1
EXHIBIT 99.1
CONFORMED COPY
AGREEMENT OF PURCHASE AND SALE
Dated as of April 30, 1997
by and between
MINNESOTA MINING AND MANUFACTURING COMPANY,
as Seller
and
OUTDOOR SYSTEMS, INC.,
as Buyer
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TABLE OF CONTENTS
Page
ARTICLE I TERMS OF PURCHASE AND SALE...............................1
1.01. Purchase and Sale........................................1
1.02. The Closing; Closing Deliveries..........................1
1.03. Purchase Price and Payment...............................2
1.04. Purchase Price Adjustment................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.................5
2.01. Capitalization...........................................5
2.02. Organization.............................................5
2.03. Financial Statements.....................................5
2.04. Absence of Certain Changes or Events.....................6
2.05. Title to Assets..........................................6
2.06. Litigation; Compliance with Laws.........................6
2.07. Permits..................................................7
2.08. Environmental............................................7
2.09. Commitments..............................................8
2.10. Corporate Power and Authority; Effect of Agreement.......8
2.11. Employee Benefit Plans...................................8
2.12. Consents.................................................9
2.13. Taxes....................................................9
2.14. Fees.....................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER..................10
3.01. Corporate Power and Authority; Effect of Agreement.......10
3.02. Consents.................................................11
3.03. Availability of Funds....................................11
3.04. Litigation...............................................12
3.05. Purchase for Investment..................................12
ARTICLE IV COVENANTS OF SELLER......................................12
4.01. Conduct of Business......................................12
4.02. Access...................................................12
4.03. No Solicitation..........................................13
(i)
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4.04. Further Assurances.......................................13
4.05. Interim Statements.......................................13
ARTICLE V COVENANTS OF BUYER.............................................13
5.01. Books and Records; Personnel.............................13
5.02. Buyer's Knowledge of Business; Representations of
Seller Modified by Buyer's Knowledge...................14
5.03. Liabilities..............................................15
5.04. Performance Bonds........................................16
5.05. Imprints.................................................16
5.06. Consummation of Agreement................................16
5.07. Further Assurances.......................................17
ARTICLE VI ADDITIONAL COVENANTS...........................................17
6.01. Taxes....................................................17
6.02. Corporate Name...........................................21
6.03. Cash Management..........................................21
6.04. Filings; Other Action....................................22
6.05. Buyer Investigation; No Representations or Warranties;
Exclusivity of Remedies................................24
6.06. Excluded Assets; Included Businesses.....................26
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER.............................27
7.01. Representations, Warranties, Covenants of Seller.........27
7.02. No Prohibition...........................................28
7.03. Governmental Consents....................................28
7.04. Non-Foreign Status Statements............................28
7.05. Resignations.............................................28
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER............................29
8.01. Representations, Warranties, Covenants of Buyer..........29
8.02. No Prohibition...........................................29
8.03. Insurance................................................29
8.04. Performance Bonds........................................29
8.05. Governmental Consents....................................29
(ii)
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ARTICLE IX EMPLOYMENT AND EMPLOYEE BENEFITS ARRANGEMENTS...........30
9.01. Definitions.............................................30
9.02. Employment..............................................30
9.03. Seller's Benefits.......................................31
9.04. Buyer's Benefits........................................33
9.05. Severance...............................................33
9.06. Indemnity...............................................34
9.07. W-2 Matters.............................................34
9.08. Continuing Assistance...................................35
9.09. Union Employees.........................................35
ARTICLE X TERMINATION PRIOR TO CLOSING............................35
10.01. Termination.............................................35
10.02. Effect on Obligations...................................36
10.03. Termination Fee.........................................36
ARTICLE XI DISPUTE RESOLUTION......................................37
11.01. Unaided Negotiations....................................37
11.02. Mediation...............................................37
11.03. Litigation..............................................38
11.04. Governing Law; Personal Jurisdiction; Waiver of Jury....38
ARTICLE XII MISCELLANEOUS...........................................38
12.01. Survival................................................38
12.02. Indemnification.........................................39
12.03. Interpretive Provisions.................................43
12.04. Entire Agreement........................................43
12.05. Successors and Assigns..................................43
12.06. Headings................................................44
12.07. Modification and Waiver.................................44
12.08. Broker's Fees...........................................44
12.09. Expenses................................................44
12.10. Notices.................................................44
12.11. Public Announcements....................................45
12.12. Nonassignable Assets....................................46
12.13. Severability............................................46
12.14. Counterparts............................................46
12.15. Third Party Rights......................................46
(iii)
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AGREEMENT OF PURCHASE AND SALE
This Agreement, made and entered into this 30th day of April,
1997, by and between Minnesota Mining and Manufacturing Company, a Delaware
corporation ("Seller"), on the one hand, and Outdoor Systems, Inc., a Delaware
corporation ("Buyer"), on the other;
W I T N E S S E T H:
WHEREAS, Seller is the owner of all of the issued and
outstanding common stock, no par value (the "Stock"), of National Advertising
Company, a Delaware corporation (the "Company");
WHEREAS, the Company is in the business of owning,
constructing, posting and maintaining off-premises advertising displays,
consisting principally of painted bulletins, poster panels and mall advertising
displays of various sizes in the United States (such U.S. business, the "Outdoor
Advertising Business" or the "Business");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase from Seller, all of the Stock;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, the parties do hereby agree as
follows:
ARTICLE I
TERMS OF PURCHASE AND SALE
1.01. Purchase and Sale. On the Closing Date (as defined in Section
1.02), on the terms and subject to the conditions set forth in this Agreement,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Stock.
1.02. The Closing; Closing Deliveries. (a) The closing of the
transactions contemplated hereby (the "Closing") shall take place at Seller's
offices at 3M Center, St. Xxxx, Minnesota, commencing at 9 a.m., Central time,
on the fifth business day after termination or expiration of the applicable
waiting period (and any extension thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), or at such other time and/or place and/or on such other date as
the parties may mutually agree (the "Closing Date"). Notwithstanding the above,
under no circumstances shall the Closing Date occur later
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than the Termination Date (as defined in Section 6.04(b)). Time is of the
essence in this transaction. Notwithstanding failure to meet the conditions set
forth in Section 7.02 (with respect to antitrust matters only) or Section 7.03,
Buyer's failure to close on or prior to the Termination Date shall constitute a
breach of this Agreement; provided, however, that Seller's failure to perform or
observe in any material respect any of its covenants or agreements contained in
this Agreement shall not have been the cause of, or result in, Buyer's failure
to close on or before such date.
(b) (i) In addition to and without limiting any other
provision of this Agreement, the Seller shall deliver to Buyer at the Closing
the following:
(A) the stock certificates evidencing the Stock,
together with such endorsements or duly executed assignments separate from
certificate as may be required to vest all right, title and interest in and to
the Stock in Buyer;
(B) the stock books, stock transfer ledgers, minute
books and corporate seals of the Company;
(C) the various certificates, instruments and
documents referred to in Article VII; and
(D) such other instruments as Buyer or its counsel
may reasonably request.
(ii) In addition to and without limiting any other
provision of this Agreement, Buyer shall pay or deliver, as the case may be, to
Seller as the Closing the following:
(A) the Purchase Price (as defined in Section 1.03)
and payable as set forth in Section 1.03;
(B) the payment described in Section 9.02(a);
(C) the various certificates, instruments and
documents referred to in Article VIII; and
(D) such other instruments as Seller or counsel for
Seller may reasonably request.
1.03. Purchase Price and Payment. (a) The aggregate purchase price
to be paid by Buyer for the Stock shall be $1,000,000,000 (one billion dollars),
as adjusted pursuant to Section 1.04 below (the "Purchase Price"). Payment of
the Deposit (as defined in Section 1.03(b)) shall be made pursuant to Section
1.03(b). Payment of the balance of the Purchase Price due on the Closing Date
shall be in U.S. dollars and shall be
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made no later than 11 a. m., Central time, on the Closing Date by wire transfer
of immediately available funds to the account of Seller at a bank specified by
Seller. If payment of the Purchase Price is made after 11 a. m., Central time,
on the Closing Date, Buyer shall pay to Seller, in the manner set forth above,
interest on the Purchase Price at an annual rate equal to the prime rate as
reported in The Wall Street Journal on the Closing Date (the "Interest Rate")
plus 2%, from and including the Closing Date to but not including the next
business day following the Closing Date.
(b) Upon the execution of this Agreement, Buyer shall deposit
the amount of $20,000,000 (twenty million dollars) in U.S. dollars (the
"Deposit") with Seller, by wire transfer of immediately available funds to a
separate, interest-bearing account of Seller at a bank designated by Seller at
an interest rate of 5.25%. In the event Closing occurs, the Deposit (plus
interest at such rate) shall be applied to the Purchase Price. In the event
Closing does not occur, the Deposit (plus interest at such rate) shall be paid
pursuant to Section 10.03.
1.04. Purchase Price Adjustment. (a) Seller and Buyer agree that the
Purchase Price will be adjusted up or down by the amount by which the Company's
Working Capital (as hereinafter defined) on the Closing Date exceeds or is less
than the Company's Working Capital as of December 31, 1996 based on the Balance
Sheet (as defined in Section 2.03); provided, however, that Seller and Buyer
agree that the Purchase Price will be adjusted (and the Purchase Price
adjustment will be paid) only in the event that the amount that would be
refunded or paid under this Section 1.04 is greater than $20,000,000 (twenty
million dollars) (two percent of the Purchase Price without regard to any
adjustment under this Section 1.04). Working Capital shall mean current assets
less current liabilities as determined in accordance with the historical
accounting practices applied in the preparation of the Balance Sheet (as defined
in Section 2.03); provided, however, that Working Capital shall exclude (i) the
current portion of (A) deferred tax liabilities and (B) income tax liabilities
and (ii) cash on hand and in bonds and other cash items of the Company other
than amounts of Pre-Closing Cash (as defined in Section 6.03(a)) left by Seller
in Bank Accounts (as defined in Section 6.03(a)) or other locations as
contemplated by the proviso in Section 6.03(a). Buyer and Seller hereby confirm
and agree that, based upon the definition of Working Capital as set forth in
this Section 1.04(a) and as described in the Disclosure Schedule, Working
Capital at December 31, 1996 is $26,044,000 (twenty-six million, forty-four
thousand dollars).
(b) Within ninety (90) days after the Closing Date, Seller
will prepare and provide to Buyer a balance sheet of the Company as of the close
of business on the Closing Date (the "Closing Balance Sheet") and a calculation
of the working capital adjustment to the Purchase Price based on the Closing
Balance Sheet. The Closing Balance Sheet shall be prepared in accordance with
the historical accounting practices applied in the preparation of the Balance
Sheet with consistent classification,
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judgments, and estimation methodology as used in the preparation of the Balance
Sheet. In preparing the Closing Balance Sheet, the amounts included for
litigation reserves and for any other reserves that were valued for the Balance
Sheet by subjective estimates shall be equal to the amounts (including zero)
included in respect of such items on the December 31, 1996 Balance Sheet except
to reflect changes that have actually occurred or events actually occurring
between December 31, 1996 and the date of the Closing Balance Sheet (in which
event the immediately preceding sentence shall govern the determination of any
changes in the reserve). The Closing Balance Sheet shall not take into account
any changes in circumstances or events occurring after the close of business on
the day immediately preceding the Closing Date.
(c) Buyer agrees that the Closing Balance Sheet delivered by
Seller to Buyer and the computation of the Purchase Price adjustment annexed
thereto shall be conclusive and binding upon the parties unless Buyer, within 10
days after the delivery to Buyer of the Closing Balance Sheet, notifies Seller
in writing that Buyer disputes any of the amounts set forth therein, specifying
the nature of the dispute and the basis therefor, and any refund or amount due
shall nonetheless be promptly made to the extent such amount is not in dispute.
The parties shall in good faith attempt to resolve any dispute, in which event
the Closing Balance Sheet and the computation of the Purchase Price adjustment,
as amended to the extent necessary to reflect the resolution of the dispute,
shall be conclusive and binding upon the parties. If any such dispute cannot be
resolved by the parties within 10 days after the date of the notice of the
dispute, it shall be referred to a mutually satisfactory independent public
accounting firm of national stature that has not been employed by either party
for the two years preceding the Closing Date. The determination of such firm
shall be conclusive and binding on each party. The fees of such firm shall be
borne equally by Buyer and Seller.
(d) (1) Buyer hereby acknowledges and agrees that access to
employees of the Company and representatives of Buyer may be required in order
that Seller may prepare the Closing Balance Sheet. Buyer shall make such persons
available to Seller and its representatives and shall give Seller and its
representatives all necessary access to the Books and Records (as defined in
Section 5.01(a)), without charge to Seller, as may reasonably be requested by
Seller, in order to assist in the preparation of the Closing Balance Sheet.
(2) Seller hereby agrees to furnish Buyer with any
documents or records in Seller's possession or control as may reasonably be
requested by Buyer in order to confirm the adjustments in this Section 1.04.
(e) On or before the one hundred and twentieth (120th) day
after the Closing Date, all required refunds or payments under this Section 1.04
shall be made on the basis of the Closing Balance Sheet.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.01. Capitalization. The authorized capital stock of the Company
consists of 50,000 shares of Stock, of which 40,000 shares are outstanding; all
of such 40,000 shares of Stock are owned of record and beneficially by Seller.
