmental Laws. ARS shall use its reasonable best efforts to afford Entercom
access to any ARS Property not then owned by ARS or its affiliates in order to
conduct such Phase I Environmental Assessments. In the event such Phase I
Environmental Assessments disclose any conditions contrary to the
representations and warranties contained in Section 4.1.20, or any potential
that such conditions may exist, then Entercom may conduct or have conducted at
its expense additional testing to confirm or negate the existence of any such
conditions. If any such Phase I Environmental Assessment or additional testing
confirms the existence of any such conditions, ARS and ARS License will cause
the conditions to be remedied to the extent required to comply with the
representations and warranties set forth in Section 4.1.20 (without regard to
any knowledge qualifier contained therein); provided, however, that such
remedial action is not reasonably expected to cost in
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excess of $150,000. In the event that such remedial action is reasonably
expected to cost in excess of $150,000, ARS and ARS License may elect not to
take such remedial action, and, notwithstanding any other provision of this
Agreement, ARS and ARS License shall have no further liability to Entercom and
ECI for any environmental condition to the extent such condition is disclosed on
Schedule 4.1.20 or any Phase I Environmental Assessment or other testing
conducted pursuant to this Section 6.1.4. In such event, Entercom and ECI may
require ARS and ARS License to proceed to Closing and Entercom and ECI shall
receive a proration at Closing in the amount of $150,000. Alternatively,
Entercom and ECI may terminate this Agreement and ARS and ARS License shall have
no liability to Entercom and ECI as a result of such termination. ARS has
furnished to Entercom copies of any environmental reports of which ARS has
knowledge of and were previously prepared for any of the ARS Property.
6.1.5 ARS STATION EMPLOYEES. Cooperate with Entercom in its
efforts to employ after the Closing any of the current employees who are
employed at the Kansas City Stations, including without limitation, allowing
Entercom to meet privately with any such current employees. ARS and ARS License
will not interfere with or attempt to undermine in any way, the efforts of
Entercom to employ such employees after the Closing Date until Entercom has
affirmatively notified ARS that it will not offer employment to any particular
employee of the applicable Kansas City Stations.
6.1.6 TITLE REPORTS. Within thirty (30) days after the
execution of this Agreement at its expense, (i) commission a qualified title
company to prepare and provide to Entercom a preliminary title report with
respect to each parcel of owned real property within the ARS Property (each, an
"ARS Preliminary Title Report"), and ARS shall promptly provide a copy of each
such ARS Preliminary Title Report to Entercom, together with complete copies of
all documents relating to the title exceptions referred to in each such ARS
Preliminary Title Report and (ii) commission a qualified surveyor to prepare and
provide to Entercom a ALTA- ACSM (1992) Survey of each parcel of owned real
property within the ARS Property (each, an "ARS Survey") depicting the location
of all title exceptions. Entercom shall have the right to disapprove of any
title exceptions (other than Permitted Encumbrances (whether or not disclosed in
each ARS Preliminary Title Report)) which in Entercom's reasonable discretion,
has a material adverse effect on the ARS Property or Entercom's intended use
thereof, and Entercom shall notify ARS of any such disapproval within ten (10)
days after receipt of each ARS Preliminary Title Report, as applicable, and each
ARS Survey, as applicable, by Entercom. All title exceptions set forth in any
ARS Preliminary Title Report and any supplemental reports or updates to any ARS
Preliminary Title Report and not disapproved by Entercom within the time periods
provided herein shall constitute Permitted Encumbrances. Prior to the Closing,
ARS shall, at its expense, remove or cause to be removed, all disapproved
exceptions (the "Disapproved Matters") or, in the alternative, obtain title
insurance in a form satisfactory to Entercom insuring against the effect of such
Disapproved Matters. If ARS is unable to remove or endorse over any such
Disapproved Matters, or if ARS exercises its right not to remove one or more
Disapproved Matters, Entercom may elect to (i) terminate this Agreement or (ii)
waive such Disapproved Matters (such Disapproved Matters shall then be deemed to
be permitted title
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exceptions), in which event Entercom shall receive a credit at the Closing in
the amount equal to the reduction in value of such ARS Property resulting from
such Disapproved Matters.
6.1.7 TAXES. Pay and discharge all taxes due after Closing
accrued or accruing with respect to periods ending on or before the Closing Date
to the extent such taxes could result in a lien or otherwise interfere with the
use or enjoyment of the ARS Assets.
6.1.8 SCHEDULES. Within a period of thirty (30) days following
the execution of this Agreement, use their best efforts to finalize all
schedules referred to in Section 4.1 and shall use their best efforts thereafter
to promptly supplement or amend the final schedules referred to herein with
respect to any matter arising after the date of this Agreement that would have
been required to make such schedules complete and accurate. Prior to the
acceptance of final schedules or any modification of any schedule referred to in
Section 4.1 by ARS or ARS License pursuant to this Section 6.1.8, Entercom and
ECI shall have the right to approve such schedule or modification, such approval
not to be unreasonably withheld, conditioned or delayed. If Entercom disapproves
of any final schedule or modification thereafter pursuant to this Section 6.1.8,
any such schedule or proposed modification will not be accepted or permitted, as
the case may be, except as thereafter agreed to by the parties. If the parties
fail to agree in the exercise of reasonable good faith judgment on any such
final schedule or proposed modification thereto, this agreement shall terminate
and no party shall have any further liability to any other party hereunder in
the case of disagreement over final schedule or, in the case of a schedule
modification, Entercom may proceed to Closing and seek indemnification pursuant
to Section 9.4 hereof.
6.1.9 INTENTION TO EMPLOY. Notify Entercom, at least eight (8)
days prior to Closing as to which employees of Entercom who are employed at KLOU
that ARS intends to hire.
6.1.10 BEST EFFORTS TO CLOSE JACOR AGREEMENT; ENFORCEMENT OF
RIGHTS. ARS and ARS License shall use their reasonable best efforts to close the
transactions contemplated by the JACOR Agreement in a timely fashion consistent
with the terms of such agreement. ARS and ARS License shall enforce their rights
to the fullest extent possible under the JACOR Agreement as they pertain to the
Kansas City Stations, unless otherwise directed by Entercom; provided however
that ARS and ARS License shall not invoke their rights to not close the JACOR
Agreement under Section 6.3(f) thereof, with respect to any material adverse
change relating to the Kansas City Stations without Entercom's prior written
approval.
6.1.11 JACOR AGREEMENT NOTIFICATIONS. To the extent ARS or ARS
License receives notifications from JACOR with respect to the Kansas City
Stations under the JACOR Agreement or otherwise becomes aware of any breach of
any representation, warranty, covenant or agreement in the JACOR Agreement or
the failure to satisfy any condition in such agreement, in each case with
respect to the Kansas City Stations, ARS and ARS License shall promptly notify
Entercom, and thereafter enforce, perform or waive any provision of the
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JACOR Agreement pertaining to the Kansas City Stations as requested by Entercom;
provided that ARS and ARS License shall not be obligated to take any action at
Entercom's request inconsistent with their rights and obligations under the
JACOR Agreement.
6.2 NEGATIVE COVENANTS OF ARS AND ARS LICENSE. Unless Entercom has
given its consent in writing, which consent shall not be unreasonably withheld,
ARS and ARS License shall not, directly or indirectly, during the period from
the date hereof to the Closing Date:
6.2.1 KANSAS CITY LEASES AND CONTRACTS. Except as specifically
provided in this Agreement, cancel, amend, modify adversely, assign, encumber or
in any way discharge or terminate any of the Kansas City Leases or Kansas City
Contracts.
6.2.2 AUTHORIZATIONS. By any act or omission, surrender,
modify adversely, forfeit or fail to renew on regular terms any Authorizations
for the Kansas City Stations or take or omit any action which might result in
the Commission instituting any proceedings for the revocation, suspension or
modification of any such Authorizations.
6.2.3 DISPOSE OF ASSETS. Except in the Ordinary Course of
Business, sell or dispose of any of the ARS Assets; provided that any ARS Assets
so disposed of in the Ordinary Course of Business are replaced with assets of
like kind, quality and quantity.
6.2.4 LIENS. Suffer or permit the creation of any mortgage,
conditional sale agreement, security interest, lease, lien, hypothecation,
pledge, encumbrance, restriction, liability, charge, claim or imperfection of
title on or with respect to any of the ARS Assets other than Permitted
Encumbrances and those identified on Schedule 4.1.8 hereto.
6.2.5 ADVERTISING CONTRACTS. Enter into any Contracts other
than in the ordinary and usual course of business and consistent with past
practice.
6.2.6 BROADCAST OPERATIONS. Fail to take any reasonable
actions necessary to maintain continuous broadcast operations of the Kansas City
Stations from their main antennae.
6.2.7 DAMAGE TO ARS ASSETS. Fail to take any reasonable
actions necessary to avoid the happening of or to cure the existence of any
material damage to or impairment of any of the ARS Assets.
6.2.8 REQUIREMENTS OF LAW. Fail to operate the Kansas City
Stations in conformity in all material respects with all of the applicable
requirements of law and regulation.
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6.2.9 JACOR AGREEMENT. Fail to comply with the terms of, waive
any of their rights under or consent to any actions requiring their consent
under the JACOR Purchase Agreement.
6.2.10 PERFORMANCE OF ARS COVENANTS. To the extent ARS and/or
ARS License is obligated to perform any covenant in this Agreement (including
but not limited to covenants contained in Sections 6.1 and 6.2 hereof) which, by
its nature, must be performed by JACOR (as defined in the JACOR Agreement) as
the owner of the Kansas City Stations, the parties acknowledge and agree that
ARS and ARS License shall satisfy their obligation under any such covenant
through enforcing their rights to the fullest extent permitted by the terms of
the comparable covenant in the JACOR Agreement for the benefit of Entercom and
ECI.
6.3 AFFIRMATIVE COVENANTS OF ENTERCOM AND ECI. During the period from
the date of this Agreement to the Closing Date (unless a different period is
specified), Entercom and ECI shall:
6.3.1 CONDUCT OF BUSINESS. Unless ARS or ARS License shall
otherwise agree in writing, conduct the business and operations of KLOU in the
Ordinary Course of Business in accordance with sound and prudent operating
practices and all requirements of law and regulation, except such requirements
of law and regulation which would not have a material adverse effect on the
business and operations of KLOU, and, to the extent consistent with the
foregoing, in the same manner in which the same have heretofore been conducted
with the intent of preserving the ongoing operations and business of KLOU.
6.3.2 ARS REVIEW; NOTIFICATION OF CERTAIN MATTERS. Cooperate
with ARS in connection with its review, analysis and monitoring of the KLOU
Assets and the operations of KLOU to the end that an efficient transfer of the
KLOU Assets may be made at Closing and the business of KLOU may continue on an
uninterrupted basis. In addition to providing information required hereunder or
reasonably requested by the other parties hereto, Entercom and ECI agree
promptly to notify the other parties hereto of any unusual problems or
developments of which Entercom or ECI becomes aware with respect to the KLOU
Assets or the business of KLOU.
6.3.3 MATERIAL OPERATIONAL CHANGES. Consult with ARS regarding
any proposed material changes to the operation of KLOU (during any period that
Entercom or its affiliates owns or operates KLOU), to insure the continued
operation of KLOU as it is now operated and cooperate with ARS to insure a
smooth transfer of ownership and continuity of operations at Closing.
6.3.4 ENVIRONMENTAL ASSESSMENT. Allow ARS to obtain, at its
expense, Phase I Environmental Assessments of all or any of the KLOU Property it
is acquiring hereunder and any real property used by KLOU in its operations or
for which ARS could be held responsible under any Environmental Laws. Entercom
shall afford ARS access to any
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KLOU Property owned by Entercom or its affiliates in order to conduct such Phase
I Environmental Assessments. In the event such Phase I Environmental Assessments
disclose any conditions contrary to the representations and warranties contained
in Section 4.2.20, or any potential that such conditions may exist, then ARS may
conduct or have conducted at its expense additional testing to confirm or negate
the existence of any such conditions. If any such Phase I Environmental
Assessment or additional testing confirms the existence of any such conditions,
Entercom will cause the conditions to be remedied to the extent required to
comply with the representations and warranties set forth in Section 4.2.20
(without regard to any knowledge qualifier contained therein); provided,
however, that such remedial action is not reasonably expected to cost in excess
of $150,000. In the event that such remedial action is reasonably expected to
cost in excess of $150,000, Entercom and ECI may elect not to take such remedial
action, and notwithstanding any other provision of this Agreement, Entercom and
ECI shall have no further liability to ARS and ARS License for any environmental
condition to the extent such condition is disclosed on Schedule 4.2.20 or any
Phase I Environmental Assessment or other testing conducted pursuant to this
Section 6.3.4. In such event, ARS and ARS License may require Entercom and ECI
to proceed to Closing and ARS and ARS License shall receive a purchase price
adjustment in the amount of $150,000. Alternatively, ARS and ARS License may
terminate this Agreement and Entercom and ECI shall have no liability to ARS or
ARS License as a result of such termination. Entercom has furnished to ARS
copies of any environmental reports of which Entercom has knowledge of and were
previously prepared for any of the KLOU Property.
6.3.5 KLOU EMPLOYEES. Cooperate with ARS in its efforts to
employ after the Closing any of the current employees who are employed at KLOU,
including without limitation, allowing ARS to meet privately with any such
current employees. Entercom will not interfere with or attempt to undermine in
any way, efforts of ARS to employ such employees after the Closing Date until
ARS has affirmatively notified Entercom that it will not offer employment to any
particular employee of KLOU.
6.3.6 TAXES. Pay and discharge all taxes due after Closing
accrued or accruing with respect to periods ending on or before the Closing Date
to the extent such taxes could result in a lien or otherwise interfere with the
use or enjoyment of the KLOU Assets.
6.3.7 FINAL SCHEDULES. Within a period of thirty (30) days
following the execution of this Agreement, use their best efforts to finalize
all Schedules referred to in Section 4.2 and shall use their best efforts
promptly to supplement or amend the schedules referred to herein with respect to
any matter arising after the date of this Agreement that would have been
required to make such schedules complete and accurate.
6.3.8 INTENTION TO EMPLOY. Notify ARS, at least eight (8) days
prior to Closing as to which employees employed at the Kansas City Stations that
Entercom intends to hire.
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6.3.9 FINANCIAL INFORMATION. Entercom, ECI and their
accountants shall cooperate with ARS in the provision of such financial
information as Entercom or ECI possess to permit, to the extent reasonably
possible, ARS's independent accountants to issue a report (which shall be
unqualified as to the scope of the audit, access to the books and records and
the cooperation of management) on the financial statements (consisting of a
balance sheet for the fiscal year ended December 31, 1996 and statements of
operations and cash flow for the one year period ended December 31, 1996) of
KLOU. The parties acknowledge that Entercom and ECI recently acquired KLOU
pursuant to the Westinghouse Agreement and as such have limited financial
information with respect to KLOU's past operations. Entercom shall exercise what
rights it may possess under the contract by which it acquired KLOU to obtain
such other financial information as may be reasonably possible and which may
assist ARS's independent accountants in issuing the report referenced in the
first sentence of this Section 5.2.5.
6.4 NEGATIVE COVENANTS OF ENTERCOM AND ECI. Unless ARS has given its
consent in writing, which consent shall not be unreasonably withheld, Entercom
and ECI shall not, directly or indirectly, during the period from the date
hereof to the Closing Date:
6.4.1 KLOU LEASES AND CONTRACTS. Except as specifically
provided in this Agreement, cancel, amend, modify adversely, assign, encumber or
in any way discharge or terminate any of the KLOU Leases or KLOU Contracts.
6.4.2 AUTHORIZATIONS. By any act or omission, surrender,
modify adversely, forfeit or fail to renew on regular terms any Authorizations
for KLOU or take or omit any action which might result in the Commission
instituting any proceedings for the revocation, suspension or modification of
any such Authorizations.
6.4.3 DISPOSE OF ASSETS. Except in the Ordinary Course of
Business, sell or dispose of any of the KLOU Assets; provided that any KLOU
Assets so disposed of in the Ordinary Course of Business are replaced with
assets of like kind, quality and quantity.
6.4.4 LIENS. Suffer or permit the creation of any mortgage,
conditional sale agreement, security interest, lease, lien, hypothecation,
pledge, encumbrance, restriction, liability, charge, claim or imperfection of
title on or with respect to any of the KLOU Assets other than Permitted
Encumbrances and those identified on Schedule 4.2.8 hereto.
6.4.5 ADVERTISING CONTRACTS. Enter into any Contracts other
than in the ordinary and usual course of business and consistent with past
practice.
6.4.6 BROADCAST OPERATIONS. Fail to take any reasonable
actions necessary to maintain continuous broadcast operations of KLOU from its
main antenna.
6.4.7 DAMAGE TO KLOU ASSETS. Fail to take any reasonable
actions necessary to avoid the happening of or to cure the existence of any
material damage to or impairment of any of the KLOU Assets.
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6.4.8 REQUIREMENTS OF LAW. Fail to operate KLOU in conformity
in all material respects with all of the applicable requirements of law and
regulation.
6.5 NO CONTROL. Nothing contained in this Agreement shall give to any
other party any right to control the operations of the Station to be acquired by
it prior to the Closing Date. Entercom and ECI acknowledge that ARS and ARS
License have no rights in respect of the Kansas City Stations other than under
the JACOR Agreement. Any advice, counsel or consent given under this Article VI
will not mitigate, detract from or otherwise affect the representations,
warranties or obligations under this Agreement and the consequences of the other
party's acting on any such advice, counsel or consent will be solely such other
party's responsibility.
ARTICLE VII
ACTIONS PRIOR TO CLOSING
7.1 APPLICATION TO COMMISSION. The parties hereby bind themselves to
use all reasonable efforts, and to cooperate with each other (which shall
include in the case of ARS and ARS License causing JACOR to cooperate), in
seeking the consent and approval of the Commission to the assignment of the
Authorizations; diligently and promptly to prepare, sign and file with the
Commission within ten (10) business days from the date of this Agreement any and
all applications requisite or desirable to procure such consents and approvals
(the "Assignment Applications"); and diligently and promptly to prepare and
submit to the Commission all information, data, exhibits, amendments,
resolutions, statements and other material necessary or proper in connection
with the Assignment Applications; and diligently to pursue the grant of a Final
Order approving such Assignment Applications by the Commission. In the event
JACOR shall fail to cooperate with Entercom and ECI to the extent required by
this Section 7.1, ARS and ARS License shall independently take such actions
necessary to prepare and file the requisite Assignment Applications and pursue
the grant of a Final Order.
7.2 HART-SCOTT-RODINO NOTIFICATION. As promptly as practicable and no
later than seven (7) days after the date hereof, the parties hereto shall take
all steps reasonably necessary to file and shall participate in the filing of
all requisite documents and notifications required to be filed pursuant to the
HSR Act. All filing fees in connection with such notifications shall be divided
equally between ARS and Entercom. The parties agree diligently to take and fully
cooperate in the taking of, all necessary and proper steps, and provide any
additional information reasonably requested in order to obtain promptly the
expiration of the waiting period under the HSR Act. ARS and ARS License may meet
their obligations hereunder by causing JACOR to comply with the provisions of
this Section 7.2. In the event that JACOR shall fail to cooperate with Entercom
and ECI and take all steps necessary to ensure the requisite documents and
notifications are filed pursuant to the HSR Act, ARS and ARS License shall
independently take such action necessary to comply with the requirements of this
provision.
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7.3 INSPECTION. During the period from the date of this Agreement to
the Closing Date, each party shall, upon reasonable request, afford, or cause to
be afforded, engineers, attorneys, accountants and other consultants and/or
representatives of the party acquiring their current Stations free access in a
reasonable manner during normal business hours to the employees, offices,
studios, transmitter sites, equipment, records and other documents pertaining to
such Stations and furnish or cause to be furnished such acquiring party with all
information concerning such Station's affairs as such acquiring party may
reasonably request, including but not limited to applications, responses to the
Commission's questionnaires, and other documents filed with the Commission. For
purposes of the foregoing, records shall include, without limitation, any sales,
research, consulting and ratings reports relating to the Stations. During any
period that a party does not own a Station, such party shall use its best
efforts to afford the other party access to such Station to the extent
contemplated by this Section 7.3. ARS and ARS License may meet their obligations
hereunder by designating Entercom as their representative to act on behalf of
ARS under the corresponding provision in the JACOR Agreement.
7.4 CONFIDENTIALITY. Each party hereby covenants and agrees that in the
event the transactions contemplated by this Agreement are not consummated for
any reason whatsoever, they will, upon request, return to the other party within
ten (10) days from the date of such request, all copies of all information
designated at the time of delivery as confidential (other than one copy thereof
which may remain with independent counsel for such party) and each party hereby
covenants and agrees to use reasonable efforts to hold all such information (the
"Confidential Information") in confidence and not to disclose, or cause any
representative, agent or employee of such party to disclose to any third party
any portion of the Confidential Information and not to use any portion of the
Confidential Information for its own benefit. Nothing shall be deemed to be
Confidential Information which: (i) is known to a party at the time of its
disclosure by the disclosing party; (ii) becomes publicly known or available
other than through disclosure by the disclosing party; (iii) is rightfully
received by a party from a third party; or (iv) is independently developed by
the party.
7.5 EMPLOYEE DIVISION. The parties agree to cooperate in good faith to
make an equitable and fair division among themselves of those employees with
duties currently at both KUDL(FM) and KMXV(FM).
ARTICLE VIII
CLOSING
8.1 CLOSING. Closing shall take place at the time and place agreed to
by the parties hereto. In the absence of agreement thereon and except as
modified elsewhere herein, the Closing shall take place at such location as the
parties may agree at 10:00 a.m., on the date of closing under the JACOR
Agreement provided that all of the conditions to Closing set forth in Article V
hereof are satisfied or waived. If the parties fail to agree on the Closing Date
or
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location, then Closing shall occur by mail on such tenth (10th) business day.
The foregoing notwithstanding, Closing may be delayed as provided in Sections
8.6 and 9.4.6 hereof.
8.2 PRORATIONS. Within ninety (90) days after Closing, an accounting
for each Station shall be made as follows:
8.2.1 GENERALLY. All prepaid income, prepaid expenses,
prepayments on any Contracts and Leases assumed, accrued income, property taxes
and accrued expenses up to the Adjustment Time shall, except as otherwise
expressly provided herein, be adjusted and allocated between the disposing party
and the acquiring party to reflect the principle that all expenses and income
rising from the operation of the Station up through the Adjustment Time shall be
for the account of the disposing party, and all expenses and income arising from
the operation of the Station after the Adjustment Time shall be for the account
of the acquiring party. Any appropriate proration required to be made to Leases
and Contracts shall also be reflected in such accounting. Any amount not paid
when due shall bear interest at the rate of ten percent (10%) per annum.
8.2.2 CERTIFICATE OF PRORATIONS. As soon as practicable
following the Closing Date, and in any event, within ninety (90) days
thereafter, or at such other time as the parties agree, the acquiring party of
each Station shall deliver to the disposing party the acquiring party's
certificate, setting forth as of the Adjustment Time, all adjustments to be made
as provided in Section 8.2.1 above as to the Station. The acquiring party shall
provide the disposing party or its representatives access to copies of all books
and records the disposing party may reasonably request for purposes of verifying
such adjustments. The acquiring party's certificate shall be final and
conclusive unless objected to by the disposing party in writing within thirty
(30) days after delivery. The acquiring and disposing party shall attempt
jointly to reach agreement as to the amount of the adjustments to be made
hereunder within sixty (60) days after receipt of such written objection, which
agreement, if achieved, shall be binding upon all parties to this Agreement and
not subject to dispute or review.
8.2.3 ARBITRATION. In the event of a disagreement between the
acquiring and disposing parties with respect to the accounting to be made
hereunder, the parties agree that Arthur Andersen, LLP shall be the final
arbiter of such disagreement.
8.2.4 PAYMENTS. Any amounts due for the adjustments provided
for herein shall be paid within ten (10) business days after final
determination.
8.2.5 JACOR PRORATIONS. ARS and Entercom shall jointly take
such actions under Section 2.3(g) of the JACOR Agreement as are reasonably
necessary to effect prorations with respect to the Kansas City Stations. To the
extent proration procedures under the JACOR Agreement are different than those
set forth herein, the procedures set forth in the JACOR Agreement shall control
prorations with respect to the Kansas City Stations.
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8.3 CLOSING DELIVERIES TO ARS AND ARS LICENSE. At or before the
Closing, Entercom and ECI shall deliver or cause to be delivered to ARS and ARS
License the following items and documents in form reasonably satisfactory to
counsel for ARS and ARS License and properly executed, unless ARS and ARS
License shall waive in whole or in part in writing such delivery and then only
to the extent of such waiver:
8.3.1 BILL OF SALE. Such Bills of Sale and assignments and
other instruments of transfer and conveyance, transferring to ARS the KLOU
Property to be sold, transferred or assigned hereunder and the rights and
interests under the KLOU Leases and the KLOU Contracts being assigned to ARS
hereunder.
8.3.2 AUTHORIZATION ASSIGNMENT. An assignment to ARS of all
right, title and interest of ECI in and to the KLOU Authorizations.
8.3.3 POSSESSION. All keys to and actual possession of all of
the KLOU Property, such KLOU Property in the same condition as the same now is,
except for ordinary wear and tear thereof.
8.3.4 BOARD RESOLUTIONS. Certified copies of resolutions of
the Board of Directors of Entercom (on its behalf and in its capacity as General
Partner of ECI) duly authorizing the execution, delivery and performance of this
Agreement and all documents to be executed and delivered by Entercom and ECI at
the Closing and thereafter.
8.3.5 OFFICER'S CERTIFICATE. Certificates signed by an
authorized officer of Entercom and ECI, to the effect that no act or omission of
Entercom or ECI or state of facts contrary to the agreements, representations
and warranties of such party contained herein has been taken or has occurred and
that said representations and warranties to the extent they do not speak as of a
specific time are true and correct as of the Closing Date with the same effect
as if made as of the time of Closing and that all covenants and agreements
contained herein of the party delivering the certificate have been complied
with.
8.3.6 ASSUMPTION AGREEMENTS. One or more agreements whereby
Entercom assumes and agrees to pay when due any liabilities of ARS or ARS
License relating to the Kansas City Stations specifically assumed by Entercom
and ECI hereunder, including without limitation, those liabilities accruing
after the Adjustment Time with respect to those Kansas City Leases and Kansas
City Contracts being assumed by Entercom hereunder.
8.3.7 REQUIRED CONSENTS. The Required Consents relating to the
KLOU Leases and the KLOU Contracts.
8.3.8 UCC SEARCHES. Entercom shall deliver to ARS Uniform
Commercial Code ("UCC") lien searches from the city of St. Louis, Missouri and
relevant filing offices in the Missouri Secretary of State, each dated not more
than thirty (30) days prior to the Closing Date and showing no UCC, judgment,
tax or other lien filings against the KLOU Assets, other
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than (i) Permitted Encumbrances and (ii) security interests or other filings
that will be released at the Closing. Entercom shall deliver evidence at Closing
of the release of security interests or other filings to be released at the
Closing.
8.3.9 OPINION OF COUNSEL. An opinion of (i) John C. Donlevie,
Esq. Entercom's General Counsel and (ii) Latham & Watkins, Entercom's FCC
counsel, in form and substance reasonably satisfactory to ARS.
8.4 CLOSING DELIVERIES TO ENTERCOM AND ECI. At or before the Closing,
ARS and ARS License shall deliver or cause to be delivered to Entercom and ECI
the following items and documents in form reasonably satisfactory to counsel for
Entercom and ECI and properly executed, unless Entercom or ECI shall waive in
whole or in part in writing such delivery and then only to the extent of such
waiver:
8.4.1 BILL OF SALE. Such Bills of Sale and assignments and
other instruments of transfer and conveyance, transferring to Entercom the ARS
Property to be sold, transferred or assigned hereunder and the rights and
interests under the Kansas City Leases and Kansas City Contracts being assigned
to Entercom hereunder.
8.4.2 AUTHORIZATION ASSIGNMENT. An assignment to ECI of all
right, title and interest of JACOR in and to the Authorizations relating to the
Kansas City Stations.
8.4.3 POSSESSION. All keys to and actual possession of all of
the ARS Property, in the same condition as the same now is, except for ordinary
wear and tear thereof.
8.4.4 BOARD RESOLUTIONS. Certified copies of resolutions of
the Board of Directors of ARS and ARS License duly authorizing the execution,
delivery and performance of this Agreement and all documents to be executed and
delivered by ARS and ARS License at the Closing and thereafter.
8.4.5 OFFICER'S CERTIFICATES. Certificates signed by an
authorized officer of ARS and ARS License to the effect that no act or omission
of ARS or ARS License, or state of facts contrary to the agreements,
representations and warranties of such party contained herein has been taken or
has occurred and that said representations and warranties to the extent they do
not speak as of a specific time are true and correct as of the Closing Date with
the same effect as if made as of the time of Closing and that all covenants and
agreements contained herein of the party delivering the certificate have been
complied with.
8.4.6 ASSUMPTION AGREEMENTS. One or more agreements whereby
ARS assumes and agrees to pay when due any liabilities of Entercom or ECI
relating to KLOU specifically assumed by ARS and ARS License hereunder,
including without limitation, those liabilities accruing after the Adjustment
Time with respect to those KLOU Leases and KLOU Contracts being assumed by ARS
or ARS License hereunder.
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8.4.7 REQUIRED CONSENTS. The Required Consents relating to the
Kansas City Leases and Kansas City Contracts.
8.4.8 UCC SEARCHES. ARS and ARS License shall deliver to
Entercom UCC lien searches from Wyandotte County, Kansas and Jackson County,
Missouri and the Missouri and Kansas Secretaries of State, each dated not more
than thirty (30) days prior to the Closing Date and showing no UCC, judgment,
tax or other lien filings against the ARS Assets, other than (i) Permitted
Encumbrances and (ii) security interests or other filings that will be released
at the Closing. ARS shall deliver evidence at Closing of the release of security
interests or other filings to be released at the Closing.
8.4.9 CASH CONSIDERATION. ARS and ARS License shall deliver to
Entercom and ECI the ARS Cash Consideration by immediately available
wire-transferred funds.
8.4.10 OPINION OF COUNSEL. An opinion of (i) Michael B.
Milsom, Esq., ARS's General Counsel and (ii) Dow, Lohnes & Albertson, PLLC,
ARS's FCC counsel, in form and substance reasonably satisfactory to Entercom.
8.4.11 RELIANCE ON JACOR. The parties acknowledge that ARS
and/or ARS License may satisfy their obligations under this Section 8.4 to the
extent that ARS and/or ARS License are entitled to receive from JACOR (as
defined in the JACOR Agreement) any of the foregoing deliveries, by causing
JACOR to make such deliveries directly to Entercom and ECI.
8.5 COVENANTS OF FURTHER ASSURANCES. At and after the time of Closing,
upon request, each party shall take such action and deliver to the other party
such further instruments of assignment, conveyance or transfer or other
documents of further assurance as may be reasonably necessary to evidence the
full and effective transfer, conveyance and assignment of the Assets and
possession thereof to the respective parties, their successors and assigns, and
to assure complete performance of this Agreement in all respects.
8.6 RISK OF LOSS; DAMAGE TO PROPERTY. The risk of loss or damage to any
of the KLOU Assets prior to Closing shall be upon Entercom and ECI. The risk of
loss or damage to any of the ARS Assets prior to Closing shall be upon ARS and
ARS License. If, at the time of Closing, any tangible personal property to be
sold hereunder that is necessary for the operations of any respective Station as
it is conducted on the date of execution of this Agreement shall have suffered
loss or damage to an extent that affects the value thereof and the party
disposing such property hereunder shall not have repaired, replaced or restored
same with property of like kind, quality and value, the party acquiring such
property hereunder shall have the right at its election to (i) complete the
purchase and Closing, in which event it shall be entitled to a payment equal to
the greater of (a) the amount necessary to repair to its original condition or
replace such property or restore such damaged property with property of like
kind, quality and value or (b) the amount of any and all insurance proceeds
available to the other party, if any, collectible by reason of such loss or
damage, or (ii) postpone Closing until such
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time as the other party shall have so repaired, replaced or restored such
property, provided that if such repair, replacement or restoration of such
property is not completed within sixty (60) days after the date on which the
loss or damage was suffered, then the acquiring party shall complete the
purchase and Closing pursuant to (i) above.
