Exhibit 2.1
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ASSET PURCHASE AND MERGER AGREEMENT
among
CROWN NETWORK SYSTEMS, INC.,
CROWN MOBILE SYSTEMS, INC.,
▇▇▇▇▇▇ ▇. CROWN,
▇▇▇▇▇▇▇ CROWN
and
CASTLE ACQUISITION CORP. I,
CASTLE ACQUISITION CORP. II,
CASTLE TOWER HOLDING CORP.
July 11, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1. Purchase and Sale of Assets; Assumption of Liabilities................................2
1.1. Crown Communications Assets...............................................................2
1.2. Excluded Assets...........................................................................4
1.3. Assumption of Certain Liabilities; Excluded Liabilities...................................4
1.4. Advance Payment; Payment of Purchase Price................................................5
1.5. Certain Definitions.......................................................................6
ARTICLE 2. The Merger Transactions...............................................................6
2.1. The Mergers Generally.....................................................................6
2.2. Conversion of Shares......................................................................7
2.3. Surrender and Payment.....................................................................8
ARTICLE 3. Due Diligence Investigation...........................................................9
3.1. Due Diligence Investigation Generally.....................................................9
3.2. Interim Financial Statements.............................................................10
ARTICLE 4. Closing; Deliveries of the Parties at Closing........................................10
4.1. The Closing..............................................................................10
4.2. Deliveries at the Closing by the Crown Parties...........................................10
4.3. Deliveries at the Closing by Buyer.......................................................11
4.4. Pre-Closing Deliveries...................................................................12
4.5. Time is of the Essence...................................................................12
ARTICLE 5. Representations and Warranties of the Crown Parties..................................13
5.1. Corporate Status; Authority..............................................................13
5.2. Corporate Action.........................................................................13
5.3. Authority; Execution.....................................................................13
5.4. No Conflicts.............................................................................14
5.5. Capitalization of Network................................................................14
5.6. Capitalization of Mobile.................................................................15
5.7. Equity Interests.........................................................................15
5.8. Title to the Crown Stock.................................................................15
5.9. Financial Statements.....................................................................16
5.10. No Undisclosed Liabilities..............................................................16
5.11. Absence of Certain Changes or Events....................................................17
5.12. Licenses................................................................................18
5.13. Sufficiency of Assets...................................................................18
5.14. Assets Other than Real Property Interests...............................................19
5.15. Title to Real Property..................................................................19
5.16. Intellectual Property...................................................................20
5.17. Employees...............................................................................21
5.18. Litigation..............................................................................22
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5.19. Brokers.................................................................................23
5.20. Contracts...............................................................................23
5.21. Compliance with Laws....................................................................24
5.22. Environmental Matters...................................................................25
5.23. Taxes...................................................................................26
5.24. Insurance...............................................................................28
5.25. Accounts Receivable.....................................................................28
5.26. Securities Act..........................................................................28
5.27. Transactions with Affiliates............................................................29
5.28. Disclosure..............................................................................29
ARTICLE 6. Representations and Warranties of Buyer..............................................29
6.1. Corporate Status; Authority..............................................................29
6.2. Corporate Action.........................................................................30
6.3. No Conflicts.............................................................................30
6.4. Capitalization of Buyer and its Subsidiaries and CTSH and its Subsidiaries...............31
6.5. Equity Interests.........................................................................32
6.6. Financial Statements.....................................................................32
6.7. No Undisclosed Liabilities...............................................................33
6.8. Absence of Certain Changes or Events.....................................................33
6.9. Licenses.................................................................................34
6.10. Assets Other than Real Property Interests...............................................34
6.11. Title to Real Property..................................................................35
6.12. Intellectual Property...................................................................36
6.13. Employees...............................................................................37
6.14. Litigation..............................................................................38
6.15. Brokers.................................................................................38
6.16. Contracts...............................................................................39
6.17. Compliance with Laws....................................................................40
6.18. Environmental Matters...................................................................41
6.19. Taxes...................................................................................42
6.20. Insurance...............................................................................42
6.21. Disclosure..............................................................................43
ARTICLE 7. Covenants of Sellers.................................................................43
7.1. Operation of the Business................................................................43
7.2. Consents.................................................................................46
7.3. Notice of Proceedings....................................................................46
7.4. No Solicitation..........................................................................46
7.5. Cooperation..............................................................................47
ARTICLE 8. Covenants of Buyer...................................................................47
8.1. Operation of the Business................................................................47
8.2. Notice of Proceedings....................................................................49
8.3. Corporate Name and Symbol................................................................49
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8.4. Liquidity Provision......................................................................49
ARTICLE 9. Mutual Covenants of the Parties......................................................49
9.1. Executive Compensation...................................................................49
9.2. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇........................................................................50
9.3. Access to Facilities, Files and Records..................................................50
9.4. Advice of Changes........................................................................50
9.5. Consummation of Agreement................................................................50
9.6. No Solicitation of Employees.............................................................51
9.7. Standstill...............................................................................51
ARTICLE 10. Conditions to the Obligations of the Crown Parties..................................52
10.1. No Buyer Material Adverse Effect; Representations and Warranties and Covenants..........52
10.2. Proceedings.............................................................................52
10.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.......................................................................52
10.4. Deliveries..............................................................................53
10.5. Liquidity Provision.....................................................................53
ARTICLE 11. Conditions to the Obligations of Buyer, CAC I and CAC II............................53
11.1. No Crown Material Adverse Effect; Representations, Warranties and Covenants.............53
11.2. Proceedings.............................................................................53
11.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.......................................................................54
11.4. Deliveries..............................................................................54
11.5. ▇▇▇▇▇▇ ▇. Crown.........................................................................54
ARTICLE 12. Survival of Representations and Warranties..........................................54
12.1. Survival................................................................................54
12.2. Indemnification.........................................................................54
ARTICLE 13 Tax-Related Matters..................................................................58
13.1. Closing of Tax Year.....................................................................58
13.2 Filing of Tax Returns...................................................................58
13.3. Tax Audits, Etc.........................................................................59
13.4. Tax Indemnification.....................................................................60
13.5. Transfer Taxes, Etc.....................................................................60
13.6. Tax Certificate.........................................................................61
13.7. Tax Agreements..........................................................................61
13.8. Access to Books and Records.............................................................61
13.9. Allocation of Crown Value...............................................................61
13.10. Survival...............................................................................62
ARTICLE 14 Miscellaneous........................................................................62
14.1. Termination of Agreement................................................................62
14.2 Liabilities Upon Termination............................................................62
14.3. Expenses................................................................................63
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14.4. Bulk Sales Laws.........................................................................63
14.5. Assignments.............................................................................63
14.6. Further Assurances......................................................................63
14.7. Public Announcement.....................................................................64
14.8. Notices.................................................................................64
14.9. Captions................................................................................65
14.10. Governing Law..........................................................................65
14.11. Waiver of Provisions...................................................................65
14.12. Counterparts...........................................................................65
14.13. Entire Agreement.......................................................................65
14.14. Confidentiality........................................................................66
14.15. Submission to Jurisdiction; Waivers....................................................66
14.16. Brokers or Finders.....................................................................66
14.17. Specific Performance...................................................................66
14.18. Definitions; Construction..............................................................67
14.19. No Third Party Beneficiaries...........................................................67
EXHIBITS
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Exhibit A Excluded Personal Property
Exhibit B Note
Exhibit C Buyer EBITDA
Exhibit D Acquired Business EBITDA
Exhibit E Shareholder Agreement
SCHEDULES
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Schedule 5.4 No Conflicts - Crown
Schedule 5.7 Equity Interests - Crown
Schedule 5.9 Financial Statements - Crown
Schedule 5.11 Absence of Certain Changes - Crown
Schedule 5.12 Licenses - Crown
Schedule 5.14 Liens - Crown
Schedule 5.15 Real Property - Crown
Schedule 5.16 Intellectual Property - Crown
Schedule 5.17 Employee Matters - Crown
Schedule 5.18 Litigation - Crown
Schedule 5.20 Contracts - Crown
Schedule 5.21 Compliance With Laws - Crown
Schedule 5.22 Environmental Matters - Crown
Schedule 5.23(b) Tax Returns - Crown
Schedule 5.23(c) Taxing Jurisdictions - Crown
Schedule 5.24 Insurance - Crown
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Schedule 5.27 Transactions with Affiliates - Crown
Schedule 6.3 No Conflicts - Buyer
Schedule 6.4(a) Capitalization of Buyer's Subsidiaries
Schedule 6.4(b) Capitalization of CTSH's Subsidiaries
Schedule 6.5 Equity Interests - Buyer
Schedule 6.6(a) Financial Statements - Buyer
Schedule 6.6(b) Financial Statements - CTSH
Schedule 6.7 No Undisclosed Liabilities - Buyer
Schedule 6.9 Licenses - Buyer
Schedule 6.10 Liens - Buyer
Schedule 6.11 Real Property - Buyer
Schedule 6.12 Intellectual Property - Buyer
Schedule 6.13 Employee Matters - Buyer
Schedule 6.14 Litigation - Buyer
Schedule 6.16 Contracts - Buyer
Schedule 6.17 Compliance With Laws - Buyer
Schedule 6.18 Environmental Matters - Buyer
Schedule 6.20 Insurance - Buyer
Schedule 9.1 Key Employees
Schedule 13.9 Allocation of Crown Value
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Table of Definitions
Term Section
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Acquired Business 1.5
Acquisition Financing 7.6
Advance Payment recitals
Affiliate 14.18(a)
Assumed Contracts 1.1(d)
Assumed Liabilities 1.3(a)
Bank Credit Agreement 6.3
BBC Agreement 6.3
Benefit Plan 5.17(c)
Buyer preamble
Buyer Audited Statements 6.6
Buyer Benefit Plan 6.13(c)
Buyer's Damages 12.2(a)
Buyer Environmental Audits 6.18(a)
Buyer Financial Statements 6.6
Buyer Interim Financial Statements 3.3(b)
Buyer Leased Property 6.11
Buyer Material Adverse Effect 6.1
Buyer Owned Property 6.11
Buyer Permitted Liens 6.19(a)
Buyer Properties 6.11
Buyer Property 6.11
Buyer Scheduled Contract 6.16
Buyer Transaction Documents 4.3(h)
CAC I preamble
CAC II preamble
Cash and Investments 1.1(1)
Cash Purchase Price 1.4(a)
Castle A Common Stock 6.4
Castle B Common Stock 2.2(a)
Closing 4.1(a)
Closing Date 4.1(a)
Code recitals
Communications Act 5.12
Contracts 1.1(d)
Crown Audited Statements 5.9
Crown Benefit Plan 5.17(c)
Crown Communications Assets 1.1
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Term Section
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Crown Communications Business recitals
Crown Environmental Audits 5.22(a)
Crown Financial Statements 5.9(b)
Crown Interim Financial Statements 3.3(a)
Crown Leased Property 5.15
Crown Material Adverse Effect 5.1
Crown Owned Property 5.15
Crown Parties preamble
Crown Permitted Liens 5.14(a)
Crown Permitted Real Estate Liens 5.15
Crown Properties 5.15
Crown Property 5.15
Crown Stock 2.2(a)
Crown Symbol 1.1(e)
Crown Territory 9.7(a)
Crown Transaction Documents 4.2(g)
Crown Unaudited Statements 5.9
Crowns preamble
CTSH recitals
CTSH Audited Statements 6.6(a)
CTSH Financial Statements 6.6(b)
CTSH Interim Financial Statements 3.3(b)
December 31 Crown Balance Sheets 5.14(a)
December 31 Buyer Balance Sheet 6.10(a)
Due Diligence Completion Date 3.1
EBITDA 3.4
Effective Time 2.1(b)
Environmental Laws 5.22(c)
Environmental Permits 5.22(b)
ERISA 5.17(c)
Excluded Assets 1.2
Excluded Liabilities 1.3(b)
FAA 5.12
Final S Tax Period(s) 13.1
GAAP 5.9
Governmental Entity 1.1(a)
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act 5.4
Hazardous Material 5.22(c)
Indemnified Party 12.2(e)
Intellectual Property 1.1(e)
IRS 5.17(i)
Licenses 1.1(a)
Liens 1.1
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Term Section
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Loss 12.2(c)
Merger Consideration 2.2(c)
Mergers recitals
Mobile preamble
Mobile Common Stock 2.2(a)
Mobile Merger recitals
Mobile Merger Consideration 2.2(c)
Mobile Share 5.6
Mobile Surviving Corporation 2.1(a)
Network preamble
Network Common Stock 2.2(a)
Network Merger recitals
Network Merger Consideration 2.2(c)
Network Shares 5.5
Network Surviving Corporation 2.1(a)
New Business 9.7
Note 1.4(a)
PBCL 2.1(a)
PCBs 5.22(b)
Person 14.18(a)
Pre-Closing Tax Return 13.2(a)
Preferred Stock 6.4
Property Taxes 13.4(a)
Purchase Price 1.4(a)
Real Property 1.1(c)
Receivables 1.1(g)
Related Person 5.20(i)
Release 5.22(c)
Representative 14.18(a)
Restricted Activities 9.7(a)
Returns 5.23(a)
Securities Act 5.26
Sellers preamble
Sellers' Damages 12.2(b)
Seller Scheduled Contract 5.20
Shareholder Agreement 4.2(f)
Straddle Period 13.4(a)
Subsidiary 14.18(a)
Tax Amount 1.4(a)
Tax Controversy 13.3
Tax Indemnification Period 13.4(a)
Taxes 5.23(a)
Third Party Claim 12.2(d)
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Term Section
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ASSET PURCHASE AND MERGER AGREEMENT dated as
of July 11, 1997, among Crown Network Systems, Inc.,
a Pennsylvania corporation ("Network"), Crown Mobile
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Systems, Inc., a Pennsylvania corporation ("Mobile"),
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▇▇▇▇▇▇ ▇. Crown, individually and as a shareholder of
Network and Mobile, ▇▇▇▇▇▇▇ Crown, individually and
as a shareholder of Network and Mobile (▇▇▇▇▇▇ ▇.
Crown and ▇▇▇▇▇▇▇ Crown, referred to together as
"Sellers" or the "Crowns" and, the Crowns,
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individually and d/b/a Crown Communications, together
with Network and Mobile, referred to as the "Crown
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Parties"), Castle Acquisition Corp. I, a Pennsylvania
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corporation ("CAC I"), Castle Acquisition Corp. II, a
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Pennsylvania corporation ("CAC II"), and Castle Tower
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Holding Corp., a Delaware corporation ("Buyer").
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RECITALS:
1. Sellers own and operate a communications site acquisition,
ownership, design, development, construction, management and servicing business
that operates under the name of Crown Communications (the "Crown Communications
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Business"), including certain real estate, leases, licenses, management
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agreements, towers, contracts and other assets described in more detail below.
Sellers also own and operate Network and Mobile.
2. Sellers desire to sell, assign and transfer to Buyer, and Buyer
desires to purchase from Sellers, all the assets and properties used or held for
use in connection with the Crown Communications Business, all as described in
more detail below, all on the terms and subject to the conditions described
herein. In connection therewith, Buyer will assume certain liabilities and
obligations of the Crown Communications Business as further described herein.
3. Simultaneously with the sale of assets described above, the parties
intend to effect a merger of CAC I with and into Network, with Network being the
surviving corporation (the "Network Merger"), and a merger of CAC II with and
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into Mobile, with Mobile being the surviving corporation (the "Mobile Merger")
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and, together with the Network Merger, the "Mergers").
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4. It is the intention of the parties that for United States Federal
income tax purposes each of the Mergers shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the
"Code") and that the purchase of the Crown Communications Business will be a
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taxable transaction.
5. It is the further intention of the parties, promptly following the
execution and delivery of this Agreement and the receipt by Sellers of an
advance payment by Buyer in the amount of $10,000,000 (the "Advance Payment"),
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by wire transfer of immediately available Pittsburgh funds to an account
specified by Sellers, that Sellers, on the one part, and Buyer, on the other
part, each shall commence a confirmatory due diligence investigation, including
a review of the businesses, assets, operations, properties, condition (financial
and otherwise), contingent liabilities, prospects (including projected EBITDA
(as defined herein)) and material agreements of the Buyer and its Subsidiaries
and Castle Transmission Services (Holdings) Ltd. ("CTSH") and its
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Subsidiaries by Sellers and of the Crown Communications Business, Network and
Mobile by Buyer. The closing of the transactions contemplated hereby shall be
subject to the satisfactory completion of such investigation as more fully set
forth in Article 3, and the disposition of the Advance Payment shall be as more
fully set forth in Sections 1.4 and 14.2.
6. Buyer has advised Sellers that it intends to complete a
reorganization of equity interests in CTSH such that, upon completion thereof,
Buyer or its successor will hold at least a majority of the outstanding equity
interests of CTSH; provided, however, that in no event shall the completion by
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Buyer of such a reorganization be deemed to constitute a condition to Sellers'
obligation to close the transaction contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties agree as follows:
ARTICLE 1.
Purchase and Sale of Assets; Assumption of Liabilities
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1.1. Crown Communications Assets. Subject to and in reliance upon the
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representations, warranties and agreements herein set forth, and subject to the
terms and conditions herein contained, Sellers shall grant, convey, sell,
assign, transfer and deliver to Buyer on the Closing Date (as defined herein),
and Buyer shall purchase on the Closing Date, free and clear of all liabilities
and obligations, as well as all covenants, restrictions, mortgages, liens,
security interests, claims, pledges, easements, assignments, subleases,
covenants, rights-of-way, options, rights of refusal, charges, leases, licenses,
defects in title, encumbrances and any other restriction of any kind or nature
(collectively, "Liens") except only those liabilities, obligations and Liens
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which are to be assumed by Buyer pursuant to Section 1.3 hereof and except Crown
Permitted Liens (as defined herein) and Crown Permitted Real Estate Liens (as
defined herein), all properties, assets, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description, wherever located, including the Crown Communications Business as a
going concern and goodwill, that are owned by Sellers and used or held for use
in connection with the Crown Communications Business, except for those assets
which are expressly excluded pursuant to Section 1.2 hereof (the "Crown
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Communications Assets"). Without limiting the foregoing, the Crown
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Communications Assets shall include the following:
(a) Licenses and Authorizations. All licenses, permits,
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franchises, certificates of compliance, consents, approvals and authorizations
by any Federal, state or local government or any subdivision thereof or any
court, administrative agency or commission or other governmental agency or
authority (a "Governmental Entity") (all the foregoing, including any renewals,
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extensions or modifications thereof and additions thereto and any pending
applications therefor, being referred to herein as "Licenses") that are held by
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Sellers and used or held for use in connection with the Crown Communications
Business, including those Licenses listed on Schedule 5.12, together with any
Licenses acquired as permitted by the terms of this Agreement between the date
of this Agreement and the Closing Date.
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(b) Tangible Personal Property. All physical assets, equipment,
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vehicles, furniture, fixtures, office materials and supplies, spare parts, and
other tangible personal property of every kind and description owned, leased or
licensed by Sellers as of the date of this Agreement and used or held for use in
connection with the Crown Communications Business, including those items
described generally on Schedule 5.14, and any additions, improvements,
replacements and alterations thereto made as permitted by the terms of this
Agreement between the date of this Agreement and the Closing Date, in each case
other than any tangible personal property consumed in the ordinary course of
business and operations of the Crown Communications Business from the date
hereof to the Closing Date.
(c) Real Property. All land and leaseholds, and other estates in
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real property and appurtenances thereto, and all easements, privileges,
rights-of-way, riparian and other water rights, lands underlying any adjacent
streets or roads, appurtenances, licenses, permits and other rights pertaining
to or accruing to the benefit of such real property and leasehold interests and
estates in real property, buildings, towers, transmitters, antennae and
warehouses, and fixtures and improvements thereon ("Real Property") owned,
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leased or licensed by Sellers as of the date hereof and used or held for use in
connection with the Crown Communications Business, including those described
generally on Schedule 5.15, and any additions, improvements, replacements and
alterations thereto made as permitted by the terms of this Agreement between the
date of this Agreement and the Closing Date.
(d) Contracts. All contracts, leases, licenses (other than
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Licenses), indentures, agreements, commitments and all other legally binding
arrangements, whether oral or written, express or implied ("Contracts") entered
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into in connection with the Crown Communications Business, including those
listed on Schedule 5.20, together with all Contracts entered into as permitted
by the terms of this Agreement between the date of this Agreement and the
Closing Date (collectively, the "Assumed Contracts").
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(e) Trademarks, etc. All trademarks (registered or unregistered),
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service marks, franchises, patents, trade names, jingles, slogans, and
logotypes, copyrights and other intangible rights, including any applications
therefor and other material intellectual property and proprietary rights,
whether or not subject to statutory registration or protection (the
"Intellectual Property"), in each case owned, leased or licensed by Sellers and
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used or held for use as of the date of this Agreement in connection with the
Crown Communications Business, including the current Crown corporate symbol (the
"Crown Symbol") and other Intellectual Property described generally on Schedule
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5.16, and any Intellectual Property acquired by Sellers in connection with the
Crown Communications Business as permitted by the terms of this Agreement
between the date hereof and the Closing Date.
(f) Files and Records. All files, records, books of account,
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general, financial, accounting and personnel records, invoices, computer
programs, tapes, electronic data processing software, customer and supplier
lists, correspondence and other records of Sellers used or held for use by or
otherwise relating to the Crown Communications Business.
(g) Prepaid Expenses and Receivables; Other Current Assets. All
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prepaid expenses (other than prepaid Taxes (as defined in Section 5.23)) and
notes and accounts
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receivable ("Receivables") and any other current assets arising in connection
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with the Crown Communications Business and existing on the Closing Date.
(h) Security Deposits. All security deposits held by third
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parties for the benefit of the Crown Communications Business on the Closing
Date.
(i) Claims. All rights, claims, credits or causes of action
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against third parties relating to or arising out of the Crown Communications
Business, except any and all claims of Sellers for refunds of Taxes paid or
attributable to a taxable period (or portion thereof) ending on or prior to the
Closing.
(j) Goodwill. All Sellers' goodwill in, and the going concern
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value of, the Crown Communications Business.
(k) Cash and Investments. All cash on hand or in bank accounts
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and other cash items, cash equivalents and short-term investments (collectively,
"Cash and Investments") held in connection with the Crown Communications
Business on the Closing Date.
(l) Insurance. All policies and contracts of insurance, other
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than directors' and officers' liability insurance, relating to the Crown
Communications Business, together with all proceeds received by Sellers from any
such policy or contract after the Closing.
1.2. Excluded Assets. The following shall be excluded from the Crown
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Communications Assets and retained by Sellers (the "Excluded Assets"):
(a) Claims for Taxes. Any and all claims of Sellers for refunds
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of Taxes paid or attributable to a taxable period (or portion thereof) ending on
or prior to the Closing;
(b) Certain Personal Property. All items of personal property
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listed on Exhibit A.
