EXHIBIT 10.4d
SECURITIES PURCHASE AGREEMENT
NOTES DUE 2000
of
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
March 20, 1997
TABLE OF CONTENTS
Page
1. Issue and Sale of Securities.........................................................................1
1.1 Description of Securities..................................................................1
1.2 Purchase and Sale..........................................................................2
1.3 Closing....................................................................................3
2. Representations and Warranties of Company............................................................4
2.1 Organization and Business; Power and Authority.............................................4
2.2 Business; Financial Information............................................................5
2.3 Changes in Condition.......................................................................5
2.4 Title to Properties; Leases................................................................5
2.5 Compliance with Governmental Authorizations and Applicable Law.............................6
2.6 Related Transactions.......................................................................7
2.7 Tax Matters................................................................................7
2.8 Employment Arrangements....................................................................7
2.9 Ordinary Course of Business................................................................8
2.10 Private Sale.............................................................................10
2.11 Disclosure...............................................................................10
2.12 Use of Proceeds..........................................................................10
2.13 Material Agreements and Private Authorizations...........................................10
2.14 Employee Retirement Income Security Act of 1974..........................................11
2.15 Authorized and Outstanding Capital Stock ................................................11
2.16 Inapplicability of Specified Statutes....................................................11
3. Representations, Warranties and Covenants of American...............................................11
3.1 Organization and Business; Power and Authority............................................12
3.2 Investment Representation.................................................................12
3.3 Covenant Regarding Transfer...............................................................13
4. Conditions of Closing...............................................................................13
4.1 Company's Officer's Certificate. ........................................................13
4.2 Company's Secretary's Certificate. ......................................................13
4.3 Opinion of Company Counsel. .............................................................14
4.4 Legality; Governmental and Other Authorizations. ........................................14
5. Payment and Exchange of Notes; Lost Notes...........................................................14
5.1 Payments..................................................................................14
5.2 Exchange..................................................................................15
5.3 Replacement of Notes......................................................................15
5.4 Transfer Office and Record of Holders of Notes............................................16
5.5 Transfer of Notes.........................................................................16
5.6 Registered Owners of Notes................................................................16
5.7 Limitation on Transfer of Notes............................................................17
6. Payment Provisions..................................................................................17
Page
6.1 Required Payments.........................................................................17
6.2 Restriction on Optional Payments..........................................................17
6.3 Notice of Payment and Offers to Repurchase................................................18
6.4 Maturity; No Reissue......................................................................18
6.5 Purchase of Notes.........................................................................18
7. Special Covenants of Company........................................................................18
7.1 Payments..................................................................................18
7.2 Prompt Payment of Taxes and Indebtedness..................................................19
7.3 Conduct of Business.......................................................................19
7.4 Maintenance of Property and Leases........................................................19
7.5 Maintenance of Insurance..................................................................20
7.6 Maintenance of Accounts and Records.......................................................20
7.7 Compliance With Laws......................................................................20
7.8 Miscellaneous Information.................................................................20
7.9 Information and Reports to Be Furnished by Company........................................21
7.10 Liens....................................................................................22
7.11 Distributions............................................................................22
7.12 Consolidation, Merger and Acquisition....................................................23
7.13 Prohibited Transactions..................................................................24
7.14 Compliance with ERISA....................................................................24
7.15 Indebtedness.............................................................................24
7.16 Operation of the Business.................................................................24
7.17 Issue of Equity Securities...............................................................25
8. Defaults. .........................................................................................25
8.1 Events of Default.........................................................................25
8.2 Notice to the Holders.....................................................................27
8.3 Annulment of Defaults.....................................................................28
8.4 Waiver by Company; Severability of Remedies...............................................28
8.5 No Waiver of Rights.......................................................................28
8.6 Costs and Expenses of Collection..........................................................29
8.7 Remedies Cumulative.......................................................................29
9. Definitions.........................................................................................29
10. Miscellaneous Provisions...........................................................................41
10.1 Stamp and Other Taxes....................................................................41
10.2 Expenses.................................................................................41
10.3 Survival of Covenants; Successors and Assigns............................................42
10.4 Notices and Communications...............................................................42
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Page
10.5 Amendments and Waivers...................................................................43
10.6 Governing Law; Venue.....................................................................43
10.7 Entire Agreement.........................................................................43
10.8 Saturdays, Sundays, Holidays, etc........................................................44
10.9 Brokers, etc.............................................................................44
10.10 Headings; Counterparts..................................................................44
10.11 Severability............................................................................44
10.12 Further Assurances......................................................................44
10.13 Specific Performance; Other Rights......................................................45
10.14 Non-Recourse Obligation.................................................................45
SCHEDULES:
DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A: Form of Note
Exhibit B: Form of Additional Compensation Certificate
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), made as of March
20, 1997, by and between Diablo Communications of Southern California, Inc., a
California corporation (the "Company"), and American Tower Systems, Inc., a
Delaware corporation ("American" or the "Purchaser").
W I T N E S S E T H:
WHEREAS, American and the Company are parties to a letter of intent,
dated as of December 19, 1996, as amended as of the date hereof (the "Letter of
Intent"), relating to an asset purchase agreement to be negotiated, executed and
delivered by the parties (the "Acquisition Agreement"), with respect to the
acquisition (the "Acquisition") by American of substantially all of the
communications tower and management business of the Company (the "Diablo
Business");
WHEREAS, the Company proposes to issue and sell on the date hereof a
Note in the principal amount of $750,000 and American is willing to purchase the
Initial Note in order to provide funds to the Company for corporate purposes;
WHEREAS, American and Diablo Communications, Inc., a California
corporation ("DCSC"), are parties to a letter of intent, dated as of December
19, 1996, as amended as of the date hereof (the "DCI Letter of Intent"),
relating to an asset purchase agreement to be negotiated, executed and delivered
by the parties (the "DCI Acquisition Agreement"), with respect to the
acquisition (the "DCI Acquisition") by American of substantially all of the
property and assets and the communications tower and management business of DCI
(collectively, the "DCI Business"); and
WHEREAS, American and DCI have, simultaneously executed and delivered a
Note Purchase Agreement, substantially in the form of this Agreement (the "DCI
Note Agreement"), pursuant to which DCI will issue up to Seven Hundred Fifty
Thousand Dollars ($650,000) in aggregate principal amount of notes of like tenor
to the Notes (the "DCI Notes") and additional compensation certificates of like
tenor to the Additional Compensation Certificates (the "DCI Additional
Compensation Certificates");
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements herein contained, and other valuable consideration, the
receipt and adequacy whereof are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby covenant and agree as follows:
1. Issue and Sale of Securities.
1.1 Description of Securities. The Company has duly authorized the
issue and sale, on the terms hereinafter provided, of the Note. As used herein,
the term "Notes" shall mean the Note together with any notes issued and
delivered in exchange or substitution therefor or for any other Notes or on
transfer of the Initial Note or any other Notes as herein provided and the term
"Note" shall mean any of the Notes. The Notes shall be in or substantially in
the form set forth in Exhibit A hereto. Each Note shall be dated the date of its
issue, shall mature on June 30, 2000, shall bear
interest from the date of its issue, at an annual rate equal to the Prime Rate
on the unpaid principal balance thereof, compounded on the last day of each
calendar month, commencing January 31, 1997, while such Note is outstanding, and
payable at maturity, including by way of acceleration or otherwise, and interest
at the rate of 2% per annum in excess of what would otherwise have been paid on
any overdue principal and, to the extent legally enforceable, any overdue
interest. Interest on the Notes shall be computed on the basis of a 360-day
year. Subject to Section 8.1, the outstanding principal amount of the Notes
shall be paid in accordance with the provisions of Section 6.1. The term "Prime
Rate" shall mean the rate, from time to time, published in the Wall Street
Journal and each change in the Prime Rate shall effect a simultaneous change in
the minimum rate of interest payable on the Notes.
The Company has duly authorized the issuance, on the terms hereinafter
provided, of certificates representing rights to additional compensation (the
"Additional Compensation Certificates") as determined in accordance with the
provisions of the Additional Compensation Certificates. The term "Additional
Compensation Certificates" shall mean any Additional Compensation Certificates
issued and delivered in exchange or substitution therefor or on transfer thereof
as therein provided; and the term "Additional Compensation Certificate" shall
mean any of the Additional Compensation Certificates. The Additional
Compensation Certificates shall be in or substantially in the form set forth in
Exhibit B hereto. Each Additional Compensation Certificate shall be dated the
date of its issue.
1.2 Purchase and Sale. On the basis of the representations and
warranties and on the terms and subject to the conditions set forth in this
Agreement, the Company agrees to issue and deliver to American, and American
agrees to acquire from the Company, the Note and the Additional Compensation
Certificates at a purchase price (the "Purchase Price") equal to 100% of the
principal amount of the Note, except that the loans evidenced by the Note shall
be advanced not more frequently than once a month, on such date (an "Advance
Date") not less than three (3) business days subsequent to delivery to American
by the Company of a request for an advance (an "Advance Request"), in accordance
with the following schedule:
Month Cumulative Advances
March 1997 $350,000
April 1997 $550,000
May 1997 $700,000
June 1997 $750,000
Notwithstanding the foregoing, American shall not be obligated to make any
advance (a) upon the occurrence and during the continuance of a Potential
Default or Event of Default or (b) if the Notes shall have become due and
payable pursuant to the provisions of Section 6.1. The Company and American
agree that the Purchase Price shall be allocable to the Notes and the Additional
Compensation Certificates in accordance with their respective fair market
values.
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1.3 Closing. The Closing (the "Closing") shall be held at such time,
place and manner not later than January 31, 1997 as the Company and American
shall agree (the date on which the Closing occurs being herein called the
"Closing Date"). At the Closing, the Company will deliver to American the Note
in the principal amount of $650,000 registered in the name of American, in
exchange for the initial advance requested by the Company in accordance with the
provisions of Section 1.2 by American in the form of bank wire transfers,
evidenced by an advice of bank credit issued by a member of the Federal Reserve
System, in the amount of such requested advance. Such wire transfers shall be
made to such account as the Company shall have designated by notice to American
at least one (1) business day in advance of the Closing.
Upon the request of American, the Company shall prepare and file an
application with the California Department of Corporations an application for
qualification of the Additional Compensation Certificates and/or the Notes (the
"California Application") under the provisions of Chapter 2 of the California
Corporate Securities Law of 1968, as amended (the "California Securities Law").
The Company shall thereafter use its best efforts to secure the qualification of
the Additional Compensation Certificates and/or the Notes under the California
Securities Law. The Company and American shall each bear fifty percent (50%) of
any and all costs and expenses of the preparation and filing of the California
Application, and securing the issuance of the qualification, including without
limitation filing and processing fees, attorneys fees, accountants fees and
other costs and expenses.
Promptly after the effective date of the qualification of the
Additional Compensation Certificates and/or the Notes, and in any event within
three (3) days after the effective date of such qualification, the Company will
issue and deliver to American one Additional Compensation Certificate registered
in the name of American, subject to the Company's and American's compliance with
such terms and requirements as may be imposed by the Commissioner of
Corporations as a condition of the qualification.
In the event that such qualification does not become effective within
six (6) weeks (or such longer period as American may, in its sole discretion,
agree) after the filing of the California Application, American shall have the
right to contribute the Notes in exchange for interests in one or more joint
ventures agreements with the Company with respect to the communication sites in
which the proceeds of the loans theretofore made or to be made pursuant to this
Agreement are used. Such joint ventures shall be on terms and conditions which
afford to American and the Company (i) substantially equivalent economic
benefits and obligations to those which they would have received had the
Additional Compensation Certificates and/or the Notes been qualified under the
California Securities Law and issued and delivered to American, and (ii)
substantially equivalent rights and obligations as contemplated in the Notes,
the Additional Compensation Certificates and this Agreement and otherwise on
terms and conditions reasonably acceptable to the Company and American.
Subsequent advances by American shall be made by American in accordance
with the provisions of Section 1.2 upon receipt by American of (a) an Advance
Request accompanied by an officer's certificate to the effect that the
representations and warranties contained in Section 2 shall
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be true and correct in all material respects on and as of the Advance Date; no
Material Adverse Change affecting the Company shall be pending or, to the
Company's knowledge, threatened; no event which constitutes an Event of Default
or a Potential Default shall have occurred and be continuing on the Advance
Date, (b) an officer's certificate specifying in reasonable detail the proposed
use of such advance, and (c) American's having approved such use, such approval
not to be unreasonably withheld, delayed or conditioned.
2. Representations and Warranties of Company. The Company represents
and warrants that:
2.1 Organization and Business; Power and Authority.
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and (ii) has all requisite power and authority (corporate
and other) to own or hold under lease its properties and to conduct its
business as now conducted and as presently proposed to be conducted.
(b) The Company has adequate power and authority (corporate
and other) and all necessary franchises, permits, licenses and other
rights and privileges to allow it to execute and deliver, and to
perform its obligations under, this Agreement, the Notes, the
Additional Compensation Certificates and each other Related Agreement
to which it is a party, and to issue and sell the Note and the
Additional Compensation Certificates. The execution, delivery and
performance of this Agreement, the Notes, the Additional Compensation
Certificates and each of the other Related Agreements to which the
Company is a party have been duly authorized by all requisite corporate
action, including that, if required, of the Company's stockholders.
This Agreement constitutes, and the Notes, the Additional Compensation
Certificates and each other Related Agreement to which it is a party
when executed and delivered by the Company will constitute, valid and
binding obligations of the Company, enforceable in accordance with
their respective terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability. The holders from time to time of the Notes and the
Additional Compensation Certificates will be entitled to the rights and
benefits set forth in the Notes, the Additional Stock Certificates and
this Agreement.
(c) The Company does not own any voting shares or other
equitable interest in any Person, however organized and however such
interest may be denominated or evidenced, which owns or has any
interest in the assets and property or business of any of the Diablo
Assets or the Diablo Business, except as set forth in the Disclosure
Schedule.