8.7 TAXES ON TRANSACTION. All sales, purchase, transfer, use or
documentary taxes, if any, payable by reason of this Agreement or any of the
transactions contemplated hereby or the sale, transfer or delivery of any of the
Assets to a party hereunder whether or not imposed on such party, shall be paid
and borne by the party transferring such Assets or causing such Assets to be
transferred either by payment thereof or by reimbursement to one of the other
parties.
ARTICLE IX
TERMINATION, DEFAULT AND INDEMNIFICATION
9.1 TERMINATION. This Agreement may be terminated by a party hereto not
then in Default hereunder upon written notice to the other parties upon
occurrence of any of the following:
9.1.1 By any of the parties hereto:
(i) if the Closing has not occurred by March 31, 1998 (the
"Termination Date"); or
(ii) if the Commission denies or designates for hearing any
of the Assignment Applications or any portion thereof by Final Order; or
(iii) if there is outstanding any final judgment, final
decree or final order that would prevent or make unlawful the Closing; or
(iv) if the JACOR Closing has not occurred by the
Termination Date other than due to a breach of the JACOR Agreement by either ARS
or ARS License.
9.1.2 By ARS or ARS License if neither of them is then in
Default, and if any of the conditions set forth in Section 5.2 of this Agreement
are not waived by ARS or ARS License and such conditions shall not have been
satisfied on or before the Closing Date or shall have become incapable of
satisfaction.
9.1.3 By Entercom or ECI if neither of them is then in
Default, and if any of the conditions set forth in Section 5.3 of this Agreement
are not waived by Entercom or ECI and such conditions shall not have been
satisfied on or before the Closing Date or shall have become incapable of
satisfaction.
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9.1.4 By written mutual consent of Entercom and ARS.
9.2 EFFECT OF TERMINATION. The termination of this Agreement under
Section 9.1 shall not relieve any party of any liability for breach of this
Agreement prior to the date of termination.
9.3 REMEDIES.
9.3.1 BREACH BY ENTERCOM OR ECI. Entercom and ECI recognize
that, in the event of a Default by Entercom or ECI, monetary damages alone will
not be adequate. Therefore, in the event of a Default by Entercom or ECI, unless
ARS or ARS License is in Default, ARS or ARS License shall be entitled, in
addition to indemnification pursuant to Section 9.4, and instead of their right
to terminate this Agreement under Section 9.1 and obtain indemnification, to
obtain specific performance of the terms of this Agreement. In any action to
enforce specifically the performance of this Agreement under this Section 9.3.1,
Entercom and ECI shall waive the defense that there is another adequate remedy
at law or equity and agree that ARS and ARS License shall have the right to
obtain specific performance of Entercom's and ECI's obligations under the terms
of this Agreement without being required to prove actual damages, post bond or
furnish other security.
9.3.2 BREACH BY ARS OR ARS LICENSE. ARS and ARS License
recognize that, in the event of a Default by ARS or ARS License, monetary
damages alone will not be adequate. Therefore, in the event of a Default by ARS
or ARS License, unless Entercom or ECI is in Default, Entercom and ECI shall be
entitled, in addition to indemnification pursuant to Section 9.4, and instead of
their right to terminate this Agreement under Section 9.1 and obtain
indemnification, to obtain specific performance of the terms of this Agreement.
In any action to enforce specifically the performance of this Agreement under
this Section 9.3.2, ARS and ARS License shall waive the defense that there is
another adequate remedy at law or equity and agree that Entercom and ECI shall
have the right to obtain specific performance of ARS's or ARS License's
obligations under the terms of this Agreement without being required to prove
actual damages, post bond or furnish other security.
9.4 INDEMNIFICATION.
9.4.1 BY ARS AND ARS LICENSE. ARS and ARS License shall
indemnify, defend and hold Entercom and ECI and their officers, directors,
partners, employees and affiliates harmless from, against and with respect to
any and all loss, damage, claim, obligation, assessment, cost, liability, and
expense (including, without limitation, reasonable attorney's fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation or claim, action, suit, proceeding or demand) of any kind or
character (a "Loss") incurred, suffered, sustained or required to be paid by any
of them and resulting from, related to or arising out of:
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(a) any breach of any of the covenants,
representations or warranties made by ARS or ARS License in or
pursuant to this Agreement or in any Collateral Document.
(b) any failure by ARS or ARS License to perform or
observe, or to have performed or observed, in full, any
covenant, agreement or condition to be performed or observed
by it pursuant to this Agreement or in any Collateral
Document;
(c) any and all obligations of ARS or ARS License,
except for obligations assumed or required to be assumed by
Entercom or ECI under the terms of this Agreement; or
(d) ARS's or ARS License's operation or ownership of
the ARS Assets prior to the Adjustment Time, including any and
all obligations and liabilities arising under the
Authorizations related to the Kansas City Stations, the Kansas
City Contracts and the Kansas City Leases which accrue or
relate to a period of time prior to the Adjustment Time; or
(e) all Environmental Liabilities and Costs related
to the Kansas City Stations; provided, however, that no
indemnity is required hereunder in respect of those
environmental conditions disclosed on Schedule 4.1.20 or in a
Phase I Environmental Assessment or additional testing
conducted pursuant to Section 6.1.4 hereof to the extent such
conditions are so disclosed; or
(f) ARS's or ARS License's operation or ownership of
the KLOU Assets after the Adjustment Time, including any and
all liabilities arising under the KLOU Authorizations, the
KLOU Contracts and/or the KLOU Leases, assumed by ARS or ARS
License which accrue after the Adjustment Time or which relate
to or arise out of events occurring after the Adjustment Time.
9.4.2 BY ENTERCOM AND ECI. Entercom and ECI shall indemnify,
defend and hold ARS and ARS License and their officers, directors, partners,
employees and affiliates harmless from, against and with respect to any and all
items of Loss incurred, suffered, sustained or required to be paid by any of
them and resulting from, related to or arising out of:
(a) any breach of any of the covenants,
representations or warranties made by Entercom and ECI in or
pursuant to this Agreement or any Collateral Document;
(b) any failure by Entercom or ECI to perform or
observe, or to have performed or observed, in full, any
covenant, agreement or condition to be performed or observed
by it pursuant to this Agreement or any Collateral Document;
(c) any and all obligations of Entercom or ECI,
except for obligations assumed or required to be assumed by
ARS or ARS License under the terms of this Agreement; or
(d) Entercom's or ECI's operation or ownership of the
KLOU Assets prior to the Adjustment Time, including any and
all obligations and liabilities arising under the KLOU
Authorizations, the KLOU Contracts and the KLOU Leases which
accrue or relate to a period of time prior to the Adjustment
Time; or
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(e) all Environmental Liabilities and Costs related
to KLOU; provided, however, that no indemnity is required
hereunder in respect of those environmental conditions
disclosed on Schedule 4.2.20 or in a Phase I Environmental
Assessment or additional testing conducted pursuant to Section
6.3.4 hereof to the extent such conditions are so disclosed;
or
(f) Entercom's or ECI's operation or ownership of the
ARS Assets after the Adjustment Time, including any and all
liabilities arising under the Kansas City Authorizations, the
Kansas City Contracts and/or Kansas City Leases, assumed by
Entercom or ECI which accrue after the Adjustment Time or
which relate to or arise out of events occurring after the
Adjustment Time.
9.4.3 NOTICE AND PROCEDURE IN CONNECTION WITH THIRD PARTY
CLAIMS. If any party has a claim for indemnification hereunder (such party, an
"Indemnitee") arising out of any claim or liability which is asserted or
threatened against it, or any action, suit or proceeding is commenced by any
third party against any Indemnitee which might result in any indemnification
obligations hereunder on behalf of any other party (such other party, an
"Indemnitor"), such Indemnitee shall, within twenty (20) business days from the
receipt of same, give written notice thereof to each such Indemnitor together
with a brief statement of the basis of the claim and a copy of any complaint or
other documents relating to such claim, provided, however, that failure to give
such notice within such twenty (20) business day period shall not affect the
liability of Indemnitor hereunder unless the failure to give such notice within
such period materially and adversely affects Indemnitor's ability to defend
against the claim giving rise to Indemnitee's claim for indemnification or to
cure the default giving rise to such claim. Within twenty (20) days from receipt
of such notice, the Indemnitor shall give the Indemnitee written notice as to
whether the Indemnitor elects to contest any such claim or liability; provided,
however, that during the interim, the Indemnitee shall be entitled to take
reasonable action (which shall not include settlement) with respect to such
claim which it deems necessary to protect against further damage or default with
respect thereto. If an Indemnitor elects to contest any such claim or liability,
it shall be at the cost and expense of the Indemnitor and using professionals
chosen by the Indemnitor. The Indemnitee may participate in the defense of any
claim or liability that an Indemnitor has elected to contest, but such
participation shall be at its own expense. If the Indemnitor 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 Indemnitee with respect to such
claim.
9.4.4 EXCLUSIVITY. Except as provided in Section 9.1
concerning termination of this Agreement and Section 9.3 concerning the rights
of the parties to specific performance, the right to indemnification hereunder
shall be the exclusive post-closing remedy for all claims of damages of any
party in connection with any breach by any other party of its representations,
warranties or covenants.
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9.4.5 LIMITATIONS. Any claim asserted for damages or
indemnification hereunder must be submitted to the Indemnitor in writing within
the time periods set forth in Section 11.3 of this Agreement and any such claim
not so asserted shall be waived and barred. No party shall be entitled to
indemnification hereunder unless the aggregate amount of its claims for
indemnification exceeds $75,000, in which event such party shall be indemnified
for the entire amount owed. This amount shall have no bearing on any
determination as to what constitutes "material" for purposes of this Agreement.
9.4.6 POSTPONEMENT OF CLOSING. Except as set forth in this
Article IX, no party shall have the right to terminate this Agreement or fail to
close under this Agreement. In the event that any of the covenants,
representations or warranties of a party have not been satisfied or have been
breached and such covenant is capable of being satisfied or breach is capable of
being cured within a reasonable time (not to exceed six (6) months) then the
other non-defaulting parties affected thereby may by agreement of all
non-defaulting parties elect to postpone Closing until such covenant has been
satisfied or such breach has been cured for a period not to exceed six (6)
months (the "Postponement Period"). In the alternative, such parties may,
subject to Sections 8.1 and 8.6 hereof, consummate the Closing without
postponement and seek indemnification under this Article IX. In the event such
covenant has not been satisfied or such breach not cured at the end of the
Postponement Period the parties shall be required to consummate the Closing
hereunder and the non-defaulting parties shall be entitled to indemnification
under this Article IX.
ARTICLE X
ASSET EXCHANGE
10.1 INTENT. It is the intent of the parties that the exchange of the
KLOU Assets for the ARS Assets and the ARS Cash Consideration will qualify to
the maximum extent possible as like-kind exchanges pursuant to Section 1031 of
the Code. It is the intent of the parties that the relinquishment by ARS and ARS
License of the Relinquished Stations under the JACOR Agreement and the
acquisition of the KLOU Assets under this Agreement will qualify to the maximum
extent possible as like-kind exchanges pursuant to Section 1031 of the Code.
10.2 ARS AND ARS LICENSE SECTION 1031 ASSET EXCHANGE. ARS and ARS
License desire to effect the transfer and conveyance of the ARS Assets as part
of an exchange under Section 1031 of the Code. In order to effect the like-kind
exchange, ARS hereby gives notice to Entercom and ECI of its intention to effect
the like-kind exchange through the use of a "qualified intermediary" as defined
in Treas. Reg. ss. 1.1031(k)-1(g)(4). ARS and ARS License may at any time at or
prior to Closing assign their rights under this Agreement to a "qualified
intermediary" subject to all of Entercom's and ECI's rights and obligations
hereunder, and shall promptly provide written notice of such assignment to all
parties hereto. Entercom and ECI shall cooperate with all reasonable requests of
ARS and ARS License and the "qualified intermediary" in arranging and effecting
the deferred like-kind exchange as
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one which qualifies under Section 1031 of the Code. Without limiting the
generality of the foregoing, Entercom and ECI shall promptly acknowledge in
writing the notification by ARS and ARS License of the assignment to the
"qualified intermediary" of their rights hereunder. To the extent ARS and/or ARS
License assign their rights under either or both of this Agreement and the JACOR
Agreement (to the extent such rights under the JACOR Agreement pertain to the
Kansas City Stations) to a "qualified intermediary," ARS and/or ARS License, as
the case may be, shall cause the "qualified intermediary" (i) to exercise such
rights for the benefit of Entercom and ECI, and (ii) immediately upon closing of
the acquisition of the Kansas City Stations by Entercom and ECI, to assign such
rights to Entercom and ECI to the extent permitted by the JACOR Agreement;
provided however, that if such assignment is prohibited by the JACOR Agreement,
ARS and ARS License shall cause such rights to be enforced to the fullest extent
permitted by the terms thereof for the benefit of Entercom and ECI.
10.3 ENTERCOM AND ECI SECTION 1031 ASSET EXCHANGE. Entercom and ECI may
elect to effect the transfer and conveyance of that portion of the KLOU Assets
properly allocable to the ARS Cash Consideration as part of an exchange under
Section 1031 of the Code. If Entercom and ECI so elect, each of Entercom and ECI
(i) may at any time at or prior to Closing assign its rights with respect to the
Cash Consideration under this Agreement to a "qualified intermediary" (as
defined in Treas. Reg. ss. 1.1031(k)-1(g)(4)), subject to all of the rights and
obligations of ARS and ARS License hereunder and (ii) shall promptly provide
written notice of such assignment to all parties hereto. ARS and ARS License
shall cooperate with all reasonable requests of Entercom and ECI and the
"qualified intermediary" in arranging and effecting the exchange as one which
qualifies under Section 1031 of the Code. Without limiting the generality of the
foregoing, ARS and ARS License shall (i) promptly provide Entercom and ECI with
written acknowledgment of such notice and (ii) at Closing, pay the ARS Cash
Consideration to the "qualified intermediary" rather than to Entercom and ECI
(which payment shall discharge the obligation of ARS and ARS License to make
payment of the ARS Cash Considerations hereunder).
10.4 ADVISORS. Notwithstanding the provisions of this Article X, the
parties to this Agreement will rely solely on their own advisors in determining
the tax consequences of the transactions contemplated by this Agreement and each
party is not relying, and will not rely, on any representations or assurances of
any other party regarding such consequences other than the representations,
warranties, covenants and agreements set forth in writing in this Agreement or
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furnished pursuant to the provisions hereof. Notwithstanding anything in this
Agreement to the contrary, the obligations of the parties set forth in this
Article X shall survive the Closing.
ARTICLE XI
GENERAL PROVISIONS
11.1 EXPENSES OF THE PARTIES. Except as otherwise specifically provided
herein, all expenses involved in the preparation, authorization and consummation
of this Agreement including, without limitation, all fees and expenses of
agents, representatives, counsel and accountants in connection therewith and in
connection with applications to the Commission hereunder, shall be borne solely
by the party who shall have incurred the same, and the other party shall have no
liability in respect thereof. The foregoing notwithstanding, the parties agree
that any filing fees of the Commission relating to the filing of the Assignment
Applications shall be divided equally between the assignor and the assignee
under each respective Assignment Application.
11.2 BROKERS. Each party hereto represents and warrants to the other
parties hereto that it has not incurred any obligation or liability, contingent
or otherwise, for brokerage or finders' fees or agents commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby for which the other parties will have any liability, and each party
hereto agrees to indemnify and hold the other parties hereto harmless against
and in respect to any such obligation or liability based in any way on any
agreement, arrangement or understanding claimed to have been made by such party
with any third party.
11.3 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
The provisions hereof which by their terms are to be performed and observed
after the Closing Date and the several representations, warranties, indemnities
and agreements of the parties herein contained shall survive the Closing Date
hereunder for a period of two (2) years and shall remain effective and unaltered
or unimpaired for such period by any investigation that may have been or may be
made at any time prior to Closing by or on behalf of any party except that the
representations concerning title, ERISA, environmental matters and taxes
contained in Sections 4.1.8, 4.1.17, 4.1.20, 4.1.24, 4.2.8, 4.2.17, 4.2.20 and
4.2.24 and the provisions of Sections 9.4.1(e) and 9.4.2(e) shall survive until
ninety (90) days after the expiration of the applicable statutes of limitation,
and the provisions of Sections 2.2 and Article X shall survive the Closing
without limitation.
11.4 CONFIDENTIALITY. Each party agrees that, until such time as this
Agreement is made public by filing with the Commission, it will not disclose to
any third party the fact of or content of this Agreement or the possible
exchange of the radio stations involved without the express prior consent of the
other parties. No public announcement (including an announcement to employees)
or press release concerning the transactions provided for herein shall be made
by any party without the prior written approval of the other parties, except as
provided or required
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by law which consent shall not be unreasonably withheld, or delayed or
conditioned. Notwithstanding anything to the contrary herein, each party and
such party's Affiliates shall, in accordance with their respective legal
obligations, including but not limited to filings permitted or required by the
federal securities laws, the New York Stock Exchange, the NASDAQ National Market
and other similar regulatory bodies, make (a) such press releases and other
public statements and announcements as such party or its Affiliates deem
necessary and appropriate to meet its legal disclosure requirements in
connection with this Agreement and the transactions contemplated hereby, and (b)
any and all statements such party deems in its sole judgment to be appropriate
in any and all regulatory filings, prospectuses and other similar documents. To
the extent practicable, the party proposing to make such press release or public
statement will consult in advance with the other regarding the nature, extent
and form of such press release or public statement.
11.5 AMENDMENT AND WAIVER. This Agreement cannot be changed or
terminated orally. Any amendment or modification hereof must be in writing
signed by the party against whom enforcement is sought. No waiver of compliance
with any provision or condition hereof, and no consent provided for herein,
shall be effective unless evidenced by an instrument in writing duly executed by
the party sought to be charged with such waiver or consent.
11.6 EFFECT OF THIS AGREEMENT. This Agreement sets forth the entire
understanding of the parties and supersedes any and all prior written or oral
agreements, arrangements or understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention has
been made by either party which is not embodied in the above-referenced
agreements, and neither party shall be bound by, or be liable for, any alleged
representation, promise, inducement or statement of intention not embodied
herein unless same shall have been made subsequent hereto, shall be in writing
and shall be signed by the party to be charged therewith. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns.
11.7 TERMS GENERALLY. (a) Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires, (b) the terms "hereof,"
"herein," and "herewith" or words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all
Schedules hereto) and not to any particular provision of this Agreement, and
Article, Section, Paragraph and Schedule references shall be construed to refer
to the Articles, Sections, Paragraphs and Schedules to this Agreement unless
otherwise specified, and (c) the word "or" shall not be exclusive.
11.8 HEADINGS. The article or section headings of this Agreement are
for convenience of reference only and do not form a part of and do not in any
way modify, interpret or construe the intention of the parties.
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11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and all such counterparts shall be construed as one and the same
instrument. Executed documents transmitted by telecopier shall be valid and
binding.
11.10 GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of New York without reference to its conflict of
law rules.
11.11 BULK SALES LAWS. Each party hereto waives compliance by the other
parties hereto with the provisions of the "bulk sales" or similar laws of any
state. Each party agrees to indemnify the other parties hereto and hold them
harmless from any and all loss, cost, damages and expenses (including but not
limited to reasonable attorney's fees) sustained by the indemnified parties as a
result of any failure of the indemnifying party to comply with any "bulk sales"
or similar laws.
11.12 ASSIGNMENT. Except as otherwise provided herein, this Agreement
and the rights and obligations hereunder may not be assigned by any party hereto
without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld. Any party may assign all or any part of this
Agreement or the rights and obligations hereunder to an Affiliate, provided that
such assignment shall not relieve such party of its obligations hereunder.
11.13 NOTICES. Any notice, report, demand, waiver or consent required
or permitted hereunder shall be in writing and shall be given by hand delivery,
by prepaid registered or certified mail, with return receipt requested, by an
established national overnight courier providing proof of delivery for next
business day delivery or by telecopy addressed as follows:
If to ARS or ARS License:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Steven B. Dodge, President
Telecopier Number: (617) 375-7575
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with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier Number: (617) 338-2380
Dow, Lohnes & Albertson, PLLC
1220 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John Pomeroy, Esq.
Telecopier Number: (202) 776-2222
If to Entercom or ECI:
Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Attention: Joseph M. Field, President
Telecopier Number: (610) 660-5641
with a copy to:
Joseph D. Sullivan, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Telecopier Number: (202) 637-2201
The date of any such notice and service thereof shall be
deemed to be: (i) the day of delivery if hand delivered or delivered by
overnight courier; (ii) the day of delivery as indicated on the return receipt
if dispatched by mail, or (iii) the date of telecopy transmission as indicated
on the telecopier transmission report provided that any telecopy transmission
shall not be effective unless a paper copy is sent by overnight courier on the
date of the telecopy transmission. Either party may change its address for the
purpose of notice by giving notice of such change in accordance with the
provisions of this Section.
11.14 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, whether
expressed or implied, is intended to: (i) confer any rights or remedies on any
person other than the parties hereto and any successors or permitted assigns;
(ii) relieve or discharge the obligation or liability of any third party; or
(iii) give any third party any right of subrogation or action against any of the
parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized corporate officers and their
respective corporate seals thereunto affixed on this the date first written
above.
AMERICAN RADIO SYSTEMS CORPORATION
By:
Name:
Title:
AMERICAN RADIO SYSTEMS LICENSE CORP.
By:
Name:
Title:
ENTERTAINMENT COMMUNICATIONS, INC.
By:
Name:
Title:
ECI LICENSE COMPANY L.P.
By: Entertainment Communications, Inc.,
Its General Partner
By:
Name:
Title:
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Schedules
Schedule 4.1.4
Kansas City Property
Schedule 4.1.5
Kansas City Leases
Schedule 4.1.6
Kansas City Contracts
Schedule 4.1.7 Intellectual Property
Schedule 4.1.8 Title to ARS Property (Permitted Encumbrances)
Schedule 4.1.10 ARS Authorizations
Schedule 4.1.11 Permits and Licenses
Schedule 4.1.12 ARS Compliance with Laws
Schedule 4.1.13 ARS Litigation and Claims
Schedule 4.1.14 ARS Labor Relations
Schedule 4.1.15 ARS Employment Contracts
Schedule 4.1.17 ARS Employee Plans
Schedule 4.1.19 Trade and Barter
Schedule 4.1.20 ARS Environmental Matters
Schedule 4.1.21 ARS Financial Information
Schedule 4.1.23 Kansas City Real Property
Schedule 4.2.4 KLOU Property
Schedule 4.2.5 KLOU Leases
Schedule 4.2.6 KLOU Contracts
Schedule 4.2.7 KLOU Intellectual Property
Schedule 4.2.8 KLOU Title to Property (Permitted Encumbrances)
Schedule 4.2.9 Defaults
Schedule 4.2.10 KLOU Authorizations
Schedule 4.2.12 Entercom Compliance with Laws
Schedule 4.2.13 Entercom Litigation and Claims
Schedule 4.2.14 Labor Relations
Schedule 4.2.15 KLOU Employment Contracts
Schedule 4.2.17 KLOU Employee Plans
Schedule 4.2.19 Trade or Barter Contracts
Schedule 4.2.20 KLOU Environmental Disclosure
Schedule 4.2.21 KLOU Financial Information
Schedule 4.2.23 Real Property
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
RECITALS.................................................................. 1
AGREEMENT................................................................. 2
ARTICLE I
DEFINITIONS............................................................... 3
ARTICLE II
ASSET EXCHANGE............................................................ 10
2.1 TRANSFER OF ASSETS........................................ 10
2.2 ALLOCATION OF VALUES...................................... 10
2.3 NON-ASSIGNABLE CONTRACTS.................................. 12
ARTICLE III
LIABILITIES............................................................... 12
3.1 ASSUMPTION OF LIABILITIES BY ARS AND ARS LICENSE.......... 12
3.2 ASSUMPTION OF LIABILITIES BY ENTERCOM AND ECI............. 13
3.3 ASSUMPTION OF EMPLOYEE OBLIGATIONS........................ 14
3.4 OTHER LIABILITIES......................................... 15
3.5 LIMITATION................................................ 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................................ 15
4.1 BY ARS AND ARS LICENSE.................................... 15
4.1.1 CORPORATE STANDING........................... 15
4.1.2 AUTHORIZATION OF AGREEMENT; NO BREACH........ 16
4.1.3 QUALIFICATION................................ 16
4.1.4 ARS PROPERTY................................. 16
4.1.5 KANSAS CITY LEASES........................... 17
4.1.6 KANSAS CITY CONTRACTS........................ 17
4.1.7 INTELLECTUAL PROPERTY........................ 17
4.1.8 TITLE TO PROPERTY............................ 17
4.1.9 NO DEFAULTS.................................. 18
4.1.10 AUTHORIZATIONS AND APPLICATIONS.............. 18
4.1.11 PERMITS AND LICENSES......................... 20
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4.1.12 COMPLIANCE WITH LAWS......................... 20
4.1.13 LITIGATION AND CLAIMS........................ 20
4.1.14 LABOR RELATIONS.............................. 21
4.1.15 EMPLOYMENT CONTRACTS......................... 22
4.1.16 DAMAGE TO ASSETS............................. 22
4.1.17 EMPLOYEE BENEFIT AND RETIREMENT PLANS........ 22
4.1.18 EMPLOYEES.................................... 23
4.1.19 TRADE OR BARTER.............................. 23
4.1.20 ENVIRONMENTAL COMPLIANCE,POLYCHLORINATED
BIPHENYLS, ASBESTOS AND OTHER TOXIC
OR HAZARDOUS SUBSTANCES...................... 23
4.1.21 FINANCIAL AND OTHER INFORMATION.............. 24
4.1.22 CONDITION OF EQUIPMENT....................... 24
4.1.23 REAL PROPERTY................................ 25
4.1.24 NO MATERIAL ADVERSE CONDITION................ 26
4.1.25 PAYMENT OF TAXES............................. 26
4.1.26 REQUIRED CONSENTS............................ 27
4.1.27 MATERIAL STATEMENTS AND OMISSIONS;
ABSENCE OF EVENTS............................ 27
4.2 BY ENTERCOM AND ECI....................................... 27
4.2.1 CORPORATE STANDING........................... 27
4.2.2 AUTHORIZATION OF AGREEMENT; NO BREACH........ 28
4.2.3 QUALIFICATION................................ 28
4.2.4 KLOU PROPERTY................................ 29
4.2.5 KLOU LEASES.................................. 29
4.2.6 KLOU CONTRACTS............................... 29
4.2.7 INTELLECTUAL PROPERTY........................ 29
4.2.8 TITLE TO PROPERTY............................ 29
4.2.9 NO DEFAULTS.................................. 30
4.2.10 AUTHORIZATIONS AND APPLICATIONS.............. 30
4.2.11 PERMITS AND LICENSES......................... 31
4.2.12 COMPLIANCE WITH LAWS......................... 31
4.2.13 LITIGATION AND CLAIMS........................ 32
4.2.14 LABOR RELATIONS.............................. 32
4.2.15 EMPLOYMENT CONTRACTS......................... 33
4.2.16 DAMAGE TO ASSETS............................. 33
4.2.17 EMPLOYEE BENEFIT AND RETIREMENT PLANS........ 33
4.2.18 EMPLOYEES.................................... 34
ii
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Page
4.2.19 TRADE OR BARTER.............................. 34
4.2.20 ENVIRONMENTAL COMPLIANCE, POLYCHLORINATED
BIPHENYLS, ASBESTOS AND OTHER TOXIC
OR HAZARDOUS SUBSTANCES...................... 34
4.2.21 FINANCIAL AND OTHER INFORMATION.............. 35
4.2.22 CONDITION OF EQUIPMENT....................... 35
4.2.23 REAL PROPERTY................................ 36
4.2.24 NO MATERIAL ADVERSE CONDITION................ 37
4.2.25 PAYMENT OF TAXES............................. 37
4.2.26 REQUIRED CONSENTS............................ 37
ARTICLE V
CONDITIONS................................................................ 38
5.1 COMMISSION CONSENT AND APPROVAL AND HSR ACT
WAITING PERIOD............................................ 38
5.2 CONDITIONS OF ARS AND ARS LICENSE......................... 39
5.3 CONDITIONS OF ENTERCOM AND ECI............................ 40
ARTICLE VI
COVENANTS AND OPERATIONS PRIOR TO CLOSING................................. 41
6.1 AFFIRMATIVE COVENANTS OF ARS and ARS LICENSE.............. 41
6.1.1 CONDUCT OF BUSINESS.......................... 41
6.1.2 ENTERCOM CONSENT AND REVIEW; NOTIFICATION OF
CERTAIN MATTERS.............................. 41
6.1.3 MATERIAL OPERATIONAL CHANGES................. 42
6.1.4 ENVIRONMENTAL ASSESSMENT..................... 42
6.1.5 ARS STATION EMPLOYEES........................ 43
6.1.6 TITLE REPORTS................................ 44
6.1.7 TAXES........................................ 45
6.1.8 SCHEDULES.................................... 45
6.1.9 INTENTION TO EMPLOY.......................... 46
6.1.10 BEST EFFORTS TO CLOSE JACOR AGREEMENT;
ENFORCEMENT OF RIGHTS........................ 46
iii
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Page
6.1.11 JACOR AGREEMENT NOTIFICATIONS................ 46
6.2 NEGATIVE COVENANTS OF ARS AND ARS LICENSE................. 47
6.2.1 KANSAS CITY LEASES AND CONTRACTS............. 47
6.2.2 AUTHORIZATIONS............................... 47
6.2.3 DISPOSE OF ASSETS............................ 47
6.2.4 LIENS........................................ 47
6.2.5 ADVERTISING CONTRACTS........................ 47
6.2.6 BROADCAST OPERATIONS......................... 48
6.2.7 DAMAGE TO ARS ASSETS......................... 48
6.2.8 REQUIREMENTS OF LAW.......................... 48
6.2.9 JACOR AGREEMENT.............................. 48
6.2.10 PERFORMANCE OF ARS COVENANTS................. 48
6.3 AFFIRMATIVE COVENANTS OF ENTERCOM AND ECI................. 49
6.3.1 CONDUCT OF BUSINESS.......................... 49
6.3.2 ARS REVIEW; NOTIFICATION OF CERTAIN MATTERS
......................................................... 49
6.3.3 MATERIAL OPERATIONAL CHANGES................. 49
6.3.4 ENVIRONMENTAL ASSESSMENT..................... 50
6.3.5 KLOU EMPLOYEES............................... 51
6.3.6 TAXES........................................ 51
6.3.7 FINAL SCHEDULES.............................. 51
6.3.8 INTENTION TO EMPLOY.......................... 51
6.4 NEGATIVE COVENANTS OF ENTERCOM AND ECI.................... 52
6.4.1 KLOU LEASES AND CONTRACTS.................... 52
6.4.2 AUTHORIZATIONS............................... 52
6.4.3 DISPOSE OF ASSETS............................ 53
6.4.4 LIENS........................................ 53
6.4.5 ADVERTISING CONTRACTS........................ 53
6.4.6 BROADCAST OPERATIONS......................... 53
6.4.7 DAMAGE TO KLOU ASSETS........................ 53
6.4.8 REQUIREMENTS OF LAW.......................... 53
6.5 NO CONTROL................................................ 53
ARTICLE VII
ACTIONS PRIOR TO CLOSING.................................................. 54
7.1 APPLICATION TO COMMISSION................................. 54
7.2 HART-SCOTT-RODINO NOTIFICATION............................ 54
7.3 INSPECTION................................................ 55
7.4 CONFIDENTIALITY........................................... 56
7.5 EMPLOYEE DIVISION......................................... 56
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Page
ARTICLE VIII
CLOSING................................................................... 56
8.1 CLOSING................................................... 56
8.2 PRORATIONS................................................ 57
8.2.1 GENERALLY.................................... 57
8.2.2 CERTIFICATE OF PRORATIONS.................... 57
8.2.3 ARBITRATION.................................. 58
8.2.4 PAYMENTS..................................... 58
8.2.5 JACOR PRORATIONS............................. 58
8.3 CLOSING DELIVERIES TO ARS AND ARS LICENSE................. 58
8.3.1 BILL OF SALE................................. 58
8.3.2 AUTHORIZATION ASSIGNMENT..................... 59
8.3.3 POSSESSION................................... 59
8.3.4 BOARD RESOLUTIONS............................ 59
8.3.5 OFFICER'S CERTIFICATE........................ 59
8.3.6 ASSUMPTION AGREEMENTS........................ 59
8.3.7 REQUIRED CONSENTS............................ 60
8.3.8 UCC SEARCHES................................. 60
8.3.9 OPINION OF COUNSEL........................... 60
8.4 CLOSING DELIVERIES TO ENTERCOM AND ECI.................... 60
8.4.1 BILL OF SALE................................. 60
8.4.2 AUTHORIZATION ASSIGNMENT..................... 61
8.4.3 POSSESSION................................... 61
8.4.4 BOARD RESOLUTIONS............................ 61
8.4.5 OFFICER'S CERTIFICATES....................... 61
8.4.6 ASSUMPTION AGREEMENTS........................ 61
8.4.7 REQUIRED CONSENTS............................ 62
8.4.8 UCC SEARCHES................................. 62
8.4.9 CASH CONSIDERATION........................... 62
8.4.10 OPINION OF COUNSEL........................... 62
8.4.11 RELIANCE ON JACOR............................ 62
8.5 COVENANTS OF FURTHER ASSURANCES........................... 62
8.6 RISK OF LOSS; DAMAGE TO PROPERTY.......................... 63
8.7 TAXES ON TRANSACTION...................................... 63
ARTICLE IX
TERMINATION, DEFAULT AND INDEMNIFICATION.................................. 64
9.1 TERMINATION............................................... 64
9.2 EFFECT OF TERMINATION..................................... 65
9.3 REMEDIES.................................................. 65
9.3.1 BREACH BY ENTERCOM OR ECI.................... 65
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Page
9.3.2 BREACH BY ARS OR ARS LICENSE................. 65
9.4 INDEMNIFICATION........................................... 66
9.4.1 BY ARS AND ARS LICENSE....................... 66
9.4.2 BY ENTERCOM AND ECI.......................... 68
9.4.3 NOTICE AND PROCEDURE IN CONNECTION
WITH THIRD PARTY CLAIMS...................... 69
9.4.4 EXCLUSIVITY.................................. 70
9.4.5 LIMITATIONS.................................. 70
9.4.6 POSTPONEMENT OF CLOSING...................... 70
ARTICLE X
ASSET EXCHANGE............................................................ 71
10.1 INTENT.................................................... 71
10.2 ARS AND ARS LICENSE SECTION 1031 ASSET EXCHANGE........... 71
10.3 ENTERCOM AND ECI SECTION 1031 ASSET EXCHANGE.............. 72
10.4 ADVISORS.................................................. 73
ARTICLE XI
GENERAL PROVISIONS........................................................ 74
11.1 EXPENSES OF THE PARTIES................................... 74
11.2 BROKERS................................................... 74
11.3 SURVIVAL OF COVENANTS, REPRESENTATIONS AND
WARRANTIES........................................................ 74
11.4 CONFIDENTIALITY........................................... 75
11.5 AMENDMENT AND WAIVER...................................... 76
11.6 EFFECT OF THIS AGREEMENT.................................. 76
11.7 TERMS GENERALLY........................................... 76
11.8 HEADINGS.................................................. 77
11.9 COUNTERPARTS.............................................. 77
11.10 GOVERNING LAW............................................. 77
11.11 BULK SALES LAWS........................................... 77
11.12 ASSIGNMENT................................................ 77
11.13 NOTICES................................................... 78
11.14 NO THIRD PARTY BENEFICIARIES.............................. 79
</TABLE>
vi
EXHIBIT 10.14
ASSET PURCHASE AGREEMENT
by and among
AMERICAN RADIO SYSTEMS CORPORATION
AMERICAN RADIO SYSTEMS LICENSE CORP.
and
ENTERTAINMENT COMMUNICATIONS, INC.
