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EXHIBIT 2.45
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UNIT AND STOCK
PURCHASE AND SALE AGREEMENT
BY AND AMONG
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES,
▇▇▇▇▇▇ MEDIA, L.P.,
▇▇▇▇▇▇ & MACFARLANE, INC.,
NEVADA OUTDOOR SYSTEMS, INC.,
MW SIGN CORP.
AND
THE SELLERS NAMED ON
SCHEDULES I, II, III AND IV
DATED AS OF JUNE 19, 1998
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TABLE OF CONTENTS
ARTICLE I. PURCHASE OF UNITS AND SHARES; DEPOSIT.................................................................7
SECTION 1.1. Purchase and Sale of Units and Shares.........................................7
SECTION 1.2. Adjustments to Purchase Price.................................................7
SECTION 1.3. Closing.......................................................................9
SECTION 1.4. Deposit......................................................................11
ARTICLE II. REPRESENTATIONS AND WARRANTIES CONCERNING MEDIA, M&M, NEVADA AND MWS................................11
SECTION 2.1. Organization, Qualification, Etc.............................................11
SECTION 2.2. Units, Capital Stock.........................................................12
SECTION 2.3. Partnership or Corporate Authority Relative to this
Agreement..............................................................13
SECTION 2.4. No Conflict..................................................................13
SECTION 2.5. Finders or Brokers...........................................................14
SECTION 2.6. Subsidiaries.................................................................14
SECTION 2.7. Reports and Financial Statements.............................................14
SECTION 2.8. No Undisclosed Liabilities...................................................15
SECTION 2.9. No Violation of Law..........................................................15
SECTION 2.10. Environmental Laws and Regulations...........................................15
SECTION 2.11. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements.................................................16
SECTION 2.12. Events Subsequent to December 31, 1997.......................................18
SECTION 2.13. Investigations; Litigation...................................................20
SECTION 2.14. Tax Matters..................................................................20
SECTION 2.15. Insurance....................................................................22
SECTION 2.16. Real Property; Title.........................................................22
SECTION 2.17. Permits and Licenses.........................................................23
SECTION 2.18. Collective Bargaining Agreements and Labor...................................23
SECTION 2.19. Intangible Assets............................................................24
SECTION 2.20. Personal Property; Information Systems.......................................24
SECTION 2.21. Material Contracts...........................................................24
SECTION 2.22. Excluded Assets and Liabilities..............................................26
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SECTION 2.23. Recent Acquisitions...........................................................26
SECTION 2.24. Disclosure....................................................................26
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLERS...........................................................27
SECTION 3.1. Authority Relative to this Agreement..........................................27
SECTION 3.2. Title to Units and Capital Stock..............................................27
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................27
SECTION 4.1. Organization, Qualification, Etc..............................................27
SECTION 4.2. Corporate Authority Relative to this Agreement; No Violation..................28
SECTION 4.3. Investigations; Litigation....................................................28
SECTION 4.4. Financial Ability.............................................................29
SECTION 4.5. Brokers' Fees.................................................................29
ARTICLE V. COVENANTS..............................................................................................29
SECTION 5.1. Conduct of Business by the Companies..........................................29
SECTION 5.2. Access to Information; Confidentiality........................................31
SECTION 5.3. Filings; Other Action.........................................................31
SECTION 5.4. No Solicitation...............................................................32
SECTION 5.5. Public Announcements..........................................................32
SECTION 5.6. Employee Matters..............................................................32
SECTION 5.7. Excluded Assets and Liabilities...............................................33
SECTION 5.8. Supplements to Disclosure Schedules...........................................33
SECTION 5.9. Phase I Environmental Audit...................................................34
SECTION 5.10. Broker's Fees................................................................34
SECTION 5.11. Western Poster Services, Inc.................................................34
SECTION 5.12. Notification of Indemnification Claim........................................35
SECTION 5.13. Indemnification Agreements...................................................35
SECTION 5.14. Stockholder Agreements.......................................................36
SECTION 5.15. Redemption of Preferred Units................................................36
SECTION 5.16. Execution of Agreement by Sellers............................................36
SECTION 5.17. Tax Covenants and Related Matters............................................36
SECTION 5.18. Conveyance Taxes.............................................................38
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ARTICLE VI. CONDITIONS TO THE CLOSING...........................................................................38
SECTION 6.1. Conditions to the Obligations of Each Party..................................38
SECTION 6.2. Conditions to the Obligations of Buyer.......................................39
SECTION 6.3. Conditions to the Obligations of the Sellers.................................40
ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER..................................................................41
SECTION 7.1. Termination or Abandonment...................................................41
SECTION 7.2. Effect of Termination........................................................42
SECTION 7.3. Extension; Waiver............................................................42
ARTICLE VIII. SURVIVAL; INDEMNIFICATION; REMEDIES...............................................................42
SECTION 8.1. Survival of Representations and Warranties...................................42
SECTION 8.2. Indemnification by Sellers...................................................43
SECTION 8.3. Indemnification by Buyer.....................................................44
SECTION 8.4. Indemnification Procedure for Third Party Claims.............................45
SECTION 8.5. Direct Claims................................................................46
SECTION 8.6. Failure to Give Timely Notice................................................46
SECTION 8.7. Reduction of Loss............................................................46
SECTION 8.8. Subrogation..................................................................47
SECTION 8.9. Sellers' Representative......................................................47
SECTION 8.10. Exclusive Remedy.............................................................47
SECTION 8.11. Treatment of Payments........................................................47
SECTION 8.12. Right to Contribution........................................................47
SECTION 8.13. Release......................................................................48
ARTICLE IX. GENERAL PROVISIONS..................................................................................49
SECTION 9.1. Notices......................................................................49
SECTION 9.2. Definitions..................................................................50
SECTION 9.3. Counterparts.................................................................52
SECTION 9.4. Entire Agreement; No Third-Party Beneficiaries...............................52
SECTION 9.5. Assignment...................................................................52
SECTION 9.6. Amendment....................................................................52
SECTION 9.7. Governing Law; Jurisdiction..................................................52
SECTION 9.8. Specific Performance.........................................................53
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SECTION 9.9. Severability.................................................................53
SECTION 9.10. Headings.....................................................................53
SECTION 9.11. Special Power of Attorney....................................................53
EXHIBITS AND SCHEDULES
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EXHIBIT A NONCOMPETITION AGREEMENT
EXHIBIT B ASSIGNMENT OF PARTNERSHIP INTEREST
EXHIBIT C ESCROW AGREEMENT
EXHIBIT D WINERY TRANSFER AGREEMENT
EXHIBIT E WPS AGREEMENT
EXHIBIT F POST CLOSING ESCROW AGREEMENT
SCHEDULE I MEDIA SELLERS
SCHEDULE II M&M SELLERS
SCHEDULE III NEVADA SELLERS
SCHEDULE IV MWS SELLERS
SCHEDULE 2.4 VIOLATIONS
SCHEDULE 2.10 ENVIRONMENTAL
SCHEDULE 2.11 EMPLOYEE BENEFIT PLANS
SCHEDULE 2.12 EVENTS SUBSEQUENT TO DECEMBER 31, 1997
SCHEDULE 2.13 LITIGATION
SCHEDULE 2.14 TAX MATTERS
SCHEDULE 2.16 REAL PROPERTY
SCHEDULE 2.16(e) SUBLEASED BILLBOARDS
SCHEDULE 2.17 LICENSES
SCHEDULE 2.19 INTELLECTUAL PROPERTY
SCHEDULE 2.20 PERSONAL PROPERTY AND INFORMATION SYSTEMS
SCHEDULE 2.21(a) MATERIAL CONTRACTS
SCHEDULE 2.21(b) CUSTOMER AGREEMENTS
SCHEDULE 2.22(a) WINERY ASSETS
SCHEDULE 2.22(b) ▇▇▇▇▇▇ HEADQUARTERS ASSETS
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SCHEDULE 5.1(d) AMENDMENTS TO EMPLOYMENT AGREEMENTS
SCHEDULE 5.1(k) AMENDMENTS TO EMPLOYEE BENEFIT PLANS
SCHEDULE 8.2 ALLOCATION OF SELLERS INDEMNIFICATION OBLIGATIONS
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This UNIT AND STOCK PURCHASE AND SALE AGREEMENT ("Agreement") is
entered into by and among Chancellor Media Corporation of Los Angeles, a
Delaware corporation ("Buyer"), ▇▇▇▇▇▇ Media, L.P., a California limited
partnership ("Media"), ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, Inc., a California corporation
("M&M"), Nevada Outdoor Systems, Inc., a Nevada corporation ("Nevada"), MW Sign
Corp., a California corporation ("MWS"), all of the general partners and limited
partners of Media (except for MWS and Nevada), each of which is named on
Schedule I (the "Media Sellers"), the stockholders of M&M, each of which is
named on Schedule II (the "M&M Sellers"), the stockholders of Nevada, each of
which is named on Schedule III (the "Nevada Sellers"), and the stockholders of
MWS, each of which is named on Schedule IV, (the "MWS Sellers"). The Media
Sellers, M&M Sellers, Nevada Sellers, and MWS Sellers are herein collectively
referred to as the "Sellers." Media, M&M, Nevada and MWS are herein referred to
individually as a "Company" and collectively as the "Companies." For the
purposes of all of the representations, warranties and covenants of the
Companies and the Sellers contained herein, except for those contained in
Sections 2.1, 2.2, 2.6 and 3.2, any reference to Media or the Companies shall be
deemed to include ▇▇▇▇▇▇▇ (as defined below).
WITNESSETH:
WHEREAS, Media and M&M own and operate an outdoor advertising business
and related assets that are managed by MWS (the businesses of the Companies are
referred to collectively herein as the "Business");
WHEREAS, the Media Sellers together with MWS and Nevada own all of the
limited partnership units and general partnership units of Media (the "Units"),
the M&M Sellers own all the issued and outstanding shares of common stock, no
par value, of M&M (the "M&M Stock"), the Nevada Sellers own all the issued and
outstanding shares of common stock, par value $1.00 per share, of Nevada (the
"Nevada Stock"), the MWS Sellers own all the issued and outstanding shares of
common stock, no par value, of MWS (the "MWS Stock" and collectively with the
M&M Stock, the Nevada Stock and the MWS Stock, the "Capital Stock");
WHEREAS, E. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and
Buyer desire to enter into a stock purchase agreement (the "WPS Stock Purchase
Agreement") whereby Buyer will purchase from ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ 73% of the
outstanding capital stock of Western Poster Service, Inc. ("WPS"), a Texas
corporation which owns and operates a poster printing business that provides
printing services to Media and M&M, among others;
WHEREAS, concurrently with and as a condition to the closing of the
transactions contemplated herein, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ will each enter into a
consultation and noncompetition agreement in substantially the form set forth in
Exhibit A attached hereto with Buyer (each, a "Noncompetition Agreement")
WHEREAS, the Sellers desire to sell all their Units and Capital Stock
to Buyer; and
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WHEREAS, Buyer desires to acquire the Business through the purchase of
all the Units and Capital Stock, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties, hereby agree as follows:
ARTICLE I
PURCHASE OF UNITS AND SHARES; DEPOSIT
SECTION 1.1. Purchase and Sale of Units and Shares. Upon the terms and
subject to the conditions set forth in this Agreement the Sellers shall sell to
Buyer, for a total consideration of Six Hundred and Ten Million Dollars
($610,000,000), as adjusted pursuant to Sections 1.2 and 5.19 (as so adjusted,
the "Purchase Price"), which Purchase Price shall include the consideration
payable (the "Consultation Consideration") pursuant to the Noncompetition
Agreements, the Units and Capital Stock as follows:
(a) The Media Sellers will sell all the Units to Buyer, and Buyer will
purchase the Units from the Media Sellers for a purchase price per Unit and an
aggregate purchase price as described on Schedule I (the "Media Purchase
Price");
(b) The M&M Sellers will sell all of the M&M Stock to Buyer, and Buyer
will purchase the M&M Stock from the M&M Sellers for a purchase price per share
and an aggregate purchase price as described on Schedule II (the "M&M Purchase
Price");
(c) The Nevada Sellers will sell all the Nevada Stock to Buyer, and
Buyer will purchase the Nevada Stock from the Nevada Sellers for a purchase
price per share and an aggregate purchase price as described on Schedule III
(the "Nevada Purchase Price" ); and
(d) The MWS Sellers will sell all the MWS Stock to Buyer, and Buyer
will purchase the MWS Stock from the MWS Sellers for a purchase price per share
and an aggregate purchase price as described on Schedule IV (the "MWS Purchase
Price").
The Buyer and Seller hereby agree that they shall, and shall cause
their respective Affiliates to, prepare all reports and returns with respect to
Taxes (as defined herein) on a basis consistent with the allocation of the
Purchase Price to the Media Purchase Price, the M&M Purchase Price, the Nevada
Purchase Price, and the MWS Purchase Price, as set forth in Schedules I, II, III
and IV hereof and as may be adjusted pursuant to Section 1.2 hereof and the
Noncompetition Agreements as indicated therein.
SECTION 1.2. Adjustments to Purchase Price.
(a) The Media Purchase Price, M&M Purchase Price, Nevada Purchase
Price, and MWS Purchase Price are each subject to adjustment as provided in
Section 1.2(b) if as of 11:59 p.m. on the Closing Date (as defined below) (the
"Adjustment Time") (i) the Working Capital (as defined
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below), for any of the Companies differs from the Base Amount (as defined below)
by more than $50,000 or (ii) there is any outstanding Debt (as defined below) of
any of the Companies. "Working Capital" shall mean the sum of (i) cash, cash
equivalents, trade accounts receivable, notes receivable from employees and
prepaid expenses (other than Deal Expenses (as defined below), less (ii)(A)
trade accounts payable, which shall include all expenses for goods and services
incurred but not paid before the Adjustment Time, (B) any amounts payable
related to expenses incurred in connection with the purchase and sale of Units
and Capital Stock hereunder ("Deal Expenses") including, without limitation,
legal fees and investment banking fees payable other than Deal Expenses included
in Debt and (C) Taxes and assessments, power and utilities charges, and rents
and similar deferred items imposed against any of the Companies in respect of
any period of time up to the Adjustment Time. "Base Amount" shall mean $0.
"Debt" shall mean (i) all debt properly includable in a balance sheet of any
Company prepared in accordance with generally accepted accounting principles in
the United States ("GAAP"), other than debt included in Working Capital or debt
incurred in connection with any Additional Acquisition (as defined below) for
which an adjustment to the Purchase Price has been made in accordance with
Section 1.2(f), (ii) the aggregate redemption price of, together with accrued
and unpaid dividends on, any outstanding Preferred Units and (iii) any amounts
attributable to the unexercised portion of the option (the "▇▇▇▇ Option")
granted to certain of the Companies by ▇▇▇▇ & Company and ▇▇▇▇▇▇▇ ▇▇▇▇
(collectively, "▇▇▇▇") to purchase certain assets held by ▇▇▇▇ pursuant to that
certain Option Agreement, dated as of June 17, 1997, between ▇▇▇▇ and M&M which
the Parties acknowledge is Thirty Million Dollars ($30,000,000) as of the date
hereof.