(d) The Company has adequate power and authority (corporate
and other) under the laws of its jurisdiction of organization and all
necessary franchises, permits, licenses and other rights and privileges
to allow it to execute and deliver, and to perform its obligations,
under, the Letter of Intent and the execution, delivery and performance
of the Letter of Intent has been duly authorized by all requisite
corporate action on the part of the Company.
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(e) Except as set forth in the Disclosure Schedule, neither
the execution and delivery of this Agreement, the Notes, the Additional
Compensation Certificates or any of the other Related Agreements to
which it is a party, nor the offer, issue, sale or delivery of any or
all of the Notes, nor the consummation of the transactions herein or
therein contemplated, nor compliance with the terms, conditions and
provisions hereof or thereof by the Company:
(i) will conflict with, or result in a breach or
violation of or constitute a default in the performance,
observance or fulfillment of any obligation, covenant or
condition contained in, or constitute, or but for any
requirement of giving of notice or passage of time or both
would constitute, a default or an event of default by the
Company under, any Applicable Law or, to the Company's
knowledge, any Private Authorization, Governmental
Authorization or Material Contractual Obligation;
(ii) will, to the Company's knowledge, result in the
creation or imposition of any Lien upon any of the properties
of the Company; or
(iii) will, to the Company's knowledge, require any
approval or action of, or filing with, any Authority, except
as set forth in the Disclosure Schedule.
2.2 Business; Financial Information. The Company has heretofore
furnished to American copies of the financial statements of the Company listed
in the Disclosure Schedule (the "Financial Statements"). The Financial
Statements have been prepared in accordance with CAAP applied on a consistent
basis throughout the periods covered thereby, except as otherwise noted in the
Disclosure Schedule, are true, complete and correct in all material respects, do
not contain any untrue statement of a material fact or omit to state a material
fact required by CAAP to be stated therein or necessary in order to make the
statements contained therein not misleading, and fairly present the financial
condition of the Company and results of operations and cash flow of the Company
on the bases therein stated, as of the respective dates thereof, and for the
respective periods covered thereby subject, in the case of unaudited financial
statements, to normal year-end audit adjustments and accruals. Except as set
forth in the most recent balance sheet constituting a part of the Financial
Statements, the Company does not have any Indebtedness for Money Borrowed. As of
the Closing Date, after giving effect to all of the transactions contemplated
hereby, the Company will be Solvent.
2.3 Changes in Condition. Since the date of the most recent balance
sheet constituting a part of the Financial Statements (the "Most Recent Balance
Sheet"), except as contemplated by this Agreement and the Letter of Intent or as
otherwise specifically set forth in the Disclosure Schedule, (i) there has been
no Material Adverse Change of the Company. There is, as of the date hereof, no
fact known to the Company which, in the reasonable judgment of the Company,
Materially Adversely Affects, or might, in the reasonable judgment of the
Company (so far as the Company can now foresee), Materially Adversely Affect,
the Company.
2.4 Title to Properties; Leases. The Company has good and marketable
title in fee simple to all real property owned by it and has good and
merchantable title to all other assets, tangible and
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intangible, owned in fee simple by the Company in the Diablo Business
(collectively, with the Real Property, the "Diablo Assets"), in all cases free
and clear of all Liens securing Indebtedness for Money Borrowed, except such as
are set forth in the Disclosure Schedule. All buildings, structures, towers,
antennae, improvements and fixtures comprising a part of the Diablo Assets are
in good and technically sound operating condition, have no latent structural
mechanical or other defects of material significance, are reasonably suited for
the purposes for which they are being used and each has adequate rights of
ingress and egress, utility service for telephone and electric for the conduct
of the business and operations of the Diablo Business as presently conducted,
except for such exceptions which, individually or in the aggregate, would not
have a Material Adverse Effect on the Company, except as otherwise set forth in
the Company Disclosure Schedule.
Each lease or other occupancy or other agreement under which the
Company holds any of the Diablo Assets has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The Company, to the Company's
knowledge, has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all such leases. All of such leases are, to the Company's
knowledge, valid and subsisting and in full force and effect; and the Company is
not in default in the performance, observance or fulfillment in any respect of
any obligation, covenant or condition contained in any such lease, except for
such exceptions which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
2.5 Compliance with Governmental Authorizations and Applicable Law. As
of the date hereof, there are no judgments, decrees or orders issued by any
Authority presently outstanding and unsatisfied against the Company. The
Disclosure Schedule contains a brief description of
(a) all Legal Actions or other Claims which are pending or in
which the Company or its business, operations or properties, or, to the
Company's knowledge, any of its officers, directors or stockholders in
connection therewith, is engaged, or which involves the business,
operations or properties of the Company or, to the Company's knowledge,
which are threatened or contemplated against, the Company or its
business, operations or properties, or any of such officers, directors
or stockholders, in connection therewith, in all cases which
individually or in the aggregate could, if adversely determined, have a
Materially Adverse Effect on the Company; and
(b) each Governmental Authorization which, if not obtained and
maintained, could singly or in the aggregate, have any Material Adverse
Effect on the Company (a "Material Governmental Authorization").
No Governmental Authorization is the subject of any pending or, to the
Company's knowledge, threatened attack, revocation or termination except for
such attacks, revocations or terminations as do not and will not have in the
aggregate any Material Adverse Effect on the Company. Neither the Company nor,
to the Company's knowledge, any of its officers, directors or stockholders in
connection with the business, operations and properties of the Company, is
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(i) in breach or violation or, or in default in the
performance of, or
(ii) charged with any such breach or violation of, or
default under, or
(iii) to the Company's knowledge, threatened with or under
investigation with respect to any such breach or
violation of, or default under,
any Governmental Authorization or any Applicable Law, and no Event exists or has
occurred, which constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a breach or violation of or
default under any such other Material Governmental Authorization or any
Applicable Law, except for such defaults, breaches or violations as do not and
will not have in the aggregate any Material Adverse Effect on the Company.
2.6 Related Transactions. The Disclosure Schedule sets forth a fair,
complete and accurate in all material respects description of any Contractual
Obligation or transaction relating to any of the Diablo Assets or the Diablo
Business between the Company and any of its officers, directors or stockholders,
or any Affiliate of any thereof (other than for services as, or loans and
advances in the ordinary course of business to, any thereof), now existing,
including without limitation any providing for the furnishing of services to or
by, providing for rental of property, real, personal or mixed, to or from, or
providing for the lending or borrowing of money to or from or otherwise
requiring payments to or from, any such officer, director or stockholder or
Affiliate, except for such as (a) will not survive the consummation of the
Acquisition or (b) are on terms at least as favorable to the Company as would be
obtained with Persons who are not Affiliated with the Company.
2.7 Tax Matters. The Company has, at all times during its existence,
been and is taxable as a Subchapter S corporation for federal and state income
Tax purposes. To the Company's knowledge, (a) all Tax Returns which in
accordance with Applicable Law are required to be filed by or on behalf of the
Company have been filed and all Taxes which have become due and payable pursuant
to said returns and all estimated Taxes due and payable and all other
governmental charges and assessments due and payable by or on behalf of the
Company have been paid, (b) such returns have been prepared in accordance with
all Applicable Laws, and (c) all Taxes which the Company is required by law to
withhold and collect have been duly withheld and collected, and have been paid
over, in a timely manner, to the proper Authorities to the extent due and
payable, except as otherwise set forth in the Disclosure Schedule..
2.8 Employment Arrangements. The Company is not now and during the past
five years has not been subject to or involved in or, to the Company's
knowledge, threatened with any union elections, petitions therefor or other
organizational activities, relating to any of the Diablo Assets or the Diablo
Business, except as described in the Disclosure Schedule. Except as described in
the Disclosure Schedule, none of the employees of the Company involved in any of
the Diablo Assets or the Diablo Business is represented by any labor union or
other employee collective bargaining organization or is a party to any labor or
other collective bargaining agreement, and there are no pending grievances,
disputes or controversies with any union or any other organization of such
employees, or threats of strikes, work stoppages or any pending demands for
collective bargaining
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by any union or organization, or, to the Company's knowledge, any active
organizing or recruiting of such employees with respect to becoming members of
any union or other employee or collective bargaining organization.
2.9 Ordinary Course of Business. With respect to each of the Diablo
Assets and the Diablo Business, the Company from the end of its Most Recent
Fiscal Year to the date hereof, and until the Closing Date, except as may be
described on the Disclosure Schedule or as may be required or permitted by the
terms of this Agreement or the Letter of Intent:
(a) has operated, and will continue to operate, the Diablo
Business in the normal, usual and customary manner in the ordinary and
regular course of business;
(b) has not sold or otherwise disposed of, and will not sell
or otherwise dispose of or contract to sell or otherwise dispose of,
any of the properties or assets of any of the Diablo Assets or the
Diablo Business, other than nonmaterial amounts of machinery and
equipment sold or otherwise disposed of in the ordinary course of
business and no longer needed in the operation or business or replaced
with assets of like kind or better kind and quality;
(c) except in each case in the ordinary course of business of
each of the Diablo Assets and the Diablo Business,
(i) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other);
(ii) has not entered and will not enter into any
commitments; and
(iii) has not sold or transferred, and will not sell
or transfer, any tangible asset or canceled or cancel any
debts or claims;
(d) has not made and will not make any additions to property
or any purchases of machinery or equipment, except for normal
maintenance and replacements;
(e) has not discharged or satisfied, and will not discharge or
satisfy, any Lien or paid or pay any obligation or liability (absolute
or contingent) other than current liabilities or obligations under
contracts then existing or thereafter entered into in the ordinary
course of business, and commitments under leases existing on that date
or incurred since that date in the ordinary course of business;
(f) has not placed and will not place, or permitted to be
placed or permit to be placed, any Lien on any of the Diablo Assets or
the Diablo Business, and has not Transferred, and will not Transfer,
any of the Diablo Assets or the Diablo Business;
(g) has not committed or suffered to exist, and will not
commit or suffer to exist, any Act of Bankruptcy;
-8-
(h) has not increased and will not increase the compensation
payable or to become payable to any of its officers, employees,
advisers, consultants, salesmen or agents involved in any of the Diablo
Assets or the Diablo Business, has not and will not otherwise alter,
modify or change in any material respect the terms of their employment
or engagement, and has not entered and will not enter into new
employment arrangements with any of the foregoing, other than in the
ordinary course of business of the Diablo Business and on terms and
conditions consistent with prior practices;
(i) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(j) has not waived, and will not waive, any rights of
substantial value without fair and adequate consideration;
(k) has not experienced any work stoppage;
(l) has not amended, and will not amend, in any material
respect, has not terminated or entered into, and will not terminate or
enter into, or become (or permit any of its property to be) bound by or
subject to any lease, Governmental Authorization, Private
Authorization, Material Agreement, Employment Arrangement or Plan or
any Contractual Obligation or transaction with any Affiliate;
(m) has not amended or terminated and will not amend or
terminate (unless replaced), and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, insurance policies and coverage meeting
the standards of Section 7.5;
(n) has not done any act or failed to do any act, and will not
do any act or fail to do any act, if such act or failure to act might
result in the expiration, revocation, suspension or modification of any
of its Governmental Authorizations or Material Private Authorizations;
(o) has not issued, sold or purchased or agreed to issue, sell
or purchase and will not issue, sell or purchase or agree to issue,
sell or purchase, any capital stock or any Convertible Securities or
Option Securities;
(p) has not declared, made or paid or agreed to declare, make
or pay, and will not have declared, made or paid or agreed to declare,
make or pay, any Distribution; and
(q) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to any of the Diablo Assets or the Diablo
Business.
The Company will notify American of any and all Events which would
require any material change to be made in the Disclosure Schedule insofar as it
relates to it or which could cause or result
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in any material breach or inaccuracy of the Company's representations and
warranties including without limitation those set forth in this Section or which
could materially impair the likelihood that all of the conditions specified in
Section 4 will be satisfied on or prior to the Closing Date.
2.10 Private Sale. The Company has not, directly or indirectly or
through anyone acting on its behalf, offered any of the Notes, the Additional
Compensation Certificates or any similar securities for sale to, or solicited
any offers to buy any thereof from, or otherwise approached or negotiated in
respect thereof with, any Person or Persons other than American, and the Company
agrees that neither it nor any agent on its behalf will offer to sell any of the
foregoing securities, or solicit any offers to buy any thereof, or otherwise
approach or negotiate with any Person in respect thereto, or take any other
action, so as to bring the issuance and sale of any of the Notes or the
Additional Compensation Certificates under the registration provisions of the
Securities Act.
2.11 Disclosure. To the Company's knowledge, neither the Disclosure
Schedule nor any other document, certificate or statement furnished to American
by or behalf of the company in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
2.12 Use of Proceeds. The Company shall use the proceeds of the sale of
the Note and the Additional Compensation Certificates to American hereunder to
complete the development of new communication sites and capital improvements to,
but not personnel costs, maintenance or other expense items of, its existing
communication sites. At the election of the Company, such proceeds may also be
used to replenish funds used for such expenses incurred subsequent to October
31, 1996.
