1
EXHIBIT 99.2
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
dated April 11, 1997
by and among
OUTDOOR SYSTEMS, INC.,
XXX XXXXXX COMMUNICATIONS, INC.,
XXXXXXX X. XXXXXX
and
XXXXX XXXXXXX
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TABLE OF CONTENTS
Page
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1. DEFINITIONS.......................................................... 1
2. PURCHASE AND SALE.................................................... 10
2.1 Agreement to Purchase and Sell............................. 10
2.2 Closing.................................................... 10
2.3 Purchase Price............................................. 10
2.4 Adjustments to Purchase Price.............................. 10
2.5 Transactions at the Closing................................ 11
3. REPRESENTATIONS AND WARRANTIES OF SELLER............................. 12
3.1 Organization and Good Standing............................. 12
3.2 Authority; No Conflict..................................... 13
3.3 Capitalization............................................. 14
3.4 Financial Statements....................................... 14
3.5 Absence of Changes......................................... 15
3.6 Permits.................................................... 15
3.7 The Structures and Site Leases............................. 15
3.8 Advertising Contracts...................................... 16
3.9 Absence of Undisclosed Liabilities......................... 16
3.10 Owned Real Property........................................ 17
3.11 Title, Encumbrances........................................ 17
3.12 Taxes...................................................... 17
3.13 Compliance with Legal Requirements......................... 18
3.14 Legal Proceedings; Orders.................................. 18
3.15 Other Contracts............................................ 18
3.16 Insurance.................................................. 19
3.17 Environmental Matters...................................... 19
3.18 Intangible Property........................................ 20
3.19 Relationships with Affiliates.............................. 20
3.20 Brokers or Finders......................................... 20
3.21 Labor Matters.............................................. 20
3.22 Employee Benefit Matters................................... 20
3.23 Books and Records.......................................... 22
3.24 Assets Necessary for Conduct of Business................... 22
3.25 Bank Accounts.............................................. 22
3.26 Payments to Employees...................................... 22
3A. REPRESENTATIONS AND WARRANTIES OF EACH SELLER........................ 22
3A.1 Authority of Seller; No Conflict........................... 22
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3A.2 Title to Shares............................................ 23
3A.3 Brokers or Finders......................................... 23
4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 24
4.1 Organization and Good Standing............................. 24
4.2 Authority; No Conflict..................................... 24
4.3 Certain Proceedings........................................ 25
4.4 Brokers or Finders......................................... 25
4.5 Investment................................................. 25
5. COVENANTS............................................................ 25
5.1 Access and Investigation................................... 25
5.2 Operation of the Company................................... 25
5.3 Negative Covenant.......................................... 26
5.4 Required Approvals......................................... 27
5.5 Best Efforts............................................... 28
5.6 Notification............................................... 28
5.7 Encumbrances and Security Interests........................ 28
5.8 Non-Transferred Employees.................................. 28
5.9 Financial Transactions at the Closing...................... 28
5.10 Non-Competition; Release................................... 29
5.11 Section 338(h)(10) Election................................ 29
5.12 Delivery of Financial Statements........................... 31
5.13 Transfer of Retained Business.............................. 31
5.14 Intercompany Indebtedness.................................. 31
5.15 Transfer and Use of Name................................... 32
5.16 Termination/Assignment of Contracts........................ 32
5.17 Tax Returns................................................ 32
5.18 Profit Sharing Plan........................................ 32
6. COVENANTS OF THE PARTIES RELATING TO ANTITRUST MATTERS............... 33
6.1 Antitrust Filings............................................... 33
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.................. 34
7.1 Accuracy of Representations................................ 34
7.2 Sellers' Performance....................................... 35
7.3 Additional Documents....................................... 35
7.4 No Proceedings............................................. 35
7.5 Change in EBITDA........................................... 35
7.6 Absence of Material Adverse Change......................... 35
7.7 Termination/Assignment of Agreements and Plans............. 35
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE................ 36
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8.1 Accuracy of Representations................................ 36
8.2 Buyer's Performance........................................ 36
8.3 Payment of Purchase Price.................................. 36
8.4 Additional Documents....................................... 36
8.5 No Proceedings............................................. 36
8.6 No Prohibition............................................. 37
9. TERMINATION.......................................................... 37
9.1 Termination Events......................................... 37
9.2 Effect of Termination...................................... 37
10. INDEMNIFICATION; REMEDIES............................................ 38
10.1 Indemnification and Payment of Damages by Sellers.......... 38
10.2 Indemnification and Payment of Damages by Buyer............ 38
10.3 Procedure for Indemnification -- Third Party Claims........ 39
10.4 Procedure for Indemnification -- Other Claims.............. 40
10.5 Survival/Limitations....................................... 40
10.6 Exclusive Remedy........................................... 41
10.7 General.................................................... 41
11. GENERAL PROVISIONS................................................... 41
11.1 Expenses................................................... 41
11.2 Public Announcements....................................... 42
11.3 Notices.................................................... 42
11.4 Further Assurances......................................... 44
11.5 Waiver..................................................... 44
11.6 Entire Agreement and Modification.......................... 44
11.7 Assignments, Successors, and No Third-Party Rights......... 44
11.8 Severability............................................... 44
11.9 Post-Closing Access........................................ 44
11.10 Headings; Construction..................................... 45
11.11 Applicable Law............................................. 45
11.12 Incorporation of Exhibits and Schedules.................... 45
11.13 Counterparts............................................... 45
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EXHIBITS
Exhibit A - Form of Non-Solicitation Agreement
Exhibit B - Form of Opinion of Sellers' Counsel
Exhibit C - Form of Opinion of Buyer's Counsel
DISCLOSURE SCHEDULE
Part 2.3(a)
Part 3.1(a)
Part 3.1(b)
Part 3.2
Part 3.3
Part 3.4
Part 3.5
Part 3.6
Part 3.7(a)
Part 3.7(b)
Part 3.8(a)
Part 3.8(b)
Part 3.9
Part 3.10
Part 3.11
Part 3.12
Part 3.13
Part 3.14
Part 3.15(a)
Part 3.15(b)
Part 3.16
Part 3.17
Part 3.18
Part 3.19
Part 3.21(a)
Part 3.21(b)
Part 3.22(a)
Part 3.22(a)(i)
Part 3.22(c)
Part 3.25
Part 3.A.2
Part 5.2
Part 5.3(c)
Part 5.3(f)
Part 5.3(g)
Part 5.13
Part 5.14
Part 5.16
Part 5.18
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is dated April 11, 1997 by
and among XXXXXXX X. XXXXXX, a resident of the state of New York ("Xxxxxx"), and
XXXXX XXXXXXX, a resident of the state of New York ("Xxxxxxx," and together with
Xxxxxx, "Sellers"), XXX XXXXXX COMMUNICATIONS, INC., a New York corporation
("Company"), and OUTDOOR SYSTEMS, INC., a Delaware corporation ("Buyer"). (Buyer
and Sellers are sometimes herein referred to individually as a "Party" and
collectively as the "Parties.")
RECITALS
The Company is engaged in the Business (as defined herein). Sellers own
all of the outstanding capital stock of the Company. Sellers desire to sell, and
Buyer desires to purchase, all of the issued and outstanding capital stock of
the Company, pursuant to the terms and conditions and subject to the limitations
and exclusions contained in this Agreement.
AGREEMENT
The Parties, for and in consideration of the covenants and agreements
herein set forth and intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the following
meanings.
"ACCREDITED INVESTOR" -- as defined in Regulation D promulgated under
the Securities Act.
"ADVERTISING CONTRACTS" -- all rights under existing and pending sales
and advertising contracts associated with the Structures and the Business, and
all rights to the advertising copy displayed on the Structures.
"ADTIME" -- shall mean Adtime Acquisition Holding Co., Inc., a Delaware
corporation.
"AFFILIATES" -- when used with reference to a specified Person, means
any other Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
specified Person. For purposes of this definition of Affiliate, "control" means
the possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies of the Person in question, whether through
the ownership of voting securities or by contract or otherwise.
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"ANTITRUST LAW" -- the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other Legal Requirements, decrees, administrative and judicial doctrines that
are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, restraint of trade or lessening of
competition through merger or acquisition.
"ANTITRUST DIVISION" -- Antitrust Division of the United States
Department of Justice.
"AUDITED 1996 FINANCIAL STATEMENTS" -- the audited balance sheets and
statement of income of the Company, including all notes thereto, as of and for
the fiscal year ended December 31, 1996.
"BANK" shall mean The First National Bank of Chicago.
"BANK PAYMENT" -- the aggregate amount of principal and interest owed
by the Company to the lenders under the Credit Agreement.
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances; provided, that, as used
in Article 6 hereof, Best Efforts shall have the meaning ascribed to such term
under the laws of the State of New York, including all applicable case-law.
"BOOKS AND RECORDS" -- All of Company's books and records, other than
those relating to the Retained Business.
"BONUS PAYMENTS" the sum of the amounts to be paid by the Company to
various officers, employees and consultants of the Company prior to the Closing
pursuant to the Bonus Plan, which amounts shall be determined by the Sellers.
"BONUS PLAN" -- the bonus plan to be adopted by the Company prior to
the Closing Date for the benefit of certain officers, employees and consultants
of the Company who remain employed by the Company for a specified transition
period prior to the Closing Date.
"BUSINESS" -- shall mean the business of managing, owning and/or
operating out of home advertising, including without limitation, outdoor signs
and billboards and managing the Xxxxx Shuttle Bus advertising in New York, and
in each case as currently operated by the Company, and shall specifically
exclude the Retained Business.
"BUYER" -- as defined in the first paragraph of this Agreement.
"BUYER'S BANK" -- Canadian Imperial Bank of Commerce.
"CLOSING" -- as defined in Section 2.2.
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"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
"CLOSING DATE BALANCE SHEET" -- the Company's unaudited Balance Sheet
as of the Closing Date, excluding the Retained Business, prepared according to
GAAP.
"CLOSING DATE NET WORKING CAPITAL" -- the net working capital of the
Company without any assets or liabilities associated with the Retained Business
as of the Closing, computed in accordance with GAAP after giving effect to the
Proration, and subject to the following:
(a) Net working capital shall be calculated without regard to, and
shall not include (i) the Indebtedness for Borrowed Money; (ii) the Bonus
Payments; (iii) the expenses referred to in Section 5.2(f); (iv) the loan
referred to in Section 2.5(a); (v) any current asset or current liability with
respect to a Retained Business; or (vi) any other cost or obligation which
Sellers are required to pay for at or before Closing as a condition to Buyer's
obligation to close hereunder; and
(b) for purposes of this Agreement, current assets will include (if the
acquisition thereof has been approved by the Buyer in writing) capital assets
purchased between the date hereof and the Closing Date, at the cost thereof less
the excess of fair market value over the sales price for any capital asset
disposed of by the Company during the same period; if any current or long-term
liability is owed in connection with such capital asset, then any such liability
will be deemed a current liability for purposes of calculating Closing Date Net
Working Capital.
"CLOSING DOCUMENTS" -- any documents to be executed at Closing pursuant
to this Agreement.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including: (a) the purchase of the Shares by Buyer from Sellers,
and (b) the performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"CREDIT AGREEMENT" that certain Amended and Restated Credit Agreement
dated January 4, 1996, as amended, by and among the Company and the Bank, as
agent for the lenders thereunder.
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"DAMAGES" -- any loss, liability, claim, damage, expense, including
Expenses (including reasonable costs of investigation and defense and reasonable
attorneys' fees, expenses and charges, and specifically excluding any
consequential damages or loss of profits), whether or not involving a
third-party claim; provided, that, in the event that a Closing hereunder does
not occur through a breach by the Buyer, and Sellers subsequently sell all of
the stock or substantially all of the assets of the Company, consequential
damages shall not be deemed to include, and therefore Damages shall include, but
not be limited to (i) the difference between $170 million and the lesser amount
received by the Sellers in respect of such sale, and (ii) all fees, costs and
expenses incurred by Sellers in connection with any such sale, which sale shall
not be required to prove damages; provided, however, that any such sale must be
at arm's-length with a bona fide purchaser.
