Exhibit 2.8
ASSET PURCHASE AGREEMENT AMONG INTERNATIONAL TOWERS
INC., S&W COMMUNICATIONS INC., TRI-EX TOWER INC.,
INTERNATIONAL TOWER INDUSTRIES, INC., AND SPECTRASITE
HOLDINGS, INC.
DATED AS OF JANUARY 5, 2000
TABLE OF CONTENTS
(continued)
ASSET PURCHASE AGREEMENT AMONG INTERNATIONAL TOWERS
INC., S&W COMMUNICATIONS INC., TRI-EX TOWER INC.,
INTERNATIONAL TOWER INDUSTRIES, INC., AND SPECTRASITE
HOLDINGS, INC.
DATED AS OF JANUARY 5, 2000
TABLE OF CONTENTS
Article 1 Defined Terms............................................1
1.1 Defined Terms.......................................1
1.2 Terms Defined Elsewhere in this Agreement...........5
1.3 Clarifications......................................5
Article 2 Purchase and Sale of Assets..............................5
2.1 Assets..............................................5
2.2 Excluded Assets.....................................6
2.3 Consideration.......................................6
2.4 Assumption of Liabilities and Obligations...........7
2.5 Allocation of Consideration.........................7
Article 3 Representations and Warranties of Buyer..................7
3.1 Organization........................................7
3.2 Authorization of Transaction; Consents..............7
3.3 Noncontravention....................................8
3.4 Brokers' Fees.......................................8
3.5 SEC Filings.........................................8
3.6 Issuance of Stock...................................8
3.7 Absence of Changes..................................8
3.8 Disclosure..........................................8
Article 4 Representations and Warranties of Sellers................8
4.1 Authorization of Transaction........................9
4.2 Noncontravention....................................9
4.3 Investment..........................................9
4.4 Organization, Qualification, and Corporate Power...10
4.5 Brokers' Fees......................................10
4.6 Title to Assets....................................10
4.7 Subsidiaries.......................................10
4.8 Financial Statements...............................10
4.9 Subsequent Events..................................10
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4.10 Undisclosed Liabilities............................12
4.11 Legal Compliance...................................12
4.12 Tax Matters........................................12
4.13 Regulatory Requirements............................12
4.14 Real Property......................................13
4.15 Intellectual Property..............................14
4.16 Tangible Assets....................................14
4.17 Contracts..........................................14
4.18 Notes and Accounts Receivable; Accounts Payable....15
4.19 Insurance..........................................15
4.20 Litigation.........................................15
4.21 Employees..........................................16
4.22 Employee Benefits..................................17
4.23 Environmental Matters..............................18
4.24 Certain Business Relationships with the Sellers....19
4.25 Product and Service Warranties.....................19
4.26 Year 2000 Compliance...............................20
4.27 Disclosure.........................................20
Article 5 Covenants...............................................20
5.1 Conduct of Business of the Sellers.................20
5.2 Other Actions......................................21
5.3 Notification of Certain Matters....................22
5.4 Access to Information..............................22
5.5 Cooperation; Further Assurances....................22
5.6 Public Announcements...............................23
5.7 Confidentiality....................................23
5.8 Expenses; Taxes....................................23
5.9 Other Buyer Transactions...........................23
5.10 Consents...........................................23
5.11 Employee Matters...................................23
5.12 Real Estate Matters................................24
5.13 Additional Post-Closing Covenants..................26
5.14 Stock Consideration................................26
Article 6 Conditions to the Obligations of Buyer..................27
6.1 Performance by Sellers.............................27
6.2 Truth of Representations and Warranties............27
6.3 Receipt of Consents................................27
6.4 Deliveries.........................................27
6.5 Material Adverse Effect............................27
6.6 Repayment of Loans and Certain Other Obligations...27
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6.7 Certain Proceedings................................27
6.8 Sellers' Actions...................................28
Article 7 Conditions to the Obligations of Sellers................28
7.1 Performance by Buyer...............................28
7.2 Truth of Representations and Warranties............28
7.3 Deliveries.........................................28
7.4 Material Adverse Effect............................28
7.5 Certain Proceedings................................28
7.6 Buyer's Actions....................................28
Article 8 Closing.................................................29
8.1 Closing............................................29
8.2 Deliveries and Actions by Sellers..................29
8.3 Deliveries by Buyer................................29
Article 9 Termination.............................................30
9.1 Termination........................................30
9.2 Effect of Termination..............................31
Article 10 Indemnification and Other Remedies......................31
10.1 Survival of Representations and Warranties.........31
10.2 Indemnification by Sellers.........................31
10.3 Indemnification by Buyer...........................32
10.4 Procedure for Indemnification......................32
10.5 Limitations........................................33
10.6 Indemnification Escrow.............................34
10.7 Injunctive Relief..................................34
10.8 Sole Remedy........................................34
Article 11 Miscellaneous...........................................35
11.1 Governing Law......................................35
11.2 Successors and Assigns.............................35
11.3 Entire Agreement; Amendment........................35
11.4 Notices, Etc.......................................35
11.5 Delays or Omissions................................36
11.6 Counterparts.......................................36
11.7 Severability.......................................36
11.8 Headings...........................................37
11.9 Waiver of Jury Trial...............................37
11.10 Exclusive Benefit..................................37
11.11 Construction.......................................37
11.12 Exhibits and Schedules.............................37
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THE FOLLOWING SCHEDULES HAVE BEEN OMITTED
AND WILL BE PROVIDED TO THE COMMISSION UPON
REQUEST.
TABLE OF SCHEDULES
Schedule 2.2 Excluded Assets
Schedule 4.2 Sellers' Consents
Schedule 4.4 Qualification
Schedule 4.6 Liens
Schedule 4.8 Financial Statements
Schedule 4.9 Subsequent Events
Schedule 4.10 Certain Liabilities
Schedule 4.13 Regulatory Requirements
Schedule 4.14 Real Property
Schedule 4.15 Intellectual Property
Schedule 4.16 Tangible Assets
Schedule 4.17 Contracts
Schedule 4.18 Setoffs or Counterclaims
Schedule 4.19 Insurance
Schedule 4.20 Litigation
Schedule 4.21 Employees
Schedule 4.22 Employee Benefits
Schedule 4.23 Environmental Matters
Schedule 4.24 Certain Business Relationships with the
Sellers
Schedule 4.25 Product and Service Warranties
Schedule 6.6 Indebtedness to be Repaid
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TABLE OF EXHIBITS
Exhibit A Form of Noncompetition Agreement
Exhibit B Escrow Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and entered into as of January 5,
2000, by and among International Towers Inc., a Delaware corporation, S&W
Communications Inc., an Arizona corporation, Tri-Ex Tower Inc., a California
corporation, International Tower Industries, Inc., an Arizona corporation, and
SpectraSite Holdings, Inc., a Delaware corporation ("Buyer").
RECITALS
International Towers Inc., S&W Communications Inc., Tri-Ex Tower Inc.,
and International Tower Industries, Inc. (collectively the "Sellers" and each,
individually, a "Seller") are engaged in the business of engineering,
fabricating, and constructing transmission towers for the communications and
broadcasting industries. Sellers desire to sell to Buyer, and Buyer desires to
acquire from Sellers, substantially all the assets owned by Sellers and used or
held for use in connection with the Business, and the parties desire to enter
into this Agreement to set forth the terms and conditions of such purchase and
sale.
IN CONSIDERATION of the foregoing recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be bound legally, agree as follows:
Article 1
Defined Terms
1.1 Defined Terms. All capitalized terms not otherwise defined elsewhere in this
Agreement shall have the meanings ascribed to such terms in this Section 1.1.
"Affiliate" means, with respect to any Person, (a) any Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with the specified Person; (b) any
Person that is a director or officer of, partner in, or trustee of, or serves in
a similar capacity with respect to, the specified Person or of which the
specified Person is a director, officer, partner, or trustee, or with respect to
which the specified Person serves in a similar capacity; (c) any Person that
directly or indirectly through one or more intermediaries is the beneficial
owner of 10% or more of any class of equity securities of the specified Person
or of which the specified Person is directly or indirectly through one or more
intermediaries the owner of 10% or more of any class of equity securities; or
(d) any Person that is acting at the direction and primarily in furtherance of
the interests of the specified Person. For purposes of this definition,
"control" as applied to any Person means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1, but
excluding all Excluded Assets.
"Assumed Contracts" means (a) all Contracts listed in Schedule 4.17,
other than Contracts designated on Schedule 4.17 as not being Assumed Contracts,
(b) Contracts in effect
on the date of this Agreement that are not required by Section 4.17 to be listed
on Schedule 4.17, and (c) any Contracts entered into by Seller between the date
of this Agreement and the Closing Date in compliance with Section 5.1 that
relate to the Business.
"Business" means the business conducted by the Sellers of engineering,
fabricating, and constructing transmission towers for the communications and
broadcasting industries, but excluding the Military Business.
"Buyer's SEC Filings" means all forms, reports, and documents filed by
Buyer with the SEC pursuant to the Exchange Act and any form of prospectus filed
by Buyer with the SEC pursuant to Rule 424(b) under the Securities Act.
"Closing" means the consummation of the purchase and sale of the Assets
in accordance with the provisions of this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and "Code
Section" refers to a section of the Code.
"Compensation Arrangement" means any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, that provides to
employees, former employees, officers, directors, independent contractors, or
stockholders of any Seller any compensation or other benefits, whether deferred
or not, in excess of base salary or wages, including any bonus or incentive
plan, stock rights plan, deferred compensation arrangement, life insurance,
stock purchase plan, severance pay plan, change of control arrangements, and any
other employee fringe benefit plan.
"Consent" means any consent, permit, or approval of any Governmental
Authority or other third party (or any notice to any such party) necessary to
consummate the sale of the Assets from Sellers to Buyer and the other
transactions contemplated by this Agreement in a lawful manner and without
causing a default under, conflict with, or acceleration, violation, or
termination of, any legal requirement or contract or agreement to which any
Seller is a party or bound, including those listed on Schedule 4.2.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements and undertakings (including leases for personal or real
property and employment agreements), written or oral (including any amendments
and other modifications thereto) to which any of the Sellers is a party or that
are binding upon any of the Sellers or that relate to the Assets or the
Business.
"Employee Plan" means any retirement or welfare plan or arrangement or
any other employee benefit plan as defined in ERISA Section 3(3) that any of the
Sellers or any ERISA Affiliate sponsors or maintains or by which any of the
Sellers or any ERISA Affiliate is bound or to which any of the Sellers or any
ERISA Affiliate contributes or is required to contribute.