All of the shares comprising the Stock are validly issued, fully paid and
non-assessable. There are outstanding no securities convertible into,
exchangeable for, or carrying the right to acquire, equity securities of the
Company, or subscriptions, warrants, options, rights or other arrangements or
commitments obligating the Company to issue or dispose of any of its equity
securities or any ownership interest therein. The sale and delivery of the Stock
to Buyer pursuant to Article I hereof will vest in Buyer legal and valid title
to the Stock, free and clear of all liens, security interests, pledges, adverse
claims and other encumbrances ("Encumbrances") (other than Encumbrances created
or suffered by Buyer).
2.02. Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing as a foreign corporation in all jurisdictions where the nature of the
property owned or leased by it, or the nature of the business conducted by it,
makes such qualification necessary and the absence of such qualification would
not have a material adverse effect on the business, assets, financial condition
or results of operations of the Company (a "Material Adverse Effect"). True and
complete copies of the certificate of incorporation and by-laws of the Company
have previously been delivered to Buyer. The Company does not have any
subsidiaries. Except as set forth on the Disclosure Schedule, the Company does
not engage in, and has not during the preceding 5 years engaged in, any business
except the Outdoor Advertising Business.
2.03. Financial Statements. Seller has delivered to Buyer audited
balance sheets of the Company as of December 31, 1996 and 1995 (the "Balance
Sheet") and audited statements of income and cash flows for each of the three
years in the period ended December 31, 1996, including footnotes thereto
(collectively, the "Financial Statements"), included in the Disclosure Schedule.
The Financial Statements fairly present in all material respects the financial
position of the Company as of December 31, 1996 and 1995 and the results of
operations and cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles
consistently applied except as disclosed in the notes thereto.
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2.04. Absence of Certain Changes or Events. Except as otherwise set
forth in the Disclosure Schedule or as otherwise contemplated by this Agreement,
since December 31, 1996, the Company has not (i) suffered any damage,
destruction or casualty loss to its physical properties which has a Material
Adverse Effect; (ii) incurred or discharged any obligation or liability or
entered into any other transaction except in the ordinary course of business and
except for obligations, liabilities and transactions that do not individually or
in the aggregate have a Material Adverse Effect; (iii) suffered any material
adverse change in its assets, business or financial condition; or (iv) increased
the rate or terms of compensation payable or to become payable by the Company to
its key employees or increased the rate or terms of any bonus, pension or other
employee benefit plan covering any of its key employees, except in each case
increases occurring in the ordinary course of business in accordance with its
customary practices (including normal periodic performance reviews and related
compensation and benefit increases) or as required by any pre-existing
Commitment (as defined in Section 2.09).
2.05. Title to Assets. (a) Other than as set forth in Section
6.06(a), the Company has or will have prior to Closing good and marketable title
to all of the assets which it purports to own (including those assets reflected
on the December 31, 1996 Balance Sheet, except for assets and properties sold,
consumed or otherwise disposed of in the ordinary course of business since the
date of the Balance Sheet) ("Assets"), free and clear of all Encumbrances, other
than (i) as set forth in the Disclosure Schedule, (ii) for liens for taxes not
yet due and payable or due but not delinquent or being contested in good faith
by appropriate proceedings and (iii) Encumbrances which individually or in the
aggregate do not have a Material Adverse Effect; provided, however, that Seller
does not represent or warrant hereby that the lessors of any lease, license,
easement or other agreement (for real property or otherwise) (collectively, the
"Leases") to which the Company is a party have good and marketable title to the
property leased thereunder. To Seller's knowledge, (i) there are no mortgages or
deeds of trust on any real property owned or leased by the Company with respect
to which the Company is the mortgagor or the obligor and (ii) there are no liens
or security interests on the Assets securing obligations of the Company, or
guaranties by the Company of obligations, for borrowed money or evidenced by
notes, debentures or other similar instruments.
(b) For purposes of this Agreement, transfers under
condemnation and conveyances under threat of condemnation shall be considered in
the ordinary course of business.
2.06. Litigation; Compliance with Laws. To the knowledge of Seller,
except for matters (i) that have occurred in the ordinary course of the Outdoor
Advertising Business (including, but not limited to, local permitting issues),
(ii) that do not have a Material Adverse Effect, (iii) that are listed in the
Disclosure Schedule or (iv) that are described in Section 2.08:
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(a) the Outdoor Advertising Business is not operating under or
subject to, or in default with respect to, any order, writ, injunction, judgment
or decree of any court or federal, state or local government;
(b) the Company has not received written notification of any
action or proceeding in any court or before any governmental authority
("Litigation") pending or threatened by or against the Company; and
(c) (i) other than with respect to the Company's off-premises
advertising displays, the Company is in compliance with applicable laws,
by-laws, regulations, orders or decrees, and the present uses by the Company of
the assets conveyed hereby do not violate or fail to comply with any such laws,
regulations, orders or decrees in any material respect and (ii) with respect to
the Company's off-premises advertising displays, the Company has not received
written notification from any federal, state, local or other governmental
authority that (x) the Company is not in compliance with applicable laws,
regulations, orders or decrees, or (y) the present uses by the Company of such
off-premises advertising displays violate or fail to comply with any such laws,
regulations, orders or decrees in any material respect.
2.07. Permits. To the knowledge of Seller, the Disclosure Schedule
lists all material licenses and permits paid by the Company as of the date set
forth on such listing in connection with the Outdoor Advertising Business and
issued to the Company by any federal or state governmental authority.
2.08. Environmental. (a) To the knowledge of Seller, no hazardous
substance (as defined under applicable federal, state, local or foreign law) has
been treated, stored, disposed of or discharged into the environment on or from
the premises of any real property owned by the Company or subject to any Lease
which is required by law, rule or regulation currently in effect to be
remediated by or at the expense of Seller or the Company, other than (i) as
listed in the Disclosure Schedule or (ii) where the cost of such remediation
individually or in the aggregate would not have a Material Adverse Effect.
(b) Buyer and Seller agree that the only representations and
warranties of Seller in this Agreement as to any Environmental Matters are those
contained in Section 2.06 and this Section 2.08, and that such representations
and warranties relate only to the present use of the property owned by the
Company or subject to any Lease. As used herein, the term "Environmental
Matters" means any matter arising out of or relating to environment, safety,
health or sanitation or the production, storage, handling, use, emission,
release, discharge or disposal of any substance, product or waste which is
hazardous or toxic or which is regulated by municipal, state, federal, foreign
or other law.
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2.09. Commitments. The Disclosure Schedule lists each written
contract or agreement and, to the knowledge of Seller, each oral agreement, to
which the Company is a party or by which the Company is bound and which is
material to the business or financial condition of the Company (collectively,
the "Commitments"). Except as set forth in the Disclosure Schedule, to Seller's
knowledge, the Company is not in default under any of the Commitments, which
default has a Material Adverse Effect.
2.10. Corporate Power and Authority; Effect of Agreement. (a) Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the Ancillary
Documents (as defined in Section 12.01) and to consummate the transactions
contemplated hereby and thereby.
(b) The execution, delivery and performance by Seller of this
Agreement and the Ancillary Documents and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller.
(c) This Agreement has been, and the Ancillary Documents when
executed and delivered will be, duly and validly executed and delivered by
Seller; and this Agreement constitutes, and the Ancillary Documents when
executed and delivered will constitute, valid and binding obligations of Seller
enforceable against Seller in accordance with their respective terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, and (ii) is subject to general principles of
equity.
(d) The execution, delivery and performance by Seller of this
Agreement and the Ancillary Documents and the consummation by Seller of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (i) violate any provision of
law, rule or regulation to which Seller or the Company is subject, (ii) violate
any order, judgment or decree applicable to Seller or the Company, or (iii)
violate any provision of the certificate of incorporation or the by-laws of
Seller or the Company; except, in each case, for violations which individually
or in the aggregate would not materially hinder or impair the consummation of
the transactions contemplated hereby and thereby and would not have a Material
Adverse Effect.
2.11. Employee Benefit Plans. (a) The Disclosure Schedule lists all
material Company Benefit Plans and material Benefit Arrangements (as defined in
Section 9.01). True and complete copies thereof, where in writing, have
previously been delivered or made available to Buyer.
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(b) With respect to each of the Company Benefit Plans intended
to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), except as set forth in the Disclosure Schedule, (i) a favorable
determination letter has been issued by the Internal Revenue Service (the "IRS")
that considers all amendments to such Company Benefit Plans required by the Tax
Reform Act of 1986, and (ii) there have been no prohibited transactions (within
the meaning of Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code) for which no exemption
exists under Section 408 of ERISA or Section 4975 of the Code and for which
there is any liability or civil penalty assessed pursuant to Section 502(i) of
ERISA or taxes imposed by Section 4975 of the Code which would individually or
in the aggregate have a Material Adverse Effect.
(c) Except as set forth in the Disclosure Schedule, the
Company Benefit Plans and the Benefit Arrangements have been maintained in
accordance with their terms and all provisions of applicable law, except where
the failure to do so does not have a Material Adverse Effect.
(d) Except as set forth in the Disclosure Schedule, the
Company does not have any obligation to contribute to a "multiemployer plan" as
defined in Section 3(37) of ERISA or a Benefit Plan subject to Title IV of ERISA
with respect to any Employees or any Union Employees (as defined in Section
9.01(c)).
2.12. Consents. To the knowledge of Seller, no consent, approval or
authorization of, or exemption by, or filing with, any governmental authority is
required to be obtained or made by Seller in connection with the execution,
delivery and performance by Seller of this Agreement and the Ancillary Documents
or the taking by Seller of any other action contemplated hereby or thereby,
other than (i) pursuant to the HSR Act, (ii) as listed in the Disclosure
Schedule or (iii) such consents, approvals, authorizations or exemptions which
individually or in the aggregate, if not made, obtained or granted, would not
have a Material Adverse Effect and would not materially affect the ability of
Seller to execute, deliver and perform this Agreement and the Ancillary
Documents or the transactions contemplated hereby or thereby.
2.13. Taxes. (a) Except as set forth in the Disclosure Schedule, all
federal, state, local and foreign tax returns and reports required to be filed
with respect to the Company have been filed in a timely manner (taking into
account all extensions of due dates) and all taxes shown as due thereon have
been paid, except where the failure to so file or pay, individually or in the
aggregate, does not have a Material Adverse Effect. Except as set forth in the
Disclosure Schedule, no deficiencies for any taxes in respect of the Company
have been asserted in writing against the Company which remain unpaid and which
individually or in the aggregate have a Material Adverse Effect.
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(b) Neither Seller nor the Company is a "foreign person"
within the meaning of Section 1445(b)(2) of the Code.
2.14. Fees. Except for the fees payable to Xxxxxxx, Xxxxx & Co.,
neither Seller nor the Company has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01. Corporate Power and Authority; Effect of Agreement. (a) Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to execute, deliver and perform this Agreement and the
Ancillary Documents and to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance by Buyer of this
Agreement and the Ancillary Documents and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Buyer.
(c) This Agreement has been, and the Ancillary Documents when
executed and delivered will be, duly and validly executed and delivered by
Buyer; and this Agreement constitutes, and the Ancillary Documents when executed
and delivered will constitute, valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, and (ii) is subject to general principles of
equity.
(d) The execution, delivery and performance by Buyer of this
Agreement and the Ancillary Documents and the consummation by Buyer of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (i) violate any provision of
law, rule or regulation to which Buyer is subject, (ii) violate any order,
judgment or decree applicable to Buyer, or (iii) violate any provision of the
Certificate of Incorporation or the By-laws of Buyer; except, in each case, for
violations which individually or in the aggregate would not
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materially hinder or impair the consummation of the transactions contemplated
hereby and thereby.
3.02. Consents. Except pursuant to the HSR Act and except for
filings pursuant to applicable federal securities laws and regulations, no
consent, approval or authorization of, or exemption by, or filing with, any
governmental authority is required to be obtained or made by Buyer in connection
with the execution, delivery and performance by Buyer of this Agreement, or the
taking by Buyer of any other action contemplated hereby.
3.03. Availability of Funds. (a) Buyer will have available on the
Closing Date sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
(b) Canadian Imperial Bank of Commerce ("CIBC") and CIBC Wood
Gundy Securities Corp. ("CIBCWG") have issued to Buyer, and Buyer has received
and accepted from CIBC and CIBCWG, a commitment letter dated as of the date
hereof (the "Senior Credit Facilities Commitment Letter"), whereby CIBC has
committed to provide to Buyer a credit facility consisting of a term loan
facility and a revolving credit facility, subject to the terms and conditions of
the Senior Credit Facilities Commitment Letter. CIBC, Inc. and CIBC WG Argosy
Merchant Fund 2, L.L.C. ("CIBC Argosy") have issued to Buyer, and Buyer has
accepted from CIBC, Inc. and CIBC Argosy, a commitment letter dated as of the
date hereof (the "Bridge Loan Commitment Letter" and, collectively with the
Senior Credit Facilities Commitment Letter, the "Commitment Letters"), whereby
CIBC, Inc. has committed to provide a senior subordinated bridge loan and CIBC
Argosy has committed to purchase Buyer's Senior Increasing Rate Redeemable
Preferred Stock, subject to the terms and conditions of the Bridge Commitment
Letter. Buyer has delivered true and complete copies of the Commitment Letters
to Seller. The aggregate amount of financing pursuant to the Commitment Letters
will be sufficient to enable Buyer to consummate the transactions contemplated
by this Agreement and to refinance, to the extent necessary, Buyer's existing
debt. The Commitment Letters are in full force and effect without amendment or
modification, except for any amendments or modifications made after the date of
this Agreement without otherwise causing the terms of this Section 3.03 to
become untrue and without otherwise having a material adverse effect upon
Buyer's right to funding of the credit and equity facilities under the
Commitment Letters.