"DISCLOSURE SCHEDULE" -- the disclosure schedule, delivered by Sellers
to Buyer concurrently with the execution and delivery of this Agreement.
"EBITDA" -- income from operations before interest, taxes, depreciation
and amortization.
"EMPLOYEE BENEFIT PLAN" -- any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" -- has the meaning set forth in ERISA
Section3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" -- has the meaning set forth in ERISA
Section3(1).
"ENCUMBRANCE" -- any charge, claim, equitable interest, lien, option,
pledge, security interest, mortgage, right of first refusal, or restriction of
any kind, including any restriction on use, transfer, receipt of income, or
exercise of any other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement pertaining to
environmental discharges, Release, emissions or spills or the manufacture, sale,
processing, handling, transportation, storage or disposal of any Hazardous
Materials, or relating to any environmental processes or condition, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act ("RCRA"), the Endangered Species Act, the
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Federal Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Surface Mining Control and Reclamation Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Coastal Zone Management Act, the National
Environmental Policy Act, the Noise Control Act. As used in this Agreement,
Environmental Laws shall mean any of such laws or regulations as the same exist
now or at the Closing Date.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"EXECUTIVES" -- Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxxx Xxxxxxx.
"FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"FINANCING ARRANGEMENTS" -- Buyer's financing arrangements with Buyer's
Bank in connection with the Contemplated Transactions.
"FTC" -- the United States Federal Trade Commission.
"GAAP" -- United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"HSR ACT" -- the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and any regulations and rules promulgated thereunder.
"INDEBTEDNESS FOR BORROWED MONEY" -- the Bank Payment and the Xxxxxxx
Loan.
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"INDEMNIFIED PERSON" -- any of the Seller Indemnified Persons or the
Buyer Indemnified Persons, as the context requires.
"INDEMNIFYING PARTY" -- Buyer or any or both of Sellers, as the context
requires.
"INTANGIBLE PROPERTY" -- All right, title and interest in and to the
goodwill and other intangible property (except for the Company's corporate or
trade names and trade logos) used in connection with the Business, all licenses,
permits and authorizations pertaining to the Business or the right to own and
operate the Business and all right, title and interest in and to (i) any
intellectual property used in connection with the Business, and (ii) all records
and data relating specifically to the Business.
"IRC" -- the Internal Revenue Code of 1986, as amended from time to
time, or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"JOINT VENTURES" -- the entity formed by the Company and: (i) Transit
Graphics Ltd., known as Xxx Xxxxxx Transit Graphics, pursuant to the Joint
Venture Agreement dated Xxxxx 00, 0000 (Xxx Xxxx); (xx) Zapco 1500 Investment
L.P., a Delaware limited partnership known as 1500 Signs Company, pursuant to
the Joint Venture Agreement dated June 1, 1996, as amended (New York); (iii)
Xxxxxxxxxx Property, Inc., as successor to Broadway State Partners, a New York
limited partnership, known as Broadway Signs Company, pursuant to the Agreement
dated February 20, 1990 (New York); (iv) Metro Display Advertising, Inc., known
as VW Metro Company pursuant to the Joint Venture Agreement dated as of November
18, 1994 (California); and (v) Tall Wall Media, Inc., known as Xxx Xxxxxx Tall
Wall Media, LLC, a California limited liability company, pursuant to the
Operating Agreement dated as of December 20, 1996.
"KNOWLEDGE" -- a Person will be deemed to have "Knowledge" of a
particular fact or other matter only if such Person is actually aware of such
fact or other matter without making any independent inquiry or investigation.
Knowledge of the Company shall mean the Knowledge of the Executives. Knowledge
of the Company and the Sellers shall mean the Knowledge of any one of them.
Knowledge of the Buyer shall mean Knowledge of any of Xxxxxxx Xxxxxx, Xxxx
Beverage, Xxxxxx X. Xxxxx, Xxxx X. Xxxxxxxx or Xxxxxx Xxxxxx.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, regulation, statute, or treaty.
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"LOAN AMOUNT" -- the aggregate amount of principal and interest owed by
Adtime to the Company pursuant to that certain Promissory Note from Adtime to
the Company dated December 12, 1996 in the original principal amount of $11
million.
"MATERIAL ADVERSE CHANGE" -- a change that is reasonably likely to
cause a Material Adverse Effect; without in any way limiting the foregoing, the
following shall not be considered a Material Adverse Change: (i) the termination
of any Contract listed on the Disclosure Schedule in accordance with its terms,
(ii) the failure to obtain any of the Consents of the other parties to the
Contracts listed on Part 3.2 of the Disclosure Schedule, or (iii) any change
resulting substantially and proximately from the public announcement or pendency
of this Agreement or the Contemplated Transactions.
"MATERIAL ADVERSE EFFECT" -- a material adverse effect on the Company
or its operations or financial condition taken as a whole.
"MOST RECENT FINANCIAL STATEMENTS" -- as defined in Section 3.4.
"MULTIEMPLOYER PLAN" -- as defined in ERISA Section3(37).
"NON-SOLICITATION AGREEMENT" -- as defined in Section 5.10.
"NON-TRANSFERRED EMPLOYEES" -- as defined in Section 5.8.
"ORDER" -- any award, decision, decree, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" if such action is
consistent with the past custom and practices of such Person and is taken in the
ordinary course of the normal operations of such Person (including with respect
to quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"OTHER CONTRACT" -- any Contract (other than a Site Lease, Advertising
Contract or Permit) relating to or affecting the Company (i) under which the
Company has or may acquire any rights, (ii) under which the Company has or may
become subject to any obligation or liability, or (iii) by which the Company or
the Business is or may become bound.
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"OWNED REAL PROPERTY" -- all of the real property owned in fee by
Seller and any rights therein, and all buildings, facilities, structures,
fixtures, leasehold and other improvements located thereon.
"PARTY" -- as defined in the first paragraph of this Agreement.
"PARTIES" -- as defined in the first paragraph of this Agreement.
"XXXXXXX LOAN" -- the aggregate amount of principal and interest owed
by the Company to Xxxxx Xxxxxxx pursuant to the terms of that certain Senior
Subordinated Note of the Company dated January 4, 1996, as amended, in the
original principal amount of $5 million.
"PERMITS" -- all state and local licenses or permits/tags and other
Governmental Authorizations of the Company that are required for the operation
of the Business, including the Structures.
"PERMITTED LIENS" -- Encumbrances for taxes not yet delinquent or, if
delinquent, being contested in good faith, and with respect to real property,
installments of special assessments not yet delinquent or, if delinquent, being
contested in good faith, recorded easements, covenants and other restrictions,
and utility easements, building restrictions, zoning restrictions and other
easements and restrictions which do not impair the current use of the parcel of
real property, interests of lessors and Encumbrances set forth in the Title
Policy and Encumbrances which are within the definition of current liabilities
as contemplated under the definition of Closing Date Net Working Capital.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PHANTOM STOCK PLAN" -- the Phantom Unit Appreciation Rights Plan of
the Company dated January 1, 1996.
"PLEDGE" -- the security interest in the Shares in favor of the Bank.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PRO-RATA PERCENTAGE" -- with respect to Xxxxxxx X. Xxxxxx, 95%, and
with respect to Xxxxx Xxxxxxx, 5%, of any amounts required to be paid by Sellers
under Article 10 hereof.
"PRORATION" -- the proration of all of the Company's revenues and expenses
without the Retained Business as of the Closing Date. Revenues and expenses will
be recognized according
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to GAAP and on the number of days of postings before and after the Closing Date.
For purposes of this definition, one month shall be deemed to have thirty (30)
days and one year shall be deemed to have three hundred and sixty (360) days.
"PURCHASE PRICE" -- as defined in Section 2.3.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"RETAINED BUSINESS" -- as defined in Section 5.13.
"SECTION 338(H)(10) ELECTION" -- as defined in Section 5.11
"SECURITIES ACT" -- the Securities Act of 1933, as amended and the rules
and regulations promulgated thereunder.
"SELLERS" -- as defined in the first paragraph of this Agreement.
"SHARES" -- as described in Section 3.3.
"SHAREHOLDERS' AGREEMENT" -- the Shareholders' Agreement between the
Sellers and the Company dated as of January 4, 1996, as amended.
"SITE LEASES" -- all leases, subleases and all other grants of the right
to place, construct, own, operate or maintain a Structure on land, buildings
and/or other real property owned by third parties.
"STRUCTURES" -- all of the billboard displays, and other out-of-home
advertising structures, together with all components, fixtures, parts,
appurtenances, and equipment attached to or made a part thereof that are
existing, under construction or for which the Company has any rights.
"TAX" -- shall mean all tax (including income tax, capital gains tax,
value added tax, sales tax, property tax, transfer tax or intangibles tax), levy
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including fine, penalty and interest) imposed, assessed or collected by
or under the authority of any Governmental Body.
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"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" -- a claim or Proceeding will be deemed to have been
"THREATENED" if any written demand or statement has been delivered to the
Company or any written notice has been delivered to the Company that would lead
a prudent Person to conclude that such a claim or Proceeding is likely to be
asserted, commenced or taken in the future.
"TITLE POLICY" -- as defined in Section 3.10.
2. PURCHASE AND SALE
2.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions of
this Agreement, each Seller hereby agrees to grant, sell, assign, transfer,
convey and deliver to Buyer all right, title and interest in and to the Shares
owned by him, free and clear of any Encumbrances, other than Encumbrances that
may be created by, or as a result of actions of, Buyer, and Buyer hereby agrees
to buy and acquire the Shares from Sellers.
2.2 CLOSING. The purchase and sale of the Shares (the "Closing") provided
for in this Agreement will take place, subject to the satisfaction of the
conditions in Sections 7 and 8 hereof, at the offices of Xxxx Marks & Xxxxx LLP,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. local time
on the date which is the later of (i) ten days after the delivery by Sellers to
Buyer of the Audited 1996 Financial Statements, and (ii) four (4) business days
after the expiration or termination of the applicable waiting period under the
HSR Act, or such other time and place as the Parties may agree in writing. The
effective time of the Closing shall be 11:59 p.m., Eastern Standard Time, on the
Closing Date.
2.3 PURCHASE PRICE. The aggregate purchase price for the Shares shall be
One Hundred Seventy Million Dollars ($170,000,000), as adjusted in accordance
with Section 2.4 hereof (the "Purchase Price"). The Purchase Price shall be paid
by wire transfer of immediately available funds, to the accounts designated by
Sellers in writing delivered to Buyer at least two (2) business days prior to
the Closing Date, and shall be allocated between Xxxxxx and Xxxxxxx in the
percentages provided in Part 2.3(a) of the Disclosure Schedule.
2.4 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be subject
to adjustment as follows;
(a) The Purchase Price shall be decreased by:
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(i) the Bonus Payments paid or owed by the
Company at or prior to Closing; and
(ii) the Indebtedness for Borrowed Money; and
(iii) to the extent not paid prior to the Closing,
all liabilities of the Company not included
in the calculation of Closing Date Net
Working Capital except for those which do
not have a monetary effect on the Company.
(b) The Purchase Price shall be increased or decreased as
follows:
(i) to the extent that the Closing Date Net
Working Capital is a positive amount, the
Purchase Price shall be increased by a
dollar amount equal to the positive balance;
and
(ii) to the extent that the Closing Date Net
Working Capital is a negative amount, the
Purchase Price shall be reduced by a dollar
amount equal to the negative balance.
(c) The Purchase Price shall be further adjusted as provided in
Section 5.11.
(d) The Purchase Price adjustments in (a) and (b) above shall be
made at Closing based on an estimate of all items (except the adjustment
provided for in Section 5.11 hereof) from an estimated Closing Date Balance
Sheet and income statement prepared by the Company's outside certified public
accountants pursuant to the terms of this Agreement and reviewed by Buyer's
outside certified public accountants. Within ninety (90) days after the Closing,
the Buyer will prepare and provide to Sellers calculations of adjustments to the
Purchase Price under this Section 2.4. Within ninety (90) days after receipt
thereof, Sellers shall provide Buyer with any objections to such calculations.