"Environmental Requirements" means all federal, state, local, and
foreign statutes, regulations, ordinances, and other provisions having the force
or effect of law, all judicial and
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administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise, or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and "ERISA Section" refers to a section of ERISA.
"ERISA Affiliate" means each entity that is treated as a single
employer with any of the Sellers under Code Section 414(b), (c), (m), (n), or
(o).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Authority" means any federal, state, or local political
subdivision or other governmental or regulatory department, court, commission,
board, bureau, agency, authority, or instrumentality, foreign or domestic.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Licenses" means all licenses, permits, authorizations, determinations,
and registrations issued by any Governmental Authority to any Seller in
connection with the conduct of the Business.
"Liens" means any mortgage, pledge, lien, charge, claim, option,
conditional sales agreement, security interest, or other encumbrance,
restriction, or limitation of any nature whatsoever.
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"Material Adverse Effect on Buyer" means a material adverse effect on,
or change in, the business, financial condition, net worth, assets, liabilities,
personnel, operations, or results of operations of Buyer or the ability of Buyer
to execute, deliver, or perform this Agreement and any of the other agreements
and documents contemplated hereby to which Buyer is a party.
"Material Adverse Effect on Sellers" means a material adverse effect
on, or change in, the business, financial condition, net worth, assets,
liabilities, personnel, operations, or results of operations of Sellers relating
to the Business, taken as a whole, or the ability of any Seller to execute,
deliver, or perform this Agreement and any of the other agreements and documents
contemplated hereby to which such Seller is a party.
"Military Business" means the business conducted by Tri-Ex Tower Inc.
relating to the engineering, fabrication, and construction of governmental and
military products, including tower trailers, crank up towers, QEAM and QEAM
derivatives, ENG masts, radar platform products, and amateur radio products.
"Multiemployer Plan" means a plan, as defined in ERISA Section 3(37) to
which any of the Sellers or any ERISA Affiliate has contributed, is
contributing, or is required to contribute.
"Multiple Employer Plan" means a plan, as defined in ERISA Section
4063(a), that any of the Sellers or any ERISA Affiliate sponsors or maintains or
to which any of the Sellers or any ERISA Affiliate contributed, is contributing,
or is required to contribute.
"Person" means any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization, governmental entity (or any department, agency, or
political subdivision thereof), or other type of entity.
"Permitted Liens" means liens for current Taxes not yet due and payable
and inchoate materialmen's, mechanics', workmen's, and repairmen's liens arising
in the ordinary course of Sellers' business consistent with past custom and
practice and which secure liabilities that are not in default.
"Real Property" means all real property, and all buildings and other
improvements thereon, used in connection with the Business.
"Real Property Interests" means all interests of any Seller in any of
the Real Property, including fee estates, leaseholds, and subleaseholds,
purchase options, licenses, easements, rights to access, and rights of way,
including the items listed in Schedule 4.14, together with any additions thereto
between the date of this Agreement and the Closing Date.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
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"Tax" or "Taxes" means any taxes, fees, duties, tariffs, imposts, and
other charges of any kind imposed by any governmental or taxing authority,
including federal, state, local, or foreign income, gross receipts, windfall
profits, severance, property, motor vehicle, ad valorem, value added,
production, sales, use, license, excise, franchise, capital, transfer,
recordation, payroll, employment, excise, severance, stamp, occupation, premium,
environmental (including taxes under Code Section 59A), customs duties, social
security (or similar), unemployment, disability, withholding, alternative or
add-on minimum tax, or other tax or governmental assessment, together with any
interest, additions, or penalties with respect thereto and any interest in
respect of such additions or penalties, whether disputed or not.
b. Terms Defined Elsewhere in this Agreement. In addition to the defined terms
in Section 1.1, the following is a list of terms used in this Agreement and a
reference to the Section of this Agreement in which each such term is defined:
Term Section
---- -------
Buyer Indemnified Parties Section 10.2
Cash Consideration Section 2.3
Claimant Section 10.4
COBRA Section 4.22
Escrow Agent Section 10.6
Escrow Agreement Section 10.6
Excluded Assets Section 2.2
Financial Statements Section 4.8
Indemnifying Party Section 10.4(a)
Losses Section 10.2
Seller, Sellers Recitals
Seller Indemnified Parties Section 10.3
Stock Consideration Section 2.3(c)
Termination Date Section 9.1(b)(i)
1.3 Clarifications. Words used herein, regardless of the gender and number
specifically used, shall be deemed and construed to include any other gender and
any other number as the context requires. The words "include," "includes," and
"including" are not limiting. Except as specifically otherwise provided in this
Agreement in a particular instance, a reference to a Section or Schedule is a
reference to a Section of this Agreement or a Schedule to this Agreement, and
the terms "hereof," "herein," and other like terms refer to this Agreement as a
whole, including the Schedules hereto, and not solely to any particular part
hereof.
Article 2
Purchase and Sale of Assets
2.1 Assets. Subject to the terms and conditions set forth in this Agreement,
Sellers hereby agree to sell, transfer, and deliver to Buyer on the Closing
Date, and Buyer agrees to purchase on the Closing Date, all of the tangible and
intangible assets owned or held by any Seller and used or held for use in
connection with the ownership and conduct of the Business (other than the
Excluded Assets), together with any additions thereto between the date of this
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Agreement and the Closing Date, free and clear of all Liens except for Permitted
Liens, including the following:
(a) the tangible assets listed on Schedule 4.16;
(b) the Real Property Interests;
(c) the Assumed Contracts;
(d) the Licenses;
(e) all Intellectual Property owned or held by any Seller and used or held for
use in connection with the ownership and conduct of the Business;
(f) all accounts receivable of the Sellers as of the Closing;
(g) all choses in action of any Seller relating to the Business or any of
the Assets;
(h) all deposits, advance payments, and prepaid expenses relating to the
Business; and
(i) all books and records relating to the Business.
2.2 Excluded Assets.The Assets shall exclude the following assets (collectively,
the "Excluded Assets"):
(a) each Seller's cash on hand as of the Closing and all other cash in any
Seller's bank or savings accounts; any insurance policies, letters of credit, or
other similar items and cash surrender value in regard thereto; and any stocks
(including shares of stock of any Seller), bonds, certificates of deposit, and
similar investments;
(b) each Seller's account books of original entry, general ledgers, and
financial records;
(c) all Contracts that are not Assumed Contracts;
(d) the equipment described on Schedule 2.2.
2.3 Consideration.
(a) In consideration of the sale, transfer, conveyance, assignment, and delivery
to Buyer of the Assets pursuant to this Agreement, and for the covenants of
Sellers under the Noncompetition Agreement described in Section 5.13(c), Buyer
agrees to pay and deliver to Sellers at the Closing the following consideration:
(i) $5,500,000 in cash; and
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(ii) 350,000 shares of Buyer's common stock, par value $0.001 per share.
(b) All payments and deliveries pursuant to Section 2.3(a) shall be apportioned
among Sellers in accordance with a schedule to be furnished by Sellers to Buyer
not later than five business days before the Closing Date.
(c) The shares of Buyer's common stock to be issued to Sellers pursuant to this
Section 2.3 are referred to in this Agreement as the "Stock Consideration," and
the cash to be paid to Sellers pursuant to this Section 2.3 is referred to in
this Agreement as the "Cash Consideration."
2.4 Assumption of Liabilities and Obligations. On the Closing Date, Buyer shall
assume and undertake to pay, discharge, and perform all obligations and
liabilities of Sellers under the Licenses and Assumed Contracts, to the extent
that such liabilities and obligations relate to the period on or after the
Closing Date. Except as provided in Section 5.11(b), Buyer shall not be required
to assume any obligations or liabilities of any Seller not described above in
this Section 2.4, including any obligations or liabilities arising under
capitalized leases or other financing agreements.
2.5 Allocation of Consideration. The consideration to be paid by Buyer for the
Assets shall be allocated among the Assets for all purposes (including
financial, accounting, and tax purposes) as agreed to between Buyer and Sellers.
The parties shall file their respective tax returns, including IRS Form 8594, in
a manner consistent with the such allocation.
Article 3
Representations and Warranties of Buyer
Buyer represents and warrants to Sellers that the statements contained
in this Article 3 are correct and complete:
3.1 Organization. Buyer is a corporation duly organized, validly existing,and in
good standing under the laws of the State of Delaware. Buyer is duly authorized
to conduct business and is in good standing under the laws of all jurisdictions
where such qualification is required, except where failure to be so qualified
would not have a Material Adverse Effect on Buyer. Buyer has full power and
authority necessary to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it.
3.2 Authorization of Transaction; Consents.Buyer has full power and authority to
execute and deliver this Agreement and the agreements contemplated hereby and to
perform its obligations hereunder and thereunder. This Agreement constitutes the
valid and legally binding obligation of Buyer, enforceable against Buyer in
accordance with its terms and conditions, except as the enforceability of this
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by the application of general equitable
principles. Except for any notices that may be required under federal or state
securities laws, and assuming the accuracy of the representations of Sellers in
Section 4.3, Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any
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Governmental Authority or other third party (including any shareholder of Buyer)
in order to consummate the transactions contemplated by this Agreement and the
agreements contemplated hereby in a lawful manner and without causing a default
under, conflict with, or acceleration, violation, or termination of any legal
requirement or any contract or agreement to which Buyer is a party or bound.
3.3 Noncontravention. Except for any notices that may be required under federal
or state securities laws, and assuming the accuracy of the representations of
Sellers in Section 4.3, neither the execution and delivery by Buyer of this
Agreement and the agreements contemplated hereby, nor the consummation of the
transactions contemplated hereby and thereby by Buyer, will (a) violate any
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any Governmental Authority to which Buyer is subject or
any provision of the certificate of incorporation or bylaws of Buyer or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by which its is
bound or to which any of its assets is subject.
3.4 Brokers' Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement except for fees payable to Communications Equity
Associates.
3.5 SEC Filings. As of their respective filing dates, none of Buyer's SEC
Filings contained any untrue statement of a material fact or omitted to state
any material fact required to be stated or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. As of their respective filing dates, each of Buyer's SEC
Filings complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, to the
extent applicable.
3.6 Issuance of Stock. The shares of common stock of the Buyer constituting the
Stock Consideration have been duly authorized and, when issued in accordance
with the terms of this Agreement, shall be validly issued and outstanding, fully
paid, and non-assessable, with no personal liability attaching to the ownership
thereof.
3.7 Absence of Changes. Since September 30, 1999, except as disclosed in Buyer's
SEC Filings, no Material Adverse Effect on Buyer has occurred.
3.8 Disclosure. The representations and warranties contained in this Article 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Article 3 not misleading.