Dated July 18, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.................................................................. 2
ARTICLE II
SALE AND PURCHASE.............................................................6
2.1. TRANSFER OF ASSETS....................................................6
2.2. PURCHASE PRICE........................................................6
2.3. PAYMENT...............................................................6
2.4. APPRAISAL.............................................................6
ARTICLE III
LIABILITIES...................................................................7
3.1. ASSUMPTION OF LIABILITIES.............................................7
3.2. LIABILITIES OF ARS....................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES................................................8
4.1. ARS AND ARS LICENSE...................................................8
4.2. ENTERCOM REPRESENTATIONS.............................................20
ARTICLE V
CONDITIONS...................................................................21
5.1. COMMISSION CONSENT AND APPROVAL AND HSR ACT
WAITING PERIOD.......................................................21
5.2. ENTERCOM'S CONDITIONS................................................22
5.3. ARS AND ARS LICENSE CONDITIONS.......................................23
5.4. NONOCCURRENCE OF CONDITIONS..........................................24
ARTICLE VI
OPERATIONS PENDING CLOSING...................................................24
6.1. AFFIRMATIVE COVENANTS OF ARS AND ARS LICENSE.........................24
6.2. NEGATIVE COVENANTS OF ARS AND ARS LICENSE............................28
6.3. NO CONTROL BY ENTERCOM...............................................31
ARTICLE VII
PREPARATION FOR CLOSING......................................................32
7.1. APPLICATION TO COMMISSION............................................32
7.2. INSPECTION BY ENTERCOM...............................................33
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7.3. CONFIDENTIALITY......................................................33
7.4. HART-SCOTT-RODINO NOTIFICATION.......................................34
ARTICLE VIII
CLOSING......................................................................34
8.1. CLOSING..............................................................34
8.2. ADJUSTMENTS..........................................................34
8.3. CLOSING DELIVERIES TO ENTERCOM.......................................37
8.4. CLOSING DELIVERIES TO ARS............................................41
8.5. COVENANTS OF FURTHER ASSURANCE.......................................43
8.6. DAMAGE TO PROPERTY...................................................43
8.7. TAXES ON TRANSACTION.................................................44
ARTICLE IX
TERMINATION, DEFAULT AND INDEMNIFICATION.....................................44
9.1. TERMINATION BY REASON OTHER THAN DEFAULT.............................44
9.2. EFFECT OF TERMINATION BY REASON OTHER THAN DEFAULT...................45
9.3. DEFAULT..............................................................45
9.4. ARS' REMEDY..........................................................45
9.5. ENTERCOM'S REMEDIES..................................................46
9.6. LIQUIDATED DAMAGES NOT A PENALTY.....................................46
9.7. INDEMNIFICATION......................................................46
ARTICLE X
GENERAL PROVISIONS...........................................................50
10.1. EXPENSES OF THE PARTIES..............................................50
10.2. BROKERS..............................................................50
10.3. SURVIVAL OF ARS' AND ARS LICENSE'S COVENANTS,
REPRESENTATIONS AND WARRANTIES.......................................51
10.4. AMENDMENT AND WAIVER.................................................51
10.5. EFFECT OF THIS AGREEMENT.............................................51
10.6. HEADINGS.............................................................51
10.7. COUNTERPARTS.........................................................51
10.8. GOVERNING LAW........................................................51
10.9. NOTICES..............................................................52
10.10. STATION EMPLOYEES....................................................53
10.11. SECTION 1031 ASSET EXCHANGE..........................................53
ii
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made and entered into this 18th day of July,
1997 by and between AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation
(hereinafter "ARS"), AMERICAN RADIO SYSTEMS LICENSE CORP., a Delaware
corporation (hereinafter "ARS License"), and ENTERTAINMENT COMMUNICATIONS, INC.,
a Pennsylvania corporation (hereinafter "Entercom").
W I T N E S S E T H:
WHEREAS, pursuant to authorizations duly granted and issued by
the Federal Communications Commission (the "Commission"), ARS is the owner of
radio station KCTC(AM) licensed to Sacramento, California, (the "Station") and
ARS operates the Station under a management agreement with ARS License, the
holder of the Authorizations for the operation of the Station; and
WHEREAS, Entercom, ARS and ARS License have agreed, subject to
prior approval by the Commission and certain other conditions, to transfer and
assign the licenses and all other authorizations relating to the Station from
ARS and ARS License to Entercom and for ARS and ARS License to transfer and
Entercom to receive all of the assets, properties, rights and privileges used in
connection with the Station as hereinafter set forth; and
WHEREAS, Entercom may elect to accomplish such transfer in
whole or part as the acquisition of replacement property in a deferred like-kind
exchange under ss._1031 of the Code.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises herein
contained and of the representations and warranties hereinafter set forth and
for other good and valuable consideration, the parties, intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following
respective meanings:
"Adjustment Time" shall mean 12:00:01 a.m. current local time
in Sacramento, California on the Closing Date.
"Agreement" shall mean this Asset Purchase Agreement.
"Applications" shall have the meaning set forth in Section 7.1
hereof.
"ARS" shall mean the corporation identified as such in the
Preamble to this Agreement.
"ARS License" shall mean the corporation identified as such in
the Preamble to this Agreement.
"Assets" shall mean the Property and all of the Authorizations
and all applications for Authorizations for the Station pending before the
Commission.
"Authorizations" shall mean all of the licenses, permits and
authorities granted by the Commission with respect to the operation of the
Station.
"Closing" shall mean the event of consummation of the
transactions contemplated by this Agreement as more fully described in Article
VIII of this Agreement.
"Closing Date" shall mean the date specified for Closing in
Section 8.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
2
<PAGE>
"Commission" shall mean the Federal Communications Commission.
"Contaminant" shall mean and include any pollutant,
contaminant, hazardous material (as defined in any of the Environmental Laws),
toxic substances (as defined in any of the Environmental Laws), asbestos or
asbestos containing material, urea formaldehyde, polychlorinated biphenyls,
regulated substances and wastes, radioactive materials, and petroleum or
petroleum by-products, including crude oil or any fraction thereof.
"Contracts" shall mean all agreements, arrangements,
commitments and undertakings, written or oral, express or implied, relating to
the Assets or any of them, or to the present or future operation of the Station
and to which ARS and/or ARS License is a party or by which ARS and/or ARS
License or its assignee is bound or obligated in any way (including without
limitation all agreements for the sale of advertising time on the Station and
all trade or barter agreements) except for any Leases.
"Environmental Laws" shall mean and include, but not be
limited to, any applicable federal, state or local law, statute, charter,
ordinance, rule or regulation or any governmental agency interpretation, policy
or guidance, including without limitation applicable safety/environmental health
laws such as but not limited to the Commission's standards relating to radio
frequency ("RF") radiation exposure, the Resource Conservation and Recovery Act
of 1976, Comprehensive Environmental Response Compensation and Liability Act,
Federal Emergency Planning and Community Right-to-Know Law, the Clean Air Act,
the Clean Water Act, the Occupational Safety and Health Act, and the Toxic
Substance Control Act, as any of the foregoing have been amended, and any
permit, order, directive, court ruling or order or consent decree applicable to
or affecting the Property or any other property (real or personal) used by or
3
<PAGE>
relating to the Station promulgated or issued pursuant to any Environmental Laws
which pertains to, governs, or controls the generation, storage, remediation or
removal of Contaminants or otherwise regulates the protection of health and the
environment including, but not limited to, any of the following activities,
whether on site or off site: (a) the emission, discharge, release, spilling or
dumping of any Contaminant into the air, surface water, ground water, soil or
substrata; or (b) the use, generation, processing, sale, recycling, treatment,
handling, storage, disposal, transportation, labeling or any other management of
any Contaminant.
"Entercom" shall mean the corporation identified as such in
the Preamble to this Agreement and any Qualified Intermediary to which Entercom
may elect to assign all or part of its rights hereunder pursuant to Section
10.11 hereof.
"Final Order" shall mean an action by the Commission upon any
application including, without limitation, the Applications for its consent,
approval or authorization, which action has not been reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action, no protest,
petition to deny, petition for rehearing or reconsideration, appeal or request
for stay is pending, and as to which action the time for filing of any such
protest, petition, appeal or request and any period during which the Commission
may reconsider or review such action on its own authority has expired.
"Leases" shall mean all agreements, arrangements or
commitments and undertakings, written or oral, express or implied, for the use
or occupation of any real or personal property required or used by ARS or ARS
License in the operation of the Station.
"Permitted Encumbrances" shall mean (i) liens for current
taxes not yet due and payable, (ii) easements or restrictions of record which do
not, either individually or in
4
<PAGE>
the aggregate, impede or restrict the present operations of the Station or
impair the marketability of any property, and (iii) statutory liens of landlords
and carriers, materialmen, mechanics, warehousemen, suppliers, and repairmen
arising in the ordinary course of business and with respect to amounts not yet
delinquent, provided that such statutory liens do not interfere in any material
respect with the operation of the Station as currently conducted, and provided
that such statutory liens are removed or satisfied on or prior to the Closing.
"Property" shall mean all of the tangible and intangible
property, whether real or personal or mixed, and all rights and interests which
are or were at any time since December 31, 1996 owned, used, or held for use by
or for ARS with the Station or the present or future operation of the Station,
other than property disposed of and replaced with equivalent or higher value or
quality in the ordinary course of business excluding only cash, cash
equivalents, accounts receivable and those assets listed on Schedule 4.1.5 as
"Excluded Assets" and including without limitation (i) the assets and property
listed in" Schedule 4.1.5 hereto as "Included Assets" (which schedule of assets
and property has been furnished to Entercom by ARS); (ii) all of ARS and/or ARS
License's rights, titles, and interests under the Leases listed on Schedule
4.1.6 hereto and the Contracts listed on Schedule 4.1.7 hereto (other than
Contracts expiring prior to Closing by their terms which Contracts Entercom has
instructed ARS not to renew); and (iii) the call letters, copyrights, trademarks
and other intellectual property associated with the Station.
"Qualified Intermediary" shall mean a party described in U.S.
Treasury Regulations Section 1.1031(k)-1(g)(4).
5
<PAGE>
"Station" shall mean the amplitude modulation (AM) radio
broadcast station licensed by the Commission to Sacramento, California
broadcasting on 1320 Khz with and currently assigned the call letters KCTC(AM).
ARTICLE II
SALE AND PURCHASE
2.1. TRANSFER OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, at the Closing ARS and ARS License shall transfer,
convey, grant, assign and deliver to Entercom free and clear of all liens and
encumbrances (other than Permitted Encumbrances) and Entercom shall buy, accept
and receive from ARS, all of the Assets.
2.2. PURCHASE PRICE. The Purchase Price for the Assets is the
sum of Four Million Dollars ($4,000,000).
2.3. PAYMENT. The Purchase Price to be paid by Entercom shall
be payable in cash delivered at the Closing by wire transfer or in other
immediately available funds to the account of ARS at such financial institution
as ARS shall specify in writing.
2.4. APPRAISAL. Entercom, ARS and ARS License agree that the
aggregate fair market value of the Station Assets (the "Aggregate Fair Market
Value") will be appraised at Entercom's expense by the appraisal firm of Bond &
Pecaro (the "Appraisal"). Entercom shall prepare IRS Form 8594 reflecting the
Aggregate Fair Market Value as found by Bond & Pecaro and such other information
as required by the form, and shall forward it within 30 days after Closing to
ARS and ARS License for its approval, which approval shall not be withheld
unreasonably. Entercom, ARS and ARS License shall each file with their
respective federal income tax return for the tax year in which the Closing
occurs, IRS Form 8594 containing the
6
<PAGE>
information agreed upon by the parties pursuant to the immediately preceding
sentence. Entercom agrees to report the purchase of the Station Assets and ARS
and ARS License agree to report the sale of such assets for income tax purposes
in a manner consistent with the information agreed upon by the parties pursuant
to this section and contained in its IRS Form 8594. In the event either or both
of the parties elects to treat all or a portion of the Assets transferred as
part of a deferred like-kind exchange under Section 1031 of the Code, each party
shall, in completing any IRS Forms 8824 that the party might be required to file
with the IRS, reflect the values for the Assets as determined in the Appraisal.
Notwithstanding any other provision of this Agreement, the provisions of this
Section 2.4 shall survive the Closing without limitation.
ARTICLE III
LIABILITIES
3.1. ASSUMPTION OF LIABILITIES. As partial consideration for
the Assets, Entercom, from and after the Closing Date, shall assume and pay,
perform and discharge the following obligations and commitments of ARS and ARS
License and no others:
3.1.1. The liabilities and obligations accruing after
the Adjustment Time with respect to the Leases listed on Schedule 4.1.6 hereto
that are specifically identified on Schedule 4.1.6 as being assumed by Entercom;
3.1.2. The liabilities and obligations accruing after
the Adjustment Time with respect to those Contracts listed on Schedule 4.1.7
that are specifically identified on Schedule 4.1.7 as being assumed by Entercom;
and any contracts entered into after the execution hereof which Entercom
expressly agrees to assume.
7
<PAGE>
3.1.3. All taxes and assessments that accrue on or
with respect to the Assets and the operation of the Station after the Adjustment
Time
3.1.4. Entercom shall discharge those obligations and
liabilities for which it receives the benefit of a closing proration with
respect to such liabilities or obligations in accordance with Section 8.2
hereof.
3.2. LIABILITIES OF ARS. Except as specifically assumed by
Entercom pursuant to Section 3.1 hereof, ARS and/or ARS License shall pay or
discharge any and all taxes, assessments, accounts payable, commitments,
agreements, undertakings, claims, debts, demands, obligations and liabilities:
3.2.1. Incurred or made by ARS and/or ARS License; or
3.2.2. Caused by, arising out of or resulting from
any act or omission of ARS and/or ARS License, their directors, officers, agents
or independent contractors; or
3.2.3. Relating to ARS and/or ARS License or the
operation of the Station before the Adjustment Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. ARS AND ARS LICENSE. ARS and ARS License hereby represent
and warrant to Entercom that:
4.1.1. CORPORATE STANDING. ARS and ARS License are
corporations, duly organized, validly existing and in good standing under the
laws of the State of Delaware and are qualified to do business in the State of
California. ARS and ARS License have full power and authority to engage in the
business in which they are presently engaged and
8
<PAGE>
to make and perform this Agreement according to its terms. ARS and ARS License
have duly and properly taken all necessary corporate actions and proceedings
required to be taken by ARS and ARS License to authorize ARS and ARS License to
execute, deliver and perform this Agreement and to convey, assign, transfer and
deliver to Entercom the Assets hereunder.
4.1.2. AUTHORIZATION. The execution, delivery and
performance of this Agreement and all transactions contemplated hereby by ARS
and ARS License have been duly authorized by ARS' and ARS License's Board of
Directors and shareholders and all necessary corporate action on ARS' and ARS
License's part has been duly taken.
4.1.3. QUALIFICATIONS AS ASSIGNOR. ARS and ARS
License know of no facts which, under the Communications Act of 1934, as
amended, or the existing rules and regulations of the Commission, would
disqualify ARS or ARS License as an assignor of the Authorizations.
4.1.4. ABSENCE OF CONFLICTING ORDERS. Neither ARS nor
ARS License is subject to any judgment, award, order, writ, injunction,
arbitration decision or decree which prohibits or prevents the performance of
this Agreement or the consummation of any transaction contemplated under this
Agreement, and there is no litigation, administrative action, arbitration,
proceeding or investigation pending, or to the knowledge of ARS and ARS License,
threatened, against ARS or ARS License or affecting ARS or ARS License in any
federal, state or local court or before any administrative agency or arbitrator
that would adversely affect ARS' or ARS License's ability to perform their
obligations under this Agreement or would hinder the consummation of the
transactions contemplated hereunder.
9
<PAGE>
4.1.5. PROPERTY. The Property to be furnished to
Entercom by ARS and ARS License, listed under the heading "Included Property" on
Schedule 4.1.5 hereto, accurately lists and includes all of the material
tangible and intangible property whether real, personal or mixed and
substantially all of the rights and interests that are now or were at any time
since December 31, 1996 used, necessary, connected or associated with or related
to the Assets or the present or future operation of the Station except for
property replaced in the ordinary course of business with property listed on
Schedule 4.1.5 and except those assets specifically listed on Schedule 4.1.5
under the heading "Excluded Property."
4.1.6. LEASES. ARS and ARS License have delivered to
Entercom true and correct copies of all Leases listed on Schedule 4.1.6 hereto.
There are no other Leases for any items of real or personal property related to
or associated with the Assets or the present or future operation of the Station
other than those disclosed on Schedule 4.1.6 hereto.
4.1.7. CONTRACTS. ARS and ARS License have delivered
to Entercom true and correct copies of all Contracts individually identified on
Schedule 4.1.7 hereto. There are no Contracts now in effect, written or oral,
express or implied, which in any way affect the Property or Assets or the
present or future operation of the Station other than as set forth on Schedule
4.1.7 hereto.
4.1.8. APPLICATIONS. There are no applications
relating to the Station presently pending before the Commission other than those
listed on Schedule 4.1.11 attached hereto.
4.1.9. TITLE TO PROPERTY. Except as disclosed on
Schedule 4.1.9 hereto, at Closing ARS and ARS License will have good, marketable
and indefeasible
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ownership, right, title and interest to the Property including the right to
transfer same free and clear of any mortgage, conditional sale agreement,
security interest, lease, lien, hypothecation, pledge, encumbrance, restriction,
liability, charge, claim or imperfection of title applicable to the Property or
any of the income or revenue therefrom whatsoever except for the Permitted
Encumbrances.
4.1.10. NO DEFAULTS. ARS and ARS License have
complied with all of the terms of the Contracts listed on Schedule 4.1.7 hereto
and the Leases listed on Schedule 4.1.6 hereto and such Contracts and Leases at
Closing shall be enforceable by ARS and ARS License in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy and similar laws affecting the enforcement of creditors' rights and
general equitable principles affecting the enforcement of equitable remedies
(including within said equitable remedies without limitation the remedy of
specific performance). Neither ARS nor ARS License is in default thereunder and
no event has occurred which with the passage of time or the giving of notice or
both would constitute a default by ARS thereunder. To ARS' and ARS License's
knowledge all other parties to the Contracts and Leases have complied with the
provisions thereof and are not in default thereunder and no event has occurred
which with the passage of time or the giving of notice or both would constitute
a default by any such other party thereunder.
4.1.11. AUTHORIZATIONS. All authorizations necessary
to the lawful operations of the Station as presently conducted have been granted
and issued by the Commission to ARS and/or ARS License and are listed on
Schedule 4.1.11 attached hereto and are now in full force and effect. There are
no applications of ARS or ARS License relating to
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the Station pending with the the Commission except as listed on such Schedule
4.1.11 and ARS and ARS License have performed and complied with all of the terms
and conditions of said Authorizations. Except as listed on Schedule 4.1.11 and
4.1.14 no Proceedings are pending, or to the knowledge of any officer of ARS or
ARS License are threatened, which may result in the revocation, modification,
non-renewal or suspension of any of any of the Authorizations, the denial of any
pending applications, the issuance of a cease and desist order, or the
imposition of any other administrative or judicial sanction to which the Station
or the Assets is or may be subject. All ownership reports, renewal applications,
and other material reports and documents required to be filed by ARS or ARS
License with the Commission have been filed, and all such reports, applications
and documents are true and correct. The Station is identified by its present
call letters and unless otherwise validly authorized by the Commission is
operated at maximum authorized power on its assigned frequency at the power and
height authorized by the Commission.
4.1.12. PERMITS AND LICENSES. In addition to the
Authorizations at Closing, ARS or ARS License shall have obtained and/or holds
all other governmental permits and licenses necessary for the lawful operation
of the Station as it is currently operated. All such governmental permits and
licenses are also listed on Schedule 4.1.11 hereto. All terms, restrictions and
requirements of such permits and licenses have been complied with and neither
ARS nor ARS License is in default of any of same.
4.1.13. COMPLIANCE WITH LAWS. ARS and ARS License
have complied in all material respects with all orders (to which ARS or ARS
License respectively is a party or is subject to), applicable laws, rules, and
regulations of all federal, state and local
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authorities with respect to the Assets and operation of the Station. Neither ARS
nor ARS License is, nor to ARS' or ARS License's knowledge, has any third party
asserted that they are in default with respect to or in violation of (a) any
judgment, order, injunction or decree; or (b) rule or regulation of any court,
administrative agency or other governmental authority, in either case in any
respect material to this transaction. All material reports, returns and other
documents filed by ARS and ARS License with any administrative agency or
governmental authority are true, correct and complete in all material respects.
4.1.14. LITIGATION AND CLAIMS. Except as disclosed in
Schedule 4.1.14 hereto, no litigation, proceeding, or controversy is pending
against ARS or ARS' License, or to the knowledge of ARS or ARS License, against
any other party, or to the knowledge of ARS or ARS License, threatened against
ARS, ARS License or any other party, which might affect any of the Assets, ARS'
or ARS License's right or power to transfer the same, the ownership, possession,
use or resale of any of the Assets, or the operation of the Station by the
Entercom or by any assignee of Entercom. No claim has been made or asserted
against ARS or ARS License material to this transaction; and there is no basis
known to ARS or ARS License for any such litigation, proceeding, controversy or
claim.
4.1.15. LABOR RELATIONS. In all respects material to
this transaction, ARS and ARS License have complied with all applicable laws,
rules and regulations pertaining to the employment of labor, including those
relating to wages, hours, collective bargaining and the payment of or
withholding of taxes, and ARS and ARS License have withheld all amounts required
by law or agreement to be withheld from the wages or salaries of its employees
and are not liable for any arrears of wages or any tax or withholding or any
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penalties or interest for failure to comply with any of the foregoing; and there
are no collective bargaining agreements relating to the relationship between any
employee of the Station. Neither ARS nor ARS License has any knowledge of any
union organizing activities involving or targeting any employees of the Station.
4.1.16. EMPLOYMENT CONTRACTS. Except as disclosed on
Schedule 4.1.16 there are no written contracts for the employment of any
personnel relating to the Station and all employees of the Station are employed
on an "at will" basis which may be terminated without cause at any time and with
not more than two weeks' notice.
4.1.17. INSURANCE. ARS currently maintains and has in
the past maintained insurance coverage on the Property and with respect to its
employees and operations in amounts and in respect of liabilities and risks
prudently insured against by radio broadcasters. Schedule 4.1.17 attached hereto
contains a true and complete listing of all such policies and binders of
insurance currently held by or on behalf of ARS, relating to the Property and
the Station's employees and operations. Such policies and binders are valid and
enforceable by ARS, in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy and similar laws affecting
the enforcement of creditor's rights and general equitable principles affecting
the enforcement of equitable remedies (including within said equitable remedies
without limitation the remedy of specific performance) and are outstanding and
duly in force as of the date hereof and provide adequate property insurance for
the replacement of the tangible assets of the Station and adequate liability
insurance for the protection of the business and operations of the Station.
4.1.18. EMPLOYEE BENEFIT AND RETIREMENT PLANS. ARS
and ARS License do not now maintain and have never maintained any "employee
pension benefit plan" or any "employee welfare benefit plan" (as defined
respectively in Sections_3(2) and 3(l) of ERISA) on behalf of the Station's
employees except as listed on Schedule_4.1.18 hereto and all retirement plans,
bonus arrangements, life insurance or medical insurance programs or any other
fringe benefit arrangements (collectively "Fringe Benefit Arrangements") for any
employees of the Station whether written or unwritten except as are listed on
Schedule 4.1.18 hereto. All "employee pension benefit plans," "employee welfare
benefit plans" and Fringe Benefit Arrangements listed on Schedule 4.1.18 hereto
comply in all respects with all applicable requirements of law and regulation.
ARS and ARS License do not maintain an employee pension benefit plan which is
subject to Title IV of ERISA and has never sponsored or contributed to any
"multi-employer pension plan" (as defined in Section 3(37) of ERISA).
4.1.19. EMPLOYEES. Schedule 4.1.19 attached hereto
contains a listing of the name, address, salary or compensation, accrued and/or
earned vacation, sick leave and/or other benefits, job description and original
employment date of all current employees of the Station along with, to the best
of ARS' and ARS License's knowledge, the dates and information concerning any
previous salary or compensation change or adjustment and the reasons for any
such change or adjustment for each such current employee. Entercom may, but
shall not be obligated (other than through its own actions independent of any
provisions of this Agreement) to offer employment to any employee of Station who
was employed by ARS at or before the Closing. With respect to any employees of
ARS that Entercom employs at Closing, ARS shall be responsible for and pay to
such employees all accrued or earned compensation and benefits of
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any kind as of the Adjustment Time, including without limitation severance or
other termination benefits if any, provided that ARS shall not be responsible
for such items to the extent that Entercom agrees to be responsible for such
items and receives a credit therefore pursuant to the provisions of Section 8.2
hereof.
4.1.20. BULK TRANSFER LAWS. Neither this Agreement,
the Closing, nor any other transactions contemplated by this Agreement are
subject to any Bulk Transfer Law or similar law in any jurisdiction applicable
to the transactions contemplated by this Agreement.
4.1.21. BROADCASTING CONTRACTS. Except as disclosed
on Schedule 4.1.21, all Contracts for the sale of broadcast advertising are
terminable without penalty by Station on not more than thirty (30) days prior
written notice and all Contracts for the sale of broadcast advertising on a
trade or barter basis are subject to preemption in favor of cash advertising and
all trade or barter advertising under such Contracts are to be broadcast prior
to the time of Closing. Schedule 4.1.21 also lists the trade and barter
contracts for the Station as of the date of this Agreement, showing the current
amount of trade and barter advertising obligations of the Station now
outstanding and all trade and barter receivables owed to the Station. The total
amount of all trade and barter advertising obligations of the Station
outstanding at Closing will not exceed $20,000 and the total of the value of the
advertising obligations of the Station outstanding less the value of the trade
and barter receivables owed to the Station as of the Closing Date shall not
exceed Ten Thousand Dollars ($10,000).
4.1.22. PROPERTY, PLANT AND EQUIPMENT. All
structures, facilities machinery, equipment, furniture, fixtures, automobiles,
trucks, tools and other tangible
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personal property included within the Property are in good operating condition
and reasonable repair and are usable in the ordinary course of the operation of
the Station, ordinary wear and tear excepted. Such tangible personal property
includes all equipment and devices reasonably necessary for proper and safe
operation of the Station, ordinary wear and tear excepted in accordance with
generally accepted engineering and operating practices of a prudent radio
broadcast operator.
4.1.23. ENVIRONMENTAL COMPLIANCE, POLYCHLORINATED
BIPHYENYLS, ASBESTOS AND OTHER TOXIC OR HAZARDOUS SUBSTANCES. None of the
Property used by the Station in its operations or for which the owner of the
Property could be held responsible under any Environmental Laws contains: (i)
any asbestos, polychlorinated biphenals ("PCBs") or any PCB contaminated oil;
(ii) any Contaminants; or (iii) any underground storage tanks. All of the
Property and such real property are in full compliance with all applicable
Environmental Laws and neither ARS nor ARS License has knowledge of any notice,
assertion or claim to the contrary.
