Exhibit 10.11
ASSET PURCHASE AGREEMENT
Dated as of May 11, 2000
by and among
NextMedia Group, Inc.,
AJ Indoor Advertising, Inc.,
and
AJ Indoor International, Inc.
TABLE OF CONTENTS
Page
Article I. PURCHASE OF ASSETS............................................................1
1.1. Purchase and Sale of Assets...................................................1
1.1.1. Contract Rights......................................................1
1.1.2. Fixed Assets and Supplies............................................1
1.1.3. Tangible Personal Property...........................................1
1.1.4. Manufacturers' or Vendors' Warranties................................2
1.1.5. Intellectual Property................................................2
1.1.6. Real Property Leases.................................................2
1.1.7. Governmental Licenses, Permits and Approvals.........................2
1.1.8. Books and Records....................................................2
1.1.9. Sellers' Names.......................................................2
1.1.10. Accounts Receivable..................................................2
1.1.11. Prepaid Items........................................................2
1.1.12. Miscellaneous Assets.................................................2
1.2. Excluded Assets...............................................................3
1.2.1. Cash.................................................................3
1.2.2. Corporate Documents..................................................3
1.2.3. Employee Benefit Plans...............................................3
1.2.4. Other Excluded Assets................................................3
1.3. Nonassignable Contracts and Permits...........................................3
1.3.1. Nonassignability.....................................................3
1.3.2. Sellers to Use Best Efforts..........................................3
1.3.3. If Waivers or Consents Cannot Be Obtained............................3
Article II. ASSUMPTION OF LIABILITIES.....................................................4
2.1. Assumed Liabilities...........................................................4
2.2. Retained Liabilities..........................................................4
Article III. PURCHASE PRICE; ADJUSTMENTS...................................................5
3.1. Purchase Price................................................................5
3.2. June EBITDA Adjustment........................................................6
3.3. Calendar 2000 EBITDA Adjustment...............................................7
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TABLE OF CONTENTS
(continued)
Page
3.4. Allocation of Purchase Price..................................................8
Article IV. THE CLOSING...................................................................8
4.1. Date of Closing...............................................................8
Article V. REPRESENTATIONS AND WARRANTIES................................................8
5.1. Representations and Warranties of AJ Indoor...................................8
5.1.1. Organization and Good Standing.......................................8
5.1.2. Authorization of Agreement; Binding Obligation.......................8
5.1.3. No Restrictions Against Sale of the Assets; Required Consents........9
5.1.4. No Third Party Options...............................................9
5.1.5. Fixed Assets.........................................................9
5.1.6. Books and Records....................................................9
5.1.7. Contracts and Commitments............................................9
5.1.8. Title to Assets.....................................................10
5.1.9. Intellectual Property...............................................10
5.1.10. Condition of Assets.................................................10
5.1.11. Leased Real Property................................................10
5.1.12. Litigation; Decrees.................................................11
5.1.13. Compliance With Law; Permits........................................11
5.1.14. Taxes...............................................................11
5.1.15. Commissions or Finders Fees.........................................12
5.1.16. Conduct of Business; Certain Actions................................12
5.1.17. Personal Guarantees.................................................12
5.1.18. Top Ten Customers...................................................13
5.1.19. Disclosure..........................................................13
5.2. Representations and Warranties of International..............................13
5.2.1. Organization and Good Standing......................................13
5.2.2. Authorization of Agreement; Binding Obligation......................13
5.2.3. No Restrictions Against Sale of the Assets; Required Consents.......13
5.2.4. No Third Party Options..............................................14
ii
TABLE OF CONTENTS
(continued)
Page
5.2.5. Fixed Assets........................................................14
5.2.6. Books and Records...................................................14
5.2.7. Contracts and Commitments...........................................14
5.2.8. Title to Assets.....................................................14
5.2.9. Intellectual Property...............................................14
5.2.10. Condition of Assets.................................................15
5.2.11. Leased Real Property................................................15
5.2.12. Litigation; Decrees.................................................15
5.2.13. Compliance With Law; Permits........................................15
5.2.14. Taxes...............................................................16
5.2.15. Commissions or Finders Fees.........................................16
5.2.16. Conduct of Business; Certain Actions................................17
5.2.17. Personal Guarantees.................................................17
5.2.18. Disclosure..........................................................17
5.3. Representations and Warranties of Purchaser..................................17
5.3.1. Organization and Good Standing......................................17
5.3.2. Authorization and Effect of Agreement...............................18
5.3.3. No Restrictions Against Purchase of the Assets......................18
Article VI. PRE-CLOSING COVENANTS........................................................18
6.1. Access to Information........................................................18
6.2. Conduct of Business..........................................................18
6.3. Notification.................................................................19
6.4. Required Consents; Cooperation...............................................20
6.5. No Inconsistent Action.......................................................20
6.6. Satisfaction of Conditions...................................................20
6.7. Confidentiality..............................................................20
6.8. Publicity....................................................................20
6.9. Acquisition Proposals........................................................21
6.10. Release of Personal Guarantees...............................................21
Article VII. CONDITIONS TO CLOSING........................................................21
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TABLE OF CONTENTS
(continued)
Page
7.1. Conditions Precedent to Obligations of Purchaser.............................21
7.1.1. Representations, Warranties and Covenants...........................21
7.1.2. Closing Documents...................................................21
7.1.3. Governmental Consents or Approvals..................................22
7.1.4. No Adverse Proceedings..............................................22
7.1.5. Third Party Consents................................................22
7.1.6. Key Employee Agreements.............................................22
7.1.7. No Liens............................................................22
7.1.8. Material Adverse Change.............................................22
7.1.9. Security for Indemnification Obligations of Sellers.................22
7.1.10. Investment Side Letter..............................................22
7.2. Conditions Precedent to Obligations of Sellers...............................23
7.2.1. No Material Misrepresentation or Breach.............................23
7.2.2. Closing Documents...................................................23
7.2.3. Governmental Consents or Approvals..................................23
7.2.4. No Adverse Proceedings..............................................23
7.2.5. Closing Price.......................................................23
7.2.6. Financial Change....................................................23
7.2.7. Letter of Credit....................................................23
Article VIII. DOCUMENTS TO BE DELIVERED AT THE CLOSING.....................................24
8.1. Documents to be Delivered by Sellers.........................................24
8.1.1. Transfer Documents..................................................24
8.1.2. Resolutions.........................................................24
8.1.3. Officer's Certificate...............................................24
8.1.4. Good Standing Certificates..........................................24
8.1.5. Purchaser Letter of Credit Side Letter..............................24
8.1.6. Seller Letter of Credit Side Letter.................................24
8.1.7. Other Documents.....................................................24
8.2. Documents to be Delivered by Purchaser.......................................24
8.2.1. Purchase Price......................................................24
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TABLE OF CONTENTS
(continued)
Page
8.2.2. Certified Resolutions...............................................24
8.2.3. Officer's Certificate...............................................25
8.2.4. Good Standing Certificates..........................................25
8.2.5. Key Employment Agreements...........................................25
8.2.6. Assumption Agreement................................................25
8.2.7. Purchaser Letter of Credit Side Letter..............................25
8.2.8. Seller Letter of Credit Side Letter.................................25
8.2.9. Other Documents.....................................................25
Article IX. POST-CLOSING COVENANTS.......................................................25
9.1. Employee Benefits............................................................25
9.2. Non-Solicitation.............................................................25
9.3. Discharge of Business Obligations............................................26
9.4. Maintenance of Books and Records.............................................26
9.5. Payments Received............................................................26
9.6. UCC Matters..................................................................27
9.7. Covenant Not to Compete; Confidentiality.....................................27
9.8. Certain Tax Matters..........................................................27
9.9. Insurance....................................................................28
9.10. Operation of Business........................................................28
9.11. Transfer of Assets...........................................................29
9.12. Working Capital Amount.......................................................29
9.13. Notices and Filings Under Franchise Agreements...............................29
9.14. Maintenance of Seller Health Plan............................................29
Article X. SURVIVAL AND INDEMNIFICATION.................................................30
10.1. Survival of Representations, Warranties and Covenants........................30
10.2. Limitations on Liability.....................................................30
10.3. Indemnification..............................................................30
10.4. Defense of Claims............................................................31
Article XI. TERMINATION..................................................................33
11.1. Termination..................................................................33
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TABLE OF CONTENTS
(continued)
Page
Article XII. MISCELLANEOUS PROVISIONS.....................................................33
12.1. Notices......................................................................33
12.2. Expenses.....................................................................34
12.3. Successors and Assigns.......................................................34
12.4. Entire Agreement.............................................................35
12.5. Amendments and Supplements...................................................35
12.6. Rights of the Parties........................................................35
12.7. Further Assurances...........................................................35
12.8. Bulk Sales...................................................................35
12.9. Transfers....................................................................35
12.10. Governing Law................................................................35
12.11. Severability.................................................................35
12.12. Execution in Counterparts....................................................35
12.13. Titles and Headings..........................................................36
12.14. Waiver.......................................................................36
12.15. Passage of Title and Risk of Loss............................................36
12.16. Offset Rights................................................................36
12.17. Certain Interpretive Matters and Definitions.................................36
vi
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 11th day of May, 2000, by and among AJ Indoor Advertising, Inc., a
Minnesota corporation ("AJ Indoor"), AJ Indoor International, Inc., a Minnesota
corporation ("International" and, collectively with AJ Indoor, "Sellers") and
NextMedia Group, Inc., a Delaware corporation, or its assignee ("Purchaser").
RECITALS:
A. AJ Indoor presently operates the leading indoor advertising company in
the United States, placing advertising in restaurants, clubs and sports arenas
throughout the United States and International, a wholly-owned subsidiary of AJ
Indoor, presently operates a leading indoor franchising company (collectively,
the "Business"); and
▇. ▇▇▇▇▇▇▇ desires to sell to Purchaser and Purchaser desires to purchase
from Sellers, the assets, rights and properties of Sellers used or useful in the
operation of the Business, on the terms and subject to the conditions contained
in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. PURCHASE OF ASSETS
1.1. Purchase and Sale of Assets. On the terms and subject to the
---------------------------
conditions contained herein, at the Closing (as defined herein), Sellers will
sell, transfer, convey, assign and deliver to Purchaser, and Purchaser will
purchase and accept from Sellers, all right, title and interest of Sellers in
and to all rights, properties and assets of Sellers used or useful in connection
with the Business, excluding the Excluded Assets (as hereinafter defined)
wherever located (collectively, the "Assets"), free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever, subject to the terms and conditions
contained in this Agreement, including, without limitation, all of Sellers'
right, title and interest in and to the rights, properties and assets described
in this Section 1.1:
1.1.1. Contract Rights. All rights and incidents of interest as of the
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Closing Date in and to all leases, agreements and other contracts and legally
binding contractual rights and obligations relating to the Business
(collectively, the "Contracts"), including, without limitation, such of the
foregoing as are described on Schedule 1.1.1;
--------------
1.1.2. Fixed Assets and Supplies. All raw materials, components,
-------------------------
work-in-process, finished products, packaging materials, supplies, spare parts
and samples (collectively, the "Fixed Assets"), wherever located;
1.1.3. Tangible Personal Property. All owned or leased machinery and
--------------------------
equipment, tools, furniture, and all other tangible personal property, wherever
located, including, without limitation, the tangible personal property listed on
Schedule 1.1.3 (collectively, the "Tangible Personal Property");
--------------
1.1.4. Manufacturers' or Vendors' Warranties. Any rights under any
-------------------------------------
manufacturers' or vendors' warranties relating to items included in the Assets,
and all similar rights against third parties relating to items included in the
Assets;
1.1.5. Intellectual Property. All of Sellers' right, title and
---------------------
interest in and to all domestic and foreign letters patent, patents, patent
applications, patent licenses, software licenses and know-how licenses, trade
names, trademarks, registered copyrights, service marks, trademark registrations
and applications, service ▇▇▇▇ registrations and applications, copyright
registrations and applications and domain names and URL addresses owned or used
by Sellers in the operation of the Business and all trade secrets, technical
knowledge, know-how and other confidential proprietary information and related
ownership, use and other rights of Sellers, including, but not limited to, those
listed or described on Schedule 1.1.5 (collectively, the "Intellectual
--------------
Property");
1.1.6. Real Property Leases. The rights and incidents of interest of
--------------------
Sellers in and to all real property leases (the "Real Property Leases") relating
to the operation of the Business, including, but not limited to, those listed or
described on Schedule 1.1.6, and all of Sellers' rights as of the Closing in all
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of the structures, fixtures and improvements located thereon (the "Leased Real
Property");
1.1.7. Governmental Licenses, Permits and Approvals. Any rights and
--------------------------------------------
incidents of interest of Sellers in and to any licenses, permits, authorizations
and approvals (collectively, the "Permits") issued to Sellers by any
Governmental Entity (as defined herein) in connection with the operation of the
Business, including, without limitation, such of the foregoing as are listed in
Schedule 1.1.7;
--------------
1.1.8. Books and Records. Copies of all of the books and records of
-----------------
Sellers relating to the operation of the Business and all files and documents
(including credit information) relating to customers and vendors of the
Business;
1.1.9. Sellers' Names. All of Sellers' rights to the names AJ Indoor
--------------
Advertising, Inc. and AJ Indoor International, Inc.; and
1.1.10. Accounts Receivable. All accounts receivable and notes
-------------------
receivable arising out of the operation of the Business (collectively, the
"Accounts Receivable"), which are described on Schedule 1.1.10;
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1.1.11. Prepaid Items. Any prepaid items, costs or fees relating to
-------------
the operation of the Business, which are described on Schedule 1.1.11; and
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1.1.12. Miscellaneous Assets. Except for the Excluded Assets, such
--------------------
other rights, properties and assets owned by Sellers, wherever located, that are
listed or described in Schedule 1.1.12.
