STOCK PURCHASE AGREEMENT
by and between
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ENTERPRISES INC.
and
SPECTRASITE COMMUNICATIONS, INC.
-------------------------
for all of the outstanding stock of
▇▇▇▇▇▇▇ PROPERTIES INC.
-------------------------
April 12, 2000
-------------------------
TABLE OF CONTENTS
1. Sale and Purchase of Shares...........................................1
1.1 Sale and Purchase of Shares..................................1
1.2 Payment of Purchase Price....................................1
1.3 Post-Closing Purchase Price Adjustments......................2
1.4 Delivery of Shares...........................................4
2. Closing; Closing Date.................................................4
3. Representations and Warranties of the Seller..........................4
3.1 Title to the Shares..........................................4
3.2 Due Incorporation and Authority..............................4
3.3 Authority to Execute and Perform Agreement...................4
3.4 Due Incorporation and Authority of Company...................5
3.5 Subsidiaries and Other Affiliates............................5
3.6 Qualification................................................5
3.7 Outstanding Capital Stock ..................................5
3.8 Options or Other Rights......................................6
3.9 Charter Documents and Corporate Records......................6
3.10 Financial Statements.........................................6
3.11 No Material Adverse Change...................................7
3.12 Taxes........................................................7
3.13 Compliance with Laws.........................................8
3.14 Permits......................................................9
3.15 No Breach....................................................9
3.16 Environmental Matters........................................9
3.17 Claims and Proceedings......................................10
3.18 Contracts...................................................10
3.19 Real Estate.................................................11
3.20 Intellectual Property.......................................15
3.21 Title to Properties.........................................15
3.22 Liabilities.................................................15
3.23 Employee Benefits...........................................16
3.24 Employment and Labor Matters................................17
3.25 Insurance...................................................17
3.26 Operations of the Company...................................18
3.27 Banks, Brokers and Proxies..................................19
3.28 Premerger Notification......................................19
3.29 Standard of Disclosure......................................19
4. Representations and Warranties of the Buyer..........................19
4.1 Due Incorporation and Authority.............................19
4.2 Authority to Execute and Perform Agreement..................20
4.3 Purchase for Investment.....................................20
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4.4 Premerger Notification......................................20
5. Covenants and Agreements.............................................20
5.1 Conduct of Business.........................................20
5.2 Corporate Examinations and Investigations...................21
5.3 Publicity...................................................22
5.4 Expenses....................................................22
5.5 Indemnification of Brokerage................................22
5.6 Related Parties.............................................22
5.7 Termination of Debt.........................................22
5.8 Release of Liens............................................23
5.9 Required Consents...........................................23
5.10 Permit Transfers............................................23
5.11 Tax Matters.................................................23
5.12 Allocation of Purchase Price. .............................28
5.13 Seller's Group Insurance Policies. ........................28
5.14 Use of ▇▇▇▇▇▇▇ Name. .......................................28
5.15 Tower Construction..........................................28
5.16 Further Assurances..........................................29
6. Conditions Precedent to the Obligation of the Buyer to Close.........29
6.1 Representations and Covenants...............................29
6.2 Consents and Approvals......................................29
6.3 Opinion of Counsel to the Seller............................29
6.4 HSR Act Filing..............................................29
6.5 Resignations; Revocations...................................29
6.6 No Claims...................................................30
6.7 Real Estate.................................................30
6.8 Release of Debt.............................................30
6.9 Release of Liens............................................30
6.10 Termination of Agreements...................................30
6.11 Due Diligence...............................................30
7. Conditions Precedent to the Obligation of the Seller to Close........31
7.1 Representations and Covenants...............................31
7.2 HSR Act Filing..............................................31
7.3 No Claims...................................................31
7.4 Opinion of Counsel to the Buyer.............................31
8. Survival of Representations and Warranties After Closing.............32
9. General Indemnification..............................................32
9.1 Obligation of the Seller to Indemnify.......................32
9.2 Obligation of the Buyer to Indemnify........................32
9.3 Notice and Opportunity to Defend............................33
9.4 Limitations on Indemnification..............................34
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10. Termination of Agreement.............................................34
10.1 Termination.................................................34
10.2 Survival After Termination..................................35
11. Miscellaneous........................................................35
11.1 Certain Definitions.........................................35
11.2 Consent to Jurisdiction and Service of Process..............40
11.3 Notices.....................................................41
11.4 Entire Agreement............................................42
11.5 Waivers and Amendments; Non-Contractual Remedies; Preservation
of Remedies.................................................42
11.6 Governing Law...............................................42
11.7 Binding Effect; No Assignment...............................42
11.8 Variations in Pronouns; Defined Terms; Interpretation.......43
11.9 Counterparts................................................43
11.10 Exhibits and Schedules......................................43
11.11 Headings....................................................43
11.12 Severability of Provisions..................................43
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EXHIBITS
A: Form of Opinion of Torys, Seller's Counsel
B: Form of Opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Buyer's
Counsel
THE FOLLOWNING SCHEDULES HAVE BEEN OMITTED, AND WILL BE FURNISHED SUPPLEMENTALLY
TO THE COMMISSION UPON REQUEST.
SCHEDULES
1.2 Capital Expenditures
3.5(i) Subsidiaries
3.5(ii) Interest in Elsinore Peak Facility Corp.
3.7 Outstanding Capital Stock of Subsidiaries
3.12 Taxes
3.14 Transfer of Permits
3.17 Claims and Proceedings
3.18 Contracts
3.19(a) Owned Real Property and Structures
3.19(b)(i) Real Property Leases
3.19(b)(ii) Binding Real Property Leases
3.19(d) Collocation Agreements
3.19(f)(i) Completed Tower Assets
3.19(f)(ii) Uncompleted Tower Assets
3.19(o) Acquisitions
3.23 Company Plans
3.25 Insurance
6.10 Continuing Related Party Agreements
11.1(i) TD Credit Facility Security Documents
11.1(ii) Working Capital
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STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of April 12, 2000, by and between
SpectraSite Communications, Inc., a Delaware corporation (the "Buyer"), and
▇▇▇▇▇▇▇ & Royle Enterprises Inc., a Canadian corporation (the "Seller"), for the
purchase and sale of all of the issued and outstanding shares of capital stock
of ▇▇▇▇▇▇▇ Properties Inc., a Delaware corporation (the "Company").
The Seller is the beneficial and record owner of all of the
issued and outstanding shares of common stock, par value $100.00 per share and
all of the issued and outstanding shares of preferred stock, par value $1000.00
per share (collectively, the "Shares"), of the Company. The Seller wishes to
sell all of the Shares and the Buyer wishes to purchase all of the Shares upon
the terms and subject to the conditions of this Agreement.
Certain terms used in this Agreement are defined in Section
11.1.
Accordingly, the parties agree as follows:
1. Sale and Purchase of Shares.
1.1 Sale and Purchase of Shares. At the closing provided for in Article 2 (the
"Closing") and upon the terms and subject to the conditions of this Agreement,
and in reliance upon the representations, warranties and agreements of the
Seller, the Buyer shall purchase all of the Shares for an aggregate purchase
price (subject to adjustment in accordance with this Article 1, the "Purchase
Price") equal to the sum of $170,000,000.00, payable as provided in Section 1.2.
1.2 Payment of Purchase Price.
(a) At the Closing and subject to adjustment in accordance with Section 1.2(c)
and Section 5.7(b), the Buyer shall deliver to the Seller cash by wire transfer
of immediately available funds in an aggregate amount of the Purchase Price, (i)
increased dollar for dollar by (1) the purchase price paid by the Company for
all acquisitions of communications towers made by the Company or any of its
Subsidiaries between January 1, 2000 and May 1, 2000 and (2) the amount of all
capital expenditures incurred by the Company or any of its Subsidiaries between
January 1, 2000 and May 1, 2000; provided, however, that the amounts referred to
in the foregoing clauses (1) and (2) shall not, during the period of time from
the date of this Agreement until May 1, 2000, without the Buyer's written
consent, exceed the amount of capital expenditures for such period calculated by
subtracting the amount of capital expenditures as of December 31, 1999 from the
amount of capital expenditures projected as of May 1, 2000, each as set forth on
Schedule 1.2 and, if such amounts are paid or payable to the Seller or any of
its affiliates, such amounts shall be at market rates (the amounts referred to
in the foregoing clauses (1) and (2), subject to the proviso, being referred to
together as the "Capital Payments"), (ii) decreased dollar for dollar by the
amount of Debt, if any, as of the Closing, and (iii) increased or decreased
dollar for
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dollar, as the case may be, by the amount by which Working Capital on the
Closing Date either exceeds or is less than a deficiency in the amount of
$1,792,562.00 (which is the amount of Working Capital as of December 31, 1999
calculated as set forth on Schedule 11.1). The parties agree that if the Closing
does not occur on or before May 1, 2000, the parties will amend Schedule 1.2 to
cover projected capital expenditures from May 1, 2000 to the Closing, and, in
such case, references above in this Section 1.2(a) to "May 1, 2000" will be
deemed to be references to "the Closing."
(b) Three days prior to the Closing, the Seller shall prepare and deliver to the
Buyer an estimated consolidated balance sheet of the Company and the
Subsidiaries as of the Closing Date (the "Preliminary Balance Sheet"). The
Preliminary Balance Sheet (i) shall be prepared by the Seller in good faith and
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis, (ii) shall include a schedule setting
forth the amount of Capital Payments, Debt and Working Capital as of the Closing
Date and (iii) shall be accompanied by all information reasonably necessary to
determine the amount of Capital Payments, Debt and Working Capital as of the
Closing Date, to the extent such amounts can be determined or estimated as of
the date of the Preliminary Balance Sheet, and such other information as may be
reasonably requested by the Buyer.
(c) At or prior to the Closing, the Buyer may provide the Seller with any
objections to the amount of Capital Payments, Debt and Working Capital on the
Preliminary Balance Sheet. After considering the Buyer's objections, the Seller
shall make such revisions to the Preliminary Balance Sheet as are mutually
acceptable to the parties, and shall deliver a copy of such revised Preliminary
Balance Sheet (the "Revised Preliminary Balance Sheet") to the Buyer. Subject to
the next sentence, at the Closing, the Buyer shall pay to the Seller the amount
of the Purchase Price as adjusted to take into account the amount of Capital
Payments, Debt and Working Capital agreed upon by the Seller and the Buyer and
included on the Revised Preliminary Balance Sheet. In the case of any amount as
to which the Seller and the Buyer do not agree prior to the Closing, payment of
such amount will be resolved following the Closing in accordance with Section
1.3. In the event that the Buyer fails to deliver any objections to the
Preliminary Balance Sheet by the Closing Date, the Preliminary Balance Sheet
shall be deemed to be the Closing Balance Sheet and shall be deemed to be
delivered to the Seller by the Buyer on the Closing Date.
1.3 Post-Closing Purchase Price Adjustments.
(a) The Seller and the Buyer agree that the Purchase Price shall be adjusted
following the Closing as follows: (i) increased dollar for dollar to the extent
that Capital Payments as set forth on the Closing Balance Sheet exceed Capital
Payments as set forth on the Revised Preliminary Balance Sheet, (ii) decreased
dollar for dollar to the extent that Capital Payments as set forth on the
Closing Balance Sheet are less than Capital Payments as set forth on the Revised
Preliminary Balance Sheet, (iii) increased dollar for dollar to the extent that
Debt as set forth on the Closing Balance Sheet is less than Debt as set forth on
the Revised Preliminary Balance Sheet, (iv) decreased dollar for dollar to the
extent that Debt as set forth on the Closing Balance
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Sheet exceeds Debt as set forth on the Revised Preliminary Balance Sheet, (v)
increased dollar for dollar to the extent that Working Capital as set forth on
the Closing Balance Sheet exceeds Working Capital as set forth on the Revised
Preliminary Balance Sheet, and (vi) decreased dollar for dollar to the extent
that Working Capital as set forth on the Closing Balance Sheet is less than
Working Capital as set forth on the Revised Preliminary Balance Sheet.
(b) Within 60 days after the Closing Date, the Buyer shall prepare and deliver
to the Seller an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the Closing Date (the "Closing Balance Sheet"). The Closing
Balance Sheet shall be prepared by the Buyer in good faith and in accordance
with GAAP applied on a consistent basis and shall be accompanied by all
information reasonably necessary to determine the amount of Capital Payments,
Debt and Working Capital as of the Closing. The Seller shall cooperate with the
Buyer in the preparation of the Closing Balance Sheet.
(c) The Buyer shall allow the Seller and its agents access at all reasonable
times after the Closing Date to the books, records and accounts of the Company
and its Subsidiaries to allow the Seller to examine the accuracy of the Closing
Balance Sheet. Within 30 days after the date that the Closing Balance Sheet is
delivered by the Buyer to the Seller, the Seller shall complete its examination
thereof and may deliver to the Buyer a written report setting forth any proposed
adjustments to the Closing Balance Sheet (the "Seller's Dispute Report"). If the
Seller notifies the Buyer of its acceptance of the amount of Capital Payments,
Debt and Working Capital as of the Closing shown on the Closing Balance Sheet,
or if the Seller fails to deliver a report of proposed adjustments to the
Closing Balance Sheet within the 30 day period specified in the preceding
sentence, the amount of Capital Payments, Debt and Working Capital as of the
Closing shown on the Closing Balance Sheet shall be conclusive and binding on
the parties as of the last day of such 30 day period. The Buyer and the Seller
shall use good faith efforts to resolve any dispute involving the amount of
Capital Payments, Debt and Working Capital as of the Closing (each a "Disputed
Matter"), and any resolution between them as to a Disputed Matter shall be
final, binding and conclusive on the parties hereto. If, after 30 days following
the receipt by the Buyer of the Seller's Dispute Report, the Buyer and the
Seller are unable to resolve any Disputed Matter, such Disputed Matter shall be
referred to a nationally recognized independent accounting firm reasonably
acceptable to both the Buyer and the Seller (the "Arbitrator") for resolution.