The Parties and their respective representatives shall thereafter work in good
faith to resolve any discrepancies. If the Parties and their Representatives are
unable to resolve such discrepancies within thirty (30) days, the matter shall
be submitted to an accounting firm or other third party mutually acceptable to
the Parties, whose determination shall be final and binding on the Parties, and
fifty (50%) of the fees and expenses of such third party shall be borne by each
of Buyer, on the one hand and Sellers (in accordance with their respective
Pro-Rata Percentage), on the other hand. Any required refund or payment with
respect to the Purchase Price shall be made promptly after a final determination
of such calculations is made.
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2.5 TRANSACTIONS AT THE CLOSING. The following transactions shall
take place at the Closing in the order listed whereby no more than the Purchase
Price amount will be loaned by Buyer to the Company at Sellers' request at the
Closing.
(a) Buyer will loan the Company, at Closing, the amount
requested by Sellers at least two (2) business days prior to the Closing to
allow the Company to meet its and the Sellers' obligations under this Agreement,
including, without limitation the Bonus Payments, the Indebtedness for Borrowed
Money, and all of the professional fees and brokerage fees incurred by the
Company in regard to preparing the Company for sale and selling it to the Buyer.
(b) Sellers shall deliver to Buyer (i) the original stock
certificates representing the Shares, endorsed in blank or accompanied by duly
executed assignment documents, (ii) the Noncompetition Agreements, (iii) duly
executed resignations of each of the officers, (other than Non-Transferred
Employees), Executives and directors of the Company and each of the trustees and
fiduciaries of each pension and other plan of the Company, (iv) duly executed
releases of each of the Executives, (v) all minute books and corporate and stock
records of the Company other than those which relate to the Retained Business,
and (vi) all other instruments of transfer and all other related documents, if
any, as may be reasonably necessary to evidence or perfect the sale, assignment,
transfer, and conveyance to Buyer of good title to the Shares in accordance with
this Agreement.
(c) The Company shall deliver to Buyer any documents or
records, including payoff letters reasonably requested by Buyer, including,
without limitation, releases of Encumbrances on the Shares and releases of all
other obligations of the Company and Encumbrances securing the same, which the
Sellers have agreed hereunder to discharge on or prior to the Closing Date.
(d) Sellers shall cause Adtime to repay the Loan Amount to the
Company.
(e) The Parties shall deliver to each other such other
agreements, instruments, opinions, certificates, and other documents referred to
in or contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Company and Sellers, jointly and severally, represent and warrant
to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with full power and authority to
conduct the Business as it is now being conducted, to own or use its assets, and
to perform all its obligations. Sellers have delivered or made available to
Buyer true and complete copies of the Company's Organizational Documents,
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as currently in effect. The Company is duly qualified and in good standing to do
business in New York and California and each other jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the lack of such
qualification would not have a Material Adverse Effect. Except as set forth on
Part 3.1(a) of the Disclosure Schedule, and except with respect to the Retained
Business, the Company does not directly or indirectly own any interest in any
corporation, joint venture or other entity.
(b) Each Joint Venture that is a legal entity has been duly
organized, is validly existing and is in good standing under the laws of the
jurisdiction of its formation, with full power and authority to conduct its
business as now being conducted and to own or use its assets and to perform all
of its obligations. Sellers have delivered or made available to Buyer true and
complete copies of the Organizational Documents of each Joint Venture, as
currently in effect. Each Joint Venture is duly qualified and in good standing
to do business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualifications necessary, except where the lack of such qualification would not
have a Material Adverse Effect. Except as set forth on Part 3.1(b) of the
Disclosure Schedule, the Joint Ventures do not directly or indirectly own any
interest in any corporation, joint venture or other entity.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been duly executed and delivered by the
Company and, assuming the valid execution and delivery by the other parties
hereto, constitutes the legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies, including specific performance, is
subject to the equitable principles and the discretion of the court before which
any proceeding therefor may be brought (whether at law or in equity). Upon the
execution and delivery by the Company of any other agreements to be executed at
Closing pursuant to this Agreement, such agreements shall, assuming the valid
execution and delivery by the other parties thereto, constitute the legal,
valid, and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the equitable principles and the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity). The Company
has the absolute and unrestricted right, power and authority to execute and
deliver this Agreement and such other agreements to which it is a Party and to
perform its obligations thereunder. The execution, delivery and performance of
this Agreement has been specifically authorized by the shareholders and
directors of the Company.
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(b) Except as set forth in Part 3.2 of the Disclosure
Schedule, neither the execution and delivery by the Company or Sellers of this
Agreement nor the consummation or performance by the Company or Sellers of any
of the Contemplated Transactions will:
(i) conflict with, violate or result in a breach
of (A) any provision of the Organizational Documents of the Company or
the Joint Ventures; or (B) any Legal Requirement or any Order to which
the Company or the Joint Ventures or any of their respective assets may
be subject; or
(ii) (A) contravene, conflict with, or result in
a violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
material Contract to which the Company or any of the Joint Ventures is
a Party; or (B) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets of the Company or the Joint
Ventures.
(c) Except for (i) filings under the HSR Act, (ii)
Consents that may be required under any Site Leases, and (iii) as set forth in
Part 3.2 of the Disclosure Schedule, the Company and each of the Joint Ventures
is not and will not be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION. The Company has authorized capital stock
consisting of: Three Hundred (300) shares of common stock, no par value, of
which 105.263157895 shares are issued and outstanding. All of the issued and
outstanding shares of the Company ("Shares") have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held beneficially and of
record by Sellers as set forth in Part 3.3 of the Disclosure Schedule. Except as
set forth in Part 3.3 of the Disclosure Schedule or any other part of the
Disclosure Schedule, (i) there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Company to
issue, sell, or otherwise cause to become outstanding any of its capital stock;
(ii) there are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Company; and (iii)
there is no liability or other indebtedness for dividends or other distributions
declared or accumulated and unpaid with respect to the capital stock of the
Company.
3.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Part 3.4 of the Disclosure
Schedule are the following financial statements of the Company (collectively,
the "Financial Statements"): (i) audited balance sheet and statement of income
as of and for the fiscal year ended December 31, 1995, and (ii) the unaudited
balance sheet and statement of income as of and for the fiscal year ended
December 31, 1996 (the "Most Recent Financial Statements"). The Financial
Statements
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(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis through the periods covered thereby and present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods; provided, however, that the Most
Recent Financial Statements lack footnotes and other presentation items.
(b) The Company has previously furnished to Buyer an
unaudited balance sheet and statement of operations as of December 31, 1996
relating to the Retained Businesses (the "Retained Business Financial
Statements"). The Retained Business Financial Statements have been prepared in
accordance with the policies stated therein.
3.5 ABSENCE OF CHANGES. Since December 31, 1996 and except as set
forth on Part 3.5 of the Disclosure Schedule, there has not been:
(i) Any change in the shares of capital stock of the
Company that are authorized or in those that are issued and
outstanding, or any grant of options, warrants, or other rights or
convertible or exchangeable securities calling for the issuance
thereof;
(ii) Any declaration of any dividend in respect of the
Shares which has not been paid;
(iii) Any change in the method of accounting or accounting
practices of Company; or
(iv) Any transaction by the Company outside the Ordinary
Course of Business.
3.6 PERMITS. Part 3.6 of the Disclosure Schedule lists
substantially all of the Permits held by the Company. Except as indicated on
Part 3.6 of the Disclosure Schedule, the Company has not received written notice
that any Governmental Body issuing any Permit intends to cancel, terminate,
modify or amend any Permit listed on Part 3.6 of the Disclosure Schedule.
Notwithstanding anything otherwise contained in this Agreement, including but
not limited to Section 3.13 hereof, this Section 3.6 shall be the only Section
in this Agreement which is applicable to, and under which the Sellers make any
representation with respect to, the Permits.
3.7 THE STRUCTURES AND SITE LEASES. (a) Part 3.7(a) of the
Disclosure Schedule lists all Site Leases of the Company. Sellers have delivered
or made available to Buyer true and complete copies of the Site Leases. On the
date hereof, the Site Leases are in full force and effect, and with respect to
those Site Leases to which the Company or a Joint Venture is a party, are
binding upon the Company or the Joint Ventures, respectively, and, to the
Company's Knowledge, on the other parties thereto, in accordance with their
terms, except as to those Site Leases the terms of which have expired, which
are, consequently, agreements "at will" or "month to month", as applicable.
Except as set forth on Part 3.7(a) of the Disclosure Schedule, each of
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the Structures located at any Site Lease or otherwise owned, leased or subleased
by the Company or the Joint Ventures are in condition to accept faces and in
adequate condition and repair for its current use, except for Structures as to
which the failure to meet any such requirement would not have a Material Adverse
Effect.
(b) Except as set forth in Part 3.7(b) of the Disclosure
Schedule (i) to the Company's Knowledge, no default by Company or any other
party has occurred under the Site Leases, (ii) to the Company's Knowledge, no
event, occurrence or condition exists which (with or without notice or lapse of
time or the happening of any further event or condition) would become a material
default by the Company or any Joint Venture thereunder or would entitle any
other party to terminate a Site Lease, to make a claim or set-off against
Company or otherwise to amend such Site Lease or prevent such Site Lease from
being renewed (if renewable) in accordance with its terms, except for any of the
foregoing which would not have a Material Adverse Effect, and (iii) the Company
and the Joint Ventures have not received any written notice of default,
termination or non-renewal under any Site Lease.
3.8 ADVERTISING CONTRACTS.
(a) Part 3.8(a) of the Disclosure Schedule contains a list of
all material Advertising Contracts as of the date hereof. Sellers have made
available or delivered to Buyer true and complete copies of all of the
Advertising Contracts set forth in Part 3.8(a) of the Disclosure Schedule.
(b) Except as set forth in Part 3.8(b) of the Disclosure
Schedule, all sales made to advertisers have been made pursuant to Advertising
Contracts. The Advertising Contracts set forth in Part 3.8(a) of the Disclosure
Schedule are in full force and effect, and with respect to those Advertising
Contracts to which the Company or a Joint Venture is a party, are binding upon
the Company or the Joint Venture and, to the Company's Knowledge, upon the other
parties thereto in accordance with their terms. Except as set forth in Part
3.8(b) of the Disclosure Schedule, or as would not have a Material Adverse
Effect, (i) no default by Company or, to the Company's Knowledge, by any other
party, has occurred under the Advertising Contracts set forth in Part 3.8(a) of
the Disclosure Schedule, and (ii) no event, occurrence or condition exists which
(with or without notice or lapse of time or the happening of any further event
or condition) would become a default by Company thereunder or would entitle any
other party to terminate an Advertising Contract set forth in Part 3.8(a) of the
Disclosure Schedule, to make a claim or set-off against Company or otherwise to
amend such Advertising Contract or prevent such Advertising Contract from being
renewed (if renewable) in accordance with its terms.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except for and to the
extent monetary liabilities and obligations are (a) provided for in the balance
sheet included in the Most Recent Financial Statements, (b) disclosed in Part
3.9 of the Disclosure Schedule or on any other Part of the Disclosure Schedule,
(c) incurred since the date of the Most Recent Financial Statements in
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the Ordinary Course of Business, or (d) any liability or obligation that may
result from any Section 338(h)(10) Election, the Company has no monetary
liabilities or obligations (whether direct, indirect, accrued or contingent) in
excess of $25,000 and there is no existing condition or situation which could
reasonably be expected to result in any such monetary liabilities or
obligations.
3.10 OWNED REAL PROPERTY. Part 3.10 of the Disclosure Schedule
contains a list of all Owned Real Property. The Company has good and marketable
record title to the Owned Real Property, to the extent set forth in the Pioneer
National Title Insurance Co. and the Title Guarantee Company Policy No.
