1
Exhibit 2.7
MERGER AGREEMENT
AND PLAN OF REORGANIZATION
AMONG
SPECTRASITE HOLDINGS, INC.,
VPI MERGER SUB, INC.,
VERTICAL PROPERTIES, INC.
AND
THE STOCKHOLDERS OF VERTICAL PROPERTIES, INC.
Dated as of December 30, 1999
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TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS............................................1
Section 1.1 Defined Terms.......................................1
Section 1.2 Terms Defined Elsewhere in this Agreement...........5
Section 1.3 Clarifications......................................7
ARTICLE 2 THE MERGER AND THE MERGER CONSIDERATION..................7
Section 2.1 The Merger..........................................7
Section 2.2 [Intentionally omitted.]...........................10
Section 2.3 [Intentionally omitted.]...........................10
Section 2.4 Qualifying Lease and Qualifying LOI Payments.......10
Section 2.5 Supplemental Payments..............................15
Section 2.6 Tax Treatment of Payments..........................15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
RELATINGTO THE STOCKHOLDERS............................15
Section 3.1 Authorization of Transaction; Consents.............15
Section 3.2 Noncontravention...................................16
Section 3.3 Brokers' Fees......................................16
Section 3.4 Investment.........................................16
Section 3.5 The Shares.........................................17
Section 3.6 Litigation.........................................17
Section 3.7 Disclosure.........................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB..17
Section 4.1 Organization of Buyer and Merger Sub...............17
Section 4.2 Authorization of Transaction; Consents.............18
Section 4.3 Noncontravention...................................18
Section 4.4 Brokers' Fees......................................18
Section 4.5 Share Validity.....................................18
Section 4.6 Securities Law Compliance..........................18
Section 4.7 SEC Filings........................................19
Section 4.8 Disclosure.........................................19
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TABLE OF CONTENTS
(continued)
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
CONCERNING COMPANY.....................................19
Section 5.1 Organization, Qualification, Corporate Power,
Authorization of Transaction......................19
Section 5.2 Capitalization.....................................20
Section 5.3 Noncontravention; Consents.........................20
Section 5.4 Brokers' Fees......................................21
Section 5.5 Title to Assets....................................21
Section 5.6 Subsidiaries.......................................21
Section 5.7 Financial Statements...............................21
Section 5.8 Events Subsequent to Most Recent Fiscal Year End...21
Section 5.9 Undisclosed Liabilities............................23
Section 5.10 Legal Compliance...................................23
Section 5.11 Tax Matters........................................23
Section 5.12 Broadcast Towers; Regulatory Requirements..........25
Section 5.13 Real Property......................................25
Section 5.14 Intellectual Property..............................27
Section 5.15 Tangible Assets....................................27
Section 5.16 Contracts..........................................27
Section 5.17 Notes and Accounts Receivable; Accounts Payable....28
Section 5.18 Powers of Attorney.................................28
Section 5.19 Insurance..........................................28
Section 5.20 Litigation.........................................29
Section 5.21 Employees..........................................29
Section 5.22 Employee Benefits..................................30
Section 5.23 Guaranties.........................................32
Section 5.24 Environmental, Health and Safety Matters...........32
Section 5.25 Certain Business Relationships with the Company....33
Section 5.26 Bank Accounts and Credits..........................33
Section 5.27 Inventory..........................................33
Section 5.28 Product and Service Warranty.......................33
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TABLE OF CONTENTS
(continued)
Section 5.29 Year 2000 Compliance...............................33
Section 5.30 Xxxx-Xxxxx-Xxxxxx..................................34
Section 5.31 Disclosure.........................................34
ARTICLE 6 COVENANTS...............................................34
Section 6.1 Conduct of Business of the Company.................34
Section 6.2 The Stockholders' Actions..........................36
Section 6.3 Other Actions......................................36
Section 6.4 Notification of Certain Matters....................36
Section 6.5 Access to Information..............................37
Section 6.6 Cooperation; Further Assurances....................37
Section 6.7 Public Announcements...............................37
Section 6.8 Confidentiality....................................38
Section 6.9 Expenses; Taxes....................................38
Section 6.10 Control of the Company's Operations................38
Section 6.11 Xxxx-Xxxxx-Xxxxxx Filing...........................38
Section 6.12 Other Buyer Transactions...........................38
Section 6.13 Consents...........................................38
Section 6.14 Employee Benefits Matters..........................39
Section 6.15 Tax Matters........................................39
Section 6.16 Additional Post-Closing Covenants..................40
ARTICLE 7 CONDITIONS TO BUYER'S OBLIGATIONS.......................41
Section 7.1 Performance by the Company and the Stockholders....41
Section 7.2 Truth of Representations and Warranties............41
Section 7.3 Receipt of Consents................................41
Section 7.4 Xxxx-Xxxxx-Xxxxxx Act and other Governmental
Authorizations....................................41
Section 7.5 Deliveries.........................................41
Section 7.6 Material Adverse Effect............................41
Section 7.7 Payment of Company Liabilities.....................41
Section 7.8 Affiliate Loans....................................41
Section 7.9 Post-Closing Lock-Ups..............................42
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TABLE OF CONTENTS
(continued)
Section 7.10 Employment Agreement...............................42
Section 7.11 Certain Proceedings................................42
Section 7.12 Buyer Investigation................................42
Section 7.13 Stockholders' Actions..............................42
Section 7.14 Certificate of Merger..............................42
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS AND THE
COMPANY................................................42
Section 8.1 Performance by Buyer...............................42
Section 8.2 Truth of Representations and Warranties............43
Section 8.3 Deliveries.........................................43
Section 8.4 Certain Proceedings................................43
Section 8.5 Buyer Actions......................................43
Section 8.6 Certificate of Merger..............................43
ARTICLE 9 CLOSING.................................................43
Section 9.1 Closing............................................43
Section 9.2 Deliveries and Actions by the Stockholders and the
Company...........................................43
Section 9.3 Deliveries by Buyer................................45
ARTICLE 10 TERMINATION.............................................45
Section 10.1 Termination........................................45
Section 10.2 Effect of Termination..............................46
ARTICLE 11 INDEMNIFICATION.........................................46
Section 11.1 Survival of Representations and Warranties.........46
Section 11.2 Indemnification by the Stockholders................47
Section 11.3 Indemnification by Buyer...........................48
Section 11.4 Procedure for Indemnification......................48
Section 11.5 Indemnification Escrow.............................50
Section 11.6 Basket Amount......................................50
ARTICLE 12 MISCELLANEOUS...........................................50
Section 12.1 Governing Law......................................50
Section 12.2 Successors and Assigns.............................50
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TABLE OF CONTENTS
(continued)
Section 12.3 Entire Agreement; Amendment........................50
Section 12.4 Notices, Etc.......................................50
Section 12.5 Delays or Omissions................................51
Section 12.6 Counterparts.......................................52
Section 12.7 Severability.......................................52
Section 12.8 Headings...........................................52
Section 12.9 Waiver of Jury Trial...............................52
Section 12.10 Exclusive Benefit..................................52
Section 12.11 Construction.......................................52
Section 12.12 Exhibits and Schedules.............................52
Section 12.13 Enforcement of Agreement...........................52
Section 12.14 Acquisition of Buyer...............................53
Section 12.15 Stockholders' Representative.......................53
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TABLE OF CONTENTS
(continued)
LIST OF SCHEDULES
Schedule A Per Share Merger Consideration
Schedule 2.4 Apportionment of Payments Among the
Stockholders
Schedule 3.2 Authorizations for Transaction;
Noncontravention; Consents
Schedule 4.2 Authorizations of Transaction;
Noncontravention; Consents
Schedule 5.1 Organization, Qualification, Corporate
Power, Authorization of Transaction
Schedule 5.2 Capitalization Stockholders Who Are Also
Employees
Schedule 5.3 Noncontravention; Consents
Schedule 5.5 Permitted Liens
Schedule 5.7(a) Financial Statements
Schedule 5.7(b) Indebtedness for Borrowed Money, Trade
Payables and Consulting Fees
Schedule 5.8 Events Subsequent to Most Recent Fiscal Year
End
Schedule 5.9 Undisclosed Liabilities
Schedule 5.11 Tax Matters
Schedule 5.12(b) Broadcast Towers; Regulatory Requirements
Schedule 5.13 Real Property
Schedule 5.14 Intellectual Property
Schedule 5.15 Tangible Assets
Schedule 5.16 Contracts
Schedule 5.18 Powers of Attorney
Schedule 5.19 Insurance
Schedule 5.20 Litigation
Schedule 5.21 Employees
Schedule 5.22 Employee Benefits
Schedule 5.23 Guaranties
Schedule 5.24 Environmental, Health and Safety Matters
Schedule 5.25 Certain Business Relationships with the
Company
Schedule 5.26 Bank Accounts and Credits
Schedule 5.28 Product and Service Warranty
Schedule 11.2 Indemnification by the Stockholders
LIST OF EXHIBITS
Exhibit A: Stockholders of Vertical Properties, Inc.
Exhibit B: Apportionment of Consideration
Exhibit C: Qualifying Lease and Qualifying LOI Payments;
Operating Budget
Exhibit D: Form of Employment Agreement
Exhibit E: Form of Opinion Letter
Exhibit F: Form of Post-Closing Escrow Agreement
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MERGER AGREEMENT
AND PLAN OF REORGANIZATION
This Merger Agreement and Plan of Reorganization is made and entered
into as of December 30, 1999 by and among SpectraSite Holdings, Inc., a Delaware
corporation (the "Buyer"), VPI Merger Sub, Inc., a Delaware corporation and
wholly owned subsidiary of Buyer ("Merger Sub"), Vertical Properties, Inc., a
New York Corporation (the "Company"), and the Stockholders listed on Exhibit A
hereto (the "Stockholders").
RECITALS
The Stockholders own all of the outstanding capital stock of the
Company. The Company is engaged in site acquisition and leasing for television
and radio transmission broadcast towers for entities in the broadcasting
industry (the "Business").
This Agreement contemplates a transaction in which Merger Sub will
merge with and into the Company (the "Merger") pursuant to this Agreement, the
Certificate of Merger and the applicable provisions of the laws of the State of
Delaware and the State of New York.
The Boards of Directors of each of the Buyer, Merger Sub and the
Company have approved this Agreement and the transactions contemplated by this
Agreement and the Boards of Directors of Merger Sub and the Company have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code (as hereinafter
defined). The Stockholders have approved this Agreement and the transactions
contemplated by this Agreement.
IN CONSIDERATION of the foregoing recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Defined Terms. All capitalized terms not otherwise defined elsewhere
in this Agreement shall have the meanings ascribed to such terms in this Section
1.1.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person
and any officer, director, general partner or family member of such Person. For
purposes of this definition, "control" as applied to any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
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"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the common stock, no par value per share,
of the Company.
"Compensation Arrangement" means any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
employees, former employees, officers, directors, independent contractors or
shareholders of the Company, any compensation or other benefits, whether
deferred or not, in excess of base salary or wages, including any bonus or
incentive plan, stock rights plan, deferred compensation arrangement, life
insurance, stock purchase plan, severance pay plan, change of control
arrangements, and any other employee fringe benefit plan.
"Consent" means the consents, permits and approvals of all Governmental
Authorities and other third parties (or notices to such parties) necessary in
order to consummate the transactions contemplated by this Agreement, including,
without limitation, the Merger, in a lawful manner and without causing a default
under, conflict with, or acceleration, violation or termination of, any legal
requirement or contract or agreement to which any Stockholder or the Company is
a party or bound, whether or not such consent is listed on Schedule 3.2 or
Schedule 5.3.
"Contracts" means all contracts, leases, non-governmental licenses,
options to purchase, options to lease, letters of intent, commitment letters and
other agreements and undertakings (including leases for personal or real
property and employment agreements), written or oral (including any amendments
and other modifications thereto) to which the Company is a party or which are
binding upon the Company or that relate to the assets or operations of the
business of the Company.
"Effective Time" means the time at which the Merger becomes effective,
which shall be the later of the times when the Certificate of Merger is filed in
the Office of the Secretary of State of the State of Delaware and the Office of
the Secretary of State of the State of New York on the Closing Date.
"Employee Plan" means any retirement or welfare plan or arrangement or
any other employee benefit plan as defined in Section 3(3) of ERISA which any
company or any ERISA Affiliate sponsors, maintains or by which any company or
any ERISA Affiliate is bound or to which any company or any ERISA Affiliate
contributes or is required to contribute.
"Environmental, Health and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing,
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discharge, release, threatened release, control or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each
as amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with the Company under Code ss.414(b), (c), (m), (n) or (o).
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Authority" means any federal, state, local political
subdivision or other governmental or regulatory department, court, commission,
board, bureau, agency, authority or instrumentality, foreign or domestic.
"Indebtedness" means (a) all indebtedness of the Company for borrowed
money, secured or unsecured, outstanding immediately prior to the Effective Time
(the "Adjustment Time"), including, without limitation, the aggregate principal
amount thereof, plus all accrued and unpaid interest thereon as of the
Adjustment Time, (b) any other costs, expenses or payments related to such
indebtedness, (c) the amount outstanding in respect of any capitalized lease
obligations of the Company as of the Adjustment Time as determined in accordance
with GAAP, (d) the amount of any guarantees by the Company of the indebtedness
or any other obligation of any other Person, (e) any drawings by the Company
under letters of credit, surety bonds or similar instruments that have not been
reimbursed or repaid as of the Adjustment Time, and (f) the amount of any
prepayment penalty or premium, change of control penalty or premium or other
payment, cost, expense or liability payable in respect of any item set forth in
clauses (a), (b), (c), (d) and (e) hereof arising out of or resulting from the
consummation of the transactions contemplated by this Agreement, including the
discharge at Closing of all Company Liabilities pursuant to Section 7.7.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and
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supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Licenses" means all licenses, permits, authorizations, determinations
and registrations issued by the FCC, the FAA or any other Governmental Authority
to the Company in connection with the conduct of the Business, including all FAA
determinations of no hazard for each broadcast tower and all FCC registrations
for each broadcast tower.
"Liens" means any mortgage, pledge, lien, charge, claim, option,
conditional sales, security interest or other encumbrance, restriction or
limitation of any nature whatsoever.
"Material Adverse Effect" means any material adverse effect on, or
change in, the business, financial condition, net worth, assets, liabilities,
personnel, operations, results of operations or prospects of the Company or the
ability of the Company or any Stockholder to execute, deliver or perform this
Agreement and the other agreements and documents contemplated hereby to which
the Company or any Stockholder is a party.
"Multiemployer Plan" means a plan, as defined in ERISA ss.3(37) to
which the Company or any ERISA Affiliate has contributed, is contributing or is
required to contribute.
"Multiple Employer Plan" means a plan, as defined in ERISA Section
4063(a), which the Company or any ERISA Affiliate sponsors or maintains or to
which the Company or any ERISA Affiliate contributed, is contributing or is
required to contribute.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Buyer Common Stock" means the common stock, par value $0.001 per
share, of Buyer.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any other type of
entity.
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Real Property" means all real property, interests in real property,
leaseholds and subleaseholds, purchase options for real property, lease options
for real property, easements,
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licenses, rights of access, and rights of way and all buildings and other
improvements thereon, of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Shares" means the shares of common stock of the Company, no par value
per share.
"Subsidiary" means, with respect to the Company, any entity of which
the Company (either alone or through or together with any other Subsidiary),
owns directly or indirectly, stock or other equity interests constituting 50% or
more of the voting or economic interest in such entity.
