EXECUTION COPY
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Exhibit 10
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ACQUISITION AGREEMENT
by and between
INTEREP NATIONAL RADIO SALES, INC.
and
TRANSPORTATION DISPLAYS INCORPORATED
Dated as of December 12, 2000
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................................................. 1
ARTICLE 2 PURCHASE AND SALE OF ASSETS................................................. 4
Section 2.1. Purchase and Sale of Assets........................................ 4
Section 2.2. Retained Assets.................................................... 5
Section 2.3. Assumed Liabilities................................................ 6
Section 2.4. Excluded Liabilities............................................... 6
Section 2.5. Closing............................................................ 6
Section 2.6. Purchase Price..................................................... 7
Section 2.7. Delivery of Purchase Price and Transfer of Assets.................. 7
Section 2.8. Allocation of Purchase Price....................................... 7
Section 2.9. Provision as to Uncollected Accounts Receivable.................... 7
ARTICLE 3 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER............................ 8
Section 3.1. Representations and Warranties Accurate.......................... 8
Section 3.2. Performance by Seller.............................................. 8
Section 3.3. Transfer Instruments............................................... 8
Section 3.4. Officer's Certificate.............................................. 8
Section 3.5. Secretary's Certificate............................................ 9
Section 3.6. Legal Prohibition.................................................. 9
Section 3.7. Consent of DOJ..................................................... 9
Section 3.8. Authority Consent.................................................. 9
Section 3.9. Other Consents..................................................... 9
Section 3.10. Due Diligence...................................................... 9
Section 3.11. Financing.......................................................... 9
Section 3.12. P&L Financial Statement Certification.............................. 9
ARTICLE 4 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER............................... 9
Section 4.1. Representations and Warranties Accurate............................ 10
Section 4.2. Performance by Purchaser........................................... 10
Section 4.3. Assumption Instruments............................................. 10
Section 4.4. Officer's Certificates............................................. 10
Section 4.5. Secretary's Certificates........................................... 10
i
TABLE OF CONTENTS
(continued)
Page
Section 4.6. Legal Prohibition.................................................. 10
Section 4.7. Consent of DOJ..................................................... 10
Section 4.8. Authority Consents................................................. 10
ARTICLE 5 INDEMNIFICATION............................................................. 10
Section 5.1. Survival of Representations and Warranties......................... 10
Section 5.2. Seller's Indemnity................................................. 11
Section 5.3. Purchaser's Indemnity.............................................. 12
Section 5.4. Limitations on Indemnification by Seller........................... 12
Section 5.5. Limitations on Indemnification by Purchaser........................ 13
Section 5.6. Notice and Defense of Claims....................................... 13
Section 5.7. Reimbursement...................................................... 14
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER.................................... 14
Section 6.1. Organization and Qualification..................................... 14
Section 6.2. Due Authorization.................................................. 14
Section 6.3. No Conflict; Consents.............................................. 14
Section 6.4. NYCTA Agreement.................................................... 15
Section 6.5. Advertising Contracts, Assigned Contracts and the Leases........... 15
Section 6.6. Title to Assets.................................................... 15
Section 6.7. Condition of Assets................................................ 15
Section 6.8. Litigation......................................................... 16
Section 6.9. Compliance with Law................................................ 16
Section 6.10. Employee Benefit Plans and Benefit Arrangements.................... 16
Section 6.11. No Material Adverse Effect......................................... 18
Section 6.12. Taxes.............................................................. 18
Section 6.13. Brokers............................................................ 19
Section 6.14. Insurance.......................................................... 19
Section 6.15. Software........................................................... 19
Section 6.16. Intellectual Property.............................................. 19
Section 6.17. P&L Financial Statement............................................ 19
Section 6.18. Net ▇▇▇▇▇▇▇▇ Statement............................................. 19
ii
TABLE OF CONTENTS
(continued)
Page
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER................................. 20
Section 7.1. Organization....................................................... 20
Section 7.2. Due Authorization.................................................. 20
Section 7.3. No Conflict........................................................ 20
Section 7.4. Brokers............................................................ 21
ARTICLE 8 COVENANTS................................................................... 21
Section 8.1. Filings and Authorizations......................................... 21
Section 8.2. Public Announcements............................................... 21
Section 8.3. Bulk Sales Compliance.............................................. 21
Section 8.4. Imprints........................................................... 21
Section 8.5. [INTENTIONALLY OMITTED]............................................ 21
Section 8.6. Access, Information and Confidentiality............................ 22
Section 8.7. Conduct of Business................................................ 22
Section 8.8. Books; Records; Access............................................. 23
Section 8.9. No Negotiation..................................................... 23
Section 8.10. FIRPTA............................................................. 23
Section 8.11. Successor Employee................................................. 23
Section 8.12. Agreement to be Bound.............................................. 23
Section 8.13. Restrictive Covenant............................................... 23
Section 8.14. Transition......................................................... 24
ARTICLE 9 CERTAIN ACTIONS SUBSEQUENT TO THE CLOSING................................... 24
Section 9.1. Purchaser to Act as Agent for Seller............................... 24
Section 9.2. Business Employee and Employment Benefit Matters................... 24
Section 9.3. WARN Act........................................................... 27
Section 9.4. Payment of Liabilities............................................. 27
ARTICLE 10 TERMINATION................................................................. 27
Section 10.1. Termination Events................................................. 27
Section 10.2. Effect of Termination.............................................. 28
ARTICLE 11 MISCELLANEOUS............................................................... 28
Section 11.1. Expenses........................................................... 28
iii
TABLE OF CONTENTS
(continued)
Page
Section 11.2. Amendment.......................................................... 28
Section 11.3. Entire Agreement................................................... 28
Section 11.4. Headings........................................................... 29
Section 11.5. Notices............................................................ 29
Section 11.6. Severability....................................................... 30
Section 11.7. Waiver............................................................. 30
Section 11.8. Counterparts and Facsimile Signatures.............................. 30
Section 11.9. Governing Law and Jurisdiction..................................... 30
Section 11.10. Assignment......................................................... 30
Section 11.11. Remedies; Specific Performance; Blue Penciling..................... 30
Section 11.12. Third Parties...................................................... 31
Section 11.13. Further Assurances................................................. 31
Section 11.14. Successors and Assigns............................................. 31
===================================
EXHIBITS
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Exhibit A: Stipulation and Order filed December 6, 1999 in the U.S. District
Court for the District Court for the District of Columbia, United
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States v. CBS Corporation, Infinity Broadcasting Corporation and
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Outdoor Systems Inc., Civil Action No. 9903212
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Exhibit B: Agreement dated January 1, 2000 between New York Transit Authority,
Staten Island Rapid Transit Operating Authority and Transportation
Displays Inc.
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EXECUTION COPY
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ACQUISITION AGREEMENT
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THIS ACQUISITION AGREEMENT, dated as of this 12th day of December,
2000, is entered into by and between Interep National Radio Sales, Inc., a New
York corporation ("Purchaser"), and Transportation Displays Incorporated, a
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Delaware corporation ("Seller").
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W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Seller is a signatory to that certain Stipulation and Order
filed December 6, 1999 in the U.S. District Court for the District of Columbia,
United States v. CBS Corporation, Infinity Broadcasting Corporation and Outdoor
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Systems Inc., Civil Action No. 9903212, providing for entry of the proposed
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Final Judgment in this matter (a copy of which is attached hereto as Exhibit A)
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(the "Final Judgment"), and concerning the divestiture of certain assets of
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Seller and its affiliates, including certain of the assets which are the subject
of this Agreement;
WHEREAS, in order to effectuate the sale and purchase of certain
assets of Seller as more fully described herein, Seller shall sell and Purchaser
shall purchase certain of the assets of Seller used in the Business (as defined
herein), all upon the terms and conditions hereinafter set forth and subject to
the Final Judgment.
NOW, THEREFORE, in reliance upon the covenants and agreements set
forth herein intending to be legally bound, the parties hereto agree as follows:
ARTICLE 1 DEFINITIONS
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The following terms shall have the following respective meanings for
all purposes of this Agreement:
"Account Receivable" and "Accounts Receivable" have the meanings set
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forth in Section 2.9.
"Advertising Contracts" has the meaning set forth in Section 2.1(a).
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"Agreement" means this Agreement, as it may be amended or supplemented
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from time to time in accordance with its terms.
"Allocation" has the meaning set forth in Section 2.8.
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"Assets" has the meaning set forth in Section 2.1.
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"Assigned Contracts" has the meaning set forth in Section 2.1.
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"Assumed Liabilities" has the meaning set forth in Section 2.3.
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"Authority Consent" has the meaning set forth in Section 2.7(c).
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"Basket Amount" has the meaning set forth in Section 5.4.
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"Benefit Arrangements" has the meaning set forth in Section
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6.10(a)(iii).
"Business" means the business conducted by Seller of installing,
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displaying and maintaining advertising (including selling space for advertising
purposes) at approved locations on the subways operated by the MTA New York City
Transit System and MTA Staten Island Railway System in the routes and rights of
way now or hereafter owned or operated by such authorities in the New York, New
York area, as provided in the NYCTA Agreement.
"Business Employees" has the meaning set forth in Section 6.10(a)(i).
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"Business Hires" has the meaning set forth in Section 6.10(a)(iv).
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"Cap" has the meaning set forth in Section 5.4.
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"Closing" means the completion of the acquisition of the Assets
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pursuant to this Agreement.
"Closing Date" means the date the Closing takes place.
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"Closing P&L Financial Statement" has the meaning set forth in Section
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3.12.
"COBRA" has the meaning set forth in Section 9.2(h).
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Collection Period" has the meaning set forth in Section 2.9.
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"Control" or "Controlled" means the possession, directly or
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indirectly, of the power to direct or to cause the direction of management and
policies of the Person in question, whether through the ownership of voting
securities or by contract or otherwise.
"DOJ" has the meaning set forth in Section 3.7.
---
"Employee Benefit Plans" has the meaning set forth in Section
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6.10(a)(ii).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
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"Indemnified Party" has the meaning set forth in Section 5.6.
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"Indemnifying Party" has the meaning set forth in Section 5.6.
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"Infinity" means Infinity Broadcasting Corporation, a Delaware
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corporation.
"Leased Tangible Assets" has the meaning set forth in Section 2.1(d).
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2
"Leases" has the meaning set forth in Section 2.1(d).
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"Licenses" has the meaning set forth in Section 6.9.
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"Liens" means any charge, claim, condition, equitable interest, lien,
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option, pledge, security interest, right of first refusal or restriction of any
kind, including any restriction on use, transfer, receipt of income or exercise
of any other attribute of ownership.
