ASSET PURCHASE AGREEMENT
dated as of March 13, 2000
among
CARIBINER INTERNATIONAL, INC.,
CARIBINER, INC.
AND
THE INTERPUBLIC GROUP OF COMPANIES, INC.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.....................................................................................1
ARTICLE II PURCHASE AND SALE..............................................................................8
2.1 Closing......................................................................................8
2.2 Assets Being Sold and Purchased..............................................................8
2.3 Excluded Assets..............................................................................9
2.4 Assumption of Assumed Liabilities............................................................10
2.5 Liabilities Not Being Assumed................................................................11
2.6 Purchase Price...............................................................................12
2.7 Payment of the Purchase Price................................................................12
2.8 Allocation of Purchase Price.................................................................12
2.9 Post-Closing Audit...........................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................14
3.1 Incorporation; Qualification and Corporate Authority.........................................14
3.2 Authorization; Execution and Validity........................................................14
3.3 Capitalization...............................................................................14
3.4 Financial Statements, Absence of Certain Changes.............................................15
3.5 No Conflict; Consents........................................................................16
3.6 Title to Properties..........................................................................16
3.7 Leased Property..............................................................................16
3.8 Condition of Property........................................................................17
3.9 Insurance....................................................................................17
3.10 Contracts....................................................................................17
3.11 Legal Proceedings; Orders....................................................................17
3.12 Environmental Laws...........................................................................18
3.13 Intellectual Property........................................................................18
3.14 Labor Relations..............................................................................18
3.15 Employee Benefit Plans.......................................................................18
3.16 Taxes........................................................................................19
3.17 Brokers......................................................................................19
3.18 Compliance with Laws and Orders..............................................................19
3.19 Opinion of Financial Advisor.................................................................19
3.20 Disclosure Schedule..........................................................................20
3.21 Standard.....................................................................................20
3.22 Disclaimer...................................................................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..........................................................21
4.1 Incorporation and Qualification; Corporate Authority.........................................21
4.2 Authorizations; Execution and Validity.......................................................21
4.3 No Conflicts; Consents.......................................................................21
4.4 Legal Proceedings............................................................................22
4.5 Purchase of Shares for Investment............................................................22
4.6 Financing....................................................................................22
4.7 Brokers......................................................................................22
ARTICLE V COVENANTS OF SELLERS............................................................................22
5.1 Access.......................................................................................23
5.2 Conduct of Business..........................................................................23
5.3 Further Assurances...........................................................................24
5.4 HSR Act Compliance...........................................................................24
5.5 No Breach of Representations and Warranties..................................................24
5.6 No Solicitation..............................................................................24
5.7 Caribiner Name...............................................................................25
5.8 Payment of Intercompany Indebtedness.........................................................25
5.9 Group Relief.................................................................................26
5.10 Tax Administration...........................................................................26
5.11 Contribution of assets to Newco..............................................................27
ARTICLE VI COVENANTS OF BUYER.............................................................................27
6.1 Confidentiality Covenant.....................................................................27
6.2 No Breach of Representations and Warranties..................................................27
6.3 Preservation of Books and Records............................................................28
6.4 HSR Act Compliance...........................................................................28
6.5 Further Assurances...........................................................................28
6.6 Return of Information........................................................................28
6.7 Employee and Employee Benefit Matters........................................................28
6.8 Workers Adjustment and Retraining Notification Act...........................................29
6.9 Transfer of Guarantees.......................................................................29
6.10 Group Relief.................................................................................30
6.11 Agreements...................................................................................30
6.12 Preferred Provider...........................................................................30
6.13 Non-solicitation.............................................................................30
6.14 Employment...................................................................................30
ARTICLE VII CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS...................................................31
7.1 Accuracy of Representations and Warranties...................................................31
7.2 Performance of Covenants.....................................................................31
7.3 Laws and Orders..............................................................................31
7.4 Xxxx-Xxxxx-Xxxxxx............................................................................31
7.5 Credit Agreement.............................................................................31
7.6 No Bankruptcy................................................................................31
7.7 No Material Adverse Change...................................................................32
7.8 Closing Documents............................................................................32
7.9 Opinion of Counsel to Sellers................................................................33
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7.10 Resignations.................................................................................33
7.11 Bank Consent.................................................................................33
7.12 Sublease.....................................................................................33
7.13 Newco Stock..................................................................................33
7.14 Overdraft Payments...........................................................................33
ARTICLE VIII CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.................................................33
8.1 Accuracy of Representations and Warranties...................................................33
8.2 Performance of Covenants.....................................................................34
8.3 Law and Orders...............................................................................34
8.4 Xxxx-Xxxxx-Xxxxxx............................................................................34
8.5 Closing Documents............................................................................34
8.6 Bank Consent.................................................................................34
8.7 Sublease.....................................................................................34
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION....................................35
9.1 Survival of Representations and Warranties of the Parties....................................35
9.2 Indemnification by the Sellers...............................................................35
9.3 Indemnification by Buyer.....................................................................35
9.4 Procedures...................................................................................36
9.5 Compensation to Buyer under Sellers' Indemnification Obligation..............................37
9.6 Compensation to Sellers under Buyer Indemnification Obligation...............................37
9.7 Arbitration..................................................................................37
9.8 Reduction for Insurance, Etc.................................................................38
9.9 Adjustment for Taxes.........................................................................38
ARTICLE X TERMINATION.....................................................................................39
10.1 Termination of Agreement.....................................................................39
10.2 Effect of Termination........................................................................39
ARTICLE XI GENERAL........................................................................................40
11.1 Amendments...................................................................................40
11.2 Waivers......................................................................................40
11.3 Notices......................................................................................40
11.4 Successors and Assigns, Parties in Interest..................................................41
11.5 Severability.................................................................................41
11.6 Entire Agreement.............................................................................41
11.7 Governing Law................................................................................42
11.8 Expenses; Transfer Taxes.....................................................................42
11.9 Release of Information; Confidentiality......................................................42
11.10 Code Section 338(h)(10) Election.............................................................43
11.11 Certain Construction Rules...................................................................43
11.12 Counterparts.................................................................................43
11.13 Resolution of Disputes.......................................................................43
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Exhibit A Purchase Price Allocation
Exhibit B Form of Xxxx of Sale and Assumption Agreement
Exhibit C Form of Opinion of Xxxxxxx Xxxx & Xxxxx LLP
Exhibit D Form of Opinion of The Interpublic Group of Companies, Inc.
Exhibit E Form of Escrow Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of March 13, 2000
(this "Agreement"), is entered into by and between The Interpublic Group of
Companies, Inc., a Delaware corporation ("Buyer"), Caribiner International,
Inc., a Delaware corporation ("Parent"), and Caribiner, Inc., a New York
corporation and a direct, wholly-owned subsidiary of Parent ("Caribiner" and
collectively with Parent, the "Sellers").
WHEREAS, Sellers and their Subsidiaries (as hereinafter
defined), among other things, are engaged in the business (the "Business") of
producing meetings, events and training programs and providing related corporate
meeting and business communication services;
WHEREAS, Buyer desires to purchase from Sellers, and Sellers
desire to sell to Buyer, substantially all of Sellers' assets related to the
Business, including the capital stock of the Subsidiaries (as defined below),
other than the Excluded Assets (as hereinafter defined), and Buyer wishes to
assume certain of the liabilities of the Sellers related to the Business, other
than the Excluded Liabilities (as hereinafter defined), all as more fully
described herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Accountants" has the meaning specified in Section 2.9(b).
"Acquisition Proposal" has the meaning specified in Section
5.6.
"Adjustment Amount" has the meaning specified in Section
2.9(a).
"Agreement" has the meaning specified in the preamble hereof.
"Approvals" has the meaning specified in Section 2.2(a)(v).
"Assets" has the meaning set forth in Section 2.2(b).
"Assumed Liabilities" has the meaning specified in Section
2.4.
"Atlanta Office" means the Sellers' office located at 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx.
"Available Losses" means, in relation to an accounting period
of a company, any amount available for surrender by way of Group Relief by that
company.
"Books and Records" means all files, documents, instruments,
papers, books and records relating solely to the Assets or the Business and
copies of those portions of the same that refer in part to the Assets or the
Business.
"Business" has the meaning specified in the preamble hereof.
"Business Day" means any day other than a Saturday, Sunday or
a day on which banks in New York, New York are authorized or obligated by Law to
close.
"Business Financial Statements" has the meaning specified in
Section 3.4(a).
"Buyer" has the meaning specified in the preamble hereof.
"Buyer Ancillary Agreements" has the meaning specified in
Section 4.1.
"Buyer Medical Plans" has the meaning specified in Section
6.7(b).
"Buyer Welfare Plans" has the meaning specified in Section
6.7(b).
"Buyer's Accountants" has the meaning specified in Section
2.9(a).
"Caribiner" has the meaning specified in the preamble hereof.
"Chicago Offices" means the Sellers' offices located at 0000
Xxxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx and 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx.
"Closing" has the meaning specified in Section 2.1.
"Closing Date" has the meaning specified in Section 2.1.
"Closing Payment" has the meaning specified in Section 2.6.
"Closing Statement" has the meaning specified in Section
2.9(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Code Section 338(h)(10) Election" has the meaning specified
in Section 11.10.
"Confidentiality Agreement" has the meaning specified in
Section 5.1.
"Contract" means any contract, agreement, indenture, note,
bond, loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, insurance policy, commitment or other arrangement or agreement,
whether written or oral, relating to the Business and to which either Seller is
a party; provided, however, that Contracts shall not include any Employee
Benefit Plan.
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"Credit Agreement" means the Credit Agreement, dated as of
October 28, 1997, as amended, among the Sellers and the several banks and other
financial institutions from time to time parties thereto.
"Damage Claim Notice" has the meaning specified in Section
9.4(a).
"Damages" has the meaning specified in Section 9.2.
"Detroit Office" means the Sellers' office located at 00000
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx.
"Detroit Projects" has the meaning specified in Section
2.3(vi).
"Disclosure Schedule" has the meaning specified in Section
3.19.
"Dispute Notice" has the meaning specified in Section 9.7.
"Dispute Period" has the meaning specified in Section 9.7.
"Employee(s)" means Persons employed by Caribiner and engaged
in the Business other than Management Employees and Excluded Employees.
"Employee Benefit Plan" means each plan, program, arrangement
or commitment which is an employment, consulting, termination or deferred
compensation agreement or an executive compensation, bonus, employee pension,
profit-sharing, savings, retirement, stock option, stock purchase, severance,
life, health, disability, or other employee benefit plan, program, arrangement
or commitment, including any "employee benefit plan" within the meaning of
Section 3(3) of ERISA, in each instance, for the benefit of the Employees, and
currently maintained, sponsored, or contributed to by either Seller or any ERISA
Affiliate or to which any such Person has any obligation to contribute to, or
with respect to which any such Person has any liability.
"Environmental Law" means any law concerning Releases into any
part of the natural environment, or activities that might result in damage to
the natural environment, or any law that is concerned in whole or in part with
the natural environment and with protecting or improving the quality of the
natural environment and protecting public and employee health and safety and
includes, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conversation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Water Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), and the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.) ("OSHA"), as such laws have been or hereafter
may be amended or supplemented, and the regulations promulgated pursuant
thereto, and any and all analogous state or local statutes and the regulations
promulgated pursuant thereto.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each of the Sellers and any Person
that is considered a single employer of either Seller for purposes of Title IV
of ERISA or Section 4.14(b), (c), (m) or (o) of the Code.
"Escrow Agreement" means the Escrow Agreement, dated as of the
Closing Date substantially in the form set forth as Exhibit E attached hereto.
"Escrow Agent" means Chase Manhattan Bank, N.A.
"Excluded Assets" has the meaning specified in Section 2.3.
"Excluded Employees" means the persons set forth on Schedule
6.7(a).
"Excluded Liabilities" has the meaning specified in Section
2.5.
"Excluded Offices" means the Sellers' Detroit Office, Chicago
Offices and Atlanta Office.
"Financial Advisor Letter" has the meaning specified in
Section 3.20.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board as applied on a basis consistent
with the preparation by the Sellers of the Business Financial Statements.
"Governmental Authority" means any federal, state, local or
foreign government or governmental regulatory body and any of their respective
subdivisions, agencies, instrumentalities, authorities or tribunals.
"Group Relief" has the meaning given to that expression in
section 402 of the United Kingdom Income and Corporation Taxes Xxx 0000.
"Hazardous Material" means any substance, material or waste,
or any constituent thereof, which is regulated by or forms the basis of
liability under any Environmental Law, including, without limitation, any
material or substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste," or "restricted
hazardous waste," "subject waste," "contaminant," "toxic waste," or "toxic
substance," under any provision of an Environmental Law, including but not
limited to, petroleum products, asbestos and polychlorinated biphenyls.
"Holdback Amount" has the meaning specified in Section 2.6.
4
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnifiable Loss" has the meaning specified in Section 9.8.
"Indemnitee" has the meaning specified in Section 9.4.
"Indemnitor" has the meaning specified in Section 9.4.
"Indemnity Payment" has the meaning specified in Section 9.8.