"Tax" or "Taxes" means any and all taxes, fees, duties, tariffs,
imposts and other charges of any kind imposed by any governmental or taxing
authority, including: federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, motor vehicle, ad valorem, value added,
production, sales, use, license, excise, franchise, capital, transfer,
recordation, payroll, employment, excise, severance, stamp, occupation, premium,
environmental (including taxes under Code ss.59A), customs duties, social
security (or similar), unemployment, disability, withholding, alternative or
add-on minimum, or other tax or governmental assessment, together with any
interest, additions, or penalties with respect thereto and any interest in
respect of such additions or penalties, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
information return or other statement or document (including any related or
supporting information, any schedule or attachment thereto and any amendment
thereof) filed or required to be filed with any federal, state, local or foreign
taxing authority in connection with the determination, assessment, collection,
administration or imposition of any Tax.
Section 1.2 Terms Defined Elsewhere in this Agreement. In addition to the
defined terms in Section 1.1, the following is a list of defined terms used in
this Agreement and a reference to the Section hereof in which such term is
defined:
Acquiror...........................................................Section 12.14
Acquiror Capital Stock.............................................Section 12.14
Adjustment Time.................................................... Section 1.1
Agreement.......................................................... Preamble
Bartered Revenue.............................................Section 2.4(f)(iii)
Bartered Value...............................................Section 2.4(f)(iii)
Basket Amount...................................................... Section 11.6
Business........................................................... Recitals
Buyer.............................................................. Preamble
Buyer Indemnified Parties.......................................... Section 11.2
CERCLA...........................................................Section 5.24(e)
Certificates......................................................Section 2.1(g)
Change of Control Transaction......................................Section 12.14
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Claimant........................................................ Section 11.4(a)
Closing ........................................................ Section 9.1
Closing Date.................................................... Section 9.1
COBRA........................................................... Section 5.22(h)
Commencement Date............................................Section 2.4(f)(iii)
Company......................................................... Preamble
Company Liabilities............................................. Section 2.1(e)
DGCL............................................................ Section 2.1(c)
Employee Stockholders........................................... Section 5.2
Employment Agreement............................................ Section 7.10
Escrow Agent...................................................Section 2.1(f)(i)
Financial Statements............................................ Section 5.7
Xxxx-Xxxxx-Xxxxxx Act........................................... Section 6.11
Indemnification Funds........................................... Section 11.5
Indemnifying Party.............................................. Section 11.4(a)
Lock-Up Agreements.............................................. Section 7.9
Losses.......................................................... Section 11.2
Material Consents............................................... Section 7.3
Merger.......................................................... Recitals
Merger Sub...................................................... Preamble
Merger Consideration............................................ Section 2.1(d)
Most Recent Fiscal Year End..................................... Section 5.7
NYBCL..........................................................Section 2.1(b)(i)
Original Appraisers..........................................Section 2.4(f)(iii)
Per Share Merger Consideration.................................. Section 2.1(d)
Permitted Liens................................................. Section 5.5
Post-Closing Escrow Agreement................................... Section 11.5
Project Cost.................................................... Section 2.4(f)
Qualifying Lease................................................ Section 2.4(f)
Qualifying LOI.................................................. Section 2.4(f)
Qualifying Lease Payment Due.................................... Section 2.4(f)
Qualifying Lease Value.......................................... Section 2.4(a)
Qualifying LOI Payment Due...................................... Section 2.4(f)
Qualifying LOI Value............................................ Section 2.4(b)
Qualifying Project.............................................. Section 2.4(f)
Real Property Fair Market Value..............................Section 2.4(f)(iii)
Real Property Options........................................... Section 5.13(g)
Representatives................................................. Section 6.5
Stockholders.................................................... Preamble
Stockholders' Indemnified Parties............................... Section 11.3
Stockholders' Representative.................................... Section 12.15
Surviving Corporation........................................... Section 2.1(a)
SWDA............................................................ Section 5.24(e)
Systems......................................................... Section 5.29
Termination Date..............................................Section 10.1(b)(i)
Third Appraiser..............................................Section 2.4(f)(iii)
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Treasury Regulations............................................ Section 5.11(f)
Value........................................................... Section 2.4(f)
VPI Markets..................................................... Section 2.4(f)
Year 2000 Compliant............................................. Section 5.29
Year 5.......................................................... Section 2.4(f)
Year 5 Cash Flow................................................ Section 2.4(f)
Section 1.3 Clarifications. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender and any other number as the context requires. Use of the word "including"
herein shall be deemed and construed to mean "including but not limited to."
Except as specifically provided otherwise in this Agreement in a particular
instance, a reference to a Section or Schedule is a reference to a Section of
this Agreement or a Schedule attached hereto, and the terms "hereof," "herein"
and other like terms refer to this Agreement as a whole, including the Schedules
hereto, and not solely to any particular part hereof.
ARTICLE 2
THE MERGER AND THE MERGER CONSIDERATION
Section 2.1 The Merger.
(a) The Merger. On and subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged with and into the Company
pursuant to this Agreement. Subject to the provisions of this Agreement, the
parties shall cause a Certificate of Merger as contemplated by Section 252 of
the DGCL and Section 907 of the NYBCL (the "Certificate of Merger") to be filed
in the Office of the Secretary of State of the State of Delaware and the Office
of the Secretary of State of the State of New York on the Closing Date, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation").
(b) Certificate of Incorporation; Bylaws; Directors and Officers. At the
Effective Time:
(i) The Certificate of Incorporation of the Company shall continue as the
Certificate of Incorporation of the Surviving Corporation, unless and until
thereafter amended as provided therein and under the Business Corporation Law of
the State of New York (the "NYBCL").
(ii) The Bylaws of the Company shall continue as the Bylaws of the Surviving
Corporation, unless and until thereafter amended as provided therein and under
the NYBCL.
(iii) The directors and officers of the Surviving Corporation shall be the
individuals designated by Buyer as of the Effective Time, until their successors
are elected and qualified.
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(c) Effects of the Merger. The Merger shall have the effects provided therefor
by the Delaware General Corporation Law ("DGCL") and the NYBCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time (i)
all the rights, privileges, immunities, powers and franchises, of a public as
well as of a private nature, and all property, real, personal and mixed, and all
debts due on whatever account, including without limitation subscriptions to
shares, and all other choices in action, and all and every other interest of or
belonging to or due to the Company or Merger Sub shall be taken and deemed to be
transferred to, and vested in, the Surviving Corporation without further act or
deed; and all property, rights and privileges, immunities, powers and franchises
and all and every other interest shall be thereafter the property of the
Surviving Corporation, as they were of the Company and Merger Sub, and (ii) all
debts, liabilities, duties and obligations of the Company and Merger Sub shall
become the debts, liabilities, duties and obligations of the Surviving
Corporation and the Surviving Corporation shall thenceforth be responsible and
liable for all the debts, liabilities, duties and obligations of the Company and
Merger Sub and neither the rights of creditors nor any liens upon the property
of the Company or Merger Sub shall be impaired by the Merger, and may be
enforced against the Surviving Corporation.
(d) Manner of Conversion of Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Buyer, Merger Sub or the Company,
the shares of capital stock of Merger Sub and the Company shall be converted as
follows:
(i) Capital Stock of Merger Sub. Each issued and outstanding share of capital
stock of Merger Sub shall be converted into and exchanged for one fully paid and
nonassessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
(ii) Cancellation of Certain Shares of Capital Stock of the Company. All shares
of capital stock of the Company that are owned directly or indirectly by the
Company shall be canceled and no consideration shall be delivered in exchange
therefor.
(iii) Conversion of Certain Other Shares of Capital Stock of the Company. All of
the issued and outstanding shares of the Company Common Stock that are issued
and outstanding immediately prior to the Effective Time shall be converted into
the right to receive the Per Share Merger Consideration as set forth herein and
subject to the terms and provisions of the Post-Closing Escrow Agreement.
(iv) [Intentionally omitted.]
(v) Adjustments to the Merger Consideration. If, on or prior to the Effective
Time, Buyer should split or combine the Buyer Common Stock, or pay a stock
dividend or other stock distribution on the Buyer Common Stock, or otherwise
change the Buyer Common Stock into any other securities, or make any other
dividend or distribution on the Buyer Common Stock (other than normal quarterly
dividends, as the same may be adjusted from time to time and in the ordinary
course), then the number of the shares of Buyer Common Stock issuable as the
Merger Consideration will be appropriately adjusted to reflect such split,
combination, dividend or other distribution or change.
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(vi) "Per Share Merger Consideration" means a number of shares of Buyer Common
Stock equal to the Merger Consideration, divided by the number of shares of
Company Common Stock issued and outstanding immediately prior to the Effective
Time, which is set forth on Schedule 5.2 hereto (rounded up or down to the
nearest whole number of shares of Buyer Common Stock).
(vii) "Merger Consideration" means 225,000 shares of Buyer Common Stock.
(e) At the Closing, Buyer shall pay each of the Persons identified on Schedule
5.7(b) the amount set forth opposite such Person's name thereon (collectively,
the "Company Liabilities") by wire transfer of immediately available funds to
the account of such Person specified on Schedule 5.7(b), such amounts
representing repayment or satisfaction in full of all amounts owed by the
Company to each such Person.
(f) At the Effective Time, Buyer shall give written instructions to its transfer
agent to deliver certificates representing the Merger Consideration to the
Persons set forth below as follows:
(i) as soon as practicable following the Merger, to Wachovia Bank, as escrow
agent (the "Escrow Agent") pursuant to the Post-Closing Escrow Agreement, a
certificate representing 22,500 shares of Buyer Common Stock, to be held
pursuant to the Post-Closing Escrow Agreement and delivered to the Stockholders
and/or Buyer in accordance therewith; and
(ii) as soon as practicable after receipt by such transfer agent of each
Stockholder's certificate representing its shares of Company Common Stock, to
each Stockholder, a certificate representing a number of shares of Buyer Common
Stock equal to 202,500, multiplied by the fraction set forth opposite such
Stockholder's name on Schedule 5.2 hereto.
(g) Certificate Delivery Requirements. At the Effective Time, each Stockholder
shall deliver to Buyer the certificates (the "Certificates") representing the
shares of Company Common Stock held by him or her, accompanied by blank stock
powers duly executed and with all necessary transfer tax and other revenue
stamps, acquired at such Stockholder's expense, affixed and canceled. The
Stockholders shall promptly cure any deficiencies with respect to the stock
powers accompanying such Certificates. The Certificates so delivered shall
forthwith be delivered by Buyer to its transfer agent and thereupon canceled.
Until canceled as contemplated by this Section 2.1(g), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the number of shares of Buyer Common Stock as provided by, and in
accordance with, this Agreement.
(h) No Further Ownership Rights in Capital Stock of the Company. All shares of
Buyer Common Stock to be delivered upon the surrender of Certificates
representing the shares of Company Common Stock in accordance with the terms
hereof shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such shares, and following the Effective Time, the Stockholders
shall have no further rights to, or ownership in, shares of
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capital stock of the Company or the Surviving Corporation. There shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 2.1.
(i) Lost, Stolen or Destroyed Certificates. If any Certificates evidencing
shares of Company Common Stock shall have been lost, stolen or destroyed, then
Buyer shall give written instructions to its transfer agent to deliver a portion
of the Merger Consideration in exchange for such lost, stolen or destroyed
Certificates as calculated in accordance with this Section 2.1, upon the
delivery to Buyer and its transfer agent by the relevant Stockholder of an
affidavit of that fact by the holder thereof; provided, however, that Buyer may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificates to deliver an indemnity
bond having such terms as it may reasonably direct as indemnity against any
claim that may be made against Buyer and its transfer agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
Section 2.2 [Intentionally omitted.]
Section 2.3 [Intentionally omitted.]
Section 2.4 Qualifying Lease and Qualifying LOI Payments.
(a) Qualifying Lease Payment. On the Qualifying Lease Payment Date, if there are
one or more Qualifying Leases, Buyer will make a payment to the Stockholders, in
the aggregate, equal to four times the Value of each Qualifying Lease (the
"Qualifying Lease Value"). Subject to Section 2.4(c), such payment shall be made
by the delivery to the Stockholders of, at Buyer's option, either (i) cash, in
an amount equal to the Qualifying Lease Value, by wire transfer of immediately
available funds to the accounts of the Stockholders designated by the
Stockholders' Representative in writing not later than two business days prior
to the Qualifying Lease Payment Date or (ii) shares of Buyer Common Stock in an
amount determined in accordance with the following sentence or (iii) any
combination of cash (by wire transfer of immediately available funds to the
accounts of the Stockholders designated by the Stockholders' Representative in
writing not later than two business days prior to the Qualifying Lease Payment
Date) and shares of Buyer Common Stock, with an aggregate value equal to the
Qualifying Lease Value on the Qualifying Lease Payment Date (with the value of
each share of Buyer Common Stock determined in accordance with the following
sentence) as determined by Buyer in its sole discretion. If Buyer elects to
deliver shares of Buyer Common Stock, the number of shares shall be determined
by dividing the Qualifying Lease Value on the Qualifying Lease Payment Date by
the weighted average daily closing price for the shares of Buyer Common Stock as
quoted on the Nasdaq National Market and reported to The Wall Street Journal
during the period of thirty consecutive trading days ending on the third
business day prior to the Qualifying Lease Payment Date. Any fractional shares
resulting from such calculation shall be rounded up or down to the nearest whole
share.
(b) Qualifying LOI Payment. On the Qualifying LOI Payment Date, if there are one
or more Qualifying Leases which resulted from Qualifying LOI's for which Buyer
did
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not make a payment to the Stockholders pursuant to Section 2.4(a), Buyer
will make a payment to the Stockholders, in the aggregate, equal to four times
the Value of each Qualifying Lease (other than a Qualifying Lease in respect of
which a payment has been made pursuant to Section 2.4(a)) resulting from a
Qualifying LOI (the "Qualifying LOI Value"). Subject to Section 2.4(c), such
payment shall be made by the delivery to the Stockholders of, at Buyer's option,
either (i) cash, in an amount equal to the Qualifying LOI Value by wire transfer
of immediately available funds to an account designated by the Stockholders'
Representative in writing not later than two business days prior to the
Qualifying LOI Payment Date (ii) shares of Buyer Common Stock, in an amount
determined in accordance with the following sentence or (iii) any combination of
cash (by wire transfer of immediately available funds to the accounts of the
Stockholders designated by the Stockholders' Representative in writing not later
than two business days prior to the Qualifying LOI Payment Date) and shares of
Buyer Common Stock, with an aggregate value equal to the Qualifying LOI Value on
the Qualifying LOI Payment Date (with the value of each share of Buyer Common
Stock determined in accordance with the following sentence) as determined by
Buyer in its sole discretion. If Buyer elects to deliver shares of Buyer Common
Stock the number of shares shall be determined by dividing the Qualifying LOI
Value by the weighted average closing price for the shares of Buyer Common Stock
as quoted on the Nasdaq National Market and reported in The Wall Street Journal
during the period of thirty consecutive trading days ending on the third
business day prior to the Qualifying LOI Payment Date. Any fractional shares
resulting from such calculation shall be rounded up or down to the nearest whole
share.
(c) Any payments to be made to the Stockholders pursuant to Sections 2.4(a) and
2.4(b) shall be made such that the aggregate amount of cash paid to the
Stockholders pursuant to Section 2.4(a) and 2.4(b) shall not exceed 20% of the
aggregate value of all consideration received by such Stockholders pursuant to
Sections 2.1(d), 2.4(a) and 2.4(b).
(d) Payments and Deliveries. All payments and deliveries to be made pursuant to
Sections 2.4(a) and (b) shall be apportioned among the Stockholders in
accordance with Schedule 5.2 hereto.
(e) Operations Pending Payment. The Stockholders and Buyer agree as follows with
respect to the operations of the Surviving Corporation and the matters
contemplated by this Section 2.4:
(i) the Surviving Corporation will, for at least the twenty-four (24) month
period following Closing, operate as the development department of Buyer's
Broadcast Division, subject to the provisions of this Agreement, including
clause (iii) below;
(ii) For the twenty-four (24) month period following Closing, Buyer will
authorize an annual operating budget for the Surviving Corporation at least
equal to that set forth in Part 1 of Exhibit C annexed hereto and shall provide
the Surviving Corporation with funds consistent therewith.