4.1.24. FINANCIAL AND OTHER INFORMATION. Schedule
4.1.24 attached hereto contains a list of all of the financial, technical and
operating information provided to Entercom by ARS or ARS License concerning the
operation of the Station. All such information and any additional information
provided to Entercom by ARS or ARS License pursuant to this Agreement is true
and correct and not misleading, does not fail to state any material information
necessary to make the statements made therein not misleading, and the financial
statements and material to be provided to Entercom by ARS fairly present the
financial condition of the Station as of the respective dates thereof and the
results of operation of the
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Station for the respective periods then ended; and were prepared in accordance
with generally accepted accounting principles consistently applied.
4.1.25. REAL PROPERTY.
(a) The real property identified on Schedule
4.1.25 has vehicular access to a road and is supplied with utilities and other
services necessary for the operation of that portion of the Station conducted
there. No real property other than that listed on Schedule 4.1.25 or listed on
Schedule 4.1.5 pertaining to Excluded Property, is used in, held for use in
connection with or necessary for the conduct of, the business or operations of
the Station. The transmitting towers, related improvements, guy anchors of the
transmitting towers, and the transmitter buildings used by ARS in the operation
of the Station are located entirely on such real property. The improvements of
ARS and ARS License upon such real property and the current use and operation on
such premises by ARS and ARS License conform in all material respects to all
restrictive covenants, conditions, easements, building, subdivision and similar
codes and federal, state and local laws, regulations, rules, orders and
ordinances and ARS has not received any notice of any violation or claimed
violation of any such restrictive covenant, condition or easement, or any
building, subdivision or similar code, or any federal, state or local law,
regulation, rule, order or ordinance which, either individually or in the
aggregate, could have a material adverse effect on the assets, business or
financial
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condition of the Station. There is no plan, study or effort by any governmental
authority or agency which could reasonably be expected to have a material
adverse effect on the assets, business or financial condition of the Station.
There are no latent defects in the real property which could reasonably be
expected to have a material adverse effect on the assets, business or financial
condition of the Station. All improvements upon the real property identified on
Schedule 4.1.25 are in good operating condition and repair, normal wear and tear
excluded. Neither ARS nor ARS License has knowledge or notice (i) of any
pending, threatened, or contemplated action to take by eminent domain or
otherwise to condemn any portion of the real property or interest therein or
(ii) of any levied, threatened or proposed assessments for public improvements
with respect to the real property.
(b) The ground system for the Station is
complete and contains the requisite number of ground radials. The ground system
for the Station is accessible and fully contained within real property that is
owned by ARS. The Station operates within licensed parameters in both daytime
and nighttime transmission, and its proof of performance is current and complete
and indicates such compliance.
4.1.26. CLOSING. All of the foregoing
representations and warranties of ARS and ARS License shall be true and accurate
as of the Closing Date and said representations and warranties shall be deemed
to have been restated in full by ARS and ARS License as of the Closing Date
except to the extent they speak as of a particular time other than the Closing
Date, or except for changes contemplated by the terms hereof.
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4.2. ENTERCOM REPRESENTATIONS. Entercom represents and
warrants to ARS and ARS License that:
4.2.1. CORPORATE STANDING. Entercom is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and at the Closing Date will have the corporate
power and authority to conduct its business as proposed to be conducted and upon
the acquisition of the Assets will be duly qualified to do business in the State
of California.
4.2.2. AUTHORIZATION OF AGREEMENT: NO BREACH.
Entercom has the corporate power and authority to execute, deliver and perform
this Agreement and such other agreements as are necessary to consummate the
transactions contemplated hereby and this Agreement constitutes the valid and
binding obligation of Entercom subject to the receipt of the consents and
approvals required elsewhere herein. Assuming the said consents and approvals
are obtained, neither such execution, delivery and performance nor compliance by
Entercom with the terms and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of Entercom or any judgment, order, injunction, decree,
regulation or ruling of any court or any other governmental authority to which
Entercom is subject or any material agreement or contract to which Entercom is a
party or to which it is subject, or constitute a material default thereunder.
4.2.3. QUALIFICATION AS ASSIGNEE. Entercom knows of
no facts which, under the Communications Act of 1934, as amended, or the
existing rules and regulations of the Commission, would disqualify Entercom as
an assignee of the Authorizations.
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4.2.4. ABSENCE OF CONFLICTING AGREEMENT AND REQUIRED
CONSENTS. Entercom is not subject to any judgment, award, order, writ,
injunction, arbitration decision or decree which prohibits the performance of
this Agreement or the consummation of any transaction contemplated under this
Agreement, and there is no litigation, administrative action, arbitration,
proceeding or investigating pending, or to the knowledge of Entercom,
threatened, against Entercom or affecting Entercom in any federal, state or
local court, or before any administrative agency or arbitrator that would
adversely affect Entercom's ability to perform its obligations under this
Agreement or would hinder the consummation of the transactions contemplated
hereunder.
4.2.5. All of the foregoing representations and
warranties of Entercom shall be true and accurate as of the Closing date and
said representations and warranties shall be deemed to have been restated in
full by Entercom as of the Closing Date except to the extent they speak as of a
particular time other than the Closing Date.
ARTICLE V
CONDITIONS
5.1. COMMISSION CONSENT AND APPROVAL AND HSR ACT WAITING
PERIOD. Performance of the obligations of the parties under this Agreement and
the Closing of the transaction provided for herein are and shall be subject to
the occurrence and concurrence of the express condition precedent that the
Commission has granted its consent and approval in writing to the assignment to
Entercom of the Authorizations issued by the Commission for the Station as
contemplated hereby, such consent to be free of any material adverse condition,
and the waiting periods (as it may be extended) applicable to the transfer of
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the Assets under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") shall have expired or been earlier terminated.
5.2. ENTERCOM'S CONDITIONS. Performance of the obligations of
Entercom under this Agreement and the Closing of the transactions provided for
herein are and shall be subject to the occurrence of the express conditions
precedent, any of which may be waived by Entercom that:
5.2.1. The Commission's consent and approval required
by Section 5.1 hereof and the consent and required approval of any other
governmental authority has been issued or received without any material adverse
condition and the Commission's consent shall have become a Final Order; and
5.2.2. The application of ARS License for the renewal
of the Authorizations of the Station shall have been granted without any
material adverse condition and such grant shall have become a Final Order by the
date that is 120 days after the closing of that certain Asset Exchange Agreement
by and between the parties dated July 18, 1997.
5.2.3. Between the date of this Agreement and the
date of Closing, except for periods not to exceed twenty-four (24) hours in any
one continuous period or forty-eight (48) hours in the aggregate, the Station
shall have broadcast continuously from its main antenna.
5.2.4. At or prior to Closing, Entercom shall not
have received any information that the Property and/or any real property used by
the Station in its operations and for which Entercom could be held responsible
under any Environmental Law may contain any asbestos, PCB's, PCB contaminated
oil, underground storage tanks, or any Contaminant, or that
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any of the property or any such real property are not or may not be in full
compliance with all Environmental Laws.
5.2.5. ARS' and ARS License's representations and
warranties contained in Section 4.1 hereof shall be true and correct in all
material respects at and as of the Closing Date as if made on and as of such
date except to the extent that they speak as of a particular time other then the
Closing Date.
5.2.6. All of the terms, covenants and conditions to
be complied with and performed by ARS on or prior to the Closing Date shall have
been complied with or performed in all material respects.
5.2.7. Closing shall have been consummated on or
before June_30, 1998 provided that the failure to consummate Closing shall not
be due to a default by Entercom in its obligations hereunder.
5.2.8. Closing under the Asset Exchange Agreement
between the parties dated as of July 18, 1997, shall have occurred.
5.3 ARS AND ARS LICENSE CONDITIONS. Performance of the
obligations of the ARS and ARS License under this Agreement and the Closing of
the transactions provided for herein are and shall be subject to the occurrence
of the express conditions precedent, each of which may be waived by the ARS and
ARS License that:
5.3.1. Entercom's representations and warranties
contained in Section 4.2 hereof shall be true and correct in all material
respects at and as of the Closing Date as if made on and as of such date except
to the extent they speak as of a particular time other than the
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Closing Date and only if the failure of any such representation or warranty to
be true and correct at Closing prevents Entercom from consummating the Closing
hereunder.
5.3.2. All of the terms, covenants and conditions to
be complied with and performed by Entercom on or prior to the Closing Date shall
have been complied with or performed in all material respects.
5.4. NONOCCURRENCE OF CONDITIONS. This Agreement may be
terminated in accordance with Article IX hereof as follows:
5.4.1. By either party if consent to the assignment
of the Authorizations issued by the Commission for said Station is denied by
Final Order;
5.4.2. By Entercom if Entercom is not then in default
hereunder and the conditions set forth in Section_5.2 of this Agreement shall
not either have been met or waived by Entercom; and
5.4.3. By ARS or ARS License if ARS or ARS License is
not then in default hereunder and the conditions set forth in Section 5.3 of
this Agreement shall not either have been met or waived by ARS or ARS License.
ARTICLE VI
OPERATIONS PENDING CLOSING.
6.1. AFFIRMATIVE COVENANTS OF ARS AND ARS LICENSE. During the
period from the date of this Agreement to the Closing Date, ARS and ARS License
shall:
6.1.1. Conduct the business and operations of the Station in
accordance with sound and prudent operating practices and all requirements of
law and regulation and, to
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the extent consistent with the foregoing, in the same manner in which the same
have heretofore been conducted with the intent of preserving the ongoing
operations and business of the Station. In connection therewith ARS and ARS
License shall use their reasonable efforts to preserve the operations,
organization and reputation of the Station consistent with past practice, to
preserve the good will and business of the Station's advertisers, suppliers and
others having business relations with the Station with no less effort than as in
the prior conduct of the business of the Station.
6.1.2. Cooperate with Entercom in connection with Entercom's
review, analysis and monitoring of the Assets and the operations of the Station
to the end that an efficient transfer of the Assets may be made at Closing and
the business of Station may continue on an uninterrupted basis. In addition to
providing information required hereunder or reasonably requested by Entercom,
ARS and ARS License agree to promptly notify Entercom of any unusual problems or
developments of which ARS or ARS License becomes aware with respect to the
Assets, or the business of the Station and of any change in any of the
information contained in the representation and warranties made in Article 4
including without limitation, immediate notification to Entercom of any
information ARS or ARS License receives concerning offers of employment by third
parties to any of the Station's employees and of any litigation, arbitration or
administrative proceeding pending, or to the knowledge of ARS or ARS License,
threatened which challenges the transactions contemplated hereby.
6.1.3. Consult with Entercom regarding any proposed material
changes to the operation of the Station to insure the continued operation of the
Station as it is now operated and cooperate with Entercom to insure a smooth
transfer of ownership and continuity
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of operations at Closing. The foregoing shall not be construed to require
Entercom to consult with ARS or ARS License or to render any advice to ARS or
ARS License.
6.1.4. Entercom may obtain a Phase I Environmental Assessment
of all of the property and any real property used by the Station in their
operations and for which Entercom could be held responsible under any
Environmental Laws. In the event such Assessment discloses any potential for
conditions contrary to the representations and warranties contained in Section
4.1.23, ARS and/or ARS License will take whatever additional measures
recommended in such Assessment and will take whatever steps are necessary to
insure that such representations and warranties are true and correct as of the
date of Closing.
6.1.5. Cooperate with Entercom in Entercom's efforts to employ
at Closing any of the current employees relating to the Station listed on
Schedule 4.1.19 that Entercom chooses, including without limitation: (i)
allowing Entercom to meet privately with any such current employees of the
Station; (ii) not interfering with or attempting to undermine in any way,
Entercom's efforts to employ such employees at the Closing; and (iii) not
discussing or offering continued employment with any such employees until
Entercom has affirmatively notified ARS that Entercom will not offer employment
to that employee at Closing.
6.1.6. ARS and/or ARS License shall make capital expenditures
reasonably required to maintain and repair the Station equipment and to continue
the operations of the Station consistent with past practice.
6.1.7. ARS shall, within thirty (30) days after the execution
of this Agreement at its expense, (i) commission a qualified title company to
prepare and provide to Entercom a preliminary title report with respect to the
real property within the Station Property
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other than the real property subject to the Communications Site License
Agreement (the "KCTC Preliminary Title Report"), and ARS shall promptly provide
a copy of the KCTC Title Report to Entercom, together with complete copies of
all documents relating to the title exceptions referred to in the KCTC
Preliminary Title Report, (ii) commission a qualified surveyor to prepare and
provide to Entercom a Category 1-A Condition IV Survey of the real property
within the Station Property other than the real property subject to the
Communications Site License Agreement (the "KCTC Survey") depicting the location
of all title exceptions. Entercom shall have the right to disapprove of any
title exceptions other than Permitted Encumbrances (whether or not disclosed in
the KCTC Preliminary Title Report) which in Entercom's reasonable discretion,
have an adverse impact on the Property or Entercom's use thereof, and Entercom
shall notify ARS of any such disapproval within thirty (30) days after receipt
of the KCTC Preliminary Title Report and KCTC Survey by Entercom. All title
exceptions set forth in the KCTC Preliminary Title Report and any supplemental
reports or updates to the KCTC Preliminary Title Report and not disapproved by
Entercom within the time periods provided herein shall constitute Permitted
Encumbrances. Prior to the Closing, ARS shall, at its expense, remove or cause
to be removed, all disapproved exceptions (the "Disapproved Matters") or, in the
alternative, obtain title insurance in a form satisfactory to Entercom, insuring
against the effect of such Disapproved Matters.
6.1.8. ARS and ARS License shall use their best efforts to
prosecute with the Commission the application for renewal of the Authorizations,
such that the application is granted without any material adverse condition and,
to the extent reasonably possible, on or prior to the date for expiration of
such Authorizations.
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6.1.9. Within a period of ten (10) days following the
execution of this Agreement, ARS and ARS License shall use their best efforts to
finalize all schedules referred to in Section_4.1 and shall use their best
efforts thereafter to promptly supplement or amend the final schedules referred
to herein with respect to any matter arising after the date of this Agreement
that would have been required to make such schedules complete and accurate.
Prior to the acceptance of final schedules or any modification of any schedule
referred to in Section_4.1 by ARS or ARS License pursuant to this Section_6.1.9,
Entercom and ECI shall have the right to approve such schedule or modification,
such approval not to be unreasonably withheld, conditioned or delayed. If
Entercom disapproves of any final schedule or modification thereafter pursuant
to this Section_6.1.9, any such schedule or proposed modification will not be
accepted or permitted, as the case may be, except as thereafter agreed to by the
parties. If the parties fail to agree in the exercise of reasonable good faith
judgment on any such final schedule or proposed modification thereto, this
Agreement shall terminate and no party shall have any further liability to any
other party hereunder in the case of disagreement over final schedule or, in the
case of a schedule modification, Entercom may proceed to Closing and seek
indemnification pursuant to Section_9.7 hereof.
6.1.10. ARS shall consult with Entercom concerning any
impending expiration of any Lease or Contract and renew such Leases or Contracts
to the extent requested by Entercom, with such modified terms (if any) as shall
be approved by Entercom.
6.2. NEGATIVE COVENANTS OF ARS AND ARS LICENSE. Unless
Entercom has given its consent in writing, which consent shall not be
unreasonably withheld or delayed, ARS and ARS License shall not, directly or
indirectly, during the period from the date hereof to the Closing Date:
6.2.1. Cancel, amend, modify adversely, assign,
encumber or in any way discharge or terminate the Leases.
6.2.2. By any act or omission surrender, modify
adversely, forfeit or fail to renew on regular terms any Authorizations for the
Station or take or omit any action which might result in the Commission
instituting any proceedings for the revocation, suspension or modification of
any of the Authorizations.
6.2.3. Except in the usual and ordinary course of
business, sell or dispose of any of the Assets; provided that any Assets so
disposed of in the ordinary course of business are replaced with Assets of like
kind, quality and quantity;
6.2.4. Suffer or permit the creation of any mortgage,
conditional sale agreement, security interest, lease, lien, hypothecation,
pledge, encumbrance, restriction, liability, charge, claim or imperfection of
title on or with respect to any of the Assets other than Permitted Encumbrances.
6.2.5. Fail to repair, replace or maintain the
Station's transmitting equipment, studio and other technical equipment and
furniture, fixtures and office equipment in good order and condition reasonable
wear and tear excepted and in accordance with the generally accepted standards
of maintenance applicable to the broadcasting industry or fail to maintain at
levels consistent with past practice its equipment, supplies and other tangible
property used or usable in the operation of the Station;
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6.2.6. Enter into any agreement for the sale of
broadcast time on the Station which cannot be terminated upon not more than
thirty (30) days' written notice.
6.2.7. Enter into or extend or renew any agreement
for the sale of broadcast time on the Station on a trade or barter basis which
would cause the total obligation for trade broadcast time or the differential
between trade broadcast time due and trade receivables to exceed the limits in
Section 4.1.21.
6.2.8. Increase or decrease the number of full time
employees currently employed solely by the Station or increase or decrease the
total current weekly employee payroll expense from that existing in the last
payroll period in June, 1997 for the Station by more than ten percent (10%) or
materially change any sales commission formula.
6.2.9. Hire any new or replacement management or
supervisory employees, or talent for major dayparts, including without
limitation general manager, sales manager, program director, announcer for any
period 6 a.m. to midnight Monday through Friday, business manager, or promotion
director.
6.2.10. Modify the current forma and/or the program
selection practices of the Station or materially modify the music/program
rotation policy of the Station.
6.2.11. Reduce by more than ten percent (10%) the
amount or modify the type of research and external promotion advertising for the
Station from that which has been budgeted by ARS as reflected in the documents
listed on Schedule 4.1.24 hereto.
6.2.12. Reduce or increase by more than ten percent
(10%) the amount of on-air promotion, contests or the dollar value of prizes on
the Station from that which has been budgeted by ARS as reflected in the
documents listed on Schedule 4.1.24 hereto.
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6.2.13. Allow or cause to exist any event of default
material to this transaction under any agreement to which ARS or ARS License is
a party.
6.2.14. Fail to take any reasonable actions necessary
to maintain the Station's continuous broadcast operations from its main antenna.
6.2.15. Fail to take any reasonable actions necessary
to avoid the happening of or to cure the existence of any damage to or
impairment of any of the Assets.
6.2.16. Enter into any new material contracts, other
than Contract for the sale of broadcast time, that will not be fully performed
prior to the date of Closing.
6.2.17. Renew, extend, modify or cancel, or allow or
suffer the automatic renewal, extension or cancellation of any of the Contracts
or Leases, except for renewal of such Contracts or Leases as is otherwise
provided herein.
6.2.18. Fail to operate the Station in conformity
with all of the applicable requirements of law and regulation.
6.2.19. Deviate from the Station's current broadcast
scheduling practices of broadcasting not more than twelve (12) commercial
announcements nor more than ten (10) minutes of commercial announcements in any
one hour period.
6.2.20. Deviate in any material way with respect to
the methodology ARS, ARS License and its predecessors have utilized during the
one year period prior to the date of this Agreement for selling commercial air
time on the Station and for setting rates with respect to such commercial air
time.
6.3. NO CONTROL BY ENTERCOM. Nothing contained in this
Agreement shall give to Entercom any right to control the operations of the
Station prior to the
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Closing Date. Any advice, counsel or consent given to ARS or ARS License by
Entercom under this Article VI will not mitigate, detract from or otherwise
affect ARS' or ARS License's representations, warranties or obligations under
this Agreement and the consequences of ARS and/or ARS License acting on any such
advice, counsel or consent will be solely ARS' and ARS License's responsibility.
Any advice, counsel or consent given to Entercom by ARS and/or ARS License under
this Article VI will not mitigate, detract from or otherwise affect Entercom's
representations, warranties or obligations under this Agreement.
ARTICLE VII
PREPARATION FOR CLOSING
7.1. APPLICATION TO COMMISSION. The parties hereby bind
themselves to use all reasonable efforts, and to cooperate with each other, in
seeking the consent and approval of the Commission to the assignment of all
Authorizations heretofore granted and issued in connection with the Station, as
herein provided; diligently and promptly to prepare, sign and file with the
Commission within ten (10) days from the date of this Agreement any and all
applications requisite or desirable to procure such consent and approval (the
"Applications"); and diligently and promptly to prepare and submit to the
Commission all information, data, exhibits, amendments, resolutions, statements
and other material necessary or proper in connection with the Applications; and
diligently to pursue the grant of a Final Order approving such Applications by
the Commission. With respect to the foregoing, ARS and ARS License hereby agree,
commit and bind themselves to prepare and deliver to Entercom on or before five
(5) days from the date of this Agreement ARS' and ARS License's portions of all
applications and documents necessary for filing with the Commission to obtain
the consent and approval of
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the Commission as required to permit the consummation of the transactions
contemplated by this Agreement.
7.2. INSPECTION BY ENTERCOM. During the period from the date
of this Agreement to the Closing Date, ARS and ARS License shall afford
engineers, attorneys, accountants and other consultants and/or representatives
of Entercom free access during normal business hours to the employees, offices,
studios, transmitter site, equipment, records and other documents pertaining to
the Station and furnish Entercom with all information concerning said Station as
Entercom may reasonably request, including but not limited to applications,
responses to the Commission inquiries, and other documents filed by ARS or ARS
License with the Commission. For purposes of the foregoing records shall
include, without limitation, any sales, research, consulting and ratings reports
relating to the Station.
7.3. CONFIDENTIALITY. Entercom hereby covenants and agrees
that in the event the transactions contemplated by this Agreement are not
consummated for any reason whatsoever, Entercom will upon request return to ARS
within ten (10) days from the date of such request, all copies of all
information designated at the time of delivery as confidential by ARS or ARS
License regarding ARS or ARS License, the Assets, the Station and the business
and operation of the Station; and Entercom hereby covenants and agrees to hold
all such information (the "Confidential Information") in confidence and not to
disclose, or cause any representative, agent or employee of Entercom to disclose
to any third parry any portion of the Confidential Information and not to use
any portion of the Confidential Information for Entercom's own benefit.
7.4. HART-SCOTT-RODINO NOTIFICATION. As promptly as
practicable and no later than twenty (20) days after the date hereof, the
parties hereto shall take all steps reasonably necessary to file and shall
participate in the filing of all requisite documents and notifications required
to be filed pursuant to the HSR Act. All filing fees in connection with such
notifications shall be divided equally between ARS and Entercom. The parties
agree diligently to take and fully cooperate in the taking of, all necessary and
proper steps, and provide any additional information reasonably requested in
order to obtain promptly the expiration of the waiting period under the HSR Act.
ARTICLE VIII
CLOSING
8.1. CLOSING. Closing shall take place at the time and place
agreed to by the parties hereto. In the absence of agreement thereon and except
as modified elsewhere herein, the Closing shall take place by mail at 10:00
a.m., Eastern Time on a date selected by Entercom on at least five (5) days
prior written notice but not later than, except as set forth below, five (5)
business days after the later of: (a) the satisfaction or waiver of each
condition to closing contained herein (other than such conditions as can only be
satisfied at the Closing); and (b) the expiration of any period of extension for
Closing provided elsewhere in this Agreement. If such date falls on a Saturday,
Sunday or legal holiday in the State of California, then such Closing shall take
place as provided herein on the next business day.
8.2. ADJUSTMENTS. Operation of the Assets and the income and
expense attributable thereto up to the Adjustment Time shall be for the account
of ARS and thereafter for the account of Entercom. Proration between ARS, ARS
License and Entercom of the items
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mentioned in this section shall be effected as of the Adjustment Time in
accordance with the provisions of this section. If the amount of any such items
cannot readily be ascertained on the Closing Date, an estimate of the proper
proration of such items shall be agreed upon by the parties and the actual
proration of such item shall be computed and paid not later than ninety (90)
days from the Closing Date. Such proration shall include, without limitation,
the following:
8.2.1. ARS shall be entitled to all income or other
consideration to be paid on account of all Contracts or Leases, to the extent
that such income or other considerations accrue before the Adjustment Time and
thereafter Entercom shall be entitled to same.
8.2.2. All accounts receivable for broadcasts on the
Station which occur prior to the Adjustment Time (the "Accounts Receivable")
shall belong to ARS and for broadcasts which occur thereafter shall belong to
Entercom. Within five (5) days following the Closing, ARS shall deliver to
Entercom a Schedule of Accounts Receivable of the Station as of the Adjustment
Time (the "Schedule of Accounts Receivable"). Entercom agrees to collect for ARS
its Accounts Receivable as shown on the Schedule of Accounts Receivable for a
period of one hundred twenty (120) days following the Closing. ARS will at the
Closing provide Entercom a power of attorney or other required authorization for
the limited purpose of allowing Entercom to endorse and deposit checks and other
instruments received in payment of such Accounts Receivable. All payments
received by Entercom from any customer whose name appears in the Schedule of
Accounts Receivable and who is also a customer of Entercom shall be credited as
payment of the account or invoice designated by such customer. In the absence of
any such designation by the customer, payments shall be first credited to the
oldest invoice which is not disputed by said customer. Entercom shall keep
accurate records of the payment
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received by it on such Accounts Receivable and ARS shall have access at
reasonable times to Entercom's records to verify such status of the Accounts
Receivable. Within thirty (30) days from the end of each standard broadcast
month, Entercom shall remit to ARS amounts previously collected by Entercom on
such Accounts Receivable, along with a written accounting of same. Any Accounts
Receivable that have not been collected within such one hundred twenty (120) day
period shall be returned to ARS, together with all records in connection
therewith, whereupon ARS may pursue collection thereof in such manner as ARS, in
its sole discretion, may determine. Entercom shall not have the right to
compromise, settle or adjust the amounts of any such Accounts Receivable without
ARS' prior written consent. Except to remit collected Accounts Receivable in
accordance herewith, Entercom shall have no liability or obligation to ARS with
respect to the collection of ARS' accounts and shall not be obligated to take
any action to collect such accounts.
8.2.3. Rental and other obligations under the Leases
and Contracts to be assigned and assumed hereunder including utilities and other
cost or expenses payable thereunder.
8.2.4. General and special state, county, school and
municipal taxes and assessments (exclusive of rebates, penalties or interest) on
the Property to be conveyed hereunder payable during the fiscal year of the
taxing authority in which the Adjustment Time falls and if the amount of any
such items may not then be ascertained, an interim adjustment shall be effected
on the basis of the corresponding items for the preceding year subject to final
adjustment at such time as the relevant information becomes available. The
foregoing notwithstanding, ARS and/or ARS License shall be responsible for and
shall pay any penalties or
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interest which are assessed and be entitled to recover any rebate or refund on
account of any such taxes or amounts which accrue at or before the Adjustment
Time, provided that any such penalty or interest or portion thereof which
results from any failure by Entercom to perform any of Entercom's obligation
under this Agreement after the Closing shall be Entercom's responsibility.
8.3. CLOSING DELIVERIES TO ENTERCOM. At or before the Closing,
ARS and/or ARS License shall deliver to Entercom the following items and
documents in form satisfactory to counsel for Entercom and properly executed,
unless Entercom shall waive in whole or in part in writing such delivery and
then only to the extent of such waiver:
8.3.1. Bills of Sale and assignments and other
instruments of transfer and conveyance, transferring to Entercom the Property to
be sold, transferred or assigned hereunder and the rights and interests under
the Leases and Contracts being assigned to Entercom hereunder and estoppel
certifications by the other parties to such Leases and those Contracts
designated as material contracts on Schedule 4.1.7 that ARS and/or ARS License
are not then in default under the terms of the Lease or Contract to which such
other party is a party.
8.3.2. An assignment of all right title and interest
of ARS License in and to the Authorizations and all pending applications
relating to the Station before the Commission.
8.3.3. All keys to and actual possession of all of
the Property, in the same condition as the same now is, except for ordinary wear
and tear thereof.
8.3.4. A certified copy of resolutions of the Board
of Directors of ARS and ARS License duly authorizing the execution, delivery and
performance of this Agreement
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and all documents to be executed and delivered by ARS and ARS License at the
Closing and thereafter.
8.3.5. A certificate signed by an authorized officer
of ARS and ARS License, to the effect that no act or omission of ARS or state of
facts contrary to the agreements, representations and warranties contained
herein has been taken or has occurred and that said representations and
warranties are true and correct in all material respects as of the Closing Date
with the same effect as if made as of the time of Closing.
8.3.6. The consents of any public authorities or
third persons that may be required in connection with the performance of this
Agreement.
8.3.7. Opinions of Michael B. Milsom, General Counsel
for ARS, with respect to matters other than Commission related matters and of
Dow, Lohnes & Albertson, with respect to Commission related matters, dated as of
the date of Closing and in form and substance satisfactory to Entercom to the
effect that:
8.3.7.1. ARS and ARS License are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and are duly qualified to do business in the State of
California and any other jurisdiction where such qualification is required;
8.3.7.2. ARS and ARS License have the
corporate power and authority to execute, deliver and perform this Agreement and
to convey, assign, transfer and deliver the Assets pursuant to the terms of this
Agreement;
8.3.7.3. All corporate proceedings required
to be taken by ARS and ARS License to authorize ARS and ARS License to execute,
deliver and perform this
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Agreement and to convey, assign, transfer and deliver to Entercom the Assets
hereunder have been duly and properly taken;
8.3.7.4. This Agreement and all documents
and instruments executed and delivered hereunder by ARS and ARS License are the
legal, valid and binding obligations of ARS and ARS License and have been
validly executed on behalf of ARS and ARS License and are valid and enforceable
in accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally and by application of
general equitable principles affecting the enforcement of equitable remedies
(including within said equitable remedies, without limitation, the remedy of
specific performance).
8.3.7.5. The execution and delivery by ARS
and ARS License of this Agreement and all the documents delivered by ARS and ARS
License pursuant to this Agreement and the sale of the Assets to Entercom will
not: (i) constitute a violation of the Certificate of Incorporation, as amended,
or the Bylaws, as amended, of ARS or ARS License; (ii) constitute a violation of
any statute, judgment, order, decree or regulation of any court, governmental
authority or arbitrator applicable or relating to ARS, ARS License or the
Assets; (iii) 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 known to such
counsel to which ARS or ARS License is a party or by which ARS or ARS License
may be bound; or (iv) create any claim, lien, charge or encumbrance on the
Station or the Assets pursuant to or as a consequence of any of the foregoing.
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8.3.7.6. All other actions and proceedings
required by federal, state and local laws or this Agreement to be taken by ARS
or ARS License at or prior to the Closing in connection with this Agreement and
the transactions provided for therein have been duly and validly taken.
8.3.7.7. Such counsel knows of no claim,
legal action, court action, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding pending or threatened against ARS
or ARS License or to which ARS or ARS License is or would be a party or relating
to the Assets or the transactions contemplated by this Agreement which would
have an adverse effect on the Station business or on the Assets or on the
transfer of the Assets to Entercom, other than those set forth in Schedule
4.1.14.
8.3.7.8. ARS License is the authorized legal
holder of the Authorizations. The Authorizations are in full force and effect.
To such counsel's knowledge after reasonable investigation: (i) there is not now
pending or threatened any action by or before the Commission to revoke, cancel,
rescind, modify or refuse to renew any of the Authorizations and (ii) there is
not then pending or threatened, issued or outstanding by or before the
Commission, any investigation, Order to Show Cause, Notice of Violation, Notice
of Apparent Liability or Notice of Forfeiture or complaint concerning the
Station or concerning ARS or ARS License if such matter could have an adverse
effect on the Station or the consummation of the transactions contemplated by
this Agreement.
8.3.7.9. The Commission has granted approval
to the assignment of the Authorizations and the application for renewal of the
Authorizations such grants have become a Final Order (unless waived by Entercom)
in accordance with the rules and
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regulations of the Commission, subject to timely notice of consummation of the
sale of the Assets and assignment of the Authorizations.
8.3.8. All books, records, public files, contracts,
leases, Commission filings, correspondence, files and other documents relating
to and necessary or appropriate to the operation of the Station, excluding
however, accounting records relating to ARS' and ARS License's period of
ownership (provided Entercom is given copies thereof), minute books and other
corporate records of ARS or ARS License.