"Material Adverse Effect" means any change in, or effect on, the
-----------------------
Business that, individually or in the aggregate with any other changes in, or
effects on, the Business, is materially adverse to the business, properties,
prospects, results of operations or financial condition of the Business;
provided, however, that "Material Adverse Effect" shall not include any change
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in, or effect in, the Business directly or indirectly arising out of or
attributable to (i) changes or effects that generally affect the industries in
which the Business operates, including, without limitation, changes or effects
relating to competition, (ii) changes in national or international general
economic, regulatory or political conditions, including any material adverse
change in the financial markets in the United States or (iii) changes or effects
resulting from the announcement of the transactions contemplated by this
Agreement.
"Multiemployer Plan" has the meaning set forth in Section 6.10(e).
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"Net ▇▇▇▇▇▇▇▇" has the meaning set forth in Section 6.18.
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"Net ▇▇▇▇▇▇▇▇ Statement" has the meaning set forth in Section 6.18.
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"New York Business Location" means the warehouse located at 48-49 35th
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Street, Long Island City, New York.
"NY Authority" has the meaning set forth in Section 2.1(a).
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"NY Authority Consent" has the meaning set forth in Section 2.7(c).
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"NYCTA" has the meaning set forth in Section 2.1(a).
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"NYCTA Agreement" has the meaning set forth in Section 2.1(a).
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"Other Consents" has the meaning set forth in Section 3.9.
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"Owned Tangible Assets" has the meaning set forth in Section 2.1(c).
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"Pension Plans" has the meaning set forth in Section 6.10(a)(ii).
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"Permitted Liens" means (i) Liens for Taxes not yet due, (ii)
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mechanic's, materialmen's and similar Liens which have arisen in the ordinary
course of business or (iii) other Liens which are immaterial in amount or
character to the Business both individually and in the aggregate.
3
"Person" means an individual, partnership, corporation, limited
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liability company, joint venture, unincorporated organization, cooperative or a
governmental entity or agency thereof.
"P&L Financial Statement" has the meaning set forth in Section 6.17.
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"Purchaser's 401(k) Plan" has the meaning set forth in Section 9.2(c).
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"Purchase Price" has the meaning set forth in Section 2.6.
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"Retained Assets" has the meaning set forth in Section 2.2.
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"Software" has the meaning set forth in Section 6.15.
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"Straddle Periods" has the meaning set forth in Section 5.2(d)(i).
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"Tax" shall mean any federal, state, local or foreign tax (including,
---
without limitation, any Income Tax, franchise tax, doing business tax, branch
profits tax, capital gains tax, value-added tax, ad valorem tax, excise tax,
transfer tax, employment tax, social security tax, sales tax, use tax, property
tax, or any other kind of tax or payment in lieu of tax no matter how
denominated), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or collected by or
under the authority of any governmental body or payable pursuant to any tax-
sharing agreement or any other contract relating to the sharing or payment of
any such tax, levy, assessment, tariff, duty, deficiency or fee.
"Tax Return" shall mean any return (including any information return),
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report, statement, schedule, notice, form or other document or information filed
with or submitted to or required to be filed with or submitted to, any
governmental body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any legal requirement relating to any Tax.
"Transfer Taxes" has the meaning set forth in Section 2.7(b).
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"WARN Act" has the meaning set forth in Section 9.2(c).
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"Welfare Plans" has the meaning set forth in Section 6.10(a)(ii).
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ARTICLE 2 PURCHASE AND SALE OF ASSETS
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Section 2.1. Purchase and Sale of Assets. At the Closing, upon the
---------------------------
terms and subject to the conditions contained herein, Seller shall sell,
transfer, convey, assign and deliver to Purchaser, effective as of the Closing,
and Purchaser shall purchase and accept from Seller, the following assets of
Seller related to the Business, free and clear of all Liens, other than
Permitted Liens (collectively, the "Assets"):
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4
(a) all of the rights and benefits that accrue to Seller after the
Closing Date under (i) that certain license agreement dated January 1, 2000, and
any amendments or extensions thereto, between the New York City Transit
Authority ("NYCTA"), the Staten Island Rapid Transit Operating Authority
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(together with the NYCTA, the "NY Authority") and Seller (the "NYCTA Agreement")
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which is attached hereto as Exhibit B, (ii) the advertising contracts of Seller
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relating to the NYCTA Agreement and the Business listed and described on
Schedule 2.1(a) hereof and any such advertising contracts relating exclusively
to the NYCTA Agreement and the Business entered into in the ordinary course of
business by Seller after the date hereof and prior to the Closing (the
"Advertising Contracts"), to the extent such Advertising Contracts relate to the
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Business and have not expired or otherwise terminated prior to the Closing Date,
and (iii) any other contracts or other rights of Seller with respect to the
Business listed in Schedule 2.1(a) hereof (the "Assigned Contracts"), to the
------------------
extent such Assigned Contracts relate to the Business and have not expired or
otherwise terminated prior to the Closing Date;
(b) all operating data and records, business plans and projections of
Seller to the extent (i) relating to the NYCTA Agreement, the Advertising
Contracts and the Assigned Contracts and (ii) relating exclusively to the
Business;
(c) the inventory, office equipment, frames, advertising structures,
charting materials, sales and promotional materials, supplies, furniture,
fixtures (to the extent owned and transferable by Seller), photographs,
machinery, equipment, computers, computer software (to the extent used
exclusively in the Business and transferable by Seller), tools and other
tangible assets owned by Seller and used primarily in the Business and (to the
extent not included in the immediately preceding description of assets) those
assets of Seller located at the New York Business Location (the "Owned Tangible
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Assets"), all as described in Schedule 2.1(c) hereof;
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(d) subject to Section 9.1 hereof, all the interest of and the rights
and benefits accruing to Seller as lessee under such leases or rental agreements
(including any security and other deposits related to such leases or rental
agreements) covering: office space, machinery, equipment, computers, computer
hardware, tools, supplies, furniture and fixtures, automobiles and other
tangible assets used primarily in the Business or located at the New York
Business Location (the "Leased Tangible Assets"), as such leases or rental
----------------------
agreements are described in Schedule 2.1(d) hereof (the "Leases");
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(e) all licenses, permits, approvals, qualifications, consents and
other authorizations necessary for the lawful conduct, ownership and operation
of the Business, if any, to the extent assignable, as listed on Schedule 2.1(e)
hereof; and
(f) all claims, warranty rights, causes of action and other similar
rights arising in the conduct of the Business, except as otherwise set forth on
Schedule 2.1(f) hereof.
Section 2.2. Retained Assets. All of the assets of Seller which are not
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included in Section 2.1 hereof (including, but not limited to, (a) any rights or
benefits accruing to Seller under the NYCTA Agreement, Advertising Contracts and
Assigned Contracts on or prior to the Closing Date and (b) any rights in or to
the "TDI" trademark, service ▇▇▇▇, trade name, logo or any other intellectual
property derived therefrom or relating thereto) and that do not relate to the
Business are expressly excluded and shall be retained by Seller (the "Retained
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Assets").
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5
Section 2.3. Assumed Liabilities. At the Closing, upon the terms and
-------------------
subject to the conditions contained herein, Purchaser shall assume, effective as
of the Closing Date, and agrees to pay, perform and discharge in accordance with
their terms, solely the following obligations and liabilities of Seller relating
to the conduct of the Business or the ownership of the Assets arising after the
Closing Date (the "Assumed Liabilities"):
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(a) all obligations under the NYCTA Agreement;
(b) all obligations pertaining to the Business and the Assets,
including those arising under the Advertising Contracts, the Assigned Contracts
and the Leases; and
(c) any liabilities and obligations to be assumed and performed by
Purchaser pursuant to Section 9.2 below.
Section 2.4. Excluded Liabilities. Purchaser and Seller agree that
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Purchaser shall not assume any liabilities (contingent or otherwise), debts,
contracts, commitments or other obligations of Seller of any nature whatsoever
except as assumed hereunder. Without limitation of the foregoing, Purchaser
shall not assume and shall not be liable for, any liability, commitment or
expense of Seller as a result of or arising from any of the following (the
"Excluded Liabilities"):
----------------------
(a) any obligation for Taxes arising from the use or ownership of the
Assets, or operation of the Business, for any periods up to and including the
Closing Date or arising out of the sale by Seller of the Assets pursuant hereto;
(b) any out-of-pocket expenses of Seller incurred in connection with
the sale of the Assets pursuant hereto;
(c) any liabilities or obligations of Seller relating to the Retained
Assets;
(d) any obligations or liabilities of Seller relating to the conduct
of the Business or the ownership of the Assets (including any accounts payable
related to the Business) arising on or prior to the Closing Date, including any
liabilities arising from any violation of any applicable law, rule or regulation
or from any property damage or personal injury arising on or prior to the
Closing Date (including, without limitation, any liabilities in connection with,
or arising out of or resulting from (i) any Business Employee arising on or
prior to the Closing Date, (ii) any Employee Benefit Plans or (iii) withdrawal
liability under any Multiemployer Plans of Seller); and
(e) any liabilities relating to the failure to comply with the bulk
sales law and any other similar law in any applicable jurisdiction in respect to
the transactions contemplated by this Agreement.
Section 2.5. Closing. The Closing shall take place at the offices of
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Weil, Gotshal & ▇▇▇▇▇▇ LLP, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on the date
that all of the conditions set forth in ARTICLE 3 and ARTICLE 4 shall be
satisfied or waived. Each party hereto agrees to use its reasonable efforts to
satisfy promptly the conditions to the obligations of the respective
6
parties hereto in order to expedite the Closing. The Closing shall be deemed for
all purposes to have occurred at 11:59 p.m. on the Closing Date.
Section 2.6. Purchase Price. The Purchase Price payable on the Closing
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Date for the Assets (the "Purchase Price") shall be Thirty-Five Million dollars
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($35,000,000) in cash.
Section 2.7. Delivery of Purchase Price and Transfer of Assets.
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(a) On the Closing Date, Purchaser shall deliver the Purchase Price
by wire transfer of immediately available federal funds to an account specified
by Seller at least two (2) days prior to the Closing Date.
(b) At the Closing, Seller shall deliver to Purchaser such deeds,
bills of sale, endorsements, assignments and other instruments of sale,
conveyance, transfer and assignment as may be reasonably requested by Purchaser,
in order to convey to Purchaser good and valid title to the Assets, free and
clear of Liens, other than Permitted Liens. All sales, transfer or stamp Taxes,
or similar charges, payable by reason of the sale hereunder (such Taxes,
"Transfer Taxes") shall be paid by Seller. Seller shall pay and
--------------
indemnify and hold harmless Purchaser (and its successors and assigns) for any
such Transfer Taxes. Seller shall prepare and file the required Tax Returns and
other required documents with respect to any such Transfer Taxes.