T41-88-01644 (together, the "Title Policy"), such title being a fee interest in
the Owned Real Property. The Company has not received any notice of pending or
Threatened claims, Proceedings, planned public improvements, annexations,
special assessments, rezonings or other adverse claims affecting the Owned Real
Property. To the Knowledge of the Company and the Sellers, all improvements on
the Owned Real Property are in compliance with all applicable Legal
Requirements, except for those that if not in compliance would not have a
Material Adverse Effect.
3.11 TITLE, ENCUMBRANCES. Except as set forth on Part 3.11 of the
Disclosure Schedule, (i) the Company owns or has good title to all of its
assets, and (ii) all of such assets are owned by Company free and clear of all
Encumbrances except for Permitted Liens.
3.12 TAXES.
(a) Except as set forth on Part 3.12 of the Disclosure
Schedule, and except for Taxes that might arise as a result of the signing of
this Agreement or the consummation of the Contemplated Transactions, the Section
338(h)(10) Election, the Company has (i) correctly prepared and timely filed all
Tax Returns required to be filed by it in respect of any Taxes, (ii) timely and
properly paid all Taxes that are due and payable, (iii) established on its books
and records reserves that are adequate for the payment of all Taxes not yet due
and payable, and (iv) complied in all respect with all applicable laws, rules
and regulations relating to the payment and withholding of Taxes and has timely
and properly withheld from employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld and paid over
under all applicable Legal Requirements.
(b) Except as set forth Part 3.12 of the Disclosure Schedule,
no deficiency for any Taxes has been proposed, asserted or assessed against the
Company which has not been resolved and paid in full. The Company has not waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(c) Except as set forth on Part 3.12 of the Disclosure
Schedule, no Tax Returns with respect to the Company for taxable periods ended
on or after December 31, 1990 have been audited, and no Tax Returns of the
Company are currently the subject of audit. The
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Company has delivered or made available to the Buyer correct and complete copies
of all Tax Returns filed by the Company since December 31, 1990.
(d) The Company is not a party to any Tax allocation or
sharing agreement and is not liable for the Taxes of any other Person.
(e) The Company has not been a member of an affiliated group
within the meaning of IRC Section1504 which filed or was required to file a
consolidated Tax Return.
(f) The Company is an "S corporation" having elected that
status pursuant to IRC Section 1362 effective March 1, 1989.
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company has complied
in all respects with (i) all Legal Requirements applicable to the Company with
respect to Site Leases, Structures and Advertising Contracts, except in each
case for any such noncompliance which would not have a Material Adverse Effect,
and (ii) all other Legal Requirements of the Company; provided, however, that
this Section 3.13 shall not be applicable to, or be deemed to include any
representation or warranty with respect to, any Permit or any Legal Requirement
relating to any Permit. Except as disclosed in Part 3.13 of the Disclosure
Schedule, the Company has not been Threatened to be charged with or given
written notice of any violation of (which has not been cured), nor to the
Company's and Sellers' Knowledge, is the Company under investigation with
respect to any violation of, any Legal Requirements applicable to the Company.
3.14 LEGAL PROCEEDINGS; ORDERS. Except as set forth in Part 3.14 of
the Disclosure Schedule, there is no Proceeding pending or, to the Knowledge of
the Company and Sellers, Threatened against the Company or that challenges, or
may have the effect of preventing or otherwise interfering with any of the
Contemplated Transactions, and there is no Order to which the Company is
subject.
3.15 OTHER CONTRACTS.
(a) Except as disclosed in Part 3.15(a) of the Disclosure
Schedule the Company and each Joint Venture is not a Party to or bound by (i)
any agreement evidencing indebtedness for money borrowed by the Company or for
loans made by the Company in excess of $25,000; (ii) any joint venture,
partnership or Other Contract involving a sharing of profits, losses, costs or
liabilities by the Company with any other person; (iii) any non-competition or
non-solicitation agreement containing covenants that in any way purport to
restrict the business activity of the Company with respect to the Business; (iv)
any power of attorney of the Company that is currently effective and
outstanding; (v) any written guaranty, performance bond or letter of credit of
the Company; (vi) any written indemnity of the Company provided in connection
with the acquisition or disposition of a business by the Company since January
1, 1992; (vii) any collective bargaining agreement, employment agreement or
confidentiality agreement; (viii) any
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sales agency agreements or other agreement of the Company providing for sales
commissions; (ix) any management contracts; and (x) any Other Contract
obligating the Company for payments in excess of Twenty-Five Thousand Dollars
($25,000) per year which is not cancelable by the Company or a Joint Venture,
without penalty within a thirty (30) day period. The Company has delivered or
made available to Buyer true and complete copies of all such Contracts. The
Other Contracts listed on Part 3.15(a) of the Disclosure Schedule are
collectively referred to as the "Material Other Contracts".
(b) The Material Other Contracts are in full force and effect,
and are binding upon the Company or the Joint Ventures, as applicable, and, to
the Company's Knowledge, upon the other parties thereto. Except as set forth in
Part 3.15(b) of the Disclosure Schedule, (i) no default by the Company or, to
the Company's Knowledge, any other party, has occurred under the Material Other
Contracts, and (ii) no event, occurrence or condition exists which (with or
without notice or lapse of time or the happening of any further event or
condition) would become a default by Company or a Joint Venture, as applicable,
thereunder or would entitle any other party to terminate a Material Other
Contract, to make a claim or set-off against Company or otherwise to amend such
Material Other Contract or prevent such Material Other Contract from being
renewed (if renewable) in accordance with its terms.
3.16 INSURANCE. The Company maintains in full force and effect
policies of fire and other casualty, liability, title and other forms of
insurance covering its assets and the Business, and the operation thereof, of
the types and with the amounts of coverage as are consistent with industry
standards for outdoor advertising businesses comparable to the Business. All
such policies are in full force and effect, all premiums with respect thereto
have been paid, and no notice of cancellation or termination has been received
by the Company, or to the Knowledge of the Company and the Sellers, Threatened
to be given, with respect to any such policy. Part 3.16 of the Disclosure
Schedule lists all claims pending or for which coverage is disputed under any
such insurance policy.
3.17 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.17 of the
Disclosure Schedule:
(a) The Company is, and at all times has been, in material
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law, except for those violations and liabilities that would
not have Material Adverse Effect. There are no pending or, to the Knowledge of
the Company and Sellers, Threatened Encumbrances resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law.
(b) Neither the Company nor the Sellers has Knowledge of, nor
has the Company received, any written citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to any alleged
actual or potential liability with respect to Hazardous Materials.
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(c) The Company and Sellers have not initiated and do not
possess any reports, studies, analyses, tests, or monitoring pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the properties
owned or leased by the Company or the Joint Ventures.
3.18 INTANGIBLE PROPERTY. Except as set forth in Part 3.18 of the
Disclosure Schedule, the Company uses no Intangible Property in connection with
the operation of the Business except for the Permits, the Books and Records, the
trade name "Xxx Xxxxxx" and licenses for commonly available software programs
under which Company is the licensee.
3.19 RELATIONSHIPS WITH AFFILIATES. Except as set forth on Part
3.19 of the Disclosure Schedule, (a) the Company is not a party to any contract
with any of the Sellers or other Affiliates of the Company or immediate family
members of Sellers or such Affiliates, and (b) neither of the Sellers nor any of
their Affiliates or any of their respective immediate family members, or any
other Affiliate of Company, is the owner (of record or as a beneficial owner) of
an equity interest or any other financial or profit interest in, a Person that
has business dealings or a material financial interest in any transaction with
Company.
3.20 BROKERS OR FINDERS. The Company has not incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement that will not be paid by Sellers at or prior to the Closing.
3.21 LABOR MATTERS. (a) Except as set forth in Part 3.21(a) of the
Disclosure Schedule, (i) the Company is not a party to or bound by, and its
employees are not covered by, any labor or collective bargaining agreement; (ii)
there are no pending or, to the Company's and Sellers' Knowledge, Threatened
strikes, work stoppages, slowdowns, lockouts, unfair labor practice charges or
complaints, grievances or arbitrations arising out of a collective bargaining
agreement, or other labor disputes against the Company and during the past three
(3) years there has not been any such action or proceeding; (iii) there are no
pending or, to the Company and Sellers' Knowledge, Threatened complaints,
charges or claims against the Company with any Governmental Authority regarding
the employment or termination of employment by the Company of any individual;
(iv) except as previously provided or made available to the Buyer, the Company
has no written personnel policies applicable to employees; and (v) no union
organization campaign is presently in progress.
(b) Part 3.21(b) of the Disclosure Schedule lists the names of
all present employees of the Company, the total compensation payable to each,
and accrued sick, personal and vacation days for each (or pay in lieu thereof),
except for the Executives. The Joint Ventures do not have any employees.
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3.22 EMPLOYEE BENEFIT MATTERS.
(a) Part 3.22(a) of the Disclosure Schedule lists each
Employee Benefit Plan that the Company maintains or to which the Company
contributes.
(i) Except as set forth on Part 3.22(a)(i) of
the Disclosure Schedule, each such Employee Benefit Plan that is not a
Multiemployer Plan (and each related trust, insurance contract, or
fund) complies in form and in operation in all material respects with
the applicable requirements of ERISA and the IRC.
(ii) With respect to each Employee Pension
Benefit Plan that is not a Multiemployer Plan maintained by the Company
that is intended to qualify under Code Section401(a) (A) the Company
has made available to Buyer the most recent opinion letter issued by
the IRS, and (B) to the Company's Knowledge, there have been no
prohibited transactions (within the meaning of Section 406 of ERISA or
IRC Section4975) for which no exemption exists under Section 408 of
ERISA or IRC Section4975 and for which there is any material liability
or civil penalty assessed pursuant to Section 502 of ERISA or material
taxes imposed by IRC Section4975.
(iii) The Company has delivered or made available
to the Buyer correct and complete copies of the plan documents and
summary plan descriptions, the most recent opinion letter received from
the IRS, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements with
respect to each of the Company's Employee Benefit Plans that is not a
Multiemployer Plan.
(b) With respect to each Employee Benefit Plan that is
not a Multiemployer Plan that the Company maintains or to which it contributes,
or is required to contribute:
(i) No such Employee Benefit Plan is or has been
subject to Title IV of ERISA.
(ii) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of
the assets of any such Employee Benefit Plan (other than routine claims
for benefits) is pending, or to the Knowledge of Sellers and the
Company, Threatened.
(c) Except as set forth on Part 3.22(c) of the Disclosure
Schedule, the consummation of the Contemplated Transactions will not in and of
itself entitle any current or former employee or officer of the Company to any
severance pay, unemployment compensation or any other payment that would not
have otherwise been payable had the Contemplated Transactions not been
consummated, and the consummation of the Contemplated Transactions will not in
and of itself accelerate the time or vesting of payments or increase the amount
of
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payments due to any current or former employee or officer of the Company in a
manner that would not have resulted had the Contemplated Transactions not been
consummated.
(d) With respect to each Employee Benefit Plan to which the
Company contributes or is required to contribute that is a Multiemployer Plan,
the Company has made all requested contributions to any such Multiemployer Plan.
(e) As used in this Section 3.22, the term "Company" shall be
deemed to include any other corporation, trade, business or other entity, other
than the Company, which would, together with the Company, now or in the past,
constitute a single employer within the meaning of IRC Section 414.
3.23 BOOKS AND RECORDS. The books of account, and other Books and
Records of Company are complete and correct in all material respects and have
been maintained in accordance with sound business practices. The Company has
provided or made available to Buyer a true and complete set of the Company's
Organizational Documents and minute books.
3.24 ASSETS NECESSARY FOR CONDUCT OF BUSINESS. After giving effect
to the transfer of the Retained Business, the Company shall own all the assets
and have all the rights necessary for the conduct of the Business as presently
conducted.