1.3. Assumption of Certain Liabilities; Excluded Liabilities.
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(a) Upon the terms and subject to the conditions of this
Agreement, effective as of the Closing Date, Buyer shall assume and agree to
pay, perform and discharge when due, and indemnify Sellers and hold each of them
harmless from the following liabilities and obligations of the Crown
Communications Business (the "Assumed Liabilities"):
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(i) outstanding indebtedness of the Crown Communications
Business, including approximately $20.5 million in the aggregate
outstanding as of May 31, 1997 and additional indebtedness incurred
thereafter in the ordinary course of business; provided, however, that
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the aggregate amount of outstanding indebtedness assumed will not
exceed (A) $25 million, plus (B) the aggregate amount of any additional
indebtedness incurred with the written consent of Buyer pursuant to
Section 7.1.
(ii) trade payables and other accounts payable reflected on
the balance sheet as of June 30, 1997 of Crown Communications included
as part of the Crown
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Interim Financial Statements (as defined herein) and those arising
thereafter in the ordinary course of business consistent with past
practice;
(iii) all liabilities and obligations of Sellers arising
under or relating to the Assumed Contracts; and
(iv) all other liabilities and obligations of Sellers
arising in the ordinary course of business consistent with past
practice, up to $2 million in the aggregate.
(b) Buyer shall in no event assume, nor shall it be liable for,
any obligations or liabilities of Sellers of any nature whatsoever (whether
express or implied, fixed or contingent, known or unknown) other than the
Assumed Liabilities (all obligations and liabilities of Sellers other than the
Assumed Liabilities are referred to herein collectively as the "Excluded
Liabilities"). Without limiting the foregoing, Buyer shall not be deemed to
assume any liabilities relating to or arising out of any Excluded Assets or any
liabilities for any Taxes, other than liability for transfer taxes to the extent
assumed by Buyer pursuant to Section 14.3.
1.4. Advance Payment; Payment of Purchase Price.
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(a) The total consideration for the Crown Communications Assets
shall consist of (i) the sum of (A) $100,000,000 plus (B) an amount equal to the
amount necessary to permit Sellers to pay all income taxes relating to the
business and operations of Crown Communications, Network and Mobile through the
Closing Date (the "Tax Amount") in cash (the "Purchase Price") and (ii) the
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assumption by Buyer of the Assumed Liabilities. The Advance Payment shall be
applied at Closing against the Purchase Price, subject to the provisions of
Article 3 and Sections 14.1 and 14.2.
(b) On the Closing Date, Buyer shall pay, or cause to be paid, to
Sellers for the Crown Communications Assets (i) by wire transfer of $15,000,000
($25,000,000 less the Advance Payment) in immediately available Pittsburgh funds
to an account specified by Sellers in writing at least two business days prior
to the Closing and (ii) by delivery to Sellers of a negotiable promissory note
of Buyer in substantially the form of Exhibit B in the principal amount equal to
the sum of (A) $75,000,000 plus (B) the Tax Amount (the "Note"), which Note
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shall be due on October 31, 1997 (subject to earlier maturity 30 days following
demand, which demand may be made any time after September 15, 1997, as specified
in the Note) and shall bear interest at the rate of 11 percent per annum,
payable monthly commencing on the date that is one month following the Closing
Date. Buyer's obligations under the Note will be secured by a first priority
pledge of all of the outstanding capital stock of the Network Surviving
Corporation and the Mobile Surviving Corporation (each as defined herein) and of
Castle Acquisition Corp. III, a Delaware corporation ("CAC III") and a wholly
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owned subsidiary of Buyer, which will, as of the Closing Date, hold all of the
Crown Communications Assets. Buyer and Sellers agree to allocate the Purchase
Price, together with the value of the Assumed Liabilities, as provided in
Section 13.9. Sellers shall deliver to Buyer as soon as practicable after the
execution of this Agreement, an estimate of the Tax Amount, and shall certify
the Tax Amount to Buyer at least one business day prior to the Closing Date,
which certificate shall include a reasonably detailed calculation of the Tax
Amount.
-5-
1.5. Certain Definitions. For the avoidance of doubt, the Crown
-------------------
Communications Business shall not include the capital stock, business, assets or
liabilities of Network or Mobile. For all purposes of this Agreement, the Crown
Communications Assets, the Assumed Liabilities and the capital stock, business,
assets and liabilities of Network and Mobile are referred to herein as the
"Acquired Business."
-----------------
ARTICLE 2.
The Merger Transactions
-----------------------
2.1. The Mergers Generally.
---------------------
(a) Upon the terms and subject to the conditions set forth
herein, at the Effective Time (as defined below) (i) CAC I shall be merged with
and into Network in accordance with the Pennsylvania Business Corporation Law
(the "PBCL") and the separate corporate existence of CAC I shall thereupon cease
----
and (ii) CAC II shall be merged with and into Mobile in accordance with the PBCL
and the separate corporate existence of CAC II shall thereupon cease. Network
and Mobile shall be the surviving corporations in the Mergers (the "Network
-------
Surviving Corporation" and the "Mobile Surviving Corporation," respectively) and
--------------------- ----------------------------
shall continue to be governed by the laws of the Commonwealth of Pennsylvania.
The Mergers shall have the effects set forth in Section 1929 of the PBCL.
(b) Simultaneously with the Closing, Network and Mobile will
file articles of merger with the Department of State of the Commonwealth of
Pennsylvania and make all other filings or recordings required by the PBCL in
connection with the Mergers. Each of the Mergers shall become effective at such
time as the relevant articles of merger are duly filed with the Department of
State of the Commonwealth of Pennsylvania or at such later time as is agreed by
the parties and specified in the articles of merger (the "Effective Time").
--------------
(c) The articles of incorporation and by-laws of the Network
Surviving Corporation and the Mobile Surviving Corporation shall contain
provisions substantially identical to those of the articles of incorporation and
by-laws of CAC I and CAC II, respectively.
2.2. Conversion of Shares.
--------------------
(a) At the Effective Time:
(i) each share of common stock, no par value, of Network
(the "Network Common Stock") held by Network as treasury stock
--------------------
immediately prior to the Effective Time shall, by virtue of the Network
Merger and without any action on the part of the holder thereof, be
canceled, and no Castle Common Stock (as defined herein) or other
consideration shall be delivered in exchange therefor;
(ii) each share of common stock, par value $1.00 per
share, of Mobile (the "Mobile Common Stock" and, together with the
-------------------
Network Common Stock, the "Crown Stock") held by Mobile as treasury
-----------
stock immediately prior to the Effective Time
-6-
shall, by virtue of the Mobile Merger and without any action on the
part of the holder thereof, be canceled, and no Castle Common Stock or
other consideration shall be delivered in exchange therefor;
(iii) each share of common stock, par value $0.01 per
share, of CAC I outstanding immediately prior to the Effective Time
shall, by virtue of the Network Merger and without any action on the
part of CAC I or the holder thereof, be converted into and become one
share of common stock of the Network Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Network
Surviving Corporation;
(iv) each share of common stock, par value $0.01 per
share, of CAC II outstanding immediately prior to the Effective Time
shall, by virtue of the Mobile Merger and without any action on the
part of CAC II or the holder thereof, be converted into and become one
share of common stock of the Mobile Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Mobile
Surviving Corporation;
(v) each share of Network Common Stock outstanding
immediately prior to the Effective Time shall, by virtue of the Network
Merger and without any action on the part of the holder thereof, except
as otherwise provided in Section 2.2(a)(i), be converted into the right
to receive the number of fully paid and nonassessable shares of Class B
Common Stock, par value $0.01 per share, of Buyer (the "Castle B Common
---------------
Stock") equal to the Network Merger Consideration (as defined herein);
-----
and
(vi) each share of Mobile Common Stock outstanding
immediately prior to the Effective Time shall, by virtue of the Mobile
Merger and without any action on the part of the holder thereof, except
as otherwise provided in Section 2.2(a)(ii), be converted into the
right to receive the number of fully paid and nonassessable shares of
Castle B Common Stock equal to the Mobile Merger Consideration (as
defined herein).
(b) From and after the Effective Time, all shares of Crown
Stock converted in accordance with Section 2.2(a)(v) or (vi) shall no longer be
outstanding and shall, by virtue of the Mergers and without any action on the
part of the holder thereof, automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the applicable Merger Consideration (as defined herein) and any dividends
payable pursuant to Section 2.3(d). From and after the Effective Time, all
certificates representing the common stock of CAC I or CAC II shall be deemed
for all purposes to represent the number of shares of common stock of the
Network Surviving Corporation or the Mobile Surviving Corporation, as the case
may be, into which they were converted in accordance with Section 2.1(a)(iii) or
(iv).
(c) The "Network Merger Consideration" shall be [ ] shares of
----------------------------
Castle B Common Stock per share of Network Common Stock, and the "Mobile Merger
-------------
Consideration" shall be [ ] shares of Castle B Common Stock per share of Mobile
-------------
Common Stock (the Mobile Merger Consideration, together with the Network Merger
Consideration, the "Merger
------
-7-
Consideration") [the combined number of shares comprising the Merger
-------------
Consideration to be not less than 1,322,000 shares of Castle B Common Stock
(based on an assumed number of fully diluted shares equal to 7,084,000) and to
be determined and apportioned by Buyer and Sellers on or prior to the Due
Diligence Completion Date based on the actual number of fully diluted shares and
the relative values of Network and Mobile] which the parties agree represents an
aggregate value of $55,000,000.
2.3. Surrender and Payment.
---------------------
(a) At the Closing, Buyer shall cause the issuance of the
Merger Consideration to the Sellers upon proper delivery of the outstanding
Crown Stock. Buyer and Sellers contemplate that the exchange of Merger
Consideration for certificates of Crown Stock will occur at the Closing.
(b) Upon surrender to the Buyer of a certificate or
certificates representing shares of the Network Common Stock or the Mobile
Common Stock, the Crowns will be entitled to receive the Merger Consideration
payable in respect of such shares and any dividends payable pursuant to Section
2.3(d). Until so surrendered, each such certificate shall, after the Effective
Time, represent for all purposes only the right to receive the Network Merger
Consideration or the Mobile Merger Consideration, as applicable, and any
dividends payable pursuant to Section 2.3(d).
(c) After the Effective Time, there shall be no further
registration of transfers of shares of Crown Stock. If, after the Effective
Time, certificates representing such shares are presented to Network Surviving
Corporation or Mobile Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 2.
(d) No dividends or other distributions with respect to Castle
B Common Stock issued in the Mergers shall be paid to the holders of any
unsurrendered certificates representing shares of Crown Stock until such
certificates are surrendered as provided in this Section 2.3. Subject to the
effect of applicable laws, following the surrender of such certificates, there
shall be paid, without interest, to the record holder of the Castle B Common
Stock issued in exchange therefor at the time of such surrender, the amount of
dividends or distributions with a record date after the Effective Date payable
with respect to such whole shares of Castle B Common Stock prior to or on the
date of such surrender and not previously paid, less the amount of any
withholding taxes which may be required thereon.
ARTICLE 3.
Due Diligence Investigation
---------------------------
3.1. Due Diligence Investigation Generally. From the date of this
-------------------------------------
Agreement through and including August 1, 1997 (the "Due Diligence Completion
------------------------
Date"), Sellers, on the one part, and the Buyer, on the other part, each shall
----
have the opportunity to conduct a due diligence investigation of the business,
assets, operations, properties, condition (financial and otherwise), contingent
liabilities, prospects and material agreements of Buyer and its Subsidiaries and
CTSH
-8-
and its Subsidiaries (in the case of Sellers) and of the Crown Communications
Business, Network and Mobile (in the case of Buyer) for the limited purposes of:
(a) in the case of Sellers, (i) confirming the accuracy, in all material
respects, of the Buyer's representations and warranties provided in Article 6,
and (ii) confirming the 1998 projections of earnings before interest, taxes,
depreciation and amortization ("EBITDA") of Buyer and its Subsidiaries and CTSH
------
and its Subsidiaries set forth in Exhibit C, within the parameters described
below; and (b) in the case of Buyer, (i) confirming the accuracy, in all
material respects, of the Crown Parties' representations and warranties provided
in Article 5, (ii) confirming the 1998 projections of EBITDA for the Acquired
Business set forth on Exhibit D, within the parameters described below, and
confirming that the amount of indebtedness for borrowed money that is needed to
generate such projected EBITDA does not exceed $25 million, (iii) determining,
in good faith, that Buyer is reasonably satisfied in all material respects with
the terms of all Contracts, Licenses and title to assets and properties of the
Acquired Business, taken as a whole, including without limitation the
assignability or risks associated with being unable to obtain consents to
assignment of any of the Contracts, Licenses or other properties or assets of
the Crown Communications Business, Mobile or Network (including any of the
Contracts, Licenses or other properties or assets identified in the Sellers'
disclosure schedules as containing restrictions on, or resulting in other
adverse consequences upon, the transfer or assignment of such Contracts,
Licenses or other properties or assets), and (iv) determining, in good faith,
that Buyer is reasonably satisfied in all material respects with all
environmental conditions affecting or relating to the Acquired Business and the
business and operations thereof and the status of compliance by the Acquired
Business with all Environmental Laws (as defined herein). For purposes of
clauses (a)(ii) and (b)(ii) of this Section 3.1, such projected 1998 EBITDA will
be deemed to have been confirmed if the Sellers or Buyer, as the case may be,
determine(s), based upon such due diligence, that the projected 1998 EBITDA
numbers of the other party are at least equal to ninety percent (90%) of the
amount of EBITDA projected for such other party set forth on Exhibit C or D,
respectively. In furtherance of the foregoing, each party shall comply at all
times during the period from the date of this Agreement through and including
the Closing Date with its respective obligations under Section 9.3.
3.2. Interim Financial Statements.
----------------------------
(a) Sellers shall deliver to Buyer on or prior to July 18,
1997 the unaudited balance sheets of each of Crown Communications, Network and
Mobile as of June 30, 1997, and the unaudited statements of income and cash flow
of each of Crown Communications, Network and Mobile for the six months then
ended, together with the notes to such interim financial statements
(collectively, the "Crown Interim Financial Statements").
----------------------------------
(b) Buyer shall deliver to Sellers on or prior to July 18,
1997 (i) the unaudited balance sheet of Buyer and its consolidated Subsidiaries
as of June 30, 1997, and the statements of income and cash flow of Buyer and its
subsidiaries for the six months then ended together with the notes to such
interim financial statements (collectively, the "Buyer Interim Financial
-----------------------
Statements"), and (ii) the unaudited balance sheet of CTSH and its consolidated
----------
Subsidiaries as of June 30, 1997, and the unaudited profit and loss account and
cash flow statement of CTSH and its Subsidiaries for the three months then ended
together with the notes to such interim financial statements (collectively, the
"CTSH Interim Financial Statements").
---------------------------------
-9-
ARTICLE 4.
Closing; Deliveries of the Parties at Closing
---------------------------------------------
4.1. The Closing.
-----------
(a) The consummation of the transactions provided for in this
Agreement, which shall be deemed to occur at the Effective Time (the "Closing"),
-------
and shall take place at the offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 A.M. on August 7, 1997 or, if the
conditions to Closing set forth in Articles 10 and 11 shall not have been
satisfied by such date, as soon as practicable after such conditions have been
satisfied. The date on which the Closing shall occur is referred to herein as
the "Closing Date."
------------
4.2. Deliveries at the Closing by the Crown Parties. At the
----------------------------------------------
Closing, Sellers shall deliver to Buyer, CAC I and CAC II:
(a) bills of sale, endorsements, assignments, certificates of
title and other good and sufficient instruments of sale, transfer and assignment
in form and substance reasonably satisfactory to Buyer and its counsel
sufficient to sell, transfer and assign to Buyer all right, title and interest
of Seller in and good and valid title to the Crown Communications Assets (other
than Real Property owned by Sellers covered by (b) below), subject to Crown
Permitted Liens;
(b) one or more special warranty deeds with covenant against
grantor's acts (or an equivalent form of deed suitable for recordation in the
relevant jurisdictions), in form and substance reasonably satisfactory to Buyer
and its counsel, but subject to all Crown Permitted Real Estate Liens, with
respect to all Real Property owned by Sellers and included within the Crown
Communications Assets; (c) certified copies of resolutions, duly adopted by the
Boards of Directors and shareholders of Network and Mobile, which shall be in
full force and effect at the time of the Closing, authorizing the execution,
delivery and performance by Sellers of this Agreement and the consummation of
the transactions contemplated hereby and any other authorization required for
the sole proprietorship to transfer the Crown Communications Assets;
(d) a certificate from each of the Crown Parties signed by
such party or an executive officer of such party, as applicable, to the effect
set forth in clauses (a) and (b) of Section 11.1;
(e) an opinion dated as of the Closing Date of ▇▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to Seller, with respect to such matters as Buyer may
reasonably request in form and substance reasonably satisfactory to Buyer;
(f) executed counterparts to the Shareholder Agreement
executed by each of the Sellers, substantially in the form set forth as Exhibit
E (the "Shareholder Agreement"); and
---------------------
-10-
(g) such other documents or instruments as Buyer or its counsel may
reasonably request (i) to demonstrate satisfaction of the conditions to Closing
set forth in Article 11 and compliance by the Crown Parties with the agreements
set forth in this Agreement and (ii) for purposes of the issuance of Buyer's
owner's title insurance policy with respect to all Real Property to be acquired
without deletion of the standard exceptions to title (such instruments referred
to in clause (a) above, deeds referred to in clause (b) above, the Shareholder
Agreement referred to in clause (f) above and this Agreement, collectively, the
"Crown Transaction Documents").
-----------------------------
4.3. Deliveries at the Closing by Buyer. At the Closing, Buyer shall
----------------------------------
deliver to the Crown Parties:
(a) the Purchase Price for the Crown Communications Assets,
consisting of the Cash Consideration (less the amount of the Advance Payment)
and the Note, in accordance with Section 1.4 hereof;
(b) executed counterparts of a pledge agreement securing Buyer's
obligations under the Note, together with the certificates representing all the
capital stock in CAC III, the Network Surviving Corporation and the Mobile
Surviving Corporation and stock powers for each executed in blank necessary to
perfect Sellers' security interests referred to in Section 1.4(b), in each case
in form and substance reasonably satisfactory to Sellers and their counsel;
(c) an instrument or instruments of assumption of the Assumed
Liabilities of the Sellers' responsibilities therefor, in each case in form and
substance reasonably satisfactory to Sellers and their counsel;
(d) certified copies of resolutions, duly adopted by the Boards of
Directors of Buyer, CAC I and CAC II which shall be in full force and effect at
the time of the Closing, authorizing the execution, delivery and performance by
Buyer, CAC I and CAC II of this Agreement and the consummation of the
transactions contemplated hereby;
(e) upon proper delivery of the Crown Stock, the Merger Consideration
in connection with the Mergers;
(f) a certificate from each of Buyer, CAC I and CAC II signed by an
executive officer of such party to the effect set forth in clauses (a) and (b)
of Section 10.1;
(g) (i) an opinion of Cravath, Swaine & ▇▇▇▇▇, counsel to Buyer, (ii)
an opinion of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to Buyer, and (iii) an opinion of
▇▇▇▇▇▇▇▇ Ingersoll Professional Corporation, counsel to Buyer, in each case
dated as of the Closing Date with respect to such matters as Sellers may
reasonably request in form and substance reasonably satisfactory to Sellers;
(h) executed counterparts to the Shareholder Agreement, executed by
all parties thereto other than the Sellers;
(i) articles of merger to effect the Mergers as contemplated by
Section 2.1;
-11-
(j) a letter agreement from ▇▇▇▇▇▇ Brothers and Buyer in favor of
Sellers confirming the continuing status of Buyer's committed financing and
stating that Buyer and ▇▇▇▇▇▇ Brothers each will provide written notice to
Sellers not less than ten (10) days prior to the scheduled termination of such
financing commitment, or prior to any termination effected by such party, such
letter to be in form and substance reasonably satisfactory to Sellers and their
counsel; and
(k) such other documents or instruments as the Crown Parties or their
counsel may reasonably request to demonstrate satisfaction of the conditions to
Closing as set forth in Article 10 and compliance by Buyer with the agreements
set forth in this Agreement (the Note referred to in clause (a) above, the
instruments referred to in clauses (b) and (c) above, the Shareholder Agreement
referred to in clause (h) above, and this Agreement, collectively, the "Buyer
------
Transaction Documents").
----------------------
4.4. Pre-Closing Deliveries. Not later than three business days following
----------------------
the Due Diligence Completion Date, Sellers shall have furnished to Buyer draft
forms of all of the Crown Transaction Documents and all other documents to be
delivered by Sellers in accordance with Section 4.2, and Buyer shall have
furnished to Sellers draft forms of all of the Buyer Transaction Documents and
all other documents to be delivered by Buyer in accordance with Section 4.3, in
each case with a view to approving and completing all such documents and
instruments not later than three business days prior to the scheduled Closing
Date.
4.5. Time is of the Essence. With regard to all dates and time periods set
----------------------
forth or referred to in this Agreement, time is of the essence.
ARTICLE 5.
Representations and Warranties of the Crown Parties
---------------------------------------------------
Each of the Crown Parties represents and warrants to Buyer, jointly and
severally, as follows:
5.1. Corporate Status; Authority. Each of Network and Mobile is a
---------------------------
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. Each of Network and Mobile is duly
qualified and in good standing to do business as a foreign corporation and the
Crown Communications Business is duly qualified and in good standing to do
business in each jurisdiction in which the conduct or nature of its business or
the ownership, leasing or holding of its properties makes such qualification
necessary, except such jurisdictions where the failure to be so qualified or in
good standing, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect (i) on the condition (financial or
otherwise), business, liabilities, properties, assets, prospects or results of
operations of the Acquired Business, taken as a whole, or (ii) on the ability of
the Crown Parties to perform their obligations under or to consummate the
transactions contemplated by this Agreement (a "Crown Material Adverse Effect").
-----------------------------
Each of Network and Mobile has all requisite corporate
-12-
power, and the Crown Communications Business has all requisite power, to carry
on its business and operations as it is now being conducted and to own and
operate such business, to enter into this Agreement, to perform its obligations
hereunder and to complete the transactions contemplated hereby.
5.2. Corporate Action. All corporate and shareholder actions and
----------------
proceedings necessary to be taken by or on the part of each of Network and
Mobile in connection with the transactions contemplated by the Crown Transaction
Documents have been duly and validly taken, and this Agreement has been duly and
validly authorized, executed and delivered by each of Network and Mobile and
constitutes, and each of the other Crown Transaction Documents, as applicable,
will be duly and validly authorized, executed and delivered by each of Network
and Mobile and will constitute, the legal, valid and binding obligation of each
of Network and Mobile, enforceable against each of Network and Mobile in
accordance with and subject to its terms, except as may be limited by bankruptcy
or other laws affecting creditors' rights and by equitable principles.
5.3. Authority; Execution. Each of the Sellers has all requisite power and
--------------------
authority to execute and deliver the Crown Transaction Documents and to
consummate the transactions contemplated thereby. All acts and other proceedings
required to be taken by the Sellers to authorize the execution, delivery and
performance of the Crown Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and properly taken. This
Agreement has been duly executed and delivered by each Seller and constitutes,
and each of the other Crown Transaction Documents, as applicable, will be duly
executed and delivered by each Seller and will constitute, a legal, valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with and subject to its terms, except as may be limited by bankruptcy or other
laws affecting creditors' rights and by equitable principles.