(c) At the Closing, Seller shall deliver to Purchaser a written
consent and release from the NY Authority (i) consenting to and permitting the
assignment of the NYCTA Agreement to Purchaser on terms no less favorable to
Purchaser than such agreement currently binds Seller and (ii) releasing Seller
from any and all liabilities and obligations arising after the Closing Date
under the NYCTA Agreement (the "NY Authority Consent").
--------------------
Section 2.8. Allocation of Purchase Price. The aggregate amount of the
----------------------------
Purchase Price and the Assumed Liabilities (that are properly included in
Purchaser's tax basis for the Assets) shall be allocated in its entirety among
the Assets in accordance with Schedule 2.8 hereto (the "Allocation"). Seller
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and Purchaser shall file all information and Tax Returns (and any amendments
thereto) in a manner consistent with this Section 2.8 (including, without
limitation, IRS Form 8594 or any successor form). If, contrary to the intent of
the parties hereto as expressed in this Section 2.8, any taxing authority makes
or proposes an allocation different from the Allocation determined under this
Section 2.8, Seller and Purchaser shall cooperate with each other in good faith
to contest such taxing authority's allocation (or proposed allocation),
provided, however, that, after consultation with the party adversely affected by
such allocation (or proposed allocation), another party hereto may file such
protective claims or returns as may reasonably be required to protect its
interests.
Section 2.9. Provision as to Uncollected Accounts Receivable. At the
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Closing, Seller shall assign to Purchaser, for purposes of collection only, all
accounts receivable relating directly and exclusively to the Business
outstanding as of the Closing Date (hereinafter such accounts receivable are
called individually "Account Receivable" and collectively "Accounts
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Receivable"). Seller shall also deliver to Purchaser as soon as practicable
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after the Closing Date a complete and detailed statement of each Account
Receivable showing, among other things, the name, amount and age thereof.
Purchaser agrees to make reasonable efforts to collect each
7
Account Receivable for a period of ninety (90) days after the Closing Date (the
"Collection Period"). On or before the date which is thirty (30) days following
-----------------
the Closing Date, and at the end of each thirty (30) day period thereafter or at
such other times as Seller and Purchaser mutually determine, Purchaser shall
furnish Seller with a list of, and pay over to Seller, the amounts Purchaser had
collected with respect to the Accounts Receivable. Any payment received by
Purchaser during or after such ninety (90) day period from any customer whose
account is an Account Receivable hereunder shall be first applied in
satisfaction of the oldest of any unpaid and accrued interest charges and,
following payment of all such interest charges, in satisfaction of the oldest of
any unpaid principal amounts due (but only to the extent that such customer does
not dispute that such Account Receivable is properly due). On or before ninety
(90) days following the Closing Date, Purchaser shall furnish Seller with a list
of each Account Receivable which is uncollected, together with all files
concerning the collection or attempts to collect such Account Receivable.
Purchaser shall not be obligated to refer any Account Receivable to a collection
agency or an attorney for collection or to take any other legal action for the
collection of any Account Receivable, and Purchaser shall not make any such
referrals, take any such legal action, or compromise, settle or adjust the
amount of any Account Receivable without Seller's consent. Seller shall be free,
however, to take any action it may deem appropriate with respect to any Account
Receivable reassigned to it.
ARTICLE 3 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser under this Agreement to consummate the
purchase of the Assets at the Closing shall be subject to the satisfaction, at
or prior to the Closing, of all of the following conditions (any of which may be
waived in writing in whole or in part by Purchaser, to the extent permitted by
applicable law):
Section 3.1. Representations and Warranties Accurate. All
---------------------------------------
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties were made on
and as of the Closing Date.
Section 3.2. Performance by Seller. Seller shall have performed and
---------------------
complied in all material respects with all the covenants and conditions required
by this Agreement to be performed and complied with by Seller prior to or on the
Closing Date.
Section 3.3. Transfer Instruments. Purchaser shall have received
---------------------
from Seller such instruments of transfer, assignment, conveyance and other
instruments sufficient to convey, transfer and assign to Purchaser all right,
title and interest in and to the Assets, all in form and substance reasonably
satisfactory to Purchaser.
Section 3.4. Officer's Certificate. Purchaser shall have received a
---------------------
certificate, dated as of the Closing Date, signed by an authorized officer of
Seller, to the effect that the conditions set forth in Section 3.1 and Section
3.2 have been satisfied.
8
Section 3.5. Secretary's Certificate. Seller shall have delivered to
------------------------
Purchaser a copy of a resolution adopted by Seller's board of directors and, if
necessary, sole stockholder, authorizing the transactions contemplated by this
Agreement, certified by a Secretary or Assistant Secretary of Seller.
Section 3.6. Legal Prohibition. On the Closing Date, no injunction
-----------------
or order shall be in effect prohibiting consummation of the transactions
contemplated hereby or which would make the consummation of such transactions
unlawful.
Section 3.7. Consent of DOJ. All authorizations and consents required
--------------
to be obtained by Seller from the United States Department of Justice (the
"DOJ") under the Final Judgment, including the approval of this Agreement, shall
---
have been received by Seller.
Section 3.8. Authority Consent. Seller and Purchaser shall have
-----------------
received the NY Authority Consent (except with respect to any release of Seller
thereunder).
Section 3.9. Other Consents. Seller and Purchaser shall have received
--------------
such third party consents and approvals to the transfer of the Advertising
Contracts, Assigned Contracts, Leases and any other Assets as are reasonably
necessary for the valid transfer of such Assets to, and full enjoyment by,
Purchaser of such Assets without the loss of any material rights with respect
thereto enjoyed by Seller or the imposition of any materially burdensome
conditions thereon (the "Other Consents").
---------------
Section 3.10. Due Diligence. Purchaser shall have completed its due
-------------
diligence review of the Business and the Assets to its reasonable satisfaction.
Section 3.11. Financing. Purchaser shall have obtained financing in
---------
the principal amount of up to the Purchase Price in order to consummate the
transactions contemplated in this Agreement, such financing to be on terms
reasonably satisfactory to Purchaser.
Section 3.12. P&L Financial Statement Certification. On or prior to
-------------------------------------
the Closing Date, Seller shall have delivered to Purchaser a statement
containing the information set forth on the P&L Financial Statement through and
including the period from January 1, 2000 to the month ended immediately prior
to the Closing Date (the "Closing P&L Financial Statement"), which Closing P&L
-------------------------------
Financial Statement shall be true and correct in all material respects as of the
date set forth therein. On or prior to the Closing Date, Seller shall have
delivered to Purchaser a certificate from Seller's independent auditor to the
effect that the Closing P&L Financial Statement has been prepared (i) from the
books and records of Seller and (ii) in accordance with Seller's accounting
practices applied on a consistent basis throughout the period indicated.
ARTICLE 4 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligation of Seller under this Agreement to consummate the sale
of the Assets at the Closing shall be subject to the satisfaction, at or prior
to the Closing, of all of the following conditions (any of which may be waived
in writing in whole or in part by Seller, to the extent permitted by applicable
law):
9
Section 4.1. Representations and Warranties Accurate. All
---------------------------------------
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties were
made on and as of the Closing Date.
Section 4.2. Performance by Purchaser. Purchaser shall have performed
------------------------
and complied in all material respects with all covenants and conditions required
by this Agreement to be performed and complied with by Purchaser prior to or on
the Closing Date.
Section 4.3. Assumption Instruments. Seller shall have received from
-----------------------
Purchaser instruments of assumption and other instruments sufficient to effect
Purchaser's assumption of the Assumed Liabilities, all in form and substance
reasonably satisfactory to Seller.
Section 4.4. Officer's Certificates. Seller shall have received
----------------------
certificates, dated as of the Closing Date, signed by an authorized officer of
Purchaser to the effect that the conditions set forth in Section 4.1 and Section
4.2 have been satisfied.
Section 4.5. Secretary's Certificates. Purchaser shall have
-------------------------
delivered to Seller copies of resolutions adopted by Purchaser's board of
directors and, if necessary, stockholders, authorizing the transactions
contemplated by this Agreement, certified by a Secretary or Assistant Secretary
of Purchaser.
Section 4.6. Legal Prohibition. On the Closing Date, no injunction
-----------------
or order shall be in effect prohibiting consummation of the transactions
contemplated hereby or which would make the consummation of such transactions
unlawful.
Section 4.7. Consent of DOJ. All authorizations and consents required
--------------
to be obtained by Seller from the DOJ under the Final Judgment shall have been
received by Seller.
Section 4.8. Authority Consents. Seller and Purchaser shall have
------------------
received the NY Authority Consent (except with respect to any release of Seller
thereunder).
ARTICLE 5 INDEMNIFICATION
---------------
Section 5.1. Survival of Representations and Warranties. Except for
------------------------------------------
(i) the representations and warranties set forth in Sections 6.1, 6.2, 6.4, 6.6,
7.1 and 7.2, which shall survive indefinitely and (ii) the representations and
warranties set forth in Section 6.12, which shall survive until the expiration
of the applicable statute of limitations with respect to the subject matter
thereof, all representations and warranties contained in this Agreement shall
survive the Closing and shall remain in full force and effect until the date
that is twelve (12) months after the Closing Date, and thereafter only to the
extent of claims for which a notice has been given on or before such date;
provided, however, that no such time limitation shall apply to fraud, or any
-------- -------
knowing misrepresentation or intentional breach of a warranty or covenant by a
party hereunder.
10
Section 5.2. Seller's Indemnity. Seller shall be responsible for the
------------------
payment of and shall indemnify and hold harmless Purchaser and its successors
and assigns at all times after the Closing Date against and in respect of:
(a) any loss, damage, cost, expense or liability (including
reasonable attorney's fees) resulting to Purchaser from the breach of any of the
representations or warranties of Seller hereunder or the breach of any covenant
of Seller under this Agreement; provided, however, under no circumstances shall
-------- -------
Seller be responsible to Purchaser or its successors or assigns for
consequential or punitive damages (except if for any willful breach);
(b) all Excluded Liabilities;
(c) all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to any of the foregoing; and
(d) (i) (A) all Taxes relating to Seller, the Business or the Assets
attributable to taxable periods that end on or prior to the Closing Date; and
(B) for all taxable periods which include (but do not end on) the Closing Date
("Straddle Periods"), Seller shall be responsible for the payment of Taxes
----------------
relating to Seller, the Business or the Assets which are attributable to such
taxable periods up to and including the Closing Date and Purchaser shall be
responsible for the payment of Taxes relating to the Business or the Assets
attributable to the period from the day immediately following the Closing Date
to the end of such taxable period. For purposes of this Section 5.2(d), Seller's
allocable portion of Taxes with respect to a Straddle Period shall be (x) in the
case of any Taxes other than Taxes based upon or related to income or receipts,
an amount equal to the Tax for the entire taxable period multiplied by a
fraction, the numerator of which is the number of days in the period for which
such Taxes are paid ending on the Closing Date and the denominator of which is
the number of days in the entire taxable period; and (y) in the case of any
Taxes based upon or related to income or receipts, the amount that would be
payable if the taxable period ended on the Closing Date. The party that has the
primary obligation to do so under applicable law shall file any Tax Return that
is required to be filed in respect of Taxes described in this Section 5.2(d),
and that party shall pay the Taxes shown on such Tax Return and the other party
shall reimburse the filing party for its share of such Tax as determined under
this Section 5.2(d) by wire transfer of immediately available funds no later
than twenty (20) days after receipt of written notice that such Tax has been
paid to the applicable governmental body.