8.3.9. The Communications Site License Agreement
executed by American Tower Systems Corporation, in the same form attached as
Exhibit A hereto.
8.3.10. ARS shall deliver to Entercom a General
Warranty Deed in recordable form transferring a fee simple interest in any fee
estate included within the Property other than the real property subject to the
Communications Site License Agreement and a fully paid policy of title insurance
(ATLA owners policy-Form 1970, if available or Form 1984 or 1990 with 1970
endorsements), for the benefit of insuring good and marketable title to such
real property free and clear of all liens and encumbrances issued by a title
insurance company reasonably acceptable to Entercom and in the amount allocated
to such real property hereunder, subject to standard title exceptions and survey
exceptions, none of which will impair or interfere with the continued use of
such real property as such is currently used.
8.4. CLOSING DELIVERIES TO ARS. At the Closing, Entercom shall
deliver to ARS or a qualified intermediary designated by ARS the Purchase Price
as set forth in Section 2.3 and deliver to ARS or a "qualified intermediary"
designated by ARS the following
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items and documents in form satisfactory to counsel for ARS and properly
executed unless ARS shall waive in whole or part in writing such delivery and
then only to the extent of such waiver:
8.4.1. An opinion of John C. Donlevie, Esq.,
Entercom's General Counsel, in form and substance satisfactory to ARS to the
effect that Entercom is a corporation duly organized, validly existing and in
good standing in the Commonwealth of Pennsylvania, is duly authorized and
empowered to enter into all of its undertakings herein provided and is duly
qualified to do business in the State of California; that this Agreement and all
documents to be executed or delivered hereunder by Entercom at Closing are valid
and binding upon Entercom in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by application of general equitable principles
affecting the enforcement of equitable remedies (including within said equitable
remedies without limitation the remedy of specific performance); all corporate
proceedings required to be taken by Entercom to authorize Entercom to execute,
deliver and perform this Agreement have been duly and properly taken; and
Entercom's counsel does not know or have any reasonable grounds to know of any
violation by Entercom of any of its agreements, representations, warranties,
certificates or affidavits contained herein or delivered pursuant hereto which
would prevent Entercom from consummating the Closing hereunder. With respect to
matters of California law such opinion of Entercom's counsel may be based solely
on or may be given by Entercom's California counsel.
8.4.2. One or more Agreements whereby Entercom
assumes and agrees to pay when due any liabilities of ARS or ARS License
specifically assumed by Entercom
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hereunder, including without limitation, those liabilities accruing after the
Adjustment Time with respect to those Leases and Contracts being assumed by
Entercom hereunder.
8.4.3. Certified copies of the resolutions of the
Board of Directors of Entercom approving and ratifying this Agreement and all
transactions contemplated by this Agreement.
8.4.4. A certificate signed by the President or any
Vice President of Entercom to the effect that with respect to any matter which
would prevent Entercom from consummating the Closing, no act or omission of
Entercom or state of facts contrary to the agreements, representations and
warranties contained herein has been taken or has occurred and that said
representations are true and correct as of the Closing Date with the same force
and effect as if made as of the time of Closing.
8.5. COVENANTS OF FURTHER ASSURANCE. At and after the time of
Closing, upon request of Entercom, ARS and/or ARS License shall take such action
and deliver to Entercom such further instruments of assignment, conveyance or
transfer or other documents of further assurance as in the opinion of counsel
for Entercom may be reasonably necessary to evidence the full and effective
transfer, conveyance and assignment of the Assets and possession thereof to
Entercom, its successors and assigns, and to assure complete performance of this
Agreement by ARS and ARS License in all respects.
8.6. DAMAGE TO PROPERTY. If, at the time of Closing, the
tangible personal property to be sold hereunder shall have suffered loss or
damage to an extent that affects the value thereof and ARS or ARS License shall
not have repaired, replaced or restored the same with property of like kind,
quality and value, Entercom shall have the right at its
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election to (i) complete the purchase and Closing, in which event it shall be
entitled to a reduction in the Purchase Price equal to the greater of the amount
necessary to repair, replace or restore such damaged property with property of
like kind, quality and value or the amount of any and all insurance proceeds
available to ARS, if any, collectible by reason of such loss or damage,
(ii) postpone closing until such time as ARS or ARS License shall have so
repaired, replaced or restored such property, provided that if such postponement
exceeds ninety (90) days then Entercom shall have the right to terminate this
Agreement in accordance with Article IX hereof.
8.7. TAXES ON TRANSACTION. All sales, purchase, transfer, use
or documentary taxes, if any, payable by reason of this Agreement or any of the
transactions contemplated hereby or the sale, transfer or delivery of any of the
Assets to Entercom whether or not imposed on ARS or ARS License, shall be paid
and borne by ARS or ARS License, either directly or by reimbursement to Entercom
and ARS or ARS License shall indemnify and hold Entercom harmless with respect
to the above taxes and any expenses incurred by Entercom relating to same.
ARTICLE IX
TERMINATION, DEFAULT AND INDEMNIFICATION
9.1. TERMINATION BY REASON OTHER THAN DEFAULT. This Agreement
may be terminated by a party hereto not then in default hereunder upon written
notice to the other party if:
9.1.1. Events occur which give rise to a specific
right hereunder to terminate this Agreement by the party seeking to terminate;
or
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9.1.2. Any material condition set forth herein to the
obligation of the party seeking to terminate this Agreement to complete the
transaction has not been satisfied or complied with by the Closing Date and has
not been waived by the party seeking to terminate.
9.2. EFFECT OF TERMINATION BY REASON OTHER THAN DEFAULT. If
this Agreement is duly terminated by either party as provided in Section 9.1,
then all obligations of either party to the other shall cease and both parties
shall be fully and finally released herefrom.
9.3. DEFAULT. The following shall constitute a default
hereunder:
9.3.1. If any of the representations or warranties of
a party contained herein is inaccurate or breached in any material respect; or
9.3.2. If any of the obligations to be performed her
under by a party hereto is not performed during the period or at or before the
time specified herein for such performance.
9.4. ARS' REMEDY. In the event Entercom is obligated to
complete Closing hereunder and defaults in such obligation which default is not
waived by ARS, ARS' sole remedy shall be to receive Two Hundred Thousand Dollars
($200,000) as liquidated damages in full and final settlement of all claims
under this Agreement and there shall be no other or further obligations,
liabilities or remedies of the parties hereunder. In the event Closing occurs
hereunder, ARS' or ARS License's remedy for any default by Entercom shall be
indemnification pursuant to Section 9.7 hereof.
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9.5. ENTERCOM'S REMEDIES. In the event of a default by ARS
and/or ARS License hereunder, which is not waived by Entercom, Entercom shall
have the following remedies:
9.5.1. Entercom may by written notice to ARS and ARS
License terminate this Agreement in which event Entercom shall be entitled to
recover from ARS or ARS License any damages Entercom sustained as a result of
the default by ARS and/or ARS License hereunder.
9.5.2.Entercom may seek specific performance by ARS
or ARS License of ARS' or ARS License's obligations hereunder and shall also be
entitled to any other remedy available at law or in equity, including without
limitation the recovery of any damages incurred by Entercom as a result of the
default by ARS or ARS License hereunder. ARS and ARS License covenant that under
such circumstances they shall not assert in defense of an action seeking
specific performance of this Agreement in favor of Entercom that Entercom has
available adequate remedies at Law.
9.5.3.In the event Closing occurs hereunder,
Entercom's remedy for any default by ARS or ARS License shall b indemnified
pursuant to Section 9.7 hereof.
9.6. LIQUIDATED DAMAGES NOT A PENALTY. With respect to the
liquidated damages provided for in Section 9.4 her of, ARS and Entercom hereby
acknowledge and agree that the damage that may be suffered by either party in
the event of a default by the other party hereunder is not readily ascertainable
and that such liquidated damages as of the date hereof are a reasonable estimate
of such damages and are intended to compensate ARS for any such damage and are
not to be construed as a penalty.
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9.7. INDEMNIFICATION.
9.7.1. By ARS and ARS License. ARS and ARS License
shall indemnify, defend and hold Entercom and its officers, directors, employees
and affiliates harmless from, against and with respect to any and all loss,
damage, claim, obligation, assessment, cost, liability, and expense (including,
without limitation, reasonable attorney's fees and costs and expenses incurred
in investigating, preparing, defending against or prosecuting any litigation or
claim, action, suit, proceeding or demand) of any kind or character (a "Loss")
incurred, suffered, sustained or required to be paid by any of them and
resulting from, related to or arising out of:
(a) any breach of any of the representations
or warranties made by ARS or ARS License in or pursuant to this Agreement, or in
any agreement, document or instrument executed and delivered pursuant hereto or
in connection with the Closing hereunder;
(b) any failure by ARS or ARS License to
perform or observe, or to have performed or observed, in full, any covenant or
agreement to be performed or observed by it pursuant to this Agreement or in any
agreement, document or instrument executed and delivered by or on behalf of it
in connection with the Closing hereunder;
(c) any and all obligations of ARS or ARS
License, except for obligations to be assumed or retained by Entercom under the
terms of this Agreement; or
(d) ARS' or ARS License's operation or
ownership of the Assets prior to the Adjustment Time, including any and all
obligations and liabilities
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arising under the Authorizations or the Contracts and Leases which accrue or
relate to a period of time prior to the Adjustment Time; or
9.7.2. By Entercom. If Closing does not occur due to
a default by Entercom in its obligation to complete such Closing hereunder, ARS'
and ARS License's remedy shall be liquidated damages pursuant to Section 9.4
hereof. Provided Closing occurs hereunder, Entercom shall indemnify, defend and
hold ARS and ARS License and their officers, directors, employees and affiliates
harmless from, against and with respect to any Loss (as defined in Section
9.7.1) incurred, suffered, sustained or required to be paid by any of them and
resulting from, related to or arising out of:
(a) any breach of any of the representations
or warranties made by Entercom in or pursuant to this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto or in
connection with the Closing hereunder;
(b) any failure by Entercom to perform or
observe, or to have performed or observed, in full, any covenant or agreement to
be performed or observed by it pursuant to this Agreement or in any agreement,
document or instrument executed and delivered by or on behalf of it in
connection with the Closing hereunder; or
(c) any and all obligations of Entercom
except for obligations to be assumed or retained by ARS and ARS License under
the terms of this Agreement; or
(d) Entercom's operation or ownership of the
Assets after the Adjustment Time, including any and all liabilities arising
under the Authorizations or the
48
<PAGE>
Contracts assumed by Entercom and Leases assumed by Entercom which accrue after
the Adjustment Time or which relate to or arise out of events occurring after
the Adjustment Time.
9.7.3. Procedures. Any party seeking indemnification
under this Agreement (the "Indemnified Party") shall give the party from who
indemnification is sought (the "Indemnifying Party") written notice of any claim
or the commencement of any action or proceeding for which the Indemnified Party
seek indemnification, and the Indemnified Party shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
such claim, unless injunctive relief is sought against the Indemnified Party in
which case the Indemnified Party shall have the right to join in any defense.
The Indemnified Party's failure to give the Indemnifying Party notice under this
clause shall not preclude the Indemnified Party from seeking indemnification
from the Indemnifying Party except to the extent that the Indemnified Party's
failure has materially prejudiced the Indemnifying Party's ability to defend the
claim or litigation. The Indemnifying Party shall not settle any claim for which
the Indemnified Party seeks indemnification or consent to entry of any judgment
in litigation arising from such a claim without obtaining a release of the
Indemnified Party from all liability in respect of such claim or litigation. If
the Indemnifying Party shall not assume the defense of any such claim or
litigation resulting therefrom, or if injunctive relief is sought against the
Indemnified Party, the Indemnified Party may defend against or settle such claim
or litigation in such manner as it may deem appropriate. The Indemnifying Party
shall promptly reimburse the Indemnified Part for the amount of all expenses,
legal or otherwise, incurred by the Indemnified Party in connection with the
defense against or settlement of such claim or
49
<PAGE>
litigation. If no settlement of the claim or litigation is made, the
Indemnifying Party shall promptly reimburse the Indemnified Party for the amount
of any judgment rendered with respect to such claim or in such litigation and
for all expenses, legal or otherwise, incurred by the Indemnified Party in the
defense against such claim or litigation.
ARTICLE X
GENERAL PROVISIONS
10.1. EXPENSES OF THE PARTIES. Except as otherwise provided
herein, all expenses involved in the preparation, authorization and consummation
of this Agreement, including, without limitation, all fees and expenses of
agents, representatives, counsel and accountants in connection therewith and in
connection with applications to the Commission hereunder, shall be borne solely
by the party who shall have incurred the same, and the other party shall have no
liability in respect thereof. The foregoing notwithstanding, the parties agree
to pay in equal shares any filing fees of the Commission relating to the filing
of the Applications.
10.2. BROKERS. Each party hereto represents and warrants to
the other party hereto that it has not incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents commissions or
other like payment in connection with this Agreement or the transactions
contemplated hereby for which the other party will have any liability, and each
party hereto agrees to indemnify and hold the other party hereto harmless
against and in respect to any such obligation or liability based in any way on
any agreement, arrangement or understanding claimed to have been made by such
party with any third party.
10.3. SURVIVAL OF ARS' AND ARS LICENSE'S COVENANTS,
REPRESENTATIONS AND WARRANTIES. The provisions hereof which by their terms are
to be performed and observed after the Closing Date and the several
representations, warranties, indemnities and agreements of ARS and ARS License
herein contained shall survive the Closing Date hereunder and shall remain
effective and unaltered or unimpaired by any investigation that may have been or
may be made at any time prior to Closing by or on behalf of the Entercom.
10.4. AMENDMENT AND WAIVER. This Agreement cannot be changed
or terminated orally. Any amendment or modification hereof must be in writing
signed by the party against whom enforcement is sought. No waiver of compliance
with any provision or condition hereof, and no consent provided for herein,
shall be effective unless evidenced by an instrument in writing duly executed by
the party sought to be charged with such waiver or consent.
10.5. EFFECT OF THIS AGREEMENT. This Agreement sets forth the
entire understanding of the parties and supersedes any and all prior written or
oral agreements, arrangements or understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention has
been made by either party which is not embodied in this Agreement, and neither
party shall be bound by, or be liable for, any alleged representation, promise,
inducement or statement of intention not embodied herein unless same shall have
been made subsequent hereto, shall be in writing and shall be signed by the
party to be charged therewith. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.
51
<PAGE>
10.6. HEADINGS. The article or section headings of this
Agreement are for convenience of reference only and do not form a part of and do
not in any way modify, interpret or construe the intention of the parties.
10.7. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and all such counterparts shall be construed as one and the
same instrument.
10.8. GOVERNING LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of California.
10.9. NOTICES. Any notice, report, demand, waiver or consent
required or permitted hereunder shall be in writing and shall be given by hand
delivery, by prepaid registered or certified mail, with return receipt
requested, by an established national overnight courier providing proof of
delivery for next business day delivery or by telecopy addressed as follows:
If to ARS/ARS License: Steven B. Dodge, President & CEO
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116-5749
Telecopy Number: (617) 375-7575
with a copy to: Michael B. Milsom, Esq.
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116-5749
Telecopy Number: (617) 375-7575
John Pomeroy, Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
52
<PAGE>
If to Entercom: Joseph M. Field, President
Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Telecopy Number: (610) 660-5620
with a copy to: Joseph D. Sullivan, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W., Suite 1300
Washington, D.C. 20004
Telecopy Number: (202) 637-2201
The date of any such notice and service thereof shall be deemed to be: (i) the
day of delivery if hand delivered or delivered by overnight courier; (ii) the
day of delivery as indicated on the return receipt if dispatched by mail, or
(iii) the date of telecopy transmission as indicated on the telecopier
transmission report provided that any telecopy transmission shall not be
effective unless a paper copy is sent by overnight courier on the date of the
telecopy transmission. Either party may change its address for the purpose of
notice by giving notice of such change in accordance with the provisions of this
section.
10.10. STATION EMPLOYEES. ARS and ARS License agree that for a
period of one year after the Closing neither they nor any of their successors or
assignees will employ, offer employment to or counsel others to offer employment
to any current employee of the Station that Entercom employs after the Closing.
10.11. SECTION 1031 ASSET EXCHANGE.
10.11.1. Entercom may elect to effect the acquisition
of all or part of the Assets as part of a deferred like-kind exchange under
Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), in
lieu of buying such assets hereunder. If Entercom so elects, it shall provide
notice to ARS and ARS License of its election, and
53
<PAGE>
thereafter (i) may at any time at or prior to Closing assign its rights under
this Agreement to a "qualified intermediary" as defined in Treas. Reg.
ss._1.1031(k)-1(g)(4), subject to all of ARS' and ARS License's rights and
obligations hereunder and (ii) shall promptly provide written notice of such
assignment to all parties hereto. Notwithstanding the assignment of Entercom's
rights hereunder, the parties acknowledge and agree that the representations,
warranties and covenants of ARS and ARS License hereunder are for the benefit of
Entercom and shall remain enforceable by Entercom against ARS and ARS License in
accordance with the terms hereof. ARS and ARS License shall cooperate with all
reasonable requests of Entercom and the "qualified intermediary" in arranging
and effecting the exchange as one which qualifies under section 1031 of the
Code. Without limiting the generality of the foregoing, if Entercom has given
notice of its intention to effect the acquisition of all or part of the Assets
as part of a tax-deferred exchange, ARS and ARS License shall (i) promptly
provide Entercom with written acknowledgment of such notice and (ii) at Closing,
accept payment for all or that portion of the Assets for which like-kind
exchange treatment is sought by Entercom from the "qualified intermediary"
rather than from Entercom (which payment shall discharge the obligation of
Entercom hereunder to make payment for such assets) and transfer, assign and
convey such assets to Entercom.
10.11.2. ARS and ARS License may elect to effect the
transfer and conveyance of all or part of the Assets as part of a deferred
like-kind exchange under Section 1031 of the Code in lieu of selling such assets
hereunder. If ARS and ARS License so elect, they shall provide notice to
Entercom of their election, and thereafter (i) may at any time at or prior to
Closing assign their rights under this Agreement to a "qualified intermediary"
as defined
54
<PAGE>
in Treas. Reg. ss._1.1031(k)-1(g)(4), subject to all of Entercom's rights and
obligations hereunder and (ii) shall promptly provide written notice of such
assignment to all parties hereto. Entercom shall cooperate with all reasonable
requests of ARS and ARS License and the "qualified intermediary" in arranging
and effecting the exchange as one which qualifies under section 1031 of the
Code. Without limiting the generality of the foregoing, if ARS and ARS License
has given notice of their intention to effect the acquisition of all or part of
the Assets as part of a tax-deferred exchange, Entercom shall (i) promptly
provide ARS and ARS License with written acknowledgment of such notice and (ii)
at Closing, pay that portion of the Purchase Price allocable to that portion of
the Assets for which like-kind exchange treatment is sought by ARS and ARS
License to the "qualified intermediary" rather than to ARS and ARS License
(which payment shall discharge the obligation of Entercom to make payment for
such assets hereunder)
[THIS SPACE LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized corporate officers and their respective corporate seals
thereunto affixed on this the day and date first written above.
ARS:
AMERICAN RADIO SYSTEMS
CORPORATION
By:_______________________________
Title:____________________________
ARS LICENSE:
AMERICAN RADIO SYSTEMS LICENSE
CORPORATION
By:_______________________________
Title:____________________________
ENTERCOM
ENTERTAINMENT COMMUNICATIONS,
INC.
By:_______________________________
Title:____________________________
56
EXHIBIT 10.15
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
SUBURBAN CABLE TV CO. INC.
Dated as of
July 8, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS..........................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS............................................................................1
2.1 Agreement to Sell and Buy..............................................................1
2.2 Assumption of Liabilities and Obligations. ............................................2
2.3 Closing; Purchase Price................................................................4
2.4 Accounts Receivable....................................................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................6
3.1 Organization and Business; Power and Authority; Effect of Transaction..................6
3.2 Financial and Other Information.. ....................................................7
3.3 Changes in Condition...................................................................7
3.4 Materiality............................................................................7
3.5 Title to Properties; Leases............................................................7
3.6 Compliance with Private Authorizations.................................................8
3.7 Compliance with Governmental Authorizations and Applicable Law.........................9
3.8 Intangible Assets.....................................................................10
3.9 Related Transactions..................................................................10
3.10 Insurance.............................................................................10
3.11 Tax Matters. ........................................................................11
3.12 Broker or Finder......................................................................11
3.13 Employment Arrangements...............................................................11
3.14 Material Agreements...................................................................12
3.15 Ordinary Course of Business...........................................................12
3.16 Material and Adverse Restrictions.....................................................13
3.17 Solvency..............................................................................13
3.18 Environmental Matters.................................................................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS.................................................................14
4.1 Organization and Business; Power and Authority; Effect of Transaction.................14
4.2 Broker or Finder......................................................................14
4.3 No Legal Action.......................................................................14
ARTICLE 5 COVENANTS.............................................................................................15
5.1 Access to Information; Confidentiality................................................15
5.2 Agreement to Cooperate. .............................................................16
5.3 Public Announcements..................................................................16
5.4 Notification of Certain Matters.......................................................17
5.5 No Solicitation.......................................................................17
5.6 Conduct of Business by Seller Pending the Closing.....................................17
<PAGE>
5.7 Preliminary Title Reports.............................................................18
5.8 Environmental Site Assessments........................................................19
5.9 Resolution of Title and Environmental Disapproved Matters.............................20
5.10 Post-Closing Covenants and Agreements of the Parties..................................21
ARTICLE 6 CLOSING CONDITIONS....................................................................................21
6.1 Conditions to Obligations of Each Party...............................................21
6.2 Conditions to Obligations of ATS......................................................22
6.3 Conditions to Obligations of Seller...................................................23
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER.....................................................................25
7.1 Termination...........................................................................25
7.2 Effect of Termination.................................................................25
ARTICLE 8 INDEMNIFICATION.......................................................................................26
8.1 Survival..............................................................................26
8.2 Indemnification.......................................................................26
8.3 Limitation of Liability...............................................................27
8.4 Notice of Claims......................................................................27
8.5 Defense of Third Party Claims.........................................................27
8.6 Exclusive Remedy......................................................................28
ARTICLE 9 GENERAL PROVISIONS....................................................................................28
9.1 Amendment.............................................................................28
9.2 Waiver................................................................................28
9.3 Fees, Expenses and Other Payments.....................................................28
9.4 Notices...............................................................................28
9.5 Specific Performance; Other Rights and Remedies.......................................29
9.6 Severability..........................................................................29
9.7 Counterparts..........................................................................30
9.8 Section Headings......................................................................30
9.9 Governing Law.........................................................................30
9.10 Further Acts..........................................................................30
9.11 Entire Agreement......................................................................30
9.12 Assignment............................................................................30
9.13 Parties in Interest...................................................................30
9.14 Mutual Drafting.......................................................................30
</TABLE>
APPENDIX A: Definitions
SCHEDULES:
Seller Disclosure Schedule
-ii-
<PAGE>
EXHIBITS:
EXHIBIT A Form of Noncompetition Agreement (Section 6.2(j))
EXHIBIT B-1 Forms of Master Lease and Sublease (Section 6.2(l))
EXHBIT B-2 Form of License Agreement (section 6.2(l))
-iii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of July 8,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and Suburban Cable TV Co. Inc., a Pennsylvania corporation ("Seller").
WHEREAS, Seller, through its Seller Subsidiaries, owns and leases and
operates communication towers and is engaged in the businesses of managing
communication sites for third parties, domestic and international satellite
transmission, and transmitting non-residential third party point-to-point
microwave video and data signals (collectively, the "Seller Business"); and
WHEREAS, ATS desires to purchase and Seller desires to sell, and to
cause the Seller Subsidiaries to sell, the Seller Assets and the Seller Business
on the terms and conditions hereinafter set forth;
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 capitalized
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 Seller 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 "either party" shall, unless the context otherwise
requires, refer to Seller and ATS.
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, Seller hereby agrees to sell, assign, transfer and
deliver, and to cause the Seller Subsidiaries to sell, assign, transfer and
deliver, to ATS at the Closing, and ATS agrees to purchase at the Closing, the
Seller Assets and the Seller Business, free and clear of any Liens of any nature
whatsoever except for Permitted Liens. For purposes of this Agreement, the term
"Seller Assets" shall mean all of the Assets of Seller and the Seller
Subsidiaries, other than the Excluded Assets. For purposes of this Agreement,
the term "Excluded Assets" shall mean the following Assets:
(i) all cash and cash equivalents;
(ii) all Accounts Receivable;
<PAGE>
(iii) all books and records which Seller or any Seller
Subsidiary is required by Applicable Law to retain, subject to the
right of ATS to have access and to copy for a period of three (3) years
from the Closing Date; the records described herein shall further
include without limitation all corporate seals, certificates of
incorporation, minute books, stock books, Tax Returns or other records
having to do with the corporate organization of Seller and the Seller
Subsidiaries;
(iv) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(v) the personal assets of the officers, directors,
shareholders and employees of Seller and the Seller Subsidiaries
described in Section 2.1 of the Seller Disclosure Schedule;
(vi) the assets set forth in Section 2.1 of the Seller
Disclosure Schedule; and
(vii) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities (collectively, the "Seller
Assumed Obligations"): (i) all of the obligations and liabilities of Seller and
the Seller Subsidiaries under the Seller Assumable Agreements, and (ii) all
obligations and liabilities of Seller and the Seller Subsidiaries with respect
to the ownership and operation of the Seller Assets and the conduct of the
Seller Business, on and after the Closing Date; provided, however, that
notwithstanding the foregoing, ATS shall not assume and agree to pay, and shall
not be obligated with respect to, the Seller Nonassumed Obligations.
(b) ATS shall not assume or become obligated to perform any debt,
liability or obligation of Seller or any of its Subsidiaries relating to any of
the following matters (collectively, the "Seller Nonassumed Obligations"):
(i) the ownership or operation of the Seller Assets or the
conduct of the Seller Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement (including without limitation any obligation to any Seller
Employee for severance benefits, vacation time or sick leave), and any
of the following to the extent same arise from Events occurring prior
to the Closing Date: products liability, Legal Actions or other Claims,
and obligations and liabilities relating to Environmental Law;
(ii) any obligations or liabilities under the Seller Assumable
Agreements relating to the period prior to the Closing Date;
(iii) any insurance policies of Seller or any of the Seller
Subsidiaries;
(iv) those required to be disclosed in the Seller Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the Seller Disclosure Schedule indicates that such
obligation or liability will not be assumed;
-2-
<PAGE>
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by Seller under this Agreement or
of Seller or any of the Seller Subsidiaries under any Collateral
Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of the obligations, covenants,
agreements or undertakings of Seller set forth in this Agreement or of
Seller or any of the Seller Subsidiaries set forth in any Collateral
Document, including without limitation Article 5 of this Agreement;
(vii) any obligation or liability relating to any Excluded
Asset;
(viii) any obligation or liability with respect to capitalized
lease obligations (except as otherwise provided in this Agreement) or
Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid pursuant to the provisions of this Agreement or any Collateral
Document by Seller or any of the Seller Subsidiaries; and
(x) any Contract between or among Seller and any Affiliate of
Seller, other than those, if any, set forth in Section 2(b)(x) of the
Seller Disclosure Schedule.
All Seller Nonassumed Obligations shall remain and be the obligations and
liabilities solely of Seller.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the term "Seller Nonassumed Obligations" shall not
include, and the term "Seller Assumed Obligations" shall include, any liability
arising out of the transfer or assignment to ATS of, or the use or enjoyment of
the benefits by ATS under, any Contract, Governmental Authorization or Private
Authorization the transfer or assignment of which (according to Section 2.2(c)
of the Seller Disclosure Schedule) requires the consent of any Authority or
other Person (collectively, the "Nonassignable Contracts"), if ATS has, on or
prior to the Closing Date, notified Seller in writing (an "Acceptance Notice")
that ATS consents to the transfer or assignment of such Nonassignable Contract
despite the failure or inability of ATS and Seller to obtain the approval or
consent of an Authority or other Person whose approval or consent is required
pursuant to the terms of such Nonassignable Contract, or elects to receive the
benefits of such Nonassumable Contract, in either of which events, if the
approval or consent of an Authority or other Person applicable to transfer of
such Nonassignable Contract is required to be obtained as a condition to ATS'
obligations at Closing pursuant to the provisions of Section 6.1(a) or 6.2(d),
ATS shall be deemed to have waived such condition with respect to such
Nonassignable Contract. With respect to any Nonassignable Contract for which the
applicable consent of any Authority or other Person is not obtained prior to the
Termination Date and for which ATS does not timely deliver an Acceptance Notice
as described in the preceding sentence, Seller and ATS shall enter into an
agreement (the "Nonassignable Contracts Agreement"), pursuant to which (i)
Seller or the applicable Seller Subsidiary will hold and, to the extent
hereinafter provided, perform services thereunder for the account of ATS, and
remit promptly to ATS all amounts received pursuant to the provisions of, all of
the Nonassignable Contracts as to which the required approval or consent to the
assignment or transfer of which was not obtained and as to which ATS has not
delivered an Acceptance Notice, and (ii) ATS will agree to (A) perform, to the
extent the same would not constitute a breach thereof or a constructive
assignment thereof without consent (in which event Seller and the applicable
Seller Subsidiary shall continue to perform), all services required to be
performed under such Nonassignable Contracts, (B) reimburse Seller or the
applicable Seller Subsidiary for all costs and expenses reasonably incurred
pursuant to the Nonassignable Contracts Agreement and (C) indemnify and hold
harmless Seller and the applicable Seller Subsidiary with respect to all actions
taken by ATS thereto and all actions, if any, taken by Seller or the applicable
Seller
-3-
<PAGE>
Subsidiary pursuant thereto other than those relating to the bad faith, gross
negligence or willful misconduct of Seller or the applicable Seller Subsidiary
or its officers, directors, stockholders or employees.
(d) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(d) of the Seller Disclosure
Schedule, all items of income and expense (including without limitation with
respect to rent, utility charges, Pro Ratable Taxes and wages, salaries and
accrued but unused vacation of Seller employees) arising from the ownership or
operation of the Seller Assets or the conduct of the Seller Business shall be
prorated as of 12:01 a.m., Eastern time, on the Closing Date, with Seller
entitled to and responsible for any such items on or prior to the Closing Date
and ATS entitled to and responsible for any such items relating to any
subsequent period. For these purposes, Pro Ratable Taxes attributable to a
period that begins before and ends after the Closing Date shall be treated on a
"closing of the books" basis as two partial periods, one ending at the close of
the Closing Date and the other beginning on the day after the Closing Date,
except that Pro Ratable Taxes (such as property Taxes) imposed on a periodic
basis shall be allocated on a daily basis. If either party shall have received
any such revenues or paid any such expenses or charges which, pursuant to the
terms hereof, the other party is entitled to or responsible for, it shall
furnish the other party with a detailed statement of any such items as soon as
practicable after receipt or payment thereof. The parties shall use their best
efforts to agree upon such items and other adjustments prior to the Closing Date
and, in any event, except as set forth in Section 2.2(c) of the Seller
Disclosure Schedule, within sixty (60) days thereafter. If the parties are
unable within such period to agree upon such items and other adjustments, Seller
and ATS shall, within the following ten (10) days, jointly designate an
independent public accounting firm to be retained to review such items and other
adjustments. The fees and other expenses of retaining such independent public
accounting firm shall be borne equally by Seller and ATS. Such firm shall report
its conclusions as to such items and other adjustments pursuant to this Section
and such report shall be conclusive on all parties to this Agreement and not
subject to dispute or review. Upon such agreement or determination by such
independent accounting firm, Seller or ATS, as the case may be, shall promptly
and, in any event, within five (5) business days reimburse the other party for
any income received or expenses paid by the other party and not previously
reimbursed or any other adjustment required by this Section.