(c) Consummation of the transactions contemplated hereby and
by the Commitment Letters will not cause or result in any breach or default
(including any event which, with notice or lapse of time or both would be a
breach or a default) or trigger any repurchase requirements under any of the
terms or provisions of any
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indebtedness of Buyer or its subsidiaries that will be outstanding after
consummation of the transactions contemplated hereby.
3.04. Litigation. There is no Litigation pending or, to Buyer's
knowledge, threatened (i) against Buyer or any of its affiliates with respect to
which there is a reasonable likelihood of a determination which would materially
affect the ability of Buyer to perform its obligations under this Agreement, or
(ii) which seeks to enjoin or obtain damages in respect of the consummation of
the transactions contemplated hereby. Neither Buyer nor any of its affiliates is
subject to any outstanding orders, rulings, judgments or decrees which would
materially affect the ability of Buyer to perform its obligations under this
Agreement.
3.05. Purchase for Investment. Buyer is purchasing the Stock for
investment and not with a view to any public resale or other distribution
thereof, except in compliance with applicable securities laws. Buyer
acknowledges that it has received, or has had access to, all information which
it considers necessary or advisable to enable it to make a decision concerning
its purchase of the Stock.
ARTICLE IV
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
4.01. Conduct of Business. Except as may be otherwise contemplated
by this Agreement or required by any of the documents listed in the Disclosure
Schedule or except as Buyer may otherwise consent to in writing (which consent
shall not be unreasonably withheld), from the date hereof and prior to the
Closing Date, Seller will (i) cause the Company to (x) in all material respects
operate the Outdoor Advertising Business only in the ordinary course, (y) use
its reasonable efforts to keep available until the Closing Date the services of
its present employees and agents (as a group) involved in the Outdoor
Advertising Business, and (z) use its reasonable efforts to preserve its
relationship with its material lenders, suppliers, contractors, customers,
lessors, advertisers, licensors and licensees and others having material
business dealings with the Outdoor Advertising Business such that the Outdoor
Advertising Business will not be materially impaired and (ii) use its reasonable
efforts to maintain in full force and effect Seller's self-insurance plan which
insures, among other affiliates of Seller, the Company.
4.02. Access. From the date hereof and prior to the Closing Date,
Seller shall provide Buyer with such information as Buyer may from time to time
reasonably request with respect to the Company and the transactions contemplated
by this Agreement and the Ancillary Documents, and shall provide Buyer and its
accountants, counsel,
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consultants and other representatives reasonable access, during regular business
hours and upon reasonable notice, to the personnel, properties, books and
records of the Company as Buyer may from time to time reasonably request;
provided, however, that Seller shall not be obligated to provide Buyer with any
information which, in the sole discretion of Seller, relates to trade secrets or
the disclosure of which would violate any law, rule or regulation or term of any
Commitment, or if the provision thereof would, in the sole discretion of Seller,
adversely affect the ability of Seller, the Company or any of their affiliates
to assert attorney-client, attorney work product or other similar privilege, and
provided, further, that any information provided under this Section 4.02 shall
be limited to information available at Seller's headquarters or such other
location as designated by Seller until such time as Seller has made a public
announcement or issued a press release concerning the transactions contemplated
herein, whichever is earlier. Any disclosure whatsoever during such
investigation by Buyer shall not constitute an enlargement of or additional
representations or warranties of Seller beyond those specifically set forth in
this Agreement. All such information and access shall be subject to the terms
and conditions of the letter agreement dated February 19, 1997 (the
"Confidentiality Agreement").
4.03. No Solicitation. From the date hereof and prior to the Closing
Date, Seller shall not, nor permit any of its affiliates to, solicit or
encourage any inquiries or proposals for, or enter into any discussions with
respect to, the acquisition or disposition of the Company.
4.04. Further Assurances. At any time or from time to time after the
Closing, Seller shall, at the request of Buyer and at Buyer's expense, execute
and deliver any further instruments or documents and take all such further
action as Buyer may reasonably request in order to evidence the consummation of
and give effect to the transactions contemplated hereby and by the Ancillary
Documents.
4.05. Interim Statements. Prior to Closing, and in addition to the
information to be provided pursuant to Section 1.04 above, Seller agrees to
promptly provide to Buyer unaudited monthly net sales results of the Company
with respect to all periods after December 31, 1996.
ARTICLE V
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
5.01. Books and Records; Personnel. For a period of seven years from
the Closing Date:
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(a) Buyer shall not dispose of or destroy any books and
records relating to the Company for periods prior to the Closing ("Books and
Records") without first offering to turn over possession thereof to Seller by
written notice to Seller at least 30 days prior to the proposed date of such
disposition or destruction;
(b) Buyer shall, upon prior written notice, allow Seller and
its agents access to all Books and Records during normal working hours at
Buyer's principal place of business or at any location where any Books and
Records are stored, and Seller shall have the right, at its own expense, to make
copies of any Books and Records; provided, however, that any such access or
copying shall be had or done in such a manner so as not to interfere with the
normal conduct of Buyer's business;
(c) Buyer shall make available to Seller upon written request
(i) copies of any Books and Records, (ii) Buyer's personnel to assist Seller in
locating and obtaining any Books and Records, and (iii) any of Buyer's personnel
whose assistance or participation is reasonably required by Seller or any of its
affiliates in anticipation of, or preparation for, existing or future
Litigation, tax returns or other matters in which Seller or any of its
affiliates is involved. Seller shall reimburse Buyer for the reasonable
out-of-pocket expenses incurred by Buyer in performing the covenants contained
in this Section 5.01(c); provided, however, that any such access or copying
shall be had or done in such manner so as not to interfere with the normal
conduct of Buyer's business.
(d) The foregoing provisions of this Section 5.01 shall be in
addition to the obligations of Buyer under Sections 6.01(g) and 12.02(c)(ii).
5.02. Buyer's Knowledge of Business; Representations of Seller
Modified by Buyer's Knowledge. To the knowledge of Buyer, the representations
and warranties of Seller made in this Agreement or in any Ancillary Document
entered into on or prior to the date hereof are true and correct. Buyer hereby
agrees that to the extent any representation or warranty of Seller made herein
or in any Ancillary Document is, to the knowledge of Buyer acquired prior to the
date hereof, untrue or incorrect, (i) Buyer shall have no rights hereunder or
thereunder by reason of such untruth or inaccuracy, and (ii) any such
representation or warranty by Seller shall be deemed to be amended to the extent
necessary to render it consistent with such knowledge of Buyer. In addition,
between the date hereof and the Closing, Buyer may acquire additional knowledge
concerning the matters covered by the representations and warranties of Seller.
Accordingly, Buyer agrees (without prejudice to any rights which Buyer may have
under Sections 7.01, 10.01 and 10.02) that, if the Closing occurs, then to the
extent any representation or warranty of Seller made herein or in any Ancillary
Document entered into at or prior to the Closing, to the knowledge of Buyer
acquired from and after the date hereof and prior to the Closing, is untrue or
incorrect, (x) Buyer shall have no rights hereunder or thereunder by reason of
such untruth or inaccuracy, and (y) any such
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representation or warranty by Seller shall be deemed to be amended to the extent
necessary to render it consistent with such knowledge of Buyer.
5.03. Liabilities. (a) Buyer understands and agrees that, from and
after the Closing, except as specifically provided in Section 6.01 to the
contrary, and except for any obligations expressly incurred by Seller in its
capacity as seller under this Agreement (including, without limitation, under
Sections 9.02, 9.03, 9.07, 12.02, 12.08, 12.09 and 12.12) (collectively, "Seller
Obligations"), neither Seller nor any its affiliates shall have any liability or
responsibility for any liability or obligation of, or arising out of, or
relating to, the Outdoor Advertising Business or the operation of the Outdoor
Advertising Business in the United States by the Company (including, but not
limited to, any liability or obligation of Seller arising out of, or relating
to, the ownership by Seller of the Business) (including, in each case, as to
tradeouts and barter (as such terms are used in the industry), Environmental
Matters, Litigations and Nonassignable Assets (as defined in Section 12.12)), of
whatever kind or nature, whether contingent or absolute, whether arising prior
to or on or after, and whether determined or indeterminable on, the Closing
Date, and whether or not specifically referred to in this Agreement (such
liabilities and obligations, except as specifically provided in Section 6.01 to
the contrary, except for the Seller Obligations and except for such liabilities
arising from Seller's fraud, willful misconduct or bad faith, being collectively
referred to as the "Liabilities"). Accordingly, Buyer agrees that, effective
upon the Closing, Buyer shall assume and be responsible for and indemnify Seller
and its affiliates and hold each of them harmless against, and shall not bring
any claim or action against Seller or its affiliates with respect to, any
liability, loss, damage, claim (including third-party claims, whether or not
meritorious), cost or expense (including, without limitation, reasonable
attorneys' fees and disbursements) (collectively, "Losses") incurred or suffered
by any of them arising out of any of the Liabilities.
(b) Buyer shall pay each Liability (or reimburse Seller
therefor) on the later of the date on which such Liability is due or within five
days after Seller advises Buyer of the amount thereof; provided, however, that
Buyer may dispute any such Liability with the third party to whom such Liability
is owed, in good faith, by appropriate proceedings after written notice to
Seller of its intent to do so and receipt of Seller's written consent thereto
(which consent shall not be unreasonably withheld and shall be deemed given if
Seller does not object thereto in writing within ten days after receipt of
Buyer's written notice). The grant to Buyer of such right to dispute shall not
in any way affect the obligation of Buyer, pursuant to Section 12.02(b) or
otherwise, to indemnify Seller and its affiliates against Losses sustained or
incurred by any of them arising out of or relating to such Liability, including
by reason of Buyer's disputing such Liability.
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(c) Buyer shall procure insurance, reasonably acceptable to
Seller and the Company's insurers (the "Company's Insurers"), insuring,
effective from and after the Closing, any product liability, general liability,
automobile liability and other claims relating to the Company in respect of
periods prior to the Closing ("Claims"), for which Seller or any of its
affiliates is responsible vis-a-vis the Company's Insurers and for which Buyer
has assumed responsibility pursuant to Section 5.03(a) so that (i) from and
after the Closing, the Company's Insurers will no longer look to Seller or any
of its affiliates for reimbursement of any payment made by the Company's
Insurers in respect of any Claim, and (ii) at the Closing, the Company's
Insurers will release any letters of credit of Seller or any of its affiliates
held by the Company's Insurers to secure the obligations of Seller or any of its
affiliates with respect to Claims.
5.04 Performance Bonds. At the Closing, Buyer shall deliver to
Seller replacement (or, if the beneficiary thereof will not permit replacement,
back-up) performance bonds, payment bonds, bid bonds, letters of credit,
guarantees and similar instruments, in an aggregate principal amount and with
terms and from banks or other financial institutions or surety companies in each
case reasonably satisfactory to Seller, to replace (or, to the extent required
as described above, to collateralize) any performance bonds, payment bonds, bid
bonds, letters of credit, guarantees and similar instruments of Seller or of any
of its affiliates related to the Company of which Seller advises Buyer or of
which Buyer otherwise has knowledge prior to the Closing (in each case, or
portions thereof) remaining outstanding on the Closing Date with respect to
which Seller or any of its affiliates will have any liability after the Closing.
5.05. Imprints. (a) No later than 180 days after the Closing Date,
Buyer, at its sole expense, shall remove from all advertising displays and
vehicles transferred hereby all imprints containing the Names (as defined in
Section 6.02) or Logos (as defined in Section 6.02); provided, however, that (i)
Buyer shall remove all such imprints within 120 days after the Closing Date with
respect to any such advertising displays containing tobacco advertising, and
(ii) Buyer shall not place any new tobacco advertising on any such advertising
displays without removing all such imprints from such displays.
(b) Buyer shall indemnify Seller and its affiliates and hold
them harmless from and against any and all Losses incurred or suffered by any of
them arising out of or resulting from the use of the Names or any similar name
or any Logos incorporating such Names or any similar Names by Buyer after the
Closing, whether or not such use is contemplated under this Section 5.05.
5.06. Consummation of Agreement. Buyer will take all corporate and
other action required of it to carry out the transactions contemplated by this
Agreement and the Commitment Letters, and will not take any action that would
have the effect of impeding or preventing the consummation of the transactions
contemplated by this
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Agreement, to the end that the transactions contemplated by this Agreement
shall be fully carried out.
5.07. Further Assurances. At any time or from time to time after the
Closing, Buyer shall, at the request of Seller and at the expense of Seller,
execute, acknowledge and deliver any further assumption agreements, instruments
or documents and take all such further action as Seller may reasonably request
in order to evidence the consummation of and give effect to the transactions
contemplated hereby and by the Ancillary Documents, and the assumption by Buyer
of the Liabilities.