2.13 Material Agreements and Private Authorizations. Except as set
forth on the disclosure Schedule:
(a) the Company has obtained all Private Authorizations and
Material Agreements which are necessary for the ownership by it of the
properties and assets constituting a part of the Diablo Assets and the
conduct of the Diablo Business as now conducted or as presently
proposed to be conducted or which, if not obtained and maintained,
could, individually or in the aggregate, have a Material Adverse Effect
on the Company;
(b) As of the date hereof, all of such Material Agreements are
valid, binding and legally enforceable obligations of the Company and,
to the knowledge of the Company, the other party thereto, and the
Company is validly and lawfully operating the business of the Diablo
Assets and the Diablo Business and owning or using the related property
under each of such Material Agreements;
(c) No such Private Authorization is the subject of any
pending or, to the Company's knowledge, threatened attack, revocation
or termination; and
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(d) As of the date hereof, the Company has duly complied in
all respects with all of the terms and conditions of each such Material
Agreement and each such Private Authorization and has not done or
performed, or failed to do or perform (and there is no pending, or, to
the Company's knowledge, threatened, Claim that the Company has not so
complied, done and performed or fail to do and perform) any act which
would invalidate or provide grounds for the other party thereto to
terminate (with or without notice, passage of time or both) or
materially impair its rights or benefits of, or materially increase the
costs to, the Company, under any of such Material Agreements or Private
Authorizations, except, in all cases, for such exceptions which,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
2.14 Employee Retirement Income Security Act of 1974. The Company has
not at any time during the past five years made and is not making any
contribution to any Plans and is not bound by any Plan relating to any of its
employees involved in the ownership and operations of any of the Diablo Assets
or the Diablo Business, except as set forth in the Disclosure Schedule. As to
all such Plans and except as listed in the Disclosure Schedule, all such Plans
comply and have been administered in form and in operation in all material
respects with all Applicable Laws. The Company is not and never has been a party
to any Multiemployer Plan or made contributions to any such Plan.
2.15 Authorized and Outstanding Capital Stock . The authorized and
outstanding capital stock of the Company is as set forth in the Disclosure
Schedule. All of such outstanding capital stock has been duly authorized and
validly issued, is fully paid and nonassessable and is not subject to any
preemptive or similar rights. Except as set forth in the Disclosure Schedule,
(i) there is neither outstanding nor has the Company agreed to grant or issue
any shares of capital stock or any Option Security or Convertible Security and
(ii) the Company is not a party to or is not bound by any agreement, put or
commitment pursuant to which it is obligated to purchase, redeem or otherwise
acquire any shares of capital stock or any Option Security or Convertible
Security.
2.16 Inapplicability of Specified Statutes. The Company is not, to its
knowledge, a "holding company", or a "subsidiary company" or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or an "investment company" or a company
"controlled" by or acting on behalf of an "investment company", as defined in
the Investment Company Act of 1940, as amended, or a "carrier" or a person which
is in control of a "carrier", as defined in sections 10102 or 11301 of Title 49,
U.S.C. The Company is not engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulations G and U of the Board of Governors of the Federal Reserve System.
3. Representations, Warranties and Covenants of American. American
represents and warrants that:
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3.1 Organization and Business; Power and Authority.
(a) American (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, and (ii) has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted and as presently
proposed to be conducted.
(b) American has adequate power and authority (corporate and other) and
all necessary franchises, permits, licenses and other rights and privileges to
allow it to execute and deliver, and to perform its obligations under, this
Agreement and each other Related Agreement to which it is a party; and the
execution, delivery and performance of this Agreement and each other Related
Agreement to which it is a party have been duly authorized by all requisite
corporate action. This Agreement constitutes, and each other Related Agreement
to which it is a party, when executed and delivered by American will constitute,
valid and binding obligations of American, enforceable in accordance with their
respective terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and (ii) the availability of equitable remedies may be limited
by equitable principles of general ap plicability.
(c) Neither the execution and delivery of this Agreement or any of the
other Related Agreement to which it is a party, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms,
conditions and provisions hereof or thereof by American:
(i) will conflict with, or result in a breach or violation of
or constitute a default in the performance, observance or fulfillment
of any obligation, covenant or condition contained in, or constitute,
or but for any requirement of giving of notice or passage of time or
both would constitute, a default or an event of default by American
under, any Applicable Law, Private Authorization, Governmental
Authorization or Contractual Obligation, or
(ii) will require any approval or action of, or filing with,
any Authority, except as United States and state securities, antitrust
and communications laws may apply.
3.2 Investment Representation.
(a) American is an "accredited investor" within the meaning of Rule 501
promulgated under the Securities Act and has been furnished with and had access
to all information, financial and other, and has the opportunity to ask
questions of the management of the Company with respect to the Company and
American's proposed investment therein.
(b) American is acquiring the Notes and the Additional Compensation
Certificates to be purchased by it for its own account for investment with no
present intention of distributing or reselling the same, subject, nevertheless,
to its right, subject to the provisions of Section 5.7 of the Notes and of
Section 2(d) of the Additional Compensation Certificates, to dispose of the
Notes and
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the Additional Compensation Certificates or any part thereof in its sole
discretion; provided, however, that notwithstanding the foregoing, American may
pledge any or all of the Notes and the Additional Compensation Certificates to
any bona fide lender to American. American understands that the Company is not
and will not be required to file a registration statement under the Securities
Act in connection with any sale, transfer or other disposition of the Notes or
the Additional Compensation Certificates.
3.3 Covenant Regarding Transfer. American covenants and agrees that it
will not sell, assign, transfer or otherwise dispose of any of the Notes or the
Additional Compensation Certificates in violation of the Securities Act.
4. Conditions of Closing. American's obligation to purchase the Notes
and the Additional Compensation Certificates shall be subject to compliance by
the Company with its agreements herein contained, to the truth and accuracy in
all material respects of the certificates to be furnished to it pursuant to this
Section, the truth and accuracy in all material respects of the representations
and warranties made by the Company herein, and to the condition that all
instruments and corporate and legal matters incident to the transactions
contemplated by this Agreement shall be reasonably satisfactory in form, scope
and substance to American and its counsel, and American and its counsel shall
have received all information and copies of all documents, including records of
corporate proceedings, which it or its counsel may reasonably request in
connection therewith, such documents where requested or appropriate to be
certified by proper corporate or governmental authorities, and to the
satisfaction on the Closing Date of the following further conditions:
4.1 Company's Officer's Certificate. Subject to the provisions of the
Letter of Intent, (a) the representations and warranties contained in Section 2
shall be true and correct in all material respects on and as of the Closing
Date; (b) no Material Adverse Change affecting the Company shall be pending or,
to the Company's knowledge, threatened; and (c) no event which if the Notes had
been outstanding immediately prior to the Closing Date would constitute an Event
of Default or a Potential Default shall have occurred and be continuing on the
Closing Date. American shall have received on the Closing Date a certificate
dated the Closing Date to such effect, and to the effect that each of the
conditions set forth in this Section has been satisfied in all material
respects, signed by an authorized executive officer of the Company.
4.2 Company's Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by the Company's secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by the Board of
Directors of the Company, authorizing and approving the execution of this
Agreement by the Company and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; and (ii)
providing, as attachments thereto, a certificate of good standing certified by
an appropriate California state official as of a date not more than fifteen (15)
days before the Closing Date and by the Company's secretary as of the Closing
Date, and a copy of the Company's Articles of Incorporation and By-Laws as in
effect on the date thereof, certified by the Company's secretary as of the
Closing Date.
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4.3 Opinion of Company Counsel. American shall have received favorable
opinions, dated the Closing Date and reasonably satisfactory in scope, form and
substance to it and its counsel, from counsel for the Company, (i) to the
effects stated in Sections 2.1(a), 2.1(b), 2.1(d) (limited to corporate power
and authority), 2.1(e) (to such counsel's knowledge), and 2.16, and (ii) to the
effect that the offer, issue, sale and delivery of the Notes under the
circumstances contemplated by this Agreement constitute transactions exempt from
the registration provisions of the Securities Act, and neither the registration
thereunder of the Notes or the Additional Compensation Certificates nor the
qualification of this Agreement under the Trust Indenture Act of 1939, as
amended to date, is required.
4.4 Legality; Governmental and Other Authorizations. Except as set
forth on the Disclosure Schedule, the purchase of and payment for the Notes and
the Additional Compensation Certificates shall not be prohibited by any law or
governmental order or regulation applicable to American, and shall not subject
American to any penalty, tax, liability or other onerous condition. All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registration, declaration or filing with, any Authority or any other Person,
with respect to the transactions contemplated hereby shall have been obtained or
made and shall be in full force and effect.
5. Payment and Exchange of Notes; Lost Notes.
5.1 Payments. Any other provision of this Agreement or of the Notes
notwithstanding,
(a) interest, principal and any premium to be paid in respect
of any Note held by American or its nominee shall be paid by wire
transfer of immediately available funds to such accounts as may from
time to time be designated in writing by American, or in such other
reasonable manner, or at such other address, as may from time to time
be designated in writing by American by notice given in accordance with
the provisions of this Agreement;
(b) interest, principal and any premium to be paid to any
subsequent Holder of Record that is an Institutional Investor shall be
paid by wire transfer (or such other reasonable manner as requested in
writing by such Holder of Record) of immediately available funds to
such Holder of Record at such address in the United States of America
as may from time to time be designated in writing to the Company by
such Holder of Record by notice given in accordance with the provisions
of this Agreement; and
(c) interest, principal and any premium to be paid to any
other Holder of Record shall be paid by mailing a check (in the case of
interest) and certified or bank cashier's check (in the case of
principal) to such Holder of Record, at the address of such Holder
shown on the register maintained pursuant to the provisions of this
Agreement, or such other address in the United States of America as may
from time to time be designated in writing to the Company by such
Holder of Record by notice given in accordance with the provisions of
this Agreement.
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Interest, principal and any premium to be paid in respect of any Note
shall be paid without any presentment or notation of payment, and the amount of
principal so paid on any Note shall be regarded as having been retired and
canceled at the time of payment. Each Holder of Record of any Note shall,
however, at any time during its regular business hours on any day when a payment
of principal is due, permit the Company at the office of the Holder of Record of
such Note to make appropriate notation on such Note of the amount of principal
which has been paid thereon, if the Company at least fifteen (15) days in
advance shall have requested in writing permission to make such notation. Before
the transfer of any Note, the Holder of Record thereof shall make a notation
thereon of the date to which interest has been paid and of all principal
payments theretofore made thereon, and shall in writing notify the Company of
the name and address of the transferee, but notwithstanding the giving of such
notice, such transferee shall not be considered a Holder of Record of such Note
until it shall have complied with the provisions of Section 5.4. Any Note with
respect to which interest, principal and any premium has been fully paid shall
be marked paid in full and surrendered to the Company and shall be retired and
canceled.
5.2 Exchange. Subject to the provisions of Section 5.7, the Holder of
Record of any of the Notes may, prior to maturity or prepayment thereof,
surrender any Note held by it for exchange at the principal office of the
Company. Within a reasonable time thereafter and without expense to such Holder
of Record, the Company shall, subject to the provisions of Section 5.7, issue in
exchange therefor another Note or Notes of the same issue for the same aggregate
principal amount as the unpaid principal amount of the Note so surrendered,
having the same maturity and rate of interest, containing the same provisions
and subject to the same terms and conditions as the Note so surrendered, in such
denomination or denominations as the Holder of Record making such exchange shall
request; provided, however, that if the issue of more than one such new Note is
requested, such new Notes shall be issued only in denominations of $10,000, or
larger amounts which are integral multiples of $10,000, except that one Note so
issued shall be for the amount by which the unpaid principal amount of the Note
or Notes so surrendered exceeded an integral multiple of $10,000. Each such new
Note shall be payable to such Person or Persons, or order, as the Holder of
Record of such surrendered Note or Notes may designate in writing, and such
exchange or transfer shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom. Any Note issued and delivered in
accordance with the provisions of this Section shall be dated as of the date to
which interest has been paid on the Note exchanged therefor. The Company agrees
that it will pay shipping and insurance charges from and to the main office of
any Institutional Investor involved in any exchange or transfer of a Note or
Notes held by it. Notwithstanding the foregoing provisions of this Section, the
Company shall not be required to issue and deliver any new Notes pursuant to
this Section unless it is indemnified against and held harmless from any United
States and state documentary stamp or similar excise taxes and any transfer
taxes.
5.3 Replacement of Notes. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of any Note,
and (in case of loss, theft or destruction) of indemnity satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of any Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such Note in a principal
amount equal to the sum of the then unpaid principal amount of, together with
accrued and unpaid interest on, such lost,
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stolen, destroyed or mutilated Note. Any Note made and delivered in accordance
with the provisions of this Section shall be dated as of the date to which
interest has been paid on the Note lost, stolen, destroyed or mutilated and
shall indicate that it is being issued in substitution for, but not in payment
of, the lost, stolen, destroyed or mutilated Note. The term "outstanding" when
used in this Agreement with reference to the Notes as of any particular time
shall not include any Note in lieu of which a new Note has been made and
delivered by the Company in accordance with the provisions of this Section or
any Note held by the Company. Notwithstanding any provision to the contrary
herein or in the Notes, if any Note of which any Institutional Investor is the
holder is lost, stolen or destroyed, then the affidavit of the principal
financial officer of such Institutional Investor, setting forth the
circumstances with respect to such loss, theft or destruction, shall be accepted
as satisfactory evidence thereof, and no indemnity shall be required as a
condition to the execution and delivery of a new Note or Notes for a like
aggregate principal amount, other than a written agreement by such Institutional
Investor, in form reasonably satisfactory to the Company, to indemnify the
Company against loss on account of the making of any payment in respect of any
such lost or stolen Note to any Person legally entitled to such payment.
5.4 Transfer Office and Record of Holders of Notes. The Company will at
all times keep or cause to be kept, at the principal office of the Company,
appropriate records for the registration and transfer of the Notes, identifying
the Holders of Record, from time to time, of the Notes, and shall cause to be
recorded therein the names and addresses of the Holders of Record of the Notes
from time to time, and any and all transfers thereof; provided, however, that
the Company shall be required to record the transfer of a Note only if and when
a subsequent holder shall have (a) presented such Note to the Company for
inspection, properly endorsed or assigned and in order for transfer, (b)
delivered to the Company a written notice of its acquisition of such Note, and
(c) designated in writing an address to which payments on and notices in respect
of such Notes shall be transmitted.
5.5 Transfer of Notes. Subject to the provisions of this Agreement,
including without limitation Section 5.7, any Note may be transferred at the
principal office of the Company by surrender thereof for cancellation, endorsed
or accompanied by a written instrument of transfer, in form reasonably
satisfactory to the Company, duly executed by or on behalf of the Holder of
Record, and thereupon the Company will issue and deliver, in the name of the
transferee or transferees, a new Note, for a like aggregate principal amount,
dated as of the date to which interest has been paid on the Note so transferred.