Nothing contained in this Section 2.2(d) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Saul, Ewing, Remick & Saul, 3800 Central Square
West, Philadelphia, Pennsylvania 19102, at 10:00 a.m., local time, on the later
of (a) October 31, 1997 and (b) the first business day after ten (10) days
following the date all authorizations, consents, waivers, orders and approvals
(and, in the case of Section 6.2(d), modifications) required to be obtained
pursuant to the provisions of Section 6.1(a) and 6.2(d) have been obtained, or
such other date, prior to the Termination Date, as the parties may agree (the
"Closing Date"). At the Closing, each of the parties shall deliver such warranty
deeds, bills of sale, assignments, assumptions of liabilities, opinions and
other instruments and documents as are described in this Agreement or as may be
otherwise reasonably requested by the parties and their respective counsel. The
purchase price for the Seller Assets and the Seller Business (the "Purchase
Price") shall be an amount equal to $70,250,000, subject to adjustment as
provided in Section 2.2(d) plus an amount equal to the Prepaid Expenses and
minus an amount equal to the sum of (a) the Seller Nonassumed Obligations, if
any, which ATS agrees to assume, and (b) Prepaid Revenues. The Purchase Price
shall be payable by wire transfer of immediately available funds to Seller for
the balance of the Purchase Price to such account (or accounts) as Seller shall
designate in written instructions to ATS delivered not later than two (2)
business days prior to the Closing.
The parties agree that BIA Consulting, Inc. shall promptly conduct and
prior to the Closing complete an appraisal of the Seller Assets which shall be
the basis for an allocation schedule (the "Tax Allocation Schedule") pursuant to
which the Purchase Price shall be allocated among the Seller Assets. Each of
Seller
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and ATS shall report the purchase and sale of the Seller Assets and the Seller
Business and the other Transactions in accordance with the Tax Allocation
Schedule for purposes of all federal, state and local Tax Returns 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 report, inconsistent with such reporting position. Each of Seller and ATS
shall promptly give the other notice of any disallowance of or challenge to such
reporting by any Taxing Authority. Notwithstanding the provisions of this
Section, the parties to this Agreement will rely solely on their own advisors in
determining the tax consequences of the transactions contemplated by this
Agreement and each party is not relying, and will not rely, on any
representations or assurances of any other party regarding such consequences
other than the representations, warranties, covenants and agreements set forth
in writing in this Agreement or furnished pursuant to the provisions hereof.
2.4 Accounts Receivable. At the closing, Seller and its Subsidiaries
shall appoint ATS its agent for the purpose of collecting all Accounts
Receivable relating to the Seller Business (the "Seller Accounts Receivable").
Seller shall deliver to ATS on or as soon as practicable after the Closing Date
a complete and detailed statement showing the name, amount and age of each
Accounts Receivable. Subject to and limited by the following, revenues relating
to the Seller Accounts Receivable will be for the account of Seller and the
Seller Subsidiaries. ATS shall use the same procedures and efforts which it uses
with respect to its own accounts receivable to collect the Seller Accounts
Receivable for a period of one hundred twenty (120) days after the Closing Date
(the "Collection Period"). Any payment received by ATS during the Collection
Period from any customer with an account which is a Seller Accounts Receivable
shall first be applied in reduction of the Seller Accounts Receivable, unless
the customer contests the validity of such application. During the Collection
Period, ATS shall furnish Seller with a list of, and pay over to Seller, the
amounts collected with respect to the Seller Accounts Receivable on a monthly
basis and forward to Seller, promptly upon receipt or delivery, as the case may
be, copies of all correspondence relating to the Seller Accounts Receivable. ATS
shall provide Seller 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, the parties shall meet to mutually and in good faith
analyze any uncollected Seller Accounts Receivable to determine if the same, in
their reasonable business judgment, are deemed to be collectable and if ATS
desires to retain such Seller Accounts Receivable. As to each such Seller
Accounts Receivable, the parties shall negotiate a good faith value of such
Seller Accounts Receivable, which ATS shall pay to Seller if ATS, in its sole
discretion, chooses to retain such Seller Accounts Receivable. Seller shall
retain the right to collect any of the Seller Accounts Receivable as to which
the parties are unable to reach agreement as to a good faith value, and ATS
agrees to turn over to Seller any payments received against any such Seller
Accounts Receivable. ATS shall not be obligated to use any extraordinary efforts
to collect any of the Seller Accounts Receivable assigned to it for collection
hereunder or to refer any of such Seller Accounts Receivable to a collection
agency or to any attorney for collection, and ATS shall not make any such
referral or compromise, nor settle or adjust the amount of any such Seller
Accounts Receivable, except with the approval of Seller. ATS shall not incur any
liability to Seller or any of the Seller Subsidiaries for any uncollected
account unless ATS shall have engaged in willful misconduct or gross negligence
in the performance of its obligations set forth in this Section. During and
after the Collection Period, without specific agreement with ATS to the
contrary, neither Seller nor any of its Subsidiaries nor any of its or their
agents shall make any direct solicitation of the Seller Accounts Receivable for
collection purposes, except for the Seller Accounts Receivable retained by
Seller or any of the Seller Subsidiaries after the Collection Period.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to, and agrees with,
ATS as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Seller and each Seller Subsidiary is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has all requisite power and authority (corporate,
partnership and other) to own or hold under lease its properties and to conduct
its business as now conducted.
(b) Seller and each Seller Subsidiary has all requisite corporate or
partnership, power and authority and has in full force and effect all
Governmental Authorizations and Private Authorizations, except for those set
forth in Section 3.1(b) of the Seller Disclosure Schedule or those the failure
of which to obtain do not and will not have, individually or in the aggregate,
any material Adverse effect on Seller or any Seller Subsidiary, 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 and each Seller Subsidiary pursuant hereto or
thereto have been duly authorized by all requisite corporate, partnership or
other action on the part of Seller and each Seller Subsidiary. This Agreement
has been duly executed and delivered by Seller and each Seller Subsidiary 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 Seller and each Seller Subsidiary will constitute, legal, valid
and binding obligations of Seller and each Seller Subsidiary, 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 Seller Disclosure
Schedule, and except for matters which would have no material Adverse effect on
Seller or any Seller Subsidiary, neither the execution and delivery by Seller
and each Seller Subsidiary of this Agreement or any Collateral Document executed
or required to be executed by it pursuant hereto or thereto, nor the
consummation by Seller and each Seller Subsidiary of the Transactions, nor
compliance with the terms, conditions and provisions hereof or thereof by Seller
and each Seller Subsidiary:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Seller or any
Seller Subsidiary 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 Seller or any Seller Subsidiary, other than those constituting
Seller Nonassumed Obligations; or
(ii) will require Seller 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 and the filings described in Section 3.1(c) of
the Seller Disclosure Schedule.
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(d) Seller and the Seller Subsidiaries are the only Persons which own
or have owned any interest in any of the Seller Assets or any aspect of the
Seller Business other than those set forth on Section 3.1(d) of the Seller
Disclosure Schedule.
3.2 Financial and Other Information.. Seller has heretofore furnished
to ATS copies of the financial statements of the Seller Business listed in
Section 3.2 of the Seller Disclosure Schedule (the "Seller Financial
Statements"). The Seller 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 Seller 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 the Seller Business, 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.
3.3 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the Seller Financial Statements, except to the
extent specifically described in Section 3.3 of the Seller Disclosure Schedule,
there has been no material Adverse change in Seller or any Seller Subsidiary.
There is no Event known to Seller which materially Adversely affects, or (so far
as Seller can now reasonably foresee) is likely to materially Adversely affect,
Seller or any Seller Subsidiary, except to the extent specifically described in
Section 3.3 of the Seller Disclosure Schedule.
3.4 Materiality. The individual materiality exceptions and
qualifications contained herein or in the Seller Disclosure Schedules do not in
the aggregate, in the reasonable business judgment of Seller, prevent the Seller
Business from operating in the ordinary course or, in the aggregate, Materially
Adversely Affect the value of Seller Assets or the Seller Business in the hands
of ATS.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Seller Disclosure Schedule contains a true,
accurate and complete list of all real property owned by Seller or any Seller
Subsidiary that is part of the Seller Assets. Seller or the applicable Seller
Subsidiary, as the case may be, has good indefeasible, marketable and insurable
title to all real property (other than leasehold real property) and good and
merchantable title to all other assets (other than real property), tangible and
intangible, constituting a part of the Seller Assets, in each case free and
clear of all Liens, except (i) Permitted Liens, (ii) Liens set forth on Section
3.5(a) of the Seller 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 of which is set forth in Section
3.5(a) of the Seller Disclosure Schedule), to Seller's knowledge, no financing
statements under the Uniform Commercial Code and no other filing which names
Seller or any Seller Subsidiary as debtor or which covers or purports to cover
any of the Seller Assets is on file in any state or other jurisdiction, and
neither Seller nor any Seller Subsidiary has 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. To Seller's
knowledge, except as disclosed in Section 3.5(a) of the Seller Disclosure
Schedule, all improvements on the real property owned or leased by Seller and
the Seller Subsidiaries and constituting a part of the Seller Assets are 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. To Seller's
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knowledge, except as disclosed in Section 3.5(a) of the Seller Disclosure
Statement, all such improvements comply in all material aspects with all
Applicable Laws, Governmental Authorizations and Private Authorizations. To
Seller's knowledge, except as disclosed in Section 3.5(a) of the Seller
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 Seller and the Seller Subsidiaries and constituting
a part of the Seller Assets are located entirely on such real property. To
Seller's knowledge, there is no pending, threatened or contemplated action to
take by eminent domain or otherwise to condemn any part of any real property
owned or leased by Seller and the Seller Subsidiaries and constituting a part of
the Seller Assets. Except as set forth in Section 3.5(a) of the Seller
Disclosure Schedule, such real property (other than land), fixtures, fixed
assets and other material items of personal property, including equipment, have,
in Seller's reasonable business judgment, been maintained in a manner consistent
with sound engineering practice and currently permit the Seller 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 Seller Disclosure Schedule contains a true,
accurate and complete list of all Leases under which any real property used in
the Seller Business is leased. Except as otherwise set forth in Schedule 3.5(b)
of the Seller Disclosure Schedule, each Lease or other occupancy or other
agreement under which Seller and each Seller Subsidiary holds real or personal
property constituting a part of the Seller Assets has been duly authorized,
executed and delivered by Seller and each Seller Subsidiary and, to Seller's
knowledge, each of the other parties thereto, and is a legal, valid and binding
obligation of Seller and each Seller Subsidiary, and, to Seller's 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. To
Seller's knowledge, Seller or the applicable Seller Subsidiary, as the case may
be, 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. To Seller's knowledge, all of such Leases are valid
and subsisting and in full force and effect; neither Seller or the applicable
Seller Subsidiary, as the case may be, nor, to Seller's 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 Seller
Assets is subject to contracts of sale, and none is held by Seller or any Seller
Subsidiary 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 Seller Disclosure Schedule.
(c) Section 3.5(c) of the Seller Disclosure Schedule contains a true,
accurate and complete list of all material items of Seller Personal Property.
Seller or the applicable Seller Subsidiary, as the case may be, owns and has
good and merchantable title to all of the Personal Property relating to the
Seller Business (the "Seller 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 Seller Disclosure Schedule (which Liens shall be released prior to
Closing). Except as set forth in Section 3.5(c) of the Seller Disclosure
Schedule, all of the Seller Personal Property is in operating condition, has
been maintained in a manner consistent with good engineering practice, does not,
to Seller's knowledge, require any material amount of repair, maintenance or
replacement and currently permits the Seller Business to be operated in
accordance with the terms and conditions of all Applicable Laws. The Seller
Personal Property is being sold in "as is" condition.
3.6 Compliance with Private Authorizations. Section 3.6 of the Seller
Disclosure Schedule sets forth a true, accurate and complete list of each
Private Authorization which individually is material to the Seller Assets or the
Seller Business. To Seller's knowledge, Seller and each Seller Subsidiary has
obtained all Private Authorizations which are necessary for the ownership or
operation of the Seller Assets or the conduct of the Seller Business which, if
not obtained and maintained, could, individually or in the aggregate,
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materially Adversely affect Seller or any Seller Subsidiary. To Seller's
knowledge, All of such Private Authorizations are valid and in good standing and
are in full force and effect. None of Seller or any Seller Subsidiary is 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 Seller or any Seller Subsidiary. To Seller's knowledge, no such
Private Authorization is the subject of any pending or threatened attack,
revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.7(a) of the Seller Disclosure Schedule contains a true,
complete and accurate list of each Governmental Authorization required, to
Seller's knowledge, under Applicable Laws (i) to own and operate the Seller
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 Seller to execute and deliver this Agreement and to perform
its obligations hereunder. Except as set forth in Section 3.7(a) of the Seller
Disclosure Schedule, to Seller's knowledge, Seller and each Seller Subsidiary
has obtained all Governmental Authorizations which are necessary for the
ownership or operation of the Seller Assets or the conduct of the Seller
Business as now conducted and which, if not obtained and maintained, would,
individually or in the aggregate, have any material Adverse effect on Seller or
any Seller Subsidiary. To Seller's knowledge, none of the Governmental
Authorizations listed in Section 3.7(a) of the Seller Disclosure Schedule is
subject to any restriction or condition which would limit in any material
respect the ownership or operations of the Seller Assets or the conduct of the
Seller Business as currently conducted, except for restrictions and conditions
generally applicable to Governmental Authorizations of such type. To Seller's
knowledge, except as set forth in Section 3.7(a) of the Seller Disclosure
Schedule, the Governmental Authorizations listed in Section 3.7(a) of the Seller
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 Seller,
the Seller Subsidiaries or any of their respective officers, directors,
employees or agents, and the ownership or operation of the Seller Assets or the
conduct of the Seller Business are in accordance in all material respects with
the Governmental Authorizations. To Seller's knowledge, all material reports,
forms and statements required to be filed by Seller and each Seller Subsidiary
with all Authorities with respect to the Seller Business have been filed and are
true, complete and accurate in all material respects. To Seller's knowledge, no
such Governmental Authorization is the subject of any pending or threatened
challenge or proceeding to revoke or terminate any such Governmental
Authorization. Seller has no reason to believe that any such Governmental
Authorization would not be renewed in the name of Seller or the applicable
Seller Subsidiary by the granting Authority in the ordinary course.
(b) Except as otherwise specifically described in Section 3.7(b) of the
Seller Disclosure Schedule, none of Seller, any Seller Subsidiary nor any
director or officer thereof (in connection with ownership or operation of the
Seller Assets or the conduct of the Seller Business) is in or is charged by any
Authority with or, to Seller's knowledge, at any time since January 1, 1996 has
been in or has been charged by any Authority with, or, to Seller's 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 Seller Assets or the conduct of the Seller Business. In
particular, but without limiting the generality of the foregoing, to Seller's
knowledge, there are no applications, complaints or Legal Actions pending or
threatened before or by any Authority (x) relating to the ownership or operation
of the Seller Assets or the conduct of the Seller 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 Seller Assets or the conduct of the Seller
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Business; (y) involving charges of illegal discrimination by Seller or any
Seller Subsidiary under any federal or state employment Laws with respect to any
of the Seller Employees, or (z) involving Environmental Laws or zoning laws,
except as otherwise specifically described in Section 3.7(b) of the Seller
Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
Seller Disclosure Schedule, to Seller's knowledge, 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 (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 Seller or any Seller Subsidiary or
(ii) any material requirement of any property or liability insurance carrier,
applicable to the ownership or operations of the Seller Assets or the conduct of
the Seller 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 Seller Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the Seller Disclosure Schedule, all
such information and matters set forth in the Seller Disclosure Schedule, if
Adversely determined against Seller or the applicable Seller Subsidiary, will
not, individually or in the aggregate, have a materially Adversely effect on
Seller or any Seller Subsidiary.
3.8 Intangible Assets. Section 3.8 of the Seller Disclosure Schedule
sets forth a true, accurate and complete list of all Intangible Assets (other
than Governmental Authorizations and Private Authorizations) relating to the
ownership and operation of the Seller Assets or the conduct of the Seller
Business held or used by Seller and each Seller Subsidiary, including without
limitation the nature of Seller's and each Seller Subsidiary's interest in each
and the extent to which the same have been duly registered in the offices as
indicated therein. To Seller's knowledge, except as set forth in Section 3.8 of
the Seller 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 Seller Assets or the conduct
of the Seller Business as currently owned, operated and conducted or proposed to
be owned, operated and conducted on or prior to the Closing Date. Seller does
not, to its knowledge, wrongfully infringe upon or unlawfully use any Intangible
Assets owned or claimed by another, and none of Seller or any Seller Subsidiary
has received any notice of any claim or infringement relating to any such
Intangible Asset.
3.9 Related Transactions. None of Seller or any Seller Subsidiary is a
party or subject to any Contractual Obligation relating to the ownership or
operation of the Seller Assets or the conduct of the Seller Business between
Seller or the applicable Seller Subsidiary and any of its officers, directors,
shareholders, employees or, to the knowledge of Seller, 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 3.13 of
the Seller Disclosure Schedule, (ii) Contractual Obligations between Seller or
any Seller Subsidiary and any of its directors, shareholders, officers,
employees or Affiliates of Seller or any of the foregoing, which constitute
Excluded Assets or Seller Nonassumed Obligations, or (iii) as specifically set
forth in Section 3.9 of the Seller Disclosure Schedule.
3.10 Insurance. Seller and each Seller Subsidiary maintains, with
respect to the Seller Assets and the Seller 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 Seller Disclosure Schedule.
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3.11 Tax Matters.
(a) Except as set forth in Section 3.11(a) of the Seller Disclosure
Schedule, Seller has in accordance with all Applicable Laws filed all Tax
Returns and/or extensions 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 Seller Financial Statements. The Tax Returns of Seller and
each Seller Subsidiary 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 Seller and each Seller Subsidiary
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. Except as set forth in Section
3.11(a) of the Seller Disclosure Schedule, adequate provision has been made on
the most recent balance sheet forming part of Seller 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, except as set forth in Section 3.11(a) of the Seller Disclosure
Schedule, there are, to Seller's knowledge, no past transactions or matters
which could result in additional Taxes of a material nature to Seller and each
Seller Subsidiary for which an adequate reserve has not been provided on such
balance sheet.
(b) The information shown on the federal income Tax Returns of Seller
and each Seller Subsidiary for each of the most recent three (3) tax years (true
and complete copies of which have, to the extent requested by ATS, been
furnished by Seller 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 Seller and each Seller Subsidiary
have not been examined by the IRS or applicable state Authority, and none of
Seller or any Seller Subsidiary has been notified of any proposed examination,
except as shown in Section 3.11(b) of the Seller Disclosure Schedule.
(c) None of Seller or any Seller Subsidiary is a party to any tax
sharing agreement or arrange ment.
3.12 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 Seller other than
Communications Equity Associates, Inc. ("CEA").
3.13 Employment Arrangements. Section 3.13 of the Seller Disclosure
Schedule contains a true, accurate and complete list of all employees of Seller
and each Seller Subsidiary involved in the operation of the Seller Assets or the
conduct of the Seller Business (the "Seller 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. None of Seller or any Seller Subsidiary
has any obligation or liability, contingent or other, under any Employment
Arrangement with any Seller Employee, other than those listed or described in
Section 3.13 of the Seller Disclosure Schedule. Except as described in Section
3.13 of the Seller Disclosure Schedule, (a) none of the Seller Employees is now,
or since January 1, 1996 has been, represented by any labor union or other
employee collective bargaining organization, and none of Seller or any Seller
Subsidiary is, or ever has been, a party to any labor or other collective
bargaining agreement with respect to any of the Seller 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) none of Seller, any
Seller Subsidiary or any of such employees is now, or has since January 1, 1996
been, subject to or involved in or, to Seller's knowledge, threatened with, any
union elections, petitions therefore
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or other organizational or recruiting activities, in each case with respect to
the Seller Employees, and (d) none of the Seller Employees has given written
notice to Seller or any Seller Subsidiary that he or she does not intend to
continue employment with Seller until the Closing or with ATS following the
Closing. Seller and each Seller Subsidiary has performed in all material
respects all obligations required to be performed under all Plans and Benefit
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.
3.14 Material Agreements. Listed on Section 3.14 of the Seller
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Seller Assets or the conduct of the business of the Seller
Business or to which Seller and each Seller Subsidiary is a party or to which it
is bound or which any of the Seller Assets is subject. True, accurate and
complete copies of each of such Material Agreements have been made available by
Seller to ATS and Seller 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 3.14 of the Seller Disclosure Schedule, with
respect to Material Agreements that are oral). All of such Material Agreements
are valid, binding and legally enforceable obligations of Seller or the
applicable Seller Subsidiary and, to Seller's 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. Seller and
each Seller Subsidiary 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, to Seller's knowledge, there is no pending or
threatened Claim that Seller or any Seller Subsidiary 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 Seller or any Seller Subsidiary under any of
such Material Agreements in any material respect.
3.15 Ordinary Course of Business. Seller and each Seller Subsidiary,
from the end of its most recent fiscal year to the date hereof, except (i) as
may be described on Section 3.15 of the Seller Disclosure Schedule, or (ii) as
may be required or expressly contemplated by the terms of this Agreement, with
respect to the Seller Assets and the Seller 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, 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 $50,000;
(c) 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;
(d) has not increased the compensation payable or to become
payable to any of the Seller Employees other than in the ordinary
course of business or otherwise materially altered, modified or changed
the terms of their employment;
(e) 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;
(f) has not waived any rights of material value without fair
and adequate consideration;
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(g) has not experienced any work stoppage;
(h) 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 Seller,
except for Seller Nonassumed Obligations; and
(i) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is material
to the Seller Assets or the Seller Business.
3.16 Material and Adverse Restrictions. None of Seller or any Seller
Subsidiary is a party to or subject to, nor is any of the Seller 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 Seller can now reasonably foresee, at any time in the future,
individually or in the aggregate, is likely to have, any material Adverse effect
on the ability of Seller or any Seller Subsidiary to perform its obligations
under this Agreement, except as set forth in Section 3.16 of the Seller
Disclosure Schedule.
3.17 Solvency. As of the execution and delivery of this Agreement,
Seller and each Seller Subsidiary is, and immediately prior to and after giving
effect to the consummation of the Transactions will be, solvent.
3.18 Environmental Matters. Except as set forth in Section 3.18 of the
Seller Disclosure Schedule, with respect to the Seller Assets, Seller and each
Seller Subsidiary:
(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 Seller's 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) to Seller's knowledge, is in compliance in all material
respects with all Environmental Laws, has obtained all Environmental
Permits required under Environmental Laws, and, to Seller's knowledge,
is not the subject of or threatened with any Legal Action involving a
demand for damages or other potential liability including any Lien with
respect to material violations or material breaches of any
Environmental Law;
(e) has no knowledge of any past or present Event related to
the Seller Business or the Seller Assets which Event, individually or
in the aggregate, will interfere with or prevent continued material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will form the basis of any material Claim for the
release or threatened release into the environment, of any Hazardous
Material; and
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(f) does not own or use any underground storage tank.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, Seller as
follows:
4.1 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, 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 and filings listed in Section 3.1(c) of the
Seller Disclosure Schedule which will be made jointly with Seller.
4.2 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.
4.3 No Legal Action. There are no Legal Actions pending or, to the
knowledge of ATS, threatened against ATS or any of its Affiliates, officers or
directors, that question or may affect the validity of this Agreement or the
right or obligation of ATS to consummate the transactions contemplated
hereunder.
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ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Seller 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 Seller's and each Seller Subsidiary's properties, books, contracts,
commitments and records (including without limitation Tax Returns) relating to
the Seller Assets and the Seller 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 Seller Assets or the Seller 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 Seller or its accountants reasonably deemed by ATS
or its Representatives necessary or useful for the purpose of performing an
audit of the Seller Assets and the Seller Business and certifying financial
statements and financial information, and (iii) such other information in the
possession or control of Seller or its accountants concerning any of the
foregoing as ATS shall reasonably request; provided, however, that Seller shall
not be required to permit any such access to the extent same would unreasonably
interfere with Seller's normal business operations. All non-public information
relating to the Seller Assets or the Seller 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 Seller, 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 Seller. 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 for a period of five (5) years,
Seller shall not, without the prior written consent of ATS, disclose any
information with respect to the Seller Assets or the Seller Business, other than
in connection with the Transactions or to the extent required by Applicable Law.
(b) Subject to the terms and conditions of Section 5.1(a), ATS may,
subject to prior consultation with Seller, 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, in the event mutual releases are not
exchanged upon such termination, 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, either 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.
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(d) No investigation pursuant to this Section or otherwise shall affect
any representation or warranty in this Agreement of either party or any
condition to the obligations of the parties hereto, except as set forth in
Section 8.3(d).
(e) The provisions of this Section shall apply to each Seller
Subsidiary.
5.2 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 causing 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 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(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 Seller Assets and conduct the Seller Business) (the
parties agreeing to use commercially reasonable efforts to make all required
filings under the Hart-Scott-Rodino Act within sixty (60) days after the date
hereof, each such filing to request early termination), (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 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.
(c) Seller 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 Seller Business described in Section
6.2(g). Seller represents and warrants that any such financial statements 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,
Seller 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.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, Seller and ATS shall consult with the other
before issuing any press release or otherwise making any public
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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
written consent of the other. Notwithstanding the foregoing, each party
acknowledges and agrees that Seller 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, 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, with Seller's prior consent, not
to be unreasonably withheld, delayed or conditioned, the subject matter of this
Agreement to Persons with whom Seller has a business or contractual relationship
in connection with ATS' due diligence investigation of Seller.
5.4 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 material respect such that one or more of the conditions of
Closing might not be satisfied, 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 Seller Disclosure Schedule in any respect
such that one or more of the conditions of Closing might not be satisfied, and
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 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.
5.5 No Solicitation. During the term of this Agreement, none of Seller
or any Seller Subsidiary shall, nor shall it knowingly permit any of its
Representatives 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 (i) any merger or consolidation,
regardless of whether Seller or any Seller Subsidiary is the surviving Entity
unless the surviving Entity remains obligated under this Agreement to the same
extent as it was, or (ii) any sale or other disposition of all or any
substantial part of the Seller Assets or the Seller Business. The provisions of
this Section shall apply to each Seller Subsidiary. If Seller or any of its
Representatives receives any inquiry with respect to an Alternative Transaction
while this Agreement is in effect, Seller shall inform the inquiring party that
it is not entitled to enter into discussions or negotiations relating to an
Alternative Transaction.
5.6 Conduct of Business by Seller 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, Seller shall, and shall cause each Seller
Subsidiary, to the extent relating to the Seller Business or the Seller 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 Seller Assets as is consistent with past practice
(except that the foregoing shall not be construed to require Seller or
any Seller Subsidiary to make capital expenditures other than those set
forth in Section 5.6(a) of the Seller Disclosure Schedule unless ATS
shall first agree in writing to reimburse
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Seller the cost therefor in which event Seller or the applicable Seller
Subsidiary shall be obligated to make such capital expenditure);
(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 Seller
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 Seller Assets
or the Seller Business, and (ii) maintain in full force and effect all
such Governmental and Private Authorizations, Leases and Material
Agreements relating to the Seller Business;
(f) not (i) dispose of any of the Seller Assets owned by
Seller or any Seller Subsidiary or used in the operation of the Seller
Business (other than for the disposition in the ordinary course of
business of immaterial assets that are of no further use to the Seller
Business) or (ii) modify or change in any material respect, or enter
into, any Material Agreement relating to the Seller Business; and
(g) not voluntarily take any action which if taken between the
end of its most recent fiscal year and prior to the date of this
Agreement would have been required to be noted as an exception on
Section 3.15 of the Seller Disclosure Schedule.
With respect to any transaction or act proposed to be entered into or performed
by Seller which, pursuant to paragraphs (a) through (g) of this section,
requires the prior approval of ATS, ATS shall be deemed to have approved same
unless written notice of disapproval is received by Seller within ten (10)
business days after receipt by ATS of a written request for approval made by
Seller.
5.7 Preliminary Title Reports. As promptly as practicable after the
execution of this Agreement, Seller shall, at its sole cost and expense, deliver
or cause to be delivered to ATS a standard preliminary title report dated on or
after the date of this Agreement issued by such title company or companies as
Seller and ATS shall mutually reasonably agree (collectively, the "Title
Company") with respect to those Seller Assets comprised of the parcels of real
property described in Section 5.7 of the Seller Disclosure Schedule (the
"Insured Real Property"). Such reports, as same may be amended or supplemented
from time to time to reflect additional title matters, are referred to herein as
the "Title Reports". The rights and obligations of the parties shall thereafter
be as follows:
(a) On or before fifteen (15) business days after ATS' receipt
of each of the Title Reports, ATS shall give to Seller written notice
("ATS' Title Notice") of ATS' disapproval of any matters shown in the
Title Reports. ATS' failure to give ATS' Title Notice shall be deemed
to constitute ATS' approval of all matters disclosed by the Title
Reports.
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(b) If ATS disapproves any title matters pursuant to ATS'
Title Notice, Seller shall deliver written notice ("Seller's Title
Notice") to ATS within fifteen (15) business days after Seller's
receipt of ATS' Title Notice, stating whether Seller agrees to
eliminate or cause the Title Company to insure over such disapproved
title matters from title to the Insured Real Property prior to the
Closing or, if elimination is not feasible prior to the Closing, to
effect such elimination thereafter and to indemnify and hold harmless
ATS with respect to such remedy. If Seller fails to timely deliver
Seller's Title Notice, or if Seller delivers Seller's Title Notice but
states therein that Seller is unwilling or unable to eliminate such
disapproved title matters, ATS and Seller shall negotiate in good faith
in an attempt to resolve such matters which resolution may, without
limitation, take the form of eliminating one or more of the sites with
disapproved title matters (the "Disapproved Title Sites" and,
collectively with the "Disapproved Environmental Sites", the
"Disapproved Sites") from the Seller Assets, a reduction of the
Purchase Price or an indemnification (or escrow) from Seller (subject
to the limitations as to time or amount specified in Section 5.9 and
Article 8). If within twenty (20) business days of such negotiations
(or such longer period as ATS and Seller shall agree), the parties have
been unable to resolve such matters, the provisions of Section 5.9
shall govern.
(c) If, at any time following ATS' approval of the Title
Reports, Seller or the Title Company notifies ATS of any additional
matter affecting title to the Insured Real Property, the parties shall
have substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above with respect to the affected parcel.
5.8 Environmental Site Assessments. Not later than sixty (60) days
after the execution of this Agreement, ATS may obtain, and deliver to Seller
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 5.8 of the Seller Disclosure Schedule. Site assessments
shall be conducted by such consultants and professionals as ATS and Seller shall
mutually agree (collectively, the "Environmental Company"), and shall be
arranged at times mutually convenient to the parties. Each of Seller 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.
(a) On or before fifteen (15) business days after ATS' receipt
of each of the Environmental Reports, ATS shall give to Seller written
notice ("ATS' Environmental Notice") of ATS' disapproval of any matters
shown in the Environmental Reports. ATS' failure to give ATS'
Environmental Notice shall be deemed to constitute ATS' approval of all
matters disclosed by the Environmental Reports.
(b) If ATS disapproves any environmental matters pursuant to
ATS' Environmental Notice, Seller shall deliver written notice
("Seller's Environmental Notice") to ATS within fifteen (15) business
days after Seller's receipt of ATS' Environmental Notice, stating
whether Seller agrees to eliminate and remedy such matter prior to the
Closing or, if such elimination or remedy is not feasible prior to the
Closing, to effect such elimination and remedy thereafter and to
indemnify and hold harmless ATS with respect to such remedy. If Seller
fails to timely deliver Seller's Environmental Notice, or if Seller
delivers Seller's Environmental Notice but states therein that Seller
is unwilling or unable to eliminate and remedy such environmental
matters, ATS and Seller shall negotiate in good faith in an attempt to
resolve such matters which resolution may, without limitation, take the
form of eliminating one or more of the sites with disapproved
environmental matters (the "Disapproved Environmental Sites") from the
Seller Assets, a reduction of the Purchase Price or an indemnification
(or escrow) from Seller (subject to the limitations as to time or
amount specified in Section 5.9 and Article 8). If within twenty (20)
business days of such negotiations (or
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such longer period as ATS and Seller shall agree), the parties have
been unable to resolve such matters, the provisions of Section 5.9
shall govern.