ARTICLE VI
ADDITIONAL COVENANTS
6.01. Taxes.
(a) Returns. (i) Consolidated Returns. Buyer shall cause the
Company to consent to join, for all taxable periods of the Company ending on or
before the Closing Date for which the Company is eligible to do so, in any
consolidated, combined or unitary Income Tax (as defined in Section 6.01(j)(i))
returns which Seller shall request the Company to join. Seller shall cause to be
prepared and filed all such consolidated, combined or unitary Income Tax
returns. Buyer agrees to cooperate with Seller and its affiliates in the
preparation of the portions of such Income Tax returns pertaining to the
Company, and hereby agrees to take no position inconsistent with the Company
being a member of such group. Seller shall cause to be timely paid all Income
Taxes to which such Income Tax returns relate for all periods covered by such
returns.
(ii) Other Pre-Closing Returns. Seller shall cause to
be prepared, and Buyer shall cause to be timely filed, all required Income Tax
returns of the Company (other than those to be filed by Seller pursuant to
Section 6.01(a)(i)) for any period which ends on or before or includes the
Closing Date, for which Income Tax returns have not been filed as of such date.
Buyer and its affiliates, including the Company after the Closing Date, shall
cooperate with Seller and its affiliates in the preparation of such Income Tax
returns. Seller shall provide such Income Tax returns to Buyer not less than
five business days before the due date (including extensions) for filing such
returns.
(b) Payments. Buyer shall timely cause to be paid all Income
Taxes with respect to the Income Tax returns to be caused to be filed by Buyer
pursuant to Section 6.01(a)(ii). Such Income Taxes to be caused to be paid by
Buyer, to the extent attributable to any period or portion of a period ending on
or before the Closing Date, shall be referred to herein as "Pre-Closing Taxes".
Seller shall pay to Buyer an amount
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equal to the Pre-Closing Taxes due with respect to any such Income Tax returns
caused to be filed by Buyer (after taking into account any estimated Income
Taxes previously paid and net of any tax benefits to Buyer or any of its
affiliates, including the Company). Where the Pre-Closing Taxes involve a period
which begins before and ends after the Closing Date (a "Straddle Period"), such
Pre-Closing Taxes shall be calculated on the basis of taxable income of the
Company determined pursuant to the principles of Treasury Regulations Section
1.1502-76(b)(i) as though the taxable year of the Company terminated at the
Closing. Any amounts owed by Seller to Buyer pursuant to this Section 6.01(b)
shall be paid by Seller within ten days of Buyer's request therefor.
(c) Refunds. Any refunds or credits of Income Taxes (including
any interest thereon) received by or credited to the Company attributable to
periods ending on or prior to the Closing Date or to Straddle Periods (in the
case of Straddle Periods, which were not borne by Buyer) (collectively,
"Seller's Refunds"), shall be for the benefit of Seller, and Buyer shall use its
best efforts to obtain any Seller's Refunds and shall cause the Company to pay
over to Seller any Seller's Refunds immediately upon receipt thereof. In
addition, if the Pre-Closing Taxes with respect to a Straddle Period of the
Company are less than the sum of the Income Tax payments made by or credited to
the Company on or before the closing Date and payments made to Buyer pursuant to
Section 6.01(b), in each case with respect to such Straddle Period, Buyer shall
cause the Company to pay to Seller the excess of such sum over such Pre-Closing
Taxes immediately upon the Company receiving the benefit of such excess through
a reduction in any Income Tax payment required to be made by the Company after
the Closing.
(d) Buyer's Indemnification. If the Closing shall occur, and
subject to Buyer fulfilling its obligations under Section 6.01(f), Seller shall
indemnify and hold harmless Buyer against any and all liability (including,
without limitation, interest, additions to tax and penalties, but net of any tax
benefits to Buyer or any of its affiliates, including the Company) for (i)
Income Taxes due with respect to or assessed against the Company for any taxable
period of the Company ending on or prior to the Closing Date, other than any
Buyer's Taxes (as defined in Section 6.01(e)), (ii) Pre-Closing Taxes that
relate to a Straddle Period, and (iii) Income Taxes of any member (other than
the Company) of any affiliated group of which Seller is a member assessed
against the Company for any taxable period ending prior to or including the
Closing Date by reason of the Company being severally liable for the entire tax
of such affiliated group pursuant to Treasury Regulations Section 1.1502-6 or
any analogous state or local tax provision.
(e) Seller's Indemnification. It is understood by the parties
hereto that Seller shall not indemnify Buyer or any of its affiliates and
instead that Buyer shall, if the Closing shall occur, pay, or cause to be paid,
and Buyer and the Company shall jointly and severally indemnify Seller and its
affiliates against and hold them harmless from any liability for taxes,
additions to tax, interest, penalties or other tax detriment (which, shall
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include, but not be limited to, the utilization of any net operating loss or
capital loss or the utilization of any tax credits or other tax attributes by
the Company) arising from any action or failure to act by Buyer or any affiliate
of Buyer (including the Company) from and after the Closing, including, without
limitation, any sale or other disposition of assets by the Company from and
after the Closing or the operation or ownership of the business of the Company
from and after the Closing ("Buyer's Taxes").
(f) Audits. Buyer shall promptly notify Seller in writing upon
receipt by Buyer or any affiliate of Buyer (including the Company after the
Closing Date) of notice of any pending or threatened federal, state, local or
foreign tax audits or assessments which may affect the Income Tax liabilities of
the Company and for which Seller would be liable under Section 6.01(d). Seller
shall have the sole right to represent the interests of the Company in any
federal, state, local or foreign Income Tax matter, including any audit or
administrative or judicial proceeding or the filing of any amended return, which
involves a refund to which Seller would be entitled under Section 6.01(c) or an
Income Tax liability or potential Income Tax liability for which Seller would be
liable under Section 6.01(d) (a "Tax Matter"), and to employ counsel of its
choice at its expense. Buyer agrees that it will cooperate fully with Seller and
its counsel in the defense or compromise of any Tax Matter. In no case shall
Buyer (including the Company after the Closing Date) settle or otherwise
compromise any Tax Matter without the prior written consent of Seller.
(g) Cooperation. After the Closing Date, Buyer and Seller
shall make available to the other, as reasonably requested, all information,
records or documents relating to tax liabilities or potential tax liabilities of
the Company for all periods prior to or including the Closing Date and shall
preserve all such information, records and documents until the expiration of any
applicable statute of limitations or extensions thereof. Buyer shall prepare and
provide to Seller such federal, state, local and foreign tax information
packages as Seller shall request for the use of Seller in preparing any tax
return that relates to the Company. Such tax information packages shall be
completed by Buyer and provided to Seller within 30 days after request therefor.
Notwithstanding any other provisions hereof, each party shall bear its own
expenses in complying with the foregoing provisions.
(h) Section 338 Elections and Forms. (i) Buyer and Seller
hereby covenant and agree with each other that they will join in making an
election under section 338(h)(10) of the Code, and the regulations promulgated
thereunder, and any applicable analogous provision of state or local law, with
respect to the sale and acquisition of the Stock hereunder (the "Section
338(h)(10) Elections").
(ii) In the case of any Section 338(h)(10) Elections
that are made in accordance with Section 6.01(h)(i) hereof,
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(A) Buyer shall be responsible for the preparation
and timely filing of all returns (other than Income Tax returns the
responsibility for the preparation and filing of which is governed by Section
6.01(a)), documents, statements and other forms required to be filed with any
federal, state or local taxing authority in connection with the Section
338(h)(10) Elections (the "Section 338 Forms"); provided, however, that Seller
shall be solely responsible for calculating the gain or loss resulting from
making the Section 338(h)(10) Elections;
(B) Seller shall cooperate with Buyer to enable Buyer
to prepare and file all Section 338 Forms and shall execute and deliver to Buyer
such documents or forms as are required by the Code or the regulations
promulgated thereunder (and any applicable analogous provision of state or local
law) to properly complete the Section 338 Forms and to complete the Section 338
Elections, provided that such material is completed and delivered by Buyer to
Seller for execution at least 60 days prior to the date Buyer wishes to file
such material;
(C) The Purchase Price, liabilities of the Company,
and other relevant items, shall be allocated in accordance with the rules of
section 338 of the Code and the regulations promulgated thereunder. Such
allocation shall be set forth on a schedule which shall be prepared jointly by
Buyer and Seller within 90 days following the Closing Date. All allocations
contained in such schedule shall be used by each party and its affiliates in
preparing the Section 338 Forms and all relevant Income Tax returns, subject to
adjustment to reflect (i) Seller's selling expenses as a reduction of sales
proceeds, and (ii) Buyer's acquisition expenses as an addition to Purchase
Price;
(D) Buyer hereby indemnifies and holds Seller, the
Company and any affiliated person or entity affected thereby harmless from and
against any and all claims, demands, liabilities, obligations, taxes, actions,
suits, proceedings, losses, damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees, of every kind and description, contingent or otherwise, arising
out of or resulting from any adverse tax consequences ("Tax Damages") that may
result (a) if Buyer makes an election under section 338(g) of the Code and Buyer
and Seller do not make Section 338(h)(10) Elections, or (b) if any income or
gain is otherwise recognized by the Company after Buyer acquires control of the
Company; and
(E) Provided that Buyer shall have fulfilled all of
its obligations under this Section 6.01(h) and as required by the Code or any
regulations promulgated thereunder and any analogous provisions of state or
local law with respect to the Section 338(h)(10) Election, Seller shall
indemnify Buyer, the Company and any affiliated person or entity affected
thereby harmless from and against any and all Tax
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Damages that may result if Seller does not make a Section 338(h)(10) Election as
provided above.
(i) Tax Sharing. Other than pursuant to this Agreement, as of
the Closing Date, the Company shall not have any further rights or obligations
under any tax-sharing agreement with or among the Seller and/or any of its
affiliates.
(j) Miscellaneous. (i) For purposes of this Agreement, "Income
Tax" means any federal, state, local or foreign tax (including interest,
penalties or additions to such tax) based upon, measured by, or calculated with
respect to, net income.
(ii) Buyer shall bear the cost of any documentary
stamp, sales, excise, transfer, stock transfer, real property transfer taxes or
real property gains taxes (provided that such real property gains taxes are not
an Income Tax) and similar taxes payable in respect of the sale of the Stock
hereunder.
(iii) Except as otherwise required by law, including any
contrary determination (within the meaning of section 1313 of the Code), Buyer
and Seller agree to treat all payments made under this Section 6.01 or Article
XII as adjustments to Purchase Price for tax purposes.
6.02. Corporate Name. Buyer acknowledges that, as between Buyer and
Seller, Seller has the absolute and exclusive proprietary right to all names,
marks, trade names, trademarks, service names and service marks (collectively,
"Names") incorporating "Minnesota Mining and Manufacturing", "3M", "3M Media"
and "3M National" and to all corporate symbols or logos (collectively, "Logos")
incorporating "Minnesota Mining and Manufacturing", "3M", "3M Media" or "3M
National", all right to which and the goodwill represented thereby and
pertaining thereto are being retained by Seller. Buyer agrees that it will not
use the Names "Minnesota Mining and Manufacturing", "3M", "3M Media" or "3M
National" or any Logo incorporating such Names in connection with the sale of
any products or services or otherwise in the conduct of its business, except as
expressly permitted by Seller in writing.
6.03. Cash Management. (a) Seller shall be entitled, prior to the
Closing, to collect and retain the proceeds of all items received in any bank
account of the Company (collectively, the "Bank Accounts") or otherwise in
respect of the Company (including the amount of any checks received by the
Company), and all other cash on hand, through the close of business on the day
immediately preceding the Closing Date (the "Pre-Closing Cash"); provided,
however, that Seller may in its sole discretion not collect but leave in any of
the Bank Accounts or other locations of the Company all or any portion of the
Pre-Closing Cash, and the aggregate amount of such uncollected Pre-Closing Cash,
calculated, in the case of foreign cash, at the exchange rate at the close of
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business on the day immediately preceding the Closing Date as reported in The
Wall Street Journal, shall be reflected in the Working Capital adjustment to the
Purchase Price.
(b) As part of Seller's cash management program, Seller and
the Company maintain the bank account(s) set forth opposite their names in the
Disclosure Schedule from which transfers to Seller and its applicable affiliates
may be made, and into which certain payments from Seller and its applicable
affiliates may be deposited (such accounts being referred to collectively as the
"Seller Accounts"). At the Closing, Seller shall retain all of the Seller
Accounts (including any positive cash balance contained therein) (which shall
not be reflected in the Working Capital adjustment to the Purchase Price), it
being the intention of Buyer to open new accounts to serve the purposes
theretofore served by the Seller Accounts.