"Intellectual Property" means (i) all trademark rights,
business identifiers, service marks, trade names and brand names, all
registrations thereof and applications therefor and all goodwill associated with
the foregoing; (ii) all copyrights, copyright registrations and copyright
applications, and all other rights associated with the foregoing and the
underlying works of authorship; (iii) all patents and patent applications, and
all international proprietary rights associated therewith; (iv) all Contracts
granting any right, title, license or privilege under the intellectual property
rights of any third Person; (v) all inventions, know-how, discoveries,
improvements, processes, designs, trade secrets, shop and royalty rights,
employee covenants and agreements respecting intellectual property and
non-competition and all other types of intellectual property; and (vi) all
claims for infringement or breach of any of the foregoing, in each instance,
relating solely to the Assets or the Business.
"Intercompany Indebtedness" means any indebtedness owed (i) by
the Sellers or any subsidiary of the Sellers to the Business, including any of
the Subsidiaries, (ii) by the Business, including any of the Subsidiaries, to
the Sellers or any subsidiaries of the Sellers, and, for the avoidance of doubt,
(iii) by the Business to the Sellers' Remaining Business.
"Inventory" has the meaning specified in Section 2.2(a)(i).
"Knowledge" means, with respect to the Sellers and the Buyer,
the actual knowledge of those officers and directors of such parties listed on
Schedule 1.1(a).
"Law" means any federal, state, local or foreign law, statute,
rule, ordinance, code or regulation.
"Leases" has the meaning specified in Section 3.7.
"Legal Proceeding" means any judicial, administrative or
arbitral action, suit, proceeding (public or private), claim or governmental
proceeding.
"License" has the meaning specified in Section 5.7(a).
"Lien" means any lien, pledge, mortgage, deed of trust,
security interest, attachment, easement or other similar encumbrance of any
kind.
5
"Management Employees" means those employees of Sellers set
forth on Schedule 1.1(b) hereto.
"Material Adverse Change" means any material and adverse
change in the condition (financial or otherwise), business, properties, assets,
liabilities or results of operations of the Business taken as a whole; provided,
however, that the definition of Material Adverse Change shall not include any
change due to (i) general economic or industry-wide conditions and (ii) any
continuation of an adverse trend disclosed to Buyer in writing on or prior to
the date hereof.
"Material Adverse Effect" has the meaning specified in Section
3.1.
"Material Contract" has the meaning specified in Section 3.10.
"Newco Stock" means all of the issued and outstanding shares
of Newco, a Delaware corporation.
"Order" means any writ, judgment, decree, injunction, or
similar order of any Governmental Authority.
"Parent" has the meaning specified in the preamble hereof.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
payable or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens could not reasonably be expected to have a
Material Adverse Effect.
"Person" means any natural person, corporation, partnership,
limited liability company, trust, unincorporated organization, Governmental
Authority, or other entity.
"Purchase Price" has the meaning specified in Section 2.6.
"Reference Balance Sheet" means the statement of Tangible Net
Worth of the Business and the Subsidiaries as of December 31, 1999, set forth on
Schedule 2.9(c).
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment, or into or out of any property
owned, operated or leased by the Subsidiaries including, without limitation, the
movement of any Hazardous Material or other substance through or in the air,
soil, surface water, groundwater or property.
"Remaining Business" means all business of the Parent, other
than the Business, including without limitation Sellers' audio-visual
operations.
"Representatives" has the meaning specified in Section 5.1.
6
"Screen and Music" has the meaning specified in Section
2.2(a)(xi).
"Securities Act" has the meaning specified in Section 4.5.
"Seller Ancillary Agreements" has the meaning specified in
Section 3.1.
"Seller Notice Date" has the meaning specified in Section
2.9(b).
"Seller Welfare Plans" has the meaning specified in Section
6.7(b).
"Sellers" has the meaning specified in the preamble hereof.
"Sellers' Accountants" has the meaning specified in Section
2.9.
"Subsidiaries" has the meaning specified in Section
2.2(a)(xi).
"Subsidiary Shares" has the meaning specified in Section
2.2(a)(xi).
"Superior Proposal" has the meaning specified in Section 5.6.
"Tangible Net Worth" means, as of the date determination
thereof is to be made, the difference between (x) the sum total of all assets of
(i) the Business, (ii) the Subsidiaries and (iii) those assets related to the
Contracts to be set forth on Schedule 2.4(vii), in each instance acquired
pursuant to this Agreement excluding any goodwill and any Excluded Assets and
(y) the sum total of all liabilities assumed of (i) the Business, (ii) the
Subsidiaries and (iii) those liabilities related to the Contracts to be set
forth on Schedule 2.4(vii) pursuant to this Agreement excluding the Excluded
Liabilities, with such determination made in accordance with GAAP.
"Tax" or "Taxes" means any and all income, profits, franchise,
gross receipts, capital, sales, use, withholding, value added, ad valorem,
transfer, employment, social security, disability, occupation, property,
severance, excise and other taxes, duties and similar governmental charges or
assessments imposed by or on behalf of any Governmental Authority.
"Tax Refund" has the meaning given to that expression in
section 000 Xxxxxx Xxxxxxx Finance Xxx 0000.
"Tax Return" means any return, report or statement required to
be filed with respect to any Tax, including, without limitation, any information
return, amended return and declaration of estimated Tax.
"Transition Services Agreement" has the meaning specified in
Section 6.12.
"U.K. Returns" has the meaning specified in Section 5.10(c).
"WARN Act" has the meaning specified in Section 6.8.
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ARTICLE II
PURCHASE AND SALE
2.1 Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Xxxxxxx Xxxx & Xxxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on
April 24, 2000, or at such other time and place or on such other date as the
parties hereto may agree in writing (the "Closing Date").
2.2 Assets Being Sold and Purchased.
(a) Subject to and upon the terms and conditions of
this Agreement, at the Closing the Sellers shall grant, transfer, sell, convey,
assign and deliver to the Buyer, and the Buyer shall purchase from the Sellers
all of each Seller's right and title to and interest in and to substantially all
of the properties and assets of every kind, nature and description primarily
used in the Business (other than the Excluded Assets) as the same existed
immediately prior to the Closing, free and clear of all Liens (other than
Permitted Liens), including, without limitation, the following:
(i) all inventories of Sellers, including
finished goods, work-in-progress, office furniture, equipment and other
materials which relate to or are used in the operation of the Business
(the "Inventory");
(ii) all Contracts;
(iii) the entire right, title and interest
of Sellers in and to all Intellectual Property;
(iv) all Books and Records of the Sellers;
(v) all right, title and interest in and to
all Federal, state, local and foreign government licenses, permits,
authorizations, certifications and approvals to do business, and
memberships to relevant industry groups, which relate to or are used in
the operation of the Business (collectively, the "Approvals"),
including such Approvals which are material to the operation of the
Business which are listed in Schedule 2.2(a)(v) hereto;
(vi) all rights of the Sellers in and to
insurance and indemnity claims relating to the Business and the Assets,
including such claims which are in excess of $100,000 which are listed
in Schedule 2.2.(a)(vi) hereto;
(vii) all of Sellers' rights and interests
under the leases of real property set forth in Schedule 3.7 hereto
relating to the Business, along with all appurtenant rights, easements,
and privileges appertaining or relating thereto;
8
(viii) all of Sellers' rights and interests
under leases of equipment or other tangible personal property used in
conducting the Business;
(ix) all rights, choses in action and claims
(known or unknown, matured or unmatured, accrued or contingent) of the
Sellers against third parties arising out of or in connection with the
Business and relating to the Assets or the Assumed Liabilities (as
defined below), including the claims set forth in Schedule 2.2 (a) (ix)
hereto;
(x) All security deposits, prepaid expenses
and other miscellaneous assets of the Business;
(xi) All of the issued and outstanding
capital stock and/or membership interests (collectively, the
"Subsidiary Shares"), and all corporate and limited liability minute
books, stock transfer ledgers and other corporate and limited liability
records, of each of the following subsidiaries of Sellers
(collectively, the "Subsidiaries"):
(a) Caribiner International Pty
Limited, including the beneficial ownership interest that
Caribiner International Pty Limited holds in Caribiner
Wavelength Unit Trust;
(b) Caribiner Asia Limited;
(c) Caribiner Europe Limited
("CEL"); and
(d) Screen and Music Travel Limited
("Screen and Music");
(xii) all of the Sellers' accounts
receivable, notes receivable or other obligations receivable or due to
Sellers related to the Business outstanding on the Closing Date; and
(xiii) subject to Section 5.7 hereof, the
corporate name "Caribiner," and any variants or derivatives thereof;
and
(xiv) the Newco Stock.
(b) The assets being sold and purchased hereunder are
hereinafter collectively referred to as the "Assets."
2.3 Excluded Assets. Notwithstanding anything contained in
Section 2.2 hereof to the contrary, the following assets of the Sellers (the
"Excluded Assets") shall be retained by the Sellers and shall not be sold,
assigned or transferred to the Buyer pursuant to this Agreement:
(i) all cash and cash equivalents of Parent and
Caribiner;
9
(ii) the real property leases listed on Schedule
2.3(ii) hereto;
(iii) (a) any assets of Sellers located at Sellers'
Detroit Office and (b) any assets of Sellers located at Sellers'
Atlanta Office and Chicago Offices, except such assets being used (such
as accounts receivables) in connection with or related to any Contract
to be set forth on Schedule 2.4(vii), which schedule shall be delivered
at Closing, which for purposes of clarification shall not be Excluded
Assets;
(iv) any other asset described on Schedule 2.3(iv)
hereto;
(v) the account receivable set forth on Schedule
2.3(v) hereto;
(vi) any assets of Sellers not relating to the
Business;
(vii) any Contract relating to services performed or
to be performed solely through the Sellers' Detroit Office, to be set
forth on Schedule 2.3(vi), which schedule shall be delivered at Closing
(the "Detroit Projects"); and
(viii) any Intercompany Indebtedness.
2.4 Assumption of Assumed Liabilities. On and subject to the
terms and conditions of this Agreement, at the Closing, Buyer agrees to assume
and become responsible for the following liabilities arising from or relating to
the Business (the "Assumed Liabilities"):
(i) unless otherwise extinguished or satisfied, all
liabilities and obligations set forth on the Business Financial
Statements or taken into account in the calculation of Tangible Net
Worth on the Closing Statement, other than liabilities and obligations
arising from or relating to the Excluded Offices, subject to Section
2.4(vii) of this Agreement;
(ii) unless otherwise extinguished or satisfied, all
liabilities and obligations which have arisen in the ordinary course of
the Business subsequent to the date of the Balance Sheet included in
the Business Financial Statements, other than liabilities and
obligations arising from or relating to the Excluded Offices, subject
to Section 2.4(vii) of this Agreement;
(iii) all liabilities and obligations of Sellers
under any guarantee that any of them may have executed and delivered in
connection with the Business, but only if listed on Schedule 2.4(iii)
hereto and only to the extent that the real property lease or contract
relating to such guarantee is assigned to the Buyer;
(iv) all liabilities and obligations of the Sellers
under the contracts, leases, licenses, receivables, inventory and other
arrangements included in the definition of Assets;
(v) all liabilities and obligations related to the
employment of the Employees by Buyer, but only to the extent provided
in Section 6.7 of this Agreement;
10
provided, that any Excluded Employee hired by Buyer within sixty (60)
days of the Closing Date shall be deemed to be an Employee for purposes
of this Agreement;
(vi) all liabilities and obligations pursuant to any
overdraft facilities currently in place for the benefit of any
Subsidiary;
(vii) all liabilities and obligations arising from or
relating to any Contract that is being performed or that has been sold
as of the Closing Date (including, without limitation, any commission,
bonus or other payment owed to any Excluded Employee for services
performed in connection with any such Contract) by the Sellers' Chicago
or Atlanta Offices, but only to the extent such liability or obligation
is to be set forth on Schedule 2.4(vii) hereto, which Schedule shall be
delivered at Closing;
(viii) all liabilities and obligations with respect
to the suits, actions, claims or proceedings that are disclosed on
Schedule 3.11 hereto;
(ix) subject to Section 6.15 of this Agreement, Buyer
shall assume fifty percent (50%) (and Sellers shall retain fifty
percent (50%)) of any and all liabilities and obligations relating to
any unknown litigation commenced after the Closing Date based on facts,
circumstances, events or conditions occurring or existing prior to the
Closing Date; and
(x) all liabilities and obligations of the Business
arising from events occurring on or after the Closing Date.
Notwithstanding the foregoing, Excluded Liabilities shall not be
Assumed Liabilities hereunder.
2.5 Liabilities Not Being Assumed. Notwithstanding anything
contained herein to the contrary, the Buyer is not assuming any of the following
liabilities and obligations of the Sellers:
(a) all liabilities and obligations of the Sellers
for borrowed money or with respect to indebtedness and obligations of
others which the Sellers or a Subsidiary has directly or indirectly
guaranteed, including the bank indebtedness set forth on the Business
Financial Statements and any obligations under the Credit Agreement;
(b) all liabilities and obligations of the Sellers or
the Business relating to or arising from the Excluded Assets referred
to in Section 2.3 hereof;
(c) all liabilities and obligations of the Sellers
under this Agreement;
(d) any Intercompany Indebtedness;
(e) all liabilities or obligations of Sellers
relating to or arising from the litigation set forth on Schedule
2.5(e), or arising from claims of a similar nature; and
(f) all liabilities and obligations of the Sellers
under an Employee Benefit Plan, except to the extent expressly assumed
by the Buyer hereunder, and any
11
liability or obligation relating to any employee or former employee of
Sellers except to the extent expressly assumed herein.