5.6 Registered Owners of Notes. Except as provided in Section 5.1 (with
respect to places of payment designated by American or a Holder of Record) and
Section 10.4 (with respect to notices to nominees designated as such), the
Company and all other Persons may treat the registered holder, as shown on the
records maintained pursuant to Section 5.4, of any Note, for the time being, as
the owner thereof for the purposes of receiving payment of the principal of and
premium, if any, and interest on such Note and for all other purposes, and the
Company shall not be affected by any notice or knowledge to the contrary,
whether payments on the Notes shall be overdue or not; and the Company, and
every successive registered holder and assignee of a Note by accepting or
holding the same, shall be deemed to have consented to and agreed with the
provisions of this Section.
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5.7 Limitation on Transfer of Notes. Anything in this Section 5 or
elsewhere in this Agreement to the contrary notwithstanding, prior to the
earlier of September 30, 1997 or the acceleration of the Notes by American
pursuant to the provisions of Section 6.1, the Notes shall not be transferable
by American (or any of its Affiliates) except (a) to an Affiliate of American or
(b) to one or more bona fide lenders to American or any of its Affiliates.
6. Payment Provisions.
6.1 Required Payments. Subject to the provisions of Section 6.2(a), the
Notes shall be paid in their entirety, without premium but with interest accrued
and unpaid thereon to the date of payment, upon the earliest to occur of (a)
consummation of the Acquisition (in which event the Company may, in its sole
discretion, elect to have the Notes assumed by American as part of such
transaction in which event the consideration to be delivered by American shall
be reduced by an amount equal to the principal amount of the Notes so assumed
and accrued and unpaid interest thereon to the date of assumption), (b) the
occurrence of the Acquisition Termination Date, and either (i) the demand by
American for payment thereof or (ii) the election of the Company to prepay the
Notes, in either case, in its sole discretion, and (c) June 30, 2000.
6.2 Restriction on Optional Payments. The Company may prepay the Notes,
in whole but not in part, either:
(a) in the event of the occurrence of the Acquisition
Termination Date, the Company may, in its sole discretion, elect, at
any time within ninety (90) days of the occurrence of the Acquisition
Termination Date, to prepay the Notes, at their principal amount,
without premium but with interest accrued and unpaid thereon to the
date of payment, either in cash or pursuant to an agreement customary
in comparable transactions and reasonably satisfactory to American
relating to the purchase and sale of the DCSC Business, free and clear
of all Liens, except as otherwise set forth in Exhibit B to the Letter
of Intent. Such agreement shall (i) provide for a purchase price for
the DCSC Business equal to (A) the sum of $4,200,000 and an amount
equal to the amount of any capital improvements made by DCSC or the
Company to the DCSC Assets since October 31, 1996, minus (B) the
principal amount of the Notes and the DCSC Notes, plus accrued and
unpaid interest on the Notes and the DCSC Notes to the date of
consummation of such purchase and sale (which shall be on such date not
earlier than December 15, 1997 and not later than December 31, 1997 as
American and the Company may agree), and (ii) contain such terms and
conditions as are customary in comparable transactions and reasonably
satisfactory to the Company and American.
(b) except as provided in Section 6.2(a), for cash, at any
time after December 31, 1997, at their principal amount together with
interest accrued to the date of payment; provided, however, that it
shall be a condition of the Company's right to prepay the Notes
pursuant to the provisions of this Section 6.2(b) that, simultaneously
with such prepayment, DCI shall have prepaid in their entirety the DCI
Notes.
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6.3 Notice of Payment and Offers to Repurchase. Notice of each required
or optional payment of Notes pursuant to Section 6.1 or 6.2 and each optional
offer to repurchase pursuant to Section 6.5 shall be given not less than thirty
(30) nor more than sixty (60) days before the date of payment or proposed
repurchase date, and all such notices shall be given by mailing by registered or
certified mail to each Holder of Record of Notes to be paid or repurchased a
notice of intention, or offer, to pay or repurchase, which notice shall include
statements specifying (a) the date of the intended payment or the proposed
repurchase date, (b) the provision of this Agreement pursuant to which such
payment or offer is being made, (c) the aggregate principal amount of the Notes
to be paid, or to which such offer to repurchase relates, (d) the principal
amount of the Notes registered in the name of such Holder to be paid, or to
which such offer to repurchase relates, and (e) the premium, if any, and accrued
interest to be paid in respect of the principal amount so to be paid, or to
which such offer to repurchase relates.
6.4 Maturity; No Reissue. Notes or portions thereof to be paid pursuant
to any provision of this Agreement shall become due and payable on the payment
date, together with accrued interest and premium, if any, and from and after
such date (unless the Company shall default in paying the amounts then due)
interest thereon shall cease to accrue. Any Note paid in full shall be
surrendered to the Company and canceled and shall not be reissued, and no Note
shall be issued in respect of any paid principal amount of any Note, and no such
paid Note or paid portion of a Note shall be considered to be "outstanding" for
any purpose hereof.
6.5 Purchase of Notes. The Company will not, and will not permit any
Subsidiary to, purchase or otherwise acquire any Note except (a) by way of
payment in accordance with the provisions of the Notes and this Agreement, or
(b) pursuant to a repurchase offer made by the Company pro rata and on the same
terms to each Holder of Record of Notes to be repurchased at the time
outstanding, pursuant to a notice given in accordance with Section 6.3 which
notice shall state whether such offer may be accepted in part or only in full,
and shall provide that any such ac ceptance may be given by written notice to
the Company in accordance with the provisions of this Agreement at any time
prior to such date, not less than thirty-five (35) days from the date of the
notice of the Company's offer under this Section as shall be specified therein.
Any Notes repurchased pursuant to this Section shall be canceled by the Company,
and shall not be reissued or deemed to be "outstanding" for any purpose of this
Agreement.
7. Special Covenants of Company. Without limiting any other covenant or
provision hereof, the Company covenants and agrees that so long as any of the
Notes are outstanding, it shall comply with, perform and observe the following
covenants and provisions and shall cause each Subsidiary, if any, to comply
with, perform and observe said covenants and provisions as are applicable
thereto (it being understood, in any event, that to the extent any of the
covenants of this Section refer to consolidated financial information they shall
apply to the Company only in the event that the Company has no Subsidiaries).
7.1 Payments. The Company will duly and punctually pay the principal of
and premium, if any, and interest on the Notes in accordance with the terms of
this Agreement and the Notes.
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7.2 Prompt Payment of Taxes and Indebtedness. The Company will, and
will cause each of its Subsidiaries to, pay promptly, or cause to be paid
promptly, all taxes, assessments and other governmental charges or levies of
whatever nature imposed on it, or upon it or its income or profits, or upon any
of its property, real, personal or mixed; provided, however, that unless and
until foreclosure, distraint sale or other similar proceedings shall have been
commenced, nothing herein shall require the Company or any Subsidiary to pay any
such tax, assessment, charge or levy so long as the validity thereof shall be
currently contested in good faith by appropriate proceedings and if the Company
or such Subsidiary shall have set aside on its books reserves deemed adequate by
the Company's Independent Accountants with respect thereto in accordance with
CAAP, consistently with the Financial Statements delivered to American
hereunder. The Company will, and will cause each of its Subsidiaries to, (a) pay
or cause to be paid when due all payments of principal of and premium and
interest on Indebtedness for Money Borrowed and will not permit or suffer any
such Indebtedness for Money Borrowed to become or remain in default, (b) pay or
cause to be paid when due all lawful claims for labor and rents, and (c) pay or
cause to be paid in a manner consistent with prudent business practice all trade
payables and pay or cause to be paid when due all other Indebtedness upon which
it is or becomes obligated, except, in each case, other than that referred to in
clause (a), to the extent payment is being contested in good faith by
appropriate proceedings and if the Company or such Subsidiary shall have set
aside on its books reserves deemed adequate by the Company's Independent
Accountants with respect thereto in accordance with CAAP, consistently with the
Financial Statements delivered to American hereunder, unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
7.3 Conduct of Business. Subject to the provisions of the Letter of
Intent and, if executed and delivered, the Acquisition Agreement (so long as it
shall remain in effect), the Company (a) will, and will cause each of its
Subsidiaries to, continue to engage in the business of owning and operating the
Diablo Assets and conducting the Diablo Business and (b) will do or cause to be
done all things reasonably necessary to preserve, renew and keep in full force
and effect and in good standing its corporate existence and its rights and
franchises necessary to conduct such business. Notwithstanding clause (b) of the
preceding sentence, the Company may merge or cause any Subsidiary to be merged
with or into the Company or another Subsidiary, or may cause any Wholly-Owned
Subsidiary which is a Wholly-Owned Subsidiary of another Subsidiary to liquidate
and distribute its assets and liabilities to such latter Subsidiary.
7.4 Maintenance of Property and Leases. Subject to the provisions of
the Letter of Intent and, if executed and delivered, the Acquisition Agreement
(so long as it shall remain in effect), the Company will, and will cause each of
its Subsidiaries to: (a) keep its assets and property relating to each of the
Diablo Assets and the Diablo Business in good repair, working order and
condition, and from time to time will make all repairs, renewals, replacements,
additions and improvements thereto so that its business may be properly and
advantageously conducted at all times; and (b) comply in all material respects
with the provisions of all leases of real or personal property relating to each
of the Diablo Assets and the Diablo Business to which it is a party or under
which it oc cupies or uses property so as to prevent any loss or forfeiture
thereof or thereunder; provided, however, that the Company or any Subsidiary may
cancel, surrender or modify any such lease if such action is deemed to be
advantageous to the Company's or such Subsidiary's business.
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7.5 Maintenance of Insurance. Subject to the provisions of the Letter
of Intent and, if executed and delivered, the Acquisition Agreement (so long as
it shall remain in effect), the Company will, and will cause each Subsidiary to:
(a) keep its assets and property relating to each of the Diablo Assets and the
Diablo Business which are of an insurable character and which are customarily
insured by companies of established reputation engaged in the same or similar
business similarly situated insured by financially sound and reputable insurers
against loss or damage by fire, explosion and hazards insured against by
extended coverage in amounts sufficient to prevent the Company or any Subsidiary
from becoming a co-insurer; and (b) maintain with financially sound and
reputable insurers insurance against other hazards and risks and liability to
persons and property, to the extent and in the manner customary for companies of
established reputation engaged in the same or similar businesses similarly
situated.
7.6 Maintenance of Accounts and Records. The Company will, and will
cause each of its Subsidiaries to, keep true records and books of account in
which full, true and correct entries will be made of dealings and transactions
in relation to the ownership and operation of the Diablo Assets and the conduct
of the Diablo Business, in accordance with CAAP consistently applied, except as
otherwise set forth in the Disclosure Schedule, and shall prepare the financial
statements required to be furnished pursuant to Section 7.9. The Company will,
and will cause each Subsidiary to, apply accounting principles in the
preparation of the financial statements of the Company and its Subsidiaries,
which, in the judgment of the Company, are in accordance with CAAP consistently
applied, except that no notes shall be required with respect thereto and except
as otherwise set forth in the Disclosure Schedule. In the event of a change in
any method of accounting used by the Company or any Subsidiary that is permitted
by this Agreement, such change shall not be deemed to result in an Event of
Default if, at the time of such change, an Event of Default had not occurred and
was not then continuing, based upon the former methods of accounting used by the
Company; provided, however, that, if, after any such change in accounting
methods, either the Company or American (or the holders of the Notes) determine
in good faith that any requirements of this Agreement are substantially altered
as a result of such change, the Company and American agree to negotiate in good
faith with respect to a change in such requirements.
7.7 Compliance With Laws. The Company will, and will cause each of its
Subsidiaries to, comply with all Applicable Laws in respect of the conduct of
the Diablo Business and the ownership of the assets and property of the Diablo
Assets, except such as are being contested in good faith and except for such
noncompliances as will not in the aggregate have a Material Adverse Effect on
the Company.
7.8 Miscellaneous Information. From time to time upon request, the
Company will furnish to each Holder of any of the Notes such information
regarding the business, properties, financial condition and results of operation
of the Company and its Subsidiaries in such detail as may reason ably be
requested; and the Company covenants and agrees that any authorized
representative of any such Holder shall have the right, reasonably exercisable,
to visit and inspect any of the properties of the Company or any of its
Subsidiaries, to examine and to discuss their affairs, finances and accounts
(including without limitation any letters of comment with respect to audits,
letters to management or confidential reports relating to financial matters
submitted to the Company or its
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Subsidiaries by independent public accountants) with, and be advised as to the
same by, their officers, all at such reasonable times and intervals as such
Holder may reasonably request.
7.9 Information and Reports to Be Furnished by Company. The Company
will furnish to each Holder of any of the Notes:
(a) Financial Statements. The following financial statements
relating to each of the Diablo Assets and the Diablo Business,
substantially in the form customarily prepared by the Company:
(i) Quarterly Reports. In duplicate as soon as
available and, in any event, within forty-five (45) days after
the end of each quarter (including the last) of the Company's
fiscal year, a balance sheet, and related statements of income
and retained earnings and cash flow for such period (including
year to date), together with comparative figures as at such
date or for the same periods of the preceding year and for the
Company's budget for such fiscal year, all in reasonable
detail, accompanied by supporting statements and schedules,
normally prepared by the Company in connection therewith, and
accompanied by a certificate of the principal financial or
accounting officer of the Company (A) stating that such
statements have been properly prepared in accordance with CAAP
and are true, correct and complete in all material respects
and fairly present the financial condition of the Company at
and as of the dates thereof and the results of its operations
for the periods covered thereby subject only to normal
non-material year-end accounting adjustments, and (B) stating
that he has reviewed this Agreement and has no knowledge of
any breach of or default under the provisions of Section 7.10
through 7.15, both inclusive, or Section 7.17, or, if he has
such knowledge, specifying such breach or default and the
nature thereof and the period of existence thereof and what
action the Company has taken, is taking or proposes to take
with respect thereto.