(b) If the Working Capital of any Company as of the Adjustment Time
differs from the Base Amount by more than $50,000, then the Media Purchase
Price, M&M Purchase Price, Nevada Purchase Price, or MWS Purchase Price, as
applicable, shall (i) be increased by the amount of Working Capital of such
Company as of the Adjustment Time in excess of the Base Amount, or (ii)
decreased by the excess of the Base Amount over the amount of Working Capital of
such Company as of the Adjustment Time. In addition, the Media Purchase Price,
M&M Purchase Price, Nevada Purchase Price and MWS Purchase Price, as applicable,
shall be reduced by (i) the amount of Debt of such Company as of the Adjustment
Time and (ii) the applicable Sellers' share of any Conveyance Taxes.
(c) Within three (3) business days prior to the Closing Date, each
Company shall deliver to Buyer a statement (together with appropriate schedules
and other support, the "Settlement Statement") that provides Buyer with a good
faith estimate of its Working Capital and Debt as of the Adjustment Time, as
adjusted, for any collections, payments or distributions to be made prior to the
Adjustment Time, including the transfer of the Winery (as hereinafter defined),
and its share of Conveyance Taxes.
(d) If the Settlement Statements require any adjustment in the Media
Purchase Price, M&M Purchase Price, Nevada Purchase Price, or MWS Purchase
Price, as described in Section 1.2(b), then such adjustment shall be reflected
in the payment to be made by Buyer on the Closing Date pursuant to Section
1.3(c).
(e) If Buyer elects to challenge the amount of Working Capital, Debt or
Conveyance Taxes contained in any Settlement Statement, then it shall so notify
the Media
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Sellers, M&M Sellers, Nevada Sellers, or MWS Sellers, as applicable, in writing
no later than ten (10) business days following the Closing Date. Buyer shall
engage ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP who shall conduct such tests and procedures as it
deems reasonable to finally determine the amount of Working Capital, Debt or
Conveyance Taxes, as applicable, on the Closing Date no later than sixty (60)
days following the Closing Date. If ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP determines that an
adjustment to the Media Purchase Price, M&M Purchase Price, Nevada Purchase
Price or MWS Purchase Price should have been made in accordance with Section
1.2(c), it shall so notify the appropriate Sellers and the Buyer of the
adjustment amount and such Sellers, or the Buyer, as applicable, shall pay to
the other party (or parties) the amount of such adjustment amount within ten
(10) days of receipt of such written notice. All costs of engaging ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP hereunder shall be paid by (i) the Sellers of the affected
Company(ies) on a pro rata basis if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP determines that a
downward adjustment of $100,000 or more in the Purchase Price is appropriate,
and (ii) by Buyer if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP determines that an upward, or a
downward adjustment of less than $100,000, adjustment of the Purchase Price is
appropriate.
(f) The Media Purchase Price, M&M Purchase Price, Nevada Purchase Price
and MWS Purchase price shall also be appropriately adjusted as described below
to reflect the closing, prior to the Closing Date, of any of the proposed
acquisitions described in Schedule 2.12 and any acquisitions not listed on
Schedule 2.12 which have been entered into after the date of this Agreement in
accordance with the provisions of Section 5.1(e) (collectively, "Additional
Acquisitions"). The purchase price of the Company making such Additional
Acquisition shall be increased by (i) (A) an amount equal to the cash
consideration paid by such Company for the Additional Acquisition (B) a fee
equal to four percent (4%) of such cash consideration, and (C) if the cash
consideration is less than ten times the earnings before interest, taxes,
depreciation and amortization as determined in accordance with industry
standards ("EBITDA") of the acquired company for the latest twelve (12) months
prior to the month in which such closing occurs (ten times such EBITDA being
referred to as the "LTM EBITDA Ratio"), an addition fee equal to ten percent
(10%) of the amount by which the LTM EBITDA Ratio exceeds the purchase price,
less (ii) any debt assumed or incurred by such Company in connection with such
Additional Acquisition. For purposes of this Section 1.2(f), the cash
consideration paid by a Company for any Additional Acquisition listed in Part B
of Schedule 2.12 shall equal the purchase price set forth in Part B of Schedule
2.12 with respect to such Additional Acquisition unless otherwise agreed by
Buyer.
SECTION 1.3. Closing. The closing ("Closing") of the purchase and sale
of the Units and the Capital Stock shall take place at 10:00 a.m. on a date to
be specified by the Parties which shall be no later than the tenth business day
after the satisfaction or waiver of the conditions set forth in Article VI (the
"Closing Date") at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date or place is agreed to
in writing by the parties hereto. At the Closing:
(a) Closing Deliveries of Sellers.
(i) Each Media Seller shall deliver an Assignment of Partnership
Interest substantially in the form attached hereto as Exhibit B, duly executed,
assigning to Buyer all the Units set forth beside its name on Schedule I, which
Units, together with the Units held by
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MWS and Nevada, shall constitute all of the issued and outstanding Units and
subscription rights, options, warrants, purchase rights, conversion rights or
other instruments that could require Media to issue any Units or other
partnership interests;
(ii) Each of the M&M Sellers, Nevada Sellers and MWS Sellers shall
deliver to Buyer, one or more certificates representing the number of shares of
M&M Stock, Nevada Stock or MWS Stock set forth beside its name on Schedule II,
III or IV, as applicable, in negotiable form and duly endorsed in blank or
accompanied by stock powers or other instruments of transfer duly executed in
blank, which shares of Capital Stock shall constitute all of the issued and
outstanding capital stock of the Companies and any subscription rights, options,
warrants, purchase rights, conversion rights or other instruments that could
require any of the Companies to issue any shares of stock;
(iii) Each of M&M, Nevada and MWS shall deliver the written
resignation of each of its officers and directors.
(iv) Each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall deliver an executed
Noncompetition Agreement.
(v) The Sellers shall deliver or cause to be delivered an opinion
of Sellers' counsel in form customary for transactions of the nature
contemplated hereby and reasonably acceptable to Buyer.
(vi) The Sellers shall deliver or cause to be delivered the
certificates and other documents required to be delivered pursuant to Section
6.2.
(b) Closing Deliveries of Buyer.
(i) Buyer shall deliver the Purchase Price by wire transfer of
immediately available funds to (A) each Media Seller its respective portion of
the Media Purchase Price, as described on Schedule I (reduced by his or her
portion of the Post-Closing Escrow Deposit (as defined below)), (B) each M&M
Seller its respective portion of the M&M Purchase Price, as described on
Schedule II (reduced by his or her portion of the Post-Closing Escrow Deposit),
(C) each Nevada Seller its respective portion of the Nevada Purchase Price, as
described on Schedule III (reduced by his or her portion of the Post Closing
Escrow Deposit), (D) each MWS Seller its respective portion of the MWS Purchase
Price, as described on Schedule IV (reduced by his or her portion of the
Post-Closing Escrow Deposit), (E) each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, his respective
portion of the Consultation Consideration, and (F) the Post-Closing Escrow Agent
the Post-Closing Escrow Deposit;
(ii) Buyer shall deliver or cause to be delivered an opinion of
Buyer's counsel in form customary for transactions of the nature contemplated
hereby and reasonably acceptable to Sellers.
(iii) Buyer shall deliver or cause to be delivered the certificates
and other documents required to be delivered pursuant to Section 6.3.
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(iv) Buyer shall deliver executed Noncompetition Agreements.
SECTION 1.4. Deposit. Within two (2) business days of the execution of
this Agreement, Buyer shall deliver to Chase Manhattan Bank (the "Escrow Agent")
an irrevocable letter of credit in the amount of $30 million (the "Letter of
Credit") to be held by Escrow Agent pursuant to an escrow agreement
substantially in the form of Exhibit C (the "Escrow Agreement"), which is being
executed concurrently with the execution of this Agreement. Pursuant to the
Escrow Agreement, if this Agreement is terminated by Sellers pursuant to Section
7.1(e), then Sellers shall be entitled, subject to the terms and conditions of
the Escrow Agreement, to cause the Escrow Agent to draw upon the Letter of
Credit and to deliver to the Company, in accordance with the Escrow Agreement,
the proceeds thereof as liquidated damages for a material breach of this
Agreement by Buyer in full settlement of any damages of any nature or kind that
Sellers or the Companies may suffer or allege to have suffered as a result of
any such breach by Buyer. Such receipt by the Companies of the proceeds of the
Letter of Credit shall be the Sellers' and the Companies' sole and exclusive
remedy in the event of any such breach by Buyer. The Companies, the Sellers and
Buyer hereby agree in advance that actual damages resulting from a breach of
Buyer's obligations hereunder would be difficult to ascertain and that the
amount to be paid pursuant to this Section 1.4 is a fair and equitable amount to
reimburse the Sellers and the Companies for damages sustained from the
termination of this Agreement pursuant to Section 7.1(e). Upon the Closing or
promptly after termination of this Agreement other than pursuant to Section
7.1(e), the Letter of Credit shall be returned by the Escrow Agent to Buyer as
provided in the Escrow Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES CONCERNING MEDIA,
M&M, NEVADA AND MWS
Each Media Seller jointly and severally represents and warrants as to
Media, each M&M Seller jointly and severally represents and warrants as to M&M,
each Nevada Seller jointly and severally represents and warrants as to Nevada,
and each MWS Seller jointly and severally represents and warrants as to MWS, to
Buyer as follows:
SECTION 2.1. Organization, Qualification, Etc. Media is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of California, M&M and MWS are each corporations duly organized,
validly existing and in good standing under the laws of the State of California,
and Nevada is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and each has the limited
partnership or corporate power and authority, as applicable, to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
have a Material Adverse Effect on the Companies. The copies of the Third Amended
and Restated Limited Partnership Agreement of Media (the "Media Partnership
Agreement") and the copies of the articles of incorporation and by-laws of M&M,
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Nevada and MWS which have previously been delivered to Buyer are each complete
and correct and in full force and effect on the date hereof.
SECTION 2.2. Units, Capital Stock.
(a) As of the date hereof, (i) 97.0999 Units are issued and outstanding
and all of such Units were held by the Media Sellers, MWS and Nevada, as
described on Schedule I, consisting of (A) 96.0999 limited partnership units,
and (B) 1.0 general partnership unit, and (ii) 25,000 Preferred Units (as
defined in the Media Partnership Agreement) and no Warrants (as defined below)
are issued and outstanding. The Preferred Units are redeemable by Media in
accordance with the applicable provisions of the Media Partnership Agreement.
(b) The authorized stock of M&M consists of 150,000 shares of M&M
Stock. As of the date hereof, 82,443 shares of M&M Stock are issued and
outstanding, all of which are held by the M&M Sellers, as described on Schedule
II.
(c) The authorized stock of Nevada consists of 100,000 shares of Nevada
Stock. As of the date hereof, 2,500 shares of Nevada stock are issued and
outstanding, all of which are held by the Nevada Sellers, as described on
Schedule III.
(d) The authorized stock of MWS consists of 100,000 shares of MWS
Stock. As of the date hereof, 2,000 shares of MWS Stock are issued and
outstanding, all of which are held by the MWS Sellers, as described on Schedule
IV.
(e) All of the outstanding Units and shares of Capital Stock have been
duly authorized, are validly issued, fully paid and nonassessable.
(f) As of the date hereof, there are no outstanding or authorized
subscription rights, options, warrants, purchase rights, conversion rights,
exchange rights or other arrangements or commitments that could require Media to
issue any Units or other partnership interests or that could require M&M,
Nevada, or MWS to issue any shares of stock, except for the Warrants (as defined
in the Media Partnership Agreement) to be issued to holders of Preferred Units
as more particularly described in Section 6.10 of the Media Partnership
Agreement and the Purchase Agreement, dated as of December 23, 1997, by and
among Media and the Purchasers named therein, and the Warrant Agreement attached
as Exhibit 3 thereto. Other than the Administrative Services Agreement between
MWS and each of Media and M&M (the "Administrative Services Agreement"), there
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to M&M, Nevada or MWS. There are no
voting trusts, proxies or other agreements or understandings with respect to the
voting of the capital stock of M&M, Nevada or MWS.
SECTION 2.3. Partnership or Corporate Authority Relative to this
Agreement. Each Company has the partnership or corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
general partner of Media and the Boards of Directors of M&M, Nevada
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and MWS and no other partnership, corporate or other proceedings on the part of
any Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each Company and, assuming this Agreement has been duly and validly
executed and delivered by Buyer, this Agreement constitutes a valid and binding
agreement of each Company, enforceable against each Company in accordance with
its terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or by principles governing the availability of
equitable remedies). Other than in connection with or in compliance with the
provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), no authorization, consent or approval of, or filing
with, any Governmental Entity (as defined below) is necessary for the
consummation by each Company of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings, the failure to
obtain or make which would not, in the aggregate, constitute a Material Adverse
Effect on the Companies; provided that none of the Sellers makes any
representation with respect to such of the foregoing as are required by reason
of the regulatory status of Buyer or any of its respective Subsidiaries or facts
specifically pertaining to any of them.
SECTION 2.4. No Conflict. Except as set forth in Schedule 2.4, and
except for, with respect to clause (d), those conflicts, breaches, defaults and
exercise of rights, that would not in the aggregate constitute a Material
Adverse Effect on the Companies, neither the execution and delivery of this
Agreement nor the consummation by the Companies and the Sellers of the
transactions contemplated hereby will (a) violate, conflict with or result in
any breach of any provision of the respective organizational documents of any
Company, (b) violate any order, decree, injunction, judgment, ruling, law,
statute, regulation, rule or other determination of any Governmental Entity
applicable to any Company, (c) require the giving of notice to, or the consent
of, any party to a Material Contract or accord any such party the right to
modify a Material Contract, or (d) (i) materially conflict with or result in a
material breach of any provision of, or (ii) constitute a material default (or
an event which, with notice or lapse of time or both, would constitute a
material default) under or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or (iii) result in any
Lien on the Units or shares of Capital Stock or the properties or assets of any
Company pursuant to (A) any Material Contract, (B) any License held by any
Company; or (C) any other contract to which any Company is a party or to which
its assets are subject.
SECTION 2.5. Finders or Brokers. Except for CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and
MWS, a copy of whose engagement agreements or other agreements have provided to
Buyer, neither the Sellers nor the Companies nor any of their respective
Subsidiaries or Affiliates has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection therewith.