6.04. Filings; Other Action. (a) Subject to the terms and conditions
herein provided, each party shall:
(i) Promptly make their respective filings and thereafter
make any other required submissions under the HSR Act with respect to the
transactions contemplated hereby;
(ii) Use their best efforts to cooperate with one another
in (x) determining which filings are required to be made prior to the
consummation of the transactions contemplated hereby, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
consummation of the transactions contemplated hereby from governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and (y) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations;
(iii) Without limiting Buyer's obligations under Section
1.02 or Section 6.04(d) of this Agreement, use their best efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper and appropriate to consummate and effectuate the
Closing Date for the transaction contemplated hereby on or prior to the
Termination Date (as hereinafter defined), including, without limitation,
promptly responding to any request for additional information pursuant to
Section (e)(1) of the HSR Act ("Second Request"), and the resolution of
objections, if any, as may be asserted by any governmental authority with
respect to the transactions contemplated hereby under any antitrust or trade or
regulatory laws or regulations of any governmental authority (it being
understood and agreed that Buyer shall use all measures available to it to
consummate the transactions contemplated hereby including, if necessary to
resolve such objections, by way of selling, licensing or
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otherwise disposing of, or holding separate or otherwise divesting itself of,
all or any portion of its businesses or assets or any portion of the business or
assets of any of its subsidiaries or any portion of the business or assets of
the Company); provided, however, that, without limiting Buyer's obligations
under this paragraph or under Section 1.02 or Section 6.04(d) of this Agreement,
Buyer shall have the right, given the option by a governmental agency, to
determine (x) which businesses or assets, or portions thereof, shall be, if
necessary to satisfy such objections, sold, licensed, disposed of, held separate
or divested, and (y) on what terms and conditions such actions shall be taken;
(iv) Use their best efforts to lift or rescind or appeal
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby and
use their best efforts to defend any litigation seeking to enjoin, prevent or
delay the consummation of the transactions contemplated hereby or seeking
material damages; and
(v) Furnish to the other party, upon request, copies of
all correspondence, filings or communications between that party, or any of its
representatives, on the one hand, and any governmental agency or authority, on
the other hand, with respect to pre-notification obligations under any antitrust
law with respect to this Agreement; provided, however, that with respect to any
documents that one party reasonably believes should not be disclosed to the
other party, such party shall instead furnish those documents to counsel for the
other party pursuant to a mutually satisfactory confidentiality agreement.
(b) "Termination Date" shall mean that date one hundred twenty
(120) days after the initial filing by Seller under the HSR act of its
Notification and Report Form for Certain Mergers and Acquisitions with respect
to the transaction contemplated hereby and which initial filing is not rejected
for any deficiency; provided, however, that such one hundred twenty day period
shall be tolled for, and to the extent of, any of the following:
(i) in the event that Buyer has substantially complied
with any Second Request but Seller has not substantially complied, each day
after the date of Buyer's substantial compliance until and including the date of
Seller's substantial compliance with the Second Request; and
(ii) in the event that Buyer has entered into an
agreement with the Department of Justice or the Federal Trade Commission with
respect to the transaction contemplated hereby ("Agreement"), each day after the
date of submission of the Agreement to the appropriate federal court or the
Federal Trade Commission for which Buyer is enjoined from closing, by either the
appropriate federal court or the Federal Trade Commission or pursuant to the
specific request of the Department of
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Justice or the Federal Trade Commission which request is embodied in the
Agreement with the relevant agency.
(c) In the event that Seller has substantially complied with
any Second Request but Buyer has not substantially complied, Buyer agrees to pay
Seller an amount of $10,000 per day for each day after the date of Seller's
substantial compliance until and including the date of Buyer's substantial
compliance with the Second Request.
(d) Buyer agrees to use its best efforts to obtain all
necessary regulatory or judicial approvals, and to take such other actions as
are necessary, to consummate the transaction contemplated herein prior to the
expiration of any public notice and comment period that may be required in
connection with the approval of the Agreement.
6.05. Buyer Investigation; No Representations or Warranties;
Exclusivity of Remedies. (a) BUYER HEREBY ACKNOWLEDGES THAT IT HAS INDEPENDENTLY
EVALUATED AND CONDUCTED DUE DILIGENCE SATISFACTORY TO BUYER WITH RESPECT TO THE
ASSETS OF THE COMPANY AND THE OUTDOOR ADVERTISING BUSINESS (INCLUDING, BUT NOT
LIMITED TO, THE OPERATIONS, FACILITIES, CONTRACTS, CUSTOMER FILES, INTELLECTUAL
PROPERTY, FINANCIAL INFORMATION AND PROSPECTS OF THE BUSINESS), AND HAS BEEN
REPRESENTED BY, AND HAD THE ASSISTANCE OF, COUNSEL IN THE CONDUCT OF SUCH DUE
DILIGENCE, THE PREPARATION AND NEGOTIATION OF THIS AGREEMENT AND THE ANCILLARY
DOCUMENTS, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) SELLER HAS MADE AVAILABLE TO BUYER AND ITS REPRESENTATIVES
CERTAIN INFORMATION AND RECORDS RELATING TO THE ASSETS OF THE COMPANY AND THE
OUTDOOR ADVERTISING BUSINESS. IT IS UNDERSTOOD AND AGREED BY THE PARTIES THAT NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN MADE BY SELLER OR ITS
AGENTS REGARDING THE ACCURACY OR COMPLETENESS OF ANY SUCH INFORMATION OR
RECORDS, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE ANCILLARY
DOCUMENTS, AND THAT SELLER WILL NOT HAVE OR BE SUBJECT TO ANY LIABILITY TO BUYER
OR ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO BUYER, OR BUYER'S USE, OF
ANY SUCH INFORMATION OR RECORDS, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
OR EXCEPT AS A RESULT OF FRAUD. FURTHERMORE, BUYER AGREES THAT IT IS ACCEPTING
POSSESSION OF THE ASSETS OF THE COMPANY AND THE OUTDOOR ADVERTISING BUSINESS
BEING TRANSFERRED TO BUYER UPON
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ACQUISITION BY BUYER OF THE STOCK AT THE CLOSING "AS IS, WHERE IS, WITH ALL
FAULTS", WITH NO RESULTING RIGHT OF SET-OFF OR REDUCTION IN THE TOTAL PURCHASE
PRICE, AND THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE
ANCILLARY DOCUMENTS, SUCH TRANSFER IS BEING MADE WITHOUT REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF INCOME
POTENTIAL, OPERATION EXPENSE, USE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR QUALITY, WITH RESPECT TO ANY OF THE ASSETS OR THE OUTDOOR
ADVERTISING BUSINESS BEING SO TRANSFERRED, OR AS TO THE CONDITION OR WORKMANSHIP
THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, ALL OF
WHICH REPRESENTATIONS AND WARRANTIES ARE HEREBY DISCLAIMED AND RENOUNCED BY
SELLER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY
SET FORTH IN SECTION 2.08 OF THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER TO THE BUYER REGARDING THE PRESENCE OR ABSENCE OF ANY
HAZARDOUS SUBSTANCES, ASBESTOS CONTAINING MATERIALS, UNDERGROUND STORAGE TANKS
OR PCBS IN, AT OR UNDER ANY OF THE ASSETS OF THE COMPANY OR THE ACCURACY OR
COMPLETENESS OF ANY STATEMENTS, DOCUMENTS OR REPORTS REGARDING ENVIRONMENTAL
MATTERS RECEIVED FROM SELLER, AND BUYER ACKNOWLEDGES THAT IT HAS CONDUCTED SUCH
INVESTIGATIONS AS IT HAS DEEMED APPROPRIATE TO EVALUATE TO ITS SATISFACTION ITS
RISKS FROM AN ENVIRONMENTAL STANDPOINT.
(c) BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, ITS SOLE AND EXCLUSIVE REMEDY WITH RESPECT
TO ANY AND ALL CLAIMS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
(INCLUDING CLAIMS FOR BREACHES OF REPRESENTATIONS, WARRANTIES AND COVENANTS
CONTAINED IN THIS AGREEMENT) SHALL BE PURSUANT TO THE INDEMNIFICATION PROVISIONS
SET FORTH IN SECTION 12.02. IN FURTHERANCE OF THE FOREGOING BUYER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY AND ALL RIGHTS, CLAIMS
AND CAUSES FOR ACTION NOT PROVIDED FOR IN SECTION 12.02 THAT BUYER MAY HAVE
AGAINST SELLER OR ANY OF ITS AFFILIATES UNDER OR BASED UPON ANY PRINCIPLE OF
EQUITY OR ANY FEDERAL, STATE, LOCAL OR FOREIGN STATUTE, LAW, ORDINANCE, RULE OR
REGULATION (INCLUDING THOSE RELATING TO HAZARDOUS SUBSTANCES, ASBESTOS
CONTAINING MATERIALS, UNDERGROUND
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STORAGE TANKS AND PCBS, AND INCLUDING SPECIFICALLY ALL RIGHTS, IF ANY, THAT
BUYER MAY HAVE TO CONTRIBUTION FROM SELLER UNDER THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY OF ACT OF 1980, AS AMENDED), EXCEPT FOR
SUCH CLAIMS ARISING OUT OF SELLER'S FRAUD, WILLFUL MISCONDUCT OR BAD FAITH.
(d) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO
CLAIMS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT MAY BE BROUGHT BY BUYER
AGAINST ANY DIRECTOR, OFFICER OR EMPLOYEE OF SELLER OR THE COMPANY IN HIS OR HER
INDIVIDUAL CAPACITY.
6.06. Excluded Assets; Included Businesses. (a) (i) Seller and Buyer
confirm and agree that the following assets, which are used by or in connection
with the Outdoor Advertising Business but are not included in the Financial
Statements, will not be transferred to Buyer upon Buyer's acquisition of the
Stock: (i) the In-Store media program utilizing 3M(TM) FloorMinders(TM)
Graphics; (ii) the Travel Center Advertising business; (iii) all vehicles listed
in the Disclosure Schedule; (iv) all cellular telephones used in the Business;
(v) all Seller company credit cards used in the Business; (vi) the Westminster,
Maryland plant, property and equipment; (vii) the corporate facilities located
at Bedford Park, Illinois, Westminster, Maryland and New York, New York; (viii)
the software and hardware listed in the Disclosure Schedule, including, without
limitation, the telecommunications system (including the Wide Area Network);
(ix) all cash of the Company; and (x) all attorneys' fees, costs, proceeds and
other funds awarded or paid to the Company or Seller in connection with Impact
Communications of Central Florida, Inc. and Xxxxxxx Xxxxxxxx v. National
Advertising Company and POA Acquisition Corp., Case No. 95-142-Civ-Orl-18,
excluding any such attorneys' fees and costs that are attributable to
prosecution of any appeal of such action subsequent to the Closing Date. Seller
shall assign its entire right, title and interest in United States Patent Number
5,613,314, dated March 25, 1997, entitled COLLAPSIBLE BILLBOARD SIGN, to the
Company and the Company, immediately prior to Closing, shall grant to Seller a
perpetual, non-exclusive, royalty free license for the benefit of Seller and its
affiliates and their customers under said patent and any reexamination or
reissue thereof on terms reasonably satisfactory to Buyer. The foregoing license
shall not be transferable by Seller or its affiliates to any third party
unrelated to Seller or any of its affiliates except in connection with the use
of such licensed rights by Seller or any of its affiliates such as in connection
with the sale or use of products under such license, but shall be transferable
as part of the sale of the entire business to which the license pertains. Seller
and Buyer also confirm that it is not the intention of Seller to transfer to
Buyer, or Buyer's intention to acquire from Seller, any ownership interest in
any Subsidiary of Seller other than the Company. Following the Closing and in
furtherance of Section 5.06, Buyer shall take such action as Seller may
reasonably request to transfer to Seller any of such excluded
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assets and will indemnify and hold Seller harmless from any and all losses
incurred by Seller in connection with the use following the Closing of any such
excluded assets not so transferred, including, but not limited to, the use of
cellular telephones and Seller company credit cards.
(ii) Buyer and Seller confirm and agree that certain
services provided by Seller and its affiliates to the Company as of the date
hereof, including, but not limited to, certain services relating to human
resources/payroll, tax, travel reimbursement, insurance coverage, insurance
claims administration, legal, financial reporting, environmental, engineering
services, property accounting, information technologies (including computer
services and data processing) and employee information systems, shall be
terminated as of the Closing Date, subject to any transition agreement with
respect to one or more of such services as may be agreed between Buyer and
Seller prior to Closing.
(b) Seller and Buyer confirm and agree that the Tradewinds
barter business, the Healthport business and the wireless communications
business (relating to use of the Company's outdoor advertising displays for
transmission purposes), which are included in the Financial Statements, will be
transferred to Buyer upon Buyer's acquisition of the Stock and are included in
the terms "Outdoor Advertising Business" and the "Business" for all purposes of
this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Stock shall be subject
to the satisfaction (or waiver) on or prior to the Closing Date of all of the
following conditions:
7.01. Representations, Warranties, Covenants of Seller. (a) Seller
shall have complied in all material respects with its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and the
representations and warranties of Seller contained herein shall be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date (taking into account all modifications to the
Disclosure Schedule as reflected in the revised disclosure schedule to be
delivered by Seller to Buyer at the Closing, which shall include any material
changes to information set forth in the Disclosure Schedule (the "Revised
Disclosure Schedule")), except (i) as otherwise contemplated hereby, and (ii) to
the extent that any such representations and warranties were made as of a
specified date and as to such representations and warranties the same shall
continue on the Closing Date to have been true in all material respects as of
the specified date.
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(b) At the Closing Date, there shall have been no changes in
the Outdoor Advertising Business, other than changes that do not individually or
in the aggregate have a Material Adverse Effect, excluding, without limitation,
changes that are otherwise contemplated hereby (including, without limitation,
changes under Section 4.01).
(c) At the Closing Date, Buyer shall have received a
certificate of Seller, dated as of the Closing Date and signed by an officer of
Seller, certifying as to the fulfillment of the conditions set forth in this
Section 7.01 (the "Certificate of Seller").
7.02. No Prohibition. No statute, rule or regulation or order of any
court or administrative agency shall be in effect which prohibits Buyer from
consummating the transactions contemplated hereby.
