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Exhibit 2.4
MERGER AGREEMENT
AND PLAN OF REORGANIZATION
AMONG
SPECTRASITE HOLDINGS INC.,
APEX MERGER SUB, INC.,
AND
APEX SITE MANAGEMENT HOLDINGS, INC.
November 24, 1999
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TABLE OF CONTENTS
Section Page
1. Definitions...........................................................1
2. The Merger............................................................8
(a) The Merger...................................................8
(b) Certificate of Incorporation; Bylaws; Directors and Officers.8
(c) Effects of the Merger........................................9
(d) Manner of Conversion of Stock................................9
(e) Escrow Deposit; Merger Consideration........................10
(f) Exchange of Certificates and Payment of Cash................13
(g) Manner of Payment and Delivery..............................14
(h) Post-Closing Merger Consideration Adjustment................14
(i) The Closing.................................................15
(j) Deliveries at the Closing...................................15
3. Representations and Warranties of the Buyer and Newco................15
(a) Organization of the Buyer and Newco.........................16
(b) Authorization of Transaction................................16
(c) Noncontravention............................................16
(d) Brokers'Fees................................................16
(e) Investment..................................................16
(f) Legal Compliance............................................16
(g) Absence of Litigation.......................................16
(h) Environment, Health, and Safety.............................17
(i) Share Validity..............................................17
(j) Securities Law Compliance...................................17
(k) Public Filings..............................................18
(l) Tax Matters.................................................18
(m) No Material Adverse Change..................................19
4. Representations and Warranties Concerning Holdings, the Company and its
Subsidiaries........................................................19
(a) Organization, Qualification, and Corporate Power............19
(b) Capitalization of Holdings..................................19
(c) Noncontravention; Consents..................................20
(d) Brokers'Fees................................................20
(e) Title to Assets.............................................20
(f) The Company and the Subsidiaries............................21
(g) Financial Statements........................................21
(h) Events Subsequent to Most Recent Fiscal Year End............22
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(i) Undisclosed Liabilities.....................................24
(j) Legal Compliance............................................24
(k) Tax Matters.................................................24
(l) Sites; Management Agreements; Tenant Agreements.............26
(m) Intellectual Property.......................................27
(n) Contracts...................................................28
(o) Notes and Accounts Receivable...............................29
(p) Insurance...................................................29
(q) Litigation..................................................30
(r) Employees...................................................30
(s) Employee Benefits...........................................30
(t) Guaranties..................................................32
(u) Environment, Health, and Safety.............................32
(v) Bank Accounts and Credit................................... 33
(w) Certain Business Relationships with Holdings, the Company
and theSubsidiaries.........................................33
(x) Disclosure..................................................33
(y) Authorization of Transaction................................33
(z) Delivery of Tax Opinion.....................................33
5. Pre-Closing Covenants................................................34
(a) Notices and Consents........................................34
(b) Xxxx-Xxxxx-Xxxxxx Act Filing................................34
(c) Operation of Business.......................................34
(d) Preservation of Business; Retention of Records..............34
(e) Full Access.................................................35
(f) Notice of Developments......................................35
(g) Exclusivity.................................................36
(h) Employees...................................................36
(i) Confidentiality.............................................36
(j) Termination of Interests....................................37
(k) Distribution of BLEC........................................37
(l) Receipt of Releases.........................................37
(m) Restricted Activities.......................................37
(n) Registration Rights Agreement...............................37
(o) Delivery of Tax Returns.....................................38
(p) Conversion of Options.......................................38
(r) General.....................................................39
6. Post-Closing Covenants...............................................39
(a) General.....................................................39
(b) Restrictions on Sale of Buyer Shares; Delivery of Investor
Representation Letter......................................40
(c) Treatment as a Tax-Free Reorganization......................40
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(d) Filing of Registration Statement............................41
7. Conditions to Obligation to Close....................................41
(a) Conditions to Obligation of the Buyer.......................41
(b) Conditions to Obligation of Holdings........................43
8. Remedies for Breaches of this Agreement..............................44
(a) Survival of Representations and Warranties..................44
(b) Indemnification Provisions for Benefit of the Buyer.........44
(c) Indemnification Provisions for Benefit of the Stockholders..45
(d) Procedures for Claims Between the Parties...................45
(e) Defense of Third-Party Actions..............................46
(f) Indemnification Limitations.................................46
9. Termination..........................................................47
(a) Termination of Agreement....................................47
(b) Effect of Termination.......................................48
10. Miscellaneous........................................................48
(a) Press Releases and Public Announcements.....................48
(b) No Third-Party Beneficiaries................................48
(c) Succession and Assignment...................................48
(d) Counterparts; Facsimile Signatures..........................48
(e) Headings....................................................49
(f) Notices.....................................................49
(g) Governing Law...............................................51
(h) Amendments and Waivers......................................51
(i) Severability................................................51
(j) Expenses....................................................52
(k) Incorporation of Exhibits, Annexes, and Schedules...........52
(l) Specific Performance........................................52
(m) Non-Recourse to Certain Persons.............................52
(n) Stockholder Representatives.................................52
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Exhibits and Schedules
Exhibits
Exhibit A Form of Employment Agreements
Exhibit B Form of Escrow Agreement
Disclosure Schedule
ss.3(c) Buyer Consents
ss.4(a) Directors and Executive Officers
ss.4(b) Capitalization of Holdings
ss.4(c)(ii) Noncontravention; Consents
ss.4(f) Subsidiaries
ss.4(h)(ii) Obligations in Excess of $50,000
ss.4(h)(iii) Acceleration, Termination, Modification or Cancellation
ss.4(h)(iv) Security Interests
ss.4(h)(v) Capital Expenditures
ss.4(h)(vi) Investments
ss.4(h)(vii) Indebtedness
ss.4(h)(xii) Rights to Purchase Capital Stock
ss.4(h)(xii) Dividends and Capital Distributions
ss.4(i) Undisclosed Liabilities
ss. 4(k) Tax Matters
ss.4(l) Real Property; Sites; Management Agreements, Lease
Agreements, Government Agreements, Tenant Agreements
ss.4(m)(iii) Intellectual Property Registrations
ss.4(m)(iv) Intellectual Property
ss.4(n) Material Contracts
ss.4(p) Insurance
ss.4(p)(v) Self-Insurance Arrangements
ss.4(q) Litigation
ss.4(r) Employees
ss.4(s) Employee Benefit Plans
ss.4(v) Bank Accounts
ss.4(w) Affiliate Transactions
ss.5(a)(ii) Material Consents
ss.5(c) Operation of Business
ss.5(h) Employment Agreements
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MERGER AGREEMENT
AND PLAN OF REORGANIZATION
This agreement (the "Agreement") is entered into as of November 24,
1999, by and among SpectraSite Holdings Inc., a Delaware corporation (the
"Buyer"), Apex Merger Sub, Inc., a Delaware corporation and a newly-formed,
wholly-owned subsidiary of the Buyer ("Newco"), and Apex Site Management
Holdings, Inc., a Delaware corporation ("Holdings"). The Buyer, Newco and
Holdings are sometimes referred to individually herein as a "Party" and together
as the "Parties."
Holdings owns all of the outstanding capital stock of Apex Site
Management, Inc., a Delaware corporation (the "Company"). The Company is engaged
in the telecommunications site management business (the "Business").
This Agreement contemplates a transaction in which Newco will merge
with and into Holdings (the "Merger") pursuant to this Agreement, the
Certificate of Merger (as defined in ss.2(a)) and the applicable provisions of
the laws of the State of Delaware.
The Boards of Directors of each of the Buyer, Newco and Holdings 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).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Additional Buyer Shares" has the meaning set forth in ss.2(h) below.
"Affiliate" has the meaning set forth in Rule 501(b) of the regulations
promulgated under the Securities Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Sec. 1504, or any similar group defined under a similar provision of state,
local or foreign law.
"Agreement" has the meaning set forth in the preface above.
"Anticipated Closing Date" has the meaning set forth in ss.2(i) below.
"Applicable Laws" shall mean any law, rule, regulation, order,
judgment, or determination of any Governmental Authority, or any restrictive
covenant or deed restriction
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(recorded or otherwise) applicable to Holdings, the Business of the Company or
any Subsidiary, including the rules and regulations of the Federal Aviation
Administration and the Federal Communications Commission.
"Assets" means all assets of Holdings, the Company and its
Subsidiaries, including the Equipment, the Management Agreements, the Lease
Agreements, the Government Agreements, and the Tenant Agreements.
"BLEC" has the meaning set forth in ss.5(k) below.
"Business" has the meaning set forth in the preface above.
"Business Day" means any day other than a Saturday, Sunday, legal
holiday in the Commonwealth of Pennsylvania or other day of the year on which
banks in the Commonwealth of Pennsylvania are authorized or required by
Applicable Laws to close.
"Buyer" has the meaning set forth in the preface above.
"Buyer Balance Sheet" has the meaning set forth in ss.3(k)(i) below.
"Buyer Balance Sheet Date" has the meaning set forth in ss.3(k)(i)
below.
"Buyer Shares" has the meaning set forth in ss.2(e)(ii) below.
"Certificate of Merger" has the meaning set forth in ss.2(a) below.
"Certificates" has the meaning set forth in ss.2(f)(ii) below.
"Claim" has the meaning set forth in ss.8(d) below.
"Claimant " has the meaning set forth in ss.8(d) below.
"Claim Notice" has the meaning set forth in ss.8(d) below.
"Closing" has the meaning set forth in ss.2(i) below.
"Closing Cash Payment" has the meaning set forth in ss.2(e)(v) below.
"Closing Date" has the meaning set forth in ss.2(i) below.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Compensation Arrangement" has the meaning set forth in ss.4(s)(i)
below.
"Confidential Information" means any confidential and proprietary
knowledge and information concerning the Business of the Company and its
Subsidiaries that is not already generally available to the public.
"Controlled Group of Corporations" has the meaning set forth in Code
Sec. 1563.
"Deductible" has the meaning set forth in ss.8(f)(i) below.
"DGCL" has the meaning set forth in ss.2(b)(i) below.
"Direction Letter" has the meaning set forth in ss.2(g)(iii) below.
"Dissenting Stockholder" has the meaning set forth in ss.2(d)(vi)
below.
"Effective Time" has the meaning set forth in ss.2(i) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"Equipment" means all equipment owned by the Company and its
Subsidiaries.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in ss.4(s)(ii) below.
"Escrow Agent" has the meaning set forth in ss.2(e)(i) below.
"Escrow Agreement" has the meaning set forth in ss.2(e)(i) below.
"Escrow Deposit" has the meaning set forth in ss.2(e)(i) below.
"Excess Loss Account" has the meaning set forth in Treas. Reg.
ss.1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302
of the Emergency Planning and Community Right-to-Know Act of 1986,
as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in ss.4(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Government Agreements" means all agreements with a Governmental
Authority providing for the Company's or any Subsidiary's management or lease of
any Site.
"Governmental Authority" means any government or political subdivision
thereof, whether federal, state, local or foreign, or any agency, commission or
regulatory or administrative authority or instrumentality.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Holdback Shares" has the meaning set forth in ss.2(e)(vii) below.
"Holdings" has the meaning set forth in the preface above.
"Holdings Share(s)" means any share or shares of the capital stock of
Holdings, including all shares of common stock and preferred stock.
"includes", "including" or other equivalent words mean "including,
without limitation".
"Indemnifying Party" has the meaning set forth in ss.8(d) below.
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"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 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).
"Intercompany Transaction" has the meaning set forth in Treas. Reg.
ss.1.1502-13.
"Knowledge" means actual knowledge of Xxxx X. Xxxxx, Xxxxxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxx Xxxxxxxxxxx and Xxxxxxxx Xxxx.
"Lease Agreements" means all agreements providing for the Company's or
any Subsidiary's lease of any Sites.
"Lender" means General Electric Capital Corporation, pursuant to the
terms of the Credit Agreement, dated as of April 21, 1999, among the Company,
the Lender and certain other parties.
"Liability" means any liability (whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"Lock-Up Agreement" has the meaning set forth in ss.6(b) below.
"Losses" means all losses, Taxes, liabilities, damages, injunctions,
judgments, orders, decrees, rulings, fines, settlements, lawsuits (including
administrative proceedings), deficiencies, claims, demands, costs or expenses,
including interest, penalties and reasonable attorneys' fees and disbursements.
"Management Agreements" means all agreements providing for the
Company's or any Subsidiary's management of any Site.
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"Material Adverse Change" means a change or set of circumstances or
conditions that has had or is reasonably likely to result in a Material Adverse
Effect.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition, assets, operations, liabilities or results of
operation of the Person, business or assets specified; provided, however, that
neither (i) the effects of any events, circumstances or conditions resulting
from changes, developments or circumstances in worldwide or national conditions
(political, economic, regulatory or otherwise) that adversely affect the markets
where the Sites are located or adversely affect industries related to the
telecommunications business generally (including proposed legislation or
regulation by any Governmental Authority or the introduction of any
technological changes in the telecommunications industry), or adversely affect a
broad group of industries generally, nor (ii) any effects of competition, shall
constitute a Material Adverse Effect.
"Material Consents" has the meaning set forth in ss.5(a)(ii) below.
"Material Contract" has the meaning set forth in ss.4(n) below.
"Measurement Date" has the meaning set forth in ss.2(h) below.
"Merger" has the meaning set forth in the preface above.
"Merger Consideration" has the meaning set forth in ss.2(e)(ii) below.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in ss.4(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Newco" has the meaning set forth in the preface above.