(iii) Buyer shall be entitled to conduct its and its subsidiaries' business and
operations, and the business and operations of the Surviving Corporation in a
manner consistent with the judgment of Buyer's Board of Directors and Buyer's
management as to the
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best interest of Buyer and its subsidiaries (including the Surviving
Corporation) and may take actions consistent with such judgment, including,
without limitation, making any of the determinations called for by this
Agreement, acquiring any assets, stock or other ownership interests of any
person or entity (by purchase of assets or equity interests, merger,
consolidation or otherwise) or selling or otherwise disposing of all or any part
of the assets or equity interests of Buyer or its subsidiaries (including the
Surviving Corporation) and Buyer shall have no obligation or liability to the
Stockholders in respect of any such actions. Notwithstanding the foregoing, no
such actions taken by Buyer shall relieve Buyer from its obligations to provide
funds pursuant to Section 2.4(e)(ii) and to make the payments pursuant to
Sections 2.4(a) and 2.4(b), if any. Without limiting the generality of the
foregoing, the Stockholders acknowledge and agree that no representations,
warranties, covenants or agreements have been made to the Stockholders as to the
expected performance of Buyer or the Surviving Corporation, as to the expected
amount of the Qualifying Lease Value, the Qualifying LOI Value or the payments
to be made pursuant to Sections 2.4(a) and 2.4(b), or any guarantee as to the
amount of the Qualifying Lease Value, the Qualifying LOI Value or the payments
to be made pursuant to Sections 2.4(a) and 2.4(b).
(iv) Buyer shall cause the Surviving Corporation to commence construction of
each broadcast tower for each project which is a Qualifying Project within 60
days after obtaining all necessary governmental permits and Licenses for the
construction and completion thereof.
(f) Definitions. For purposes of this Agreement, the following terms shall have
the meanings set forth below:
"Project Cost" means in respect of any applicable Qualifying
Project the entire projected wholesale cost of a Qualifying Project, as
determined in the reasonable discretion of Buyer, taking into account the type
of tower to be built, and relevant economic and market factors and other matters
customarily taken into account in the tower business in determining the cost of
a project, and which amount shall include $200,000 in respect of general and
administrative costs of the Company allocable to each such Qualifying Project.
"Qualifying Lease" shall mean a lease associated with a
Qualifying Project, executed by a tenant and one of Buyer's subsidiaries (a)
within seventeen (17) months following the Closing Date or (b) within 23 months
following the Closing as a result of a Qualifying LOI if such lease is not a
lease described in clause (a) hereof, and, in any such case, otherwise meeting
the criteria set forth in Part 2 of Exhibit C hereto.
"Qualifying LOI" means a letter of intent (in form and
substance reasonably satisfactory to Buyer) executed by the proposed tenant and
one of Buyer's subsidiaries within seventeen (17) months following the Closing
Date with respect to entry into a Qualifying Lease and which in fact results in
execution by the tenant and such subsidiary of a Qualifying Lease within
twenty-three (23) months following the Closing Date.
"Qualifying Lease Payment Date" means the date eighteen (18)
months following the Closing Date (and if such date is not a business day on the
first business day thereafter).
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"Qualifying LOI Payment Date" means the date twenty-four (24)
months following the Closing Date (and if such date is not a business day on the
first business day thereafter).
"Qualifying Project" means a project for the construction of a
tower facility located within a VPI Market that meets each of the following
criteria:
(i) All tenants for the project must be reasonably satisfactory to Buyer and
credit-worthy and at least one such tenant must be a television and/or radio
broadcaster.
(ii) With respect to each project, there must be a minimum lease Value for the
first full year of the lease term greater than or equal to twelve percent (12%)
of Project Cost.
(iii) If a project includes deferred rent associated with land barter, capital
contribution, or other barter type agreements or other non-cash terms, all such
arrangements and terms shall be reasonably satisfactory to Buyer. Without
limiting the foregoing, with respect to any project for which the Company
acquires or leases real property from any Person in exchange for deferred or
free rental payments for tower space by the Person from which the Company
acquires or leases such real property, "Bartered Revenue" means the Bartered
Value divided by the number of years of deferred or free rental payments for
tower space (provided, however, that if such free rental is perpetual, the
Bartered Value shall be divided by 30). Bartered Value shall be determined as
follows. Buyer and Sellers' Representative shall negotiate in good faith to
establish the value of any real property acquired or leased by the Company in
exchange for deferred or free rental payments for tower space on such project
(the "Bartered Value"). If Buyer and Sellers' Representative are unable to reach
agreement on such Bartered Value within 15 days of the commencement of
discussions to establish such value (such fifteenth day, the "Commencement
Date"), each of Buyer and Sellers' Representative shall select an appraiser of
real estate of good reputation in the market in question (the "Original
Appraisers") to determine the value of such real property, which shall be the
fair market value thereof at which a willing seller would sell and willing buyer
would buy, in the case of real property acquired by the Company, and the value
thereof at which a willing lessor and a willing lessee would lease for such
term, in the case of real property leased by the Company, and, in each case,
without being under compulsion to buy, sell or lease, as applicable, and each
having all material information related to the property, and based, among other
things, upon the use to be made of such real property and the uniqueness of such
property for such use in the relevant market (the "Real Property Fair Market
Value"), and the Bartered Value of such real property shall be the average of
the Real Property Fair Market Value determined by such appraisers; provided,
however, that if the Real Property Fair Market Value determined by one Original
Appraiser is ten percent (10%) greater or less than the Real Property Fair
Market Value determined by the other Original Appraiser, the Original Appraisers
shall select a third appraiser of real estate of good reputation in the market
in question (the "Third Appraiser") to determine the Real Property Fair Market
Value, and the Bartered Value shall be the average of the two Real Property Fair
Market Value determinations which are closer in value to each other. The costs
and expenses of all such appraisers shall be paid one-half by Buyer and one-half
by Sellers. The Original Appraisers shall complete their determination of the
Real Property Fair Market Value
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by the 30th day after the Commencement Date and the Third Appraiser, if any,
shall complete its determination of the Real Property Fair Market Value by
the 30th day following its selection.
(iv) The proposed site of the tower facility must at the time of determination
either (x) be in receipt of all necessary governmental permits or licenses for
the construction and completion of the project and be in compliance with all
applicable zoning laws, ordinances, rules and regulations; or (y) there must be
a zoning feasibility study, completed by a person or entity reasonably
satisfactory to Buyer, in form and substance reasonably satisfactory to Buyer,
that demonstrates, to the reasonable satisfaction of Buyer that all necessary
governmental permits or licenses for the construction and completion of the
project can be obtained within a reasonable period of time and that there are no
conflicts with zoning laws, ordinances, rules or regulations that could not be
expected to be resolved satisfactorily (as determined in the reasonable
discretion of Buyer within a reasonable period of time.
(v) The project must be projected to produce an unlevered, compounded internal
rate of return equal to 25%, based upon Project Cost, a terminal value of twelve
times Year 5 Cash Flow and a term of five (5) years, calculated in good faith by
Buyer, as illustrated in Part 3 of Exhibit C hereto.
It is understood and agreed that Buyer may, but shall have no
obligation to, agree that a project is a Qualifying Project, even if such
project fails to meet one or more of the foregoing criteria, and that
commencement of construction of a project within 24 months of the Closing Date
shall constitute such agreement.
"Value" means, for purposes of a Qualifying Lease, the first
year lease revenue, including, without limitation, any management fees in
respect thereof payable to the Company and any Bartered Revenue of a Qualifying
Lease, net of (a) recurring expenses (including, without limitation, land rent,
taxes and maintenance costs in the case of a "triple net" lease to the extent
included in the calculation of lease revenue and land rent, taxes and
maintenance costs in the case of a "gross" lease), such expenses as reasonably
determined by Buyer, and (b) any prepaid rent for periods subsequent to such
first year.
"VPI Markets" means those markets described in Part 4 of
Exhibit C hereto.
"Year 5 Cash Flow" with respect to any project shall mean the
projected cash flow (i.e., net income associated with such project before
interest, taxes, depreciation and amortization) from leases for tower space on
such project for the fifth (5th) full year of the lease term for such project,
as such completion date is determined Buyer ("Year Five"), from (i) radio and
television broadcasters and (ii) any other Person with which the Surviving
Corporation has entered into a binding letter of intent or binding agreement for
the rental of tower space on such project which includes Year Five, determined
in the reasonable discretion of Buyer.
(f) Determinations. It is understood and agreed that all
determinations of Buyer made pursuant to this Section 2.4 shall be made in good
faith and the reasonable discretion of Buyer and so long as made in good faith
and reasonably, shall be final and binding on the Stockholders for all purposes
of this Agreement and otherwise and shall not be subject to challenge by the
Stockholders.
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Section 2.5 Supplemental Payments. The parties agree that the payments to be
made to the Stockholders in exchange for their shares of Company Common Stock
pursuant to Section 2.4 are being made with respect to the initial exchange, but
are being delayed from the Closing because of the difficulty in determining the
value of the Company as of the Closing and for other valid business reasons.
Such payments (i) are not being made as compensation, royalties or other
consideration other than as consideration for the shares of Company Common
Stock, (ii) are not subject to adjustment by reason of any tax audit of the
Company or Stockholders and (iii) shall be made no later than five (5) years
from the Closing Date. The parties further agree that the rights to receive any
payments pursuant to this Article 2 shall not be assignable except by operation
of law. Any shares of Buyer Common Stock deposited with the Escrow Agent
pursuant to Section 2.1(f)(i) shall be reflected as issued and outstanding on
Buyer's balance sheet, and all dividends with respect to such shares of Buyer
Common Stock shall be for the account of the party receiving such shares of
Buyer Common Stock upon distribution by the Escrow Agent pursuant to the
Post-Closing Escrow Agreement, and all voting rights with respect to such shares
of Buyer Common Stock shall be exercisable by the Stockholders unless
distributed by the Escrow Agent to Buyer. The Stockholders' receipt of such
shares of Buyer Common Stock shall not be subject to employment conditions, and
such shares of Buyer Common Stock shall be released from escrow no later than
five (5) years from the Closing Date.
Section 2.6 Tax Treatment of Payments. The parties intend that the transaction
being contemplated by this Agreement will constitute a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and that they
will reasonably cooperate in taking any actions required or appropriate in order
to qualify for such treatment, including, without limitation, the filing of
appropriate reports, elections and declarations with the Internal Revenue
Service with respect to the transaction characterizing it as such.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS RELATING TO
THE STOCKHOLDERS
Each of the Stockholders hereby represents and warrants to Buyer that
the statements contained in this Article 3 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article 3).
Section 3.1 Authorization of Transaction; Consents. Each Stockholder has full
power and authority to execute and deliver this Agreement and the agreements
contemplated hereby and to perform his obligations hereunder and thereunder.
This Agreement constitutes the valid and legally binding obligation of each
Stockholder, enforceable against him or her in accordance with its terms and
conditions. Except as set forth in Schedule 3.2, none of the Stockholders needs
to give any notice to, make any filing with, or obtain any authorization,
consent or approval of any Governmental Authority or other third party in order
to consummate the transactions contemplated by this Agreement and the agreements
contemplated hereby and the transactions contemplated hereby and thereby in a
lawful manner and without causing a
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default under, conflict with, or acceleration, violation or termination of
any legal requirement and contract or agreement to which any Stockholder or the
Company is a party or bound.
Section 3.2 Noncontravention. Except for any notices that may be required
pursuant to the Xxxx-Xxxxx-Xxxxxx Act or as otherwise set forth in Schedule 3.2,
neither the execution and delivery of this Agreement and the agreements
contemplated hereby by any Stockholder, nor the consummation of the transactions
contemplated hereby and thereby by any Stockholder, will (A) violate any
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any Governmental Authority to which any Stockholder or
the Company is subject or any provision of the Company's organizational
documents or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any Stockholder or the Company is a party or by which any of them is bound or to
which any of their assets are subject.
Section 3.3 Brokers' Fees. None of the Stockholders has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated hereby.
Section 3.4 Investment. Each of the Stockholders (A) understands that the shares
of Buyer Common Stock to be delivered to them pursuant to this Agreement have
not been, and will not be, registered under the Securities Act, or under any
state securities laws, and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (B) is
acquiring the shares of Buyer Common Stock to be acquired by it pursuant to this
Agreement solely for his own account for investment purposes and not with a view
to the distribution thereof, (C) is a sophisticated investor with knowledge and
experience in business and financial matters, (D) has received certain
information concerning Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding the shares of Buyer Common Stock to be acquired by it pursuant to this
Agreement, (E) is able to bear the economic risk and lack of liquidity inherent
in holding the shares of Buyer Common Stock to be acquired by it pursuant to
this Agreement, and (F) is an Accredited Investor. Each of the Stockholders
understands that he will be required to sign a Lock-Up Agreement pursuant to
Section 7.9 and that the Lock-Up Agreement will contain certain restrictions on
the transfer of the shares of Buyer Common Stock to be acquired by it pursuant
to this Agreement. Each of the Stockholders understands and agrees that the
certificates representing the shares of Buyer Common Stock to be acquired by it
pursuant to this Agreement will bear a legend substantially to the following
effect:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 NOR UNDER APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY
HAVE BEEN REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
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THE CORPORATION IS AUTHORIZED TO ISSUE DIFFERENT CLASSES AND SERIES OF
CAPITAL STOCK. THE CORPORATION WILL FURNISH ANY SHAREHOLDER WITHOUT
CHARGE, UPON REQUEST IN WRITING, A STATEMENT OF THE DESIGNATIONS,
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE TO EACH CLASS
OF CAPITAL STOCK OF THE CORPORATION AND OF VARIATIONS IN RIGHTS,
PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES AND THE
AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE THE VARIATIONS FOR
FUTURE SERIES.
Section 3.5 The Shares. The shares of Company Common Stock held by the
Stockholders and set forth on Exhibit A hereto constitute all of the issued and
outstanding shares of capital stock of the Company and are free and clear of any
restrictions on transfer, Taxes, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. None of the Stockholders
is a party to any option, warrant, purchase right or other contract or
commitment that could require him to sell, transfer or otherwise dispose of any
capital stock of the Company (other than this Agreement) or that would require
the Company to issue any capital stock of the Company to any Person. None of the
Stockholders is a party to any voting trust, proxy or other agreement or
understanding with respect to the voting of any capital stock of the Company,
other than this Agreement, or any other agreement or understanding relating to
the Company or its capital stock.
Section 3.6 Litigation. None of the Stockholders is (i) subject to any
outstanding injunction, judgment, order, decree, ruling or charge or (ii) is a
party to or, to the Knowledge of such Stockholder, is threatened to be made a
party to, any action, suit, proceeding, hearing or investigation of, in or
before any court or quasi judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator that could result
in a Material Adverse Effect.
Section 3.7 Disclosure. The representations and warranties contained in this
Article 3 do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements and information
in this Article 3 not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Each of Buyer and Merger Sub represents and warrants to the Company and
the Stockholders as to itself only that the statements contained in this Article
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article 4).
Section 4.1 Organization of Buyer and Merger Sub. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger
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Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
Section 4.2 Authorization of Transaction; Consents. Each of Buyer and Merger Sub
has full power and authority to execute and deliver this Agreement and the
agreements contemplated hereby and to perform its obligations hereunder and
thereunder. This Agreement constitutes the valid and legally binding obligation
of each of Buyer and Merger Sub, enforceable against them in accordance with its
terms and conditions. Except for any notices that may be required pursuant to
the Xxxx-Xxxxx-Xxxxxx Act or under federal or state securities laws or as
otherwise set forth on Schedule 4.2, neither Buyer nor Merger Sub needs to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Authority or other third party in order to
consummate the transactions contemplated by this Agreement and the agreements
contemplated hereby in a lawful manner and without causing a default under,
conflict with, or acceleration, violation or termination of any legal
requirement or contract or agreement to which Buyer or Merger Sub is a party or
bound.