Article 4
Representations and Warranties of Sellers
Sellers, jointly and severally, represent and warrant to Buyer that the
statements contained in this Article 4 are correct and complete:
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4.1 Authorization of Transaction. Each Seller has full power and authority to
execute and deliver this Agreement and the agreements contemplated hereby and to
perform its obligations hereunder and thereunder. This Agreement constitutes the
valid and legally binding obligations of each Seller, enforceable against it in
accordance with its terms and conditions, except as the enforceability of this
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by the application of general equitable
principles.
4.2 Noncontravention. Except as set forth in Schedule 4.2, neither the execution
and delivery of this Agreement and the agreements contemplated hereby by any
Seller, nor the consummation of the transactions contemplated hereby and thereby
by Sellers, will (a) violate any statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which any Seller is subject or any provision of any
Seller's organizational documents or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which any Seller is a party or by which any of them is bound or to which any
of their assets are subject. Except as set forth in Schedule 4.2, none of the
Sellers needs to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any Governmental Authority or other third
party in order for the parties hereto to consummate the transactions
contemplated by this Agreement in a lawful manner and without causing a default
under, conflict with, or acceleration, violation, or termination of, any legal
requirement or contract or agreement to which any of the Sellers is a party or
bound.
4.3 Investment. Each Seller (a) understands that the Stock Consideration has not
been, and will not be, registered under the Securities Act, or under any state
securities laws, and is being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (b) is
acquiring the Stock Consideration solely for its own account for investment
purposes and not with a view to the distribution thereof, (c) is a sophisticated
investor with knowledge and experience in business and financial matters, (d)
has received certain information concerning Buyer and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and the
risks inherent in holding the Stock Consideration, (e) is able to bear the
economic risk and lack of liquidity inherent in holding the Stock Consideration,
and (f) is an "accredited investor" as defined in Regulation D promulgated under
the Securities Act. Each Seller understands and agrees that the certificates
representing the Stock Consideration will bear a legend substantially to the
following effect:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR UNDER
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN
REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
THE CORPORATION IS AUTHORIZED TO ISSUE DIFFERENT CLASSES AND
SERIES OF CAPITAL STOCK. THE CORPORATION WILL FURNISH ANY
SHAREHOLDER WITHOUT CHARGE, UPON
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REQUEST IN WRITING, A STATEMENT OF THE DESIGNATIONS, RELATIVE
RIGHTS, PREFERENCES, AND LIMITATIONS APPLICABLE TO EACH CLASS
OF CAPITAL STOCK OF THE CORPORATION AND OF VARIATIONS IN
RIGHTS, PREFERENCES, AND LIMITATIONS DETERMINED FOR EACH
SERIES AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO
DETERMINE THE VARIATIONS FOR FUTURE SERIES.
4.4 Organization, Qualification, and Corporate Power. International Towers Inc.
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Each of S&W Communications Inc. and
International Tower Industries, Inc. is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Arizona
corporation. Tri-Ex Tower Inc. is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California. Each
of the Sellers is duly authorized to conduct business and is in good standing
under the laws of the jurisdictions set forth on Schedule 4.4, which are the
only jurisdictions where such qualification is required except where failure to
be so qualified would not have a Material Adverse Effect on Sellers. Each of the
Sellers has full power and authority necessary to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
Schedule 4.4 lists the directors and officers of each Seller.
4.5 Brokers'Fees. None of the Sellers has any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
4.6 Title to Assets. Each Seller has good and marketable title to the properties
and assets used by it. All of the Assets are free and clear of all Liens, except
for Permitted Liens and the Liens set forth in Schedule 4.6 which shall be
removed at or prior to Closing.
4.7 Subsidiaries. None of the Sellers owns any equity interest in any other
Person, except that International Towers Inc. owns all of the outstanding
capital stock of each of S&W Communications Inc., Tri-Ex Tower Inc., and
International Tower Industries, Inc.
4.8 Financial Statements. Schedule 4.8 consists of the following financial
statements of Sellers (collectively the "Financial Statements"): (a) audited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended December 31, 1998 and
December 31, 1997; and (b) unaudited consolidated balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for the
eleven months ended November 30, 1999. The Financial Statements (including the
notes thereto) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly in all material
respects the financial condition of Sellers as of such dates and the results of
operations of Sellers for such periods, except that the unaudited Financial
Statements are subject to normal year-end adjustments and do not include all of
footnotes that may be required by GAAP.
4.9 Subsequent Events. Since December 31, 1998, no Material Adverse Effect on
Sellers has occurred and, except as set forth on Schedule 4.9,
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(a) none of the Sellers has sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for fair consideration in the
ordinary course of Sellers' business consistent with past custom and practice;
(b) none of the Sellers has entered into any agreement, contract, lease, or
license outside the ordinary course of Sellers' business consistent with past
custom and practice;
(c) none of the Sellers has accelerated, terminated, modified, or cancelled any
material agreement, contract, lease, or license other than in the ordinary
course of Sellers' business consistent with past custom and practice;
(d) none of the Sellers has imposed any Lien upon any of its assets, tangible or
intangible, other than Permitted Liens;
(e) none of the Sellers has made any capital expenditure (or series of related
capital expenditures) involving more than $75,000;
(f) none of the Sellers has made any capital investment in, any loan or advance
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) involving more
than $75,000;
(g) none of the Sellers has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
(h) none of the Sellers has delayed or postponed the payment of accounts payable
or other liabilities other than in the ordinary course of Sellers' business
consistent with past custom and practice;
(i) none of the Sellers has cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims) involving more than
$75,000;
(j) none of the Sellers has granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(k) none of the Sellers has experienced any damage, destruction, or loss
(whether or not covered by insurance) to property having an aggregate value
greater than $75,000;
(l) none of the Sellers has granted any increase in the base compensation of any
of its directors, officers, independent contractors, or employees outside the
ordinary course of Sellers' business consistent with past custom and practice;
(m) none of the Sellers has adopted, amended, modified, or terminated any
Employee Plan or Compensation Arrangement (including any bonus, profit-sharing,
incentive, severance, termination, change of control or other plan, contract, or
commitment for the benefit of any of its directors, officers, or employees),
other than in the ordinary course of Sellers' business consistent with past
custom and practice;
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(n) none of the Sellers has made any other change in employment terms or
engagement terms for any of its directors, officers, independent contractors, or
employees outside the ordinary course of Sellers' business consistent with past
custom and practice;
(o) no other material event, incident, action, or transaction involving any of
the Sellers has occurred outside the ordinary course of Sellers' business
consistent with past custom and practice; and
(p) none of the Sellers has committed to do any of the foregoing.
4.10 Undisclosed Liabilities. Except as set forth on Schedule 4.10, none of the
Sellers has any liability or obligation (and there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against it giving rise to any liability or obligation), except
for (a) liabilities set forth on the balance sheet at November 30, 1999 included
in the Financial Statements, and (b) liabilities that arose after November 30,
1999 in the ordinary course of Sellers' business consistent with past custom and
practice, which in the aggregate do not exceed $100,000 (none of which results
from, arises out of, or relates to any breach of contract, breach of warranty,
tort, infringement, or violation of law).
4.11 Legal Compliance. Each Seller has complied in all material respects with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of all Governmental
Authorities, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
4.12 Tax Matters.
(a) Each of the Sellers has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(b) There are no proposed reassessments of any property owned by any Seller that
would affect the Taxes of Buyer after the Closing Date. There are no Tax liens
on any assets of any Seller, other than liens for current Taxes not yet due and
payable.
(c) None of the Sellers has been a "United States real property holding
corporation," within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii).
4.13 Regulatory Requirements. Schedule 4.13 also sets forth a list of all
Licenses of each Seller together with all amendments and modifications thereto
and all applications relating thereto. Such Licenses constitute all of the
licenses, permits, and authorizations necessary to conduct the business of the
Sellers as currently operated in compliance with all laws, rules, and
regulations of all Governmental Authorities. Each of the Sellers is in
compliance with all of the requirements of the Licenses. All such Licenses are
valid and in full force and effect and no suspension, cancellation, or
termination of any of the Licenses is pending or, to the knowledge of Sellers,
threatened. Each Seller has filed all returns, reports and statements required
to be filed by it with the FCC, the FAA, and any other Governmental Authority.
All of such returns, reports,
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and statements are complete and correct as filed. None of the Sellers owns,
operates, manages, or leases any communications tower.
4.14 Real Property.
(a) Schedule 4.14 contain a true and complete description of all Real Property
and Real Property Interests.
(b) With respect to each Real Property Interest that is a leasehold, a Seller
has a valid leasehold or subleasehold interest and assuming compliance by such
Seller with the terms of the lease or sublease, a right of quiet enjoyment of
the underlying Real Property.
(c) There are no pending or, to the knowledge of Sellers, threatened
condemnation proceedings, lawsuits, or administrative actions relating to any
Real Property or Real Property Interest or other matters affecting adversely the
current use, occupancy, or value thereof.
d) The legal description of any Real Property contained in the deed or lease or
sublease thereof describes such Real Property fully and adequately, the
buildings and improvements are located within the boundary lines of the
described parcels of land, are not in violation of applicable setback
requirements, zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming use"
or "permitted non-conforming structure" classifications), and do not encroach on
any easement which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of the land, and
the property is not located within any flood plain or subject to any similar
type restriction for which any permits or licenses necessary to the use thereof
have not been obtained.
(e) Except as disclosed on Schedule 4.14, there are no leases, subleases,
licenses, concessions, or other agreements, written or oral, granting to any
Person the right of use or occupancy of any portion of any Real Property other
than Sellers.
(f) No Real Property Interest owned by any Seller is subject to any outstanding
options or rights of first refusal to purchase such Real Property Interest, or
any portion thereof or interest therein.
(g) There are no Persons (other than the Sellers) in possession of any Real
Property, other than tenants under any leases or licenses disclosed on Schedule
4.14.
(h) Except as disclosed on Schedule 4.14, all facilities located on any Real
Property are supplied with utilities and other services necessary for the
operation of such facilities, including gas, electricity, water, telephone,
sanitary sewer, and storm sewer, all of which services are adequate in
accordance with all applicable laws, ordinances, rules, and regulations and are
provided by way of public roads or permanent, irrevocable, appurtenant easements
benefiting such Real Property; the facilities are in good order and repair, and
in a good, safe, substantial condition, free from defects; all plumbing,
heating, electrical, and air conditioning systems and equipment and systems
therein are in good order and repair and operating condition; the facilities are
constructed and completed strictly in compliance with all
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applicable laws and accepted standards of good materials and workmanship; all
electrical, plumbing, heating, and air conditioning and exterior drainage
systems in or on the Real Property are in good condition and working order.