---------------
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1.2. Excluded Assets. Notwithstanding anything to the contrary contained in
---------------
this Agreement, the following rights, properties and assets (collectively, the
"Excluded Assets") will not be included in the Assets:
1.2.1. Cash. All cash and cash equivalents in transit, on hand and/or
----
in banks and all marketable securities and other liquid assets ("Cash");
1.2.2. Corporate Documents. Sellers' minute books, charter documents,
-------------------
stock record books and such other books and records as pertain to the
organization, existence or capitalization of Sellers, and duplicate copies of
such records as are necessary to enable Sellers to file their tax returns and
reports, as well as any other records or materials relating to Sellers generally
and not related to the Assets or the operation of the Business.
1.2.3. Employee Benefit Plans. Except as is otherwise provided herein,
----------------------
any employee plans or pension plans and all other pension, profit sharing, cash
or deferred plans and trusts, and the assets thereof, and any other employee
benefit plan or arrangement and the assets thereof, if any, maintained by
Sellers or any of their Affiliates (as defined in Article XII); and
1.2.4. Other Excluded Assets. Any right, property or asset which is
---------------------
described on Schedule 1.2.4.
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1.3. Nonassignable Contracts and Permits.
-----------------------------------
1.3.1. Nonassignability. Without limiting or otherwise affecting the
----------------
rights of Purchaser pursuant to Articles VII or X, to the extent that any
Contract or Permit to be assigned pursuant to the terms of Sections 1.1.1 or
1.1.7 is not capable of being assigned without the consent, approval or waiver
of a third person or entity (including, without limitation, a Governmental
Entity), nothing in this Agreement will constitute an assignment or require the
assignment thereof, except to the extent provided in this Section 1.3.
1.3.2. Sellers to Use Best Efforts. Notwithstanding anything to the
---------------------------
contrary contained in this Agreement, Sellers will not be obligated to assign to
Purchaser any of their rights and obligations in and to any of the Contracts or
Permits referred to in Section 1.3.1 without first having obtained all of the
consents, approvals and waivers necessary for such assignment; provided,
--------
however, that Sellers shall use their best efforts to obtain all such consents,
-------
approvals and waivers prior to and, if the Closing occurs, after the Closing
Date (as defined herein).
1.3.3. If Waivers or Consents Cannot Be Obtained. To the extent that
-----------------------------------------
any consents, approvals and waivers referred to in Section 1.3.1 are not
obtained by Sellers, Sellers shall use their best efforts to: (a) provide to
Purchaser the economic and business benefits of any Contract or Permit referred
to in Section 1.3.1 and (b) enforce, at Purchaser's request and for Purchaser's
account, any rights of Sellers arising from any such Contract or Permit
(including, without limitation, the right to elect to terminate such Contract or
Permit in accordance with the terms thereof).
3
ARTICLE II. ASSUMPTION OF LIABILITIES
2.1. Assumed Liabilities. As of the Closing, Purchaser will assume, and
-------------------
thereafter in due course will pay and fully satisfy, the following liabilities
and obligations of Sellers (the "Assumed Liabilities") and no other liabilities
or obligations:
(i) liabilities arising out of the ownership of the Assets and/or the
operation of the Business by Purchaser or any other person or entity,
including, without limitation, liability for personal injury of customers
or employees, but only to the extent that the event giving rise to such
liability occurs after the Closing Date;
(ii) liabilities under the Real Property Leases assumed under this
Agreement arising solely from and after the Closing Date, but only to the
extent that the event giving rise to such liability occurs after the
Closing Date;
(iii) liabilities under the Contracts, but only to the extent that the
event giving rise to such liability occurs after the Closing Date;
(iv) liabilities with respect to the termination of employment of any
person by Purchaser who becomes an employee of Purchaser after the Closing
Date; and
(v) all of the accounts payable and any accrued expenses arising out
of the operation of the Business as of the Closing Date, a description of
which is outlined on Schedule 2.1(v).
---------------
2.2. Retained Liabilities. Notwithstanding anything to the contrary
--------------------
contained in this Agreement, Purchaser does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Sellers, whether primary or secondary or direct or indirect, other than the
Assumed Liabilities. Sellers will retain and pay, satisfy, discharge and perform
in accordance with the terms thereof, all liabilities and obligations other than
the Assumed Liabilities, including, without limitation, those set forth below
(such liabilities and obligations retained by Sellers being referred to herein
as the "Retained Liabilities"):
(a) all obligations or liabilities of Sellers or any predecessor or
Affiliate of Sellers which relate to any of the Excluded Assets;
(b) all obligations or liabilities of Sellers or any predecessor or
Affiliate of Sellers relating to Taxes (as defined herein) with respect to the
operation of the Business, the transfer from Sellers to Purchaser of the Assets,
or otherwise, for all periods, or portions thereof, on or prior to the Closing
Date;
(c) all obligations or liabilities for any legal, accounting,
investment banking, brokerage or similar fees or expenses incurred by Sellers in
connection with, resulting from, or attributable to the transactions
contemplated by this Agreement;
4
(d) all obligations or liabilities for any borrowed money incurred
with respect to the operation of the Business prior to the Closing Date;
(e) all liabilities and obligations of Sellers or any predecessor or
Affiliate of Sellers resulting from, caused by or arising out of, directly or
indirectly, the conduct of the Business or the ownership or lease of any of the
Assets or any of the properties or assets previously used in the Business at any
time prior to or on the Closing Date, including, without limitation, such of the
foregoing as constitute, may constitute or are alleged to constitute a tort,
breach of contract or violation or requirement of any domestic or foreign
statute, law, ordinance, rule or regulation ("Law") of any domestic or foreign
court, government, governmental agency, authority, entity or instrumentality
("Governmental Entity"), or which relate to, result in or arise out of the
existence or imposition of any liability or obligation to remediate or
contribute or otherwise pay any amount under or in respect of any environmental,
superfund or other environmental cleanup or remedial Laws, occupational safety
and health Laws or other Laws; and
(f) all claims for severance, other employee benefits (including,
without limitation, benefits mandated by Law) or other compensation or damages
by or on behalf of any employees (present or former), agents or independent
contractors of Sellers or by or on behalf of any Governmental Entity in respect
of employees (present or former), agents or independent contractors of Sellers
involving any alleged employment loss, violation of any Law or termination of
employment actually or constructively (by operation of Law or pre-existing
contract, including without limitation any liability for severance), all
liabilities and obligations of Sellers or any predecessor or Affiliate of
Sellers with respect to employees (present or former), agents or independent
contractors of Sellers under any employee plan or any pension plan, or in
respect of payments for unemployment compensation or unemployment insurance, all
liabilities and obligations with respect to physical, mental or other health
conditions of employees (present or former), agents or independent contractors
of Sellers existing prior to or at the Closing and all other obligations in
respect of employees (present or former), agents or independent contractors of
Sellers relating to periods of employment ending on or prior to the Closing
Date.
ARTICLE III. PURCHASE PRICE; ADJUSTMENTS
3.1. Purchase Price. The initial purchase price (the "Initial Purchase
--------------
Price") for the Assets shall be Eleven Million Nine Hundred Thirty Nine Thousand
Five Hundred Twenty Dollars ($11,939,520). The parties have attached hereto as
Exhibit 3.1(a) the mutually agreed upon calculation of the EBITDA (defined
--------------
below) of the Business for the period beginning April 1, 1999 and ending March
31, 2000 which was used to determine the Initial Purchase Price and will be used
by the parties as a guideline to make any EBITDA calculations of the Business in
accordance with this Article III. The parties acknowledge and agree that the
Initial Purchase Price shall be adjusted prior to the Closing Date to include an
amount equal to the amount by which value of the Accounts Receivable and the
prepaid items acquired by Purchaser pursuant to Sections 1.1.10 and 1.1.11
hereof exceeds the value of the liabilities assumed by the Purchaser pursuant to
Section 2.1(v) (the "Working Capital Amount"). The calculation of the Working
Capital Amount shall be attached hereto as Exhibit 3.1(b) prior to the Closing
--------------
of the transactions contemplated hereby. The sum of the Initial Purchase Price
and the Working Capital Amount is hereinafter referred to as the "Purchase
Price." At Closing, Purchaser shall pay to Sellers the
5
Purchase Price in cash, which amount shall be paid by Purchaser to Sellers by
wire transfer of immediately available funds to an account or accounts
designated by Sellers.
3.2. June EBITDA Adjustment. If, and only if, Sellers receive at Closing a
----------------------
Purchase Price less than $15,000,000 for the Assets, Sellers may be entitled to
an additional amount based upon the earnings before interest, taxes,
depreciation and amortization (including unamortized lease-up expenses)
("EBITDA") of the Business for the period beginning July 1, 1999 and ending June
30, 2000. As soon as is practicable following June 30, 2000, Purchaser shall
deliver Sellers an income statement (the "Proposed June Statement") prepared by
Purchaser or its representatives in accordance with GAAP, consistently applied,
which reflects the EBITDA of the Business for the period beginning July 1, 1999
and ending June 30, 2000. Sellers, within a reasonable period of time following
receipt of the Proposed June Statement, not to exceed five (5) business days,
shall review the EBITDA calculation contained in the Proposed June Statement. In
connection with Sellers' review of the Proposed June Statement, Purchaser hereby
acknowledges and agrees that it will promptly make available to Sellers such
documents or records relating to Purchaser's EBITDA calculation contained in the
Proposed June Statement as may be required for Sellers to properly understand
such calculation. Following their review of the Proposed June Statement and any
of Purchaser's documents or records relating thereto, Sellers shall deliver to
Purchaser their determination of the EBITDA of the Business for the period
beginning July 1, 1999 and ending June 30, 2000 ("Sellers' June EBITDA
Calculation"). In the event that Sellers' June EBITDA Calculation matches
Purchaser's EBITDA calculation contained in the Proposed June Statement,
Purchaser's EBITDA calculation shall become final and binding on both Purchaser
and Sellers for purposes of determining any additional amount to be paid
pursuant to this Section 3.2 (the "Agreed June EBITDA Amount"). In the event
that Sellers' June EBITDA Calculation differs from the EBITDA calculation
contained in the Proposed June Statement, Purchaser and Sellers, in good faith
and acting reasonably, shall attempt promptly to arrive at a mutually agreeable
figure which represents the EBITDA of the Business for the period beginning July
1, 1999 and ending June 30, 2000, which figure will become the Agreed June
EBITDA Amount. In the event that Purchaser and Sellers cannot mutually agree
upon an EBITDA figure for the Business for the period beginning July 1, 1999 and
ending June 30, 2000 within five (5) business days following Purchaser's receipt
of Sellers' June EBITDA Calculation, Purchaser and Sellers agree that they shall
promptly refer the EBITDA determination for the period beginning July 1, 1999
and ending June 30, 2000 to PricewaterhouseCoopers (the "Accountant"). The
Accountant shall promptly make its determination as to the EBITDA of the
Business for such period, which calculation shall become the Agreed June EBITDA
Amount and which shall be: (i) in writing, (ii) furnished to each of the
Purchaser and Sellers as promptly as practicable, and (iii) conclusive and
binding upon each of the parties. Each of Purchaser and Sellers shall comply
with all requests by the Accountant for information, books, records and similar
items to assist the Accountant in establishing the Agreed June EBITDA Amount.