"New Options" has the meaning set forth ss.6(p)(i) below.
"Optionee" has the meaning set forth in ss.6(p) below.
"Options" has the meaning set forth in ss.6(p) below.
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"Ordinary Course of Business" means the ordinary course of business of
the Company and its Subsidiaries consistent with past custom and practice
(including with respect to quantity and frequency).
"Party(ies)" has the meaning set forth in the preface above.
"Payoff Amount" has the meaning set forth in ss.2(e)(vi) below.
"Payoff Letter" has the meaning set forth in ss.2(e)(vi) below.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Interest" means (a) liens for Taxes not yet due and payable
or for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings and for which an adequate reserve has been established, (b) any
lease and any Security Interest arising out of deposits made to secure leases or
other obligations of a like nature arising in the Ordinary Course of Business,
(c) any easements, rights of way, restrictions, installations or public
utilities, title imperfections and restrictions, reservations in land patents or
zoning ordinances that do not materially interfere with the use by the Company
of the property subject thereto or affected thereby, (d) mechanic's,
materialmen's, and similar liens for sums not yet due, (e) purchase money liens
and liens securing rental payments under capital lease arrangements that are
listed in ss.4(n) of the Disclosure Schedule, and (f) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money or capitalized leases and that do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of the Business.
"Person" means an individual, a partnership, a corporation, 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 entity.
"Post-Closing Average" has the meaning set forth in ss.2(h) below.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Registration Rights Agreement" has the meaning set forth in
ss.2(e)(iv) below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"SEC" has the meaning set forth in ss.3(k)(i) below.
"SEC Documents" has the meaning set forth in ss.3(k)(i) below.
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"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest.
"Sites" means all communications sites where the Company or its
Subsidiaries conducts its Business.
"Stockholder(s)" means the holder(s) of shares of capital stock of
Holdings listed in ss.4(b) of the Disclosure Schedule.
"Stockholder Representative Agreement" has the meaning set forth in
ss.10(n) below.
"Stockholder Representatives" has the meaning set forth in ss.10(n)
below.
"Subsidiary" or "Subsidiaries" means any Person in which Holdings,
directly or indirectly through another Person, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the control of, such Person,
including each of the entities listed in ss.4(f) of the Disclosure Schedule.
"Surviving Corporation" has the meaning set forth in ss.2(a) below.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind imposed by any Governmental
Authority, including: federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty
(and any interest in respect of such penalty), or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
information return or other statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
"Tenant Agreements" means all agreements providing for end user
tenants' operations on the Sites.
"Third Party Action" has the meaning set forth in ss.8(e) below.
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"Third Party Action Notice" has the meaning set forth in ss.8(e) below.
2. The Merger.
(a) The Merger. On and subject to the terms and conditions of this Agreement, at
the Effective Time, Newco shall be merged with and into Holdings pursuant to
this Agreement and the Certificate of Merger (the "Certificate of Merger") to be
filed in the Office of the Secretary of State of the State of Delaware, and the
separate corporate existence of Newco shall cease. Holdings, as it exists from
and after the Effective Time, is sometimes referred to as the "Surviving
Corporation."
(b) Certificate of Incorporation; Bylaws; Directors and Officers. At the
Effective Time:
(i) The Certificate of Incorporation of the Surviving Corporation shall be
amended and restated at and as of the Effective Time to read as did the
Certificate of Incorporation of Newco immediately prior to the Effective Time
(except that the name of the Surviving Corporation will remain unchanged),
unless and until thereafter amended as provided therein and under the General
Corporation Law of the State of Delaware (the "DGCL").
(ii) The Bylaws of the Surviving Corporation shall be amended and restated at
and as of the Effective Time to read as did the Bylaws of Newco immediately
prior to the Effective Time (except that the name of the Surviving Corporation
will remain unchanged), unless and until thereafter amended as provided therein
and under the DGCL.
(iii) The directors and officers of the Surviving Corporation shall be the
individuals designated by the Buyer, until their successors are elected and
qualified.
(c) Effects of the Merger. The Merger shall have the effects provided therefor
by the DGCL. 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 choses in
action, and all and every other interest of or belonging to or due to Holdings
or Newco 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 as effectually the property of the Surviving Corporation, as
they were of Holdings and Newco, and (ii) all debts, liabilities, duties and
obligations of Holdings and Newco 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 Holdings and Newco and neither the rights of creditors nor any
liens upon the property of Holdings or Newco shall be impaired by the Merger,
and may be enforced against the Surviving Corporation.
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(d) Manner of Conversion of Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the Buyer, Newco or Holdings, the
shares of capital stock of the Parties shall be converted as follows:
(i) Capital Stock of Newco. Each issued and outstanding share of capital stock
of Newco shall be converted into and exchanged for one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(ii) Cancellation of Certain Shares of Capital Stock of Holdings. All shares of
capital stock of Holdings that are owned directly or indirectly by Holdings
shall be canceled and no consideration shall be delivered in exchange therefor.
(iii) Conversion of Certain Other Shares of Capital Stock of Holdings. All of
the issued and outstanding Holdings Shares (other than shares to be canceled
pursuant to ss.2(d)(ii) and other than shares held by Dissenting Stockholders),
that are issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the Merger Consideration set forth in
ss.2(e)(ii) hereof. Each issued and outstanding option to purchase Holdings
Shares that is issued and outstanding immediately prior to the Effective Time
shall be converted as set forth in ss.6(p) hereof.
(iv) Fractional Shares. No fractional Buyer Shares shall be issued pursuant to
this Agreement, but in lieu thereof each holder of Holdings Shares who would
otherwise be entitled to receive a fraction of a Buyer Share shall receive from
the Buyer the whole number of Buyer Shares measured by rounding the fraction up
or down to the nearest whole share.
(v) Adjustments to Buyer Shares. If, on or prior to the Effective Time, the
Buyer should split or combine its common stock, or pay a stock dividend or other
stock distribution in its common stock, or otherwise change the common stock
into any other securities, or make any other dividend or distribution on the
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 Buyer Shares
issuable as the Merger Consideration will be appropriately adjusted to reflect
such split, combination, dividend or other distribution or change.
(vi) Appraisal Rights. If any Stockholder (a "Dissenting Stockholder")
perfects such Stockholder's right to seek an appraisal under the DGCL, the
Merger Consideration to be delivered hereunder shall be adjusted as set forth in
this ss.2(d)(vi). The Holdings Shares held by such Dissenting Stockholder will
not be converted as set forth herein and the Buyer shall not deliver the pro
rata portion of the Merger Consideration that would otherwise be delivered to
such Stockholder, but instead will retain such Merger Consideration to satisfy
any appraisal obligations the Buyer might have to the Dissenting Stockholder. If
the pro rata portion of the Merger Consideration held by the Buyer has a value
greater than the amount of the Buyer's
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appraisal obligation, then the Buyer shall retain such excess. If the pro rata
portion of the Merger Consideration held by the Buyer is insufficient to satisfy
the Buyer's appraisal obligations under the DGCL, the Buyer shall be entitled to
indemnification for the amount of the deficiency, as set forth in ss.8 hereof.
The Stockholder Representatives shall have the right to participate in all
proceedings with respect to any such appraisal procedure. If such Dissenting
Stockholder shall have effectively withdrawn or lost the right to receive an
appraisal under the DGCL, the Holdings Shares held by such Stockholder shall
then be deemed to have been converted into and to have become exchangeable for,
as of the Effective Time, the right to receive its pro rata share of the Merger
Consideration, without any interest thereon, in accordance with ss.2.
(e) Escrow Deposit; Merger Consideration.
(i) Escrow Deposit. On November 26, 1999, the Buyer will deliver to First Union
National Bank, as escrow agent (the "Escrow Agent"), $3,000,000 in cash, which
amount (including, unless otherwise stated herein, any interest earned thereon,
the "Escrow Deposit") shall be held by the Escrow Agent pursuant to the terms of
the Escrow Agreement attached hereto as Exhibit B (the "Escrow Agreement"). The
parties acknowledge and agree that time is of the essence in delivering the
Escrow Deposit to the Escrow Agent hereunder.
(ii) Merger Consideration. The Buyer agrees to deliver to the Stockholder
Representatives for distribution to the Stockholders or the Stockholders'
designee, 4,807,612 shares of unregistered common stock, par value $.001 per
share of the Buyer, which number shall be subject to adjustment as set forth
herein (as so adjusted, the "Buyer Shares" and collectively, including any Buyer
Shares delivered pursuant to ss.2(h), the "Merger Consideration").
(iii) Adjustment of New Options. For purposes of this ss.2(e)(iii), the
following definitions shall apply:
"Fair Market Value" means the fair market value of a share of common
stock of the Buyer on the Closing Date.
"Adjustment Ratio" means $12.59 divided by the Fair Market Value.
"Adjusted Option Shares" shall mean the Adjustment Ratio multiplied by
202,000.
"Holdings Exercise Price" means $3.76.
If, at the Closing, the Adjustment Ratio must be greater than 1.04917
to avoid a charge against earnings or variable accounting treatment with respect
to the New Options, then the number of Buyer Shares to be issued at the Closing
as set forth herein shall be reduced by the Buyer Share Adjustment, calculated
pursuant to the following formula:
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(1) Adjusted Option Shares x (Fair Market Value - (Holdings
Exercise Price / Adjustment Ratio) = Aggregate Option Value
(2) Aggregate Option Value / Fair Market Value = Adjusted
Aggregate Shares
(3) 1/2 x (Adjusted Aggregate Shares - 148,638) = Buyer Share
Adjustment.
(iv) Registration Rights Agreement. Holdings acknowledges and agrees that on the
Closing Date, the Buyer Shares will be not be registered under the Securities
Act. The Buyer Shares will be subject to the terms of a registration rights
agreement to be entered into as of the Closing Date among the Buyer and certain
parties (the "Registration Rights Agreement"), as more specifically set forth in
ss.5(n) hereof.
(v) Option to Receive Cash. No later than three (3) Business Days prior to the
Anticipated Closing Date, the Stockholder Representatives may notify the Buyer
that the Stockholders elect to receive up to 18% of the Merger Consideration in
cash (the "Closing Cash Payment"); provided, however, that in no event shall the
Closing Cash Payment exceed the lesser of (A) $4,500,000 or (B) an amount which,
when added to the cash to be paid to Stockholders exercising their appraisal
rights under the DGCL, will equal or exceed 19% of the Merger Consideration. If
the Stockholders elect to receive the Closing Cash Payment, the number of Buyer
Shares to be delivered to the Stockholders as Merger Consideration shall be
reduced by the quotient of the Closing Cash Payment divided by twelve (12).
(vi) Payoff of Amounts Due to Lender and Others.
(A) The Buyer agrees to pay up to $2,000,000, plus any amount borrowed as set
forth in this ss.2(v) (the "Payoff Amount") to the Lender at the Closing in
accordance with the terms of a payoff letter in a form reasonably satisfactory
to the Parties (the "Payoff Letter"). If the Effective Time is on or prior to
December 31, 1999, then on the Closing Date, the Buyer will loan to Holdings an
amount sufficient to pay year-end bonuses to be paid to employees of the
Company, in an amount not to exceed $465,000 in the aggregate, and in accordance
with written instructions to be delivered by the Stockholder Representatives to
the Buyer no later than three (3) Business Days prior to the Anticipated Closing
Date. If the Effective Time is after December 31, 1999, Holdings may draw down
sufficient funds under its credit facility with Lender to pay such year-end
bonuses to employees of the Company, in an amount not to exceed $465,000 in the
aggregate, and the amount of the funds borrowed will be included in the Payoff
Amount.
(B) Any amount due to the Lender by the Company at the Effective Time in excess
of (i) $2,465,000 if Holdings has borrowed funds from the Lender to pay employee
bonuses as set forth in ss.2(e)(vi) or (ii) $2,000,000 if the Buyer has loaned
funds to Holdings to pay employee bonuses as set forth in ss.2(e)(vi), will be
included in the Payoff Amount and reduce the Merger Consideration to be
delivered hereunder. Such reduction will be
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first from the Closing Cash Payment, if any, and then from the Buyer Shares. If
such reduction is made in Buyer Shares, the number of Buyer Shares deliverable
at Closing will be reduced by the quotient of the difference between the amount
due to the Lender as set forth in the Payoff Letter and $2,465,000 or
$2,000,000, as appropriate, divided by twelve (12).
(C) The Buyer may elect to repay in full, concurrently with the Closing, any
capitalized lease obligations of Holdings.
(D) The Buyer may elect to pay any sums necessary to release Security Interests,
which payments shall reduce the Merger Consideration to be delivered hereunder
(other than amounts covered by the Payoff Letter). Such reduction will be first
from the Closing Cash Payment, if any, and then from the Buyer Shares. If such
reduction is made in Buyer Shares, the number of Buyer Shares deliverable at
Closing will be reduced by the quotient of the dollar amount of such payment
divided by twelve (12).
(vii) Holdback Shares. At the Closing, the Buyer shall deliver 250,000 Buyer
Shares issued in the name of the Escrow Agent, on behalf of the Stockholder
Representatives (the "Holdback Shares") to the Escrow Agent to be held pursuant
to the terms of the Escrow Agreement. The Holdback Shares shall be available as
security for any payment due to the Buyer pursuant to ss.8 of this Agreement.
The Holdback Shares shall be distributed by the Escrow Agent pursuant to the
terms of the Escrow Agreement.