The Arbitrator shall be instructed to use every reasonable effort to make its
determination with respect to such Disputed Matter (the "Determination") within
30 days of the submission to the Arbitrator of such Disputed Matter. The Buyer
shall give the Arbitrator access at all reasonable times to the books, records
and accounts of the Company and its Subsidiaries used to prepare the Closing
Balance Sheet. After completing the Determination, the Arbitrator shall deliver
notice of the Determination to the Buyer and the Seller and upon receipt
thereof, the Determination shall be final, binding and conclusive on the parties
hereto with respect to such Disputed Matter. Each of the Buyer and the Seller
shall bear all costs, fees and expenses incurred by it in connection with such
arbitration, and the allocation of the costs, fees and expenses of the
Arbitrator as
4
between the Buyer and the Seller shall be determined by the
Arbitrator in its sole discretion.
(d) If the Purchase Price as finally determined in accordance with Section
1.3(a) is less than the amount paid by the Buyer to the Seller at the Closing,
then the Seller shall pay over to the Buyer the amount of such difference, plus
interest thereon at the rate of 8.5% per annum from and including the Closing
Date to but excluding the date of payment, by wire transfer of immediately
available funds within three days after the date on which the Purchase Price
adjustments are finally determined in accordance with this Section 1.3. If the
Purchase Price as finally determined in accordance with Section 1.3(a) is
greater than the amount paid by the Buyer to the Seller at the Closing, then the
Buyer shall pay over to the Seller the amount of such difference, plus interest
thereon at the rate of 8.5% per annum from and including the Closing Date to but
excluding the date of payment, by wire transfer of immediately available funds
within three days after the date on which Purchase Price adjustments are finally
determined in accordance with this Section 1.3.
1.4 Delivery of Shares. At the Closing, the Seller shall deliver or cause to be
delivered, as the case may be, to the Buyer stock certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly executed in
blank, in proper form for transfer, and with all appropriate stock transfer tax
stamps affixed.
2. Closing; Closing Date. The Closing of the sale and purchase of the Shares
contemplated hereby shall take place at the offices of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 1:00 p.m.
local time, on the later of (i) May 1, 2000 and (ii) four business days after
each of the conditions to the Closing contained in Sections 6 and 7 has been
satisfied or waived by the party entitled to waive such condition; or such other
time or date as the Buyer and the Seller agree in writing. The time and date
upon which the Closing occurs is herein called the "Closing Date."
3. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyer as follows:
3.1 Title to the Shares. The Seller owns the Shares beneficially and of record,
free and clear of any Lien. Upon delivery of and payment for such Shares at the
Closing as herein provided, the Seller will convey to the Buyer good and valid
title thereto, free and clear of any Lien.
3.2 Due Incorporation and Authority. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of Canada. The Seller has
all requisite corporate power, approvals and authority to own, lease and operate
its properties and to carry on its business as now being and as heretofore
conducted.
3.3 Authority to Execute and Perform Agreement. The Seller has the full legal
right and power and all authority and approvals required to execute and
5
deliver this Agreement and to perform fully its obligations hereunder. This
Agreement has been duly executed and delivered by the Seller and (assuming the
due authorization, execution and delivery hereof by the Buyer) is a valid and
binding obligation of the Seller enforceable in accordance with its terms.
Except for approval pursuant to the Seller Credit Facility (which has been
obtained or will be obtained prior to Closing), the execution and delivery by
the Seller of this Agreement, the consummation of the transactions contemplated
by this Agreement (the "Contemplated Transactions") and the performance by the
Seller of this Agreement in accordance with its terms will not (a) require the
approval or consent of any Governmental Body (excluding notification and report
forms filed pursuant to the HSR Act) or the approval or consent of any other
person; (b) conflict with or result in any breach or violation of any of the
terms and conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, the Certificate of Incorporation or By-Laws of the
Seller, any Law or Order of any Governmental Body applicable to the Seller or to
the Shares held by the Seller, or any Contract to which the Seller is a party or
by or to which the Seller is, or the Shares held by the Seller are, bound or
subject; or (c) result in the creation of any Lien on the Shares held by the
Seller.
3.4 Due Incorporation and Authority of Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being and
heretofore conducted.
3.5 Subsidiaries and Other Affiliates. Schedule 3.5(i) sets forth the name and
jurisdiction of organization of each corporation or other entity in which the
Company directly or indirectly owns or has the power to vote shares of any
capital stock or other ownership interests having ordinary voting power to elect
a majority of the directors of such corporation, or other persons performing
similar functions for such entity, as the case may be. Except for the entities
set forth on Schedule 3.5(i) and for the interest in Elsinore Peak Facility
Corp. described in Schedule 3.5(ii), the Company does not directly or indirectly
own any interest in any other person. Each of the Subsidiaries is a corporation
duly organized, validly existing and, to the extent applicable, in good standing
under the laws of its jurisdiction of organization and has the corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being and heretofore conducted.
3.6 Qualification. Each of the Company and each of its Subsidiaries is duly
qualified or otherwise authorized as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification or
authorization is required by law and in which the failure so to qualify or be
authorized could have a material adverse effect on the properties, business,
results of operations or financial condition of the Company and the
Subsidiaries, taken as a whole (collectively, the "Condition of the Companies").
3.7 Outstanding Capital Stock. The Company is authorized to issue (a) 30,000
shares of common stock, par value $100.00 per share, of which 24,000
6
shares are issued and outstanding and (b) 15,000 shares of preferred stock, par
value $1,000.00 per share, of which 13,325 shares are issued and outstanding.
The authorized and issued shares of capital stock of each Subsidiary are set
forth on Schedule 3.7. All issued and outstanding capital stock of each
Subsidiary is owned by the Company, free and clear of all Liens, except for
Liens securing the TD Credit Facility. All of the outstanding shares of capital
stock of the Company and the Subsidiaries are duly authorized and validly
issued, fully paid and non-assessable. No other class of capital stock or other
ownership interests of the Company or any of the Subsidiaries is authorized or
outstanding.
3.8 Options or Other Rights. There is no outstanding right, subscription,
warrant, call, unsatisfied preemptive right, option or other agreement of any
kind to purchase or otherwise to receive from the Company, any of the
Subsidiaries or the Seller any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
the Company or any of the Subsidiaries, and there is no outstanding security of
any kind of the Company or any Subsidiary convertible into any such capital
stock.
3.9 Charter Documents and Corporate Records. The Seller will make available to
the Buyer after the date hereof true and complete Certificates of Incorporation
and By-Laws, or comparable instruments, of the Company and each of the
Subsidiaries as in effect on the date hereof. The minute books of the Company
and of each of the Subsidiaries which will be made available to the Buyer for
its inspection contain true and complete records in all material respects of all
meetings and consents in lieu of meeting of the Board of Directors (and any
committee thereof) of the Company and of each of the Subsidiaries, and their
respective shareholders, since the time of its organization and accurately
reflect in all material respects all transactions referred to in such minutes
and consents in lieu of meeting. The stock books of the Company and each of the
Subsidiaries, which will be made available to the Buyer for its inspection, are
true and complete in all material respects.
3.10 Financial Statements.
(a) The consolidated balance sheets of Lodestar Towers, Inc. and the
Subsidiaries that are, directly or indirectly, wholly owned by Lodestar Towers,
Inc. as of December 31, 1997, December 31, 1998, and December 31, 1999 and the
related consolidated statements of operations, cash flows and changes in
stockholder's equity for the years then ended, including the footnotes thereto,
opined on by Deloitte & Touche, LLP or McGladrey & ▇▇▇▇▇▇, LLP, as applicable,
independent certified public accountants, which have been delivered to the
Buyer, fairly present the consolidated financial position of Lodestar Towers,
Inc. and such Subsidiaries as at such dates and the consolidated results of
operations for such respective periods, in each case in accordance with GAAP
consistently applied for the periods covered thereby. (The foregoing
consolidated financial statements of Lodestar Towers, Inc. and such
Subsidiaries, together with the financial statements of Spurs referred to in
Section 3.10(b), as of December 31, 1999 and for the year then ended are
sometimes herein called the "Audited Financials," the consolidated balance
sheets included in the Audited
7
Financials are sometimes herein called the "Audited Balance Sheet" and December
31, 1999 is sometimes herein called the "Audited Balance Sheet Date.")
(b) The balance sheets of Spurs of Missouri, Inc. ("Spurs") as of December 31,
1997, December 31, 1998, and December 31, 1999 and the related statements of
operations, cash flows and changes in stockholder's equity for the years then
ended which have been delivered to the Buyer, fairly present the financial
position of Spurs as at such dates and its results of operations for such
respective periods, in each case in accordance with GAAP consistently applied
for the periods covered thereby.
(c) Each of the Company and L&T Communications, Inc. is a holding company that
has never carried on any active business. The Company owns no assets other than
shares of capital stock of Lodestar Towers, Inc. and L&T Communications, Inc.
and has no Liabilities. L&T Communications, Inc. owns no assets other than the
shares of capital stock of Spurs and has no Liabilities.
3.11 No Material Adverse Change. Since the Audited Balance Sheet Date, there has
been no material adverse change (excluding any change generally affecting the
industry in which the Company and the Subsidiaries operate, and any change in
general economic conditions) in the Condition of the Companies, and to the
knowledge of the Seller, there has been no such change which is threatened in
writing, nor has there been any damage, destruction or loss which would
reasonably be expected to have or has had a material adverse effect on the
Condition of the Companies, whether or not covered by insurance.
3.12 Taxes.
(a) The Company and the Subsidiaries have paid all Material Taxes, and shall
timely pay such Material Taxes required to be paid by or with respect to the
Company and the Subsidiaries (or any of them) after the date hereof and on or
before the Closing Date.
(b) All returns and other reports required to be filed by or with respect to the
Company and the Subsidiaries (or any of them) with respect to Taxes (hereinafter
"Tax Returns") on or before the date hereof have been timely filed. All Tax
Returns required to be filed by or with respect to the Company and the
Subsidiaries (or any of them) after the date hereof and on or before the Closing
Date shall be prepared and timely filed, in a manner consistent with prior years
(except where any inconsistency is required by applicable laws and regulations)
and applicable laws and regulations.
(c) Except as set forth on Schedule 3.12, the Company and the Subsidiaries will
not be required to pay any Taxes attributable to any member of any group of
affiliated corporations that files consolidated or combined returns (other than
a member of the group that consists of the Company and the Subsidiaries) of
which the Company or any of the Subsidiaries was a member before the Closing
Date by reason of
8
Treas. Reg. ss. 1.1502-6 or any comparable provision of state, local or foreign
law that provides for joint or several liability, in whole or in part.
(d) With respect to all Federal and state income Tax Returns of the Company and
any of the Subsidiaries, (i) no audit is in progress and no extension of time
(other than automatic extensions of time) is in force with respect to any date
on which any Tax Return was or is to be filed and no waiver or agreement is in
force for the extension of time for the assessment or payment of any Tax; and
(ii) there is no unassessed deficiency proposed or threatened in writing against
the Company or any of the Subsidiaries.
(e) With respect to all state, county, local and foreign Tax audits of the Tax
Returns of the Company and the Subsidiaries, no audit is in progress.
(f) Except as set forth on Schedule 3.12, neither the Company nor any of the
Subsidiaries has agreed to or is required to make any adjustments under Section
481(a) of the Internal Revenue Code of 1986, as amended (the "Code") (or in any
similar provision of state, local or foreign tax law) by reason of a change in
accounting method or otherwise for any tax period for which the applicable
Federal statute of limitations has not yet expired.
(g) Schedule 3.12 sets forth all Federal, state, county, local and foreign tax
elections under the Code and other applicable provisions of tax law that are in
effect with respect to the Company and the Subsidiaries for the fiscal year
ended December 31, 1999 and the fiscal year beginning January 1, 2000.
(h) Except as set forth on Schedule 3.12, no gain or loss from deferred
intercompany transactions or excess loss accounts of the Company or the
Subsidiaries have been or will be triggered by the Contemplated Transactions.
(i) The Company and the Subsidiaries have not at any time consented under
Section 341(f)(1) of the Code to have the provisions of Section 341(f)(2) of the
Code apply to any sale of its capital stock.
(j) Neither the Company nor any of the Subsidiaries will have any liability
after the Closing Date under any tax sharing agreement to which they have been a
party, and all such tax sharing agreements in effect before the Closing Date
shall terminate and be of no further force and effect as of the end of the
Closing Date.
(k) There are no Liens for Taxes on the assets of the Company or the
Subsidiaries except for Liens for current Taxes not yet due.
(l) Schedule 3.12 sets forth all net operating loss carryovers of the Company
and the Subsidiaries for Federal income tax purposes, their respective
expiration dates, and any Code Section 382 limitations to which they may be
subject.
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(m) Neither the Company nor any of its Subsidiaries is, or has been, a United
States real property holding corporation (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
3.13 Compliance with Laws. Neither the Company nor any of the Subsidiaries is in
material violation of any applicable order, judgment, injunction, award, decree
or writ (collectively, "Orders"), or any applicable law, statute, code,
ordinance or regulation (including, without limitation, zoning laws and
regulations) (collectively, "Laws"), of any government or political subdivision
thereof, whether Federal (including, without limitation, the Federal
Communications Commission or the Federal Aviation Administration), state, local
or foreign, or any agency or instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively, "Governmental Bodies"),
and, except as set forth in Schedule 3.17, none of the Company, any of the
Subsidiaries or the Seller has received written notice that any such violation
is being or may be alleged. The continued existence, use, occupancy and
operation of each Tower Asset is not dependent on the granting of any special
permit, exception, approval or variance by any Governmental Body.
3.14 Permits. The Company and the Subsidiaries have all licenses, permits,
exemptions, consents, waivers, authorizations, rights, certificates of
occupancy, orders or approvals of, and have made all required registrations
with, any Governmental Body that are material to the conduct of the business of,
or the current use and operation of any properties of, the Company or any of the
Subsidiaries (collectively, "Permits"). All such Permits are in full force and
effect; no material violations are or have been recorded in respect of any such
Permit; and no proceeding is pending or, to the knowledge of the Seller,
threatened in writing to revoke, adversely modify, limit or impair the
renewability of any such Permit. Except as set forth in Schedule 3.14, no action
by the Seller, the Company, any of the Subsidiaries or the Buyer is required in
order that all Permits will remain in full force and effect following the
consummation of the Contemplated Transactions.