The fees and expenses of the Accountant shall be shared equally by Purchaser and
Sellers, unless it shall have been determined by a court of competent
jurisdiction that the dispute as to the calculation of EBITDA was caused by the
bad faith of either party, in which case the fees and expenses of the Accountant
shall be borne entirely by the party who has been found to have acted in bad
faith.
Following the determination of the Agreed June EBITDA Amount, Purchaser
shall multiply the Agreed June EBITDA Amount by eight; the resulting figure is
referred to herein as
6
the "June Price". In the event that the June Price exceeds the Purchase Price,
Purchaser shall remit to Sellers only that portion of the difference that equals
the difference between the Purchase Price paid at Closing and $15,000,000, and
Sellers shall be entitled to no additional amount. Any amount to be paid by
Purchaser to Sellers pursuant to this Section 3.2 promptly shall be remitted by
Purchaser to Sellers by wire transfer of immediately available funds to an
account designated by Sellers.
3.3. Calendar 2000 EBITDA Adjustment. If, and only if, the Purchase Price
-------------------------------
that Sellers have received at Closing, plus any June Payment amount which
Sellers received in accordance with Section 3.2 above, is less than $21,300,000,
Sellers may be entitled to an additional amount based on the EBITDA of the
Business for calendar year 2000, as provided in this Section 3.3. As soon as
practicable following the close of calendar year 2000, Purchaser shall present
Sellers with an income statement (the "2000 EBITDA Statement") which reflects
the EBITDA of the Business for the period beginning January 1, 2000 and ending
December 31, 2000 (the "2000 Calendar EBITDA"). Sellers, within a reasonable
period of time following receipt of the ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, not to exceed
five (5) business days, shall review the EBITDA calculation contained in the
2000 EBITDA Statement. In connection with Sellers' review of the 2000 EBITDA
Statement, Purchaser hereby acknowledges and agrees that it will promptly make
available to Sellers such documents or records relating to Purchaser's EBITDA
calculation contained in the 2000 EBITDA Statement as may be required for
Sellers to properly understand such calculation. Following its review of the
2000 EBITDA Statement and any of Purchaser's documents or records relating
thereto, Sellers shall deliver to Purchaser their determination of the EBITDA of
the Business for the period beginning January 1, 2000 and ending December 31,
2000 ("Sellers' 2000 EBITDA Calculation"). In the event that Sellers' 2000
EBITDA Calculation matches Purchaser's EBITDA calculation contained in the 2000
EBITDA Statement, Purchaser's EBITDA calculation shall become final and binding
on both Purchaser and Sellers for purposes of determining any additional amount
to be paid pursuant to this Section 3.3 (the "Agreed 2000 Calendar EBITDA"). In
the event that Sellers' 2000 EBITDA Calculation differs from the EBITDA
calculation contained in the 2000 EBITDA Statement, Purchaser and Sellers, in
good faith and acting reasonably, promptly shall attempt to arrive at a mutually
agreeable figure which represents the EBITDA of the Business for the period
beginning January 1, 2000 and ending December 31, 2000, which figure will become
the Agreed 2000 Calendar EBITDA. In the event that Purchaser and Sellers cannot
mutually agree upon an EBITDA figure for the Business for the period beginning
January 1, 2000 and ending December 31, 2000 within five (5) business days
following Purchaser's receipt of Sellers' 2000 EBITDA Calculation, Purchaser and
Sellers agree that they shall promptly refer the EBITDA determination for the
period beginning January 1, 2000 and ending December 31, 2000 to the Accountant.
The Accountant shall promptly make its determination as to the EBITDA of the
Business for such period, which calculation shall become the Agreed 2000
Calendar EBITDA and which shall be: (i) in writing, (ii) furnished to each of
the Purchaser and Sellers as promptly as practicable, and (iii) conclusive and
binding upon each of the parties. Each of Purchaser and Sellers shall comply
with all requests by the Accountant for information, books, records and similar
items to assist the Accountant in establishing the Agreed 2000 Calendar EBITDA.
The fees and expenses of the Accountant shall be shared equally by Purchaser and
Sellers, unless it shall have been determined by a court of competent
jurisdiction that the dispute as to the calculation of EBITDA was caused by the
bad faith of either party, in which case the fees and
7
expenses of the Accountant shall be borne entirely by the party who has been
found by such court to have acted in bad faith.
Following the determination of the Agreed 2000 Calendar EBITDA, Purchaser
shall multiply the Agreed 2000 Calendar EBITDA by eight; the resulting figure is
referred to herein as the "2000 Price". In the event that the 2000 Price exceeds
the sum of the Purchase Price and the June Payment, Purchaser shall remit to
Sellers only that portion of the difference that equals the difference between
the Purchase Price paid at Closing plus the June Payment amount and $21,300,000,
and Sellers shall be entitled to no additional amount. Any amount to be paid by
Purchaser to Sellers pursuant to this Section 3.3 promptly shall be remitted by
Purchaser to Sellers by wire transfer of immediately available funds to an
account designated by Sellers.
3.4. Allocation of Purchase Price. Sellers and Purchaser agree upon the
----------------------------
allocation of the Purchase Price for the Assets as set forth on Exhibit 3.3 (the
-----------
"Allocation"). Purchaser and Sellers agree to prepare and to file all income tax
returns (including, if applicable, Form 8594) in a manner consistent with the
mutually agreed upon Allocation and will not in connection with the filing of
such returns make any allocation which is contrary to any such Allocation.
ARTICLE IV. THE CLOSING
4.1. Date of Closing. The consummation of the purchase and sale of the
---------------
Assets contemplated hereby (the "Closing") shall take place on or before May 23,
2000 at the offices of AJ Indoor Advertising, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇, ▇▇▇.
▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other place as the parties may
designate) or such other date designated by the parties in writing, after each
of the conditions specified in Article VII has been fulfilled (or waived by the
party entitled to waive that condition). The date on which the Closing is
effected is referred to in this Agreement as the "Closing Date."
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of AJ Indoor. AJ Indoor hereby makes
-------------------------------------------
the following representations and warranties to Purchaser, each of which is true
and correct as of the date hereof and shall be true and correct as of the
Closing Date:
5.1.1. Organization and Good Standing. AJ Indoor is a corporation
------------------------------
validly existing and in good standing under the laws of the State of Minnesota.
AJ Indoor has the requisite corporate power and authority to own, lease or
otherwise hold the Assets owned, leased or otherwise held by it and to carry on
the Business as presently conducted by it. AJ Indoor is in good standing and
duly qualified to conduct business as a foreign corporation in every state of
the United States in which its ownership or lease of property or conduct of the
Business makes such qualification necessary.
5.1.2. Authorization of Agreement; Binding Obligation. AJ Indoor has
----------------------------------------------
the requisite corporate power to execute and to deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by AJ
Indoor of this Agreement and the performance by AJ Indoor of the transactions
contemplated hereby to be performed by AJ Indoor shall be duly authorized by all
necessary action on the part of AJ Indoor prior to Closing. This Agreement has
been duly executed and delivered by duly authorized officers of
8
AJ Indoor and, assuming the due execution and delivery of this Agreement by
International and Purchaser, constitutes a valid and binding obligation of AJ
Indoor enforceable against AJ Indoor in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.1.3. No Restrictions Against Sale of the Assets; Required Consents.
-------------------------------------------------------------
The execution and delivery of this Agreement by AJ Indoor does not, and the
performance by AJ Indoor of the transactions contemplated hereby to be performed
by AJ Indoor will not: (a) conflict with the articles of incorporation or
by-laws of AJ Indoor, (b) conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit under, any contract, permit, order, judgment
or decree to which AJ Indoor is a party or by which any of its properties are
bound, (c) constitute a violation of any law or regulation applicable to AJ
Indoor, or (d) result in the creation of any lien, charge or encumbrance upon
any of the Assets. Except as described on Schedule 5.1.3, no consent, approval,
--------------
order or authorization of, or registration, declaration or filing with, any
Governmental Entity or third party is required to be obtained or made by or with
respect to AJ Indoor in connection with the execution and delivery of this
Agreement by AJ Indoor or the performance by AJ Indoor of the transactions
contemplated hereby.
5.1.4. No Third Party Options. There are no existing agreements with,
----------------------
options or rights of, or commitments to, any other person to acquire any of the
Assets or any interest therein.
5.1.5. Fixed Assets. All Fixed Assets of AJ Indoor used in the conduct
------------
of the Business, have been maintained in the ordinary course of the Business,
are of good and merchantable quality, and consist substantially of a quality,
quantity and condition usable, leasable or saleable in the ordinary course of
the Business.
5.1.6. Books and Records. The books, records and accounts of AJ Indoor
-----------------
maintained with respect to the Business accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of AJ Indoor
with respect to the Business.
5.1.7. Contracts and Commitments. Except as disclosed on Schedule
------------------------- --------
5.1.7, each material Contract which comprises a portion of the Assets acquired
-----
by Purchaser is valid and enforceable in accordance with its terms; AJ Indoor
is, and to the best of AJ Indoor's knowledge all other parties thereto are, in
compliance with the provisions thereof; AJ Indoor is not, and to AJ Indoor's
knowledge no other party thereto is, in default in the performance, observance
or fulfillment of any obligation, covenant or condition contained therein; and
no event has occurred which with or without the giving of notice or lapse of
time, or both, would constitute a default thereunder. Furthermore, no such
Contract contains any contractual requirement with which there is a reasonable
likelihood that AJ Indoor, or, to AJ Indoor's knowledge, any other party
thereto, will be unable to comply.
9
5.1.8. Title to Assets. Except as listed or described on Schedule
--------------- --------
5.1.8, AJ Indoor has, and following the Closing, Purchaser will have, good,
-----
valid and marketable title to the Assets free and clear of all title defects or
objections, mortgages, liens, claims, pledges, or other encumbrances of any
nature whatsoever, including without limitation licenses, leases, chattel or
other mortgages, collateral security arrangements, pledges, title imperfections,
defect or objection liens, security interests, conditional and installment sales
agreements, charges, and other title or interest retention arrangements or
reservations (collectively, "Liens").
5.1.9. Intellectual Property. Schedule 1.1.5 contains an accurate and
--------------------- --------------
complete list of all Intellectual Property owned or used by AJ Indoor in the
operation of the Business. Except as set forth on Schedule 5.1.9, AJ Indoor owns
--------------
the entire right, title and interest in and to the Intellectual Property used in
the operation of the Business (including, without limitation, the right to use
and license the same). Except as set forth in Schedule 5.1.9, there are no
--------------
pending, or to the knowledge of AJ Indoor, threatened actions or claims of any
nature affecting the Intellectual Property. Except as set forth on Schedule
--------
5.1.9, there is, to the knowledge of AJ Indoor, no reasonable basis upon which
-----
any claim may be asserted against AJ Indoor for infringement or misappropriation
of any domestic or foreign letters patent, patents, patent applications, patent
licenses, software licenses, and know-how licenses, trade names, trademark
registrations and applications, trademarks, service marks, copyrights, copyright
registrations or applications, domain names or URL addresses, trade secrets,
technical knowledge, know-how or other confidential proprietary information. All
letters patent, registrations and certificates issued by any Governmental Entity
relating to any of the Intellectual Property and all licenses and other
agreements pursuant to which AJ Indoor uses any of the Intellectual Property,
are valid and subsisting, have been properly maintained and neither AJ Indoor,
nor to the knowledge of AJ Indoor, any other person, is in default or violation
thereunder.
5.1.10. Condition of Assets. All of the Assets are in good operating
-------------------
condition and repair, subject to normal wear and maintenance, are usable in the
regular and ordinary course of business and conform to all applicable laws,
ordinances, codes, rules and regulations, and Permits relating to their
construction, use and operation. The Assets constitute all of the assets and
rights necessary to operate the Business as currently conducted and as currently
contemplated to be conducted. No person, other than Sellers, owns any equipment
or other tangible assets or properties situated on the premises of AJ Indoor or
necessary to the operation of the Business of Sellers, except for leased items
disclosed herein.