SECTION 2.6. Subsidiaries. The only Subsidiary of the Companies is
▇▇▇▇▇▇▇ Company, Incorporated ("▇▇▇▇▇▇▇"). ▇▇▇▇▇▇▇ is incorporated in the
Commonwealth of Virginia. The authorized capital stock of ▇▇▇▇▇▇▇ consists of
500 shares of common stock, of which 280 shares are issued and outstanding and
no shares of common stock are held in treasury. All of the issued and
outstanding shares of common stock of ▇▇▇▇▇▇▇ have been duly authorized
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and are validly issued, fully paid, and nonassessable. Media holds of record and
owns beneficially all of the outstanding shares of common stock ▇▇▇▇▇▇▇, free
and clear of any restrictions on transfer (other than restrictions under the
Securities Act of 1933, as amended, (the "Securities Act") and state securities
laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other contracts or commitments that could require Media to sell,
transfer or otherwise dispose of any capital stock of ▇▇▇▇▇▇▇ or that could
require ▇▇▇▇▇▇▇ to issue, sell or otherwise cause to become outstanding any of
its own capital stock. There are no outstanding stock appreciation, phantom
stock, profit participation or similar rights with respect to ▇▇▇▇▇▇▇. There are
no voting trusts, proxies or other agreements or understanding with respect to
the voting of any of the capital stock of ▇▇▇▇▇▇▇. None of the Companies
controls, directly or indirectly, or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association other than ▇▇▇▇▇▇▇.
SECTION 2.7. Reports and Financial Statements.
(a) Media and M&M have previously furnished to Buyer true and complete
copies of (i) their respective balance sheets as of December 31, 1997 and
December 31, 1996, statements of operations, changes in financial position and
cash flows for the fiscal years ended on said date, each accompanied by a report
thereon containing an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, certified public accounts,
and (ii) their respective unaudited balance sheets as of April 30, 1998,
statements of operations, changes in financial position and cash flows for the
two months ended on said date.
(b) Nevada has previously furnished to Buyer its Form K-1 received from
Media for the year ended December 31, 1996 together with its unaudited balance
sheet as of December 31, 1997.
(c) MWS has previously furnished to Buyer true and complete copies of
unaudited balance sheets as of December 31, 1997 and December 31, 1996,
statements of operations, changes in financial position and cash flows for the
fiscal years ended on said dates.
The audited financial statements and unaudited financial statements
described above (including any related notes and schedules) (the "Financial
Statements") fairly present the financial position of each Company as of the
dates thereof and the results of operations and cash flows for the applicable
periods (subject, where appropriate, to normal year-end adjustments), in each
case in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto and except
that the unaudited financial statements therein do not contain all of the
footnote disclosures required by GAAP).
SECTION 2.8. No Undisclosed Liabilities. To the Knowledge of Sellers,
none of the Companies has any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, of a type required by GAAP to be
reflected on a balance sheet except (a) liabilities or obligations reflected in
any of the Financial Statements and (b) liabilities or obligations which would
not in the aggregate constitute a Material Adverse Effect on the Companies.
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SECTION 2.9. No Violation of Law. To the Knowledge of Sellers, the
Business is not being conducted in violation of any law, ordinance or regulation
of any governmental body or authority (provided that no representation or
warranty is made in this Section 2.9 with respect to Licenses (as defined and
covered by Section 2.17 below) or Environmental Laws (as defined in and covered
by Section 2.10 below)), including but not limited to, any laws relating to
occupational health or safety, except for violations or possible violations
which would not in the aggregate constitute a Material Adverse Effect on the
Companies, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced or, to the
Knowledge of Sellers, threatened against any of the Companies alleging any such
violation, except for such actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands or notices which would not
in the aggregate constitute a Material Adverse Effect on the Companies.
SECTION 2.10. Environmental Laws and Regulations.
(a) Except as set forth on Schedule 2.10, to the Knowledge of Sellers
and except as would not in the aggregate constitute a Material Adverse Effect on
the Companies, (i) each Company is in compliance with all applicable federal,
state and local laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), which compliance includes, but is not limited to, the
possession by each Company of all permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, (ii) no Company has received written notice of, or is the
subject of, any actions, causes of action, claims, demands, notices, judgments,
orders, hearings or proceedings by any person, or, investigations by any
Governmental Entity alleging liability under or non-compliance with any
Environmental Law, and (iii) there are no circumstances, based on currently
available information that are reasonably likely to prevent or interfere with
such compliance or give rise to such liability in the future.
(b) Except as set forth on Schedule 2.10, to the Knowledge of Sellers
and except as would not in the aggregate constitute a Material Adverse Effect on
the Companies (i) no underground storage tanks, polychlorinated biphenyls (PCBs)
or asbestos-containing materials are located on, in or under any property owned
or leased by any Company in violation of any applicable Environmental Law, and
(ii) no Company has caused or permitted Hazardous Materials to be stored,
released, treated, recycled or disposed of on, under or at any property owned or
leased by any Company in violation of any applicable Environmental Law or in a
manner that would reasonably be expected to require remediation by any Company
under applicable Environmental Laws.
(c) Except as set forth on Schedule 2.10 and except as would not in the
aggregate constitute a Material Adverse Effect on the Companies, none of the
Companies has released by written contract or agreement any other person from
any claim under any Environmental Law or, to the Knowledge of Sellers, waived
any rights or defenses concerning any environmental conditions at any property
currently or formerly owned, leased or operated by any Company.
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(d) To the Knowledge of the Sellers, there is no environmental
assessment, investigation, study or audit report prepared by or for any Company
in relation to the Business of such Company that has not been made available to
Buyer.
SECTION 2.11. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements.
(a) Schedule 2.11 contains a complete list of each employment,
consulting, severance or other similar contract, arrangement or policy and each
plan, arrangement (written or oral), program, agreement or commitment providing
for insurance coverage (including without limitation any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life, health or
accident benefits (including without limitation any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code providing
for the same or other benefits) or for deferred compensation, profit-sharing
bonuses, stock options, stock appreciation rights, stock purchases or other
forms of incentive compensation or post-retirement insurance, compensation or
benefits (whether or not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), which any Company maintains,
administers, contributes to, or in the last six (6) years was required to
contribute to, or under which any Company may incur any liability (each, a
"Benefit Plan"). True and complete copies of each of the following documents
have been delivered or made available by Seller to Buyer: (i) each Benefit Plan
and all amendments thereto, all written descriptions thereof which have been
distributed to Seller's employees and all annuity contracts or other funding
instruments, and a complete description of any Benefit Plan which is not in
writing, (ii) the most recent determination or opinion letter issued by the
Internal Revenue Service with respect to each Benefit Plan (other than a
"multiemployer plan", as defined in Section 3(37) or 4001(a) of ERISA, a
"Multiemployer Plan"), (iii) for the three most recent plan years, Annual
Reports on Form 5500 Series required to be filed with any governmental agency
for each Benefit Plan, (iv) all actuarial reports prepared for the last three
plan years for each Benefit Plan, (v) a description of complete age, salary,
service and related data as of the last day of the last plan year for employees
of the Companies (other than employees of the Winery), and (vi) a description
setting forth the amount of any liability of any Company as of the Closing Date
for payments more than thirty (30) calendar days past due with respect to each
Benefit Plan.
(b) No Benefit Plan (other than a Multiemployer Plan) is subject to the
minimum funding requirements of Section 302 of ERISA or Section 412 of the
Internal Revenue Code of 1986, as amended (the "Code"). No Benefit Plan is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA other than a
Multiemployer Plan. Neither any Company nor any Benefit Plan (other than a
Multiemployer Plan) holds as an asset of any Benefit Plan any interest in any
annuity contract, guaranteed investment contract or any other investment or
insurance contract issued by an insurance company that is the subject of
bankruptcy, conservatorship or rehabilitation proceedings.
(c) Each Benefit Plan and each related trust agreement, annuity
contract or other funding instrument presently is in material compliance and has
been maintained in material compliance with its terms and, both as to form and
in operation, with the requirements prescribed
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by any and all statutes, orders, rules and regulations which are applicable to
such plans, including without limitation ERISA and the Code, except where such
instances of non-compliance would not in the aggregate have a Material Adverse
Effect on the Companies.
(d) No Company has engaged in, or to the Knowledge of Sellers, is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Section 4212(c) of ERISA. All contributions required to be made by
any Company to each Multiemployer Plan have been made when due. If, as of the
Closing Date, each Company were to withdraw from all Multiemployer Plans to
which any Company has contributed or been obligated to contribute, it (and they)
would incur no liabilities to such plans under Title IV of ERISA.
(e) To Sellers' Knowledge, with respect to each Multiemployer Plan: (1)
no such Multiemployer Plan has been terminated or has been in reorganization
under ERISA so as to result, directly or indirectly, in any liability,
contingent or otherwise, of any Company under Title IV of ERISA; (2) no
proceeding has been initiated by any person (including the Pension Benefit
Guaranty Corporation) to terminate any Multiemployer Plan; (3) Seller has no
reason to believe that any Multiemployer Plan will be terminated or will be
reorganized under ERISA; and (4) no Company expects to withdraw from any
Multiemployer Plan.
(f) None of the Companies or any Benefit Plan has any present or future
obligation to make any payment to, or with respect to any present or former
employee of any Company pursuant to, any retiree medical benefit plan, or other
retiree Benefit Plan, and no condition exists which would prevent any Company
from amending or terminating any such Benefit Plan.
(g) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Companies that is an "excess parachute
payment" pursuant to Section 280G of the Code.
(h) Neither Seller, any Company nor any ERISA Affiliate has any
announced plan or legally binding commitment to create any additional Benefit
Plans which are intended to cover employees or former employees of the Companies
or to amend or modify any existing Benefit Plan.
(i) Except as would not in the aggregate have a Material Adverse Effect
on the Companies, no event has occurred in connection with which any Company or
any Benefit Plan, directly or indirectly, could be subject to any material
liability (A) under any statute, regulation or governmental order relating to
any Employee Plans; (B) pursuant to any obligation of any Company to indemnify
any person against liability incurred under any such statute, regulation or
order as they relate to the Employee Plans or (C) pursuant to any benefit plan,
program or arrangement of any entity which is (or at any relevant time was) a
member of a "controlled group of corporations" with, under "common control"
with, or a member of an "affiliated service group" with, any Company as set
forth in Section 414(b), (c), (m) or (o) of the Code.
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(j) Neither the execution and delivery of this Agreement by Seller nor
the consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any person to benefits under any
Benefit Plan (including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting or the
acceleration or creation of any rights under any severance, parachute or change
in control agreement).
SECTION 2.12. Events Subsequent to December 31, 1997. Except as set
forth on Schedule 2.12, since December 31, 1997, the Business has been conducted
in the ordinary course and there has not been in the aggregate any Material
Adverse Effect on the Companies. Without limiting the generality of the
foregoing, since that date:
(a) no Company has sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
ordinary course of business;
(b) other than new and pending acquisitions set forth in the
Confidential Information Memorandum dated February, 1998 provided to Buyer by
Sellers (the "Offering Memo") or on Schedule 2.12, no Company has entered into
any transaction or contract material to any such Company outside the ordinary
course of business or has made any material changes in the customary method of
operations of such Company, including, without limitation, practices relating to
marketing, selling and pricing;
(c) no party (including any Company) has accelerated, terminated,
modified, or canceled any Material Contract;
(d) no Company has imposed any Lien upon any of its assets, tangible or
intangible, except for any Liens that are related to a liability included in
Debt or Working Capital;
(e) except for new builds planned for 1998 and set forth in the
Offering Memo, no Company has made any capital expenditure (or series of related
capital expenditures) either involving more than $5,000,000 or outside the
ordinary course of business;
(f) other than new and pending acquisitions set forth in the Offering
Memo or on Schedule 2.12, no Company has made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either involving
more than $1,000,000 or outside the ordinary course of business;
(g) no Company has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation that is not prepayable without penalty and, if not
prepaid prior to Closing, included in Debt;
(h) no Company has canceled, compromised, waived, or released any right
or claim (or series of related rights and claims) outside the ordinary course of
business;
(i) there has been no change made or authorized in the charter,
partnership agreement or bylaws of any Company;
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(j) no Company has (i) issued, sold, or otherwise disposed of any of
its partnership units or capital stock, or granted any options, warrants, or
other rights to purchase or obtain (including upon conversion, exchange or
exercise) any of its partnership units or capital stock, as applicable, nor (ii)
declared, set aside, or paid any non-cash dividend or made any distribution with
respect to or redeemed, purchased, or otherwise acquired any of, its partnership
units or capital stock;
(k) no Company has experienced any damage, destruction or loss (whether
or not covered by insurance) to any property, which properties individually or
in the aggregate are material;
(l) (i) no Company has made any loan to, or entered into any other
material transaction with, any of its directors, officers, or employees other
than in the ordinary course of business consistent with past practice in
connection with their employment, (ii) no Company has entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement, (iii) no Company
has granted any increase in the base compensation of any of its directors,
officers, or employees other than in the ordinary course of business and
consistent with past practices, and (iv) no Company has adopted, amended,
modified or terminated any bonus, profit-sharing, incentive, severance or other
plan, contract or commitment for the benefit of any of its directors, officers,
or employees (or taken any such action with respect to any other employee
benefit plan).
(m) there has not been any change by any Company in its accounting
methods, principles or practices, other than such changes required by GAAP;
(n) except as reflected in Working Capital, (i) there has not been any
writing down, other than in accordance with GAAP and consistent with past
practice, of the value of any accounts or other receivables or any revaluation
by any Company of any of its assets or (ii) any cancellation or writing off as
worthless and uncollectable of any debt, note or account or other receivable by
any Company, or (iii) any waiver by any Company of a right of substantial value;
(o) except as reflected in Working Capital or in the case of any items
arising in the ordinary course of business, there has not been any payment or
incurring of liability to pay any material Taxes, assessments, fees, penalties,
interest or other governmental charges;
(p) there has not been any other material occurrence, event, incident,
action, failure to act or transaction outside the ordinary course of business
involving any Company; and
(q) no Company has committed to any of the foregoing.
SECTION 2.13. Investigations; Litigation. Except as described in any of
the Financial Statements or as disclosed on Schedule 2.13:
(a) no investigation or review by any Governmental Entity with respect
to any Company which would in the aggregate constitute a Material Adverse Effect
on the Companies is pending nor has any Governmental Entity notified any Company
of an intention to conduct such an investigation or review;
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(b) there are no actions, suits or proceedings pending (or, to the
Knowledge of the Sellers, threatened) against or affecting any of the Companies,
or any of their respective properties at law or in equity, or before any
Governmental Entity, which, in the aggregate, would constitute a Material
Adverse Effect on the Companies; and
(c) No Company is subject to any outstanding injunction, judgment,
order, decree, ruling or charge.