(f)Exchange of Certificates and Payment of Cash.
(i) Delivery of Consideration. At the Closing, in exchange for the outstanding
Holdings Shares (other than Holdings Shares held by Dissenting Stockholders),
the Buyer shall cause to be made available to the Stockholders or their designee
the Merger Consideration, with all cash payments to be made by federal wire
transfer of immediately available funds pursuant to wire transfer instructions
provided by the Stockholder Representatives at least three (3) Business Days
prior to the Anticipated Closing Date.
(ii) Certificate Delivery Requirements. At the Effective Time, the Stockholder
Representatives on behalf of the Stockholders shall deliver to the Buyer the
certificates (the "Certificates") representing Holdings Shares owned by each
Stockholder, accompanied by blank stock powers duly executed and with all
necessary transfer tax and other revenue stamps, acquired at the Stockholders'
expense, affixed and canceled. The Stockholder Representatives on behalf of the
Stockholders shall promptly cure any deficiencies with respect to the stock
powers accompanying such Certificates. The Certificates so delivered shall
forthwith be canceled. Until delivered as contemplated by this ss.2(f)(ii), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the number of Buyer Shares as
provided by this Agreement and the applicable provisions of the DGCL.
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(iii) No Further Ownership Rights in Capital Stock of Holdings. All Buyer Shares
and cash to be delivered upon the surrender of certificates representing
Holdings Shares in accordance with the terms hereof (including any additional
Buyer Shares delivered pursuant to ss.2(h) hereof) shall be deemed to have been
delivered in full satisfaction of all rights pertaining to such Holdings Shares,
and, following the Effective Time, the Stockholders shall have no further rights
to, or ownership in, shares of capital stock of Holdings. There shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Holdings Shares 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 ss.2(f).
(iv) Lost, Stolen or Destroyed Certificates. If any Certificates evidencing
Holdings Shares shall have been lost, stolen or destroyed, then the Buyer shall
deliver a portion of the Merger Consideration in exchange for such lost, stolen
or destroyed certificates, upon the delivery to the Buyer of an affidavit of
that fact by the holder thereof; provided, however, that the 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
indemnification agreement without a bond having such terms as it may reasonably
direct as indemnity against any claim that may be made against the Buyer with
respect to the certificates alleged to have been lost, stolen or destroyed.
(g) Manner of Payment and Delivery. At Closing:
(i) Concurrently with the Closing, the Buyer shall pay to the Lender by wire
transfer of immediately available funds to such banks and accounts thereat as
shall be specified in the Payoff Letter an amount equal to the Payoff Amount.
(ii) The Buyer shall deliver to the Stockholder Representatives (or to any other
Person as the Stockholder Representatives may direct in writing) (A) the Buyer
Shares less the Holdback Shares (issued in the names and denominations
designated by the Stockholder Representatives to the Buyer no later than three
(3) Business Days prior to the Anticipated Closing Date), and (B) if the
Stockholders so elect, the Closing Cash Payment by wire transfer of immediately
available funds to such banks and accounts thereat as shall be specified in
writing by the Stockholder Representatives at least three (3) Business Days
prior to the Anticipated Closing Date, for distribution to the Stockholders or
the Stockholders' designee.
(iii) The Buyer and the Stockholder Representatives shall direct the Escrow
Agent in writing (the "Direction Letter") to deliver to the Buyer the Escrow
Deposit.
(h) Post-Closing Merger Consideration Adjustment. The number of Buyer Shares to
be delivered hereunder shall be subject to adjustment as set forth herein. The
adjustment set forth in this ss.2(h) shall be calculated on the date (the
"Measurement Date") that is the earlier to occur of (i) the date that is 180
days after the Closing Date, if the Buyer has not
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consummated an initial public offering of its common stock within such 180-day
period and (ii) the date that is 180 days after the expiration of the
restrictions on transfer in the Lock-Up Agreement, if the Buyer shall have
consummated an initial public offering of its common stock within 180 days after
the Closing Date. On the Measurement Date, the Buyer and the Stockholder
Representatives shall calculate the average of the closing share prices (the
"Post-Closing Average") of the Buyer common stock for the thirty (30) trading
day period ended on the last trading day immediately prior to the Measurement
Date. If the Post-Closing Average is $12.00 per share or higher, there shall be
no adjustment to the number of Buyer Shares to be delivered as part of the
Merger Consideration hereunder. If the Post-Closing Average is less than $9.00
per share, the Buyer shall deliver to the Stockholder Representatives for
distribution to the Stockholders an additional 1,670,000 Buyer Shares. If the
Post-Closing Average is equal to or higher than $9.00 per share, and lower than
$12.00 per share, the Buyer shall deliver to the Stockholder Representatives for
distribution to the Stockholders, a number of additional Buyer Shares equal to
(A) the quotient obtained by dividing $60,000,000 by the Post-Closing Average,
minus (B) 5,000,000. The number of Buyer Shares to be delivered as set forth in
this ss.2(h) shall be reduced by the same pro rata portion that the Merger
Consideration was reduced pursuant to ss.2(d)(vi). The Buyer shall issue
1,670,000 Buyer Shares into escrow on the Closing Date (the "Additional Buyer
Shares") which shall be released to the Buyer or the Stockholders'
Representatives, as appropriate, promptly following the Measurement Date. The
Buyer shall not be entitled to set off against any additional Buyer Shares to be
delivered hereunder any amounts claimed by the Buyer to be owed under ss.8
hereof or otherwise.
(i) The Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Kleinbard, Xxxx & Xxxxxxx
LLP, 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000, commencing at 9:00
a.m. local time on the second Business Day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) (any such date being
referred to herein as the "Anticipated Closing Date") or such other date as the
Buyer and the Stockholder Representatives may mutually determine. The date on
which the Closing shall occur is referred to in this Agreement as the "Closing
Date"; provided, however, that the Closing Date shall be no later than January
14, 2000. On the Closing Date, the Certificate of Merger, or other appropriate
documents executed in accordance with the DGCL, together with any required
officers' certificates, shall be filed in accordance with the provisions of the
DGCL. The Merger shall become effective upon such filings or at such later time
as may be specified in such filings (the "Effective Time").
(j) Deliveries at the Closing. At the Closing, (i) Holdings will deliver to the
Buyer the various certificates, instruments, and documents referred to in
ss.7(a) below, (ii) the Buyer will deliver to the Stockholder Representatives on
behalf of the Stockholders the various certificates, instruments, and documents
referred to in ss.7(b) below, (iii) the Stockholder Representatives on behalf of
the Stockholders will deliver to the Buyer, free and clear of all liens, stock
certificates representing all of the Holdings Shares (or affidavits of lost
certificates, as
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described in ss.2(f)(iv)), endorsed in blank or accompanied by duly executed
assignment documents, (iv) the Buyer will deliver to the Stockholder
Representatives for distribution to the Stockholders or the Stockholders'
designee, the Buyer Shares less the Holdback Shares and, if applicable, the
Closing Cash Payment, (v) the Buyer will deliver to the Stockholder
Representatives for distribution to the Optionees, the New Options, (vi) the
Stockholder Representatives and the Buyer will deliver to the Escrow Agent the
Direction Letter, (vii) the Buyer will deliver the Holdback Shares to the Escrow
Agent, (viii) the Stockholder Representatives will deliver to the Buyer the
Payoff Letter signed by the Lender, (ix) the Buyer will deliver to the Lender
the Payoff Amount and (x) the Parties will deliver the Certificate of Merger for
filing in the office of the Secretary of State of the State of Delaware pursuant
to the DGCL,. In addition to the foregoing, at the Closing, the Stockholder
Representatives shall deliver to the Buyer (x) originals of all Management
Agreements, Lease Agreements, Government Agreements and Tenant Agreements, (y)
the entire corporate books and records of Holdings, the Company and each
Subsidiary from the dates of incorporation through the Closing, including the
Certificates of Incorporation or Formation, Bylaws and minutes of meetings of
Holdings, the Company and each Subsidiary, if any, and (z) the resignations of
all directors, officers and employees of Holdings, the Company and each
Subsidiary, other than the resignations described in ss.7(a)(ix) hereof.
3. Representations and Warranties of the Buyer and Newco. The Buyer and Newco,
jointly and severally, represent and warrant to Holdings as follows:
(a) Organization of the Buyer and Newco. Each of the Buyer and Newco is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. Each of the Buyer and Newco has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Buyer and Newco, enforceable in accordance with its terms and
conditions, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect affecting creditors' rights generally.
Except for any notices that may be required to be filed pursuant to the
Xxxx-Xxxxx-Xxxxxx Act, under federal securities laws or under state securities
or blue sky laws, neither the Buyer nor Newco need give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (A) violate
any injunction, judgment, order, decree, ruling, charge, or other restriction of
any Governmental Authority to which the Buyer or Newco is subject or any
provision of its charter or bylaws or (B) subject to the receipt of the consents
listed in ss.3(c) of the Disclosure Schedule, violate, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right
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to accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer or Newco is a party or by which it is bound or to which any of its
assets is subject.
(d) Brokers Fees. Neither the Buyer nor Newco 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 for which Holdings could become
liable or obligated.
(e) Investment. The Buyer and Newco are not acquiring Holdings Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
(f) Legal Compliance. Each of the Buyer, Newco and, to the Knowledge of the
Buyer, their predecessors and Affiliates have complied in all respects with all
Applicable Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply, except where the failure so to
comply would not have a Material Adverse Effect on the Buyer.
(g) Absence of Litigation. Except as disclosed in the Buyer's SEC Documents,
neither the Buyer nor Newco is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge and is not a party, or to the knowledge of the
Buyer, is not threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any Governmental Authority or before
any arbitrator, except where such injunction, judgment, order, decree, ruling,
charge, action, suit, proceeding, hearing or investigation would not have a
Material Adverse Effect on the Buyer.
(h) Environment, Health, and Safety.
(i) Each of the Buyer, Newco and, to the knowledge of the Buyer, their
respective predecessors and Affiliates, has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply, except where
any non-compliance would not have a Material Adverse Effect on the Buyer.
Without limiting the generality of the preceding sentence, each of the Buyer and
Newco and, to the knowledge of the Buyer, their respective predecessors and
Affiliates has obtained and been in compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are required
under all Environmental, Health, and Safety Laws, except where any
non-compliance would not have a Material Adverse Effect on the Buyer.
(ii) To the Buyer's knowledge, neither the Buyer nor Newco has any Liability
(and the Buyer, Newco and their respective Affiliates have not handled
or disposed of any substance or arranged for the disposal of any substance
giving rise to any Liability) for
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damage to any site where the Buyer or Newco operates its business, location, or
body of water (surface or subsurface), for any illness of or personal injury to
any employee or other individual, arising under any reason under any
Environmental, Health, and Safety Law, where such Liability would have a
Material Adverse Effect on the Buyer.
(i) Share Validity. The Buyer Shares and the shares issuable upon exercise of
the New Options shall be, upon issuance in accordance with this Agreement or the
New Options, as applicable, duly authorized, validly issued, fully paid and
nonassessable, and free and clear of any liens and preemptive and other similar
rights.
(j) Securities Law Compliance. The Buyer has given the Stockholder
Representatives and their agents, and agrees to continue to give the Stockholder
Representatives and their agents through the Closing Date, the opportunity to
ask questions of, and receive answers from, executive officers of the Buyer
concerning the Buyer and the Buyer Shares. Neither the Buyer nor, to the Buyer's
knowledge, any Person acting on its behalf has, in connection with the Buyer
Shares offered hereby, engaged in (A) any form of general solicitation or
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 Buyer Shares 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 Buyer Shares if as a result the offer and
sale of the Buyer Shares contemplated hereby would fail to be entitled to
exemption from the registration requirements of the Securities Act. As used in
this ss.3(j), the terms "offer" and "sale" have the meanings specified in
Section 2(3) of the Securities Act.
(k) Public Filings.
(i) The Buyer has made available (or will make available within ten (10) days
after the execution of this Agreement) to Holdings true and complete copies of
its quarterly report on Form 10-Q for fiscal quarter ended September 30, 1999
and all current reports on Form 8-K and other documents filed since January 1,
1999 (collectively, the "SEC Documents") and will make available to Holdings any
similar SEC Documents filed with the U.S. Securities and Exchange Commission
(the "SEC") on or before the Closing Date. As of their respective filing dates,
each SEC Document complied, or will comply, in all material respects with the
requirements of the Securities Exchange Act, and as of their respective dates
none of the SEC Documents contained, or will contain, any untrue statement of a
material fact or omitted, or will omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As used in this
Agreement, the consolidated balance sheet of the Buyer and its consolidated
subsidiaries as of September 30, 1999 included in the Form 10-Q for the fiscal
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quarter then ended is hereinafter referred to herein as the "Buyer Balance
Sheet" and September 30, 1999 is hereinafter referred to herein as the "Buyer
Balance Sheet Date".
(ii) Except to the extent expressly set forth in, or contemplated by, the Buyer
Balance Sheet, or the notes, schedules or exhibits thereto, or as disclosed in,
or contemplated by, the SEC Documents: (i) as of the Buyer Balance Sheet Date,
neither the Buyer nor any of its consolidated subsidiaries had any material
liabilities or obligations (whether absolute, contingent, accrued or otherwise)
that would be required to be included on a consolidated or condensed balance
sheet or in the notes, schedules or exhibits thereto prepared in accordance with
GAAP; and (ii) since the Buyer Balance Sheet Date, the Buyer and its
consolidated subsidiaries have not incurred any such material liabilities or
obligations other than in the ordinary course of business or as so disclosed or
contemplated.