5.1.11. Leased Real Property.
--------------------
(a) Leased Real Property. Each Real Property Lease is, and at Closing
--------------------
shall be, in full force and effect and has not been assigned, modified,
supplemented or amended, and, except as disclosed in Schedule 5.1.11, no party
---------------
under any Real Property Lease is in default under any of the Real Property
Leases, and no circumstances or state of facts presently exists which, with the
giving of notice or passage of time, or both, would permit any party under any
Real Property Lease to terminate any Real Property Lease.
(b) No Notices. The property used under the Real Property Leases,
----------
complies with all Laws of all Governmental Entities having jurisdiction over
such property, and AJ Indoor has received no notices, oral or written, from any
Governmental Entity, and has no reason to
10
believe, that such property or any improvements erected or situated thereon, or
the uses conducted thereon or therein, violate any Laws of any Governmental
Entity having jurisdiction over such property.
5.1.12. Litigation; Decrees. There are no judicial or administrative
-------------------
actions, proceedings or investigations pending or, to AJ Indoor' knowledge,
threatened that question the validity of this Agreement or any action taken or
to be taken by AJ Indoor in connection with this Agreement. Except as listed or
described on Schedules 5.1.12 or 5.1.13, there are no: (i) lawsuits, claims,
---------------- ------
administrative or other proceedings or investigations relating to the conduct of
the Business pending or, to AJ Indoor' knowledge, threatened by, against or
affecting AJ Indoor or any Affiliate thereof or (ii) judgments, orders or
decrees of any Governmental Entity binding on the AJ Indoor or the Assets.
5.1.13. Compliance With Law; Permits. AJ Indoor has complied, in all
----------------------------
material respects, with each Law, judgment, order and decree of any Governmental
Entity to which AJ Indoor or its business, operations, assets or properties is
subject and is not currently in violation of any of the foregoing. AJ Indoor
owns, holds, possesses or lawfully uses in the operation of its business all
Permits which are in any manner necessary for it to conduct the Business as now
or previously conducted or for the ownership and use of the Assets, free and
clear of all liens, charges, restrictions and encumbrances and in compliance
with all Laws. AJ Indoor is not in default, nor has it received any notice of
any claim of default, with respect to any such Permits. Except as disclosed on
Schedule 5.1.13, all such Permits are renewable by their terms or in the
---------------
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees
and none of such Permits will be adversely affected by consummation of the
transactions contemplated hereby.
5.1.14. Taxes.
-----
(a) All Tax Returns (as defined herein) that are required to be filed
on or before the Closing Date by AJ Indoor have been duly filed on a timely
basis under the statutes, rules or regulations of each applicable jurisdiction.
All such Tax Returns were complete and accurate in all material respects. All
Taxes owed by AJ Indoor have been paid by it, whether or not such Taxes are
disputed. AJ Indoor has not executed or filed with the Internal Revenue Service
or any other taxing authority any agreement extending the period for filing any
Tax Return.
(b) No claim for assessment or collection of Taxes has been asserted
against AJ Indoor. AJ Indoor is not a party to any pending action, proceeding or
investigation by any Governmental Entity for the assessment or collection of
Taxes nor does AJ Indoor have knowledge of any such threatened action,
proceeding or investigation.
(c) No waivers of statutes of limitation in respect of any Tax Returns
have been given or requested by AJ Indoor nor has AJ Indoor agreed to any
extension of time with respect to a Tax assessment or deficiency. No claim has
ever been made by a Governmental Entity in a jurisdiction where AJ Indoor does
not currently file Tax Returns that it is or may be subject to taxation by that
jurisdiction nor is AJ Indoor aware that any such assertion of jurisdiction is
threatened. No security interests have been imposed upon or asserted against any
11
of AJ Indoor's Assets as a result of or in connection with any failure, or
alleged failure, to pay any Tax.
(d) AJ Indoor has withheld and paid all Taxes required to be withheld
in connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party.
(e) For purposes of this Agreement, the terms "Tax" and "Taxes" shall
mean all federal, state, local, or foreign income, payroll, employee
withholding, unemployment insurance, social security, sales, use, service,
service use, leasing, leasing use, excise, franchise, gross receipts, value
added, alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall profits,
environmental (including taxes under Section 59A of the Code), or other tax of
the same or of a similar nature, including any interest, penalty, or addition
thereto, whether disputed or not. The term "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes or any amendment thereto, and including any Schedule or
attachment thereto.
5.1.15. Commissions or Finders Fees. Other than to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and
---------------------------
Co. LLC, AJ Indoor has not agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity.
5.1.16. Conduct of Business; Certain Actions. Except as set forth on
------------------------------------
Schedule 5.1.16 attached hereto, from March 3, 2000 to the date hereof, AJ
---------------
Indoor has, in all material respects, conducted its Business in the ordinary
course and consistent with past practices and has:
(i) maintained the Assets of the Business in sufficient operating
condition and repair to enable them to operate in all material respects in
the manner in which they were being operated;
(ii) not sold, encumbered or otherwise placed any Lien on any of the
Assets other than in the ordinary course of business;
(iii) used its commercially reasonable efforts to retain the services
of its officers, employees, and independent contractors;
(iv) used its commercially reasonable efforts to preserve its
relationships with each of its material lenders, suppliers, customers and
other third parties having material business dealings with AJ Indoor; and
(v) recorded all sales and maintained its books of account in
accordance with GAAP.
5.1.17. Personal Guarantees. Schedule 5.1.17 describes in detail each
------------------- ---------------
of the personal guarantees that have been made on behalf of Sellers by ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ in connection with the ownership of the
Assets and the operation of the Business (the "Personal Guarantees"). Other than
the Personal Guarantees described on
12
Schedule 5.1.17, there are no other personal guarantees that have been made with
---------------
respect to the ownership of the Assets or the operation of the Business.
5.1.18. Top Ten Customers. Schedule 5.1.18 contains a list of the Top
----------------- ---------------
10 customers of the Business. Each Contract relating to one of the Top 10
customers of the Business will be properly assigned to Purchaser at Closing.
5.1.19. Disclosure. No representation or warranty by AJ Indoor
----------
contained in this Agreement, and no statement contained in any document, list,
certificate or other instrument furnished or to be furnished by or on behalf of
AJ Indoor or any Affiliate thereof to Purchaser or any of its representatives in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading
or necessary in order fully and fairly to provide the information required to be
provided in any such document, list, certificate or other instrument. AJ Indoor
has not failed to disclose to Purchaser any fact which would reasonably be
determined to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Business, or which is
otherwise material to the Business.
5.2. Representations and Warranties of International. International hereby
-----------------------------------------------
makes the following representations and warranties to Purchaser, each of which
is true and correct as of the date hereof and shall be true and correct as of
the Closing Date:
5.2.1. Organization and Good Standing. International is a corporation
------------------------------
validly existing and in good standing under the laws of the State of Minnesota.
International has the requisite corporate power and authority to own, lease or
otherwise hold the Assets owned, leased or otherwise held by it and to carry on
the Business as presently conducted by it. International is in good standing and
duly qualified to conduct business as a foreign corporation in every state of
the United States in which its ownership or lease of property or conduct of the
Business makes such qualification necessary.
5.2.2. Authorization of Agreement; Binding Obligation. International
----------------------------------------------
has the requisite corporate power to execute and to deliver this Agreement and
to perform the transactions contemplated hereby. The execution and delivery by
International of this Agreement and the performance by International of the
transactions contemplated hereby to be performed by International shall be duly
authorized by all necessary action on the part of International prior to
Closing. This Agreement has been duly executed and delivered by duly authorized
officers of International and, assuming the due execution and delivery of this
Agreement by International and Purchaser, constitutes a valid and binding
obligation of International enforceable against International in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
5.2.3. No Restrictions Against Sale of the Assets; Required Consents.
-------------------------------------------------------------
The execution and delivery of this Agreement by International does not, and the
performance by International of the transactions contemplated hereby to be
performed by International will not:
13
(a) conflict with the articles of incorporation or by-laws of International, (b)
conflict with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, any contract, permit, order, judgment or decree to which
International is a party or by which any of its properties are bound, (c)
constitute a violation of any law or regulation applicable to International, or
(d) result in the creation of any lien, charge or encumbrance upon any of the
Assets. Except as described on Schedule 5.2.3, no consent, approval, order or
--------------
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to International in
connection with the execution and delivery of this Agreement by International or
the performance by International of the transactions contemplated hereby.
5.2.4. No Third Party Options. There are no existing agreements with,
----------------------
options or rights of, or commitments to, any other person to acquire any of the
Assets or any interest therein.
5.2.5. Fixed Assets. All Fixed Assets of International used in the
------------
conduct of the Business, have been maintained in the ordinary course of the
Business, are of good and merchantable quality, and consist substantially of a
quality, quantity and condition usable, leasable or saleable in the ordinary
course of the Business.
5.2.6. Books and Records. The books, records and accounts of
-----------------
International maintained with respect to the Business accurately and fairly
reflect, in reasonable detail, the transactions and the assets and liabilities
of International with respect to the Business.
5.2.7. Contracts and Commitments. Except as disclosed on Schedule
------------------------- --------
5.2.7, each material Contract which comprises a portion of the Assets acquired
-----
by Purchaser is valid and enforceable in accordance with its terms;
International is, and to the best of International's knowledge all other parties
thereto are, in compliance with the provisions thereof; International is not,
and to International's knowledge no other party thereto is, in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained therein; and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder.
Furthermore, no such Contract contains any contractual requirement with which
there is a reasonable likelihood that International, or, to International's
knowledge, any other party thereto, will be unable to comply.
5.2.8. Title to Assets. Except as listed or described on Schedule
--------------- --------
5.2.8, International has, and following the Closing, Purchaser will have, good,
-----
valid and marketable title to the Assets free and clear of all Liens.
5.2.9. Intellectual Property. Schedule 1.1.5 contains an accurate and
--------------------- --------------
complete list of all Intellectual Property owned or used by International in the
operation of the Business. Except as set forth on Schedule 5.2.9, International
--------------
owns the entire right, title and interest in and to the Intellectual Property
used in the operation of the Business (including, without limitation, the right
to use and license the same). Except as set forth in Schedule 5.2.9, there are
--------------
no pending, or to the knowledge of International, threatened actions or claims
of any nature affecting the Intellectual Property. Except as set forth on
Schedule 5.2.9, there is, to the
--------------
14
knowledge of International, no reasonable basis upon which any claim may be
asserted against International for infringement or misappropriation of any
domestic or foreign letters patent, patents, patent applications, patent
licenses, software licenses, and know-how licenses, trade names, trademark
registrations and applications, trademarks, service marks, copyrights, copyright
registrations or applications, trade secrets, technical knowledge, know-how or
other confidential proprietary information. All letters patent, registrations
and certificates issued by any Governmental Entity relating to any of the
Intellectual Property and all licenses and other agreements pursuant to which
International uses any of the Intellectual Property, are valid and subsisting,
have been properly maintained and neither International, nor to the knowledge of
International, any other person, is in default or violation thereunder.
5.2.10. Condition of Assets. All of the Assets are in good operating
-------------------
condition and repair, subject to normal wear and maintenance, are usable in the
regular and ordinary course of business and conform to all applicable laws,
ordinances, codes, rules and regulations, and Permits relating to their
construction, use and operation. The Assets constitute all of the assets and
rights necessary to operate the Business as currently conducted and as currently
contemplated to be conducted. No person, other than Sellers, owns any equipment
or other tangible assets or properties situated on the premises of International
or necessary to the operation of the Business of Sellers, except for leased
items disclosed herein.
5.2.11. Leased Real Property.
--------------------
(a) Leased Real Property. Each Real Property Lease is, and at Closing
--------------------
shall be, in full force and effect and has not been assigned, modified,
supplemented or amended, and, except as disclosed in Schedule 5.2.11, no party
---------------
under any Real Property Lease is in default under any of the Real Property
Leases, and no circumstances or state of facts presently exists which, with the
giving of notice or passage of time, or both, would permit any party under any
Real Property Lease to terminate any Real Property Lease.