(ii) Monthly Reports. In duplicate as soon as
available and, in any event, within forty-five (45) days after
the end of each month (including the last) of the Company's
fiscal year, a balance sheet, and related statements of income
and retained earnings and cash flow for such period (including
year to date), together with comparative figures as at such
date or for the same periods of the preceding year and for the
Company's budget for such fiscal year, all in the form
customarily prepared for management.
(iii) Annual Statements. In duplicate as soon as
available and, in any event, within one hundred and twenty
(120) days after the end of each fiscal year of the Company, a
balance sheet, and related statements of income and retained
earnings and cash flow for such year, together with
comparative figures as at the end of and for the immediately
preceding fiscal year and for the Company's budget for such
fiscal year, all in reasonable detail, accompanied by
supporting statements and schedules, normally prepared by the
Company in connection therewith, and
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accompanied by (A) a letter from a firm of certified public
accountants to the effect that it has reviewed (but not
audited) such statements, and (B) a certificate of the
principal financial or accounting officer of the Company with
respect to the matters set forth in clause (B) of paragraph
(i) of this subdivision.
(iv) Annual Budget. in duplicate as soon as available
and, in any event, on or prior to March 1 of each year, an
annual budget with respect to the Diablo Assets and the Diablo
Business containing, in reasonable detail, information with
respect to the balance sheet, statements of income and retain
earnings, cash flow and Capital Expenditures for the calendar
year, all in a form substantially similar to those of the
financial statements required to be delivered pursuant to the
provisions of this Section 7.9(a); and, thereafter, promptly,
from time to time during the course of such year, amendments
to such annual budget.
(v) Reports to Stockholders or Others. In duplicate
promptly upon the sending, making available or filing of the
same, copies of all proxy statements, registration statements,
prospectuses, reports and financial statements that the
Company shall send or make available to its stockholders or
file with the Securities and Exchange Commission or any stock
exchange upon which its capital stock may be listed.
(b) Notice of Litigation, Event of Default, Potential Default,
etc. The Company will promptly give notice of any litigation or any
administrative proceeding to which it or any Subsidiary may hereafter
become a party which involves a potential liability to the Company or
any Subsidiary of at least $50,000, or which may have any Material
Adverse Effect on the Company. Forthwith upon any executive officer of
the Company obtaining knowledge of any of the following, the Company
shall give to American prompt written notice of any Change in Control
or proposed Change in Control, any Act of Bankruptcy and any Event or
Default or Potential Default, specifying the nature and period of
existence of any such Event of Default or Potential Default and what
action the Company has taken, is taking or proposes to take with
respect thereto.
7.10 Liens. The Company will not, and will not permit any Subsidiary
to, create or incur, directly or indirectly, or suffer to be created or incurred
or to exist (except in favor of the Company or a Wholly-Owned Subsidiary), any
Lien upon any of the assets or property of any of the Diablo Assets or the
Diablo Business other than the Permitted Liens.
7.11 Distributions. The Company will not, and will not permit any
Subsidiary to, declare, order, pay or make, directly or indirectly, any
Distribution (other than dividends paid by a Subsidiary to a Wholly-Owned
Subsidiary or the Company) or set apart any sum or property therefor, or agree
to do so, other than in cash or cash equivalents and then only if, after giving
effect thereto, (a) the Company has cash or cash equivalents of not less than
$500,000, (b) no Default or Event of Default shall have occurred and be
continuing, and (d) a maximum of debt to tangible net worth of not more than
1.00 to 1.00. For purposes of this Section, "effective tangible net worth",
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"tangible net worth", "debt coverage" and "debt" shall be determine in
accordance with the provisions of the Sanwa Loan Agreement as in effect on the
date hereof.
7.12 Consolidation, Merger and Acquisition. Subject to the provisions
of the Letter of Intent and, if executed and delivered, the Acquisition
Agreement (so long as it shall remain in effect), the Company will not, directly
or indirectly:
(a) voluntarily liquidate, dissolve or otherwise wind up its
business; or
(b) permit any Subsidiary to merge or consolidate with any
Person (other than the Company or a Wholly-Owned Subsidiary) unless (i)
the surviving or resulting Person is a Subsidiary which is organized
under the laws of a state of the United States of America or the
District of Columbia, and (ii) no condition or event shall exist prior
to, as a result of or immediately after giving effect to such merger or
consolidation which constitutes an Event of Default or a Potential
Default, including without limitation the provisions of paragraph (c)
of this Section; or
(c) consolidate with or merge into another Person (other than
a Wholly-Owned Subsidiary) or permit another Person to consolidate or
merge into it, or acquire (x) all or any substantial part of the
assets, property or business of, or (y) any assets that constitute a
division or operating unit of the business of, any other Person, unless
such assets, property or business are or is, as the case may be,
consolidated with the Company for financial reporting purposes and
unless
(i) the Person surviving such consolidation or
merger, is either (A) the Company, or (B) an Entity which (I)
is organized under the laws of a state of the United States of
America, or the District of Columbia, and (II) shall expressly
assume the obligations of the Company under this Agreement and
under the Notes to the same extent and with the same effect as
though such surviving Person were a party hereto and thereto
and were named and defined as the "Company" herein and
therein;
(ii) no condition or event shall exist, either as a
result of, or immediately after giving effect to, such
consolidation, merger or acquisition which constitutes an
Event of Default or a Potential Default;
(iii) none of the rights, privileges or preferences
of any holder of the Notes would be adversely affected by such
consolidation, merger or acquisition; and
(iv) in the case of any such acquisition, all of the
assets, property and business to be acquired, to the extent
they relate to any of the Diablo Assets or the Diablo
Business, shall have been made subject to the Lien of the
Security Agreement on terms and conditions satisfactory to the
holders of the Notes.
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7.13 Prohibited Transactions. Except as set forth on the Disclosure
Schedule and marked "Permitted Affiliated Transactions" or as otherwise agreed
upon by the holders of the Notes, the Company will not, and will not permit any
Subsidiary to, permit to exist or enter into any agreement or arrangement
relating to any of the Diablo Assets or the Diablo Business whereby it engages
in a transaction of any kind with any Subsidiary (other than a Wholly-Owned
Subsidiary), or with any other Affiliate of the Company or any Subsidiary except
on terms no less favorable to the Company as could be obtained from Persons who
are not Affiliates of the Company..
7.14 Compliance with ERISA. The Company will, and will cause each if
its Subsidiaries to, fulfill the obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan relating to any of the Diablo
Assets or the Diablo Business, to the extent such minimum funding standards are
applicable, and comply in all material respects with the presently applicable
provisions of ERISA and the Code, and will not, and will not permit any
Subsidiary to, incur any material liability to the PBGC or any such Plan under
Title IV of ERISA.
7.15 Indebtedness. The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness pursuant to this Agreement;
(b) Indebtedness (other than Indebtedness for Money Borrowed)
arising in connection with the Permitted Liens;
(c) Indebtedness incurred in the ordinary course of business
which does not represent Indebtedness for Money Borrowed;
(d) Indebtedness existing on the date of this Agreement and
set forth in the Disclosure Schedule; and
(e) Other Indebtedness for Money Borrowed so long as, after
giving effect thereto and concurrent repayment of Indebtedness for
Money Borrowed, the aggregate principal amount of Indebtedness for
Money Borrowed to be outstanding would not exceed five (5) times
Operating Cash Flow for the most recent twelve months ending on the
calendar quarter for which financial statements are required to have
been delivered pursuant to the provisions of Section 7.9(a)(i), so long
as after giving effect to such Indebtedness for Money Borrowed no
Potential Default or Event of Default has occurred and is continuing.
7.16 Operation of the Business. Subject to the provisions of the Letter
of Intent and, if executed and delivered, the Acquisition Agreement (so long as
it shall remain in effect), the Company and each of its Subsidiaries will own
and operate the Diablo Assets and conduct the Diablo Business in the normal,
usual and customary manner in the ordinary and regular course of business.
Without limiting the generality of the foregoing, subject to the provisions of
the Letter of Intent and, if executed and delivered, the Acquisition Agreement
(so long as it shall remain in
-24-
effect), the Company will not, and will not permit any Subsidiary to, take any
of the following actions with respect to the Diablo Assets and the Diablo
Business:
(a) Transfer or agree to Transfer any of the properties or
assets constituting a part of the Diablo Assets or the Diablo Business,
other than nonmaterial amounts of machinery and equipment sold or
otherwise disposed of in the ordinary course of business and no longer
needed in the operation or business or replaced with assets of like
kind or better kind and quality;
(b) with prior practices, (i) incur any material obligations
or liabilities (fixed, contingent or other); (ii) make any additions to
its property or any purchases of machinery or equipment, except for
normal maintenance and replacements; (iii) or agents, and will not
otherwise alter, modify or change in any material respect the terms of
their employment or engagement, and has not entered and will not enter
into new employment arrangements; (iv) waive, any rights of substantial
value without fair and adequate consideration; (v) amend in any
material respect, terminate or enter into or become (or permit any of
its property to be) bound by or subject to any Lease, Governmental
Authorization, Private Authorization, Employment Arrangement or Plan or
any Contractual Obligation which could have a Material Adverse Effect
on the Company; (vi) do any act or fail to do any act, if such act or
failure to act might result in the expiration, revocation, suspension
or modification of any of its Material Governmental Authorizations or
Material Private Authorizations; and (vii) enter into, any other
transaction or series of related transactions which individually or in
the aggregate is Material to the Company; and
(c) waive any condition set forth therein to consummation of,
or otherwise amend, modify or terminate, any Material Agreement, or
enter into any agreement or other arrangement which would constitute a
Material Agreement, except for such waivers, amendments or
modifications, or such other agreements or arrangements as do not and
will not have in the aggregate any Material Adverse Effect on the
Company.
The Company shall use reasonable business efforts to preserve the
ownership, operation, management, policies and personnel of the Diablo Assets
and the Diablo Business, and shall not alter such ownership, operation,
management, policies, or personnel in any manner that would, individually or in
the aggregate, have a Materially Adverse Effect on the Diablo Assets or the
Diablo Business.
7.17 Issue of Equity Securities. The Company will not issue, or agree
to issue, any shares of capital stock or any Convertible Securities or Option
Securities, if such issuance would result in a Change of Control of the Company.
8. Defaults.
8.1 Events of Default. If one or more of the following events (herein
termed "Events of Default") shall have occurred, that is to say:
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(a) if the Company shall fail to make payment of the principal
of or premium, if any, or, for a period of five (5) business days,
interest on any of the Notes when and as the same shall become due and
payable, whether at their stated maturity, on a date fixed for payment,
by a notice of payment or offer to pay, by declaration or otherwise; or
(b) if any representation or warranty of the Company contained
in this Agreement, or any statement or certificate furnished by the
Company in connection with the issue or sale of any of the Notes or
pursuant to any provision of this Agreement, shall have been false,
incorrect or misleading in any material respect when made or so
certified to, and such representation and warranty was either (i)
willfully and intentionally made as such or (ii) not so willfully and
intentionally made, but the defect giving rise to such false, incorrect
or misleading representation and warranty, to the ext curable, has not
been cured within thirty (3) days of the Company obtaining knowledge of
the defect and, whether or not curable, has, together with any other
such false, incorrect or misleading representations and warranties,
resulted in a Material Adverse Change in the Company; or
(c) if the Company or any Subsidiary shall fail to observe or
perform any of the covenants, agreements or provisions contained in
Sections 7.10 through 7.13, inclusive, 7.15, 7.16 and 7.18; or
(d) if the Company or any Subsidiary shall fail duly to
observe or perform any other covenant, agreement or provision contained
in this Agreement, the Notes or any other Related Agreement, other than
those referred to in subdivisions (a), (b) or (c) above, and such
failure shall have continued for a period of thirty (30) days after
written notice to the Company from the holders of a majority in
interest of the Notes; or
(e) if the Company or any Subsidiary shall default, as
principal or as guarantor or other surety, (i) in any payment of
principal of or premium, if any, or interest on any Indebtedness for
Money Borrowed (other than the Notes), or any purchase money
Indebtedness in excess of $100,000, or (ii) with respect to any of the
terms of any evidence of such Indebtedness or of any mortgage, security
agreement, indenture or other agreement relating thereto, and such
default shall continue for more than the period of grace, if any,
specified therein; or
(f) if one or more final judgments for the payment of money in
excess of $150,000 shall be rendered against the Company or any
Subsidiary, and such judgments shall not be discharged or their
discharge shall not have been provided for in accordance with its
terms, or a stay of execution thereof shall not have been procured
within thirty (30) days from the date of the entry thereof, or within
said period of thirty (30) day period (or such longer period during
which execution on such judgment shall have been stayed), the Company
or such Subsidiary shall not have filed an appeal therefrom (or from
the order, decree or process upon which or pursuant to which said
judgment shall have been granted, passed or entered); or
-26-
(g) if the Company or any of its Subsidiaries shall, as a
debtor, be involved in or commit an Act of Bankruptcy; or
(h) if a Change in Control with respect to the Company shall
be pending or shall have occurred; or
(i) if the Company or DCI shall enter into an agreement,
whether or not legally binding, with respect to a Third Party Transfer
or a Third Party Transfer shall have occurred; or
(j) if any Potential Default or Event of Default (each as
defined in the DCI Note Agreement) shall have occurred and be
continuing;
then, except as set forth below in this Section, (I) in the case of any event
specified in subdivision (g) of this Section, there shall automatically become
forthwith due and payable the unpaid balance of all of the Notes, and (II) in
each and every other case specified in this Section, the holders of a majority
in principal amount of the Notes at the time outstanding may by notice in
writing to the Company declare to be forthwith due and payable the unpaid
balance of all of the Notes, together in any such case with interest accrued
thereon, and thereupon such balance shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived by the Company; the Holders of a majority in principal
amount of the Notes of the time outstanding may, without being required to give
any notice (except as may be required by law), exercise their rights under the
Security Agreement whether or not they elect to accelerate payment as provided
herein; and/or in addition thereto each Holder may proceed to protect and
enforce its rights by suit in equity, action at law and/or other appropriate
proceeding, either for specific performance of any covenant or provision
contained in the Notes or herein or in aid of the exercise of any power granted
in the Notes or herein or in lieu thereof. Notwithstanding any provision to the
contrary in this Agreement, no events other than those described in this Section
8.1 shall constitute an Event of Default giving rise to the consequences set
forth in clause (I) or (II) of the preceding sentence; provided, however, that
should the Event of Default giving rise to the consequences set forth in clause
(I) or (II) of the preceding sentence occur prior to the consummation of the
transactions contemplated by the Acquisition Agreement, the Company may, at its
sole discretion, elect to pay the Notes at their principal amount, without
premium, but including interest accrued and unpaid thereon to the date of
payment pursuant to an Agreement customary in comparable transactions and
reasonably satisfactory to American relating to the purchase and sale of the DCI
business, free and clear of all liens, except as otherwise set forth in Exhibit
B to the Letter of Intent. Such agreement shall be on the same terms and
conditions as are set forth in Section 6.2 of this Agreement.