5.4. No Conflicts. Except as set forth on Schedule 5.4, neither the
------------
execution, delivery and performance by the Crown Parties, as applicable, of the
Crown Transaction Documents nor the consummation by the Crown Parties of the
transactions contemplated thereby is an event that, by itself or with the giving
of notice or the passage of time or both, will (i) conflict with the articles of
incorporation or by-laws, as amended, of either Network or Mobile, (ii)
constitute a violation of, or conflict with or result in any breach of or any
default under, or constitute grounds for termination or acceleration of, any
License, mortgage, indenture, lease, contract, agreement or instrument to which
any of the Crown parties or the Acquired Business is a party or by which any of
them is bound, except for such violations, conflicts, breaches, terminations and
accelerations as individually or in the aggregate would not have or be
reasonably expected to have a Crown Material Adverse Effect or result in the
creation of any Lien (other than a Permitted Lien (as defined herein)) upon any
of the assets of the Acquired Business or (iii) violate (A) any judgment, decree
or order or (B) any statute, rule or regulation, in each such case, applicable
to any of the Crown Parties or the Acquired Business. The execution, delivery
and performance by the Crown Parties of this Agreement, and the consummation by
the Crown Parties of the transactions contemplated hereby, require no action by
or in respect of, or filing with, any Governmental Entity other than (a) the
filing of articles of merger with the Department of State of the Commonwealth of
Pennsylvania and of appropriate documentation with the relevant authorities of
other states in which Network or Mobile or the Crown Communications Business is
qualified to
-13-
do business; (b) compliance with any applicable requirements of the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
-----------------
Act"); (c) the approvals of the FCC contemplated by this Agreement; (d) actions
---
or filings which, if not taken or made, would not, individually or in the
aggregate, reasonably be expected to have a Crown Material Adverse Effect; and
(e) filings and notices not required to be made or given until after the
Effective Time.
5.5. Capitalization of Network. The authorized capital stock of Network
-------------------------
consists of 100,000 shares of Common Stock, no par, of which two shares are duly
authorized and validly issued and outstanding, fully paid and nonassessable (the
"Network Shares"). ▇▇▇▇▇▇ ▇. Crown is the record and beneficial owner of one
--------------
Network Share and ▇▇▇▇▇▇▇ Crown is the record and beneficial owner of one
Network Share.. Except for the Network Shares, there are no shares of capital
stock or other equity securities of Network outstanding. The Network Shares have
not been issued in violation of, and the Network Shares are not subject to, any
purchase option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, the Network articles of
incorporation or by-laws, as amended, any Contract to which Network or Sellers
are subject, bound or a party or otherwise. There are no outstanding warrants,
options, rights, "phantom" stock rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) (a) pursuant to
which any of the Sellers or Network is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other securities of
Network or (b) that give any Person the right to receive any benefits or rights
similar to any rights enjoyed by or accruing to the Crowns as holders of the
Network Shares. There are no equity securities of Network reserved for issuance
for any purpose. There are no outstanding bonds, debentures, notes or other
securities having the right to vote on any matters on which stockholders of
Network may vote.
5.6. Capitalization of Mobile. The authorized capital stock of Mobile
------------------------
consists of 1,000 shares of Common Stock, par value $1.00 per share, of which
one share is duly authorized and validly issued and outstanding, fully paid and
nonassessable (the "Mobile Share"). ▇▇▇▇▇▇ ▇. Crown is the record and beneficial
------------
owner of 1 Mobile Share. Except for the Mobile Share, there are no shares of
capital stock or other equity securities of Mobile outstanding. The Mobile Share
has not been issued in violation of, and the Mobile Share is not subject to, any
purchase option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, the Mobile articles of
incorporation or by-laws, as amended, any Contract to which Mobile or Sellers
are subject, bound or a party or otherwise. There are no outstanding warrants,
options, rights, "phantom" stock rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) (a) pursuant to
which any of the Sellers or Mobile is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other securities of
Mobile or (b) that give any Person the right to receive any benefits or rights
similar to any rights enjoyed by or accruing to ▇▇▇▇▇▇ ▇. Crown as holder of the
Mobile Share. There are no equity securities of Mobile reserved for issuance for
any purpose. There are no outstanding bonds, debentures, notes or other
securities having the right to vote on any matters on which stockholders of
Mobile may vote.
5.7. Equity Interests. Except as set forth on Schedule 5.7, neither
----------------
Network nor Mobile owns, nor do the Crown Communications Assets include,
directly or indirectly, any capital stock of or other equity interests in any
corporation, partnership, limited liability company, limited
-14-
liability partnership or other Person and neither Network, Mobile nor Crown
Communications is a member of or participant in any partnership, joint venture,
limited liability company, limited liability partnership or similar Person.
Other than the Crown Stock, Sellers do not own capital stock of or other equity
interests in any corporation, partnership, limited liability company, limited
liability partnership or other Person that is related to or involved in the
conduct or operation of the Crown Communications Business or the business of
Network or Mobile or any similar or related business or operations.
5.8. Title to the Crown Stock. The Crowns have good and valid title to the
------------------------
Network Shares and the Mobile Share, free and clear of any Liens. Assuming Buyer
has the requisite power and authority to be the lawful owner of the Crown Stock,
upon delivery to Buyer at the Closing of certificates representing the Crown
Stock, duly endorsed by Sellers for transfer to Buyer, and upon Sellers' receipt
of the Merger Consideration with respect to such shares, good and valid title to
the Crown Stock will pass to Buyer, free and clear of any Liens, other than
those arising from acts of Buyer or its Affiliates (including, without
limitation, the pledge of capital stock in favor of Sellers referred to in
Section 1.4(b)). Other than this Agreement, the Crown Stock is not subject to
any voting trust agreement or other contract, agreement, arrangement, commitment
or understanding restricting or otherwise relating to the voting, dividend
rights or disposition of the Crown Stock.
5.9. Financial Statements. Schedule 5.9 sets forth true, correct and
--------------------
complete copies of (a) the balance sheets of each of Crown Communications,
Network and Mobile as at December 31, 1995 and 1996, and the statements of
income and cash flows of each of Crown Communications, Network and Mobile for
each of the years then ended together with the notes to such financial
statements and, in the case of Crown Communications, the reports thereon of
▇▇▇▇▇ ▇. ▇▇▇▇▇ & Associates, independent certified public accountants (with
respect to Crown Communications, the "Crown Audited Statements" and, with
------------------------
respect to Network and Mobile, the "Crown Unaudited Statements"); and (b) the
--------------------------
balance sheets of each of Crown Communications, Network and Mobile as at May 31,
1997 and the statements of income and cash flows of each of Crown
Communications, Network and Mobile for the five months then ended (together with
the Crown Audited Statements, the Crown Unaudited Statements and the Crown
Interim Financial Statements, the "Crown Financial Statements"). The Crown
--------------------------
Financial Statements have been, or in the case of the Crown Interim Financial
Statements, will be, prepared from the books and records of the Crown Parties
and present fairly (subject, in the case of the Crown Interim Financial
Statements, to normal recurring year-end adjustments) the financial position of
the Crown Communications Business, Network or Mobile, as applicable, as at
December 31, 1995 and 1996, May 31, 1997 and June 30, 1997 and the statements of
income and cash flows of the Crown Communications Business, Network or Mobile,
as applicable, for the periods then ended in conformity with generally accepted
accounting principles ("GAAP") applied on a basis consistent with past practice,
except in each case as described in the notes thereto or as otherwise disclosed
in Schedule 5.9.
5.10. No Undisclosed Liabilities.
--------------------------
(a) There have been no material liabilities or obligations (whether
pursuant to Contracts or otherwise) of any kind whatsoever (whether accrued,
contingent, absolute,
-15-
determined, determinable or otherwise) incurred by the Crown Communications
Business, Network or Mobile since December 31, 1996, other than:
(i) liabilities or obligations disclosed or provided for in the
Crown Interim Balance Sheets or in the notes thereto;
(ii) liabilities or obligations incurred or that have arisen in
the ordinary course of business consistent with past practice which,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Crown Material Adverse Effect; or
(iii) liabilities or obligations under this Agreement or incurred
in connection with the transactions contemplated hereby.
(b) On the Closing Date, neither Network nor Mobile will have any
material liabilities or obligations (whether pursuant to Contracts or otherwise)
of any kind whatsoever (whether accrued, contingent, absolute, determined,
determinable or otherwise) other than:
(i) trade payables and other accounts payable reflected on the
balance sheets as of June 30, 1997 of Network and Mobile respectively, and
those arising thereafter in the ordinary course of business consistent with
past practice; and
(ii) liabilities or obligations under the Sellers Scheduled
Contracts (as defined herein).
5.11. Absence of Certain Changes or Events. Since December 31, 1996, the
------------------------------------
Crown Parties have made reasonable efforts consistent with past practice to
preserve the Crown Communications Business, Network and Mobile's relationships
with customers, suppliers, lenders, creditors, employees, licensors, licensees,
distributors and others with whom the Crown Communications Business, Network or
Mobile or any of the Crown Parties has a business or financial relationship, and
no such Person or group of persons having a material business or financial
relationship with the Crown Communications Business, Network or Mobile or any of
the Crown Parties has informed any of the Crown Parties that such Person intends
to change or discontinue such relationship, except for such changes or
discontinuances as individually or in the aggregate would not have or be
reasonably expected to have a Crown Material Adverse Effect. Except as set forth
on Schedule 5.11, the Crown Communications Business and the businesses of
Network and Mobile have been conducted in the ordinary course consistent with
past practice (including with respect to the collection of receivables, payment
of payables and other liabilities, advertising activities, sales practices
(including promotions, discounts and concessions), capital expenditures and
inventory levels, and contributions to or accruals to or in respect of Benefit
Plans (as defined herein)) and there has not occurred with respect to the Crown
Communications Business, Network or Mobile:
(a) any event, occurrence or development which, individually or in
the aggregate, has had or would reasonably be expected to have a Crown Material
Adverse Effect;
-16-
(b) any damage, destruction or loss not covered by insurance that
would reasonably be expected to have a Crown Material Adverse Effect; provided
--------
that any such damage, destruction or loss between the date hereof and the
Closing Date shall be subject to Section 7.1 and upon the Crown Parties' giving
notice to Buyer of the Crown Parties' election to repair such damage,
destruction or loss pursuant to Section 7.1, and such damage, destruction or
loss being repaired to Buyer's satisfaction, such damage, destruction or loss
shall be deemed not to be a failure of the condition set forth in Section 10.1;
provided further that the Crown Parties shall be under no obligation to elect to
----------------
repair such damage, destruction or loss; or
(c) any action taken by any of the Crown Parties which, if taken
after the date hereof, would constitute a breach of the covenant set forth in
Section 7.1.
5.12. Licenses. None of the Crown Parties owns, holds or uses any Licenses
--------
which are material to the ownership or operation of the Acquired Business as
currently operated other than the Licenses listed on Schedule 5.12, true and
complete copies of which have been or will be made available to Buyer. Schedule
5.12 identifies the legal holders of all Licenses material to the ownership or
operation of the Acquired Business and whether they are part of the Crown
Communications Business or held by Network or Mobile. Such Licenses are valid
and are in full force and effect and, except as limited by the provisions of the
Communications Act of 1934, as amended (the "Communications Act"), and the FCC's
------------------
rules, regulations and policies and as otherwise specified on the face of such
Licenses, none of such Licenses is subject to any restriction or condition which
would limit in any material respect the operation of the Acquired Business as it
is presently being conducted. The Crown Parties are familiar with and have
operated the Acquired Business (and any auxiliary assets operated in connection
with the operation of the Acquired Business) at all times in material compliance
with generally accepted industry practices and in compliance in all material
respects with the Licenses, the Communications Act and the existing rules,
regulations and policies of the FCC and the rules and regulations and policies
of the Federal Aviation Administration ("FAA"). Except as shown on Schedule
5.12, no application, action or proceeding is pending for the renewal or
modification of any of the Licenses and there is not now before any Governmental
entity any investigation or complaint against any of the Crown Parties relating
to the Acquired Business the unfavorable resolution of which would impair the
qualifications of any of the Crown Parties to hold any of the Licenses. Except
as shown on Schedule 5.12, no event or events have occurred which, individually
or in the aggregate, and with or without the giving of notice or the lapse of
time or both, would constitute grounds for, or which could result in, the
revocation or termination of any License or the imposition of any restriction or
limitation by any Governmental Entity on the operation of the Acquired Business
or the Crown Communications Business. No Licenses other than those shown on
Schedule 5.12 are necessary or required to operate the Acquired Business as it
is presently being conducted.
5.13. Sufficiency of Assets. Except for the Excluded Assets, the Acquired
---------------------
Business constitutes, and on the Closing Date will constitute, all of the assets
or property used or held for use primarily in the Crown Communications Business
to conduct the Crown Communications Business as the same is now being conducted.
On the Closing Date, the Network Surviving Corporation will have all of the
assets or property used or held for use primarily in the business and operations
of Network to conduct such business and operations as the same is now being
-17-
conducted, and the Mobile Surviving Corporation will have all of the assets or
property used or held for use primarily in the business and operations of Mobile
to conduct such business and operations as the same is now being conducted. On
the Closing Date, the Acquired Business will have access to liquidity and will
have working capital reasonably sufficient to enable it to conduct its business
and operations, including those of Network and Mobile, as the same is now being
conducted and as proposed to be conducted after the Closing as contemplated by
the parties.
5.14. Assets Other than Real Property Interests.
-----------------------------------------
(a) The Crown Parties have good and valid title to all assets
reflected on the December 31, 1996 balance sheets of the Crown Communications
Business, Network and Mobile included in the Crown Financial Statements (the
"December 31 Crown Balance Sheets") or thereafter acquired, except those sold or
--------------------------------
otherwise disposed of in the ordinary course of business consistent with past
practice and not in violation of this Agreement, in each case free and clear of
all Liens of any kind except (i) such as are set forth on Schedule 5.14, (ii)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business consistent with past practice, (iii)
Liens which secure debt that is reflected as a liability on the balance sheets
as of June 30, 1997 included in the Crown Interim Financial Statements and other
debt incurred under existing credit facilities and vehicle financings of the
Acquired Business and (iv) other imperfections of title or encumbrances, if any,
which do not, individually or in the aggregate, materially impair the continued
use and operation of the assets to which they relate in the Acquired Business,
as presently conducted (Liens, encumbrances and imperfections of title described
in clauses (i), (ii), (iii) and (iv) above are hereinafter referred to
collectively as "Crown Permitted Liens"). Schedule 5.14 sets forth a list of all
---------------------
material personal property owned by Sellers and used or held for use in
connection with the Crown Communications Business.
(b) All the material tangible assets used, held for use or necessary
in the Acquired Business (i) have been and are being maintained in accordance
with the customary industry practice, (ii) are free from material defects and
(iii) are in all material respects in good working condition, reasonable wear
and tear and depreciation excepted. All leased personal property used or held
for use in the Acquired Business is in all material respects in the condition
required of such property by the terms of the lease applicable thereto during
the term of the lease and upon the expiration thereof.
This Section 5.14 does not relate to Real Property or interests in Real
Property, such items being the subject of Section 5.15.
5.15. Title to Real Property. Schedule 5.15 sets forth a complete list of
----------------------
all Real Property and interests in Real Property used or held for use in the
Acquired Business owned in fee by the Crown Parties (individually, a "Crown
-----
Owned Property") and identifies any material reciprocal easement or operating
--------------
agreements (other than such operating agreements not relating to Real Property
identified on other disclosure schedules of the Crown Parties attached hereto)
relating thereto. Schedule 5.15 sets forth a complete list of all Real Property
and interests in Real Property used or held for use in the Acquired Business
leased by the Crown Parties (individually, a "Crown Leased Property") and
---------------------
identifies any material leases and reciprocal easement or operating agreements
(other than such operating agreements not relating to Real Property
-18-
identified on other disclosure schedules of the Crown Parties attached hereto)
relating thereto. The Crown Parties have (i) good and insurable fee title to all
Crown Owned Property and (ii) assuming good and adequate title in each lessor of
a leasehold estate, good and valid title to the leasehold estates in all Crown
Leased Property (a Crown Owned Property or Crown Leased Property being sometimes
referred to herein, individually, as a "Crown Property" and, collectively, as
--------------
"Crown Properties"), in each case free and clear of all Liens and other similar
----------------
restrictions of any nature whatsoever, except (A) such as are set forth on
Schedule 5.15, (B) leases, subleases and similar agreements set forth on
Schedule 5.20, (C) Crown Permitted Liens, (D) easements, covenants, rights-of-
way and other similar restrictions of record, (E) any conditions that may be
shown by a current, accurate survey or readily determined by a physical
inspection of any Crown Property made prior to Closing and (F) (I) zoning,
building and other similar restrictions, (II) Liens and other similar
restrictions that have been placed by any developer, landlord or other third
party on property over which the Crown Parties have easement rights or on any
Leased Property and subordination or similar agreements relating thereto, and
(III) unrecorded easements, covenants, rights-of-way and other similar
restrictions, none of which items set forth in clauses (I), (II) and (III),
individually or in the aggregate, materially impair the continued use and
operation of the property to which they relate in the Crown Communications
Business, as presently conducted. Except as disclosed on Schedule 5.18, to the
knowledge of the Crown Parties, the current use by the Crown Parties of the
plants, offices and other facilities located on Crown Property does not violate
any local zoning or similar land use or government regulations in any material
respect (Liens, encumbrances and imperfections of title described in clause (A),
(B), (C), (D), (E) and (F) are hereinafter referred to as "Crown Permitted Real
--------------------
Estate Liens"). No condemnation of any material portion of the Crown Properties
------------
has occurred; and the Crown Parties have not received any notice related to any
future or proposed condemnation of any material portion of the Crown Properties.
5.16. Intellectual Property.
---------------------
(a) Schedule 5.16 sets forth a true and complete list of all material
Intellectual Property owned, used, filed by or licensed to the Crown Parties in
connection with the Acquired Business. With respect to registered trademarks,
Schedule 5.16 sets forth a list of all jurisdictions in which such trademarks
are registered or applied for and all registrations and application numbers.
Except as set forth on Schedule 5.16, the Crown Parties own, and the Crown
Parties have the right to use, execute, reproduce, display, perform, modify,
enhance, distribute, prepare derivative works of and sublicenses, without
payment to any other person, all Intellectual Property listed in Schedule 5.16
and, to the knowledge of the Crown Parties, the consummation of the transactions
contemplated hereby will not conflict with, alter or impair any such rights. The
Crown Parties have all rights to Intellectual Property which are necessary in
connection with the Acquired Business as it is presently being conducted.
(b) The Crown Parties have not granted any licenses or contractual
rights of any kind relating to Intellectual Property listed on Schedule 5.16 or
the marketing or distribution thereof. None of the Crown Parties is bound by or
a party to any Contracts of any kind relating to the Intellectual Property of
any other Person, except as set forth on Schedule 5.16 and except for agreements
relating to computer software licensed to the Crown Parties in the ordinary
course of business consistent with past practice. Subject to the rights of third
parties set forth on
-19-
Schedule 5.16, all Intellectual Property listed in Schedule 5.16 is free and
clear of the claims of others and of all Liens whatsoever. The conduct of the
Acquired Business as it is presently being conducted and as it is proposed to be
conducted after the Closing as contemplated by the parties does not and will not
violate, conflict with or infringe the Intellectual Property of any other
Person. Except as set forth on Schedule 5.16, (i) no claims are pending or, to
the knowledge of the Crown Parties, threatened against the Crown Parties by any
Person with respect to the ownership, validity, enforceability, effectiveness or
use of any Intellectual Property and (ii) the Crown Parties have not received
any communications alleging that the Crown Parties have violated any rights
relating to Intellectual Property of any Person.
5.17. Employees.
---------
(a) Except as described in Schedule 5.17, the Crown Parties have no
contracts of employment with any employee and none of the Crown Parties is a
party to or subject to any collective bargaining agreements with respect to the
Crown Communications Business, Network or Mobile. Schedule 5.17 contains a true
and complete list of all officers and key employees and a reasonably complete
list of all other employees, with their job titles and compensation, of the
Crown Communications Business, Network and Mobile as of July 1, 1997.
(b) No employee of the Crown parties shall (i) be entitled to receive
any termination, severance or deferred compensation payment as a result of the
transactions contemplated by this Agreement or (ii) be entitled to any such
payment in the event that any such employee ceases to be employed in the Crown
Communications Business, by Network or Mobile, upon the Closing.
(c) Schedule 5.17 lists each "employee benefit plan" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and each other employment, pension, welfare, savings,
-----
deferred compensation, severance, termination, holiday, vacation, sick leave,
performance, incentive, bonus, insurance, stock option, stock purchase or other
equity-based plan, program, arrangement or understanding (a "Benefit Plan") with
respect to which the Crown Parties contribute or have any liability in respect
of any present or former employee of the Crown Communications Business, Network
or Mobile (each a "Crown Benefit Plan"). The Crown Parties have made available
------------------
to Buyer true and complete copies of any Crown Benefit Plan and related trust
agreements as in effect on the date hereof and the most recent Form 5500
required to be filed with respect to such Crown Benefit Plan. No event has
occurred since the filing of the most recent Form 5500 that will materially
increase the cost of any Crown Benefit Plan. No Crown Benefit Plan is a
"multiemployer plan" (within the meaning of Section 3(37) of ERISA) and with
respect to the operations of the Acquired Business, the Crown Parties are not
required to contribute to, nor have the Crown Parties maintained or contributed
to or had an obligation to maintain or contribute to, any such plan within the
five full plan years of any such plan immediately prior to the date hereof.
(d) Each of the Crown Benefit Plans is in compliance in all material
respects with all applicable requirements of ERISA, the Code and other
applicable law. Each of the Crown Benefit Plans has been administered in all
material respects in accordance with its terms. No Crown Benefit Plan which is a
"defined benefit plan" (within the meaning of Section 3(35) of
-20-
ERISA) has a material amount of unfunded benefit liabilities (within the meaning
of Section 4001(a)(18) of ERISA). No "reportable event" (as defined in Section
4043 of ERISA), "prohibited transaction" (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to any Crown Benefit Plan which could subject Crown
Communications, Network or Mobile to a material penalty, tax or other liability
under ERISA, the Code or applicable law; there is no pending or, to the
knowledge of the Crown Parties, threatened claim or litigation by any party with
respect to the Crown Benefit Plans, other than routine claims for benefits. None
of the Crown Parties nor any entity required to be treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA has a material actual or
contingent liability under Title IV of ERISA and no condition exists that could
reasonably be expected to give rise to any such liability.
(e) No Crown Benefit Plan (i) has an "accumulated funding deficiency"
within the meaning of Section 412(a) of the Code as of its most recent plan year
or (ii) has applied for or received a waiver of the minimum funding standards
imposed by Section 412 of the Code; and the Crown Parties have not incurred any
material liability to a Crown Benefit Plan (other than for contributions not yet
due) or to the Pension Benefit Guaranty Corporation (other than for premiums not
yet due).