(b) No Notices. The property used under the Real Property Leases,
----------
complies with all Laws of all Governmental Entities having jurisdiction over
such property, and International has received no notices, oral or written, from
any Governmental Entity, and has no reason to believe, that such property or any
improvements erected or situated thereon, or the uses conducted thereon or
therein, violate any Laws of any Governmental Entity having jurisdiction over
such property.
5.2.12. Litigation; Decrees. There are no judicial or administrative
-------------------
actions, proceedings or investigations pending or, to International' knowledge,
threatened that question the validity of this Agreement or any action taken or
to be taken by International in connection with this Agreement. Except as listed
or described on Schedules 5.2.12 or 5.2.13, there are no: (i) lawsuits, claims,
---------------- ------
administrative or other proceedings or investigations relating to the conduct of
the Business pending or, to International' knowledge, threatened by, against or
affecting International or any Affiliate thereof or (ii) judgments, orders or
decrees of any Governmental Entity binding on the International or the Assets.
5.2.13. Compliance With Law; Permits. International has complied, in
----------------------------
all material respects, with each Law, judgment, order and decree of any
Governmental Entity to
15
which International or its business, operations, assets or properties is subject
and is not currently in violation of any of the foregoing. International owns,
holds, possesses or lawfully uses in the operation of its business all Permits
which are in any manner necessary for it to conduct the Business as now or
previously conducted or for the ownership and use of the Assets, free and clear
of all liens, charges, restrictions and encumbrances and in compliance with all
Laws. International is not in default, nor has it received any notice of any
claim of default, with respect to any such Permits. Except as disclosed on
Schedule 5.2.13, all such Permits are renewable by their terms or in the
---------------
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees
and none of such Permits will be adversely affected by consummation of the
transactions contemplated hereby.
5.2.14. Taxes.
-----
(a) All Tax Returns (as defined herein) that are required to be filed
on or before the Closing Date by International have been duly filed on a timely
basis under the statutes, rules or regulations of each applicable jurisdiction.
All such Tax Returns were complete and accurate in all material respects. All
Taxes owed by International have been paid by it, whether or not such Taxes are
disputed. International has not executed or filed with the Internal Revenue
Service or any other taxing authority any agreement extending the period for
filing any Tax Return.
(b) No claim for assessment or collection of Taxes has been asserted
against International. International is not a party to any pending action,
proceeding or investigation by any Governmental Entity for the assessment or
collection of Taxes nor does International have knowledge of any such threatened
action, proceeding or investigation.
(c) No waivers of statutes of limitation in respect of any Tax Returns
have been given or requested by International nor has International agreed to
any extension of time with respect to a Tax assessment or deficiency. No claim
has ever been made by a Governmental Entity in a jurisdiction where
International does not currently file Tax Returns that it is or may be subject
to taxation by that jurisdiction nor is International aware that any such
assertion of jurisdiction is threatened. No security interests have been imposed
upon or asserted against any of International's Assets as a result of or in
connection with any failure, or alleged failure, to pay any Tax.
(d) International has withheld and paid all Taxes required to be
withheld in connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party.
5.2.15. Commissions or Finders Fees. Other than to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and
---------------------------
Co. LLC, International has not agreed to pay a commission, finder's fee or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity.
16
5.2.16. Conduct of Business; Certain Actions. Except as set forth on
------------------------------------
Schedule 5.2.16 attached hereto, from March 3, 2000 to the date hereof,
---------------
International has, in all material respects, conducted its Business in the
ordinary course and consistent with past practices and has:
(i) maintained the Assets of the Business in sufficient operating
condition and repair to enable them to operate in all material respects in
the manner in which they were being operated;
(ii) not sold, encumbered or otherwise placed any Lien on any of the
Assets other than in the ordinary course of business;
(iii) used its commercially reasonable efforts to retain the services
of its officers, employees, and independent contractors;
(iv) used its commercially reasonable efforts to preserve its
relationships with each of its material lenders, suppliers, customers and
other third parties having material business dealings with International;
and
(v) recorded all sales and maintained its books of account in
accordance with GAAP.
5.2.17. Personal Guarantees. Schedule 5.1.17 describes in detail each
------------------- ---------------
of the personal guarantees that have been made on behalf of Sellers by ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ in connection with the ownership of the
Assets and the operation of the Business (the "Personal Guarantees"). Other than
the Personal Guarantees described on Schedule 5.1.17, there are no other
---------------
personal guarantees that have been made with respect to the ownership of the
Assets or the operation of the Business.
5.2.18. Disclosure. No representation or warranty by International
----------
contained in this Agreement, and no statement contained in any document, list,
certificate or other instrument furnished or to be furnished by or on behalf of
International or any Affiliate thereof to Purchaser or any of its
representatives in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading or necessary in order fully and fairly to provide the
information required to be provided in any such document, list, certificate or
other instrument. International has not failed to disclose to Purchaser any fact
which would reasonably be determined to have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Business, or which is otherwise material to the Business.
5.3. Representations and Warranties of Purchaser. Purchaser hereby makes
-------------------------------------------
the following representations and warranties to Sellers, each of which is true
and correct as of the date hereof and shall be true and correct as of the
Closing Date and shall be unaffected by any investigation heretofore or
hereafter made by Sellers.
5.3.1. Organization and Good Standing. Purchaser is a corporation
------------------------------
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the
17
requisite corporate power and authority to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted.
5.3.2. Authorization and Effect of Agreement. Purchaser has the
-------------------------------------
requisite corporate power to execute and to deliver this Agreement and to
consummate the transactions contemplated hereby to be consummated by Purchaser.
The execution and delivery by Purchaser of this Agreement and the consummation
by Purchaser of the transactions contemplated hereby to be consummated by
Purchaser have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and, assuming the due execution and delivery of this Agreement by
Sellers, constitutes a valid and binding obligation of Purchaser, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3.3. No Restrictions Against Purchase of the Assets. The execution
----------------------------------------------
and delivery of this Agreement by Purchaser does not, and the performance by
Purchaser of the transactions contemplated hereby to be performed by Purchaser
will not (a) conflict with the articles of incorporation or bylaws of Purchaser,
(b) conflict with, or result in any violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, any material contract or permit, order, judgment or decree to
which Purchaser is a party or by which it is bound, or (c) constitute a
violation of any law or regulation applicable to Purchaser. Except as described
on Schedule 5.3.3, no consent, approval, order or authorization of, or
--------------
registration, declaration or filing with any Governmental Entity is required to
be obtained or made by or with respect to Purchaser in connection with the
execution and delivery of this Agreement by Purchaser or the consummation by
Purchaser of the transactions contemplated hereby to be consummated by it,
except as listed or described on Schedule 5.3.3.
--------------
ARTICLE VI. PRE-CLOSING COVENANTS
6.1. Access to Information. Prior to the Closing, upon reasonable notice
---------------------
from Purchaser to Sellers, Sellers will afford to the officers, attorneys,
accountants or other authorized representatives of Purchaser reasonable access,
during normal business hours, with minimal disruption to Sellers' Business and
accompanied by a senior management officer to the employees, Assets, facilities
and the books and records of Sellers so as to afford Purchaser full opportunity
to make such review, examination and investigation of the Business as Purchaser
may desire to make. Purchaser will be permitted to make extracts from, or to
make copies of, such books and records as may be reasonably necessary in
connection therewith. Prior to the Closing, Sellers will promptly furnish or
cause to be furnished to Purchaser such financial and operating data and other
information as Purchaser may reasonably request. All such due diligence shall be
conducted in strict compliance with that certain confidentiality agreement dated
February 21, 2000 by and between Purchaser and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., LLC,
acting on behalf of AJ Indoor, and in accordance with Section 6.7 of this
Agreement.
6.2. Conduct of Business. Except as set forth on Schedule 6.2, as
------------------- ------------
contemplated herein, or as otherwise consented to by Purchaser in writing,
during the period from the date of
18
the Agreement and continuing until the Closing Date, Sellers will, in respect of
the conduct of the Business:
(a) use their commercially reasonable efforts to (i) carry on the
Business in the usual, regular and ordinary course as presently conducted and
consistent with past practice, (ii) keep the Business intact, (iii) keep
available the services of the present employees of the Business, and (iv)
maintain the goodwill associated with the Business, including, but not limited
to, preserving the relationships of customers, suppliers and others having
business dealings with the Business;
(b) maintain the Assets in good condition, subject to normal wear and
tear;
(c) not sell, lease or dispose of, or make any contract for the sale,
lease or disposition of, or subject to Lien, any Assets other than in the
ordinary course of the Business;
(d) not intentionally incur any liability or obligation (absolute,
accrued, contingent or otherwise) or assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other person,
other than in the ordinary course of business;
(e) not amend or terminate any material Contract or other agreement,
other than in the ordinary course of business consistent with past practices;
(f) not make any change in financial or tax accounting methods,
principles or practices unless required by GAAP or applicable law;
(g) maintain their books, accounts and records in the usual, regular
and ordinary manner on a basis consistent with prior years;
(h) not grant to any employee of the Business any increase in
compensation or in severance or termination pay, grant any severance or
termination pay, or enter into any employment agreement with any employee,
except as may be required under employment or termination agreements in effect
on the date of this Agreement;
(i) not enter into any agreement, including an agreement to purchase
or lease Assets, which includes an aggregate payment or commitment on the part
of either party of more than $10,000.00, and in no event enter into any such
agreements which have payments or commitments in the aggregate exceeding
$150,000; and
(j) not take or omit to take any action as a result of which any
representation or warranty of Sellers in Article V would be rendered untrue or
incorrect if such representation or warranty were made immediately following the
taking or failure to take such action.
6.3. Notification.
------------
(a) Sellers shall notify Purchaser, and Purchaser shall notify
Sellers, of any litigation, arbitration or administrative proceeding pending or,
to such party's knowledge,
19
threatened against the Sellers or Purchaser, as the case may be, which
challenges the transactions contemplated hereby.
(b) Sellers will provide prompt written notice to Purchaser of any
change in any of the information contained in its representations and warranties
made in Article V hereof or any Exhibits or Schedules referred to herein or
attached hereto and shall promptly furnish any information which Purchaser may
reasonably request in relation to such change; provided, however, that such
-------- -------
notice shall not operate to cure any breach of the representations and
warranties made in Article V hereof or any Exhibits or Schedules referred to
herein or attached hereto.
6.4. Required Consents; Cooperation. Sellers shall obtain and shall deliver
------------------------------
to Purchaser prior to Closing all third-party consents required to effect the
transactions contemplated hereby including, without limitation, any consents
required to assign the Contracts to Purchaser. Purchaser and the Sellers shall
cooperate fully with each other in taking any actions, including actions to
obtain the required consent of any Governmental Entity or any third party,
necessary or helpful to accomplish the transactions contemplated by this
Agreement; provided, however, that no party shall be required to take any action
-------- -------
which would have a material adverse effect upon such party, any Affiliate
thereof, or the Assets.
6.5. No Inconsistent Action. Neither Purchaser nor Sellers shall take any
----------------------
action which is materially inconsistent with their obligations under this
Agreement.
6.6. Satisfaction of Conditions. Without limiting the generality or effect
--------------------------
of any provision of Article VII, prior to the Closing, each of the parties will
use its reasonable efforts with due diligence and in good faith to satisfy
promptly all conditions required hereby to be satisfied by such party in order
to expedite the consummation of the transactions contemplated hereby.
6.7. Confidentiality. Purchaser and Sellers shall keep confidential all
---------------
information obtained by any such party with respect to the other in connection
with this Agreement and the negotiations preceding this Agreement, and will use
such information solely in connection with the transactions contemplated by this
Agreement, and if the transactions contemplated hereby are not consummated,
shall return to the other, without retaining a copy thereof, any Schedules,
documents or other written information obtained from the other in connection
with this Agreement and the transactions contemplated hereby. Notwithstanding
the foregoing, no party shall be required to keep confidential or return any
information which (a) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party, (b) is or
becomes publicly known through no fault of the receiving party or its agents,
(c) is required to be disclosed pursuant to an order or request of a judicial
authority or Governmental Entity (provided the disclosing party is given
reasonable prior notice), or (d) is developed by the receiving party
independently of the disclosure by the disclosing party.