(i) All Real Property abuts on and has direct vehicular access to a public road,
or has access to a public road by way of a permanent, irrevocable, appurtenant
easement benefiting the Real Property, and access to the Real Property is
provided by paved public right-of-way with adequate curb cuts available.
(j) Sellers have delivered to Buyer true and complete copies of any deed, lease,
or sublease for each Real Property Interest.
4.15 Intellectual Property. Each Seller owns all Intellectual Property necessary
for the operation of the Business as conducted by it. None of the Sellers has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any rights of third parties in any Intellectual Property, and none
of the Sellers has received any complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation (including any
claim that any of the Sellers must license or refrain from using any
Intellectual Property rights owned by any third party). To the knowledge of
Sellers, no third party has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property owned by any Seller.
Schedule 4.15 identifies all registered Intellectual Property of the Sellers and
each pending application therefor and identifies each license, agreement, or
other permission that any Seller has granted to any third party with respect to
any Intellectual Property.
4.16 Tangible Assets.
(a) Each Seller owns or leases all buildings, machinery, equipment, and other
tangible assets necessary for the conduct of its business as now conducted. All
tangible assets are free from material defects, have been maintained in
accordance with normal industry practice, are in good operating condition and
repair, and are suitable for the purposes for which they are used. Schedule 4.16
sets forth a list of all material tangible assets of each Seller, including the
location thereof.
(b) The inventory of each Seller consists of raw materials and supplies,
manufactured and purchased parts, goods in process, and finished goods, all of
which are merchantable and fit for the purpose for which they were procured or
manufactured, subject only to the reserve for inventory writedown set forth on
the balance sheet at November 30, 1999 included in the Financial Statements as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Sellers.
4.17 Contracts. Schedule 4.17 contains a true and complete list of all Contracts
except for Contracts entered into in the ordinary course of Sellers' business
consistent with past custom and practice that involve annual expenditures of no
more than $20,000 per year per Contract or $50,000 per year collectively for all
such Contracts. Sellers have delivered to Buyer a correct and complete copy of
each written Contract and a written summary setting forth the terms and
conditions of each oral Contract. Each Contract is legal, valid, binding,
enforceable against each party thereto, and in full force and effect in
accordance with its terms. Each Contract will
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continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
by this Agreement. No party is in material breach or default under any Contract,
and to the knowledge of Sellers, no event has occurred that with notice or lapse
of time would constitute a breach or default under any Contract, or permit
termination, modification, or acceleration, or reduce the amount of payments due
any Seller, or give rise to any liquidated damages, under any Contract. No party
to any Contract has repudiated any provision of the Contract.
4.18 Notes and Accounts Receivable; Accounts Payable. All notes, accounts
receivable, unbilled work in process, and other debts due any Seller are
reflected properly on its books and records and are valid receivables. To the
knowledge of Sellers, except as described on Schedule 4.18, none of such amounts
due any Seller are subject to setoffs or counterclaims, and all such amounts are
current and collectible, and will be collected in accordance with their terms at
their recorded amounts, subject only to the reserve for bad debts set forth on
the face of the balance sheet at November 30, 1999 included in the Financial
Statements. Each Seller has paid on a timely basis all of its accounts payable
and such accounts payable arose in the ordinary course of Sellers' business
consistent with past custom and practice.
4.19 Insurance.
(a) Schedule 4.19 sets forth the following information with respect to each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) to which
any of the Sellers is a party, a named insured, or otherwise the beneficiary of
coverage:
(i) the name of the insurer, the name of the policyholder, and the name of
each covered insured;
(ii) the period of coverage;
(iii) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
(iv) a description of any retroactive premium adjustments or other loss-sharing
arrangements.
(b) Each of the Sellers has been covered during the past two years by insurance
in scope and amount customary and reasonable for the businesses in which it has
engaged during such period. Schedule 4.19 describes any self-insurance
arrangements affecting any of the Sellers. Except as set forth on Schedule 4.19,
none of the Sellers has been subject to, nor has any insurer defended or
settled, on behalf of any Seller or paid out money on behalf of any Seller with
respect to any workers compensation claim or any claim under any insurance
policy where the aggregate amount at issue exceeded $25,000.
4.20 Litigation. Schedule 4.20 sets forth each instance in which any of the
Sellers (a) is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (b) is a party to or, to the knowledge of Sellers, is
threatened to be made a party to any action, suit,
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proceeding, hearing or investigation of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator, and none of the Sellers is aware of any
basis for the same. None of the actions, suits, proceedings, hearings, and
investigations set forth in Schedule 4.20 could result in any Material Adverse
Effect on Sellers. No Seller has any reason to believe that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened against
any of the Sellers.
4.21 Employees.
(a) Schedule 4.21 contains a correct and complete list of (i) the names and
positions of each of the employees, officers, directors, and Affiliates of any
Seller whose services relate primarily to the Business, (ii) the annual salary
or hourly wage of each such person, and (iii) any oral or written contracts or
agreements that provide for employment of any individual as an employee or
independent contractor of any Seller and which does not permit the termination
of such contract or agreement, without penalty, upon no more than thirty days'
prior notice.
(b) No employees of any Seller are members of any collective bargaining unit
with respect to their employment with such Seller. There are no collective
bargaining agreements and no contracts or agreements with labor unions, relating
to, involving, or affecting the employees of any of the Sellers, and the none of
the Sellers has any obligation to bargain with any labor organization with
respect to any such persons. None of the Sellers is currently, nor during the
past three years has it been, the subject of any certification or
decertification drive, and, to the knowledge of Sellers, no such organizing
activity is threatened. To the knowledge of Sellers, no union or other
collective bargaining representative claims to represent, has been certified as
representing, or has requested that any of the Sellers recognize such union or
collective bargaining representative as representing any of the employees of
such Seller for collective bargaining purposes. No Seller has recognized or
agreed to recognize or is required to recognize any union as the collective
bargaining representative for any employee of any Seller.
(c) There are no unfair labor practice charges pending against any Seller and,
to the knowledge of Sellers, there are neither any demands for recognition or
any other requests or demands from a labor organization for representative
status with respect to any persons employed by any Seller, and no such activity
is threatened. Neither any Seller nor the Business is currently, or during the
past three years has been, the subject of any strike, work stoppage, picketing
or work slowdown, or other labor dispute, controversy, or proceeding, and to the
knowledge of Sellers no such activity is threatened. Each Seller has complied in
all material respects with all laws relating to the employment and safety of
labor, including provisions relating to wages, hours, benefits, collective
bargaining, discrimination, the payment of social security and other payroll
expenses, and all applicable occupational safety and health acts, laws, and
regulations. None of the Sellers is subject to any investigation or other
challenge relating to the misclassification of employees as independent
contractors. None of the Sellers is required to comply with any government
contractor affirmative action obligations.
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4.22 Employee Benefits.
(a) Each Employee Plan and Compensation Arrangement is listed and described in
Schedule 4.22. Sellers have furnished to Buyer complete and accurate copies of
any written Employee Plans and Compensation Arrangements (or related insurance
policies), complete descriptions of copies of any unwritten Employee Plans or
Compensation Arrangements, and all employee handbooks or similar documents
describing such Employee Plans and Compensation Arrangements. Except as
disclosed in Schedule 4.22, neither any Seller nor any ERISA Affiliate is a
party to or has in effect or to become effective after the date of this
Agreement any plan, arrangement, or other scheme that will become an Employee
Plan or Compensation Arrangement (including any bonus, cash, or deferred
compensation, severance, medical, pension, profit sharing or thrift, stock
option, employee stock ownership, life or group insurance, death benefit,
vacation, sick leave, disability, or trust agreement or arrangement), or any
amendment to an Employee Plan or Compensation Arrangement.
(b) Sellers have furnished to Buyer the Forms 5500 filed for each of the
Employee Plans (including all attachments and schedules), actuarial reports,
summaries of material modifications, summary annual reports, and any other
employer notices (including, governmental filings and descriptions of material
changes to Employee Plans or Compensation Arrangements) relating to the Employee
Plans for the last three plan years, and the current summary plan descriptions.
(c) Each Employee Plan and Compensation Arrangement has been administered in
compliance with its terms and in material compliance with the provisions of
ERISA, the Code, the Age Discrimination in Employment Act, and any other
applicable federal or state laws.
(d) Neither any Seller nor any ERISA Affiliate (i) is contributing to, is
required to contribute to, or has contributed within the last seven years to,
any Multiemployer Plan, Multiple Employer Plan, or employee pension benefit
plan, as defined under ERISA Section 3(2), that was subject to Title IV of
ERISA, (ii) has incurred within the last seven years, or reasonably expects to
incur, any "withdrawal liability," as defined under ERISA Section 4201 et seq.,
or (iii) has ever engaged in a transaction to evade liability, as described
under ERISA Section 4069.
(e) Each Employee Plan, to the extent such Employee Plan is intended to be
tax-qualified, satisfies all minimum coverage and minimum participation
requirements, if any, imposed on such Employee Plan by the applicable terms of
the Code and ERISA.
(f) No Seller is aware of the existence of any governmental inspection,
investigation, audit, or examination of any Employee Plan or Compensation
Arrangement or of any facts that would lead them to believe that any such
governmental inspection, investigation, audit, or examination is pending or
threatened. There exists no action, suit, or claim (other than routine claims
for benefits) with respect to any Employee Plan or Compensation Arrangement
pending or, to the knowledge of Sellers, threatened against any such plan or
arrangement, and no Seller knows of any facts that could give rise to any such
action, suit, or claim.
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(g) Except as described in Schedule 4.22, neither any of the Sellers nor any
ERISA Affiliate sponsors, maintains, or contributes to any Employee Plan or
Compensation Arrangement that provides medical or death benefit coverage to
former employees of any of the Sellers, except to the extent required by COBRA.
(h) With respect to each Employee Plan and, to the extent applicable, each
Compensation Arrangement, (i) each Employee Plan that is intended to be
tax-qualified, and each amendment thereto, is the subject of a favorable
determination letter, and no plan amendment that is not the subject of a
favorable determination letter would affect the validity of an Employee Plan's
letter; (ii) no condition or event exists or is expected to occur that could
subject, directly or indirectly, any Seller or any ERISA Affiliate to any
material liability, contingent or otherwise, or the imposition of any lien on
the assets of any of the Sellers or any ERISA Affiliate under the Code or Title
IV of ERISA whether to the Pension Benefit Guaranty Corporation, the Internal
Revenue Service, or any other person; (iii) no Prohibited Transaction (as
defined in ERISA Section 406 and Code Section 4975) has occurred that would
subject any of the Sellers or any ERISA Affiliate to any liability; and (iv) all
contributions, premiums, payments, or liabilities accrued, in whole or in part,
under each Employee Plan or Compensation Arrangement or with respect thereto as
of the Closing will be paid by Sellers, on or prior to Closing. Each Employee
Plan or Compensation Arrangement that provides severance or severance like
benefits may be terminated by any Seller without any penalty and without any
liability to pay severance benefits in connection with any terminations of
employment that occur after the date such Employee Plan or Compensation
Arrangement is terminated. Each Employee Plan or Compensation Arrangement that
is a "group health plan," as defined under ERISA Section 601 et seq. and Code
Section 4980B ("COBRA") has provided "continuation coverage" to each "covered
employee" and "qualified beneficiary" entitled thereto (with each term defined a
under COBRA).