(f) No employee of the Crown Parties will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of any
benefits under any Crown Benefit Plan (other than under written employment
contracts listed on Schedule 5.17) as a result of the transactions contemplated
hereby. The deduction of any amount payable under any Crown Benefit Plan shall
not be subject to disallowance under Section 280G of the Code.
(g) Each Crown Benefit Plan may be amended or terminated after the
Closing without material liability to Buyer, the Network Surviving Corporation
or the Mobile Surviving Corporation. The consummation of the transactions
contemplated by this Agreement shall not give rise to any material liability
with respect to any Crown Benefit Plan. Each Crown Benefit Plan intended to be a
qualified plan under Section 401(a) of the Code has been the subject of a
determination letter from the Internal Revenue Service (the "IRS") to the effect
that such Crown Benefit Plan is qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, and no event has
occurred that could adversely affect such qualified or exempt status.
5.18. Litigation. Schedule 5.18 sets forth a list of all pending lawsuits
----------
or claims with respect to which any of the Crown Parties has been contacted in
writing by counsel for the plaintiff or claimant against or affecting the
Acquired Business or arising out of the Acquired Business, including litigation
and claims relating to electromagnetic fields, and which (i) relate to or
involve more than $50,000, (ii) seek any material injunctive relief or (iii) may
give rise to any legal restraint on or prohibition against the transactions
contemplated by this Agreement. Except as set forth on Schedule 5.18, to the
knowledge of the Crown Parties, none of the lawsuits or claims listed in
Schedule 5.18 as to which there is at least a reasonable possibility of adverse
determination would have, if so determined, individually or in the aggregate, a
Crown Material Adverse Effect. Except as set forth on Schedule 5.18, to the
knowledge of the Crown Parties, there are no unasserted or threatened claims of
the type that would be required to be disclosed in
-21-
Schedule 5.18. To the knowledge of the Crown Parties, except as set forth on
Schedule 5.18, none of the Crown Parties is a party or subject to or in default
under any material judgment, order, injunction or decree of any Governmental
Entity or arbitration tribunal applicable to it or the Acquired Business. Except
as set forth on Schedule 5.18, there is no lawsuit or claim by any of the Crown
Parties pending, or which any of the Crown Parties intend to initiate, against
any other Person. Except as set forth on Schedule 5.18, to the knowledge of the
Crown Parties, there is no pending or threatened investigation of or affecting
the Acquired Business or the Crown Communications Business by any Governmental
Entity.
5.19. Brokers. Other than ▇▇▇▇▇▇ ▇▇▇▇▇, whose fees will be paid by Sellers,
-------
there is no investment banker, broker or finder or other Person who will have
any valid claim against any of the Crown Parties for a commission or brokerage
fee in connection with this Agreement or the transactions contemplated hereby as
a result of any agreement of, or action taken by, any of the Crown Parties.
5.20. Contracts. Except for Contracts listed on Schedule 5.20, none of the
---------
Crown Parties is a party to or bound by any Contract relating to or affecting
the Crown Communications Business, Network or Mobile which is a:
(a) Contract with its agents, suppliers, customers, advertisers,
consultants, advisors, sales representatives, distributors, sales agents or
dealers other than Contracts which by their terms are cancelable by any of the
Crown Parties with notice of not more than 30 days and without cancellation
penalties or severance payments, in the case of any such Contract, in excess of
$50,000;
(b) covenant not to compete (other than pursuant to any radius
restriction contained in any lease, reciprocal easement agreement or
development, construction, operating or similar agreement) or confidentiality
agreement;
(c) Contract with any Governmental Entity;
(d) agreement, Contract or other instrument under which any of the
Crown Parties has borrowed any money from, or issued any note, bond, debenture
or other evidence of indebtedness to, any Person or any other note, bond,
debenture or other evidence of indebtedness issued to any Person;
(e) Contract (including any so-called take-or-pay, cash deficiency or
keepwell agreement) under which (A) any Person (including any of the Crown
Parties) has directly or indirectly guaranteed indebtedness, liabilities or
obligations of any of the Crown Parties or (B) or any of the Crown Parties has
directly or indirectly guaranteed indebtedness, liabilities or obligations of
any Person, and other than endorsements for the purpose of collection in the
ordinary course of business consistent with past practice and including
agreements having the effect of a guarantee, whether or not required to be
reflected on the Crown Communications Business' Financial Statements in
accordance with GAAP;
-22-
(f) pledge, security agreement, deed of trust, financial statement or
other document granting a Lien on any of the assets of the Acquired Business
(other than Crown Permitted Liens or Crown Permitted Real Property Liens);
(g) Contract under which any of the Crown Parties has, directly or
indirectly, made any advance, loan, extension of credit or capital contribution
to, or other investment in, any Person (other than Network or Mobile) in excess
of $50,000;
(h) Contract under which any of the Crown Parties is lessee of, or
holds or operates, any machinery, equipment, vehicle or other tangible personal
property owned by a third party and used in the Acquired Business or the Crown
Communications Business and which entails payments in any 12-month period, in
the case of any such Contract, in excess of $50,000;
(i) Contract or other arrangement with (A) any other Crown Party or
any Affiliate of the Crown Parties or (B) any current or former officer,
director or employee, shareholder or with any relative, beneficiary, spouse or
Affiliate of any such Person (a "Related Person") of the Crown Communications
--------------
Business, Network or Mobile or any of their respective affiliates;
(j) Contract for the sale of any assets of the Acquired Business
(including any capital stock or rights to acquire capital stock of Network or
Mobile) or the grant of any preferential rights to purchase any portion of the
Acquired Business or requiring the consent of any party to the transfer thereof
or otherwise limiting the Crown Parties' ability to sell any assets of the
Acquired Business (including any capital stock or rights to acquire capital
stock of Network or Mobile);
(k) Contract not made in the ordinary course of business consistent
with past practice, including any joint venture or partnership arrangement or
any agreement relating to any merger or acquisition involving any of the Crown
Parties; or
(l) Contract whether or not made in the ordinary course of business,
which is material to the Acquired Business or the termination of which would
reasonably be expected to have a Crown Material Adverse Effect.
The Crown Parties are not, and to the knowledge of the Crown Parties, no other
party is (with or without the lapse of time or the giving of notice or both) in
default in any material respect under any Contract, License or instrument
required to be set forth in the Crown Parties disclosure schedules (each, a
"Seller Scheduled Contract"). The Crown Parties have made available to Buyer or
-------------------------
its Representatives true and complete copies of all Seller Scheduled Contracts.
Each Seller Scheduled Contract is in full force and effect and constitutes a
legal, valid and binding obligation of Sellers, Network or Mobile, as the case
may be, and, to the knowledge of the Crown Parties, the other parties thereto,
enforceable in accordance with its terms. The Crown Parties have not received
any written notice of the intention of any party to terminate any Seller
Scheduled Contract.
-23-
5.21. Compliance with Laws. Except as set forth on Schedule 5.21, the
--------------------
operations of the Crown Communications Business, Network and Mobile are not now
being conducted and, to the knowledge of the Crown Parties, have not been
conducted in violation of any applicable law, ordinance, statute, rule or
regulation of any Governmental Entity except for violations which do not and
will not, individually or in the aggregate, have or reasonably be expected to
have a Crown Material Adverse Effect. None of the Crown Parties has received any
notice from any Governmental Entity that the operations of the Crown
Communications Business, Network and Mobile are being conducted in violation of
any applicable law, ordinance, statute, rule or regulation of any Governmental
Entity, or of any investigation or review pending or threatened by any
Governmental Entity investigating or reviewing any alleged violation, which
violation individually or in the aggregate with all other violations would have
or would reasonably be expected to have a Crown Material Adverse Effect. Except
as set forth on Schedule 5.21, all the Real Property included in the assets of
the Acquired Business is in compliance with applicable laws, including zoning,
land use and building code laws, ordinances and regulations necessary to conduct
the operations of the Acquired Business and the Crown Communications Business as
presently conducted, and the transactions contemplated by this Agreement could
not reasonably be expected to result in the revocation of any permit or
variance, except to the extent that any such non-compliance or violation or
revocation, individually or in the aggregate, would not have or would not
reasonably be expected to have a Crown Material Adverse Effect.
5.22. Environmental Matters.
---------------------
(a) Except as set forth on Schedule 5.22, the Crown Parties are in
compliance with all Environmental Laws (as defined herein), except for instances
of non-compliance that, individually or in the aggregate, do not or will not
have or would not reasonably be expected to result in a Crown Material Adverse
Effect. No Lien has attached to any Crown Property or facility of the Crown
Communication Business, Network or Mobile pursuant to any Environmental Laws.
Except as set forth on Schedule 5.22, there have been no Releases of Hazardous
Material, as both terms are defined herein, by any of the Crown Parties or, to
the knowledge of the Crown Parties, by any other Person, in, on, under or
affecting any Crown Property or facility of the Crown Communications Business,
Network or Mobile, and the Crown Parties have not disposed of any Hazardous
Material in a manner that in either case, individually or in the aggregate,
could reasonably be expected to result in a Crown Material Adverse Effect.
Except as set forth on Schedule 5.22, prior to the period of ownership or
operation by any of the Crown Parties of any Crown Property or facility of the
Crown Communications Business, Network or Mobile, to the knowledge of the Crown
Parties, no Hazardous Material was generated, treated, stored, disposed of,
used, handled or manufactured at, or transported, shipped or disposed of from,
such currently or previously owned properties and, except as set forth on
Schedule 5.22, to the knowledge of the Crown Parties, there were no Releases of
Hazardous Material in, on, under or affecting any such property. Except as set
forth on Schedule 5.22, there are no sites, locations or operations for which
any of the Crown Parties have received notice that it is or may be responsible
for any remedial or response action, as defined in any Environmental Law,
relating to any Release of Hazardous Material. Schedule 5.22 sets forth a list
of any and all environmental audits of any Crown Property or facility of the
Crown Communications Business, Network or Mobile conducted by the Crown Parties
during their ownership of the Crown Communications Business, Network or Mobile,
or obtained by, or performed on behalf of, any of
-24-
the Crown Parties in connection with its acquisition of the Crown Communications
Business, Network or Mobile, and any environmental audits in the Crown Parties'
possession of any Crown Property or facility adjacent to the Crown
Communications Business, Network or Mobile which relate to any facts, conditions
or circumstances that have resulted, or may result, in a Release of Hazardous
Material at or under any Crown Property or facility of the Crown Communications
Business, Network or Mobile (collectively, the "Crown Environmental Audits").
--------------------------
Sellers have made copies of all Crown Environmental Audits available to Buyer.
(b) The Crown Parties have obtained, and are in compliance in all
material respects with, all permits, licenses, authorizations, registrations and
other governmental consents required by applicable Environmental Laws
("Environmental Permits"). Except as disclosed on Schedule 5.22, the Crown
---------------------
Parties have not received notice of any civil, criminal or administrative claims
or proceedings, pending or threatened, that are based on or related to any
Environmental Laws or the failure to comply with any terms and conditions of any
Environmental Permits which claims or proceedings of which failure to comply,
individually or in the aggregate, would have or reasonably be expected to result
in a Crown Material Adverse Effect. To the knowledge of the Crown Parties,
except as described in Schedule 5.22, (i) there are no polychlorinated biphenyls
("PCBs") in any container or equipment on, about, under or within any Crown
----
Property or facility of the Crown Communications Business, Network or Mobile,
(ii) there is no asbestos at, on, about, under or within any Crown Property or
facility of the Crown Communications Business, Network or Mobile, and (iii)
there are no underground storage tanks, whether in service or closed in place,
under any Crown Property or facility of the Crown Communications Business,
Network or Mobile.
(c) The term "Environmental Laws" means laws relating to the
------------------
contamination, pollution or preservation of the environment or to human health.
The term "Release" has the meaning set forth in the Comprehensive Environmental
-------
Response, Compensation, and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C. (S) 9601(22). The term "Hazardous
---------
Material" means (1) hazardous materials, pollutants, contaminants, constituents,
--------
medical or infectious wastes, hazardous wastes and hazardous substances as those
terms are defined in any Environmental Law, (2) petroleum, including crude oil
and any by-products or fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) asbestos and/or asbestos-containing material, (5) radon
and (6) PCBs or materials or fluids containing PCBs.
5.23. Taxes.
-----
(a) For purposes of this Agreement "Taxes" shall mean all Federal,
-----
state, local and foreign taxes or similar charges, including all income,
franchise, real property, withholding, employment, sales, excise and transfer
taxes and any interest and penalties thereon. The Crown Parties have timely
filed or caused to be timely filed, or will timely file or cause to be timely
filed on or prior to the Closing Date, all Tax returns and Tax reports which are
required to be filed (including proper filing extensions) on or prior to the
Closing date by Network or Mobile or the Crown Communications Business (the
"Returns"). All the Returns were or will be, as the case may be, complete and
-------
correct in all material respects at the time of filing. All Taxes due and
payable with respect to taxable periods covered by the Returns, or with respect
to which
-25-
Network, Mobile or the Crown Communications Business is or might be otherwise be
liable (including Taxes which Network, Mobile or the Crown Communications
Business may have been required to withhold from amounts owing to any
stockholder, employee, creditor or third party), have been, or prior to the
Closing Date will be, timely paid. None of the Crown Communication Business,
Network or Mobile is delinquent in the payment of any Tax, or has any Tax
deficiencies proposed, assessed, or to the knowledge of the Crown Parties,
threatened against it. No Liens for Taxes exist with respect to any assets of
the Crown Communications Business, Network or Mobile.
(b) Schedule 5.23(b) sets forth the tax years through which the
Returns have been examined and closed or are returns with respect to which the
applicable period for assessment under applicable law, after giving effect to
extensions or waivers, has expired. Any deficiencies resulting from any Federal,
state, local or foreign audits or examinations of Network, Mobile or the Crown
Communications Business have been paid in full. There are no present audits,
disputes or proceedings as to any Taxes of Network, Mobile or the Crown
Communications Business. No material issued were raised in writing during any
audit, dispute or proceeding of Network, Mobile or the Crown Communications
Business that might apply to any taxable period subsequent to the taxable period
covered by such audit, dispute or proceeding. No power of attorney with respect
to Taxes of Network, Mobile or the Crown Communications Business has been filed
with any taxing jurisdiction or authority. None of the Crown Communication
Business, Network or Mobile has executed any waiver of the statute of
limitations on the assessment or collection of any Tax.
(c) Each of Network and Mobile, and all of its current or former
shareholders, have consented to a valid election for its first taxable year or
period, which election has not been revoked or terminated or otherwise become
ineffective for any subsequent taxable year or period, under Section 1362(a) of
the Code, to be taxed as an "S Corporation" under Sections 1361 through 1379 of
the Code. Each of Network and Mobile, and all of its current or former
shareholders, have consented to a valid election, which election has not been
revoked or terminated or otherwise become ineffective, to be taxed in a
comparable fashion under comparable state, local or foreign Tax law, for each of
the taxable periods by each of the taxing jurisdictions set forth on Schedule
5.23(c). Network, Mobile and the Crown Communications Business do not file, and
are not required to file, state or local Tax returns in any states or localities
other than those listed on Schedule 5.23(c). None of the assets of Network or
Mobile are of a type described in Section 1374(d)(8) of the Code.
(d) None of the Crown Communication Business, Network or Mobile is a
party to or bound by any agreement (including any tax sharing agreement),
election or extension of the statute of limitations with respect to taxes. None
of the Crown Communications Business, Network or Mobile is or has ever been a
member of an affiliated, consolidated, combined or unitary group of which any
corporation other than Network or Mobile also is or was a member.
(e) Neither Network nor Mobile is a party to, and none of the assets
of Network, Mobile or the Crown Communications Business is subject to, any lease
made pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954. No
assets of Network, Mobile or the
-26-
Crown Communications Business is "tax exempt use property" within the meaning of
Section 168(h) of the Code.
(f) Neither Network nor Mobile has taken any action that would
require it to include in income any adjustment under Section 481(a) of the Code
by reason of a change in accounting method initiated by Network or Mobile, and
the Internal Revenue Service has not proposed for any open Tax year any such
adjustment or change in accounting method. Neither Network nor Mobile will be
required to include in a taxable period (or portion thereof) beginning on or
after the Closing Date taxable income attributable to income that economically
accrued in a prior taxable period (or portion thereof), including as a result of
the installment method of accounting, the completed contract method of
accounting or the cash method of accounting.
5.24. Insurance. The Crown Parties maintain policies of fire and casualty,
---------
liability and other forms of insurance with respect to the Crown Communications
Business, Network and Mobile in such amounts, with such deductibles and against
such risks and losses as are customary in the business in which they are
engaged. The insurance policies currently owned and maintained by the Crown
Parties are listed in Schedule 5.24.
All such policies are in full force and effect, all premiums due and
payable thereon have been paid (other than retroactive or retrospective premium
adjustments that are not yet, but may be, required to be paid with respect to
any period ending prior to the Closing Date), and no notice of cancellation or
termination has been received with respect to any such policy which has not been
replaced on substantially similar terms prior to the date of such cancellation.
The activities and operations of the Crown Communications Business, Network and
Mobile have been conducted in a manner so as to conform in all material respects
to all applicable provisions of such insurance policies.
5.25. Accounts Receivable. All the accounts receivable included in the
-------------------
Acquired Business (i) do and on the Closing Date will represent actual
indebtedness incurred by the applicable account debtors, (ii) have and on the
Closing Date will have arisen in the ordinary course of business consistent with
past practice and (iii) are and on the Closing Date will be subject to no prior
assignment, claim, Lien, dispute or unapplied credit of any nature whatsoever
other than Crown Permitted Liens.
5.26. Securities Act. The shares of Castle B Common Stock acquired by the
--------------
Crowns in the Mergers and the Note are being acquired by the Crowns for
investment only and not with a view to any public distribution thereof, and the
Crowns shall not offer to sell or otherwise dispose of the shares so acquired by
them in violation of the registration requirements of the Securities Act of 1933
(the "Securities Act"). Each Seller is an "accredited investor" within the
--------------
meaning of Rule 501 under the Securities Act and has sufficient knowledge and
experience in business and investment matters so as to be able to evaluate the
risks and merits of an investment in Buyer and, after the Closing, he or she is
each financially able to bear the risks of such investment, including the risk
of a complete loss of its investment in Buyer.
5.27. Transactions with Affiliates. Except as set forth in Schedule 5.27,
----------------------------
none of the Seller Scheduled Contracts between the Crown Communications
Business, Network or Mobile,
-27-
on the one hand, and Sellers or any Affiliates or Related Persons of the Crown
Parties, on the other hand, will continue in effect subsequent to the Closing.
Except as set forth in Schedule 5.27, after the Closing neither Sellers nor any
Affiliate or Related Person of the Crown Parties will have any interest in any
property (real or personal, tangible or intangible) or Contract used in or
pertaining to the acquired Business. Neither Sellers nor any Affiliate or
Related Person of the Crown Parties has any direct or indirect ownership
interest in any Person in which the Crown Communications Business, Network or
Mobile has any direct or indirect ownership interest or with which the Crown
Communications Business, Network or Mobile competes or has a business
relationship. Except as set forth in Schedule 5.27, none of Sellers or any
Affiliates or Related Persons of the Crown Parties provide any material services
to the Crown Communications Business, Network or Mobile.
5.28. Disclosure. No statement of Sellers contained in this Article 5, in
----------
Exhibit D, in any of the disclosure schedules referred to in Article 5 or in any
certificates delivered by any of the Crown Parties pursuant to Section 1.1(k),
Section 4.2(d) and Section 7.1(c) intentionally contains any untrue statement of
a material fact or intentionally omits to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
ARTICLE 6.
Representations and Warranties of Buyer
---------------------------------------
6.1. Corporate Status; Authority. Each of Buyer and its Subsidiaries and
---------------------------
CTSH and its Subsidiaries is a corporation, partnership or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Each of Buyer and its
Subsidiaries and CTSH and its Subsidiaries is duly qualified and in good
standing to do business as a foreign corporation in each jurisdiction in which
the conduct or nature of its business or the ownership, leasing or holding of
its properties makes such qualification necessary, except such jurisdictions
where the failure to be so qualified or in good standing, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect
(i) on the condition (financial or otherwise), business, liabilities,
properties, assets, prospects or results of operations of Buyer and its
Subsidiaries and CTSH and its Subsidiaries, taken as a whole, or (ii) on the
ability the buyer or its Subsidiaries to perform their obligations under or to
consummate the transactions contemplated by this Agreement (a "Buyer Material
--------------
Adverse Effect"). Each of Buyer and its Subsidiaries and CTSH and its
--------------
Subsidiaries has all requisite corporate power to carry on its business as it is
now being conducted, to own and operate such business and each of Buyer, CAC I
and CAC II has all requisite corporate power to enter into this Agreement, to
perform its obligations hereunder and to complete the transactions contemplated
hereby.
6.2. Corporate Action. All corporate and shareholder actions and
----------------
proceedings necessary to be taken by or on the part of Buyer, CAC I and CAC II,
as applicable, in connection with the transactions contemplated by the Buyer
Transaction Documents
have been duly and validly taken, and this Agreement has
been duly and validly authorized, executed and delivered by Buyer, CAC I and CAC
II and constitutes, and each of the other Buyer Transaction Documents
-28-
will be duly and validly authorized, executed and delivered by Buyer and will
constitute, the legal, valid and binding obligations of Buyer, CAC I and CAC II,
as applicable, enforceable against Buyer, CAC I and CAC II, as applicable, in
accordance with and subject to its terms, except as may be limited by bankruptcy
or other laws affecting creditors' rights and by equitable principles.
6.3. No Conflicts. Except as set forth on Schedule 6.3, neither the
------------
execution, delivery and performance by Buyer, CAC I or CAC II, as applicable, of
the Buyer Transaction Documents, nor the consummation by Buyer, CAC I and CAC II
of the transactions contemplated thereby is an event that, by itself or with the
giving of notice or the passage of time or both, will (i) conflict with the
certificate of incorporation or by-laws, as amended, of Buyer or the articles of
incorporation or by-laws of CAC I or CAC II, (ii) constitute a violation of, or
conflict with or result in any breach of or any default under, or constitute
grounds for termination or acceleration of, any mortgage, indenture, lease,
contract, agreement (including, without limitation, the agreement between the
British Broadcasting Corporation, CTSH and/or its Affiliates (the "BBC
---
Agreement") and the credit agreement between the Buyer and KeyBank National
---------
Association dated as of April 26, 1995 (as amended, the "Bank Credit
-----------
Agreement")) or instrument to which Buyer, any of its Subsidiaries, CAC I, CAC
---------
II, CTSH or any of its Subsidiaries is a party or by which it is bound, except
for such violations, conflicts, breaches, terminations and accelerations as
individually or in the aggregate would not have or be reasonably expected to
have a Buyer Material Adverse Effect or result in the creation of any material
Lien upon any of Buyer's assets such that it is reasonably likely that Buyer,
CAC I and CAC II will be unable to proceed with the transactions contemplated in
this Agreement or (iii) violate (A) any judgment, decree or order or (B) any
statute, rule or regulation, in each such case, applicable to Buyer, CAC I or
CAC II. The execution, delivery and performance by Buyer, CAC I and CAC II of
this Agreement, and by Buyer of the Shareholder Agreement, and the consummation
by Buyer, any of its Subsidiaries, CAC I, CAC II, CTSH or any of its
Subsidiaries of the transactions contemplated hereby or thereby, require no
action by or in respect of, or filing with, any Governmental Entity other than
(a) the filing of articles of merger with the Department of State of the
Commonwealth of Pennsylvania and of appropriate documentation with the relevant
authorities of other states in which CAC I or CAC II is qualified to do
business; (b) compliance with any applicable requirements of the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Act; (c) the approvals of the FCC contemplated by this Agreement; (d)
actions or filings which, if not taken or made, would not, individually or in
the aggregate, reasonably be expected to have a Buyer Material Adverse Effect;
and (e) filings and notices not required to be made or given until after the
Effective Time.