The foregoing liabilities and obligations of the Sellers not being assumed by
the Buyer are collectively referred to herein as the "Excluded Liabilities."
2.6 Purchase Price. The Buyer shall purchase the Assets of the
Sellers for an aggregate purchase price (the "Purchase Price") equal to
$90,000,000. A portion of the Purchase Price equal to $5,000,000 (the "Holdback
Amount") shall not be paid to the Sellers at the Closing but instead shall be
deposited into an escrow account maintained by the Escrow Agent pursuant to the
Escrow Agreement, as security for (i) the indemnity obligations of the Sellers
under this Agreement and (ii) any adjustment to the Purchase Price required
pursuant to the provisions of Section 2.9 below. The Holdback Amount shall be
released to the Sellers in accordance with, and subject to, Article IX hereof.
The $85,000,000 which represents the Purchase Price minus the Holdback Amount is
sometimes referred to as the "Closing Payment".
2.7 Payment of the Purchase Price. At the Closing, against
delivery of (i) appropriate instruments of sale, transfer, conveyance and
assignment with respect to the Assets, and (ii) certificates representing the
Subsidiary Shares, in appropriate form for transfer to Buyer or accompanied by
duly executed stock powers, the Buyer shall deliver to (x) Sellers the Closing
Payment by wire transfer of immediately available United States funds to such
accounts as Sellers shall designate by written notice delivered to Buyer at
least one (1) Business Day prior to the Closing Date and (y) the Holdback Amount
to the Escrow Agent pursuant to the terms of the Escrow Agreement.
2.8 Allocation of Purchase Price. The Purchase Price paid to
Sellers shall be allocated to the Assets in accordance with Exhibit A hereto.
Such allocation shall be prepared in a manner consistent with the requirements
of Section 1060 of the Code and the regulations thereunder. Each of the Buyer
and the Sellers agrees (i) to jointly complete and separately file Form 8594
with its federal income tax return for the tax year in which the Closing occurs
in a manner consistent with such allocation and (ii) that no party will take a
position on any Tax Return, before any Governmental Authority charged with the
collection of any Tax or in any judicial proceeding relating to any Tax that is
in any manner inconsistent with such allocation.
2.9 Post-Closing Audit.
(a) Sellers shall cause Ernst & Young LLP ("Sellers'
Accountants") to prepare a combined balance sheet with respect to the Business
as of the Closing Date and provide a computation in accordance with GAAP of
Tangible Net Worth as of the Closing Date (the "Closing Statement"). Sellers
shall deliver the Closing Statement to Buyer within sixty (60) days after the
Closing Date, and Sellers shall cause Sellers' Accountants to give Buyer and
PricewaterhouseCoopers LLP ("Buyer's Accountants") access to the Sellers'
Accountants and their work papers in order to evaluate the Closing Statement.
(b) To the extent that Buyer disputes either the
amount of, or basis for, the Tangible Net Worth as set forth on the Closing
Statement, then, within thirty (30) days from
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the date of receipt of the Closing Statement (the "Buyer Notice Date"), the
Buyer shall provide written notice thereof to Sellers, stating any objection and
the basis for such objection. If the Tangible Net Worth set forth in the Closing
Statement is not disputed in a notice of objection delivered by Buyer to Sellers
on or before the Buyer Notice Date, Buyer and Sellers shall, not later than the
close of business on the first Business Day after the Buyer Notice Date, jointly
and immediately provide notice to the Escrow Agent of the final Tangible Net
Worth and the Escrow Agent shall make disbursements from the escrow account
pursuant to the terms of Section 2.9(c) below. If Tangible Net Worth set forth
on the Closing Statement is disputed in a notice of objection delivered to
Seller on or before the Buyer Notice Date, then the parties shall undertake to
resolve the amount so disputed. If the Buyer and the Sellers are able to agree
on Tangible Net Worth, they shall jointly and immediately provide notice to the
Escrow Agent of the agreed-upon Tangible Net Worth and the Escrow Agent shall
make disbursements from the escrow account pursuant to the terms of Section
2.9(c) below. If the parties are unable to resolve any part of the amount so
disputed within thirty (30) days from the date of Sellers' receipt of the
Buyer's notice of objection, then the issues in dispute will be submitted to
certified public accountants reasonably acceptable to Sellers and Buyer (the
"Accountants") for resolution. If issues in dispute are submitted to the
Accountants for resolution, (x) each party will furnish to the Accountants such
workpapers and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party (or its
independent public accountants), and will be afforded the opportunity to present
to the Accountants any material relating to the determination and to discuss the
determination with the Accountants; (y) the determination by the Accountants, as
set forth in a notice delivered to Buyer, the Sellers and the Escrow Agent by
the Accountants, will be binding and conclusive on the parties; and (z) Buyer
and the Sellers will each bear 50% of the fees of the Accountants for such
determination. Until resolution of Tangible Net Worth pursuant to the procedures
set forth herein, the proceeds of the Escrow Account shall not be disbursed by
the Escrow Agent.
(c) Within ten (10) Business Days following a final
determination of the Tangible Net Worth as provided in Section 2.9(b), if the
Tangible Net Worth is determined to be less than $17,500,000 the Escrow Agent
will pay such difference from the Escrow Account to Buyer by wire transfer to
such bank account as Buyer will specify. Subject to the provisions of Article
IX, the Holdback Amount shall be released from the Escrow Account within one (1)
Business Day after a final resolution is reached with respect to the Adjustment
Amount according to the procedures set forth in Section 2.9(b) of the Agreement.
The Closing Statement shall be prepared in a manner consistent with the
preparation of the Reference Balance Sheet set forth on Schedule 2.9(c)
(prepared in accordance with GAAP (i) other than the absence of footnotes
required by GAAP and (ii) subject to normal year-end adjustments).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby represents and warrants to Buyer as
follows:
3.1 Incorporation; Qualification and Corporate Authority. Each
Seller and each Subsidiary is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to conduct the Business in all
material respects as presently conducted. Each Seller has all requisite
corporate power to execute, deliver and perform its obligations under (i) this
Agreement and (ii) the Xxxx of Sale and Assumption Agreement and the other
documents described in Section 7.8 (collectively, the "Seller Ancillary
Agreements"), and to consummate the transactions contemplated hereby and
thereby. Each Seller and each Subsidiary is duly qualified to do business and is
in good standing in each jurisdiction where the ownership or operation of its
assets and properties or the conduct of the Business requires such
qualification, except where the failure to be so qualified or in good standing,
as the case may be, would not have a material adverse effect on the Assets, the
Business, the consummation of the transactions contemplated by this Agreement or
the ability of Sellers to fulfill their obligations hereunder (a "Material
Adverse Effect"); provided, however, that the definition of Material Adverse
Effect shall not include any change or effect due to (i) general economic or
industry-wide conditions and (ii) any continuation of an adverse trend disclosed
to Buyer in writing on or prior to the date hereof.
3.2 Authorization; Execution and Validity. Each Seller has
taken all corporate and other actions necessary to authorize it to execute,
deliver and perform this Agreement, the Seller Ancillary Agreements and all
instruments and agreements delivered pursuant hereto and thereto and to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Seller Ancillary Agreements have been duly and validly executed and
delivered by each Seller and constitute valid and binding obligations of such
Seller enforceable against such Seller in accordance with their respective
terms, except to the extent that the enforceability thereof may be limited by:
(i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws from time to time in effect affecting generally the
enforcement of creditors' rights and remedies; and (ii) general principles of
equity, including, without limitation, principles of reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in equity or at
law.) No vote or other approval by the stockholders of Parent is required to be
solicited or obtained, nor is any notice required to be given to the
stockholders of Parent, under applicable Laws, in order for Parent to enter into
and consummate its obligations under this Agreement.
3.3 Capitalization. Schedule 3.3 sets forth the authorized,
issued and outstanding capital stock of each Subsidiary. Other than obligations
to settle Intercompany Indebtedness prior to Closing, there shall be no change
in the outstanding capital stock of each Subsidiary. The Subsidiary Shares
constitute the only shares of capital stock of the Subsidiaries issued and
outstanding. All of the Subsidiary Shares are duly authorized, validly issued,
fully paid and nonassessable and are owned, directly or indirectly (as shown on
Schedule 3.3), by the
14
Sellers free and clear of all Liens, other than the security interest in the
Subsidiary Shares pursuant to the Credit Agreement. Other than pursuant to this
Agreement, and except as disclosed in Schedule 3.3, there are no outstanding
options, subscriptions, warrants, calls, commitments or other rights obligating
any Subsidiary to issue or sell any Subsidiary Shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock. Other than as set forth on Schedule 3.3, none of the Subsidiaries owns
shares or other equity interests in any other entity.
3.4 Financial Statements, Absence of Certain Changes. (a)
Schedule 3.4 contains the (i) audited, combined balance sheets with respect to
the Business (except for Screen and Music) at September 30, 1998 and September
30, 1999, and the related statements of income and cash flows for the years
ended September 30, 1997, September 30, 1998 and September 30, 1999 (including
the notes contained therein or annexed thereto), which balance sheets,
statements of income and cash flows have been reported on, and are accompanied
by, the signed unqualified opinion of Ernst & Young, independent auditors for
the Sellers for such years, (ii) the unaudited balance sheet at September 30,
1999 and the income statement for the year then ended for Screen and Music,
(iii) the unaudited, combined balance sheet with respect to the Business (except
for Screen and Music) at December 31, 1999, (iv) the unaudited balance sheet at
December 31, 1999 for Screen and Music and (v) the unaudited pro forma combined
balance sheet at December 31, 1999, after giving effect to the Excluded Assets
and the Excluded Liabilities, based on Sellers' best faith estimate thereof
(collectively, the financial statements described in clauses (i) through (v)
shall hereafter be referred to as the "Business Financial Statements").
(b) Except as noted in the Business Financial
Statements or as otherwise set forth in Schedule 3.4, the Business Financial
Statements (i) were prepared in accordance with GAAP applied on a basis
consistent with Parent's internal accounting practices throughout the periods
involved, except that unaudited financial statements do not contain footnotes
required by GAAP, and (ii) fairly present, in all material respects, the
combined financial position of the Business (excluding Screen and Music and the
Excluded Offices) as at the dates thereof and for the periods indicated, subject
in the case of unaudited financial statements to normal year-end adjustments.
(c) There are no material liabilities or obligations
of the Business (whether accrued, absolute, contingent or otherwise) except for
liabilities and obligations (i) reflected on or adequately reserved for on the
Business Financial Statements in accordance with GAAP (except that the unaudited
financial statements (x) do not contain footnotes required by GAAP and (y) are
subject to normal year-end adjustments), (ii) as set forth in Schedule 3.4(c) or
in any other Schedule to this Agreement or (iii) for liabilities and obligations
incurred in the ordinary course of business.
(d) Except as set forth in Schedule 3.4(d), since
December 31, 1999, the Sellers have conducted the Business only in the ordinary
course, and, since such date, (i) the Sellers (x) have not incurred any material
obligation or liability, or entered into any material transaction relating to
the Business, except in the ordinary course of business, and (y) have continued
to pay creditors in the ordinary course of business and (ii) there have not been
any
15
events, changes or developments that would reasonably be expected to have a
Material Adverse Effect.
(e) All liabilities and obligations for claims
incurred by Employees pursuant to the Seller Welfare Plans have been
appropriately reflected on the Business Financial Statements or the Closing
Balance Sheet in accordance with GAAP.
3.5 No Conflict; Consents. Except as disclosed in Schedule
3.5, neither the execution and delivery by Sellers of this Agreement or the
Seller Ancillary Agreements, nor the consummation or performance by Sellers of
the transactions contemplated hereby and thereby will: (a) conflict with or
violate any Law or Order to which either Seller or any Subsidiary is bound,
except as would not reasonably be expected to adversely affect the validity or
enforceability of the transactions contemplated by this Agreement or to have a
Material Adverse Effect, (b) conflict with or violate the certificate of
incorporation or by-laws of either Seller or any Subsidiary, (c) require any
material consent, approval or authorization of, or registration, declaration or
filing with, any Governmental Authority on the part of either Seller or any
Subsidiary, except to comply with the provisions of the HSR Act; or (d) (i)
conflict with or violate, (ii) require either Seller or any Subsidiary to obtain
any consent, approval or action of, make any filing with or give any notice to
any Person as a result or under the terms of, or (iii) result in the creation or
imposition of any Lien (except for Permitted Liens) upon either Seller or any
Subsidiary or any of their respective Assets under, any Contract, except as
would not materially adversely affect the Assets being purchased by Buyer.