(i) Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (i) result in any material payment
(including severance or unemployment compensation) becoming due to any director
or employee of any Seller or any ERISA Affiliate; (ii) result in the
acceleration of vesting under any Employee Plan or Compensation Arrangement; or
(iii) materially increase any benefits otherwise payable under any Employee
Plan.
4.23 Environmental Matters.
(a) Each Seller and all Real Property is in compliance in all material respects
with all Environmental Requirements. To the knowledge of Sellers, each
predecessor of the Sellers as the owner or occupier of any Real Property has
complied in all material respects with all Environmental Requirements. No Seller
has any material liability under any Environmental Requirements.
(b) Each of the Sellers has obtained and complied with, and is in compliance
with, in all material respects all permits, licenses, and other authorizations
that are required pursuant to Environmental Requirements for the occupation of
its facilities and the operation of its business.
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(c) Except as set forth in Schedule 4.23, none of the Sellers has received any
written or oral notice, report, or other information regarding any actual or
alleged violation of Environmental Requirements or any liability or obligation,
including any investigatory, remedial, or corrective obligations, relating to
any of them or their facilities arising under Environmental Requirements.
(d) Except as set forth in Schedule 4.23, to the knowledge of Sellers, none of
the following exists at any property or facility owned or operated by any of the
Sellers: (i) underground storage tanks, (ii) asbestos-containing material in any
form or condition, (iii) materials or equipment containing polychlorinated
biphenyls, or (iv) landfills, surface impoundments, or disposal areas.
(e) Except as set forth in Schedule 4.23, to the knowledge of Sellers, none of
the Sellers or their respective predecessors has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any
substance, including any hazardous substance, or owned or operated any property
or facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages, or attorney fees, pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended, or any other
Environmental Requirements.
(f) None of the Sellers has, either expressly or, to the knowledge of Sellers,
by operation of law, assumed or undertaken any liability, including any
obligation for corrective or remedial action, of any other Person relating to
Environmental Requirements.
4.24 Certain Business Relationships with the Sellers. Except as set forth in
Schedule 4.24, no Affiliate of any Seller (other than another Seller) has been
involved in any business arrangement or relationship with any of the Sellers
within the past 12 months, and no Affiliate of any Seller (other than another
Seller) owns any asset, tangible or intangible, that is used in the Business.
4.25 Product and Service Warranties. Each product manufactured, sold, leased or
delivered, and each service performed, by any of the Sellers has been in
conformity in all material respects with all applicable contractual commitments
and all express and implied warranties, and none of the Sellers has any
liability or obligation (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any liability or obligation) for replacement
or repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the balance sheet at November
30, 1999 included in the Financial Statements as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
the Sellers. No product manufactured, sold, leased, or delivered, and no service
performed, by any of the Sellers is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale, lease. or
service. Schedule 4.25 includes copies of the standard terms and conditions of
sale and service for each of the Sellers (containing applicable guaranty,
warranty, and indemnity provisions).
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4.26 Year 2000 Compliance. To the knowledge of Sellers, all computer software
programs, including all source code, object code, and documentation related
thereto, hardware, databases, and embedded control systems used by any Seller
accurately process date and time data (including calculating, comparing, and
sequencing) from, into, and between the years 1999 and 2000, accurately perform
leap year calculations, and accurately operate with other software and hardware
that use four digits to represent years.
4.27 Disclosure. The representations and warranties contained in this Article 4
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Article 4 not misleading.
Article 5
Covenants
5.1 Conduct of Business of the Sellers.
(a) Except as contemplated by this Agreement or with the prior written consent
of Buyer, prior to the Closing, Sellers shall conduct their operations only in
the ordinary course of business consistent with past custom and practice, and
Sellers will use their reasonable best efforts to preserve intact the business
and organization of each Seller, to keep available the services of the present
officers and key employees of each Seller, and to preserve the good will of
customers, suppliers, and all other persons having business relationships with
any Seller.
(b) Except as otherwise contemplated by this Agreement, prior to the Closing,
Sellers shall not, without the prior written consent of Buyer:
(i) increase the compensation or fringe benefits payable or to become payable to
its directors, officers, or employees, or pay any benefit not required by any
existing Employee Plan or Compensation Arrangement or grant any severance or
termination pay to (except pursuant to existing Employee Plans or Compensation
Arrangements), or enter into, review, terminate, amend, or waive any material
provision of any employment or severance agreement with, any director, officer,
or other employee of any Seller or establish, adopt, enter into, or amend any
collective bargaining agreement, employment agreement, termination agreement,
Employee Plan, or Compensation Arrangement;
(ii) acquire, sell, lease, license, transfer, pledge, encumber, grant, or
dispose of (whether by merger, consolidation, purchase, sale, or otherwise) any
assets (other than the acquisition and sale of inventory or the disposition of
used or excess equipment and the purchase of raw materials, supplies, and
equipment, in either case in the ordinary course of Sellers' business consistent
with past custom and practice);
(iii) incur or assume any indebtedness for borrowed money, assume, guarantee,
endorse, or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, or make any
loans, advances or capital contributions to, or investments in, any other Person
except for loans and advances between any of the Sellers;
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(iv) change any accounting policies or procedures, other than as required by
GAAP;
(v) waive,release, assign, settle, or compromise any material rights, claims or
litigation;
(vi) take any action that would cause any representation or warranty set forth
in Article 4 to be untrue if made following the taking of such action;
(vii) enter into any Contract except for any Contract entered into in the
ordinary course of Sellers' business consistent with past custom and practice
under which the consideration payable or receivable by a Seller does not exceed
$50,000 per year per Contract or $125,000 per year in the aggregate for all such
Contracts or amend or terminate any existing Contract;
(viii) make any material increase in the size or change the composition of the
workforce of any Seller; or
(ix) voluntarily recognize any union or other collective bargaining
representative as the collective bargaining representative for any of the
employees of any Seller.
(c) Except as otherwise contemplated by this Agreement, prior to the Closing,
Sellers shall:
(i) maintain their assets in good operating condition (ordinary wear and tear
excepted), with inventories of spare parts and expendable supplies being
maintained at levels consistent with past practices, and make all repairs or
replacements necessary to restore any assets to the condition represented in
Article 4 of this Agreement;
(ii) maintain the existing insurance policies in full force and effect;
(iii) maintain the books and records of each Seller in accordance with past
practices;
(iv) furnish to Buyer within twenty days after the end of each month financial
statements for the month just ended containing balance sheets and statements of
income and cash flow for such period that shall comply with the representations
set forth in Section 4.8;
(v) comply in all material respects with all laws, rules, and regulations and
with all Contracts and keep in full force and effect all Licenses;
(vi) pay all of the obligations and liabilities of the Sellers on a timely
basis; and
(vii) preserve the corporate existence of each Seller.
5.2 Other Actions. Prior to the Closing, neither Sellers nor Buyer shall take
any action that would, or that would reasonably be expected to, result in any of
the conditions to the
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transactions contemplated hereby set forth in Article 6 or Article 7 hereof not
being satisfied or satisfaction thereof being delayed.
5.3 Notification of Certain Matters. Sellers shall promptly notify Buyer of the
occurrence of any fact or event that would reasonably be expected (a) to cause
any representation or warranty of Sellers contained in this Agreement to be
untrue if made after the occurrence of such fact or event, (b) to cause any
covenant or agreement of any Seller hereunder not to be complied with, or (c) to
cause a Material Adverse Effect on Sellers. Buyer shall promptly notify Sellers
of the occurrence of any fact or event that would reasonably be expected (a) to
cause any representation or warranty of Buyer contained in this Agreement to be
untrue if made after the occurrence of such fact or event, (b) to cause any
covenant or agreement of Buyer hereunder not to be complied with, or (c) to
cause a Material Adverse Effect on Buyer.
5.4 Access to Information. Sellers shall (a) provide to Buyer (and its officers,
directors, employees, accountants, consultants, legal counsel, financial
advisors, investment bankers, agents, and other representatives access at
reasonable times to the assets and properties, personnel and the books and
records of each Seller and (b) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel, and other
aspects of the Sellers as Buyer or its representatives may reasonably request.
No investigation conducted under this Section 5.4 shall affect or be deemed to
modify any representation or warranty made in this Agreement.
5.5 Cooperation; Further Assurances.
(a) Subject to the terms and conditions provided in this Agreement and to
applicable legal requirements, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done and to assist and cooperate with the other parties
hereto in doing, as promptly as practicable, all things necessary, proper, or
advisable under applicable laws and regulations to ensure that the conditions
set forth in Article 6 or Article 7 are satisfied and to consummate and make
effective the transactions contemplated by this Agreement. No party to this
Agreement shall take any action that is inconsistent with its obligations under
this Agreement. Notwithstanding the foregoing, Buyer shall not be required to
expend any monies to obtain any Consent or to accept any adverse condition or
change in terms to obtain any Consent.
(b) Sellers will cooperate in all commercially reasonable respects with Buyer
and its counsel and accountants in connection with any filing to be made by
Buyer with the SEC. Sellers shall provide to Buyer such information relating to
the Sellers and the Business as Buyer may reasonably request. All costs,
expenses, and fees incurred in connection with the preparation and inclusion by
Buyer of such information in any such filing shall be borne by Buyer. Sellers
hereby consent to the inclusion by Buyer of financial statements of the Sellers,
if requested to be so included by Buyer, in any filing to be made by Buyer with
the SEC or pursuant to applicable securities laws, including the Securities Act
and the Exchange Act. All costs, expenses, and fees incurred in connection with
the preparation and inclusion by Buyer of financial statements of the Sellers in
any such filing shall be borne by Buyer. Sellers agree to use commercially
reasonable efforts to obtain the consent of the independent public accountants
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of the Sellers to the inclusion of such financial statements in any filing to be
made by Buyer; provided, however, Sellers shall not be required to expend any
monies to obtain such consent.