6.4. Capitalization of Buyer and its Subsidiaries and CTSH and its
-------------------------------------------------------------
Subsidiaries.
------------
(a) The authorized capital stock of Buyer consists of 270,000 shares
of Class A Common Stock, par value $0.01 per share ("Castle A Common Stock"), of
---------------------
which 208,313 are duly authorized and validly issued and outstanding, fully paid
and nonassessable; 7,000,000 shares of Castle B Common Stock, par value $0.01
per share, of which 297,666 are duly authorized and validly issued and
outstanding, fully paid and nonassessable; and 5,777,733 shares of Preferred
Stock, par value $0.01 per share ("Preferred Stock"), of which 5,777,733 are
---------------
duly authorized and validly issued and outstanding, fully paid and
nonassessable. A total of 584,000 shares of Castle B Common Stock are reserved
for issuance under Buyer's 1995 Stock Option Plan and a total of 6,095,014
shares of Castle B Common Stock are reserved for the conversion of Castle A
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Common Stock and Preferred Stock of Buyer. Except as set forth in this Section
6.4(a) and except for transactions contemplated by this Agreement there are
outstanding no shares of capital stock or other equity securities of Buyer.
Schedule 6.4(a) sets forth for each Subsidiary of Buyer the amount of its
authorized capital stock, the amount of its outstanding capital stock and the
record and beneficial owners of its outstanding capital stock. All the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set forth on
Schedule 6.4(a), there are no shares of capital stock or other equity securities
of any Subsidiary of Buyer outstanding. Neither the shares of capital stock of
Buyer nor those of any of its Subsidiaries have been issued in violation of, and
except as set forth on Schedule 6.4, none of such shares are subject to, any
purchase option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, the certificate of
incorporation, as amended, or by-laws of Buyer or the comparable governing
instruments of any of its Subsidiaries, any Contract to which Buyer or any of
its Subsidiaries is subject, bound or a party or otherwise. Except as indicated
above or as set forth on Schedule 6.4(a), there are no outstanding warrants,
options, rights, "phantom" stock rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement and Buyer's financing
commitments dated as of June 27, 1997 from ▇▇▇▇▇▇ Brothers Inc., copies of which
have been made available to Sellers) (i) pursuant to which Buyer or any of its
Subsidiaries is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of Buyer or any of its
Subsidiaries or (ii) that give any Person the right to receive any benefits or
rights similar to any rights enjoyed by or accruing to holders of shares of
capital stock of Buyer or any of its Subsidiaries. Except as set forth above or
on Schedule 6.4(a), there are no equity securities of Buyer or any of its
Subsidiaries reserved for issuance for any purpose. Except as set forth on
Schedule 6.4(a), Buyer has good and valid title, directly or through one or more
wholly owned Subsidiaries, to all the outstanding shares of capital stock of
each such Subsidiary, free and clear of any Liens and restrictions of any kind.
There are no outstanding bonds, debentures, notes or other securities having the
right to vote on any matters on which stockholders of Buyer or any of its
Subsidiaries may vote.
(b) The authorized share capital of CTSH consists of 11,477,290 ordinary
shares, par value 1p per share ("CTSH Stock"), all of which are duly authorized
----------
and validly issued and outstanding, fully paid and nonassessable and held of
record by the Persons named in Schedule 6.4(b) in the respective amount shown
therein. Except as set forth in this Section 6.4(b) and except for transactions
contemplated by this Agreement there are outstanding no shares of capital stock
or other equity securities of CTSH. Schedule 6.4(b) sets forth for each
Subsidiary of CTSH the amount of its authorized share capital, the amount of its
outstanding capital stock and the record and beneficial owners of its
outstanding shares. All the outstanding shares of capital stock of each
Subsidiary of CTSH have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth on Schedule 6.4(b), there are no
shares of capital stock or other equity securities of any Subsidiary of CTSH
outstanding. Neither the shares of capital stock of CTSH nor those of any of its
Subsidiaries have been issued in violation of, and except as set forth on
Schedule 6.4(b), none of such shares are subject to, any purchase option, call,
right of first refusal, preemptive, subscription or similar rights under any
provision of applicable law or any charter documents of CTSH or the comparable
governing instruments of any of its Subsidiaries, any Contract to which CTSH or
any of its Subsidiaries is subject, bound or a party
-30-
or otherwise. Except as indicated above or as set forth in Schedule 6.4(b),
there are no warrants, options, rights, "phantom" stock rights, agreements,
convertible or exchangeable securities or other commitments (other than this
Agreement) outstanding as of the date hereof or as to which CTSH will be or is
likely to become bound or obligated in connection with the financing by Buyer of
the transactions contemplated hereby (i) pursuant to which CTSH or any of its
Subsidiaries is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of CTSH or any of its
Subsidiaries or (ii) that give any Person the right to receive any benefits or
rights similar to any rights enjoyed by or accruing to holders of share capital
of CTSH or any of its Subsidiaries. Except as set forth above or on Schedule
6.4(b), there are no equity securities of CTSH or any of its Subsidiaries
reserved for issuance for any purpose. Except as set forth on Schedule 6.4(b),
CTSH has good and valid title, directly or through one or more wholly owned
Subsidiaries, to all the outstanding shares of capital stock of each of its
Subsidiaries, free and clear of any Liens and restrictions of any kind. There
are no outstanding bonds, debentures, notes or other securities having the right
to vote on any matters on which stockholders of CTSH or any of its Subsidiaries
may vote.
6.5. Equity Interests. Except as set forth on Schedule 6.5 hereto, Buyer
----------------
does not directly or indirectly own any capital stock of or other equity
interests in any corporation, partnership or other Person and neither Buyer nor
any of its Subsidiaries is a member of or participant in any partnership, joint
venture, limited liability company, limited liability partnership or similar
Person.
6.6. Financial Statements.
--------------------
(a) Schedule 6.6(a) sets forth true, correct and complete copies of
(i) the balance sheet of Buyer and its consolidated Subsidiaries as at December
31, 1995, and December 31, 1996, and the statements of income and cash flows of
Buyer and its consolidated Subsidiaries for each of the years then ended,
together with the notes thereto and report thereon of KPMG Peat Marwick LLP,
independent public accountants (the "Buyer Audited Statements"); and (ii) the
------------------------
balance sheet of Buyer and its consolidated Subsidiaries as at May 31, 1997 and
the statements of income and cash flows of Buyer and its consolidated
Subsidiaries for the five months then ended (together with the Buyer Audited
Statements and the Buyer Interim Financial Statements, the "Buyer Financial
---------------
Statements"). The Buyer Financial Statements have been, or in the case of the
----------
Buyer Interim Financial Statements, will be, prepared from the books and records
of Buyer and present fairly (subject, in the case of the Buyer Interim Financial
Statements, to normal recurring year-end adjustments) the financial position of
Buyer and its consolidated Subsidiaries as at December 31, 1995 and 1996, May
31, 1997 and June 30, 1997 and the statements of income and cash flows of Buyer
and its consolidated Subsidiaries for the periods then ended in conformity with
GAAP applied on a basis consistent with past practices (except in each case as
described in the notes thereto or as otherwise disclosed in Schedule 6.6(a)).
(b) Schedule 6.6(b) sets forth true, correct and complete copies of
(i) the balance sheet of CTSH and its consolidated Subsidiaries as at March 31,
1997, and the consolidated profit and loss account and consolidated cash flow
statement for the seven-month period ended March 31, 1997, together with the
notes and report thereon of KPMG, Chartered Accountants (the "CTSH Audited
------------
Statements"); and (ii) the CTSH Interim Financial Statements
----------
-31-
(collectively, together with the CTSH Audited Statements, the "CTSH Financial
--------------
Statements"). The CTSH Financial Statements have been prepared from the books
----------
and records of CTSH and give a true and fair view of the state of affairs of
CTSH and its consolidated Subsidiaries as at March 31, 1997 and of their
consolidated profit for the period then ended and have been properly prepared in
accordance with the U.K. Companies Act 1985 (as if those requirements were to
apply) applied on a basis consistent with past practices (except in each case as
described in the notes thereto or as otherwise disclosed in Schedule 6.6(b).
6.7. No Undisclosed Liabilities. Except as set forth on Schedule 6.7,
--------------------------
there have been no material liabilities or obligations (whether pursuant to
Contracts or otherwise) of any kind whatsoever (whether accrued, contingent,
absolute, determined, determinable or otherwise) incurred by Buyer or any of its
Subsidiaries since December 31, 1996, or incurred by CTSH or any of its
Subsidiaries since March 31, 1997, other than:
(a) liabilities or obligations disclosed or provided for in the
balance sheet of Buyer and its Subsidiaries as of June 30, 1997 included in the
Buyer Interim Financial Statements or the balance sheet of CTSH and its
consolidated Subsidiaries as of June 30, 1997 included in the CTSH Interim
Financial Statements or in the notes to the Buyer Interim Financial Statements
or the CTSH Interim Financial Statements.
(b) liabilities or obligations incurred or that have arisen in the
ordinary course of business consistent with past practice which, individually
and in the aggregate have not had and would not reasonably be expected to have a
Buyer Material Adverse Effect; or
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
6.8. Absence of Certain Changes or Events. Since December 31, 1996, the
------------------------------------
business of Buyer and its Subsidiaries has been conducted in the ordinary course
consistent with past practice (including with respect to the collection of
receivables, payment of payables and other liabilities, advertising activities,
sales practices (including promotions, discounts and concessions), capital
expenditures and inventory levels, and contributions to or accruals to or in
respect of Benefit Plans). There has not occurred with respect to the business
of Buyer and its Subsidiaries since December 31, 1996 or with respect to the
business of CTSH and its Subsidiaries since March 31, 1997:
(a) any event, occurrence or development which, individually or in
the aggregate, has had or would reasonably be expected to have a Buyer Material
Adverse Effect.
(b) any action taken by the Buyer or any of its Subsidiaries which,
if taken after the date hereof, would constitute a breach of the covenant set
forth in Section 8.1.
6.9. Licenses. None of Buyer or any of its Subsidiaries owns, holds or
--------
uses any Licenses which are material to the ownership or operation of their
respective businesses other than the Licenses listed on Schedule 6.9, true and
complete copies of which have been made available to Sellers. Schedule 6.9
identifies the legal holders of all Licenses relating to the
-32-
business of Buyer or any of its Subsidiaries. Such Licenses are valid and are in
full force and effect and, except as limited by the provisions of the
Communications Act, and the FCC's rules, regulations and policies and as
otherwise specified on the face of such Licenses, none of such Licenses is
subject to any restriction or condition which would limit in any material
respect the operation of any business of Buyer or any of its Subsidiaries as it
is presently being conducted. Buyer and its Subsidiaries are familiar with and
have operated their respective businesses (and any auxiliary assets operated in
connection with the operation of such businesses) at all times in material
compliance with generally accepted industry practices and in compliance in all
material respects with the Licenses, the Communications Act and the existing
rules, regulations and policies of the FCC and the rules and regulations and
policies of the FAA. Except as shown on Schedule 6.9, no application, action or
proceeding is pending for the renewal or modification of any of the Licenses and
there is not now before any Governmental Entity any investigation or complaint
against Buyer or any of its Subsidiaries the unfavorable resolution of which
would impair the qualifications of any of Buyer or any of its Subsidiaries to
hold any of the Licenses. Except as shown on Schedule 6.9, no event or events
have occurred which, individually or in the aggregate, and with or without the
giving of notice or the lapse of time or both, would constitute grounds for, or
which could result in, the revocation or termination of any License or the
imposition of any restriction or limitation by any Governmental Entity on the
operation of the businesses of Buyer or any of its Subsidiaries. No Licenses
other than those shown on Schedule 6.9 are necessary or required to operate any
business of Buyer or its Subsidiaries as it is presently being conducted.
6.10. Assets Other than Real Property Interests.
-----------------------------------------
(a) Buyer and its Subsidiaries have good and valid title to
all assets reflected on the December 31, 1996 balance sheet of Buyer and its
consolidated Subsidiaries included in the Buyer Financial Statements (the
"December 31 Buyer Balance Sheet") or thereafter acquired, except those sold or
-------------------------------
otherwise disposed of in the ordinary course of business consistent with past
practice and not in violation of this Agreement, in each case free and clear of
all Liens of any kind except (i) such as are set forth on Schedule 6.10, (ii)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business consistent with past practice, (iii)
Liens which secure debt that is reflected as a liability on the balance sheets
as of June 30, 1997 included in the Buyer Interim Financial Statements and other
debt incurred under existing credit facilities of Buyer or its Subsidiaries and
(iv) other imperfections of title or encumbrances, if any, which do not,
individually or in the aggregate, materially impair the continued use and
operation of the assets to which they relate, as presently conducted (Liens,
encumbrances and imperfections of title described in clauses (i), (ii), (iii)
and (iv) above are hereinafter referred to collectively as "Buyer Permitted
---------------
Liens"). Schedule 6.10 sets forth a list of all material personal property owned
-----
by Buyer and its Subsidiaries and used or held for use in connection with their
respective businesses.
(b) All the material tangible assets used, held for use or
necessary in the operation of the businesses of Buyer and its Subsidiaries (i)
have been and are being maintained in accordance with the customary industry
practice, (ii) are free from material defects and (iii) are in all material
respects in good working condition, reasonable wear and tear and depreciation
excepted. All leased personal property used, or held for use or necessary in the
operation of the
-33-
businesses of Buyer and its Subsidiaries is in all material respects in the
condition required of such property by the terms of the lease applicable thereto
during the term of the lease and upon the expiration thereof.
This Section 6.10 does not relate to Real Property or interests in Real
Property, such items being the subject of Section 6.11.
6.11. Title to Real Property. Schedule 6.11 sets forth a complete
----------------------
list of all Real Property and interests in Real Property used or held for use in
the operation of the businesses of Buyer and its Subsidiaries and owned in fee
by Buyer or any of its Subsidiaries (individually, a "Buyer Owned Property") and
--------------------
identifies any material reciprocal easement or operating agreements (other than
such operating agreements not relating to Real Property identified on other
disclosure schedules of Buyer attached hereto) relating thereto. Schedule 6.11
sets forth a complete list of all Real Property and interests in Real Property
used, or held for use in the operation of the businesses of Buyer and its
Subsidiaries leased by Buyer or any of its Subsidiaries (individually, a "Buyer
-----
Leased Property") and identifies any material leases and reciprocal easement or
---------------
operating agreements (other than such operating agreements not relating to Real
Property identified on other disclosure schedules of Buyer attached hereto)
relating thereto. Buyer and its Subsidiaries have (i) good and insurable fee
title to all Buyer Owned Property and (ii) assuming good and adequate title in
each lessor of a leasehold estate, good and valid title to the leasehold estates
in all Buyer Leased Property (a Buyer Owned Property or Buyer Leased Property
being sometimes referred to herein, individually, as a "Buyer Property" and,
--------------
collectively, as "Buyer Properties"), in each case free and clear of all Liens
----------------
and other similar restrictions of any nature whatsoever, except (A) such as are
set forth on Schedule 6.11, (B) leases, subleases and similar agreements set
forth on Schedule 6.16, (C) Buyer Permitted Liens, (D) easements, covenants,
rights-of-way and other similar restrictions of record, (E) any conditions that
may be shown by a current, accurate survey or readily determined by a physical
inspection of any Buyer Property made prior to Closing and (F) (I) zoning,
building and other similar restrictions, (II) Liens and other similar
restrictions that have been placed by any developer, landlord or other third
party on property over which the Buyer Parties have easement rights or on any
Buyer Leased Property and subordination or similar agreements relating thereto,
and (III) unrecorded easements, covenants, rights-of-way and other similar
restrictions, none of which items set forth in clauses (I), (II) and (III),
individually or in the aggregate, materially impair the continued use and
operation of the property to which they relate, as presently conducted. Except
as set forth on Schedule 6.17, to the knowledge of Buyer, the current use by
Buyer and its Subsidiaries of the plants, offices and other facilities located
on Buyer Property does not violate any local zoning or similar land use or
government regulations in any material respect. No condemnation of any material
portion of the Buyer Properties has occurred; and Buyer and its Subsidiaries
have not received any notice related to any future or proposed condemnation of
any material portion of the Buyer Properties.
6.12. Intellectual Property.
---------------------
(a) Schedule 6.12 sets forth a true and complete list of all
material Intellectual Property owned, used, filed by or licensed to Buyer or any
of its Subsidiaries. With respect to registered trademarks, Schedule 6.12 sets
forth a list of all jurisdictions in which such trademarks are registered or
applied for and all registrations and application numbers. Except as set forth
on
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Schedule 6.12, the Buyer and its Subsidiaries own, and Buyer and its
Subsidiaries have the right to use, execute, reproduce, display, perform,
modify, enhance, distribute, prepare derivative works of and sublicenses,
without payment to any other Person, all Intellectual Property listed in
Schedule 6.12 and, to the knowledge of Buyer or its Subsidiaries, the
consummation of the transactions contemplated hereby will not conflict with,
alter or impair any such rights. Buyer and its Subsidiaries have all rights to
Intellectual Property as are necessary in connection with their respective
businesses as they are presently being conducted.
(b) Buyer and its Subsidiaries have not granted any licenses
or contractual rights of any kind relating to Intellectual Property listed on
Schedule 6.12 or the marketing or distribution thereof. Buyer and its
Subsidiaries are not bound by or a party to any Contracts of any kind relating
to the Intellectual Property of any other Person, except as set forth on
Schedule 6.12 and except for agreements relating to computer software licensed
to Buyer and its Subsidiaries in the ordinary course of business consistent with
past practice. Subject to the rights of third parties set forth on Schedule
6.12, all Intellectual Property listed in Schedule 6.12 is free and clear of the
claims of others and of all Liens whatsoever. The conduct of the businesses of
Buyer and its Subsidiaries as they are presently being conducted and as they are
proposed to be conducted after the Closing as contemplated by the parties does
not and will not violate, conflict with or infringe the Intellectual Property of
any other Person. Except as set forth on Schedule 6.12, (i) no claims are
pending or, to the knowledge of Buyer or any of its Subsidiaries, threatened
against Buyer or any of its Subsidiaries by any Person with respect to the
ownership, validity, enforceability, effectiveness or use of any Intellectual
Property and (ii) Buyer and its Subsidiaries have not received any
communications alleging that Buyer or any of its Subsidiaries has violated any
rights relating to Intellectual Property of any Person.
6.13. Employees.
---------
(a) Except as described on Schedule 6.13, Buyer and its
Subsidiaries have no contracts of employment with any employee and are not a
party to or subject to any collective bargaining agreements. Schedule 6.13
contains a true and complete list of all officers and key employees of Buyer and
each of its Subsidiaries as of July 1, 1997.
(b) No employee of Buyer or any of its Subsidiaries shall be
entitled to receive any termination, severance or deferred compensation payment
as a result of the transactions contemplated by this Agreement.
(c) Schedule 6.13 lists each Benefit Plan with respect to
which Buyer and its Subsidiaries contribute or have any liability (each a "Buyer
-----
Benefit Plan"). Buyer has made available to the Crown Parties true and complete
------------
copies of any Buyer Benefit Plan and related trust agreements as in effect on
the date hereof and the most recent Form 5500 required to be filed with respect
to such Buyer Benefit Plan. No event has occurred since the filing of the most
recent Form 5500 that will materially increase the cost of any Buyer Benefit
Plan. No Buyer Benefit Plan is a "multiemployer plan" (within the meaning of
Section 3(37) of ERISA), and with respect to the operations of their businesses,
Buyer and its Subsidiaries are not required to contribute to, nor have Buyer and
its Subsidiaries maintained or contributed to or had an
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obligation to maintain or contribute to, any such plan within the five full plan
years of any such plan immediately prior to the date hereof.
(d) Each of the Buyer Benefit Plans is in compliance in all
material respects with all applicable requirements of ERISA, the Code and other
applicable law. Each of the Buyer Benefit Plans has been administered in all
material respects in accordance with its terms. No Buyer Benefit Plan which is a
"defined benefit plan" (within the meaning of Section 3(35) of ERISA) has a
material amount of unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA). No "reportable event" (as defined in Section 4043 of
ERISA), "prohibited transaction" (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to any Buyer Benefit Plan which could subject the Crown Parties or
Buyer to a material penalty, tax or other liability under ERISA, the Code or
applicable law; there is no pending or, to the knowledge of Buyer, threatened
claim or litigation by any party with respect to the Buyer Benefit Plans, other
than routine claims for benefits. None of Buyer or its Subsidiaries nor any
entity required to be treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA has a material, actual or contingent liability under
Title IV of ERISA and no condition exists that could reasonably be expected to
give rise to any such liability.
(e) No Buyer Benefit Plan (i) has an "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code as of its most
recent plan year of (ii) has applied for or received a waiver of the minimum
funding standards imposed by Section 412 of the Code; and Buyer and its
Subsidiaries have not incurred any material liability to a Buyer Benefit Plan
(other than for contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for premiums not yet due).
(f) No employee of Buyer or any of its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Buyer Benefit Plan (other than under
written employment contracts listed on Schedule 6.13) as a result of the
transactions contemplated hereby. The deduction of any amount payable under any
Buyer Benefit Plan shall not be subject to disallowance under Section 280G of
the Code.
(g) Each Buyer Benefit Plan may be amended or terminated
after the Effective Time without material liability to Buyer, Network or Mobile.
(h) The consummation of the transactions contemplated by
this Agreement shall not give rise to any material liability with respect to any
Buyer Benefit Plan.
(i) Each Buyer Benefit Plan intended to be a qualified plan
under Section 401(a) of the Code has been the subject of a determination letter
from the IRS to the effect that such Buyer Benefit Plan is qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no event has occurred that could adversely affect such qualified or
exempt status.
