Exhibit 10.4a
ASSET PURCHASE AGREEMENT
By and Between
AMERICAN TOWER SYSTEMS, INC.
and
DIABLO COMMUNICATIONS, INC.
Dated as of
July 8, 1997
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS...................................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.....................................................................2
2.1 Agreement to Sell and Buy..............................................................2
2.2 Assumption of Liabilities and Obligations. ............................................2
2.3 Closing; Purchase Price................................................................5
2.4 Accounts Receivable....................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF DIABLO........................................................8
3.1 Organization and Business; Power and Authority; Effect of Transaction..................8
3.2 Financial and Other Information. .....................................................9
3.3 Changes in Condition...................................................................9
3.4 Materiality............................................................................9
3.5 Title to Properties; Leases............................................................9
3.6 Compliance with Private Authorizations................................................11
3.7 Compliance with Governmental Authorizations and Applicable Law........................11
3.8 Intangible Assets.....................................................................12
3.9 Related Transactions..................................................................12
3.10 Insurance.............................................................................12
3.11 Tax Matters. ........................................................................13
3.12 Employee Retirement Income Security Act of 1974.......................................13
3.13 Absence of Sensitive Payments.........................................................15
3.14 Inapplicability of Specified Statutes.................................................15
3.15 Employment Arrangements...............................................................15
3.16 Material Agreements...................................................................16
3.17 Ordinary Course of Business...........................................................16
3.18 Material and Adverse Restrictions.....................................................17
3.19 Broker or Finder......................................................................17
3.20 Solvency..............................................................................17
3.21 Environmental Matters.................................................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ATS..........................................................18
4.1 Organization and Business; Power and Authority; Effect of Transaction.................18
4.2 Broker or Finder......................................................................18
4.3 Solvency..............................................................................18
4.4 No Legal Action.......................................................................19
ARTICLE 5 COVENANTS......................................................................................19
5.1 Access to Information; Confidentiality................................................19
5.2 Agreement to Cooperate. .............................................................20
5.3 Public Announcements..................................................................20
5.4 Notification of Certain Matters.......................................................21
5.5 No Solicitation.......................................................................21
5.6 Conduct of Business by Diablo Pending the Closing.....................................21
5.7 Preliminary Title Reports.............................................................22
5.8 Environmental Site Assessments........................................................23
5.9 Post-Closing Covenants and Agreements of the Parties..................................24
ARTICLE 6 CLOSING CONDITIONS.............................................................................24
6.1 Conditions to Obligations of Each Party to effect the Transactions....................24
6.2 Conditions to Obligations of ATS......................................................25
6.3 Conditions to Obligations of Diablo...................................................28
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................................29
7.1 Termination...........................................................................29
7.2 Effect of Termination.................................................................29
ARTICLE 8 INDEMNIFICATION................................................................................30
8.1 Survival..............................................................................30
8.2 Indemnification.......................................................................31
8.3 Limitation of Liability...............................................................31
8.4 Notice of Claims......................................................................33
8.5 Defense of Third Party Claims.........................................................33
8.6 Exclusive Remedy......................................................................34
ARTICLE 9 GENERAL PROVISIONS.............................................................................34
9.1 Amendment.............................................................................34
9.2 Waiver................................................................................34
9.3 Fees, Expenses and Other Payments.....................................................34
9.4 Notices...............................................................................34
9.5 Specific Performance; Other Rights and Remedies.......................................35
9.6 Severability..........................................................................36
9.7 Counterparts..........................................................................36
9.8 Section Headings......................................................................36
9.9 Governing Law; Venue..................................................................36
9.10 Further Acts..........................................................................36
9.11 Entire Agreement......................................................................36
9.12 Assignment............................................................................37
9.13 Parties in Interest...................................................................37
9.14 Mutual Drafting.......................................................................37
9.15 Arbitration...........................................................................37
9.16 Disclosure Schedule...................................................................37
APPENDIX A: Definitions
SCHEDULES:
Diablo Disclosure Schedule
EXHIBITS:
EXHIBIT A Form of Noncompetition Agreement (Section 6.2(j))
EXHIBIT B Form of Indemnity Escrow Agreement (Section 6.2(k))
-ii-
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of July 8,
1997 by and between American Tower Systems, Inc., a Delaware corporation
("ATS"), and Diablo Communications, Inc., a California corporation ("Diablo").
WHEREAS, Diablo owns and leases and operates communication towers and
is engaged in the business of managing communication sites for third parties
(the "Diablo Business");
WHEREAS, ATS desires to purchase and Diablo desire to sell the Diablo
Assets and the Diablo Business on the terms and conditions hereinafter set
forth;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, ATS and Diablo have entered into an escrow agreement (the "Escrow
Agreement") with Bank of San Francisco (the "Escrow Agent"), pursuant to which
ATS has made a deposit of $1,800,000 (the "Escrow Deposit");
WHEREAS, ATS is party to an asset purchase agreement with Diablo
Communications of Southern California, Inc., a California corporation ("DCSC"),
dated as of the date of this Agreement (the "Other Agreement"), relating to the
purchase and sale of the communication towers and the business of managing
communication sites for third parties of DCSC; and
WHEREAS, ATS and Diablo have heretofore executed and delivered a Note
Purchase Agreement, dated as of March 20, 1997 (the "Note Agreement"), pursuant
to which Diablo has issued an unsecured note in the aggregate principal amount
of up to Six Hundred Fifty Thousand Dollars ($650,000) (the "Interim Financing
Note");
NOW, THEREFORE, in consideration of the above premises and the
covenants and agreements contained herein, the parties, intending to be legally
bound, do hereby covenant and agree as follows:
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and the reference to any gender shall be deemed to
include all genders. Unless otherwise defined or the context otherwise clearly
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in the Diablo Disclosure Schedule and each Collateral
Document executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto. The term
"either party" shall, unless the context otherwise requires, refer to Diablo and
ATS.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Diablo hereby agrees to sell, assign, transfer and
deliver to ATS at the Closing, and ATS agrees to purchase at the Closing, the
Diablo Assets and the Diablo Business, free and clear of any Liens of any nature
whatsoever except for Permitted Liens. For purposes of this Agreement, the term
"Diablo Assets" shall mean all of the Assets of Diablo, other than the Excluded
Assets. For purposes of this Agreement, the term "Excluded Assets" shall mean
the following Assets:
(a) all cash and cash equivalents;
(b) all Accounts Receivable;
(c) a certificate of deposit in the face amount of $70,000
pledged as collateral on New England Capital loan;
(d) all books and records (including without limitation, if
retained by Diablo, any financial records necessary or desirable to
enable the condition specified in Section 6.2(g) to be satisfied) which
Diablo is required by Applicable Law to retain, subject to the right of
ATS to have access and to copy for a period of three (3) years from the
Closing Date; the records described herein shall further include
without limitation all corporate seals, certificates of incorporation,
minute books, stock books, Tax Returns or other records having to do
with the corporate organization of Diablo;
(e) any pension, profit-sharing or employee benefit plans,
including any assets in any related trusts;
(f) the miscellaneous assets of Diablo and the personal assets
of the officers, directors, shareholders and employees of Diablo, all
as more specifically described in Section 2.1(f) of the Diablo
Disclosure Schedule;
(g) any of the real property specifically described in Section
2.1(g) of the Diablo Disclosure Schedule which is covered by any
agreement executed and delivered pursuant to the provisions of Section
6.2(p); and
(h) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing.
2.2 Assumption of Liabilities and Obligations.
(a) At the Closing, ATS shall assume and agree to pay, discharge and
perform the following obligations and liabilities of Diablo (collectively, the
"Diablo Assumed Obligations"): (i) all of the obligations and liabilities of
Diablo under the Diablo Assumable Agreements, and (ii) all obligations and
liabilities of Diablo with respect to the ownership and operation of the Diablo
Assets and the conduct of the Diablo Business, on and after the Closing Date;
provided, however, that notwithstanding the foregoing, ATS shall not assume and
agree to pay, and shall not, except as provided in Section 2.2(c), be obligated
with respect to, the Diablo Nonassumed Obligations.
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(b) Except as otherwise specifically set forth in this Agreement or in
the Diablo Disclosure Schedule to the contrary, ATS shall not assume or become
obligated to perform any debt, liability or obligation of Diablo relating to any
of the following matters (collectively, the "Diablo Nonassumed Obligations"):
(i) the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business prior to the Closing Date, including
without limitation Taxes, unfunded pension costs, any Employment
Arrangement of Diablo (including without limitation any obligation to
any Diablo Employee for severance benefits or, except as provided in
Section 2.2(c), vacation time or sick leave), and any of the following
to the extent same arise from Events occurring prior to or existing on
the Closing Date: products liability, Legal Actions or other Claims,
and obligations and liabilities relating to Environmental Law;
(ii) any obligations or liabilities under the Diablo Assumable
Agreements relating to the period prior to the Closing;
(iii) any insurance policies of Diablo;
(iv) those required to be disclosed in the Diablo Disclosure
Schedule which are not so disclosed or which, if disclosed, Section
2.2(b)(iv) of the Diablo Disclosure Schedule indicates that such
obligation or liability will not be assumed;
(v) any liability or obligation from or relating to breach of
any warranty or any misrepresentation by Diablo under this Agreement or
any Collateral Document;
(vi) any liability or obligation from or relating to breach or
violation of, or failure to perform, any of Diablo's obligations,
covenants, agreements or undertakings set forth in this Agreement or
any Collateral Document, including without limitation Article 5 of this
Agreement;
(vii) any obligation or liability relating to any Excluded
Asset;
(viii) any obligation or liability with respect to capitalized
lease obligations or Indebtedness for Money Borrowed;
(ix) any Taxes, fees, expenses or other amounts required to be
paid by Diablo pursuant to the provisions of this Agreement or any
Collateral Document;
(x) any Contract with any Affiliate of Diablo, other than
those set forth in Section 2(b)(x) of the Diablo Disclosure Schedule;
and
(xi) any liability or obligation with respect to the U.S. Navy
Claim in excess of fifty percent (50%) of the obligation of Diablo to
the U.S. Navy, which obligation shall be determined by subtracting from
the total obligation of Diablo to the U.S. Navy that portion thereof
allocated to ▇▇▇▇▇▇ Communications Systems, Inc.
All Diablo Nonassumed Obligations shall remain and be the obligations and
liabilities solely of Diablo.
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, the term "Diablo Nonassumed Obligations" shall not
include, and the term "Diablo Assumed Obligations" shall include, (i) the ATS
Assumed Vacation Liability and the ATS Accrued Sick Time Liability and (ii) any
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liability arising out of the transfer or assignment to ATS of, or the use or
enjoyment of the benefits by ATS under, any Contract, Governmental Authorization
or Private Authorization the transfer or assignment of which (according to
Section 2.2(c) of the Diablo Disclosure Schedule or according to the terms of
such Government Authorization or Private Authorization) requires or may require
the consent of any Authority or other third party (collectively, the
"Nonassignable Contracts"), if ATS has, on or prior to the Closing Date,
notified Diablo in writing (an "Acceptance Notice") that ATS consents to the
transfer or assignment of such Nonassignable Contract despite the failure or
inability of ATS and Diablo to obtain the approval or consent of an Authority or
other Person whose approval or consent is required pursuant to the terms of such
Nonassignable Contract, or receives the benefits of such Nonassignable Contract,
in either of which events, if the approval or consent of an Authority or other
Person applicable to transfer of such Nonassignable Contract is required to be
obtained as a condition to ATS' obligations at Closing pursuant to the
provisions of Section 6.1(a), 6.2(d) or 6.2(m), ATS shall be deemed to have
waived such condition with respect to such Nonassignable Contract. With respect
to any Nonassignable Contract for which the applicable consent of any Authority
or other Person is not obtained prior to the Termination Date and for which ATS
does not timely deliver an Acceptance Notice as described in the preceding
sentence, Diablo and ATS shall enter into an agreement reasonably acceptable to
each party which agreement shall to the maximum extent feasible provide ATS with
the rights, benefits and obligations under such Nonassignable Contracts. The
term "ATS Assumed Vacation Liability" shall mean the liability for Diablo
employees with respect to accrued vacation (or payment in lieu thereof), whether
accrued before or after the Closing subject to the following limitations and/or
qualifications: (i) accrued vacation for all Diablo Employees who are retained
by Diablo after the Closing will be the sole responsibility of Diablo; (ii)
accrued vacation for any Diablo Employee who elects to resign prior to close,
for reasons other than the sale to ATS, or whom Diablo chooses to terminate with
or without cause, other than by reason of the sale to ATS, will be the sole
responsibility of Diablo; (iii) accrued vacation for Diablo Employees who
terminate at Closing and who are either not rehired by ATS or who choose not to
be employed by ATS will be the sole responsibility of ATS; (iv) accrued
vacation, to the time of close, for employees who are terminated by Diablo but
rehired by ATS who terminate their employment with ATS but who ATS wishes to
remain as an employee, will be the responsibility of Diablo; any accrued
vacation after Closing for such employees will be the responsibility of ATS; and
(v) accrued vacation for any employee terminated by Diablo, rehired by ATS and
subsequently terminated by ATS, as well as accrued vacation for any employee who
is terminated by Diablo prior to close at the request of ATS, will be the sole
responsibility of ATS. The term "ATS Accrued Sick Time Liability" shall mean the
liability with respect to accrued sick time (as provided in the applicable
Diablo Benefit Arrangement or Plan), accrued on or before the Closing of Diablo
Employees who become employees of ATS after the Closing. Although ATS has not
had an opportunity to complete its evaluation of the Diablo employees, except
for the employees being retained by Diablo, it is the current intention of ATS
to hire initially all of the current Diablo employees at positions and
compensation generally comparable to those currently in effect, subject,
however, to the right of ATS, upon completion of its evaluation and to its
determination of the overall needs of ATS, particularly in light of its general
staffing patterns and of other pending or prospective acquisitions of comparable
businesses in the state of California, not to offer such employment to certain
of the Diablo employees or to alter the terms of such employment, including the
positions and compensation. In no event shall the expression of ATS' current
intention be deemed to be a covenant or agreement of ATS to so employ any
particular current Diablo employee and no rights to employment by any particular
current Diablo employee shall be created hereby.
(d) Notwithstanding anything contained in this Agreement to the
contrary, except as set forth in Section 2.2(d) of the Diablo Disclosure
Schedule, all items of income and expense (including without limitation with
respect to rent, utility charges, Pro Ratable Taxes and wages and salaries)
arising from the ownership or operation of the Diablo Assets or the conduct of
the Diablo Business shall be prorated as of 12:01 a.m., Pacific time, on the
Closing Date, with Diablo entitled to and responsible for any such items on or
prior to the Closing Date and ATS entitled to and responsible for any such items
relating to any subsequent
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period. For these purposes, Pro Ratable Taxes attributable to a period that
begins before and ends after the Closing Date shall be treated on a "closing of
the books" basis as two partial periods, one ending at the close of the Closing
Date and the other beginning on the day after the Closing Date, except that Pro
Ratable Taxes (such as property Taxes) imposed on a periodic basis shall be
allocated on a daily basis. If either party shall have received any such
revenues or paid any such expenses or charges which, pursuant to the terms
hereof, the other party is entitled to or responsible for, it shall furnish the
other party with a detailed statement of any such items as soon as practicable
after receipt or payment thereof. The parties shall use their best efforts to
agree upon such items and other adjustments prior to the Closing Date and, in
any event, except as set forth in Section 2.2(c) of the Diablo Disclosure
Schedule, within sixty (60) days thereafter. If the parties are unable within
such period to agree upon such items and other adjustments, Diablo and ATS
shall, within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review such items and other
adjustments. The fees and other expenses of retaining such independent public
accounting firm shall be borne equally by Diablo and ATS. Such firm shall report
its conclusions as to such items and other adjustments pursuant to this Section
and such report shall be conclusive on all parties to this Agreement and not
subject to dispute or review. Upon such agreement or determination by such
independent accounting firm, Diablo or ATS, as the case may be, shall promptly
reimburse the other party for any income received or expenses paid by the other
party and not previously reimbursed or any other adjustment required by this
Section. Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, ATS shall be solely responsible for the payment of, and shall
defend, indemnify and hold harmless Diablo, its officers, directors and
shareholders from, any and all supplemental or additional real property or
personal property taxes assessed on or in connection with the Diablo Assets or
any part thereof, which arise from the transactions contemplated by this
Agreement, with respect to California or other sales and/or use taxes, and
documentary or governmental transfer or stamp taxes arising from the purchase
and sale of the Diablo Assets and the Diablo Business contemplated hereby.