SECTION 2.14. Tax Matters. Except to the extent disclosed on Schedule
2.14:
(a) each Company (Media, M&M, Nevada and MWS and each Subsidiary of
Media, M&M, Nevada or MWS are hereinafter sometimes referred to collectively as
the "Taxpayers" or individually as a "Taxpayer") has (i) duly filed (or there
have been filed on its behalf) with the appropriate Tax authorities all Tax
Returns required to be filed by it on or prior to the date hereof, and such Tax
Returns are true, complete, and correct in all material respects, except to the
extent that any failure to file any Tax Return or any inaccuracies in filed Tax
Returns would not, individually or in the aggregate, have a Material Adverse
Effect and (ii) duly paid in full (or there has been paid on each of their
behalf), or has established (or there has been established on each of their
behalf) an adequate accrual or reserve for Taxes as reflected in the calculation
of Working Capital for, all Taxes that accrue or are payable by such Taxpayer
(x) in respect of any taxable periods that end on or before the Closing Date and
(y) for any taxable period that begins before the Closing Date and ends
thereafter, to the extent that such Taxes are attributable to the portion of
such period ending on the Closing Date under the terms of Section 5.15 (d),
except to the extent that any failure to pay or reserve for would not,
individually or in the aggregate, have a Material Adverse Effect. There is no
audit or other matter in controversy with respect to any Taxes due and owing by
any Taxpayer, and there is no Tax deficiency or claim assessed or, to the best
of the Taxpayers' Knowledge, proposed or threatened (whether orally or in
writing) against any Taxpayer, other than (x) in respect of any such audits,
controversies, deficiencies, assessments, or proposed assessments that are being
contested in good faith, for which adequate reserves have been established in
accordance with GAAP or (y) would not, individually or in the aggregate, have a
Material Adverse Effect. Schedule 2.14 sets forth any contested liability in
respect of which the amount being contested exceeds $250,000.
(b) none of the Taxpayers (i) has waived any statutory period of
limitations for the assessment of any Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency other than in the case of any
such waivers or extensions in respect of an assessment or deficiency of Tax the
liability of which has been satisfied or settled, (ii) has filed a consent under
Code Section 341(f) concerning collapsible corporations, or (iii) has any
liability for the Taxes of any other person as defined in Section 7701(a)(1) of
the Code under Treas. Reg. Sections 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee, successor or by contract (other than
liability for Taxes imposed by contract entered into in the ordinary course of
business for the acquisition by a Taxpayer of assets used in the Business or
stock of any entity holding any such assets used in the Business), except to the
extent that any such waiver, consent, or liability referred to in clauses (i),
(ii) and (iii), respectively, of this Section 2.14(b) would not, individually or
in the aggregate, have a Material Adverse Effect;
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(c) to the Knowledge of the Taxpayers, no claim has been made since
January 1, 1994 by an authority in a jurisdiction where a Taxpayer does not file
Tax Returns that such Taxpayer is or may be subject to taxation by that
jurisdiction, other than in the case of any such claims the liability of which
has been satisfied or settled or, except to the extent that any such claims
would not, individually or in the aggregate, have a Material Adverse Effect;
(d) none of the assets of the Taxpayers (i) are required to be treated
as being owned by any other person pursuant to the so-called safe harbor lease
provisions of former Section 168(f)(8) of the Code, (ii) secures any debt the
interest on which is tax-exempt under Code Section 103(a), or (iii) is
tax-exempt use property within the meaning of Code Section 168(h), except to the
extent that any such treatment or condition under this Section 2.14(d) would
not, individually or in the aggregate, have a Material Adverse Effect;
(e) none of the Taxpayers has agreed to or is required to make any
adjustment pursuant to Code Section 481(a) by reason of a change in accounting
method initiated by such Taxpayer and none of the Taxpayers have Knowledge that
the Internal Revenue Service (the "IRS") has proposed any such adjustment or
change in accounting method, except to the extent that any such adjustment or
proposed adjustment would not have a Material Adverse Effect;
(f) for Federal income Tax purposes, M&M and MWS are each an "S
Corporation" as defined in Section 1361(a) of the Code and M&M has been an S
Corporation for each taxable year since July 1, 1995 and MWS has been an S
Corporation for each taxable year since August 14, 1991.
(g) Media is treated, and has been treated since its formation, as a
partnership for U.S. federal income tax purposes, and is not, and has never
been, treated as an association taxable as a corporation for U.S. federal income
tax purposes;
(h) none of the Taxpayers has requested an extension of the time within
which to file any Federal or state Tax Return for which such Tax Return has not
been filed;
(i) none of the Taxpayers has any obligation under any Tax allocation
or sharing agreement among or between the Taxpayers and the Sellers or any
Affiliates thereof, and after the Closing Date, no Taxpayer shall be a party to,
bound by or have any obligation under any Tax allocation or sharing agreement or
have any liability thereunder among or between the Taxpayers and the Sellers or
any Affiliates thereof for amounts due in respect of periods prior to the
Closing Date, except to the extent that any such obligation referred to in this
Section 2.14(i) would not, individually or in the aggregate, have a Material
Adverse Effect; and
(j) Schedule 2.14 set forth the states in which each of M&M and MWS
filed state income Tax Returns for the 1997 taxable year and their respective
filing status for such taxable year and each of M&M and MWS have taken all
required steps to be treated as an S Corporation under applicable state income
tax law in each state in which M&M and MWS filed state income Tax Returns for
the 1997 taxable year in which M&M or MWS status on Schedule 2.14 is listed as
"S Corporation."
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SECTION 2.15. Insurance. Each Company has insurance policies, including
without limitation, policies of life, health and liability insurance, that are
customary and appropriate for the industry and the locales in which it operates
and such policies are in full force and effect, except for the failure to have
or maintain in full force and effect such policies as would not in the aggregate
constitute a Material Adverse Effect on the Companies. Copies of all such
policies, including the related certificates of insurance, have been provided to
or made available to Buyer.
SECTION 2.16. Real Property; Title. Schedule 2.16 lists all real
property used in the conduct of the Business and indicates whether such property
is leased or owned by the Companies. With respect to each such parcel of real
property:
(a) the identified owner has good and marketable title to the real
property, free and clear of any Liens, easements, covenants, or other
restrictions, except for installments of special assessments not yet delinquent
and recorded easements, covenants, and other restrictions which do not
materially impair the current use, occupancy, or value, or the marketability of
title, of the property subject thereto;
(b) except as disclosed on Schedule 2.13, there are no pending or, to
the Knowledge of Sellers, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the real property or other matters affecting
adversely the current use, occupancy, or the material value to the Companies
thereof;
(c) to the Knowledge of Sellers, with respect to each parcel of owned
real property, (i) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property; (ii) there are
no outstanding options or rights of first refusal to purchase the parcel of real
property, or any portion thereof or interest therein; and (iii) there are no
parties (other than the Companies) in possession of the parcel of real property,
other than tenants under any leases disclosed in Schedule 2.16 who are in
possession of space to which they are entitled.
(d) The Sellers have delivered or made available to the Buyer correct
and complete copies of the leases and subleases listed in Schedule 2.16 (as
amended to date) of real property held by the Companies (the "Leases"). With
respect to each, Lease: each Company party to the respective Leases (i) has a
valid and subsisting leasehold interest in each Lease, (ii) has not subleased or
assigned any interest in any such Lease, except in connection with such
Company's financing activities, and (iii) has not received any written notice of
material default under any such Lease which is still in effect, except for such
defaults that would not in the aggregate constitute a Material Adverse Effect.
(e) Section 2.16(e) is a list of all of the material structures used to
display billboards, posters and "faces" that are subleased by any of the
Companies.
SECTION 2.17. Permits and Licenses. Each Company holds and is in
material compliance with all permits and licenses necessary to operate the
Business as currently operated, each of which is listed in Schedule 2.17 (the
"Licenses"). Except as set forth in Schedule 2.17, no
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governmental qualifications, registrations, filings, privileges, franchises,
licenses, permits, approvals or authorizations other than the Licenses are
required to operate the Business in substantially the same manner as the
Business is being operated as of the date hereof, other than those that the
failure to hold or obtain would not in the aggregate constitute a Material
Adverse Effect on the Companies. No application, action or proceeding is pending
for the renewal or modification of any of the Licenses, except for matters in
the ordinary course of business for each of the Companies, and, except for
actions or proceedings affecting outdoor advertising companies generally and the
actions described in Schedule 2.13, no application, complaint, action or
proceeding is pending, or threatened in writing, that would reasonably be
expected to result in (i) the denial of an application for renewal of any of the
Licenses, (ii) the revocation, modification, nonrenewal or suspension of any of
the Licenses, (iii) the issuance of a cease-and-desist order with respect to any
of the Licenses or (iv) the imposition of any material administrative or
judicial sanction with respect to any Company, except as, with respect to (i),
(ii), (iii) and (iv), would not in the aggregate result in a Material Adverse
Effect on the Companies.
SECTION 2.18. Collective Bargaining Agreements and Labor. The Companies
have previously provided to Buyer all labor or collective bargaining agreements
which pertain to any of the employees of any of the Companies. To the Knowledge
of the Sellers, there are no pending complaints, charges or claims against any
Company filed with any public or governmental authority, arbitrator or court
based upon the employment or termination by any Company of any individual,
except for such complaints, charges or claims which if adversely determined
would not in the aggregate constitute a Material Adverse Effect on the
Companies.
SECTION 2.19. Intangible Assets. Other than as set forth in Schedule
2.19, there are no material patents, patent applications, trademarks, trade
names, service marks, copyright registrations or copyright applications licensed
or used by or registered in the name of any Company which are used in the
conduct of the Business.
SECTION 2.20. Personal Property; Information Systems.
(a) The Companies collectively own, have a valid leasehold interest in,
or have legal right to use, all of the tangible personal property necessary to
carry on the Business of the Companies as presently conducted, free and clear of
all Liens except for (i) Liens for inchoate mechanics' and materialmens' liens
for construction in progress and workmens', repairmens', warehousemens' and
carriers' liens arising in the ordinary course of business, (ii) Liens for Taxes
not yet payable, (iii) Liens arising out of, under, or in connection with, this
Agreement and (iv) Liens set forth in Schedule 2.20.
(b) The operating and applications computer programs and data bases
("Software") which the Companies currently use or have available for use are
adequate and sufficient to service their existing customers on the date hereof
through the end of the current term of the contracts with such customers. All
such Software is owned outright by a Company or, if not owned by a Company, a
Company has the right to use the same pursuant to valid licenses therefor,
except where the absence of such licenses would not cause significant disruption
to the Companies' operations as presently conducted or result in significant
expense if use of the related Software were required to be terminated or the
related Software were required to be
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replaced. To the Sellers' Knowledge, none of the Software owned by a Company and
none of the Software licensed by a Company, infringes upon or violates any
intellectual property right of any other Person.
SECTION 2.21. Material Contracts.
(a) Schedule 2.21(a) sets forth (grouped by each clause of this Section
2.21(a)) the following contracts (collectively, along with each Lease and each
Customer Agreement, the "Material Contracts") in effect as of the date of this
Agreement to which any Company is a party or to which it or its assets is
subject:
(i) any contract (excluding any employment contract,
Customer Agreement and Lease) that the Sellers reasonably anticipate will, in
accordance with its terms, involve aggregate annual payments after the date
hereof by any Company of more than $100,000 and that is not cancelable without
liability within sixty (60) days;
(ii) any employment or consulting contracts
(including without limitation any arrangements or obligations with respect to
severance, change in control or termination pay) with any director, officer or
employee of any Company;
(iii) all partnership or joint venture agreements of
any Company;
(iv) any note, loan, letter of credit, contract
relating to indebtedness for borrowed money or capitalized leases, or other
contract in respect of which any Company is obligated in any way to provide
funds in respect of, or to guarantee or assume, any debt, obligation or dividend
of any person or entity involving aggregate obligations of the Companies of more
than $100,000;
(v) any indemnity arrangement arising in connection
with any sale or disposition of assets (other than sales of assets in the
ordinary course of business);
(vi) any royalty arrangement arising in connection
with any sale or disposition of assets;
(vii) any acquisition or disposition contracts of any
Company under which a party thereto remains obliged to pay moneys or perform in
any material manner;
(viii) all contracts, other than Licenses or Leases,
with any Governmental Entity or with any labor union;
(ix) contracts for capital expenditures requiring
payments by any Company after the date hereof, individually or in the aggregate,
in excess of $100,000 per year or $500,000 per project;
(x) each contract to which any Company is a party (i)
limiting the right of any Company prior to or after the Closing Date, (A) to
engage in, or to compete with any person in, any business, including each
contract or agreement containing exclusivity provisions
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restricting the geographical area in which, or the method by which, any business
may be conducted by any Company prior to or after the Closing Date, or (B) to
solicit any vendor, customer or client, or (ii) containing "most favored
nations" or similar provisions affecting the pricing terms of contracts to which
it is a party; and
(xi) each other contract which is material to any
Company or the conduct of its business and the absence of which would constitute
a Material Adverse Effect on such Company.
(b) Schedule 2.21(b) is true and correct and sets forth a
complete and accurate listing of all Customer Agreements to which any Company is
a party as of the date hereof. At Closing, the Sellers will provide a true,
correct and complete listing of all Customer Agreements to which any Company is
a party at the time of Closing. "Customer Agreement" means any contract, letter
agreement or other agreement entered into by a Company for the provision of
outdoor advertising services, which agreement generates revenues in excess of
$250,000 per year, as such agreements may be amended from time to time.
(c) Sellers have made available to Buyer true and complete
copies of all Material Contracts (including all amendments thereto).
(d) Each Material Contract and each other contract of any
Company which would have been required to be disclosed Schedule 2.21(a) or
2.21(b) had such contract been entered into prior to the date of this Agreement,
is in full force and effect and is a legal, valid and binding obligation of such
Company, and there is not (i) any material default or breach of a material
provision (or any event which, with the giving of notice or lapse of time or
both, would be a material default) by any Company or, to the Knowledge of the
Sellers, any other party, in the timely performance of any obligation to be
performed or paid under any such Material Contract or any such other contract or
(ii) to the Sellers' Knowledge, any threat of cancellation or termination of any
such Material Contract or other such contract, except with respect to clauses
(i) and (ii), for such defaults, cancellations or terminations that would not in
the aggregate constitute a Material Adverse Effect on the Companies.
(e) As used herein, "contract" means any legally binding
agreement, commitment or arrangement.
SECTION 2.22. Excluded Assets and Liabilities.
(a) Winery. Schedule 2.22(a) sets forth a true, complete and
correct list of all assets, liabilities and employees of the Companies relating
principally to the Winery, including a separate list of liabilities to be
reflected in Working Capital or Debt as of the Adjustment Time ("Excluded Winery
Liabilities") located in Paso ▇▇▇▇▇▇, California and currently owned by M&M (the
"Winery").
(b) ▇▇▇▇▇▇ Headquarters. Schedule 2.22(b) sets forth a true,
complete and correct list of certain assets and liabilities related primarily
to, and employees housed at, the headquarters offices of the Business located in
Paso ▇▇▇▇▇▇, California ("▇▇▇▇▇▇ Headquarters"),
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including a separate list of liabilities to be reflected in Working Capital or
Debt as of the Adjustment Time ("Excluded Headquarters Liabilities").
SECTION 2.23. Recent Acquisitions. Each of the acquisitions
listed in Part A of Schedule 2.12 have been consummated by one or more of the
Companies for the purchase price and with the cashflows listed in Part A of
Schedule 2.12. True, correct and complete copies of each of the agreements
pursuant to which such acquisitions were made have been provided or made
available to Buyer.