3.25 BANK ACCOUNTS. Part 3.25 of the Disclosure Schedule sets forth
the name of each bank or similar entity in which the Company has an account,
lock box or safe deposit box and the names of the persons authorized to draw
thereon or have access thereto.
3A. REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each of the Sellers, severally and not jointly, represents and warrants
to Buyer as follows with respect to himself:
3A.1 AUTHORITY OF SELLER; NO CONFLICT.
(a) This Agreement constitutes (assuming the valid execution
and delivery by the other parties hereto) the legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the equitable principles and the discretion
of the court before which any proceeding therefor may be brought (whether at
laws or equity). Upon the execution and delivery by such Seller of any other
agreements to be executed at Closing pursuant to this Agreement, such agreements
will, assuming the valid execution and delivery by the other parties thereto,
constitute the legal, valid, and binding obligations of such Seller, enforceable
against
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such Seller in accordance with their respective terms except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the equitable principles and the discretion of the court before which any
proceeding therefor may be brought (whether at laws or equity). Subject to
release of the Pledge, repayment of the Bank Payment and the Xxxxxxx Loan, and
the cancellation of the Shareholders' Agreement, such Seller has the absolute
and unrestricted right, power and authority to execute and deliver this
Agreement and the other agreements to which he is a Party, to transfer his
Shares to Buyer, and to perform his obligations hereunder and thereunder.
(b) Except as set forth in Part 3A.2 of the Disclosure Schedule,
neither the execution and delivery by such Seller of this Agreement and the
other agreements to which he is a party nor the consummation or performance by
such Seller of any of the Contemplated Transactions will:
(i) conflict with, violate or result in a breach of any
Legal Requirement or any Order to which such Seller may be subject; or
(ii) (A) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Contract to which such Seller is a party or any interest or rights of
such Seller in or to his Shares; or (B) result in the imposition or
creation of any Encumbrance upon or with respect to any of his Shares.
(c) Except for filing under the HSR Act and as set forth
in Part 3A.2 of the Disclosure Schedule, such Seller is not and will not be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or any of the
Closing Documents or the consummation or performance of any of the Contemplated
Transactions.
3A.2 TITLE TO SHARES. Such Seller has, and will have at the Closing
Date, good title to the Shares to be conveyed by such Seller as provided in
Section 2.1 above, and such Seller owns such Shares free and clear of any
Encumbrances other than the Pledge, the Bank Payment, the restrictions contained
in the Shareholders' Agreement and the right of the Company to purchase
Xxxxxxx'x Shares under certain circumstances, all of which shall be released at
Closing.
3A.3 BROKERS OR FINDERS. Sellers have not incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement that will not be paid by Sellers at Closing, subject to provisions of
Section 11.1 hereof.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been duly and validly executed and delivered
by Buyer and (assuming the valid execution and delivery by the Company and the
Sellers) constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the equitable principles and the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity). Upon the
execution and delivery by Buyer of the other agreements to be executed and
delivered at Closing to which Buyer is a party, such agreements will (assuming
the valid execution and delivery by the other parties thereto) constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the equitable
principles and the discretion of the court before which any proceeding therefor
may be brought (whether at law or in equity). Buyer has the absolute and
unrestricted right, power, and authority to execute and deliver this Agreement
and the other agreements to which it is a party and to perform its obligations
thereunder. The execution and delivery of this Agreement and the other
agreements to which it is a party have been authorized by Buyer's Board of
Directors, and no other corporate or other proceedings are necessary to
authorize the execution and delivery of the Agreement or any other agreement to
be executed in connection herewith or the performance or consummation of any of
the Contemplated Transactions.
(b) Except for the consent of Buyer's Bank (which is not, however, a
condition to Buyer's obligation to close hereunder) neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will (i) conflict with, violate or
result in a breach of any provision of Buyer's Organizational Documents, or any
Legal Requirement or Order to which Buyer may be subject; (ii) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify
any material Contract to which Buyer is a party or by which Buyer may be bound;
or (iii) result in the imposition or creation of any Encumbrance upon or with
respect to any of the material assets of Buyer. Except for filings under the HSR
Act and except for the consent of Buyer's Bank (which is not, however, a
condition to Buyer's obligation
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to close hereunder), Buyer is not and will not be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no Proceeding pending or, to
Buyer's Knowledge, Threatened that challenges, or may have the effect of
preventing, or otherwise interfering with any of the Contemplated Transactions.
4.4 BROKERS OR FINDERS. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement that will
not be paid by the Buyer.
4.5 INVESTMENT. The Buyer is an Accredited Investor. The Buyer is
buying the Shares for its own account and not with a view to the public
distribution thereof, and will not sell or transfer such Shares in violation of
the Securities Act, or any applicable state securities or "blue sky" laws.
5. COVENANTS
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, Sellers will, and will cause the Company and its
Representatives to, afford Buyer and its Representatives reasonable access
during normal business hours to the Company's personnel, properties, Books and
Records, and other documents and data, and furnish Buyer and its Representatives
with copies of the same. Sellers and the Company shall cooperate with Buyer to
provide all information and take all actions reasonably requested by Buyer in
conjunction with Buyer's Financing Arrangements which shall specifically exclude
any payments of money.
5.2 OPERATION OF THE COMPANY. Except as otherwise set forth in
Part 5.2 of the Disclosure Schedule or as expressly contemplated by this
Agreement, between the date of this Agreement and the Closing Date, the Company
will:
(a) operate only in the Ordinary Course of Business;
(b) use commercially reasonable efforts to maintain the
Business, and maintain the relations and good will with advertisers, landlords,
employees, suppliers, distributors, customers and others associated with the
operation of the Company;
(c) confer on a regular and frequent basis with Buyer and its
Representatives to discuss operational matters and the general status of ongoing
operations;
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(d) promptly notify Buyer of any material changes in the
Business, or the properties, assets, condition (financial or other), results of
operations or prospects of the Company;
(e) notify Buyer at least twenty-four hours prior to entering
into a collective bargaining agreement, and give Buyer the reasonable
opportunity to comment with respect to the terms thereof; and
(f) be permitted to pay any professional fees to lawyers,
accountants, investment banking or brokerage fees incurred by the Sellers or the
Company, in each case in connection with the execution and delivery of this
Agreement and the performance of the Contemplated Transactions.
5.3 NEGATIVE COVENANT. Except for the transfer of the Retained
Business and the transfer of the name "Xxx Xxxxxx" and related trademarks, logos
and similar Intangible Property as contemplated by Sections 5.12 and 5.13
hereof, and except as otherwise expressly contemplated by this Agreement or the
Disclosure Schedule, between the date of this Agreement and the Closing Date,
Sellers will not, and will not permit the Company to:
(a) take any action with respect to the Business that is not
in the Ordinary Course of Business.
(b) (i) amend or propose to amend the Company's charter or
bylaws; or (ii) split, combine or reclassify its outstanding capital stock or
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise;
(c) (i) authorize the issuance of, or issue, sell, grant,
pledge or dispose of, or agree to issue, sell, grant, pledge or dispose of, any
additional shares of, or any options, warrants, or rights of any kind to acquire
any shares of, the capital stock of the Company of any class or any debt or
equity securities convertible into or exchangeable for such capital stock, (ii)
amend or agree to amend any stock option plans of the Company or agreements with
respect thereto; (iii) sell (including, without limitation, by sale-leaseback),
pledge, dispose of or encumber any assets of the Company or interest therein,
other than as provided in Part 5.3(c) of the Disclosure Schedule, or
dispositions of assets (other than sales of advertising space pursuant to the
Advertising Contracts) in the Ordinary Course of Business not exceeding $250,000
in the aggregate, (iii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock, (iv) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(d) acquire, or publicly propose to acquire, all or any
substantial part of the business and properties or capital stock of any Person,
whether by merger, purchase of assets, tender offer or otherwise;
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(e) initiate, solicit or encourage, and will direct and use
its best efforts to cause any officer, director or employee, investment banker,
attorney, accountant or other agent employed or retained by the Company not to
initiate, solicit or encourage, any proposal or offer to acquire all or any
substantial part of the business and properties or capital stock of the Company,
whether by merger, purchase of assets, tender offer or otherwise; and will not
engage in any negotiations with respect thereto with any other Person; provided,
that the restrictions contained in this Section 5.3(e) shall be null and void
and of no further force and effect if the Closing has not occurred within 90
days of the date hereof;
(f) except as set forth on Part 5.3(f) of the Disclosure
Schedule, enter into or amend any employment, severance, bonus, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees of the
Company;
(g) except as set forth on Part 5.3(g) of the Disclosure
Schedule, adopt, enter into or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or retiree of the Company, except (i)
as required to comply with changes in applicable law occurring after the date
hereof and (ii) with respect to all plans, other than in the Ordinary Course of
Business;
(h) incur any indebtedness for money borrowed or guarantee any
such indebtedness or issue or sell any debt securities or make any loans or
advances, or make any capital expenditures except in the Ordinary Course of
Business;
(i) grant any general or limited power of attorney, proxy or
other similar delegation of authority, waive, toll or extend any statute of
limitations or compromise or settle any litigation, or arbitration, except (i)
to the extent that the defense or prosecution of any of the foregoing are in the
control of an insurance company on behalf of the Company, (ii) with respect to
the compromise or settlement of the pending arbitration listed on Part 3.14 of
the Disclosure Schedule, or (iii) for an amount less than $25,000;
(j) agree in writing, or otherwise, to take any of the
foregoing actions or any other action which would make any representation or
warranty of Sellers or the Company contained in this Agreement untrue or
incorrect in any material respect as of the Closing Date; and
(k) except as contemplated by Sections 5.13 and 5.14 hereof,
prepay any liability with respect to the Retained Business.
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5.4 REQUIRED APPROVALS AND CONSENTS. As promptly as practicable
after the date of this Agreement, Sellers will make, and will cause the Company
to make, and Buyer will make, all filings required by Legal Requirements,
including, without limitation, the HSR Act, to be made by them in order to
consummate the Contemplated Transactions.
5.5 BEST EFFORTS. (a) Between the date of this Agreement and the
Closing Date, Sellers will use their, and will cause Company to use its, Best
Efforts to cause the conditions in Article 7 and 8 to be satisfied, and will
take all actions contemplated by Article 6 hereof; provided, that this Agreement
will not require Sellers or Company to dispose of or make any change in any
portion of the Business prior to the Closing.
(b) Between the date of this Agreement and the Closing Date,
Buyer will use its Best Efforts to cause the conditions in Article 7 and 8 to be
satisfied.
5.6 NOTIFICATION. (a) Between the date of this Agreement and the
Closing Date, Sellers will notify Buyer in writing if Sellers, or either of
them, or the Company become aware of any fact or condition that causes or
constitutes a material breach of any of Sellers' representations and warranties
as of the date of this Agreement, or if Sellers or the Company become aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
material breach of any such representation or warranty had such representation
or warranty been made as of the time of occurrence or discovery of such fact or
condition. During the same period, Sellers will notify Buyer of the occurrence
of any event that may make the satisfaction of the conditions in Article 7
impossible or unlikely.
(b) Between the date of this Agreement and the Closing Date,
Buyer will notify Sellers in writing if Buyer becomes aware of any fact or
condition that causes or constitutes a material breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a material breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, Buyer will notify Sellers of
the occurrence of any breach of any covenant of Buyer in this Section 6 or of
the occurrence of any event that may make the satisfaction of the conditions in
Section 8 impossible or unlikely.
5.7 ENCUMBRANCES AND SECURITY INTERESTS. Sellers agrees to obtain
at or prior to Closing and deliver to Buyer at the Closing releases of all
Encumbrances on the assets of the Company or the Shares, other than Permitted
Liens.
5.8 NON-TRANSFERRED EMPLOYEES. At least twenty business days prior
to the Closing Date, Buyer shall notify Sellers in writing of those employees of
the Company whose
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employment Buyer shall terminate on or within thirty (30) days after the Closing
Date (the "Non-Transferred Employees").