6.14. Litigation. Schedule 6.14 sets forth a list of all pending
----------
lawsuits or claims with respect to which Buyer or any of its Subsidiaries has
been contacted in writing by counsel for the
-36-
plaintiff or claimant against or affecting Buyer or any Subsidiary or any of
their respective properties, assets, operations or businesses, and which (i)
relate to or involve more than $50,000, (ii) seek any material injunctive relief
or (iii) may give rise to any legal restraint on or prohibition against the
transactions contemplated by this Agreement. Except as set forth on Schedule
6.14, to the knowledge of Buyer or its Subsidiaries, none of the lawsuits or
claims listed in Schedule 6.14 as to which there is at least a reasonable
possibility of adverse determination would have, if so determined, individually
or in the aggregate, a Buyer Material Adverse Effect. Except as set forth on
Schedule 6.14, to the knowledge of Buyer and its Subsidiaries, there are no
unasserted or threatened claims of the type that would be required to be
disclosed in Schedule 6.14. To the knowledge of Buyer and its Subsidiaries,
except as set forth on Schedule 6.14, none of Buyer and its Subsidiaries is a
party or subject to or in default under any material judgment, order, injunction
or decree of any Governmental Entity or arbitration tribunal applicable to it or
its respective properties, assets, operations or businesses. Except as set forth
on Schedule 6.14, there is no lawsuit or claim by Buyer or any of its
Subsidiaries pending, or which Buyer or any of its Subsidiaries intend to
initiate, against any other Person. Except as set forth on Schedule 6.14, to the
knowledge of Buyer and its Subsidiaries, there is no pending or threatened
investigation of or affecting Buyer or any of its Subsidiaries by any
Governmental Entity.
6.15. Brokers. There is no investment banker, broker or finder
-------
or other Person who will have any valid claim against Buyer, CAC I or CAC II for
a commission or brokerage in connection with this Agreement or the transactions
contemplated hereby as a result of any agreement of, or action taken by, Buyer,
other than ▇▇▇▇▇▇ Brothers whose fees will be paid by Buyer.
6.16. Contracts. Except for Contracts listed on Schedule 6.16,
---------
neither the Buyer nor any of its Subsidiaries is a party to or bound by any
Contract relating to or affecting the assets of Buyer and its Subsidiaries which
is a:
(a) Contract with its agents, suppliers, customers,
advertisers, consultants, advisors, sales representatives, distributors, sales
agents or dealers other than Contracts which by their terms are cancelable by
Buyer or any of its Subsidiaries with notice of not more than 30 days and
without cancellation penalties or severance payments, in the case of any such
Contract, in excess of $50,000;
(b) covenant not to compete (other than pursuant to any
radius restrictions contained in any lease, reciprocal easement agreement or
development, construction, operating or similar agreement) or confidentiality
agreement;
(c) Contract with any Governmental Entity;
(d) agreement, Contract or other instrument under which
Buyer or any of its Subsidiaries has borrowed any money from, or issued any
note, bond, debenture or other evidence of indebtedness to, any Person or any
other note, bond, debenture or other evidence of indebtedness issued to any
Person;
-37-
(e) Contract (including any so-called take-or-pay, cash
deficiency or keepwell agreement) under which (A) any Person (including Buyer or
any of its Subsidiaries) has directly or indirectly guaranteed indebtedness,
liabilities or obligations of Buyer or any of its Subsidiaries or (B) or Buyer
or any of its Subsidiaries has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any Person, and other than endorsements for the
purpose of collection in the ordinary course of business consistent with past
practice and including agreements having the effect of a guarantee, whether or
not required to be reflected on the Buyer Financial Statements in accordance
with GAAP;
(f) pledge, security agreement, deed of Trust, financial
statement or other document granting a Lien on any of the assets of Buyer or any
of its Subsidiaries (other than Buyer Permitted Liens);
(g) Contract under which Buyer or any of its Subsidiaries
has, directly or indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any Person in excess of
$50,000;
(h) Contract under which Buyer or any of its Subsidiaries is
lessee of, or holds or operates, any machinery, equipment, vehicle or other
tangible personal property owned by a third party and used in the business of
Buyer or any of its Subsidiaries and which entails payments in any 12-month
period, in the case of any such Contract, in excess of $50,000;
(i) Contract or other arrangement with (A) any affiliate of
Buyer or any of its Subsidiaries or (B) any current or former officer, director
or employee, shareholder or with any Related Person of Buyer or any of its
Subsidiaries or any of their respective affiliates;
(j) Contract for the sale of any of the assets of Buyer and
its Subsidiaries (including any capital stock or rights to acquire capital stock
of Buyer and its Subsidiaries) or the grant of any preferential rights to
purchase any of the assets of Buyer and its Subsidiaries or requiring the
consent of any party to the transfer thereof or otherwise limiting the ability
of Buyer and its Subsidiaries to sell the assets of Buyer and its Subsidiaries
(including any capital stock or rights to acquire capital stock of Buyer and its
Subsidiaries);
(k) Contract not made in the ordinary course of business
consistent with past practice, including any joint venture or partnership
arrangement or any agreement relating to any merger or acquisition involving the
Buyer or any of its Subsidiaries; or
(l) Contract whether or not made in the ordinary course of
business, which is material to Buyer and its Subsidiaries, taken as a whole, or
the termination of which could reasonably be expected to have a Buyer Material
Adverse Effect.
Buyer and its Subsidiaries are not, and to the best of the knowledge of Buyer
and its Subsidiaries, no other party is (with or without the lapse of time or
the giving of notice or both) in default in any material respect under any
Contract, License or instrument required to be set forth in Buyer's disclosure
schedules (each, a "Buyer Scheduled Contract"). Buyer and its Subsidiaries have
------------------------
made available to the Crown Parties or their Representatives true and complete
copies of all Buyer
-38-
Scheduled Contracts. Each Buyer Scheduled Contract is in full force and effect
as of the date hereof and constitutes a legal, valid and binding obligation of
Buyer and its Subsidiaries and, to the best of the knowledge of Buyer and its
Subsidiaries, the other parties thereto, enforceable in accordance with its
terms. Neither Buyer nor any of its Subsidiaries has received any written notice
of the intention of any party to terminate any Buyer Scheduled Contract.
6.17. Compliance with Laws. Except as set forth on Schedule 6.17,
--------------------
the operations of Buyer and its Subsidiaries are not now being conducted and, to
the knowledge of Buyer or any of its Subsidiaries, have not been conducted in
violation of any applicable law, ordinance, statute, rule or regulation of any
Governmental Entity except for violations, which do not and will not,
individually or in the aggregate, have or be reasonably expected to have a Buyer
Material Adverse Effect. Buyer and its Subsidiaries have not received any notice
from any Governmental Entity that the operations of Buyer and its Subsidiaries
are being conducted in violation of any applicable law, ordinance, statute, rule
or regulation of any Governmental Entity, or of any investigation or review
pending or threatened by any Governmental Entity investigating or reviewing any
alleged violation, which violation individually or in the aggregate with all
other violations would have or would reasonably be expected to have a Buyer
Material Adverse Effect. Except as set forth on Schedule 6.17 to this Agreement,
all the Real Property of Buyer and its Subsidiaries is in compliance with
applicable laws, including zoning, land use and building code laws, ordinances
and regulations necessary to conduct the operations of Buyer and its
Subsidiaries as presently conducted, and the transactions contemplated by this
Agreement could not reasonably be expected to result in the revocation of any
permit or variance, except to the extent that any such non-compliance, violation
or revocation, individually or in the aggregate, would not have or would not
reasonably be expected to have a Buyer Material Adverse Effect.
6.18. Environmental Matters.
---------------------
(a) Except as set forth on Schedule 6.18, Buyer and its
Subsidiaries are in compliance with all Environmental Laws, except for instances
of non-compliance, that, individually or in the aggregate, do not or will not
have or would not reasonably be expected to have a Buyer Material Adverse Effect
on the financial condition, business, operations or assets of Buyer and its
Subsidiaries. No Lien has attached to any Buyer Property or facility of Buyer
and its Subsidiaries pursuant to any Environmental Laws. Except as set forth on
Schedule 6.18, there have been no Releases of Hazardous Material by Buyer or any
of its Subsidiaries or, to the knowledge of Buyer or any of its Subsidiaries, by
any other Person in, on, under or affecting any Buyer Property or facility of
Buyer and its Subsidiaries, and Buyer and its Subsidiaries have not disposed of
any Hazardous Material in a manner that, in either case, individually or in the
aggregate, could reasonably be anticipated to result in a Buyer Material Adverse
Effect. Except as set forth on Schedule 6.18, prior to the period of ownership
or operation by Buyer and its Subsidiaries of any Buyer Property or facility, to
the knowledge of Buyer, no Hazardous Material was generated, treated, stored,
disposed of, used, handled or manufactured at, or transported, shipped or
disposed of from, such current or previously owned properties and, except as set
forth on Schedule 6.18, to the knowledge of Buyer, there were no Releases of
Hazardous Material in, on, under or affecting any such property. Except as set
forth on Schedule 6.18, there are no sites, locations or operations for which
Buyer and its Subsidiaries have received notice that they are or may be
responsible for any remedial or response action, as defined in any Environmental
Law,
-39-
relating to any Release of Hazardous Material. Schedule 6.18 sets forth a
list of any and all environmental audits of any Buyer Property or facility of
Buyer and its subsidiaries conducted by Buyer or by any of its Subsidiaries
during Buyer's or a Subsidiary's ownership of such Buyer Property or facility,
or obtained by, or performed on behalf of, Buyer and its Subsidiaries in
connection with its acquisition of any Buyer Property or facility, and any
audits in the possession of Buyer and its Subsidiaries of any Buyer Property or
facility adjacent to their facilities which relate to any facts, conditions or
circumstances that have resulted, or may result, in a Release of Hazardous
Material at or under such Buyer Property or facility (collectively, the "Buyer
-----
Environmental Audits"). Buyer has made copies of all Buyer Environmental Audits
--------------------
available to Sellers.
(b) Buyer and its Subsidiaries have obtained, and are in
material compliance in all material respects with all Environmental Permits.
Except as disclosed on Schedule 6.18, Buyer and its Subsidiaries have not
received notice of any civil, criminal or administrative claims or proceedings,
pending or threatened, that are based on or related to any Environmental Laws or
the failure to comply with any terms and conditions of any Environmental Permits
which claims or proceedings of which failure to comply, individually or in the
aggregate, would have or reasonably be expected to result in a Buyer Material
Adverse Effect. To the knowledge of Buyer, except as described in Schedule 6.18,
(i) there are no PCBs in any container or equipment on, about, under or within
any Buyer Real Property or facility of Buyer and its Subsidiaries, (ii) there is
no asbestos at, on, about, under or within any Real Property or facility of
Buyer and its Subsidiaries and (iii) there are no underground storage tanks,
whether in service or closed in place, under any Buyer Property or facility of
Buyer or its Subsidiaries.
6.19. Taxes.
-----
(a) Buyer and its Subsidiaries have timely filed or caused
to be timely filed, or will timely file or cause to be timely filed on or prior
to the Closing Date, all Tax returns and Tax reports which are required to be
filed (including proper filing extensions) on or prior to the Closing Date by
them. All such returns were or will be, as the case may be, complete and correct
in all material respects at the time of filing. All Taxes due and payable with
respect to taxable periods covered by such returns, or with respect to which any
of Buyer or its Subsidiaries is or might be otherwise liable (including Taxes
which Buyer and its Subsidiaries may have been required to withhold from amounts
owing to any stockholder, employee, creditor or third party), have been, or
prior to the Closing Date will be, timely paid. Except as disclosed in schedule
6.7, none of Buyer or any of its Subsidiaries is delinquent in the payment of
any Tax, or has any Tax deficiencies proposed, assessed, or to the knowledge of
Buyer, threatened against it. No Liens for Taxes exist with respect to any
assets of Buyer or its Subsidiaries.
(b) Any deficiencies resulting from any tax audits or
examinations of Buyer or any of its Subsidiaries have been paid in full. There
are no present audits, disputes or proceedings as to any Taxes of Buyer or any
of its Subsidiaries. No material issues were raised in writing during any audit,
dispute or proceeding of Buyer or any of its Subsidiaries that might apply to
any taxable period subsequent to the taxable period covered by such audit,
dispute or proceeding.
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(c) None of Buyer or its Subsidiaries is a party to or bound
by any agreement (including any tax sharing agreement), election or extension of
the statute of limitations with respect to taxes. None of the Buyer or its
Subsidiaries is or has ever been a member of an affiliated, consolidated,
combined or unitary group of which any corporation other than Buyer or any of
its Subsidiaries also is or was a member.
(d) Neither Buyer nor any of its Subsidiaries has taken any
action that would require it to include in income any adjustment under Section
481(a) of the Code by reason of a change in accounting method initiated by Buyer
or any of its Subsidiaries, and the Internal Revenue Service has not proposed
for any open Tax year any such adjustment or change in accounting method.
Neither Buyer nor any of its Subsidiaries will be required to include in a
taxable period (or portion thereof) beginning on or after the Closing Date
taxable income attributable to income that economically accrued in a prior
taxable period (or portion thereof), including as a result of the installment
method of accounting, the completed contract method of accounting or the cash
method of accounting.
6.20. Insurance. Buyer and its Subsidiaries maintain policies
---------
of fire and casualty, liability and other forms of insurance in such amounts,
with such deductibles and against such risks and losses as are customary in the
businesses in which they are engaged. The insurance policies owned and
maintained by Buyer and its Subsidiaries are listed in Schedule 6.20. All such
policies are in full force and effect, all premiums due and payable thereon have
been paid (other than retroactive or retrospective premium adjustments that are
not yet, but may be, required to be paid with respect to any period ending prior
to the Closing Date), and no notice of cancellation or termination has been
received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation. The
activities and operations of Buyer and its Subsidiaries have been conducted in a
manner so as to conform in all material respects to all applicable provisions of
such insurance policies.
6.21. Disclosure. No statement of Buyer contained in this
----------
Article 6, in Exhibit C, in any of the disclosure schedules referred to in
Article 6 or in any Certificates delivered pursuant to Section 4.3(f)
intentionally contains any untrue statement of a material fact or intentionally
omits to state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they are made not misleading.
ARTICLE 7.
Covenants of Sellers
--------------------
Each of the Crown Parties, on a joint and several basis that from the
date hereof until the completion of the Closing (or, in the case of Section 7.4,
until the third anniversary of the Closing Date), covenants and agrees as
follows:
7.1. Operation of the Business. From the date hereof until the
-------------------------
Closing, except as expressly provided otherwise in this Agreement, the Crown
Parties shall conduct, or cause to be conducted, the Crown Communications
Business and the businesses of Network and Mobile in
-41-
the ordinary course consistent with past practice (including with respect to the
collection of receivables, payment of payables and other liabilities,
advertising activities, sales practices (including promotions, discounts and
concessions), capital expenditures and inventory levels, and contributions to or
accruals to or in respect of Benefit Plans). Furthermore, without limiting the
generality of the foregoing, until the Closing, the Crown Parties will (i) use
reasonable commercial efforts to (A) preserve intact their business
organizations and the business organization of the Crown Communications
Business, (B) keep available to Buyer and the Surviving Corporations the
services of the present officers and key employees of the Crown Communications
Business, Network and Mobile, (C) continue in full force and effect without
modification all existing policies or binders of insurance currently maintained
in respect of the Crown Communications Business, Network and Mobile, (D)
preserve their current material relationships with customers, suppliers,
creditors, employees, licensors, licensees, distributors and others with whom
any of the Crown Parties has a material business or financial relationship, (E)
safeguard the inventory of the Crown Communications Business, Network and Mobile
from theft or misappropriation, (F) maintain the books and records of the Crown
Communications Business, Network and Mobile in substantially the same manner as
presently maintained and (G) continue the construction and development of all in
progress construction and development sites, and (ii) not engage in any
practice, take any action, fail to take any action or enter into any transaction
that would or would reasonably be expected to result in any of the conditions
set forth in Article 11 not being satisfied on the Closing Date. In the event of
damage, destruction or loss affecting any assets of the Crown Communications
Business, Network or Mobile between the date hereof and the Closing Date, the
Crown Parties may (but shall not be obligated to) prior to the Closing Date
elect to repair (or undertake to repair) such damage, destruction or loss at the
expense of Sellers.
In furtherance and not in limitation of the foregoing, each of the
Crown Parties covenants and agrees that, prior to the Closing, without the prior
written consent of Buyer, none of the Crown Parties will:
(a) make any material change in the business policies or
practice of the Crown Communications Business (including any advertising,
marketing, pricing, purchasing, personnel or sales policy or practice) except in
the ordinary course of business consistent with past practice;
(b) engage in any forward selling or acceleration of
customer orders or contracts, any deferral in paying payables, any deferral in
making capital expenditures or any delay in any construction or other capital
projects, any grant of any discount to customers other than in the ordinary
course of business consistent with past practice or any other changes intended
to increase the current income and cash collection of the Crown Communications
Business prior to the Closing Date by accelerating revenue that would otherwise
be collected after the Closing Date or deferring payment that would otherwise be
expected to be made prior to the Closing Date;
(c) in the case of Network or Mobile, declare, set aside or
pay any dividend or other distribution with respect to any shares of capital
stock of Network or Mobile, or repurchase, redeem or otherwise acquire any
amount of outstanding shares of capital stock or other equity securities of, or
other ownership interests in, Network or Mobile;
-42-
(d) issue, sell, transfer, pledge, or otherwise dispose of
or encumber any shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or acquisition rights of any kind with
respect to any shares of, capital stock of any class or series of Network or
Mobile;
(e) in the case of Network or Mobile, amend any term of any
outstanding security of Network or Mobile;
(f) (x) incur or assume any indebtedness for borrowed money
other than under existing credit facilities in the ordinary course of business
consistent with past practice (but in any event not more than an aggregate
amount of additional indebtedness, to be agreed upon by Buyer and Sellers on or
prior to the Due Diligence Completion Date, in excess of the aggregate amounts
reflected on the Crown Interim Financial Statements), or (y) guarantee, endorse
or otherwise incur or assume (whether directly, contingently or otherwise)
liability for the obligations of any other Person, other than in the ordinary
course of business consistent with past practice;
(g) create or assume any Lien on any material asset of the
Crown Communications Business, Network or Mobile other than Crown Permitted
Liens, Crown Permitted Real Estate Liens, and Liens incurred under existing
credit facilities or in the ordinary course of business consistent with past
practice;
(h) make any loan, advance (other than to employees for
business expenses, consistent with past practice) or capital contribution to or
investment in any Person;
(i) (x) enter into any Contract relating to any acquisition
or disposition of, or the lease, mortgage or pledge of, any assets or business
of any Person, except in the ordinary course of business consistent with past
practice or as required to comply with Section 7.1(o) hereof, or (y) agree to
any modification, amendment, assignment, termination or relinquishment of any
Contract, License or other right (including any insurance policy naming it as a
beneficiary or a loss payable payee) that would have or reasonably be expected
to have a Crown Material Adverse Effect, other than in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
(j) change any method of accounting or accounting principles
or practice relating to the Crown Communications Business, Network or Mobile,
except for any such change required by reason of a change in GAAP;
(k) make or change any Tax election, change any annual Tax
accounting period, adopt or change any method of Tax accounting, file any
amended return, enter into any closing agreement, settle any Tax claim or
assessment, surrender any right to claim a Tax refund, fail to make any Tax
payments or consent to extend or waive the limitations period applicable to any
Tax claim or assessment;
(l) (w) grant any severance or termination pay to any
director, officer or employee of the Crown Communications Business, Network or
Mobile, (x) enter into any employment, deferred compensation or other similar
agreement (or any amendment to any such
-43-
existing agreement) with any director, officer or other employee of the Crown
Communications Business, Network or Mobile, (y) increase benefits payable under
any existing severance or termination pay policies or employment agreements, or
(z) increase compensation, bonuses or other benefits payable to directors,
officers or employees of the Crown Communications Business, Network or Mobile
except, with respect to clauses (w) or (z) pursuant to Crown Benefit Plans in
existence on the date hereof;
(m) adopt any changes to the articles of incorporation or by-laws
of Network or Mobile;
(n) adopt any plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of the Crown Communications Business, Network or Mobile;
(o) fail to make any material capital expenditures necessary to
maintain the existing business of the Crown Communications Business, Network and
Mobile;
(p) enter into any Contract or transaction with any Affiliate or
Related Person of any of the Crown Parties;
(q) enter into or amend any Benefit Plan other than as required by
law; or
(r) agree in writing or otherwise to take any of the actions
specified in this Section 7.1.
7.2. Consents. Without limiting the provisions of Section 9.3 hereof, the
--------
Crown Parties shall use commercially reasonable efforts to obtain or cause to be
obtained prior to the Closing Date any necessary consents from any Person to the
assignment (directly or indirectly) to Buyer of any Contract, License or other
instrument and right of the Crown Parties included in the Acquired Business that
requires the consent of any third party by reason of the transactions provided
for in this Agreement, and Buyer will reasonably cooperate with the Crown
Parties in this regard, but neither the Crown Parties nor Buyer will be
obligated to make any special payment or grant any special concession to any
party. For the avoidance of doubt, the procurement of any such necessary
consents shall not be deemed to be a condition to Buyer's obligation to close
the transaction contemplated hereby.
7.3. Notice of Proceedings. The Crown Parties will promptly notify Buyer
---------------------
telephonically and in writing upon the Crown Parties' (i) becoming aware of any
order or decree or any complaint praying for an order or decree restraining or
enjoining the consummation of this Agreement or the transactions contemplated
hereunder or (ii) receiving any notice from any Governmental Entity of its
intention (x) to institute an investigation into, or institute a suit or
proceeding to restrain or enjoin, the consummation of this Agreement or such
transactions or (y) to nullify or render ineffective this Agreement or such
transactions if consummated.
7.4. No Solicitation. From the date of this Agreement through the Closing
---------------
Date or the earlier termination of this Agreement in accordance with its terms,
none of the Crown Parties shall, nor shall any of the Crown Parties authorize or
permit any Representative of any of the
-44-
Crown Parties to, directly or indirectly solicit, initiate, encourage or
participate in any discussions or negotiations with, or furnish any information
or assistance to, or afford access to the properties, books and records or
employees of the Crown Communications Business, Network or Mobile to, any Person
or group (other than Buyer or its Representatives) concerning any merger, sale
of securities, sale of substantial assets or similar transaction involving any
of the Crown Parties. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by Sellers,
the Crown Communications Business, Network or Mobile, or any Representative of
Sellers, Network or Mobile, whether or not such Person is purporting to act on
behalf of any of Seller, the Crown Communications Business, Network or Mobile,
shall be deemed to be a breach of this Section 7.4 by Sellers.
7.5. Cooperation. The Crown Parties acknowledge that Buyer intends to
-----------
finance or refinance the acquisition of the Acquired Business by arranging for a
loan or loans from certain banks and by issuing securities in the high yield
debt market (collectively, the "Acquisition Financing"). In connection with the
---------------------
Acquisition Financing, the Crown Parties shall cooperate with Buyer and aid
Buyer in consummating the Acquisition Financing, including by (a) using
commercially reasonable efforts to assist Buyer and its accountants in
obtaining, no later than July 28, 1997, audited and unaudited combined
historical financial statements for the Acquired Business meeting the
requirements of Regulation S-X for a Form S-1 registration statement with the
audited financial statements being audited by KPMG Peat Marwick LLP; (b)
executing and delivering to KPMG Peat Marwick LLP a customary letter of
representations to enable KPMG Peat Marwick LLP to deliver its audit opinion
with respect to the audited combined financial statements referred to in clause
(a) above; (c) assisting Buyer in the preparation of a customary offering
memorandum in connection with the issuance by Buyer of securities in the high
yield debt market; (d) providing access to Buyer's Representatives at reasonable
times to information and officers and other key employees of the Crown
Communications Business, Network or Mobile for due diligence purposes in
connection with the Acquisition Financing; and (e) providing access to Buyer's
Representatives at reasonable times to prior audits, working papers and other
information related to the financial statements of the Crown Communications
Business, Network and Mobile. For the avoidance of doubt, in no event shall
Buyer's obtaining or completing the audited financial statements or financing
referred to above be deemed to constitute a condition to Buyer's obligation to
close the transactions contemplated hereby. Any information obtained by Buyer
and its Representatives pursuant to this Section 7.5 relating to the operation
of the Acquired Business or the Crown Communications Business shall be held
confidential pursuant to the Confidentiality Agreement referred to in Section
14.14 hereof; provided, however, that Buyer and its Representatives may disclose
-------- -------
such information as is reasonably necessary to complete the Acquisition
Financing (including as is reasonably necessary to meet their disclosure
obligations in connection with the Acquisition Financing).