7.03. Governmental Consents. The applicable waiting period under the
HSR Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies that shall be
required in order to enable Buyer to consummate the transactions contemplated
hereby and by the Ancillary Documents shall have been obtained (except for such
consents, approvals, authorizations, exemptions and waivers, the absence of
which would not prohibit consummation of such transactions or render such
consummation illegal).
7.04. Non-Foreign Status Statements. Seller shall have delivered
statements, as contemplated under Section 1.1445-2(b)(2) of the Treasury
Regulations, to the effect that neither Seller nor the Company is a foreign
person within the meaning of the Code and applicable Treasury Regulations.
7.05. Resignations. Seller shall have received the resignations,
effective as of the Closing, of each director and officer of the Company other
than those whom Buyer shall have specified in writing at least ten days prior to
the Closing Date (it being understood that each such resigning director and
officer who is an Employee on the Closing Date shall remain an Employee (as
defined in Section 9.01(c)), and no such resignation shall constitute a
resignation from, or a termination of employment with, the Company).
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ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to sell the Stock shall be subject to the
satisfaction (or waiver) on or prior to the Closing Date of all of the following
conditions:
8.01. Representations, Warranties, Covenants of Buyer. Buyer shall
have complied in all material respects with its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and the
representations and warranties of Buyer contained herein shall be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date, except (i) as otherwise contemplated hereby,
and (ii) to the extent that any such representations and warranties were made as
of a specified date and as to such representations and warranties the same shall
continue on the Closing Date to have been true in all material respects as of
the specified date. Seller shall have received a certificate of Buyer, dated as
of the Closing Date and signed by an officer of Buyer, certifying as to the
fulfillment of the condition set forth in this Section 8.0l (the "Certificate of
Buyer").
8.02. No Prohibition. No statute, rule or regulation or order of any
court or administrative agency shall be in effect which prohibits Seller from
consummating the transactions contemplated hereby.
8.03. Insurance. Buyer shall have procured the insurance referred to
in Section 5.03(c).
8.04. Performance Bonds. Buyer shall have delivered to Seller the
performance bonds, payment bonds, bid bonds, letters of credit, guarantees
and/or other instruments referred to in Section 5.04.
8.05. Governmental Consents. The applicable waiting period under the
HSR Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies that shall be
required in order to enable Seller to consummate the transactions contemplated
hereby and by the Ancillary Documents shall have been obtained (except for such
consents, approvals, authorizations, exemptions and waivers, the absence of
which would not prohibit consummation of such transactions or render such
consummation illegal).
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ARTICLE IX
EMPLOYMENT AND EMPLOYEE BENEFITS ARRANGEMENTS
9.01. Definitions. (a) The term "Benefit Plans" shall mean each and
all "employee benefit plans", as defined in Section 3(3) of ERISA, including (i)
any such plans that are "employee welfare benefit plans" as defined in Section
3(1) of ERISA and (ii) any such plans that are "employee pension benefit plans"
as defined in Section 3(2) of ERISA.
(b) The term "Benefit Arrangements" shall mean each and all
pension, supplemental pension, accidental death and dismemberment, life and
health insurance and benefits (including medical, dental, vision and
hospitalization), workers compensation, short- and long-term disability,
savings, bonus, deferred compensation, incentive compensation, holiday,
vacation, severance pay, salary continuation, sick pay, sick leave, tuition
refund, service award, company car, scholarship, relocation, patent award,
fringe benefit and other employee benefit arrangements, plans, contracts
(including individual employment, consulting or severance contracts), policies
or practices providing employee or executive compensation or benefits, other
than the Benefit Plans.
(c) As used in this Agreement the following terms shall have
the meanings set forth in this clause (c).
(i) "Employee" shall mean all salaried and hourly
employees of the Company not represented by a union or subject to a collective
bargaining agreement and other than an "Extra Employee."
(ii) "Extra Employee" shall have the meaning set forth in
Section 9.02(a).
(iii) "Union Employee" shall mean employees of the
Company represented by a union or subject to a collective bargaining agreement.
9.02. Employment. (a) Buyer will identify, as soon as possible but
in no event later than 45 days from the date hereof, those employees of the
Company other than Union Employees which it does not intend to retain following
the Closing Date (the "Extra Employees"). As of the day before the Closing Date,
the Extra Employees shall cease to be employees of the Company and their future
employment status and any compensation (other than accrued salary which shall be
the responsibility of the Company and shall be paid as provided in this clause
(a)), severance pay or other benefits due such employee shall be the
responsibility of Seller. On the Closing Date, Buyer will pay to Seller in cash
an amount equal to the sum of (i) Twenty-Five Hundred Dollars ($2,500)
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per Extra Employee, and (ii) one and one-half weeks of pay of each Extra
Employee (at such employee's Pay Level (as defined in clause (b) hereof)
immediately prior to the Closing Date) for each year of such Extra Employee's
employment with Seller, the Company or any of their affiliates and respective
predecessors. Seller and Buyer agree that the accrued salary of the Extra
Employees as of the Closing Date shall, at Seller's option, either be paid by
Seller and promptly reimbursed to Seller by the Company or be paid by the
Company. Buyer further agrees that, after the Closing, Buyer shall cause the
Company to take these and all other actions contemplated by this Agreement to be
taken by the Company.
(b) Except with respect to directors and officers who are not
also Employees of the Company, all Employees immediately prior to the Closing
Date (including those on lay off, disability or other leaves of absence, whether
paid or unpaid) shall remain employed by the Company immediately after the
Closing Date at substantially the same compensation levels (including bonus,
commission and sales incentive programs) ("Pay Level") and on substantially the
same terms and conditions and in comparable positions (including level of
responsibilities and authority, and location) as those in effect immediately
prior to the Closing Date. By purchasing the Stock of the Company, Buyer shall
assume all obligations of Seller, the Company and their affiliates under all
individual agreements which relate to employment, compensation or benefits
(including, but not limited to, employment and consulting and severance
agreements) with any Employee who remains employed by the Company immediately
after the Closing Date. Nothing in this Agreement shall limit Buyer's right to
terminate the employment of any Employee following the Closing, provided that
the termination is in accordance with any applicable individual agreement and
the provisions of Section 9.05.
9.03. Seller's Benefits. (a) As of the Closing Date, the Company
will cease to be a participating employer in, and the Employees and Union
Employees will cease to be covered by, the Seller's Benefit Plans and Benefit
Arrangements. Except as provided in paragraphs (b) and (c) of this Section 9.03,
Seller and its Benefit Plans will remain responsible to the Employees and Union
Employees for all benefits accrued or payable under such Plans and the Seller's
Benefit Arrangements with respect to periods prior to the Closing Date
(including but not limited to retiree health and life benefits attributable to
participation in Seller's Benefit Plans and Benefit Arrangements). Except as
provided in paragraphs (b), (c) and (d) of this Section 9.03, Buyer assumes no
liability or obligation with respect to Seller's Benefit Plans or Benefit
Arrangements.
(b) (i) As soon as practicable after Seller receives the
opinion letter or the determination letter referred to in subparagraph (ii)
below, Seller shall cause the trustees of the 3M Voluntary Investment Plan and
Employee Stock Ownership Plan and, subject to obtaining any required consent of
the respective unions representing the Union Employees, the 3M Savings Plan
("Seller's 401(k) Plans") to transfer to the trust forming
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a part of the Buyer's defined contribution plan described in Section 9.04(a)
cash and outstanding participant loans in an amount equal to the account
balances of the Employees and Union Employees under Seller's 401(k) Plans as of
the transfer date (the "Account Balances"). For the period between the Closing
Date and the date of the transfer of the Account Balances, Seller shall treat
the Employees and Union Employees as inactive participants in Seller's 401(k)
Plans in accordance with the terms of such plans and applicable law.
(ii) Within 30 days after the Closing Date, Buyer shall either
(A) provide Seller with an opinion letter of counsel reasonably acceptable to
Seller that the Buyer's defined contribution plan and related trust satisfy in
form the requirements for qualification under Sections 401(a) and 401(k) of the
Code as of the later of its effective date or the Closing Date or (B) deliver to
Seller a favorable determination letter issued by the IRS with respect to the
Buyer's defined contribution plan and related trust that addresses all
provisions that are required to be incorporated in such plan and trust under
Sections 401(a) and 401(k) of the Code as of the Closing Date. No transfer shall
be made unless Buyer provides Seller with the opinion letter or determination
letter referred to in this subparagraph (ii).
(iii) In consideration for the transfer by the Seller's 401(k)
Plans of the Account Balances to the trust forming a part of the Buyer's defined
contribution plan, Buyer shall, effective as of the date of transfer, assume all
of the liabilities and obligations of Seller and its affiliates in respect of
the Employees and Union Employees and their beneficiaries under the Seller's
401(k) Plans, and Seller and its affiliates and the Seller's 401(k) Plans shall
be relieved of all liabilities and obligations to the Employees and Union
Employees and their beneficiaries arising out of the Seller's 401(k) Plans.
(c) Buyer shall assume effective as of the Closing Date all of
the liability and obligations of Seller in respect of Employees for the amount
of their accrued and unused vacation benefits under Seller's vacation plan
through the Closing Date. Within thirty (30) days after the Closing Date, Seller
will provide Buyer with a list of the Employees and the days of unused vacation
benefits as of the Closing Date. During the remainder of 1997, Buyer will cause
its vacation plan to permit the Employees to receive paid vacation benefits
equal in time to the number of days of unused vacation benefits as of the
Closing Date. Immediately after the end of 1997 or, if sooner, upon the
termination of their employment with the Company and the Buyer, the Buyer shall
pay in cash to the Employees of the Company any remaining amount of such unused
vacation benefits.
(d) Within thirty (30) days after receiving each invoice from
Seller or its agent, Buyer or the Company will reimburse Seller for all workers
compensation benefits and related expenses paid by Seller or its insurers after
the Closing Date with
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respect to Employees or Union Employees of the Company as a result of injuries
or illnesses occurring or arising on or prior to the Closing Date. At least ten
(10) days prior to entering into any binding agreement, Seller will inform or
cause its agent to inform Buyer of any proposed settlement involving the payment
of workers compensation benefits totaling more than $25,000 to any Employee or
Union Employee of the Company for injuries or illnesses occurring or arising on
or prior to the Closing Date. Upon Buyer's request, Seller shall consult with
Buyer and seek Buyer's consent prior to entering into a binding settlement of
such a claim. If Buyer withholds its consent to such settlement, Buyer shall
reimburse Seller for all amounts that Seller or Seller's insurers ultimately pay
in connection with such claim (including, but not limited to, workers
compensation benefits, related expenses and attorneys' fees).
9.04. Buyer's Benefits. (a) From and after the Closing Date, Buyer
will provide coverage and benefits to the Employees under the same Benefit Plans
and Benefit Arrangements that cover its current employees and Seller will have
no responsibility therefor on and after such date. Buyer shall cause each of its
Benefit Plans to recognize all service that Employees completed with Seller and
its affiliates and respective predecessors prior to the Closing Date for all
purposes for which such service was recognized by Seller's Benefit Plans.
(b) Buyer shall cause its Benefit Plans which provide medical
or dental welfare benefits to (i) waive any pre-existing conditions and
actively-at-work exclusions affecting Employees and their eligible family
members, and (ii) recognize any out-of-pocket medical and dental expenses
incurred by Employees and their eligible family members during 1997 under the
Seller's Benefit Plans and Benefit Arrangements on or before the Closing Date
for purposes of satisfying applicable annual deductible, coinsurance and maximum
out-of-pocket provisions.
(c) Buyer's vacation plan will recognize all of the service
that Employees completed with Seller and its affiliates and respective
predecessors prior to the Closing Date for the purpose of determining their
vacation benefits after the Closing Date.
(d) Buyer represents and warrants to Seller that its defined
contribution pension plan and trust have been maintained in accordance with
their terms and all provisions of applicable law, except where the failure to do
so would not have a material adverse effect on the business, assets, financial
condition or results of operations of Buyer.
9.05. Severance. Buyer agrees to cause the Company to provide the
following severance benefits to any Employee whose employment is either (i)
terminated (other than for cause) by the Company or Buyer or (ii) terminated in
connection with a
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sale or disposition of all or part of the Business regardless of whether such
Employee accepts employment with the entity that acquires the Business or such
part thereof, in the case of either (i) or (ii), within two years after the
Closing Date: (a) severance pay in accordance with the severance policy of Buyer
in effect at the time of termination, but not less than one and one-half weeks
of pay (at the Employee's Pay Level at the time of such termination) for each
year of employment with the Company, Seller or any of their affiliates and
respective predecessors (including periods prior to the Closing Date); and (b)
six months of continued health benefits coverage for such Employee and his or
her eligible family members at no cost.