SECTION 2.24. Disclosure. None of the representations,
warranties or statements by the Sellers in this Agreement or the Schedules, and
no information provided by any Company or Seller to another Seller in connection
with the sale and purchase contemplated by this Agreement, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact necessary to make the statements or facts contained herein not
misleading. To the Sellers' Knowledge, there is no fact or circumstance in
existence which constitutes, or is reasonably likely to constitute, a Material
Adverse Effect on any Company or the due performance by any Company of its
obligations hereunder, which has not been expressly set forth in this Agreement
or the Schedules.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller severally represents and warrants to Buyer to the
extent pertaining to such Seller as follows:
SECTION 3.1. Authority Relative to this Agreement. Such Seller
has the corporate, partnership, trust or other power and authority, as
applicable, to enter into this Agreement and to carry out its obligations
hereunder. With respect to any Seller not an individual, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by any boards of directors,
shareholders, partners or trustees and no other corporate, stockholder,
partnership, trust or other approvals are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by such Seller and, assuming this Agreement has
been duly and validly executed and delivered by Buyer, this Agreement
constitutes a valid and binding agreement of such Seller, enforceable against
such Seller in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
SECTION 3.2. Title to Units and Capital Stock. Except as set
forth in Schedules I, II, III and IV, such Seller owns the number of Units
and/or shares of Capital Stock, as applicable, set forth opposite such Seller's
name on Schedules I, II, III and/or IV, as applicable, free and clear of all
Liens, and upon delivery and payment for such Units and/or shares of Capital
Stock at the Closing as provided for in this Agreement, Buyer will acquire good
and valid title to
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all such Units and/or shares of Capital Stock, as applicable, being sold to it
by such Seller, free and clear of all Liens.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
SECTION 4.1. Organization, Qualification, Etc. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
have a Material Adverse Effect on Buyer.
SECTION 4.2. Corporate Authority Relative to this Agreement;
No Violation. Buyer has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of Buyer and no
other corporate or stockholder proceedings on the part of Buyer is necessary to
authorize this Agreement and the other transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement has been duly and validly executed and delivered by the
other parties hereto, this Agreement constitutes a valid and binding agreement
of Buyer, enforceable against it in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Buyer is not subject to or obligated under any charter, by-law or contract
provision or any license, franchise or permit, or subject to any order or
decree, which would be breached or violated by its executing or carrying out
this Agreement. Other than in connection with or in compliance with the HSR Act,
no authorization, consent or approval of, or filing with, any governmental body
or authority is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals or filings, the failure to obtain or make which would not, in the
aggregate, have a material adverse effect on Buyer; provided that Buyer makes no
representation with respect to such of the foregoing as are required by reason
of the regulatory status of the Companies or facts specifically pertaining to
the Companies.
SECTION 4.3. Investigations; Litigation. Except as previously
disclosed in writing to the Companies:
(a) no investigation or review by any Governmental Entity with
respect to Buyer or any of its Subsidiaries which would in the aggregate have or
be reasonably likely to have a material adverse effect on Buyer's ability to
consummate the transactions contemplated by this
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Agreement is pending nor has any Governmental Entity notified Buyer of an
intention to conduct such an investigation or review; and
(b) there are no actions, suits or proceedings pending (or, to
Buyer's Knowledge, threatened) against or affecting Buyer or its Subsidiaries,
or any of their respective properties at law or in equity, or before any
Governmental Entity which in the aggregate is reasonably likely to have a
material adverse effect on Buyer's ability to consummate the transactions
contemplated by this Agreement.
SECTION 4.4. Financial Ability. Buyer has the funds necessary
to pay the Purchase Price and consummate the transactions contemplated by this
Agreement.
SECTION 4.5. Brokers' Fees. The Buyer has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any Seller
could become liable or obligated.
ARTICLE V
COVENANTS
SECTION 5.1. Conduct of Business by the Companies. From the
date of this Agreement to the Closing or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, and except as may be
agreed to by the other parties hereto or as may be permitted pursuant to this
Agreement, each Company shall:
(a) conduct its operations and maintain its accounting
methods, principles, or practices according to its ordinary and usual course of
business consistent with past practice and GAAP;
(b) use its reasonable efforts to (i) preserve intact its
business organizations and goodwill in all material respects, (ii) keep
available the services of its officers and employees as a group, subject to
changes in the ordinary course, and (iii) maintain satisfactory relationships
with suppliers, distributors, customers and others having business relationships
with them;
(c) notify Buyer of any emergency or other change in the
normal course of its businesses or in the operation of its properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority other than
nonmaterial complaints, investigations or hearings arising in the ordinary
course of business;
(d) except as otherwise provided in this Agreement or as
disclosed on Schedule 5.1(d), not enter into or amend any employment, severance
or similar agreements or arrangements with any of their respective directors or
executive officers, except general salary increases in amounts consistent with
past practices including without limitation the annual salary increases
scheduled for July 1998 as previously disclosed to Buyer;
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(e) except as (i) described in Schedule 2.12, (ii) as
previously disclosed to Buyer in the Offering Memo, and (iii) in connection with
the ▇▇▇▇ Option, not (A) authorize, propose or enter into an agreement with
respect to, any merger, consolidation or business combination, or any
acquisition of assets or securities except to the extent that such mergers,
consolidations or business combinations or any acquisitions of assets or
securities, taken in the aggregate, do not exceed $500,000, (B) dispose of a
material amount of assets or securities, (C) release or relinquish of any
material contract rights not in the ordinary course of business and consistent
with past practice or (D) exceed the amount of capital expenditures for new
builds contained in its 1998 budget, as previously provided to Buyer;
(f) not propose or adopt any amendments to its partnership
agreement or corporate charter or by-laws, as applicable;
(g) not issue any partnership interests or shares of its
capital stock, as applicable, or otherwise change its capitalization as it
existed on the date hereof, except for the issuance or incurrence of
nonconvertible debt in connection with acquisitions permitted pursuant to
Section 5.1(e), which debt is either prepaid prior to the Closing or included in
Debt or Working Capital as of the Adjustment Time, and as otherwise contemplated
herein;
(h) not grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to acquire
any partnership interests or shares of its capital stock, as applicable;
(i) except for required distributions with respect to
Preferred Units, not authorize or pay any stock dividends or make any non-cash
distribution with respect to its Units or outstanding shares of stock, as
applicable; provided, however, cash distributions shall be permitted in the sole
and absolute discretion of the general partner or board of directors, as
applicable;
(j) not purchase or redeem any partnership interest or shares
of its capital stock, except for the redemption of all outstanding Preferred
Units as contemplated by this Agreement;
(k) except as described on Schedule 5.1(k), not amend the
terms of its respective employee benefit plans, programs or arrangements or any
severance or similar agreements or arrangements in existence on the date hereof
except as required by law, or adopt any new employee benefit plans, programs or
arrangements or any severance or similar agreements or arrangements;
(l) not enter into any loan agreement, refinance any existing
loan, incur any indebtedness for borrowed money or purchase money indebtedness
that is not prepayable without penalty and either paid prior to the Closing or
included as Working Capital or Debt as of the Adjustment Time or, other than in
the ordinary course of business and consistent with past practice and, if
outstanding at the Closing, included in Working Capital or Debt as of the
Adjustment Time, assume, guarantee, endorse or otherwise become responsible for
indebtedness of any other person, or make any loans or advances to any person;
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(m) not (i) terminate, modify or amend any Material Contract,
License, or any confidentiality agreement, except in the ordinary course of
business and not involving a material increase in liability that is not
reflected in Working Capital, or reduction in revenue, (ii) settle or otherwise
resolve any financial issue, claim or adjustment under any such Material
Contract, Lease, License, or other contract or commitment, except by payment of
cash or the incurrence of a liability reflected in Working Capital, or (iii)
effect any modification to any Material Contract, Lease or License in connection
with obtaining any consent or approval necessitated by the transactions
contemplated hereby;
(n) not settle or compromise any action or proceeding (i) for
any amount in excess of $200,000, except by payment of cash or the incurrence of
a liability reflected in Working Capital, or (ii) that involves any commitment
or arrangement which in the aggregate constitutes a Material Adverse Effect on
the Companies;
(o) not enter into any contracts other than in the ordinary
course of business consistent with general past practice;
(p) not make any material election with respect to Taxes or
settle or compromise any material liability with respect to Taxes, except by
payment of cash or the incurrence of a liability reflected in Working Capital;
and
(q) not agree, in writing or otherwise, to take any of the
foregoing actions or take any action which would make any representation or
warranty in Articles II or III hereof untrue or incorrect.
SECTION 5.2. Access to Information; Confidentiality. The
Companies shall afford to Buyer, and to Buyer's officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
access during normal business hours during the period prior to the Closing Date
to all the respective properties, books, contracts, commitments and records of
the Companies, and during such period, the Companies shall furnish promptly to
Buyer all information concerning the Business as Buyer shall reasonably request.
The Buyer will keep all such information provided to it, directly or indirectly,
by the Companies confidential in accordance with the terms of the
Confidentiality Agreement, dated ___________, 1998, among the Buyer, Media and
M&M (the "Confidentiality Agreement").
SECTION 5.3. Filings; Other Action. Subject to the terms and
conditions herein provided, each appropriate Party shall (i) promptly, and in
any event not later than fifteen (15) business days after the date hereof, make
or cause to be made their respective filings and thereafter promptly make any
other required submissions under the HSR Act, (ii) use reasonable efforts to
cooperate with one another in (A) determining whether any filings are required
to be made with, or consents, permits, authorizations or approvals are required
to be obtained from, any third party or Governmental Entity in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such consents, permits, authorizations or approvals, and
(iii)
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use reasonable efforts to take, or cause to be taken, all other such actions and
do, or cause to be done, all other things as the Parties may agree are
necessary, proper or advisable to consummate and make effective the transactions
contemplated hereby. Each of (i) Buyer and (ii) the Companies will provide to
the other copies of all correspondence between it (or its advisors) and any
Governmental Entities with regulatory jurisdiction over enforcement of any
applicable antitrust laws ("Government Antitrust Entity") relating to this
Agreement or any of the matters described in this Section 5.3 and will consult
with the other Parties with respect to any communications by it or its advisors
with any Government Antitrust Entity regarding the transactions contemplated
hereby or any of the matters described in this Section 5.3. Notwithstanding any
of the foregoing, no failure to obtain termination of the waiting period under
the HSR Act shall be deemed to be a breach hereunder by the Companies, the
Sellers or Buyer.
SECTION 5.4. No Solicitation. From the date hereof until the
termination of this Agreement, the Companies shall not (whether directly or
indirectly through advisors, agents or other intermediaries), and each Company
shall use its reasonable efforts to ensure that its respective officers,
directors, employees, advisors, representatives or other agents will not,
directly or indirectly, (a) solicit, initiate, encourage or take any other
action to knowingly facilitate, any Acquisition Proposal or (b) engage or
participate in negotiations or substantive discussions with, or disclose any
non-public information relating to any of the Companies or afford access to the
properties, books or records of any of the Companies to, any Person that has
made, or has indicated its interest in making or considering or intending to
make, an Acquisition Proposal. The Companies will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
other Person that have been conducted heretofore with respect to a potential
Acquisition Proposal.
SECTION 5.5. Public Announcements. Unless otherwise required
by applicable law or the requirements of any listing agreement with any
applicable stock exchange, Buyer and the Companies shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or any transaction contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation.
SECTION 5.6. Employee Matters.
(a) For a period of one year immediately following the
Closing, Buyer agrees to cause each Company to provide to all active employees
of such Company as of the Closing who continue to be employed by such Company
coverage under group medical, dental, 401(k) savings, disability insurance, life
insurance, accidental death and disability, and vacation plans or arrangements
which are, in the aggregate, substantially similar to the plans providing such
benefits to the employees immediately prior to the Closing Date; provided that
in no event shall any employee of the Winery or located at ▇▇▇▇▇▇ Headquarters
be covered hereby.
(b) For a period of one year immediately following the Closing
Date, Buyer agrees to cause each Company to provide to all active employees of
such Company as of the Closing Date which may be affected by any reduction in
force subsequent to the Closing Date reasonable severance benefits in accordance
with Buyer's severance plans and policies in effect for
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similarly situated employees of Buyer; provided that in no event shall any
employee of the Winery or located at ▇▇▇▇▇▇ Headquarters be covered hereby.
SECTION 5.7. Excluded Assets and Liabilities.
(a) Winery. The Parties hereby agree and acknowledge that the
Winery and any assets, liabilities or employees of M&M related primarily to the
Winery (except for the Excluded Winery liabilities are not intended to be
transferred to Buyer under this Agreement. Accordingly, prior to the Closing,
M&M shall enter into and consummate an agreement substantially in the form
attached hereto as Exhibit D (the "Winery Transfer Agreement") providing for the
transfer of the assets owned and employees employed by M&M and used solely in
the operation of the Winery and the liabilities relating to the Winery, each of
which assets, employees and liabilities are listed on Schedule 2.22(a), to a
newly formed entity controlled by one or more of the Sellers. The Winery
Transfer Agreement shall provide for the indemnification of M&M from and against
any and all liabilities and claims relating to the Winery, except for the
Excluded Winery liabilities.
(b) ▇▇▇▇▇▇ Headquarters. The Parties hereby agree and
acknowledge that ▇▇▇▇▇▇ Headquarters and certain assets and liabilities of the
Companies related primarily thereto and any employees of any of the Companies
housed therein are not intended to be transferred to Buyer under this Agreement
or employed by any of the Companies following the Closing. Accordingly, on or
prior to the Closing Date, Sellers shall cause the Companies to (i) transfer
such assets and liabilities (except for the Excluded Headquarters liabilities)
related primarily to ▇▇▇▇▇▇ Headquarters to a newly formed entity controlled by
one or more of the Sellers pursuant to the Winery Transfer Agreement and (ii)
terminate the employment by the Companies of the employees housed at ▇▇▇▇▇▇
Headquarters which assets, liabilities and employees are listed on Schedule
2.22(b). The Sellers shall be responsible for the payment of any accrued but
unpaid vacation, holidays, benefits or other compensation as well as any
severance payment due to such employees upon termination and shall indemnify
Buyer from and against any and all liabilities and claims relating to such
assets, liabilities and employees, except for the Excluded Headquarters
liabilities.
SECTION 5.8. Supplements to Disclosure Schedules. No more than
five (5) business days after the date hereof, Sellers and the Companies may
supplement in writing the following schedules hereto only to the extent and for
the purposes provided in this Section 5.8: (a) Schedule 2.4 for the purpose of
adding other Material Contracts for which consent to the consummation of the
transactions contemplated hereby of a party thereto is required, (b) Schedule
2.16(e), (c) Schedule 2.21(a); provided, however, that to the extent that
Sellers and the Companies propose to add to such Schedule Material Contracts
which have not previously been disclosed to Buyer in connection with its due
diligence on the Companies, Sellers and the Companies may not add such Material
Contract to Schedule 2.21(a) without Buyer's consent which shall not be
unreasonably withheld and (d) Schedules I, II, III, IV and 8.2 with respect to
the allocation of the Purchase Price and indemnification obligations among the
Sellers so long as such allocation does not affect the allocation of the
aggregate Purchase Price among the Companies previously provided to Buyer in the
▇▇▇▇▇▇ Sign Companies Analysis of Allocation of Consideration & Related
Adjustments.