ARTICLE 8.
Covenants of Buyer
------------------
Buyer covenants and agrees that from the date hereof until the completion
of the Closing:
-45-
8.1. Operation of the Business. From the date hereof until the Closing,
-------------------------
except as expressly provided otherwise in this Agreement, Buyer and its
Subsidiaries shall conduct, or cause to be conducted, their business in the
ordinary course consistent with past practice (including with respect to the
collection of receivables, payment of payables and other liabilities,
advertising activities, sales practices (including promotions, discounts and
concessions), capital expenditures and inventory levels, and contributions to or
accruals to or in respect of Benefit Plans). Furthermore, without limiting the
generality of the foregoing, Buyer and its Subsidiaries will (i) use reasonable
commercial efforts to (A) preserve intact their business organizations, (B) keep
available the services of their present officers and key employees, (C) continue
in full force and effect without modification all existing policies or binders
of insurance currently maintained in respect of their business, (D) preserve
their current material relationships with customers, suppliers, lenders,
creditors, employees, licensors, licensees, distributors and others with whom
Buyer or any of its Subsidiaries or CTSH or any of its Subsidiaries has a
material business or financial relationship, including without limitation the
BBC Agreement, (E) safeguard the inventory of Buyer and its Subsidiaries from
theft or misappropriation and (F) maintain the books and records of Buyer and
its Subsidiaries in substantially the same manner as presently maintained and
(ii) not engage in any practice, take any action, fail to take any action or
enter into any transaction that would or would reasonably be expected to result
in any of the conditions set forth in Article 10 not being satisfied on the
Closing Date.
In furtherance and not in limitation of the foregoing, Buyer covenants and
agrees that, prior to the Closing, without the prior written consent of the
Crown Parties, none of Buyer or its Subsidiaries will:
(a) issue, sell, transfer, pledge or otherwise dispose of or
encumber any shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or acquisition rights of any kind with
respect to any shares of, capital stock of any class or series of Buyer or its
Subsidiaries, other than issuances pursuant to the exercise of stock-based
awards or options, including under the plans described in Section 6.13,
outstanding on the date hereof and the issuance of convertible preferred stock
to investors in Buyer as contemplated in connection with transactions
contemplated hereby;
(b) declare, set aside or pay any dividend or other distribution
with respect to any shares of capital stock of Buyer or any of its Subsidiaries
or repurchase, redeem or otherwise acquire any amount of outstanding shares of
capital stock or other equity securities of, or other ownership interests in,
Buyer or any of its Subsidiaries, other than intercompany distributions and
advances between wholly owned Subsidiaries;
(c) enter into any Contract relating to any acquisition or
disposition, or the lease, mortgage or pledge of, of any assets or business of
any Person that would be reasonably likely to have a Buyer Material Adverse
Effect, other than in the ordinary course of business consistent with past
practice and those contemplated by this Agreement, or amend, modify, terminate
or violate any term of the BBC Agreement;
(d) change any method of accounting or accounting principles or
practice, except for any such change required by reason of a change in GAAP;
-46-
(e) adopt any changes to the certificate of incorporation or by-
laws of Buyer and similar governing instruments of its Subsidiaries;
(f) adopt any plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of Buyer or any of its Subsidiaries; or
(g) agree in writing or otherwise to take any of the actions
specified in this Section 8.1.
8.2. Notice of Proceedings. Buyer will promptly notify the Crown Parties
---------------------
telephonically and in writing upon Buyer (i) becoming aware of any order or
decree or any complaint praying for an order or decree restraining or enjoining
the consummation of this Agreement or the transactions contemplated hereunder or
(ii) receiving any notice from any Governmental Entity of its intention (x) to
institute an investigation into, or institute a suit or proceeding to restrain
or enjoin, the consummation of this Agreement or such transactions or (y) to
nullify or render ineffective this Agreement or such transactions if
consummated.
8.3. Corporate Name and Symbol. On the Closing Date, Buyer will take all
-------------------------
necessary action such that CAC III shall adopt the name "Crown Communication
Inc." or another name including "Crown" that is satisfactory to Sellers.
Commencing as of the Closing, Buyer and its Subsidiaries shall adopt and use the
current Crown Symbol, to the extent reasonably possible and permitted under
applicable law.
8.4. Liquidity Provision. Buyer shall take appropriate steps to obtain
-------------------
and maintain for one year following the Closing Date, not less than $30 million
in life insurance on the life of ▇▇▇▇▇▇ ▇. Crown naming ▇▇▇▇▇▇▇ Crown as
beneficiary in order to provide liquid funds to pay taxes related to the capital
stock of Buyer owned by the Crowns resulting from the death of ▇▇▇▇▇▇ ▇. Crown
or both the Sellers; provided, however, that the annual premium for any such
-------- -------
life insurance shall not exceed $45,000.
ARTICLE 9.
Mutual Covenants of the Parties
-------------------------------
Buyer and the Crown Parties covenant and agree from the date hereof until
the completion of the Closing:
9.1. Executive Compensation. As soon as practicable after the Closing,
----------------------
Buyer shall adopt, for the benefit of ▇▇▇▇▇▇ ▇. Crown and other key employees
named on Schedule 9.1, a mutually acceptable modern and meaningful compensation
package containing appropriate base salary, short-term incentives, long-term
incentives, pensions, group term life and medical insurance and other forms of
compensation comparable to those offered by other companies of comparable size
in the same or similar businesses. Prior to the Closing, Buyer shall provide to
▇▇▇▇▇▇ ▇. Crown a detailed summary of such proposed compensation package. In his
capacity as Chief Executive Officer, ▇▇▇▇▇▇ ▇. Crown shall make the
recommendations to the compensation
-47-
committee or Board of Directors of Buyer, as applicable, regarding compensation
packages for the benefit of employees of Crown Communications Inc.
9.2. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. As soon as possible (but in no event later than
-----------------
five business days) after the date hereof, the parties shall prepare and file
all documents with the Federal Trade Commission and the United States Department
of Justice as are required to comply with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and shall
request early termination of the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
The parties will furnish promptly all materials thereafter requested by any
Governmental Entity having jurisdiction over such filings. The parties shall
keep each other fully informed of the status of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act filing
and any other filings made to a Governmental Entity in connection with the
transactions contemplated in this Agreement.
9.3. Access to Facilities, Files and Records. At the reasonable request
---------------------------------------
of any party hereto and upon reasonable advance notice, the other parties will
give or cause to be given to the authorized Representatives of such requesting
party (i) full access to all facilities, management personnel, property,
accounts, books, deeds, title papers, insurance policies, licenses, agreements,
contracts, commitments, logs, records and files of every character, equipment,
machinery, fixtures, furniture, vehicles and notes and accounts payable and
receivable and (ii) all such other information as such party may reasonably
request; provided, however, that parties shall not be required to permit such
access or provide such information to the extent it unreasonably interferes with
the operation of the party's business or such information is subject to a
binding confidentiality agreement with a third party.
9.4. Advice of Changes. Each party will give written notice to the other
-----------------
parties promptly upon its learning of (i) the occurrence of any event that would
or would be reasonably expected to cause or constitute a material breach had
such event occurred or been known to such party prior to the date hereof, of any
of such party's representations or warranties contained in this Agreement or in
any disclosure schedule to this Agreement, or of a Crown Material Adverse Effect
or a Buyer Material Adverse Effect, as the case may be, or (ii) any attempted
unionization of employees of such party.
9.5. Consummation of Agreement. Subject to the provisions of Section 14.1
-------------------------
of this Agreement, each of the parties hereto will use all reasonable efforts to
fulfill and perform all conditions and obligations required on its part to be
fulfilled and performed under this Agreement, and to cause the transactions
contemplated by this Agreement to be carried out.
9.6. No Solicitation of Employees.
----------------------------
(a) For a period of two years after the date of this Agreement or
until the earlier consummation of the Mergers, neither Buyer nor any of its
Subsidiaries will, nor will Buyer cause CTSH or any of its Subsidiaries to,
directly or indirectly, solicit or hire any employee of the Crown Communications
Business, Network or Mobile.
-48-
(b) For a period of two years after the date of this Agreement or
until the earlier consummation of the Mergers, none of the Crown Parties will,
directly or indirectly, solicit or hire any employee of the Buyer, CTSH or any
of their respective Subsidiaries.
9.7. Standstill.
----------
(a) Buyer acknowledges that Sellers have provided certain highly
sensitive and proprietary information to Buyer relating to, inter alia,
marketing plans, business strategies and methods of operations of the Crown
Parties, which, if used by Buyer in violation of the Confidentiality Agreement,
would be unfair and cause irreparable damage to the Crown Parties, for which
Crown's legal remedies would be inadequate. Accordingly, for a period of one
year from the date of this Agreement, neither Buyer nor any of its Subsidiaries
will, directly or indirectly, engage in, or provide any financial assistance to,
or make any investment in any business engaging in any wireless communications
site acquisition, ownership, design, development, construction, management and
servicing, including broadcast and telecommunications tower and rooftop
facilities ("Restricted Activities") conducted in any service area (or any
portion thereof) in Pennsylvania, West Virginia, Ohio or Kentucky served by the
Crown Parties as of the date hereof (the "Crown Territory"); provided, however,
that the prohibitions against Restricted Activities by Buyer set forth in this
Section 9.7(a) shall not apply to any Restricted Activities directly related to
or arising from existing contractual arrangements and certain contractual
negotiations between Buyer and NEXTEL with respect to Restricted Activities
within the Commonwealth of Kentucky, such contractual arrangements and
negotiations having been entered into prior to the date of this Agreement.
(b) Sellers acknowledge that Buyer has provided certain highly
sensitive and proprietary information to Seller relating to, inter alia,
marketing plans, business strategies and methods of operations of the Buyer and
its Subsidiaries, which, if used by Buyer in violation of the Confidentiality
Agreement, would be unfair and cause irreparable damage to the Buyer, for which
Buyer's legal remedies would be inadequate. Accordingly, for a period of one
year from the date of this Agreement, none of the Crown Parties will, directly
or indirectly, engage in, or provide any financial assistance to, or make any
investment in any business engaging in the any Restricted Activities conducted
in any service area (or any portion thereof) in Arizona, Colorado, Mississippi,
Nevada, New Mexico, North Dakota, Oklahoma, Puerto Rico or Texas served by the
Buyer or its Subsidiaries as of the date hereof.
Notwithstanding the foregoing, Buyer or any of its Subsidiaries may (i)
acquire stock or assets of a business ("New Business") that is engaged in
Restricted Activities in the Crown Territory, provided that the Restricted
Activities conducted by such New Business in the Crown Territory account for
less than 10% of the annual gross revenues of the New Business and less than 10%
of the total asset value of such New Business, and provided further, that in
each such case the Buyer or its Subsidiaries, or such New Business shall, within
one (1) month of such acquisition, offer to sell to Sellers the portion of such
New Business conducted in the Crown Territory upon the same price and other
terms paid by Buyer for such portion of the New Business. In the event that
Buyer is unable to allocate the consideration paid for the New
-49-
Business to that portion thereof conducted in the Crown Territory, then Buyer
and Sellers shall use commercially reasonable efforts to agree upon an
acceptable price therefor.
ARTICLE 10.
Conditions to the Obligations of the Crown Parties
--------------------------------------------------
The obligations of the Crown Parties to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (or waiver by the
Crown Parties) of the following conditions:
10.1. No Buyer Material Adverse Effect; Representations and Warranties
----------------------------------------------------------------
and Covenants.
-------------
(a) No event or events shall have occurred since the date of this
Agreement which, individually or in the aggregate, has had or is reasonably
likely to result in a Buyer Material Adverse Effect.
(b) Each of Buyer, CAC I and CAC II shall have performed in all
material respects all of its obligations and complied in all material respects
with all of its covenants hereunder required to be performed or complied with by
it at or prior to the Closing and the representations and warranties of each of
Buyer, CAC I and CAC II contained in this Agreement qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, as of the Closing Date, as if made at and as of such
date, except for those representations and warranties that address matters only
as of a particular date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
date).
10.2. Proceedings. Neither the Crown Parties nor Buyer, CAC I or CAC II
-----------
shall (a) be subject to any restraining order or injunction restraining or
prohibiting the consummation of the transactions contemplated hereby and (b)
have received written notice from any Governmental Entity of its intention to
institute any action or proceeding seeking to restrain, enjoin or nullify this
Agreement or the transactions contemplated hereby.
10.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The applicable waiting period imposed by the
-----------------
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or been terminated.
10.4. Deliveries. Buyer shall have complied with each and every one of its
----------
obligations set forth in Section 4.3.
10.5. Liquidity Provision. Buyer shall have obtained life insurance for
-------------------
▇▇▇▇▇▇ ▇. Crown as provided in Section 8.4.
-50-
ARTICLE 11.
Conditions to the Obligations of Buyer, CAC I and CAC II
--------------------------------------------------------
The obligations of Buyer, CAC I and CAC II to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (or waiver by
such parties) of the following conditions:
11.1. No Crown Material Adverse Effect; Representations, Warranties and
-----------------------------------------------------------------
Covenants.
---------
(a) No event or events shall have occurred since the date of this
Agreement which, individually or in the aggregate, has had or is reasonably
likely to result in a Crown Material Adverse Effect.
(b) Each of the Crown Parties shall have performed in all material
respects all of its obligations and complied in all material respects with all
of its covenants hereunder required to be performed or complied with by it at or
prior to the Closing and the representations and warranties of each of the Crown
Parties contained in this Agreement qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all
material respects, as of the Closing Date, as if made at and as of such date,
except for those representations and warranties that address matters only as of
a particular date (in which case such representations and warranties qualified
as to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such date).
11.2. Proceedings. Neither the Crown Parties nor Buyer, CAC I or CAC II
-----------
shall (a) be subject to any restraining order or injunction restraining or
prohibiting the consummation of the transactions contemplated hereby and (b)
have received written notice from any Governmental Entity of its intention to
institute any action or proceeding seeking to restrain, enjoin or nullify this
Agreement or the transactions contemplated hereby.
11.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The applicable waiting period imposed by the
-----------------
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act relating to the transactions contemplated by this
Agreement shall have expired or been terminated. The applicable waiting period
imposed by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act relating to the investment by certain of
the Investors (as defined in the Shareholder Agreement) in Buyer in shares of
convertible preferred stock in connection with the transactions contemplated by
this Agreement shall have been expired or been terminated.
11.4. Deliveries. Each of the Crown Parties shall have complied with each
----------
and every one of its obligations set forth in Section 4.2.
11.5. ▇▇▇▇▇▇ ▇. Crown. ▇▇▇▇▇▇ ▇. Crown shall be alive and shall have the
---------------
mental and physical capacity to operate the Acquired Business as such business
is operated by him as of the date of this Agreement.
-51-
ARTICLE 12.
Survival of Representations and Warranties
------------------------------------------
12.1. Survival. All representations and warranties contained in this
--------
Agreement or in any Schedule, Exhibit, certificate, agreement, document or
statement delivered pursuant hereto shall terminate on and as of the Closing.
12.2. Indemnification. From and after the Closing, the parties shall
---------------
indemnify each other as set forth below.
(a) Indemnification by Sellers. Sellers jointly and severally shall
--------------------------
indemnify Buyer, the Crown Communications Business, CAC I, CAC II, Network and
Mobile and each of their respective Affiliates and each of their respective
Representatives against and hold them harmless from any loss, liability, claim,
damage or expense (including reasonable legal fees and expenses) (collectively,
the "Buyer's Damages") suffered or incurred by any such indemnified party (other
---------------
than any relating to Taxes, for which indemnification provisions are set forth
in Section 13.4) arising from, relating to or otherwise in respect of (i) any
breach of any pre-closing covenant of Sellers contained in this Agreement, (ii)
all Excluded Liabilities and (iii) all obligations and liabilities of Network
and Mobile of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than any such liabilities or
obligations disclosed in Section 5.10 (b); provided, however, that Sellers shall
-------- -------
not have any liability under clause (i) above unless the Buyer's Damages shall
have resulted from an intentional breach or fraud on the part of any of the
Crown Parties.
Each of Buyer, CAC I, CAC II, Network and Mobile acknowledges and
agrees that, should the Closing occur, its sole and exclusive remedy with
respect to any and all claims relating to this Agreement and the transactions
contemplated hereby (other than matters related to the Shareholder Agreement and
other than post-Closing covenants) and the Crown Communications Business (other
than claims of, or causes of action arising from, fraud) shall be pursuant to
the indemnification provisions set forth in this Article 12. In furtherance of
the foregoing, each of Buyer, CAC I, CAC II, Network and Mobile hereby waives,
from and after the Closing, any and all rights, claims and causes of action
(other than claims of, or causes of action arising from, fraud) it may have
against Sellers and their respective Affiliates arising under or based upon any
federal, state, local or foreign statute, law, ordinance, rule or regulation or
otherwise (except pursuant to the indemnification provisions set forth in this
Article 12).
(b) Indemnification by Buyer. Buyer shall, and shall cause its
Subsidiaries to, indemnify Sellers and their respective Affiliates and each of
their respective Representatives against and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) (collectively, "Sellers' Damages") incurred by any such indemnified
----------------
party, arising from, relating to or otherwise in respect of (i) any breach of
any pre-closing covenant of Buyer contained in this Agreement and (ii) all
Assumed Liabilities; provided that Buyer shall not have any liability under
clause (i) above unless the Sellers' Damages shall have resulted from an
intentional breach or fraud on the part of Buyer.
-52-
Each of the Sellers acknowledges and agrees that, should the Closing
occur, his or her sole and exclusive remedy with respect to any and all claims
relating to this Agreement and the transactions contemplated hereby (other than
the matters related to the Shareholder Agreement and other than post-closing
covenants, or claims of, or causes of action arising from, fraud) shall be
pursuant to the indemnification provisions set forth in this Article 12. In
furtherance of the foregoing, each of the Sellers hereby waives from and after
the Closing, any and all rights, claims and causes of action (other than claims
of, or causes of action arising from, fraud) he or she may have against Buyer
and its Affiliates arising under or based upon any federal, state, local or
foreign statute, law, ordinance, rule or regulation or otherwise (except
pursuant to the indemnification provisions set forth in this Article 12).
(c) Losses Net of Insurance, etc. The amount of any loss,
----------------------------
liability, claim, damage, expense or Tax for which indemnification is provided
under this Article 12 or Article 13 shall be net of any amounts recovered by the
indemnified party under insurance policies with respect to such loss, liability,
claim, damage, expense or Tax (collectively, a "Loss") and shall be (i)
increased to take account of any net Tax cost incurred by the indemnified party
arising from the receipt or accrual of indemnity payments hereunder (grossed up
for such increase) and (ii) reduced to take account of any net Tax benefit
realized by the indemnified party arising from the deductibility of any such
Loss. In computing the amount of any such Tax cost or Tax benefit, the
indemnified party shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
or accrual of any indemnity payment hereunder or the deductibility of any
indemnified Loss. Any indemnification payment hereunder shall initially be made
without regard to this paragraph and shall be increased or reduced to reflect
any such net Tax cost (including gross-up) or net Tax benefit only after the
indemnified party has actually realized such cost or benefit. For purposes of
this Agreement, an indemnified party shall be deemed to have "actually realized"
a net Tax cost or a net Tax benefit to the extent that, and at such time as, the
amount of Taxes payable by such indemnified party is increased above or reduced
below, as the case may be, the amount of Taxes that such indemnified party would
be required to pay but for the receipt or accrual of the indemnity payment or
the deductibility of such Loss, as the case may be. The amount of any increase
or reduction hereunder shall be adjusted to reflect any final determination
(which shall include the execution of Form 870-AD or successor form) with
respect to the indemnified party's liability for Taxes and payments between
Sellers and Buyer to reflect such adjustment shall be made if necessary. Any
indemnity payment under this Agreement shall be treated as an adjustment to the
Purchase Price for Tax purposes, unless a final determination (which shall
include the execution of a Form 870-AD or successor form) with respect to the
indemnified party or any of its affiliates causes any such payment not to be
treated as an adjustment to the Purchase Price for federal income Tax purposes.
(d) Termination of Indemnification. The obligations to indemnify
------------------------------
and hold harmless a party hereto pursuant to Sections 12.2(a) and 12.2(b) shall
not terminate.
(e) Procedures Relating to Indemnification under Article 12. In
-------------------------------------------------------
order for a party (the "indemnified party") to be entitled to any
indemnification provided for under this Agreement (other than under Article 13)
in respect of, arising out of or involving a claim or demand made by any Person
against the indemnified party (a "Third Party Claim"), such indemnified party
-----------------
must notify the indemnifying party in writing, and in reasonable detail, of the
-53-
Third Party Claim within 10 business days after receipt by such indemnified
party of written notice of the Third Party Claim; provided, however, that
-------- -------
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure (except that the indemnifying party shall
not be liable for any expenses incurred during the period in which the
indemnified party failed to give such notice). Thereafter, the indemnified party
shall deliver to the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the Third
Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the indemnified
party therefor, to assume the defense thereof with counsel selected by the
indemnifying party; provided that such counsel is not reasonably objected to by
--------
the indemnified party. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, the indemnifying party shall not be liable to
the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel (not reasonably
objected to by the indemnifying party), at its own expense, separate from the
counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the indemnified party
for any period during which the indemnifying party has failed to assume the
defense thereof (other than during the period prior to the time the indemnified
party shall have given notice of the Third Party Claim as provided above).
If the indemnifying party so elects to assume the defense of any
Third Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party shall have
assumed the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnified party's prior written consent (which
consent shall not be unreasonably withheld). If the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified party shall
agree to any settlement, compromise or discharge of Third Party Claim which the
indemnifying party may recommend and which by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnifying party completely in
connection with such Third Party Claim and which would not otherwise adversely
affect the indemnified party.
Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Third Party Claim (and shall be liable for
the reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than
-54-
money damages against the indemnified party which the indemnified party
reasonably determines, after conferring with its outside counsel, cannot be
separated from any related claim for money damages. If such equitable relief or
other relief portion of the Third Party Claim can be so separated from that for
money damages, the indemnifying party shall be entitled to assume the defense of
the portion relating to money damages. The indemnification required by Section
12.2(a) or 12.2(b) other than Third Party Claims shall be governed by Section
12.2(e). All Tax Controversies as defined in Section 13.3 shall be governed by
Section 13.3.