3.15 No Breach. The execution, delivery and performance of this Agreement by the
Seller and the consummation of the transactions contemplated hereby will not (a)
violate any provision of the Certificate of Incorporation or By-Laws (or
comparable instruments) of the Company or any of the Subsidiaries; (b) require
the Seller, the Company or any of the Subsidiaries to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
Governmental Body or any other person, except as contemplated by Section 3.28
(collectively, the "Required Consents"); (c) if the Required Consents are
obtained, violate, conflict with or result in the breach of any of the terms of,
in each case in any material respect, result in a material modification of the
effect of, otherwise cause the termination of or give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a material default (by way of substitution, novation or
otherwise) under, any material contract, agreement, indenture, note, guaranty,
bond, loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, commitment or other binding arrangement (collectively, the
"Contracts") to which the Company or any of the Subsidiaries is a party
10
or by or to which any of them or any of their properties may be bound or
subject, or result in the creation of any Lien upon any of the properties of the
Company or any of the Subsidiaries pursuant to the terms of any such Contract;
(d) if the Required Consents are obtained, violate any Order of any Governmental
Body against, or binding upon, the Company or any of the Subsidiaries or upon
their respective securities, properties or business; (e) if the Required
Consents are obtained, violate any Law of any Governmental Body; or (f) if the
Required Consents are obtained, violate or result in the revocation or
suspension of any Permit.
3.16 Environmental Matters. The Company and the Subsidiaries (i) are and have
been in compliance in all material respects with all applicable Safety and
Environmental Laws; (ii) there is no Environmental Claim pending or threatened
in writing against the Company or any of the Subsidiaries and there is no civil,
criminal or administrative judgment or notice of violation against the Company
or any of the Subsidiaries pursuant to Safety and Environmental Laws or
principles of common law relating to pollution, protection of the Environment or
health and safety; and (iii) to the knowledge of the Seller, and except for the
risk of liability related to electromagnetic fields, there are no past or
present events, conditions, circumstances, activities, practices, incidents,
agreements, actions or plans which may prevent compliance with Safety and
Environmental Laws, or which have given rise to or will give rise to an
Environmental Claim or to Environmental Compliance Costs. The Seller will make
available to the Buyer after the date hereof true and complete copies of all of
the documents related to environmental matters with respect to the Company and
the Subsidiaries referenced in Section 5.2(a)(i).
3.17 Claims and Proceedings. There are no outstanding Orders of any Governmental
Body against the Company or any of the Subsidiaries or any of their properties.
Except as set forth on Schedule 3.17, there are no investigations by any
Governmental Body, actions, suits, claims or legal, administrative or arbitral
proceedings (collectively, "Claims") pending, or to the knowledge of the Seller,
threatened in writing, against the Company or any of the Subsidiaries or any of
their properties, owned or leased. All notices required to have been given to
any insurance company listed as insuring against any Claim set forth on Schedule
3.17 have been timely and duly given and, except as set forth on Schedule 3.17,
no insurance company has asserted in writing that such Claim is not covered by
the applicable policy relating to such Claim. There are no Claims pending or, to
the knowledge of the Seller, threatened in writing that would give rise to any
right of indemnification on the part of any director or officer of the Company
or any of the Subsidiaries or the heirs, executors or administrators of such
director or officer, against the Company or any of the Subsidiaries or any
successor to the business of the Company or any of the Subsidiaries.
3.18 Contracts.
(a) Schedule 3.18 sets forth all of the following Contracts to which the Company
or any of the Subsidiaries is a party or by or to which it or any of its
properties may be bound or subject (other than those specifically set forth on
any other Schedule): (i) Contracts with any current or former officer, director,
11
shareholder, employee, consultant, agent or other representative or with an
entity in which any of the foregoing is a controlling person (except that such
employment contracts do not necessarily reflect current base and/or
bonus/incentive remuneration); (ii) Contracts for the sale of any assets other
than in the ordinary course of business or for the grant to any person of any
option or preferential rights to purchase any properties or assets; (iii)
partnership or joint venture agreements; (iv) Contracts under which the Company
or the Subsidiary agrees to indemnify any party or to share tax liability of any
party; (v) Contracts (excluding Contracts for the construction or purchase of
new communications towers) which cannot be canceled without liability, premium
or penalty and which provide for a current or future obligation of the Company
or the Subsidiary to make payments in excess of $50,000; (vi) Contracts for the
construction or purchase of new communications towers which cannot be cancelled
without liability, premium or penalty and which provide for a current or future
obligation of the Company or a Subsidiary to make payments in excess of
$200,000; (vii) Contracts containing covenants of the Company or the Subsidiary
not to compete in any line of business or with any person in any geographical
area or covenants of any other person not to compete with the Company or the
Subsidiary in any line of business or in any geographical area; (viii) Contracts
relating to the acquisition by the Company or the Subsidiary of any operating
business or the capital stock of any other person; (ix) Contracts containing
obligations or liabilities of any kind to holders of the capital stock of the
Company or the Subsidiary as such (including, without limitation, an obligation
to register any of such securities under any Federal or state securities laws);
(x) Contracts relating to the borrowing of money; (xi) management Contracts and
other similar agreements with any person, excluding those providing for site
management by the Company or a Subsidiary entered into in the ordinary course of
business; and (xii) Contracts with the Seller or any of its affiliates.
(b) The Seller will make available to the Buyer after the date hereof the true
and complete Contracts (including, without limitation, all modifications,
amendments and supplements thereto and copies of all quarterly reports required
to be delivered by the Company under the Florida DoT Contract) set forth on
Schedule 3.18 or on any other Schedule. To the knowledge of the Seller, all of
the Contracts referred to in the preceding sentence are valid and binding and
enforceable upon the Company or one of the Subsidiaries, as the case may be, in
accordance with their terms. Neither the Company nor any of the Subsidiaries is
in breach or default in any material respect under any of such Contracts, nor
does any condition exist that with notice or lapse of time or both would
constitute such a material default thereunder. To the knowledge of the Seller,
no other party to any such Contract is in default thereunder in any material
respect nor does any condition exist that with notice or lapse of time or both
would constitute such a material default thereunder.
(c) Each of the Contracts set forth on Schedule 6.10 to remain in effect after
the Closing relates to matters described in Schedule 6.10 and is at market
rates.
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3.19 Real Estate.
(a) Ownership of the Premises. The Company or a Subsidiary is the owner of fee
simple insurable title to the land described on Schedule 3.19(a) and to all of
the buildings, structures and other improvements located thereon (collectively,
the "Owned Real Property and Structures") subject only to (1) taxes not yet due
and payable, (2) easements, rights of way and other similar non-monetary title
defects the existence of which does not interfere in any material respect with
the use, occupancy or operation of the applicable parcel of Real Property and
Structures as currently used, occupied and operated, (3) rights of Collocators,
(4) Liens described on Schedule 3.19(a), and (5) Liens securing the TD Credit
Facility (clauses (1), (2), (3), (4) and (5) defined collectively as the
"Permitted Encumbrances"). The Owned Real Property and Structures includes all
of the real property owned by the Company and the Subsidiaries on the date
hereof.
(b) Leased Properties. Schedule 3.19(b)(i) is a true, correct and complete
schedule as of the date hereof of all leases, easements and other agreements
(collectively, the "Real Property Leases") under which the Company or any of the
Subsidiaries uses or occupies or has the right to use or occupy, now or in the
future, any real property (the land, buildings and other improvements covered by
the Real Property Leases being herein called the "Leased Real Property"), which
Schedule sets forth the start date and end date (excluding renewal terms) of and
parties to each Real Property Lease, the annual base rent payable thereunder and
a brief description of the Leased Real Property covered thereby. The Seller will
cause the Company and the Subsidiaries (i) to make available to the Buyer after
the date hereof the true, correct and complete Real Property Leases (including
all modifications, amendments and supplements thereto) and (ii) to assist the
Buyer in preparing a true, correct and complete index of the Real Property
Leases and all such modifications, amendments and supplements thereto. To the
knowledge of the Seller, there is no underlying mortgage, deed of trust, lease,
grant of term or other estate in or interest affecting any Leased Real Property
which is superior to the interest of the Company or a Subsidiary, whichever is
applicable, as tenant under the applicable Real Property Lease. Except for
Permitted Encumbrances, the Company or a Subsidiary, whichever is applicable,
holds the leasehold estate under and interest in each Real Property Lease free
and clear of all liens, encumbrances and other title defects and survey defects
(collectively, "Title Defects"). Except as set out in Schedule 3.19(b)(ii), each
Real Property Lease is valid, binding and in full force and effect; all rent and
other sums and charges payable by the Company or any of the Subsidiaries as
tenant thereunder are current; no notice of default under any Real Property
Lease has been received by the Company or a Subsidiary which remains uncured;
and to the knowledge of the Seller (except with respect to the Florida DoT
Contract, for which there shall be no knowledge qualification), no uncured
default on the part of the Company or the applicable Subsidiary or, to the
knowledge of the Seller, the landlord, exists under any Real Property Lease.
(c) Entire Premises. All of the land, buildings, structures and other
improvements used by the Company and the Subsidiaries in the conduct of their
business are included in the Owned Real Property and Structures and the Leased
Real Property. The Leased Real Property and the Owned Real Property and
Structures are hereinafter collectively referred to as the "Real Property and
Structures."
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(d) Collocation Agreements. Schedule 3.19(d) is a true, correct and complete
schedule as of the Audited Balance Sheet Date of all leases, subleases,
licenses, easements, collocation agreements, master collocation agreements and
other agreements (collectively, the "Collocation Agreements") granting to any
person or entity other than the Company and the Subsidiaries any right to the
possession, use, occupancy or enjoyment of the Real Property and Structures or
Tower Assets or any portion thereof, which schedule sets forth the commencement
date of and parties to each Collocation Agreement, the term thereof, the initial
fees and annual escalator percentage payable thereunder. The Seller will cause
the Company and the Subsidiaries (i) to make available to the Buyer after the
date hereof the true, correct and complete Collocation Agreements in effect as
of the date of this Agreement (including all modifications, amendments and
supplements thereto), (ii) to assist the Buyer in preparing a true, correct and
complete index of such Collocation Agreements and all such modifications,
amendments and supplements, and (iii) to make available to the Buyer after the
date hereof a schedule of commitments to enter into Collocation Agreements. Each
Collocation Agreement is valid, binding and in full force and effect; all rent
and other sums and charges payable by the tenant or occupant thereunder (the
"Collocator") are current subject to ordinary course allowances for overdue or
doubtful accounts; no notice of default or termination under any Collocation
Agreement is outstanding except for such notices in the ordinary course which
are not material; no termination event or condition or, to the knowledge of the
Seller, uncured default on the part of the Company or the applicable Subsidiary
or, to the knowledge of the Seller, the Collocator, exists under any Collocation
Agreement, and, to the knowledge of the Seller in the case of Collocators, no
event has occurred and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute such a default or termination event
or condition.
(e) No Options. Neither the Seller, the Company nor any Subsidiary owns or
holds, or is obligated under or a party to, any option, right of first refusal
or other contractual right to purchase, acquire, sell, dispose of or lease the
Real Property and Structures or any portion thereof or interest therein.
(f) Condition and Operation of Tower Assets. All of the towers, tower grounding
rings, tower foundations, fences, landscaping, tower lighting and tower lighting
control panels, buildings, structures, fixtures and other improvements owned by
the Company or any Subsidiary, whether completed (the "Completed Tower Assets")
or under construction (the "Uncompleted Tower Assets" and, together with the
Completed Tower Assets, the "Tower Assets"), are located in or on the Real
Property and Structures and, in the case of Completed Tower Assets, are serviced
by all utilities believed by the Seller to be reasonably necessary for the
operation of the Tower Assets as currently used and have adequate access to
public streets. Schedule 3.19(f)(i) contains a list and brief description of all
Completed Tower Assets and Schedule 3.19(f)(ii) contains a list and brief
description of all Uncompleted Tower Assets. All completed Tower Assets are in
good operating condition and repair, ordinary wear and tear excepted. During the
past three years there has not been any significant interruption of the
operations of the Company or any of the Subsidiaries due to inadequate
maintenance of the Tower Assets.
14
(g) Condemnation. There is no pending or threatened in writing condemnation
proceeding and, to the knowledge of the Seller, there is no other threatened
condemnation proceeding affecting the Real Property and Structures or any part
thereof, or any sale or other disposition of the Real Property and Structures or
any part thereof.
(h) Casualty. No portion of the Real Property and Structures or the Tower Assets
suffered any material damage by fire or other casualty which has not heretofore
been completely repaired and restored to its original condition. To the
knowledge of the Seller, no portion of the Real Property and Structures is
located in a special flood hazard area as designated by Federal governmental
authorities.
(i) Real Property Taxes. To the knowledge of the Seller, there has been no
imposition of any special assessments with respect to any Real Property and
Structures.
(j) Zoning. There is no pending or, to the knowledge of the Seller, the Company
or the Subsidiaries, threatened in writing action or proceeding to change the
zoning classification of any Real Property and Structures in a manner that would
interfere with the use and operation of any of the Tower Assets or the ability
to restore the same after a casualty.