Section 4.3 Noncontravention. Except for any notices that may be required
pursuant to the Xxxx-Xxxxx-Xxxxxx Act or under federal or state securities laws
or as otherwise set forth on Schedule 4.2, neither the execution and delivery by
each of Buyer and Merger Sub of this Agreement and the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby and thereby
by Buyer and Merger Sub, will (A) violate any statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which Buyer or Merger Sub is subject or any provision
of its certificate of incorporation or bylaws or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Buyer or Merger Sub is a party or by which it is bound or
to which any of its assets is subject.
Section 4.4 Brokers' Fees. Neither Buyer nor Merger Sub has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement, except for the
broker fee payable to Communications Equity Associates.
Section 4.5 Share Validity. The shares of Buyer Common Stock issuable to the
Stockholders pursuant to this Agreement shall be, upon issuance in accordance
with this Agreement duly authorized, validly issued, fully paid and
nonassessable, and free and clear of any liens and preemptive and other similar
rights.
Section 4.6 Securities Law Compliance. Buyer has given the Stockholders'
Representative and his agents, and agrees to continue to give the Stockholders'
Representative and his agents through the Closing Date, the opportunity to ask
questions of, and receive answers from, executive officers of Buyer concerning
Buyer and the shares of Buyer Common Stock issuable to the Stockholders pursuant
to this Agreement. Neither Buyer nor, to Buyer's Knowledge, any Person acting on
its behalf has, in connection with the shares of Buyer Common Stock to be issued
pursuant to this Agreement engaged in (A) any form of general solicitation or
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general advertising (as those terms are used within the meaning of Rule 502(c)
under the Securities Act), (B) any action involving a public offering within the
meaning of Section 4(2) of the Securities Act, or (C) any action that would
require the registration under the Securities Act of the offering and sale of
the shares of Buyer Common Stock to be issued pursuant to this Agreement or that
would violate applicable state securities or "Blue Sky" laws. The Buyer has not
made and will not prior to the Closing make, directly or indirectly, any offer
or sale of securities of the same or a similar class as the shares of Buyer
Common Stock to be issued pursuant to this Agreement if as a result the issuance
of the shares of Buyer Common Stock to be issued pursuant to this Agreement
would fail to be entitled to exemption from the registration requirements of the
Securities Act. As used in this Section 4.6, the terms "offer" and "sale" have
the meanings specified in Section 2(3) of the Securities Act.
Section 4.7 SEC Filings. Buyer's filings with the Securities and Exchange
Commission since September 2, 1999, did not at the time they were filed contain
any untrue statement of a material fact or omit to state any material fact
required to be stated or necessary in order to make the statements made in those
reports, in light of the circumstances under which they were made, not
misleading.
Section 4.8 Disclosure. The representations and warranties contained in this
Article 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 4 not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
CONCERNING COMPANY
Each Stockholder and the Company represents and warrants to Buyer that
the statements contained in this Article 5 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article 5).
Section 5.1 Organization, Qualification, Corporate Power, Authorization of
Transaction.
(a) The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of New York. The Company is duly authorized
to conduct business and is in good standing under the laws of the jurisdictions
set forth on Schedule 5.1, which are the only jurisdictions where such
qualification is required except where failure to be so qualified would not have
a Material Adverse Effect. The Company has full power and authority necessary to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. Schedule 5.1 lists the directors and officers of the
Company. The Company has delivered to Buyer correct and complete copies of the
charter and bylaws of the Company (as amended to date) and complete copies of
the minute books (containing the records of meetings of the stockholders, the
board of directors and any committees of the board
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of directors), the stock certificate books and the stock record books of the
Company. The Company is not in default under or in violation of any provision
of its charter or bylaws.
(b) The Company has full corporate power and authority to execute and deliver
this Agreement and the agreements contemplated hereby and to perform its
obligations hereunder and thereunder. The execution and the delivery of this
Agreement and the agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Board of Directors and the Stockholders,
which constitutes all corporate and stockholder action necessary on the part of
the Company and its stockholders to authorize the execution and delivery of this
Agreement and the agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby by the Company. The Company has
provided Buyer with a true, correct and complete copies of unanimous written
consents of its Board of Directors and Stockholders authorizing the execution
and delivery of this Agreement and the agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby and such
unanimous written consents remain in full force and effect, and have not been
amended, modified or rescinded. No Stockholder has exercised or perfected its
rights to receive payment for shares pursuant to Section 910 of Chapter 855 of
the NYBCL.
Section 5.2 Capitalization. The entire authorized capital stock of the Company
consists of 200 shares of Company Common Stock, of which 100 shares are issued
and outstanding and held by the Stockholders (and no shares are held in
treasury). Each of the Stockholders owns, legally and beneficially, the number
of shares of Company Common Stock set forth opposite his or her name on Schedule
5.2. The Stockholders whose names are marked with an asterisk on Schedule 5.2
are the only employees of the Company who hold any securities of the Company
(the "Employee Stockholders"). Other than as set forth in the first sentence of
this Section 5.2, there are no authorized or issued and outstanding capital
stock or other securities of the Company. All of the shares of Company Common
Stock have been duly authorized, are validly issued, fully paid and
nonassessable, not subject to preemptive or similar rights and are held of
record and beneficially by the Stockholders. All of the shares of Company Common
Stock were issued in accordance with all applicable securities laws. There are
no outstanding or authorized options, warrants, purchase rights, redemption
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments of any character that could require the Company to
issue, sell or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of the Company or otherwise relating to the capital stock
of the Company.
Section 5.3 Noncontravention; Consents. Except as set forth in Schedule 5.3,
neither the execution and the delivery of this Agreement and the agreements
contemplated hereby by the Stockholders, nor the consummation of the
transactions contemplated hereby and thereby by the Stockholders, will (i)
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any Governmental Authority to which the
Company is subject or any provision of the charter or bylaws or other similar
governing instrument of the Company or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or
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cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which the Company is a party or
by which it is bound or to which any of its assets is subject or result in the
imposition of any Lien upon any of its assets. Except as set forth in Schedule
5.3, the Company does not need to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any Governmental Authority
or other third party in order for the parties hereto to consummate the
transactions contemplated by this Agreement in a lawful manner and without
causing a default under, conflict with, or acceleration, violation or
termination of, any legal requirement or contract or agreement to which the
Company is a party or bound.
Section 5.4 Brokers' Fees. The Company has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
Section 5.5 Title to Assets. The Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, all of such
properties and assets are located on its premises, as shown on the Most Recent
Balance Sheet or acquired after the date thereof, and are free and clear of all
Liens, except for (i) liens for current taxes not yet due and payable, (ii)
inchoate materialmen's, mechanics', workmen's and repairmen's liens incurred in
the Ordinary Course of Business and which are not in default, (iii) recorded
easements and rights of way which do not materially adversely affect the
marketability or use or value of the applicable parcel of real estate as
presently used and (iv) the Liens set forth in Schedule 5.5 which shall be
removed when indicated in Schedule 5.5 at or prior to Closing (the "Permitted
Liens").
Section 5.6 Subsidiaries. The Company has no Subsidiaries and has no
direct or indirect equity participation in any Person.
Section 5.7 Financial Statements. Attached hereto as Schedule 5.7(a) are the
unaudited balance sheets and statements of income, changes in stockholders'
equity and cash flow (the "Financial Statements") as of and for the twelve month
period ended December 28, 1999 (the "Most Recent Fiscal Year End") for the
Company. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Company
as of such dates and the results of operations of the Company for such periods,
are correct and complete, and are consistent with the books and records of the
Company (which books and records are correct and complete).
Section 5.8 Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, no Material Adverse Effect has occurred. Without
limiting the generality of the foregoing, since that date, except as set forth
on Schedule 5.8:
(i) The Company has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
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(ii) the Company has not entered into any agreement, contract, lease or license
(or series of related agreements, contracts, leases and licenses) outside the
Ordinary Course of Business;
(iii) the Company has not accelerated, terminated, modified or cancelled any
material agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses);
(iv) the Company has not imposed any Lien upon any of its assets, tangible or
intangible, other than Permitted Liens;
(v) the Company has not made any capital expenditure (or series of related
capital expenditures) either involving more than $25,000 or outside the Ordinary
Course of Business;
(vi) the Company has not made any capital investment in, any loan or advance to,
or any acquisition of the securities or assets of, any other Person (or series
of related capital investments, loans, and acquisitions) either involving more
than $25,000 or outside the Ordinary Course of Business;
(vii) the Company has not issued any note, bond or other debt security or
created, incurred, assumed or guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
(viii) the Company has not delayed or postponed the payment of accounts payable
and other Liabilities outside the Ordinary Course of Business;
(ix) the Company has not cancelled, compromised, waived or released any right or
claim (or series of related rights and claims) either involving more than
$25,000 or outside the Ordinary Course of Business;
(x) the Company has not granted any license or sublicense of any rights under or
with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the charter or bylaws of the
Company;
(xii) the Company has not issued, sold or otherwise disposed of any of its
capital stock or other equity interest, or granted any options, warrants or
other rights to purchase or obtain (including upon conversion, exchange or
exercise) any of its capital stock or other equity;
(xiii) the Company has not declared, set aside or paid any dividend or made any
distribution with respect to its capital stock or other equity interest (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock or other equity;
(xiv) the Company has not experienced any damage, destruction or loss (whether
or not covered by insurance) to its property;
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(xv) except as set forth on Schedule 5.7(b), the Company has not made any loan
or advance to, or entered into any other transaction with, any of its directors,
officers or employees or with any of the Stockholders or any of its Affiliates,
outside the Ordinary Course of Business;
(xvi) the Company has not granted any increase in the base compensation of any
of its directors, officers, independent contractors or employees outside the
Ordinary Course of Business;
(xvii) the Company has not adopted, amended, modified or terminated any Employee
Plan or Compensation Arrangement (including any bonus, profit-sharing,
incentive, severance, termination, change of control or other plan, contract or
commitment for the benefit of any of its directors, officers or employees);
(xviii) the Company has not made any other change in employment terms or
engagement terms for any of its directors, officers, independent contractors or
employees outside the Ordinary Course of Business;
(xix) the Company has not made or pledged to make any charitable or other
capital contribution;
(xx) there has not been any other material occurrence, event, incident, action,
failure to act or transaction outside the Ordinary Course of Business involving
the Company; and
(xxi) the Company has not committed to any of the foregoing.
Section 5.9 Undisclosed Liabilities. Except as set forth on Schedule 5.7(b), the
Company has no Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against it giving rise to any Liability), except for (i) Liabilities set
forth on the face of the Financial Statements and (ii) Liabilities which have
arisen after the date of the Most Recent Fiscal Year End in the Ordinary Course
of Business which in the aggregate do not exceed $25,000 (none of which results
from, arises out of, relates to, is in the nature of or was caused by any breach
of contract, breach of warranty, tort, infringement or violation of law). The
Liabilities described in clauses (i) and (ii) of the preceding sentence include
the Company Liabilities.
Section 5.10 Legal Compliance. The Company has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of all
Governmental Authorities, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
Section 5.11 Tax Matters.
(a) The Company has (i) duly filed or caused to be filed in a timely manner all
Tax Returns that it was required to file with the appropriate Governmental
Authorities, and (ii) paid or made adequate provision in the Financial
Statements in accordance with GAAP for the
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payment of all Taxes owed by the Company. All of the Tax Returns referred to
in clause (i), above, are true, correct and complete in all material respects.
The Company has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(b) The Company has not executed any waiver or extension of any statute of
limitations on the assessment or collection of any Tax of the Company or with
respect to any liability arising therefrom. None of the Tax Returns filed by or
on behalf of the Company is currently being audited by any Governmental
Authority, and there are no other examinations, requests for information or
other administrative or judicial proceedings pending with respect to Taxes of
the Company. Neither the Internal Revenue Service nor any other Governmental
Authority has asserted any deficiency or claim for additional Taxes against, or
any adjustment of Taxes relating to the Company. No claim has been made by any
Governmental Authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. Neither
the Stockholders nor the Company expect any Governmental Authority to assess any
additional Taxes for any period of the Company for which Tax Returns have been
filed.
(c) Schedule 5.11 lists all jurisdictions in which the Company is required
to file a state Tax Return.
(d) The Company has delivered to Buyer: (i) true, correct and complete copies of
all Tax Returns filed by or on behalf of the Company with respect to taxable
periods ending on or after December 31, 1996, and (ii) all examination reports
and statements of deficiency asserted against or agreed to by the Company with
respect to Taxes since January 1, 1996. Schedule 5.11 contains true, correct and
complete information, as of the end of the most recently concluded taxable year
of the Company, regarding: (i) the Tax basis of the assets of the Company, and
the depreciation and amortization schedules relating to such assets, (ii) the
Tax basis in the stock of the Company and (iii) the earnings and profits, net
operating loss carryovers, and other Tax attributes, credits and carryover items
(and any limitations applicable to any of the foregoing) of the Company.
(e) There are no proposed reassessments of any property owned
by the Company that would affect the Taxes of the Company after the Closing
Date. There are no Tax liens on any assets of the Company, other than liens for
current Taxes not yet due and payable.
(f) The Company has no liability for the Taxes of any person
or entity (other than the Company) pursuant to Section 1.1502-6 of the Treasury
Regulations promulgated under the Code (the "Treasury Regulations"), any
comparable provisions of any state, local or foreign Tax law in respect of a
consolidated, combined or unitary Tax Return, or by contract or otherwise. As of
the Closing, there will be no tax sharing agreements or similar arrangements in
effect with respect to or involving the Company.
(g) No consent under Section 341(f) of the Code has been
filed with respect to the Company.
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(h) The Company does not have any income or gain reportable
for a period ending after the Closing Date but attributable to a transaction
(e.g., an installment sale) occurring in, or a change in accounting method made
for, a taxable period ending on or prior to the Closing Date which resulted in a
deferred reporting of income or gain from such transaction or from such change
in accounting method.
(i) The Company has not been a "United States real property
holding corporation," within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(j) The Company has not entered into any compensatory
agreements with respect to the performance of services which payment thereunder
would result in a non-deductible expense to such company pursuant to Section
280G of the Code.
(k) The Company has been taxable as an "S Corporation" within
the meaning of Section 1361(a) of the Code throughout its entire existence.
Section 5.12 Broadcast Towers; Regulatory Requirements.
(a) [Intentionally omitted.]
(b) Schedule 5.12(b) sets forth a list of all Licenses of the Company together
with all amendments and modifications thereto and all applications by or on
behalf of the Company for Licenses. Such Licenses constitute all of the
licenses, permits and authorizations necessary to conduct the business of the
Company as currently operated in compliance with all laws, rules and regulations
of all Governmental Authorities. The Company is in compliance with all of the
requirements of the Licenses. If required by the rules and regulations of the
FAA and FCC, the Company has received for each broadcast tower an FAA
Determination of No Hazard and has registered each broadcast tower with the FCC.
All such Licenses are valid and in full force and effect and no suspension,
cancellation or termination of any of the Licenses is pending or, to the
Knowledge of the Stockholders and the Company, threatened. There are no pending
or, to the Knowledge of the Stockholders and the Company, threatened complaints
or other objections concerning any broadcast tower before the FAA, the FCC or
any other Governmental Authority. The Company has filed all returns, reports and
statements required to be filed by it with the FCC, the FAA and any other
Governmental Authority. All of such returns, reports and statements are complete
and correct as filed. The broadcast towers are in compliance with and have been
operated and maintained in accordance with all requirements of the FAA, the FCC
and other Governmental Authorities.