Nothing contained in this Section 2.2(d) is intended or shall be deemed
to amend or modify the indemnification provisions of Article 8 nor to reallocate
responsibility for the matters set forth therein.
2.3 Closing; Purchase Price. The closing of the Transactions (the
"Closing") shall take place at ▇▇▇▇▇▇, White & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, on or
before September 30, 1997, (the "Closing Date"). At the Closing, each of the
parties shall deliver such bills of sale, assignments, assumptions of
liabilities, opinions and other instruments and documents as are described in
this Agreement or as may be otherwise reasonably requested by the parties and
their respective counsel. The purchase price for the Diablo Assets and the
Diablo Business (the "Purchase Price") shall be an amount equal to $40,500,000,
plus an amount equal to the sum of the Interim Adjustment and Prepaid Expenses
and deposits and minus an amount equal to the sum of (i) the Diablo Nonassumed
Obligations, if any, which ATS agrees to assume at the request of Diablo and
(ii) Prepaid Revenues. The term "Interim Adjustment" shall mean an amount equal
to the aggregate amount actually incurred by Diablo from and after November 1,
1996 and prior to the Closing Date with respect to the completion of
construction projects and site development projections (a) described in Section
2.3 of the Diablo Disclosure Schedule or (b) acquired after the date of this
Agreement in accordance with the provisions of this Agreement, including without
limitation Section 5.6, and capital improvements to, but not personnel costs,
maintenance or other expenses items of, existing communication sites, in all
cases, which ATS shall have approved in writing prior to their incurrence or
commitment by Diablo. Section 2.3(a) of the Diablo Disclosure Schedule sets
forth a description of the items constituting a part of the Interim Adjustment
for the period ended as of a date not more than five (5) days prior to the date
of this Agreement. The Purchase Price shall be payable by (a) delivery and
cancellation of the Interim Financing Note and the Additional Compensation
Certificates (as defined in the Note Agreement) (valued for such purposes at an
amount equal to the unpaid principal amount of the Interim Financing Notes, plus
accrued and unpaid interest to the Closing Date), (b) ATS instructing the Escrow
Agent to deliver the Escrow Deposit (together with interest and other increments
thereto) to
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Diablo, (c) crediting against the Purchase Price amounts paid by ATS pursuant to
the amendment included as part of the Letter of Intent, and, the balance, (d)
wire transfer of immediately available funds (i) to the Indemnity Escrow Agent
(or as it may designate) pursuant to the provisions of the Indemnity Escrow
Agreement in the amount of $900,000 (together with interest and earnings
thereon, the "Indemnity Escrow Fund") and (ii) to Diablo or, to the extent
provided in Section 2.5, the "qualified intermediary" designated pursuant to the
provisions of Section 2.5, for the balance of the Purchase Price to such account
(or accounts) as Diablo shall designate in written instructions to ATS delivered
not later than two (2) business days prior to the Closing.
Although the parties believe that the value of the tangible personal
property (other than goodwill, Governmental Authorizations, Private
Authorizations and Contracts) constituting a part of the Diablo Assets
approximate their depreciated book value, ATS shall have the right, at its sole
discretion, to engage BIA Consulting, Inc. to promptly after the execution of
this Agreement conduct and use its reasonable best efforts to complete, within
forty-five (45) days, an appraisal of the Diablo Assets which shall be the basis
for an allocation schedule (the "Tax Allocation Schedule") pursuant to which the
Purchase Price shall be allocated among the Diablo Assets. Such appraisal shall
be conducted in a manner which does not interfere with or inconvenience in any
material matter any of the landlords or tenants at any of Diablo's sites and
shall not, in any event, affect the Purchase Price. The cost of such appraisal,
if undertaken, shall be borne by ATS. Each of Diablo and ATS shall report the
purchase and sale of the Diablo Assets and the Diablo Business and the other
Transactions in accordance with the Tax Allocation Schedule for purposes of all
federal, state and local Tax Returns and shall not take, and shall cause their
respective Affiliates, representatives, successors and assigns not to take, any
position on any federal, state or local Tax Return or report, inconsistent with
such reporting position. Each of Diablo and ATS shall promptly give the other
notice of any disallowance of or challenge to such reporting by any Taxing
Authority. Notwithstanding the provisions of this Section, the parties to this
Agreement will rely solely on their own advisors in determining the tax
consequences of the transactions contemplated by this Agreement and each party
is not relying, and will not rely, on any representations or assurances of any
other party regarding such consequences other than the representations,
warranties, covenants and agreements set forth in writing in this Agreement or
furnished pursuant to the provisions hereof.
2.4 Accounts Receivable. At the closing, Diablo shall appoint ATS its
agent for the purpose of collecting all Accounts Receivable relating to the
Diablo Business. Diablo shall deliver to ATS on or as soon as practicable after
the Closing Date a complete and detailed statement showing the name, amount and
age of each Accounts Receivable of the Diablo Business. Subject to and limited
by the following, revenues relating to the Accounts Receivable relating to the
Diablo Business will be for the account of Diablo. ATS shall use its reasonable
business efforts to collect the Accounts Receivable with respect to the Diablo
Business for a period of one hundred eighty (180) days after the Closing Date
(the "Collection Period"). Any payment received by ATS during the Collection
Period from any customer with an account which is an Accounts Receivable with
respect to the Diablo Business shall first be applied in reduction of the
Accounts Receivable, unless the customer contests in writing the validity of
such application. During the Collection Period, ATS shall furnish Diablo with a
list of, and pay over to Diablo, the amounts collected with respect to the
Accounts Receivable with respect to the Diablo Business on a monthly basis and
forward to Diablo, promptly upon receipt or delivery, as the case may be, copies
of all correspondence relating to Accounts Receivable. ATS shall provide Diablo
with a final accounting on or before the fifteenth (15th) day following the end
of the Collection Period. Upon the request of either party at and after such
time, the parties shall meet to mutually and in good faith analyze any
uncollected Accounts Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if ATS desires to retain
such Accounts Receivable. As to each such Accounts Receivable, the parties shall
negotiate a good faith value of such Accounts Receivable, which ATS shall pay to
Diablo if ATS, in its sole discretion, chooses to retain such Accounts
Receivable. Diablo shall retain the right to collect any of its Accounts
Receivable as to which the parties are unable to
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reach agreement as to a good faith value, and ATS agrees to turn over to Diablo
any payments received against any such Accounts Receivable. ATS shall not be
obligated to use any extraordinary efforts to collect any of the Accounts
Receivable assigned to it for collection hereunder or to refer any of such
Accounts Receivable to a collection agency or to any attorney for collection,
and ATS shall not make any such referral or compromise, nor settle or adjust the
amount of any such Accounts Receivable, except with the approval of Diablo. ATS
shall not incur any liability to Diablo for any uncollected account unless ATS
shall have engaged in willful misconduct or gross negligence in the performance
of its obligations set forth in this Section. During and after the Collection
Period, without specific agreement with ATS to the contrary, neither Diablo nor
its agents shall make any direct solicitation of the Accounts Receivable for
collection purposes, except for Accounts Receivable retained by Diablo after the
Collection Period. The provisions of this Section shall not apply to those
certain Accounts Receivable set forth in Section 2.4 of the Diablo Disclosure
Schedule or to any other Accounts Receivable which Diablo, in its sole business
judgment, determines will require extraordinary collection efforts or referrals
to a collection agency or attorney for collection (collectively, the "Retained
Accounts Receivable"), provided the Retained Accounts Receivable are set forth
in a written notice delivered to ATS by Diablo on or prior to the Closing Date.
Diablo shall retain the sole and exclusive right to collect, whether during or
after the Collection Period, all Retained Accounts Receivable, as Diablo in its
sole discretion may determine.
2.5 Like-Kind Exchanges. Diablo shall have the right, but not the
obligation, to effect the transfer and conveyance of the Diablo Assets, in whole
or in part, as part of one or more exchanges under Section 1031 of the Code,
including the delay in Closing of escrow for those Assets subject to the
exchange. If Diablo so elects, it shall provide notice to ATS of its election
(the "Like-Kind Notice"), setting forth in reasonable detail which portion or
portions of the Diablo Assets are to be so treated. In such event, Diablo (i)
may at any time at or prior to Closing assign its rights, in whole or in part,
under this Agreement with respect to such Diablo Assets to a "qualified
intermediary" as defined in Treas. Reg. ss.1.1031(k)-1(g)(4), subject to all of
the rights and obligations hereunder of ATS, and (ii) shall promptly provide
written notice of such assignment to ATS. No such assignment shall, however,
relieve Diablo of its obligations under this Agreement. If Diablo shall have
given a Like-Kind Notice, ATS shall (i) promptly provide Diablo with written
acknowledgment of such notice, (ii) at the Closing, convey the Purchase Price
for the Diablo Assets (or such portion of them as shall have been designated in
writing by Diablo) to the "qualified intermediary" rather than to Diablo (which
conveyance shall, to such extent, discharge the obligation of ATS to deliver
such Purchase Price (or portion thereof), and (iii) at the request of Diablo
extend the closing of escrow for all or a portion of those assets subject to the
Like-Kind Notice for a period not to exceed one year. Should the closing for any
Like-Kind Notice properties be so extended, Diablo and ATS shall enter into an
agreement reasonably acceptable to each party which agreement shall, to the
maximum extent feasible, provide ATS with the rights, benefits, and obligations
for any Like-Kind Notice property for which the closing is so extended. Without
limiting the generality of the foregoing, Diablo and ATS shall promptly after
receipt by ATS of the Like-Kind Notice, negotiate in good faith in order to
determine the portion of the Purchase Price attributable to the Diablo Assets
which are to be the subject of like-kind exchange and, in the event they are
unable to so agree on such amount, it shall be determined by arbitration in
accordance with the provisions of Section 9.15 and not materially inconsistent
with the appraisal undertaken pursuant to Section 2.3. If such determination has
not been made on or prior to the Closing, ATS shall transfer to the "qualified
intermediary" the amount proposed by Diablo in the Like-Kind Notice, subject to
an agreement by the "qualified intermediary" to remit to Diablo the excess, if
any, of the amount so transferred over the amount as finally determined by the
arbitrator.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DIABLO
Diablo hereby represents, warrants and covenants to, and agrees with,
ATS as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Diablo is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted.
(b) Diablo has all requisite corporate power and corporate authority
and has in full force and effect all Governmental Authorizations (which, for
purposes of this Section 3.1(b), relate only to the sale of the Diablo Assets
and Diablo Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) and Private
Authorizations, except for those set forth in Section 3.1(b) of the Diablo
Disclosure Schedule or those the failure of which to obtain do not and will not
have, individually or in the aggregate, any material adverse effect on ATS,
necessary to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each Collateral Document executed or required to be
executed by it pursuant hereto or thereto or to consummate the Transactions; and
the execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed by it pursuant hereto or thereto
have been duly authorized by all requisite corporate or other action on the part
of Diablo. This Agreement has been duly executed and delivered by Diablo and
constitutes, and each Collateral Document executed or required to be executed by
it pursuant hereto or thereto or to consummate the Transactions when executed
and delivered by Diablo will constitute, legal, valid and binding obligations of
Diablo, enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity.
(c) Except as set forth in Section 3.1(c) of the Diablo Disclosure
Schedule, and except for matters which would have no material adverse effect on
ATS, neither the execution and delivery by Diablo of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by Diablo of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by Diablo:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of Diablo or any
Applicable Law (which, for purposes of this Section 3.1(c)(i), relates
only to the sale of the Diablo Assets and the Diablo Business generally
and not to local Applicable Law) on the part of Diablo, or will
conflict with, or result in a breach or violation of, or constitute a
default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of giving of notice or passage
of time or both would constitute such a conflict with, breach or
violation of, or default under, or permit any such acceleration in, any
Contractual Obligation of Diablo, other than those constituting Diablo
Nonassumed Obligations; or
(ii) will require Diablo to make or obtain any Governmental
Authorization, Governmental Filing (which, for purposes of this Section
3.1(c)(ii)), relate only to the sale of the Diablo Assets and Diablo
Business generally and not to "site-specific" Governmental
Authorizations or those required by local Applicable Law) or Private
Authorization including without limitation under the FCA, except for
filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
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(d) Diablo does not have any Subsidiaries except as set forth in
Section 3.1(d) of the Diablo Disclosure Schedule.
3.2 Financial and Other Information. Diablo has heretofore furnished to
ATS copies of the financial statements of the Diablo Business listed in Section
3.2 of the Diablo Disclosure Schedule (the "Diablo Financial Statements"). The
Diablo Financial Statements, including in each case the notes thereto, have been
prepared in accordance with CAAP applied on a consistent basis throughout the
periods covered thereby, except as otherwise noted therein or as set forth in
Section 3.2 of the Diablo Disclosure Schedule, are true, accurate and complete
in all material respects, do not contain any untrue statement of a material fact
or omit to state a material fact required by CAAP to be stated therein or
necessary in order to make the statements contained therein not misleading, and
fairly present the financial position and the results of operations and cash
flow of the Diablo Business, on the bases therein stated, as of the respective
dates thereof, and for the respective periods covered thereby subject, in the
case of unaudited financial statements, to normal year-end audit adjustments and
accruals.
3.3 Changes in Condition. Since the date of the most recent financial
statements constituting a part of the Diablo Financial Statements, except to the
extent specifically described in Section 3.3 of the Diablo Disclosure Schedule,
there has been no material adverse change in Diablo. There is no Event known to
Diablo which materially adversely affects, or (so far as Diablo can now
reasonably foresee) is likely to materially adversely affect, Diablo, except to
the extent specifically described in Section 3.3 of the Diablo Disclosure
Schedule.
3.4 Materiality. Other than those set forth in the Diablo Disclosure
Schedule, the representations and warranties set forth in this Article would in
the aggregate be true and correct even without the materiality exceptions or
qualifications contained therein. Other than those set forth in the Diablo
Disclosure Schedule, in the aggregate all such exceptions and qualifications to
the representations and warranties are not and could not reasonably be expected
to be materially adverse to Diablo.
3.5 Title to Properties; Leases.
(a) Section 3.5(a) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all real property owned or leased by Diablo
that is part of the Diablo Assets. Without limiting the generality of the
foregoing, Section 3.5 of the Diablo Disclosure Schedule will include a
description of the approximately 74 acre parcel on Black Mountain that contains
the communication site (the "Black Mountain Communication Site"); the Black
Mountain Communications Site will be encumbered with a permanent conservation
easement in favor of the Nature Conservancy that will prohibit development of
that portion of the site that contains a certain endangered flower, so long as
such easement does not interfere with access to the parcel or the use of the
parcel for a communication site. Except as set forth in Section 3.5(a) of the
Diablo Disclosure Schedule, Diablo has good indefeasible, marketable and
insurable title to all real property (other than leasehold and managed real
property) and good indefeasible and merchantable title to all other assets
(other than real property), tangible and intangible, constituting a part of the
Diablo Assets, in each case free and clear of all Liens, except (i) Permitted
Liens, (ii) Liens set forth on Section 3.5(a) of the Diablo Disclosure Schedule
and (iii) Approved Title Conditions. Except for financing statements evidencing
Liens referred to in the preceding sentence (a true, accurate and complete list
and description of which is set forth in Section 3.5(a) of the Diablo Disclosure
Schedule), no financing statements under the Uniform Commercial Code and no
other filing which names Diablo as debtor or which covers or purports to cover
any of the Diablo Assets is on file in any state or other jurisdiction, and
Diablo has not signed or agreed to sign any such financing statement or filing
or any agreement authorizing any secured party thereunder to file any such
financing statement or filing. Except as disclosed in Section 3.5(a) of the
Diablo Disclosure Schedule, to Diablo's knowledge, all improvements on the real
property owned or leased by Diablo are in compliance
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with applicable zoning, wetlands and land use laws, ordinances and regulations
and applicable title covenants, conditions, restrictions and reservations in all
respects necessary to conduct the operations as presently conducted, except for
any instances of non-compliance which do not and will not in the aggregate have
a material adverse effect on the owner or lessee, as the case may be, of such
real property. Except as disclosed in Section 3.5(a) of the Diablo Disclosure
Statement, all such improvements, to Diablo's knowledge, comply in all material
aspects with all Applicable Laws, Governmental Authorizations and Private
Authorizations. Except as disclosed in Section 3.5(a) of the Diablo Disclosure
Statement, to Diablo's knowledge, all of the transmitting towers, ground
radials, guy anchors, transmitting buildings and related improvements located on
the real property owned or leased by Diablo are located entirely on such real
property. Diablo has no knowledge of any pending, threatened or contemplated
action to take by eminent domain or otherwise to condemn any part of any real
property owned or leased by Diablo. Except as set forth in Section 3.5(a) of the
Diablo Disclosure Schedule, such real property (other than land), fixtures,
fixed assets and other material items of personal property, including equipment,
have, in Diablo's reasonable business judgment, been maintained in a manner
consistent with generally accepted standards of sound engineering practice and
currently permit the Diablo Business to be operated in all material respects in
accordance with the terms and conditions of all Applicable Laws, Governmental
Authorizations and Private Authorizations.