3.6 Title to Properties. Each Seller has, and is transferring
to the Buyer, good and valid title to all of the Assets which it owns (except
for Assets sold, consumed or otherwise disposed of by such Seller in the
ordinary course of business since the date of the most recent Business Financial
Statements, and except where the failure to have such good and valid title would
not materially adversely affect the Assets being purchased by Buyer, and such
Assets are owned free and clear of all Liens, except for (a) Liens listed in
Schedule 3.6 and (b) Permitted Liens. Each Subsidiary has good and valid title
to all of the assets which it owns (except for assets sold, consumed or
otherwise disposed of by such Subsidiary in the ordinary course of business
since the date of the most recent Business Financial Statements, and except
where the failure to have such good and valid title would not materially
adversely affect the Assets being purchased by Buyer, and such assets are owned
free and clear of all Liens, except for (a) Liens listed in Schedule 3.6 and (b)
Permitted Liens.
3.7 Leased Property. Schedule 3.7 contains a complete and
correct list of (i) all real property leases ("Real Property Leases") and (ii)
personal property leases which require annual payments in excess of $100,000
("Personal Property Leases"), and any and all amendments thereto which relate to
the Business and to which either Seller is a party. Except as disclosed in
Schedule 3.7, and except as would not materially adversely affect the Assets
being purchased by Buyer, (i) each Personal Property Lease is in full force and
effect and, to the Knowledge of the Sellers, is enforceable against the Person
party thereto in accordance with its terms, (ii) no notices of default or
notices of termination have been issued with respect to any Personal Property
Lease which has not been withdrawn or canceled and (iii) to the Knowledge of
16
Sellers, no other party is in default under any Personal Property Lease. Except
as disclosed in Schedule 3.7, (i) each Real Property Lease is in full force and
effect, in all material respects, and, to the Knowledge of the Sellers is
enforceable against the Person party thereto in accordance with its terms, (ii)
no notices of default or notices of termination have been issued with respect to
any Real Property Lease which has not been withdrawn or cancelled and (iii) to
the knowledge of Sellers, no other party is in default under any Real Property
Lease.
3.8 Condition of Property. Except as would not have a Material
Adverse Effect, the items of tangible personal property owned or leased by the
Sellers or any Subsidiary and included in the Assets are (a) in good working
order, reasonable wear and tear excepted and (b) reasonably suitable for the
uses for which they are intended.
3.9 Insurance. Schedule 3.9 contains a list of all insurance
maintained by or on behalf of the Sellers or any Subsidiary with respect to the
Assets and relating to the Business. Except as would not have a Material Adverse
Effect, all such insurance policies maintained by or on behalf of the Sellers or
any Subsidiary are in full force and effect, all material premiums with respect
thereto have been paid, and no written notice of cancellation or termination has
been received with respect to any such policy.
3.10 Contracts. Schedule 3.10 sets forth a list, as of the
date hereof, of each material written Contract (and each material oral Contract
as to which Seller has Knowledge) ("Material Contract") (other than (i) any
purchase or sale orders arising in the ordinary course of business, (ii) any
Contract (other than client Contracts) involving aggregate payments of less than
$200,000, (iii) client Contracts involving aggregate payments of less than
$300,000 and (iv) any Contract listed in any other Schedule). Except as set
forth in Schedule 3.10, each Material Contract set forth in Schedule 3.10 is a
valid and binding agreement of the Seller which is a party thereto and, to the
Knowledge of Sellers, is in full force and effect, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws relating to creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law). Except as set
forth in Schedule 3.10, Sellers have no Knowledge of any default by either
Seller under any Material Contract, which default has not been cured or waived
and which default would reasonably be expected to have a Material Adverse
Effect.
3.11 Legal Proceedings; Orders. Schedule 3.11 lists all Legal
Proceedings pending, threatened in writing, or, to the Seller's Knowledge,
verbally threatened, against or affecting either of the Sellers or any
Subsidiary which, if adversely determined, would materially adversely affect the
Assets being purchased by Buyer. Except as disclosed in Schedule 3.10, neither
Sellers nor any Subsidiary is subject to any Order (including, without
limitation, any Order under appeal or any other type of review) the violation of
which would reasonably be expected to have a Material Adverse Effect.
3.12 Environmental Laws. Except as set forth in Schedule 3.12,
with respect to the Assets, (i) each Seller is, and to the Knowledge of the
Sellers, the Subsidiaries are, in material compliance with all applicable
Environmental Laws, (ii) the Sellers have not, and to the
17
Knowledge of the Sellers, none of the Subsidiaries have, received any written
request for information, or have been notified in writing that it is a
potentially responsible party, under CERCLA or any similar state or foreign Law,
with respect to any on-site or offsite location for which liability is currently
being asserted and (iii) neither Sellers nor any Subsidiary is subject to any
pending Legal Proceedings or Legal Proceedings threatened in writing relating to
any Environmental Law.
3.13 Intellectual Property. Schedule 3.13 sets forth a list of
all Intellectual Property owned or licensed by Sellers or any Subsidiary which
are material to the operation of the Business. Except as set forth in Schedule
3.13, Sellers and the Subsidiaries own or possess licenses or other rights to
use all Intellectual Property as is necessary to conduct the Business as
presently conducted in all material respects, and neither Sellers nor any
Subsidiary has any Knowledge of any conflict with the proprietary intellectual
property rights relating to the Business or any Knowledge of any conflict by
Sellers or any Subsidiary with the rights of others therein. To the Company's
Knowledge, all copies of software being used in connection with the Business are
being used pursuant to valid licenses.
3.14 Labor Relations. Schedule 3.14 sets forth a list, as of
the date hereof, of all written agreements with Employees that individually
provide for annual compensation in excess of $150,000. Except as set forth in
Schedule 3.14, neither Sellers nor any Subsidiary is a party to any collective
bargaining agreement with respect to the Business. Except as set forth in
Schedule 3.14, no work stoppage, strike or labor dispute against the Sellers or
any Subsidiary is pending or, to Sellers' Knowledge threatened. Neither Sellers
nor any Subsidiary has received written notice of any unfair labor practice and,
to Sellers' Knowledge, no such complaints are pending before the National Labor
Relations Board or other similar governmental authority.
3.15 Employee Benefit Plans.
(a) Employee Benefit Plans. Schedule 3.15 sets forth
a true and correct list of all Employee Benefit Plans.
(b) Employee Benefit Plan Exceptions. Each Employee
Benefit Plan has been administered in accordance with the documents and
instruments governing such plan, and with applicable requirements of ERISA, the
Code and other Applicable Law, except as would not reasonably be expected to
result in a Material Adverse Effect.
(c) Funding. All contributions required by applicable
Law or an Employee Benefit Plan to be made on or prior to the date hereof by
Sellers or a Subsidiary to an Employee Benefit Plan have been made within the
time prescribed by the applicable Law or Employee Benefit Plan.
(d) Records. Sellers have provided or caused to be
provided to Buyer copies of each Employee Benefit Plan and any amendments
thereto and any related trust agreement, and if applicable: (i) the most recent
actuarial valuation report, (ii) the last filed Form 5500 or 5500-C, (iii) the
summary plan description currently in effect for each Employee Benefit Plan and
all material modifications thereto, (iv) the last financial statements for each
Employee
18
Benefit Plan and its related trust, if any, and (v) the most recent
determination letter issued with respect to each Employee Benefit Plan.
(e) No Audit, Etc. No Employee Benefit Plan is under
audit or is the subject of an investigation by the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
federal, state governmental agency, nor to the Knowledge of the Sellers, is any
such audit or investigation pending or threatened.
(f) No Acceleration, Etc. Except as disclosed in
Schedule 3.15(f), the consummation of the transactions contemplated hereby,
either alone or in combination with another event, will not (i) entitle any
Employee or former Employee to any payment, (ii) increase the amount of
compensation due to any such Employee, (iii) accelerate the time of vesting of
any compensation, equity incentive or other benefit, (iv) result in any
"parachute payment" under Section 280G of the Code, whether or not such payment
is considered to be reasonable compensation for services rendered, or (v) result
in the forfeiture of any bonus, equity incentive or other benefit otherwise
payable to any Employee or former Employee.
3.16 Taxes. Sellers and/or the Subsidiaries have paid all
Taxes in respect of periods ending on or prior to the date hereof to the extent
the failure to pay any such Tax could result in the imposition of a Lien on any
Asset or the imposition of any other liability on Buyer. All unpaid Taxes
payable in respect of the Business have been accrued or reserved for on the
Business Financial Statements as at the dates thereof in accordance with GAAP,
regardless of whether payment of such taxes was due or payable as of such dates.
None of the Subsidiaries is a party to any agreement or understanding in respect
of allocation or sharing of liability for Taxes other than with another
Subsidiary.
3.17 Brokers. Except for the fees payable to Xxxxxxx Xxxxx
Xxxxxx Inc., which are the responsibility of the Sellers, neither Sellers nor
any Subsidiary has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions contemplated
hereby.
3.18 Compliance with Laws and Orders. Except as set forth in
Schedule 3.18, the operations of the Sellers and the Subsidiaries relating to
the Business are in material compliance with all applicable Laws and Orders.
3.19 Opinion of Financial Advisor. The Board of Directors of
Parent has received an opinion, dated the date of this Agreement, of Xxxxxxx
Xxxxx Barney Inc. to the effect that the Purchase Price is fair, from a
financial point of view, to the Parent (the "Financial Advisor Letter").
3.20 Sale of Assets. Sellers have actively marketed the Assets
and concluded that (i) as of the date hereof, the transactions contemplated by
this Agreement are in the best interests of the Company and (ii) the Purchase
Price to be paid by Buyer for the Assets represents fair consideration.
19
3.21 Disclosure Schedule. On or prior to the date hereof, the
Sellers have delivered to Buyer a schedule (as the same may be amended or
supplemented pursuant to this Section 3.21, the "Disclosure Schedule") setting
forth, among other things, items of disclosure relating to any or all of the
representations and warranties of the Sellers. Either Seller shall, Two Business
Days prior to Closing, by notice in accordance with this Agreement, amend or
supplement any Section of the Disclosure Schedule to include any matters (x)
which, if existing or occurring before or at the date of this Agreement, would
have caused any representation or warranty of Sellers to be untrue or incorrect
if not set forth or described in the Disclosure Schedule, and (y) hereafter
arising prior to the Closing which, if existing or occurring before or at the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedule, it being hereby agreed and understood that any such
amendment or supplement to any Section of the Disclosure Schedule shall not
operate to cure any prior breach by Sellers, of any representation or warranty
to which such amended or supplemented schedule relates. In no event shall
Sellers have any liability by virtue of its failure to disclose in response to
any Section of this Agreement information which is disclosed herein in
reasonable detail in response to another Section of this Agreement.
3.22 Standard. No representation or warranty of Sellers
contained in Article III hereof shall be deemed untrue or incorrect, and Sellers
shall not be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with all other
facts, circumstances or events inconsistent with any Section of Article III, has
had or would have a Material Adverse Effect.
3.23 Disclaimer. SELLERS HAVE NOT MADE AND SHALL NOT BE DEEMED
TO HAVE MADE TO BUYER ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE EXPRESSLY
MADE BY SELLERS IN SECTIONS 3.1 THROUGH 3.22. IN ANY EVENT, EXCEPT AS OTHERWISE
EXPRESSLY STATED IN THIS ARTICLE 3, SELLERS MAKE NO REPRESENTATION OR WARRANTY
TO BUYER (A) AS TO MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR QUALITY, WITH RESPECT TO ANY OF THE ASSETS TRANSFERRED OR WHICH MAY
BE DEEMED TO BE TRANSFERRED UPON TRANSFER OF THE SUBSIDIARY SHARES, OR AS TO THE
CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER
LATENT OR PATENT (OR ANY OTHER REPRESENTATION OR WARRANTY REFERRED TO IN SECTION
2-312 OF THE UNIFORM COMMERCIAL CODE OF ANY APPLICABLE JURISDICTION), (B) WITH
RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE
TO BUYER, OR (C) WITH RESPECT TO ANY OTHER INFORMATION OR DOCUMENTS MADE
AVAILABLE TO BUYER EXCEPT, IN THE CASE OF THIS CLAUSE (C) ONLY, AS EXPRESSLY
COVERED BY A REPRESENTATION OR WARRANTY CONTAINED IN SECTIONS 3.1 THROUGH 3.22.
20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each Seller as
follows:
4.1 Incorporation and Qualification; Corporate Authority.
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to execute, deliver and perform (i) this Agreement
and (ii) the Xxxx of Sale and Assumption Agreement and the other documents
described in Section 8.5 hereto (collectively, the "Buyer Ancillary
Agreements"), and to consummate the transactions contemplated hereby and
thereby. Buyer is duly qualified to do business and is in good standing in each
jurisdiction where the ownership or operation of its assets and properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing, as the case may be, would not
have a material adverse effect on its ability to fulfill its obligations under
this Agreement and the transactions contemplated hereby.
4.2 Authorizations; Execution and Validity. The execution and
delivery of this Agreement and the Buyer Ancillary Agreements by Buyer, the
performance of this Agreement and the Buyer Ancillary Agreements by Buyer, and
the consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement and the Buyer Ancillary Agreements have been duly and
validly executed and delivered by Buyer and constitute valid and binding
obligations of Buyer enforceable against Buyer in accordance with their
respective terms, except to the extent that the enforceability thereof may be
limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time affecting generally
the enforcement of creditors' rights and remedies; and (ii) general principles
of equity, including, without limitation, principles of reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in equity or
at law).