(ii) Seller and Purchaser shall provide each other with such
cooperation and information as either of them reasonably may request of the
other with respect to Seller, the Business or the Assets in filing any Tax
Return, amended return or claim for refund, determining a liability for Taxes or
a right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes with respect to Seller, the Business or the Assets. Such
cooperation and information shall include, without limitation, providing copies
of all relevant portions of Tax Returns with respect to Seller, together with
accompanying schedules and related work papers, documents relating to rulings or
other determinations by taxing authorities and records concerning the ownership
and tax basis of property, which either party may possess. Each party shall make
its employees available on a mutually convenient basis to provide explanation of
any documents or information provided hereunder. The party requesting assistance
hereunder shall reimburse the other for any reasonable out-of-pocket costs
incurred in
11
providing any return, document or other written information, and shall
compensate the other for any reasonable costs (excluding wages and salaries) of
making employees available, upon receipt of reasonable documentation of such
costs. Each party shall retain all returns, schedules and work papers and all
material records or other documents relating thereto, until the expiration of
the statute of limitations (including extensions) of the taxable years to which
such returns and other documents relate and, unless the relevant portions of
such returns and other documents are offered to the other party, until the final
determination of any payments which may be required in respect of such years
under this Agreement. Any information obtained under this Section 5.2(d)(ii)
shall be kept confidential, except as may be otherwise necessary in connection
with the filing of Tax Returns or claims for refund or in conducting any audit
or other proceeding and shall be used solely for the purposes set forth in the
first sentence of this Section 5.2(d)(ii). Notwithstanding anything to the
contrary in this Section 5.2(d)(ii), neither Seller nor Purchaser, nor any of
their respective affiliates, shall be required unreasonably to prepare any
document, or determine any information not then in its possession, in response
to a request under this Section 5.2(d)(ii).
(iii) Any indemnity payment that is due pursuant to this Section
5.2(d) shall be made not later than twenty (20) days after receipt by the party
who is required to make such indemnification payment of a notice that such
indemnity is due and the amount of the indemnity payment that is required to be
made hereunder.
Section 5.3. Purchaser's Indemnity. Purchaser shall be responsible
---------------------
for the payment of and shall indemnify and hold harmless Seller and its
successors and assigns at all times after the Closing Date against and in
respect of:
(a) any damage, loss, cost, expense or liability (including
reasonable attorney's fees) resulting to Seller from the breach of any of the
representations or warranties of Purchaser hereunder or the breach of any
covenant of Purchaser under this Agreement; provided, however, under no
-------- --------
circumstances shall Purchaser be responsible to Seller or its successors or
assigns for consequential or punitive damages (except if for any willful
breach);
(b) all Assumed Liabilities;
(c) all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to any of the foregoing; and
(d) all Taxes relating to the Business or Assets for periods
commencing after the Closing Date.
Section 5.4. Limitations on Indemnification by Seller. Notwithstanding
----------------------------------------
anything herein to the contrary, Seller shall indemnify and hold Purchaser
harmless pursuant to this Agreement for any loss, damage, cost, expense or
liability from (i) the breach of any representations or warranties of Seller
hereunder indemnifiable pursuant to Section 5.2(a) hereof or (ii) breach of any
covenant required to be performed by Seller hereunder prior to the Closing
indemnifiable pursuant to Section 5.2(a) hereof, but only to the extent that
such amounts as to which Seller is obligated pursuant to Section 5.2(a) to
indemnify Purchaser exceed in the aggregate $500,000 (such amount, the "Basket
------
Amount"); provided, that if aggregate claims
------ --------
12
hereunder exceed the Basket Amount, then Seller shall indemnify and hold
Purchaser harmless pursuant to this Agreement only for the amount exceeding the
Basket Amount; provided, however, that the Basket Amount shall not apply to
-------- -------
fraud or any knowing misrepresentation or intentional breach of a warranty or
covenant. Notwithstanding any other provisions of this Agreement, in no event
shall Seller's liability to indemnify Purchaser hereunder for any such breach of
Seller's representations and warranties or covenants referenced in this Section
5.4 exceed the Purchase Price (such amount, the "Cap"); provided, however, that
--- -------- -------
any loss, damage, cost, expense or liability resulting from any breach of the
representations and warranties contained in Sections 6.1, 6.2 and 6.13 shall not
be subject to the Cap.
Section 5.5. Limitations on Indemnification by Purchaser.
-------------------------------------------
Notwithstanding anything herein to the contrary, Purchaser shall indemnify and
hold Seller harmless pursuant to this Agreement for any loss, damage, cost,
expense or liability from (i) breach of any representations or warranties of
Purchaser hereunder indemnifiable pursuant to Section 5.3(a) hereof or (ii)
breach any covenant required to be performed by Purchaser hereunder prior to the
Closing indemnifiable pursuant to Section 5.3(a) hereof, but only to the extent
that such amounts as to which Purchaser is obligated pursuant to Section 5.3(a)
to indemnify Seller exceed in the aggregate the Basket Amount, provided, that if
--------
aggregate claims hereunder exceed the Basket amount, then Purchaser shall
indemnify and hold Seller harmless pursuant to this Agreement only for the
amount exceeding the Basket Amount; provided, however, that the Basket Amount
-------- -------
shall not apply to fraud or any knowing misrepresentation or intentional breach
of a warranty or covenant. Notwithstanding any other provisions of this
Agreement, in no event shall Purchaser's liability to indemnify Seller hereunder
for any such breach of representations and warranties or covenants referenced in
this Section 5.5 exceed the Cap; provided, however, that any loss, damage, cost,
-------- -------
expense or liability resulting from any breach of the representations and
warranties contained in Sections 7.1, 7.2 and 7.5 shall not be subject to the
Cap.
Section 5.6. Notice and Defense of Claims. Each party entitled to
----------------------------
indemnification under this ARTICLE 5 (the "Indemnified Party") shall give notice
-----------------
to the party required to provide indemnification (the "Indemnifying Party")
------------------
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be reasonably acceptable to
the Indemnified Party and the Indemnified Party may participate in such defense
at the Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this ARTICLE 5, except to the extent
the Indemnifying Party demonstrates that it has been materially prejudiced
thereby. The Indemnifying Party, in the defense of any such claim or
litigation, shall not, except with the consent of the Indemnified Party, consent
to entry of any judgment or entry into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect to such claim or
litigation. The Indemnified Party shall furnish such information regarding
itself or the claim in question as the Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom. Notwithstanding the foregoing,
if the Indemnified Party determines in good faith that there is a reasonable
probability that a claim may adversely affect it other than as a result of
monetary damages for which it
13
would be entitled to indemnification under this Agreement, the Indemnified Party
may, by notice to the Indemnifying Party, assume the exclusive right to defend,
compromise, or settle such claim, but the Indemnifying Party will not be bound
by any determination of a claim so defended or any compromise or settlement
effected without its consent.
Section 5.7. Reimbursement. At the time that the Indemnified Party
-------------
shall suffer a loss because of a breach of any representation, warranty or
covenant by the Indemnifying Party or at the time the amount of any liability on
the part of the Indemnifying Party under this ARTICLE 5 is determined (which in
the case of payment to third persons shall be the earlier of (a) the date of
such payments or (b) the date that a court of competent jurisdiction shall enter
a final judgment, order or decree (after exhaustion of appeal rights)
establishing such liability, the Indemnifying Party shall forthwith, upon prompt
notice from the Indemnified Party, pay to the Indemnified Party the amount of
such indemnity claim.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Purchaser as follows:
Section 6.1. Organization and Qualification. Seller is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to own or lease its properties
and carry on its business as presently conducted. Seller is licensed or
qualified to transact business in each jurisdiction in which the nature of the
properties owned or leased by it or the business transacted by it requires it to
be so licensed or qualified, except where the failure to be so qualified or
licensed would not have a Material Adverse Effect on Seller.
Section 6.2. Due Authorization. Seller has all requisite corporate
-----------------
power and authority to execute and deliver this Agreement and to perform fully
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery by Seller of this Agreement and the other
documents contemplated hereby, the performance by Seller of its obligations
hereunder, and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Seller. This Agreement is a legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms (except as the
enforceability thereof may be limited by any applicable bankruptcy, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law).
Section 6.3. No Conflict; Consents. Except as set forth in Schedule
---------------------
6.3, neither the execution and delivery of this Agreement or any of the other
documents contemplated hereby by Seller nor the consummation by Seller of the
transactions contemplated hereby will (a) conflict with, result in a breach or
violation of or constitute (or with notice or lapse of time or both constitute)
a default under, (i) the Articles of Incorporation or By-Laws of Seller or (ii)
any statute, regulation, order, judgment or decree or any instrument, contract
or other agreement to which Seller is a party or by which Seller (or any of the
properties or assets of Seller) is subject or bound; (b) result in the creation
of, or give any party the right to create, any lien, charge, option, security
interest or other encumbrance upon the property and assets of Seller; or (c)
require Seller to obtain any authorization, consent, approval or waiver from, or
to make any
14
filing with, any public body or authority or to obtain the approval or consent
of any other Person; except, in the case of (c) above, as would not reasonably
be expected to have a Material Adverse Effect on Seller or the Business. Other
than the NY Authority Consent, the authorizations and consents required to be
obtained by Seller from the DOJ under the Final Judgment and the Other Consents,
there are no other consents, waivers or approvals required by law or contract to
be obtained to transfer or assign to Purchaser any of the Assets or to
consummate any of the other transactions contemplated by this Agreement.
Section 6.4. NYCTA Agreement. The NYCTA Agreement is a valid and
---------------
binding obligation of Seller, enforceable in accordance with its terms, and
Seller is not in breach of any material provision of, and has not received
notice of, any such breach under the terms of the NYCTA Agreement. To Seller's
knowledge, the NYCTA is not in breach of any material provision of the NYCTA
Agreement. Exhibit B hereto contains a true, correct and complete copy of the
---------
NYCTA Agreement, as amended to the date hereof.
Section 6.5. Advertising Contracts, Assigned Contracts and the Leases.