(b) Section 3.5(b) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all Leases under which any real property
used in the Diablo Business is leased. Except as otherwise set forth in Schedule
3.5(b) of the Diablo Disclosure Schedule, each Lease or other occupancy or other
agreement under which Diablo holds real or personal property constituting a part
of the Diablo Assets has been duly authorized, executed and delivered by Diablo
or its predecessors in interest, as the case may be, and, to Diablo's knowledge,
each of the other parties thereto, and is a legal, valid and binding obligation
of Diablo, and, to Diablo's knowledge, each of the other parties thereto,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, moratorium, insolvency and similar laws affecting the
rights and remedies of creditors and obligations of debtors generally and by
general principles of equity. Diablo has a valid leasehold interest in and
enjoys peaceful and undisturbed possession under all Leases pursuant to which it
holds any such real property or tangible personal property. All of such Leases
are valid and subsisting and in full force and effect; neither Diablo nor, to
Diablo's knowledge, any other party thereto, is in material default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any such Lease. None of the fixed assets or equipment comprising a
part of the Diablo Assets is subject to contracts of sale, and none is held by
Diablo as lessee or as conditional sales vendee under any Lease or conditional
sales contract and none is subject to any title retention agreement, except as
set forth in Section 3.5(b) of the Diablo Disclosure Schedule.
(c) Section 3.5(c) of the Diablo Disclosure Schedule contains a true,
accurate and complete description of all material items of Diablo Personal
Property. Diablo owns and has good and merchantable title to all of the Diablo
Personal Property relating to the Diablo Business (the "Diablo Personal
Property"), in each case, free and clear of all Liens, except (i) Permitted
Liens and (ii) Liens set forth on Section 3.5(c) of the Diablo Disclosure
Schedule (which Liens shall be released prior to Closing). Except as set forth
in Section 3.5(c) of the Diablo Disclosure Schedule, all of the Diablo Personal
Property is in a state of good repair and maintenance and is in good operating
condition, normal wear and tear excepted, has been maintained in a manner
consistent with generally accepted standards of good engineering practice and
currently permits the Diablo Business to be operated in accordance with the
terms and conditions of all Applicable Laws. Except for financing statements
listed in Section 3.5(c) of the Diablo Disclosure Schedule, no financing
statements under the Uniform Commercial Code and no other filing which names
Diablo as debtor or which covers or purports to cover any of the Diablo Assets
is on file in any state or other jurisdiction, and Diablo has not signed or
agreed to sign any such financing statement or filing or any agreement
authorizing any secured party thereunder to file any such financing statement or
filing.
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3.6 Compliance with Private Authorizations. Section 3.6 of the Diablo
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
Diablo Assets or the Diablo Business. To Diablo's knowledge, and as set forth in
Section 3.6 of the Diablo Disclosure Schedule, Diablo has obtained all Private
Authorizations which are necessary for the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business which, if not obtained and
maintained, could, individually or in the aggregate, materially adversely affect
Diablo. All of such Private Authorizations are valid and in good standing and
are in full force and effect. Diablo is not in breach or violation of, or in
default in the performance, observance or fulfillment of, any such Private
Authorization, and no Event exists or has occurred, which constitutes, or but
for any requirement of giving of notice or passage of time or both would
constitute, such a breach, violation or default, under any such Private
Authorization, except for such defaults, breaches or violations as do not and
will not have in the aggregate any material adverse effect on Diablo. No such
Private Authorization is the subject of any pending or, to Diablo's knowledge,
threatened attack, revocation or termination.
3.7 Compliance with Governmental Authorizations and Applicable Law.
(a) To Diablo's knowledge, Section 3.7(a) of the Diablo Disclosure
Schedule contains a true, complete and accurate description of each Governmental
Authorization required under Applicable Laws (i) to own and operate the Diablo
Business, as currently conducted or proposed to be conducted on or prior to the
Closing Date, all of which are in full force and effect or (ii) that is
necessary to permit Diablo to execute and deliver this Agreement and to perform
its obligations hereunder. To Diablo's knowledge, except as otherwise set forth
in Section 3.7(a) of the Diablo Disclosure Schedule, Diablo has obtained all
Governmental Authorizations which are necessary for the ownership or operation
of the Diablo Assets or the conduct of the Diablo Business as now conducted and
which, if not obtained and maintained, would, individually or in the aggregate,
have any material adverse effect on Diablo. None of the Governmental
Authorizations listed in Section 3.7(a) of the Diablo Disclosure Schedule is
subject to any restriction or condition which would limit in any material
respect the ownership or operations of the Diablo Assets or the conduct of the
Diablo Business as currently conducted, except for restrictions and conditions
generally applicable to Governmental Authorizations of such type. The
Governmental Authorizations listed in Section 3.7(a) of the Diablo Disclosure
Schedule are valid and in good standing, are in full force and effect and are
not impaired in any material respect by any act or omission of Diablo or its
officers, directors, employees or agents, and the ownership or operation of the
Diablo Assets or the conduct of the Diablo Business are in accordance in all
material respects with the Governmental Authorizations. To Diablo's knowledge,
all material reports, forms and statements required to be filed by Diablo with
all Authorities with respect to the Diablo Business have been filed and are
true, complete and accurate in all material respects. No such Governmental
Authorization is the subject of any pending or, to Diablo's knowledge,
threatened challenge or proceeding to revoke or terminate any such Governmental
Authorization. Diablo has no reason to believe that any such Governmental
Authorization would not be renewed in the name of Diablo by the granting
Authority in the ordinary course.
(b) Except as otherwise specifically described in Section 3.7(b) of the
Diablo Disclosure Schedule, neither Diablo nor any director or officer thereof
(in connection with ownership or operation of the Diablo Assets or the conduct
of the Diablo Business) is in or is charged by any Authority with or, to
Diablo's knowledge, at any time since January 1, 1993 has been in or has been
charged by any Authority with, or, to Diablo's knowledge, is threatened or under
investigation by any Authority with respect to, breach or violation of, or
default in the performance, observance or fulfillment of, any Governmental
Authorization or any Applicable Law relating to the ownership and operation of
the Diablo Assets or the conduct of the Diablo Business. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or Legal Actions pending or, to Diablo's knowledge, threatened before
or by any Authority (x) relating to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business which,
-11-
individually or in the aggregate, are reasonably likely to result in the
revocation or termination of any Governmental Authorization or the imposition of
any restriction of such a nature as would adversely affect the ownership or
operations of the Diablo Business; (y) involving charges of illegal
discrimination by Diablo under any federal or state employment Laws, or (z)
involving Environmental Laws or zoning laws, except as otherwise specifically
described in Section 3.7(b) of the Diablo Disclosure Schedule.
(c) Except as otherwise specifically described in Section 3.7(c) of the
Diablo Disclosure Schedule, no Event exists or has occurred, which, to Diablo's
knowledge, constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a breach, violation or default,
under (i) any Governmental Authorization or any Applicable Law, except for such
breaches, violations or defaults as do not and will not have, individually or in
the aggregate, any material adverse effect on Diablo or (ii) any material
requirement of any insurance carrier, applicable to the ownership or operations
of the Diablo Assets or the conduct of the Diablo Business.
(d) With respect to matters, if any, of a nature referred to in Section
3.7(a), 3.7(b) or 3.7(c) of the Diablo Disclosure Schedule, except as otherwise
specifically described in Section 3.7(d) of the Diablo Disclosure Schedule, all
such information and matters set forth in Sections 3.7(a), 3.7(b) or 3.7(c) of
the Diablo Disclosure Schedule, if adversely determined against Diablo, will
not, individually or in the aggregate, have a materially adversely effect on
Diablo.
3.8 Intangible Assets. Section 3.8 of the Diablo Disclosure Schedule
sets forth a true, accurate and complete description of all Intangible Assets
(other than Governmental Authorizations and Private Authorizations) relating to
the ownership and operation of the Diablo Assets or the conduct of the Diablo
Business held or used by Diablo, including without limitation the nature of
Diablo's interest in each and the extent to which the same have been duly
registered in the offices as indicated therein. Except as set forth in Section
3.8 of the Diablo Disclosure Schedule, to Diablo's knowledge, no Intangible
Assets (except Governmental Authorizations, Private Authorizations, and the
Intangible Assets so set forth) are required for the ownership or operation of
the Diablo Assets or the conduct of the Diablo Business as currently owned,
operated and conducted or proposed to be owned, operated and conducted on or
prior to the Closing Date. To Diablo's knowledge, Diablo does not wrongfully
infringe upon or unlawfully use any Intangible Assets owned or claimed by
another, and Diablo has not received any notice of any claim or infringement
relating to any such Intangible Asset.
3.9 Related Transactions. Diablo is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business between Diablo and any of its
officers, directors, shareholders, employees or, to the knowledge of Diablo, any
Affiliate of any thereof, including without limitation any Contractual
Obligation providing for the furnishing of services to or by, providing for
rental of property, real, personal or mixed, to or from, or providing for the
lending or borrowing of money to or from or otherwise requiring payments to or
from, any such Person, other than (i) Employment Arrangements listed or
described in Section 3.15 of the Diablo Disclosure Schedule, (ii) Contractual
Obligations between Diablo and any of its directors, shareholders, officers,
employees or Affiliates of Diablo or any of the foregoing, which constitute
Excluded Assets or Diablo Nonassumed Obligations, or (iii) as specifically set
forth in Section 3.9 of the Diablo Disclosure Schedule.
3.10 Insurance. Diablo maintains, with respect to the Diablo Assets and
the Diablo Business, policies of fire and extended coverage and casualty,
liability and other forms of insurance in such amounts and against such risks
and losses as are set forth in Section 3.10 of the Diablo Disclosure Schedule.
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3.11 Tax Matters.
(a) Except as set forth in Section 3.11(a) of the Diablo Disclosure
Schedule, Diablo has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, except with respect to failures to file
which in the aggregate would not have a material adverse effect on Diablo and,
to Diablo's knowledge, has paid, or made adequate provision for the payment of,
all Taxes which have or may become due and payable pursuant to said Tax Returns
and all other governmental charges and assessments received to date other than
those Taxes being contested in good faith for which adequate provision has been
made on the most recent balance sheet forming part of Diablo Financial
Statements. The Tax Returns of Diablo have, to Diablo's knowledge, been prepared
in all material respects in accordance with all Applicable Laws and generally
accepted principles applicable to taxation consistently applied. All Taxes which
Diablo is required by law to withhold and collect have, to Diablo's knowledge,
been duly withheld and collected, and have been paid over, in a timely manner,
to the proper Authorities to the extent due and payable. Diablo has not executed
any waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of Diablo for the fiscal years prior to and including the
most recent fiscal year. Adequate provision has, to Diablo's knowledge, been
made on the most recent balance sheet forming part of Diablo Financial
Statements for all Taxes accrued through the date of such balance sheet of any
kind, including interest and penalties in respect thereof, whether disputed or
not, and whether past, current or deferred, accrued or unaccrued, fixed,
contingent, absolute or other, and there are, to Diablo's knowledge, no past
transactions or matters which could result in additional Taxes of a material
nature to Diablo for which an adequate reserve has not been provided on such
balance sheet. Diablo is not a "consenting corporation" within the meaning of
Section 341(f) of the Code. Diablo has at all times been taxable as a Subchapter
S corporation under the Code, and has never been a member of any consolidated
group for Tax purposes, except as otherwise set forth in Section 3.11(a) of the
Diablo Disclosure Schedule.
(b) The information shown on the federal income Tax Returns of Diablo
for each of the most recent five tax years (true and complete copies of which
have, to the extent requested by ATS, been furnished by Diablo to ATS) is, to
Diablo's knowledge, true, accurate and complete in all material respects and
fairly and accurately reflects the information purported to be shown. Federal
and state income Tax Returns of Diablo have not been examined by the IRS or
applicable state Authority, and Diablo has not been notified of any proposed
examination, except as shown in Section 3.11(b) of the Diablo Disclosure
Schedule.
(c) Diablo is not a party to any tax sharing agreement or arrangement,
other than those contained in certain of its leases.
3.12 Employee Retirement Income Security Act of 1974.
(a) Diablo (which for purposes of this Section shall include any ERISA
Affiliate) is not making any contribution to or sponsoring, and has not at any
time since its organization made any contribution to or sponsored, any Plan or
Benefit Arrangement, except as set forth in Section 3.12(a) of the Diablo
Disclosure Schedule. As to all Plans and Benefit Arrangements listed in Section
3.12(a) of the Diablo Disclosure Schedule:
(i) all such Plans and Benefit Arrangements comply and have
been administered in form and in operation with all Applicable Laws in
all material respects, and Diablo has not received any notice from any
Authority questioning or challenging such compliance;
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(ii) all such Plans maintained or previously maintained by
Diablo that are or were intended to comply with Sections 401 and 501 of
the Code comply and complied in form and in operation with all
applicable requirements of such sections, and no event has occurred
which will or could give rise to disqualification of any such Plan
under such sections or to a tax under Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iv) there have been no "prohibited transactions" (as
described in Section 406 of ERISA or Section 4975 of the Code) with
respect to any such Plan and Diablo has not otherwise engaged in any
prohibited transaction;
(v) there have been no acts or omissions by Diablo which have
given rise to or may give rise to any material fines, penalties, taxes
or related charges under Sections 502(c), 502(i) or 4071 or ERISA or
Chapter 43 of the Code for which Diablo may be liable;
(vi) there are no Claims (other than routine claims for
benefits or actions seeking qualified domestic relations orders)
pending or threatened involving such Plans or the assets of such Plans,
and, to Diablo's knowledge, no facts exist which could give rise to any
such Claims (other than routine claims for benefits or actions seeking
qualified domestic relations orders);
(vii) no such Plan is subject to Title IV of ERISA, or, if
subject, there have been no "report able events" (as described in
Section 4043 of ERISA), and no steps have been taken to terminate any
such Plan;
(viii) all group health Plans of Diablo have been operated in
compliance in all material respects with the group health plan
continuation coverage requirements of COBRA;
(ix) actuarially adequate accruals for all obligations under
the Plans are reflected in the most recent balance sheet forming part
of the Diablo Financial Statements and such obligations include a pro
rata amount of the contributions which would otherwise have been made
in accordance with past practices for the Plan years which include the
Closing Date;
(x) neither Diablo nor any of its respective directors,
officers, employees or any other fiduciary has committed any breach of
fiduciary responsibility imposed by ERISA or any similar Applicable Law
that would subject Diablo or any of its respective directors, officers
or employees to material liability under ERISA or any similar
Applicable Law;
(xi) no such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code applied, nor would have had an
accumulated funding deficiency on such date if such year were the first
year of such Plan to which Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code applied;
(xii) no material liability to the PBGC has been or is
expected by Diablo to be incurred by Diablo with respect to any Plan,
and there has been no event or condition which presents a material risk
of termination of any Plan by the PBGC;
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(xiii) except as set forth in Section 3.12(xiii) of the Diablo
Disclosure Schedule, Diablo is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan;
(xiv) except as set forth in Section 3.12(a)(xiv) of the
Diablo Disclosure Schedule (which entry, if applicable, shall indicate
the present value of accumulated plan liabilities calculated in a
manner consistent with FAS 106 and actual annual expense for such
benefits for each of the last two (2) years) and pursuant to the
provisions of COBRA, Diablo does not maintain any Plan that provides
benefits described in Section 3(1) of ERISA, except as the provisions
of COBRA may apply, to any former employees or retirees of Diablo; and
(xv) Diablo has made available to ATS a copy of the two most
recently filed Federal Form 5500 series and accountant's opinion, if
applicable, for each Plan (and the two most recent actuarial valuation
reports for each Plan, if any, that is subject to Title IV of ERISA),
and all information provided by Diablo to any actuary in connection
with the preparation of any such actuarial valuation report was true,
accurate and complete in all material respects.