5.9 FINANCIAL TRANSACTIONS AT THE CLOSING. At least two business days
prior to the Closing Date, Sellers shall notify Buyer in writing of the amount
of the Bank Payment and the Xxxxxxx Loan on the expected Closing Date. The
Parties agree to take all actions and make all such payments as contemplated by
Section 2.5 hereof.
5.10 NON-SOLICITATION; RELEASE. Sellers shall, and shall cause each
Executive to, execute and deliver to Buyer at the Closing (i) a Non-Solicitation
Agreement in the form attached hereto as Exhibit A (the "Non-Solicitation
Agreements"); and (ii) a general release in favor of the Company in form and
substance mutually satisfactory to the parties. Buyer acknowledges and agrees
that (i) Sellers and the other Executives are currently engaged in the business
of leasing rotating signage systems and soliciting and selling advertising for
display on such signage, and the business of installing and maintaining
basketball backboards and soliciting and selling advertising or sponsorship
space thereon and other indoor and outdoor advertising business, and (ii)
Sellers and the other Executives may continue to operate such businesses, the
Retained Business and any other businesses not expressly prohibited by the terms
of their respective Non-Solicitation Agreements.
5.11 SECTION 338(H)(10) ELECTION. (a) Sellers hereby covenant and agree
with Buyer that if Buyer so elects, Sellers will join in making an election
under Section 338(h)(10) of the Code, and the regulations promulgated
thereunder, and any applicable analogous provision of state or local law, with
respect to the sale and acquisition of the Shares hereunder (the "Section
338(h)(10) Elections").
(b) In the case of any Section 338(h)(10) Elections that are made
in accordance with this Section 5.11,
(i) Buyer shall be responsible for the preparation and timely
filing of all Company returns, documents, statements and other forms
required to be filed with any federal, state or local taxing authority or
any other Governmental Body in connection with the Section 338(h)(10)
Elections (the "Section 338 Forms"); and
(ii) Sellers shall cooperate with Buyer to enable Buyer to
prepare and file all Section 338 Forms and shall execute and deliver to
Buyer such documents or forms as are required by the Code or the
regulations promulgated thereunder (and any applicable analogous provision
of state or local law) to properly complete the Section 338 Forms and to
complete the Section 338 Elections, provided that such material is
completed and delivered by Buyer to Sellers for execution at least 60 days
prior to the date Buyer wishes to file such material.
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(c) In the case of any Section 338(h)(10) Elections that are made
in accordance with this Section 5.11,
(i) Buyer shall be responsible for and pay any and all
tax liability or other Taxes of the Company that arises under the
provisions of Sections 1374 or 1375 of the Code that arises as a result
of such Section 338(h)(10) Elections and all state, local or other tax
liability or Taxes that arises as a result of such Section 338(h)(10)
Elections and shall, notwithstanding the provisions of Section 3.12 of
this Agreement, indemnify and hold the Sellers harmless from any such
tax liability or other Taxes; and
(ii) Buyer shall, as an increase to the Purchase Price set
forth in Section 2.3 of this Agreement, pay to Sellers, pro rata based
upon their respective stock ownership, an amount equal to (A) that
portion of any gain reported by the Company as a result of a Section
338(h)(10) Elections which is not characterized as capital gain, times
(B) the "Effective Tax Rate Differential," which shall equal the
highest marginal federal income tax rate on ordinary income in effect
for the period during the calendar year 1997 that includes the Closing
Date minus the federal capital gains tax rate in effect for the period
during the calendar year 1997 that includes the Closing Date, which
amount shall then be further divided by the result obtained by
subtracting (x) the sum of the federal capital gains tax rate in effect
for the period during the calendar year 1997 and the highest marginal
state income tax rate of the Sellers in effect for the period during
the calendar year 1997 that includes the Closing Date, minus such
marginal state and local income tax rate times highest marginal federal
income tax rate in effect for the period during the calendar year 1997
that includes the Closing Date from (y) one (1).
(iii) If (A) the gain reported by the Company on the final
S returns, or any amended returns or as a result of a final IRS
determination or otherwise, is more or less than the gain used in
determining the amount due under Section 5.11(c)(ii), and/or (B)
legislation is enacted which retroactively changes the tax rates to be
used in making such determination resulting in an Effective Tax Rate
Differential which is more or less than the Effective Tax Rate
Differential determined at the time the payment under Section
5.11(c)(ii) is made, then the Purchase Price shall be further increased
or decreased, as appropriate, to account for the foregoing. Any such
further adjustments to the Purchase Price under this Section
5.11(c)(iii), shall be promptly made by Sellers or Buyer upon
notification by such Party that such amounts are due.
(iv) All accountants,' legal and all other fees, costs and
other expenses which are not unconscionable and which are incurred by
the Sellers in good faith in connection with the filings and all other
transactions contemplated by this Section 5.11 shall be borne by Buyer.
(d) The Buyer shall be responsible for preparing the final
subchapter-S corporate tax returns of the Company for the year commencing
January 1, 1997 (the "S Return")
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which shall include the gain(s) reported as a result of the deemed sale of the
Company assets provided by such Section 338(h)(10) Elections provided however
that the Buyers shall include in such returns all information provided by
Sellers with respect to all items of income, loss, deduction, or credit that
arises from all activities other than the items resulting from such Section
338(h)(10) Election. Sellers and Buyer shall provide each other with such
information and cooperation as may reasonably be required to complete such
returns. Buyer shall provide Sellers with a copy of any such return, for their
review and comment, no later than sixty (60) days prior to the due date for
filing such return.
(e) For purposes of determining the payments to be made by Buyer
to Sellers in accordance with Section 5.11(c)(ii) hereof, Buyer shall notify
Sellers in writing of its intention to make a Section 338(h)(10) Election or
file the S Return not more than thirty (30) business days prior to the
anticipated date of such filing. Sellers shall, not more than ten (10) business
days thereafter, deliver to Buyer estimates of Sellers' accountants as to the
amounts to be paid by Buyer to Sellers under Section 5.11(c)(ii) hereof. All
amounts to be paid by Buyer to Sellers pursuant to Section 5.11(c)(ii) hereof
shall be made in immediately available funds no later than the one business day
prior to the date of the filing by Buyer of the S Return.
(f) All of the obligations of Sellers under this Section 5.11 are
conditioned upon and subject to payment by Buyer to Sellers of the payments due
as provided in this Section 5.11.
(g) Buyer shall pay to Sellers an amount equal to $100,000 for
each day any payment due under this Section 5.11 (other than the payments to be
made under Section 5.11(c)(iv)) has not been so paid on the date due.
5.12 DELIVERY OF FINANCIAL STATEMENTS. (a) Sellers agree to deliver
the Audited 1996 Financial Statements to Buyer not less than twenty days prior
to the Closing Date (provided, that if the Closing Date is prior to May 31,
1997, such delivery shall be made no later than seven days prior to the Closing
Date), which shall be prepared in accordance with GAAP applied on a consistent
basis through the periods covered thereby, and will present fairly the financial
condition of the Company as of December 31, 1996 and the results of operations
of the Company for the period then ordered.
(b) From the date hereof through the Closing Date, Sellers shall
use their Best Efforts to cause the Company to deliver to Buyer a monthly
statement of operations for the previous month as soon as available and in any
event within thirty (30) calendar days after the end of each month; provided,
that such statements for the months of January, February and March of 1997 shall
not be required to be provided to Buyer before May 15, 1997.
5.13 TRANSFER OF RETAINED BUSINESS. Sellers, Buyer and the Company
agree that as of a date which is prior to the Closing Date, the Company will
assign, transfer or otherwise divest itself of ("Transfer") the securities,
contracts and other assets owned by the Company listed on
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Part 5.13 of the Disclosure Schedule, all of which shall collectively be
referred to in this Agreement as the "Retained Business," and all obligations
with respect thereto shall be assumed by the assignee or other recipient
thereof. Notwithstanding any provision of this Agreement to the contrary,
including but not limited to Section 5.2(a), any business opportunity which
would not be a violation by Xxxxxx under the Non-Solicitation Agreement if the
effective date thereof were the date hereof, shall be deemed to be an
opportunity derived for the benefit of Xxxxxx and, at Xxxxxx' discretion, may be
assigned prior to the Closing and shall, for purposes of this Agreement, be
deemed a "Retained Business".
5.14 INTERCOMPANY INDEBTEDNESS. The Parties hereto acknowledge that as
of a date which is prior to the Closing Date, the intercompany and related
company indebtedness set forth on Part 5.14 of the Disclosure Schedule owed to
the Company shall be contributed by the Company to the capital of the respective
debtors , or shall be cancelled in any such other manner as shall be determined
by Sellers, provided there is no adverse tax consequence to Buyer as a result
thereof.
5.15 TRANSFER AND USE OF NAME. At the Closing, the Company shall assign
to Xxxxxx or his designee all of the Company's rights and interests in the name
"Xxx Xxxxxx", together with any registered or unregistered trademarks, service
marks, trade names, logos or similar Intellectual Property relating to the name
"Xxx Xxxxxx" of the Company (collectively, the "Names") without recourse or
warranty. At the Closing, the Parties shall take all actions necessary and
desirable to change the name of the Company in accordance with the provisions of
this Section 5.15. At the Closing, Xxxxxx shall xxxxx to the Company a
nonexclusive, royalty free, worldwide license to use the "Xxx Xxxxxx" name for
thirty (30) days after the Closing Date in connection with the conduct of the
Business of the Company; provided that such license shall be for a period of 180
days after the Closing solely with respect to use of the Names on displays of
the Company. Buyer hereby agrees that, at the Closing, Buyer will change the
name of the Company or any successor to the Business of the Company from "Xxx
Xxxxxx" or any name similar to or containing the words "Xxx Xxxxxx" and that
neither the Buyer nor the Company nor any successor to the Business of the
Company nor any Affiliate of Buyer or the Company will continue to use the name
"Xxx Xxxxxx" or any name similar to or containing the words "Xxx Xxxxxx" in
connection with the Company or with the conduct of any Business. Within 180 days
following Closing, the Company shall modify all displays maintained by the
Company so that they no longer contain the name "Xxx Xxxxxx".
5.16 TERMINATION/ASSIGNMENT OF CONTRACTS. At or prior to the Closing,
Sellers shall cause all of the agreements described on Parts 5.3(f), 5.3(g) and
5.16 of the Disclosure Schedule (except for the Profit Sharing Plan defined in
Section 5.18, the Group Major Medical, Dental and Life Insurance, the Vision
Service Plan and the Group Long Term Disability Plan, all as described in Part
5.3(g) of the Disclosure Schedule) to be terminated or assigned and, if
assigned, to be assumed by the assignee thereof, unless a release of the Company
is given with respect thereto.
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5.17 TAXES. (a) After the Closing, and subject to the provisions of
Section 5.11 hereof, Sellers shall have the exclusive authority and obligation
to prepare and file, or cause to be prepared and filed, all income Tax Returns
of the Company for, or with respect to, income Taxes for all taxable periods
ended or prior to the Closing; provided, however, that the Tax Returns with
respect to the income of the Company that relate to the taxable year or other
taxable period which includes the Closing Date shall, to the extent permitted by
applicable law, be prepared by treating all items on such Tax Returns in a
manner consistent with the past practices of the Company with respect to such
items.
(b) Except as otherwise provided in Section 5.11 and except with
respect to current liabilities as contemplated in the definition of Closing Date
Net Working Capital, Sellers shall pay all Taxes of the Company with respect to
periods prior to the Closing Date.
5.18 PROFIT SHARING PLAN. Buyer hereby covenants and agrees that, (a)
coincident with the Closing, the Company shall assume the Van Wagner
Communications, Inc. Profit Sharing Plan (the "Profit Sharing Plan"), retaining
all liabilities of the Profit Sharing Plan, (b) upon the Closing, the Company
shall (i) appoint a committee to administer the Profit Sharing Plan, (ii)
appoint a trustee or trustees of the trust maintained under the Profit Sharing
Plan, and (iii) enter into an agreement with such trustees to maintain the
Profit Sharing Plan, subject to the requirements of the Profit Sharing Plan and
(c) Buyer shall take all actions necessary to permit each Profit Sharing Plan
participant and beneficiary to receive prompt payment of any distribution to
which such participant or beneficiary is entitled under the Profit Sharing Plan.