8.2 Notice to the Holders. If and whenever the Company shall become
aware of the existence of any Event which constitutes, or which after giving of
notice or passage of time or both would constitute, an Event of Default, the
Company shall forthwith give notice to each Holder of such condition or event
and what action the Company has taken, is taking or proposes to take with
respect thereto. If any creditor of the Company shall take any action, of which
the Company shall
-27-
have actual knowledge, in respect of any Event which constitutes, or which after
giving notice or passage of time or both would constitute, an Event of Default,
then and in any such event, and whether or not the Company shall have given a
notice under the first sentence of this Section with respect to the condition or
event to which such demand or action shall relate, the Company shall forthwith
give to each Holder written notice, specifying such action and the nature of
such alleged default or Event of Default and what actions the Company has taken,
is taking or proposes to take with respect thereto.
8.3 Annulment of Defaults. This Section is subject to the condition
that, if at any time after the principal of any or all of the Notes shall have
been declared and become due and payable, and before any judgment or decree for
the payment of the moneys so due, or any part thereof, shall be entered, all
arrears of interest upon all the Notes and all other sums payable upon the Notes
(except the principal of and interest on such Notes which by such declaration
shall have become payable) shall have been duly paid, and every other Potential
Default and Event of Default shall have been made good or cured, then and in
every such case the Holders of a majority in principal amount of the Notes at
the time outstanding may, by written instrument or instruments filed with the
Company, rescind and annul such declaration and its consequences. No rescission
or annulment under this Sec tion shall extend to or affect any subsequent
Potential Default or Event of Default or impair any right consequent thereon.
8.4 Waiver by Company; Severability of Remedies. To the fullest extent
permitted by applicable law, the Company hereby agrees to waive, and does hereby
absolutely and irrevocably waive and relinquish, (a) the benefit and advantage
of any valuation, stay, appraisal, extension or redemption laws now existing or
which may hereafter exist, which, but for this provision, might be applicable to
any sale made under the judgment, order or decree of any court, or otherwise,
based on the Notes or any claim for interest on the Notes; (b) all presentments,
demands for performance and notices of nonperformance (except to the extent
required by the provisions hereof); (c) any requirements of diligence or
promptness on the part of any Holder, as a holder of Notes, in the enforcement
of its rights under the provisions of this Agreement or the Notes; and (d) any
and all notices of every kind and description which may be required to be given
by any statute or rule of law and any defense of any kind which it may now or
hereafter have with respect to its liability under this Agreement or the Notes.
In the event any remedy or other provision of this Section is not enforceable
for any reason, no other remedy or provision shall be affected thereby, and all
such other remedies and provisions shall be given full force and effect in
accordance with their terms.
8.5 No Waiver of Rights. No course of dealing between the Company or
any Subsidiary and any Holder, as a holder of Notes, and no delay or omission on
the part of any Holder in exercising any rights under the Notes or this
Agreement, shall operate as a waiver of the rights of such Holder, as a holder
of Notes. No failure to insist upon the strict provisions of any covenant, term,
condition or other provision of this Agreement or any of the Notes or to
exercise any right or remedy thereunder shall constitute a waiver by any Holder,
as a holder of Notes, of any such covenant, term, condition or other provision
or of any Potential Default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or of the
Notes or Potential Default or Event of Default hereunder on one occasion shall
not be construed as a bar to or a waiver
-28-
of any right or remedy on any future occasion and shall not affect or alter this
Agreement or the Notes except to the extent specifically provided in the
instruments setting forth such waiver delivered under Section 10.5, and every
covenant, term, condition and other provision of this Agreement and the Notes
shall, in such event, continue in full force and effect.
8.6 Costs and Expenses of Collection. Subject to the provisions of
Section 10.2, the Company covenants and agrees that if default be made in any
payment of principal of or interest on the Notes, it will, to the extent
permitted under applicable law, pay to each Holder, as a holder of Notes, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the attorneys of each Holder
for all services rendered in that connection.
8.7 Remedies Cumulative. No remedy herein conferred upon each Holder,
as a holder of Notes or otherwise, is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
9. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings. Terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa, and the reference to any gender shall be deemed to include all genders.
Unless otherwise defined or the context otherwise clearly requires, terms for
which meanings are provided in this Agreement shall have such meanings when used
in the Disclosure Schedule and in each instrument, notice, certificate,
communication, opinion or other document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto. If the Company has any Subsidiaries all financial terms shall
be deemed to apply to the Company and its Consolidated Subsidiaries, determined
in accordance with CAAP consistently applied with the Financial Statements
delivered to American hereunder.
The term "Acquisition" is defined in the first whereas paragraph,
preceding Section 1.
The term "Acquisition Agreement" is defined in the first whereas
paragraph, preceding Section 1, and shall include all amendments, modifications
and supplements thereto.
The term "Acquisition Termination Date" shall mean the earlier of (a)
the failure of American and the Company to enter into a definitive agreement
with respect date to the Acquisition, regardless of the reason therefor, within
the time permitted by the Letter of Intent or (b) the date on which the
Acquisition Agreement, if executed and delivered, is terminated, whether in
accordance with its terms or by American or the Company, and whether with or
without cause.
The term "Act of Bankruptcy" shall mean, when used with reference to
any Person, any of the following events or occurrences:
-29-
(a) its admitting in writing its inability, or being unable
under Applicable Law, or its failing generally, to pay its debts
generally as they become due, or
(b) its filing a petition, answer or consent seeking relief as
a debtor or otherwise commencing a voluntary case under the Bankruptcy
Code as from time to time in effect, or its authorizing, by appropriate
proceedings of its board of directors or other governing body, any such
petition, answer, consent or commencement of such a voluntary case; or
(c) the filing against it or all or any substantial part of
its property of a petition com mencing an involuntary case under the
Bankruptcy Code which shall remain undismissed for a period of more
than thirty (30) days or which is consented to by such Person or any
order or decree approving relief adverse to such Person thereunder
shall remain unstayed and in effect for more than forty five (45) days;
or
(d) its commencement of proceedings or filing a petition,
answer or consent seeking relief as a debtor under any Applicable Law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or its consenting to or
acquiescing in such relief or its admitting or acquiescing in or
failing promptly and in any event within thirty (30) days of the filing
thereof, in an appropriate manner, to deny the material allegations of
any petition seeking such relief, any such involuntary petition
remaining undismissed for more than thirty (30) days or an order in any
involuntary proceeding adverse to such Person remaining unstayed and in
effect for more than forty-five (45) days; or
(e) the entry of an order or decree (whether or not final) by
a court of competent jurisdiction (i) finding it to be bankrupt or
insolvent, (ii) ordering or approving its liquidation, dissolution or
winding up, or reorganization or any modification or alteration of the
rights of its creditors, or any composition or readjustment of debts,
(iii) assuming custody of, or appointing a receiver, trustee,
sequestrator, conservator, assignee, custodian, liquidator, fiscal
agent or similar official for, such Person or all or a substantial part
of its property and any such order or decree shall continue unstayed
and in effect for a period of forty-five (45) days; or
(f) its convening a meeting of creditors for the purpose of
consummating an out-of-court arrangement, or making an assignment for
the benefit of, or entering into a composition, extension or similar
arrangement with, its creditors in respect of all or a substantial
portion of its debt; or
(g) its seeking or consenting to or acquiescing in the
appointment of a receiver, trustee, sequestrator, conservator,
liquidator, fiscal agent or other custodian of itself or of all or any
substantial part of its property; or
(h) its winding-up, liquidation or dissolution; or
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(i) its authorization, by appropriate action of its board of
directors or other governing body, of any of the foregoing.
The term "Additional Compensation Certificates" is defined in Section
1.1.
The term "Affiliate", when used with respect to any Person, shall mean
(i) any other Person at the time directly or indirectly controlling, controlled
by or under direct or indirect common control with such Person, (ii) any other
Person of which such Person at the time owns, or has the right to acquire,
directly or indirectly twenty percent (20%) or more on a consolidated basis of
the equity or beneficial interest, (iii) any other Person which at the time
owns, or has the right to acquire, directly or indirectly twenty percent (20%)
or more of the equity or beneficial interest of such Person, (iv) any executive
officer or director of such Person, or any Person of which such Person or any
executive officer or director of such Person at the time owns, or has the right
to acquire, directly or indirectly, twenty percent (20%) of more of the equity
or beneficial interest, and (v) when used with respect to an individual, shall
include a spouse, any ancestor or descendant, or any other relative (by blood,
adoption or marriage), within the third degree of such individual. A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power to direct or cause the direction of the
management or policies of such Person or the disposition of its assets or
property, whether by stock, equity or other ownership, contract, arrangement or
understanding, or otherwise.
The term "American" is defined in the preamble of this Agreement.
The term "Applicable Law" shall mean any Law of any Authority, whether
domestic or foreign, including without limitation all federal and state
securities Laws, to which the Person in question is subject or by which it or
any of its property is bound.
The term "Authority" shall mean any governmental or quasi-governmental
authority, whether executive, legislative, judicial, administrative or other, or
any combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, board, body, branch, bureau, central bank
or comparable agency or entity, commission, corporation, court, department,
instrumentality, master, mediator, panel, referee, system or other political
unit or subdivision or other entity of any of the foregoing, whether domestic or
foreign.
The term "Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as
from time to time in effect, and any successor law, and any reference to any
statutory provision shall be deemed to be a reference to any successor statutory
provision.
The term "CAAP"" shall mean the accounting principles used by the
Company in the preparation of the Financial Statements and described in general
terms in the Disclosure Schedule, such principles applied on a consistent basis,
except as otherwise heretofore disclosed in the Disclosure Schedule. The
requirement that such principles be consistently applied means that the
accounting principles in a current period are comparable in all material respect
to those applied in
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preceding period. All accounting and financial terms used in this Agreement and
the compliance with each covenant contained in this Agreement that relates to
financial matters shall be determined in accordance with the accounting
principles referred to in this paragraph (except as otherwise specifically noted
in certain of the definitions where the term GAAP is used). In the event of a
change in any method of accounting used by the Company or any of its
Subsidiaries that is permitted by this Agreement, such change shall not be
deemed to result in an Event of Default if, at the time of such change, an Event
of Default had not occurred and was not then continuing, based upon the former
methods of accounting used by the Company; provided, however, that, if, after
any such change in accounting methods, either the Company or American determine
in good faith that any requirements of this Agreement are substantially altered
as a result of such change, the Company and American agree to negotiate in good
faith with respect to a change in such requirements.
The term "California Application" is defined in Section 1.1.
The term "California Securities Law" is defined in Section 1.1.
The term "Capital Expenditures" shall mean, with respect to the
Company, for any period during which the amount thereof is to be determined,
without duplication, the amount of all expenses or liabilities (including
without limitation Capital Lease Obligations) incurred or accrued or
expenditures made by the Company directly or indirectly with respect to any of
the Diablo Assets or the Diablo Business which, in accordance with CAAP, would
be treated as a capital expenditure, but shall not include interest or
amortization, depreciation or the like with respect to any previous Capital
Expenditure.
The term "Capitalized Lease Obligation" shall mean the principal
portion of any lease obligation on which in accordance with CAAP would be
characterized as a capital lease.
The term "Change in Control" shall mean, with respect to any Person
(the "Target"), any of the following:
(a) the acquisition, directly or indirectly, in a transaction
or series of transactions, including without limitation by merger,
consolidation or other reorganization, by any Person (such term to
include anyone deemed a person under Section 13(d)(3) under the
Securities Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act) of a majority
or more of the capital stock or voting stock of the Target, other than
by (i) the Target or any of its Subsidiaries, (ii) any employee benefit
plan or related trust of the Target or any of its Subsidiaries, (iii)
any existing stockholder of the Target who as of the date of this
Agreement owns more than ten percent (10%) of the voting stock of the
Target or any of his Affiliates or (iv) American or any of its
Affiliates (an "Acquiring Person"); or
(b) the sale or other disposition of all or any substantial
part of the assets of the Target or, in the case of the Company, any of
the Diablo Assets or the Diablo Business, in
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one transaction or series of related transactions, including by way of
merger, consolidation or other reorganization, other than with or to
American; or
(c) the adoption of a plan relating to the liquidation or
dissolution of the Target; or
(d) the Continuing Directors cease for any reason to
constitute a majority of the directors of the Target then in office.
For purposes of this definition, any transfer of any capital stock or
other equity interest of an Entity that was formed for the purpose of acquiring
voting stock of the Target shall be deemed to be a transfer of such portion of
such voting stock as corresponds to the portion of the equity of such Entity
that has been so transferred.
The term "Claims" shall mean, with respect to any Person, any and all
debts, liabilities, obligations, losses, damages, deficiencies, assessments and
penalties of or against such Person, together with all Legal Actions, pending or
threatened, claims and judgments of whatever kind and nature relating thereto,
and all fees, costs, expenses and disbursements (including without limitation
reasonable attorneys' and other legal fees, costs and expenses) relating to any
of the foregoing.