4.3 No Conflicts; Consents. The execution and delivery by
Buyer of this Agreement and the Buyer Ancillary Agreements and the consummation
or performance by Buyer of the transactions contemplated by this Agreement and
the Buyer Ancillary Agreements will not: (a) conflict with or violate any Law or
Order applicable to Buyer or by which Buyer is bound, (b) conflict with or
violate the certificate of incorporation or by-laws (or other comparable
corporate charter document) of Buyer, (c) require any consent, approval or
authorization of, or registration, declaration or filing with, any Governmental
Authority on the part of Buyer, except to comply with the provisions of the HSR
Act, or (d) (i) conflict with or violate, (ii) require Buyer to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, or (iii) result in the creation or
imposition of any Lien upon Buyer or any of its assets or properties under, any
contract to which Buyer is a party or by which any of its assets and properties
are bound.
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4.4 Legal Proceedings. There are no Legal Proceedings pending
against Buyer or, to the Knowledge of Buyer, threatened, that question the
validity of this Agreement or any action taken or to be taken by Buyer in
connection with, or which seeks to enjoin or obtain monetary damages in respect
of, the consummation of the transactions contemplated by this Agreement.
4.5 Purchase of Subsidiary Shares for Investment. Buyer (a) is
an informed sophisticated entity with sufficient knowledge and experience in
investing so as to be able to evaluate the risks and merits of its purchase of
the Subsidiary Shares, (b) is financially able to bear the risks of purchasing
the Subsidiary Shares, (c) has had an opportunity to discuss the business,
management and financial affairs of the Subsidiaries with such Subsidiaries'
management, (d) is acquiring the Subsidiary Shares for its own account for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof and (e) understands that (i) such securities have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and (ii) such securities must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration.
4.6 Financing. Buyer has sufficient funds with which to
consummate the transactions contemplated hereby. The lack of availability of any
funds to Buyer at Closing shall not excuse Buyer in any respect from its
obligations to close the transactions contemplated hereby.
4.7 Brokers. Buyer has not paid or become obligated to pay any
fee or commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby.
ARTICLE V
COVENANTS OF SELLERS
From and after the date hereof and until the Closing (except
with respect to Sections 5.3 and 5.7, which shall survive the Closing), the
Sellers hereby covenant and agree that:
5.1 Access. Sellers shall, and shall cause the Subsidiaries to
(a) provide Buyer and its officers, employees, and Buyer's counsel, accountants,
financial advisors, consultants and other representatives (collectively, the
"Representatives") with reasonable access, upon reasonable prior notice and
during normal business hours, to the officers, employees, agents and accountants
of Sellers and the Subsidiaries and their respective Books and Records relating
to the Business (including, without limitation, reports regarding receipt and
aging of accounts receivable and payment and aging of accounts payable), but
only to the extent that such access does not unreasonably interfere with the
business and operations of the Sellers or any Subsidiary, and (b) furnish Buyer
and its Representatives with all such information and data concerning the
Business as Buyer or any of such Representatives reasonably may request in
connection with
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such investigation, except to the extent that furnishing any such information or
data would violate any Law or Order applicable to Sellers or any Subsidiary (in
which event Sellers will use reasonable efforts to afford Buyer access to such
information or data). All access and information is subject to the terms and
conditions of the confidentiality agreement, dated July 28, 1999 between Buyer
and Parent (the "Confidentiality Agreement").
5.2 Conduct of Business. Sellers shall, and shall cause the
Subsidiaries to (unless Buyer shall otherwise consent in writing (which consent
shall not be unreasonably withheld or delayed) or except as otherwise
specifically contemplated by this Agreement):
(a) operate the Business, including payment of
ongoing obligations, and collection of accounts receivable, only in the usual,
regular and ordinary manner consistent with past practice, and use its
commercially reasonable efforts to preserve its present business, organization
and goodwill;
(b) (i) maintain the Assets in their current
condition, normal wear and tear excepted, (ii) not dispose of any Assets other
than in the ordinary course and (iii) maintain insurance upon all of such Assets
in such amounts and of such kinds comparable to that in effect on the date
hereof on such properties and with respect to such operation;
(c) maintain its Books and Records in the usual,
regular and ordinary manner, on a basis consistent with prior years, and comply
with all material contractual and other obligations;
(d) not enter, or allow any Subsidiary to enter, into
any sale, acquisition, merger or consolidation with any Person that prohibits
the consummation of the transactions contemplated by this Agreement.
(e) not allow any Subsidiary to incur or agree to
incur any obligations to issue any securities nor issue, sell or dispose of any
of its securities;
(f) comply in all material respects with all
applicable Laws to which it is subject; and
(g) not agree to take any action or actions
prohibited by any of the foregoing clauses (a) through (f).
5.3 Further Assurances. Sellers shall, and shall cause the
Subsidiaries to, execute and deliver such instruments and take such other
actions as may reasonably be required to (a) carry out the intent of this
Agreement and the Seller Ancillary Agreements and (b) consummate the
transactions contemplated hereby and thereby, including, without limitation,
using reasonable efforts to assist Buyer in obtaining any consent or approval to
any instrument which is required to transfer, assign or otherwise convey such
instrument and which was not received as of the Closing, and Sellers will
cooperate with Buyer to provide that Buyer shall receive the interest of the
Sellers in the benefits under any such instrument; provided, that Buyer shall
undertake to pay or satisfy the corresponding liabilities and obligations for
the enjoyment of
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such benefit to the extent Buyer would have been responsible therefor hereunder
if such consent or approval had been obtained.
5.4 HSR Act Compliance. Promptly after the execution of this
Agreement, but in no event later than 10 Business Days following the execution
and delivery thereof, Sellers shall file any notification required to be filed
under the HSR Act to consummate the transactions contemplated hereby, and shall
request early termination of the waiting period thereunder. Sellers shall use
commercially reasonable efforts to comply as promptly as practicable with any
request made pursuant to the HSR Act for additional information. Sellers shall
coordinate and cooperate with Buyer in exchanging such information and supplying
such reasonable assistance as may be reasonably requested by Buyer in connection
with the foregoing.
5.5 No Breach of Representations and Warranties. Sellers will
not take any action, and will use its commercially reasonable efforts not to
permit any event to occur, which would result in any of the representations and
warranties of Sellers contained in this Agreement not being true and correct on
and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date.
5.6 No Solicitation. From and after the date hereof, Sellers
and their respective officers, directors, employees, attorneys, financial
advisors, agents or other representatives or those of any Subsidiary will not
directly or indirectly, solicit, initiate or knowingly encourage (including by
way of furnishing information) any Acquisition Proposal (as hereinafter defined)
from any third party, or engage in or continue discussions or negotiations
relating thereto; provided, however, that either Seller may, directly or
indirectly, furnish information and access and may engage in discussions and
negotiations with any third party which makes an Acquisition Proposal if the
Board of Directors of Parent concludes in good faith after consultation with
independent legal counsel that the failure to take such action would present a
reasonable possibility of violating the Board's fiduciary obligations to Parent
or to Parent's stockholders under applicable law. Sellers will promptly notify
Buyer of the receipt of any Acquisition Proposal, including the material terms
and conditions thereof and the identity of the person or group making such
Acquisition Proposal, and will promptly notify Buyer of any determination by
Parent's Board of Directors that a Superior Proposal (as hereinafter defined)
has been made. "Acquisition Proposal" shall mean any bona fide unsolicited
offer, proposal or other indication of interest regarding any of the following
(other than this Agreement): (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction whereby the
Sellers would be precluded from consummating the sale of the Business or any
Subsidiary contemplated hereby; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of more than 25% of all of the Assets in a
single transaction or series of related transactions; or (iii) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. The term "Superior Proposal" shall
mean a bona fide unsolicited Acquisition Proposal made by a third party on terms
that a majority of the members of the Board of Directors of Parent determines in
their good faith reasonable judgment (after consultation with an independent
financial advisor) may be more favorable to Parent, to its stockholders or to
Caribiner than the transactions contemplated hereby.
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5.7 Caribiner Name.
(a) Sellers shall grant to the Buyer, effective the
Closing Date, an exclusive, perpetual, royalty-free quitclaim (subject to the
representations and warranties of Sellers in this Agreement) license to use the
"Caribiner" name or any variant or derivative thereof (the "License").
(b) Parent shall at its next regularly scheduled
stockholders' meeting (or at a special meeting of stockholders, if such special
meeting otherwise occurs earlier than the regularly scheduled meeting), include
in its proxy statement a proposal to change the name of Parent. If such proposal
is thereafter approved by the requisite number of shares of Parent's
stockholders, then Parent shall prepare and file all necessary documents and
take such other actions as reasonably may be required to transfer and assign
full right and title in and to the name "Caribiner" to Buyer; provided, that if
such proposal is not approved, Parent shall include such proposal in its proxy
statement at the next regularly scheduled stockholders' meeting.
(c) After the Closing, Sellers shall (i) promptly
take all necessary action to change the name of any subsidiary of Parent that
uses the term "Caribiner" in its name and (ii) to the extent that any subsidiary
of Parent uses the term "Caribiner" as a trade name or d/b/a, cease the use of
such trade name or d/b/a; provided, however, that such use shall be permitted
for a period of 120 days after the name changes referred to in (i) above are
effected; provided further, that Sellers may continue to use the Caribiner name
or variants or derivatives thereof in connection with the performance and
completion of any Detroit Project. Nothing in this Agreement shall prevent
Sellers from using "Caribiner" or variants or derivatives thereof for historical
statements or applications.
5.8 Payment of Intercompany Indebtedness. At or prior to the
Closing, all Intercompany Indebtedness shall be paid in full or otherwise
satisfied.
5.9 Group Relief.
(a) Parent agrees it shall procure that neither it nor any of
its affiliates shall unilaterally revoke any claim for or surrender of Group
Relief which has been made prior to the date of this Agreement in relation to
any Subsidiary.
(b) If and to the extent that Parent from time to time so
requests in writing, Buyer shall procure that the relevant Subsidiary specified
in the request, surrenders for no consideration, any Available Losses or Tax
Refunds (to the extent such Available Losses or Tax Refunds have not been taken
into account in the preparation of the combined balance sheet of the Business
prepared in accordance with Article 2.9(a) with the effect that a provision in
respect of United Kingdom corporation tax which would otherwise have been made
is reduced) in respect of any accounting period commencing before Closing in
such amount and to such persons as shall be specified in the request and Buyer
shall procure that the Subsidiary gives all consents, makes all returns or
claims and takes all other action as may be necessary for the purpose. Parent
may cancel, amend or replace any request.
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(c) Parent shall be entitled to require that Buyer shall and
shall procure that any relevant Subsidiary co-operates and takes all reasonably
necessary steps to claim or utilize any Available Losses by way of Group Relief
or Tax Refunds which are available from another Subsidiary (except to the extent
such Available Losses or Tax Refunds were taken into account in the preparation
of the combined balance sheet of the Business prepared in accordance with
Article 2.9(a) with the effect that a provision in respect of United Kingdom
corporation tax for that Subsidiary would otherwise have been made or increased)
or any affiliate of the Parent for accounting periods commencing before Closing
as can lawfully be made. If and to the extent (x) a payment has been made to
Buyer out of the Escrow Account pursuant to Article 2.9(c) above and (y) the
combined balance sheet of the Business prepared in accordance with Article
2.9(a) above included a provision in respect of United Kingdom corporation tax
in respect of any of the Subsidiaries, Buyer shall or shall procure that payment
is made forthwith to Parent (or to such other person as Parent may direct) for
such Available Losses or Tax Refund equal to (i) in respect of any Available
Losses, the full rate of United Kingdom corporation tax applicable for the
relevant accounting period (such rate to be time weighted to the extent more
than one rate of corporation tax applies for the relevant accounting period)
multiplied by the Available Losses and (ii) in respect of a Tax Refund, the
amount of the Tax Refund.
5.10 Tax administration
(a) Buyer shall procure that the Subsidiaries shall keep all
documents, books and records (in their possession or control at Closing)
relevant to their Tax affairs for any period up to Closing or matter arising
before Closing for as long as may be required by law or for such longer period
as Parent may reasonably request.
(b) Buyer shall, and shall procure that the Subsidiaries shall
(x) give Parent promptly on request such access to documents, books and records
of the Subsidiaries as Parent shall reasonably require and (y) provide copies of
such documents, books and records for the purposes of any matter relating to the
Tax affairs of Parent or its affiliates.
(c) Buyer shall, and shall procure that Subsidiaries shall,
consult with Parent in relation to the preparation and submission to the United
Kingdom Inland Revenue of the Tax returns, computations, elections, consents,
claims, disclaimers and notices of the Subsidiaries and amendments thereto (the
"U.K. Returns") for (or in respect of matters occurring in) the accounting
period (or periods) of the Subsidiaries in which Closing takes place and provide
copies of the same to Parent for this purpose in draft form as soon as
reasonably practicable and in any event, in the case of the Tax computations for
such period or periods, at least 45 days before the due date for payment
(without interest or penalties) of the Tax to which the computations relate and,
in any other case, at least 30 days before the due date for submission of such
U.K. Returns to the Inland Revenue. Buyer shall use all reasonable endeavours to
ensure that the draft U.K. Returns made available to the Parent in accordance
with this Article contain the best estimates and information available. Buyer
shall, and shall procure that Subsidiaries shall, incorporate into such U.K.