Nothing in this Section 5.18 shall be construed to impose on the Buyer any
obligation to continue to maintain the Profit Sharing Plan with respect to
periods after the Closing Date.
5.19 PAYMENTS TO EMPLOYEES. On the Closing Date, the Company will have
paid or accrued as a current liability all wages (including vacation pay),
bonuses and commissions, which shall be prorated as of Closing, due to its
employees under any contracts or other agreements of the Company for payment of
any of the foregoing.
5.20 INSURANCE. Sellers agree that all of the insurance claims described
in Item 4 on Part 3.16 of the Disclosure Schedule shall remain the obligations
of Sellers (unless or until the insurance company of the Company (basic and
umbrella coverage) agrees that the claim is a covered claim), provided that
Buyer, at the expense of Sellers, (i) maintain in full force and effect the
insurance policy under which such claim is made, (ii) cooperate in the defense
of such claim, and (iii) take all actions reasonably requested by Sellers in
connection with the foregoing. Sellers shall have the sole right to control and
settle such claim, provided that Sellers pay all costs and expenses with respect
thereto.
6. COVENANTS OF THE PARTIES RELATING TO ANTITRUST MATTERS
6.1 ANTITRUST FILINGS. In addition to and without limiting the
covenants and agreements of the Parties contained elsewhere in this Agreement:
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(a) The Parties shall use their Best Efforts to (i) as soon as
practicable, take all actions necessary to make the filings and notifications
required of such parties or any of their Affiliates under the HSR Act or any
Antitrust Law (as hereinafter defined), (ii) comply at the earliest practicable
date with any request for additional information or documentary material
received by Buyer, Sellers or the Company or any of their affiliates from the
FTC or the Antitrust Division. The Parties shall take all action necessary,
proper and advisable under applicable Legal Requirements with respect to the
following: (x) to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable, including, without limitation,
by responding as promptly as practicable to any inquiries received from the FTC
or the Antitrust Division or any Governmental Body for additional information or
documentation, (y) to cause the expiration or termination of applicable waiting
periods, the satisfaction of such other filing requirements, or the issuance of
such approvals, consents or authorizations as may be required with respect to
the Antitrust Laws of any foreign jurisdiction or any Governmental Body, and (z)
to avoid the entry of any decree, judgment, injunction or other Order, whether
temporary, preliminary or permanent, under any Antitrust Law, that would have
the effect of prohibiting, preventing or restricting consummation of the
Contemplated Transactions.
(b) The Parties shall, in connection with the efforts
referenced in the foregoing paragraph to obtain all requisite approvals and
authorizations for the Contemplated Transactions under Antitrust Laws (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry; (ii)
promptly inform the other Party of any communication to it from any Governmental
Body and permit the other Party to review in advance any proposed communication
from it to any Governmental Body or third party; and (iii) not arrange for or
participate in any meeting with any Governmental Body in respect of any filings,
investigation or other inquiry without consulting with each other in advance,
and, to the extent permitted by such Governmental Body, giving the other Party
the opportunity to attend and participate thereat.
(c) The Parties shall use their Best Efforts to resolve such
objections, if any, as may be asserted with respect to the Contemplated
Transactions under any Antitrust Law. If any administrative, judicial or
legislative action or proceeding is instituted (or threatened to be instituted)
challenging the Contemplated Transactions as violative of any Antitrust Law,
Buyer, Sellers and the Company shall each cooperate and use its Best Efforts
vigorously to contest and resist any such action or proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other Order (whether temporary, preliminary or permanent) that is in effect and
that restricts, prevents or prohibits (or seeks to restrict, prevent or
prohibit) consummation of the Contemplated Transactions, including, without
limitation, by vigorously pursuing all available avenues of administrative and
judicial appeal and all available legislative actions. Notwithstanding the
foregoing, the Company shall not be required to divest or hold separate or
otherwise take or commit to take any action that, prior to the Closing Date,
limits its freedom of action with respect to, or its ability to retain, any of
its businesses or assets.
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(d) Buyer shall also take, or agree to also take any action
that may be required (i) by the applicable Governmental Body (including, without
limitation, the FTC, the Antitrust Division or any state attorney general) in
order to resolve any objections that such Governmental Body may have to the
Contemplated Transactions under such Antitrust Law, or (ii) by any domestic or
foreign court or other tribunal, in any action or proceeding brought by a
private party or Governmental Body challenging such transactions as violative of
any Antitrust Law, in order to avoid the entry of, or to effect the dissolution,
vacating, lifting or reversal of, any Order that has the effect of restricting,
preventing or prohibiting the consummation of any such transactions, including,
without limitation, divesting or agreeing to divest any stock or other equity
interest of a corporation or other entity or assets of any nature.
Notwithstanding any other provision of this Agreement, Buyer shall take any
action required by this Article 6 so as to enable the Closing to take place not
later than 150 days after the date hereof.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in writing, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. Sellers' representations and
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date (except for those
representations and warranties made as of a specific date which shall be
accurate in all material respects as of the date made), and Buyer shall have
received a certificate of Sellers, dated as of the Closing Date, as to such
accuracy.
7.2 SELLERS' PERFORMANCE. The covenants and obligations that
Sellers are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing must have been performed and complied with in all
material respects, including, without limitation, the release of all
Encumbrances on the Shares, and Buyer shall have received a certificate of
Sellers, dated as of the Closing Date, as to such compliance.
7.3 ADDITIONAL DOCUMENTS. Each of the following documents must
have been delivered to Buyer:
(a) a favorable opinion of counsel to Sellers and the Company
dated the Closing Date, to the effect set forth on Exhibit B;
(b) the deliveries required from Sellers and the Company in
Section 2.5; and
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(c) such other documents as Buyer may reasonably request for the
purpose of (i) evidencing the satisfaction of any condition referred to in this
Article 7, or (ii) otherwise facilitating the consummation or performance of any
of the Contemplated Transactions.
7.4 NO PROCEEDINGS. Since the date of this Agreement, there must not have
been commenced and pending or Threatened any Proceeding (other than a Proceeding
relating to the HSR Act or other Antitrust Law) by a third party (i) involving
any challenge to, or seeking damages or other relief in connection with, any of
the Contemplated Transactions, or (ii) that prevents, makes illegal, or
otherwise materially interferes with any of the Contemplated Transactions or
seeks to do any of the foregoing.
7.5 CHANGE IN EBITDA. The EBITDA of the Company for the fiscal year ended
December 31, 1996, as calculated based on the Audited 1996 Financial Statements,
shall not be less than $7,816,000.
7.6 ABSENCE OF MATERIAL ADVERSE CHANGE. Since the date hereof, there will
not have been any Material Adverse Change.
7.7 TERMINATION/ASSIGNMENT OF AGREEMENTS AND PLANS. The agreements
described on Parts 5.3(f), 5.3(g) and 5.16 of the Disclosure Schedule (except
for the Profit Sharing Plan defined in Section 5.18, the Group Major Medical,
Dental and Life Insurance, the Vision Service Plan and the Group Long Term
Disability Plan, all as described in Part 5.3(g) of the Disclosure Schedule),
shall have been terminated or assigned and, if assigned, to be assumed by the
assignee thereof, unless a release of the Company is given with respect thereto.
7.8 NO PROHIBITION. Except for any Legal Requirement of or with respect to
the HSR Act or the Antitrust Division, there must not be in effect any Legal
Requirement or injunction or other Orders that prohibits or materially restricts
the consummation of the Contemplated Transactions.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE
Sellers' obligations to sell the Shares and Sellers' obligations to take
the other actions required to be taken by Sellers at the Closing are subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Sellers, in writing, in whole or in
part):
8.1 ACCURACY OF REPRESENTATIONS. Buyer's representations and warranties in
this Agreement must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, and Sellers shall have received a
certificate of an executive officer of Buyer, dated as of the Closing Date, as
to such accuracy.
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8.2 BUYER'S PERFORMANCE. The covenants and obligations that Buyer
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing must have been performed and complied with in all material
respects, and Sellers shall have received a certificate of an executive officer
of Buyer, dated as of the Closing Date, as to such compliance.
8.3 PAYMENT OF PURCHASE PRICE. The Buyer shall have paid the
Purchase Price to Seller at Closing in accordance with the terms hereof.
8.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Sellers:
(a) a favorable opinion of counsel to Buyer dated the Closing
Date, to the effect set forth in Exhibit C;
(b) the deliveries required from Buyer in Section 2.5; and
(c) such other documents as Sellers may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Article 8, or (ii) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced and pending or Threatened any Proceeding by a third
party (i) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (ii) that prevents,
makes illegal, or otherwise materially interferes with any of the Contemplated
Transactions or seeks to do any of the foregoing.
8.6 NO PROHIBITION. The applicable waiting period applicable under
the HSR Act shall have terminated or expired and there must not be in effect any
Legal Requirement or any injunction or other Order that prohibits or restricts
the consummation of the Contemplated Transactions; provided that Sellers shall
have taken all actions required of Sellers under Article 6 hereof.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by mutual written consent of Buyer and Sellers;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has
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not waived such condition on or before the Closing Date; or (ii) by Sellers, if
any of the conditions in Article 8 has not been satisfied as of the Closing Date
or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Sellers or the Company to comply with their respective
obligations under this Agreement) and Sellers have not waived such condition on
or before the Closing Date; or
(c) by Buyer, on the one hand, or Sellers, on the other hand,
if the Closing has not occurred on or before 150 days after the date of this
Agreement (other than through the failure of the other Party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement).
9.2 EFFECT OF TERMINATION.
Each Party's right of termination under Section 9.1 is in
addition to any other rights it may have under this Agreement. If this Agreement
is terminated pursuant to Section 9.1, all further obligations of the Parties
under this Agreement will terminate, except that the obligations in Section 11.1
will survive; provided, however, that if this Agreement is terminated by a Party
because of the breach of the Agreement by the other Party or because one or more
of the conditions to the terminating Party's obligations under this Agreement is
not satisfied as a result of the other Party's failure to comply with its
obligations under this Agreement, each Party's right to pursue all legal and
equitable remedies, including without limitation, specific performance,
separately or simultaneously will survive such termination unimpaired.
9.3 BUYER'S BREACH.
Notwithstanding anything to the contrary contained in this
Agreement, if the Closing has not occurred within 150 days from the date hereof
and all of the conditions set forth in Article 7 hereof (but specifically
excluding any conditions with respect to the HSR Act or the Antitrust Division)
have been fulfilled, Buyer shall be deemed to have breached its obligations
under this Agreement, and Sellers shall be entitled to exercise all of their
rights and remedies under this Agreement, including, without limitation, under
Articles 9 and 10 hereof, and to pursue all other legal and equitable remedies
available to them, as a result of such breach.