(c) If, at any time following ATS' approval of the
Environmental Reports, ATS or the Environmental Company notifies Seller
of any additional environmental matter, the parties shall have
substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above with respect to the affected site.
5.9 Resolution of Title and Environmental Disapproved Matters. In the
event ATS and Seller are unable to resolve matters with respect to disapproved
title matters pursuant to the provisions of Section 5.7 and/or with respect to
disapproved environmental matters pursuant to the provisions of Section 5.8, the
rights and obligations of the parties with respect to such matters shall
thereafter be as follows:
(a) In the event that the aggregate cost reasonably estimated
by the parties (or, in the event they are unable to agree, the Title
Company and the Environmental Company) to eliminate the disapproved
title matters and eliminate and remedy the disapproved environmental
matters with respect to the Disapproved Sites (the "Disapproved Cost
Amount") is not greater than $500,000 with respect to any particular
Disapproved Site (the "Maximum Site Disapproved Cost Amount") and not
greater than $2,000,000 for all Disapproved Sites (the "Maximum
Disapproved Cost Amount"), then ATS shall have the right to require
Seller to remedy all such matters (including, at ATS' election, after
the Closing in which event Seller shall indemnify and hold harmless ATS
with respect to such remedy and shall place in escrow with the Title
Company a sum sufficient to effect such remedy but not in excess of the
limitations set forth in this paragraph) and to proceed with the
Closing;
(b) In the event that the Disapproved Cost Amount is greater
than the Maximum Disapproved Cost Amount, then ATS shall have the right
to require Seller to remedy all such matters (including, at ATS'
election, after the Closing in which event Seller shall indemnify and
hold harmless ATS with respect to such remedy and shall place in escrow
with the Title Company a sum sufficient to effect such remedy but not
in excess of the limitations set forth in paragraph (a) of this
Section) and to proceed with the Closing; provided, however, that under
such circumstances, Seller shall have the right to elect not to effect
such remedy with respect to (i) any particular Disapproved Site if the
Disapproved Cost Amount for such Disapproved Site exceeds the Maximum
Site Disapproved Cost Amount and (ii) one or more of the Disapproved
Sites (to the extent there is a choice, selected by Seller with the
approval of ATS, such approval not to be unreasonably withheld), the
aggregate Disapproved Cost Amount of which is not greater than the
excess of the Disapproved Cost Amount over the Maximum Disapproved Cost
Amount, in which event, unless Seller or ATS shall, in its sole and
absolute discretion, have agreed to bear the excess determined pursuant
to clause (i) and/or (ii) of this paragraph or the parties shall have
otherwise agreed in writing, such Disapproved Site or Sites shall be
eliminated from the Seller Assets and the Purchase Price shall be
reduced in accordance with the provisions of paragraph (c) below; and
(c) In the event one or more Disapproved Sites is eliminated
from the Seller Assets, the parties shall negotiate in good faith in an
attempt to agree upon the fair market value of such Disapproved Sites,
which value shall be based on the Purchase Price and shall assume that
there were no disapproved title and/or environmental matters with
respect to such Disapproved Sites. In the event the parties are unable
within twenty (20) business days to agree upon such fair market value,
the matter shall be submitted to binding, nonappealable arbitration in
accordance with the federal commercial arbitration rules of the
American Arbitration Association before the Philadelphia chapter, with
each party paying its own legal and other expenses.
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Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, the costs required to be expended by Seller pursuant to the
provisions of this Section (whether prior or subsequent to the Closing) shall
not affect the obligations of Seller pursuant to the provisions of Article 8.
5.10 Post-Closing Covenants and Agreements of the Parties. From and
after the consummation of the Transactions, ATS and Seller covenant and agree as
follows:
(a) ATS shall afford to Seller, and Seller shall afford to
ATS, access to each of their (and, in the case of Seller, any of the
Seller Subsidiaries) respective employees who were (or in the case of
Seller who remain) employees of Seller (or any of the Seller
Subsidiaries) on the Closing Date to the end that such employees are
available to provide assistance, consultation and historical background
to the requesting party; provided, however, that neither ATS nor Seller
shall have any such obligation after the expiration of one (1) year
from the Closing Date or to the extent that it would unduly interfere
with the continuing conduct by ATS or Seller of their respective
businesses; and
(b) ATS shall afford to Seller, and Seller shall afford to
ATS, access to all books and records delivered to ATS or retained by
Seller (or any of the Seller Subsidiaries), as the case may be,
relating to periods prior to the Closing Date, in order to enable
Seller or ATS, as the case may be, to prepare all necessary Tax
Returns, deal with Legal Actions or other Claims (including without
limitation those of the Internal Revenue Service) or personnel matters
or for any other reasonable purposes, subject, however, in all events,
to the provisions of Section 5.1 with respect to confidentiality.
ARTICLE 6
CLOSING CONDITIONS
6.1 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 writing, 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 ATS and Seller 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, if any, as
are set forth in Section 6.1(b) of the Seller 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 Seller Assets or
the Seller Business.
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6.2 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 writing, 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) Seller 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 Saul, Ewing, Remick &
Saul, counsel for Seller and the Seller Subsidiaries, with respect to
the matters set forth in Sections 3.1 and 3.7, 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;
(c) The representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects 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 in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Seller or
ATS, except as otherwise specifically provided herein); each and all of
the agreements and conditions to be performed or satisfied by Seller
hereunder at or prior to the Closing Date shall have been duly
performed or satisfied in all material respects; and Seller 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 for such authorizations, consents, waivers, orders
or approvals the failure of which to obtain would not, in the
reasonable business judgment of ATS, have a material Adverse effect on
the Seller Assets or the Seller Business, 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 by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
Seller Assets and the Seller Business (including without limitation all
Private Authorizations, Leases and Material Agreements of Seller and,
at the cost and expense of Seller, all modifications of Leases and
other Contractual Obligations which ATS shall within ten (10) business
days of the date hereof advise Seller in writing are a requirement of
Closing) and the full enjoyment thereof shall have been obtained,
without the imposition, individually or in the aggregate, of any
condition or requirement which could materially Adversely affect ATS;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material Adverse
change in Seller from that reflected in the most recent Seller
Financial Statements which Materially and Adversely effects the
transactions contemplated hereby except for events affecting the tower
rental and video transmission industry generally; as of the Closing
Date, the Governmental Authorizations with respect to the ownership or
operation of the Seller Assets or the conduct of the Seller Business
shall not have been materially and Adversely affected by any act, or
failure to act, of Seller;
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(f) Seller and each Seller Subsidiary 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
Seller and each Seller Subsidiary 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 three years in the period ended December 31, 1996)
of the Seller Business, 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 Seller 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 Seller Assets
and the Seller Business, 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) All Environmental Reports obtained by the parties prior to
the Closing Date pursuant to the provisions of Section 5.8 hereof shall
be approved or deemed approved by ATS in the manner described in
Section 5.8;
(j) Seller and each of the individuals named therein shall
have executed and delivered to ATS an agreement substantially in the
form of Exhibit A attached hereto and made a part hereof (the "ATS
Noncompetition Agreements");
(k) ATS shall have received standard CLTA title insurance
policies insuring ATS' fee or leasehold interests in all Insured Real
Property, subject only to Approved Title Conditions; and
(l) Seller or the applicable Seller Subsidiary shall have
delivered to ATS leases, subleases and license agreements with respect
to certain of the Seller towers or tower sites as indicated in Section
6.2(l) of the Seller Disclosure Schedule, all on the terms and
conditions set forth in the applicable document included as part of
Exhibit B attached hereto and made a part hereof (collectively, the
"Collateral Real Estate Documents").
6.3 Conditions to Obligations of Seller. The obligation of Seller to
effect the Transactions shall be subject to the satisfaction of the following
conditions, any or all of which may be waived in writing, 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 Seller
and its counsel, and Seller 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;
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(b) ATS shall have furnished Seller and, at Seller's request,
any bank or other financial institution providing credit to Seller,
with favorable opinions, dated the Closing Date of Sullivan & Worcester
LLP, counsel for ATS, with respect to the matters set forth in Section
4.1 and 4.3 and with respect to such other matters arising after the
date of this Agreement and incident to the Transactions, as Seller or
its counsel may reasonably request or which may be reasonably requested
by any such bank or financial institution or their respective counsel;
(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 in all material respects 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 in all material respects as of such
date on the Closing Date (including without limitation giving effect to
any later obtained knowledge of Seller 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 Seller 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 Seller or its counsel
shall have reasonably requested;
(d) ATS shall have delivered or cause to be delivered to
Seller all of the Collateral Documents and other agreements, documents
and instruments required to be delivered by ATS to Seller at or prior
to the Closing pursuant to the terms of this Agreement;
(e) Except to the extent, if any, specifically set forth in
Section 6.2(d) of the Seller 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 by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
Seller Assets and the Seller Businesses (including without limitation
all Private Authorizations, Leases and Material Agreements of Seller
and, at the cost and expense of Seller, all modifications of Leases and
Contractual Obligations heretofore requested by ATS and set forth in
Section 6.2(d) of the Seller Disclosure Schedule) and the full
enjoyment thereof shall have been obtained, without the imposition,
individually or in the aggregate, of any condition or requirement which
could materially and Adversely affect Seller;
(f) ATS shall have delivered to Seller or the applicable
Seller Subsidiary the Collateral Real Estate Documents;
(g) The Purchase Price shall have been paid as set forth in
Section 2.3; and
(h) 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 Seller, based upon the advice of
counsel, have a material adverse effect on ATS, 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.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of Seller and ATS;
(b) by either ATS or Seller 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 Seller in the event (i) Seller 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) 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)
Seller 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
(e) by ATS in the event of a failure of the condition set
forth in Section 6.2(i) or 6.2(k).
The term "Termination Date" shall mean March 31, 1998 or such other
date as the parties may, from time to time, mutually agree.
The right of ATS or Seller 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 either party, any Person controlling any
such party or any of their respective Representatives whether prior to or after
the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 (with respect to
confidentiality), 5.3, 9.3 and 9.5 and this Section, in the event of the
termination of this Agreement pursuant to Section 7.1, 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 either party, or any of their respective shareholders,
officers or directors, to the other and all rights and obligations of either
party shall cease; provided, however, that such termination shall not relieve
either party from liability for any misrepresentation or breach of any of its
warranties, covenants or agreements set forth in this Agreement.
(b) Each of Seller and ATS agrees that, in the event either party shall
seek specific performance of this Agreement in accordance with the provisions of
Section 9.5, (i) any breach by it shall be deemed to be detrimental to the
other, (ii) it will not oppose any temporary restraining order or other form of
injunctive relief sought by the other party, and (iii) in the case of the
Seller, it will hold the proceeds of any sale or other
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disposition of all or any part of the Seller Assets or the Seller Business in
constructive trust for the benefit of ATS.
(c) In the event this Agreement is terminated pursuant to the
provisions of Section 7.1(a), 7.1(b) or 7.1(e), except as provided in Section
7.2(a), neither of the parties shall have any further rights, obligations or
remedies.
ARTICLE 8
INDEMNIFICATION
8.1 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) one (1) year 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, 3.7(a), 3.11, 3.18 and 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 one (1) year unless otherwise
herein expressly provided to the contrary. 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 or 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.
8.2 Indemnification. Each of Seller and ATS (the "indemnifying party")
agrees that on and after the Closing it shall indemnify and hold harmless the
other (the "indemnified party") from and against any and all damages, claims,
losses, expenses, costs, obligations and liabilities, including without
limitation liabilities for all reasonable attorneys', accountants' and experts'
fees and expenses including those incurred to enforce the terms of this
Agreement or any Collateral Document executed by it (collectively, "Loss and
Expense"), suffered, directly or indirectly, by the indemnified party by reason
of, or arising out of:
(a) any material breach of representation or warranty made by
the indemnifying party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the indemnifying party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(b) in the case of Seller as the indemnifying party, the
failure of Seller or any Seller Subsidiary to comply with Bulk Sales
law of any applicable jurisdiction; or
(c) in the case of Seller as the indemnifying party, by reason
of, or arising out of, (i) Seller Nonassumed Obligations and/or (ii)
the ownership and operation of the Seller Assets and the Seller
Business prior to the Closing Date; or
(d) in the case of ATS as the indemnifying party, by reason
of, or arising out of, (i) Seller Assumed Obligations and/or (ii) the
ownership and operation of the Seller Assets and the Seller Business
from and after the Closing Date, except for Events arising prior to or
existing on the
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Closing Date, unless they are part of the Seller Assumed Obligations,
and/or (iii) Section 5.2(c) financial statements, except to the extent
Seller is liable to ATS pursuant to the provisions of paragraph (a) of
this Section.
8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, each indemnified party's rights to
indemnification shall be subject to the following limitations: (i) the
indemnified party 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), and (ii) in no event shall the aggregate amount
required to be paid by each indemnifying party pursuant to the provisions of
this Article exceed the greater of (x) $1,000,000 or (y) the excess of (I)
$2,500,000 over the (II) the amount paid by such indemnifying party pursuant to
the provisions of Section 5.9, except for any Loss or Expense arising out of
matters of a nature referred to in Sections 3.1 and 4.1 as to which the
limitations set forth in this clause (ii) shall not apply.
(b) In the case any event shall occur which would otherwise entitle
either 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.
8.4 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 8.1, 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 materially prejudices such indemnifying
party's ability to defend against such Claim.
8.5 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 ATS, do not include any term or
condition which would restrict in any material manner the continued ownership or
operations of the Seller Assets or the conduct of the Seller Business in
substantially the manner then being theretofore owned, operated and conducted by
ATS.
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8.6 Exclusive Remedy. Except for fraud or willful or intentional
misrepresentation or breach of warranty, covenant or agreement or as otherwise
provided in Section 9.5, the indemnification provided in this Article shall be
the sole and exclusive post-Closing remedy available to either party against the
other party for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
9.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, ATS or Seller may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions with respect to the Termination Date, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and waive compliance by the other
with any of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. 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 equally by
Seller and ATS. All costs of preliminary title reports for Real Property
constituting a part of the Seller Assets shall be borne by Seller. All costs of
title insurance and environmental studies shall be borne by ATS. All other costs
and expenses incurred in connection with this Agreement and the consummation of
the Transactions, including without limitation Hart-Scott-Rodino filing fees,
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.
9.4 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 (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telecopy or other form
of rapid transmission, confirmed by mailing (by first class or express mail, or
by recognized courier service, postage prepaid) written confirmation at
substantially the same time as such rapid transmission, or (c) 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:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
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with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to Seller:
200 Cresson Boulevard
P.O. Box 989
Oaks, Pennsylvania 19456-0989
Attention: Samuel W. Morris, Jr., Vice President-General
Counsel
Telecopier No.: (616) 650-3061
with a copy to:
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, Pennsylvania 19102
Attention: Thomas K. Pasch, Esq.
Telecopier No.: (215) 972-7725
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.
9.5 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 7, 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 for such breach or
threatened breach.
9.6 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
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to affect materially and Adversely either 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.
9.7 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.
9.8 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.
9.9 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 Delaware 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.
9.10 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.
9.11 Entire Agreement. This Agreement (together with the Seller
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, including without limitation that
certain letter of intent, dated May 16, 1997, between the parties.
9.12 Assignment. This Agreement shall not be assignable by either 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.
9.13 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 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of Seller 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 either party based on any presumption of that party's
involvement in the drafting thereof.
9.15 Consent. Whenever this Agreement affords to a party the right to
consent to any act or request of another, such party shall not unreasonably
withhold, delay or condition such consent.
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IN WITNESS WHEREOF, ATS and Seller 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: James S. Eisenstein
Title: Chief Operating Officer
Suburban Cable TV Co. Inc.
By:______________________________________
Name: Harry F. Brooks
Title: Executive Vice President
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following capitalized terms (or any variant in the form thereof) 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
herein shall have such meanings when used in the Seller 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 "either party" shall, unless the context otherwise
requires, refer to Seller and ATS.
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 Seller attributable to the ownership or operation of the
Seller 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 Seller'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 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 financial condition or results of operation of
the Seller Business, or (c) impair Seller'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 or the video business
shall not be deemed to constitute such a change, affect or effect.
Additional Title Matter shall have the meaning given to it in Section
5.7.
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; provided, however, that for
purposes of this Agreement, Tele-Communications, Inc. and its direct and
indirect Subsidiaries shall not be treated as an Affiliate of Seller.
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Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the Seller
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.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the FCA 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.
Approved Title Conditions shall mean any one or more of the following:
(a) Liens for real property taxes and assessments not then delinquent; (b)
matters of title approved by ATS or deemed approved in accordance with the
provisions of Section 5.7; and (c) matters of title created following the date
of this Agreement by or with the written consent of ATS.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the Seller Business, which business and
assets are being exchanged, transferred or otherwise conveyed hereunder,
including without including without limitation the following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Private Authorizations;
(e) the Contracts (other than the Seller Nonassumed
Obligations);
(f) all Intellectual Property and other proprietary
information, which relate to the Seller Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the Seller Business;
(g) all claims, choses in action and rights under warranties
relating to the Seller Business or any of the Seller Assets;
(h) all books and records relating to the ownership or
operation of the Seller Assets or the conduct of the Seller Business,
including executed copies of Leases, Material Agreements and other
written Contracts, and all records required by Applicable Law to be
kept, subject to the right of the conveying party to have such books
and records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate business purposes. The records described herein
shall not include corporate seals, certificates of incorporation,
minute books, stock books, tax returns or other records having to do
with the corporate organization of Seller; and
(i) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets shall not
include any of the Excluded Assets.
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ATS shall have the meaning given to it in the Preamble.
ATS' Environmental Notice shall have the meaning given to it in Section
5.8.
ATS' Noncompetition Agreements shall have the meaning given to it in
Section 6.2(j).
ATS' Title Notice shall have the meaning given to it in Section 5.7.
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 Seller Business.
CEA shall have the meaning given to it in Section 3.12.
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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
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 Collateral Real Estate Documents,
the ATS Noncompetition Agreements, the Nonassignable Contracts Agreement,
warranty deeds, bills of sale, assignments of intangibles, assumption agreements
with respect to the Seller Assumed Obligations, other instruments of conveyance
and assignment sufficient to vest in ATS title to all of the other Seller Assets
and the Seller Business, and any other agreement, certificate, contract,
instrument, notice, opinion or other document delivered pursuant to the
provisions of this Agreement or any Collateral Document.
Collateral Real Estate Documents shall have the meaning given to it in
Section 6.2(m).
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Collection Period shall have the meaning given to it in Section 2.4.
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 Seller Assets or the
conduct of the Seller 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.
Disapproved Cost Amount shall have the meaning given to it in Section
5.9.
Disapproved Environment Sites shall have the meaning given to it in
Section 5.8.
Disapproved Sites shall have the meaning given to it in Section 5.7.
Disapproved Title Sites shall have the meaning given to it in Section
5.7.
Employment Arrangement shall mean, with respect to Seller, 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 Seller 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 Seller Assets or
the conduct of the Seller 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), 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 Company shall have the meaning given to it in Section
5.8.
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
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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 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
5.8.
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 Seller 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.
Excluded Assets shall have the meaning given to it in Section 2.1.
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.
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, 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
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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.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the Federal
Aviation Administration, in connection with the ownership or operation of the
Seller Assets or the conduct of the Seller 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.
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 Seller,
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.
Insured Real Property shall have the meaning given to it in Section
5.7.
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,
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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 (including without limitation MicroNet and all variations
thereof), 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 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 8.2.
Material Agreement shall mean, with respect to Seller, 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 $50,000 during the last fiscal year, (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 (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 Seller
Business in the last year or is likely to account for more than three percent
(3%) of revenues of the Seller
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Business during the current fiscal year, (f) is with the United States Forest
Service or any other Authority, or (g) involves the management by Seller of any
communication tower of any other Person.
Maximum Disapproved Cost Amount shall have the meaning given to it in
Section 5.9.
Maximum Site Disapproved Cost Amount shall have the meaning given to it
in Section 5.9.
MicroNet L.P. shall mean MicroNet Delmarva Associates, L.P., a Delaware
limited partnership.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Nonassignable Contracts shall have the meaning given to it in Section
2.2(c).
Nonassignable Contracts Agreement shall have the meaning given to it in
Section 2.2(c).
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).
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
Seller Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
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
Seller or any Seller Subsidiary and used as of the date hereof in the conduct of
the Seller 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 Seller Business.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by Seller prior to the Closing
and relates to a period subsequent to the Closing.
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Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by Seller prior to the Closing
and relates to a period subsequent to the Closing.
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 relating to the ownership or operation of the Seller
Assets or the conduct of the Seller Business.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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 Seller or any Seller Subsidiary as of the date hereof in the
conduct of the Seller 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 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 5.1(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.
Seller shall have the meaning given to it in the Preamble.
Seller Accounts Receivable shall have the meaning given to it in
Section 2.4.
Seller Assets shall have the meaning given to it in Section 2.1.
Seller Assumable Agreements shall mean all obligations and liabilities
of Seller under all Leases, Material Agreements, Governmental Authorizations,
Private Authorizations and other Contractual Obligations not required to be
listed on Section 3.15 of the Seller Disclosure Schedule entered into in the
ordinary course of business and relating to the ownership or operation of any of
the Seller Assets or the
conduct of the Seller Business.
Seller Assumed Liabilities shall have the meaning given to it in
Section 2.2(b).
Seller Business shall have the meaning given them in the first Whereas
paragraph.
Seller Disclosure Schedule shall mean the Seller Disclosure Schedule
dated as of the date of this Agreement delivered by Seller to ATS.
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<PAGE>
Seller Employees shall have the meaning given it in the Section 3.14.
Seller Financial Statements shall have the meaning given to it in
Section 3.2(b).
Seller Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
Seller Subsidiaries shall mean, collectively, Lenfest Atlantic, Inc., a
New Jersey corporation, MicroNet, Inc., a Delaware corporation, MicroNet
Diversified Investments, Inc., a Delaware corporation, MicroNet Delmarva, Inc.,
a Delaware corporation, MicroNet, L.P, a Delaware limited partnership, and
Lenfest New Castle County, a Delaware general partnership.
Seller's Environmental Notice shall have the meaning given to it in
Section 5.8.
Seller's knowledge means the actual knowledge of any Seller officer or
senior manager, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of appropriate Seller records.
Seller's Title Notice shall have the meaning given to it in Section
5.7.
Settlement Proposal shall have the meaning given to it in Section 8.5.
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
2.3.
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 Company shall have the meaning given to it in Section 5.7.
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Title Reports shall have the meaning given to it in Section 5.7.
Termination Date shall have the meaning given to it in Section 7.1.
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 Seller Assets and the Seller Business and the execution, delivery
and performance of the Collateral Documents.
A-11
EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
DB CONSULTANTS, INC.
Dated as of
May 21, 1997
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................1
2.1 Agreement to Sell and Buy..............................................................1
2.2 Assumption of Liabilities and Obligations. ............................................1
2.3 Closing; Purchase Price................................................................3
2.4 Accounts Receivable....................................................................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF DBC...........................................................4
3.1 Organization and Business; Power and Authority; Effect of Transaction..................4
3.2 Financial and Other Information. .....................................................5
3.3 Changes in Condition...................................................................5
3.4 Materiality............................................................................5
3.5 Title to Properties; Leases............................................................5
3.6 Compliance with Private Authorizations.................................................5
3.7 Compliance with Governmental Authorizations and Applicable Law.........................6
3.8 Intangible Assets......................................................................7
3.9 Related Transactions...................................................................7
3.10 Solvency...............................................................................7
3.12 Employee Retirement Income Security Act of 1974........................................7
3.13 Absence of Sensitive Payments..........................................................7
3.14 Inapplicability of Specified Statutes..................................................8
3.15 Employment Arrangements................................................................8
3.16 Material Agreements....................................................................8
3.17 Ordinary Course of Business............................................................8
3.18 Broker or Finder.......................................................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS...........................................................9
4.1 Organization and Business; Power and Authority; Effect of Transaction..................9
4.2 Broker or Finder......................................................................10
4.3 Solvency..............................................................................10
4.4 No Legal Action.......................................................................10
ARTICLE 5 CLOSING CONDITIONS.............................................................................10
5.1 Conditions to Obligations of Each Party to effect the Transactions....................10
5.2 Conditions to Obligations of ATS......................................................11
5.3 Conditions to Obligations of DBC......................................................12
ARTICLE 6 INDEMNIFICATION................................................................................12
6.1 Survival..............................................................................12
6.2 Indemnification.......................................................................12
6.3 Limitation of Liability...............................................................13
6.4 Notice of Claims......................................................................13
6.5 Defense of Third Party Claims.........................................................14
6.6 Exclusive Remedy......................................................................14
ARTICLE 7 GENERAL PROVISIONS.............................................................................14
7.1 Amendment.............................................................................14
7.2 Waiver................................................................................14
<PAGE>
7.3 Fees, Expenses and Other Payments.....................................................14
7.4 Notices...............................................................................14
7.5 Specific Performance; Other Rights and Remedies.......................................15
7.6 Severability..........................................................................16
7.7 Counterparts..........................................................................16
7.8 Section Headings......................................................................16
7.9 Governing Law.........................................................................16
7.10 Further Acts..........................................................................16
7.11 Entire Agreement......................................................................17
7.12 Assignment............................................................................17
7.13 Parties in Interest...................................................................17
7.14 Arbitration...........................................................................17
7.15 Mutual Drafting.......................................................................17
</TABLE>
APPENDIX A: Definitions
SCHEDULES: DBC Disclosure Schedule
-ii-
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of May 21,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and DB Consultants, Inc., a Texas corporation ("DBC").
WHEREAS, DBC is engaged in the business of identifying and locating and
managing communication sites for third parties (the "DBC Business"); and
WHEREAS, ATS desires to purchase and DBC desires to sell the DBC Assets
and the DBC Business on the terms and conditions hereinafter set forth;
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 DBC 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 "either party" shall, unless the context otherwise requires, refer to
DBC and ATS.
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, DBC hereby agrees to sell, assign, transfer and deliver
to ATS at the Closing, and ATS agrees to purchase at the Closing, the DBC Assets
and the DBC Business, free and clear of any Liens of any nature whatsoever
except for Permitted Liens. For purposes of this Agreement, the term "DBC
Assets" shall mean all of the Assets of DBC set forth on Schedule 2.1 of the DBC
Disclosure Schedule.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of DBC (collectively, the "DBC
Assumed Obligations"): (i) all of the obligations and liabilities of DBC under
the DBC Assumable Agreements, and (ii) all obligations and liabilities of DBC
with respect to the ownership and operation of the DBC Assets and the conduct of
the DBC Business, on and
<PAGE>
after the Closing Date; provided, however, that notwithstanding the foregoing,
ATS shall not assume and agree to pay, and shall not be obligated with respect
to, the DBC Nonassumed Obligations.
(b) ATS shall not assume or become obligated to perform any debt,
liability or obligation of DBC relating to any of the following matters
(collectively, the "DBC Nonassumed Obligations"):
(i) the ownership or operation of the DBC Assets or the
conduct of the DBC Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement of DBC (including without limitation any obligation to any
DBC Employee for severance benefits, vacation time or sick leave), and
any of the following to the extent same arise from Events occurring
prior to or existing on the Closing Date: products liability, Legal
Actions or other Claims, and obligations and liabilities relating to
Environmental Law;
(ii) any obligations or liabilities under the DBC Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of DBC;
(iv) those required to be disclosed in the DBC Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the DBC Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by DBC under this Agreement or
any Collateral Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of DBC's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any asset of DBC
not included in the DBC Assets.
(viii) any obligation or liability with respect to capitalized
lease obligations or Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid by DBC pursuant to the provisions of this Agreement or any
Collateral Document; and
(x) any Contract with any Affiliate of DBC, other than those,
if any, set forth in Section 2(b)(x) of the DBC Disclosure Schedule.
All DBC Nonassumed Obligations shall remain and be the obligations and
liabilities solely of DBC.
(c) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(c) of the DBC Disclosure Schedule,
all items of income and expense (including without limitation with respect to
rent, utility charges, Pro Ratable Taxes and wages, salaries and accrued but
unused vacation of DBC employees) arising from the ownership or operation of the
DBC Assets or the conduct of the DBC Business shall be prorated as of 12:01
a.m., Eastern time, on the Closing Date, with DBC entitled to and responsible
for any such items on or prior to the Closing Date and ATS entitled to and
responsible for any such items relating to any subsequent period. For these
purposes, Pro Ratable Taxes attributable to a period that begins before and ends
after the Closing Date shall be treated on a "closing of the books" basis
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<PAGE>
as two partial periods, one ending at the close of the Closing Date and the
other beginning on the day after the Closing Date, except that Pro Ratable Taxes
(such as property Taxes) imposed on a periodic basis shall be allocated on a
daily basis. If either party shall have received any such revenues or paid any
such expenses or charges which, pursuant to the terms hereof, the other party is
entitled to or responsible for, it shall furnish the other party with a detailed
statement of any such items as soon as practicable after receipt or payment
thereof. The parties shall use their best efforts to agree upon such items and
other adjustments prior to the Closing Date and, in any event, except as set
forth in Section 2.2(c) of the DBC Disclosure Schedule, within sixty (60) days
thereafter. If the parties are unable within such period to agree upon such
items and other adjustments, DBC and ATS shall, within the following ten (10)
days, jointly designate a nationally known independent public accounting firm to
be retained to review such items and other adjustments. The fees and other
expenses of retaining such independent public accounting firm shall be borne
equally by DBC and ATS. Such firm shall report its conclusions as to such items
and other adjustments pursuant to this Section and such report shall be
conclusive on all parties to this Agreement and not subject to dispute or
review. Upon such agreement or determination by such independent accounting
firm, DBC or ATS, as the case may be, shall promptly reimburse the other party
for any income received or expenses paid by the other party and not previously
reimbursed or any other adjustment required by this Section.
Nothing contained in this Section 2.2(c) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts 02109, at 10:00 a.m., local time, on May 21, 1997 or such
other date, prior to the Termination Date, as the parties may agree (the
"Closing Date"). At the Closing, each of the parties shall deliver such bills of
sale, assignments, assumptions of liabilities, opinions and other instruments
and documents as are described in this Agreement or as may be otherwise
reasonably requested by the parties and their respective counsel. The purchase
price for the DBC Assets and the DBC Business (the "Purchase Price") shall be an
amount equal to $3,137,000 subject to adjustment as provided in Section 2.2(d)
plus an amount equal to the Prepaid Expenses and minus an amount equal to the
sum of (i) the DBC Nonassumed Obligations, if any, which ATS agrees to assume,
and (ii) Prepaid Revenues.