Returns the reasonable written representations, suggestions, amendments,
deletions and additions made or suggested by Parent (or its agents).
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(d) Parent (or its agents) shall, prepare and submit all U.K.
Returns for accounting periods ended before Closing. Buyer shall procure that
Subsidiaries shall co-operate and do all necessary things reasonable to assist
in the same and shall promptly sign and submit the same to the Parent for
submission to the Inland Revenue. Parent shall consult Buyer (or its agents)
concerning the U.K. Returns before submission of the same to the extent that
matters therein could materially affect the Tax affairs of Buyer or Subsidiaries
after Closing and shall take into account and incorporate any reasonable
comments of Buyer in relation thereto. For purposes of Sections 5.9 and 5.10, an
accounting period shall be deemed to end at Closing even if it does not actually
do so.
5.11 Contribution of assets to Newco. Sellers shall contribute
to Newco all of Caribiner's tangible assets related to the Business (other than
any Excluded Assets) and shall receive the Newco Stock as consideration
therefor.
ARTICLE VI
COVENANTS OF BUYER
From and after the date hereof and until the Closing (except
with respect to Sections 6.1 and 6.3, 6.11, 6.12 and 6.13, which shall survive
the Closing), Buyer hereby covenants and agrees that:
6.1 Confidentiality Covenant. The Confidentiality Agreement is
hereby confirmed and acknowledged as a continuing obligation of Buyer.
6.2 No Breach of Representations and Warranties. Buyer will
not take any action, and will use its best efforts not to permit any event to
occur, which would result in any of the representations and warranties of Buyer
contained in this Agreement not being true and correct on and as of the Closing
Date with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date.
6.3 Preservation of Books and Records. With respect to the
Books and Records relating to the Business relating to matters on or prior to
the Closing Date: (a) commencing with the Closing Date, for a period of seven
years after the Closing Date, Buyer shall not cause or permit their destruction
or disposal without first offering to surrender them to Sellers or any Person
designated by Sellers, and (b) where Sellers shall determine that any Books and
Records are reasonably necessary for the conduct of its remaining business, or
there is any other legitimate purpose, including, without limitation, an audit
by the IRS or any other taxing authority, Buyer shall allow Sellers and their
representatives or agents, during regular business hours, access to such Books
and Records and the ability to inspect and copy same or (if required) obtain the
originals thereof.
6.4 HSR Act Compliance. Promptly after the execution of this
Agreement, but in no event later than 10 Business Days following the execution
and delivery of this Agreement, Buyer shall file any notification required to be
filed under the HSR Act to
27
consummate the transactions contemplated hereby, and shall request early
termination of the waiting period thereunder. Buyer shall use commercially
reasonable efforts to comply as promptly as practicable with any request made
pursuant to the HSR Act for additional information. Buyer shall coordinate and
cooperate with Sellers in exchanging such information and supplying such
reasonable assistance as may be reasonably requested by Sellers in connection
with the foregoing.
6.5 Further Assurances. Buyer agrees to execute and deliver
such instruments and take such other actions as may reasonably be required to
(a) carry out the intent of this Agreement and the Buyer Ancillary Agreements
(b) consummate the transactions contemplated hereby.
6.6 Return of Information. In the event of termination of this
Agreement, Buyer will return or cause to be returned to Sellers and the
Subsidiaries all documents and other materials obtained from, or on behalf of,
the Sellers in connection with the transactions contemplated hereby and will
keep confidential any such information, all in accordance with the provisions of
the Confidentiality Agreement.
6.7 Employee and Employee Benefit Matters.
(a) Employment Status. Buyer agrees to employ the
Employees as of the Closing.
(b) Seller Welfare Benefit Plans.
(i) Except as may be provided in the
Transition Services Agreement (as defined below), as of the Closing
Date, (i) all Employees and their dependents that participate in any
"employee welfare benefit plan" (as defined by Section 3(1) of ERISA)
that is maintained by Sellers (collectively the "Seller Welfare Plans")
shall cease to do so and (ii) Buyer shall take such actions as are
necessary so that such Employees and dependents shall commence
participation in any "employee welfare benefit plan" (as defined by
Section 3(1) of ERISA) maintained by Buyer for individuals employed by
Buyer immediately prior to the Closing Date (the "Buyer Welfare
Plans").
(ii) Buyer shall pay or shall reimburse
Sellers for claims incurred by Employees pursuant to the Seller Welfare
Plans, provided that any liability for such claims has been reflected
on the Business Financial Statements or the Closing Balance Sheet.
(iii) The Buyer Welfare Plans which provide
medical, health and dental care benefits to Employees (the "Buyer
Medical Plans"), shall waive any coverage waiting period, pre-existing
condition and actively-at-work requirements, and shall provide that any
expenses incurred before the Closing Date by an Employee (and his or
her dependents) during the calendar year of the Closing shall be taken
into account for purposes of satisfying the applicable deductible,
coinsurance and maximum out-of-pocket
28
provisions, and applicable annual and/or lifetime maximum benefit
limitation of the Buyer Medical Plans.
(iv) The Buyer Welfare Plans shall be liable
for the payment of claims of Employees and their eligible dependents
for expenses incurred under the Buyer Welfare Plans on or after the
Closing Date, notwithstanding the fact that any such expense may be
related to another expense which was paid or is eligible for payment
under the terms of any of the Seller Welfare Plans or was related to
any treatment for any condition diagnosed or existing prior to the
Closing Date.
6.8 Workers Adjustment and Retraining Notification Act. Buyer
shall defend, indemnify and hold Sellers harmless from and against any claims or
liabilities in connection with the Workers Adjustment and Retraining
Notification Act (29 U.S.C. Sections 2101, et seq.) ("WARN Act") or any
comparable state law resulting from decisions made, or actions taken, by Buyer
after the Closing Date.
6.9 Transfer of Guarantees. Buyer shall use its reasonable
best efforts to release Sellers from all guarantees and letters of credit of
Sellers guaranteeing or securing the obligations of the Business or the
Subsidiaries, or any of the Subsidiaries' respective subsidiaries, that either
Seller may have executed and delivered in connection with the Business, which
guarantees are listed in Schedule 2.4(iii) hereto, and shall indemnify Sellers
to the extent that (i) Sellers or their subsidiaries are not released from any
such guarantee or letters of credit and (ii) Buyer receives a valid assignment
of the underlying lease or contract or receives the benefit thereof as
contemplated by Section 5.3 hereof. Sellers shall use reasonable efforts to
assist Buyer in obtaining such releases.
6.10 Group Relief. Buyer shall not, and it shall procure that
its affiliates and the Subsidiaries shall not, unilaterally revoke any claim for
or surrender of group relief (as defined in section 402 of the United Kingdom
Income and Corporation Taxes Act 1988) which has been made prior to the date of
this Agreement in relation to a Subsidiary.
6.11 Agreements. Sellers shall enter into with Buyer at the
Closing a transition services agreement ("Transition Services Agreement") having
a term of 90 days after the Closing which shall address agreed-upon services
between the parties.
6.12 Preferred Provider. From and after the Closing, Buyer
shall (a) view Sellers as the preferred provider of staging services that Buyer
requires in connection with the Business, (b) give periodic notification to its
employees who are responsible for soliciting bids from potential providers of
staging services that Sellers are the preferred provider of staging services and
(c) use its reasonable best efforts to include Sellers in any bid, request for
proposed or initial negotiations with respect to the provision of such staging
services. Notwithstanding the foregoing, Buyer shall not be obligated to use
Sellers for the provision of the staging services.
6.13 Non-solicitation. From the date hereof, Buyer shall not,
directly or indirectly, hire or solicit any employee employed by Sellers in the
Detroit Office until the Detroit Projects are completed.
29
6.14 Employment. Buyer shall not employ any employees of
Sellers prior to the Closing.
6.15 Litigation. From and after Closing, in connection with
any litigation relating to Section 2.4(ix) of this Agreement, upon receipt of
notice of commencement of any action or the assertion in writing on any claim by
a third party, the party receiving such notice shall give prompt written notice
thereof to the other party, together with a copy of such claim, process or other
legal pleading, and Sellers shall have the right to undertake the defense
thereof by representatives of its own choosing. In connection with the defense
of any such litigation, Buyer shall cooperate with all reasonable requests of
the Sellers. Sellers shall not compromise or settle any claim relating to
Section 2.4(ix) without the prior written consent of Buyer, which consent shall
not be unreasonably withheld.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction of the
following conditions at or prior to the Closing (all or any of which may be
waived in whole or in part by Buyer in its sole discretion):
7.1 Accuracy of Representations and Warranties. Each of the
representations and warranties of Sellers contained in this Agreement shall be
true and correct, in all material respects, in each case at and as of the
Closing Date as if made at and as of the Closing Date (except for the
representations and warranties that address matters only as of a particular date
or only with respect to a specific period of time which need only be true and
accurate, in all material respects, as of such date or with respect to such
period). Notwithstanding anything contained herein to the contrary, in making
the determination required by the preceding sentence, deviations which result
solely from actions or inactions expressly requested or consented to by Buyer in
writing shall not be considered.
7.2 Performance of Covenants. Sellers and the Subsidiaries
shall have performed and complied, in all material respects, with the covenants
and provisions of this Agreement, the Seller Ancillary Agreements and all other
documents delivered in connection herewith required to be performed or complied
with by them between the date hereof and the Closing Date.
7.3 Laws and Orders. No Law or Order shall be in effect on the
Closing Date forbidding, enjoining or restraining the consummation of the
transactions contemplated in this Agreement.
7.4 Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods in
respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired or been terminated.
30
7.5 Credit Agreement. All Liens on all Assets pursuant to the
Credit Agreement shall be been released and Buyer shall have received evidence
reasonably satisfactory to Buyer and its counsel of same.
7.6 No Bankruptcy.
(a) None of the Sellers or the Subsidiaries shall
have commenced a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall have
consented to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced against
it, or shall have made a general assignment for the benefit of creditors or
shall have taken any corporate action to authorize any of the foregoing.
(b) No involuntary case or other proceeding shall
have been commenced against any of the Sellers or the Subsidiaries seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and either
such case or proceeding shall remain undismissed or unstayed for a period of 60
days or an order for relief shall have been entered against it under the Federal
bankruptcy laws as now or hereinafter in affect.
7.7 No Material Adverse Change. No Material Adverse Change
shall have occurred on or prior to the Closing Date.
7.8 Closing Documents. Sellers shall have delivered to Buyer
the following documents, each in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) such deeds, bills of sale, enforcements,
assignments and other good and sufficient instruments of sale, transfer,
conveyance and assignment as shall be necessary to sell, transfer, convey and
assign to the Buyer, in accordance with the terms hereof, title to the Assets,
free and clear of all Liens (other than Permitted Liens) including without
limitation, a xxxx of sale, assignment and assumption agreement, substantially
in the form of Exhibit B hereto (the "Xxxx of Sale and Assumption Agreement");
(b) the certificates representing the Subsidiary
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank.
(c) all consents, waivers, licenses, permits,
approvals and authorizations from parties to any Contract with Sellers or any
Subsidiary required in connection with the performance by each Seller of its
obligations under this Agreement, which are set forth on Schedule 7.8(c)
attached hereto;
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(d) certified copies of the resolutions of the Board
of Directors of the Sellers authorizing the sale of the Assets being transferred
by Sellers pursuant hereto, the execution and delivery of this Agreement, the
Seller Ancillary Agreements and all other documents delivered in connection
herewith by officers of the Sellers and the consummation of the transactions
contemplated hereby and thereby, and a certificate of the Secretary of the
Sellers certifying that such resolutions were duly adopted and have not been
rescinded or amended as of the Closing Date;
(e) a certificate from Sellers to the effect set
forth in Sections 7.1, 7.2 and 7.4 hereof, dated the Closing Date, signed on
behalf of Sellers by duly authorized officer, thereof; and
(f) an executed copy of the License and Transition
Services Agreement.
(g) a certificate from a senior officer of the Parent
stating that the Board of Directors of Parent had received the Financial Advisor
Letter.
7.9 Opinion of Counsel to Sellers. The Buyer shall have
received the opinion of Xxxxxxx Xxxx & Xxxxx LLP, special counsel to the
Sellers, dated the Closing Date, addressed to the Buyer and substantially in the
form of Exhibit C hereto, and the opinion of Xxxxxxx Xxxx & Xxxxx LLP or
Delaware counsel that stockholder approval is not required to consummate the
transactions contemplated by this Agreement.
7.10 Resignations. Buyer shall have received the resignations,
each dated the Closing Date, of those officers and directors of the Subsidiaries
requested by Buyer.
7.11 Bank Consent. Sellers shall have received the consent of
the lenders to the Credit Agreement to consummate the transactions contemplated
by this Agreement.
7.12 Sublease. Sellers shall enter into a sublease agreement
with Buyer with respect to the real property lease set forth on Schedule 7.12.
7.13 Newco Stock. Newco shall not have engaged in any activity
other than the sale of the Newco Stock.