10. INDEMNIFICATION; REMEDIES
10.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. From and
after the Closing Date and subject to the provisions of this Article 10, (i)
with respect to each of 10.1(a), 10.1(b) and 10.1(d), each of the Sellers,
severally in proportion to his Pro Rata Percentage (provided that, with respect
to the representations contained in Article 3.A hereof, each Seller shall
indemnify Buyer as otherwise provided hereunder severally with respect to
himself), and (ii) with respect to each of 10.1(c) and 10.1(e), Xxxxxx, will
indemnify and hold harmless Buyer and its Affiliates (collectively, the "Seller
Indemnified Persons") for, and will pay to the Seller
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Indemnified Persons the amount of, any Damages arising directly or indirectly
from or in connection with:
(a) any breach of any representation or warranty made by
Sellers, or either of them, in this Agreement or the Disclosure Schedule or the
certificate described in Section 7.1 hereof, unless Buyer had Knowledge of such
breach at the time of the Closing and nonetheless elected to proceed with the
Closing;
(b) any breach by Sellers, or either of them, of any covenant
or obligation of Sellers, or either of them, in this Agreement or the
certificate described in Section 7.2 hereof, unless Buyer had Knowledge of such
breach at the time of the Closing and nonetheless elected to proceed with the
Closing;
(c) the Retained Business;
(d) the Dorna USA Employee Savings and Investment Plan; or
(e) (i) any amounts due under the Phantom Stock Plan of the
Company, and (ii) any bonus or other compensation payments claimed in respect of
the Executives, the Non-Transferred Employees and under any of the employment or
consulting agreements listed on Parts 5.3(f), 5.3(g) and 5.16 of the Disclosure
Schedule, in each case other than any bonus or other compensation payments
claimed with respect to services provided to the Company after the Closing Date.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Sellers and their respective Affiliates
(collectively, the "Buyer Indemnified Persons") for, and will pay to the Buyer
Indemnified Persons the amount of any Damages arising, directly or indirectly,
from or in connection with:
(a) any breach of any representation or warranty made by Buyer
in this Agreement or the Disclosure Schedule, unless any of the Executives had
Knowledge of such breach at the time of the Closing and Sellers nonetheless
elected to proceed with the Closing;
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement, (unless any of the Executives had knowledge of such breach at
the time of the Closing and Sellers nonetheless elected to proceed with the
Closing); or
(c) any Taxes or other tax liability of the Company incurred
by Sellers pursuant to or in connection with any Section 338(h)(10) Elections
made by Buyer in accordance with Section 5.11 hereof, in which case, any payment
made by the Buyer pursuant to this Section 10.2(c) shall be "grossed up" for any
federal, state or local tax liability payable in respect of such payments
(provided that this Section is not intended and shall not require more than one
"gross up").
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10.3 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 10.1 or 10.2, of notice of any claim against it, such Indemnified Person
will, if a claim is to be made against an Indemnifying Party under such Section,
give notice to the Indemnifying Party of the commencement of such claim, but the
failure to notify the Indemnifying Party will not relieve the Indemnifying Party
of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnified Party is prejudiced by the Indemnifying Party's
failure to give such notice.
(b) If any claim referred to in Section 10.3(a) is brought
against an Indemnified Person and such Indemnified Person gives notice to the
Indemnifying Party of the commencement of a proceeding with respect to such
claim (a "Proceeding"), the Indemnifying Party will be entitled to participate
in such Proceeding and, to the extent that it chooses (unless the Indemnifying
Party is also a party to such Proceeding and the Indemnified Person determines
in good faith that the Indemnifying Party would have a conflict of interest in
assuming such defense) to assume the defense of such Proceeding with counsel
reasonably satisfactory to the Indemnified Person and, after notice from the
Indemnifying Party to the Indemnified Person of its election to assume the
defense of such Proceeding, the Indemnifying Party will not, as long as it
diligently conducts such defense, be liable to the Indemnified Person under this
Article 10 for any fees of other counsel (other than in the circumstances
provided above) or any other expenses with respect to the defense of such
Proceeding. If the Indemnifying Party assumes the defense of a claim, no
compromise or settlement of any such claim may be effected by the Indemnifying
Party without the Indemnified Person's consent, which consent shall not be
unreasonably withheld, unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party. Subject to Section 10.3(c), if
notice is given to an Indemnifying Party of any claim and the Indemnifying Party
does not, within twenty (20) days after the Indemnified Person's notice is
given, give notice to the Indemnified Person of its election to assume the
defense of such claim, the Indemnifying Party will be bound by any determination
made in such Proceeding or any compromise or settlement effected by the
Indemnified Person and will be liable for all expenses if it wrongfully failed
to assume such defense.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a claim may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise, or settle such claim, but the
Indemnifying Party will not be bound by any determination of a claim so defended
or any compromise or settlement effected without its consent (which may not be
unreasonably withheld) or delayed.
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10.4 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim shall be
asserted by written notice to the Indemnifying Party from whom indemnification
is sought.
10.5 SURVIVAL/LIMITATIONS.
(a) The Parties hereto agree that (i) the representations and
warranties contained in Articles 3A and 4 shall survive for the applicable
statute of limitations; (ii) the covenants contained herein which are to be
performed after the Closing Date shall survive without limitation, (iii) the
representations and warranties in Sections 3.12 and 3.22 shall survive for three
(3) years, (iv) the representations and warranties in Section 3.11 shall survive
for eighteen (18) months, (v) the representations and warranties in Section 3.9
shall survive for thirty (30) months, and (vi) all other representations and
warranties shall survive for twelve (12) months, following the Closing Date
(subject, in the case of clauses (iii), (iv) and (v) and (vi) hereof, to any
applicable shorter statutes of limitation with respect to the subject matter
thereof). Any claim with respect to a breach of representations and warranties
must be made in a writing to the Indemnifying Party within the survival period
specified for such representations and warranties.
(b) Sellers shall have no obligation to indemnify the Seller
Indemnified Persons for Damages pursuant to Section 10.1(a) or (b) hereof
(except with respect to a breach of the representations contained in Section
3.A.2 hereof), except for any Damages in the aggregate in excess of Two Hundred
and Fifty Thousand Dollars ($250,000) the ("Floor") provided, however, that if
Damages in the aggregate exceed the Floor, the Sellers shall indemnify the
Seller Indemnified Persons only for the amount of all such Damages in excess of
the Floor. In no event shall Sellers, in the aggregate, have any obligation to
indemnify the Seller Indemnified Persons for Damages pursuant to Section 10.1(a)
or (b) hereof (except with respect to a breach of the representations contained
in Section 3.A.2 hereof) in an amount in excess of $25,000,000 in the aggregate.
(c) The amount of any indemnification required to be paid by Sellers
hereunder shall be reduced by any tax benefit received by Buyer directly as a
result of the Damages giving rise to a claim for indemnification.
10.6 EXCLUSIVE REMEDY. The indemnification provisions in this Article 10
are the exclusive remedy of the Parties from and after the Closing Date for any
breach of a representation, warranty or covenant contained herein.
10.7 GENERAL. (a) Each Indemnified Party shall be obligated in connection
with any claim for indemnification under this Article 10 to use all commercially
reasonable efforts to obtain any insurance proceeds available to such
Indemnified Party with regard to the applicable claim. The amount which an
Indemnifying Party is or may be required to pay to any Indemnified Party
pursuant to this Article 10 shall be reduced (retroactively, if necessary) by
any insurance
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proceeds or other amounts actually recovered (net of any relevant collection
costs) by or on behalf or such Indemnified party in reduction of the related
Damages. If an Indemnified Party shall have received the payment required by
this Agreement from an Indemnifying Party in respect of Damages and shall
subsequently receive insurance proceeds or other amounts in respect of such
Damages, then such Indemnified Party shall promptly repay to such Indemnifying
Party a sum equal to the amount of such insurance proceeds or other amounts
actually received (net of any relevant collection costs).
(b) In addition to the requirements of Section 10.7(a), each
Indemnified party shall be obligated in connection with any claim for
indemnification under this Article 10 to use all commercially reasonable efforts
to mitigate Damages upon and after becoming aware of any event which could
reasonably be expected to give rise to such Damages.
11. GENERAL PROVISIONS
11.1 EXPENSES. (a) Except as otherwise expressly provided in this
Agreement, Sellers shall pay Sellers' and the Company's (incurred prior to the
Closing) expenses, and Buyer shall pay Buyer's expenses, incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including, without limitation, all fees and expenses
of agents, representatives, brokers or finders, counsel, and accountants
(collectively, "Expenses"). In the event of termination of this Agreement, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
(b) All sales and other transfer taxes (other than those
arising in connection with the transfers of the Retained Business and the Name
contemplated by Sections 5.13 and 5.15, which shall be borne by Sellers) arising
out of or in connection with the Contemplated Transactions shall be borne by
Buyer or the Company.
(c) Buyer shall pay all of the expenses of the Sellers
incurred in connection with any 338(h)(10) Election made by Buyer, which
expenses shall include all fees, charges and expenses of attorneys, accountants
and other professionals retained by Sellers in connection with any matter
relating to the 338(h)(10) Election.
11.2 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Any public announcement
or similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such manner as Buyer
and Seller agree in writing, provided that the Parties shall reasonably
cooperate in such announcements, and provided further that nothing contained
herein shall prevent any Party from at any time furnishing information required
by a Governmental Body. Unless consented to by Buyer and Seller in advance or
required by Legal Requirements, prior to the Closing, each Party shall, and
shall cause their respective Representatives to, keep this Agreement strictly
confidential and may not make any disclosure of
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this Agreement to any Person. Buyer agrees that Sellers shall have the
opportunity to review and make comment on, which comments shall be reasonably
considered by Buyer, any disclosures made by Buyer pursuant to any Legal
Requirements with respect to the Company. In addition, the terms of that certain
Confidentiality Agreement dated March 31, 1997 between Buyer and Sellers (the
"Confidentiality Agreement") are incorporated herein by reference; provided,
however, that the Confidentiality Agreement shall not preclude Buyer from making
any filings required by any Legal Requirement.
11.3 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
Party may designate by notice to the other Parties):
If to a Xxxxxx, to:
Xxxxxxx X. Xxxxxx
c/o Van Wagner Communications, Inc.
000 Xxxxxxxxx Xxxxxx.
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.:
With a copy to:
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Buyer, to:
Outdoor Systems, Inc.
0000 X. Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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With a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP Sixteenth Floor 000 Xxxxxxxxx
Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Xxxxxxx to:
00 Xxxxxxx Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
Cox Xxxxxxxx
Xxxxxxx & Shakarchy
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
11.4 FURTHER ASSURANCES. The Parties and the Company agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other Party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 10).
11.5 WAIVER. Neither the failure nor any delay by any Party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.
11.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter and
constitutes (along with the documents referred to in, or executed in connection
with, this Agreement including, but not limited to, the Confidentiality
Agreement) a complete and exclusive statement of the terms of the agreement
between the Parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the Party to be charged
with the amendment.
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11.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Party; provided, however, that Buyer may assign its rights and obligations
hereunder to an Affiliate of Buyer or as security for Buyer's lender(s) in
connection with Buyer's Financing Arrangements; provided, further, however, that
no such assignment shall relieve Buyer of its obligations hereunder. This
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the Parties, their successors, and their permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
11.8 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.9 POST-CLOSING ACCESS. Buyer agrees that all Books and Records
delivered to Buyer by Sellers pursuant to this Agreement shall be maintained
open for inspection by Sellers at any time during regular business hours upon
reasonable notice for a period of six (6) years (or for such longer period as
may be required by applicable Legal Requirements) following the Closing and
that, during such period, Sellers, at their expense, may make such copies
thereof as it may reasonably desire (subject in each case to Sellers'
obligations to maintain the confidentiality of such Books and Records).
11.10 HEADINGS; CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
11.11 APPLICABLE LAW. This Agreement shall be governed and controlled
as to validity, enforcement, interpretations, construction, effect and in all
other respects by the internal laws of the State of New York, without giving
effect to the conflicts of law provisions thereof. The Parties hereto agree to
submit exclusively to jurisdiction any federal or state court located in the
State of New York any dispute or controversy arising out of or relating to this
Agreement.
11.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits, Schedules
and Disclosure Schedule identified in this Agreement are incorporated herein by
reference and made a part hereof. Any matter disclosed on the Disclosure
Schedule pursuant to one provision, subprovision, section or subsection of this
Agreement is deemed disclosed for all other purposes of this Agreement or the
Disclosure Schedule.
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11.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
Outdoor Systems, Inc.
By: ______________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
SELLERS:
____________________________________________
XXXXXXX X. XXXXXX
____________________________________________
XXXXX XXXXXXX
COMPANY:
Van Wagner Communications, Inc.
By: ______________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
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