(b) The execution, delivery and performance by Diablo of this Agreement
and the Collateral Documents executed or required to be executed pursuant hereto
and thereto will not involve any prohibited transaction within the meaning of
ERISA or Section 4975 of the Code.
3.13 Absence of Sensitive Payments. Neither Diablo nor, to Diablo's
knowledge, any of its officers, directors, employees, agents or other
representatives, has with respect to the Diablo Assets or the Diablo Business
(a) made any contributions, payments or gifts to or for the private use of any
governmental official, employee or agent where either the payment or the purpose
of such contribution, payment or gift is illegal under the laws of the United
States or the jurisdiction in which made or (b) established or maintained any
unrecorded fund or asset for any purpose or made any false or artificial entries
on its books.
3.14 Inapplicability of Specified Statutes. Diablo is not a "holding
company", or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in section 11301 of Title 49, U.S.C.
3.15 Employment Arrangements. Section 3.15 of the Diablo Disclosure
Schedule contains a true, accurate and complete list of all Diablo employees
involved in the ownership or operation of the Diablo Assets or the conduct of
the Diablo Business (the "Diablo Employees"), together with each such employee's
title or the capacity in which he or she is employed and the basis for each such
employee's compensation. Diablo has no obligation or liability, contingent or
other, under any Employment Arrangement with any Diablo Employee, other than
those listed or described in Section 3.15 of the Diablo Disclosure Schedule.
Except as described in Section 3.15 of the Diablo Disclosure Schedule, (i) none
of the Diablo Employees is now, or, to Diablo's knowledge, since January 1,
1993, has been, represented by any labor union or other employee collective
bargaining organization, and Diablo is not, and has never been, a party to any
labor or other collective bargaining agreement with respect to any of the Diablo
Employees, (ii) there are no pending grievances, disputes or controversies with
any union or any other employee or collective bargaining organization of such
employees, or threats of strikes, work stoppages or slowdowns or any pending
demands for collective bargaining by any such union or other organization, (iii)
neither Diablo nor any of such employees is now, or, to Diablo's knowledge, has
since January 1, 1993 been, subject to or involved in or, to Diablo's knowledge,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities, in each case with respect to the Diablo
Employees and (iv) none of the Diablo Employees has notified Diablo in writing
that he or she does not intend to continue employment with Diablo until the
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Closing or with ATS following the Closing. Diablo has performed in all material
respects all obligations required to be performed under all Employment
Arrangements and is not in material breach or violation of or in material
default or arrears under any of the terms, provisions or conditions thereof.
3.16 Material Agreements. Listed on Section 3.16 of the Diablo
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the Diablo Assets or the conduct of the business of the Diablo
Business or to which Diablo is a party or to which it is bound or which any of
the Diablo Assets is subject. True, accurate and complete copies of each of such
Material Agreements have been provided by Diablo to ATS to the extent requested
by ATS (or true, accurate and complete descriptions thereof have been set forth
in Section 3.16 of the Diablo Disclosure Schedule, with respect to Material
Agreements that are oral). All of such Material Agreements are valid, binding
and legally enforceable obligations of Diablo and, to Diablo's knowledge, all
other parties thereto, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency and similar laws affecting the rights and
remedies of creditors and obligations of debtors generally and by general
principles of equity. Diablo has duly complied with all of the material terms
and conditions of each such Material Agreement and has not done or performed, or
failed to do or perform (and there is no pending or, to the knowledge of Diablo,
Claim threatened in writing that Diablo has not so complied, done and performed
or failed to do and perform) any act which would invalidate or provide grounds
for the other party thereto to terminate (with or without notice, passage of
time or both) such Material Agreement or impair the rights or benefits, or
increase the costs, of Diablo under any of such Material Agreements in any
material respect.
3.17 Ordinary Course of Business. From the end of its most recent
fiscal quarter to the date hereof, except (i) as may be described on Section
3.17 of the Diablo Disclosure Schedule, or (ii) as may be required or expressly
contemplated by the terms of this Agreement or the Letter of Intent, Diablo has
operated the Diablo Business in all material respects in the normal, usual and
customary manner in the ordinary and regular course of business, consistent with
prior practice, and, except in each case in the ordinary course of business,
consistent with prior practice,
(a) has not incurred any obligation or liability (fixed,
contingent or other) individually having a value in excess of $20,000;
(b) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of its properties or assets having a
value in excess of $20,000;
(c) has not entered into any individual commitment having a
value in excess of $20,000;
(d) has not canceled any debts or claims;
(e) has not created or permitted to be created any Lien on any
of its property;
(f) has not made or committed to make any additions to its
property or any purchases of equipment, except in the ordinary course
of business consistent with past practice or for normal maintenance and
replacements;
(g) has not increased the compensation payable or to become
payable to any of the Diablo Employees other than in the ordinary
course of business or otherwise materially altered, modified or changed
the terms of their employment;
(h) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
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(i) has not waived any rights of material value without fair
and adequate consideration;
(j) has not experienced any work stoppage;
(k) has not entered into, amended or terminated any Lease,
Governmental Authorization, Private Authorization, Material Agreement
or Employment Arrangement, or any transaction, agreement or arrangement
with any Affiliate of Diablo, except for Diablo Nonassumed Obligations;
and
(l) has not entered into any other transaction or series of
related transactions which individually or in the aggregate is material
to the Diablo Assets or the Diablo Business.
3.18 Material and Adverse Restrictions. To Diablo's knowledge, Diablo
is not a party to or subject to, nor are any of the Diablo Assets subject to,
any Applicable Law, Governmental Authorization, Contractual Obligation,
Employment Arrangement, Material Agreement or Private Authorization, or any
other obligation or restriction of any kind or character, which now has or, as
far as Diablo can now reasonably foresee, at any time in the future,
individually or in the aggregate, is likely to have, any material adverse effect
on Diablo, except as set forth in Section 3.18 of the Diablo Disclosure
Schedule.
3.19 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of Diablo.
3.20 Solvency. As of the execution and delivery of this Agreement,
Diablo is, and immediately prior to and after giving effect to the consummation
of the Transactions will be, solvent.
3.21 Environmental Matters. Except as set forth in Section 3.21 of the
Diablo Disclosure Schedule, with respect to the Diablo Assets, Diablo:
(a) has not been notified that it is potentially liable under,
has not received any request for information or other correspondence
concerning its potential liability with respect to any site or facility
under, and, to Diablo's knowledge, is not a "potentially responsible
party" under, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, the Resource Conservation
Recovery Act, as amended, or any similar state law;
(b) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to any
Environmental Law;
(c) is not a party in interest or in default under any
judgment, order, writ, injunction or decree of any final order issued
pursuant to any Environmental Law;
(d) is, to the knowledge of Diablo, in compliance in all
material respects with all Environmental Laws, has, to Diablo's
knowledge, obtained all Environmental Permits required under
Environmental Laws, and is not the subject of or, to Diablo's
knowledge, threatened with any Legal Action involving a demand for
damages or other potential liability including any Lien with respect to
material violations or material breaches of any Environmental Law; and
(e) has no knowledge of any past or present Event related to
the Diablo Business or the Diablo Assets which Event, individually or
in the aggregate, will interfere with or prevent continued material
compliance with all Environmental Laws, or which, individually or in
the aggregate, will
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form the basis of any material Claim for the release or threatened
release into the environment, of any Hazardous Material.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ATS
ATS represents, warrants and covenants to, and agrees with, Diablo as
follows:
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) ATS is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted.
(b) ATS has all requisite corporate power and corporate authority
necessary to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each Collateral Document executed or required to be
executed by it pursuant hereto or thereto or to consummate the Transactions; and
the execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed by it pursuant hereto or thereto
have been duly authorized by all requisite corporate or other action on the part
of ATS. This Agreement has been duly executed and delivered by ATS and
constitutes, and each Collateral Document executed or required to be executed by
it pursuant hereto or thereto or to consummate the Transactions when executed
and delivered by ATS will constitute, legal, valid and binding obligations of
ATS, enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and the obligations of
debtors generally and by general principles of equity.
(c) Except for matters which would not have any material adverse effect
on ATS, neither the execution and delivery by ATS of this Agreement or any
Collateral Document executed or required to be executed by it pursuant hereto or
thereto, nor the consummation by ATS of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by ATS:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Organic Document of ATS or any
Applicable Law on the part of ATS, or will conflict with, or result in
a breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation
of ATS; or
(ii) will require ATS to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization including
without limitation under the FCA, except for filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
4.2 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of ATS.
4.3 Solvency. As of the execution and delivery of this Agreement, ATS
is, and immediately prior to and after giving effect to the consummation of the
Transactions will be, solvent.
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4.4 No Legal Action. There are no Legal Actions pending or, to the
knowledge of ATS, threatened against ATS or any of its Affiliated Entities,
officers or directors, that question or may affect the validity of this
Agreement or the right of ATS to consummate the transactions contemplated
hereunder.
ARTICLE 5
COVENANTS
5.1 Access to Information; Confidentiality.
(a) Diablo shall afford to ATS and its accountants, counsel, lenders,
financial advisors and other representatives (the "Representatives") full access
during normal business hours throughout the period prior to the Closing Date to
all of Diablo's properties, books, contracts, commitments and records (including
without limitation Tax Returns) relating to the Diablo Assets and the Diablo
Business and, during such period, shall furnish promptly upon request (i) a list
(and copies to the extent requested by ATS) of each report, schedule and other
document filed or received by Diablo pursuant to the requirements of any
Applicable Law or filed by it with any Authority in connection with the
Transactions or which may have a material adverse effect on the Diablo Assets or
the Diablo Business or the businesses, operations, properties, prospects,
personnel, condition (financial or other), or results of operations thereof,
(ii) to the extent not provided for pursuant to the preceding clause, all
financial records, ledgers, work papers and other sources of financial
information possessed and controlled by Diablo or its accountants reasonably
deemed by ATS or its Representatives necessary or useful for the purpose of
performing an audit of the Diablo Assets and the Diablo Business and certifying
financial statements and financial information, and (iii) such other information
in the possession or control of Diablo or its accountants concerning any of the
foregoing as ATS shall reasonably request; provided, however, that Diablo shall
not be required to permit any such access to the extent same would unreasonably
interfere with Diablo's normal business operations. All non-public information
relating to the Diablo Assets or the Diablo Business furnished prior to the
execution, or pursuant to the provisions, of this Agreement, including without
limitation this Section, will be kept confidential and shall not, without the
prior written consent of Diablo, be disclosed by ATS in any manner whatsoever,
in whole or in part, and shall not be used for any purposes, other than in
connection with the Transactions. In no event shall ATS or any of its
Representatives use such information to the detriment of Diablo. ATS agrees to
reveal such information only to those of its Representatives or other Persons
who need to know such information for the purpose of evaluating the
Transactions, who are informed of the confidential nature of such information
and who shall undertake to act in accordance with the terms and conditions of
this Agreement. From and after the Closing, Diablo shall not, without the prior
written consent of ATS, disclose any information remaining in its possession
with respect to the Diablo Assets or the Diablo Business, and no such
information shall be used for any purposes, other than in connection with the
Transactions or to the extent required by Applicable Law.
(b) Subject to the terms and conditions of Section 5.1(a), ATS may,
subject to prior consultation with Diablo, disclose such information as may be
necessary in connection with seeking all Governmental and Private Authorizations
or that is required by Applicable Law to be disclosed. In the event that this
Agreement is terminated for any reason, ATS shall promptly redeliver all
non-public written material provided pursuant to this Section or any other
provision of this Agreement or otherwise in connection with the Transactions and
shall not retain any copies, extracts or other reproductions in whole or in part
of such written material, other than one copy thereof which shall be delivered
to independent counsel for ATS (which independent counsel shall be subject to
the provisions of Section 5.1(a)), and ATS shall so certify to such effect.
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(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, either party may disclose information received or
retained by it in accordance with the provisions of this Agreement if it can
demonstrate (i) such information is generally available to or known by the
public from a source other than the party seeking to disclose such information
or (ii) was obtained by the party seeking to disclose such information from a
source other than the other party, provided that such source was not bound by a
duty of confidentiality to the other party or another party with respect to such
information.
5.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use reasonable business efforts
(x) to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under Applicable Law to consummate the
Transactions, and (y) to refrain from taking, or cause to be taken, any action
and to refrain from doing or causing to be done, any thing which could impede or
impair the consummation of the Transactions, including, in all cases, without
limitation using its reasonable business efforts (i) to prepare and file with
the applicable Authorities as promptly as practicable after the execution of
this Agreement all requisite applications and amendments thereto, together with
related information, data and exhibits, necessary to request issuance of orders
approving the Transactions by all such applicable Authorities, each of which
must be obtained or become final to the extent provided in Section 6.1(a), (ii)
to obtain all necessary or appropriate waivers, consents and approvals,
including without limitation those referred to in Section 6.2(d), without
payment of any material amount of compensation, (iii) to effect all necessary
registrations, filings and submissions (including without limitation filings
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and all filings necessary for ATS to own and
operate the Diablo Assets and conduct the Diablo Business), (iv) to lift any
injunction or other legal bar to the Transactions (and, in such case, to proceed
with the Transactions as expeditiously as possible), and (v) to obtain the
satisfaction of the conditions specified in Article 6, including without
limitation the truth and correctness as of the Closing Date as if made on and as
of the Closing Date of the representations and warranties of such party and the
performance and satisfaction as of the Closing Date of all agreements and
conditions to be performed or satisfied by such party.
(b) The parties shall cooperate with one another in the preparation,
execution and filing of all Tax Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Transactions that are required or permitted to be filed on
or before the Closing Date.
(c) Diablo shall, at ATS' expense, cooperate and use its reasonable
business efforts to (i) prepare its financial statements for the period ended
December 31, 1996 and thereafter in accordance with GAAP and (ii) cause its
independent accountants to reasonably cooperate with ATS, and at ATS' expense,
in order to enable ATS to have its independent accountants prepare audited
financial statements for the Diablo Business described in Section 6.2(g).
Without limiting the generality of the foregoing, Diablo agrees that after the
Closing Date it will (x) if required by the Securities Act or the Exchange Act,
consent to the use of such audited financial statements in any registration
statement or other document filed by ATS or any Affiliate of ATS under the
Securities Act or the Exchange Act and (y) if reasonably requested by ATS'
independent accountants, execute and deliver, and cause its officers to execute
and deliver, such "representation" letters as are customarily delivered in
connection with audits under comparable circumstances.
5.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, Diablo and ATS shall consult with the other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Transactions and shall not issue any such press
release or make any such public statement without the prior consent of the
other. Notwithstanding the foregoing, each party acknowledges and agrees that
Diablo and ATS may, without the other's prior consent, issue such press
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releases or make such public statements as may be required by Applicable Law, in
which case, to the extent practicable, the party proposing to make such press
release or public statement will consult with the other regarding the nature,
extent and form of such press release or public statement. In addition, subject
to the terms and conditions hereof, ATS may disclose the subject matter of this
Agreement to Persons with whom Diablo has a business or contractual relationship
in connection with ATS' due diligence investigation of Diablo; provided,
however, that prior to (i) ATS sending any written communication to any such
Person, ATS shall secure the written approval of the form and content of such
communication, such approval not to be unreasonably withheld, delayed or
conditioned, and (ii) any verbal or in person communication with any such
Person, ATS shall provide Diablo with the opportunity to participate with ATS in
any such conversation or meeting.
5.4 Notification of Certain Matters. Diablo and ATS shall, prior to the
Closing, give prompt notice to the other, of the occurrence or non-occurrence of
any Event the occurrence or non-occurrence of which would be likely to cause (i)
any representation or warranty made by it contained in this Agreement to be
untrue or inaccurate in any material respect such that one or more of the
conditions of Closing might not be satisfied, or (ii) any covenant, condition or
agreement made by it contained in this Agreement not to be complied with or
satisfied, or (iii) any change to be made in the Diablo Disclosure Schedule in
any respect such that one or more of the conditions of Closing might not be
satisfied, and any failure made by it to comply with or satisfy, or be able to
comply with or satisfy, any covenant, condition or agreement to be complied with
or satisfied by it hereunder in any respect such that one or more of the
conditions of Closing might not be satisfied; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
5.5 No Solicitation. So long as this Agreement remains in effect,
Diablo shall not, nor shall it knowingly permit any of its Representatives
(including, without limitation, any investment banker, broker, finder, attorney
or accountant retained by it) to, initiate, solicit or facilitate, directly or
indirectly, any inquiries or the making of any proposal with respect to any
Alternative Transaction, engage in any discussions or negotiations concerning,
or provide to any other Person any information or data relating to, it or any
Subsidiary for the purposes of, or otherwise cooperate in any way with or assist
or participate in, or facilitate any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, a proposal to seek
or effect any Alternative Transaction, or agree to or endorse any Alternative
Transaction. "Alternative Transaction" means a transaction or series of related
transactions (other than the Transactions) resulting in (i) any merger or
consolidation, regardless of whether Diablo is the surviving Entity unless the
surviving Entity remains obligated under this Agreement to the same extent as it
was, or (ii) any sale or other disposition of all or any substantial part of the
Diablo Assets or the Diablo Business. The provisions of this Section shall apply
to each of Diablo's Subsidiaries. If Diablo or any of its Representatives
receives any inquiry with respect to an Alternative Transaction while this
Agreement is in effect, Diablo shall inform the inquiring party that it is not
entitled to enter into discussions or negotiations relating to an Alternative
Transaction.