(k) Documents Delivered. There will be made available to the Buyer after the
date hereof, to the extent in the possession of the Seller, the Company, the
Subsidiaries or any of their agents or affiliates, the true, correct and
complete:
(i) design drawings and specifications for the Tower Assets, construction,
engineering and architectural drawings, structural analyses, as-built
drawings and related site plans and surveys pertaining to the
construction of the Tower Assets;
(ii) Federal Aviation Administration applications, responses, approvals and
registrations numbers submitted or received by the Company or the
Subsidiaries;
(iii) zoning permits and approvals, variances, building permits and such
other federal, state or local governmental approvals which have been
obtained or for which the Company or the Subsidiaries have made
application;
(iv) geotechnical reports (being reports of soil conditions for the purpose
of tower foundation design) which have been commissioned by the Company
or the Subsidiaries;
(v) title reports, commitments for title insurance, ownership and
encumbrance reports, title opinion letters, copies of
15
instruments in the chain of title or any other information which may
have been produced regarding title to the Real Property and Structures
or the Tower Assets;
(vi) environmental assessments, including Phase I reports and, if
commissioned, Phase II reports and any environmental reports involving
contemporaneous or subsequent intrusive testing, the "FCC Checklist"
performed pursuant to NEPA requirements and any other information which
may have been produced regarding the environmental condition of the
Real Property and Structures or neighboring real property; and
(vii) all guarantees and warranties related to the Tower Assets.
(l) Construction. To the knowledge of the Seller, the Uncompleted Tower Assets
(to the extent completed) and the Completed Tower Assets have been constructed
substantially in accordance with the design drawings and other items described
in Section 3.19(k)(i). Construction of all Completed Tower Assets has been
completed. With respect to the Uncompleted Tower Assets, Schedule 1.2 sets
forth, with respect to the costs of construction of the Uncompleted Tower
Assets, management's best good faith estimates of (i) the amounts expended as of
December 31, 1999, January 31, 2000, February 29, 2000 and (ii) the projected
completed cost.
(m) Geotechnical Reports. The Company or the Subsidiaries commissioned
geotechnical reports prior to the construction of each of the Tower Assets for
which they arranged the construction, and all such Tower Assets were constructed
in accordance with the recommendations contained in such reports.
(n) Capacity. Each Completed Tower Asset has the used (current) capacity set
forth on Schedule 3.19(f)(i). The Completed Tower Assets have, in the aggregate
(and assuming that all capital expenditures set forth in the column labeled "Eng
cost to achieve" on Schedule 3.19(f)(i) shall be made), the total design
(realistic) capacities set forth on Schedule 3.19(f)(i) as to each of the
following: PCS/MW; Paging; UHF; 800/900; FM; TV; LPFM; and LPTV. Each
Uncompleted Tower Asset will have, if constructed in accordance with the
drawings, plans and specifications therefor, the following capacities: (x) for
Uncompleted Tower Assets constructed on Leased Real Property leased from the
Florida Department of Transportation, a capacity of four broadband tenant
equivalents per Uncompleted Tower Asset; and (y) for Uncompleted Tower Assets
constructed along Interstate 70, a capacity of at least four broadband tenant
equivalents per Uncompleted Tower Asset.
(o) Pending Acquisitions. Schedule 3.19(o) identifies communications towers
either acquired, or expected to be acquired, by the Company since the Audited
Statements Date. The aggregate gross revenues from said towers is not less than
$100,000. Said towers have an average additional capacity of 1.7 broadband
tenant equivalents per tower.
3.20 Intellectual Property. The Company and each of the Subsidiaries own or have
valid rights to use the material trademarks, trade names,
16
copyrights, patents, logos, logo types, type styles and computer software
programs (excluding the source codes thereto) that are necessary for the conduct
of their respective businesses as now being conducted. To the knowledge of the
Seller, neither the Company nor any of the Subsidiaries has received written
notice that the Company or any of the Subsidiaries is infringing on any
trademark, trade name, copyright, patent or other intangible property right or
any registration thereof or application pending therefor which is necessary for
the conduct of their business on the date hereof.
3.21 Title to Properties. The Company and the Subsidiaries own outright and have
good title to all of the assets reflected for value on the Audited Balance Sheet
(but not including, however, (x) the Real Property and Structures, which is
addressed in Section 3.19, (y) leasehold interests in any property, real or
personal, and (z) licensed interests in any intellectual property), in each case
free and clear of any Lien, except for Permitted Encumbrances.
3.22 Liabilities. As at the Audited Balance Sheet Date, the Company and the
Subsidiaries did not have any Liabilities that were not fully and adequately
reflected or reserved against on the Audited Balance Sheet or described on any
Schedule or in the notes to the Audited Financials, in either case as required
by GAAP. The Company and the Subsidiaries have not, except in the ordinary
course of business, incurred any Liabilities since the Balance Sheet Date.
3.23 Employee Benefits.
(a) Schedule 3.23, which constitutes the Lodestar Towers, Inc. employee
handbook, accurately describes each employee benefit plan, program, arrangement,
policy or commitment (including, without limitation, any executive compensation,
incentive bonus or other bonus, employee pension, profit-sharing, savings,
retirement, stock option, stock purchase, severance pay, life, health,
disability or accident insurance plan, or vacation, or other employee benefit
plan, program, arrangement, agreement or commitment, including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA)
under which the Company or any of the Subsidiaries has any obligation to
contribute, or has any direct or indirect liability, whether contingent or
otherwise (each, a "Company Plan") other than for performance based incentive
plans in the ordinary course (the details of which shall be made available to
the Buyer after the date hereof).
(b) Neither the Company nor any Subsidiary nor any person who would be
considered a single employer with either the Company or any of the Subsidiaries
pursuant to Section 414(b), (c), (m) or (o) of the Code maintains or contributes
to, or has within the preceding six years maintained or contributed to, or has
had during such period the obligation to maintain or contribute to, or may have
any liability with respect to, any Company Plan subject to Title IV of ERISA or
Section 412 of the Code or any multiple employer plan within the meaning of the
Code or ERISA.
(c) With respect to each Company Plan, (i) all payments due from the Company or
any Subsidiary to date have been made when due and all amounts properly accrued
to date or as of the date of the Closing as liabilities of
17
the Company which have not been paid have been properly recorded on the books of
the Company; (ii) the Company and each Subsidiary has complied with, and each
such Company Plan conforms in form and operation to, all applicable laws and
regulations, including, but not limited to, ERISA and the Code, in all material
respects; (iii) each such Company Plan which is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and intended to qualify under
Section 401 of the Code is so qualified, and, to the knowledge of the Seller,
nothing has occurred that is likely to adversely affect such qualification; and
(iv) there are no actions, suits or claims pending (other than routine claims
for benefits) or threatened in writing with respect to such Company Plan or
against the assets of such Company Plan.
(d) The consummation of the transactions contemplated by this Agreement will not
(i) accelerate the time of the payment or vesting of, or increase the amount of,
compensation due to any Employee, (ii) reasonably be expected to result in any
excess parachute payment under section 280G of the Code, (iii) result in any
liability to any Employee, including, but not limited to, as a result of the
Worker Adjustment Retraining and Notification Act, or (iv) result in any
liability to any Employee under any change of control, severance, stay bonus,
employment or other similar arrangement.
(e) Neither the Company nor any Subsidiary has an announced plan or legally
binding commitment to create any additional Company Plans or to amend or modify
any existing Company Plan, other than to increase the Company's matching 401(k)
plan contributions as previously approved and announced.
(f) Neither the Company nor any Subsidiary has any liability, whether absolute
or contingent, direct or indirect, including any obligations under any Company
Plan, with respect to any misclassification of a person as an independent
contractor rather than as an Employee.
(g) Neither the Company nor any Subsidiary has any obligation to provide or any
direct or indirect liability, whether contingent or otherwise, with respect to
the provision of health or death benefits following termination of employment to
any Employees, except as may be required pursuant to COBRA and the costs of
which are fully paid by such Employees.
3.24 Employment and Labor Matters.
(a) Neither the Company nor any Subsidiary is a party to any collective
bargaining agreements and there are no labor unions or other organizations
representing or, to the knowledge of the Seller, purporting to represent or
attempting to represent, any Employee.
(b) Neither the Company nor any Subsidiary has violated in any material respect
any provision of federal or state law or any governmental rule or regulation, or
any Order of any Governmental Body regarding the terms and conditions of
employment of Employees or prospective employees or other labor related matters,
including, without limitation, laws, rules, regulations, orders, rulings,
decrees,
18
judgments and awards relating to discrimination, fair labor standards and
occupational health and safety, wrongful discharge or violation of the personal
rights of Employees or prospective employees.
3.25 Insurance. Schedule 3.25 sets forth a list (specifying the insurer,
describing each pending claim thereunder of more than $50,000 and setting forth
the aggregate amounts paid out under each such policy during the past
twenty-four months and the aggregate limit, if any, of the insurer's liability
thereunder) of all policies or binders of fire, liability, product liability,
worker's compensation, vehicular and other insurance held by or on behalf of the
Company or any of the Subsidiaries, and includes fire and comprehensive coverage
for the full replacement value of all Tower Assets. Such policies and binders
are valid and binding in accordance with their terms, are in full force and
effect, and, to the knowledge of the Seller, insure against risks and
liabilities to an extent and in a manner customary in the industries in which
the Company and the Subsidiaries operate. Neither the Company nor any of the
Subsidiaries is in material default with respect to any provision contained in
any such policy or binder or has failed to give any notice or present any claim
under any such policy or binder in due and timely fashion. There are no
outstanding unpaid claims under any such policy or binder, and neither the
Company nor any of the Subsidiaries has received any notice of cancellation or
non-renewal of any such policy or binder. Since January 1, 1997, there has been
no written notice from any insurer requiring or recommending a change in any
operating procedures, the performance of any work or the taking of any other
action which has not heretofore been fully complied with. Neither the Company
nor any of the Subsidiaries has received any notice from any of its insurance
carriers or any Governmental Body that any insurance premiums will or may be
materially increased in the future or that any insurance coverage listed on
Schedule 3.25 will or may not be available in the future on substantially the
same terms as now in effect.
3.26 Operations of the Company. Except as set forth on any Schedule and for the
Contemplated Transactions, since the Audited Balance Sheet Date, the Company and
each of the Subsidiaries has only engaged in business conducted in the ordinary
course, and neither the Company nor any of the Subsidiaries has:
(a) declared or paid any dividends or declared or made any other distributions
of any kind to its shareholders, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of its capital stock;
(b) except for short-term bank borrowings in the ordinary course of business,
the Seller Capital Loans and borrowings pursuant to the TD Credit Facility,
incurred any indebtedness for borrowed money;
(c) reduced its cash or short-term investments or their equivalent, other than
to meet cash needs arising in the ordinary course of business, consistent with
past practices;
(d) waived any material right under any Contract of the type required to be set
forth on any Schedule;
19
(e) made any change in its accounting methods or practices or made any change in
depreciation or amortization policies or rates adopted by it;
(f) made any loan or advance to any of its shareholders, officers, directors,
employees, consultants, agents or other representatives (other than travel
advances made in the ordinary course of business), or made any other loan or
advance otherwise than in the ordinary course of business;
(g) except with respect to inventory or equipment in the ordinary course of
business, sold, abandoned or made any other disposition of any of its properties
or assets;
(h) except with respect to acquisitions of communications towers made after the
date of this Agreement with the prior written consent of the Buyer, made any
acquisition of all or any part of the properties, assets, capital stock or
business of any other person;
(i) paid, directly or indirectly, any of its material Liabilities before the
same became due in accordance with its terms, otherwise than in the ordinary
course of business;
(j) terminated or failed to renew, or received any written threat (that was not
subsequently withdrawn) to terminate or fail to renew, any Contract that is or
was material to the Condition of the Companies;
(k) amended its Certificate of Incorporation or By-Laws (or comparable
instruments) or merged with or into or consolidated with any other person,
subdivided or in any way reclassified any shares of its capital stock or changed
or agreed to change in any manner the rights of its outstanding capital stock;
(l) established or increased the benefits under, or promised to establish,
modify or increase the benefits under, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or employment, consulting or severance agreement, or
otherwise increased the compensation payable or to become payable to any
directors, officers or Employees of the Company or the Subsidiaries, except in
the ordinary course, or established, adopted or entered into any collective
bargaining agreement; or
(m) engaged in any other material transaction other than in the ordinary course
of business.
3.27 Banks, Brokers and Proxies. The Seller will make available to the Buyer
after the date hereof a schedule which sets forth (a) the name of each bank,
trust company, securities or other broker or other financial institution with
which the Company or any of the Subsidiaries has an account, credit line or safe
deposit box or vault; (b) the name of each person authorized by the Company or
any of the Subsidiaries to draw thereon or to have access to any safe deposit
box or vault; (c) the purpose of each such account, safe deposit box or
20
vault; and (d) the names of all persons authorized by proxies, powers of
attorney or other instruments to act on behalf of the Company or any of the
Subsidiaries in matters concerning its business or affairs.
3.28 Premerger Notification. As soon as practical after the date hereof, the
Company (or its ultimate parent entity) will file notification and report forms
with respect to the Contemplated Transactions in compliance with the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, and the rules and
regulations promulgated thereunder (the "HSR Act").
3.29 Standard of Disclosure. References to specific dollar amounts in Section 3
are for convenience of disclosure only and do not establish or imply a standard
of materiality, a standard for what is or is not in the ordinary course, or any
other standard for disclosure set forth in this Agreement. No implication shall
be drawn that any condition, set of facts or other disclosure set forth in a
Schedule is necessarily material or is otherwise required to be disclosed or
that the inclusion of such disclosure establishes or implies a standard of
materiality, a standard for what is or is not in the ordinary course, or any
other standard for disclosure set forth in this Agreement.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller as follows:
4.1 Due Incorporation and Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being and as heretofore
conducted.
4.2 Authority to Execute and Perform Agreement. The Buyer has the full legal
right and power and all authority and approvals required to execute and deliver
this Agreement and to perform fully its obligations hereunder. This Agreement
has been duly executed and delivered by the Buyer and (assuming the due
authorization, execution and delivery hereof by the Seller) is a valid and
binding obligation of the Buyer enforceable in accordance with its terms. The
execution and delivery by the Buyer of this Agreement, the consummation of the
Contemplated Transactions and the performance by the Buyer of this Agreement in
accordance with its terms will not (a) require the consent of any Governmental
Body (excluding notification and report forms filed pursuant to the HSR Act) or
any other person; (b) conflict with or result in any breach or violation of any
of the terms and conditions of, or constitute (or with notice or lapse of time
or both constitute) a default under, the Certificate of Incorporation or By-Laws
of the Buyer, any Law or Order of any Governmental Body applicable to the Buyer,
or any Contract to which the Buyer is a party or by or to which the Buyer or any
of its properties is bound or subject; or (c) result in the creation of any Lien
on any of the properties of the Buyer.