--------------------------------------------------------
The Advertising Contracts, Assigned Contracts and the Leases are valid and
binding obligations of Seller, enforceable in accordance with their terms, and
Seller is not in breach of any material provision of, nor is in default in any
material respect under the terms of, any of the Advertising Contracts, Assigned
Contracts or the Leases, nor has it received any notice to such effect. To
Seller's knowledge, no other party to the Advertising Contracts, the Assigned
Contracts or the Leases is in breach of any material provision thereof. Except
for any agreements to which Seller is a party that relate to the operation of
the Business conducted by Seller at its headquarters or at any other of Seller's
offices other than the New York Business Location, the Advertising Contracts,
Assigned Contracts and the Leases collectively constitute all of the material
agreements to which Seller is a party in respect of the Business.
Section 6.6. Title to Assets. Seller has, and, except for the
---------------
Retained Assets, upon payment therefor Purchaser will have, as of the Closing
Date, good and valid title to, or valid and subsisting leasehold interests in or
valid licenses to use, all of the Assets, free and clear of any and all Liens,
other than Permitted Liens.
Section 6.7. Condition of Assets. Exhibit B and Schedules 2.1(a),
------------------- ---------
2.1(c), 2.1(d), 2.1(e) and 2.1(f) accurately reflect all the property and assets
held by Seller to be transferred to Purchaser in connection with this Agreement.
The Owned Tangible Assets and the Leased Tangible Assets constitute all of the
material operating assets of Seller necessary for Seller to fulfill its existing
obligations as of the date hereof under the NYCTA Agreement, the Advertising
Contracts and the Assigned Contracts and are in good operating condition and
repair, reasonable wear and tear excepted. All material inventories of the
Business at the New York Business Location (including, without limitation,
stationery, consumable office supplies, training literature, photos, non-
proprietary promotional materials and other supplies) to be delivered to
Purchaser at the Closing (A) meet the usual standards of Seller, (B) are
suitable for use in the Business and (C) exist at levels consistent with
Seller's operation of the Business as currently conducted, consistent with
Seller's past practice with respect to the Business.
15
Section 6.8. Litigation. Except as set forth in Schedule 6.8, there
----------
are no actions, suits, proceedings or investigations pending or, to the
knowledge of Seller, threatened against Seller at law, in equity or otherwise,
in, before, or by, any court or governmental agency or authority that, if
determined adversely to Seller, would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Business.
There is no unsatisfied judgment or outstanding order, injunction, decree,
stipulation or award (whether rendered by a court or administrative agency or by
arbitration) against Seller with respect to the Business or Assets which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Business.
Section 6.9. Compliance with Law. Neither the Assets nor the Business
-------------------
is (i) being operated or conducted in violation of any law, ordinance,
regulation or order of any federal, state or local governmental entity,
including, without limitation, any law, ordinance, regulation or order with
respect to the environment or the release or treatment of hazardous materials,
or (ii) subject to any unpaid fine or any continuing governmental sanction for
any such violation, except for, in either case, such violations, fines or
sanctions which if enforced, individually or in the aggregate, would not have a
Material Adverse Effect on Seller or the Business. Seller has not received any
written notices, orders, correspondence or documents from any governmental
entity notifying Seller of any violation or alleged violation of any provision
of any foreign, federal, state or local law, regulation or ordinance applicable
to either the Business or the Assets which violation or alleged violation,
individually or in the aggregate, would have a Material Adverse Effect on Seller
or the Business. Schedule 6.9 hereto lists all governmental approvals, permits
and licenses material to the Business (the "Licenses"). The Licenses constitute
--------
all material permits which are required for Seller to operate the Business as
currently conducted by Seller, consistent with Seller's past practice
immediately prior to the Closing. To Seller's knowledge, each of the Licenses is
valid and in full force and effect immediately prior to the Closing.
Section 6.10. Employee Benefit Plans and Benefit Arrangements.
-----------------------------------------------
(a) The following terms shall have the following respective meanings
for purposes of this Agreement:
(i) The term "Business Employees" shall mean all current
------------------
employees of Seller with respect to the Business, including employees on
approved leaves of absence (whether family leave, workers compensation, medical
leave or otherwise), and who are listed on Schedule 6.10(a)(i) hereto.
(ii) The term "Employee Benefit Plans" shall mean each and all
----------------------
"employee benefit plans" as defined in Section 3(3) of ERISA, maintained or
contributed to by Seller or any predecessor thereof or in which Seller or any
predecessor participates or participated and which provides benefits to Business
Employees including (a) any "employee welfare benefit plans" as defined in
Section 3(1) of ERISA, including retiree medical and life insurance plans
("Welfare Plans"), (1) which Seller maintains, administers, contributes to or is
-------------
required to contribute to, or under which Seller may incur liability and (2)
which covers any employee or former employee of Seller; and (b) any "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (other than a
multiemployer plan as defined in Section 4001(a)(3) of
16
ERISA) ("Pension Plans") (1) which Seller contributes to, or, within the five
-------------
years prior to the date of this transaction, maintained, administered,
contributed to or was required to contribute to, or under which Seller may incur
any liability and (2) which covers any employee or former employee of Seller;
and
(iii) The term "Benefit Arrangements" shall mean any life and
--------------------
health insurance, hospitalization, savings, bonus, deferred compensation,
incentive compensation, service award, company car, scholarship, relocation,
patent award, fringe benefit, contracts, collective bargaining agreements,
individual employment, consultancy, termination contracts or severance contracts
and other policies or practices of Seller providing employee or executive
compensation or benefits to Business Employees, other than Employee Benefit
Plans.
(iv) The term "Business Hires" shall mean all Business Employees
--------------
who accept employment with Purchaser and are hired by Purchaser.
(b) Schedule 6.10(b) lists all Employee Benefit Plans and material
Benefit Arrangements. Prior to the Closing Date, to the extent applicable,
Seller will have made available to Purchaser true, complete and correct copies
of each Employee Benefit Plan and the most recent summary plan description for
each Employee Benefit Plan.
(c) Except as set forth in Schedule 6.10(c), none of the Employee
Benefit Plans are subject to Title IV of ERISA or Section 412 of the Code.
(d) To the knowledge of Seller, no "prohibited transaction" (as
defined in Section 4975 of the Code or Section 406 of ERISA) has occurred with
respect to the Employee Benefit Plans that would result in a material liability.
(e) Except as set forth in Schedule 6.10(e), none of the Employee
Benefit Plans is a "multiemployer plan" within the meaning of Section 4001(a)(3)
of ERISA ("Multiemployer Plan"). As of the Closing, Seller has not incurred any
------------------
liability or taken any action and, to Seller's knowledge, no action or event has
occurred, that could cause it to incur any liability (A) on account of a partial
or complete withdrawal (as defined in Sections 4203 and 4205 of ERISA,
respectively) with respect to any Multiemployer Plan, or (B) on account of
unpaid contributions to any Multiemployer Plan.
(f) Except as set forth in Schedule 6.10(f), no Business Employee
will become entitled to any materially enhanced or accelerated benefit as a
result of the transactions contemplated hereby.
(g) Except as set forth in Schedule 6.10(g), no amount payable to
any Business Employee in connection with the transactions contemplated by this
Agreement will fail to be deductible by reason of Code Section 280G.
(h) Except as disclosed in Schedule 6.10(h), since December 31,
1999, there have been no Employee Benefit Plan amendments which have resulted in
a material increase in liabilities of the Business.
17
(i) Seller has complied in all material respects with applicable
law, rules and regulations with respect to each Employee Benefit Plan.
(j) Seller has complied in all material respects with all other
applicable federal, state, and local laws, rules and regulations relating to
wages and hours, unemployment, worker's compensation and withholding with
respect to the Business Employees. Seller is not a party to any collective
bargaining agreement or any other contract with any labor organization with
respect to the Business Employees except as set forth in Schedule 6.10(j) and is
not aware of any labor organizational actions with respect to the Business
Employees.
Section 6.11. No Material Adverse Effect. Since January 1, 2000,
--------------------------
there has been no Material Adverse Effect.
Section 6.12. Taxes.
-----
(a) Except as disclosed on Schedule 6.12(a), Seller has duly filed,
or caused to be filed, and, with respect to any Tax Return required to be filed
for any period ending on or prior to the Closing Date, will file, or cause to be
filed, all Tax Returns required to be filed in respect of the Business or the
Assets. Except as would not reasonably be expected to have a Material Adverse
Effect on Seller or the Business, such Tax Returns were, and in the case of Tax
Returns not yet filed, will be, true, correct and complete when filed.
(b) Except as disclosed on Schedule 6.12(b), (i) Seller has duly
paid, caused to be paid, or made provision for the payment of and will timely
pay, all Taxes relating to the Business or the Assets for all periods ending
prior to or on, and including, the Closing Date, (ii) all Taxes relating to the
Business or the Assets that Seller is or was required to withhold or collect
have been duly withheld or collected, including, without limitation, all
employment related Taxes and withholdings, and to the extent required, have been
or will be timely paid to the proper governmental body or other Person when due,
(iii) there are no Tax liens upon any of the Assets, other than liens for Taxes
not yet due and payable and (iv) no deficiency for any amount of Tax has been
asserted or assessed, in each case in writing, by a taxing authority against
Seller with respect to the Business or the Assets that has not previously been
paid.
(c) Except as disclosed on Schedule 6.12(c), there is no claim,
audit, action, suit, proceeding or investigation now pending against, or to
Seller's knowledge threatened by any governmental body with respect to, the
Business or the Assets in respect of any Tax (including any claim by any
governmental body of a jurisdiction where Seller does not file Tax Returns that
Seller, with respect to the Business or the Assets, is or may have been subject
to taxation by that jurisdiction).
(d) As of the Closing, none of the Assets (i) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code, (ii) is "qualified
leased property" subject to a tax benefit transfer lease subject to the
provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954 or
(iii) secures any debt the interest on which is exempt from tax under Section
103 of the Code.
18
Section 6.13. Brokers. Seller has not paid or become obligated to pay
-------
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement.
Section 6.14. Insurance. Seller maintains insurance policies with
---------
respect to the Business and the Assets in amounts not less than is customarily
maintained, subject to reasonable deductibles for Seller, by persons engaged in
the same or similar business and similarly situated, including, without
limitation, insurance against loss, damage, fire, theft, public liability and
other risks typical in the industry. Seller has conducted its business in a
manner so as to conform in all material respects to all applicable provisions of
such policies, and Seller has not taken or failed to take any action which would
cause any such insurance policy to not be in full force or effect in any
material respect.