5.6 Conduct of Business by Diablo Pending the Closing. Except as
otherwise contemplated by this Agreement, after the date hereof and prior to the
Closing Date or earlier termination of this Agreement, unless ATS shall
otherwise agree in writing, Diablo shall, to the extent relating to the Diablo
Business or the Diablo Assets:
(a) conduct its business in the ordinary and usual course of
business and consistent with past practice, including without
limitation the performance of such maintenance, repairs or replacements
with respect to communication towers, fixtures and Personal Property
comprising the Diablo Assets as is consistent with past practice;
-21-
(b) use all reasonable business efforts to preserve intact its
business organizations and goodwill, keep available the services of its
present key employees, and preserve the goodwill and business
relationships with customers and others having business relationships
with it;
(c) to the extent permitted under Applicable Law, confer, as
and when reasonably requested, on a regular and frequent basis with one
or more representatives of ATS to report material operational matters
and the general status of ongoing operations;
(d) maintain with financially responsible insurance companies
insurance on its assets and its business in such amounts and against
such risks and losses as are consistent with past practice;
(e) use reasonable business efforts to (i) operate the Diablo
Business in conformity in all material respects with all Governmental
and Private Authorizations, Leases and Material Agreements on a basis
consistent with past practice and Applicable Law and the rules and
regulations of any Authority with jurisdiction over the Diablo Assets
or the Diablo Business, and (ii) maintain in full force and effect all
such Governmental and Private Authorizations, Leases and Material
Agreements relating to the Diablo Business;
(f) except as set forth in Section 5.6(f) of the Diablo
Disclosure Schedule, not (i) dispose of any of the Diablo Assets owned
by Diablo or used in the operation of the Diablo Business (other than
for the disposition in the ordinary course of business of immaterial
assets that are of no further use to the Diablo Business) or (ii)
modify or change in any material respect, or enter into, any Material
Agreement relating to the Diablo Business; and
(g) not voluntarily take any action which if taken between the
end of its most recent fiscal quarter and prior to the date of this
Agreement would have been required to be noted as an exception on
Section 3.17 of the Diablo Disclosure Schedule.
With respect to any transaction or act proposed to be entered into or performed
by Diablo which, pursuant to this Section 5.6, requires the prior approval of
ATS, ATS shall be deemed to have approved the same unless written notice of
disapproval is received by Diablo within five (5) business days after receipt by
ATS of a written request for approval made by Diablo.
5.7 Preliminary Title Reports. As promptly as practicable after the
execution of this Agreement, Diablo shall, at its sole cost and expense, deliver
or cause to be delivered to ATS a standard preliminary title report dated on or
after the date of this Agreement issued by such title company as Diablo and ATS
shall mutually reasonably agree (the "Title Company") with respect to those
Diablo Assets comprised of the parcels of real property described in Section 5.7
of the Diablo Disclosure Schedule (the "Insured Real Property"). Such reports,
as same may be amended or supplemented from time to time to reflect additional
title matters, are referred to herein as the "Title Reports". The rights and
obligations of the parties shall thereafter be as follows:
(a) On or before fifteen (15) business days after ATS' receipt
of the last of the Title Reports, ATS shall give to Diablo written
notice ("ATS' Title Notice") of ATS' disapproval of any matters shown
in the Title Reports. ATS' failure to give ATS' Title Notice within
such fifteen (15) business days shall be deemed to constitute ATS'
approval of all matters disclosed by the Title Reports;
(b) If ATS disapproves any title matters pursuant to ATS'
Title Notice, Diablo shall deliver written notice ("Diablo's Title
Notice") to ATS within ten (10) business days after Diablo's
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receipt of ATS' Title Notice, stating whether Diablo agrees to
eliminate such disapproved title matters from title to the Insured Real
Property prior to the Closing or, if such elimination is not feasible
prior to the Closing, to effect such elimination thereafter and to
indemnify and hold harmless ATS with respect to such remedy. If Diablo
fails to timely deliver Diablo's Title Notice, or if Diablo delivers
Diablo's Title Notice but states therein that Diablo is unwilling or
unable to eliminate such disapproved title matters, ATS and Diablo
shall negotiate in good faith in an attempt to resolve such matters
(the "Disapproved Title Sites" and, collectively with the "Disapproved
Environmental Sites", the "Disapproved Sites") from the Diablo Assets,
a reduction of the Purchase Price or an indemnification (and escrow)
from Diablo (not subject to the limitations as to time or amount
specified in Article 8). If within twenty (20) business days of the
commencement of such negotiations (or such longer period as ATS and
Diablo shall agree), the parties have been unable to resolve such
matters, either party can terminate this Agreement pursuant to the
provisions of Section 7.1(f) within ten (10) business days of the end
of such negotiation period; and
(c) If, at any time following ATS' approval of the Title
Reports, Diablo or the Title Company notifies ATS of any additional
matter affecting title to the Insured Real Property, the parties shall
have substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above.
5.8 Environmental Site Assessments. As promptly as practicable after
the execution of this Agreement, ATS may at its own cost and expense obtain, and
deliver to Diablo full and complete copies of, Phase I environmental site
assessment reports (the "Environmental Reports") on any or all of those certain
parcels of real property described on Section 5.8 of the Diablo Disclosure
Schedule. Site assessments shall be conducted by such consultants and
professionals as ATS and Diablo shall mutually agree (collectively, the
"Environmental Company"), shall be arranged at times mutually convenient to the
parties, and shall be conducted in a manner which does not interfere with or
inconvenience in any material manner any of the landlords or tenants at any of
Diablo's sites. Each of Diablo and ATS shall be entitled to have representatives
present at the time such site assessments are conducted, and to have copies of
all correspondence with the Environmental Company:
(a) On or before fifteen (15) business days after ATS' receipt
of the last of the Environmental Reports, ATS shall give to Diablo
written notice ("ATS' Environmental Notice") of ATS' disapproval of any
matters shown in the Environmental Reports. ATS' failure to give ATS'
Environmental Notice within such fifteen (15) business days shall be
deemed to constitute ATS' approval of all matters disclosed by the
Environmental Reports;
(b) If ATS disapproves any environmental matters pursuant to
ATS' Environmental Notice, Diablo shall deliver written notice
("Diablo's Environmental Notice") to ATS within ten (10) business days
after Diablo's receipt of ATS' Environmental Notice, stating whether
Diablo agrees to eliminate and remedy such matter prior to the Closing
or, if such elimination or remedy is not feasible prior to the Closing,
to effect such elimination and remedy thereafter and to indemnify and
hold harmless ATS with respect to such remedy. If Diablo fails to
timely deliver Diablo's Environmental Notice, or if Diablo delivers
Diablo's Environmental Notice but states therein that Diablo is
unwilling or unable to eliminate and remedy such environmental matters,
ATS and Diablo shall negotiate in good faith in an attempt to resolve
such matters (the "Disapproved Environmental Sites") from the Diablo
Assets, a reduction of the Purchase Price or an indemnification (and
escrow) from Diablo (not subject to the limitations as to time or
amount specified in Article 8). If within twenty (20) business days of
the commencement of such negotiations (or such longer period as ATS and
Diablo shall agree), the parties have been unable to resolve such
matters, either party can
-23-
terminate this Agreement pursuant to the provisions of Section 7.1(f)
within ten (10) business days of the end of such negotiation period;
and
(c) If, at any time following ATS' approval of the
Environmental Reports, ATS or the Environmental Company notifies Diablo
of any additional environmental matter, the parties shall have
substantially the same rights and obligations as are set forth in
paragraphs (a) and (b) above.
5.9 Post-Closing Covenants and Agreements of the Parties. From and
after the consummation of the Transactions, ATS and Diablo covenant and agree as
follows:
(a) Diablo shall have the right, if it shall have so notified
ATS not later than five (5) business days prior to the Closing, to
retain (or to cause any of its Affiliates to retain) the services of
each of the individuals named in Section 5.9(a) of the Diablo
Disclosure Schedule;
(b) ATS shall afford to Diablo, and Diablo shall afford to
ATS, access to their respective employees who were (or in the case of
Diablo who remain) employees of Diablo on the Closing Date to the end
that such employees are available to provide assistance, consultation
and historical background to the requesting party; provided, however,
that neither ATS nor Diablo shall have any such obligation after the
expiration of five (5) years from the Closing Date or to the extent
that it would exceed an average of four (4) hours per week over such
period; and
(c) ATS shall afford to Diablo, and Diablo shall afford to
ATS, access to all books and records delivered to ATS or retained by
Diablo, as the case may be, relating to periods prior to the Closing
Date, in order to enable Diablo or ATS, as the case may be, to prepare
all necessary Tax Returns, deal with Legal Actions or other Claims
(including without limitation those of the Internal Revenue Service) or
personnel matters or for any other reasonable purposes, subject,
however, in all events, to the provisions of Section 5.1 with respect
to confidentiality. Anything in this Section to the contrary
notwithstanding, Diablo and ATS shall cooperate fully in the event of
an Internal Revenue Service audit or investigation related to this
Agreement, including without limitation providing each other with full
and complete access to each other's records and employees to the extent
necessary to respond to any such audit or investigation.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to effect the Transactions.
The respective obligations of each party to effect the Transactions shall,
except as hereinafter provided in this Section, be subject to the satisfaction
at or prior to the Closing Date of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by Applicable Law:
(a) All authorizations, consents, waivers, orders or approvals
required to be obtained from all Authorities, and all filings,
submissions, registrations, notices or declarations required to be made
by ATS and Diablo with any Authority, prior to the consummation of the
Transactions, shall have been obtained from, and made with, all such
Authorities, except for such authorizations, consents, waivers, orders,
approvals, filings, registrations, notices or declarations as are set
forth in Section 6.1(a) of the Diablo Disclosure Schedule or the
failure to obtain or make would not, in the reasonable business
judgment of ATS, have a material adverse effect on the Diablo Assets
and the Diablo Business;
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(b) The transactions contemplated by the Other Agreement shall
have been consummated prior to or simultaneously with the consummation
of the Transactions; and
(c) The parties shall have entered into an escrow agreement in
form, scope and substance reasonably satisfactory to the parties with
the Title Company or any other Person reasonably acceptable to the
parties, pursuant to which, among other things, ATS shall have
deposited the portion of the Purchase Price not being delivered to the
Indemnity Escrow Agent or to a "qualified intermediary" pursuant to the
provisions of Section 2.3, and Diablo shall have delivered deeds in
customary form with respect to all of the real property to be conveyed
to ATS as part of the Diablo Assets and the parties, to the extent
required by Section 9.3, shall have deposited an amount sufficient to
pay all recording fees, transfer taxes and other fees and expenses
which must be paid as a condition of consummation of the transactions
contemplated by this Agreement.
6.2 Conditions to Obligations of ATS. The obligation of ATS to effect
the Transactions shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
required to be delivered pursuant to the provisions of this Agreement
shall be reasonably satisfactory in form, scope and substance to ATS
and its counsel, and ATS and its counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which they may reasonably request in connection therewith,
such documents where appropriate to be certified by proper corporate
officers;
(b) Diablo shall have furnished ATS and, at ATS' request, any
bank or other financial institution providing credit to ATS, with a
favorable opinion, dated the Closing Date of ▇▇▇▇▇▇, White & ▇▇▇▇▇▇,
counsel for Diablo, with respect to the matters set forth in Sections
3.1(a), (b) and (c), 3.7(b) and 3.14, and such other matters arising
after the date of this Agreement and incident to the Transactions, as
ATS or its counsel or its counsel may reasonably request or which may
be reasonably requested by any such bank or financial institution or
their respective counsel;
(c) The representations and warranties of Diablo contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto shall be true and correct in all material respects at
and as of the Closing Date with the same force and effect as though
made on and as of such date except those which speak as of a certain
date which shall continue to be true and correct in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Diablo or
ATS, except as otherwise specifically provided herein); each and all of
the covenants and agreements and conditions to be performed or
satisfied by Diablo hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and
Diablo shall have furnished ATS with such certificates and other
documents evidencing the truth of such representations, warranties,
covenants and agreements and the performance of such agreements or
conditions as ATS or its counsel shall have reasonably requested;
(d) Except to the extent, if any, specifically set forth in
Section 6.2(d) of the Diablo Disclosure Schedule, all authorizations,
consents, waivers, orders or approvals required by the provisions of
this Agreement to be obtained from all Persons (other than Authorities)
prior to the consummation of the Transactions, including without
limitation those required by the provisions of this Agreement in order
to vest fully in ATS all right, title and interest in and to all of the
Diablo
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Assets and the Diablo Business (including without limitation all
Private Authorizations, Leases and Material Agreements of Diablo), and
the full enjoyment thereof shall have been obtained, without the
imposition, individually or in the aggregate, of any condition or
requirement which could materially adversely affect ATS;
(e) Between the date of this Agreement and the Closing Date,
there shall not have occurred and be continuing any material adverse
change in Diablo from that reflected in the most recent Diablo
Financial Statements; as of the Closing Date, the Governmental
Authorizations with respect to the ownership or operation of the Diablo
Assets or the conduct of the Diablo Business shall not have been
materially and adversely affected by any act, or failure to act, of
Diablo;
(f) Diablo shall have delivered or caused to be delivered to
ATS all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by Diablo to ATS at or prior to
the Closing pursuant to the terms of this Agreement;
(g) ATS shall have received from its independent accountants
(i) an unqualified report (as to the scope of the audit, access to the
books and records and the cooperation of management) on the financial
statements (consisting of balance sheets for each of the fiscal years
ended December 31, 1995 and 1996 and statements of operations and cash
flow for each of the three years in the period ended December 31, 1996)
of the Diablo Business, which financial statements shall have been
prepared in conformity with GAAP and Regulation S-X under the
Securities Act, or (ii) such other documentation as shall be reasonably
satisfactory to ATS indicating that such an unqualified report could be
issued if requested by ATS;
(h) As of the Closing Date, except as otherwise set forth in
Section 3.7(a) of the Diablo Disclosure Schedule, no Legal Action shall
be pending before or threatened in writing by any Authority seeking to
enjoin, restrain, prohibit or make illegal or to impose any materially
adverse conditions in connection with, the consummation of the
Transactions, or which might, in the reasonable business judgment of
ATS, based upon the advice of counsel, have a material adverse effect
on the Diablo Assets and the Diablo Business, it being understood and
agreed that a written request by any Authority for information with
respect to the Transactions, which information could be used in
connection with such Legal Action, shall not be deemed to be a threat
of any such Legal Action;
(i) All Environmental Reports obtained by the parties prior to
the Closing Date pursuant to the provisions of Section 5.8 hereof shall
be approved or deemed approved by ATS in the manner described in
Section 5.8;
(j) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), the chairman and principal
shareholder of Diablo, shall have executed and delivered to ATS an
agreement substantially in the form of Exhibit A attached hereto and
made a part hereof (the "▇▇▇▇▇▇ Noncompetition Agreement");
(k) Diablo and ▇▇▇▇▇▇ shall have executed and delivered to ATS
and the escrow agent named therein (the "Indemnity Escrow Agent") an
escrow agreement (the "Indemnity Escrow Agreement") substantially in
the form of Exhibit B attached hereto and made a part hereof;
(l) ATS shall have received standard CLTA title insurance
policies insuring ATS' fee interests in all Insured Real Property,
subject only to Approved Title Conditions;
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(m) Diablo shall have delivered to ATS all use permits,
consents or other Governmental Authorizations of and all Leases from
the United States Forest Service set forth in Section 6.2(m) of the
Diablo Disclosure Schedule;
(n) Diablo shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
(the "Nonassignable Contracts Agreement"), pursuant to which (i) Diablo
will hold (but will have no obligation to perform services thereunder)
for the account of ATS, and remit promptly to ATS all amounts received
pursuant to the provisions of, all of the Nonassignable Contracts as to
which the required approval or consent to the assignment or transfer of
which was not obtained and as to which ATS has delivered an Acceptance
Notice, and (ii) ATS will agree to (A) perform all services required to
be performed under such Nonassignable Contracts, (B) reimburse Diablo
for all costs and expenses reasonably incurred pursuant to the
Nonassignable Contracts Agreement and (C) indemnify and hold harmless
Diablo with respect to all actions taken by ATS pursuant thereto and
all actions, if any, taken by Diablo pursuant thereto other than those
relating to the bad faith, negligence or willful misconduct of Diablo
or its officers, directors, stockholders or employees;
(o) Diablo and ▇▇▇▇▇▇ shall have delivered to ATS, an
agreement, in form, scope and substance reasonably satisfactory to ATS
and Diablo, pursuant to which (i) Diablo and ▇▇▇▇▇▇ would, for a period
of three years, agree to offer only to ATS (and not to any other Person
regardless of whether ATS shall have accepted any such offer) all
property in California which is suitable for development as a
communication site and with respect to which they have, as broker or
otherwise, any rights, and (ii) if ATS accepts such property, it would
agree to pay ▇▇▇▇▇▇ a percentage of net income on other compensation as
set forth in such agreement (the "Acquisition Participation
Agreement");
(p) Diablo, ▇▇▇▇▇▇ and any other Person having any interest in
the property on Black Mountain which is contiguous to Black Mountain
Communications Site shall have executed and delivered to ATS an
agreement, in recordable form, (i) granting permanent mutual access and
permanent utility easements, without the payment of any consideration,
and (ii) agreeing not to construct any communication towers on any
portion of such property, all on terms and conditions as are reasonably
satisfactory to ATS and Diablo (the "Black Mountain Easement
Agreement");
(q) ▇▇▇▇▇▇ (as the owner of the Drake Industrial Park) shall
have executed and delivered to ATS a lease, in form, scope and
substance reasonably satisfactory to ATS and Diablo, pursuant to which
ATS shall lease approximately 2,400 square feet, for a term of five (5)
years and at a rent of $1,200 per month (the "Drake Lease");
(r) ▇▇▇▇▇▇ shall have executed and delivered to ATS an
agreement, in form, scope and substance reasonably satisfactory to ATS
and Diablo, pursuant to which (i) ATS shall have a right, for a period
of three years, of first refusal on any communication facility to be
constructed on any building in California owned or managed by ▇▇▇▇▇▇ or
any Affiliate of ▇▇▇▇▇▇, (ii) in the event ATS exercises such right of
first refusal, gross revenues (after deduction for installation and
electrical expenses) from such development will be shared equally by
ATS and ▇▇▇▇▇▇, and (iii) in the event ATS does not exercise its right
of first refusal, ▇▇▇▇▇▇ shall have the right to lease the facility to
any Person who is not an Affiliate of ▇▇▇▇▇▇ (the "Exclusivity
Agreement"); and
(s) In the event an agreement or agreements have been entered
into between Diablo (or ATS) and TeleCommunications, Inc. relating to
the management of its towers, Diablo shall have executed and delivered
to ATS and agreement, in form, scope and substance reasonably
satisfactory
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to ATS, pursuant to which Diablo shall receive the initial $65,000 of
revenue (in reimbursement of its expenses) and thereafter revenue will
be shared two-thirds to ATS and one-third to Diablo (the "TCI
Agreement").