Section 5.13 Real Property. Schedule 5.13 contains a true and complete
description of the Real Property. With respect to each parcel of Real Property:
(a) with respect to any owned parcel of Real Property, the Company has good and
marketable title to such parcel of Real Property, free and clear of any Liens,
except for Permitted Liens;
(b) with respect to any leased or subleased Real Property, the Company has a
valid leasehold or subleasehold interest to such parcel of Real Property, free
and clear of any
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Liens other than Permitted Liens, and assuming compliance by the Company with
the terms of the lease or sublease, the Company has a right of quiet enjoyment
of such parcel of Real Property;
(c) there are no pending or, to the Knowledge of the Stockholders and the
Company, threatened condemnation proceedings, lawsuits or administrative actions
relating to such property or other matters affecting adversely the current use,
occupancy, or value thereof;
(d) the legal description for such parcel contained in the deed or lease or
sublease thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements, zoning laws and
ordinances (and none of the properties or buildings or improvements thereon are
subject to "permitted non-conforming use" or "permitted non-conforming
structure" classifications), and do not encroach on any easement which may
burden the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not located
within any flood plain or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been obtained;
(e) other than as disclosed on Schedule 5.13, there are no leases, subleases,
licenses, concessions or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any portion of such parcel of
real property other than the Company;
(f) with respect to any Real Property owned by the Company, there are no
outstanding options or rights of first refusal to purchase such parcel of real
property, or any portion thereof or interest therein, and the Company has no
option or right of first refusal to purchase any Real Property leased by the
Company;
(g) there are no parties (other than the Company and, with respect to parcels of
Real Property for which the Company holds an option to lease or to purchase such
Real Property (a "Real Property Option"), the Person granting such option to
lease or option to purchase, as applicable) in possession of such parcel of Real
Property, other than tenants under any leases or licenses disclosed in Schedule
5.13;
(h) all facilities located on such parcel of Real Property are supplied with
utilities and other services, including gas, electricity, water, telephone,
sanitary sewer and storm sewer, in accordance with all applicable laws,
ordinances, rules and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting such parcel of real
property, the facilities are in good order and repair, and in a good, safe,
substantial condition, free from defects; all plumbing, heating, electrical and
air conditioning systems and equipment and systems therein are in good order and
repair and operating condition; the facilities are constructed and completed
strictly in compliance with all applicable laws and accepted standards of good
materials and workmanship, all electrical, plumbing, heating and
air-conditioning and exterior drainage systems, in or on the Real Property are
in good condition and working order, all facilities located on such parcel of
Real Property (other than any parcel subject to a Real Property Option) are
supplied with utilities and other services necessary for the
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operation of such facilities, including gas, electricity, water, telephone,
sanitary sewer and storm sewer, all of which are adequate;
(i) such parcel of Real Property abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefiting the parcel of real property, and access to the
property is provided by paved public right-of-way with adequate curb cuts
available;
(j) the Company has delivered to Buyer true and complete copies of any deed,
lease, sublease or agreement setting forth a Real Property Option; and
(k) each Real Property Option may be terminated at the election of the Company
on no more than 90 days' prior notice and without the payment of any penalty,
fee, expenses or other amounts to any other Person.
Section 5.14 Intellectual Property. The Company owns or has the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the business of the Company as presently
conducted. The Company has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of third
parties, and the Company has not received any complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation or violation
(including any claim that the Company must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of the
Stockholders and the Company, no third party has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Company. Schedule 5.14 identifies all registered
Intellectual Property of the Company and each pending application therefor and
identifies each license, agreement or other permission which the Company has
granted to any third party with respect to any of its Intellectual Property.
Section 5.15 Tangible Assets. The Company owns or leases all buildings,
machinery, equipment and other tangible assets necessary for the conduct of its
business as presently conducted. Each such tangible asset is free from material
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair and is suitable for
the purposes for which it presently is used. Schedule 5.15 sets forth a list of
all material items of tangible assets of the Company, including the location
thereof.
Section 5.16 Contracts. Schedule 5.16 contains a true and complete list of all
Contracts, except for Contracts entered into in the Ordinary Course of Business
which involve annual expenditures of no more than $20,000 per year per Contract
or $50,000 per year collectively for all such Contracts which are not listed on
Schedule 5.16 (other than any Contracts constituting Real Property Options, all
of which are listed on Schedule 5.16). The Company has delivered to Buyer a
correct and complete copy of each written Contract (as amended to date) and a
written summary setting forth the terms and conditions of each oral Contract.
Each Contract is legal, valid, binding, enforceable against the Company and, to
the Knowledge of the Stockholders and the Company, each other party thereto, and
in full force and effect in accordance with its terms. Each Contract will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the consummation of the
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transactions contemplated hereby. Neither the Company, nor to the Knowledge
of the Stockholders and the Company, any other party thereto is in material
breach or default under any Contract, and, to the Knowledge of the Stockholders
and the Company, no event has occurred which with notice or lapse of time
would constitute a breach or default under any Contract, or permit termination,
modification or acceleration, or reduce the amount of payments due the Company,
or give rise to any liquidated damages, under any Contract. No party to any
Contract has repudiated any provision of such Contract.
Section 5.17 Notes and Accounts Receivable; Accounts Payable. All notes,
accounts receivable, unbilled work in process and other debts due the Company
are reflected properly on its books and records, are valid receivables subject
to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet. The Company has paid on a timely basis all of its accounts payable and
such accounts payable arose in the Ordinary Course of Business.
Section 5.18 Powers of Attorney. Schedule 5.18 lists all outstanding powers
of attorney executed on behalf of the Company.
Section 5.19 Insurance. Schedule 5.19 sets forth the following information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which the Company is a party, a named insured, or otherwise the
beneficiary of coverage:
(a) the name of the insurer, the name of the policyholder and the name of
each covered insured;
(b) the policy number and the period of coverage;
(c) the scope (including an indication of whether the coverage was on a claims
made, occurrence or other basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of coverage; and
(d) a description of any retroactive premium adjustments or other loss-sharing
arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Company nor, to the Knowledge of the Stockholders and
the Company, any other party to the policy is in breach or default thereunder
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification or
acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. The Company has been covered during the past 2 years by
insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during such period. Schedule 5.19 describes any
self-insurance arrangements affecting the Company. Except as set forth on
Schedule 5.19, the Company has not been subject to, nor has any insurer
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defended or settled, on behalf of the Company, or paid out money on behalf of
the Company with respect to any workers' compensation claim or any claim under
any insurance policy where the aggregate amount at issue exceeded $5,000.
Section 5.20 Litigation. Schedule 5.20 sets forth each instance in which the
Company (i) is subject to any outstanding injunction, judgment, order, decree,
ruling or charge or (ii) is a party to or, to the Knowledge of the Stockholders
and the Company, is threatened to be made a party to any action, suit,
proceeding, hearing or investigation of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator, and neither the Stockholders nor the
Company is aware of any Basis for the same. None of the actions, suits,
proceedings, hearings and investigations set forth in Schedule 5.20 could result
in any Material Adverse Effect. Neither the Stockholders nor the Company has any
reason to believe that any such action, suit, proceeding, hearing or
investigation may be brought or threatened against any of the Stockholders or
the Company.
Section 5.21 Employees.
(a) Schedule 5.21 contains a correct and complete list of (i) the names and
positions of each of the employees, officers and directors of the Company and of
any affiliate of any Stockholder whose services relate primarily to the
Business, (ii) the annual salary or hourly wage of each such person, and (iii)
any oral or written contracts or agreements that provide for employment of any
individual as an employee or independent contractor of the Company and which
does not permit the termination of such contract or agreement, without penalty,
upon no more than 30 days prior notice. The Stockholders have provided to Buyer
correct and complete copies (or descriptions, if oral) of all contracts or
agreements listed in Schedule 5.21.
(b) No employees of the Company are presently members of any collective
bargaining unit with respect to their employment with the Company. There are no
collective bargaining agreements and no contracts or agreements with labor
unions, relating to, involving or affecting the employees of the Company to
which the Company is a party or by which it is bound, and the Company has no
obligation to bargain with any labor organization with respect to any such
persons. The Company is not currently, nor during the past three years has it
been, the subject of any certification or decertification drive, and, to the
Knowledge of the Stockholders and the Company, no such organizing activity is
threatened. To the Knowledge of the Stockholders and the Company, no union or
other collective bargaining representative claims to represent, has been
certified as representing or has requested that the Company recognize such union
or collective bargaining representative as representing any of the employees of
the Company for collective bargaining purposes. Neither the Stockholders nor the
Company has recognized or agreed to recognize or is required to recognize any
union as the collective bargaining representative for any employee of the
Company.
(c) There are no unfair labor practice charges pending against
the Company and, to the Knowledge of the Stockholders and the Company, there are
neither any demands for recognition or any other requests or demands from a
labor organization for representative status with respect to any persons
employed by the Company and no such activity is threatened. Neither the Company
nor the Business is currently, or during the past three years has been, the
subject of any strike, work stoppage, picketing or work slowdown, or any other
labor dispute,
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controversy or proceeding, and to the Knowledge of the Stockholders and
the Company no such activity is threatened. The Company has complied in all
material respects with all laws relating to the employment and safety of labor,
including provisions relating to wages, hours, benefits, collective
bargaining, discrimination, the payment of social security and other payroll
expenses, and all applicable occupational safety and health acts, laws and
regulations. The Company is not subject to any investigation or other
challenge relating to the misclassification of employees as independent
contractors. The Company is not required to comply with any government
contractor affirmative action obligations.
Section 5.22 Employee Benefits.
(a) Each Employee Plan and Compensation Arrangement is listed and described in
Schedule 5.22, and complete and accurate copies of (including any amendments to)
any such written Employee Plans and Compensation Arrangements (or related
insurance policies) have been furnished to Buyer, along with copies of any
employee handbooks or similar documents describing such Employee Plans and
Compensation Arrangements. Any unwritten Employee Plans or Compensation
Arrangements also are listed in Schedule 5.22, and complete descriptions have
been furnished to Buyer. Except as disclosed in Schedule 5.22, neither the
Company nor any ERISA Affiliate is a party to and does not have in effect or to
become effective after the date of this Agreement any plan, arrangement or other
scheme which will become an Employee Plan or Compensation Arrangement (including
any bonus, cash or deferred compensation, severance, medical, pension, profit
sharing or thrift, stock option, employee stock ownership, life or group
insurance, death benefit, vacation, sick leave, disability or trust agreement or
arrangement), or any amendment to an Employee Plan or Compensation Arrangement.
(b) The Company has furnished to Buyer the Forms 5500 filed for each of the
Employee Plans (including all attachments and schedules), actuarial reports,
summaries of material modifications, summary annual reports, and any other
employer notices (including, governmental filings and descriptions of material
changes to Employee Plans or Compensation Arrangements) relating to the Employee
Plans for the last three plan years, and the current summary plan descriptions.
(c) Each Employee Plan and Compensation Arrangement has been administered in
compliance with its own terms and in material compliance with the provisions of
ERISA, the Code, the Age Discrimination in Employment Act and any other
applicable Federal or state laws.
(d) Neither the Company nor any ERISA Affiliate (i) is contributing to, is
required to contribute to, or has contributed within the last seven years to,
any Multiemployer Plan, Multiple Employer Plan, or, employee pension benefit
plan, as defined under Section 3(2) of ERISA, which was subject to Title IV of
ERISA, (ii) has incurred within the last seven years, or reasonably expects to
incur, any "withdrawal liability," as defined under Section 4201 et seq. of
ERISA or (iii) has ever engaged in a transaction to evade liability, as
described under Section 4069 of ERISA.
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(e) At all times on or prior to the Closing, each Employee Plan, to the extent
such Employee Plan is intended to be tax-qualified, satisfies all minimum
coverage and minimum participation requirements, if any, imposed on such
Employee Plan by the applicable terms of the Code and ERISA.
(f) Neither the Stockholders nor the Company is aware of the existence of any
governmental inspection, investigation, audit or examination of any Employee
Plan or Compensation Arrangement or of any facts which would lead them to
believe that any such governmental inspection, investigation, audit or
examination is pending or threatened. There exists no action, suit or claim
(other than routine claims for benefits) with respect to any Employee Plan or
Compensation Arrangement pending or, to the Knowledge of the Stockholders and
the Company, threatened against any of such plan or arrangement, and neither the
Stockholders nor the Company possesses any knowledge of any facts which could
give rise to any such action, suit or claim.
(g) Except as described in Schedule 5.22, neither the Company nor any ERISA
Affiliate sponsors, maintains or contributes to any Employee Plan or
Compensation Arrangement that provides medical or death benefit coverage to
former employees of the Company, except to the extent required by Section 4980B
of the Code.
(h) With respect to each Employee Plan and, to the extent applicable, each
Compensation Arrangement: (i) each Employee Plan that is intended to be
tax-qualified, and each amendment thereto, is the subject of a favorable
determination letter, and no plan amendment that is not the subject of a
favorable determination letter would affect the validity of an Employee Plan's
letter; (ii) no condition or event exists or is expected to occur that could
subject, directly or indirectly, the Company or any ERISA Affiliate to any
material liability, contingent or otherwise, or the imposition of any lien on
the assets of the Company or any ERISA Affiliate under the Code or Title IV of
ERISA whether to the Pension Benefit Guaranty Corporation, the Internal Revenue
Service, or any other person; (iii) no Prohibited Transaction has occurred which
would subject the Company or any ERISA Affiliate to any liability; (iv) which
provides severance or severance like benefits such Employee Plan or Compensation
Arrangement may be terminated by the Company without any penalty and without any
liability to pay severance benefits in connection with any terminations of
employment which occur after the date such Employee Plan or Compensation
Arrangement is terminated; (v) which is a "group health plan," as defined under
Section 601 et seq of ERISA and 4980B of the Code ("COBRA"), has provided
"continuation coverage" to each "covered employee" and "qualified beneficiary"
entitled thereto (with each term as defined under COBRA); and (vi) all
contributions, premiums, payments or liabilities accrued, in whole or in part,
under each Employee Plan or Compensation Arrangement or with respect thereto as
of the Closing will be paid by the Company or the Stockholders, on or prior to
Closing or shall be reflected on the financial statements of the Company as of
Closing and shall be paid within the time period permitted by ERISA and the
Code.
(i) Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (i) result in any material payment
(including, without limitation, severance, or unemployment compensation)
becoming due to any director or employee of the Company or any ERISA Affiliate;
(ii) result in the acceleration of
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vesting under any Employee Plan or Compensation Arrangement; or (iii)
materially increase any benefits otherwise payable under any Employee Plan; an
any such payment or increase in benefits is fully deductible under the Code,
including but not limited to Sections 162, 280G and 404 of the Code.
Section 5.23 Guaranties. Except for guarantees that are disclosed on Schedule
5.23 and that will be terminated prior to Closing, the Company is not a
guarantor or otherwise is liable for any Liability or obligation (including
indebtedness) of any other Person.
Section 5.24 Environmental, Health and Safety Matters.
(a) The Company has complied in all material respects, and the Company, and each
parcel of Real Property owned or leased by the Company (other than Real Property
Options), is in compliance in all material respects with all Environmental,
Health and Safety Requirements and to the Stockholders' and the Company's
Knowledge, each predecessor of the Company has complied in all material respects
with all Environmental, Health and Safety Requirements. The Company has no
material liability under any Environmental, Health and Safety Requirements.
(b) Without limiting the generality of the foregoing, the Company has obtained
and complied with, and is in compliance with, in all material respects all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health and Safety Requirements for the occupation of its
facilities and the operation of its business.
(c) Except as set forth in Schedule 5.24, the Company has not received any
written or oral notice, report or other information regarding any actual or
alleged violation of Environmental, Health and Safety Requirements or any
Liability, including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under Environmental, Health
and Safety Requirements.