(l) Tax Matters. The fair market value of the Buyer Shares and other
consideration received by the Stockholders will be approximately equal to the
fair market value of the Holdings Shares surrendered in the Merger. Immediately
before the Merger, the Buyer will be in control of Newco within the meaning of
Code Sec. 368(c). The Buyer has no plan or intention to (i) cause Holdings to
issue additional shares of its stock that would result in the Buyer losing
control of Holdings within the meaning of Code Sec. 368(c), (ii) reacquire any
of its stock issued in the Merger, except as provided pursuant to the escrow of
the Additional Buyer Shares or as provided by the Escrow Agreement or (iii)
liquidate Holdings, merge Holdings with or into another corporation, sell or
otherwise dispose of the stock of Holdings (except for transfers of stock to
corporations controlled by the Buyer), or to cause Holdings to sell or otherwise
dispose of any of its assets or any of the assets acquired from Newco, except
for dispositions made in the ordinary course of business or transfers of assets
to a corporation controlled by Holdings. Newco will have no liabilities assumed
by Holdings, and will not transfer to Holdings any assets subject to liabilities
in the Merger. The Buyer does not own, nor has it owned during the past five
years, any shares of the stock of Holdings. Neither Buyer nor Newco is or will
be an investment company as defined in Code Secs. 368(a)(2)(F)(iii) and (iv).
(m) No Material Adverse Change. Since the Buyer Balance Sheet Date,
there has been no Material Adverse Change in the business, financial condition,
assets, liabilities, operations or results of operations of the Buyer or its
ability to consummate the transactions contemplated hereby.
4. Representations and Warranties Concerning Holdings, the Company and
its Subsidiaries. Holdings represents and warrants to the Buyer as follows:
(a) Organization, Qualification, and Corporate Power. (a)ab Each of Holdings,
the Company and the Subsidiaries is a corporation or limited liability company
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or organization. Each of Holdings, the Company
and the Subsidiaries is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
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required, except where the failure to be so qualified would not have a Material
Adverse Effect on Holdings. Each of Holdings, the Company and the Subsidiaries
has full corporate or limited liability company power and authority and all
licenses, permits, and authorizations necessary to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it,
except where the failure to have such licenses, permits and authorizations would
not have a Material Adverse Effect on Holdings. ss.4(a) of the Disclosure
Schedule lists the directors and officers of each of Holdings, the Company and
the Subsidiaries. Holdings has delivered to the Buyer correct and complete
copies of the charter and bylaws or other organizational documents of each of
Holdings, the Company and the Subsidiaries (as amended to date). The minute
books (containing the records of meetings of the stockholders or members, the
board of directors or manager, and any committees of the board of directors),
the stock certificate books, and the stock record books of each of Holdings, the
Company and the Subsidiaries are correct and complete. None of Holdings, the
Company and the Subsidiaries is in default under or in violation of any
provision of its charter or bylaws or other organizational documents.
(b) Capitalization of Holdings.
(i) The entire authorized capital stock of Holdings consists of 5,000,000 shares
of Common Stock, par value $0.01 per share, of which 3,451,440 shares are issued
and outstanding, and 12,200,000 shares of Preferred Stock, par value $0.01 per
share, of which 12,161,997 shares are issued and outstanding. No shares are held
in treasury. All of the issued and outstanding Holdings Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Stockholders as set forth in ss.4(b) of the Disclosure Schedule.
Except as set forth in ss.4(b) of the Disclosure Schedule, there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Holdings to issue, sell, or otherwise cause to become
outstanding any of its capital stock or equity. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to Holdings. Except as set forth in ss.4(b) of the
Disclosure Schedule, there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Holdings.
(ii) The Stockholders and Optionees hold of record and own beneficially all of
the Holdings Shares and/or Options set forth opposite such Stockholder's or
Optionee's name in ss.4(b) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. Except
as set forth in ss.4(b) of the Disclosure Schedule, no Stockholder is a party to
any option, warrant, purchase right, or other contract or commitment that could
require the Stockholder to sell, transfer, or otherwise dispose of any capital
stock of any Subsidiary, the Company, or Holdings (other than this Agreement).
Except as set forth in ss.4(b) of the Disclosure Schedule, no Stockholder is a
party to any voting trust, proxy, or other agreement
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or understanding with respect to the voting of any capital stock of any
Subsidiary, the Company, or Holdings.
(c) Noncontravention; Consents.
(i) Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any
injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which any of Holdings, the Company or any Subsidiary
is subject or any provision of the charter or bylaws or other organizational
documents of Holdings, the Company or any Subsidiary or (B) subject to the
receipt of any consent listed in ss.4(c)(i) of the Disclosure Schedule, violate,
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 of Holdings, the Company or any Subsidiary 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 Security Interest upon any of its assets),
excluding in any case such violations, breaches or defaults or Permitted
Interests that in the aggregate would not reasonably be expected to have a
Material Adverse Effect on Holdings.
(ii) Except for (A) consents listed in ss.4(c)(ii) of the Disclosure Schedule,
(B) the expiration or earlier termination of any required waiting period under
the Xxxx-Xxxxx-Xxxxxx Act, and (C) the requisite approval of the Stockholders
pursuant to ss.251 of the DGCL, none of Holdings, the Company or any Subsidiary
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Person or Governmental Authority in order for the
Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers Fees. None of Holdings, the Company or any Subsidiary 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.
(e) Title to Assets. Holdings, the Company and the Subsidiaries have good and
marketable title to, or a valid leasehold interest in, their respective Assets,
free and clear of all Security Interests (other than Permitted Interests),
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet. Each tangible asset of
Holdings, the Company and the Subsidiaries is in good operating condition and
repair (subject to normal wear and tear) and is suitable for the purposes for
which it presently is used.
(f) The Company and the Subsidiaries. ss.4(f) of the Disclosure Schedule sets
forth for the Company and each Subsidiary (i) its name and jurisdiction of
incorporation or organization, (ii) the number of shares of authorized capital
stock (or other equity) of each class of its capital stock (or other equity),
(iii) the number of issued and outstanding shares (or interests) of each class
of its capital stock (or other equity), the names of the holders thereof, and
the number of shares (or
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interests) held by each such holder, and (iv) the number of shares (or
interests) of its capital stock (or other equity) held in treasury. All of the
issued and outstanding shares (or interests) of capital stock (or other equity)
of each Subsidiary have been duly authorized and are validly issued, fully paid,
and nonassessable. Holdings is the sole owner of all equity interests in the
Company, and holds of record and owns beneficially all of the outstanding shares
of the Company, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. The Company is the sole owner of all equity
interests in each Subsidiary, and holds of record and owns beneficially all of
the outstanding shares of each Subsidiary of the Company, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights, conversion rights,
exchange rights, or other contracts or commitments that could require Holdings,
the Company, or any Subsidiary to sell, transfer, or otherwise dispose of any
capital stock of the Company or any Subsidiary or that could require the Company
or any Subsidiary to issue, sell, or otherwise cause to become outstanding any
of its own capital stock (or other equity). There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company or any Subsidiary. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of any capital
stock of the Company or any Subsidiary. None of Holdings, the Company or any
Subsidiary controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association except as set forth in ss.4(f) of the Disclosure Schedule. Except as
set forth in ss.4(f) of the Disclosure Schedule, neither Holdings, the Company
nor any Subsidiary holds or owns any equity interest in any corporation,
partnership, limited liability company, or other entity.
(g) Financial Statements. Holdings has provided to the Buyer the following
financial statements (collectively the "Financial Statements"): (i) audited
consolidated and unaudited consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1996, December 31, 1997 and December 31, 1998 (the
"Most Recent Fiscal Year End") for Holdings, the Company and the Subsidiaries;
and (ii) unaudited consolidated and consolidating balance sheets and statements
of income, changes in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the nine months ended September 30, 1999
(the "Most Recent Fiscal Month End") for Holdings, the Company and the
Subsidiaries. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby (subject to, in the case of the Most Recent Financial
Statements, the absence of footnotes, year-end adjustments, and other items
required by GAAP to be included in audited statements), present fairly the
financial condition of Holdings, the Company and the Subsidiaries as of such
dates and the results of operations of
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Holdings, the Company and the Subsidiaries for such periods, are correct and
complete, and are consistent with the books and records of Holdings, the Company
and the Subsidiaries.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, there has not been any Material Adverse Change in the business,
financial condition, assets, liabilities, operations or results of operations of
Holdings, the Company and the Subsidiaries. Without limiting the generality of
the foregoing, since that date:
(i) none of Holdings, the Company or any Subsidiary has sold, leased,
transferred, or assigned any of its assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business;
(ii) except as set forth in ss.4(h)(ii) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) either obligating the Company to pay more than $50,000 or outside
the Ordinary Course of Business;
(iii) except as set forth in ss.4(h)(iii) of the Disclosure Schedule, no party
(including Holdings, the Company or any Subsidiary) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) except where such
acceleration, termination, modification or cancellation would not have a
Material Adverse Effect on Holdings;
(iv) except as set forth in ss.4(h)(iv) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has imposed any Security Interest (other
than Permitted Interests) upon any of its assets, tangible or intangible;
(v) except as set forth in ss.4(h)(v) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has made any capital expenditure (or
series of related capital expenditures) either involving more than $50,000 or
outside the Ordinary Course of Business;
(vi) except as set forth in ss.4(h)(vi) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has made any capital investment in, any
loan 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 $50,000 or outside the Ordinary Course of Business;
(vii) except as set forth in ss.4(h)(vii) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation;
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(viii) none of Holdings, the Company or any Subsidiary has delayed or postponed
the payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) none of Holdings, the Company or any Subsidiary has cancelled, compromised,
waived, or released any right or claim (or series of related rights and claims)
either involving more than $50,000 in the aggregate or outside the Ordinary
Course of Business;
(x) none of Holdings, the Company or any Subsidiary has 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 any
of Holdings, the Company or any Subsidiary;
(xii) except as set forth in ss.4(h)(xii) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(xiii) except as set forth in ss.4(h)(xiii) of the Disclosure Schedule, none of
Holdings, the Company or any Subsidiary has declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(xiv)none of Holdings, the Company or any Subsidiary has experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
(xv) none of Holdings, the Company or any Subsidiary has made any loan to, or
entered into any other transaction with, any of its Stockholders, directors,
officers, and employees or their Affiliates outside the Ordinary Course of
Business;
(xvi) none of Holdings, the Company or any Subsidiary has entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) none of Holdings, the Company or any Subsidiary has granted any increase
in the base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xviii)ab none of Holdings, the Company or any Subsidiary has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, or employees (or taken any such action with respect to any other
Employee Benefit Plan);
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(xix) none of Holdings, the Company or any Subsidiary has made any other change
in employment terms for any of its directors, officers, or employees outside the
Ordinary Course of Business;
(xx) none of Holdings, the Company or any Subsidiary has made or pledged to make
any charitable or other capital contribution in excess of $10,000 in the
aggregate;
(xxi) there has not been any other occurrence, event, incident, action, failure
to act, or transaction outside the Ordinary Course of Business involving any of
Holdings, the Company or any Subsidiary that would reasonably be expected to
have a Material Adverse Effect on Holdings; and
(xxii) none of Holdings, the Company or any Subsidiary has committed to any of
the foregoing.
(i) Undisclosed Liabilities. None of Holdings, the Company or any Subsidiary has
any Liability, except for (i) Liabilities set forth on the Most Recent Balance
Sheet, (ii) Liabilities which have arisen after the Most Recent Fiscal Month End
in the Ordinary Course of Business and (iii) the Liabilities set forth in
ss.4(i) of the Disclosure Schedule.
(j) Legal Compliance. Each of Holdings, the Company, its Subsidiaries, and their
respective predecessors and Affiliates has complied in all material respects
with all Applicable Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
(k) Tax Matters.
(i) Each of Holdings, the Company and the Subsidiaries has filed in a timely
manner all Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all material respects. All Taxes owed by Holdings, the
Company and the Subsidiaries (whether or not shown on any Tax Return) have been
paid. None of Holdings, the Company or any Subsidiary currently is the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by a Governmental Authority in a jurisdiction where any
of Holdings, the Company or any Subsidiary does not file Tax Returns that it is
or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of any of Holdings, the Company or any Subsidiary
that arose in connection with any failure (or alleged failure) to pay any Tax.
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(ii) Each of Holdings, the Company and each Subsidiary 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.
(iii) There is no dispute or claim concerning any Tax Liability of any of
Holdings, the Company or any Subsidiary either (A) claimed or raised by any
Governmental Authority in writing or (B) as to which Holdings has Knowledge
based upon personal contact with any agent of such Governmental Authority.
ss.4(k) of the Disclosure Schedule lists all federal, state, local, and foreign
Tax Returns filed with respect to any of Holdings, the Company or any Subsidiary
for taxable periods ended on or after December 31, 1996 and indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit.
(iv) None of Holdings, the Company or any Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(v) None of Holdings, the Company or any Subsidiary has filed a consent under
Code Sec. 341(f) concerning collapsible corporations. None of Holdings, the
Company or any Subsidiary has made any payments, is obligated to make any
payments, or is a party to any agreement that under any circumstances could
obligate it to make any payments that will not be deductible under Code Sec.
280G. To the Knowledge of Holdings, there are no proposed reassessments of any
property owned by Holdings, the Company, or the Subsidiaries that would affect
the Taxes of such company after the Closing Date. Holdings has not been a United
States real property holding corporation within the meaning of Code Sec.