6.3 Conditions to Obligations of Diablo. The obligation of Diablo to
effect the Transactions shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
required to be delivered pursuant to the provisions of this Agreement
shall be reasonably satisfactory in form, scope and substance to Diablo
and its counsel, and Diablo and its counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which they may reasonably request in connection therewith,
such documents where appropriate to be certified by proper corporate
officers;
(b) ATS shall have furnished Diablo and, at Diablo's request,
any bank of other financial institution providing credit to Diablo,
with favorable opinions, dated the Closing Date of ▇▇▇▇▇▇▇▇ & Worcester
LLP, counsel for ATS, with respect to the matters set forth in Section
4.1 and with respect to such other matters arising after the date of
this Agreement and incident to the Transactions, as Diablo or its
counsel may reasonably request or which may be reasonably requested by
any such bank or financial institution or their respective counsel;
(c) The representations and warranties of ATS contained in
this Agreement or otherwise made in writing by it or on its behalf
pursuant hereto shall be true and correct in all material respects at
and as of the Closing Date with the same force and effect as though
made on and as of such date except those which speak as of a certain
date which shall continue to be true and correct in all material
respects as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge of Diablo or
ATS, except as otherwise specifically provided herein); each and all of
the covenants and agreements and conditions to be performed or
satisfied by ATS hereunder at or prior to the Closing Date shall have
been duly performed or satisfied in all material respects; and ATS
shall have furnished Diablo with such certificates and other documents
evidencing the truth of such representations, warranties, covenants and
agreements and the performance of such agreements or conditions as
Diablo or its counsel shall have reasonably requested;
(d) ATS shall have delivered or cause to be delivered to
Diablo all of the Collateral Documents and other agreements, documents
and instruments required to be delivered by ATS to Diablo at or prior
to the Closing pursuant to the terms of this Agreement;
(e) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority seeking to enjoin,
restrain, prohibit or make illegal or to impose any materially adverse
conditions in connection with, the consummation of the Transactions, it
being understood and agreed that a written request by any Authority for
information with respect to the Transactions, which information could
be used in connection with such Legal Action, shall not be deemed to be
a threat of any such Legal Action;
(f) ATS shall have executed and delivered to Diablo, ▇▇▇▇▇▇
and the Indemnity Escrow Agent a counterpart of the Indemnity Escrow
Agreement;
(g) ATS shall have executed and delivered to Diablo the
Nonassignable Contracts Agreement;
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(h) ATS shall have executed and delivered to Diablo the Black
Mountain Easement Agreement and the Exclusivity Agreement; and
(i) ATS shall, if applicable, have executed and delivered to
Diablo the TCI Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Diablo and ATS;
(b) by either ATS or Diablo if any permanent injunction,
decree or judgment by any Authority preventing the consummation of the
Transactions shall have become final and nonappealable; or
(c) by Diablo in the event (i) Diablo is not in material
breach of this Agreement and none of its representations or warranties
shall have become and continue to be untrue in any material respect,
and (ii) ATS is in material breach of this Agreement or any of its
representations or warranties shall have become and continue to be
untrue in any material respect, and such a breach or untruth exists and
is not capable of being cured by and will prevent or delay consummation
of the Transactions by or beyond the Termination Date; or
(d) by ATS in the event (i) ATS is not in material breach of
this Agreement and none of its representations or warranties shall have
become and continue to be untrue in any material respect, and (ii)
Diablo is in material breach of this Agreement or any of its
representations or warranties shall have become and continue to be
untrue in any material respect, and such a breach or untruth exists and
is not capable of being cured by and will prevent or delay consummation
of the Transactions by or beyond the Termination Date; or
(e) by ATS in the event of a failure of the condition set
forth in Section 6.2(i) or 6.2(l); or
(f) by ATS or Diablo pursuant to the provisions of Section
5.7(b) or 5.8(b).
The term "Termination Date" shall mean September 30, 1997 or such other
date as the parties may, from time to time, mutually agree.
The right of ATS or Diablo to terminate this Agreement pursuant to this
Section shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of either party, any Person controlling any
such party or any of their respective Representatives whether prior to or after
the execution of this Agreement.
7.2 Effect of Termination.
(a) Except as provided in Sections 5.1 (with respect to
confidentiality), 5.3, 9.3 and 9.15 and this Section, in the event of the
termination of this Agreement pursuant to Section 7.1, or in the event the
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Transactions shall not have been consummated prior to the end of business on the
Termination Date, this Agreement shall forthwith become void, there shall be no
liability on the part of either party, or any of their respective shareholders,
officers or directors, to the other and all rights and obligations of either
party shall cease; provided, however, that such termination shall not relieve
either party from liability for any misrepresentation or breach of any of its
warranties, covenants or agreements set forth in this Agreement.
(b) In the event this Agreement is terminated by Diablo pursuant to the
provisions of Section 7.1(c), then Diablo shall be entitled to liquidated
damages of (i) an amount equal to the Escrow Deposit, together with interest and
other earnings thereon, and (ii) delivery and cancellation of the Interim
Financing Notes, including all accrued and unpaid interest thereon, and any
Additional Compensation Certificates; the parties agree that such amounts shall
collectively constitute full payment for any and all damages suffered by Diablo
by reason of ATS' failure to consummate the Transactions. ATS and Diablo agree
in advance that actual damages would be difficult to ascertain and that such
liquidated damages is a fair and equitable amount to reimburse Diablo for
damages sustained due to ATS' failure to consummate the Transactions for the
above-stated reasons. In the event this Agreement is terminated by ATS pursuant
to the provisions of Section 7.1(d), then ATS shall be entitled to the amount of
the Escrow Deposit, together with interest and other earnings thereon, without
prejudice to ATS' right to pursue damages or other remedies hereunder.
Notwithstanding the foregoing, each party shall have the right to seek specific
performance pursuant to the provisions of Section 9.5.
(c) In the event this Agreement is terminated pursuant to the
provisions of Section 7.1(a), 7.1(b), 7.1(e), 7.1(f) or 7.1(g), except as
provided in Section 7.2(a), neither of the parties shall have any further rights
or remedies, except that ATS shall be entitled to the Escrow Deposit, together
with interest and earnings thereon.
(d) Anything in this Article or elsewhere in this Agreement to the
contrary notwithstanding, in no event shall Diablo be required to refund to ATS
the nonrefundable deposits made by ATS subsequent to March 31, 1997 pursuant to
the Amendment to Letter of Intent dated March 19, 1997.
ARTICLE 8
INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements
of the parties contained in or made pursuant to this Agreement or any Collateral
Document (except as otherwise provided in any Collateral Document) shall survive
the Closing and shall remain operative and in full force and effect for a period
of (a) two (2) years after the Closing Date or (b) in the case of matters of a
nature referred to in Section 3.21, three (3) years after the Closing Date,
regardless of any investigation or statement as to the results thereof made by
or on behalf of any party hereto. The term "Indemnity Period" shall mean the
applicable period with respect to which a representation, warranty, covenant or
agreement survives the Closing as provided in this Section. No claim for
indemnification, other than with respect to fraud, may be asserted after the
expiration of the Indemnity Period. ATS shall promptly advise Diablo in the
event it shall discover any fraud or alleged fraud, it being understood that, in
the event that ATS discovers such fraud or alleged fraud prior to the expiration
of the Indemnity Period and fails to so notify Diablo thereof, it shall not
thereafter be entitled to assert any Claim with respect thereto. Notwithstanding
anything herein to the contrary, any representation, warranty, covenant and
agreement which arises and is the subject of a Claim which is asserted in
writing prior to the expiration of the applicable Indemnity Period shall survive
with respect to such Claim or any dispute with respect thereto until the final
resolution thereof or the expiration of the applicable statute of limitation
unless arbitration or litigation has been pursued.
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8.2 Indemnification.
(a) During the Indemnity Period, each of Diablo and ATS (the
"indemnifying party") agrees that on and after the Closing it shall indemnify
and hold harmless the other (the "indemnified party") from and against any and
all damages, claims, losses, expenses, costs, obligations and liabilities,
including without limitation liabilities for all reasonable attorneys',
accountants' and experts' fees and expenses including those incurred to enforce
the terms of this Agreement or any Collateral Document executed by it
(collectively, "Loss and Expense"), suffered, directly or indirectly, by the
indemnified party by reason of, or arising out of:
(i) any breach of representation or warranty made by the
indemnifying party pursuant to this Agreement or any Collateral
Document executed by it or any failure by the indemnifying party to
perform or fulfill any of its respective covenants or agreements set
forth in this Agreement or any Collateral Document executed by it; or
(ii) any Legal Action or other Claim by any third party
relating to the indemnifying party or, in the case of ATS, the
ownership or operations of the Diablo Assets or the conduct of the
business of the Diablo Business to the extent such Legal Action or
other Claim has also resulted in a breach of representation or warranty
by the indemnifying party pursuant to this Agreement or any Collateral
Document executed by it; or
(iii) in the case of Diablo as the indemnifying party, the
failure of Diablo to comply with Bulk Sales law of the State of
California.
(b) Diablo agrees that on or after the Closing it shall indemnify and
hold harmless ATS from and against any and all Loss and Expense suffered,
directly or indirectly, by ATS by reason of, or arising out of, (i) Diablo
Nonassumed Obligations or (ii) the ownership and operation of the Diablo Assets
and the Diablo Business prior to the Closing Date.
(c) ATS agrees that on or after the Closing it shall indemnify and hold
harmless Diablo from and against any and all Loss and Expense suffered, directly
of indirectly, by Diablo by reason of, or arising out of, (i) (A) Diablo Assumed
Obligations or (B) the ownership and operation of the Diablo Assets and the
Diablo Business from and after the Closing Date, except for Events arising prior
to or existing on the Closing Date, unless they are part of the Diablo Assumed
Obligations, and (ii) any ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or other federal or state
antitrust Law filings or any Legal Action or other Claim of any Authority
relating to the Transactions based upon any of the foregoing, except, in all
cases, to the extent such filing, Legal Action or other Claim relates to or is
based upon information furnished or omitted by Diablo.
8.3 Limitation of Liability.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
except as otherwise provided in Section 8.6, each indemnified party's rights to
indemnification shall be subject to the following limitations: (i) the
indemnified party shall be entitled to recover its Loss and Expense in respect
of any Claim only in the event that the aggregate Loss and Expense for all
Claims (together with Claims (as defined therein) under the Other Agreement
("Other Agreement Claims")) exceeds, in the aggregate, $100,000, in which event
the indemnified party shall be entitled to recover all such Loss and Expense
(including without limitation such $100,000), and (ii) in no event shall the
aggregate amount required to be paid by each indemnifying party pursuant to the
provisions of this Article (and the comparable provision of the Other Agreement)
exceed $1,000,000, except for any Loss or Expense arising out of matters of a
nature referred
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to in Sections 3.1 and 4.1 (and the comparable provision of the Other Agreement)
as to which the dollar limitations set forth in this clause (ii) shall not
apply.
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, except as
provided in Sections 8.3(d) and 8.6, (i) the exclusive recourse of ATS after the
Closing with respect to the liability of Diablo pursuant to Section 8.2 or any
other provision of this Agreement or Applicable Law which requires Diablo to
defend, indemnify or hold harmless ATS from or against any Claim, Loss or
Expense shall be the Escrow Indemnity Funds; and (ii) ATS' remedies for any such
liability of Diablo, or for any Claim arising under this Agreement, shall be
limited to its right to recover from the Escrow Indemnity Funds in accordance
with the provisions of the Escrow Indemnity Agreement, and neither ATS nor any
of its officers, directors, shareholders, agents or Affiliated Entities shall
have any right of recovery against Diablo or any of its officers, directors,
shareholders, agents or Affiliated Entities or against the assets of any of them
for any such liability.
(c) In the event there shall be no Claims pending pursuant to the
provisions of this Agreement (or Other Agreement Claims) with respect to the
Escrow Indemnity Funds, if any, existing at the expiration of one (1) year after
the Closing, the excess of (x) the Escrow Indemnity Funds then remaining over
(y) $500,000 shall be distributed to Diablo. In the event one or more such
Claims (and/or Other Agreement Claims) with respect to the Escrow Indemnity
Funds, if any, shall exist upon the expiration of one (1) year after the
Closing, funds in an amount equal to the sum of (i) $500,000, (ii) the aggregate
amount of such Claims (and/or Other Agreement Claims), and (iii) the amount
reasonably necessary to cover the fees, expense and other costs (including
reasonable counsel fees and expenses) which will be required to resolve such
Claims (and/or Other Agreement Claims) shall be shall be retained as part of the
Escrow Indemnity Funds and the balance thereof, if any, shall be distributed to
Diablo. Upon the resolution of all such Claims (and/or Other Agreement Claims)
existing upon the expiration of one (1) year after the Closing and the payment
of all such fees, expenses and costs out of the Escrow Indemnity Funds, the
excess, if any, of (x) the Escrow Indemnity Funds then remaining over (y)
$500,000 shall be distributed to Diablo.