(d) Except as set forth in Schedule 5.24, none of the following exists at any
property or facility owned or operated by the Company: (i) underground storage
tanks, (ii) asbestos-containing material in any form or condition, (iii)
materials or equipment containing polychlorinated biphenyls or (iv) landfills,
surface impoundments or disposal areas.
(e) Except as set forth in Schedule 5.24, neither the Company nor, to the
Stockholders' or the Company's Knowledge, its predecessors has treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled or
released any substance, including any hazardous substance, or owned or operated
any property or facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would give rise to
liabilities, including any liability for response costs, corrective action
costs, personal injury, property damage, natural resources damages or attorney
fees, pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as
amended ("SWDA") or any other Environmental, Health and Safety Requirements.
(f) Except as set forth in Schedule 5.24, neither this Agreement nor the
consummation of the transaction that is the subject of this Agreement will
result in any
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obligations for site investigation or cleanup, or notification to or consent of
any Government Authorities or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health and Safety Requirements.
(g) The Company has not, either expressly or by operation of law, assumed or
undertaken any liability, including any obligation for corrective or remedial
action, of any other Person relating to Environmental, Health and Safety
Requirements.
Section 5.25 Certain Business Relationships with the Company. Except as set
forth in Schedule 5.25, none of the Stockholders nor any Affiliate thereof or of
the Company has been involved in any business arrangement or relationship with
the Company within the past 12 months, and neither any Stockholder nor any
Affiliate thereof or of the Company owns any asset, tangible or intangible,
which is used in the business of the Company. There are no tax sharing
agreements between the Company and any Stockholder or any Stockholder's
Affiliates.
Section 5.26 Bank Accounts and Credits. Schedule 5.26 lists all banks and
lending institutions with which the Company maintains any account or has a
credit facility, and sets forth the names of all individuals who have signing
authority for any such account.
Section 5.27 Inventory. The inventory of the Company consists of raw materials
and supplies, manufactured and purchased parts, goods in process and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged or
defective, subject only to the reserve for inventory writedown set forth on the
face of the Financial Statements (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of the Company.
Section 5.28 Product and Service Warranty. Each product manufactured, sold,
leased or delivered, and each service performed, by the Company has been in
conformity in all material respects with all applicable contractual commitments
and all express and implied warranties, and the Company does not have any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
any of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Financial Statements (rather than
in any notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company. No product
manufactured, sold, leased or delivered, and no service performed, by the
Company is subject to any guaranty, warranty or other indemnity beyond the
applicable standard terms and conditions of sale, lease or service. Schedule
5.28 includes copies of the standard terms and conditions of sale and service
for the Company (containing applicable guaranty, warranty, and indemnity
provisions).
Section 5.29 Year 2000 Compliance. All computer software programs, including all
source code, object code and documentation related thereto, hardware, databases
and embedded control systems (collectively the "Systems") used by the Company
are Year 2000 Compliant. "Year 2000 Compliant" means that the Systems (a)
accurately process date and time data (including calculating, comparing and
sequencing) from, into and between the twentieth
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and twenty-first centuries, the years 1999 and 2000, and leap year calculations
and (b) operate accurately with other software and hardware that use
standard format (4 digits) for representation of the year.
Section 5.30 Xxxx-Xxxxx-Xxxxxx. The Company, as reflected on the Most Recent
Balance Sheet, had less than $25,000,000 in assets, and the Company, as
reflected in the Financial Statements for the twelve-month period ended December
31, 1998, had annual net sales of less than $25,000,000.
Section 5.31 Disclosure. The representations and warranties contained in this
Article 5 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 5 not misleading.
ARTICLE 6
COVENANTS
Section 6.1 Conduct of Business of the Company. Except as contemplated by this
Agreement or with the prior written consent of Buyer, during the period from the
date of this Agreement to the Effective Time, the Company shall conduct its
operations only in the Ordinary Course of Business consistent with past
practice, and the Company will preserve intact the Business and organization of
the Company, to keep available the services of the present officers and key
employees of the Company and to preserve the good will of customers, suppliers
and all other persons having business relationships with the Company.
(a) Except as otherwise contemplated by this Agreement, prior to the Effective
Time, the Company shall not, without the prior written consent of Buyer:
(i) adopt any amendment to the certificate of incorporation or bylaws of
the Company;
(ii) issue, reissue or sell, or authorize the issuance, reissuance or sale of
any additional shares or other equity interest in the Company or securities
convertible into any rights, warrants or options to acquire any additional
shares or other equity interest in the Company;
(iii) declare, set aside or pay any dividend or make any other distribution
(whether in cash, securities or property or any combination thereof);
(iv) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any of its
shares or other equity interest;
(v) increase the compensation or fringe benefits payable or to become payable to
its directors, officers or employees, or pay any benefit not required by any
existing Employee Plan or Compensation Arrangement (including the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance
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or termination pay to (except pursuant to existing Employee Plans or
Compensation Arrangements), or enter into, review, terminate, amend or waive any
material provision of any employment or severance agreement with, any director,
officer or other employee of the Company or establish, adopt, enter into, or
amend any collective bargaining agreement, employment agreement, termination
agreement, Employee Plan, or Compensation Arrangement;
(vi) acquire, sell, lease, license, transfer, pledge, encumber, grant or dispose
of (whether by merger, consolidation, purchase, sale or otherwise) any assets
(other than the acquisition and sale of inventory or the disposition of used or
excess equipment and the purchase of raw materials, supplies and equipment, in
either case in the Ordinary Course of Business);
(vii) incur or assume or prepay any Indebtedness, assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person, or make any loans, advances
or capital contributions to, or investments in, any other Person;
(viii) change any accounting policies or procedures, other than in the Ordinary
Course of Business or as required by GAAP;
(ix) waive, release, assign, settle or compromise any material rights, claims or
litigation;
(x) take any action that would make any representation or warranty set
forth in Article 5 to become untrue;
(xi) make any Tax election or settle or compromise any material federal, state,
local or foreign income Tax Liability;
(xii) enter into any Contract except for any Contract entered into in the
Ordinary Course of Business under which the consideration payable or receivable
by the Company does not exceed $20,000 per year per Contract or $50,000 per year
in the aggregate for all such Contracts or amend or terminate any existing
Contract;
(xiii) incur any Liability except for Liabilities incurred by the Company in the
Ordinary Course of Business which in the aggregate for all such Liabilities
incurred between the date hereof and the Effective Time do not exceed $50,000;
(xiv) authorize or enter into any formal or informal binding written or other
agreement or otherwise make any binding commitment to do any of the foregoing;
(xv) make any material increase in the size or
change the composition of the workforce of the Company; or
(xvi) voluntarily recognize any union or other
collective bargaining representative as the collective bargaining representative
for any of the employees of the Company.
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(b) The Company shall do the following:
(i) maintain its assets in good operating condition (ordinary wear and tear
excepted), with inventories of spare parts and expendable supplies being
maintained at levels consistent with past practices and to make all repairs or
replacements necessary to restore any assets to the condition represented in
Section 5 of this Agreement;
(ii) maintain the existing insurance policies in full force and effect;
(iii) maintain the books and records of the Company in accordance with past
practices;
(iv) furnish to Buyer, within twenty days after the end of each month, monthly
financial statements for the month just ended containing balance sheets and
statements of income and cash flow for such period which shall comply with the
representations set forth in Section 5.7;
(v) comply in all material respects with all laws, rules and regulations and
with all Contracts and keep in full force and effect all Licenses;
(vi) pay all of the obligations and Liabilities of the Company on a timely
basis; and
(vii) preserve the corporate existence of the Company.
Section 6.2 The Stockholders' Actions. During the period from the date of this
Agreement to the Effective Time, the Stockholders shall not sell, transfer or
encumber any of their shares of Company Common Stock or grant or permit to exist
any Lien on any of their shares of Company Common Stock and shall not enter into
any commitment to sell, transfer, grant any Lien or otherwise encumber any of
their shares of Company Common Stock. The Stockholders shall cause the Company
to comply with all of the terms of this Agreement applicable to them, including
Section 6.1.
Section 6.3 Other Actions. During the period from the date hereof to the
Effective Time, the Stockholders shall not, and shall cause the Company not to,
take any action that would, or that would reasonably be expected to, result in
any of the conditions to the transactions contemplated hereby set forth in
Article 7 or 8 hereof not being satisfied or satisfaction thereof being delayed.
Section 6.4 Notification of Certain Matters. The Stockholders and the Company
shall promptly notify Buyer of the occurrence of any fact or event that would
reasonably be expected (i) to cause any representation or warranty of any
Stockholder or the Company contained in this Agreement to be untrue, (ii) to
cause any covenant, condition or agreement of any Stockholder or the Company
hereunder not to be complied with or satisfied or (iii) to cause a Material
Adverse Effect. Buyer shall promptly notify the Stockholders and the Company of
the occurrence of any fact or event that would reasonably be expected (i) to
cause any representation or warranty of Buyer to be untrue or (ii) to cause any
covenant, condition or agreement of Buyer hereunder not to be complied with or
satisfied.
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Section 6.5 Access to Information. The Company shall: (i) provide to Buyer (and
its officers, directors, employees, accountants, consultants, legal counsel,
financial advisors, investment bankers, agents and other representatives
(collectively, "Representatives")) access at reasonable times to the assets and
properties, personnel and the books and records of the Company and (ii) furnish
promptly such information concerning the business, properties, contracts,
assets, liabilities, personnel and other aspects of the Company as Buyer or its
Representatives may reasonably request. No investigation conducted under this
Section 6.5 shall affect or be deemed to modify any representation or warranty
made in this Agreement.
Section 6.6 Cooperation; Further Assurances.
(a) Subject to the terms and conditions provided in this Agreement and to
applicable legal requirements, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done and to assist and cooperate with the other parties
hereto in doing, as promptly as practicable, all things necessary, proper or
advisable under applicable laws and regulations to ensure that the conditions
set forth in Articles 7 and 8 are satisfied and to consummate and make effective
the transactions contemplated by this Agreement. No party to this Agreement
shall take any action that is inconsistent with its obligations under this
Agreement. Notwithstanding the foregoing, Buyer shall not be required to expend
any monies to obtain any Consent or to accept any adverse condition or change in
terms to obtain any Consent.
(b) The Stockholders and the Company will cooperate in all commercially
reasonable respects with Buyer and its counsel and accountants in connection
with any filing to be made by Buyer with the SEC. The Stockholders shall provide
to Buyer such information relating to the Company and the Business as Buyer may
reasonably request. All costs, expenses and fees incurred in connection with the
preparation and inclusion by Buyer of such information in any such filing shall
be borne by Buyer. The Stockholders and the Company hereby consent to the
inclusion by Buyer of financial statements of the Company, if requested to be so
included by Buyer, in any filing to be made by Buyer with the SEC or pursuant to
applicable securities laws, including the Securities Act and the Securities
Exchange Act. All costs, expenses and fees incurred in connection with the
preparation and inclusion by Buyer of financial statements of the Company in any
such filing shall be borne by Buyer. The Stockholders and the Company agree to
use commercially reasonable efforts to obtain the consent of the independent
public accountants of the Company to the inclusion of such financial statements
in any filing to be made by Buyer.
Section 6.7 Public Announcements. The initial press release concerning the
transactions contemplated by this Agreement shall be a joint press release and,
thereafter, the parties hereto shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or any of the transactions contemplated hereby and shall not issue any
such press release or make any such public statement prior to such consultation,
except to the extent public disclosure may be required or advisable under
applicable law, including under the securities laws or the requirements of any
securities exchange, as determined by the disclosing party in good faith.
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Section 6.8 Confidentiality. Except for such disclosures to officers, directors,
employees, advisors and representatives as may be appropriate in furtherance of
this transaction and except for disclosures that may be required to comply with
applicable law, including under the securities laws or the requirements of any
securities exchange, each party hereto shall use commercially reasonable efforts
to keep confidential all information of a confidential nature obtained by it
from the other parties hereto in connection with the transactions contemplated
by this Agreement, and if this Agreement is terminated without a Closing, each
party hereto will return to the other parties all documents and other materials
obtained from the other party in connection herewith.
Section 6.9 Expenses; Taxes. Whether or not the transaction contemplated by this
Agreement is consummated, all expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, except that the filing fee under the Xxxx-Xxxxx-Xxxxxx
Act, if any, shall be shared equally by the Stockholders and Buyer. All expenses
of the Company payable as a result of this Section 6.9 shall be borne by the
Stockholders.
Section 6.10 Control of the Company's Operations. Nothing contained in this
Agreement shall give Buyer, directly or indirectly, any right to control or
direct the Company's operations prior to the Effective Time.
Section 6.11 Xxxx-Xxxxx-Xxxxxx Filing. Within ten days after the execution of
this Agreement, the Stockholders and Buyer shall make any and all filings which
are required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder (the "Xxxx-Xxxxx-Xxxxxx Act") with
respect to the transactions contemplated hereby. Each party shall furnish to the
other such necessary information and reasonable assistance as any other party
may request in connection with its preparation of necessary filings or
submissions pursuant to the provisions of the Xxxx-Xxxxx-Xxxxxx Act. If the
Federal Trade Commission or the Department of Justice requests additional
information from the parties or imposes any condition upon the transactions
contemplated hereby, the parties will cooperate with each other, the Federal
Trade Commission and the Department of Justice; provided, however, that nothing
herein shall compel either party or any affiliate of such party to comply with
any condition imposed upon such party or such affiliate that is adverse to the
interests of such party or its affiliates as determined by such party in the
exercise of its reasonable business judgment. The filing fees required under the
Xxxx-Xxxxx-Xxxxxx Act shall be shared equally by the Stockholders and Buyer.
Section 6.12 Other Buyer Transactions. Notwithstanding anything to the contrary
in this Agreement, nothing in this Agreement shall prevent or restrict Buyer and
its subsidiaries from engaging in any merger, acquisition, business combination
or other transaction (whether or not Buyer is the surviving corporation),
provided that such merger, acquisition, business combination or other
transaction would not prevent Buyer from complying with its obligations under
this Agreement.
Section 6.13 Consents. The Stockholders and the Company shall give all notices
of this Agreement or the transaction contemplated hereby to Governmental
Authorities and other third parties to the extent required by any law, rule,
regulation or Contract. The Stockholders
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and the Company shall use commercially reasonable efforts to obtain, prior to
Closing, all of the Consents without any change in the terms of any Contract or
License to which such Consent relates. Notwithstanding anything in this
Agreement to the contrary, Buyer shall not be required to expend any monies to
obtain any Consent or to accept any adverse condition or change in terms to
obtain any Consent. The Stockholders and the Company shall promptly notify
Buyer of any difficulty in obtaining any Consents.
Section 6.14 Employee Benefits Matters.
(a) Prior to the Closing, the Stockholders and the Company shall take any and
all action necessary or appropriate to terminate immediately prior to the
Closing any Employee Plan which includes a cash or deferred arrangement
tax-qualified under Code Section 401(k) and provides benefits solely to
employees of the Company.
(b) The Stockholders and the Company shall (i) obtain the written, irrevocable
resignations of any employee of the Company identified by Buyer at least one (1)
day prior to Closing, which resignation shall be effective as of the Effective
Time, (ii) discharge in full on or prior to Closing any and all liabilities owed
by the Company to such employees (including but not limited to, any liability
for stay bonus, severance pay, pay in lieu of advance notice, or deferred
compensation benefits), other than any liabilities to provide future benefits to
such employees under any tax-qualified Benefit Plan or under ERISA Section 601,
(iii) obtain from such employees a general release of any and all claims,
including but not limited to any claims under the Age Discrimination in
Employment Act, that such employees may have with respect to their employment
with the Company or any of the Stockholders' Affiliates through Closing, which
general release shall be irrevocable as of Closing and shall be in a form
reasonably acceptable to Buyer, and (iv) obtain from such employees covenants of
non-competition and non-interference in a form reasonably acceptable to Buyer.