7.14 Overdraft Payments. CEL, its subsidiaries and Screen and
Music shall have repaid to National Westminster Bank, LLC ("Natwest") all
obligations arising under the banking facilities described in the advice of
terms for Caribiner Group, dated July 7, 1999, issued by Natwest, as may be
incurred in the ordinary course of such entities' business.
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ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
The obligation of Sellers to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction of the
following conditions at or prior to the Closing Date (all or any of which may be
waived in whole or in part by Sellers in their sole discretion):
8.1 Accuracy of Representations and Warranties. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct, in each case at and as of the Closing Date as if made at and
as of the Closing Date, except for the representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period.
8.2 Performance of Covenants. Buyer shall have performed and
complied, in all material respects, with the covenants and provisions in this
Agreement and the Buyer Ancillary Agreements required herein to be performed or
complied with by them between the date hereof and the Closing Date.
8.3 Laws and Orders. No Law or Order shall be in effect on the
Closing Date forbidding, enjoining or restraining the consummation of the
transactions contemplated hereby.
8.4 Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods in
respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired or been terminated.
8.5 Closing Documents. Buyer shall have delivered to Sellers
the following documents, each in form and substance reasonably satisfactory to
Sellers and their counsel:
(a) certified copies of the resolutions of the Board
of Directors of Buyer authorizing the purchase of the Assets pursuant hereto,
the execution and delivery of this Agreement, the Buyer Ancillary Agreements and
all other documents delivered in connection herewith by officers of the Buyer
and the consummation of the transactions contemplated hereby and thereby, and a
certificate of the Secretary of the Buyer dated as of the Closing Date
certifying that such resolutions were duly adopted and have not been rescinded
or amended as of the Closing Date;
(b) the Purchase Price;
(c) the opinion of Xxxxxxxx X. Camera, Esq., General
Counsel to Buyer dated the Closing Date, addressed to Parent, in the form of
Exhibit C hereto;
(d) a certificate from Buyer to the effect set forth
in Section 8.1 and 8.2 hereof, dated the Closing Date, signed by a duly
authorized officer thereof; and
33
(e) an executed copy of the Transition Services
Agreement.
8.6 Bank Consent. Sellers shall have received the consent of
the lenders to the Credit Agreement to consummate the transactions contemplated
by this Agreement.
8.7 Sublease. Buyer shall enter into a sublease agreement with
Sellers with respect to the real property lease set forth on Schedule 8.7.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 Survival of Representations and Warranties of the Parties.
All representations and warranties made by any party hereto contained in this
Agreement or in any document to be delivered in connection herewith, and the
indemnification obligations of each party hereto, shall survive the Closing Date
until one hundred eighty (180) days after the Closing Date; provided, that the
indemnification obligations of Sellers and Newco under Section 11.10 of this
Agreement shall survive for two hundred forty (240) days after the Closing Date.
Provided that a party has made a claim for indemnification on or prior to the
expiration of the survival period referred to in the previous sentence, then the
indemnity obligations relating to such claim shall survive until the final
resolution of such claim, as further provided in this Article IX.
9.2 Indemnification by the Sellers. The Sellers hereby jointly
and severally agree to indemnify and hold Buyer harmless (subject to the terms
of this Article IX) from and against any and all damages, losses, liabilities,
deficiencies, costs and/or expenses (including all reasonable legal fees,
expenses and other out-of-pocket costs) (collectively, "Damages") imposed upon,
or incurred or suffered by Buyer, directly or indirectly, as a result of,
arising from or in connection with (a) any breach of any representation or
warranty made by any Seller to Buyer in this Agreement, whether or not any such
Damages are in connection with any action, suit, proceeding, demand or judgment
of a third party (including Governmental Authorities) and (b) any claim by any
third party with respect to any liability relating to the Sellers, the
Subsidiaries or the Business which is not an Assumed Liability hereunder;
provided, however, that neither Buyer nor any of its affiliates shall be
entitled to any indemnification to the extent that the aggregate amount of
Damages exceeds $9,500,000 (other than for breaches of Section 3.1, 3.2 or 3.3
of this Agreement); and provided further, however, that Sellers shall be liable
to Buyer under this Section 9.2 only if the aggregate cumulative liability of
Sellers to Buyer pursuant to this Section 9.2 for all such matters is in excess
of $750,000, at which point Buyer shall be entitled to receive all Damages
(subject to the preceding proviso) in excess of $750,000. Notwithstanding the
foregoing provisions of this Section 9.2, if any event occurs and Buyer would be
entitled to indemnification under the provisions of this Section 9.2 by reason
of such event but for the second proviso in the immediately preceding sentence,
the notice and procedural provisions of this Article IX shall nevertheless apply
to such event.
9.3 Indemnification by Buyer. Buyer agrees to indemnify and
hold the Sellers harmless (subject to the terms of this Article IX) from and
against any and all Damages imposed upon, or incurred or suffered by any Seller,
directly or indirectly, as a result of, arising from or in
34
connection with any breach of any representation or warranty made by Buyer to
the Sellers in this Agreement, whether or not any such Damages are in connection
with any action, suit, proceeding, demand or judgment of a third party
(including Governmental Authorities); provided, however, that neither Sellers
nor any of their respective affiliates shall be entitled to any indemnification
to the extent that the aggregate amount of Damages exceeds $9,500,000 (other
than (i) for breaches of Section 4.1 or 4.2 of this Agreement or (ii) for
Damages incurred or suffered by any Seller in connection with any Assumed
Liabilities or any client Contract assumed by Buyer); and provided further,
however, that Buyer shall be liable to Sellers under this Section 9.3 only if
the aggregate cumulative liability of Buyer to such entities pursuant to this
Section 9.3 for all such matters is in excess of $750,000 (provided that such
deductible does not apply to Damages incurred under (ii) above for Transfer
Taxes incurred under Section 11.8 below), at which point Sellers shall be
entitled to receive all Damages (subject to the preceding proviso) in excess of
$750,000. Notwithstanding the foregoing provisions of this Section 9.3, if any
event occurs and Sellers would be entitled to indemnification under the
provisions of this Section 9.3 by reason of such event but for the second
proviso in the immediately preceding sentence, the notice and procedural
provisions of this Article IX shall nevertheless apply to such event.
9.4 Procedures.
(a) Upon receipt by one party of notice of any claim
by a third party which might give rise to indemnification hereunder, or upon
such party's discovery of facts which might give rise to indemnification
hereunder, the party claiming indemnification hereunder (the "Indemnitee") shall
give prompt written notice to the other (the "Indemnitor"), and to the Escrow
Agent, which notice to be effective shall describe in reasonable detail the
Damages estimated to be suffered (if ascertainable) and the specific
circumstances thereof, and specifying the provisions of this Agreement to which
such claim for Damages relates (the "Damage Claim Notice"). If Buyer is
delivering the Damage Claim Notice under this Section 9.4(a), Buyer may request
that the Escrow Agent hold back a portion of the Holdback Amount corresponding
to the Damages estimated in good faith to have been suffered pending resolution
of such claim; and in such event, the Escrow Agent shall hold back that portion
of the Holdback Amount which corresponds to the amount set forth in the Damage
Claim Notice; and the Escrow Agent shall not release any of such amounts until
the matter has been fully resolved under this Agreement. The Indemnitor shall be
entitled to participate in the defense of any such claim or action which is a
third party claim or action at the Indemnitor's own cost and to assume the
defense thereof, with counsel of Indemnitor's own choosing, the cost of which
shall be paid for by the Indemnitor. Upon notice from Indemnitor to Indemnitee
of Indemnitor's election to assume the defense, the Indemnitor will not be
liable to the Indemnitee for any legal or other expenses subsequently incurred
by the Indemnitee in connection with the defense thereof. The Indemnitee may not
compromise or settle any claim for which it has asserted or may assert its right
to indemnification without the prior written consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed.
(b) Upon receipt by Indemnitor of a Damage Claim
Notice which does not relate to a third party claim (and which contains the same
information as the Damage Claim
35
Notice described in clause (a) above), the Indemnitor and Indemnitee shall make
all reasonable efforts to promptly resolve such claim on an amicable basis
within the thirty (30) day period following such receipt, failing which the
existence and/or the amount of the indemnification obligation set forth in the
Damage Claim Notice shall, at the option of either party, be finally resolved by
arbitration pursuant to the provisions of Section 9.7 hereof. If Buyer is
delivering the Damage Claim Notice under this Section 9.4(b), Buyer shall
deliver a copy thereof to the Escrow Agent and the Escrow Agent shall hold back
that portion of the Holdback amount which corresponds to the amount set forth in
the Damage Claim Notice; and the Escrow Agent shall not release any such amounts
to the Sellers until the matter is resolved under this Agreement.
9.5 Compensation to Buyer under Sellers' Indemnification
Obligation.
(a) Subject to the provisions of this Article IX,
Sellers will promptly compensate Buyer in respect of any Damages actually
sustained which are mutually agreed or finally determined to be covered by the
indemnities set forth in Section 9.2 hereof.
(b) If a demand for indemnification is made by Buyer
under Section 9.2 hereof prior to the full release of the Holdback Amount under
the Escrow Agreement, and the Damage Claim Notice requests the holdback of a
portion of all or a portion of the Holdback Amount, and if it is finally
determined that Sellers are obligated to indemnify Buyer (regardless of when
such final determination is made), Sellers shall satisfy such indemnification
first, from that portion of the Holdback Amount held back by the Escrow Agent
under Section 9.2 hereof; and to the extent that the Holdback Amount is not
sufficient to satisfy the Sellers' obligations hereunder, Seller shall satisfy
such obligation in accordance with the provisions of Section 9.2 hereof.
9.6 Compensation to Sellers under Buyer Indemnification
Obligation. Buyer will promptly compensate Sellers in respect of any actual
liability or damage which is finally agreed or determined to be covered by the
indemnities set forth in Section 9.3, in accordance with the provisions of
Section 9.3 hereof.
9.7 Arbitration. In the event that any party disputes the
existence and/or amount of a claim for indemnification set forth in a Damage
Claim Notice, such party will be entitled (a) if such dispute relates primarily
to accounting issues, to engage a firm of independent accountants at its own
expense to examine the disputed claim and to deliver a notice to the other party
confirming or disputing its validity or the amount thereof, or (b) if such
dispute does not relate primarily to accounting issues, to deliver a notice to
the other party confirming or disputing its validity or the amount thereof (the
"Dispute Notice"). The Dispute Notice will be given within 30 days of receipt of
the Damage Claim Notice to which the Dispute Notice relates. The party receiving
such Dispute Notice shall provide the other party or the independent public
accountants retained by such other party with access to such books and records
as may be reasonably requested by them for purposes of verifying such claim.
Each party shall pay the expenses of any independent public accountants retained
by it in any dispute under this Section 9.7. The parties shall in good faith
meet promptly after such review so as to come to a settlement of the matter. In
the event a settlement is not achieved within 30 days after the date of the
36
Dispute Notice (the "Dispute Period"), (x) if the dispute relates primarily to
accounting issues, the independent public accountants of Buyer and Seller will
have 30 additional days in which to engage another firm of independent public
accountants unaffiliated with Buyer or Sellers, the expenses of which shall be
borne jointly by Buyer on the one hand and Sellers on the other, to render a
final and binding determination of the dispute, and (y) if the dispute does not
relate primarily to accounting issues, the matter will be submitted by the
parties within 10 days after the end of the Dispute Period to resolution by
final and binding arbitration in New York, New York pursuant to the then
applicable rules and regulations of the American Arbitration Association, the
expenses of which shall be borne jointly and equally by Buyer on the one hand
and Sellers on the other. The arbitrator shall be bound by New York law. The
decision of the outside firm of independent accountants or of the arbitrator(s)
shall be given not later than 30 days from appointment thereof and shall be
final and binding on the parties and may be confirmed in any court of competent
jurisdiction. Each party shall pay its own legal expenses in connection with any
dispute under this Section 9.7.
9.8 Reduction for Insurance, Etc. The amount which an
Indemnitor is required to pay to, for or on behalf of any other party pursuant
to this Article IX shall be reduced (including, without limitation,
retroactively) by any insurance proceeds actually recovered by or on behalf of
such Indemnitee and other amounts paid by any other person in reduction of the
related indemnifiable loss (the "Indemnifiable Loss"); provided, that the amount
of increased costs of insurance arising from the payment or collection of such
insurance proceeds shall be taken into account in determining the amount of
reduction of Indemnifiable Losses. Amounts required to be paid, as so reduced,
are hereafter sometimes called an "Indemnity Payment." If an Indemnitee shall
have received or shall have paid on its behalf an Indemnity Payment, in respect
of an Indemnifiable Loss and shall subsequently, receive directly or indirectly,
insurance proceeds or other amounts in respect of such Indemnifiable Loss, then
such Indemnitee shall promptly pay to the Indemnitor a sum equal to the amount
of such insurance proceeds or other amounts, provided the same does not exceed
an amount equal to the payment actually made by the Indemnitor.
9.9 Adjustment for Taxes. Notwithstanding the foregoing
provisions of this Article IX, any payment for an Indemnifiable Loss shall be
subject to the following: in computing the amount of an Indemnifiable Loss, the
indemnity shall be for the net amount of such loss after giving effect to any
Tax benefit reasonably expected to be received by the Indemnitee on or
subsequent to the Closing Date with respect to the item or items making up such
Indemnifiable Loss.