897(c)(2) during the applicable period specified in Code Sec. 897(c)(1)(A)(ii).
None of Holdings, the Company, or any Subsidiary has 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. Each of Holdings, the Company and the
Subsidiaries has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Sec. 6662. None of Holdings, the Company or the
Subsidiaries is a party to any Tax allocation or sharing agreement. None of
Holdings, the Company or the Subsidiaries (A) is or has been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Holdings) or (B) has any Liability for the
Taxes of any Person (other than any of Holdings, the Company and the
Subsidiaries) under Treas. Reg. ss.1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise.
(vi) ss.4(k) of the Disclosure Schedule sets forth the following information
with respect to each of Holdings, the Company and the Subsidiaries (or, in the
case of clause (B) below, with respect to each of the Subsidiaries) as of the
most recent practicable
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date: (A) the basis of Holdings, the Company and the Subsidiaries in their
respective Assets; (B) the basis of the stockholder(s) of the Company and the
Subsidiaries in their stock (or the amount of any Excess Loss Account); (C) the
amount of all net operating loss, net capital loss, unused investment or other
credit, unused foreign tax, credit and excess charitable contribution carryovers
(and any limitations applicable to any of the foregoing), and the earnings and
profits allocable to Holdings, the Company and the Subsidiaries; and (D) the
amount of any deferred gain or loss allocable to Holdings, the Company or the
Subsidiaries arising out of any Intercompany Transaction.
(vii) The fair market value of the Buyer Shares and other consideration received
by the Stockholders will be approximately equal to the fair market value of the
Holdings Shares surrendered in the Merger.
(viii) The unpaid Taxes of Holdings, the Company and the Subsidiaries (including
any Taxes attributable to the distribution or other disposition of property on
or prior to the Closing Date) (A) did not, as of the Most Recent Fiscal Month
End, exceed the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) and (B) do not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Holdings, the Company and the Subsidiaries in filing their Tax Returns. The
distribution by Holdings of the stock of BLEC pursuant to ss.5(k) will not
result in any Tax Liability to Holdings.
(l) Sites; Management Agreements; Tenant Agreements. Except as set forth in
ss.4(l) of the Disclosure Schedule, neither Holdings, the Company nor any
Subsidiary owns or holds a ground lease of any real property. ss.4(l) of the
Disclosure Schedule (i) lists all Sites and (ii) identifies the Management
Agreements, Lease Agreements, Government Agreements, and Tenant Agreements that
correspond to the Sites. The Sites listed in ss.4(l) of the Disclosure Schedule
constitute all of the telecommunication Sites included in the Business. Holdings
has given the Buyer access to correct and complete copies of all Management
Agreements, Lease Agreements, Government Agreements, and all Tenant Agreements,
including the agreements (as amended to date) listed in ss.4(l) of the
Disclosure Schedule. ss.4(l) of the Disclosure Schedule identifies the
expiration date or remaining term of each Management Agreement, Lease Agreement,
Government Agreement and Tenant Agreement. Such Management Agreements, Lease
Agreements, Government Agreements and Tenant Agreements constitute all of the
agreements with property owners and telecommunications services providers
relating to the Business. With respect to each Management Agreement, Lease
Agreement, Government Agreement or Tenant Agreement (as applicable) and except
as set forth in ss.4(l) of the Disclosure Schedule:
(i) the Management Agreement, Lease Agreement, Government Agreement or Tenant
Agreement (as applicable) is legal, valid, binding, enforceable, and in full
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force and effect, subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect affecting creditors' rights
generally;
(ii) neither Holdings, the Company nor any Subsidiary is and, to the Knowledge
of Holdings, no other party to the Management Agreement, Lease Agreement,
Government Agreement or Tenant Agreement (as applicable) is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iii) neither Holdings, the Company nor any Subsidiary has and, to the Knowledge
of Holdings, no other party to the Management Agreement, Lease Agreement,
Government Agreement or Tenant Agreement (as applicable) has repudiated any
provision thereof;
(iv) there are no disputes, oral agreements, or forbearance programs in effect
as to the Management Agreement, Lease Agreement, Government Agreement or Tenant
Agreement (as applicable) that would, in the aggregate, have a Material Adverse
Effect on Holdings;
(v) none of Holdings, the Company and its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in
the leasehold or subleasehold in a manner that would, in the aggregate, have a
Material Adverse Effect on Holdings; and
(vi) ss.4(l) of the Disclosure Schedule sets forth the applicable expiration
date.
(m) Intellectual Property.
(i) Holdings, the Company and the Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the Business as presently conducted.
Each of Holdings, the Company and the Subsidiaries has taken all reasonable
action to maintain and protect each item of Intellectual Property that it owns
or uses.
(ii) None of Holdings, the Company or any Subsidiary has ever received any
written charge, complaint, claim, demand, or notice alleging any interference
with, infringement of, misappropriation of, or violation of any Intellectual
Property rights of third parties (including any claim that any of Holdings, the
Company and the Subsidiaries must license or refrain from using any Intellectual
Property rights of any third party).
(iii) ss.4(m)(iii) of the Disclosure Schedule identifies each registration which
has been issued to any
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of Holdings, the Company and the Subsidiaries with respect to any of its
Intellectual Property, identifies each pending application for registration
which any of Holdings, the Company and the Subsidiaries has made with respect to
any of its Intellectual Property, and identifies each license, agreement, or
other permission which any of Holdings, the Company and the Subsidiaries has
granted to any third party with respect to any of its Intellectual Property
(together with any exceptions). ss.4(m)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by any of Holdings,
the Company and the Subsidiaries in connection with its Business.
(iv) ss.4(m)(iv) of the Disclosure Schedule identifies each item of Intellectual
Property that any third party owns and that any of Holdings, the Company and the
Subsidiaries uses pursuant to license, sublicense, agreement, or permission.
Holdings has delivered to the Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date).
(n) Contracts. ss.4(n) of the Disclosure Schedule lists the following contracts
and other agreements to which Holdings, the Company or any Subsidiary is a party
other than the Management Agreements, Lease Agreements, Government Agreements
and Tenant Agreements (each a "Material Contract"):
(i) any agreement (or group of related agreements) for the lease of property to
or from any Person providing for lease payments in excess of $5,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase or sale of
materials, supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a period of
more than one year, result in a material loss to Holdings, the Company or any
Subsidiary, or involve consideration in excess of $15,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has created,
incurred, assumed, or guaranteed any indebtedness for borrowed money, or any
capitalized lease obligation, or under which it has imposed a Security Interest
(other than a Permitted Interest) on any of its assets, tangible or intangible;
(v) any agreement with any Stockholder and its Affiliates (other than Holdings,
the Company and the Subsidiaries);
(vi) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan arrangement for the
benefit of its current or former directors, officers, or employees;
(vii) any collective bargaining agreement;
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(viii) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis;
(ix) any agreement under which it has advanced or loaned any amount to any of
its directors, officers, and employees which, in the aggregate, does not exceed
$50,000;
(x) any other agreement (or group of related agreements) the performance of
which involves consideration in excess of $50,000; or
(xi) any noncompetition agreement.
Holdings has given the Buyer access to correct and complete copies of
each written agreement listed in ss.4(n) of the Disclosure Schedule.
With respect to each Material Contract: (A) the Material Contract is
legal, valid, binding, enforceable, and in full force and effect, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally; (B) neither Holdings,
the Company nor any Subsidiary is, and to the Knowledge of Holdings, no other
party thereto is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the Material Contract; and (C)
neither Holdings, the Company nor any Subsidiary has, and to the Knowledge of
Holdings, no other party thereto has repudiated any provision of the Material
Contract.
(o) Notes and Accounts Receivable. All notes and accounts receivable of
Holdings, the Company and the Subsidiaries are reflected on their books and
records, are valid receivables subject to no setoffs or counterclaims, are
current and collectible, subject only to the reserve for bad debts set forth on
the face of the Most Recent Balance Sheet as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Holdings, the Company and the Subsidiaries.
(p) Insurance. ss.4(p) of the Disclosure Schedule 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 Holdings, the Company or any Subsidiary has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past three (3) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name of each
covered insured;
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(iii) the policy number and the period of coverage;
(iv) 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
(v) 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) neither Holdings,
the Company or any Subsidiary nor, to the Knowledge of Holdings, any other party
to the policy is in breach or default (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 (C) neither
Holdings, the Company or any Subsidiary nor, to the Knowledge of Holdings, any
other party to the policy has repudiated any provision thereof. Each of
Holdings, the Company and the Subsidiaries has been covered during the past five
(5) years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. ss.4(p) of
the Disclosure Schedule describes any self-insurance arrangements affecting any
of Holdings, the Company and the Subsidiaries.
(q) Litigation. ss.4(q) of the Disclosure Schedule sets forth each instance in
which Holdings, the Company or any Subsidiary (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to
the Knowledge of Holdings, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any Governmental
Authority or before any arbitrator.
(r) Employees. ss.4(r) of the Disclosure Schedule sets forth the name and title
of each employee of Holdings, the Company and each Subsidiary. To the Knowledge
of Holdings, no executive, key employee, or group of employees has any plans to
terminate employment with any of Holdings, the Company or any Subsidiary. None
of Holdings, the Company or any Subsidiary is a party to or bound by any
collective bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. Holdings has no Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to employees
of any of Holdings, the Company or any Subsidiary. Except as set forth in
ss.4(r) of the Disclosure Schedule, none of Holdings, the Company or any
Subsidiary has any employment agreement of any kind, oral or written, express or
implied, that would require the Buyer to employ any employee of Holdings, the
Company or any Subsidiary after the Effective Time. Each such agreement is
terminable at will without liability, or without liability in excess of $50,000
in the aggregate with respect to all such agreements, to Holdings, the Company
or any Subsidiary.
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(s) Employee Benefits.
(i) ss.4(s) of the Disclosure Schedule lists each Employee Benefit Plan and each
material compensation arrangement providing compensation or other benefits,
whether deferred or not, in excess of base salary or wages ("Compensation
Arrangement") that any of the Company and its Subsidiaries maintains or to which
Holdings, the Company or any Subsidiary contributes. Each Employee Welfare
Benefit Plan and each Compensation Arrangement may be terminated at any time,
subject to requirements to deliver notices, without liability to Holdings, the
Company or its Subsidiaries.
(A) Each such Employee Benefit Plan (and each related trust, insurance contract,
or fund) complies in form and in operation in all material respects with the
applicable requirements of ERISA, the Code, and other Applicable Laws.
(B) All required reports and descriptions (including Form 5500 Annual Reports,
Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions) have been filed
or distributed in accordance with Applicable Laws with respect to each such
Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of
ERISA and of Code Sec. 4980B have been met with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each such Employee
Benefit Plan which is an Employee Pension Benefit Plan and all contributions for
any period ending on or before the Closing Date which are not yet due have been
paid to each such Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of Holdings, the Company or any Subsidiary. All
premiums or other payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee Pension Benefit Plan
meets the requirements of a "qualified plan" under Code Sec. 401(a) and has
received a favorable determination letter from the Internal Revenue Service, and
no plan amendment that is not the subject of a favorable determination letter
would affect the validity of an Employee Benefit Plan's letter.
(E) The market value of assets under each such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer Plan) equals or
exceeds the present value of all vested and nonvested Liabilities thereunder
determined in accordance with PBGC methods, factors, and assumptions applicable
to an Employee Pension Benefit Plan terminating on the date for determination.
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(F) Holdings has delivered to the Buyer correct and complete copies of the plan
documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan, along with copies
any employee handbooks or similar documents.
(ii) With respect to each Employee Benefit Plan that Holdings, the Company, any
Subsidiary or any entity required to be combined with Holdings, the Company or
its Subsidiaries under Code Sec. 414(b), (c), (m) or (o) ("ERISA Affiliate")
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is in Employee Pension Benefit Plan
(other than any Multiemployer Plan) has been completely or partially terminated
or been the subject of a Reportable Event as to which notices would be required
to be filed with the PBGC. No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
instituted or, to the Knowledge of Holdings, threatened.
(B) There have been no Prohibited Transactions with respect to any such Employee
Benefit Plan. No Fiduciary has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of Holdings, threatened,
and Holdings has no Knowledge of any facts which could give rise to any such
action, suit or proceeding.
(C) None of Holdings, the Company, any Subsidiary or any ERISA Affiliate of such
entity has incurred any Liability to the PBGC (other than PBGC premium payments)
or otherwise under Title IV of ERISA (including any withdrawal Liability) or
under the Code with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
(iii) None of Holdings, the Company, any Subsidiary or any ERISA Affiliate of
such entity contributes to, ever has contributed to, or ever has been required
to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) None of Holdings, the Company or any Subsidiary maintains or ever has
maintained or contributes, ever has contributed, or ever has been required to
contribute to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other
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welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code
Sec. 4980B).
(t) Guaranties. None of Holdings, the Company or any Subsidiary is a guarantor
or otherwise is liable for any Liability or obligation (including indebtedness)
of any other Person.
(u) Environment, Health, and Safety.
(i) Each of Holdings, the Company, the Subsidiaries, and their respective
predecessors and Affiliates has complied in all material aspects with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, each of Holdings, the
Company, the Subsidiaries, and, with respect to the Business, their respective
predecessors and Affiliates has obtained and been in substantial compliance with
all of the terms and conditions of all material permits, licenses, and other
authorizations which are required under all Environmental, Health, and Safety
Laws.