4.3 Purchase for Investment. The Buyer is purchasing the Shares for its own
account for investment and not with a view toward or for resale in
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connection with any distribution thereof. The Buyer acknowledges that the sale
of the Shares has not been registered under the Securities Act of 1933, as
amended, or any applicable state securities laws and that such Shares may only
be sold or otherwise disposed of under an effective registration statement under
the Securities Act of 1933, as amended, or under an exemption therefrom. The
Buyer is an accredited investor, as defined in Rule 501(a) of the Securities Act
of 1933, as amended.
4.4 Premerger Notification. As soon as practical after the date hereof, the
Buyer (or its ultimate parent entity) will file notification and report forms
with respect to the Contemplated Transactions in compliance with the HSR Act.
5. Covenants and Agreements.
5.1 Conduct of Business. From the date hereof through the Closing Date, the
Seller agrees that it (a) shall cause the Company and the Subsidiaries to
conduct their businesses in the ordinary course and, without the prior written
consent of the Buyer which may not be unreasonably withheld or delayed, not to
undertake any of the actions specified in Section 3.26 and (b) shall cause the
Company and the Subsidiaries to use commercially reasonable efforts to conduct
their businesses in such a manner so that the representations and warranties
contained in Article 3 shall continue to 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.
Without limiting the foregoing, between the date hereof and the Closing Date,
the Company and the Subsidiaries shall: (A) not, without the prior written
consent of the Buyer, which consent may not, with respect to amendments to Real
Property Leases or Collocation Agreements, be unreasonably withheld or delayed,
(i) amend in any material respect or terminate any Real Property Lease, (ii)
amend in any material respect or terminate any Collocation Agreement, (iii)
enter into any new Collocation Agreement (other than Collocation Agreements
pursuant to commitments therefor entered into prior to the date of this
Agreement); provided, however, that the Seller shall cooperate with the Buyer to
market collocation; (B) not assign, sell, encumber or otherwise transfer or
dispose of any of the Real Property and Structures or the Tower Assets; (C) use
commercially reasonable efforts to (i) maintain all of the Real Property and
Structures and the Tower Assets in their present condition, reasonable wear and
tear and ordinary usage excepted, and (ii) promptly repair any damage to any
Real Property and Structures or Tower Assets; and (D) use commercially
reasonable efforts to maintain all Permits in full force and effect. The Seller,
on the one hand, and the Buyer, on the other hand, shall give each other prompt
notice of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, of such parties or that would constitute a violation or breach of
any covenant of any of such parties contained in this Agreement.
5.2 Corporate Examinations and Investigations. Prior to the Closing Date, the
Seller agrees that the Buyer shall be entitled, through its employees and
representatives, to make such investigation of the properties, businesses and
operations of the Company and the Subsidiaries, and such examination of the
books, records and financial condition of the Company and the Subsidiaries, as
it wishes. Any such
22
investigation and examination shall be conducted at reasonable times and under
reasonable circumstances, and the Seller shall, and shall cause the Company and
the Subsidiaries to, cooperate fully therein. No investigation by the Buyer
shall diminish or obviate any of the representations, warranties, covenants or
agreements of the Seller contained in this Agreement. In order that the Buyer
may have full opportunity to make such physical, business, accounting and legal
review, examination or investigation as it may wish of the affairs of the
Company and the Subsidiaries, (a) the Seller shall make available and shall
cause the Company and the Subsidiaries to make available to the representatives
of the Buyer during such period (i) all reports, assessments, audits, reviews,
plans, analyses and other documents or correspondence in the possession or
control of the Seller, the Company or any of the Subsidiaries relating to the
condition of the Environment, the effect of the operations of the Company or any
of the Subsidiaries on the Environment, or the compliance of the Company or any
of the Subsidiaries with Safety and Environmental Laws and (ii) all information
and copies of such documents concerning the affairs of the Company and the
Subsidiaries as such representatives may reasonably request, (b) the Seller
shall permit the representatives of the Buyer access to the Real Property and
Structures and the Tower Assets, subject to any restrictions on access in the
Real Property Leases, and (c) the Seller shall use commercially reasonable
efforts to cause its officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with such representatives in connection with such
review and examination. If this Agreement terminates, (a) the Buyer shall, and
shall cause its employees and representatives to, keep confidential, and shall,
and shall cause its employees and representatives to, not use in any manner any
information or documents obtained from the Company or the Subsidiaries
concerning their properties, businesses and operations, unless (i) disclosure of
such information or documents shall be required by applicable Law or Order, or
(ii) disclosure of such information or documents is reasonably required in
connection with any litigation against or involving the Buyer with respect to
the Contemplated Transactions, or (iii) such information is or such documents
are readily ascertainable from public or published information, or trade
sources, or, without violation of this Agreement by the Buyer or its employees
or representatives, already known or subsequently developed by the Buyer
independently of any investigation of the Company or the Subsidiaries, and (b)
any documents obtained from the Company or the Subsidiaries and all copies
thereof shall be returned to the Company.
5.3 Publicity. The parties agree that no publicity release or announcement
concerning this Agreement or the Contemplated Transactions shall be made without
advance approval thereof by the Seller and the Buyer, except as shall be
required by applicable Law or Order (and in which case the announcing party
shall make reasonable efforts to obtain the input and approval of the other
party in advance of such publicity release or announcement).
5.4 Expenses. The parties to this Agreement shall, except as otherwise
specifically provided herein, bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Contemplated Transactions, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants. With respect to
any real property transfer taxes incurred in connection with the Contemplated
Transactions, the Buyer, on the one hand,
23
shall bear one half of the amount of such real property transfer taxes and the
Seller, on the other hand, shall bear one half of the amount of such real
property transfer taxes.
5.5 Indemnification of Brokerage. Each party hereto agrees to indemnify and save
the other harmless from any claim or demand for commission or other compensation
by any broker, finder, agent or similar intermediary claiming to have been
employed by or on behalf of such party or any of its affiliates, and to bear the
cost of legal expenses incurred in defending any such Claim or demand. Claims
for indemnification under this Section 5.5 will be made in accordance with the
provisions set forth in Section 9.3 but will not be subject to any of the
limitations set forth in Section 9.4.
5.6 Related Parties.
(a) The Seller shall, prior to or at the Closing, pay or cause to be paid to the
Company or each of the Subsidiaries, as the case may be, all amounts owed to the
Company or such Subsidiary by the Seller or any of its affiliates (other than
the Company or any Subsidiary).
(b) At and as of the Closing, any debts of the Company or any of the
Subsidiaries owed to the Seller or to any of its affiliates (other than the
Company or any Subsidiary), including intercompany advances, demand notes and
debentures (but excluding Seller Capital Loans, which are addressed in Section
5.7, and trade accounts payable in the ordinary course and at market rates),
shall be contributed to the capital of the Company. The Buyer will cause such
trade accounts payable to be paid in the ordinary course.
(c) Within 30 days after the Closing, the Buyer will cause the $50,000 letter of
credit posted by the Seller with the Florida Department of Transportation
pursuant to the Florida DoT Contract to be returned, undrawn, to the Seller.
5.7 Termination of Debt.
(a) The Seller shall cause the Company and the Subsidiaries to, prior to or at
the Closing, pay or repay and terminate all Debt of the Company and each
Subsidiary, including, without limitation, (i) the Credit Agreement, dated
December 13, 1999, among Lodestar Towers, Inc. and the lenders named therein
(the "TD Credit Facility"), and (ii) the Seller Capital Loans, but excluding the
Promissory Notes which are addressed in paragraph (b) below. At the Seller's
option, by written notice delivered to the Buyer prior to Closing, the Seller
may direct the Buyer to wire transfer a portion of the Purchase Price otherwise
payable by the Buyer to the Seller at Closing under Section 1 to satisfy the TD
Credit Facility and/or the Seller Capital Loans, in which event such payment
shall reduce the amount otherwise payable by the Buyer to the Seller at Closing
under Section 1 on a dollar for dollar basis.
(b) The Seller agrees to use commercially reasonable efforts to restructure the
financial and legal arrangements related to the Promissory Notes,
24
in consultation with the Buyer, so as to be able to cause the Company to repay
and terminate the Promissory Notes prior to or at Closing. If the Promissory
Notes are repaid prior to or at Closing, then the Buyer will increase the amount
otherwise payable to the Seller at Closing on a dollar for dollar basis. If the
Seller is unable to cause the Promissory Notes to be repaid prior to or at
Closing, the Buyer and the Seller agree to restructure the Contemplated
Transactions so as to enable the Buyer to acquire the Company and the
Subsidiaries without any Debt outstanding on the closing date of such
acquisition in a way that maintains the economics negotiated in this Agreement.
5.8 Release of Liens. The Seller shall cause the Company and the Subsidiaries to
terminate and release all Liens on the capital stock and the assets of the
Company and each of the Subsidiaries, other than Liens referred to in clauses
(1), (2), (3) and (4) of the definition of Permitted Encumbrances, prior to or
at the Closing.
5.9 Required Consents. The Seller shall, prior to the Closing, use commercially
reasonable efforts to obtain or make, at its sole expense, all Required Consents
and undertake all commercially reasonable actions and incur all commercially
reasonable expenses, costs and obligations required pursuant to the Required
Consents.
5.10 Permit Transfers. At and as of the Closing, the Seller, at its sole
expense, shall use commercially reasonable efforts to cause the transfer,
reissuance or modification of any Permits to the extent that such is required to
cause the Permits to remain in full force and effect in the possession of the
Company or any Subsidiary after the Closing.
5.11 Tax Matters.
(a) Tax Indemnity. Subject to the limitations set forth in Section 5.11(f), the
Seller shall indemnify and hold harmless the Buyer against the following amounts
(including any Loss reasonably incurred in contesting or otherwise in connection
with any such amounts) (collectively, "Indemnified Taxes"): (i) Taxes imposed on
or required to be withheld by the Company or any of the Subsidiaries (including,
without limitation, Taxes imposed as a result of the Company or any of the
Subsidiaries being included in an affiliated group that files consolidated or
combined returns by reason of U.S. Treasury Regulation ss.1.1502-6 or any
comparable provision of state, local or foreign law that provides for joint or
several liability) with respect to any taxable year or period ending on or
before the Closing Date, except for (A) Taxes, other than deferred taxes, that
have been reserved or otherwise accrued or reflected on the Audited Balance
Sheet, and (B) Taxes in an amount equal to the accrued and unpaid Taxes of the
Company and its Subsidiaries reflected on the books and records of the Company
and its Subsidiaries since December 31, 1999 in the ordinary course of business
consistent with past practice and relating to operations since December 31,
1999; (ii) with respect to any taxable year or period beginning before the
Closing Date and ending after the Closing Date, Taxes imposed on or required to
be withheld by the Company or any of its Subsidiaries which are allocable,
pursuant to Section 5.11(b) below, to the portion of such taxable year or period
ending at the end of the day on the Closing Date (an "Interim Period") (Interim
Periods and any taxable years or periods that
25
end on or prior to the Closing Date being referred to collectively hereinafter
as "Pre-Closing Periods"), except for (A) Taxes, other than deferred taxes, that
have been reserved or otherwise accrued or reflected on the Audited Balance
Sheet, and (B) Taxes in an amount equal to the accrued and unpaid Taxes of the
Company and its Subsidiaries reflected on the books and records of the Company
and the Subsidiaries since December 31, 1999 in the ordinary course of business
consistent with past practice and relating to operations since December 31,
1999; and (iii) Taxes arising from the Company or any of the Subsidiaries
ceasing to be members of an affiliated group that files consolidated or combined
income tax returns by reason of any of the Contemplated Transactions; and (iv)
without duplication of any Indemnified Taxes referred to in clauses (i) or (ii)
hereof, Taxes imposed on the Buyer, the Company or any affiliate of the Buyer or
the Company as a result of a breach or inaccuracy of any representation or
warranty set forth in Section 3.12, or as a result of a breach of any covenant
contained in this Section 5.11 without duplication. The Seller shall pay to the
Buyer any Tax indemnity required to be paid pursuant to the preceding sentence
within 15 days of the Seller's receipt of a written request therefor from the
Buyer describing in reasonable detail the Indemnified Taxes which are the
subject of and basis for such Tax indemnity and the computation of the amount so
payable; provided, that if Indemnified Taxes are being contested in accordance
with Section 5.11(e), the Seller shall pay any required Tax indemnity to the
Buyer within 15 days of final resolution of such contest. The failure of the
Buyer to submit to the Seller a written request for indemnification under this
Section 5.11 shall not relieve the Seller of its indemnity obligation under this
Section 5.11. Subject to the limitations set forth in Section 5.11(f), the Buyer
shall indemnify and hold harmless the Seller against the following amounts
(including any Loss reasonably incurred in contesting or otherwise in connection
with any such amounts) (also, collectively, "Indemnified Taxes"): Taxes imposed
on or required to be withheld by the Company or any of the Subsidiaries
(including, without limitation, Taxes imposed as a result of the Company or any
of the Subsidiaries being included in an affiliated group that files
consolidated or combined returns by reason of U.S. Treasury Regulation
ss.1.1502-6 or any comparable provision of state, local or foreign law that
provides for joint or several liability) with respect to any taxable year or
period beginning after the Closing Date (including the portion of any Interim
Period beginning after the Closing Date). The Buyer shall pay to the Seller any
Tax indemnity required to be paid pursuant to the preceding sentence within 15
days of the Buyer's receipt of a written request therefor from the Seller
describing in reasonable detail the Indemnified Taxes which are the subject of
and basis for such Tax indemnity and the computation of the amount so payable;
provided, that if indemnified taxes are being contested in accordance with
Section 5.11(e), the Buyer shall pay any required Tax indemnity to the Seller
within 15 days of final resolution of such contest. The failure of the Seller to
submit to the Buyer a written request for indemnification under this Section
5.11 shall not relieve the Buyer of its indemnity obligation under this Section
5.11.