Section 6.15. Software. Seller owns or has valid licenses to use all
--------
computer software, applications and data bases currently used exclusively in the
conduct of the Business (together, the "Software"). The use of Seller's owned
--------
Software, and to Seller's knowledge, of its licensed Software, does not infringe
on the intellectual property rights of any third party. Seller is in compliance
in all material respects with the terms of all Software license agreements to
which it is a party. Seller has taken and is taking reasonable precautions
consistent with industry practices to protect any material trade secrets and
other confidential information included in the Software.
Section 6.16. Intellectual Property. To Seller's knowledge, the
---------------------
Business, as presently conducted, does not violate any patent, trademark,
service ▇▇▇▇, trade name, copyright, trade secret, license or proprietary
interest of any other party, in any way which could reasonably be expected to
have a Material Adverse Effect, and no claim has been asserted to the contrary.
Seller has taken commercially reasonable measures to preserve the
confidentiality of all confidential data transmitted to it in the operation of
the Business and has complied in all material respects with any and all privacy
policies and confidentiality agreements applicable to Seller in the conduct of
the Business. Other than the "TDI" trademark, service ▇▇▇▇, trade name, logo or
any other intellectual property derived therefrom or relating thereto, Seller
does not use any other copyrights, trademarks, service marks or trade names in
its conduct of the Business.
Section 6.17. P&L Financial Statement. The financial information with
-----------------------
respect to the NYCTA Agreement set forth on Schedule 6.17 (the "P&L Financial
-------------
Statement") is true and correct, in all material respects, as of the dates
---------
indicated thereon. The P&L Financial Statement has been prepared from the books
and records of Seller and fairly presents, in all material respects, the
financial information with respect to the NYCTA Agreement set forth therein as
at the dates and for the periods reflected thereon in accordance with Seller's
accounting practices applied on a consistent basis throughout the period
indicated.
Section 6.18. Net ▇▇▇▇▇▇▇▇ Statement.
----------------------
(a) Schedule 6.18(a) is a true and correct statement of Seller's
Net ▇▇▇▇▇▇▇▇ (for purposes hereof, "Net ▇▇▇▇▇▇▇▇" means gross advertising
------------
revenues less agency commissions) for the Business arranged by client for each
month in the eleven-month period ended November 30, 2000 and including an
aggregate amount of Net ▇▇▇▇▇▇▇▇ for the eleven-month period ended
19
November 30, 2000 (the "Net ▇▇▇▇▇▇▇▇ Statement"). All Net ▇▇▇▇▇▇▇▇ were
---------------------
generated pursuant to valid contracts with the advertisers listed on Schedule
6.18, and Seller has made available or will make available to Purchaser a true
and correct copy of each such contract.
(b) Schedule 6.18(b) sets forth, as of the date hereof, the current
aggregate Net ▇▇▇▇▇▇▇▇ for the calendar year 2001 for the Advertising Contracts
and Assigned Contracts, which Net ▇▇▇▇▇▇▇▇ are subject to any cancellations or
modifications of the Advertising Contracts or Assigned Contracts. Seller has
made available or will make available to Purchaser a true and correct copy of
each Advertising Contract and Assigned Contract.
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to Seller as follows:
Section 7.1. Organization. Purchaser is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of New York,
with full corporate power and authority to own or lease its properties and carry
on its business as presently conducted. Purchaser is licensed or qualified to
transact business in each jurisdiction in which the nature of the properties
owned or leased by it or the business transacted by it requires it to be so
licensed or qualified, except where the failure to be so qualified or licensed
would not have a material adverse effect on Purchaser.
Section 7.2. Due Authorization. Purchaser has all requisite corporate
-----------------
power and authority to execute and deliver this Agreement and to perform fully
its respective obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser
and the other agreements contemplated hereby, the performance by Purchaser of
its obligations hereunder and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Purchaser. This Agreement is a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms (except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law).
Section 7.3. No Conflict. Neither the execution and delivery of this
-----------
Agreement or any of the other agreements contemplated hereby by Purchaser nor
the consummation by Purchaser of the transactions contemplated hereby will
(a) conflict with, result in a breach or violation of or constitute (or with
notice or lapse of time or both constitute) a default under, (i) the Articles of
Incorporation or By-laws of Purchaser, or (ii) any statute, regulation, order,
judgment or decree or any instrument, contract or other agreement to which
Purchaser is a party or by which it (or any of its properties or assets) is
subject or bound which would have a material adverse effect on the businesses of
Purchaser; (b) result in the creation of, or give any party the right to create,
any lien, charge, encumbrance, security interest or other adverse interest upon
any property or asset of Purchaser or which would have a material adverse effect
on the business of Purchaser; or (c) require Purchaser to obtain any
authorization, consent, approval or waiver from, or to make any filing (other
than filing to qualify as a foreign corporation where necessary) with, any
public body or authority, or to obtain the approval or consent of any other
Person; except, in the case of
20
(b) and (c) above, as would not reasonably be expected to have a material
adverse effect on Purchaser and except as set forth in Schedule 7.3 hereto.
Section 7.4. Brokers. Purchaser has not failed to pay or become
-------
obligated to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with the transactions contemplated by this
Agreement.
ARTICLE 8 COVENANTS
---------
Section 8.1. Filings and Authorizations. Each of Seller and Purchaser,
--------------------------
as promptly as practicable, (a) will make, or cause to be made, all filings and
submissions under laws, rules and regulations applicable to it, or to its
subsidiaries and affiliates, as may be required for it to consummate the
transactions contemplated hereby; (b) will use its commercially reasonable
efforts to obtain, or cause to be obtained, all authorizations, approvals,
consents and waivers from all Persons and governmental or public authorities or
bodies necessary to be obtained by it, or any subsidiaries or affiliates, in
order for it so to consummate such transactions; and (c) will use its reasonable
best efforts to take, or cause to be taken, all other actions necessary, proper
or advisable in order for it to fulfill its obligations hereunder. In
particular, Seller shall seek and use its reasonable best efforts to obtain (i)
all authorizations and consents required to be obtained by Seller from the DOJ
under the Final Judgment and (ii) all Other Consents necessary for the
assignment to Purchaser of the NYCTA Agreement, the Advertising Contracts, the
Leases and the Assigned Contracts. Seller and Purchaser will coordinate and
cooperate with one another in exchanging information and supplying such
reasonable assistance as may be reasonably requested by each in connection with
the foregoing. Purchaser shall use its reasonable best efforts to assist Seller
in obtaining all consents required under the Advertising Contracts and the
Assigned Contracts as a result of this Agreement and the transactions
contemplated hereby.
Section 8.2. Public Announcements. Unless and to the extent required
--------------------
by law or any applicable stock exchange rule or listing requirement, each party
hereto will agree in advance prior to the issuance by either of any press
release or the making of any public statement with respect to this Agreement and
the transactions contemplated hereby and shall not issue any such press release
or make any such public statement without the prior consent in writing of the
other party. In the event that either party is required to issue a press release
or make a public statement by law, it will notify the other party of the
contents thereof in advance of the issuance or making thereof.
Section 8.3. Bulk Sales Compliance. Purchaser and Seller hereby waive
----------------------
compliance by Purchaser and Seller with the bulk sales law and any other similar
laws in any applicable jurisdiction in respect to the transactions contemplated
by this Agreement.
Section 8.4. Imprints. No later than ninety (90) days after the
---------
Closing, Purchaser shall use its best efforts to remove from all structures
covered by the terms of the NYCTA Agreement all imprints used by Seller
containing Seller's trade names or the trade names of any of Seller's
affiliates.
Section 8.5. [INTENTIONALLY OMITTED].
-----------------------
21
Section 8.6. Access, Information and Confidentiality.
----------------------------------------
(a) Seller shall permit Purchaser and its representatives after the
date of this Agreement and until the Closing to have access, during regular
business hours and upon reasonable advance notice, to the New York Business
Location, and shall furnish, or cause to be furnished, to Purchaser such
financial and operating data and other information with respect to the Business
as Purchaser shall from time to time reasonably request.
(b) Whether or not the transactions contemplated hereby are
consummated, each of Seller and Purchaser shall keep confidential all
information and materials regarding the other party reasonably designated by
such party as confidential at the time of disclosure thereof. If the
transactions contemplated hereby are consummated, Seller shall maintain
confidential and shall not use or disclose, directly or indirectly (except as
required by law or as authorized in writing by Purchaser prior to such
disclosure), any confidential or proprietary information or materials regarding
the Business or the Assets. If the transactions contemplated hereby are not
consummated, Purchaser (i) shall maintain strict confidentiality of all non-
public, proprietary information obtained during its due diligence review of
Seller, the Business and the Assets, (ii) shall return to Seller or destroy all
documents received from Seller and all copies thereof containing any such
information and (iii) shall not use any of Seller's non-public, proprietary
information for Purchaser's own purposes.
Section 8.7. Conduct of Business. From the date hereof to the Closing,
-------------------
Seller covenants and agrees to operate the Business solely in the ordinary and
usual course in accordance with Seller's past custom and practice and to use its
reasonable best efforts to preserve the properties, Business and relationships
with suppliers and customers of the Business. Except as otherwise contemplated
by this Agreement or consented to in writing by Purchaser, Seller covenants and
agrees that, until the Closing:
(a) it shall maintain insurance coverage with respect to the
Business at presently existing levels so long as such insurance is available at
commercially reasonable rates;
(b) other than in Seller's ordinary and usual course of business, it
shall not, with respect to the Business, (i) dispose of or encumber any material
assets of the Business; (ii) incur any material liabilities which would
constitute Assumed Liabilities hereunder; (iii) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing or
(iv) amend any Assigned Contract, Advertising Contract or Lease (including,
without limitation, any collective bargaining agreement); and
(c) it shall not grant any salary or wage increase (other than
pursuant to the union contracts listed on Schedule 8.7(c)) or create or amend
any employee benefit plan covering employees of the Business (other than those
employees to whom Purchaser has not, as of the date of this Agreement, offered
employment following the Closing).
22
Section 8.8. Books; Records; Access. At the Closing, Seller shall
----------------------
deliver to Purchaser all the books and records of Seller relating primarily to
the Business and copies of the relevant portions of any books and records that
otherwise relate to the Business. Seller represents that all such books and
records shall be complete and correct in all material respects. Until the third
anniversary of the Closing Date, Purchaser and Seller agree to retain all such
books and records in existence on the Closing Date and to make the same
available after the Closing Date for inspection and copying by the other or its
agents (at such party's expense), upon reasonable request and upon reasonable
notice.
Section 8.9. No Negotiation. From the date hereof until the earlier
--------------
of (i) the Closing or (ii) the termination of this Agreement pursuant to ARTICLE
10, and except as otherwise may be required by the DOJ pursuant to the Final
Judgment, Seller will not, and will cause each of its representatives not to,
directly or indirectly solicit, initiate or encourage any inquiries or proposals
from, discuss or negotiate with, provide any non-public information to, or
consider the merits of any unsolicited inquiries or proposals from, any person
(other than Purchaser) relating to any transaction involving the sale of the
Business or Assets (other than in the ordinary course of business) or any stock
sale, merger, consolidation, business combination or similar transaction
involving the Business.