(ii) To the Knowledge of Holdings, none of Holdings, the Company or any
Subsidiary has any Liability (and none of Holdings, the Company, any Subsidiary,
and their respective Affiliates has handled or disposed of any substance or
arranged for the disposal of any substance giving rise to any Liability) for
damage to any Site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, arising under
any reason under any Environmental, Health, and Safety Law, where such Liability
would have a Material Adverse Effect on Holdings.
(v) Bank Accounts and Credit. ss.4(v) of the Disclosure Schedule lists all banks
and lending institutions with which Holdings, the Company or any Subsidiary
maintains any account or has a credit facility, and sets forth the names of all
individuals who have signing authority for any such account.
(w) Certain Business Relationships with Holdings, the Company and the
Subsidiaries. No Stockholder or its Affiliates has been involved in any business
transaction, arrangement or relationship (except transactions, arrangements, or
relationships that are on "arms length" terms and conditions) with any of
Holdings, the Company or any Subsidiary within the past 12 months, and no
Stockholder or its Affiliates owns any asset, tangible or intangible, which is
used in the business of any of Holdings, the Company or any Subsidiary. To the
Knowledge of Holdings, ss.4(w) of the Disclosure Schedule lists all "arms
length" transactions of Holdings, the Company or any Subsidiary with any
Stockholder or its Affiliates.
(x) Disclosure. The representations and warranties contained in this ss.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
ss.4 not misleading.
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(y) Authorization of Transaction. Subject to the receipt of required Stockholder
approval pursuant to ss.251 of the DGCL, Holdings has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Subject to the receipt of required Stockholder approval pursuant to
ss.251 of the DGCL, this Agreement constitutes the valid and legally binding
obligation of Holdings, enforceable in accordance with its terms and conditions,
subject to bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditors' rights generally.
(z) Delivery of Tax Opinion. With respect to the opinion to be delivered at the
Closing pursuant to ss.7(b)(ix) hereof, Holdings has been advised by Wolf,
Block, Xxxxxx & Xxxxx-Xxxxx that if the Merger were to be effected on the date
of this Agreement in accordance with the terms of this Agreement, such firm
would render the opinion described in ss.7(b)(ix) and has been advised by such
firm that it is not aware of any facts or circumstances existing as of the date
hereof or that would arise prior to the Closing Date that would prevent the
delivery of such opinion at the Closing.
5.Pre-Closing Covenants. The Parties agree as follows with respect to the period
between the execution of this Agreement and the Closing.
(a) Notices and Consents.
(i) The Buyer and Holdings (including the Company and the Subsidiaries) will use
commercially reasonable efforts to (A) give any required notices to third
parties and (B) to obtain any consents from any Governmental Authority or third
party necessary for the lawful consummation of the Closing, whether any of the
foregoing are referenced in ss.3(c) or ss.4(c) hereof, or otherwise. In
furtherance of the foregoing, the Buyer and Holdings agree to provide all
information (including financial information) that is reasonably requested by
any Person from whom any consent is necessary for lawful consummation of the
Closing.
(ii) Holdings and the Buyer have agreed that, subject to the provisions of this
ss.5(a)(ii), only any consent required under a Management Agreement, Tenant
Agreement, Lease Agreement or Government Agreement that involves revenue to
Holdings, the Company or any subsidiary in an amount in excess of $100,000 on an
annual basis will be required to be delivered at Closing (the "Material
Consents");
(b) Xxxx-Xxxxx-Xxxxxx Act Filing. If, after the date hereof, any filing of any
Notification and Report Forms with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice is required under
the Xxxx-Xxxxx-Xxxxxx Act, then each Party will make such filings and will use
commercially reasonable efforts to obtain (and Holdings will cause each of the
Company and its Subsidiaries to use commercially reasonable efforts to obtain)
an early termination of the applicable waiting period, and will make (and
Holdings will cause each of the Company and its Subsidiaries to make) any
further filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith.
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(c) Operation of Business. Holdings will not cause or permit the Company or any
Subsidiary to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business, except where the failure to
comply with the foregoing would not have a Material Adverse Effect on Holdings.
Without limiting the generality of the foregoing, except as set forth in ss.5(c)
of the Disclosure Schedule, Holdings will not (without the Buyer's consent,
which shall not be unreasonably withheld), and will not (without the Buyer's
consent, which shall not be unreasonably withheld) cause or permit the Company
or any Subsidiary to, (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock, or (ii) otherwise engage in any practice, take
any action, or enter into any transaction of the sort described in ss.4(h)
above.
(d) Preservation of Business; Retention of Records. Holdings will and will cause
each of the Company and its Subsidiaries to keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees. From and after the date hereof, Holdings shall, and
shall cause the Company and the Subsidiaries to, retain all Tax Returns and all
books, records and other financial information relating to any Tax or Tax Return
of Holdings, the Company and the Subsidiaries, and to abide by all record
retention agreements entered into with any Governmental Authority.
(e) Full Access.
(i) Holdings will permit, and Holdings will cause each of the Company and its
Subsidiaries to permit, representatives of the Buyer to have full access at all
reasonable times and upon reasonable advance written notice to Xxxxxxxxx X.
Xxxxxxx or Xxxxxxx X. Xxxxx, and in a manner so as not to interfere with the
normal business operations of Holdings, Company and the Subsidiaries, to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each of Holdings, the Company and
the Subsidiaries. The Buyer agrees to provide Holdings with prompt written
notice if the Buyer determines that, based upon information provided to the
Buyer or through its own investigation, Holdings is in breach of any
representation, warranty or covenant of Holdings set forth in this Agreement;
provided, however, that such notice by the Buyer will not constitute acceptance
by the Buyer to the items constituting the breach, as set forth in ss.5(f)
hereof, and will not constitute a waiver by the Buyer of the conditions to
Closing set forth in ss.7(a) hereof. If this Agreement is terminated, the Buyer
agrees to return or cause to be returned all such information provided to the
Buyer or its representatives within five (5) Business Days after the date of
such termination.
(ii) The Buyer will permit representatives of Holdings to have full access at
all reasonable times and upon reasonable advance written notice to Xxxxxxx X.
Xxxxx, and in a manner so as not to interfere with the normal business
operations of the Buyer, to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to the Buyer.
If this Agreement is terminated, Holdings agrees to
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return or cause to be returned all such information provided to Holdings or its
representatives within five (5) Business Days after the date of such
termination.
(f) Notice of Developments. Holdings may, no later than three (3) days before
the Closing, supplement or amend the Disclosure Schedule attached hereto (or
create one or more additional sections of the Disclosure Schedule, if
appropriate) with respect to any matter that arises or is discovered after the
date of this Agreement that, if existing or known at the date of this Agreement,
would have been required to be set forth or listed in the Disclosure Schedule;
provided that, for purposes of determining the rights and obligations of the
parties under this Agreement (other than the obligations of Holdings under this
ss.5(f)), any such disclosure will be deemed to have been disclosed to the Buyer
as of the date of this Agreement and the Buyer shall be entitled to terminate
this Agreement pursuant to ss.9(a)(ii) hereof if: (i) the
supplementally-disclosed items have had or would reasonably be expected to have
a Material Adverse Effect on Holdings; or (ii) in case of
supplementally-disclosed items that arose from events, transactions and
occurrences after the date hereof, such supplementally-disclosed items
constitute violations of the covenants contained in ss.5(c). If the Buyer does
not terminate this Agreement as provided above and consummates the Closing, the
Buyer shall be deemed to have consented to any such disclosure.
(g) Exclusivity. Holdings will not cause or permit any of the Company and its
Subsidiaries, to (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets of
Holdings, the Company or any Subsidiary (including any acquisition structured as
a merger, consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Holdings will not vote
any of its shares in the Company and the Company will not vote any of its shares
in any Subsidiary, in favor of any such acquisition structured as a merger,
consolidation, or share exchange.
(h) Employees. At the Closing, each of the employees of Holdings, the Company or
its Subsidiaries listed in ss.5(h) of the Disclosure Schedule shall enter into
employment agreements with SpectraSite Communications in substantially the form
of the attached Exhibit A. Nothing contained in this Agreement shall confer upon
any employee of the Business any right with respect to continued employment by
the Surviving Corporation or the Buyer, except pursuant and subject to the terms
of such employment agreements entered into at the Closing. No provision of this
Agreement shall create any third party rights in any such employee, or any
beneficiary or dependent thereof, with respect to the compensation, terms and
conditions of employment and benefits that may be provided to such employee by
the Buyer or under any Employee Benefit Plan that the Buyer may maintain. On or
prior to the Closing Date, Holdings shall, or shall cause the Company or its
Subsidiaries, as applicable, to take such action as may be necessary to
terminate any defined contribution retirement plan sponsored or maintained by
Holdings, the Company or any Subsidiary effective as of a date no later than the
Closing Date. Within ten (10) days following the date of this Agreement, upon
delivery of
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written notice by the Buyer to Holdings, Holdings will, or will cause the
Company to, obtain (within five (5) Business Days after the Buyer delivers
written notice) the affected employee's consent to the termination, subject to
the consummation of the Merger, of any written employment agreements or
descriptions of any oral employment agreements set forth or required to be set
forth in ss.4(r) of the Disclosure Schedule and the continuation of employment
on an at-will basis without increase in compensation or benefits.
(i) Confidentiality. Each Party will treat and hold as such all of the
Confidential Information and refrain from using any of the Confidential
Information except in connection with this Agreement. In the event that any
Party is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, such Party
will notify the other Party promptly of the request or requirement so that the
other Party may seek an appropriate protective order or waive compliance with
the provisions of this ss.5(i). If, in the absence of a protective order or the
receipt of a waiver hereunder, any Party is, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand liable
for contempt, such Party may disclose the Confidential Information to the
tribunal; provided, however, that the disclosing Party shall use its reasonable
best efforts to obtain, at the reasonable request of the non-disclosing Party,
an order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the
non-disclosing Party shall designate. The foregoing provisions shall not apply
to any Confidential Information which is generally available to the public
immediately prior to the time of disclosure. If this Agreement is terminated
prior to the Closing Date as set forth in ss.9, the Buyer agrees not to hire or
solicit for employment any employees of Holdings or the Company, without the
written consent of Holdings, for a period of two years from the date of this
Agreement.
(j) Termination of Interests.
(i) On or before the Closing Date, all options, warrants, purchase rights,
proxies, voting trusts, and other contracts, agreements, commitments or
understandings required to be identified in ss.4(b) of the Disclosure Schedule
shall be terminated, except for the Options subject to ss.5(p) hereof.
(ii) Effective as of the Closing Date, the Company will terminate its
participation in the Preit-Xxxxx Profit Sharing 401(k) Plan.
(k) Distribution of BLEC. Holdings owns one hundred percent (100%) of the issued
and outstanding capital stock of BLEC Investment Company, Inc, a Delaware
corporation ("BLEC"). Prior to the Closing Date, Holdings will distribute the
outstanding capital stock of BLEC to the Stockholders of Holdings. The Buyer
shall be entitled to reimbursement from the Holdback Shares for any Tax cost to
Holdings, the Company or its Subsidiaries that arises as a result of the
distribution of BLEC.
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(l) Receipt of Releases. Holdings shall use its reasonable best efforts to
obtain, from each officer and director of Holdings, releases containing terms
reasonably satisfactory to the Buyer.
(m) Restricted Activities. The Buyer will not, and the Buyer will use its best
efforts to ensure that all persons whose actions or ownership interests would be
attributable to the Buyer will not, in any manner, directly or indirectly,
solicit, initiate, encourage or participate in bids, purchases or negotiations
with respect to any acquisition or other transaction that, if consummated, would
have the effect under any agreement or any Applicable Laws of preventing or
delaying the Buyer from consummating the Merger.
(n) Registration Rights Agreement. Prior to the Closing Date, the Buyer will
prepare, and receive all required approvals to enter into, a registration rights
agreement that grants registration rights (with respect to the Buyer Shares and
Additional Buyer Shares to be delivered hereunder) to the Stockholders (other
than Dissenting Stockholders) or its designee that are no less favorable to the
Stockholders than the registration rights given to the Buyer's current
stockholders pursuant to the terms of the Second Amended and Restated
Registration Rights Agreement, dated April 20, 1999, by and among the Buyer;
Whitney Equity; Whitney III; Whitney Strategic; Xxxxxx-Xxxxxx; Kitty Hawk III;
Xxxxx Xxxx XX; Eagle Creek; NCEF; Xxxxxx X.X.; certain affiliates of CIBC
Xxxxxxxxxxx Corp.; certain affiliates and employees of Welsh Xxxxxx Xxxxxxxx &
Xxxxx; Tower Parent Corp.; Gupton, Eckert, Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxxx,
including (i) "piggyback registration rights" corresponding to and in equal
priority to the Buyer's existing preferred stockholders, provided such rights
shall not be limited by references to, and the provisions of, the Stockholders'
Agreement among certain stockholders of the Buyer, (ii) registration rights on
any Registration Statement of the Buyer on Form S-3, (iii) subject to the
limitation requiring a demand by holders of 25% of the Buyer's stock, rights to
join in and cause a "required registration", (iv) indemnification rights and (v)
payment of the Stockholders' expenses.
(o) Delivery of Tax Returns. Within ten (10) days following the execution of
this Agreement, Holdings shall deliver to the Buyer correct and complete copies
of all Tax Returns filed by or on behalf of, and examination reports and
statements of deficiencies asserted against or agreed to by each of Holdings,
the Company and the Subsidiaries since December 31, 1996.