(b) Allocation of Taxes. In the case of Taxes that are payable with respect to
an Interim Period, the portion of any such Tax that is allocable to the portion
of the Interim Period ending on the Closing Date shall be deemed equal to:
26
(i) in the case of Taxes that are either (x) based upon or related to
income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible), the amount of such Taxes which would be payable if the
taxable year ended on the Closing Date determined, to the extent
permissible under applicable Laws, in a manner which is consistent with
the relevant company's accounting practices and business operations as
in effect prior to the Closing Date (except that, solely for purposes
of determining the marginal tax rate applicable to income or receipts
during such period in a jurisdiction in which such tax rate depends
upon the level of income or receipts, annualized income or receipts may
be taken into account, if appropriate, for an equitable sharing of such
Taxes); and
(ii) in the case of Taxes not described in subparagraph (i) that are imposed
on a period basis and measured by the level of any item, the amount of
such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the period ending at the end of
the day on the Closing Date and the denominator of which is the number
of calendar days in the entire period and determined, to the extent
permissible under applicable Laws, in a manner which is consistent with
the relevant company's accounting practices and business operations as
in effect prior to the Closing Date.
(c) Filing of Tax Returns and Payment of Taxes. The Seller shall prepare and
timely file, or shall cause the Company to prepare and timely file, all Tax
Returns with respect to the Company and the Subsidiaries for the taxable years
or periods that end on or prior to the Closing Date, including, for those
jurisdictions and tax authorities that permit or require a short period Tax
Return, for the period ending on and including the Closing Date (the "Indemnitor
Returns"). All such Indemnitor Returns shall be prepared and filed in a manner
that is consistent with past practice, except as required by applicable Law. The
Seller shall deliver such Indemnitor Returns to the Buyer at its address
specified in Section 11.3 at least 20 days prior to the respective due dates of
such Indemnitor Returns (as the same may have been validly extended) for the
approval of the Buyer, such approval not to be unreasonably withheld or delayed.
If any Indemnitor Returns have not been filed as of the Closing Date, the
Company shall timely file such Indemnitor Returns as prepared by the Seller in
accordance with the foregoing sentences of this Section 5.11(c). The Buyer shall
prepare and timely file all Tax Returns with respect to the Company and its
Subsidiaries for Interim Periods (the "Straddle Returns") and for all periods
that do not end on or prior to the Closing Date. The Buyer shall deliver the
Straddle Returns, and a statement setting forth any amounts on such Straddle
Returns allocable to an Interim Period pursuant to Section 5.11(b) of this
Agreement (a "Straddle Statement"), to the Seller at its address specified in
Section 11.3 at least 20 days prior to the respective due dates of such Straddle
Returns as the same may have been validly extended for the approval of the
Seller, such approval not to be unreasonably withheld or delayed. If the Seller
does not approve the Straddle Statement, and the Seller and the Buyer cannot
otherwise agree, such Straddle Statement shall be submitted to the Independent
Accountant for binding resolution in accordance with this
27
Section 5.11(c). The fees of the Independent Accountant incurred in connection
with the resolution of any dispute under this Section 5.11(c) shall be shared
equally by the Buyer, on the one hand, and the Seller, on the other hand.
(d) Tax Refunds. Any Tax refund (including any interest with respect thereto)
relating to a Pre-Closing Period of the Company and its Subsidiaries shall be
the property of the Seller and, if received by the Buyer, shall be payable to
the Seller within 15 business days of the Buyer's receipt, except for (x) any
such Tax refunds attributable to the carry back of losses incurred in or with
respect to any taxable year or period beginning after the Closing Date and (y)
any such Tax refunds reflected or accrued as a receivable or other asset on the
Audited Balance Sheet or on the books and records of the Company and its
Subsidiaries since December 31, 1999 in the ordinary course of business
consistent with past practice relating to operations since December 31, 1999. In
the event the Seller receives any amount relating to a refund under this Section
5.11(d) and subsequent thereto adjustments are made to any item that gave rise
to such refund and as a result thereof either the Company or any of its
Subsidiaries is required to pay any additional Taxes for which either the
Company or any of its Subsidiaries is not otherwise indemnified for by the
Seller under this Agreement, then the Seller shall pay all or any portion of
such refund relating to such adjustment back to either the Company or its
Subsidiaries, as the case may be, within 15 days of receipt of such refund.
(e) Contests.
(i) After the Closing Date, the Buyer shall promptly notify the Seller, or
the Seller shall promptly notify the Buyer, in each case in writing, of
any written notice of a proposed assessment or claim in an audit or
administrative or judicial proceeding involving the Company or its
Subsidiaries which, if determined adversely to the taxpayer, would be
grounds for indemnification under this Section 5.11; provided, however,
that failure to give prompt written notice of any such claim shall bar
indemnification hereunder only to the extent such failure materially
prejudices the Indemnifying Party.
(ii) Except as provided in Section 5.11(e)(iii) below, in the case of an
audit or administrative or judicial proceeding that relates to any
Pre-Closing Period, the Seller shall have the right, at its own
expense, to control the conduct of such audit or proceeding, provided
that within 30 days after the Seller has received notice directly, or
the written notice from the Buyer that is required under Section
5.11(e)(i) above, and prior to taking any action with respect to such
audit or administrative or judicial proceeding, the Seller acknowledges
in writing its liability under Sections 5.11(a) above, subject to the
limitations set forth in Section 5.11(f) of this Agreement, to hold the
Buyer harmless against the full amount of any adjustment which may be
made as a result of such audit or proceeding that relates to the
Pre-Closing Period and provided further, that the Seller shall not
settle or agree to settle any such audit or proceeding without the
written consent of the Buyer (which consent shall not be unreasonably
withheld or delayed). The Buyer also may participate in any such
28
audit or proceeding at its own expense and, if the Seller does not
assume the defense of any such audit or proceeding, the Buyer may
defend the same at its own expense in such manner as it may deem
appropriate, including, but not limited to, settling such audit or
proceeding, without any effect on the Buyer's right to indemnification
under this Section 5.11.
(iii) With respect to a proposed adjustment for an Interim Period or for
which both the Seller (as evidenced by its acknowledgment under this
Section 5.11(e)) and the Buyer could be liable (x) the Seller and the
Buyer may each participate in the audit or proceeding, and (y) the
audit or proceeding shall be controlled by the Seller or the Buyer,
whichever would bear the burden of the greatest portion of the
adjustment. The principle set forth in the preceding sentence shall
govern also for purposes of deciding any issue that must be decided
jointly (in particular, choice of judicial forum) in situations in
which separate issues are otherwise controlled hereunder by the
Seller and the Buyer.
(f) Additional Provisions Affecting Tax Indemnification. If an audit adjustment
for a Pre-Closing Period (A) gives rise to an indemnity obligation pursuant to
which payment is made under Section 5.11(a), and (B) results in a reduction of
the taxable income of the Company, any Subsidiary or the Buyer for a taxable
year or period beginning after the Closing Date (such reduction in taxable
income is referred to herein as a "Post-Closing Tax Benefit"), then the Buyer
shall repay to the Seller the portion of such indemnity payment corresponding to
the "realized value" of such Post-Closing Tax Benefit. The "realized value" of a
Post-Closing Tax Benefit shall be equal to the excess of (x) the liability of
the Buyer for Taxes for the taxable year or period in respect of which the
Post-Closing Tax Benefit is realized, computed without regard to any deductions
or credits directly attributable to the Post-Closing Tax Benefit over (y) the
actual liability of the Buyer for Taxes for such taxable year or period. Any
repayment required to be made by the Buyer pursuant to this Section 5.11(f)
shall be made within 15 days following the Buyer's actual utilization of the
Post-Closing Tax Benefit to reduce its Taxes payable.
(g) Cooperation and Exchange of Information. The Buyer and the Seller shall
provide each other with such cooperation and information as any of them
reasonably may request in filing any Tax Return, amended Tax Return or claim for
refund, determining a liability for Taxes or a right to a refund of Taxes, or
participating in or conducting any audit or other proceeding in respect of Taxes
of the Company or any Subsidiary. Such cooperation and information shall include
providing copies of relevant Tax Returns of the Company or any Subsidiary or
portions thereof, together with accompanying schedules, related work papers and
documents relating to rulings or other determinations by Tax authorities. The
Seller and the Buyer shall make their respective employees available on a basis
mutually convenient to both parties to provide explanations of any documents or
information provided hereunder. The Seller and the Buyer shall retain all Tax
Returns, schedules, work papers, records and other documents in their respective
possession relating to Tax matters of the Company and its Subsidiaries for each
taxable year or period until the later of (i) the expiration of the statute of
limitations of the taxable periods to which such Tax Returns and other
29
documents relate, without regard to extensions except to the extent notified by
the other party in writing of such extensions for the respective Tax periods, or
(ii) five years following the due date (without extension) for such Tax Returns.
Any information obtained under this Section 5.11(g) shall be kept confidential
except as may be otherwise necessary in connection with the filing of Tax
Returns or claims for refund or in conducting an audit or other proceeding.
(h) Survival of Obligations. Notwithstanding any other provisions in this
Agreement, the obligations of the parties set forth in this Section 5.11 shall
not be subject to any limitations other than those set forth in this Agreement
and shall remain in effect until 30 days after the expiration of all applicable
statutes of limitations.
5.12 Allocation of Purchase Price. The Buyer and the Seller shall use
commercially reasonable efforts to agree, on or before the Closing, on a joint
determination of the fair market value of the assets of the Company and the
Subsidiaries.
5.13 Seller's Group Insurance Policies. The Buyer acknowledges that, at the
Seller's election, the Company and the Subsidiaries may cease to be covered
under the Seller's group insurance policies following the Closing.
5.14 Use of ▇▇▇▇▇▇▇ Name. The Buyer and the Seller agree that the Buyer shall be
permitted to use the "▇▇▇▇▇▇▇" name, design and logo (and any trade or service
names or marks related thereto) for a period of 60 days following the Closing.
The Buyer agrees that after such 60-day period, the Buyer shall cease to use the
"▇▇▇▇▇▇▇" name, design and logo (and any trade or service names or marks related
thereto) and that the Buyer shall have no right and no interest in and to the
use of the "▇▇▇▇▇▇▇" name design and logo (and any trade or service names or
marks related thereto).
5.15 Tower Construction.
(a) The Seller agrees that for a period of two years following the Closing,
neither the Seller nor any of its affiliates shall, directly or indirectly,
perform any fabrication, modification or erection of broadcast towers for
American Tower Corporation, a Delaware corporation, or any of its affiliates in
any broadcast market in which the Company or any Subsidiary owns a broadcast
tower or has a broadcast tower under construction as of the date of Closing.
(b) If any court of competent jurisdiction determines that the covenant
contained in Section 5.15(a), or any part thereof, is unenforceable because of
duration or geographic scope, such court shall have the power to reduce the
duration or scope of such covenant, as the case may be, and, in its reduced
form, such covenant shall then be enforceable.
(c) If the Seller or any of its affiliates breaches, or threatens to breach, the
covenant contained in Section 5.16(a), the Buyer shall have the right and remedy
to have such covenant specifically enforced by a court of competent
30
jurisdiction, it being agreed that any such breach or threatened breach would
cause irreparable injury to the Buyer, the Company and the Subsidiaries and that
money damages would not provide an adequate remedy to the Buyer, the Company and
the Subsidiaries.
5.16 Further Assurances. Each of the parties shall use its commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions to the
Closing set forth in Articles 6 and 7.
6. Conditions Precedent to the Obligation of the Buyer to Close. The obligation
of the Buyer to enter into and complete the Closing is subject, at the option of
the Buyer acting in accordance with the provisions of Article 10 with respect to
termination of this Agreement, to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be waived by it:
6.1 Representations and Covenants. The representations and warranties of the
Seller contained in this Agreement shall be true in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date or, in the case of representations and warranties made as of
a specified date earlier than the Closing Date, as of such date. The Seller
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by
the Seller on or prior to the Closing Date. The Seller shall have delivered to
the Buyer a certificate, dated the date of the Closing and signed by an officer
of the Seller, to the foregoing effect.
6.2 Consents and Approvals. All Required Consents shall have been obtained and
be in full force and effect, and the Buyer shall have been furnished with
evidence reasonably satisfactory to it that such Required Consents have been
obtained.
6.3 Opinion of Counsel to the Seller. The Buyer shall have received the opinion
of Torys, counsel to the Seller, dated the date of the Closing, addressed to the
Buyer, substantially in the form of Exhibit A.
6.4 HSR Act Filing. Any person required in connection with the Contemplated
Transactions to file a notification and report form in compliance with the HSR
Act shall have filed such form and the applicable waiting period with respect to
each such form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
6.5 Resignations; Revocations. The resignation of each director and officer of
the Company and each director and officer of each of the Subsidiaries shall, if
so requested by the Buyer, have been delivered to the Buyer. The Buyer shall
have received evidence satisfactory to it that effective as of the Closing Date,
any proxies, powers of attorney or other instruments authorizing persons to act
on behalf of the Company or any of the Subsidiaries in matters concerning their
respective businesses or affairs have been revoked and are of no further force
and effect, if so requested by the Buyer.
31
6.6 No Claims. There shall not be on the Closing Date any Orders of any
Governmental Body or Law which would prohibit the purchase of the Shares or the
consummation of the Contemplated Transactions.
6.7 Real Estate.
(a) Tax Returns. The Buyer shall have received any and all real property
transfer tax returns and other similar filings required by law in connection
with the Contemplated Transactions and relating to the Real Property and
Structures, any part thereof or ownership interest therein, all duly and
properly executed and acknowledged by the Seller, the Company and/or the
Subsidiary, whichever is required. If required in connection with any of the
foregoing filings, the Buyer shall have received the written agreement of the
Seller and the Buyer allocating to certain parcels of Real Property and
Structures a portion of the Purchase Price. The Seller shall also have executed
such affidavits in connection with such filings as shall have been required by
law or reasonably requested by the Buyer. The Buyer agrees to cooperate with the
Seller in connection with the filings required under this Section 6.7 and to
execute any and all required affidavits, questionnaires, returns or similar
documents.