2.4 Accounts Receivable. At the closing, DBC shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the DBC
Business. DBC shall deliver to ATS on or as soon as practicable after the
Closing Date a complete and detailed statement showing the name, amount and age
of each Accounts Receivable of the DBC Business. Subject to and limited by the
following, revenues relating to the Accounts Receivable relating to the DBC
Business will be for the account of DBC. ATS shall use the same procedures and
efforts which it uses with respect to its own accounts receivable to collect the
Accounts Receivable with respect to the DBC Business for a period of ninety (90)
days after the Closing Date (the "Collection Period"). Any payment received by
ATS during the Collection Period from any customer with an account which is an
Accounts Receivable with respect to the DBC Business shall first be applied in
reduction of the Accounts Receivable, unless the customer contests the validity
of such application. If the customer contests the validity of any payment
received by ATS during the Collection Period to be applied in reduction of the
Accounts Receivable, then ATS shall promptly notify DBC and any payment with
respect to which application is contested as aforesaid shall be placed in an
escrow arrangement reasonably satisfactory to ATS and DBC until the validity of
the application is determined. During the Collection Period, ATS shall furnish
DBC with a list of, and pay over to DBC, the amounts collected with respect to
the Accounts Receivable with respect to the DBC Business on a monthly basis and
forward to DBC, promptly upon receipt or delivery, as the case may be, copies of
all correspondence relating to Accounts Receivable. ATS shall provide DBC 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, the
parties shall meet to mutually
-3-
<PAGE>
and in good faith analyze any uncollected Accounts Receivable to determine if
the same, in their reasonable business judgment, are deemed to be collectable
and if ATS desires to retain such Accounts Receivable. As to each such Accounts
Receivable, the parties shall negotiate a good faith value of such Accounts
Receivable, which ATS shall pay to DBC if ATS, in its sole discretion, chooses
to retain such Accounts Receivable. DBC shall retain the right to collect any of
its Accounts Receivable as to which the parties are unable to reach agreement as
to a good faith value, and ATS agrees to turn over to DBC any payments received
against any such Accounts Receivable. ATS shall not be obligated to use any
extraordinary efforts 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 ATS shall not make any
such referral or compromise, nor settle or adjust the amount of any such
Accounts Receivable, except with the approval of DBC. ATS shall not incur any
liability to DBC for any uncollected account unless ATS shall have engaged in
willful misconduct or gross negligence in the performance of its obligations set
forth in this Section. During and after the Collection Period, without specific
agreement with ATS to the contrary, neither DBC nor its agents shall make any
direct solicitation of the Accounts Receivable for collection purposes, except
for Accounts Receivable retained by DBC after the Collection Period.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DBC
DBC hereby represents, warrants and covenants to, and agrees with, ATS
as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) DBC 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) DBC has all requisite corporate power and corporate authority and
has in full force and effect all Governmental Authorizations and Private
Authorizations, except for those set forth in Section 3.1(b) of the DBC
Disclosure Schedule or those the failure of which to obtain do not and will not
have, individually or in the aggregate, any material adverse effect on DBC,
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 either of the DBC. This Agreement has been duly executed and delivered by DBC
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 DBC will constitute, legal, valid and binding
obligations of DBC, 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 DBC Disclosure
Schedule, and except for matters which would have no material adverse effect on
the DBC, neither the execution and delivery by DBC of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by DBC of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by DBC:
-4-
<PAGE>
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of DBC or any
Applicable Law on the part of DBC, 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 DBC, other than those constituting DBC Nonassumed Obligations;
provided, however, that DBC makes no representation and warranty that
any Contractual Obligation which requires a consent to its assignment
will not be breached if such consent is not obtained prior to the
Closing and the rights of DBC thereunder are nevertheless assigned to
ATS; or
(ii) will require DBC to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA.
(d) DBC has no Subsidiaries.
3.2 Financial and Other Information. The DBC has heretofore furnished
to ATS copies of the internally prepared cash basis income and expense
statements of the DBC Business listed in Section 3.2 of the DBC Disclosure
Schedule (the "DBC Statements"). The DBC Statements are true, accurate and
complete cash basis income and expense statements in all material respects, do
not contain any untrue statement of a material fact, and fairly present the cash
flow of the DBC Business for the respective periods covered thereby, subject to
normal nonmaterial adjustments. ATS acknowledges that no representations have
been made by DBC that (a) the past financial performance of DBC as reflected in
the DBC Statements (and on the Tax Returns furnished pursuant to the provisions
of Section 3.11) are in any way reflective of future financial performance and
(b) that certain amounts of income included in the DBC Statements (and on the
Tax Returns furnished pursuant to the provisions of Section 3.11) are derived
from sources other than the DBC Assets.
3.3 Changes in Condition. Since the date of the most recent statements
constituting a part of the DBC Statements, except to the extent specifically
described in Section 3.3 of the DBC Disclosure Schedule, there has been no
material adverse change in the DBC Assets or the DBC Business. There is no Event
known to DBC which materially adversely affects, or (so far as DBC can now
reasonably foresee) is likely to materially adversely affect, the DBC Assets or
the DBC Business, except to the extent specifically described in Section 3.3 of
the DBC 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 DBC
Disclosure Schedule, except for such exceptions and qualifications including
without limitation those set forth in the DBC 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 the DBC Assets or the DBC
Business.
3.5 Title to Properties; Leases. DBC does not own or lease any real
property or lease any personal property that is part of the DBC Assets or own
any material items of tangible personal property and, therefore, no real
property or any material items of tangible personal property or any interest
therein is being transferred.
3.6 Compliance with Private Authorizations. Section 3.6 of the DBC
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
DBC Assets or the DBC Business. DBC has obtained all Private Authorizations
which are necessary for the ownership or operation of the DBC Assets or the
conduct of the DBC Business which, if
-5-
<PAGE>
not obtained and maintained, could, individually or in the aggregate, materially
adversely affect DBC; provided, however, that the representations and warranties
set forth in this Section are not intended to apply to (a) any of the consents
required in order to assign the DBC Assets to ATS pursuant to the provisions of
this Agreement, and (b) the failure of DBC to obtain any or all of the consents
required in order to assign the DBC Assets to ATS pursuant to the provisions of
this Agreement. All of such Private Authorizations are valid and in good
standing and are in full force and effect. DBC 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 DBC; provided,
however, that the foregoing representation and warranty is not intended to apply
to the failure of DBC to obtain all consents required in order to assign the DBC
Assets to ATS pursuant to the provisions of this Agreement. No such Private
Authorization is the subject of any pending or, to DBC's knowledge, threatened
attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) Except as otherwise specifically described in Section 3.7(a) of the
DBC Disclosure Schedule, there is no Governmental Authorization required under
Applicable Laws (i) to own and operate the DBC Business, as currently conducted
or proposed to be conducted on or prior to the Closing Date, or (ii) that is
necessary to permit DBC to execute and deliver this Agreement and to perform its
obligations hereunder; provided, however, that the foregoing representation and
warranty is not intended to apply to consents of Persons (other than
Authorities) required in order to assign the DBC Assets to ATS pursuant to the
provisions of this Agreement.
(b) Except as otherwise specifically described in Section 3.7(b) of the
DBC Disclosure Schedule, neither DBC nor any director or officer thereof (in
connection with ownership or operation of the DBC Assets or the conduct of the
DBC Business) is in or is charged by any Authority with or, to DBC's knowledge,
at any time since January 1, 1993 has been in or has been charged by any
Authority with, or, to DBC's 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 Applicable Law relating to the
ownership and operation of the DBC Assets or the conduct of the DBC Business. In
particular, but without limiting the generality of the foregoing, there are no
applications, complaints or Legal Actions pending or, to DBC's knowledge,
threatened before or by any Authority (x) relating to the ownership or operation
of the DBC Assets or the conduct of the DBC Business which, individually or in
the aggregate, are reasonably likely to result in the imposition of any
restriction of such a nature as would adversely affect the ownership or
operation of the DBC Assets or the conduct of the DBC Business; (y) involving
charges of illegal discrimination by DBC 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 DBC Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
DBC Disclosure Schedule, no Event exists or has occurred, which, to DBC's
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 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 the DBC Assets or the DBC Business.
(d) With respect to matters, if any, of a nature referred to in Section
3.7(b) or 3.7(c) of the DBC Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the DBC Disclosure Schedule, all
such information and matters set forth in the DBC Disclosure Schedule, if
adversely determined
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<PAGE>
against DBC, will not, individually or in the aggregate, have a materially
adverse effect on the DBC Assets or the DBC Business.
3.8 Intangible Assets. There are no Intangible Assets (other than
Private Authorizations) required for the ownership or operation of the DBC
Assets or the conduct of the DBC Business as currently owned, operated and
conducted or proposed to be owned, operated and conducted on or prior to the
Closing Date. DBC, to its knowledge, does not wrongfully infringe upon or
unlawfully use any Intangible Assets owned or claimed by another, and DBC has
not received any notice of any claim or infringement relating to any such
Intangible Asset.
3.9 Related Transactions. DBC is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the DBC Assets
or the conduct of the DBC Business between DBC and any of its officers,
directors, shareholders, employees or, to the knowledge of DBC, 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 DBC Disclosure Schedule, (ii) Contractual Obligations between DBC and any of
its directors, shareholders, officers, employees or Affiliates of DBC or any of
the foregoing, which constitute assets other than DBC Assets or DBC Nonassumed
Obligations, or (iii) as specifically set forth in Section 3.9 of the DBC
Disclosure Schedule.
3.10 Solvency. As of the execution and delivery of this Agreement, DBC
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
3.11 Tax Matters.
(a) DBC is not a "consenting corporation" within the meaning of Section
341(f) of the Code. DBC has at all times been taxable as a Subchapter C
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
DBC Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of DBC for
each of the most recent four tax years (true and complete copies of which have,
to the extent requested by ATS, been furnished by DBC to ATS) is true, accurate
and complete in all material respects and fairly and accurately reflects the
information purported to be shown. Federal Tax Returns of DBC have not been
examined by the Internal Revenue Service, and DBC has not been notified of any
proposed examination, except as shown in Section 3.11(b) of the DBC Disclosure
Schedule.
(c) DBC is not a party to any tax sharing agreement or arrangement.
3.12 Employee Retirement Income Security Act of 1974. DBC (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 which is
subject to ERISA.
3.13 Absence of Sensitive Payments. Neither DBC nor, to DBC's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the DBC Assets or the DBC 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
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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. DBC 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 DBC Disclosure
Schedule contains a true, accurate and complete list of all employees and
consultants of DBC involved in the ownership or operation of the DBC Assets or
the conduct of the DBC Business (the "DBC Employees"), together with each such
employee's title or the capacity in which he or she is employed and the basis
for the DBC Employees' compensation. DBC has no obligation or liability,
contingent or other, under any Employment Arrangement with any DBC Employee,
other than those listed or described in Section 3.15 of the DBC Disclosure
Schedule. Except as described in Section 3.15 of the DBC Disclosure Schedule,
(a) none of the DBC Employees is now, or since January 1, 1993 has been,
represented by any labor union or other employee collective bargaining
organization, and DBC is not and never has been a party to any labor or other
collective bargaining agreement with respect to any of the DBC Employees, (b)
there are no pending grievances, disputes or controversies with any union or any
other employee or collective bargaining organization of the DBC 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 DBC
nor any of the DBC Employees is now, or has since January 1, 1993 been, subject
to or involved in or, to DBC's knowledge, threatened with, any union elections,
petitions therefore or other organizational or recruiting activities, in each
case with respect to the DBC Employees, and (d) none of the DBC Employees has
notified DBC that he or she does not intend to continue employment with DBC
until the Closing or with ATS following the Closing. DBC 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 DBC Disclosure
Schedule are all Material Agreements relating to the ownership or operation of
the DBC Assets or the conduct of the business of the DBC Business or to which
DBC is a party or to which it is bound or which any of the DBC Assets is
subject. True, accurate and complete copies of each of such Material Agreements
have been made available by DBC to ATS and DBC has provided ATS with photocopies
of all such Material Agreements requested by ATS. All of such Material
Agreements are valid, binding and legally enforceable obligations of DBC and, to
DBC's 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. DBC 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 DBC, Claim threatened in writing that DBC 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 DBC under any of such Material Agreements in
any material respect.
3.17 Ordinary Course of Business. DBC, from the date of the most recent
DBC Financial Statements to the date hereof, except (i) as may be described on
Section 3.17 of the DBC Disclosure Schedule, or (ii) as may be required or
expressly contemplated by the terms of this Agreement, with respect to the DBC
Assets and the DBC Business:
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(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 increased the compensation payable or to become
payable to any of the DBC Employees other than in the ordinary course
of business or otherwise materially altered, modified or changed the
terms of their employment, except for its officers;
(e) has not waived any rights of material value under any
Contractual Obligation constituting a part of the DBC Assets without
fair and adequate consideration;
(f) has not experienced any work stoppage; and
(g) except in the ordinary course of business, has not entered
into, amended or terminated any Private Authorizations or Material
Agreement constituting a part of the DBC Assets.
3.18 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 DBC.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, DBC as
follows:
4.1 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
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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 no material adverse effect on
ATS, 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.
4.2 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.
4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
4.4 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 of ATS to consummate the transactions contemplated
hereunder.
ARTICLE 5
CLOSING CONDITIONS
5.1 Conditions to Obligations of Each Party to effect the Transactions.
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;
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(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 ATS and DBC 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 the failure
to obtain or make would not, in the reasonable business judgment of
ATS, have a material adverse effect on the DBC Assets or the DBC
Business; and
(c) The transactions contemplated by the Other Agreement shall
be consummated simultaneously with the Closing.
5.2 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) DBC 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 Robert Osborn, Esq.,
counsel for DBC, or other counsel to DBC reasonably acceptable to ATS,
with respect to the matters set forth in Sections 3.1(a), (b) and (c)
and 3.7(b) (to such counsel's knowledge);
(c) DBC shall have furnished ATS with such certificates and
other documents evidencing the truth of its representations,
warranties, covenants and agreements and the performance of its
agreements or conditions as ATS or its counsel shall have reasonably
requested;
(d) DBC 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 DBC to ATS at or prior to the
Closing pursuant to the terms of this Agreement;
(e) ATS shall have received advice from its independent
accountants to the effect that, if requested by ATS, 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 three years in the period ended December 31, 1996) of
the DBC Business in conformity with GAAP and Regulation S-X under the
Securities Act could be prepared; and
(f) The individual named therein shall have executed and
delivered to ATS an indemnity agreement (the "Indemnity Agreement"), in
form, scope and substance reasonably satisfactory to ATS.
5.3 Conditions to Obligations of DBC. The obligation of DBC 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:
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(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 DBC
and its counsel, and DBC 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) ATS shall have furnished DBC and, at DBC's request, any
bank of other financial institution providing credit to DBC, with
favorable opinions, dated the Closing Date of Sullivan & Worcester LLP,
counsel for ATS, with respect to the matters set forth in Sections 4.1
and 4.4;
(c) ATS shall have furnished DBC with such certificates and
other documents evidencing the truth of its representations,
warranties, covenants and agreements and the performance of its
agreements or conditions as DBC or its counsel shall have reasonably
requested; and
(d) ATS shall have delivered or cause to be delivered to DBC
all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by ATS to DBC at or prior to the
Closing pursuant to the terms of this Agreement.
ARTICLE 6
INDEMNIFICATION
6.1 Survival. The representations and warranties of the parties
contained in or made pursuant to Sections 3 and 4 of 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) one (1) year 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, 4.1 and 4.4, 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 all of the other Sections of 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. Any Claim for indemnification, no matter how arising,
not asserted by written notice to the Indemnifying Party prior to the expiration
of the applicable Indemnity Period and for which arbitration for such Claim
pursuant to Section 7.14 of this Agreement is not commenced within sixty (60)
days of said written notice shall be waived and of no force and effect.
6.2 Indemnification. Each of DBC and ATS (the "Indemnifying Party")
agrees that on and after the Closing it shall, subject to survival periods set
forth in Section 6.1, indemnify and hold harmless the other (the "Indemnified
Party") from and against any and all damages, claims, losses, expenses, costs,
obligations and liabilities, including without limitation liabilities for all
reasonable attorneys', accountants' and experts' fees and expenses including
those incurred to enforce the terms of this Agreement or any Collateral Document
executed by it (collectively, "Loss and Expense" provided, however, that Loss
and Expense shall, in the case of damages, be limited to actual damages and
shall not include any type of punitive, consequential (including without
limitation loss of anticipated profits) or any other measure of damages
permitted by Applicable Law or otherwise), suffered directly by the Indemnified
Party by reason of, or arising out of:
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(a) any breach of representation or warranty made by the
Indemnifying Party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the Indemnifying Party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(b) any Legal Action or other Claim by any third party
relating to the Indemnifying Party or, in the case of ATS, the
ownership or operations of the DBC Assets or the conduct of the
business of the DBC Business to the extent such Legal Action or other
Claim has also resulted in a breach of representation or warranty by
the Indemnifying Party pursuant to this Agreement or any Collateral
Document executed by it; or
(c) in the case of DBC as the Indemnifying Party, by reason
of, or arising out of, (i) DBC Nonassumed Obligations or (ii) the
ownership and operation of the DBC Assets and the DBC Business prior to
the Closing Date; or
(d) in the case of ATS as the Indemnifying Party, by reason
of, or arising out of, (i) DBC Assumed Obligations or (ii) the
ownership and operation of the DBC Assets and the DBC Business from and
after the Closing Date, except for Events arising prior to or existing
on the Closing Date, unless they are part of the DBC Assumed
Obligations.
6.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 6.2, after the Closing,
except as otherwise provided in Section 6.6, each Indemnified Party's rights to
indemnification shall be subject to the following limitations: (i) the
Indemnified Party 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, $25,000, in which event the Indemnified Party
shall be entitled to recover all such Loss and Expense (including without
limitation such $25,000), and (ii) in no event shall the aggregate amount
required to be paid by an Indemnifying Party pursuant to the provisions of this
Article exceed $410,000, except for any Loss or Expense arising out of matters
of a nature referred to in Sections 3.1 and 4.1 as to which the limitations set
forth in this clause (ii) shall not apply.
(b) In the case any event shall occur which would otherwise entitle
either 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.
6.4 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 6.1, 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.
6.5 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
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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 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 ATS, do not include any term or
condition which would restrict in any material manner the continued ownership or
operations of the DBC Assets or the conduct of the DBC Business in substantially
the manner then being theretofore owned, operated and conducted by ATS.
6.6 Exclusive Remedy. Except for (a) fraud constituting dishonesty or
willful or intentional gross misrepresentation or willful or intentional gross
breach of warranty, covenant or agreement; provided, however, that any Claim
with respect to fraud constituting dishonesty or willful or intentional gross
misrepresentation or willful or intentional gross breach of warranty, covenant
or agreement, no matter how arising, not asserted by written notice to the party
alleged to have committed the same prior to May 21, 1999 and for which
arbitration with respect to such Claim pursuant to Section 7.14 of this
Agreement is not commenced within sixty (60) days of said written notice shall
be waived and of no force and effect; or (b) specific performance and injunctive
relief as provided in Section 7.5, the indemnification provided in this Article
shall be the sole and exclusive post-Closing remedy available to either party
against the other party for any Claim under this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time prior to the Closing Date but only by an instrument
in writing signed by the parties hereto.
7.2 Waiver. At any time prior to the Closing Date, except to the extent
not permitted by Applicable Law, ATS or DBC may extend the time for the
performance of any of the obligations or other acts of the other, subject,
however, to the provisions with respect to the Termination Date, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and waive compliance by the other
with any of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
7.3 Fees, Expenses and Other Payments. All 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.
7.4 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 (a) mailed by first-class or express
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mail, or by recognized courier service, postage prepaid, (b) sent by telex,
telegram, telecopy or other form of rapid transmission, confirmed by mailing (by
first class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) 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:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to DBC:
23 Hampden Drive
Norwood, Massachusetts 02062
Attention: David Burnett
Telecopier No.: (617) 551-0546
with a copy to:
D'Agostine, Levine & Gordon, P.C.
268 Main Street
Acton, Massachusetts 01720
Attention: Louis N. Levine, Esq.
Telecopier No.: (508) 264-4868
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.
7.5 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, be entitled to injunctive relief and to enforce its rights
by an action for specific performance to the extent permitted by Applicable Law.
The parties agree that the dispute underlying Claims of any action for specific
performance shall be decided by arbitration in accordance with the provisions of
Section 7.14. All actions for injunctive relief, specific performance or other
relief shall be determined in accordance with the governing law provisions of
Section 7.9. 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
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contained in this Agreement for such breach or threatened breach.
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, after the Closing Date ATS shall not be entitled to specific
performance or any other remedy to the extent that the cost to DBC arising from
the enforcement or exercise of such remedy would exceed the amount of the
indemnification required by Section 6.3, for all costs and expenses incurred in
connection with its performance of or compliance with the remedy exercised or
enforced.
7.6 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 either 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.
7.7 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.
7.8 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.
7.9 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
Commonwealth of Massachusetts 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 6, 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. In the event of any Legal Action among the parties
arising out of this Agreement, the parties agree to submit the matter to the
appropriate state or federal court sitting in Suffolk County, Massachusetts and
the parties agree to submit to the jurisdiction of such courts.
7.10 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.
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7.11 Entire Agreement. This Agreement (together with the DBC 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, including without limitation that certain
letter of intent, dated March 6, 1997, between the parties. The parties have not
made or relied upon any warranties or representations except those specifically
set forth in this Agreement.
7.12 Assignment. This Agreement shall not be assignable by either 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.
7.13 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 7.12.
7.14 Arbitration. Subject to the provisions of Section 2.2(d) and the
right to seek injunctive relief and specific performance in accordance with the
provisions of Section 7.5 which shall take precedence over the provisions of
this Section, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be determined by arbitration in
accordance with the governing law provisions of Section 7.9 and the then
existing commercial arbitration rules of the American Arbitration Association
before a panel of three (3) arbitrators in Boston, Massachusetts, selected
within thirty (30) days of the commencement of such arbitration, with each
participant selecting one arbitrator and the two so selected selecting the third
(or the third being selected by the American Arbitration Association if
agreement on a third is not reached within thirty (30) days); and the parties
hereto agree that any judgment or award rendered by such arbitrators shall be a
final and binding determination as to such matter or matters and may be entered
in any court having jurisdiction thereof; provided, however, that in the case of
damages, the parties shall, except in the case of a fraud constituting
dishonesty or willful or intentional gross misrepresentation or willful or
intentional gross breach of warranty, covenant or agreement, be limited to
actual damages and shall not be entitled to any type of punitive, consequential
(including without limitation loss of anticipated profits) or any other measure
of damages permitted by Applicable Law or otherwise. The arbitrators shall award
fees and expenses (including reasonable attorney fees and expenses) to the
prevailing party or, if they determine there is no prevailing party, as they may
otherwise determine.
7.15 Mutual Drafting. This Agreement is the result of the joint efforts
of DBC 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 either party based on any presumption of that party's
involvement in the drafting thereof.
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IN WITNESS WHEREOF, ATS and DBC 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:
DB Consultants, Inc.
By:______________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) 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 herein shall
have such meanings when used in the DBC 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 "either party" shall, unless the context otherwise requires, refer to
DBC and ATS.
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 DBC attributable to the ownership or operation of the
DBC 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 DBC'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 DBC
Business, or (c) impair DBC'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.
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Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the DBC
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.
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.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the DBC
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, which are the following:
(a) the Private Authorizations;
(b) the Contracts (other than the DBC Nonassumed Obligations);
(c) all Intellectual Property and other proprietary
information, which relate to the DBC Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the DBC Business;
(d) all claims, choses in action and rights under warranties
relating to the DBC Business or any of the DBC Assets;
(e) all books and records relating to the ownership or
operation of the DBC Assets or the conduct of the DBC Business,
including executed copies of Material Agreements and other written
Contracts, and all records required by Applicable Law to be kept,
subject to the right of the conveying party to have such books and
records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate business purposes. The records described herein
shall not include corporate seals, certificates of incorporation,
minute books, stock books, tax returns or other records having to do
with the corporate organization of DBC; and
(f) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
ATS shall have the meaning given to it in the Preamble.
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
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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 DBC Business.
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 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
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 Document shall mean the Indemnity Agreement, bills of sale,
assignments of intangibles, assumption agreements with respect to the DBC
Assumed Obligations, other instruments of conveyance and assignment sufficient
to vest in ATS title to all of the other DBC Assets and the DBC Business, and
any other agreement, certificate, contract, instrument, notice, opinion or other
document delivered pursuant to the provisions of this Agreement or any
Collateral Document.
Collection Period shall have the meaning given to it in Section 2.4.
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 DBC Assets or the
conduct of the DBC 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.
DBC shall have the meaning given to it in the Preamble.
DBC Assets shall have the meaning given to it in Section 2.1.
DBC Assumable Agreements shall mean all obligations and liabilities of
DBC under all Leases, Material Agreements, Governmental Authorizations, Private
Authorizations and other Contractual Obligations not required to be listed on
Section 3.16 of the DBC Disclosure Schedule entered into in the ordinary course
of business and relating to the ownership or operation of any of the DBC Assets
or the
conduct of the DBC Business.
DBC Assumed Obligations shall have the meaning given to it in Section
2.2(b).
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DBC Business shall have the meaning given them in the first Whereas
paragraph.
DBC Disclosure Schedule shall mean the DBC Disclosure Schedule dated as
of the date of this Agreement delivered by DBC to ATS.
DBC Employees shall have the meaning given it in the Section 3.15.
DBC Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
DBC Statements shall have the meaning given to it in Section 3.2(b).
DBC's knowledge means the actual knowledge of any officer or senior
manager of DBC, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of DBC's records.
Employment Arrangement shall mean, with respect to DBC, 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 DBC 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 DBC Assets or the conduct of the DBC 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 or foreign, Laws, and the rules and regulations
promulgated thereunder all as from time to time in effect, and
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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.
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 DBC 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.
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.
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, 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.
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 DBC Assets or the conduct of the DBC
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.
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
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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 DBC, 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.
Indemnity Agreement shall have the meaning given to it in Section
5.2(h).
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 the following, but solely and
exclusively to the extent it relates to the DBC Business, and not otherwise: 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
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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 6.2.
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 DBC, 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 DBC Business
in any of the last three fiscal years or is likely to account for more than
three percent (3%) of revenues of the DBC Business during the current fiscal
year, (f) is with the United States Forest Service or any other Authority, or
(g) involves the management by DBC of any communication tower of any other
Person.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
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).
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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
DBC Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
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
DBC and used or useful as of the date hereof in the conduct of the business or
operations of the DBC 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 DBC Business.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by DBC prior to the Closing and
relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by DBC prior to the Closing
and relates to a period subsequent to the Closing.
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.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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 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.
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.
A-8
<PAGE>
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 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.
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 DBC Assets and the DBC Business and the execution, delivery and
performance of the Collateral Documents.
A-9
<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
American Radio Systems Corporation
EXHIBIT 11
(In thousands, except per share data)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average shares of common stock 19,153 29,089 18,075 25,080
Add common stock equivalents in the form of stock options
and warrants (using treasury stock method) 989 951
----------- ----------- ----------- -----------
Weighted average common stock and common stock
equivalents 20,142 29,089 19,026 25,080
=========== =========== =========== ===========
Net income (loss):
Income (loss) before extraordinary loss after preferred
dividends $ 2,077 $ (5,673) $ 1,621 $ (14,595)
Extraordinary loss (1,639)
----------- ----------- ----------- -----------
Net income (loss) applicable to common stockholders $ 2,077 $ (5,673) $ 1,621 $ (16,234)
=========== =========== =========== ===========
Primary per common share amounts:
Income (loss) before extraordinary loss $ .10 $ (.20) $ .09 $ (.58)
Extraordinary loss (.07)
----------- ----------- ----------- -----------
Net income (loss) applicable to common stockholders $ .10 $ (.20) $ .09 $ (.65)
=========== =========== =========== ===========
FULLY DILUTED (Not presented due to anti-dilution):
Weighted average shares of common stock 19,153 29,089 18,075 25,080
Add common stock equivalents in the form of stock options
and warrants (using treasury stock method) 989 1,218 951 1,219
Assumed conversion of preferred stock 3,235 3,235 3,235 3,235
----------- ----------- ----------- -----------
Weighted average common stock and common stock
equivalents 23,377 33,542 22,261 29,534
=========== =========== =========== ===========
Net income (loss):
Income (loss) before extraordinary loss after preferred
dividends $ 2,077 $ (5,673) $ 1,621 $ (14,595)
Add convertible preferred dividends 134 2,406 134 4,813
----------- ----------- ----------- -----------
Income (loss) after redeemable stock dividends before
extraordinary loss $ 2,211 $ (3,267) $ 1,755 $ (9,782)
Extraordinary loss (1,639)
----------- ----------- ----------- -----------
Net income (loss) applicable to common stockholders $ 2,211 (3,267) $ 1,755 $ (11,421)
=========== =========== =========== ===========
Fully diluted per common share amounts:
Income (loss) before extraordinary loss $ .10 $ (.10) $ .08 $ (.33)
Extraordinary loss (.06)
Net income (loss) applicable to common stockholders $ .10 $ (.10) $ .08 $ (.39)
</TABLE>
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
American Radio Systems Corporation
EXHIBIT 12
(In thousands, except ratio data)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Computation of Earnings:
Income (loss) from continuing operations before
income taxes $ 4,018 $ 3,733 $ 3,191 $ (677)
Add:
Interest expense (1) 4,261 15,732 8,964 23,236
Rent expense (2) 235 645 429 1,142
-------------- -------------- ------------- --------------
Earnings as adjusted 8,514 20,110 12,584 23,701
Computation of Fixed Charges:
Interest expense (1) 4,261 15,732 8,964 23,236
Rent expense (2) 235 645 429 1,142
Preferred dividends 134 8,094 134 14,292
-------------- -------------- ------------- --------------
Fixed charges 4,630 24,471 9,527 38,670
Ratio of earnings to combined fixed charges (3) 1.84 ----- 1.32 -----
<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 six months ended June 30, 1997
by approximately $4,361 and $14,969, respectively.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,469
<SECURITIES> 0
<RECEIVABLES> 82,284
<ALLOWANCES> 7,297
<INVENTORY> 0
<CURRENT-ASSETS> 104,680
<PP&E> 153,044
<DEPRECIATION> 13,294
<TOTAL-ASSETS> 1,918,238
<CURRENT-LIABILITIES> 48,937
<BONDS> 760,563
209,478
1
<COMMON> 294
<OTHER-SE> 683,402
<TOTAL-LIABILITY-AND-EQUITY> 1,918,238
<SALES> 0
<TOTAL-REVENUES> 154,345
<CGS> 0
<TOTAL-COSTS> 133,570
<OTHER-EXPENSES> 21,452
<LOSS-PROVISION> 2,002
<INTEREST-EXPENSE> 23,236
<INCOME-PRETAX> (677)
<INCOME-TAX> (374)
<INCOME-CONTINUING> (303)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,639)
<CHANGES> 0
<NET-INCOME> (1,942)
<EPS-PRIMARY> (.65)
<EPS-DILUTED> (.65)
</TABLE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Joe Winn, Chief Financial
Officer or Bruce Danziger, Director
of Investor Relations
(617) 375-7500
AMERICAN RADIO SYSTEMS ANNOUNCES
RADIO STATION EXCHANGE WITH ENTERCOM
Boston, Massachusetts--July 21, 1997--American Radio Systems Corporation (NYSE:
AFM) announced that it has entered into a series of agreements whereby it will
convey radio stations KUDL-FM and WDAF-AM in Kansas City and KCTC-AM in
Sacramento, along with $3,000,000 in cash, to Entertainment Communications, Inc.
(Entercom) in exchange for radio station KLOU-FM in St. Louis. Consummation of
the transaction is subject to regulatory approval.
Steve Dodge, American's Chairman & CEO, stated, "We are fortunate to be
acquiring a terrific radio station in KLOU-FM which will help solidify our
position in St. Louis. At the same time, we are pleased to be able to maintain a
significant presence in Kansas City with four excellent FM's. The downside to
this deal is that John Gehron won't be able to hear his music on one of our
stations in Sacramento."
American Radio Systems Corporation began trading shares publicly in June, 1995.
The Company owns and/or programs and markets approximately 100 radio stations in
Boston, Seattle, Cincinnati, Baltimore, Pittsburgh, Portland, Sacramento, St.
Louis, Charlotte, Kansas City, Hartford, Las Vegas, Austin, Buffalo, San
Francisco/San Jose, West Palm Beach, Rochester, and Fresno. The Company also has
options and/or agreements to buy additional radio stations in Boston, Portland,
San Francisco/San Jose, Pittsburgh, West Palm Beach, and Riverside.
##
116 Huntington Avenue, Boston, Massachusetts 02116
(617) 375-7500 FAX (617) 375-7575