5.6 Public Announcements. The initial press release concerning the sale of the
Assets to Buyer shall be a joint press release and, thereafter, the parties
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement prior to such consultation, except to the extent
public disclosure may be required or advisable under applicable law, including
under the securities laws or the requirements of any securities exchange, as
determined by the disclosing party in good faith.
5.7 Confidentiality. Except for any disclosures to officers, directors,
employees, advisors, and representatives that may be appropriate in furtherance
of this transaction and except for disclosures that may be required to comply
with applicable law, including securities laws or the requirements of any
securities exchange, each party hereto shall use commercially reasonable efforts
to keep confidential all information of a confidential nature obtained by it
from the other parties hereto in connection with the transactions contemplated
by this Agreement, and if this Agreement is terminated, each party hereto will
return to each other party all documents and other materials obtained from such
other party in connection with this Agreement.
5.8 Expenses; Taxes. Whether or not the transaction contemplated by this
Agreement is consummated, all expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, except that all transfer Taxes, if any, payable as a
result of this transaction shall be borne by Sellers.
5.9 Other Buyer Transactions. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall prevent or restrict Buyer and its
subsidiaries from engaging in any merger, acquisition, business combination, or
other transaction that does not prevent Buyer (or its successor) from complying
with its obligations under this Agreement.
5.10 Consents. Sellers shall give all notices of this Agreement or the
transaction contemplated hereby to Governmental Authorities and other third
parties to the extent required by any law, rule, regulation, or Contract.
Sellers shall use commercially reasonable efforts to obtain, prior to Closing,
all of the Consents without any change in the terms of any Contract or License
to which such Consent relates. Sellers shall promptly notify Buyer of any
difficulty in obtaining any Consents.
5.11 Employee Matters.
(a) Buyer may offer employment, effective as of the Closing, to any employee of
any Seller who performs services in connection with the Business. Buyer may, at
such times as will be arranged by it with Sellers, meet with the employees of
the Sellers prior to Closing. The terms and conditions of employment offered by
Buyer to any such employee will be established by Buyer in its discretion.
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(b) At the Closing, Buyer will assume all liabilities of Sellers that have
accrued since January 1, 2000, in accordance with the Compensation Arrangements
described in Schedule 4.22, to provide vacation benefits and sick leave to any
employees of Sellers who are employed by Buyer from and after the Closing.
(c) Except as provided in Section 5.11(b), Sellers will retain and Buyer will
not assume any liability or obligation of Sellers to or in connection with any
employee or former employee of any Seller. Without limiting the generality of
the foregoing, each Seller will remain solely responsible for any obligations
and liabilities, including those pursuant to the Code, ERISA, and any and all
federal, state, and local discrimination laws, in respect of all employees and
former employees of such Seller, and their respective beneficiaries and
dependants, relating to or arising in connection with, during the course of, or
as a result of (i) the employment or the actual or constructive termination of
employment of any such employee by such Seller (including in connection with the
consummation of the transactions contemplated by this Agreement); (ii) the
participation in or accrual of benefits or compensation under, or the failure to
participate in or to accrue compensation or benefits under, any Employee Plan of
any Seller or ERISA Affiliate; (iii) accrued but unpaid salaries, wages,
bonuses, incentive compensation, vacation or sick pay (except as provided in
Section 5.11(b)), or other Compensation Arrangements of any Seller; and (iv) the
provisions of health continuation coverage for such employees required by COBRA.
(d) At Closing, Sellers will deliver to Buyer a complete and accurate list of
all covered employees and qualified beneficiaries, as such terms are defined
under Code Section 4980B, as of the date thereof (including covered employees
and qualified beneficiaries who are in the election period for continuation
coverage but who have not yet elected continuation coverage), the date of the
applicable qualifying event, and the expected duration of such coverage.
(e) At Buyer's request, Sellers will use their commercially reasonable efforts
to assist Buyer in obtaining from the Sellers' current insurance carriers
insurance to provide medical, death, and disability benefits to the former
employees of Sellers who are hired by Buyer immediately following the Closing
that are substantially identical to the benefits such carriers currently provide
to employees of Sellers.
(f) This Section 5.11 will operate exclusively for the benefit of the parties to
this Agreement and not for the benefit of any other person or entity, including
any employee or former employee of any Seller who performs or performed services
in connection with the Business.
5.12 Real Estate Matters.
(a) Sellers will obtain the following title insurance commitments, at least ten
days prior to Closing and the following title insurance policies and riders
before the Closing:
(i) with respect to each parcel of Real Property that any Seller owns, an ALTA
Owner's Policy of Title Insurance Form B-1987 (or equivalent policy reasonably
acceptable to Buyer if the Real Property is located in a state in which an ALTA
Owner's Policy
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of Title Insurance Form B-1987 is not available) issued by a title insurer
reasonably satisfactory to Buyer, in such amount as Buyer reasonably may
determine to be the fair market value of such Real Property (including all
improvements located thereon), insuring title to such Real Property to be in
Buyer as of the Closing (subject only to Permitted Liens);
(ii) with respect to each parcel of Real Property that any Seller leases or
subleases, an ALTA Leasehold Owner's Policy of Title Insurance-1987 (or
equivalent policy reasonably acceptable to the Buyer if the Real Property is
located in a state in which an ALTA Leasehold Owner's Policy of Title
Insurance-1987 is not available) issued by a title insurer reasonably
satisfactory to the Buyer in such amount as the Buyer reasonably may determine
(taking into account the time cost of money and such other factors as whether
the fair market rental value of the premises exceeds the stipulated
consideration in the lease or sublease, whether the tenant or subtenant has any
option to renew or extend, whether the tenant or subtenant owns any improvements
located on the premises, whether the tenant or subtenant is permitted to
sublease, and whether the tenant or subtenant would owe any amount under the
lease or sublease if evicted), insuring title to the leasehold or subleasehold
estate to be in Buyer as of the Closing (subject only to Permitted Liens).
(b) Each title insurance policy delivered under Section 5.12(a) shall (i) insure
title to the applicable Real Property Interest and all recorded easements
benefiting such Real Property Interest, (ii) contain an "extended coverage
endorsement" insuring over the general exceptions contained customarily in such
policies, (iii) contain an ALTA Zoning Endorsement 3.1 (or equivalent), (iv)
contain an endorsement insuring that the Real Property described in the title
insurance policy is the same Real Property as shown on the Survey delivered
pursuant to Section 5.12(c) with respect to such property, (v) contain an
endorsement insuring that each street adjacent to the Real Property is a public
street and that there is direct and unencumbered pedestrian and vehicular access
to such street from the Real Property, (vi) contain an inflation endorsement
providing for annual adjustments in the amount of coverage corresponding to the
annual percentage increase, if any, in the United States Department of Commerce
Composite Construction Cost Index (Base Year = 1999), (vii) if the Real Property
consists of more than one record parcel, contain a "contiguity" endorsement
insuring that all of the record parcels are contiguous to one another, and
(viii) contain a "non-imputation" endorsement to the effect that title defects
known to the officers, directors, and stockholders of the owner prior to the
Closing shall not be deemed "facts known to the insured" for purposes of the
policy.
(c) With respect to each parcel of Real Property as to which a title insurance
policy is to be procured pursuant to Section 5.12(a) above, Sellers will procure
at least ten days prior to the Closing a current survey of the Real Property
certified to Buyer, prepared by a licensed surveyor and conforming to current
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads. No such Survey shall disclose any
survey defect or encroachment from or onto the Real Property which has not been
cured or insured over prior to the Closing.
(d) Sellers shall provide to Buyer copies of (i) Phase I environmental surveys,
reasonably acceptable to Buyer, conducted by a company reasonably acceptable to
Buyer, with
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respect to each parcel of Real Property, and (ii) to the extent available, all
environmental surveys or audits performed during the past five years in
connection with each parcel of Real Property, and the results of any existing
search of the public records of the authorities in the relevant jurisdictions
responsible for environmental matters with respect to any proceeding or action
affecting any such parcel of Real Property, and any correspondence to or from
any Seller relating to any environmental matter.
5.13 Additional Post-Closing Covenants.
(a) General. If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other party reasonably may request, all at the
sole cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Article 10).
(b) Transition. Sellers shall not take any action that is designed or intended
to have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of any of the Sellers from maintaining the same
business relationships with Buyer after the Closing as it maintained with the
Sellers prior to the Closing. Sellers will refer all customer inquiries relating
to the Business to the Buyer from and after the Closing.
(c) Noncompetition Agreement. At the Closing, Buyer, Sellers, Xxxxxxx Xxxxxxx,
and Xxxxxx Xxxxx will enter into a Noncompetition Agreement substantially in the
form of Exhibit A.
5.14 Stock Consideration.
(a) Sellers will not sell, transfer, or otherwise dispose of any of the shares
of Buyer's common stock included in the Stock Consideration unless the shares
have been registered under the Securities Act and applicable state securities
laws or an exemption from registration is available.
(b) Prior to transferring any of the shares of Buyer's common stock included in
the Stock Consideration to any holder of any debt or equity interest issued by
any Seller, such Seller will deliver to Buyer a certificate from the transferee
to the effect that the transferee:
(i) understands that such shares have not been, and will not be, registered
under the Securities Act or under any state securities laws;
(ii) is acquiring such shares solely for its own account for investment purposes
and not with a view to the distribution thereof;
(iii) is a sophisticated investor with knowledge and experience in business and
financial matters;
(iv) has had the opportunity to obtain from the Company any information it
desires in order to evaluate the merits and the risks inherent in holding such
shares;
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(v) is able to bear the economic risk and lack of liquidity inherent in holding
such shares;
(vi) is an "accredited investor" as defined in Regulation D promulgated under
the Securities Act; and
(vii) understands that certificates representing such shares will bear a legend
as described in Section 4.3.
Article 6
Conditions to the Obligations of Buyer
The obligations of Buyer to consummate the transactions provided for in
this Agreement are subject to all of the conditions set forth below in this
Article 6, any of which may be waived by Buyer.
6.1 Performance by Sellers. Sellers shall have performed in all material
respects all of their agreements and covenants under this Agreement required to
be performed by them at or prior to the Closing.
6.2 Truth of Representations and Warranties. The representations and warranties
of Sellers contained in this Agreement shall be true and complete in all
material respects on and as of the Closing Date, with the same effect as if then
made.
6.3 Receipt of Consents. All Consents shall have been obtained and delivered to
Buyer and shall be in full force and effect as of the Closing and shall be in
form and substance reasonably satisfactory to Buyer without any conditions or
changes in the underlying Contract or License to which such Consent relates.
6.4 Deliveries. Sellers shall have made all of the deliveries required by
Section 8.2.