(b) FIRPTA Affidavit. The Buyer shall have received an affidavit of an officer
of the Company sworn to under penalty of perjury pursuant to U.S. Treasury
Regulation ss.1.1445-2(c)(3), containing a statement that the Shares are not
"U.S. real property interests" within the meaning of Section 897(c)(1) of the
Code.
6.8 Release of Debt. The Buyer shall have received evidence satisfactory to it
that effective as of the Closing Date, the Company and each Subsidiary are
released from any and all liability with respect to the Debt, including, without
limitation, releases from the Security Documents related thereto, and the
Company and each Subsidiary are no longer obligated with respect to the Debt.
6.9 Release of Liens. The Buyer shall have received evidence satisfactory to it
that effective as of the Closing Date, the capital stock and the assets of the
Company and each Subsidiary are released from any and all Liens, other than
Liens referred to in clauses (1), (2), (3) and (4) of the definition of
Permitted Encumbrances.
6.10 Termination of Agreements. Except for the Contracts identified on Schedule
6.10, at and as of the Closing, the Seller, the Company and/or the Subsidiaries
shall have terminated all Contracts between the Company or a Subsidiary, on the
one hand, and the Seller or any of its affiliates (other than the Company or any
Subsidiary), on the other hand, and the Company or such Subsidiary, as the case
may be, shall retain no obligations under such Contracts. The Buyer shall have
received evidence satisfactory to it of the termination of all Contracts
required to be terminated pursuant to the preceding sentence and of the release
of any obligations under such Contracts of the Company and all relevant
Subsidiaries. As to the Contracts identified on Schedule 6.10, the Seller will
cause the Company and the Subsidiaries to perform their obligations thereunder.
32
6.11 Due Diligence. As a result of the Buyer's due diligence review of (a) each
of the documents and materials required to be made available pursuant to
Sections 3.9, 3.16, 3.18 and 3.19 and (b) any document or material referenced in
any Schedule (other than the Florida DoT Contract and the Lodestar Towers, Inc.
employee handbook, each of which has previously been delivered to the Buyer),
the Buyer shall not have learned any information which is (i) inconsistent with
any written material or written information delivered to the Buyer prior to
April 11, 2000 and (ii) individually or in the aggregate materially adverse to
the Condition of the Companies; provided, however, that to the extent that this
condition is not satisfied, the Buyer agrees to seek to renegotiate the terms
and conditions of this Agreement with the Seller in good faith for a reasonable
period of time. The Seller agrees to make available to the Buyer each of the
documents and materials referred to in the previous sentence as soon as
practicable but in no event later than April 17, 2000. The condition to Closing
set forth in the first sentence of this Section 6.11 shall be deemed satisfied
unless, prior to 5:00 p.m. on April 24, 2000, the Buyer provides written notice
to the Seller that it has not been satisfied, including reasonable justification
therefor. The Buyer confirms that it has completed its business due diligence of
the Company and the Subsidiaries and that this due diligence condition is
intended to cover only the specific matters referred to in this Section 6.11.
7. Conditions Precedent to the Obligation of the Seller to Close. The obligation
of the Seller to enter into and complete the Closing is subject, at the option
of the Seller acting in accordance with the provisions of Article 10 with
respect to termination of this Agreement, to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may be waived
by the Seller:
7.1 Representations and Covenants. The representations and warranties of the
Buyer contained in this Agreement shall be true in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date or, in the case of representations and warranties made as of
a specified date earlier than the Closing Date, as of such date. The Buyer shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. The Buyer shall have delivered to the Seller a
certificate, dated the date of the Closing and signed by an officer of the
Buyer, to the foregoing effect.
7.2 HSR Act Filing. Any person required in connection with the Contemplated
Transactions to file a notification and report form in compliance with the HSR
Act shall have filed such form and the applicable waiting period with respect to
each such form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
7.3 No Claims. There shall not be on the Closing Date any Orders of any
Governmental Body or Law which would prohibit the purchase of the Shares or the
consummation of the Contemplated Transactions.
7.4 Opinion of Counsel to the Buyer. The Seller shall have received an opinion
of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Buyer,
33
dated the date of the Closing, addressed to the Seller, substantially in
the form of Exhibit B.
8. Survival of Representations and Warranties After Closing. Notwithstanding any
right of the Buyer fully to investigate the affairs of the Company and the
Subsidiaries and notwithstanding any knowledge of facts determined or
determinable by the Buyer pursuant to such investigation or right of
investigation, the Buyer has the right to rely fully upon the representations,
warranties, covenants and agreements of the Seller contained in this Agreement
or the certificate delivered pursuant to Section 6.1. All such representations,
warranties, covenants and agreements shall survive the execution and delivery of
this Agreement and the Closing hereunder. Except for those representations and
warranties in Sections 3.1, 3.7 and 3.8 (all of which representations and
warranties shall survive without limitation), all representations and warranties
of the Seller contained in this Agreement shall terminate and expire (a) two
years after the Closing Date, with respect to any General Claim based upon,
arising out of or otherwise in respect of any fact, circumstance or Claim of
which the Buyer prior to that date shall not have given notice to the Seller;
and (b) with respect to any Tax Claim, on the later of (i) the date upon which
the liability to which any such Tax Claim may relate is barred by all applicable
statutes of limitations and (ii) the date upon which any claim for refund or
credit related to such Tax Claim is barred by all applicable statutes of
limitations.
9. General Indemnification.
9.1 Obligation of the Seller to Indemnify.
(a) Subject to the limitations contained in Article 8 and Section 9.4, the
Seller agrees to indemnify, defend and hold harmless the Buyer (and its
directors, officers, employees, affiliates, successors and permitted assigns)
from and against all losses, liabilities, damages, deficiencies, demands,
Claims, actions, judgments or causes of action, assessments, costs or expenses
(including, without limitation, claims by mechanics, materialmen, architects,
contractors and subcontractors for labor or materials performed, rendered or
supplied to or in connection with any Real Property and Structures, interest,
penalties and reasonable fees, expenses and disbursements of attorneys, experts,
personnel and consultants reasonably incurred by the indemnified party in any
action or proceeding between the indemnifying party and the indemnified party or
between the indemnified party and any third party, or otherwise) after applying
applicable insurance proceeds ("Losses") based upon, arising out of or otherwise
in respect of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Seller contained in this Agreement, except to the
extent otherwise covered by Sections 9.1(b).
(b) The Seller's indemnification obligation for any inaccuracy in or any breach
of any representation, warranty, covenant or agreement of the Seller set forth
in Sections 3.12 or 5.11 of this Agreement shall be governed exclusively by
Section 5.11 of this Agreement.
34
9.2 Obligation of the Buyer to Indemnify. The Buyer agrees to indemnify, defend
and hold harmless the Seller from and against all Losses based upon, arising out
of or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Buyer contained in this
Agreement.
9.3 Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. With respect to third party claims, all claims
for indemnification by any party making a claim under this Article 9 (referred
to herein as the "Indemnitee") shall be asserted and resolved as follows:
Promptly after receipt by an Indemnitee of notice of any demand, claim or
circumstances, which, with the lapse of time, would or might give rise to a
claim or the commencement (or the threatened commencement of) any action,
proceeding or investigation (an "Asserted Liability") that may result in Losses
which are subject to indemnification under Sections 9.1 or 9.2, the Indemnitee
shall give notice thereof (the "Claims Notice") to the party against whom such
claims are asserted (referred to herein as the "Indemnifying Party"). The Claims
Notice shall describe the Asserted Liability in reasonable detail, and shall
indicate the amount (estimated, if necessary, and to the extent feasible) of the
Losses that have been or may be suffered by the Indemnitee. The failure of an
Indemnitee to provide a Claims Notice with reasonable promptness shall not
adversely affect any indemnification obligations hereunder except to the extent
that the Indemnifying Party is actually prejudiced thereby.
(b) Opportunity to Defend. The Indemnifying Party may elect to compromise or
defend, at its own expense and by its own counsel, any Asserted Liability. If
the Indemnifying Party elects to compromise or defend such Asserted Liability,
it shall, within 30 days (or sooner, if the nature of the Asserted Liability so
requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, fails to notify the Indemnitee
of its election as herein provided or contests its obligations to defend under
this Agreement, the Indemnitee may pay, compromise or defend such Asserted
Liability (at the Indemnifying Party's sole cost and expense). Notwithstanding
the foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the objection of the other; provided, however, that if
the settlement or compromise does not result in any liability to the
Indemnifying Party, consent to such settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnitee and the Indemnifying Party
may participate, at their own expense, in the defense of such Asserted
Liability. If the Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense
(in the judgment of counsel engaged by the Indemnifying Party).
The Indemnitee has the right to employ its own
counsel in any compromise of, or defense against, any Asserted Liability, or in
connection with the
35
Indemnitee's provision of reasonable cooperation and assistance to the
Indemnifying Party or the Indemnifying Party's counsel as provided above, but
the fees, expenses and other charges of such counsel employed by the Indemnitee
will be at the expense of the Indemnitee unless (i) the employment of counsel by
the Indemnitee has been authorized in writing by the Indemnifying Party or (ii)
the Indemnifying Party has not in fact employed counsel to compromise or defend
against the Asserted Liability within a reasonable time, in each of which cases
the reasonable fees, disbursements and other charges of counsel retained by the
Indemnitee will be at the expense of the Indemnifying Party. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time retained by the Indemnitee unless
the employment of more than one counsel has been authorized in writing by the
Indemnifying Party.
(c) Notice of Direct Claim. In the event that an Indemnitee has a claim for
indemnification that does not involve a third party (a "Direct Claim"), the
Indemnitee shall notify the Indemnifying Party of such Direct Claim with
reasonable promptness, specifying, to the extent known, the nature,
circumstances and amount of such Direct Claim (a "Direct Claim Notice"),
however, the failure of an Indemnitee to provide such Direct Claim Notice with
reasonable promptness shall not adversely affect any indemnification obligations
hereunder except to the extent that the Indemnifying Party is actually
prejudiced thereby. If the Indemnifying Party notifies the Indemnitee that it
disputes the Indemnitee's right of indemnification with respect to a Direct
Claim, the Indemnitee and the Indemnifying Party shall use reasonable efforts to
resolve such dispute. In the absence of such an agreement, the Indemnitee shall
be entitled to proceed to enforce its rights hereunder.
9.4 Limitations on Indemnification. The indemnification provided for in Section
9.1 shall be subject to the following limitations:
(a) The Seller shall not be obligated to pay any amounts for indemnification for
breach of representation or warranty under Section 9.1(a), except those based
upon, arising out of or otherwise in respect of Sections 3.1, 3.3, 3.7, 3.8 and
3.23 (the "Basket Exclusions"), until the aggregate amounts for indemnification
under Section 9.1(a), exclusive of those based on the Basket Exclusions, equals
1.0% of the Purchase Price (the "Basket Amount"), whereupon the Seller shall be
obligated to pay in full all such amounts for such indemnification above, but
excluding, the Basket Amount.
(b) The Seller shall be obligated to pay any amounts for indemnification based
on the Basket Exclusions (in accordance with its liability as set forth in
Section 9.1(a)) without regard to the individual or aggregate amounts thereof
and without regard to whether all other indemnification payments shall have
exceeded, in the aggregate, the Basket Amount.
36
10. Termination of Agreement.
10.1 Termination. This Agreement may be terminated prior to the Closing as
follows:
(a) at the election of the Seller in writing, if any one or more of the
conditions to its obligation to close has not been fulfilled by July 31, 2000;
(b) at the election of the Buyer in writing, if any one or more of the
conditions to its obligation to close has not been fulfilled by July 31, 2000;
(c) at the election of the Seller or the Buyer in writing, if any legal
proceeding is commenced or threatened by any Governmental Body seeking to
prevent the consummation of the Contemplated Transaction and the Seller or the
Buyer, as the case may be, reasonably and in good ▇▇▇▇▇ ▇▇▇▇▇ it impracticable
or inadvisable to proceed in view of such legal proceeding;
(d) at the election of the Seller in writing, if the Buyer has breached any
material representation, warranty, covenant or agreement contained in this
Agreement, which breach cannot be or is not cured within thirty (30) days after
notification of such intent to terminate is sent;
(e) at the election of the Buyer in writing, if the Seller has breached any
material representation, warranty, covenant or agreement contained in this
Agreement, which breach cannot be or is not cured within thirty (30) days after
notification of such intent to terminate is sent; or
(f) at any time on or prior to the Closing Date, by mutual written consent of
the Seller and the Buyer.
If this Agreement so terminates, it shall become null and void
and have no further force or effect, except as provided in Section 10.2.
10.2 Survival After Termination. If this Agreement terminates pursuant to
Section 10.1, it shall become null and void and have no further force or effect,
except that any such termination shall be without prejudice to the rights of any
party on account of the non-satisfaction of the conditions set forth in Articles
6 and 7 resulting from the intentional or willful breach or violation of the
representations, warranties, covenants or agreements of another party under this
Agreement. Notwithstanding anything in this Agreement to the contrary, Sections
5.2 (relating to the Buyer's confidentiality obligations), 5.3, 5.4, 5.5, this
Section 10.2 and Article 11 shall survive any termination of this Agreement.
11. Miscellaneous.
11.1 Certain Definitions. (a) As used in this Agreement, the following
terms have the following meanings:
37
"affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with, such person.
"COBRA" means the provisions of Section 4980B of the Code and
Part 6 of Subtitle B of Title I of ERISA.