The terms "Closing" and "Closing Date" are defined in Section 1.3.
The term "Code" shall mean the United States Internal Revenue Code of
1986, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
The term "Company" is defined in the preamble of this Agreement.
The term "Continuing Director" shall mean any member of the Board of
Directors of a Person who (a) is a member of the Board of Directors of such
Person as of the date hereof or (b) was nominated for election by either (i) one
or more of stockholders of such Person who, as of the date of this Agreement,
owned more than ten percent (10%) of the voting stock of such Person (or an
Affiliate of such Person) or (ii) the Board of Directors, a majority of whom
were directors as of the date of this Agreement or whose election or nomination
for election was previously approved by one or more of such stockholders or such
directors.
The term "Contractual Obligation" shall mean, with respect to any
Person, any term, condition, provision, representation, warranty, agreement,
covenant, undertaking, commitment, indemnity or other obligation set forth in
the organizational agreements and other documents of such Person or which is
outstanding or existing under any agreement, contract, arrangement, instrument
or understanding to which such Person is a party or by which it or any of its
business is subject or properties is bound and which, in the case of the
Company, relates to any of the Diablo Assets or the Diablo Business.
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The term "Convertible Securities" shall mean, with respect to any
Person, any evidences of indebtedness, shares of any class of capital stock
(other than common stock which is not convertible into or exchangeable for any
other shares of any class of capital stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
The term "DCI" is defined in the third whereas paragraph, preceding
Section 1.
The term "DCI Additional Compensation Certificates" is defined in the
fourth whereas paragraph, preceding Section 1.
The term "DCI Business" is defined in the third whereas paragraph,
preceding Section 1.
The term "DCI Letter of Intent" is defined in the third whereas
paragraph, preceding Section 1.
The term "DCI Notes" is defined in the fourth whereas paragraph,
preceding Section 1.
The term "DCI Note Agreement" is defined in the fourth whereas
paragraph, preceding Section 1.
The term "Diablo Assets" is defined in Section 2.4.
The term "Diablo Business" is defined in the first whereas paragraph,
preceding Section 1.
The term "Disclosure Schedule" shall mean the Disclosure Schedule,
dated as of the date hereof, heretofore delivered by the Company to American
pursuant to the provisions of this Agreement.
The term "Distribution", when used in reference to capital stock shall
mean: (i) the declaration or payment of any distribution dividend (except
distributions payable solely in common stock of the Company) on or in respect of
any class of capital stock of the Company, (ii) the purchase, redemption or
other retirement of any shares of any class of capital stock of the Company or
any Subsidiary owned by a Person other than the Company or a Subsidiary, and
(iii) any other distribution on or in respect of any shares of any class of
capital stock of the Company or any Subsidiary owned by a Person other than the
Company or a Subsidiary.
The term "Employment Arrangement" shall mean, with respect to the
Company, any employment, consulting, retainer, severance or similar contract,
agreement, plan, arrangement or policy (exclusive of any which is terminable
within ninety (90) days without liability, penalty or payment of any kind of the
Company or any of its Affiliates), or providing for severance, termination
payments, insurance coverage (including any self-insured arrangements), workers
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compensation, disability benefits, life, health, medical, dental or
hospitalization benefits, supplemental unemployment benefits, vacation or sick
leave benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or
post-retirement insurance, compensation or benefits, or any collective
bargaining or other labor agreement, whether or not any of the foregoing is
subject to the provisions of ERISA, to the extent, in each case, it relates to,
covers or is for the benefit of any employee involved in the business or
operations of any of the Diablo Assets or the Diablo Business.
The term "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as from time to time in effect, and any successor law, and any
reference to any statutory provision shall be deemed to be a reference to any
successor provision.
The term "Event" shall mean the occurrence or existence of any act,
action, activity, circumstance, condition, event, fact, failure to act, incident
or practice, or any set or combination of any of the foregoing.
The term "Event of Default" is defined in Section 8.1.
The term "GAAP" shall mean means, except to the extent that a deviation
therefrom is expressly required by this Agreement, such principles applied on a
consistent basis, (i) as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants ("AICPA") and/or
in statements of the Financial Accounting Standards Board that are applicable in
the circumstances as of the date in question, (ii) when not inconsistent with
such opinions and statements, as set forth in other AICPA publications and
guidelines and/or (iii) that otherwise arise by custom for the particular
industry, all as the same shall exist on the date of this Agreement.
The term "Governmental Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, plans, registrations and
other authorizations of all Authorities relating, in the case of the Company, to
the ownership or operation of the Diablo Assets or the conduct of the Diablo
Business.
The terms "Guaranty" or "Guaranteed" shall mean and include all
liabilities and obligations under or by reason of any guarantee or other
contingent liability (other than endorsements of negotiable instruments for
collection or deposit in the ordinary course of business), direct or indirect,
with respect to any Indebtedness, obligation or other liability (collectively,
an "obligation") of another Person, through an agreement or otherwise.
The terms "Holder" and "Holders" shall mean the holders, from time to
time, of any of the Notes. The terms "Holder of Record" and "Holders of Record"
shall mean Holders, from time to time as shown on the records of the Company
maintained for such purpose.
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The term "Indebtedness" shall mean, with respect, to any Person, (a)
all items, except items of capital stock, partnership interests, surplus or
general contingency or deferred tax reserves or any minority interest in any
Subsidiary to the extent such interest is treated as a liability with
indeterminate term on the consolidated balance sheet of such Person, which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person, (b) all obligations
secured by any Lien to which any property or asset owned or held by such Person
is subject, whether or not the obligation secured thereby shall have been
assumed, and (c) to the extent not otherwise included, all Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease back arrangement.
The term "Indebtedness for Money Borrowed" shall mean, with respect to
any Person, (a) money borrowed, (b) Indebtedness represented by notes payable
and drafts accepted representing extensions of credit, all obligations evidenced
by bonds, debentures, notes or other similar instruments, the maximum amount
currently or at any time thereafter available to be drawn under all outstanding
letters of credit issued for the account of such Person, (c) Indebtedness upon
which interest charges are customarily paid by such Person, (d) Indebtedness
(including Capitalized Lease Obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, and (e)
Guarantees of any of the Indebtedness described in items (a) through (d), but
shall not include (i) trade payables, (ii) expenses accrued in the ordinary
course of business or (iii) customer advance payments and customer deposits
received in the ordinary course of business.
The term "Law" shall mean any action, code, consent decree,
constitution, decree, directive, enactment, finding, guideline, law, injunction,
interpretation, judgment, order, ordinance, policy statement, proclamation,
promulgation, regulation, requirement, rule, rule of law, rule of public policy,
settlement agreement, statute, or writ, or the common law, or any particular
section, part or provision thereof, or any interpretation, directive, guideline
or request (whether or not having the force of law), of any Authority, including
without limitation (a) the judicial systems thereof, or any particular section,
part or provision thereof, and (b) any of the foregoing relating to antitrust or
prohibiting other anticompetitive business practices, those relating to
employment practices (such as discrimination, health and safety), and those
relating to minority business enterprises.
The term "Legal Action" shall mean, with respect to any Person, any
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information or suits, at law
or in arbitration, equity or admiralty (whether or not purported to be brought
on behalf of such Person) affecting such Person or any of its business or
property or assets.
The term "Letter of Intent" is defined in the first whereas paragraph,
preceding Section 1.
The term "Lien" shall mean any mortgage, lien (statutory or other),
preference, priority or other security agreement, arrangement or interest,
hypothecation, pledge or other deposit arrange ment, assignment, charge, levy,
executory seizure, attachment, garnishment, encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction,
-36-
building or use restriction, and the like), conditional sale, title retention or
other similar arrangement, device, agreement or restriction, preemptive or
similar right, any financing lease involving substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction, or any
option, equity, claim or right of or obligation to, any other Person, of
whatever kind and character.
The terms "Material" or "Materiality" for the purposes of the
Agreement, shall, unless specifically stated to the contrary, be determined
without regard to the fact that various provisions of the Agreement set forth
specific dollar amounts.
The term "Material Adverse" when used alone or in conjunction with
other terms (including without limitation "Affect," "Change" and "Effect") shall
mean, with respect to the Company, any Event or set of Events which could be
expected to (a) have any material adverse effect upon or result in any material
adverse change in the validity or enforceability of the Agreement or any other
agreement, instrument or other document executed or required to be executed by
such Person pursuant hereto or thereto, (b) materially and adversely affect the
business, operations, management, properties or prospects, or the condition,
financial or other, or results of operation of such Person or such Person and
its Subsidiaries taken as a whole, which, in the case of the Company, shall mean
each of the Diablo Assets or the Diablo Business, (c) materially impair such
Person's ability to fulfill its obligations under the terms of any agreement,
instrument or other document executed or required to be executed by such Person,
(d) materially and adversely affect the aggregate rights and remedies of any
party (other than such Person) under the Agreement or any agreement, instrument
or other document executed or required to be executed pursuant hereto or
thereto, or (e) or, in the case of the Company, adversely affects its ability to
perform this Agreement, the Notes or any of the other Related Agreements or to
pay when due, in accordance with the terms of this Agreement and the Notes, the
principal of and interest and premium, if any, on the Notes.
The term "Material Agreement" shall mean, with respect to the Company,
any agreement, contract, arrangement, undertaking, commitment, license or
obligation relating to the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business which (a) was not entered into in the ordinary
course of business, (b) was entered into in the ordinary course of business
which (i) involves the purchase, sale or lease of goods or materials or
performance of services aggregating more than Fifty Thousand Dollars ($50,000),
(ii) extends for more than twelve (12) months, or (iii) is not terminable on
thirty (30) days' or less notice without penalty or other payment, (c) involves
Indebtedness for Money Borrowed in excess of Fifty Thousand Dollars ($50,000),
or (d) would account for more than one percent (1%) of revenues or expenses of
the Diablo Business projected to be received or incurred by the Company during
the current fiscal year. Without limiting the generality of the foregoing, the
term "Material Agreement" shall include the Acquisition Agreement.
The term "Most Recent Balance Sheet" is defined in Section 2.3.
The term "NSR Rate" is defined in the Additional Compensation
Certificates.
The term "Net Site Revenue" is defined in the Additional Compensation
Certificates.
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The term "Notes" is defined in Section 1.1.
The term "Operating Cash Flow" shall mean, with respect to the Company,
for any period: (a) net revenues of the Company and its Subsidiaries, determined
in accordance with CAAP, for such period, less (b) operating expenses (inclusive
of taxes and corporate overhead, selling and administrative expenses). Cash Flow
shall be adjusted on a consistent basis to reflect the acquisition, sale,
exchange and disposition of property (other than tangible personal property
disposed of in the ordinary course of business). Cash Flow shall exclude all
extraordinary gains and losses and all gains and losses from acquisitions,
sales, exchanges and dispositions of assets (other than tangible personal
property disposed of in the ordinary course of business).
The term "Option Securities" shall mean all rights, options and
warrants, and calls or commitments evidencing the right, to subscribe for,
purchase or otherwise acquire shares of any class of capital stock or other
securities or Convertible Securities, whether or not the right to subscribe for,
purchase or otherwise acquire is immediately exercisable or is conditioned upon
the passage of time, the occurrence or non-occurrence or the existence or
non-existence of some other Event.
The term "PBGC" shall mean the Pension Benefit Guaranty Corporation and
any Person succeeding to any or all of its functions under ERISA.
The term "Permitted Liens" shall mean:
(e) the security interest created under the Security Agreement
in favor of the holders of the Notes;
(f) Liens for taxes if payment shall not at the time be
required to be made in accordance with the provisions of Section 7.2;
(g) Liens of carriers, warehousemen, mechanics, laborers,
materialmen and landlords incurred in the ordinary course of business
for sums not yet due or being contested in good faith, if payment shall
not be required to be made in accordance with the provisions of Section
7.2;
(h) Liens arising out of judgments or awards, and appeal and
similar bonds incident to the conduct of legal actions, against such
Person with respect to which such Person shall then be prosecuting
appeal or other proceedings for review (and as to which any foreclosure
or other enforcement proceedings shall not have begun or shall have
been fully bonded or otherwise effectively stayed);
(i) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance Laws,
but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto; and
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(j) Liens set forth in the Disclosure Schedule.
The term "Person" shall mean any natural individual, corporation, firm,
unincorporated organization, association, partnership, limited liability
company, business trust, joint stock company, joint venture, trust or other
organization, entity or business, or any governmental authority, whether acting
in an individual, fiduciary or other capacity.
The term "Plan" shall mean, with respect to any Person and at a
particular time, any employee benefit plan which is covered by ERISA and in
respect of which such Person or an ERISA Affiliate (as defined in ERISA) is (or,
if such plan were terminated at such time, would under Sec tion 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
The term "Potential Default" shall mean any event or circumstance which
after notice, passage of time, or both, would become an Event of Default.
the term "Prepayment Penalty" is defined in the Additional Compensation
Certificates.
The term "Prime Rate" is defined in Section 1.1.
The term "Private Authorizations" shall mean all approvals,
concessions, consents, franchises, licenses, permits, and other authorizations
of all Persons (other than Authorities) other than those of a nature included
within the definition of Intellectual Property which, in the case of the
Company, relates to the ownership or operation of the Diablo Assets or the
conduct of the Diablo Business.
The term "Purchase Price" is defined in Section 1.2.
The term "Related Agreement" shall mean this Agreement, the Notes,
Acquisition Agreement (if executed and delivered), and each other agreement,
instrument and other document executed or required to be executed by the Company
on the Closing Date or at any time thereafter, in connection with the
transactions contemplated by this Agreement or any of the other Related
Agreements, in each case, as amended, modified or supplemented from time to
time.
The term "Rental Obligations," with respect to any lease for any
period, shall mean the minimum amount of rental payments required to be made in
such period by the lessee under such Lease, including without limitation any
amounts required to be paid by such lessee, whether or not designated as rental
or additional rental: (a) on account of maintenance and repairs, insurance,
taxes, assessments, water and sewer rates and similar charges, and (b) which are
payable on the basis of profits, revenues or sales to be derived from the leased
property or any other index of performance.