6.5 Material Adverse Effect. No Material Adverse Effect on Sellers shall
have occurred.
6.6 Repayment of Loans and Certain Other Obligations. Buyer shall have received
evidence of the repayment of the indebtedness of the Sellers to be repaid by
Sellers at or prior to Closing, all of which is listed on Schedule6.6.
6.7 Certain Proceedings. No writ, order, decree, or injunction of a court of
competent jurisdiction or other Governmental Authority shall have been entered
against Buyer or any Seller that prohibits or restricts the transactions
contemplated hereby, limits or restricts the operation of the Business as it is
currently conducted, or otherwise restricts the Buyer's exercise of full rights
to own and operate the Business after the Closing, and no action, proceeding,
investigation, regulation, or legislation shall have been instituted or
threatened before any court or other Governmental Authority that (a) questions
the validity or legality of the transactions contemplated hereby or seeks to
enjoin, restrain, prohibit, or obtain substantial damages in respect of, or
which is related to, or arising out of, this Agreement or the consummation of
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the transactions contemplated hereby; (b) seeks material damages against Buyer
as a result of the transaction contemplated hereby; or (c) can otherwise
reasonably be expected to materially and adversely affect Buyer as a result of
the consummation of the transactions contemplated hereby.
6.8 Sellers' Actions. All actions to be taken by Sellers in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Buyer.
Article 7
Conditions to the Obligations of Sellers
The obligations of Sellers to consummate the transactions provided for
in this Agreement are subject to all of the conditions set forth below in this
Article 7, any of which may be waived by Sellers.
7.1 Performance by Buyer. Buyer shall have performed in all material respects
all of its agreements and covenants under this Agreement required to be
performed by it at or prior to the Closing.
7.2 Truth of Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects on and as of the Closing Date, with the same effect as if then made.
7.3 Deliveries. Buyer shall have made all of the deliveries set forth in Section
8.3.
7.4 Material Adverse Effect. No Material Adverse Effect on Buyer shall have
occurred.
7.5 Certain Proceedings. No writ, order, decree, or injunction of a court of
competent jurisdiction or other Governmental Authority shall have been entered
against Buyer or any Seller that prohibits or restricts the transaction
contemplated hereby and no action, proceeding, investigation, regulation or
legislation shall have been instituted or threatened before any court or any
other Governmental Authority that (a) questions the validity or legality of the
transactions contemplated hereby or seeks to enjoin, restrain, prohibit or
obtain substantial damages in respect of, or which is related to, or arising out
of, this Agreement or the consummation of the transactions contemplated hereby,
(b) seeks material damages against any Seller as a result of the transactions
contemplated hereby; or (c) can otherwise reasonably be expected to materially
and adversely affect any Seller as a result of the consummation of the
transaction contemplated hereby.
7.6 Buyer's Actions. All actions to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Sellers.
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Article 8
Closing
8.1 Closing. Subject to satisfaction or waiver of all of the conditions of
closing set forth in Article 6 and Article 7, the Closing shall take place at
the offices of Dow, Xxxxxx & Xxxxxxxxx, PLLC, 0000 Xxx Xxxxxxxxx Xxx., X.X.,
Xxxxx 000, Xxxxxxxxxx, X.X. 00000, at 10:00 a.m., local time, on the date
specified by Buyer by notice to Sellers, which specified date shall be no later
than ten business days after all Consents have been obtained without any
conditions or changes in the underlying Contract or License to which such
Consent relates, or on such other date as Buyer and Sellers may mutually agree.
8.2 Deliveries and Actions by Sellers. Sellers shall deliver to Buyer the
following items at the Closing:
(a) Consents. Sellers shall deliver to Buyer originals of all Consents.
(b) Certificate Concerning Representations and Covenants. Sellers shall deliver
to Buyer a certificate, dated as of the Closing Date, executed by each Seller,
certifying that except as disclosed in such certificate, (i) all representations
and warranties of Sellers contained in this Agreement are true and complete in
all material respects on and as of the Closing Date, with the same effect as if
then made; and (ii) that Sellers have performed in all material respects all
covenants and agreements set forth in this Agreement to be performed by Sellers
at or prior to the Closing.
(c) Lien Searches. Sellers shall deliver to Buyer lien, Tax, and judgment
searches in each state and county in which any of the Assets are located and
releases and terminations of all Liens on the Assets that are not Permitted
Liens.
(d) Tax Clearance Certificates. Sellers shall furnish Buyer with Tax clearance
certificates or similar documents issued by the taxing authorities in each state
in which any of the Sellers is subject to Tax certifying that the Sellers have
paid all Taxes that are due and payable as of a date as close as practicable to
the Closing Date.
(e) Noncompetition Agreement. Sellers shall deliver the Noncompetition Agreement
in the form of Exhibit A, duly executed on behalf of Sellers, Xxxxxxx Xxxxxxx,
and Xxxxxx Xxxxx.
(f) Escrow Agreement. Sellers shall deliver the Escrow Agreement in the form of
Exhibit B, duly executed on behalf of Sellers.
8.3 Deliveries by Buyer. Buyer shall deliver to Sellers the following items at
the Closing:
(a) Certificate Concerning Representations and Covenants. Buyer shall deliver to
Seller a certificate, dated as of the Closing Date, executed by Buyer,
certifying that except as disclosed in such certificate, (i) all representations
and warranties of Buyer contained in this Agreement are true and complete in all
material respects on and as of the Closing Date,
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with the same effect as if then made; and (ii) that Buyer has performed in all
material respects all covenants and agreements set forth in this Agreement to be
performed by Buyer at or prior to the Closing.
b) Consideration. Buyer shall deliver to Sellers the Cash Consideration by wire
transfer of immediately available funds to an account designated by Sellers in
writing not later than two business days before the Closing Date. Buyer shall
deliver to Sellers certificates evidencing the Stock Consideration to be
delivered pursuant to Section 2.3(a)(ii).
(c) Assumption Agreements. Buyer shall deliver appropriate assumption agreements
pursuant to which Buyer will assume and undertake to perform those obligations
and liabilities required to be assumed by Buyer pursuant to Section 2.4.
(d) Noncompetition Agreement. Buyer shall deliver the Noncompetition Agreement
in the form of Exhibit A, duly executed on behalf of Buyer.
(e) Escrow Agreement. Buyer shall deliver the Escrow Agreement in the form of
Exhibit B, duly executed on behalf of Buyer.
Article 9
Termination
9.1 Termination.
(a) This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing by mutual written agreement of
Sellers and Buyer.
(b) This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing, at the election of either
Sellers or Buyer, if:
(i) the Closing does not occur on or before February 15, 2000 (the "Termination
Date"), except that no party may elect to terminate this Agreement pursuant to
this Section 9.1(b)(i) if such party's breach of any provision of this Agreement
prevented the Closing from occurring on or before the Termination Date; or
(ii) there shall be enacted or adopted any law or regulation that makes
consummation of the transaction contemplated hereby illegal or otherwise
prohibited; or
(iii) any final judgment, injunction, order, or decree of any court or other
Governmental Authority having competent jurisdiction enjoins Sellers or Buyer
from consummating the transactions contemplated by this Agreement.
(c) This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing, at the election of Buyer, if
on any date determined for the Closing in accordance with Section 8.1 each
condition in Article 7 has
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been satisfied (or will be satisfied by actions to be taken at the Closing) and
either a condition set forth in Article 6 has not been satisfied (or will not be
satisfied by actions to be taken at the Closing) or Sellers have nonetheless
refused to consummate the Closing; provided that Buyer may not terminate this
Agreement pursuant to this Section 9.1(c) if the failure of any condition set
forth in Article 6 to be satisfied was principally caused by Buyer's breach of
or failure to perform any of its covenants and agreements in accordance with
this Agreement.
(d) This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing, at the election of Sellers,
if on any date determined for the Closing in accordance with Section 8.1 each
condition in Article 6 has been satisfied (or will be satisfied by actions to be
taken at the Closing) and either a condition set forth in Article 7 has not been
satisfied (or will not be satisfied by actions to be taken at the Closing) or
Buyer has nonetheless refused to consummate the Closing; provided that Sellers
may not terminate this Agreement pursuant to this Section 9.1(d) if the failure
of any condition set forth in Article 7 to be satisfied was principally caused
by Sellers' breach of or failure to perform any of their covenants and
agreements in accordance with this Agreement.
(e) Any party electing to terminate this Agreement pursuant to this Section 9.1
shall give notice of its election to the other parties hereto.
9.2 Effect of Termination. If this Agreement is terminated pursuant to Section
9.1, this Agreement shall become void and of no effect without liability of any
party hereto to the other parties hereto, except that (a) the agreements
contained in this Section 9.2 shall survive the termination hereof, and (b) no
such termination shall relieve any party of any liability or damages resulting
from any material breach by such party of any representation, warranty,
covenant, or agreement set forth in this Agreement.
Article 10
Indemnification and Other Remedies
10.1 Survival of Representations and Warranties. All of the representations and
warranties of the parties hereto contained in this Agreement shall survive the
Closing hereunder (even if the damaged party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of Closing).
10.2 Indemnification by Sellers. From and after the Closing, Sellers shall
indemnify Buyer and its Affiliates, officers, directors, employees,
stockholders, and agents (the "Buyer Indemnified Parties") against and hold them
harmless from any liability, claim, damage, Tax, or expense (including
reasonable legal fees and expenses) ("Losses") suffered or incurred by any Buyer
Indemnified Party as a result of, arising from, or relating to the following:
(a) any breach of any representation or warranty of Sellers contained in this
Agreement or any certificate delivered pursuant hereto;
(b) any breach of any covenant or agreement of Sellers contained in this
Agreement;
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(c) liabilities of any Seller resulting from or arising out of the conduct of
the Business prior to the Closing; and
(d) expenses of any Seller relating to the consummation of the transactions
contemplated by this Agreement, including fees and expenses of attorneys,
accountants, financial advisors and broker fees.
10.3 Indemnification by Buyer. From and after the Closing, Buyer shall indemnify
Sellers and their Affiliates, officers, directors, employees, stockholders, and
agents (the "Seller Indemnified Parties") against and hold them harmless from
any Losses suffered or incurred by any Seller Indemnified Parties as a result
of, arising from, or relating to the following:
(a) any breach of any representation or warranty of Buyer contained in this
Agreement or in any certificate delivered pursuant hereto;
(b) any breach of any covenant or agreement of Buyer contained in this
Agreement;
(c) Buyer's failure to perform any obligations and liabilities required to be
assumed by Buyer pursuant to Section 2.4;
(d) liabilities resulting from or arising out of the conduct of the Business by
Buyer after the Closing.