(p) Conversion of Options. As of the Closing, any outstanding options (the
"Options") granted by Holdings to its employees (such employee being referred to
hereinafter as an "Optionee") to acquire Holdings Shares shall be assumed by the
Buyer on the following terms:
(i) The Options shall be exchanged for options to acquire common stock of the
Buyer (the "New Options") with each Optionee receiving one or more New Options
in exchange for the Option or Options relinquished by such Optionee.
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(ii) Each New Option shall have substantially the same terms and conditions as
were contained in the Option for which such New Option is exchanged, and shall
not provide the Optionee with any additional benefits which such Optionee did
not have under the Option.
(iii) The number of shares of common stock of the Buyer subject to the New
Option, and the exercise price for each such share shall be set using an
exchange ratio, the intent of which is to provide that both of the following
conditions are met:
(A) The aggregate "fair market value" (as such term is used for purposes of Code
Sec. 422) of the shares of common stock of the Buyer subject to the New Option
immediately following the exchange of the New Option for the Option is equal to
the aggregate "fair market value" of the Holdings Shares subject to the Option
immediately prior the exchange of the New Option for the Option; and
(B) The excess of the aggregate fair market value of the shares of common stock
of the Buyer subject to the New Option immediately after the exchange of the New
Option for the Option over the aggregate option price for such shares of common
stock of the Buyer is not more than the excess of the aggregate fair market
value of the Holdings Shares subject to the Option immediately before the
exchange of the New Option for the Option over the aggregate option price of
such shares of capital stock of Holdings.
(q) Voting Agreement; Stockholder Approval. Within ten (10) Business Days after
the date hereof, Holdings will deliver to the Buyer a voting agreement, signed
by Stockholders having the right to vote at least fifty-one percent (51%) of the
outstanding Holdings Shares entitled to vote for the Merger, pursuant to which
such Stockholders will agree to approve the Merger and this Agreement, agree to
vote at a meeting all of their Holdings Shares entitled to vote thereon in favor
of the Merger (or approve the Merger by written consent), agree, if this
Agreement has not been terminated by its terms, not to vote any of their
Holdings Shares in favor of any competing transaction involving the sale of
Holdings, the Company and its Subsidiaries, and will waive any rights of
appraisal under the DGCL. In addition, within ten (10) Business Days of the date
hereof, Holdings will deliver its Stockholders either (i) a notice of a special
meeting of Stockholders (which will take place no later than twenty-one (21)
days after the delivery of such notice), at which the Stockholders will be asked
to vote to approve the Merger, or (ii) a written consent in lieu of meeting by
which the Stockholders will be asked to approve the Merger, together with notice
to the Stockholders pursuant to ss.262(d)(2) of the DGCL that the Merger has
been approved. Holdings will take all action necessary in accordance with
Applicable Laws and its Certificate of Incorporation and Bylaws either to
convene a meeting of its Stockholders to consider and vote upon the Merger and
this Agreement or to obtain approval of its Stockholders by written consent in
lieu of a meeting, and Holdings and its Board of Directors will take all lawful,
reasonable actions to solicit, and use all reasonable efforts to obtain, such
approval or consent from all of the Stockholders.
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(r) General. Each of the Parties will use his or its commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in ss.7 below).
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case 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 ss.8 below).
Holdings acknowledges and agrees that from and after the Closing the Buyer will
be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to Holdings, the
Company and its Subsidiaries, provided, however, that the Buyer will provide to
Holdings reasonable access, at Holdings' cost and expense, necessary to permit
Holdings to comply with Applicable Laws.
(b) Restrictions on Sale of Buyer Shares; Delivery of Investor Representation
Letter. As a condition to receiving the Merger Consideration:
(i) The Stockholders will agree to be bound by the terms of any customary
lock-up agreement (not to exceed 180 days) required by the underwriters of an
initial public offering of the Buyer's common stock (the "Lock-Up Agreement").
Each certificate representing the Buyer Shares will bear substantially the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR
UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT
BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF ALL SUCH
LAWS.
(ii) Each Stockholder and each Optionee will deliver to the Buyer an investment
representation letter (to be provided by the Buyer and reasonably acceptable to
Holdings) in a form customary for private placement transactions. The investment
representation letter will contain provisions requesting the Stockholder or
Optionee to indicate whether the Stockholder or Optionee is an Accredited
Investor and other provisions necessary to permit the Buyer to conclude that the
issuance of the Buyer Shares and the New Options hereunder will qualify as an
offering exempt from the registration requirements of the Securities Act and
applicable state securities or "Blue Sky" laws under Regulation D of the
Securities Act.
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(c) Treatment as a Tax-Free Reorganization.
(i) Following the Merger, Holdings will hold at least ninety percent (90%) of
the fair market value of its net assets and at least seventy percent (70%) of
the fair market value of its gross assets and at least ninety percent (90%) of
the fair market value of Newco's net assets and at least seventy percent (70%)
of the fair market value of Newco's gross assets held immediately prior to the
Merger. For purposes of this ss.6(c)(i), amounts paid by Holdings or Newco to
Stockholders (or their designee) exercising appraisal rights under the DGCL,
amounts paid by Holdings or Newco to Stockholders (or their designee) who
receive cash or other property, amounts used by Holdings or Newco to pay
reorganization expenses, all redemptions and distributions made by Holdings
(including the distribution by Holdings of stock and/or other investments in
BLEC, but excluding any regular, normal dividends paid by Holdings) will be
included as assets of Holdings or Newco, respectively, immediately prior to the
Merger.
(ii) Following the Merger, Holdings will continue its historic business or use a
significant portion of its historic business assets in a business, each within
the meaning of section 1.368-1(d) of the Treasury Regulations.
(iii) With respect to the Holdback Shares and the Additional Buyer Shares: (A)
the Holdback Shares and the Additional Buyer Shares will appear as issued and
outstanding on the Buyer's balance sheet and such Holdback Shares and the
Additional Buyer Shares will be legally outstanding under Applicable Laws; (B)
all dividends paid on such Holdback Shares and the Additional Buyer Shares will
be distributed currently to the Stockholders or their designee; (C) all voting
rights of such Holdback Shares and Additional Buyer Shares of stock will be
exercisable by or on behalf of the Stockholders or their designee; and (D)
except as otherwise provided pursuant to the escrow of the Additional Buyer
Shares or the Escrow Agreement, no Holdback Shares and Additional Buyer Shares
will be subject to restrictions requiring their return to the issuing
corporation because of death, failure to continue employment, or similar
restrictions.
(iv) The Buyer intends that the transactions contemplated by this Agreement
qualify as a reorganization within the meaning of Code Secs. 368(a)(1)(A) and
368(a)(2)(E). The Buyer agrees that all positions it takes in its Tax Returns
and financial statements will be consistent with treating such transactions as a
reorganization within the meaning of Code Secs. 368(a)(1)(A) and 368(a)(2)(E),
unless otherwise required pursuant to a "determination" within the meaning of
Code Sec. 1313(a).
(d) Filing of Registration Statement. The Buyer agrees not to file with the SEC
any registration statement relating to its proposed initial public offering
until after the Closing Date, unless the Closing shall not have occurred
primarily because of Holdings' breach of any representation, warranty, or
covenant contained in this Agreement.
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7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.4 above (other than
representations and warranties made as of a specific date) shall be true and
correct in all material respects at and as of the Closing Date with the same
force and effect as if made at and as of the Closing Date (subject to Holdings'
right to supplement or amend the Disclosure Schedule as set forth in ss.5(f));
(ii) Holdings shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(iii) there shall have been no Material Adverse Change in Holdings or the
Company since the date of this Agreement;
(iv) no action, suit, or proceeding shall be pending or threatened before any
Governmental Authority wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(v) Holdings shall have delivered to the Buyer a certificate, signed by its
chief executive officer, to the effect that each of the conditions specified
above in ss.7(a)(i)-(iv) is satisfied in all respects;
(vi) all applicable waiting periods (and any extensions thereof) under the
Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated and all of
the Material Consents shall have been procured;
(vii) the relevant parties shall have entered into the employment agreements in
form and substance as set forth in Exhibit A attached hereto and the same shall
be in full force and effect;
(viii) the Buyer shall have received confirmation, satisfactory to it, that (A)
the period in which to perfect appraisal rights under ss.262 of the DGCL has
expired and the Dissenting Stockholders would not have been entitled to receive
more than five percent (5%) of the Merger Consideration (before reduction
pursuant to ss.2(d)(iii) and ss.2(d)(vi), (B) Stockholders holding at least 95%
of the outstanding Holdings Shares shall have executed and delivered a release
of claims against the Surviving Corporation, the Company and its Subsidiaries
with terms
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reasonably satisfactory to the Buyer and (C) no more than thirty-five (35) of
the Stockholders and Optionees who are receiving Buyer Shares or New Options
hereunder are not Accredited Investors;
(ix) Holdings shall have received Stockholder approval for the Merger;
(x) there shall be no Security Interests (other than Permitted Interests and
Security Interests in favor of the Lender, which shall be governed by the Payoff
Letter) relating to or affecting any property of Holdings, the Company or any
Subsidiary that cannot be released by payment of money;
(xi) the Buyer shall have received an opinion of Xxxxxxxxx, Xxxx & Xxxxxxx LLP,
counsel to Holdings, in form and substance reasonably satisfactory to the Buyer,
including an opinion that the Merger has been approved by all necessary director
and Stockholder action;
(xii) the Buyer shall have received the resignations, effective as of the
Closing, of each director and officer of Holdings, the Company and the
Subsidiaries other than those whom the Buyer shall have specified in writing at
least five (5) Business Days prior to the Anticipated Closing Date; and
(xiii) all actions to be taken by Holdings and the Stockholder Representatives
in connection with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
The Buyer may waive any condition specified in this ss.7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Holdings. The obligation of Holdings to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(b) above (other than
representations and warranties made as of a specific date) shall be true and
correct in all material respects at and as of the Closing Date with the same
force and effect as if made at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(iii) there shall have been no Material Adverse Change in the Buyer since the
date of this Agreement;
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(iv) no action, suit, or proceeding shall be pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(v) the Buyer shall have delivered to Holdings a certificate to the effect that
each of the conditions specified above in ss.7(b)(i)-(iv) is satisfied in all
respects;
(vi) all applicable waiting periods (and any extensions thereof) under the
Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated and all of
the Material Consents shall have been procured (provided, however, that the
condition regarding procurement of all of the Material Consents shall be
satisfied by the Buyer's waiver in writing of the requirement that the Material
Consents be procured prior to Closing);
(vii) the relevant parties shall have entered into the employment agreements in
form and substance as set forth in Exhibit A and the same shall be in full force
and effect (provided, however, that Holdings may not claim that this condition
has not been satisfied if the Buyer has presented for signature employment
agreements signed by the Buyer in form and substance as set forth in Exhibit A);
(viii) the Buyer shall have executed and delivered the Registration Rights
Agreement;
(ix) Holdings shall have received from Wolf, Block, Xxxxxx & Xxxxx-Xxxxx an
opinion substantially to the effect that, on the basis of facts, representations
and assumptions referenced in such opinion that are reasonably consistent with
the state of facts existing at the Closing Date, the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Code Secs.
368(a)(1)(A) and 368(a)(2)(E). In rendering such opinion counsel may request and
rely upon representations contained in certificates of officers of the Parties
and the Parties shall use their best efforts to make available such truthful
certificates;
(x) Holdings shall have received an opinion of Dow, Xxxxxx & Xxxxxxxxx, PLLC,
counsel to the Buyer and Newco, in form and substance reasonably satisfactory to
Holdings;
(xi) the Buyer shall have delivered the New Options;
(xii) the average of the closing prices of the common stock of the Buyer on the
Nasdaq Stock Market for the five (5) trading day period ended on the trading day
immediately prior to the Anticipated Closing Date shall be higher than $6.00 per
share; and
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(xiii) all actions to be taken by the Buyer in connection with consummation of
the transactions contemplated hereby and all certificates, instruments, and
other documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Holdings.
Holdings may waive any condition specified in this ss.7(b) if they
execute a writing so stating at or prior to the Closing.
8.Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the representations,
warranties and covenants of the Parties contained in this Agreement shall
survive the Closing for a period of twelve (12) months and shall thereafter
terminate and be of no further force and effect, except for covenants and
agreements to be performed after the Closing Date, which shall survive in
accordance with their terms.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event Holdings breaches any of its representations, warranties, and
covenants contained herein, and, if there is an applicable survival period
pursuant to ss.8(a) above, provided that the Buyer makes a written claim for
indemnification to the Stockholder Representatives pursuant to ss.10(f) below
within such survival period, then from and after the Closing Date, the Buyer
shall be indemnified out of the Holdback Shares from and against the entirety of
any Losses (including Losses of Holdings, the Company or any Subsidiary) the
Buyer may suffer through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by the
breach.
(ii) From and after the Closing Date, if there is an applicable survival
period pursuant to ss.8(a) above, provided that the Buyer makes a written claim
for indemnification to the Stockholder Representatives pursuant to ss.10(f)
below within such survival period, the Buyer shall be indemnified out of the
Holdback Shares from and against the entirety of any Losses (including Losses of
Holdings, the Company or any Subsidiary) the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability of any
of the Company and its Subsidiaries for the unpaid Taxes of any Person (other
than any of the Company and its Subsidiaries) under Treas. Reg. ss.1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(iii) If any Dissenting Stockholder properly exercises appraisal rights under
the DGCL, if there is an applicable survival period pursuant to ss.8(a) above,
provided that the Buyer makes a written claim for indemnification pursuant to
ss.10(f) below within such survival period, the Buyer shall be indemnified out
of the Holdback Shares from and against any Losses (including Losses of
Holdings, the Company or any Subsidiary) the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by such Stockholder's
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exercise of appraisal rights, but only to the extent such Losses are in excess
of the value of the Merger Consideration retained by the Buyer pursuant to
ss.2(d)(vi) hereof.