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SECTION 5.9. Phase I Environmental Audit. Buyer may obtain, at
its own expense, as soon as practicable, but in any event within thirty (30)
days of the date of this Agreement, Phase I reports pursuant to ASTM Standard E
1527-97 or other standard environmental assessments (the "Environmental
Reports") with respect to any properties owned or leased by any Company from an
environmental engineering firm selected by Buyer and approved by MWS (which
approval shall not be unreasonably withheld). If Buyer elects to obtain such
Environmental Reports, Buyer shall, promptly (but in no event later than two
business days) after receipt thereof, provide a copy of such Environmental
Reports to Sellers. If any such Environmental Report indicates that remediation
of an environmental condition on any property owned or leased by any Company is
required under any Environmental Law or that any other action is required under
any Environmental Law (collectively, the "Remedial Actions"), other than any
matters identified in Schedule 2.10 or the reports listed therein, Sellers
shall, at Buyer's request, take and complete such Remedial Actions in accordance
with applicable Environmental Law; provided, that in the event that the cost of
completing such Remedial Actions is, in the aggregate, (i) less than $500,000,
then Buyer shall pay costs to complete such Remedial Actions up to $500,000,
(ii) at least $500,000 but less than $5,000,000, then Sellers shall pay eighty
percent (80%) and Buyer shall pay twenty percent (20%) of the cost to complete
such Remedial Actions in excess of $500,000, or (iii) $5,000,000 or more, then
Sellers may elect either (A) to pay the cost to complete such Remedial Actions
in excess of $5,000,000 or (B) to terminate this Agreement by written notice to
Buyer within five (5) business days after Buyer notifies Sellers of the cost of
such Remedial Actions and, provided, further, that in the event that such
Remedial Actions are not completed prior to the Closing Date, the Parties shall
take steps necessary to ensure the payment of such costs, which steps may
include the placement of a portion of the Purchase Price equal to any unpaid
amounts required to be paid by Sellers pursuant to this Section 5.9 in escrow at
Closing.
SECTION 5.10. Broker's Fees. Any fees due to CIBC ▇▇▇▇▇▇▇▇▇▇▇
shall be paid by the Companies on or prior to the Closing Date and the resulting
reduction in cash or increase in debt, as applicable, shall be reflected in
Working Capital or Debt as of the Adjustment Time.
SECTION 5.11. Western Poster Services, Inc. Buyer, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ shall enter into the WPS Stock Purchase Agreement substantially in the
form of Exhibit E relating to the sale to Buyer of 33,000 shares (the "WPS
Shares") of the common stock, no par value and stated value of $1.00 per share,
of WPS held by ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇. Concurrently with the Closing the parties to
the WPS Stock Purchase Agreement shall consummate the purchase and sale of the
WPS Shares.
SECTION 5.12. Notification of Indemnification Claim. If on or
prior to the Closing Date, Buyer has, or has Knowledge of, a claim for
indemnification against any Seller pursuant to Section 8.2, it shall promptly,
and prior to the Closing, notify the Sellers' Representative of such claim;
provided, however, that failure to provide such notification shall not affect
Buyer's rights pursuant to Article VIII.
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SECTION 5.13. Indemnification Agreements.
(a) Following the Closing, Buyer shall cause each of the
Companies to continue in full force and effect for at least six years from the
Closing Date all rights to indemnification and all limitations on liability
existing in favor of any of the individuals who prior to the Closing were
partners, officers, directors, employees or shareholders of any of the Companies
and the heirs, executors, trustees, fiduciaries and administrators of such
partners, officers, directors, employees or shareholders (collectively, the
"Company Indemnitees") as provided in the Media Partnership Agreement or the
Articles of Incorporation of By-laws of M&M, Nevada or MWS, as applicable, or
any Indemnity Agreement (as defined below); provided, however, that, no Seller
or any partners, officers, directors, employees or shareholders of any Seller,
or any heirs, executors, trustees, fiduciaries and administrators of such
partners, officers, directors, employees or shareholders, shall have or be
deemed to have any such rights with respect to any Losses arising out of or
related to any matter with respect to which such Seller has agreed to indemnify
the Buyer Indemnified Parties pursuant to Section 8.2(a) or (b) (without
reference to the Buyer Deductible, Cap or Individual Cap, as such terms are
defined in Section 8.2(a)). To the extent permitted by (i) California or Nevada
law, as applicable, (ii) the Media Partnership Agreement or the Articles of
Incorporation and the By-laws of M&M, Nevada or MWS, as applicable, or (iii) the
Administrative Services Agreement (each, an "Indemnity Agreement"), and subject
to the proviso in the preceding sentence, if any Company Indemnitee notifies any
Company of any claim for indemnification then Buyer shall cause such Company to
indemnify the Company Indemnitee, and advancement of expenses (which term shall
include all out of pocket costs, charges and expenses, including reasonable
attorneys fees, incurred in connection with investigating, defending, being a
witness in or participating (including on appeal), or preparing to defend, be a
witness or participate in any action, suit or proceeding for which
indemnification is being sought), upon receipt of reasonably detailed statements
therefor, shall be mandatory rather than permissive, subject to appropriate
undertakings to repay if indemnification is determined not to be available. If a
claim for indemnification is asserted or made within such six year period, all
rights to indemnification and advancement of expenses in respect of any such
claim shall continue until such claim is disposed of or all judgments, orders,
decrees or other rulings in connection with such claim are fully satisfied;
provided, however, that no Company shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld or
delayed). Except as otherwise may be provided pursuant to any Indemnity
Agreement, the Company Indemnitees as a group may retain only one law firm with
respect to each related matter except to the extent there is, in the opinion of
counsel to a Company Indemnitee, under applicable standards of professional
conduct, a conflict on any significant issue between positions of any two or
more Company Indemnitees.
(b) Notwithstanding any other provisions hereof, the
obligations of the Companies and Buyer contained in this Section 5.13 shall be
binding upon the successors and assigns of Buyer and the Companies. In the event
any Company or any of its successors or assigns (i) consolidates with or merges
into any other Person or (ii) transfers all or substantially all of its
properties or assets to any Person, then, and in each case, proper provision
shall be made so that successors and assigns of such Company honor the
indemnification obligations set forth in this Section 5.13(b).
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SECTION 5.14. Stockholder Agreements. By execution of this
Agreement, each of the Media Sellers, M&M Sellers, Nevada Sellers and MWS
Sellers who is a party to any agreements set forth on Schedule 2.4 relating to
the Units or Capital Stock consents to the sales of Units and Capital Stock as
contemplated by this Agreement, waives any rights of first refusal which such
Seller may have with respect to any of such Units or Capital Stock and waives
the effect of any other provision of any such agreement that would otherwise
prohibit the sale and purchase of the Units and Capital Stock as contemplated by
this Agreement, which consents and waivers shall be deemed to be both of such
Seller and the Company in which such Seller holds Units or Capital Stock,
including, without limitation, in the case of the MWS Sellers and Nevada
Sellers, the consent and waiver of MWS and Nevada as holders of Units.
SECTION 5.15. Redemption of Preferred Units. Media shall
redeem all issued and outstanding Preferred Units on or prior to the Closing
Date.
SECTION 5.16. Execution of Agreement by Sellers. This
Agreement shall be effective as of the execution hereof by Buyer, the Companies,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇. Upon the effectiveness hereof, each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
shall use his best efforts to secure the execution hereof by each other Seller
as promptly as practicable; provided, however, that neither shall be required to
pay any additional consideration to any Seller by the provisions of this Section
5.16 for the purpose of inducing such Seller to execute this Agreement.
SECTION 5.17. Tax Covenants and Related Matters.
(a) Returns. Sellers shall cause to be prepared and filed all
income Tax Returns of each Taxpayer for taxable years or periods ending on or
before the Closing Date but which are due to be filed after the Closing Date
(taking into account all applicable extensions of time for filing).
(b) Refunds. Sellers shall be entitled to retain, or receive
payment from Buyer within fifteen (15) days of the receipt of any Tax refunds or
credits relating to a Taxpayer that were paid with respect to (i) all taxable
periods ending on or prior to the Closing Date and (ii) Pre-Closing Partial
Periods, for that portion of such taxable period up to and including the Closing
Date except in each case to the extent such refund or credit arises as the
result of a carryback of a loss, credit other tax benefit arising after the
Closing Date. Buyer shall, if Sellers' Representative so requests and at
Sellers' Representative's expense, cause a Taxpayer to file for and obtain any
refund to which Sellers is entitled to under this Section 5.17(b), provided that
Sellers' Representative shall not file, and Buyer shall not be obligated to
file, to obtain any refund that would have the effect of (x) increasing any Tax
liability of a Taxpayer or (y) otherwise materially and adversely affect any
item or Tax attribute of a Taxpayer, in each case for any taxable period ending
after the Closing Date, without Sellers' Representative first obtaining Buyer's
consent, which consent shall not be unreasonably withheld. Buyer shall permit
Sellers' Representative to control (at the Sellers' Representative's expense)
the prosecution of such refund claim, and shall cause powers of attorney
authorizing Sellers' Representative to represent a Taxpayer before the relevant
taxing authority with respect to such refund to be executed, provided that
Sellers' Representative (i) shall keep Buyer informed regarding the progress and
substantive aspect of any such refund and (ii) shall not compromise or settle
any such refund
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without obtaining Buyer's consent, which consent shall not be unreasonably
withheld, if such compromise or settlement would have the effect of (x)
increasing any Tax liability of a Taxpayer or (y) otherwise materially and
adversely affect any item or Tax attribute of a Taxpayer, in each case for any
taxable period ending after the Closing Date. In the event that any refund or
credit of Taxes for which a payment has been made pursuant to this section
5.17(b) is subsequently reduced or disallowed, the Sellers shall indemnify and
hold Buyer harmless for any Taxes assessed against Buyer or a Taxpayer by reason
of the reduction or disallowance.
(c) Cooperation. Buyer and the Sellers shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of any Tax Returns for a Taxpayer, the filing and prosecution of any
Tax claims and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
(d) Allocation of Taxes. For purposes of Section 2.14, this
Section 5.17 and Article VIII, in the case of Taxes that are payable with
respect to a taxable period that begins before the Closing Date and ends after
the Closing Date, the portion of such Taxes payable for the period ending on the
Closing Date shall be (a) in the case of any Tax based upon or measured by
income, and in the case of sale or use tax, the amount which would be payable if
the taxable year ended as of the end of the Closing Date and (b) in the case of
any other Tax, such as property, the amount of such tax for the entire period
multiplied by a fraction, the numerator of which is the number of days in the
period ending on the Closing Date and the denominator of which is the number of
days in the entire period. In the case of the close of the taxable year for a
Taxpayer subject to tax as an S Corporation pursuant to section 1361 et seq. (or
a comparable state law provision) of the Code, the tax books and records of such
Taxpayer shall be closed and the Federal (or comparable state) income tax return
of such Taxpayer shall be prepared, on a basis consistent with Treasury
Regulation section 1.1362-3 (or a comparable state law provision). In the case
of the close of the taxable year for a Taxpayer subject to tax as a partnership
pursuant to section 701 et. seq. of the Code (or a comparable state law
provision), the tax books and records of such Taxpayer shall be closed, and the
Federal (or comparable state) income tax return of such Taxpayer shall be
prepared, on a basis consistent with Treasury Regulation section 1.706-1(c) (or
a comparable state law provision).
(e) Net Operating Loss of Nevada.
(i) Within three (3) business days prior to the Closing
Date, Nevada shall deliver to Buyer a statement (together with appropriate
schedules and other support, the "NOL Statement") that provides Buyer with a
good faith estimate of the amount of Nevada's net operating loss (the "NOL
Amount") as of the Closing Date.
(ii) If Buyer elects to challenge the NOL Amount
contained in the NOL Statement, then it shall so notify the Nevada Sellers in
writing no later than ten (10) business days following the Closing Date. Buyer
shall engage ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP who shall finally determine
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the NOL Amount on the Closing Date no later than sixty (60) days following the
Closing Date. If ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP determines that an adjustment to the NOL
Amount in the NOL Statement should be made, it shall so notify the Nevada
Sellers and the Buyer of the adjustment amount. All costs of engaging ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP hereunder shall be paid by (i) the Nevada Sellers on a pro rata
basis if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP determines that a downward adjustment of $50,000 or
more in the NOL Amount is appropriate, and (ii) by Buyer if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
determines that an upward adjustment or a downward adjustment of less than
$50,000 is appropriate.
SECTION 5.18. Conveyance Taxes. Any transfer, documentary,
stamp and other similar Taxes ("Conveyance Taxes") incurred solely as a result
of a change of control of any Company occurring upon consummation of this
Agreement shall be borne 50% by Buyer and 50% by Sellers of such Company (pro
rata based on their relative equity ownership). Sellers' share of Conveyance
Taxes shall be treated as an adjustment to the Purchase Price as described in
Section 1.2.
ARTICLE VI
CONDITIONS TO THE CLOSING
SECTION 6.1. Conditions to the Obligations of Each Party. The
obligations of the Sellers and Buyer to consummate the Closing are subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) All consents and approvals of Governmental Entities or any
Person necessary for consummation of the transactions contemplated hereby shall
have been obtained, other than those which, if not obtained, would not in the
aggregate constitute a Material Adverse Effect.
(b) Any waiting period (and any extension thereof) under the
HSR Act applicable to the consummation of the transactions contemplated herein
shall have expired or been terminated;
(c) The closing of the purchase and sale of the WPS shares
shall have been consummated concurrently with the Closing in accordance with the
WPS Stock Purchase Agreement; and
(d) the Winery Transfer Agreement shall have been executed and
the transactions contemplated thereby shall have been consummated.
SECTION 6.2. Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate the Closing are subject to the satisfaction
or waiver by Buyer on or prior to the Closing Date of the following further
conditions:
(a) no statute, rule, regulation, executive order, decree,
preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits the consummation of the transactions contemplated hereby. No action or
proceeding shall be pending, or, to the Knowledge of the
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parties hereto, threatened, against the Companies, Sellers or Buyer or any of
their respective affiliates, partners, associates, officers or directors, or any
officers or directors of such partners, before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator (i) seeking to prevent or delay the transactions
contemplated hereby or challenging any of the terms of provisions of this
Agreement or seeking material damages in connection therewith, or (ii) wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (B) materially and adversely affect the right of the
Buyer to own the Units and Capital Stock and to control the Companies, or (C)
materially and adversely affect the right of any of the Companies to own its
assets and to operate its businesses;
(b) the representations and warranties of the Sellers
contained herein that are qualified as to materiality shall be true and correct,
and that are not qualified as to materiality shall be true and correct in all
material respects as of the Closing Date with the same effect as though made as
of the Closing Date except (i) for changes specifically permitted by the terms
of this Agreement and (ii) that the accuracy of representations and warranties
that by their terms speak as of the date of this Agreement or some other date
will be determined as of such date;
(c) the obligations, agreements and covenants of each Seller
and each Company contained in this Agreement to be performed or complied with on
or prior to the Closing Date that are qualified as to materiality shall have
been performed or complied with, and that are not qualified as to materiality
shall have been performed or complied with in all material respects, in each
case on or prior to the Closing Date;
(d) the Sellers shall have delivered to Buyer a certificate,
dated the Closing Date, to the effect that each of the conditions specified
above in Section 6.2(b) and (c) is satisfied in all respects;
(e) Each of the Sellers shall deliver, or cause to be
delivered, to Buyer an executed affidavit, dated not more than thirty (30) days
prior to the Closing Date, in accordance with Code Section 1445(b)(2) and
Treasury Regulation section 1.1445-2(b), which statement certifies that the
Seller is not a foreign person and sets forth the Seller's name, identifying
number and address (a "FIRPTA Affidavit").