10.4 Procedure for Indemnification. The procedure for indemnification shall be
as follows:
(a) The party claiming indemnification (the "Claimant") shall promptly give
notice to the party from which indemnification is claimed (the "Indemnifying
Party") of any claim, whether between the parties or brought by a third party,
specifying in reasonable detail the factual basis for the claim, the amount
thereof, estimated in good faith, and the method of computation of such claim,
all with reasonable particularity and containing a reference to the provisions
of this Agreement in respect of which such indemnification claim shall have
occurred. If the claim relates to an action, suit, or proceeding filed by a
third party against the Claimant, such notice shall be given by the Claimant
promptly after written notice of such action, suit, or proceeding was given to
the Claimant; provided, however, that any delay in giving the notice shall not
impair the Claimant's rights hereunder unless such delay has a material adverse
effect on the Indemnifying Party's ability to defend such claim.
(b) With respect to claims solely between the parties, following receipt of
notice from the Claimant of a claim, the Indemnifying Party shall have thirty
days to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation, the Claimant
agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree prior to the expiration
of such thirty-day period (or any mutually agreed upon extension thereof) to the
validity and amount of such claim, the Indemnifying Party shall immediately pay
to the Claimant the full amount of the claim. If the Claimant and the
Indemnifying Party do not agree within such thirty-day period (or
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any mutually agreed upon extension thereof), the Claimant may seek appropriate
remedies at law or equity, as applicable.
(c) With respect to any claim by a third party as to which the Claimant is
entitled to indemnification under this Agreement, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim if, within five business days after notice from the
Claimant of any such claim for Losses, the Indemnifying Party provides to the
Claimant notice thereof acknowledging its potential liability to the Claimant
hereunder, and the Claimant shall cooperate fully with the Indemnifying Party,
subject to reimbursement for actual out-of-pocket expenses incurred by the
Claimant as the result of a request by the Indemnifying Party. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim in accordance with the preceding sentence, the Claimant shall have the
right to participate in such defense with legal counsel of the Claimant's own
selection, but the fees and expenses of such counsel shall be its fees and
expenses unless (i) the Indemnifying Party has agreed to pay such fees and
expenses, (ii) the Indemnifying Party has failed to assume the defense of such
claim, within five business days after receiving notice of such claim, (iii) the
remedies sought against the Claimant include any remedy that is not solely a
claim for monetary damages or (iv) the named parties to any proceeding in
respect of the claim (including any impleaded parties) include both the
Indemnifying Party and the Claimant and the Claimant has been advised by counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party (in which case,
if the Claimant notifies the Indemnifying Party that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action, claim, or
proceeding on behalf of the Claimant). If the Indemnifying Party does not (or,
as provided in clause (iv) of the preceding sentence, cannot) elect to assume
control or otherwise participate in the defense of any third-party claim, then
the Claimant may defend through counsel of its own choosing and settle such
claim, action, or suit, and to recover from the Indemnifying Party the amount of
such settlement or of any judgment and the costs and expenses of such defense.
The Indemnifying Party shall not compromise or settle any third party claim,
action, or suit without the prior written consent of the Claimant, which consent
will not be unreasonably withheld or delayed.
(d) If a claim, whether between the parties or by a third party, requires
immediate action, the parties will make every reasonable effort to reach a
decision with respect thereto as expeditiously as practicable.
10.5 Limitations. Notwithstanding anything in this Agreement to the contrary,
(a) no party shall indemnify or otherwise be liable to any other party with
respect to any claim for any breach of a representation or warranty, or for the
breach of any covenant to be performed prior to the Closing, unless notice of
the claim is given (i) with respect to any claim for a breach of any
representation or warranty made in Section 3.1, Section 3.2, Section 3.6,
Section 4.1, Section 4.3, Section 4.4, Section 4.6, Section 4.12, or Section
4.23, sixty days after the expiration of the applicable statute of limitations
(including all periods of extension thereof) and (ii) in the case of any other
claim, within one year after the Closing Date;
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(b) Sellers shall not be required to indemnify or otherwise be liable to any
Buyer Indemnified Parties for any breach of a representation or warranty, or for
the breach of any covenant to be performed prior to the Closing, unless the
Losses suffered or incurred by all Buyer Indemnified Parties arising from all
such breaches exceed in the aggregate $75,000;
(c) Buyer shall not be required to indemnify or otherwise be liable to any
Seller Indemnified Parties for any breach of a representation or warranty, or
for the breach of any covenant to be performed prior to the Closing, unless the
Losses suffered or incurred by all Seller Indemnified Parties arising from all
such breaches exceed in the aggregate $75,000; and
(d) Sellers shall not be required to indemnify or otherwise be liable to any
Buyer Indemnified Parties for any breach of a representation or warranty, or for
the breach of any covenant to be performed prior to the Closing, to the extent
that the Losses suffered or incurred by all Buyer Indemnified Parties arising
from all such breaches (other than Losses for which the Buyer Indemnified
Parties are not entitled to indemnification pursuant to the other provisions of
this Section 10.5) exceed in the aggregate $1,500,000.
10.6 Indemnification Escrow. On the Closing Date, Buyer, Sellers, and First
Union National Bank (the "Escrow Agent") shall execute an Escrow Agreement
substantially in the form attached as Exhibit B (the "Escrow Agreement") in
accordance with which, on the Closing Date, Sellers shall deposit $400,000 with
the Escrow Agent in order to provide a fund for the payment of any claims for
which Buyer is entitled to indemnification under this Article 10. Seller shall
make such deposit with the Escrow Agent in the form of shares of Buyer's common
stock from the Stock Consideration (valued at ten dollars per share), cash from
the Cash Consideration, or a combination of shares and cash, as specified by
Sellers in writing not later than five business days before the Closing Date.
All cash or shares deposited in escrow and any interest or other earnings in
respect of such deposit shall be held and disbursed in accordance with the terms
of the Escrow Agreement. Buyer and Sellers agree that any claim for
indemnification by Buyer under this Article 10 for which Buyer is entitled to
payment shall be satisfied first from cash or property held in escrow under the
Escrow Agreement, to the extent of such cash or property, and then from other
assets of Sellers.
10.7 Injunctive Relief . Sellers acknowledge that Buyer would be irreparably
damaged if any of the provisions of this Agreement were not performed by them.
Accordingly, Sellers expressly agree that, in addition to any other right or
remedy Buyer may have, Buyer may seek and obtain specific performance of the
covenants and agreements set forth in this Agreement and may seek and obtain
temporary and permanent injunctive relief to prevent any breach or violation
hereof, and that no bond or other security may be required from Buyer in
connection therewith. If any action is brought by Buyer to enforce this
Agreement, Sellers hereby waive the defense that there is an adequate remedy at
law.
10.8 Sole Remedy. After the Closing, except as provided in Section 10.7, the
respective rights of the Buyer Indemnified Parties and the Seller Indemnified
Parties under to indemnification as provided for in this Article 10 shall be the
exclusive remedy for any Losses suffered or incurred by any Buyer Indemnified
Party or Seller Indemnified Party, as applicable, for which indemnification is
provided under this Article 10; provided, however, that nothing contained herein
shall prevent any Person from pursuing any remedies that may be available to
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such party under applicable law in the event of (a) fraud or intentional
misrepresentation or (b) any party's failure to comply with its indemnification
obligations under this Article 10.
Article 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed in all respects by the laws
of the State of North Carolina, without regard to such state's conflict of law
rules.
11.2 Successors and Assigns. Except as otherwise expressly provided herein, no
party hereto may assign its rights and obligations hereunder unless such party
obtains the prior written consent of the other parties hereto, except that,
without the consent of any Seller, Buyer may assign to any Person directly or
indirectly controlled by Buyer its right to acquire the Assets, but Buyer shall
remain liable for all of its obligations hereunder notwithstanding any such
assignment, except that Buyer's assignee may assume at Closing the obligations
described in Section 2.4 instead of Buyer. Except as otherwise provided herein,
this Agreement shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto.
11.3 Entire Agreement; Amendment. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged, or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge, or
termination is sought.
11.4 Notices, Etc. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, or by reputable overnight delivery service, postage prepaid, or otherwise
delivered by hand or by messenger, addressed as follows:
If to Sellers: International Towers Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention:
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Corey, Farrell, Xxxx & Bromiel, P.C.
Suite 830, Norwest Tower
Xxx Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
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If to Buyer: SpectraSite Holdings, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Fax: (000) 000-0000
with copies to: SpectraSite Holdings, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Dow, Xxxxxx & Xxxxxxxxx, PLLC 0000 Xxx Xxxxxxxxx
Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
All notices shall be deemed given only upon receipt.
11.5 Delays or Omissions. No delay or omission to exercise any right, power, or
remedy hereunder shall impair any such right, power, or remedy of any party
hereto, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring. Any waiver, permit, consent, or approval of any kind or character on
the part of any party hereto of any breach or default under this Agreement, or
any waiver on the part of any party hereto of any provisions or conditions of
this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing or as provided in this Agreement. All
remedies, either under this Agreement or by law or otherwise afforded to any
party hereto, shall be cumulative and not alternative.
11.6 Counterparts. This Agreement may be executed in any number of counterparts
by original or facsimile signature, each of which shall be deemed an original,
and all of which taken together shall constitute one and the same instrument.
11.7 Severability. If any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without such provision, except
that no such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.
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11.8 Headings. The subject headings of the sections of this Agreement are
included for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
11.9 Waiver of Jury Trial. Each party hereto hereby waives any right to a trial
by jury with respect to any action relating to this Agreement.
11.10 Exclusive Benefit. Nothing in this Agreement is intended to confer any
rights or remedies, whether express or implied, under or by reason of this
Agreement, on any Persons other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement.
11.11 Construction. The parties have participated jointly in the negotiation and
drafting of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant.
11.12 Exhibits and Schedules. The exhibits and schedules identified in this
Agreement are incorporated herein by reference and made a part hereof. Nothing
in any schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless such schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself).
[SIGNATURE PAGE FOLLOWS IMMEDIATELY]
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed as of the day and year first above written.
International Towers Inc.
/s/Xxxxxxx X. Xxxxxxx
By: ---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: CEO
S&W Communications Inc.
/s/Xxxxxxx X. Xxxxxxx
By: ---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: CEO
Tri-Ex Tower Inc.
/s/Xxxxxxx X. Xxxxxxx
By: ---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: CEO
International Tower Industries, Inc.
/s/Xxxxxxx X. Xxxxxxx
By: ---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: CEO
SpectraSite Holdings, Inc.
/s/Xxxxxxx X. Xxxxx
By: ---------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
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