(d) In the event there shall be no Claims (or Other Agreement Claims)
pending pursuant to the provisions of this Agreement with respect to the Escrow
Indemnity Funds, if any, existing at the expiration of two (2) years after the
Closing, the Escrow Indemnity Funds then remaining shall be distributed to
Diablo and DCSC (in such proportion as they shall agree in writing). In the
event one or more such Claims (and/or Other Agreement Claims) with respect to
the Escrow Indemnity Funds, if any, shall exist upon the expiration of the
Indemnity Period, funds in an amount equal to the sum of (i) the aggregate
amount of such Claims (and/or Other Agreement Claims) and (ii) the amount
reasonably necessary to cover the fees, expense and other costs (including
reasonable counsel fees and expenses) which will be required to resolve such
Claims (and/or Other Agreement Claims) shall be retained as part of the Escrow
Indemnity Funds and the balance thereof, if any, shall be distributed to Diablo
and DCSC (in such proportion as they shall agree in writing). Upon the
resolution of all such Claims (and/or Other Agreement Claims) and the payment of
all such fees, expenses and costs out of the Escrow Indemnity Funds, the
remainder of the Escrow Indemnity Funds, if any, shall be distributed to Diablo
and DCSC (in such proportion as they shall agree in writing).
(e) If, following the distribution to Diablo, DCSC or any other Person
of any remaining Escrow Indemnity Funds, ATS becomes entitled to indemnification
for Loss and Expense suffered by ATS arising from breach of the warranties and
misrepresentations set forth in Section 3.21, or breach by Diablo of any
covenants or agreement by Diablo under this Agreement or any Collateral Document
to which it is a party, then ATS may pursue such Claim directly against Diablo,
its successors and assigns and ▇▇▇▇▇▇ (but only to the extent he received any
such funds); provided, however, that the maximum amount of liability in the
aggregate of Diablo (and such successors and assigns and ▇▇▇▇▇▇) for any and all
such Claims shall be the amount of Escrow Indemnity Funds that were distributed
to Diablo, DCSC or any other Person (other than
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a claimant whose Claim was paid out of the Indemnity Escrow Fund) claiming by,
through or in the name of Diablo (including without limitation ▇▇▇▇▇▇ (but only
to the extent he received any such funds) or Diablo's or his successors,
assigns, trustees, beneficiaries, heirs or executors) upon the expiration of the
Indemnity Period or thereafter.
(f) In the case any event shall occur which would otherwise entitle
either party to assert a claim for indemnification hereunder, no Loss and
Expense shall be deemed to have been sustained by such party to the extent of
any proceeds received by such party from any insurance policies with respect
thereto. No indemnifying party shall be liable under this Article for a loss
resulting from any event relating to a misrepresentation or breach of warranty,
covenant or agreement if the indemnifying party can establish that the
indemnified party had actual knowledge on or before the Closing Date of such
event and did not, on or before the Closing Date, reserve its rights with
respect thereto.
8.4 Notice of Claims. If an indemnified party believes that it has
suffered or incurred any Loss and Expense, it shall notify the indemnifying
party promptly in writing, and in any event within the applicable time period
specified in Section 8.1, describing such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. If any Legal Action
is instituted by a third party with respect to which an indemnified party
intends to claim any liability or expense as Loss and Expense under this
Article, such indemnified party shall promptly notify the indemnifying party of
such Legal Action, but the failure to so notify the indemnifying party shall not
relieve such indemnifying party of its obligations under this Article, except to
the extent such failure to notify prejudices such indemnifying party's ability
to defend against such Claim.
8.5 Defense of Third Party Claims. The indemnifying party shall have
the right to conduct and control, through counsel of their own choosing,
reasonably acceptable to the indemnified party, any third party Legal Action or
other Claim, but the indemnified party may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that if the
indemnifying party shall fail to defend any such Legal Action or other Claim,
then the indemnified party may defend, through counsel of its own choosing, such
Legal Action or other Claim, and (so long as it gives the indemnifying party at
least fifteen (15) days' written notice of the terms of the proposed settlement
thereof and permits the indemnifying party to then undertake the defense
thereof) settle such Legal Action or other Claim and to recover the amount of
such settlement or of any judgment and the reasonable costs and expenses of such
defense. The indemnifying party shall not compromise or settle any such Legal
Action or other Claim without the prior written consent of the indemnified
party; provided, however, that if the indemnified party fails or refuses to
consent in writing to any compromise of settlement proposed by the indemnifying
party and agreed to in writing by the claimant in such Legal Action or other
Claim (the "Settlement Proposal") within ten (10) business days after receipt of
written notice of all of the material terms and conditions of the Settlement
Proposal, and such terms and conditions (a) include a full release of the
indemnified party from the Legal Action or other Claim which is the subject of
the Settlement Proposal, and (b) if the indemnified party is ATS, do not include
any term or condition which would restrict in any material manner the continued
ownership or operations of the Diablo Assets or the conduct of the Diablo
Business in substantially the manner then being theretofore owned, operated and
conducted by ATS, then, unless the indemnifying party forthwith withdraws the
Settlement Proposal, the indemnified party (i) shall have the right but not the
obligation to undertake the conduct of the defense of such Legal Action or other
Claim, and (ii) whether or not it shall so undertake the defense of such Legal
Action or other Claim, shall bear, and shall indemnify and hold the indemnifying
party harmless from, all Loss and Expense arising from such Legal Action or
other Claim (to the extent not theretofore (x) accrued with respect to the costs
and expenses of the defense of such Legal Action or other Claim or (y) paid with
respect to such Legal Action or other Claim) in excess of the amount contained
in the Settlement Proposal, it being understood, in such event, that the
indemnifying party shall bear all Loss and Expense, including subsequently
incurred Loss and Expense (including without limitation those attributable to
legal fees and
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expenses) up to the amount contained in the Settlement Proposal, even if the
ultimate disposition of such Legal Action or other Claim results in payments to
the claimant of less than those contained in the Settlement Proposal.
8.6 Exclusive Remedy. Except for fraud, willful or intentional
misrepresentation or willful or intentional breach of warranty, covenant or
agreement or as otherwise provided in Section 9.5, the indemnification provided
in this Article shall be the sole and exclusive post-Closing remedy available to
either party against the other party for any Claim under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Amendment. This Agreement may be amended from time to time by the
parties hereto at any time but only by an instrument in writing signed by the
parties hereto.
9.2 Waiver. Except to the extent not permitted by Applicable Law, ATS
or Diablo may, at any time, extend the time for the performance of any of the
obligations or other acts of the other, subject, however, to the provisions with
respect to the Termination Date, waive any inaccuracies in the representations
and warranties of the other contained herein or in any document delivered
pursuant hereto, and waive compliance by the other with any of the agreements,
covenants or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
9.3 Fees, Expenses and Other Payments. All costs and expenses, incurred
in connection with any transfer taxes, recording or documentary taxes, stamps or
other comparable charges levied by any Authority in connection with this
Agreement and the consummation of the Transactions, title insurance for Diablo's
fee-owned Real Property shall be borne equally by Diablo and ATS. All
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ filing fees for both this Agreement and the Other Agreement
shall be borne equally by Diablo and ATS up to the amount of $20,000 for each of
Diablo and ATS, with the balance to be borne by ATS. All other costs and
expenses incurred in connection with this Agreement and the consummation of the
Transactions, including without limitation fees and disbursements of counsel,
financial advisors and accountants incurred by the parties hereto, shall be
borne solely and entirely by the party which has incurred such costs and
expenses.
9.4 Notices. All notices and other communications which by any
provision of this Agreement are required or permitted to be given shall be given
in writing and shall be (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) personally delivered to the receiving party (which if other than an
individual shall be an officer or other responsible party of the receiving
party). All such notices and communications shall be mailed, sent or delivered
as follows:
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(a) If to ATS:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Diablo:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, White & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
9.5 Specific Performance; Other Rights and Remedies. Anything in this
Agreement to the contrary notwithstanding, each party recognizes and agrees that
in the event the other party should refuse to perform any of its obligations
under this Agreement or any Collateral Document, the remedy at law would be
inadequate and agrees that for breach of such provisions, each party not in
material breach of this Agreement or any Collateral Document shall, in addition
to such other remedies as may be available to it at law or in equity or as
provided in Article 7, be entitled to injunctive relief and to enforce its
rights by an action for specific performance to the extent permitted by
Applicable Law. Each party hereby waives any requirement for security or the
posting of any bond or other surety in connection with any temporary or
permanent award of injunctive, mandatory or other equitable relief. Nothing
herein contained shall be construed as prohibiting each party from pursuing any
other remedies available to it pursuant to the provisions of, and subject to the
limitations contained in, this Agreement for such breach or threatened breach.
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, after the Closing Date ATS shall not be entitled to specific
performance or any other remedy to the extent that the cost to Diablo arising
from the enforcement or exercise of such remedy would exceed the amount then on
deposit in the Escrow Indemnity Funds, in accordance with the provisions of the
Escrow Indemnity Agreement, for all costs and expenses incurred in connection
with its performance of or compliance with the remedy exercised or enforced.
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9.6 Severability. If any term or provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to affect materially and
adversely either party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled and consummated to the
maximum extent possible.
9.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
9.8 Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.9 Governing Law; Venue. The validity, interpretation, construction
and performance of this Agreement shall be governed by, and construed in
accordance with, the applicable laws of the United States of America and the
laws of the State of California applicable to contracts made and performed in
such State and, in any event, without giving effect to any choice or conflict of
laws provision or rule that would cause the application of domestic substantive
laws of any other jurisdiction. Anything in this Agreement to the contrary
notwithstanding, including without limitation the provisions of Article 8, in
the event of any dispute between the parties which results in a Legal Action,
the prevailing party shall be entitled to receive from the non-prevailing party
reimbursement for reasonable legal fees and expenses incurred by such prevailing
party in such Legal Action. In the event of any Legal Action between the parties
arising out of this Agreement, the parties agree to submit the matter to the
appropriate municipal, state or federal court sitting in San Francisco County,
California, and the parties agree to submit to the jurisdiction of such courts.
9.10 Further Acts. Each party agrees that at any time, and from time to
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as any other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
9.11 Entire Agreement. This Agreement (together with the Diablo
Disclosure Schedule and the other Collateral Documents delivered in connection
herewith), constitutes the entire agreement of the parties and supersedes all
prior agreements and undertakings, both written and oral, between the parties,
with respect to the subject matter hereof, including without limitation that
certain letter of intent, dated December 19, 1996, between the parties, as
amended by the letter dated March 19, 1997 (the "Letter of Intent").
-36-
9.12 Assignment. This Agreement shall not be assignable by either party
and any such assignment shall be null and void, except that it shall inure to
the benefit of and by binding upon any successor to any party by operation of
law, including by way of merger, consolidation or sale of all or substantially
all of its assets, and ATS may assign its rights and remedies hereunder to any
bank or other financial institution which has loaned funds or otherwise extended
credit to it.
9.13 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, including without limitation Section 2.2(c), is intended to
or shall confer upon any Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, except as otherwise provided in
Section 9.12.
9.14 Mutual Drafting. This Agreement is the result of the joint efforts
of Diablo and ATS, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against either party based on any presumption of that party's
involvement in the drafting thereof.
9.15 Arbitration. If there is any dispute between the parties to this
Agreement which remains unresolved for thirty (30) days or more, either party
may, upon written notice to the other, submit such dispute to binding
arbitration in San Francisco, California in accordance with the commercial rules
of the American Arbitration Association (the "AAA") before a panel of three (3)
arbitrators knowledgeable in the tower communications industry, one arbitrator
chosen by ATS, one by Diablo, and the third as mutually agreed upon by the two
arbitrators so appointed or, in the absence of such agreement, by the President
of the San Francisco Chapter of the AAA, and the decision of such panel shall,
in the absence of fraud, be conclusively binding on the parties.
9.16 Disclosure Schedule. Diablo has delivered to ATS prior to
execution and delivery of this Agreement the Diablo Disclosure Schedule and all
related documents required to be delivered by Diablo pursuant to Article 3 of
this Agreement. Without limiting the generality of the foregoing, the Diablo
Disclosure Schedule sets forth: (i) which authorizations, consents, waivers,
orders or approvals are a condition of Closing pursuant to the provisions of
Section 6.1(a); (ii) which Private Authorizations, Leases and Material
Agreements and other Contractual Obligations are a condition to Closing pursuant
to the provisions of Section 6.2(d); and (iii) which permits, consents or other
Governmental Authorizations of the United States Forest Service are a condition
to Closing pursuant to the provisions of Section 6.2(m). ATS has received and
hereby accepts the Diablo Disclosure Schedule and agrees to consummate the
transactions contemplated by this Agreement, subject to the satisfaction of the
conditions set forth in Sections 6.1 and 6.2 and subject to the matters
disclosed in the Diablo Disclosure Schedule.
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IN WITNESS WHEREOF, ATS and Diablo have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
American Tower Systems, Inc.
By:_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
Diablo Communications, Inc.
By:_____________________________________
Name:
Title:
The undersigned, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the principal shareholder of
Diablo, hereby acknowledges and agrees to be bound by the provisions of Article
8, including without limitation Section 8.3(d).
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein shall
have such meanings when used in the Diablo Disclosure Schedule, and each
Collateral Document executed or required to be executed pursuant hereto or
thereto or otherwise delivered, from time to time, pursuant hereto or thereto.
References to "hereof", "herein" or similar terms are intended to refer to the
Agreement as a whole and not a particular Section, and references to "this
Section" are intended to refer to the entire Section and not a particular
subsection thereof. The term "either party" shall, unless the context otherwise
requires, refer to Diablo and ATS.
Acceptance Notice shall have the meaning given to it in Section 2.2(c).
Accounts Receivable shall mean (a) any and all rights to the payment of
money or other forms of consideration of any kind at any time now or hereafter
owing or to be owing to Diablo attributable to the ownership or operation of the
Diablo Business (whether classified under the Uniform Commercial Code of any
state as accounts, contract rights, chattel paper, general intangibles or
otherwise), including without limitation accounts receivable, letters of credit
and the right to receive payment thereunder, chattel paper, insurance proceeds,
contract rights, notes, drafts, instruments, documents, acceptances, and all
other debts, obligations and liabilities in whatever form now or hereafter owing
from any other Person, all guarantees, security and Liens for the payment of any
thereof, and all of Diablo's rights to goods, now owned or hereafter acquired,
sold (delivered, undelivered, in transit or returned) which may be represented
thereby; and (b) all proceeds of any of the foregoing.
Acquisition Participation Agreement shall have the meaning given to it
in Section 6.2(o).
adverse, adversely, when used alone or in conjunction with other terms
(including without limitation "affect," "change" and "effect") shall mean any
Event which is reasonably likely, in the reasonable business judgment of ATS, to
be expected to (a) adversely affect the validity or enforceability of this
Agreement or the likelihood of consummation of the Transactions, or (b)
adversely affect the business, operations, management, properties or prospects,
or the condition, financial or other, or results of operation of the Diablo
Business, or (c) impair Diablo's ability to fulfill its obligations under the
terms of this Agreement, or (d) adversely affect the aggregate rights and
remedies of ATS under this Agreement. Notwithstanding the foregoing, and
anything in this Agreement to the contrary notwithstanding, any Event (i)
generally affecting the economy or the tower communications business or (ii) of
a nature described in the "Definition" section of the Diablo Disclosure Schedule
shall not be deemed to constitute an adverse change, have an adverse effect or
to adversely affect or effect.
Additional Title Matter shall have the meaning given to it in Section
5.7.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person,
(e) with respect to any partnership, joint venture or similar Entity, any
general partner thereof, and (f) when used with respect to an individual, shall
include any member of such individual's immediate family or a family trust.
Agreement shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the Diablo
Disclosure Schedule and all exhibits hereto, and as any of the same may from
time to time be supplemented, amended, modified or restated in the manner herein
or therein provided.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the FCA and all federal and state
securities and Environmental Laws, to which a Person is subject or by which it
or any of its business or operations is subject or any of its property or assets
is bound.
Approved Title Conditions shall mean any one or more of the following:
(a) Liens for real property taxes and assessments not then delinquent; (b) the
Lien of supplemental Taxes assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, to the extent that such
supplemental Taxes are attributable to the transactions contemplated by this
Agreement; (c) matters of title approved by ATS or deemed approved in accordance
with the provisions of Section 5.7; and (d) matters of title created following
the date of this Agreement by or with the written consent of ATS.