(f) all actions to be taken by the Sellers in connection with
the consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Buyer; and
(g) each of the Sellers shall have executed this Agreement.
SECTION 6.3. Conditions to the Obligations of the Sellers. The
obligations of the Sellers to consummate the Closing are subject to the
satisfaction or waiver by the Sellers on or prior to the Closing Date of the
following further conditions:
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(a) no statute, rule, regulation, executive order, decree,
preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits the consummation of the transactions contemplated hereby. No action or
proceeding shall be pending, or, to the Knowledge of the parties hereto,
threatened, against the Companies, Sellers or Buyer or any of their respective
affiliates, partners, associates, officers or directors, or any officers or
directors of such partners, before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator (i) seeking to prevent or delay the transactions contemplated hereby
or challenging any of the terms of provisions of this Agreement or seeking
material damages in connection therewith, or (ii) wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation;
(b) the representations and warranties of Buyer contained
herein that are qualified as to materiality shall be true and correct, and that
are not qualified as to materiality shall be true and correct in all respects as
of the Closing Date with the same effect as though made as of the Closing Date
except (i) for changes specifically permitted by the terms of this Agreement and
(ii) that the accuracy of representations and warranties that by their terms
speak as of the date of this Agreement or some other date will be determined as
of such date;
(c) the obligations, agreements and covenants of Buyer
contained in this Agreement to be performed or complied with on or prior to the
Closing Date that are qualified as to materiality shall have been performed or
complied with, and that are not qualified as to materiality shall have been
performed or complied with in all material respects, in each case as of the
Closing Date;
(d) Buyer shall have delivered to the Company a certificate,
dated the Closing Date and signed by its Chief Executive Officer, Chief
Financial Officer or a Senior Vice President, certifying to the effect that each
of the conditions specified above in Section 6.2(b) and (c) is satisfied in all
respects; and
(e) all actions to be taken by the Buyer in connection with
the consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Sellers.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination or Abandonment. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement may be
terminated and abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of MWS and Buyer;
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(b) by either MWS or Buyer if the Closing Date shall not have
occurred on or before September 30, 1998; provided, that, the party seeking to
terminate this Agreement pursuant to this clause 7.1(b) shall not have breached
in any material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the failure to consummate the Closing on
or before such date;
(c) by either MWS or Buyer if (i) a statute, rule, regulation
or executive order shall have been enacted, entered or promulgated prohibiting
the consummation of the Closing substantially on the terms contemplated hereby
or (ii) an order, decree, ruling or injunction shall have been entered
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Closing substantially on the terms contemplated hereby and such order,
decree, ruling or injunction shall have become final and non-appealable;
(d) by Buyer at any time prior to the Closing in the event any
of the Sellers or any of the Companies has breached any representation,
warranty, or covenant contained in this Agreement in any material respect, the
Buyer has notified MWS of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach; provided that Buyer shall
not have breached in any material respect any representation, warranty or
covenant contained in this Agreement; and
(e) MWS may terminate this Agreement on behalf of the Sellers
and the Companies by giving written notice to the Buyer at any time prior to the
Closing in the event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect, MWS
has notified the Buyer of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach; provided that no Seller and
no Company shall have breached in any material respect any material
representation, warranty or covenant contained in this Agreement.
(f) MWS may terminate this Agreement on behalf of the Sellers
and the Companies in accordance with the provisions of Section 5.9.
The party desiring to terminate this Agreement pursuant to
this Section 7.1 shall give written notice of such termination to the other
party.
SECTION 7.2. Effect of Termination. In the event of
termination of this Agreement by either MWS or Buyer as provided in Section 7.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Buyer, the Company or Sellers, other than
the provisions of Section 1.4, the last sentence of Section 5.2, this Section
7.2 and Article IX, and except to the extent that such termination results from
the willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
SECTION 7.3. Extension; Waiver. At any time prior to the
Closing Date, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) waive compliance
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with any of the agreements or conditions of the other party contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in any instrument in writing signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights. Notwithstanding the foregoing, no failure or delay by the Sellers, the
Companies or Buyer in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise of any other right hereunder.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION; REMEDIES
SECTION 8.1. Survival of Representations and Warranties. All
of the representations and warranties of the Sellers contained in this Agreement
shall survive the Closing and continue in full force and effect for a period of
one (1) year thereafter, except for those contained in Section 2.14 and Article
III which shall survive the Closing and continue in full force and effect until
thirty (30) days after the expiration of the applicable statutory period of
limitations. Notwithstanding any right of Buyer to fully investigate the affairs
of the Companies and notwithstanding any knowledge of facts determined or
determinable by Buyer pursuant to such investigation or right of investigation,
Buyer has the right fully to rely upon the representations, warranties and
covenants of the Companies and Sellers contained in this Agreement.
SECTION 8.2. Indemnification by Sellers.
(a) Subject to the limitations set forth herein, each of the
Sellers shall, severally, in proportion to the Purchase Price allocable to them
as described on Schedule 8.2 indemnify, defend and save Buyer and each Company
(following the Closing) and their respective Affiliates and each of their
respective officers, directors, employees, agents, and other than any Seller
(each, a "Buyer Indemnified Party"), harmless from and against, and to promptly
pay to a Buyer Indemnified Party or reimburse a Buyer Indemnified Party for, any
and all liabilities (whether contingent, fixed or unfixed, liquidated or
unliquidated, or otherwise), obligations, deficiencies, demands, claims, suits,
actions, or causes of action, assessments, losses, costs, expenses, interest,
fines, penalties, actual or punitive damages or costs or expenses of any and all
investigations, proceedings, judgments, environmental remediations, settlements
and compromises (including reasonable fees and expenses of attorneys,
accountants and other experts) (individually and collectively, "Losses")
sustained or incurred by any Buyer Indemnified Party relating to, resulting
from, arising out of or otherwise by virtue of any (i) misrepresentation or
breach of a warranty by any Seller made in Article II or (ii) non-compliance
with or breach by any Seller or any Company (until the Closing) of any of the
covenants or agreements contained in this Agreement.
(b) Each Seller severally agrees to indemnify, defend and save
each Buyer Indemnified Party, harmless from and against, and to promptly pay to
a Buyer Indemnified Party or reimburse a Buyer Indemnified Party for, any and
all Losses sustained or incurred by any Buyer
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Indemnified Party relating to, resulting from, arising out of or otherwise by
virtue of misrepresentation or breach of a warranty made in Article III by such
Seller.
(c) For purposes of calculating the amount of Losses subject
to indemnification pursuant to this Section 8.2, it is understood and agreed
between the Parties that to determine if there has been an inaccuracy or breach
of a representation or warranty (i) which is qualified as to materiality by the
Party making such representation or warranty or contains an exception for
matters that would not constitute a Material Adverse Effect (except for a
Material Adverse Effect resulting solely from an Advertiser Effect), then such
representation or warranty shall be read as if it were not so qualified or
contained no such exception, or (ii) which is qualified as to Knowledge by the
Seller (except those representations and warranties made in Sections 2.9, 2.13
and 2.16 as to threatened litigation or proceedings) shall be read as if it were
not so qualified.
(d) At Closing, Buyer shall place a portion of the Purchase
Price equal to two and one-half percent (2 1/2%) of the Purchase Price (the
"Post-Closing Escrow Deposit") in an escrow account with Chase Manhattan Bank
(the "Post-Closing Escrow Agent") in accordance with a Post-Closing Escrow
Agreement among Buyer, Sellers and the Escrow Agent (the "Post-Closing Escrow
Agreement") substantially in the form attached hereto as Exhibit F. Any claim
for indemnification by a Buyer Indemnified Party pursuant to Section 8.2(a)
shall, and any claim for indemnification pursuant to Section 8.2(b) against the
breaching Seller(s) may, at Buyer's sole discretion, first be satisfied from the
Post-Closing Escrow Deposit pursuant to the terms and conditions of the
Post-Closing Escrow Agreement. Buyer may only seek satisfaction of an
indemnification claim pursuant to Section 8.2(a) directly from the Sellers at
such time as the amount of the Post-Closing Escrow Deposit is fully exhausted.
On the first day of the thirteenth month after the Closing Date, the Escrow
Agent shall release as much of the Post-Closing Escrow Deposit as is not subject
to a claim by Buyer, plus accrued interest on such amount as provided in the
Post-Closing Escrow Agreement, to Sellers.
(e) The Buyer Indemnified Parties or Seller Indemnified
Parties shall be entitled to indemnification pursuant to Section 8.2(a) or
Section 8.4, as applicable, only if and to the extent that the aggregate amount
of Losses with respect to which all claims for indemnification made pursuant to
Section 8.2(a) or Section 8.4 (except for claims (i) brought by a Seller in
connection with actions of any Company (prior to the Closing) or any other
Seller related to the transactions contemplated by this Agreement and (ii)
relating to the Winery or ▇▇▇▇▇▇ Headquarters), as applicable, exceed, in the
case of the Buyer Indemnified Parties Six Million Dollars ($6,000,000) plus 20%
of the NOL Amount (the "Buyer Deductible"), and in the case of the Seller
Indemnified Parties Six Million Dollars ($6,000,000) (the "Seller Deductible"),
whereupon the Sellers or Buyer, as applicable, shall be obligated to pay in full
all such Losses, but only to the extent such Losses are in excess of the Buyer
Deductible or Seller Deductible, as the case may be, and provided that the Buyer
Indemnified Parties or Seller Indemnified Parties, shall not be entitled to
aggregate indemnification payments pursuant to Section 8.2(a) or Section 8.4, as
applicable, in excess of five percent (5%) of the Purchase Price (the "Cap").
Notwithstanding any other provision of this Agreement, the aggregate amount
payable by any Seller under this Article VIII shall not exceed the portion of
the Purchase Price paid or payable to such Seller under this Agreement (the
"Individual Cap"). Indemnification claims made pursuant to Section
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8.2(b) shall not be subject to the Buyer Deductible or limited by the Cap, but
shall only be limited by the Individual Cap.
SECTION 8.3. Indemnification by Buyer. From and after the
Closing, Buyer agrees to indemnify, defend and save each Seller and its, his or
her respective officers, directors, employees and partners and such Person's
respective heirs, executors, trustees, fiduciaries and administrators (each, a
Seller Indemnified Party), harmless from and against, and to promptly pay to a
Seller Indemnified Party or reimburse a Seller Indemnified Party for, any and
all Losses sustained or incurred by such Seller Indemnified Party relating to,
resulting from, arising out of or otherwise by virtue of any non-compliance with
or breach by Buyer of any of the covenant or agreements contained in this
Agreement to be performed by Buyer.
SECTION 8.4. Indemnification Procedure for Third Party Claims.
In the event that subsequent to the Closing any person or entity entitled to
indemnification under this Agreement (an "Indemnified Party") asserts a claim
for indemnification or receives notice of the assertion of any claim or of the
commencement of any action or proceeding by any entity who is not a party to
this Agreement or an Affiliate of such a party (including, but not limited to
any Governmental Entity (a "Third Party Claim") against such Indemnified Party,
against which a Party is required to provide indemnification under this
Agreement (an "Indemnifying Party"), the Indemnified Party shall give written
notice together with a statement of any available information regarding such
claim to the Indemnifying Party within thirty (30) days (or fifteen (15) days in
the case of any third party claims relating to Taxes) after learning of such
claim (or within such shorter time as may be necessary to give the Indemnifying
Party a reasonable opportunity to respond to such claim). The Indemnifying Party
shall have the right, upon written notice to the Indemnified Party (the "Defense
Notice") within thirty (30) days after receipt from the Indemnified Party of
notice of such claim, (which notice by the Indemnifying Party shall specify the
counsel it will appoint at its own expense and in its sole discretion to defend
such claim ("Defense Counsel")), to conduct at its expense the defense against
such claim in its own name, or if necessary in the name of the Indemnified
Party.
(a) In the event that the Indemnifying Party shall fail to
give such notice, it shall be deemed to have elected not to conduct the defense
of the subject claim, and in such event the Indemnified Party shall have the
right to conduct such defense in good faith and to compromise and settle the
claim in its reasonable discretion, provided, however that any settlement of a
Third Party Claim shall require the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed and the Indemnifying Party
will be liable for all costs, expenses, settlement amounts or other Losses paid
or incurred in connection therewith.
(b) In the event that the Indemnifying Party does elect to
conduct the defense of the subject claim, the Indemnified Party will cooperate
with and make available to the Indemnifying Party such assistance and materials
as may be reasonably requested by it, all at the expense of the Indemnifying
Party, and the Indemnified Party shall have the right at its expense to
participate in the defense assisted by counsel of its own choosing. The
Indemnifying Party shall not enter into any settlement of any Third Party Claim
or consent to any entry of judgment without the consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed, except (i) a
settlement that includes as an unconditional term thereof the giving by the
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person or persons asserting such Third Party Claim to all Indemnified Parties an
unconditional release from liability or (ii) a settlement or judgment providing
solely for a monetary award in the full amount of the item in controversy which
is indemnified in full hereunder and such settlement is paid directly out of the
Post-Closing Escrow Deposit by the Escrow Agent or paid or otherwise provided
for by one or more Sellers, as applicable, in accordance with Section 8.2.
Without the prior written consent of the Indemnified Party, the Indemnifying
Party will not enter into any settlement of any Third Party Claim or cease to
defend against such claim, if pursuant to or as a result of such settlement or
cessation, (x) injunctive or other equitable relief would be imposed against the
Indemnified Party or its Affiliates, (y) such settlement or cessation would lead
to liability or create any financial or other obligation on the part of the
Indemnified Party or its Affiliates for which the Indemnified Party is not
entitled to indemnification hereunder or (z) such settlement or cessation would,
individually or taken together with any other settlement or cessation made
pursuant to this Section 8.4(b)(z), reduce the aggregate adjusted tax basis, as
determined for Federal income tax purposes, and determined as of immediately
prior to the Closing, of the assets of M&M, MWS, Nevada and any Subsidiaries of
M&M, MWS and Nevada, for any taxable period ending after the Closing Date by One
Million Dollars ($1,000,000) or more. If a firm offer is made to settle a Third
Party Claim, which offer the Indemnifying Party is permitted to settle pursuant
to the preceding sentence, and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party will give written notice to the
Indemnified Party to that effect. To the extent that the acceptance by the
Indemnifying Party of such offer would require the consent of the Indemnified
Party, if the Indemnified Party notifies the Indemnifying Party that it does not
wish such offer to be accepted within twenty (20) calendar days after its
receipt of such notice, the Indemnified Party may elect by such notice to the
Indemnifying Party to 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 Indemnified Party through the end of such
twenty (20) day period.