(f) Other Claims. In the event any indemnified party should have a
------------
claim against any indemnifying party under Section 12.2(a) or 12.2(b) that does
not involve a Third Party Claim being asserted against or sought to be collected
from such indemnified party, the indemnified party shall deliver notice of such
claim with reasonable promptness to the indemnifying party. The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such indemnified
party under Section 12.2(a) or 12.2(b), except to the extent that the
indemnifying party demonstrates that it has been materially prejudiced by such
failure. If the indemnifying party does not notify the indemnified party within
10 business days following its receipt of such notice that the indemnifying
party disputes its liability to the indemnified party under Section 12.2(a) or
12.2(b), such claim specified by the indemnified party in such notice shall be
conclusively deemed a liability of the indemnifying party under Section 12.2(a)
or 12.2(b) and the indemnifying party shall pay the amount of such liability to
the indemnified party on demand or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined. If the indemnifying party has timely disputed its liability with
respect to such claim, as provided above, the indemnifying party and the
indemnified party shall proceed in good faith to negotiate a resolution of such
dispute, and, if not resolved through negotiations, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction.
(g) Mitigation. Buyer and Sellers shall cooperate with each other
----------
with respect to resolving any claim or liability with respect to which one party
is obligated to indemnify the other party hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability; provided that such party shall not be required to make such efforts
--------
if they would be detrimental in any material respect to such party. In the event
that Buyer or Sellers shall fail to make such commercially reasonably efforts to
mitigate or resolve any claim or liability, then (unless the proviso to the
foregoing covenant shall be applicable) notwithstanding anything else to the
contrary contained herein, the other party shall not be required to indemnify
any Person for any loss, liability, claim, damage or expense that could
reasonably be expected to have been avoided if Buyer or Sellers, as the case may
be, had made such efforts.
ARTICLE 13
Tax-Related Matters
-------------------
13.1. Closing of Tax Year. The Crown Parties and Buyer hereby acknowledge
-------------------
that, effective as of the Closing Date, each of Network and Mobile will cease to
be an S corporation
-55-
under the Code. As a result, each of Network's and Mobile's taxable years as an
S corporation will terminate as of the Closing Date, and such corporations will
be required to file Federal income tax returns and various state income and
franchise tax returns for the period beginning January 1, 1997 and ending on the
earlier to occur of December 31, 1997 and the date prior to the Closing Date,
and, if the Closing does not occur prior to December 31, 1997, the period
commencing January 1, 1998 and ending on the date prior to the Closing Date (the
"Final S Tax Period(s)"). Each of the Crown Parties and Buyer hereby agree that
---------------------
Network and Mobile each shall be treated as an S corporation for Federal income
tax purposes, and by all states and localities listed on Schedule 5.23(c), for
the Final S Tax Period(s).
13.2 Filing of Tax Returns.
---------------------
(a) The Crown Parties shall, at their sole expense, cause Habib &
Associates to prepare all Tax returns required to be filed by Network and/or
Mobile or with respect to the Crown Communications Business for any taxable
period which ends prior to the Closing Date or on the Closing Date, including
the Federal income tax return(s) for the Final S Tax Period(s), and the various
state income tax and franchise returns for the same period(s) (each, a "Pre-
----
Closing Tax Return"); provided, however, that (i) such returns shall be prepared
------------------ -------- -------
on a basis consistent with the intention of the parties that each of the Mergers
will qualify as a "reorganization" within the meaning of Section 368(a) of the
Code (to the extent such position is consistent with applicable law) and that
the purchase of the Crown Communications Business will be a taxable transaction,
(ii) such returns shall be prepared on a basis consistent with past practice and
in a manner that does not distort taxable income (e.g., by deferring income to a
----
period after the Closing or accelerating deductions to a period prior to the
Closing) and (iii) such returns shall be submitted to Buyer no less than two
weeks prior to the due date for filing and shall not be filed without the prior
written consent of Buyer. The parties shall use reasonable commercial efforts to
promptly resolve any disagreements as to the Pre-Closing Tax return(s). Any
remaining disagreements will be referred to a "Big 6" accounting firm, mutually
agreed upon by Buyer and Sellers, for resolution, provided that the scope of
--------
review by such accounting firm shall be limited to the disputed items.
(b) All returns with respect to Taxes for a Tax Indemnification
Period (as defined in Section 13.4), other than Pre-Closing Tax Returns, shall
be prepared by Buyer in a manner consistent with that set forth in Section
13.2(a).
(c) The Crowns shall pay to Buyer, Network or Mobile, as Buyer may
direct, all amounts due with respect to Pre-Closing Tax Returns or any other
return for the Tax Indemnification Period no later than two days prior to the
due date for payment with respect thereto.
(d) Any tax refunds of Taxes of Network, Mobile or the Crown
Communications Business attributable to the Tax Indemnification Period shall be
for the account of the Crowns. Any other tax refunds shall be for the account of
Buyer.
13.3. Tax Audits, Etc. The Crowns and Buyer shall promptly notify each
---------------
other in writing within 10 days from receipt by any of them (or Network or
Mobile, in the case of Buyer)
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of notice of any pending or threatened Tax audit, determination or assessment of
Network, Mobile or the Crown Communications Business for any Tax Indemnification
Period (a "Tax Controversy"); provided, however, that the failure of one party
--------------- -------- -------
to so notify the other party of any Tax Controversy shall not affect such other
party's obligations hereunder except to the extent such other party is actually
prejudiced by such failure. Except as otherwise provided in this Section 13.3,
the Crowns shall have the right to control, at their own expense, all phases of
any Tax Controversy relating to a Pre-Closing Tax Return. In connection with any
such Tax Controversy, the Crowns shall have the right to employ third-party
advisors, including accountants and attorneys, all at their own expense;
provided, however, that no such third-party advisors shall be retained without
-------- -------
the prior consent of Buyer. The Crowns shall regularly consult with Buyer in
connection with any such Tax Controversy and shall provide reports (including
copies of any and all correspondence received by the Crowns from taxing
authorities) to Buyer no less frequently than monthly to apprise it of the
status thereof. Buyer shall have the right to participate, at its own expense,
in any and all proceedings with respect to any such Tax Controversy.
Notwithstanding the foregoing, the Crowns shall have no right, without the prior
written consent of Buyer, to (A) enter into any settlement agreement, closing
agreement or other agreement in compromise with any taxing authority in
connection with a Tax Controversy, (B) file a petition in any court in
connection with a Tax Controversy (whether in the form of a claim for refund, a
challenge of an asserted deficiency or otherwise) or appeal or file to appeal
any decision of any court in connection with a Tax Controversy or (C) permit the
expiration of any period of time during which administrative or judicial relief
may be sought with respect to a Tax Controversy. Buyer shall have the right to
control, at its own expense, all phases of any Tax Controversy other than a Tax
Controversy relating to a Pre-Closing Tax Return. The Crowns shall have the same
right to participate in any such Tax Controversy as Buyer would have in a Tax
Controversy relating to a Pre-Closing Tax Return.
13.4. Tax Indemnification. The Crowns jointly and severally shall
-------------------
indemnify and hold harmless Buyer, CAC I, CAC II, Network and Mobile and their
respective affiliates from (i) all liability for Taxes of Network, Mobile or the
Crown Communications Business for all taxable period ending on or before the
Closing Date and the portion of any taxable period ending on the Closing Date
where the taxable period includes (but does not end on) the Closing Date (the
"Tax Indemnification Period"), (ii) (A) all liability (as a result of Treasury
--------------------------
Regulation (S) 1.1502-6(a) or otherwise) for Taxes of any person other than
Network or Mobile which is or has ever been affiliated with Network or Mobile or
with whom Network or Mobile has ever joined (or has ever been required to join)
in filing any consolidated, combined, unitary or aggregate return, or with
respect to which Network, Mobile or the Crown Communications Business is a
transferee or a successor, (iii) any loss, liability, claim, damage or expense
attributable to any breach of any warranty or representation contained in
Section 5.23 (relating to Taxes), or any breach by the Crown Parties of any
covenant contained in this Article 13 (relating to Taxes), (iv) all liability
for Taxes arising (directly or indirectly) as a result of or otherwise
attributable to the sale of the Crown Communications Business, the Mergers or
otherwise in connection with this Agreement or the transactions contemplated
hereby, other than any transfer taxes to the extent assumed by Buyer pursuant to
Section 13.5, and (v) all liability for reasonable legal, accounting, appraisal,
consulting or similar fees and expenses attributable to any item in clauses (i)
through (iv) above.
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In the case of any taxable period that includes (but does not end on) the
Closing Date (a "Straddle Period"):
---------------
(i) real, personal and intangible property Taxes ("Property Taxes")
--------------
of Network, Mobile or the Crown Communications Business for the Straddle Period
shall be equal to the amount of such property Taxes for the entire Straddle
Period multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that are in the Pre-Closing Tax Period and the
denominator of which is the number of days in the entire Straddle Period; and
(ii) the Taxes of Network, Mobile or the Crown Communications
Business (other than property Taxes) for the Pre-Closing Tax Period shall be
computed as if such taxable period ended as of the close of business on the
Closing Date.
13.5. Transfer Taxes, Etc. All transfer, documentary, sales, use,
-------------------
registration and other such Taxes (including all applicable real estate transfer
or gains Taxes and stock transfer and sales Taxes) and the related fees
(including any penalties, interests and additions to Tax) incurred in connection
with the sale of the Crown Communications Business, the Mergers or otherwise in
connection with this Agreement or the transactions contemplated hereby shall be
paid by Buyer, and the Crowns and Buyer shall cooperate in timely preparing and
filing all Returns as may be required to comply with the provisions of such Tax
laws. The Crowns shall cooperate with Buyer to minimize, to the extent permitted
by law, the amount of any sales taxes, transfer taxes or similar taxes and fees
imposed with respect to the transactions contemplated by this Agreement,
including by utilizing any applicable sales tax exemptions for occasional sales.
13.6. Tax Certificate. The Crowns shall deliver to Buyer at the Closing a
---------------
duly executed and acknowledged certificate, in form and substance acceptable to
Buyer and in compliance with the Code and Treasury Regulations, certifying such
facts as to establish that the sale of the Crown Communications Business, the
Mergers and any other transactions contemplated hereby are each exempt from
withholding under Section 1445 of the Code.
13.7. Tax Agreements. The Crown Parties shall cause the provisions of any
--------------
agreement, arrangement or practice with respect to Taxes (including any Tax
sharing agreements) between the Crowns and their affiliates other than Network
and Mobile, on the one hand, and Network, Mobile and the Crown Communications
Business on the other hand, to be terminated on or before the Closing Date.
After the Closing Date, no Person shall have any rights or obligations under any
such agreement, arrangement or practice with respect to Taxes.
13.8. Access to Books and Records. After the Closing Date, each party
---------------------------
shall, upon the request of the other party, in connection with the preparation
by either party of Tax returns or Tax contests and for such other purposes as
either party shall reasonably request: (i) provide to the officers and other
authorized Representatives of the requesting party full access, during normal
business hours upon reasonable advance notice, to any and all premises,
properties, files, books, records, documents and other information of Network,
Mobile or the Crown Communications Business, (ii) cause its officers to (and in
the case of Crowns, the Crowns will) furnish to the requesting party and its
authorized Representatives any and all relevant financial, technical and
operating data and other information pertaining to Network, Mobile or the Crown
-58-
Communications Business, (iii) make available to the requesting party and its
authorized Representatives personnel to consult with such Persons and (iv) make
available for inspection and copying by the requesting party at such party's
expense true and complete copies of any documents relating to the foregoing. Any
information obtained by either party pursuant to this Section 13.8 relating to
the operation of Network, Mobile or the Crown Communications Business after (in
the case of the Crowns) or prior to (in the case of Buyer) the Closing shall be
held confidential by the requesting party to the same extent as the requesting
party is required to keep information confidential pursuant to the
Confidentiality Agreement referred to in Section 14.14 hereof. In exercising
their rights under the foregoing provisions of this Section 13.8, the requesting
party and its Representatives shall not interfere with the other party's normal
operations.
13.9. Allocation of Crown Value. The value of the Crown Communications
-------------------------
Business and the Assumed Liabilities and the Network and Mobile Common Stock
shall be mutually agreed to by Buyer and the Crowns. Buyer shall provide a draft
schedule of such allocations to the Crowns no later than the earlier of 30 days
from the date hereof and 10 days prior to the Closing Date, and the Crowns and
Buyer shall agree to such allocations at or prior to the Closing Date. The
parties agree that, except as otherwise provided in section 13.5, the sole
consideration allocable to the Mergers is the Castle B Common Stock. Such
allocations shall be set forth on Schedule 13.9 to this Agreement, and all
allocations contained in such Schedule shall be used by the parties in preparing
all relevant Tax returns, information reports and other Tax documents and forms
(unless a contrary allocation is required pursuant to a final determination of a
relevant Governmental Entity).
13.10. Survival. Notwithstanding any other provision in this Agreement,
--------
this Article 13 shall survive the Closing Date and remain in force until the
expiration of the relevant statutes of limitation (including all periods of
extension, whether automatic or permissive).
ARTICLE 14
Miscellaneous
-------------
14.1. Termination of Agreement. This Agreement may be terminated at any
------------------------
time on or prior to the Closing Date (a) by the mutual consent of Sellers and
Buyer; (b) by Sellers or Buyer if the Closing has not taken place by October 31,
1997, and the party seeking to terminate this Agreement has not contributed in
any material way to the failure of the transaction to close by such date; or (c)
by Sellers, if the Buyer has not terminated the Agreement pursuant to clause (x)
of this Section 14.1, below, and Buyer fails or refuses to close the transaction
on the scheduled Closing Date notwithstanding the prior satisfaction or waiver
of all of Buyer's conditions to Closing in Article 11. In addition, this
Agreement may be terminated at any time on or prior to the Due Diligence
Completion Date (x) by Buyer, if Buyer provides a written certification to
Sellers to the effect that Buyer, in good faith, has not confirmed or determined
that it is satisfied in all material respects with respect to the matters
referred to in clause (b) of Section 3.1 and specifying, in reasonable detail,
the reasons supporting such certification; and (y) by Sellers, if Sellers
provide a written certification to Buyer to the effect that Sellers, in good
faith, have not
-59-
confirmed the matters referred to in clause (a) of Section 3.1 and specifying,
in reasonable detail, the reasons supporting such certification. Any such
certification shall be delivered to the other party on or prior to the Due
Diligence Completion Date.
14.2 Liabilities Upon Termination. Except for the obligations contained
----------------------------
in Sections 14.3, 14.7, 14.14 and 14.16 hereof, which shall survive any
termination of this Agreement, and except as provided in the next sentence of
this Section 14.2, upon the termination of this Agreement pursuant to Section
14.1 hereof, this Agreement shall forthwith become null and void, and no party
hereto or any of its officers, directors, employees, agents, consultants or
stockholders, shall have any rights, liabilities or obligations hereunder or
with respect hereto. If this Agreement is terminated (a) by Buyer pursuant to
clause (x) of Section 14.1 or by Buyer or Sellers pursuant to clause (a) or (b)
of Section 14.1, then Sellers shall forthwith return to Buyer the Advance
Payment (and any interest or earnings thereon); (b) by Sellers pursuant to
clause (c) of Section 14.1, then Sellers shall retain the Advance Payment (and
any interest or earnings thereon) as liquidated damages; or (c) by Sellers
pursuant to clause (y) of Section 14.1, then Sellers shall retain one-half of
the Advance Payment (together with one-half of any interest or earnings thereon)
as liquidated damages, and shall forthwith return to Buyer the remaining one-
half of the Advance Payment (together with one-half of any interest or earnings
thereon).
14.3. Expenses. Each party hereto shall bear all its expenses incurred in
--------
connection with the transactions contemplated in this Agreement, including
accounting, legal and financial advisory fees incurred in connection herewith;
provided, however, that (i) Buyer shall pay in the first instance any ▇▇▇▇-
-------- -------
▇▇▇▇▇-▇▇▇▇▇▇ filing fees required to be paid in connection with the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ applications of both Buyer and Sellers referred to in Section 9.2 hereof,
and at Closing the Crown Parties shall reimburse Buyer for 50% of all such ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ filing fees promptly upon presentation by Buyer of appropriate
supporting documentation with respect thereto, (ii) the Buyer shall pay any
sales or transfer taxes arising from the transfer of the Acquired Business to
Buyer as provided in Section 13.5, and (iii) Buyer shall pay the cost of any
reasonable and customary title insurance which Buyer elects to obtain with
respect to any interest in Real Property included in the Acquired Business.
14.4. Bulk Sales Laws. Buyer hereby waives compliance with the provisions
---------------
of any applicable bulk sales law, and Buyer agrees to indemnify and hold Sellers
harmless from all claims made by creditors with respect to non-compliance with
any bulk sales law.
14.5. Assignments. No party hereto may assign any of its rights or
-----------
delegate any of its duties hereunder without the prior written consent of the
other parties, and any such attempted assignment or delegation without such
consent shall be void, except that Buyer may assign any or all of its rights
(but not its obligations) hereunder to CAC III.
14.6. Further Assurances. From time to time prior to, at and after the
------------------
Closing Date, each party hereto will execute all such instruments and take all
such actions as any other party, being advised by counsel, shall reasonably
request in connection with carrying out and effectuating the intent and. purpose
hereof and all transactions and things contemplated by this Agreement, including
the execution and delivery of any and all confirmatory and other instruments
-60-
in addition to those to be delivered on the Closing Date, any and all actions
which may reasonably be necessary or desirable to complete the transactions
contemplated hereby.
14.7. Public Announcement. Prior to the Closing Date, no party shall,
-------------------
without the approval of the others, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that such party shall be so obligated by law, in which case
such party shall give advance notice to the other parties and the parties shall
use all reasonable efforts to cause a mutually agreeable release or announcement
to be issued.
14.8. Notices. Notices and other communications provided for herein shall
-------
be in writing (which shall include notice by facsimile transmission) and shall
be delivered or mailed (or if by facsimile communications equipment of the
sending party hereto, delivered by such equipment), addressed as follows:
If to any of the Crown Parties:
Mr. And ▇▇▇. ▇▇▇▇▇▇ ▇. Crown
c/o Crown Communications
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
If to Buyer, CAC I or CAC II:
Castle Tower Holding Corp.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
-61-
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
or to such other address as a party may from time to time designate in writing
in accordance with this Section 14.8. All notices and other communications given
to any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
14.9. Captions. The captions of Articles and Sections of this Agreement
--------
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
14.10. Governing Law. This Agreement shall be governed by, construed, and
-------------
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to conflict of laws principles.
14.11. Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties and conditions of this Agreement may be amended, modified of waived
only by a written instrument executed by the party sought to be bound thereby.
The failure of any party at any time or times to require performance of any
provision of this Agreement shall in no manner affect the right of such party at
a later date to enforce the same. No waiver by any party of any condition or the
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances
shall be deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
14.12. Counterparts. This Agreement may be executed in several
------------
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that the parties are not
signatory to the same counterpart.
14.13. Entire Agreement. This Agreement and the Confidentiality Agreement
----------------
referenced in Section 14.14, including the Schedules, Exhibits and Annexes
hereto, constitute the entire Agreement between the parties and supersede and
cancel any and all prior agreements between them relating to the subject matter
hereof.
14.14. Confidentiality. All information provided to Buyer or its
---------------
Representatives by or on behalf of Sellers or their affiliates before or after
the date of this Agreement concerning the business, assets, liabilities and
operations of Sellers, the Acquired Business or the Crown Communications
Business shall be governed by the Confidentiality Agreement dated as of June 27,
1997, heretofore executed by Buyer and the Crown Parties. All information
provided to the
-62-
Crown Parties or their respective Representatives by or on behalf of Buyer or
its affiliates before or after the date of this Agreement concerning the
business, assets, liabilities and operations of Buyer and its Subsidiaries and
affiliates shall be governed by the Confidentiality Agreement dated as of June
27, 1997, heretofore executed by the Crown Parties and Buyer.
14.15. Submission to Jurisdiction; Waivers. Each of Buyer, CAC I, CAC II
-----------------------------------
and the Crown Parties hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition of the enforcement of
any judgment in respect thereof, to the exclusive general jurisdiction of the
courts of the Commonwealth of Pennsylvania, the courts of the United States of
America located in the Commonwealth of Pennsylvania and appellate courts from
any of the foregoing;
(b) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same; and
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such party at its
address as provided in Section 14.8 hereof.
14.16. Brokers or Finders. Each party agrees to indemnify and hold the
------------------
other harmless from and against any and all claims, liabilities, or obligations
with respect to any other fees, commissions or expenses asserted by any Person
on the basis of any act or statement alleged to have been made by the other
party or its Affiliates.
14.17. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the term and provisions of this Agreement in any
courts of the Commonwealth of Pennsylvania or any courts of the United States of
America located in the Commonwealth of Pennsylvania, in addition to any other
remedy to which they are entitled at law or in equity.
14.18. Definitions; Construction.
-------------------------
(a) As used herein, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any specified Person, any other
---------
Person directly or indirectly controlling or controlled by or under the direct
or indirect common control with such specified Person. Without limiting the
generality of the foregoing, for purposes of this Agreement, CTSH and its
Subsidiaries shall each be deemed to be an Affiliate of Buyer.
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"Person" means an individual, a corporation, a limited liability
------
company, a partnership, a joint venture, a business association, a trust or any
other entity or organization, including a Governmental Entity.
"Representative" when used with respect to any Person means any
--------------
directors, officers, employees, stockholders, agents or representatives
(including attorneys, accountants, consultants, banks and financial advisors) of
such Person.
"Subsidiary" when used with respect to any Person means any other
----------
Person, whether incorporated or unincorporated, of which at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect at least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries.
(b) The definitions in this Agreement shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and exhibits and Schedules to, this Agreement unless
the context shall otherwise require.
14.19. No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
confer upon any Person other than the parties hereto and their respective
successors and assigns any rights or remedies hereunder.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
▇▇▇▇▇▇ ▇. CROWN,
/s/ ▇▇▇▇▇▇ ▇. CROWN
--------------------------------------------
Individually and as a shareholder of Network
and Mobile
/s/ ▇▇▇▇▇▇ ▇. CROWN
--------------------------------------------
▇▇▇▇▇▇ ▇. Crown, d/b/a Crown Communications
▇▇▇▇▇▇▇ CROWN,
/s/ ▇▇▇▇▇▇▇ CROWN
--------------------------------------------
Individually and as a shareholder of Network
and Mobile
/s/ ▇▇▇▇▇▇▇ CROWN
--------------------------------------------
▇▇▇▇▇▇▇ Crown, d/b/a Crown Communications
CROWN NETWORK SYSTEMS, INC.,
By: /s/ ▇▇▇▇▇▇ ▇. CROWN
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. Crown
Title: Chief Executive Officer and
President
CROWN MOBILE SYSTEMS, INC.,
By: /s/ ▇▇▇▇▇▇ ▇. CROWN
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. Crown
Title: Chief Executive Officer and
President
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ CORP.,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: Chief Executive Officer and
President
CASTLE ACQUISITION CORP. I
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: EVP - CFO
CASTLE ACQUISITION CORP. II
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: EVP - CFO
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