9.06. Indemnity. Buyer shall indemnify Seller and its affiliates and
hold each of them harmless from and against any Losses which may be incurred or
suffered by any of them (i) under the Worker Adjustment and Retraining
Notification Act arising out of, or relating to, any actions taken by Buyer or
the Company on or after the Closing Date; (ii) in connection with any claim made
by any Employee or any Union Employee for any severance pay or other damages
(including, but not limited to, compensation and benefits) by reason of Buyer's
or the Company's failure to offer such Employee or Union Employee employment in
accordance with Section 9.02 or Section 9.09, as applicable, or to employ or
continue to employ such Employee or such Union Employee on or after the Closing
Date at substantially the same compensation levels (including bonus, commission
and sales incentive programs) and on substantially the same terms and conditions
and in a comparable position (including level of responsibilities and authority,
and location) as those in effect immediately prior to the Closing Date;
provided, however, that Buyer shall not indemnify Seller and its affiliates or
hold any of them harmless with respect to any claim for severance pay or other
damages by reason of Buyer's or the Company's failure to offer an Extra Employee
employment in accordance with Section 9.02 or to employ or continue to employ an
Extra Employee on or after the Closing Date as set forth above, or if such claim
is made by an Employee to whom Buyer offers employment in accordance with
Section 9.02 but who rejects Buyer's offer of employment; (iii) in connection
with any claim made by any Employee or any Union Employee for any severance pay
or other damages (including, but not limited to, compensation and benefits) by
reason of such Employee's or such Union Employee's termination of employment by
Buyer or the Company after the Closing Date; or (iv) by reason of Buyer's
failure to comply with the provisions of this Article IX.
9.07. W-2 Matters. Pursuant to IRS Revenue Procedure 84-77, Buyer
shall assume the obligations of Seller to furnish Forms W-2 to Employees and
Union Employees for the calendar year in which the Closing occurs. Seller will
provide Buyer with any information available to it and not available to Buyer
relating to periods ending on the Closing Date necessary for Buyer to prepare
and distribute such Forms W-2, which Forms W-2 will include all remuneration
earned by Employees and Union Employees
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from Seller and Buyer during such calendar year, and Buyer will prepare and
distribute such forms.
9.08. Continuing Assistance. Subsequent to the Closing Date and for
a period of six months thereafter, other than with respect to the Seller's
401(k) Plans, which shall be the later of such six-month period or the
completion of the transfer of the Account Balances as provided in Section
9.03(b)(i), Seller and Buyer shall, at their own cost (but at the other's
expense for out-of-pocket costs), provide such assistance to each other
(including making records and personnel reasonably available) as may be
reasonably requested to enable Seller and Buyer to administer their Benefit
Plans and Benefit Arrangements with respect to the Employees and Union Employees
and the spouses and covered dependents of such Employees and Union Employees.
9.09. Union Employees. (a) All Union Employees shall remain employed
by the Company immediately after the Closing Date. Buyer recognizes the unions
representing Union Employees and accepts the terms and conditions of existing
collective bargaining agreements until expiration or amended through the
collective bargaining process. In the event the employment of a Union Employee
is terminated within the time and for the reasons set forth in Section 9.05,
Buyer agrees that in the negotiations with the union representing such employee,
the Company's initial offer shall include (and, in any case, Buyer will cause
the Company to pay, subject to the consent of the relevant union and
notwithstanding any contrary provision in any agreement resulting from such
negotiation) minimum severance benefits payable to such employee of not less
than one and one-half weeks of pay (at such employee's Pay Level at the time of
such termination) for each year of employment with the Company, Seller or any of
their affiliates and respective predecessors (including periods prior to the
Closing Date); and shall also provide six months of continued health benefits
coverage for such employee and his or her eligible family members at no cost.
(b) All obligations of Seller under the collective bargaining
agreements shall terminate on the Closing Date.
ARTICLE X
TERMINATION PRIOR TO CLOSING
10.01. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of Buyer and Seller; or
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(b) in writing by Seller, if the Closing shall not have
occurred on or before the Termination Date, provided, however, that the right to
terminate this Agreement pursuant to this Section 10.01(b) shall not be
available to Seller if Seller's failure to perform or observe in any material
respect any of its covenants or agreements contained in this Agreement shall
have been the cause of, or resulted in, the failure of the consummation of the
transactions contemplated hereby to occur on or before such date; or
(c) in writing by either Buyer or Seller, if there shall have
been a material breach by the other party of any of its representations,
warranties, covenants or agreements contained herein and such breach results in
a failure to satisfy a condition to the terminating party's obligation to
consummate the transactions provided herein which cannot be cured or is not
cured prior to the Closing Date; or
(d) in writing by Buyer, if the Closing shall not have
occurred on or before 60 days after the Termination Date by reason of a failure
to satisfy the conditions set forth in Section 7.01(b) or Section 7.02 (other
than matters relating to antitrust law), provided, however, that the right to
terminate this Agreement pursuant to this Section 10.01(d) shall not be
available to Buyer if Buyer's failure to perform or observe in any material
respect any of its covenants or agreements contained in this Agreement shall
have been the cause of, or resulted in, the failure of the consummation of the
transactions contemplated hereby to occur on or before such date.
10.02. Effect on Obligations. Termination of this Agreement pursuant
to this Article X shall terminate all obligations of the parties hereunder,
except for the obligations under Article XI and Sections 12.08, 12.09, and
12.11; provided, however, that termination by Seller pursuant to clause (b) or
by Buyer or Seller pursuant to clause (c) of Section 10.01 shall not relieve the
defaulting or breaching party from any liability to the other party hereto.
10.03. Termination Fee. In the event that Closing does not occur on
or before Termination Date and Seller has the unilateral right to terminate this
Agreement pursuant to Section 10.01(b), then Buyer agrees to pay Seller,
immediately upon Seller's demand, the sum of $20,000,000 (twenty million
dollars) as a termination fee and not as liquidated damages, in which case Buyer
and Seller agree that payment of such fee shall not relieve Buyer from liability
for its breach hereunder or be construed as limiting Seller's rights in any
manner, including, without limitation, the right to sell the Stock or the assets
of the Company (or any portion of them) to one or more buyers and/or the right
to seek further damages against Buyer in equity or at law. Buyer and Seller
confirm and agree that payment of the termination fee is in consideration, among
other things, of the benefit to Buyer of Seller's selection of Buyer as the
acquiror of the Company. The Deposit shall be applied against any amounts
payable to Seller under this Section 10.03.
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In addition, if the Deposit is paid to Seller under this Section 10.03, any
interest earned on the Deposit (as contemplated by the terms of Section 1.03(b))
shall also be paid to Seller.
ARTICLE XI
DISPUTE RESOLUTION
11.01. Unaided Negotiations. To resolve any disputes among the
parties, Buyer or Seller must first provide written notice to the other,
specifying in as much detail as possible the source or reason for the dispute,
the amount of claimed damages, if any, and the resolution proposed by the
notifying party. The receiving party shall respond in writing to any such notice
within seven business days after receipt. The responding party may include in
its reply a detailed description of any disputes it would like to resolve and
the proposed resolutions. The first notifying party shall respond within seven
business days. If the dispute is not then resolved, there shall follow within
seven business days of the last written response a meeting between at least one
representative of each party. Each party agrees to have present such person or
persons who are authorized to fully and finally resolve the dispute. The purpose
of this meeting shall be to discuss and negotiate in good faith the complete
resolution of any outstanding dispute. The date and time shall be mutually
agreed (within the stated period), and the location of the meeting shall be
chosen by the party responding to the first notice. Each party shall bear its
own costs (including travel expenses) incident to this negotiation and meeting.
11.02. Mediation. Should the procedure outlined in Section 11.01 not
bring about a resolution of the dispute, then within 30 days following the
meeting of principals, the party first sending the notice shall initiate a
voluntary, nonbinding mediation conducted by a mutually-agreed mediator. Should
the parties for any reason be unable or unwilling to agree upon a mediator, they
shall request J-A-M-S/Endispute in New York, NY, to appoint a capable mediator
for them in accordance with the commercial mediation rules of such organization.
The parties shall bear equally all costs and expenses (including any attorneys'
fees) of this mediation and endeavor in good faith to resolve their differences.
While this mediation shall be nonbinding in all respects (i.e., any agreement
must be accepted by each party), each party agrees that:
(a) It shall appear when directed by the mediator, be fully
prepared to work towards a resolution of the dispute, and participate in good
faith in the mediation towards a resolution of all disputed issues or concerns;
(b) The duty to mediate in good faith under this Agreement
shall be specifically enforceable by the courts of Minnesota; and
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(c) Should a court in litigation stemming from the same
general dispute or disagreement among the parties determine that either did not
participate in good faith in the mediation process hereunder, then such party
shall be liable for the other party's attorneys' fees in the resulting
litigation, up to $100,000.
11.03. Litigation. In the event that the parties are unable to
resolve any outstanding disagreement or dispute as provided above, then, as a
last resort, either party may commence Litigation; provided, however, that it
must do so in the courts (state or federal, provided the court selected has
subject matter jurisdiction) of the State of Minnesota, County of Xxxxxx.
11.04. Governing Law; Personal Jurisdiction; Waiver of Jury. Any
questions, claims, disputes, remedies, or Litigation arising from or related to
this Agreement, and any relief or remedies sought by any parties hereunder,
shall be governed exclusively by the laws of the State of Minnesota, without
giving effect to the conflicts of laws principles thereof. The parties agree
that the State of Minnesota and the County of Xxxxxx each have a substantial
relationship to this transaction, and each party consents to personal
jurisdiction in the courts thereof, consistent with Section 11.03. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY AND ALL STATUTORY OR CONSTITUTIONAL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
ARTICLE XII
MISCELLANEOUS
12.01. Survival. The representations and warranties made in this
Agreement or in any agreement, certificate (including the Certificate of Seller
and the Certificate of Buyer) or other document executed at or prior to the
Closing in connection herewith (an "Ancillary Document") shall survive the
Closing Date until the first anniversary thereof and shall thereupon expire
together with any right to indemnification for breach thereof (except to the
extent a written notice asserting a claim for breach of any such representation
or warranty, describing the nature of the breach in reasonable detail, shall
have been given prior to such date to the party which made such representation
or warranty, in which case such representation and warranty shall survive, to
the extent of such claim only, until such claim is resolved, whether or not the
amount of the damages or expenses resulting from such breach has been finally
determined at the time the notice is given, if, but only if, (i) in the case of
any claim made by Buyer by reason of a third-party claim, the written notice is
accompanied by a copy of the written notice of the third-party claimant or (ii)
in the case of any claim made by Buyer other than by reason of a
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third-party claim, some damages or expense shall have been incurred in good
faith at or prior to the date of such notice; and provided that any notice
asserting a claim for breach of any of the representations and warranties
contained in Sections 2.06 and 2.08 (or in the Certificate of Seller insofar as
it pertains to Sections 2.06 and 2.08) as to Environmental Matters (an
"Environmental Breach") shall not be effective notice unless accompanied by (x)
written notice from the applicable regulatory authority, or, if there has been a
claim made against Buyer by a third party, the written notice of the third-party
claimant, alleging the existence of the conditions as to which an Environmental
Breach is claimed or (y) a written report from an environmental consulting firm
reasonably acceptable to Seller, the fees and expenses of which firm shall be
borne solely by Buyer, confirming, in reasonable detail, the existence of the
conditions as to which an Environmental Breach is claimed). The covenants and
agreements contained herein to be performed or complied with prior to the
Closing (and the provisions of the Certificate of Seller and the Certificate of
Buyer pertaining thereto) shall expire at the Closing. The covenants and
agreements contained herein to be performed or complied with at or after the
Closing (other than the covenant and agreement to indemnify against breaches of
representations and warranties, which shall expire as set forth in the first
sentence of this Section 12.01, but including the indemnification obligations
contained in Sections 5.03, 5.05, 6.01, 6.06 and 9.06) shall survive the Closing
until the expiration of the applicable statute of limitations. Accordingly,
Buyer agrees (without prejudice to any rights which Buyer may have under
Sections 7.01, 10.01 and 10.02) that, if the Closing occurs, then to the extent
any representation or warranty of Seller made herein or in any Ancillary
Document entered into at or prior to the Closing, to the knowledge of Buyer
acquired from and after the date hereof and prior to the Closing, is untrue or
incorrect, (x) Buyer shall have no rights hereunder by reason of such untruth or
inaccuracy, and (y) any such representation or warranty by Seller shall be
deemed to be amended to the extent necessary to render it consistent with such
knowledge of Buyer.
12.02. Indemnification. (a) If the Closing shall occur, Seller
(except with respect to indemnification claims relating to or arising from
Section 6.01, which claims shall be governed by Section 6.01(d)) shall indemnify
Buyer and its affiliates and hold each of them harmless from and against all
Losses which are incurred or suffered by any of them (i) by reason of the breach
of any of the representations or warranties made by Seller herein or in any
Ancillary Document or (ii) by reason of the failure by Seller to perform or
comply with any of the covenants or agreements contained herein or in any
Ancillary Document to be performed or complied with by Seller at or after the
Closing. Any recovery by Buyer and its affiliates for indemnification shall be
limited as follows: (l) Buyer and its affiliates shall not be entitled to any
recovery unless a claim for indemnification is made in accordance with Section
12.01 and paragraph (c)(i) of this Section 12.02 and within the time period of
survival set forth in Section 12.01; (2) Buyer and its affiliates shall not be
entitled to recover any amount for indemnification claims
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under clause (i) of this Section 12.02(a) unless and until the amount which
Buyer and its affiliates are entitled to recover in respect of such claims
exceeds, in the aggregate, $10,000,000 (ten million dollars) (the "Deductible"),
in which event (subject to clause (3) below) the entire amount which Buyer and
its affiliates are entitled to recover in respect of such claims less the
Deductible shall be payable; and (3) the maximum amount recoverable by Buyer and
its affiliates for indemnification claims under clause (i) of this Section
12.02(a) (other than claims relating to a breach of Seller's representations and
warranties set forth in Section 2.01) shall in the aggregate be equal to
$50,000,000 (fifty million dollars).