6.8. Publicity. Prior to the Closing, neither party will issue or cause the
---------
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the other party, which consent will not be unreasonably withheld; provided,
--------
however, that nothing herein will prohibit either party
-------
20
from issuing or causing publication of any such press release or public
announcement to the extent that such party determines such action to be required
by Law, in which event the party making such determination will, if practicable
in the circumstances, use reasonable efforts to allow the other party reasonable
time to comment on such release or announcement in advance of its issuance. The
parties hereto acknowledge and agree that as promptly as is practicable
following the Closing that they shall issue a joint press release in agreed form
regarding the execution of this Agreement and the consummation of the
transactions
6.9. Acquisition Proposals. From and after the date of this Agreement,
---------------------
Sellers shall not, nor shall Sellers authorize or permit any officer, director
or employee of, or any investment banker, attorney, accountant or other
representative retained by Sellers to, solicit, initiate or encourage submission
of any proposal or offer (including by way of furnishing information) from any
person which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. As used in this Agreement, "Acquisition Proposal" shall
mean any proposal for a merger or other business combination involving Sellers
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the Sellers Assets.
6.10. Release of Personal Guarantees. Sellers acknowledge and agree that
------------------------------
prior to the Closing that they shall use their best efforts to cause each of the
Personal Guarantees made on their behalf to be released.
ARTICLE VII. CONDITIONS TO CLOSING
7.1. Conditions Precedent to Obligations of Purchaser. The obligations of
------------------------------------------------
Purchaser under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to Closing, of all of
the following conditions, any one or more of which may be waived at the option
of Purchaser:
7.1.1. Representations, Warranties and Covenants.
-----------------------------------------
(a) All representations and warranties of Sellers made in this
Agreement or any Exhibit, Schedule or document delivered pursuant to this
Agreement, shall be true and complete in all material respects as of the date
hereof without regard to any Schedule updates furnished by Sellers after the
date hereof and on and as of the Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Sellers on or prior to the Closing Date shall have been
complied with or performed.
(c) Purchaser shall have received a certificate, dated as of the
Closing Date, executed on behalf of Sellers by authorized officers thereof,
certifying in such detail as Purchaser may reasonably request that the
conditions specified in Sections 7.1.1(a) and (b) hereof have been fulfilled.
7.1.2. Closing Documents. Sellers shall have delivered to Purchaser
-----------------
the documents identified in Section 8.1.
21
7.1.3. Governmental Consents or Approvals. Each of the governmental
----------------------------------
and other approvals, consents or waivers required to be obtained pursuant to the
terms and conditions of this Agreement shall have been obtained.
7.1.4. No Adverse Proceedings. No suit, action, claim or governmental
----------------------
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or Governmental Entity shall have been rendered against, any party
hereto which would render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms.
7.1.5. Third Party Consents. Sellers shall have obtained, and shall
--------------------
have delivered to Purchaser, all third-party consents required to effect the
transactions contemplated hereby, including, without limitation, any consents
required to assign the Contracts to Purchaser.
7.1.6. Key Employee Agreements. Each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
and ▇▇▇▇ ▇▇▇▇▇▇▇ shall enter into employment agreements with Purchaser on the
Closing Date on the terms and conditions mutually agreeable to the parties
thereto.
7.1.7. No Liens. Purchaser shall have received evidence reasonably
--------
satisfactory to Purchaser that any Liens on the Assets have been released,
terminated or otherwise discharged.
7.1.8. Material Adverse Change. From the date hereof, to and including
-----------------------
the Closing Date, there shall not have occurred any event, condition or change
to the Business with respect to the Assets or the financial condition of the
Business, individually or together with other events, conditions or changes,
which could reasonably be expected to materially and adversely affect the value
of the Assets, taken as a whole, or the ability of Purchaser to operate the
Business.
7.1.9. Security for Indemnification Obligations of Sellers. Sellers
---------------------------------------------------
shall have issued a letter of credit for the benefit of Purchaser in the amount
of One Hundred Thousand Dollars ($100,000) in order to secure any payments that
may be required to be made by Sellers to Purchaser pursuant to Section 10.3 of
this Agreement, on terms and conditions more particularly described in the side
letter among the parties and referenced in Sections 8.1.6 and 8.2.8.
7.1.10. Investment Side Letter. Purchaser shall have entered into a
----------------------
side letter with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ on terms and
conditions mutually acceptable to Purchaser regarding the obligation of each of
Arabanos, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ to invest in Class C membership interests of
NextMedia Investors, LLC, a Delaware limited liability company and the parent of
Purchaser.
22
7.2. Conditions Precedent to Obligations of Sellers. The obligations of
----------------------------------------------
Sellers under this Agreement to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to the Closing, of all the
following conditions, any one or more of which may be waived at the option of
Sellers:
7.2.1. No Material Misrepresentation or Breach.
---------------------------------------
(a) All representations and warranties of the Purchaser made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all material respects as of the date hereof and on
and as of the Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Purchaser on or prior to the Closing Date shall have been
complied with or performed.
(c) Sellers shall have received a certificate, dated as of the Closing
Date, executed on behalf of Purchaser by an authorized officer, certifying in
such detail as Sellers may reasonably request that the conditions specified in
Sections 7.2.1(a) and (b) have been fulfilled.
7.2.2. Closing Documents. Purchaser shall have delivered to Sellers
-----------------
the documents identified in Section 8.2.
7.2.3. Governmental Consents or Approvals. Each of the governmental
----------------------------------
and other approvals, consents or waivers required to be obtained pursuant to the
terms and conditions of this Agreement shall have been obtained.
7.2.4. No Adverse Proceedings. No suit, action, claim or governmental
----------------------
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other Governmental Entity shall have been rendered against, any
party hereto which would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
7.2.5. Closing Price. Purchaser shall have delivered to Sellers by
-------------
wire transfer an amount equal to the Purchase Price.
7.2.6. Financial Change. From the date hereof, to and including the
----------------
Closing Date, there shall not have occurred any event, condition or change
outside of the ordinary course of business which has had, or could reasonably be
expected to have, a material adverse effect on the financial condition of
Purchaser.
7.2.7. Letter of Credit. Purchaser shall have issued a letter of
----------------
credit for the benefit of Sellers in order to secure any payments that may be
required to be made by Purchaser to Sellers pursuant to Sections 3.2 and 3.3 of
this Agreement, on terms and conditions more particularly described in the side
letter among the parties and referenced in Sections 8.1.5 and 8.2.7 of this
Agreement.
23
ARTICLE VIII. DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1. Documents to be Delivered by Sellers. At the Closing, Sellers will
------------------------------------
deliver to Purchaser the following, at the expense of Sellers and in proper form
for recording when appropriate:
8.1.1. Transfer Documents. Such bills of sale, assignments (including
------------------
assignments with respect to contracts and leases), and other good and sufficient
instruments of transfer as Purchaser may reasonably request conveying and
transferring to Purchaser title to the Assets.
8.1.2. Resolutions. Resolutions of the Board of Directors of each
-----------
Sellers approving the execution and delivery of this Agreement and each of the
other documents delivered by such Sellers pursuant thereto and authorizing the
consummation of the transactions contemplated hereby and thereby.
8.1.3. Officer's Certificate. Certificates, dated the Closing Date,
---------------------
executed on behalf of Sellers in the form described in Section 7.1.1.
8.1.4. Good Standing Certificates. Governmental certificates showing
--------------------------
that Sellers are validly existing and in good standing in Minnesota and are in
good standing in each state in which they are qualified to conduct the Business,
certified as of a date not more than ten (10) days before the Closing Date.
8.1.5. Purchaser Letter of Credit Side Letter. A side letter by and
--------------------------------------
among the parties with respect to Purchaser's obligation to issue a letter of
credit for the benefit of Sellers in order to secure any payments that may be
required to be made by Purchaser to Sellers pursuant to Sections 3.2 and 3.3 of
this Agreement.
8.1.6. Seller Letter of Credit Side Letter. A side letter by and among
-----------------------------------
the parties with respect to Sellers' obligation to issue a letter of credit for
the benefit of Purchaser in order to secure any payments that may be required to
be made by Sellers to Purchaser pursuant to Section 10.3 of this Agreement.
8.1.7. Other Documents. Such additional information and materials as
---------------
Purchaser shall reasonably request.
8.2. Documents to be Delivered by Purchaser. At the Closing, Purchaser will
--------------------------------------
deliver to Sellers, at its expense:
8.2.1. Purchase Price. Evidence of a wire transfer in the amount of
--------------
the Purchase Price.
8.2.2. Certified Resolutions. Resolutions by an authorized officer of
---------------------
Purchaser approving the execution and delivery of this Agreement and each of the
other documents delivered by Purchaser pursuant hereto and authorizing the
consummation of the transactions contemplated hereby and thereby.
24
8.2.3. Officer's Certificate. A certificate, dated the Closing Date,
---------------------
executed on behalf of the Purchaser in the form described in Section 7.2.1.
8.2.4. Good Standing Certificates. Governmental certificates showing
--------------------------
that Purchaser is validly existing and in good standing in the state of its
organization, certified as of a date not more than ten (10) days before the
Closing Date.
8.2.5. Key Employment Agreements. Employment agreements between
-------------------------
Purchaser and each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ executed on
behalf of the parties thereto on terms and conditions mutually agreeable to the
parties thereto.
8.2.6. Assumption Agreement. An assumption agreement in a form and
--------------------
substance reasonably satisfactory to Seller which governs Purchaser's assumption
of the Assumed Liabilities pursuant to the terms and conditions of this
Agreement.
8.2.7. Purchaser Letter of Credit Side Letter. A side letter by and
--------------------------------------
among the parties with respect to Purchaser's obligation to issue a letter of
credit for the benefit of Sellers in order to secure any payments that may be
required to be made by Purchaser to Sellers pursuant to Sections 3.2 and 3.3 of
this Agreement.
8.2.8. Seller Letter of Credit Side Letter. A side letter by and among
-----------------------------------
the parties with respect to Sellers' obligation to issue a letter of credit for
the benefit of Purchaser in order to secure any payments that may be required to
be made by Sellers to Purchaser pursuant to Section 10.3 of this Agreement.
8.2.9. Other Documents. Such additional information and materials as
---------------
Sellers shall reasonably request.
ARTICLE IX. POST-CLOSING COVENANTS
9.1. Employee Benefits. Purchaser shall assume no liability to any employee
-----------------
of Sellers in connection with any benefit accrued by such employee price to
Closing. No portion of the assets of any employee plan, pension plan or any
other plan, fund, program or arrangement, written or unwritten, heretofore
sponsored or maintained by Sellers (and no amount attributable to any such plan,
fund, program or arrangement) shall be transferred to Purchaser, and Purchaser
shall not be required to continue any such plan, fund, program or arrangement
after the Closing Date. The amounts payable on account of all benefit
arrangements shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent, and Purchaser shall not be liable for any claim for insurance,
reimbursement or other benefits payable by reason of any event which occurs
prior to the Closing Date. All employees of Sellers who are employed by
Purchaser on or after the Closing Date in accordance with Section 9.2 of this
Agreement shall be new employees of Purchaser and any prior employment by
Sellers of such employees shall not affect entitlement to, or the amount of,
salary or other cash compensation, current or deferred, which Purchaser may make
available to its employees.
9.2. Non-Solicitation. As of the Closing Date, Purchaser shall offer
----------------
employment to, and Sellers shall use their commercially reasonable efforts,
without any obligation to incur any
25
expense or liability, to assist Purchaser in employing as new employees of
Purchaser, all persons presently engaged in the Business who are identified by
Purchaser prior to the Closing Date (the "Employees"). Sellers shall terminate
effective as of the Closing Date all employment arrangements it has with any of
the Employees. Sellers shall be responsible for any severance or similar
obligations arising from any such terminations. Until the third anniversary of
the Closing Date, Sellers will not directly or indirectly solicit or offer
employment to any Employee (i) who did not become an employee of Purchaser
within 180 days of Closing, (ii) who is then an employee of Purchaser, or (iii)
who has terminated such employment without the consent of Purchaser within 180
days of such solicitation or offer.
9.3. Discharge of Business Obligations. From and after the Closing Date,
---------------------------------
Sellers shall pay and discharge, in accordance with past practice but not less
than on a timely basis, all obligations and liabilities incurred prior to the
Closing Date in respect of the Business, its operations or the assets and
properties used therein (except for those expressly assumed by Purchaser
hereunder), including without limitation any liabilities or obligations to
employees, trade creditors and clients of the Business.