The term "Sanwa Loan Agreement" shall mean the Term Loan Agreement,
dated as of January 31, 1996, by and between Sanwa Bank California and Diablo
Communications, Inc. and Xxxxxxx X. Xxxxxx, Trustee of the Xxxx Xxxxxxx Xxxxxx
Family Trust U/A/D June 16, 1983, as amended as of the date hereof.
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The term "Securities Act" shall mean the Securities Act of 1933, and
the rules and regulations promulgated thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
The term "Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, and the rules and regulations promulgated thereunder, all as from
time to time in effect, or any successor law, rules or regulations, and any
reference to any statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
The term "Solvent" shall mean, with respect to any Person on a
particular date, that on such date (i) the fair value of the assets of such
Person (both at fair valuation and at present fair saleable value) is, on the
date of determination, greater than the total amount of liabilities, including,
without limitation, contingent and unliquidated liabilities, of such Person,
(ii) such Person is able to pay all liabilities of such Person as they mature,
and (iii) such Person does not have unreasonably small capital with which to
carry on its business. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability. For purposes of this definition, "indebtedness" shall mean any
liability on a claim, and "claim" shall mean (a) right to payment, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal equitable, secured
or unsecured, or (b) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
The term "Subject Sites" is defined in Section 1.1.
The term "Subsidiary" with respect to any corporation (the "parent")
shall mean any Person of which such parent, at the time in respect of which such
term is used, (a) owns directly or indirectly more than fifty percent (50%) of
the equity or beneficial interest, on a consolidated basis, and (b) owns
directly or controls with power to vote, indirectly through one or more
Subsidiaries, shares of capital stock or beneficial interest having the power to
cast at least a majority of the votes entitled to be cast for the election of
the directors, trustees, managers or other officials having powers analogous to
those of directors of a corporation. Unless otherwise specifically indicated,
when used herein the term Subsidiary shall refer to a direct or indirect
Subsidiary of the Company.
The term "Tax" (and with correlative meanings, "Taxes" and "Taxable"),
shall mean, with respect to any Person, (a) any net income, alternative or
add-on minimum tax, gross income, gross receipts, gains, sales, use, ad valorem,
transfer, franchise, profits, license, withholding on amounts paid to or by such
Person or any of its Subsidiaries, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any Authority (a "Taxing
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Authority") responsible for the imposition of any such tax (domestic or
foreign), (b) joint or several liability of such Person or any of its
Subsidiaries with any other Person for the payment of any amounts of the type
described in (a) and (c) liability of such Person or any of its Subsidiaries for
the payment of any amounts of the type described in (a) as a result of any
express or implied obligation to indemnify any other Person.
The term "Tax Returns" shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed in any jurisdiction with respect to Taxes.
The term "Transfer" shall mean any sale, assignment, conveyance,
transfer or other disposition, mortgage, pledge or other Lien, lease, exchange,
abandonment, parting with control of, gift, granting of an option or proxy or
other act of alienation.
The term "Third Party Transfer" shall mean, with respect to any Person,
the Transfer of all or any substantial portion of business, property or assets
of such Person, including in the case of the Company of all or any substantial
portion of the Diablo Assets or the Diablo Business to any other Person other
than (a) any Transfer to American or one of its Affiliates or (b) any bona fide
mortgage, pledge or other Lien thereon granted to a bank or other recognized
financial institution pursuant to the incurrence of Indebtedness and not with
the intent of avoiding Section 6.1 of this Agreement.
The term "Wholly-Owned Subsidiary" shall mean a Subsidiary of the
Company, all of the outstanding shares of every class of stock (other than
directors' qualifying shares, if required by statute, the certificates for
which, duly endorsed in blank or accompanied by a stock power duly endorsed in
blank, shall be held by such Subsidiary) and all other securities of which are
at the time owned, directly or indirectly, by the Company or another
Wholly-Owned Subsidiary.
10. Miscellaneous Provisions.
10.1 Stamp and Other Taxes. The Company covenants and agrees that it
will pay all United States and state documentary stamp or similar excise taxes,
including any interest or penalties thereon, which may be legally payable in
connection with or arising out of the issue of any of the Notes and will
indemnify each holder of any thereof against, and save it harmless from, any
liability, cost or expense in respect of any such stamp taxes or other taxes and
any interest or penalties thereon. The Company's agreement in this connection
shall survive termination of this Agreement and the payment of the Notes.
10.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company will pay all of the following expenses in
connection with such transactions and in con nection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement, the Notes and the other Related Agreements to which it is a party:
(a) the cost and expenses of its counsel, including the furnishing of all
opinions by such counsel and all certificates on behalf of the Company, and of
the Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with; (b) the taxes
specified in Section 10.1; (c) the costs and expenses specified in Sections 8.6
and 10.9; and
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(d) the out-of-pocket expenses incurred by each holder of any Notes in
connection with any amendments or waivers or in connection with or arising out
of any litigation, investigation or proceeding instituted by any Authority or
any other Person with respect to this Agreement, the Notes or the other Related
Agreements to which it is a party or the transactions contemplated hereby and
requiring such holder's participation or involvement, except as otherwise
provided in the Acquisition Agreement.
Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, in the event of any Legal Action between the Company and the
holders from time to time of the Notes, the prevailing party shall be entitled
to be reimbursed for the reasonable legal fees and expenses and other court
costs of such Legal Action.
10.3 Survival of Covenants; Successors and Assigns. All covenants,
agreements and representations made herein and in certificates delivered in
connection herewith shall be deemed material and relied on by American
notwithstanding any investigation made by it or in its behalf, and shall survive
the execution and delivery of the Notes, to it and its payment therefor, and
shall bind and, subject to compliance with the provisions of this Agreement
including without limitation Section 7.12, inure to the benefit of the Company's
successors and assigns, whether so expressed or not, and all such covenants,
agreements and representations shall inure to the benefit of the successors and
assigns of American, whether so expressed or not.
10.4 Notices and Communications. All notices and other communications
which by any provision of this Agreement are required or permitted to be given
shall be given in writing and shall be (i) mailed by first-class, express mail
or other overnight mail service, postage prepaid, or Federal Express or other
overnight mail courier service, (ii) sent by telex, telegram, telecopy or other
similar form of rapid transmission, confirmed by mailing (by first class or
express mail, postage prepaid, or Federal Express or other overnight mail
courier service) written confirmation at substantially the same time as such
rapid transmission, or (iii) personally delivered to an officer of the receiving
party. All such communications shall be mailed, set or delivered:
(a) if to the Company, at 0000 Xxxxxxxxx Xxxx Xxxx, Xxxxx 000,
Xxxxx Xxxxxxxx, XX 00000, (facsimile [510] 236-3799), attention:
Xxxxxxx Xxxxxx, Chairman (with a copy to Xxxxxx, White & Xxxxxx, 0000
Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000,
(facsimile [510] 256-9428), attention: Xxxxx Xxxxxx, Esq.);
(b) if to American, at 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxx Xxxxx, XX 00000, (facsimile: [407] 998-2278), attention: Xxxxx X.
Xxxxxxxxxx, Chief Operating Officer (with copies to American Radio
Systems Corporation, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000,
(facsimile [617] 375-7575), attention: Xxxxxx X. Xxxx, Chief Financial
Officer, and Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, (facsimile [617] 338-2880), attention: Xxxxxx X.
Xxxxxxx, Esq.); and
(c) if to any other Holders of Notes to the address set forth
in the Company's records;
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or at such other addresses (including copies) as any party may designate in
writing to the other parties to this Agreement.
A notice delivered in person shall be effective when received or upon
refusal to accept receipt; a notice sent by mail shall not become effective
until received by the Person to whom it is given, unless it is mailed by
registered or certified mail, in which case it shall be deemed effective on the
date of receipt or refusal to accept receipt as indicated by postal records; a
notice sent by rapid transmission shall be deemed to be given when receipt of
such transmission is acknowledged.
10.5 Amendments and Waivers. Any provision of this Agreement to the
contrary notwithstanding, changes in or additions to this Agreement and the
Notes may be made, or compli ance with any term, covenant, agreement, condition
or provision set forth herein, in the Notes may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the consent in writing of the holders of a majority in
principal amount of the Notes at the time outstanding and the Company, except
that no such change, addition, omission, waiver or consent may be made with
respect to the Notes, without the consent of all of the holders of the Notes,
except as otherwise provided in Section 8.3, if it involves any change,
addition, omission, waiver or consent with respect to the provisions regarding
the amount, timing or form of payment of premium, if any, or interest on or
principal of the Notes, the maturity date thereof or which changes or amends the
provisions of this Section with respect to the requirement of unanimous consent
of the Noteholders; and each such change, addition or waiver shall be binding
upon each future holder of the Notes and, in the case of the Company, its
successors and permitted assigns. Any consent may be given subject to
satisfaction of conditions stated therein. The failure to insist upon the strict
provisions of any covenant, term, condition or other provision of this Agreement
or the Notes or to exercise any right or remedy hereunder or thereunder shall
not constitute a waiver of any such covenant, term, condition or other provision
thereof or Potential Default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or thereof or
Potential Default or Event of Default hereunder shall not affect or alter this
Agreement or the Notes in any other respect, and each and every covenant, term,
condition or other provision of this Agreement and the Notes shall, in such
event, continue in full force and effect, except as so waived, and shall be
operative with respect to any other then existing or subsequent Potential
Default or Event of Default in connection therewith.
10.6 Governing Law; Venue. This Agreement is and shall be deemed to be
a contract made under, and the validity, interpretation, construction and
performance of this Agreement shall be governed by, the applicable laws of the
United States of America and the domestic substantive laws of the State of New
York without giving effect to any choice or conflict of laws provision or rule
that would cause the application of domestic substantive laws of any other
jurisdiction. In the event of any Legal Action between the parties arising out
of this Agreement, the parties agree to submit the matter to the appropriate
municipal, state or federal court sitting in San Francisco, California, and the
parties agree to submit to the jurisdiction of such courts.
10.7 Entire Agreement. This Agreement (which term, unless the context
otherwise specifically requires, includes all Exhibits and Schedules hereto)
constitutes the entire agreement
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between American and the Company with respect to the subject matter hereof and
supersedes all prior agreements, arrangements, covenants, promises, conditions,
understandings, inducements, representations and negotiations, expressed or
implied, oral or written, between them as to such subject matter.
10.8 Saturdays, Sundays, Holidays, etc. If the last or appointed day
for taking of any action required or permitted hereby or by the Notes (other
than the payment of principal of or interest or premium, if any, on the Notes)
shall be a Saturday, Sunday or legal holiday in Boca Raton, Florida or San
Francisco, California, or a day on which banking institutions in Boca Raton,
Florida or San Francisco, California, are authorized by law or executive order
to close, then such action may be taken on the next succeeding business day for
banking institutions in such cities.
10.9 Brokers, etc. No broker, finder or other person performing a
similar function has been retained by the Company in connection with the issue
and sale of the Notes or the Acquisition. The Company will pay, and will
indemnify and hold harmless American and its officers, directors, stockholders,
employees, trustees and agents from, the fees, commissions and expenses of any
Person purporting to have acted on the Company's behalf in such connection or in
connection with the issue and sale of the Notes and the Acquisition. American
will pay, and will indemnify and hold harmless the Company and its officers,
directors, employees, trustees and agents from, the fees, commissions and
expenses of any Person purporting to have acted on American's behalf in such
connection or in connection with the issue and sale of the Notes and the
Acquisition.
10.10 Headings; Counterparts. The headings contained in this Agreement
are for reference purposes only and shall not limit or otherwise affect the
meaning of any provision of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument, binding upon all of the parties
hereto. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
10.11 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution or statute or rule of public policy or
for any other reason, such circumstance shall not have the effect of rendering
the provision or provisions in question invalid, inoperative, illegal or
unenforceable in any other jurisdiction or in any other case or circumstance or
of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case.
10.12 Further Assurances Each of the parties hereto agrees to execute
and deliver those writings and documents reasonably required to more fully carry
out the acts contemplated hereby,
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and each party hereby agrees, at the written request of any other party, to
advise any Person of the status of this Agreement, the Notes or any of the other
Related Agreements and to the effect that any of the same is or is not in
default.
10.13 Specific Performance; Other Rights. The parties recognize that
various of the rights of the parties under this Agreement are unique and,
accordingly, the parties shall, in addition to such other remedies as may be
available to it at law or in equity, have the right to enforce its rights
hereunder by actions for injunctive relief and specific performance to the
extent permitted by Law. Nothing herein contained shall be construed as
prohibiting either party from pursuing any other remedies available to it for
such breach or threatened breach, including without limitation the recovery of
damages.
10.14 Non-Recourse Obligation. The obligations of the Company
represented by the Notes are nonrecourse to the stockholders of the Company,
and, notwithstanding any provision to the contrary in this Agreement, the Note
or any of the other Related Agreements, American agrees for itself, and its
successors and assigns that (a) neither any stockholder of the Company nor his
successors and assigns shall be personally liable on the Notes, and (b) in the
event that one or more Events of Defaults has occurred or any other default
whatsoever has occurred under this Agreement or the Notes, American, or any of
its successors and assigns, shall look solely to the Company and its property
and assets, including without limitation the Diablo Assets and the Diablo
Business, of the Company for payment of the indebtedness represented by the
Notes and will not make any claim or institute any action or proceeding against
any stockholder of the Company, or any of his successors and assigns, for
payment of such indebtedness (or for any deficiency).
IN WITNESS WHEREOF the parties hereto have executed this Agreement, all
pursuant to authority heretofore granted, to the extent applicable, by their
respective Boards of Directors, as of the date and year first above written.
Diablo Communications of Southern California, Inc.
By:________________________________
Name:
Title:
American Tower Systems Corporation
By:________________________________
Name:
Title:
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