Section 8.10. FIRPTA. At the Closing, Seller shall deliver to
------
Purchaser a certificate of Seller certifying that Seller is not a "foreign
person" within the meaning of Section 1445 of the Code, which certificate shall
be reasonably satisfactory to Purchaser.
Section 8.11. Successor Employee. Seller and Purchaser agree that
------------------
pursuant to the "Alternate Procedure" provided in Section 5 of Revenue Procedure
96-60, 1996-2 C.B. 399, with respect to preparing, filing and furnishing
Internal Revenue Service Forms ▇-▇, ▇-▇, ▇▇▇ ▇▇▇ ▇-▇, (▇) Seller and Purchaser
shall report on a "predecessor-successor" basis as set forth therein, (ii)
Seller shall be relieved from furnishing Forms W-2 to any of its employees who
become employees of Purchaser immediately following the Closing and who continue
to be employed by Purchaser on January 31 of the calendar year immediately
following the calendar year of Closing, (iii) Purchaser shall assume the
obligations of Seller to furnish such Forms W-2 to such employees for the full
calendar year in which the Closing occurs and (iv) Seller shall transfer to
Purchaser all Forms W-4 for any Business Employees for the calendar year in
which Closing occurs.
Section 8.12. Agreement to be Bound. Pursuant to Article III of the
---------------------
Final Judgment, Purchaser hereby covenants and agrees to be bound by the
provisions of the Final Judgment.
Section 8.13. Restrictive Covenant. None of Seller, Infinity or any of
--------------------
Infinity's other Controlled subsidiaries, any successor to Seller, Infinity or
any of Infinity's other Controlled subsidiaries or any successor to all or
substantially all of their respective businesses (including any successor that
is an affiliate of Infinity), shall submit a bid in connection with the bidding
process conducted by the NY Authority with respect to the NYCTA Agreement
(including any bidding process with respect to any "new types of Advertising
Devices" (as such phrase is defined in the NYCTA Agreement) to be used on the
subways operated by the NY Authority in the routes and rights of way now or
hereafter owned or operated by the NY Authority in the New York, New York area)
that occurs immediately following the earlier of (a) the expiration of
23
the current NYCTA Agreement on December 31, 2005, or (b) the date upon which the
current NYCTA Agreement is otherwise terminated in accordance with its terms.
Section 8.14. Transition. Seller shall use its commercially reasonable
----------
efforts to assist Purchaser from time-to-time in transitioning the operation of
the Business from Seller to Purchaser prior to the Closing Date and for six (6)
months thereafter by providing, upon reasonable request by Purchaser, such
assistance as may be mutually agreed between the parties (which shall include,
but not by way of limitation, assistance and the provision of information in
connection with (i) certain charting functions with respect to the Business,
(ii) accounts payable and receivable aging and (iii) relationships with clients
of the Business prior to the Closing Date). Seller shall use its commercially
reasonable efforts to make available certain of its personnel (which
determination concerning personnel shall be made by mutual agreement of the
parties) to assist Purchaser in connection with the transitioning referred to in
this Section 8.14.
ARTICLE 9 CERTAIN ACTIONS SUBSEQUENT TO THE CLOSING
-----------------------------------------
Section 9.1. Purchaser to Act as Agent for Seller. This Agreement
------------------------------------
shall not constitute an agreement to assign any contract right included among
the Assets if any attempted assignment of the same without the consent of the
other party thereto would constitute a breach thereof or in any way adversely
affect the rights of Seller thereunder. If such consent is not obtained or if
any attempted assignment would be ineffective or would adversely affect Seller's
rights thereunder so that Purchaser would not in fact receive all such rights,
then Purchaser shall act as the agent for Seller in order to obtain for
Purchaser the benefits thereunder. Nothing herein shall be deemed to make
Purchaser Seller's agent in respect of the Retained Assets.
Section 9.2. Business Employee and Employment Benefit Matters.
------------------------------------------------
(a) Continuation of Employment. Purchaser shall offer employment
--------------------------
to each Business Employee on the Closing Date, provided that any such offer
shall be expressly conditioned on the consummation of the transactions
contemplated hereunder. As of the Closing, the Business Hires shall cease
participating in all Employee Benefit Plans of Seller. Seller shall deliver a
schedule to Purchaser of anticipated Business Employees fifteen (15) business
days before the Closing Date. Such schedule shall be updated by Seller as soon
as practical after the Closing Date. Any employee of Seller who is not otherwise
a Business Employee but who is offered and accepts employment by Purchaser,
pursuant to mutual agreement with Seller, during the six months following the
Closing Date shall be deemed to be a Business Hire as of the date of actual
employment with Purchaser. Purchaser shall not offer employment to any employee
of any Seller during such six-month period without the consent of Seller.
Purchaser shall not be responsible for, and Seller shall indemnify and hold
harmless Purchaser against, any severance benefits or other liabilities in
respect of any Business Employee who does not accept an offer of employment from
Purchaser; provided that any such failure to accept an offer of employment from
Purchaser is not the result of Purchaser's failure to comply with the provisions
of this Section 9.2.
(b) Continuation of Compensation and Benefits. Notwithstanding the
-----------------------------------------
more specific provisions set forth in this Section 9.2, Purchaser shall provide
or shall cause to be provided to the Business Hires, other than Business Hires
who are subject to a collective
24
bargaining agreement, compensation equivalent to the compensation received by
such Business Hires immediately prior to the Closing Date and benefits or
coverage under the employee benefit plans and benefit arrangements that
Purchaser maintains for similarly situated employees. Purchaser shall cause
Business Hires to receive full credit for years of service with Seller prior to
the Closing Date for purposes of eligibility, participation and vesting, but not
accrual, of benefits under Purchaser's employee benefit plans and benefit
arrangements.
(c) Savings Plan.
------------
(i) As soon as reasonably practicable after the Closing Date,
Purchaser shall adopt or have in effect a defined contribution plan that
includes a qualified cash or deferred arrangement within the meaning of Section
401(k) of the Code (the "Purchaser's 401(k) Plan") which offers benefits to
-----------------------
Business Hires eligible to participate in Seller's 401(k) plan which is listed
on Schedule 6.10(b) hereto (the "Seller 401(k) Plan") and which contains
------------------
provisions substantially similar to the provisions of the Seller 401(k) Plan to
the extent required by Section 411(d)(6) of the Code for account balances to be
transferred from the Seller 401(k) Plan. Each Business Hire eligible to
participate in the Seller 401(k) Plan as of the Closing Date shall become
eligible to participate in Purchaser's 401(k) Plan as soon as reasonably
practicable after the Closing Date.
(ii) As soon as reasonably practicable after the Closing Date, and
after receipt of documentation described in (iii) below, Seller shall cause to
be transferred from the Seller 401(k) Plan to Purchaser's 401(k) Plan assets
having a fair market value equal to the aggregate value of the account balances
in the Seller 401(k) Plan as of the date of transfer with respect to Business
Hires and Purchaser shall cause the Purchaser's 401(k) Plan to accept the
receipt of such transfers and the liabilities relating thereto, in accordance
with Section 414(l) of the Code.
(iii) As soon as reasonably practicable after the Closing Date,
Purchaser shall provide Seller with (A) a copy of the most recent favorable IRS
determination letter to the effect that Purchaser's 401(k) Plan is qualified
under Section 401(a) of the Code or an opinion of Purchaser's counsel,
reasonably satisfactory to Seller, to such effect and (B) an opinion of
Purchaser's counsel, reasonably satisfactory to Seller, that the Purchaser's
401(k) Plan will satisfy Section 411(d)(6) of the Code with respect to account
balances to be transferred to the Purchaser's 401(k) Plan from the Seller 401(k)
Plan pursuant to (ii) above.
(iv) Seller represents, warrants and covenants that after the
Closing and at the time of the transfer of assets to the Purchaser's 401(k)
Plan, the Seller 401(k) Plan will be qualified under Section 401(a) and (k) of
the Code and, to the extent pertinent to the qualified status of the Purchaser's
401(k) Plan as relevant to asset transfers as provided herein, for all prior
periods, and will not be disqualified retroactively to any such time or for any
such period. Seller and Purchaser shall cooperate in making, and shall make, all
appropriate filings required under the Code and ERISA, and the regulations
thereunder, and shall further cooperate to ensure that the transfers described
in this Section 9.2(c) satisfy the applicable requirements of Sections 401(k),
414(l), 411(d)(6) and 401(a)(12) of the Code and the regulations thereunder.
25
(d) Welfare Benefits. Effective as of the Closing Date, Purchaser
----------------
shall provide the Business Hires, other than those Business Hires subject to a
collective bargaining agreement, with employee welfare benefits (the "Purchaser
---------
Welfare Benefits") that Purchaser maintains for similarly situated employees,
----------------
and Purchaser shall cause the Purchaser Welfare Benefit plans or arrangements
(A) to provide continuous coverage to such Business Hires and their eligible
spouses and dependents, (B) to credit service with Seller for purposes of
eligibility and benefit levels, and (C) with respect to medical benefits and
dental benefits (if any), waive any pre-existing condition limitations and
credit the amount of any copayments and deductibles incurred during the calendar
year of the Closing.
(e) Union Representation. Purchaser agrees with respect to any
--------------------
collective bargaining agreement that relates to Business Hires, to
(i) recognize each union which at the Closing Date represents any group of
Business Hires as the collective bargaining representatives of such employees as
of the Closing Date (to the extent required by applicable law) and (ii) assume
the obligations for Business Hires under any such collective bargaining
agreement including, but not limited to, the wages and benefits in effect on the
date of this Agreement.
(f) Accrued Vacation. Purchaser shall credit each Business Hire
----------------
with the unused vacation days and any personal and sickness days earned in
accordance with the vacation and personnel policies and collective bargaining
agreements of Seller as of the Closing Date, provided that an appropriate
adjustment shall be made in the event of any cash payment required to be made by
either Purchaser or Seller as a result of the transaction contemplated by this
Agreement and provided further that Seller shall be responsible for any vacation
pay accrued or attributable to services with Seller on or prior to the Closing
Date. Seller shall provide to Purchaser at the Closing Date such schedules as
Seller maintains and such other information as reasonably necessary to calculate
such benefits.
(g) Cooperation. The parties hereto agree to furnish each other
-----------
with such information concerning employees and employee benefit plans, and to
take all such other action, as is necessary and appropriate to effect the
transactions contemplated by this Agreement.