9.4. Maintenance of Books and Records. Sellers and Purchaser shall preserve
--------------------------------
until the tenth anniversary of the Closing Date all records possessed or to be
possessed by such party relating to any of the Assets, the Assumed Liabilities
or the Business prior to the Closing Date. After the Closing Date, where there
is a legitimate purpose, such party shall provide the other parties with access,
upon prior reasonable written request specifying the need therefor, during
regular business hours, to (i) the officers, employees and representatives of
such party and (ii) the books of account and records of such party, but, in each
case, only to the extent relating to the Assets, Assumed Liabilities or the
Business prior to the Closing Date, and the other parties and their
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
-------- -------
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and further, provided, that, as to so much of such
------- --------
information as constitutes trade secrets or confidential business information of
such party, the requesting party and its officers, directors and representatives
will use due care to not disclose such information except (i) as required by
law, (ii) with the prior written consent of such party, which consent shall not
be unreasonably withheld, or (iii) where such information becomes available to
the public generally, or becomes generally known to competitors of such party,
through sources other than the requesting party, its affiliates or its officers,
directors or representatives. Such records may nevertheless be destroyed by a
party if such party sends to the other parties written notice of its intent to
destroy records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless another party objects to the destruction, in which case
the party seeking to destroy the records shall either agree to retain such
records or deliver such records to the objecting party.
9.5. Payments Received. Each party agrees that after the Closing that such
-----------------
party will hold and will promptly transfer and deliver to the other, from time
to time as and when received by such party, any cash, checks with appropriate
endorsements (using their efforts not to convert such checks into cash), or
other property that such party may receive on or after the Closing which
properly belongs to the other under this Agreement.
26
9.6. UCC Matters. From and after the Closing Date, Sellers will promptly
-----------
refer all inquiries with respect to ownership of the Assets or the Business to
Purchaser. In addition, Sellers will execute such title documents and financing
statements as Purchaser may reasonably request from time to time to evidence
transfer of the Assets to Purchaser, including any necessary assignments of
financing statements.
9.7. Covenant Not to Compete; Confidentiality. Sellers agrees that for a
----------------------------------------
period of three (3) years after the Closing Date that neither Sellers nor any of
their Affiliates will, directly or indirectly, (i) own, manage, operate, control
or participate in the ownership, management, operation or control of any
business, whether in corporate, proprietorship or partnership form or otherwise,
that competes with the Business; A competing business for purposes of the
foregoing, shall include any business engaged in indoor print advertising in
restaurants, bars and public facilities located throughout the United States, or
(ii) disclose, reveal, divulge or communicate to any person or entity other than
authorized officers, directors or employees of Purchaser, or use or otherwise
exploit for their own benefit or for the benefit of anyone other than Purchaser,
any Confidential Information (as defined below). Sellers shall not have any
obligation to keep confidential any Confidential Information if and to the
extent disclosure thereof is specifically required by law; provided, however,
-------- -------
that in the event disclosure is required by applicable law, Sellers shall, to
the extent reasonably possible, provide Purchaser with prompt notice of such
requirement prior to making any disclosure so that Purchaser may seek an
appropriate protective order. For purposes of this Section 9.7, "Confidential
Information" shall mean any confidential information with respect to the conduct
or details of the Business, including, without limitation, methods of operation,
customers, and customer lists, products, proposed products, former products,
proposed, pending or completed acquisitions of any company, division, product
line or other business unit, prices, fees, costs, plans, designs, technology,
inventions, trade secrets, know-how, software, marketing methods, policies,
plans, personnel, suppliers, competitors, markets or other specialized
information or proprietary matters. The term "Confidential Information" does not
include, and there shall be no obligation hereunder with respect to, information
that (a) is generally available to the public on the date of this Agreement, or
(b) becomes generally available to the public other than as a result of a
disclosure by Sellers not otherwise permissible thereunder, or (c) Sellers learn
from other sources where such sources have not violated their confidentiality
obligation to Purchaser. The parties hereto specifically acknowledge and agree
that the remedy at law for any breach of the foregoing will be inadequate and
that the Purchaser, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage. In the event that the provisions of this Section 9.7
should ever be deemed to exceed the limitation provided by applicable law, then
the parties hereto agree that such provisions shall be reformed to set forth the
maximum limitations permitted.
9.8. Certain Tax Matters.
-------------------
(a) All sales, use, transfer, stamp, conveyance, value added or other
similar taxes, duties, excises or governmental charges imposed by any taxing
jurisdiction, domestic or foreign, and all recording or filing fees, notarial
fees and other similar costs of Closing with respect to the transfer of the
Assets or otherwise on account of this Agreement or the transactions
contemplated hereby will be borne by Sellers. Sellers will indemnify Purchaser
against any liability, direct or indirect, for any Taxes imposed on Purchaser or
with respect to the Assets that
27
are attributable to any taxable periods ending on or prior to the Closing Date
or with respect to the allocable portion of any taxable period that includes but
does not end on the Closing Date.
(b) Purchaser, in conjunction with Sellers where the taxable period
for which the Tax Return is to be filed includes any period for which Sellers
may be subjected to Tax liability in conjunction with their operation of the
Business, will prepare and file or cause to be prepared and filed all Tax
Returns with respect to the Business required to be filed with the appropriate
United States, state and local agencies for all taxable periods for which Tax
Returns are due after the Closing Date. Purchaser will make all payments
required with respect to any such Tax Returns. The preceding sentence will not
limit or relieve Sellers of their obligations to reimburse Purchaser
concurrently therewith to the extent that any payment by Purchaser relates to
the operations of the Business for any period ending on or before the Closing
Date or with respect to the allocable portion of any taxable period that
includes but does not end on the Closing Date.
(c) Sellers will prepare and file or cause to be prepared and filed
all Tax Returns for the Sellers that are required to be filed with respect to
the Business, other than Tax Returns that Purchaser is obligated to prepare and
file pursuant to Section 9.8(b) with the appropriate United States, state and
local agencies. Sellers will pay or cause to be paid all Taxes required to be
paid with respect to such Tax Returns. Sellers will pay all Taxes that are
imposed with respect to the Business or with respect to the allocable portion of
any taxable period that includes but does not end on the Closing Date (or, if
applicable, reimburse Purchaser for the payment of such Taxes) attributable to
taxable periods ending on or prior to the Closing Date. The amount of Taxes
attributable to a portion of a taxable period that includes but does not end on
the Closing Date shall be determined pursuant to the interim closing of the
books method.
9.9. Insurance. With respect to any loss, liability or damage relating to,
---------
resulting from or arising out of the conduct of the Business on or prior to the
Closing Date for which Sellers would be entitled to assert, or cause any
Affiliate or other person or entity to assert, a claim for recovery under any
policy of insurance maintained by or for the benefit of Sellers or any Affiliate
thereof in respect of the Business or the Assets, at the request of Purchaser,
Sellers will use reasonable efforts to assert, or to assist Purchaser to assert,
one or more claims under such insurance covering such loss, liability or damage
if Purchaser is not itself entitled to assert such claim but Sellers are so
entitled. In the case of any damage to or destruction of the Assets occurring
prior to Closing that is covered by insurance maintained by Sellers or any
Affiliate of Sellers, Sellers shall deliver all insurance proceeds realized
therefrom to Purchaser at Closing or as soon thereafter as collected by Sellers
or such Affiliate.
9.10. Operation of Business. Purchaser acknowledges and agrees that from
---------------------
and after the Closing Date through December 31, 2000 that it shall consistently
operate the Business in general conformity to Sellers' projected 2000 budget for
the Business as set forth on Schedule 9.10 attached hereto. Purchaser further
acknowledges that prior to incurring any Material Expense(s) in connection with
the operation of the Business that it shall obtain the prior written consent of
Sellers, which consent shall not be unreasonably withheld or delayed. For the
purposes of the foregoing, "Material Expense(s)" shall include any of the
following: (i) any Business expense relating to operational overhead which
exceeds $10,000.000 per year in the aggregate and is not included in the
projected 2000 Budget, (ii) any new market acquisition
28
expenses, (iii) any capital expenses, and (iv) any salaries/bonuses or
compensation to employees or independent contractors that are not included in
the projected 2000 Budget. In the event that Purchaser fails to obtain any such
written consent, the amount of such unconsented Material Expense shall not be
included in the EBITDA calculation for purposes of the adjustment provisions
contained in Article III of this Agreement.
9.11. Transfer of Assets. Purchaser acknowledges and agrees that from and
------------------
after the Closing Date through the date on which it is determined that no
additional adjustment payments are required to be made to Sellers by Purchaser
pursuant to Article III, or the date on which all of the adjustment payments to
be made by Purchaser to Sellers under Article III have been made, that Purchaser
shall actively manage and operate the Business and shall not transfer title to
any of the Assets to any entity who is not an Affiliate of Purchaser. Purchaser
further acknowledges that in the event that Purchaser breaches the provisions of
this Section 9.11 that Purchaser shall pay to Sellers an amount equal to
$21,300,000 less all amounts which have previously been paid to Sellers pursuant
to the terms and conditions of Article III.
9.12. Working Capital Amount. The parties acknowledge and agree that in the
----------------------
event that it is discovered at any time following the Closing that the Accounts
Receivable or the prepaid expenses acquired pursuant to Sections 1.1.10 or
1.1.11 of this Agreement were invalid or that the liabilities assumed pursuant
to Section 2.1(v) were understated such that the working capital amount that
should have been a part of the Purchase Price at Closing differed from the
Working Capital Amount actually included, and the difference provided a benefit
to Sellers, Purchaser shall be entitled to promptly receive from Sellers the
amount that was incorrectly attributable to the Working Capital Amount in favor
of Sellers. The parties further acknowledge and agree that in the event that any
Accounts Receivable assumed by Purchaser pursuant to Section 1.1.10 of this
Agreement have not been collected within 120 days of the Closing Date that, upon
written notice from Purchaser detailing the amount of such uncollected Accounts
Receivable, Sellers shall promptly pay to Purchaser an amount equal to the
amount of such uncollected Accounts Receivable and, in the event of any
subsequent collection of the uncollected Accounts Receivable by Purchaser,
Purchaser shall promptly remit such funds to Sellers.
9.13. Notices and Filings Under Franchise Agreements. International agrees
----------------------------------------------
that, from and after the Closing Date, it shall make all filings, and shall
deliver or cause to be delivered all notices, as may be required under the terms
and conditions of any franchise agreement to which International is a party as
of the Closing Date.
9.14. Maintenance of Seller Health Plan. At Closing, Purchaser shall assume
---------------------------------
AJ Indoor's Group Health Care Coverage Contract with Blue Cross and Blue Shield
of Minnesota, Contract Number RG086. Purchaser agrees that from and after the
Closing Date through December 31, 2000 that Purchaser shall make all regular
premium payments which come due with respect to such contract and shall keep
such contract in full force and effect. Purchaser shall have no obligation to
maintain such contract, and may terminate the same in its sole and absolute
discretion, at any time following December 31, 2000.
29
ARTICLE X. SURVIVAL AND INDEMNIFICATION
10.1. Survival of Representations, Warranties and Covenants.
-----------------------------------------------------
(a) Except as to (i) the representations and warranties contained in
Section 5.1.8 relating to title to the Assets, which shall survive the Closing
and remain in effect indefinitely and (ii) the representations and warranties
contained in Section 5.1.14, which shall survive the Closing until the
expiration of the last day on which any Tax may be validly assessed by the
Internal Revenue Service or any other Governmental Entity against the Assets or
the Business, the representations and warranties of Sellers and Purchaser
contained in this Agreement or in any Transfer Document shall survive the
Closing until the expiration of two years from the Closing Date. Any claim for
indemnification with respect to any of such matters which is not asserted by
notice given as herein provided relating thereto within such specified period of
survival may not be pursued and is hereby irrevocably waived after such time.
Any claim for an Indemnifiable Loss asserted within such period of survival as
herein provided will be timely made for purposes hereof.
(b) Unless a specified period is set forth in this Agreement (in which
event such specified period will control), the covenants in this Agreement will
survive the Closing and remain in effect indefinitely.