(c) Indemnification Provisions for Benefit of the Stockholders. In the event
the Buyer breaches any of its representations, warranties, and covenants
contained herein, and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that the Stockholder Representatives make a written
claim for indemnification against the Buyer pursuant to ss.10(h) below within
such survival period, then, from and after the Closing Date, the Buyer agrees to
indemnify the Stockholders from and against the entirety of any Losses the
Stockholders may suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the nature of,
or caused by the breach.
(d) Procedures for Claims Between the Parties. If a claim (a "Claim") is to be
made by the party claiming indemnification (the "Claimant") against the other
party (the "Indemnifying Party"), the Claimant shall give written notice (a
"Claim Notice") to the Indemnifying Party as soon as practicable after the
Claimant becomes aware of the facts, condition or event that gave rise to Losses
for which indemnification is sought under this ss.8, provided that in no event
shall such notice be effective if given after the date that is twelve (12)
months after the Closing Date. Following receipt of the Claim Notice from the
Claimant, the Indemnifying Party shall have thirty (30) days to make such
investigation of the Claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party and/or its authorized representative(s) the
information relied upon by the Claimant to substantiate the Claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of said
thirty (30) day period to the validity and amount of such Claim, then, subject
to the provisions of ss.8(f), the Indemnifying Party shall pay to the Claimant
the amount of such Claim. If the Claimant and the Indemnifying Party do not
agree within said period, the Claimant may seek appropriate legal remedy.
(e) Defense of Third-Party Actions. If any lawsuit or enforcement action (a
"Third-Party Action") is filed against a Claimant entitled to the benefit of
indemnity hereunder, written notice thereof (the "Third-Party Action Notice")
shall be given by the Claimant to the Indemnifying Party as promptly as
practicable (and in any event within five (5) days after the service of the
citation or summons or other manner of process), provided that in no event shall
such notice be effective if given after the date that is twelve (12) months
after the Closing Date. After such notice, if the Indemnifying Party shall
acknowledge in writing to the Claimant that the Indemnifying Party shall be
obligated under the terms of its indemnity obligation hereunder in connection
with such Third-Party Action, then the Indemnifying Party shall be entitled, if
it so elects, (i) to take control of the defense and investigation of such
Third-Party Action, (ii) to employ and engage attorneys of its choice (and
reasonably satisfactory to the Claimant) to handle and defend the same, at the
Indemnifying Party's cost, risk and expense, and (iii) to compromise or settle
such Third-Party Action, which compromise or settlement shall be made only with
the written consent of the Claimant (such consent not to be unreasonably
withheld, conditioned or delayed) unless such compromise or settlement involves
only the payment of money damages
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and does not impose an injunction or other equitable relief upon the
Claimant, in which case no such consent shall be required. If the Claimant
desires to participate in, but not control, any such defense or settlement
the Indemnified Party may do so at its sole cost and expense. If the
Indemnifying Party fails to assume the defense of such Third-Party
Action within fifteen (15) days after receipt of the Third-Party Action
Notice, the Claimant will (upon delivering notice to such effect to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such Third-Party Action; provided, however, that such Third-Party
Action shall not be compromised or settled without the prior written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld,
conditioned or delayed. In the event the Claimant assumes the defense of the
Third-Party Action, the Claimant will keep the Indemnifying Party timely
informed of the progress of any such defense, compromise or settlement.
(f) Indemnification Limitations. Notwithstanding anything to the contrary set
forth in this Agreement or otherwise, the Indemnifying Party's obligations to
indemnify the Indemnified Party pursuant to this ss.8 shall be subject to the
following limitations:
(i) No indemnification shall be required to be made by an Indemnifying Party
until the aggregate amount of the Indemnified Party's Losses exceeds $600,000
(the "Deductible"), and then indemnification shall be required to be made by the
Indemnifying Party only to the extent of such aggregate Losses that exceed the
Deductible; provided, however, that the Deductible shall not apply to (A) the
Buyer's breach of its obligation to deliver the Merger Consideration or (B)
Buyer's right to indemnification for Losses incurred by the Buyer as a result of
any Stockholder exercising appraisal rights under the DGCL.
(ii) No indemnification shall be required to be made by an Indemnifying Party
for the amount of the Indemnified Party's Losses that are in excess of the value
of the Holdback Shares. The Buyer's maximum liability for its indemnification
obligations under this ss.8 is $3,000,000.
(iii) In connection with the satisfaction by the Indemnifying Party of a claim
with respect to which indemnification is made hereunder, the Indemnifying Party
shall be entitled to reimbursement from the Indemnified Party for the amount of
any (A) net reduction in federal, state, local or foreign income or franchise
tax liability actually realized by the Indemnified Party within two years from
the date the indemnification obligation is fulfilled by the Indemnifying Party,
(B) available insurance proceeds, and (C) of the Indemnified Party's Losses that
are subsequently recovered by the Indemnified Party pursuant to a settlement or
otherwise.
(iv) In no event shall the term "Losses" include any consequential, incidental
or indirect loss or damage to the Indemnified Party, whether or not based upon
events giving rise to indemnification hereunder, including claims brought by
third parties in connection with any public offering or damages based on a
multiple of earnings formula.
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(v) The Buyer shall not be entitled to recover Losses with respect to any
matter which was disclosed to the Buyer on the Disclosure Schedule prior to the
Closing Date.
(vi) From and after the Closing Date, (A) the indemnification rights contained
in this ss.8, and (B) any statutory, equitable, or common law remedy relating to
fraud, shall constitute the sole and exclusive remedies of the parties hereunder
and shall supersede and displace all other remedies that either party may have
under Applicable Laws.
9. Termination.
(a) Termination of Agreement. This Agreement may be terminated as provided
below:
(i) the Buyer and Holdings may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii)ab the Buyer may terminate this Agreement by giving written notice to the
Stockholder Representatives at any time prior to the Closing (A) in the event
Holdings has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has notified Holdings of the
breach, and the breach has continued without cure for a period of thirty (30)
days after the notice of breach (provided, that Holdings shall have no
opportunity to cure the breach of their obligation to deliver the Holdings
Shares to be delivered to the Buyer), or (B) the Buyer is entitled to terminate
this Agreement pursuant to ss.5(f);
(iii) Holdings may terminate this Agreement by giving written notice to the
Buyer at any time prior to the Closing in the event the Buyer has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, Holdings has notified the Buyer of the breach, and the breach
has continued without cure for a period of thirty (30) days after the notice of
breach (provided, that the Buyer shall have no opportunity to cure the breach of
its obligation to deliver any required portion of the Merger Consideration); and
(iv) if the Closing has not occurred before January 14, 2000, this Agreement
shall terminate automatically without any action by any Party.
(b) Effect of Termination. If this Agreement is terminated pursuant to ss.9(a)
above, all rights and obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party (except for any Liability
of any Party then in breach), except that the Buyer and Holdings will instruct
the Escrow Agent to return the Escrow Deposit to the Buyer promptly, except to
the extent Holdings makes a claim against the Buyer for a breach of this
Agreement.
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10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the Buyer
and the Stockholder Representatives; provided, however, that any Party may make
any public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded securities (in
which case the disclosing Party will use its reasonable best efforts to advise
the other Parties prior to making the disclosure). Notwithstanding anything in
this Agreement to the contrary, no Party shall make any public disclosure prior
to the Closing Date, of the amount of Merger Consideration without the prior
written approval of the other Party.
(b) No Third-Party Beneficiaries. (b)ab This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Buyer and Holdings; provided, however, that the Buyer may (i) assign any
or all of its rights and interests hereunder to one or more of its Affiliates,
and (ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases the Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
(d Counterparts; Facsimile Signatures. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Facsimile signatures on
this Agreement and any of the agreements and documents executed in connection
with herewith shall be deemed original signatures.
(e) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two Business
Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Holdings:
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Apex Site Management Holdings, Inc.
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Vice President and General Counsel
If to Stockholder Representatives:
Apex Site Management Holdings, Inc.
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxxxx
Apex Site Management Holdings, Inc.
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx
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With a required copy to:
Kleinbard, Xxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
If to the Buyer:
SpectraSite Holdings Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
With a required copy to:
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the Commonwealth of Pennsylvania without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Pennsylvania or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Pennsylvania.
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(h) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer and
the Stockholder Representatives. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
(j) Expenses. Each of the Parties, the Company, and its Subsidiaries will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
Holdings agrees that none of the Company and its Subsidiaries has borne or will
bear any of Holdings' costs and expenses (including any of their legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby and Holdings agrees that its expenses will be borne by the
Stockholders and not Holdings.
(k) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits, Annexes,
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(l) Specific Performance. Each of the Parties agrees that the Buyer Shares and
the Holdings Shares are unique assets that cannot be readily obtained on the
open market and that each Party will be irreparably injured if this Agreement is
not specifically enforced. Each of the Parties acknowledges and agrees that the
other Parties would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled, at law or
in equity.
(m) Non-Recourse to Certain Persons. Notwithstanding anything to the contrary
contained herein or otherwise, this Agreement shall be recourse to Holdings and
the Holdback Shares (only to the extent set forth herein) but shall be
non-recourse to any members, officers, employees, partners, stockholders,
directors and Affiliates of the Stockholders.
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(n) Stockholder Representatives.
(i) Pursuant to the terms of this ss.10(n) and by executing an appropriate
agreement prior to the Closing Date (the "Stockholder Representative
Agreement"), each Stockholder will appoint Xxxxxxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxxxxx to act as such Stockholder's agents and representatives (the
"Stockholder Representatives") for purposes of receiving on his or its behalf
all notices under this Agreement, issuing on his or its behalf such notices
under this Agreement as the Stockholder Representatives shall determine in their
sole discretion to issue, and performing such other administrative and other
functions under this Agreement as may become necessary or desirable.
(ii) The Stockholder Representatives 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 Stockholder Representatives are
authorized to (A) resolve all claims for indemnification under this Agreement
and (B) retain counsel of its choosing, experts and other professionals as may
be necessary or desirable to assist in the resolution of any claim for
indemnification under this Agreement. The Stockholder Representatives 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 Stockholder Representatives with respect
to any claim arising pursuant to ss.8 of this Agreement shall be deemed notice
to all the Stockholders with respect thereto.
(iii) The Stockholder Representatives shall be entitled to reasonable
compensation from the Stockholders for their services and reimbursement of all
expenses (including the cost of errors and omissions insurance) incurred in
their capacity as the Stockholder Representatives.
(iv) At any time after the date hereof, the 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 the Buyer in good faith
believes to have been signed or presented by the Stockholder Representatives and
the Buyer will have no liability to any Stockholder if it acts in accordance
with the foregoing.
(v) The Stockholder Representatives shall be entitled to reimbursement by the
Stockholders (subject to the provisions of ss.8 hereof) of all reasonable
expenses (including the cost of errors and omissions insurance) incurred in
their capacity as Stockholder Representatives. The Stockholders shall, pursuant
to the terms of the Stockholder Representative Agreement, indemnify and hold
harmless the Stockholder Representatives from any and all costs, expenses, or
damages (paid or incurred) in connection with the performance of their
obligations pursuant to this Agreement, other than those arising from the gross
negligence or willful misconduct of the Stockholder Representatives. The
Stockholders shall, pursuant to the terms of the Stockholder Representative
Agreement, be jointly and severally liable to the Stockholder Representatives
for any liability arising out of this ss.10(n). Pursuant to the terms of
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the Stockholder Representative Agreement, the Stockholder Representatives will
be permitted to establish a trust account out of a portion of the Closing Cash
Payment to be delivered hereunder. Prior to distributing the Merger
Consideration to the Stockholders, the Stockholder Representatives shall deposit
in an interest-bearing trust account $500,000 (which shall be deducted from the
Merger Consideration to be distributed to the Stockholders hereunder), which
amount shall be available to the Stockholder Representatives only for
reimbursement of the Stockholder Representatives' costs, expenses, or damages
paid or incurred in connection with the performance of their obligations under
this Agreement. Following the final resolution of any indemnification claims and
following the distribution of all Holdback Shares held by the Escrow Agent
pursuant to the terms of the Escrow Agreement, the Stockholder Representatives
shall distribute to the Stockholders their pro rata portion of any funds held
pursuant to the terms of this ss.10(n)(v).
* * * * *
61
[Signature Page to Merger Agreement and Plan of Reorganization]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
SPECTRASITE HOLDINGS INC.,
a Delaware corporation
By:/s/Xxxxxxx X. Xxxxx
------------------------
Xxxxxxx X. Xxxxx
Title:
NEWCO:
APEX MERGER SUB, INC.,
a Delaware corporation
By:/s/Xxxxxxx X. Xxxxx
------------------------
Xxxxxxx X. Xxxxx
Title:
HOLDINGS:
APEX SITE MANAGEMENT HOLDINGS, INC.,
a Delaware corporation
By:/s/Xxxxxxxxx X. Xxxxxxx
------------------------
Xxxxxxxxx X. Xxxxxxx
President
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