Section 6.15 Tax Matters.
(a) Tax Returns.
(i) The Stockholders shall be responsible for
the preparation and timely filing of, and the payment of all Taxes due with
respect to, all Tax Returns of the Company for all taxable periods that end
on or prior to the Closing Date, including Tax Returns of the Company for
periods that end on or prior to the Closing Date but are required to be filed
after the Closing Date; provided, however, that the Stockholders shall
provide Buyer with drafts of such Tax Returns (together with the relevant
back-up information) for review and consent by Buyer at least 20 days prior to
filing. Such Tax Returns shall be prepared in a manner consistent with the past
practice of the Company. The Stockholders shall provide Buyer with correct and
complete copies of such Tax Returns in the form filed within 15 days after the
filing date.
(ii) Buyer shall be responsible for the
preparation and timely filing of all Tax Returns of the Company for all taxable
periods that end after the Closing Date, including Tax Returns of the Company
for periods (if any) that begin before and end after the Closing Date. Buyer
shall be responsible for the payment of all Taxes due with respect to such Tax
Returns; provided, however, that with respect to Taxes due for taxable periods
that begin before
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and end after the Closing Date, the Stockholders shall be responsible for the
payment of the portion of such Tax that is attributable to the portion of such
periods that end on the Closing Date.
(b) Retention of Records; Cooperation. From and after the date
hereof, the Company shall retain all Tax Returns and all books, records and
other information relating to any Tax or Tax Return of the Company, and to abide
by all record retention agreements entered into with any Governmental Authority.
The Stockholders, the Company and Buyer shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the filing of
Tax Returns pursuant to this Section 6.15 and any audit, litigation, or other
proceeding with respect to Taxes of the Company. The Stockholders, the Company
and Buyer agree that if any of them receives any notice of an audit or
examination from any taxing authority with respect to Taxes of the Company for
any taxable period or portion thereof ending on or prior to the Closing Date,
then the recipient of such notice shall, within three (3) days of the receipt
thereof, notify and provide copies of such notice to the other parties, as the
case may be, in accordance with the notice provisions of Section 12.4.
Section 6.16 Additional Post-Closing Covenants.
(a) General. If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other party reasonably may request, all at the
sole cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Article 11). The Stockholders and the
Company acknowledge and agree that from and after the Closing Buyer will be
entitled to possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Company.
(b) Transition. The Stockholders and the Company shall not take any action that
is designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. The Stockholders will refer
all customer inquiries relating to the business of the Company to Buyer from and
after the Closing.
(c) Covenant Not to Compete. For a period of three years from and after the
Closing Date, neither the Employee Stockholders nor any of their Affiliates will
engage directly or indirectly in the Business; provided, however, that no owner
of less than 1% of the outstanding stock of any publicly-traded corporation
shall be deemed to engage solely by reason thereof in the Business. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 6.16(c) is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
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ARTICLE 7
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for in
this Agreement are subject to all of the conditions set forth below in this
Article 7, any of which may be waived in writing by Buyer.
Section 7.1 Performance by the Company and the Stockholders. The Company and the
Stockholders shall have performed in all material respects all of their
agreements and covenants under this Agreement required to be performed by them
at or prior to the Closing.
Section 7.2 Truth of Representations and Warranties. Each of the representations
and warranties of the Company and the Stockholders contained in this Agreement
(i) if specifically qualified by materiality, shall be true and complete as so
qualified, and (ii) if not qualified by materiality, shall be true and complete
in all material respects, in each such case, on and as of the Closing Date, with
the same effect as if then made, except where any such representation or
warranty is made as of a specific earlier date, in which event it shall remain
true and correct (as qualified) as of such earlier date.
Section 7.3 Receipt of Consents. All of the Consents indicated as material on
Schedule 3.2, 4.2 or 5.3 (the "Material Consents") shall have been obtained and
delivered to Buyer and shall be in full force and effect as of the Closing and
shall be in form and substance reasonably satisfactory to Buyer without any
conditions or changes in the underlying Contract or License to which such
Material Consent relates.
Section 7.4 Xxxx-Xxxxx-Xxxxxx Act and other Governmental Authorizations. All
waiting periods required under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise shall have been terminated prior to the Closing, and the parties and
the Company shall have received all other authorizations, consents and approvals
of Governmental Authorities required to consummate the transactions contemplated
hereby in a lawful manner.
Section 7.5 Deliveries. The Stockholders and the Company shall have made
all of the deliveries required by Section 9.2.
Section 7.6 Material Adverse Effect. No Material Adverse Effect shall
have occurred.
Section 7.7 Payment of Company Liabilities . All Company Liabilities shall be
paid simultaneously with Closing and Buyer shall have received evidence of such
payments and releases from each Person receiving a payment pursuant to Section
2.1(e) hereof of all claims it has or may have against the Company, other than
pursuant to this Agreement.
Section 7.8 Affiliate Loans. Subject to payment by Buyer of the Company
Liabilities pursuant to Section 2.1(e), all loans, advances and payables owing
by the Company to any Stockholder shall have been cancelled by each such
Stockholder and Buyer shall have received a certificate to such effect duly
executed by such Stockholder.
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Section 7.9 Post-Closing Lock-Ups. Each Stockholder shall have delivered to
Buyer lock-up agreements in substantially the form requested by any underwriter
from Buyer's principal stockholders in connection with any offering of Buyer's
capital stock (the "Lock-Up Agreements").
Section 7.10 Employment Agreement. Xxxxxxx X. Xxxxxxx shall have entered
into an employment agreement in substantially the form attached hereto as
Exhibit D (the "Employment Agreement").
Section 7.11 Certain Proceedings. No writ, order, decree or injunction of a
court of competent jurisdiction or other Governmental Authority shall have been
entered against Buyer, any Stockholder or the Company that prohibits or
restricts the transactions contemplated hereby, limits or restricts the
operation of the Company's business as it is currently conducted, or otherwise
restricts the Company's exercise of full rights to own and operate its business
after the Effective Date, and no action, proceeding, investigation, regulation
or legislation shall have been instituted or threatened before any court or
other Governmental Authority which (i) questions the validity or legality of the
transactions contemplated hereby or seeks to enjoin, restrain, prohibit or
obtain substantial damages in respect of, or which is related to, or arising out
of, this Agreement or the consummation of the transactions contemplated hereby;
(ii) seeks material damages against Buyer, any Stockholder or the Company as a
result of the transactions contemplated hereby; or (iii) can otherwise
reasonably be expected to materially and adversely affect Buyer or the Company
as a result of the consummation of the transactions contemplated hereby.
Section 7.12 Buyer Investigation. Buyer shall be reasonably satisfied with
the results of its due diligence investigation of the Company and the Business.
Section 7.13 Stockholders' Actions. All actions to be taken by the Stockholders
in connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby shall be reasonably satisfactory in form
and substance to Buyer.
Section 7.14 Certificate of Merger. The Certificate of Merger shall have
become effective under the DGCL and the NYBCL.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS AND THE COMPANY
The obligations of the Stockholders and the Company to consummate the
transactions provided for in this Agreement are subject to all of the conditions
set forth below in this Article 8, any of which may be waived in writing by the
Stockholders and the Company.
Section 8.1 Performance by Buyer. Buyer shall have performed in all material
respects all of its agreements and covenants under this Agreement required to be
performed by it at or prior to the Closing.
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Section 8.2 Truth of Representations and Warranties. Each of the representations
and warranties of Buyer contained in this Agreement (i) specifically qualified
by materiality, shall be true and complete as so qualified, and (ii) if not
qualified by materiality, shall be true and complete in all material respects,
in each such case, on and as of the Closing Date, with the same effect as if
then made, except where any such representation or warranty is as of a specific
earlier date in which event it shall remain true and correct (as qualified) as
of such earlier date.
Section 8.3 Deliveries. Buyer shall have made all of the deliveries set
forth in Section 9.3.
Section 8.4 Certain Proceedings. No writ, order, decree or injunction of a court
of competent jurisdiction or other Governmental Authority shall have been
entered against any Stockholder or the Company that prohibits or restricts the
transaction contemplated hereby and no action, proceeding, investigation,
regulation or legislation shall have been instituted or threatened before any
court or any other Governmental Authority which (i) questions the validity or
legality of the transactions contemplated hereby or seeks to enjoin, restrain,
prohibit or obtain substantial damages in respect of, or which is related to, or
arising out of, this Agreement or the consummation of the transactions
contemplated hereby, (ii) seeks material damages against any Stockholder as a
result of the transactions contemplated hereby or (iii) can otherwise reasonably
be expected to materially and adversely affect any Stockholder as a result of
the consummation of the transaction contemplated hereby.
Section 8.5 Buyer Actions. All actions to be taken by Buyer in connection with
the consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Stockholders.
Section 8.6 Certificate of Merger. The Certificate of Merger shall have
become effective under the DGCL and the NYBCL.
ARTICLE 9
CLOSING
Section 9.1 Closing. Subject to satisfaction or waiver of all of the conditions
of closing set forth in Articles 7 and 8, the closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Dow,
Xxxxxx & Xxxxxxxxx, PLLC, 0000 Xxx Xxxxxxxxx Xxx., X.X., Xxxxx 000, Xxxxxxxxxx,
X.X. 00000, at 10:00 a.m., local time, on the date specified by Buyer by notice
to the Stockholders and the Company, which specified date shall be no later than
ten business days after the conditions of Closing set forth in Sections 7.3 and
7.4 have been satisfied or waived by the party entitled to the benefit thereof
or on such other date as Buyer, the Stockholders and the Company may mutually
agree (the "Closing Date").
Section 9.2 Deliveries and Actions by the Stockholders and the Company. The
Stockholders and/or the Company as applicable, shall deliver to Buyer the
following items at the Closing:
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(a) Consents. The Stockholders and the Company shall deliver to Buyer at Closing
originals of the Material Consents and any other Consents which the Stockholders
and the Company shall obtain.
(b) Articles of Incorporation, Certified Bylaws and Certificates of Existence
and Good Standing for the Company. The Company shall deliver to Buyer at Closing
(i) copies of the certificate of incorporation or other applicable governing
instruments and all amendments thereto of the Company certified within ten
business days prior to the Closing by the Secretary of State of the State of New
York, (ii) copies of the bylaws or other applicable governing instruments of the
Company certified by the Secretary or Assistant Secretary of the Company as
being correct, complete and in full force and effect on the Closing Date, and
(iii) certificates of existence and good standing of the Company dated within
ten business days of the Closing Date issued by the Secretary of State of the
State in which the Company is organized or qualified to conduct business.
(c) Certificates. The Stockholders shall deliver to Buyer the stock certificates
representing all of the issued and outstanding shares of Company Common Stock in
blank in accordance with Section 2.1(g).
(d) Resignations and Releases. The Company shall deliver to Buyer resignations
of the officers and directors of the Company effective as of the Closing. The
Stockholders shall deliver to Buyer releases of the officers and directors of
the Company and their respective Affiliates releasing all claims they may have
against the Company, in a form satisfactory to Buyer.
(e) Employment Agreement and Lock-Up Agreements. The applicable parties thereto
shall deliver to Buyer fully executed Employment Agreement and Lock-Up
Agreements.
(f) Opinion of Counsel. The Company shall deliver the favorable opinion of
Xxxxxxx & Xxxxxxx, LLP substantially in the form of Exhibit E hereto.
(g) Post-Closing Escrow Agreement. The Company and the Stockholders shall
deliver to Buyer and the Escrow Agent the Post-Closing Escrow Agreement, duly
executed by the Stockholders.
(h) Stockholders and Company Closing Certificate. The Stockholders and the
Company shall deliver to Buyer at Closing a certificate executed by the
Stockholders' Representative and the Company certifying (i) as to the incumbency
and signatures of the Stockholders and officers of the Company who executed this
Agreement and the agreements contemplated hereby on behalf of the Stockholders
and the Company, (ii) as to the adoption of the unanimous written consents of
the Board of Directors of the Company and the Stockholders which are in full
force and effect on the Closing Date authorizing the execution and delivery of
this Agreement and the agreements contemplated hereby and the performance of the
obligations of the Company hereunder and thereunder, (iii) as to the Company's
bylaws and all amendments thereto as being correct, complete and in full force
and effect on the Closing Date and (iv) that the conditions to the Buyer's
obligation to consummate the transactions contemplated by this
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Agreement set forth in Sections 7.1 and 7.2 have been satisfied (the
"Stockholders and Company Closing Certificate").
Section 9.3 Deliveries by Buyer. Buyer shall deliver to the Stockholders
and the Company the following items at the Closing:
(a) Certificates of Existence, Good Standing and Qualification. Buyer shall
deliver to the Stockholders and the Company at Closing a certified copy of its
certificate of incorporation and a certificate of good standing with respect to
Buyer, dated within ten business days of the Closing Date, issued by the
Secretary of State of the State of Delaware.
(b) Buyer's Closing Certificate. Buyer shall deliver to the Stockholders and the
Company at Closing a certificate of an executive officer of Buyer certifying (i)
as to the incumbency and signatures of the officers of Buyer who executed this
Agreement and the agreements contemplated hereby on behalf of Buyer, (ii) as to
the adoption of resolutions of the executive committee of the board of directors
of Buyer which are in full force and effect on the Closing Date authorizing the
execution and delivery of this Agreement and the agreements contemplated hereby
and the performance of the obligations of Buyer hereunder and thereunder, (iii)
as to Buyer's bylaws and all amendments thereto as being correct, complete and
in full force and effect on the Closing Date and (iv) that the conditions to the
Stockholders' and the Company's obligations to consummate the transactions
contemplated by this Agreement set forth in Sections 8.1 and 8.2 have been
satisfied.
(c) Consideration. Buyer shall deliver to the Stockholders a copy of its written
instructions to its transfer agent to be delivered pursuant to Section 2.1(f).
(d) Company Liabilities. Buyer shall have made the payments required pursuant to
Section 2.1(e).
(e) Post-Closing Escrow Agreement. Buyer shall deliver to the Stockholders and
the Escrow Agent the Post-Closing Escrow Agreement, duly executed by Buyer.
ARTICLE 10
TERMINATION
Section 10.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written agreement of the Stockholders, the Company and Buyer;
(b) by either the Stockholders, the Company or Buyer, if:
(i) the transaction contemplated hereby has not been consummated on or before
February 1, 2000 (the "Termination Date"); provided that the right to terminate
this Agreement pursuant to this Section 10.1(b)(i) shall not be available to a
party whose breach of
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any provision of this Agreement results in the failure of such transaction to
be consummated by the Termination Date; or
(ii) (A) there shall be any law or regulation that makes consummation of the
transaction contemplated hereby illegal or otherwise prohibited or (B) any
judgment, injunction, order or decree of any court or other Governmental
Authority having competent jurisdiction enjoining the Stockholders, the Company
or Buyer from consummating such transaction is entered, and such judgment,
injunction, order or decree shall have become final.
(c) by Buyer if on any date determined for the Closing in accordance with
Section 9.1 each condition in Article 8 has been satisfied (or will be satisfied
by actions to be taken at the Closing) and either a condition set forth in
Article 7 has not been satisfied (or will not be satisfied by actions to be
taken at the Closing) or the Stockholders and/or the Company have nonetheless
refused to consummate the Closing; provided that Buyer may not terminate
pursuant to this Section 10.1(c) if the failure of any condition set forth in
Article 7 to be satisfied was principally caused by Buyer's breach of or failure
to perform any of its covenants and agreements in accordance with this
Agreement;
(d) by the Stockholders and/or the Company if on any date determined for the
Closing in accordance with Section 9.1 each condition in Article 7 has been
satisfied (or will be satisfied by actions to be taken at the Closing) and
either a condition set forth in Article 8 has not been satisfied (or will not be
satisfied by actions to be taken at the Closing) or Buyer has nonetheless
refused to consummate the Closing; provided that the Stockholders and the
Company may not terminate pursuant to this Section 10.1(d) if the failure of any
condition set forth in Article 8 to be satisfied was principally caused by the
Stockholders' or the Company's breach of or failure to perform any of its
covenants and agreements in accordance with this Agreement.