Assets shall mean the business and the tangible and intangible assets
used in connection with the conduct of the business or operations of the Diablo
Business, which business and assets are being exchanged, transferred or
otherwise conveyed hereunder, including without including without limitation the
following:
(a) the Personal Property;
(b) the Real Property;
(c) the Governmental Authorizations;
(d) the Private Authorizations;
(e) the Contracts (other than the Diablo Nonassumed
Obligations);
(f) the corporate name of Diablo and all variations thereof;
(g) all Intellectual Property and other proprietary
information, which relate to the Diablo Business, including without
limitation, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams, blueprints
and schematics, including filings with all Authorities which relate to
the Diablo Business;
(h) all claims, choses in action and rights under warranties
relating to the Diablo Business or any of the Diablo Assets;
(i) all books and records relating to the ownership or
operation of the Diablo Assets or the conduct of the Diablo Business,
including executed copies of Leases, Material Agreements and other
written Contracts, and all records required by Applicable Law to be
kept, subject to the right of the conveying party to have such books
and records made available to it for such time as may be reasonably
required in connection with audits, defense or prosecution of lawsuits,
or other legitimate
A-2
business purposes. The records described herein shall not include
corporate seals, certificates of incorporation, minute books, stock
books, tax returns or other records having to do with the corporate
organization of Diablo; and
(j) any and all products, profits and proceeds of, and
including without limitation any Claims with respect to, any of the
foregoing;
provided, however, that notwithstanding the foregoing, the term Assets
shall not include any of the Excluded Assets.
ATS shall have the meaning given to it in the Preamble.
ATS Accrued Sick Time Liability shall have the meaning given to it in
Section 2.2(c).
ATS Assumed Vacation Liability shall have the meaning given to it in
Section 2.2(c).
ATS' Environmental Notice shall have the meaning given to it in Section
5.8.
ATS' Title Notice shall have the meaning given to it in Section 5.7.
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign., including without limitation the FCC.
Benefit Arrangement shall mean any material benefit arrangement that is
not a Plan, including (a) any employment or consulting agreement (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of the Diablo Business.
Black Mountain Communications Site shall have the meaning given to it
in Section 3.5(a).
Black Mountain Easement Agreement shall have the meaning given to it in
Section 6.2(p).
CAAP shall mean the accounting principles used by the Company in the
preparation of the Financial Statements and described in general terms in the
Disclosure Schedule, such principles applied on a consistent basis, except as
otherwise heretofore disclosed in the Disclosure Schedule. The requirement that
such principles be consistently applied means that the accounting principles in
a current period are comparable in all material respect to those applied in
preceding period. All accounting and financial terms used in this Agreement and
the compliance with each covenant contained in this Agreement that relates to
financial matters shall be determined in accordance with the accounting
principles referred to in this paragraph (except as otherwise specifically noted
in certain of the definitions where the term GAAP is used).
A-3
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 2.3.
Closing Date shall have the meaning given to it in Section 2.3.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
Code shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
Collateral Document shall mean the Escrow Agreement, the Indemnity
Escrow Agreement, the Acquisition Participation Agreement, the Nonassignable
Contracts Agreement, the Black Mountain Easement Agreement, the Drake Lease, the
Exclusivity Agreement, the TCI Agreement, special warranty deeds, bills of sale,
assignments of intangibles, assumption agreements with respect to the Diablo
Assumed Obligations, other instruments of conveyance and assignment sufficient
to vest in ATS title to all of the other Diablo Assets and the Diablo Business,
and any other agreement, certificate, contract, instrument, notice, opinion or
other document delivered pursuant to the provisions of this Agreement or any
Collateral Document.
Collection Period shall have the meaning given to it in Section 2.4.
Construction Adjustment shall have the meaning given to it in Section
2.3.
Contract, Contractual Obligation shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability which involves the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
DCSC shall have the meaning given to it in the fourth Whereas
paragraph.
Diablo shall have the meaning given to it in the Preamble.
Diablo Assumable Agreements shall mean all obligations and liabilities
of Diablo under all Leases, Material Agreements, Governmental Authorizations,
Private Authorizations and other Contractual Obligations not required to be
listed on Section 3.16 of the Diablo Disclosure Schedule entered into in the
ordinary course of business and relating to the ownership or operation of any of
the Diablo Assets or the
conduct of the Diablo Business.
Diablo Assets shall have the meaning given to it in Section 2.1.
A-4
Diablo Assumed Liabilities shall have the meaning given to it in
Section 2.2(b).
Diablo Business shall have the meaning given them in the first Whereas
paragraph.
Diablo Disclosure Schedule shall mean the Diablo Disclosure Schedule
dated as of the date of this Agreement delivered by Diablo to ATS.
Diablo Employees shall have the meaning given it in the Section
3.15(a).
Diablo Financial Statements shall have the meaning given to it in
Section 3.2(b).
Diablo Nonassumed Obligations shall have the meaning given to it in
Section 2.2(b).
Diablo Personal Property shall have the meaning given to it in Section
3.5(c).
Diablo's Environmental Notice shall have the meaning given to it in
Section 5.8.
Diablo's knowledge means the actual knowledge of any Diablo officer or
senior manager, as such knowledge exists on the date of this Agreement and no
later date, after reasonable review of appropriate Diablo records.
Diablo's Title Notice shall have the meaning given to it in Section
5.7.
Drake Lease shall have the meaning given to it in Section 6.2(q).
Employment Arrangement shall mean, with respect to Diablo, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by Diablo or any
Affiliate), or providing for severance, termination payments, insurance coverage
(including any self-insured arrangements), workers compensation, disability
benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or post-retirement
insurance, compensation or benefits, or any collective bargaining or other labor
agreement, whether or not any of the foregoing is subject to the provisions of
ERISA, but only to the extent that it covers or relates to any officer, employee
or other Person involved in the ownership or operation of the Diablo Assets or
the conduct of the Diablo Business.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Company shall have the meaning given to it in Section
5.8.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment, including without limitation Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials or other
chemicals or
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industrial pollutants, substances, materials or wastes into the environment
(including, without limitation, ambient air, surface water, ground water, mining
or reclamation or mined land, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, generation, distribution, use,
treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Federal Insecticide Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state, local or foreign, Laws, and the rules and regulations
promulgated thereunder all as from time to time in effect, and any reference to
any statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
Environmental Reports shall have the meaning given to it in Section
5.8.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is treated as a single
employer with Diablo under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Escrow Agent shall have the meaning given to it in the third Whereas
paragraph.
Escrow Agreement shall have the meaning given to it in the third
Whereas paragraph.
Escrow Deposit shall have the meaning given to it in the third Whereas
paragraph.
Event shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Excluded Assets shall have the meaning given to it in Section 2.1.
Exclusivity Agreement shall have the meaning given to it in Section
6.2(r).
FCA shall mean the Communication Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
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FCC shall mean the Federal Communications Commission and shall include
any successor Authority.
Final Order shall mean, with respect to any Authority, including
without limitation the FCC, one with respect to which no appeal, no stay, no
petition or application for rehearing, reconsideration, review or stay, whether
on motion of the applicable Authority or other Person or otherwise, and no other
Legal Action contesting such consent or approval, is in effect or pending and as
to which the time or deadline for filing any such appeal, petition or
application or other Legal Action has expired or, if filed, has been denied,
dismissed or withdrawn, and the time or deadline for instituting any further
Legal Action has expired.
GAAP shall mean means, except to the extent that a deviation therefrom
is expressly required by this Agreement, such principles applied on a consistent
basis, (i) as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants ("AICPA") and/or in
statements of the Financial Accounting Standards Board that are applicable in
the circumstances as of the date in question, (ii) when not inconsistent with
such opinions and statements, as set forth in other AICPA publications and
guidelines and/or (iii) that otherwise arise by custom for the particular
industry, all as the same shall exist on the date of this Agreement.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the United
States Forest Service and the Federal Aviation Administration, in connection
with the ownership or operation of the Diablo Assets or the conduct of the
Diablo Business.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Improvement Act
of 1976, as from time to time in effect, or any successor law, and any reference
to any statutory provision shall be deemed to be a reference to any successor
statutory provision.
Hazardous Materials shall mean and include any substance, material,
waste, constituent, compound, chemical, natural or man-made element or force (in
whatever state of matter): (a) the presence of which requires investigation or
remediation under any Environmental Law, or (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law; or (c) that is
toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
applicable Authority or subject to any Environmental Law; or (d) the presence of
which on the real property owned or leased by such Person causes or threatens to
cause a nuisance upon any such real property or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or about any
such real property; or (e) the presence of which on adjacent properties could
constitute a trespass by such Person; or (f) that contains gasoline, diesel fuel
or other petroleum hydrocarbons, or any by-products or fractions thereof,
natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment,
radon or other radioactive elements, ionizing radiation, electromagnetic field
radiation and other non-ionizing radiation, sonic forces and other natural
forces, lead, asbestos or asbestos-containing materials ("ACM"), or urea
formaldehyde foam insulation.
Indebtedness shall mean, with respect to any Person, (a) all items,
except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary of such Person
to the extent such interest is treated as a liability with indeterminate term on
the consolidated balance sheet of such Person, which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person, (b) all obligations secured by any Lien
to which any property or asset owned or held by such Person is subject, whether
or not the obligation
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secured thereby shall have been assumed, and (c) to the extent not otherwise
included, all Contractual Obligations of such Person constituting capitalized
leases and all obligations of such Person with respect to Leases constituting
part of a sale and leaseback arrangement.
Indebtedness for Money Borrowed shall mean, with respect to Diablo,
money borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, the maximum amount currently or
at any time thereafter available to be drawn under all outstanding letters of
credit issued for the account of such Person, all Indebtedness upon which
interest charges are customarily paid by such Person, and all Indebtedness
(including capitalized lease obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, but shall
not include (a) trade payables, (b) expenses accrued in the ordinary course of
business, (c) customer advance payments and customer deposits received in the
ordinary course of business, or (d) conditional sales agreements not prohibited
by the terms of this Agreement.
Indemnity Escrow Agent shall have the meaning given to it in Section
6.2(k).
Indemnity Escrow Agreement shall have the meaning given to it in
Section 6.2(k).
Indemnity Escrow Fund shall have the meaning given to it in Section
2.3.
Insured Real Property shall have the meaning given to it in Section
5.7.
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means, and shall include, without limitation, concessions, copyrights,
franchises, license, patents, permits, service marks, trademarks, trade names,
and applications with respect to any of the foregoing, technology and know-how.
Intellectual Property shall mean any and all research, information,
inventions, designs, procedures, developments, discoveries, improvements,
patents and applications therefor, trademarks and applications therefor, service
marks, trade names, copyrights and applications therefor, logos, trade secrets,
drawing, plans, systems, methods, specifications, computer software programs,
tapes, discs and related data processing software (including without limitation
object and source codes) owned by such Person or in which it has an ownership
interest and all other manufacturing, engineering, technical, research and
development data and know-how made, conceived, developed and/or acquired by such
Person, which relate to the manufacture, production or processing of any
products developed or sold by such Person or which are within the scope of or
usable in connection with such Person's business as it may, from time to time,
hereafter be conducted or proposed to be conducted.
Interim Adjustment shall have the meaning given to it in Section 2.3.
Interim Financing Note shall have the meaning given to it in the fifth
Whereas paragraph.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ of
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or
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request, whether or not having the force of law including, in all cases, without
limitation any particular section, part or provision thereof.
Lease shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto.
Legal Action shall mean, with respect to any Person, any and all
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information by or pursuant to
the order of any Authority or suits, at law or in arbitration, equity or
admiralty, whether or not purported to be brought on behalf of such Person,
affecting such Person or any of such Person's business, property or assets.
Letter of Intent shall have the meaning given to it in Section 9.11.
Lien shall mean any of the following: mortgage; lien (statutory or
other); or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
Like-Kind Notice shall have the meaning given to it in Section 2.5.
Loss and Expense shall have the meaning given to it in Section 8.2.
material, materially or materiality for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement shall mean, with respect to Diablo, any Contractual
Obligation which (a) was not entered into in the ordinary course of business,
(b) was entered into in the ordinary course of business which (i) involved the
purchase, sale or lease of goods or materials, or purchase of services,
aggregating more than $20,000, (ii) extends for more than three (3) months, or
(iii) is not terminable on thirty (30) days or less notice without penalty or
other payment, (c) involves a capitalized lease obligation or Indebtedness for
Money Borrowed, (d) is or otherwise constitutes a written agency, broker,
dealer, license, distributorship, sales representative or similar written
agreement, (e) is with the United States Forest Service or any other Authority,
or (f) involves the management by Diablo of any communication tower of any other
Person.
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Nonassignable Contracts shall have the meaning given to it in Section
2.2(c).
Nonassignable Contracts Agreement shall have the meaning given to it in
Section 6.2(n).
Note Agreement shall have the meaning given to it in the fifth Whereas
paragraph.
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Organic Document shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
Other Agreement shall have the meaning given to it in the fourth
Whereas paragraph.
Other Agreement Claims shall have the meaning given to it in Section
8.3(a).
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Permitted Liens shall mean (a) Liens current taxes not yet due and
payable, (b) such imperfections of title, easements, encumbrances and mortgages
or other Liens, if any, as are not, individually or in the aggregate,
substantial in character, amount or extent and do not materially detract from
the value, or materially interfere with the present use, of the property subject
thereto or affected thereby, or otherwise materially impair the conduct of the
Diablo Business, and (c) such other Liens as are permitted by the provisions of
this Agreement to be in place on the Closing Date.
Person shall mean any natural individual or any Entity.
Personal Property shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
Diablo and used or useful as of the date hereof in the conduct of the business
or operations of the Diablo Business, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
Plan shall mean, with respect to any Person and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Assets or the conduct of the business of the Diablo Business.
Prepaid Expense shall mean any item which in accordance with GAAP would
be treated as an expense and which has been paid by Diablo prior to the Closing
and relates to a period subsequent to the Closing.
Prepaid Revenue shall mean any item which in accordance with GAAP would
be treated as revenue and which has been received by Diablo prior to the Closing
and relates to a period subsequent to the Closing.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to
Intellectual Property.
Pro Ratable Taxes shall mean real estate and other property Taxes, ad
valorem Taxes, gross receipts Taxes and similar Taxes, but shall not include
federal, state or local income Taxes, franchise Taxes or other Taxes measured by
or based upon income or gain on sale or other disposition of property or assets.
Purchase Price shall have the meaning given to it in Section 2.3.
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Retained Accounts Receivable shall have the meaning given to it in
Section 2.4.
Real Property shall mean all of the fee estates and buildings and other
fixtures and improvements thereon, leasehold interest, easements, licenses,
rights to access, right-of- way, and other real property interest which are
owned or used by Diablo as of the date hereof, in the operations of the Diablo
Business, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
Regulations shall mean the federal income tax regulations promulgated
under the Code, as such Regulations may be amended from time to time. All
references herein to specific sections of the Regulations shall be deemed also
to refer to any corresponding provisions of succeeding Regulations, and all
references to temporary Regulations shall be deemed also to refer to any
corresponding provisions of final Regulations.
Representatives shall have the meaning given to it in Section 5.1(a).
SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the SEC thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
▇▇▇▇▇▇ shall have the meaning given to it in Section 6.2(j).
▇▇▇▇▇▇ Noncompetition Agreement shall have the meaning given to it in
Section 6.2(j).
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Person,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, or other like assessment or charge of any kind whatsoever, together with
any interest, levies, assessments, charges, penalties, addition to tax or
additional amount imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a) and (c) any liability of such Person for the payment
of any amounts of the type described in (a) as a result of any express or
implied obligation to indemnify any other Person.
Tax Allocation Schedule shall have the meaning given to it in Section
2.3.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11.
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Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
TCI Agreement shall have the meaning given to it in Section 6.2(s).
Title Company shall have the meaning given to it in Section 5.7.
Title Reports shall have the meaning given to it in Section 5.7.
Termination Date shall have the meaning given to it in Section 7.1.
Transactions shall mean the transactions contemplated to be consummated
on or prior to the Closing Date, including without limitation the purchase and
sale of the Diablo Assets and the Diablo Business and the execution, delivery
and performance of the Collateral Documents.
U.S. Navy Claim means all obligations, liabilities and other Claims
with respect to the T.V. Hill Site and the U.S. Navy, including those of ▇▇▇▇▇▇
Communications Systems, Inc., a former partner of Diablo and/or ▇▇▇▇▇▇ with
respect thereto and of Diablo to the U.S. Navy with respect to its guaranty of
the obligations and liabilities of ▇▇▇▇▇▇ Communications Systems, Inc.
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