ARTICLE X
TERMINATION
10.1 Termination of Agreement. This Agreement and the
transactions contemplated hereby may be terminated at any time before the
Closing Date, as follows:
(a) Mutual Consent. By the mutual written consent of
Sellers and Buyer.
37
(b) Expiration Date. By Sellers, on the one hand, or
Buyer, on the other hand, if the Closing shall not have occurred within 90 days
after the execution of this Agreement (which date may be extended by mutual
agreement of Buyer and Sellers and which shall be extended as necessary if there
is a delay in obtaining approval under the HSR Act), provided that the
terminating party is not then in default hereunder.
(c) Consummation Prohibited. By Sellers, on the one
hand, or Buyer, on the other hand, if consummation of the transactions
contemplated hereby would violate any nonappealable final Order of a
Governmental Authority having competent jurisdiction.
(d) Breach. By Sellers, on the one hand, or Buyer, on
the other hand, if a breach of or failure to perform any provision of this
Agreement, which breach or failure would reasonably be expected to materially
adversely effect the consummation of the transactions contemplated hereby, has
been committed by the other party and such breach has not been waived.
(e) Superior Proposal. By either Sellers or Buyer, if
the Board of Directors of Parent shall have approved an Acquisition Proposal
after determining, pursuant to Section 5.6, that such Acquisition Proposal
constitutes a Superior Proposal; provided, further, that Sellers may not
terminate this Agreement pursuant to this Section 10.1(e) unless simultaneously
with such termination Sellers pay to Buyer the amount specified under Section
10.2.
10.2 Effect of Termination. If this Agreement shall be
terminated pursuant to Section 10.1(a)-(d), all further obligations of the
parties to this Agreement shall terminate without further liability of any party
to another and each party shall pay all costs and expenses incident to its
negotiation and preparation of this Agreement and to its performance of and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with, including the fees, expenses and disbursements of
its counsel; provided, however, that (i) the obligations of the Buyer under the
Confidentiality Agreement shall survive any such termination and (ii) nothing
herein shall relieve a breaching or defaulting party for liability arising from
any breach or default by it hereunder. Notwithstanding the foregoing, in the
event that this Agreement is terminated pursuant to Section 10.1(e), Sellers
shall pay to Buyer a fee of $3,600,000 in cash, such payment to be made
simultaneously with such termination.
ARTICLE XI
GENERAL
11.1 Amendments. This Agreement may only be amended by an
instrument in writing executed by Buyer and Sellers.
11.2 Waivers. The observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term, but such waiver
shall be effective only if it is in a writing signed by
38
the party entitled to enforce such term and against which such waiver is to be
asserted. Unless otherwise expressly provided in this Agreement, no delay or
omission on the part of any party in exercising any right or privilege under
this Agreement shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any right or privilege under this Agreement operate as a
waiver of any other right or privilege under this Agreement nor shall any single
or partial exercise of any right or privilege preclude any other or further
exercise thereof or the exercise of any other right or privilege under this
Agreement.
11.3 Notices. Any notices or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given (and
shall be deemed to have been duly given upon receipt) if sent by telecopy (with
a confirmation copy sent for next day delivery via courier service, such as
Federal Express), overnight mail, registered mail or certified mail, postage
prepaid, or by hand, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to Sellers, to:
Caribiner, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy (which shall not constitute
effective notice) to:
Xxxx Xxxxxxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
(b) If to Buyer, to:
The Interpublic Group of Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxx, Executive Vice
President and Chief Financial Officer
Telecopier: (000) 000-0000
39
With a copy (which shall not constitute
effective notice) to:
The Interpublic Group of Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Camera, Esq.,
Vice President and General Counsel
Telecopier: (000) 000-0000
11.4 Successors and Assigns, Parties in Interest. This
Agreement shall be binding upon and shall inure solely to the benefit of the
parties hereto and their respective successors, legal representatives and
permitted assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned without the written consent of the other party.
Nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person, other than the parties hereto and their respective successors,
legal representatives and permitted assigns, any rights, benefits or remedies of
any nature whatsoever under or by reason of this Agreement, and no Person shall
be deemed a third party beneficiary under or by reason of this Agreement;
provided, however, that Buyer may assign any or all of its rights, interests or
obligations under this Agreement to any wholly-owned subsidiary of Buyer, but no
such assignment shall relieve Buyer of its obligations hereunder.
11.5 Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance, shall be
declared judicially to be invalid, unenforceable or void, such decision shall
not have the effect of invalidating or voiding the remainder of this Agreement,
it being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to render it
valid, legal and enforceable while preserving its intent or, if such
modification is not possible, by substituting therefor another provision that is
valid, legal and enforceable and that achieves the same objective.
11.6 Entire Agreement. This Agreement, the Buyer Ancillary
Agreements, the Seller Ancillary Agreements (including the exhibits and
Schedules hereto and thereto, and the documents and instruments executed and
delivered in connection herewith and therewith) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings, whether written or
oral, among the parties or any of them with respect to the subject matter
hereof, and there are no representations, understandings or agreements relating
to the subject matter hereof that are not fully expressed herein and therein and
the documents and instruments executed and delivered in connection herewith;
provided, however, that the Confidentiality Agreement shall remain in full force
and effect according to its terms and shall survive and remain in full force and
effect in the event this Agreement is terminated; provided, further, that if any
conflict exists between this Agreement and the Confidentiality Agreement, the
terms and conditions set forth herein shall supersede and govern. All exhibits
and Schedules attached to this Agreement are expressly made a part of, and
incorporated by reference into, this Agreement.
40
11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws principles thereof.
11.8 Expenses; Transfer Taxes. Each party to this Agreement
shall bear its own expenses (including all legal, accounting, broker, finder and
investment banker fees) incurred by it in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement, each of the
other documents and instruments executed in connection with or contemplated by
this Agreement and the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, Buyer hereby agrees to indemnify and
hold Sellers harmless from and against any and all sales, use, transfer, stamp,
documentary and similar taxes, duties and charges imposed by or on behalf of any
Governmental Authority, and any interest, fines, penalties and additional
amounts with respect thereto ("Transfer Taxes"), and any other Taxes to the
extent such other Taxes would not have been imposed if Caribiner had sold to
Buyer its tangible assets rather than contributing such assets to Newco and
selling the stock of Newco to Buyer ("Other Taxes"), regardless of the party
that has liability for such Transfer Taxes or Other Taxes under applicable law,
imposed on or in respect of the transactions contemplated by this Agreement,
including, without limitation, Caribiner's transfer of its tangible assets to
Newco and the transfer of the Newco Stock to Buyer hereunder. The provisions of
Sections 9.4, 9.7, 9.8 and 9.9 shall apply to the indemnification provided
hereunder.
11.9 Release of Information; Confidentiality. The parties
shall cooperate with each other in releasing information concerning this
Agreement and the transactions contemplated hereby. No press releases or other
public announcements concerning the transactions contemplated by this Agreement
shall be made by any party without prior consultation with, and agreement of,
the other parties, except for any legally required communication by any party
and then only with prior consultation and as much advance notice as is
practicable under the circumstances requiring any announcement, together with
copies of all drafts of the proposed text. The provisions of the Confidentiality
Agreement shall remain in full force and effect, provided, however, that if any
conflict exists between this Agreement and the Confidentiality Agreement, the
terms and conditions set forth herein shall supersede and govern.
11.10 Code Section 338(h)(10) Election. The Sellers and Newco
each agree that, if Buyer notifies the Sellers in writing, on or prior to the
240th day following the Closing, of its intention to make an election under
Sections 338(g) and 338(h)(10) of the Code (a "Code Section 338(h)(10)
Election"), with respect to Newco, the Sellers and Newco shall each join with
Buyer in timely making a joint Code Section 338(h)(10) Election (and in taking
all steps necessary to effectuate the same) and any similar election as may be
available under applicable state or local law, to produce generally the same
income tax effect to Sellers and Buyer as if Sellers had sold the assets of
Newco to Buyer.
11.11 Certain Construction Rules. The article and section
headings and the table of contents contained in this Agreement are for
convenience of reference only and shall in no way define, limit, extend or
describe the scope or intent of any provisions of this Agreement.
41
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa. In
addition, as used in this Agreement, unless otherwise provided to the contrary,
(a) all references to days, months or years shall be deemed references to
calendar days, months or years and (b) any reference to a "Section," "Article,"
or "Schedule" shall be deemed to refer to a section or article of this Agreement
or an exhibit or schedule attached to this Agreement. The words "hereof",
"herein", and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Unless otherwise specifically provided for herein, the term
"or" shall not be deemed to be exclusive.
11.12 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one instrument binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
11.13 Resolution of Disputes. All disputes between the parties
in connection with or arising out of the existence, validity, construction,
performance and termination of the Agreement (or any terms thereof) which the
parties are unable to resolve between themselves, shall be finally settled by
arbitration. The arbitration shall be held in New York City, New York in
accordance with the Commercial Rules of the American Arbitration Association by
one or more arbitrators appointed in accordance with such rules. Judgment may be
entered upon the award made in such arbitration in any court of competent
jurisdiction. All fees and expenses required to be paid in connection with any
such arbitration shall be borne equally by the parties unless the arbitration
award shall provide otherwise. Arbitration pursuant to this Section 11.13 shall
be the exclusive means of resolving any dispute or disagreement arising
hereunder.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
SELLERS:
CARIBINER INTERNATIONAL, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
----------------------------
Name:
Title:
CARIBINER, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
----------------------------
Name:
Title:
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name:
Title:
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
AMENDMENT NO. 1, dated as of April __, 2000 (this
"Amendment"), to the Asset Purchase Agreement dated as of March 13, 2000 (the
"Purchase Agreement"), by and among The Interpublic Group of Companies, Inc., a
Delaware corporation ("Buyer"), Caribiner International, Inc., a Delaware
corporation ("Parent"), and Caribiner, Inc., a New York corporation and a
direct, wholly-owned subsidiary of Parent ("Caribiner" and collectively with
Parent, the "Sellers"). Capitalized terms used herein and not otherwise defined
shall have their respective meanings set forth in the Purchase Agreement.
W I T N E S S E T H:
WHEREAS, Buyer and Sellers are parties to the Purchase
Agreement, pursuant to which Buyer has agreed to purchase from Sellers,
substantially all of Sellers' assets related to the Business, including the
capital stock of the Subsidiaries, other than the Excluded Assets, and Buyer has
agreed to assume certain of the liabilities of the Sellers related to the
Business, other than the Excluded Liabilities, all as more fully described in
the Purchase Agreement.
WHEREAS, Buyer and Sellers wish to amend certain provisions of
the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Amendment, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Buyer and Sellers hereby agree as follows:
SECTION 1. AMENDMENTS
1.1 Amendments to Section 2.6 of the Purchase Agreement.
Section 2.6 of the Purchase Agreement is hereby amended by deleting the dollar
figure "$90,000,000" from the first sentence of such Section and inserting in
lieu thereof the dollar figure "$88,350,000", and by deleting the dollar figure
"$85,000,000" from the last sentence of such Section and inserting in lieu
thereof the dollar figure "$83,350,000".
1.2 Amendment to Section 2.8 of the Purchase Agreement.
Section 2.8 of the Purchase Agreement is hereby amended by deleting the Exhibit
A attached to the Purchase Agreement and replacing in lieu thereof the Exhibit A
attached hereto.
1.3 Amendments to Section 2.9 of the Purchase Agreement.
Section 2.9 of the Purchase Agreement is hereby amended by adding the following
subsection (d) at the end thereof:
(d) Within ten (10) Business Days following a final
determination of the Tangible Net Worth as provided in Section 2.9(b), if the
Tangible Net
1
Worth is determined to be more than $17,500,000, the Buyer will pay
such difference, up to a maximum of $1,650,000, to Sellers by wire transfer to
such bank account as Sellers will specify.
1.4 Amendment to Section 2.1 of the Purchase Agreement.
Section 2.1 of the Purchase Agreement is hereby amended to insert the following
sentence at the end thereof: The effective time of the Closing shall be 12:01
a.m. on the Closing Date.
SECTION 2. MISCELLANEOUS
2.1 Counterpart Execution. This Amendment may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
2.2 Effect of Amendment. This Amendment shall become
effective, and shall be deemed to be effective as of the date hereof. Except as
otherwise expressly modified herein, the Purchase Agreement shall remain
unchanged and is in full force and effect. All references in the Purchase
Agreement to "this Agreement," "hereto," "hereof," "hereunder" or words of like
import referring to the Purchase Agreement shall mean the Purchase Agreement as
amended by this Amendment.
2.3 Headings. The headings of the sections and paragraphs of
this Amendment have been inserted for convenience of reference only and shall in
no way affect or otherwise modify any of the terms and provisions hereof.
2.4 Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws principles thereof.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Amendment No. 1 to the Asset Purchase
Agreement has been duly executed as of the date first above written.
CARIBINER INTERNATIONAL, INC.
By: /s/ Xxxx X. Jureker
---------------------------
Name:
Title:
CARIBINER, INC.
By: /s/ Xxxx X. Jureker
---------------------------
Name:
Title:
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------
Name:
Title:
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