(c) Any judgment entered or settlement agreed upon in the
manner provided herein shall be binding upon the Indemnifying Party, and shall
conclusively be deemed to be an obligation with respect to which the Indemnified
Party is entitled to prompt indemnification hereunder.
SECTION 8.5. Direct Claims. It is the intent of the parties
hereto that all direct claims by an Indemnified Party against a party hereto not
arising out of Third Party Claims shall be subject to and benefit from the terms
of this Article VIII. Any claim under this Article VIII by an Indemnified Party
for indemnification other than indemnification against a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party written notice
thereof.
SECTION 8.6. Failure to Give Timely Notice. A failure by an
Indemnified Party to give timely, complete or accurate notice as provided in
Section 8.4 or 8.5 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 entitled to receive such notice was deprived of its right to recover any
payment under any applicable insurance coverage of which the Indemnified Party
has been given notice prior to the Closing or to the extent that it was
otherwise damaged as a result of such failure to give timely notice.
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SECTION 8.7. Reduction of Loss. The amount of Losses payable
with respect to any indemnification claim hereunder shall be determined on an
after-tax basis, provided, however, that the NOL Amount shall not be taken into
account in determining the amount of Losses which are the subject of any
indemnification claim, and reduced by receipt of payment (i) under insurance
policies which are not subject to retroactive adjustment or other reimbursement
to the insurer in respect of such payment, or (ii) from third parties not
Affiliated with the Indemnified Party, such payments (net of the expenses of the
recovery thereof) (collectively, "Reimbursements") shall be credited against
such Loss; provided, however, (A) the pendency of such payments shall not delay
or reduce the obligation of the Indemnifying Party to make payment to the
Indemnified Party in respect of such Loss, and (y) the Indemnified Party's only
obligation, hereunder or otherwise, to pursue payment under or from any insurer
or third party in respect of such Loss shall be to undertake reasonable efforts.
If any Reimbursement is obtained subsequent to payment by an Indemnifying party
in respect of a Loss, such Reimbursement shall be promptly paid over to the
Indemnifying Party. No Indemnified Party shall take any action the sole purpose
and intent of which is to prejudice the defense of any claim subject to
indemnification hereunder or to induce a third party to assert a claim subject
to indemnification hereunder.
SECTION 8.8. Subrogation. The Indemnifying Party shall be
subrogated to the Indemnified Party's rights of recovery to the extent of any
Loss satisfied by the Indemnifying Party. The Indemnified Party shall execute
and deliver such instruments and papers as are necessary to assign such rights
and assist in the exercise thereof, including access to books and records of the
Companies.
SECTION 8.9. Sellers' Representative. Notwithstanding anything
to the contrary contained in this Article VIII, to the extent that any Third
Party Claim or Direct Claim is asserted by any Buyer Indemnitee against more
than one Seller, with respect to provisions providing for notice to the
"Indemnifying Party" and the rights of the "Indemnifying Party" to conduct or
control the defense of any claim and to consent to any settlement of a claim,
"Indemnifying Party" shall refer to Sellers' Representative, as the
representative of each Seller in connection therewith, and each Seller by its
execution of this Agreement hereby appoints Sellers' Representative as its
representative to receive notice, and to act with respect to such matter, on its
behalf.
SECTION 8.10. Exclusive Remedy. Notwithstanding anything
contained herein, the indemnity provided in this Article VIII shall be the
exclusive remedy for any Losses resulting from the matters described in Section
8.2 or Section 8.3; provided, however, that nothing contained herein shall
preclude a party from seeking specific performance of a covenant made by another
Party as provided by this Agreement.
SECTION 8.11. Treatment of Payments. All payments made
pursuant to this Article VIII in satisfaction of a claim for indemnification,
including, without limitation, any payments made from the Post-Closing Escrow
Deposit, shall be treated as an adjustment in the Purchase Price.
SECTION 8.12. Right to Contribution. If any Media Seller, M&M
Seller, Nevada Seller or MWS Seller is required hereunder to pay money to a
Buyer Indemnified Party to satisfy an indemnification claim (a "Satisfied
Claim") in an amount in excess of the amount (the
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"Proportionate Amount") such Seller would have had to pay with respect to such
Satisfied Claim if all Media Sellers, M&M Sellers, Nevada Sellers or MWS
Sellers, as applicable, had paid money to satisfy such Satisfied Claim based on
the proportionate amount of the aggregate Media Purchase Price, M&M Purchase
Price, Nevada Purchase Price and/or MWS Purchase Price, as applicable, allocable
to such Seller, then such Seller may make a claim for and seek contribution from
one or more Sellers to recover from such Sellers their respective Proportionate
Amounts or such other appropriate amounts, which after recovery, will cause the
Seller seeking Contribution not to have paid in excess of its Proportionate
Amount. Notwithstanding the foregoing, when determining the Proportionate
Amount, any Satisfied Claim pursuant to Section 8.2(b) shall be allocated solely
to the breaching Seller.
SECTION 8.13. Release. Effective as of the Closing Date,
except as described below, each Seller hereby releases (this "Release") and
forever discharges the Companies and the other Sellers and their respective past
and present agents, representatives, employees, officers, directors, affiliates,
controlling persons, subsidiaries, successors and assigns (collectively, the
"Releasees") from any and all claims, demands, actions, causes of action,
judgments, obligations, contracts, agreements, debts and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in equity
which such Seller (or its heir, executors, administrators, successors and
assigns) now have, have ever had or may hereafter have against the respective
Releasees arising contemporaneously with or prior to the Closing Date or on
account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the Closing Date in connection with its
capacity as a partner of Media or as a shareholder of M&M, MWS or Nevada.
Notwithstanding the above, this Release shall not apply to any claims of a
Seller (i) pursuant to Section 1.2(f), Section 5.13 or Section 8.3 of this
Agreement or (ii) made pursuant to the Post Closing Escrow Agreement or a
Noncompetition Agreement.
In order to provide a full and complete release, with respect
to any matter whatsoever released hereby, each Seller understands and agrees
that this Release is intended to include all claims, if any, which such Seller
may have and which such Seller does not now know or suspect to exist in his or
her favor against the Releasees and that this Release extinguishes those claims.
Each Seller expressly waives all rights under California Civil Code Section 1542
("Section 1542") or any statute or common law principle of similar effect in any
jurisdiction. Section 1542 states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such address
for a party as shall be specified by like notice):
(a) if to Media, M&M, Nevada, MWS, WPS Sellers to:
MW SIGN Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇
Attention: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Buyer, to:
Chancellor Media Corporation of Los Angeles
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention:
Facsimile No.:
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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SECTION 9.2. Definitions. For purposes of this Agreement:
(a) "Acquisition Proposal" means any offer or proposal for a
merger, consolidation, recapitalization, liquidation, business combination or
similar transaction involving any one or more of the Companies or the
acquisition or purchase of any equity securities or other equivalent interests
of any one or more of the Companies, or any tender offer (including
self-tenders) or exchange offer of equity securities or other equivalent
interests of any one or more of the Companies or any sale of assets of any one
or more of the Companies outside of the ordinary course of business, other than
the transactions contemplated by this Agreement.
(b) "Advertiser Effect" means any and all legal, financial, or
other effect, on or to this Agreement, the Closing, the Business, or the
Company, Buyer, or any of their stockholders, partners or Affiliates, that may
arise from or are in any way related to: any public discussion, announcement,
development, action or potential action, settlement, negotiation, legislation,
proposed or enacted, judicial decision, order, judgment or change in status of
any nature or type, which relates to, concerns, proposes, threatens or results
in any voluntary or non-voluntary cessation of or a legal ban or restrictions on
the use of the outdoor advertising services by Persons seeking to advertise
tobacco products or products containing alcohol.
(c) "Affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
(d) "Antitrust Laws" mean and include the ▇▇▇▇▇▇▇ Act, as
amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission
Act, as amended, and all other federal, state or foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
(e) "Control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
(f) "Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
(g) "Hazardous Material" means any pollutant, chemical,
contaminant or waste, and any other carcinogenic, ignitable, corrosive,
reactive, toxic or otherwise hazardous substance or material, including but not
limited to any petroleum or petroleum product, urea formaldehyde, PCBs, and
asbestos, and similar substances, materials or wastes regulated, controlled or
required to be remediated under any Environmental Law.
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(h) "Knowledge" or "Known" means, with respect to the matter
in question, if any of the executive officers of any of the Companies or Buyer,
as the case may be, has actual knowledge of such matter without any duty of
independent investigation.
(i) "Lien" means any encumbrance, hypothecation, infringement,
lien, mortgage, pledge, restriction, security interest, title retention or other
security arrangement, or any adverse right or interest, charge or claim of any
nature whatsoever of, on, or with respect to any asset, property or property
interest; provided, however, that the term "Lien" shall not include (i) liens
for water and sewer charges and current Taxes not yet due and payable or being
contested in good faith, (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens arising or incurred in the
ordinary course of business (iii) all liens approved in writing by the other
party hereto or (iv) restrictions on transfer imposed by federal or state
securities laws.
(j) "Material Adverse Effect" means, when used in connection
with the Companies or Buyer, any change or effect that (i) has had, or is
reasonably likely to have a material adverse impact on the business, operations,
or results of operations, assets or condition (financial or otherwise) of such
Party and its Subsidiaries, taken as a whole, or (ii) substantially impairs or
delays the consummation of the transactions contemplated hereby, but, in either
such event, shall not include any change or effect that results from (A) an
Advertiser Effect, (B) conditions, events or circumstances generally affecting
the industries in which the Companies or Buyer operate, including any proposed
or actual ban or restriction, voluntary or involuntary, on the use of outdoor
advertising services for the advertisement of tobacco products or beverages
containing alcohol, or the economy in general or (C) any action or change
specifically contemplated by the provisions of this Agreement.
(k) "Party" or "Parties" means the Sellers and the Companies,
on the one hand, and Buyer on the other hand.
(l) "Person" means any natural person, firm, individual,
business trust, trust, association, corporation, partnership, joint venture,
company, unincorporated entity or Governmental Entity.
(m) "Sellers' Representative" means ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇,
collectively.
(n) "Subsidiary" or "Subsidiaries" of any Person means another
Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first Person.
(o) "Taxes" means all Federal, state, local, and foreign
taxes, net or gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, personal property, real property, capital stock, profits,
social security, (or similar) unemployment, disability, registration, value
added, estimated, alternative or add-on minimum taxes, customs duties or other
assessments of a
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similar nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, imposed by an Tax
authority.
(p) "Tax Returns" mean all Federal, state, local and foreign
tax returns, declarations, statements, reports, schedules, forms, and
information returns and any amendments thereto.
SECTION 9.3. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 9.4. Entire Agreement; No Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement (provided, however, that the
provisions of the Confidentiality Agreement shall remain valid and in effect)
and, except for the provisions of Section 5.13 and Article VIII, is not intended
to confer upon any Person other than the Parties any rights or remedies
hereunder.
SECTION 9.5. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, except that Buyer may
assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct or indirect wholly owned
subsidiary of Buyer, but no such assignment shall relieve Buyer of any of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the Parties and their respective successors and assigns, heirs, executors, and
administrators.
SECTION 9.6. Amendment. Neither this Agreement nor any
provision hereof may be waived, modified or amended, except by an instrument in
writing signed by the Party against which the enforcement of such writing is
sought, and only then to the extent set forth in such writing.
SECTION 9.7. Governing Law; Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, without regard to any applicable conflicts of law. Any suit, action or
proceeding by a Party with respect to this Agreement, or any judgment entered by
any court in respect of any thereof, may be brought in any state or federal
court of competent jurisdiction in the County of Los Angeles, State of
California, and each party hereto hereby submits to the exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.
By the execution and delivery of this Agreement, Buyer and each Company
(following the Closing) appoints ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, at its office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, as its agent upon which
process may be served in any such suit, action or proceeding. By execution and
delivery of this Agreement, each Seller and each Company (prior to the Closing)
appoints Sellers' Representative, at their office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as his, her or its
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agent upon which process may be served in any such suit, action or proceeding.
Nothing herein shall in any way be deemed to limit the ability of a party hereto
to serve any such writs, process or summonses in any other manner permitted by
applicable law.
SECTION 9.8. Specific Performance. The parties recognize that
if any of the Sellers refuse to close as and when required under the provisions
of this Agreement, monetary damages will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to the right to
collect money damages, to obtain specific performance of the terms of this
Agreement. If any action is brought by Buyer to enforce this Agreement, each
Seller shall waive the defense that there is an adequate remedy at law. Buyer
shall have the right to obtain specific performance of the terms of this
Agreement without being required to prove actual damages, post bond or furnish
other security.
SECTION 9.9. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
SECTION 9.10. Headings. Headings of the Articles and Sections
of this Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
SECTION 9.11. Special Power of Attorney. Each Seller grants
▇▇▇▇▇▇ and, in the event of his death or disability, ▇▇▇▇▇▇▇ (individually, the
"Attorney"), jointly, a special power of attorney irrevocably making,
constituting, and appointing the Attorney as such Seller's attorney in fact,
with all power to act in the Seller's name and on the Seller's behalf to (a)
execute, acknowledge and deliver and swear to in the execution, acknowledgment
and delivery of any and all documents necessary or related to effecting the
Closing including, without limitation, all documents required to be delivered by
such Seller at the Closing, any amendments to this Agreement or any waivers of
conditions or covenants contained herein, and (b) to take such other actions on
behalf of such Seller as the Attorney determines is necessary or advisable under
this Agreement or to effect the Closing; provided, however, that such documents
or actions included in (a) or (b) do not amend the definition of Purchase Price
in a manner which would reduce the consideration payable to any Seller hereunder
or otherwise adversely affect any Seller in a manner not applicable to all
Sellers similarly situated. The special power granted in this Section 9.11: (i)
is irrevocable, (ii) is coupled with an interest and (iii) shall survive such
Seller's death, incapacity or dissolution. The Attorney may exercise its special
power of attorney granted in this Section 9.11 by facsimile signatures.
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53
IN WITNESS WHEREOF, Buyer, the Companies and the Sellers have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CHANCELLOR MEDIA CORPORATION OF LOS
ANGELES
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: SVP-Strategic Development
---------------------------
▇▇▇▇▇▇ MEDIA, L.P.
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: President/CEO
--------------------------
▇▇▇▇▇▇ & MacFARLANE, INC.
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: President/CEO
--------------------------
NEVADA OUTDOOR SYSTEMS, INC.
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: President/CEO
--------------------------
MW SIGN CORP.
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: President/CEO
--------------------------
/s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