(h) COBRA. Seller shall be responsible for all notices and coverage
-----
for Business Hires and their eligible dependents under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), for all periods up to
-----
to and including the Closing Date, thereafter, Purchaser shall be responsible
for the COBRA notices and coverage applicable to Business Hires and their
eligible dependents under Purchaser's group health plan(s).
(i) Workers Compensation. Effective as of the Closing Date,
--------------------
Purchaser shall take all necessary and appropriate action to adopt a workers'
compensation program providing such workers' compensation benefits as are
provided under Seller's workers' compensation program for the Business
Hires covered by such program ("Purchaser's Workers Compensation Program").
----------------------------------------
Purchaser's Workers Compensation Program shall be responsible for all claims for
benefits which are payable after the Closing Date with respect to Business Hires
to the extent such claims are incurred after the Closing Date.
26
(j) No Right to Employment. Nothing herein expressed or implied
----------------------
shall (i) confer upon any of the employees of Seller or Purchaser any additional
rights or remedies, including, without limitation, any additional right to
employment, or continued employment, for any specified period, of any nature or
kind whatsoever under or by reason of this Agreement, or (ii) except as provided
in this Section 9.2, confer upon Purchaser (A) any liability or obligation with
respect to any Employee Benefit Plan, Multiemployer Plan or Benefit Arrangement,
(B) the obligation to continue to provide (or to provide any benefit in lieu of)
any level of compensation or benefits, or to provide any benefit plans, programs
or arrangements to Business Hires after the Closing or (c) the obligation to
continue to employ any Business Hire for any specific period of time after the
Closing, or otherwise interfere with the right of Purchaser to terminate any
such Business Hire at any time for any reason, subject to applicable law.
(k) Alternate Procedure. Seller and Purchaser agree that, pursuant
-------------------
to the "Alternate Procedure" provided in Section 5 of Revenue Procedure 96-60,
1996-2 C.B. 399, (i) Purchaser will report on a predecessor/successor basis as
set forth therein, (ii) Seller and its affiliates will be relieved from filing a
Form W-2 with respect to any Business Hire who accepts employment with Purchaser
and who continue to be employed by Purchaser on January 31 of the calendar year
immediately following the calendar year of Closing, (iii) Purchaser will
undertake to file (or cause to be filed) a Form W-2 for each such employee for
the year that includes the Closing Date, including the portion of such year that
such employee was employed by Seller and (iv) Seller shall transfer to Purchaser
all Forms W-4 for any Business Hires for the calendar year in which Closing
occurs. Seller agrees to provide Purchaser with all payroll and employment-
related information with respect to each Business Hire and to otherwise
cooperate in following the "Alternate Procedure."
Section 9.3. WARN Act. Following the Closing, Seller shall use its
--------
best reasonable efforts to give such notices and take such other actions as
Purchaser shall deem necessary or appropriate to timely and fully comply with
the notification and other requirements of the WARN Act in connection with the
consummation of the transactions under this Agreement and any loss of employment
occasioned thereby.
Section 9.4. Payment of Liabilities. Following the Closing Date
----------------------
Purchaser agrees to discharge in accordance with their terms the Assumed
Liabilities.
ARTICLE 10 TERMINATION
-----------
Section 10.1. Termination Events. Subject to the provisions of Section
------------------
10.2, this Agreement may, by written notice given at or prior to the Closing in
the manner hereinafter provided, be terminated and abandoned:
(a) By Seller in the event of a material default or material breach
by Purchaser of any of its covenants contained herein or any of its respective
representations and warranties contained in ARTICLE 7 and such material default
or breach cannot be cured within a reasonable period of time or has not been
waived by Seller;
27
(b) By Purchaser in the event of a material default or material
breach by Seller of any of its covenants contained herein or any of its
representations and warranties contained in ARTICLE 6 and such material default
or breach cannot be cured within a reasonable period of time or has not been
waived by Purchaser;
(c) By Purchaser, if it is not reasonably satisfied with the results
of its due diligence investigation of the Business and the Assets;
(d) By written mutual consent of Seller and Purchaser;
(e) By Purchaser if the conditions to Closing set forth in Sections
3.7, 3.8, 3.9 and 3.11 are not satisfied by March 31, 2001;
(f) By Seller if the conditions to Closing set forth in Sections
4.7, 4.8 and 4.9 are not satisfied by March 31, 2001; or
(g) By either Seller or Purchaser upon receipt of official notice
from the DOJ that the sale and transfer of the Assets and the Business to
Purchaser is not permitted pursuant to the Final Judgment.
Section 10.2. Effect of Termination. In the event this Agreement is
---------------------
terminated pursuant to Section 10.1, all further obligations of the parties
hereunder shall terminate, no party shall have any right against the other party
hereto and each party shall bear its own costs and expenses; provided, however,
-------- -------
that if this Agreement is terminated by a party because of the breach of this
Agreement by the other party hereto or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal and equitable
remedies (including, but not limited to, specific performance), separately or
simultaneously, will survive such termination unimpaired.
ARTICLE 11 MISCELLANEOUS
-------------
Section 11.1. Expenses. Except as specifically provided in Section
--------
2.7(b), each party to this Agreement shall pay its own costs and expenses
(including all legal and accounting fees incurred by it) relating to this
Agreement, the negotiations leading up to this Agreement and the transactions
contemplated by this Agreement.
Section 11.2. Amendment. This Agreement shall not be amended or
---------
modified except by a writing duly executed by Seller and Purchaser.
Section 11.3. Entire Agreement. This Agreement, including the Exhibits
----------------
and Schedules hereto and the other instruments, agreements and documents
delivered pursuant to this Agreement, contain all of the terms, conditions and
representations and warranties agreed upon by the parties relating to the
subject matter of this Agreement and supersedes all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter.
28
Section 11.4. Headings. The headings contained in this Agreement are
--------
solely for convenience and shall not affect the rights of the parties to this
Agreement.
Section 11.5. Notices. All notices, requests, demands and other
-------
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given (a) on the date of delivery, if
delivered to the persons identified below, (b) seven calendar days after mailing
if mailed, with proper postage, by certified or registered mail, air mail
postage prepaid, return receipt requested, addressed as follows:
If to Seller:
Transportation Displays Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Haut, Esq.
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇ Angus, Esq.
If to Purchaser:
Interep National Radio Sales, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Guild
With a copy to:
Salans ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or (c) on the date of receipt if sent by telex or telecopy, and confirmed in
writing in the manner set forth in (b) on or before the next day after the
sending of the telex or telecopy. Such addresses and numbers may be changed,
from time to time, by means of a notice given in the manner provided in this
Section.
29
Section 11.6. Severability. If any provision of this Agreement is
------------
held to be invalid and unenforceable for any reason, it shall be adjusted rather
than voided, if possible, in order to achieve the intent of the parties to this
Agreement to the extent possible. In any event, all other provisions of this
Agreement shall be deemed valid and enforceable to the full extent possible.
Section 11.7. Waiver. Waiver of any term or condition of this
------
Agreement by any party shall only be effective if in writing and shall not be
construed as a waiver of any subsequent breach or failure of the same term or
condition, or a waiver of any other term or condition of this Agreement.
Section 11.8. Counterparts and Facsimile Signatures. This Agreement
-------------------------------------
may be signed in two or more counterparts with the same effect as if the
signatures to each counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this Agreement. For
purposes of this Agreement, a facsimile copy of a party's signature shall be
sufficient to bind such party.
Section 11.9. Governing Law and Jurisdiction.
------------------------------
(a) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, without regard to the conflicts of laws
principles thereof.
(b) Purchaser and Seller hereby irrevocably submit to the
jurisdiction of any New York or United States federal court sitting in New York,
New York over any suit, action or other proceeding brought by either party
arising out of or relating to this Agreement and Seller and Purchaser hereby
irrevocably agree that all claims with respect to such suit, action or other
proceeding may be heard and determined in such courts. In the event of any such
suit, action or proceeding, the prevailing party shall be entitled to reasonable
attorneys' fees and other costs and expenses (including without limitation
travel expenses) incurred in litigating, enforcing or otherwise resolving or
settling such suit, action or proceeding.
Section 11.10. Assignment. This Agreement may not be assigned by
----------
Seller or Purchaser without the prior written consent of the other parties
hereto, except that Purchaser may assign its rights under this Agreement to a
subsidiary thereof; provided, that Purchaser shall remain liable for all
--------
liabilities and obligations under this Agreement.
Section 11.11. Remedies; Specific Performance; Blue Penciling. Any
----------------------------------------------
remedy chosen by the parties hereto shall be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise. The parties hereto acknowledge that the provisions of
this Agreement are (i) reasonable, fair and equitable in scope, term and
duration, (ii) necessary to protect the legitimate business interests of the
parties hereto, and (iii) necessary for the protection of the parties and that
it will be difficult to determine the resulting damages to the damaged party if
the agreements and covenants contained herein are not specifically enforced.
Accordingly, the parties hereto each agree that, in addition to any other
remedies to which a damaged party may be entitled, each damaged party shall be
entitled to seek and obtain injunctive relief from a court of competent
jurisdiction without the necessity of posting a bond. In the event that any
provision of this Agreement shall be declared to be invalid, illegal or
unenforceable, the remainder of such provision shall survive to the extent it is
not so
30
declared, and the validity, legality and enforceability of the other provisions
hereof shall not in any way be affected or impaired thereby, unless such action
would substantially impair the benefits to any party of the remaining provisions
of this Agreement.
Section 11.12. Third Parties. Except as specifically set forth or
-------------
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person other than the parties hereto and
their successors or assigns any rights or remedies under or by reason of this
Agreement.
Section 11.13. Further Assurances. Prior to, on or after the Closing
------------------
Date, the parties hereto agree to (i) furnish upon request to each other such
further information, (ii) execute and deliver to each other such other documents
and (iii) do such other acts and things, in form and manner reasonably
satisfactory to the requesting party, all as a party hereto may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to herein.
Section 11.14. Successors and Assigns. The provisions of this
----------------------
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective successors and assigns; provided, that
--------
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement except as provided in Section 11.10 hereof.
[signature page follows]
31
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date set forth above.
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ ▇▇▇▇▇ ▇. Guild
--------------------------------
Name: ▇▇▇▇▇ ▇. Guild
Title: Chief Executive Officer
TRANSPORTATION DISPLAYS INCORPORATED
By: /s/ ▇▇▇▇ ▇. Haut
--------------------------------
Name: ▇▇▇▇ ▇. Haut
Title: Executive Vice President
32
ACKNOWLEDGED and, with respect to Section 8.13, AGREED as of the date
set forth above.
INFINITY BROADCASTING CORPORATION
By: /s/ ▇▇▇▇ ▇. Haut
-------------------------------
Name: ▇▇▇▇ ▇. Haut
Title: Vice President
33