10.2. Limitations on Liability. For purposes of this Agreement, (i)
------------------------
"Indemnity Payment" means any amount of Indemnifiable Losses required to be paid
pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement, (iii) "Indemnifying Party"
means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs and expenses, and any and all claims, demands or
suits (by any person or entity, including without limitation any Governmental
Entity), including without limitation the costs and expenses of any and all
actions, suits, proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and including reasonable attorneys' fees, court
costs and expenses in connection therewith, and (v) "Third Party Claim" means
any claim, action or proceeding made or brought by any person or entity who or
which is not a party to this Agreement or an Affiliate of a party to this
Agreement. Notwithstanding any other provision hereof or of any applicable Law,
no Indemnitee will be entitled to make a claim against an Indemnifying Party
hereunder unless and until the aggregate amount of claims asserted for
Indemnifiable Losses exceeds $100,000 in which event the Indemnitee will be
entitled to make a claim against the Indemnifying Party to the extent of the
full amount of Indemnifiable Losses. Notwithstanding the foregoing, the
aggregate amount of claims which may be asserted for Indemnifiable Losses with
respect to breaches of representations and warranties under Sections 10.3(a)(i)
or 10.3(b)(i) shall in no event exceed $4,500,000.
10.3. Indemnification.
---------------
(a) Subject to Sections 10.1 and 10.2, Sellers agree to indemnify,
defend and hold harmless Purchaser and its Affiliates and their respective
directors, officers, partners, employees, agents and representatives from and
against any and all Indemnifiable Losses to the extent relating to, resulting
from or arising out of:
30
(i) any breach of any representation or warranty of Sellers under the
terms of this Agreement or any certificate or other document delivered
pursuant hereto;
(ii) any breach or nonfulfillment of any agreement or covenant of
Sellers under the terms of this Agreement;
(iii) any Retained Liabilities;
(iv) any failure to comply with any "bulk sales" laws applicable to
the transactions contemplated hereby; and
(v) the conduct of the Business or any portion thereof or the use or
ownership of any of the Assets prior to or on the Closing Date.
(b) Subject to Sections 10.1 and 10.2, Purchaser agrees to indemnify,
defend and hold harmless Sellers and their Affiliates and their respective
directors, officers, partners, employees, agents or representatives from and
against any and all Indemnifiable Losses to the extent relating to, resulting
from or arising out of:
(i) any breach of representation or warranty of Purchaser under the
terms of this Agreement or any certificate or other document delivered
pursuant hereto;
(ii) any breach or nonfulfillment of any agreement or covenant of
Purchaser under the terms of this Agreement;
(iii) any Assumed Liabilities;
(iv) the conduct of the Business or any portion thereof or use or
ownership of any of the Assets after the Closing Date; and
(v) any claim made by a third party with respect to the Personal
Guarantees (to the extent that the same shall not have been released prior
to the Closing).
10.4. Defense of Claims.
-----------------
(a) If any Indemnitee receives notice of the assertion or commencement
of any Third Party Claim against such Indemnitee with respect to which an
Indemnifying Party is obligated to provide indemnification under this Agreement,
the Indemnitee will give such Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 30 calendar days after receipt
of the notice of such Third Party Claim. Such notice will describe the Third
Party Claim in reasonable detail, will include copies of all material written
evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in, or, by
giving written notice to the Indemnitee, to assume, the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
31
(b) If, within ten calendar days after giving notice of a Third Party
Claim to an Indemnifying Party pursuant to Section 10.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided above,
the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
--------
however, that if the Indemnifying Party fails to take reasonable steps necessary
-------
to defend diligently such Third Party Claim within ten calendar days after
receiving written notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps or if the Indemnifying Party
has not undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. Without the prior written
consent of the Indemnitee, the Indemnifying Party will not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of Indemnitee for which Indemnitee is
not entitled to indemnification hereunder. If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or
other obligation on the part of Indemnitee for which Indemnitee is not entitled
to indemnification hereunder and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm offer
within ten calendar days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim and, in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will
not exceed the amount of such settlement offer, plus costs and expenses paid or
incurred by the Indemnitee through the end of such ten calendar day period.
(c) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 10.4(a) or 10.4(b) will not
affect the rights or obligations of any party hereunder except, and only to the
extent that, as a result of such failure, any party which was entitled to
receive such notice was damaged as a result of such failure.
(d) The Indemnifying Party will have a period of 30 calendar days
within which to respond in writing to any claim by an Indemnitee on account of
an Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim"). If the Indemnifying Party does not so respond within such 30 calendar
day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Article X.
(e) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an Indemnity Payment, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any claim,
recovery, settlement or payment by or against any other entity, the amount of
such reduction, less any costs, expenses, premiums or taxes incurred in
connection therewith (together with interest thereon from the date of payment
thereof at the annualized rate of interest equal to the "prime" or "reference"
rate of interest as publicly announced by NorWest N.A. and in effect from time
to time during the relevant period, calculated on the basis of the actual number
of days elapsed over 365) will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any Indemnity Payment the
32
Indemnifying Party will, to the extent of such Indemnity Payment, be subrogated
to all rights of the Indemnitee against any third party that is not an Affiliate
of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnity
Payment related; provided, however, that (i) the Indemnifying Party shall then
be in compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers fully payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of said Indemnity Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
party. Without limiting the generality or effect of any other provision hereof,
each such Indemnitee and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights.
ARTICLE XI. TERMINATION
11.1. Termination. Notwithstanding anything contained in this Agreement to
-----------
the contrary, this Agreement may be terminated at any time prior to the Closing
if the party seeking to terminate is not then in material default or breach of
this Agreement:
(a) By the mutual written consent of Purchaser and Sellers;
(b) By either Purchaser or Sellers if the Closing shall not have
occurred on or before May 23, 2000; provided, however, that if the Closing shall
-------- -------
not have occurred on or before any such date due to a breach of this Agreement
by Purchaser or Sellers, the breaching party may not terminate this Agreement
pursuant to this Section 11.1(b);
(c) By either Purchaser or Sellers if there shall have been entered an
order or injunction of any Governmental Entity restraining or prohibiting the
consummation of the transactions contemplated hereby or any material part
thereof; or
(d) By either Purchaser or Sellers if, prior to the Closing Date, the
other party is in material breach of any representation, warranty, covenant or
agreement herein contained and such breach shall not be cured within fifteen
(15) days of the date of notice of default served by the party claiming such
material default, provided that such terminating party shall not also be in
material breach of this Agreement at the time notice of termination is
delivered. In no event shall termination of this Agreement relieve any party of
any liability for breaches of this Agreement prior to the date of termination.
In no event shall termination of this Agreement relieve any party of any
liability for breaches of this Agreement prior to the date of termination.
ARTICLE XII. MISCELLANEOUS PROVISIONS
12.1. Notices. All notices and other communications required or permitted
-------
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person, one (1)business
day after having been dispatched by a nationally recognized overnight courier
service or when such notice is delivered by certified mail, return receipt
requested, postage prepaid to the appropriate party at the address specified
below:
33
(a) If to Sellers, to:
AJ Indoor Advertising, Inc.
and
AJ Indoor International, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
Segreto & Associates
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) If to Purchaser, to:
NextMedia Group, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
12.2. Expenses. Except as otherwise expressly provided herein, each party
--------
will pay its expenses incurred incident to this Agreement and in preparing to
consummate and consummating the transactions provided for herein.
12.3. Successors and Assigns. This Agreement shall be binding upon, and
----------------------
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns, but will not be assignable or delegable by any
party without the prior written consent of the other party which consent shall
not be unreasonably withheld; provided, however, that (a) other than the
-------- -------
provisions contained in Section 9.11, nothing in this Agreement is intended to
limit Purchaser's ability to sell or to transfer any or all of the Assets
following the Closing Date, (b) upon notice to Sellers, Purchaser may assign or
delegate any or all of its rights or obligations under this Agreement to any
Affiliate or subsidiary of Purchaser, and (c) Purchaser may make a collateral
assignment of its rights under this Agreement to any institutional lender who
provides funds to Purchaser for the acquisition of the Assets. Sellers agree to
execute acknowledgements of such assignment(s) and collateral assignments in
such forms as Purchaser or Purchaser's institutional
34
lender(s) may from time to time reasonably request. In the event of such a
proposed assignment by Purchaser, the provisions of this Agreement shall inure
to the benefit of, and be binding upon, Purchaser's assigns.
12.4. Entire Agreement. This Agreement (including the Schedules hereto)
----------------
supersedes any other agreement, whether written or oral, that may have been made
or entered into by any party hereto (or by any representative thereof) relating
to the matters contemplated hereby. This Agreement (together with any Exhibits
or Schedules hereto) constitutes the entire agreement by and among the parties
hereto and there are no agreements or commitments by or among such parties or
their Affiliates except as expressly set forth herein.
12.5. Amendments and Supplements. This Agreement may be amended or
--------------------------
supplemented at any time by additional written agreements signed by the parties
hereto.
12.6. Rights of the Parties. Except as may otherwise be provided herein,
---------------------
nothing expressed or implied in this Agreement is intended or will be construed
to confer upon or give any person or entity other than the parties hereto and
their respective Affiliates any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
12.7. Further Assurances. From time to time, as and when requested by any
------------------
party, the other parties will execute and deliver, or cause to be executed and
delivered, all such documents and instruments as may be reasonably necessary to
consummate the transactions contemplated by this Agreement.
12.8. Bulk Sales. Purchaser waives compliance by Sellers with the
----------
provisions of the bulk sales Law of any jurisdiction; provided, however, that
-------- -------
Sellers will indemnify, defend and hold harmless Purchaser and its Affiliates in
respect of any Indemnifiable Loss relating to, resulting from or arising out of
Sellers' failure so to comply with such Laws in connection with the transactions
contemplated by this Agreement.
12.9. Transfers. The parties hereto will cooperate and take such action as
---------
may be reasonably requested by the other parties in order to effect an orderly
transfer of the Assets and the Business with minimum disruption to the
operations and employees of the businesses of Purchaser and Sellers.
12.10. Governing Law. This Agreement, including without limitation, the
-------------
interpretation, construction and validity hereof, shall be governed by the Laws
of the state of Minnesota.
12.11. Severability. The parties agree that if one or more provisions
------------
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable Law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
12.12. Execution in Counterparts. This Agreement may be executed in two or
-------------------------
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
35
12.13. Titles and Headings. Titles and headings to sections of this
-------------------
Agreement are inserted for convenience of reference only and are not intended to
be a part of, or to affect the meaning or interpretation of, this Agreement.
12.14. Waiver. No failure or delay on the part of any party in exercising
------
any right, power or privilege hereunder or under any of the documents delivered
in connection with this Agreement shall operate as a waiver of such right, power
or privilege; nor shall any single or partial exercise of any such right, power
or privilege preclude any other or future exercise thereof or the exercise of
any other right, power or privilege.
12.15. Passage of Title and Risk of Loss. Legal title, equitable title and
---------------------------------
risk of loss with respect to the Assets will not pass to Purchaser until such
Assets are transferred at the Closing.
12.16. Offset Rights. No offset rights shall be granted to any party to
-------------
this Agreement with respect to any payment that such party may owe to any other
party to this Agreement against any payment that is owed to such party by such
other party.
12.17. Certain Interpretive Matters and Definitions.
--------------------------------------------
(a) Unless the context otherwise requires, (i) all references to
Sections, Articles or Schedules are to Sections, Articles or Schedules of or to
this Agreement, (ii) each term defined in this Agreement has the meaning
assigned to it, (iii) each accounting term not otherwise defined in this
Agreement has the meaning assigned to it in accordance with GAAP, (iv) "or" is
disjunctive but not necessarily exclusive, (v) words in the singular include the
plural and vice versa, and (vi) the terms "Subsidiary" and "Affiliate" have the
meanings given to those terms in Rule 12b-2 of Regulation 12B under the 1934
Act. All references to "$" or dollar amounts will be to lawful currency of the
United States of America.
(b) No provision of this Agreement will be interpreted in favor of, or
against, either of the parties hereto by reason of the extent to which either
such party or its counsel participated in the drafting thereof or by reason of
the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NextMedia Group, Inc.
By:___________________________________
Name:_________________________________
Title:________________________________
AJ Indoor Advertising, Inc.
By:___________________________________
Name:_________________________________
Title:________________________________
AJ Indoor International, Inc.
By:___________________________________
Name:_________________________________
Title:________________________________