(b) If the Closing shall occur, Buyer shall indemnify Seller
and its affiliates and hold each of them harmless from and against all Losses
which are incurred or suffered by any of them (i) by reason of the breach by
Buyer of any of the representations or warranties made by Buyer herein or in any
Ancillary Document, (ii) by reason of the failure by Buyer to perform or comply
with any of the covenants or agreements contained herein or in any Ancillary
Document to be performed or complied with by Buyer at or after the Closing or
(iii) by reason of the ownership by Buyer or any of its affiliates of the Assets
or the conduct by Buyer or any of its affiliates of its business after the
Closing; provided, however, that Seller and its affiliates shall not be entitled
to any recovery unless a claim for indemnification is made in accordance with
paragraph (c)(i) of this Section 12.02 and within the time period set forth in
Section 12.01.
(c) (i) In the event that any party shall incur or suffer any
Losses in respect of which indemnification may be sought by such party pursuant
to the provisions of this Section 12.02, the party seeking to be indemnified
hereunder (the "Indemnitee") shall assert a claim for indemnification by written
notice (a "Notice") to the party from whom indemnification is sought (the
"Indemnitor") stating the nature and basis of such claim, and if such claim is
with respect to a third-party claim or a claim relating to an Environmental
Matter, accompanied by the documentation set forth in Section 12.01. In the case
of Losses arising by reason of any third-party claim, the Notice shall be given
within 30 days of the filing or other written assertion of any such claim
against the Indemnitee, but the failure of the Indemnitee to give the Notice
within such time period shall not relieve the Indemnitor of any liability that
the Indemnitor may have to the Indemnitee except to the extent that the
Indemnitor is prejudiced thereby.
(ii) The Indemnitee shall provide to the Indemnitor on request
all information and documentation reasonably necessary to support and verify any
Losses which the Indemnitee believes give rise to a claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee which
would have bearing on such claim.
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(iii) In the case of third-party claims for which
indemnification is sought, the Indemnitor shall have the option, and with
respect to such claims that represent or are in respect of any of the
Liabilities ("Liabilities Claims") shall have the obligation, (x) to conduct any
proceedings or negotiations in connection therewith, (y) to take all other steps
to settle or defend any such claim (provided that the Indemnitor shall not
settle any such claim without the consent of the Indemnitee (which consent shall
not be unreasonably withheld)) and (z) to employ counsel to contest any such
claim or liability in the name of the Indemnitee or otherwise. In any event, the
Indemnitee shall be entitled to participate at its own expense and by its own
counsel in any proceedings relating to any third-party claim. The Indemnitor
shall, within 45 days of receipt of the Notice, notify the Indemnitee of (or, in
the case of a Liabilities Claim, confirm to the Indemnitee) its intention to
assume the defense of such claim. Until the Indemnitee has received notice of
the Indemnitor's election whether to (or, in the case of a Liabilities Claim,
the Indemnitor's confirmation of its intention to) defend any claim, the
Indemnitee shall take reasonable steps to defend (but may not settle) such
claim. Except for Liabilities Claims, as to which this sentence shall not be
applicable, if the Indemnitor shall decline to assume the defense of such claim,
or shall fail to notify the Indemnitee within 45 days after receipt of the
Notice of the Indemnitor's election to defend such claim, the Indemnitee shall
defend against such claim (provided that the Indemnitee shall not settle such
claim without the consent of the Indemnitor, which consent shall not be
unreasonably withheld). The expenses of all proceedings, contests or lawsuits in
respect of any such claims (other than those incurred by the Indemnitee which
are referred to in the second sentence of this subparagraph (iii)) shall be
borne by the Indemnitor but only if the Indemnitor is responsible pursuant
hereto to indemnify the Indemnitee in respect of the third-party claim and, if
applicable, only to the extent required by the second sentence of Section
12.02(a). Regardless of which party shall assume the defense of the claim, the
parties agree to cooperate fully with one another in connection therewith. In
the case of a claim for indemnification made under Sections 12.02(a)(i) or
12.02(b)(i), (a) if (and to the extent) the Indemnitor is responsible pursuant
hereto for indemnifying the Indemnitee in respect of the third-party claim, then
within ten days after the occurrence of a final non-appealable determination
with respect to such third-party claim, the Indemnitor shall pay the Indemnitee,
in immediately available funds, the amount of any Losses (or such portion
thereof as the Indemnitor shall be responsible for pursuant to the provisions
hereof, including, without limitation, the second sentence of Section 12.02(a)),
and (b) in the event that any Losses incurred by the Indemnitee do not involve
payment by the Indemnitee of a third-party claim, then, if (and to the extent)
the Indemnitor is responsible pursuant hereto for indemnifying the Indemnitee
against such Losses, the Indemnitor shall within ten days after agreement on the
amount of Losses or the occurrence of a final non-appealable determination of
such amount pay to the Indemnitee, in immediately available funds, the amount of
such Losses (or such portion thereof as the Indemnitor
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shall be responsible for pursuant to the provisions hereof, including, without
limitation, the second sentence of Section 12.02(a)).
(d) The provisions of paragraph (c) of this Section 12.02
shall apply to all claims for indemnification hereunder, except indemnification
claims relating to or arising from Section 6.01, which claims shall be governed
by Section 6.01.
(e) The indemnification provided in this Section 12.02 shall
be the sole and exclusive remedy for any inaccuracy or breach of any
representation or warranty made by Seller in this Agreement or in any Ancillary
Document. All amounts payable by one party in indemnification of the other shall
be considered an adjustment to the Purchase Price.
(f) IN NO EVENT SHALL SELLER BE LIABLE FOR LOSS OF PROFITS OR
CONSEQUENTIAL DAMAGES BY REASON OF A BREACH OF ANY REPRESENTATION OR WARRANTY,
WHETHER ORAL OR WRITTEN, MADE BY SELLER IN THIS AGREEMENT, IN ANY ANCILLARY
DOCUMENT OR OTHERWISE.
(g) Notwithstanding anything in this Agreement to the
contrary, neither Seller nor any of its affiliates shall be responsible for any
liability or obligation as a result of Buyer's failure to comply with applicable
law after the Closing even if the Outdoor Advertising Business acquired hereby
is operated after the Closing in the manner operated prior to Closing.
(h) Upon making any payment to an Indemnitee for any
indemnification claim pursuant to this Section 12.02, the Indemnitor shall be
subrogated, to the extent of such payment, to any rights which the Indemnitee
may have against any other parties with respect to the subject matter underlying
such indemnification claim.
(i) Buyer understands and agrees that the rights accorded it
by clause (a) of this Section 12.02 are its sole and exclusive remedy against
Seller or any of its affiliates with respect to any Environmental Matters
whatsoever. Buyer (on its own behalf and on behalf of its affiliates and the
successors and assigns of any of the foregoing) hereby waives any right to seek
contribution or other recovery from Seller or any of its affiliates that any of
them may now or in the future ever have under 42 U.S.C. Sections 9607 and
9613(f) of the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. Section 601 et seq.), as amended ("CERCLA"), the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Clean Water
Act (33 U.S.C. Section 1251 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C.
Sections 11001 et seq.), the Safe
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Drinking Water Act (42 U.S.C. Sections 300f et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) or any other
federal, state, local or foreign law relating to Environmental Matters, the
rules and regulations promulgated under any thereof, and any provisions of
common law providing for any remedy or right of recovery with respect to
Environmental Matters, as these laws, rules, regulations and provisions were in
the past or are currently in effect, or may in the future be enacted or be in
effect (collectively, "Environmental Laws"), with respect to the Liabilities.
Buyer (on its own behalf and on behalf of its affiliates and the successors and
assigns of any of the foregoing) hereby further unconditionally releases Seller
and its affiliates from any and all claims, demands, and causes of action that
any of them may now or in the future ever have against Seller or any of its
affiliates for recovery under CERCLA or under any other Environmental Laws with
respect to the Liabilities.
12.03. Interpretive Provisions. (a) Whenever used in this Agreement
the term "knowledge" shall mean actual knowledge without the need for
independent investigation and "knowledge" with respect to Seller shall mean
actual knowledge of those individuals listed in the Disclosure Schedule. The
burden of proving that a party or person had knowledge shall be on the party
asserting such knowledge.
(b) The inclusion of any item in this Agreement, the
Disclosure Schedule or the Revised Disclosure Schedule shall not be deemed an
acknowledgment that such item is material or would result in a Material Adverse
Effect.
(c) Buyer and Seller confirm and agree that any judgment,
order, settlement, legislation or regulation which has the effect of restricting
tobacco advertising, in whole or in part, shall not be a "Material Adverse
Effect" for purposes of this Agreement.
12.04. Entire Agreement. This Agreement, the Disclosure Schedule,
the Revised Disclosure Schedule and the Confidentiality Agreement constitute the
sole understanding of the parties with respect to the subject matter hereof.
Matters disclosed by Seller to Buyer pursuant to any Section of this Agreement
shall be deemed to be disclosed with respect to all Sections of this Agreement.
12.05. Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto; provided, however, that this
Agreement may not be assigned by Buyer without the prior written consent of
Seller, except that Buyer may, at its election, assign this Agreement to any
direct or indirect wholly owned subsidiary so long as (i) the representations
and warranties of Buyer made herein are equally true of such assignee, (ii) such
assignment does not have any adverse consequences to Seller or any of
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its affiliates (including, without limitation, any adverse tax consequences or
any adverse effect on the ability of Buyer to consummate (or timely consummate)
the transactions contemplated hereby), and (iii) such assignee shall execute a
counterpart of this Agreement agreeing to be bound by the provisions hereof as
"Buyer", and agreeing to be jointly and severally liable with the assignor and
any other assignee for all of the obligations of the assignor hereunder, but no
such assignment of this Agreement or any of the rights or obligations hereunder
shall relieve Buyer of its obligations under this Agreement; and provided,
further, that Buyer may assign its rights but not its obligations under this
Agreement as collateral security under financing arrangements entered into by
Buyer for the purpose of obtaining the funds required for the Purchase Price.
12.06. Headings. The headings of the Articles, Sections and
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.
12.07. Modification and Waiver. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof.
12.08. Broker's Fees. Each of the parties hereto (i) represents and
warrants that it has not taken and will not take any action that would cause the
other party hereto to have any obligation or liability to any person for a
finder's or broker's fee, and (ii) agrees to indemnify the other party hereto
for breach of the foregoing representation and warranty, whether or not the
Closing occurs.
12.09. Expenses. Except as otherwise provided herein, Seller and
Buyer shall each pay all costs and expenses incurred by it or on its behalf in
connection with this Agreement and the transactions contemplated hereby,
including, without limiting the generality of the foregoing, fees and expenses
of its own financial consultants, accountants and counsel.
12.10. Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to any other party shall be in writing
and shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard forms of written telecommunications, by overnight courier or
by registered or certified mail, postage prepaid,
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if to Seller to:
Minnesota Mining and Manufacturing Company
0X Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Senior Vice President - Legal Affairs
Telecopy: (000) 000-0000
with a copy to:
Minnesota Mining and Manufacturing Company
0X Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Office of General Counsel
Xxxxx Xxxxxx, Esq.
Assistant General Counsel
Telecopy: (000) 000-0000
if to Buyer to:
Outdoor Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000 and
(000) 000-0000
with a copy to:
Powell, Goldstein, Xxxxxxx & Xxxxxx LLP
16th Floor
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
or at such other address for a party as shall be specified by like notice.
12.11. Public Announcements. Neither Seller nor Buyer shall make any
public statements, including, without limitation, any press releases, with
respect to this
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Agreement and the transactions contemplated hereby without the prior written
consent of the other party (which consent shall not be unreasonably withheld or
delayed) except as may be required by law. If a public statement is required to
be made by law, the parties shall consult with each other in advance as to the
contents and timing thereof.
12.12. Nonassignable Assets. "Nonassignable Asset" shall mean any
asset used in the Outdoor Advertising Business whose sale, conveyance, transfer,
assignment or delivery is not permitted, or is not permitted without the consent
of any other person or party (including any governmental, regulatory or
administrative authority) other than consents, approvals, permits or
authorizations contemplated by Section 6.04. The Purchase Price shall not be
subject to adjustment or revision, and Buyer shall not be entitled to any
repayment, refund or other compensation, with respect to such Nonassignable
Asset. The Seller shall, to the maximum extent permitted by law or any terms or
limitations pertaining to such Nonassignable Asset, use its reasonable efforts
to obtain for the Buyer the benefits thereunder, and shall cooperate with Buyer
in any reasonable arrangement designed to provide such benefits to Buyer,
including any sublease or subcontract or similar arrangement; provided, however,
that Seller shall not be required to make any payments or incur any obligations
in connection with such arrangements.
12.13. Severability. If any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality or enforceability
of the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
12.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
12.15. Third Party Rights. Nothing in this Agreement shall be deemed
to create any right on the part of any person or entity not a party to this
Agreement other than (i) any permitted assignees and (ii) with respect to
Article IX, any Employee or Union Employee of the Company.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
MINNESOTA MINING AND MANUFACTURING COMPANY
By: /s/ MINNESOTA MINING AND MANUFACTURING COMPANY
----------------------------------------------
Name:
Title:
OUTDOOR SYSTEMS, INC.
By: /s/ OUTDOOR SYSTEMS, INC.
-------------------------
Name:
Title:
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