The party desiring to terminate this Agreement pursuant to
this Section 10.1 (other than pursuant to Section 10.1(a)) shall give notice of
such termination to the other parties hereto.
Section 10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall become void and of no effect without
liability of any party hereto to the other parties hereto, except that (a) the
agreements contained in this Section 10.2 shall survive the termination hereof,
and (b) no such termination shall relieve any party of any liability or damages
resulting from any material breach by such party of any representation,
warranty, covenant or agreement set forth in this Agreement.
ARTICLE 11
INDEMNIFICATION
Section 11.1 Survival of Representations and Warranties. All of the
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing hereunder (even if the damaged party knew or had
reason to know of any misrepresentation or
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breach of warranty or covenant at the time of Closing) and continue in full
force and effect until the latest of: (a) the date that is two years after
the Closing Date, (b) the date of final resolution of a claim that has been
asserted in writing to the other party prior to the ending of such two year
period, and (c) as to the representations and warranties made in Sections
3.1, 3.5, 4.1, 4.2, 5.1, 5.2, 5.7, 5.9, 5.11, 5.22 and 5.24, 60 days after the
expiration of the applicable statute of limitations (including all periods
of extension thereof) or, if later as to the representations and
warranties made in Section 5.11, until the final resolution of any claim
asserted in writing by a Governmental Authority.
Section 11.2 Indemnification by the Stockholders. From and after the Closing,
the Stockholders shall indemnify Buyer and its affiliates, officers, directors,
employees, stockholders and agents (the "Buyer Indemnified Parties") against and
hold them harmless from any liability, claim, damage, Tax or expense (including
reasonable legal fees and expenses) ("Losses") suffered or incurred by any Buyer
Indemnified Party as a result of, arising from or relating to the following:
(a) any breach of any representation or warranty of the Stockholders
contained in this Agreement or any certificate delivered pursuant hereto;
(b) any breach of any covenant or agreement of the Stockholders contained in
this Agreement, including, without limitation, the actions or inactions of the
Stockholders' Representative;
(c) any breach of any covenant or agreement of the Company contained in this
Agreement relating to the period prior to the Effective Time;
(d) liabilities of the Company resulting from or arising out of the conduct of
the Business prior to the Effective Time to the extent such liabilities are not
included as adjustments in the determination of the Purchase Price pursuant to
Section 2.3;
(e) any claim arising out of any breach or violation or alleged breach or
violation of any Environmental, Health and Safety Requirement relating to any
Real Property owned or leased by the Company or its predecessors, which breach
or violation occurred or allegedly occurred prior to the Effective Time, or
arising out of any environmental matters described on Schedule 11.2, and any
judgment or other adverse determination or settlement or claim arising out of
any suit, action or proceeding arising out of the conduct of the Business prior
to the Effective Time, including those claims and other matters described on
Schedule 11.2;
(f) expenses of any Stockholder or the Company relating to the consummation of
the transactions contemplated by this Agreement, including fees and expenses of
attorneys, accountants, financial advisors and broker fees;
(g) any Taxes of the Company for any taxable period or portion thereof ending on
or prior to the Closing Date;
(h) any Lien, other than Permitted Liens, or any assets of the Company arising
prior to the Effective Time or as a result of any action or inaction by the
Company or the Stockholders prior to the Effective Time, which are set forth in
Lien, Tax and judgment searches
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obtained by Buyer in each state and country in which any Stockholder or the
Company has assets; and
(i) any action, suit, proceeding, claim, demand, assessment or judgment incident
to the foregoing or incurred in investigating or to avoid the same or to oppose
the imposition thereof or in enforcing this indemnity.
Section 11.3 Indemnification by Buyer. From and after the Closing, Buyer shall
indemnify the Stockholders and their affiliates, officers, directors, employees,
stockholders and agents (the "Stockholders' Indemnified Parties") against and
hold them harmless from any Losses suffered or incurred by any Stockholders'
Indemnified Parties as a result of, arising from or relating to the following:
(a) any breach of any representation or warranty of Buyer contained in this
Agreement or in any certificate delivered pursuant hereto;
(b) any breach of any covenant or agreement of Buyer contained in this
Agreement;
(c) liabilities of the Company resulting from or arising out of the conduct of
the Business by the Company after the Closing, unless and to the extent Buyer is
entitled to indemnification therefore pursuant to Section 11.2; and
(d) any action, suit, proceeding, claim, demand, assessment or judgment incident
to the foregoing or incurred investigating or to avoid the same or to oppose the
imposition thereof or in enforcing this indemnity.
Section 11.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall promptly give
notice to the party from which indemnification is claimed (the "Indemnifying
Party") of any claim, whether between the parties or brought by a third party,
specifying in reasonable detail the factual basis for the claim, the amount
thereof, estimated in good faith, and the method of computation of such claim,
all with reasonable particularity and containing a reference to the provisions
of this Agreement in respect of which such indemnification claim shall have
occurred. If the claim relates to an action, suit, or proceeding filed by a
third party against the Claimant, such notice shall be given by the Claimant
promptly after written notice of such action, suit, or proceeding was given to
the Claimant; provided, however, that any delay in giving the notice shall not
impair the Claimant's rights hereunder unless such delay has a material adverse
effect on the Indemnifying Party's ability to defend such claim.
(b) With respect to claims solely between the parties, following receipt of
notice from the Claimant of a claim, the Indemnifying Party shall have thirty
days to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation, the Claimant
agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree prior to the expiration
of such thirty day
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period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, the Indemnifying Party shall immediately pay to the
Claimant the full amount of the claim. If the Claimant and the
Indemnifying Party do not agree within such thirty day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate remedies at
law or equity, as applicable.
(c) With respect to any claim by a third party as to which the Claimant is
entitled to indemnification under this Agreement, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party.
If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in such
defense with legal counsel of the Claimant's own selection, but the fees and
expenses of such counsel shall be its fees and expenses unless (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party has failed to assume the defense of such claim, within five
business days after receiving notice of such claim, (iii) the remedies sought
against the Claimant include any remedy that is not solely a claim for monetary
damages or (iv) the named parties to any proceeding in respect of the claim
(including any impleaded parties) include both the Indemnifying Party and the
Claimant and the Claimant has been advised by counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party (in which case, if the Claimant
notifies the Indemnifying Party that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of the
Claimant, it being understood, however, that the Indemnifying Party shall not,
in connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Claimant). If the Indemnifying Party does not (or,
as provided in clause (iv) of the preceding sentence, cannot) elect to assume
control or otherwise participate in the defense of any third-party claim, then
the Claimant may defend through counsel of its own choosing and (so long as it
gives the Indemnifying Party at least five days prior written notice of the
terms of any proposed settlement thereof and permits the Indemnifying Party to
then undertake the defense thereof) settle such claim, action or suit, and to
recover from the Indemnifying Party the amount of such settlement or of any
judgment and the costs and expenses of such defense. The Indemnifying Party
shall not compromise or settle any third party claim, action or suit without the
prior written consent of the Claimant, which consent will not be unreasonably
withheld or delayed.
(d) If a claim, whether between the parties or by a third party, requires
immediate action, the parties will make every reasonable effort to reach a
decision with respect thereto as expeditiously as practicable.
(e) Following the Closing, the Stockholders shall have no right of contribution
against the Company for any indemnification payment made by the Stockholders
hereunder or otherwise, and the Stockholders hereby waive any and all rights of
contribution that they may have against the Company.
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Section 11.5 Indemnification Escrow. On the Closing Date, Buyer, the
Stockholders and the Escrow Agent shall execute a Post-Closing Escrow Agreement
substantially in the form attached as Exhibit F hereto (the "Post-Closing Escrow
Agreement") in accordance with which Buyer shall deposit 22,250 shares of Buyer
Common Stock with the Escrow Agent (such shares and all amounts and other
property held from time to time by the Escrow Agent in respect of such shares,
including any dividends, stock dividends or other earnings in respect thereof,
the "Indemnification Funds") in order to provide a fund for the payment of any
claims for which Buyer is entitled to indemnification as provided in this
Article 11. The Indemnification Funds shall be held and disbursed in accordance
with the terms of the Post-Closing Escrow Agreement.
Section 11.6 Basket Amount. The Stockholders' and Buyer's obligations under
Sections 11.2(a) and 11.3(a) shall not be payable by the Stockholders or Buyer,
as the case may be, unless and until the amount of the Stockholders' obligations
(in the case of claims pursuant to Section 11.2) and the amount of the Buyer's
obligations (in the case of claims pursuant to Section 11.3) exceeds Fifty
Thousand Dollars ($50,000) (the "Basket Amount") in the aggregate; provided,
that once the aggregate amount of Losses suffered or incurred by the Buyer
Indemnified Parties, in the aggregate, or the Stockholders' Indemnified Parties,
in the aggregate, exceeds the Basket Amount, indemnification shall be made by
the Stockholders and the Buyer, respectively, for all Losses suffered or
incurred by the Buyer Indemnified Parties or the Stockholders' Indemnified
Parties, respectively, without regard to the Basket Amount.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware, without regard to such state's
conflict of law rules.
Section 12.2 Successors and Assigns. Except as otherwise expressly provided
herein, no party hereto may assign its or his rights and obligations hereunder
unless such party obtains the prior written consent of the other parties hereto.
Except as otherwise provided herein, this Agreement shall inure to the benefit
of, and be binding upon, the successors and permitted assigns of the parties
hereto.
Section 12.3 Entire Agreement; Amendment. This Agreement constitutes the full
and entire understanding and agreement among the parties with regard to the
subject matter hereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
Section 12.4 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, or by reputable overnight delivery service, postage prepaid, or
otherwise delivered by hand or by messenger, addressed as follows:
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to the Stockholders Vertical Properties, Inc.
and the Company: 000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxxxx, LLP
Financial Plaza
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
to Buyer: SpectraSite Holdings, Inc.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
Notice shall be deemed to be given upon receipt.
Section 12.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy hereunder shall impair any such right, power or remedy of any
party hereto, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party hereto of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing or as provided in this
Agreement. All remedies, either under this Agreement or by law or otherwise
afforded to any party hereto, shall be cumulative and not alternative.
Section 12.6 Counterparts. This Agreement may be executed in any number of
counterparts, by original or facsimile signature, each of which shall be deemed
an original, and all of which taken together shall constitute one and the same
instrument.
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Section 12.7 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
Section 12.8 Headings. The subject headings of the sections of this Agreement
are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
Section 12.9 Waiver of Jury Trial. Each party hereto hereby waives any right to
a trial by jury with respect to any action relating to this Agreement.
Section 12.10 Exclusive Benefit. Nothing in this Agreement is intended to confer
any rights or remedies, whether express or implied, under or by reason of this
Agreement, on any persons other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement.
Section 12.11 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
parties intend that each representation, warranty and covenant contained herein
shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
Section 12.12 Exhibits and Schedules. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
Nothing in any Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless such Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself).
Section 12.13 Enforcement of Agreement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled
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at law or in equity. In the event of any action to enforce this Agreement,
the breaching party hereby waives the defense that there is an adequate remedy
at law and no bond or other security shall be required for the party seeking to
enforce this Agreement pursuant to this Section 12.13..
Section 12.14 Acquisition of Buyer. Notwithstanding anything in this Agreement
to the contrary, if the Buyer consummates a Change of Control Transaction, Buyer
or its successor in such Change of Control Transaction may, at its election,
deliver to the Stockholders shares of Acquiror Capital Stock having a value,
determined on the basis of the weighted average closing price for the shares of
the Acquiror's Capital Stock so delivered as quoted on the principal national
securities exchange or automated quotation system on which such Acquiror Capital
Stock is traded and reported in the Wall Street Journal during the period of
thirty consecutive trading days ending on the third business day prior to the
Qualifying Lease Payment Date or Qualifying LOI Payment Date, as the case may
be, equal to the amount to be delivered pursuant to Section 2.4(a) or 2.4(b), as
the case may be, in lieu of shares of Buyer Common Stock. For purposes hereof, a
"Change of Control Transaction" means a transaction or series of transactions
pursuant to which a Person (the "Acquiror") acquires all or substantially all of
the outstanding capital stock of Buyer in full or partial consideration of the
delivery by the Acquiror to the stockholders of Buyer of shares of capital stock
of the Acquiror ("Acquiror Capital Stock").
Section 12.15 Stockholders' Representative.
(a) Pursuant to the terms of this Section 12.15, each Stockholder hereby
appoints Xxxxxxx X. Xxxxxxx to act as such Stockholder's agent and
representative (the "Stockholders' Representative") for purposes of receiving on
his or her behalf all notices under this Agreement, issuing on his or her behalf
such notices under this Agreement as the Stockholders' Representative shall
determine in his sole discretion to issue, and performing such other
administrative and other functions under this Agreement as may become necessary
or desirable.
(b) The Stockholders' Representative shall have full power and authority to act
for and on behalf of the Stockholders in regard to their rights under this
Agreement. Without limiting the foregoing, the Stockholders' Representative is
authorized to (i) resolve all claims for indemnification under this Agreement,
(ii) retain counsel of his choosing, experts and other professionals as may be
necessary or desirable to assist in the resolution of any claim for
indemnification under this Agreement, and (iii) execute and deliver the
Stockholders and Company Closing Certificate on behalf of the Stockholders. The
Stockholders' Representative shall have no right to act as agent for service of
process for any one of the Stockholders, except that any notice delivered to the
Stockholders' Representative with respect to any claim arising pursuant to
Section 11.2 of this Agreement shall be deemed notice to all the Stockholders
with respect thereto.
(c) The Stockholders' Representative shall be entitled to reasonable
compensation from the Stockholders for his services and reimbursement of all
expenses, including the cost of error and omissions insurance incurred in his
capacity as the Stockholders' Representative.
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(d) At any time after the date hereof, Buyer shall be fully entitled in acting
on and relying upon any written notice, direction, request, waiver, consent,
receipt or other paper or document that Buyer in good faith believes to have
been signed or presented by the Stockholders' Representative and Buyer will have
no liability to any Stockholder if it acts in accordance with the foregoing.
(e) The Stockholders' Representative shall be entitled to reimbursement by the
Stockholders of all reasonable expenses (including the cost of errors and
omissions insurance) incurred in his capacity as Stockholders' Representative.
The Stockholders shall indemnify and hold harmless the Stockholders'
Representative from any and all costs, expenses, or damages (paid or incurred)
in connection with the performance of his obligations pursuant to this
Agreement, other than those arising from the gross negligence or willful
misconduct of the Stockholders' Representative. The Stockholders shall be
jointly and severally liable to the Stockholders' Representative for any
liability arising out of this Section 12.15.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be duly executed as of the day and year first above written.
SPECTRASITE HOLDINGS, INC.
By:/s/Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer and President
VPI MERGER SUB, INC.
By:/s/Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President
VERTICAL PROPERTIES, INC.
By:/s/Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
/s/Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
/s/Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
/s/X. Xxxx Xxxxxx
-----------------------------------
X. Xxxx Xxxxxx
63
/s/W.Xxxxxx Xxxxxxxx
------------------------------------
W. Xxxxxx Xxxxxxxx
/s/Xxxxxxx XxXxxxx
------------------------------------
Xxxxxxx XxXxxxx
/s/Xxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
/s/Xxxxx XxXxxxx
--------------------------------
Xxxxx XxXxxxx
/s/Xxxxx Xxxx
--------------------------------
Xxxxx Xxxx
/s/Xxxxxx Xxxxxx
--------------------------------
Xxxxxx Xxxxxx
/s/Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx, as Stockholders'
Representative