"Debt" of the Company or any Subsidiary means, without
duplication, all obligations or liabilities of such person (i) for borrowed
money, whether current, short term or long term, or secured or unsecured, (ii)
evidenced by notes, bonds, debentures or similar instruments, other than
operating leases, (iii) for the deferred purchase price for purchases of assets
or property (other than trade payables), (iv) created or arising under any
conditional sale or other title retention with respect to assets or property
acquired directly or indirectly by such person, (v) under leases which are
capital leases in accordance with GAAP, (vi) in respect of banker's acceptance
or letters of credit (other than documentary and stand-by letters of credit in
support of ordinary course trade payables or self-insured workers' compensation
obligations), (vii) with respect to interest trade swaps, collars, caps and
similar obligations, (viii) for accrued and unpaid interest or other charges
(including any contractual prepayment premiums, penalties or similar charges
resulting from the Contemplated Transactions or the discharge of such
obligations) with respect to any of the foregoing, (ix) for any costs or
expenses incurred by such person in connection with the Contemplated
Transactions and to be borne by the Company or any Subsidiary (on behalf of the
Seller) and not the Buyer, including legal fees and disbursements, fees and
other payments to any broker, finders, agents or similar intermediaries, (x) for
all bonuses or other compensation payable to employees of the Company or any
Subsidiary which are conditioned upon the consummation of the transactions
contemplated by this Agreement, and (xi) in the nature of guarantees of
obligations of the type described in clauses (i) through (x) above of any other
person.
"Employee" means any individual employed at any time by the
Company or any of the Subsidiaries.
"Environment" means navigable waters, waters of the contiguous
zone, ocean waters, natural resources, surface waters, ground water, drinking
water supply, land surface, subsurface strata, ambient air, both inside and
outside of buildings and structures, man-made buildings and structures, and
plant and animal life on earth.
"Environmental Claims" means any written notification, whether
direct or indirect, formal or informal, pursuant to Safety and Environmental
Laws or principles of common law relating to pollution, protection of the
Environment or health and safety, that any of the current or past operations of
the Company or any of the Subsidiaries, or any by-product thereof, or any of the
property currently or formerly owned, leased or operated by the Company or any
of the Subsidiaries, or the operations or property of any predecessor or
affiliates of the Company or any of the Subsidiaries is or may be implicated in
or subject to any proceeding, action, investigation, claim, lawsuit, order,
agreement or evaluation by any Governmental Body or any other person.
"Environmental Compliance Costs" means any expenditures,
costs, assessments or expenses (including, without limitation, any payments,
costs, assessments or expenses in connection with the conduct of any Remedial
Action, as well as reasonable
38
fees, disbursements and expenses of attorneys, experts, personnel and
consultants), whether direct or indirect, necessary to cause the operations,
real property, assets, equipment or facilities owned, leased, operated or used
by the Company or by any of the Subsidiaries to be in compliance with any and
all requirements, as in effect at the Closing Date, of Safety and Environmental
Laws, principles of common law concerning pollution, protection of the
Environment or health and safety, or Permits issued pursuant to Safety and
Environmental Laws; provided, however, that Environmental Compliance Costs do
not include payments, costs, assessments or expenses necessary in connection
with normal maintenance of such real property, assets, equipment or facilities
or the replacement of equipment in the normal course of events due to ordinary
wear and tear.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Florida DoT Contract" means the Lease and Operating Agreement
for Commercial Wireless Telecommunications, dated March 25, 1999, between the
State of Florida, Department of Transportation, as Lessor, and the Company, as
Lessee.
"General Claim" means any claim (other than a Tax Claim) based
upon, arising out of or otherwise in respect of any inaccuracy in or any breach
of any representation or warranty of the Seller (other than a representation or
warranty set forth in Sections 3.1, 3.7 and 3.8) contained in this Agreement.
"Hazardous Substance" means any toxic waste, pollutant,
hazardous substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste,
radioactive substance or waste, or any constituent of any such substance or
waste, or any other substance regulated under or defined by any Safety and
Environmental Law.
"IRS" means the Internal Revenue Service.
"knowledge" or "belief" with respect to the Seller means the
knowledge or belief, as applicable, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇; and "knows" or
"believes" have correlative meanings.
"Liabilities" means any direct or indirect indebtedness,
liability, Claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, whether or not
of a kind required by GAAP to be set forth on a financial statement or in the
notes thereto.
"Lien" means any lien, pledge, mortgage, security interest,
claim, lease, license, charge, option, right of first refusal, easement,
servitude, transfer restriction, encumbrance or any other restriction or
limitation whatsoever.
"material" means, where the context permits, material to the
Company and the Subsidiaries, taken as a whole.
39
"Material Taxes" means any Taxes the liability for which when
aggregated with the liabilities for all other Taxes equals or exceeds $50,000.
"NEPA" means the National Environmental Protection Agency.
"person" means any individual, corporation, partnership,
limited liability company, limited liability partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Promissory Notes" means (a) the Promissory Note, dated August
19, 1987, made by Lodestar New Orleans, Inc. in favor of ▇▇▇▇▇▇ Broadcasting
System Group, Inc., (b) the Replacement Promissory Note, dated February 11,
1999, made by Lodestar New Orleans, Inc. in favor of ▇▇▇▇▇▇▇▇ Radio of New
Orleans, Inc., and (c) the related Loan Agreement between Lodestar New Orleans,
Inc., as borrower, and ▇▇▇▇▇▇ Broadcasting Group, Inc. and EZ Communications,
Inc., as lenders.
"property" or "properties" means real, personal or mixed
property, tangible or intangible.
"Remedial Action" means all actions, whether voluntary or
involuntary, reasonably necessary to comply with, or discharge any obligation
under, Safety and Environmental Laws to (A) clean up, remove, treat, cover or in
any other way adjust Hazardous Substances in the indoor or outdoor Environment;
(B) prevent or control the release of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
Environment; or (C) perform remedial studies, investigations, restoration and
post-remedial studies, investigations and monitoring on, about or in any real
property.
"Safety and Environmental Laws" means all Laws and Orders
relating to pollution, protection of the Environment, public or worker health
and safety, or the emission, discharge, release or threatened release of
pollutants, contaminants or industrial, toxic or hazardous substances or wastes
into the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or industrial, toxic or hazardous substances or wastes,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Toxic Substances
Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 121 et
seq., the Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., the
Asbestos Hazard Emergency Response Act, 15 U.S.C. ss.2601 et seq., the Safe
Drinking Water Act, 42 U.S.C.
ss. 300f et seq., the Oil Pollution Act of 1990 and analogous state acts.
"Security Documents" means the security documents securing the
TD Credit Facility as listed on Schedule 11.1(i)
"Seller Capital Loans" means any and all loans by the Seller
or any of its affiliates (other than the Company and the Subsidiaries) to the
Company or any
40
of the Subsidiaries made from the date hereof until immediately prior to the
Closing to fund Capital Payments.
"Seller Credit Facility" means the Credit Agreement, dated
November 26, 1999, among the Seller and the other borrowers and lenders named
therein.
"Subsidiaries" means those entities listed on Schedule 3.5(i).
"Tax Claim" means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation or
warranty of the Seller contained in this Agreement related to Taxes.
"Taxes" means all Federal, state, county, local and foreign
taxes (including, without limitation, income, profits, premium, estimated,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance,
capital levy, production, transfer, withholding, employment, unemployment
compensation, payroll related and property taxes and import duties), whether or
not measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto,
required to be paid by or with respect to the Company and the Subsidiaries (or
any of them) on or before the date hereof.
"Working Capital" means the working capital of the Company and
the Subsidiaries, taken as a whole, as determined as of December 31, 1999 based
on the Audited Balance Sheet and as of the Closing Date based on the Closing
Balance Sheet, in each case calculated on the same basis as set forth on
Schedule 11.1(i).
(b) The following capitalized terms are defined
in the following Sections of this Agreement:
Term Section
---- -------
Arbitrator.......................................................... 1.3(c)
Asserted Liability.................................................. 9.3(a)
Audited Balance Sheet............................................... 3.10(a)
Audited Balance Sheet Date.......................................... 3.10(a)
Audited Financials.................................................. 3.10(a)
Basket Amount....................................................... 9.4(a)
Basket Exclusions................................................... 9.4(a)
Buyer............................................................... Preamble
Capital Payments.................................................... 1.2(a)
Claims.............................................................. 3.17
Claims Notice....................................................... 9.3(a)
Closing............................................................. 1.1
Closing Balance Sheet............................................... 1.3(b)
Closing Date........................................................ 2
Code................................................................ 3.12(f)
Collocation Agreements.............................................. 3.19(d)
Collocator.......................................................... 3.19(d)
Company............................................................. Preamble
41
Company Plan........................................................ 3.23(a)
Completed Tower Assets.............................................. 3.19(f)
Condition of the Companies.......................................... 3.6
Contemplated Transactions........................................... 3.3
Contracts........................................................... 3.15
Determination....................................................... 1.3(c)
Direct Claim........................................................ 9.3(c)
Direct Claim Notice................................................. 9.3(c)
Disputed Matter..................................................... 1.3(c)
FCC Checklist....................................................... 3.19(k)
GAAP................................................................ 1.2(b)
Governmental Body(ies).............................................. 3.13
HSR Act............................................................. 3.27
Indemnified Taxes................................................... 5.11(a)
Indemnifying Party.................................................. 9.3(a)
Indemnitee.......................................................... 9.3(a)
Indemnitor Returns.................................................. 5.11(c)
Independent Accountant.............................................. 5.11(c)
Interim Period...................................................... 5.11(a)
Laws................................................................ 3.13
Leased Real Property................................................ 3.19(b)
Liabilities......................................................... 3.22
Losses.............................................................. 9.1(a)
Orders.............................................................. 3.13
Owned Real Property and Structures.................................. 3.19(a)
Permits............................................................. 3.14
Permitted Encumbrances.............................................. 3.19(a)
Post-Closing Tax Benefit............................................ 5.11(f)
Pre-Closing Period.................................................. 5.11(a)
Preliminary Balance Sheet........................................... 1.2(b)
Purchase Price...................................................... 1.1
Real Property and Structures........................................ 3.19(c)
Real Property Leases................................................ 3.19(b)
Required Consents................................................... 3.15
Revised Preliminary Balance Sheet................................... 1.2(c)
Seller.............................................................. Preamble
Seller's Dispute Report............................................. 1.3(c)
Shares.............................................................. Preamble
Spurs............................................................... 3.10(b)
Straddle Returns.................................................... 5.11(c)
Straddle Statement.................................................. 5.11(c)
TD Credit Facility.................................................. 5.7
Tax Returns......................................................... 3.12(b)
Title Defects....................................................... 3.19(b)
Tower Assets........................................................ 3.19(f)
42
Uncompleted Tower Assets............................................ 3.19(f)
11.2 Consent to Jurisdiction and Service of Process. Any Claim arising out of or
relating to this Agreement or the Contemplated Transactions may be instituted in
any Federal court of the Southern District of New York or any state court
located in New York County, State of New York, and each party agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the jurisdiction of
such court, that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
Each party further irrevocably submits to the jurisdiction of such court in any
such action, suit or proceeding. Any and all service of process and any other
notice in any such action, suit or proceeding shall be effective against any
party if given personally or by registered or certified mail, return receipt
requested, or by any other means of mail that requires a signed receipt, postage
prepaid, mailed to such party as herein provided. Nothing herein contained shall
be deemed to affect the right of any party to serve process in any manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any other jurisdiction.
11.3 Notices. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally or sent by a nationally
recognized overnight courier service. Any such notice shall be deemed given when
so delivered personally or by such courier service as follows:
(i) if to the Buyer, to:
SpectraSite Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
43
(ii) if to the Seller:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ Enterprises Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇, Ext. 219
Facsimile: 905-844-2787
with a copy to:
Torys
Suite 3000, Maritime Life Tower
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 416-865-7380
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
11.4 Entire Agreement. This Agreement (including the Exhibits and Schedules) and
any collateral agreements executed in connection with the consummation of the
Contemplated Transactions contain the entire agreement among the parties with
respect to the purchase of the Shares and supersede all prior agreements,
written or oral, with respect thereto.
11.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies.
This Agreement may be amended, superseded, canceled, renewed or extended, and
the terms hereof may be waived, only by a written instrument signed by the Buyer
and the Seller or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The rights
and remedies of any party based upon, arising out of or otherwise in respect of
any inaccuracy in or breach of any representation, warranty, covenant or
agreement contained in this Agreement or the certificates delivered pursuant to
Section 6.1 or 7.1 shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or
44
agreement contained in this Agreement or the certificates delivered pursuant to
Section 6.1 or 7.1 (or in any other agreement between the parties) as to which
there is no inaccuracy or breach.
11.6 Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely within such State.
11.7 Binding Effect; No Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable except by operation of law,
and any purported assignment in violation hereof shall be null and void;
provided, however, that the Buyer may assign this Agreement to (i) any direct or
indirect wholly-owned subsidiary of the Buyer if the Buyer guarantees the
performance by such assignee of its obligations hereunder, (ii) to any successor
to all or substantially all of its business or assets, and (iii) to the Buyer's
lenders as collateral security; provided, further, that the Seller may assign
this Agreement to any direct or indirect wholly-owned subsidiary of the Seller
if the Seller transfers all of the Shares to such assignee, the Seller
guarantees the performance by such assignee of its obligations hereunder and
such assignment would have no adverse effect on the Buyer, as determined in the
Buyer's sole discretion.
11.8 Variations in Pronouns; Defined Terms; Interpretation. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require. All terms defined in this Agreement in their
singular or plural forms have correlative meanings when used herein in their
plural or singular forms, respectively. Unless otherwise expressly provided, the
words "include," "includes" and "including" do not limit the preceding words or
terms and shall be deemed to be followed by the words "without limitations." All
references herein to dollar amounts shall mean United States Dollars.
11.9 Counterparts. This Agreement may be executed by the parties hereto by
facsimile signature and in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
11.10 Exhibits and Schedules. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to Sections,
Exhibits and Schedules shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
11.11 Headings. The headings in this Agreement are for reference only, and shall
not affect the interpretation of this Agreement.
11.12 Severability of Provisions. If any provision or any portion of any
provision of this Agreement shall be held invalid or unenforceable, the
remaining portion of such provision and the remaining provisions of this
Agreement shall not be affected thereby. If the application of any provision or
any portion of any provision of
45
this Agreement to any person or circumstance
shall be held invalid or unenforceable, the application of such provision or
portion of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
BUYER:
SPECTRASITE COMMUNICATIONS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
SELLER:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ENTERPRISES INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President