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EXHIBIT 2.2
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (the "Agreement") dated August 18,
1995, by and among XXXXX MEDIA COMPANY, a Delaware corporation (the "Company"),
XXXX, Inc., an Arizona corporation "XXXX") and EM Holdings LLC, an Arizona
limited liability company ("Holdings").
WHEREAS, Xxxx Xxxxx ("Xxxxx"), indirectly through Red River
Inc., an Arizona corporation ("Red River"), owns 100 percent of the issued and
outstanding shares of XXXX;
WHEREAS, XXXX owns 93.21 percent of the issued and outstanding
shares of Class B Common Stock of Xxxxx Investment Company, an Arizona
Corporation ("EIC"), and the balance of the outstanding Class B Common Stock of
EIC is owned by two minority shareholders (all of such shares of Class B Common
Stock hereinafter collectively the "Shares");
WHEREAS, prior to Closing, as defined in Section 2 hereof,
XXXX and the minority shareholders of EIC will transfer the Shares to Holdings,
which shall be controlled by Xxxxx;
WHEREAS, Xxxxx will cause Holdings to contribute the Shares to
the Company in exchange for the number of shares of Common Stock of the Company
specified in Section 2 hereof (the "New Shares"), which contribution is intended
to constitute a contribution to the capital of the Company pursuant to Section
351 of the Internal Revenue Code;
WHEREAS, pursuant to a purchase agreement of even date
herewith (the "Stock Purchase Agreement") Xxxxxxx & Xxxxxxxx Capital Partners
III, L.P. ("HFCP III") and certain other shareholders shall separately
contribute cash to the Company in exchange for shares of Common Stock of the
Company; and
WHEREAS, the parties desire to enter into this Agreement to
provide for the contribution of the Shares to the Company in exchange for the
New Shares.
NOW, THEREFORE, the parties agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
indicated meanings, which meanings shall be applicable, except to the extent
otherwise indicated in a definition of a particular term, both to the singular
and plural forms of such terms. All terms used in this Agreement that are not
defined in this Section 1 shall have the meanings set forth elsewhere in this
Agreement. Any agreement referred to below shall mean such agreement as amended,
supplemented and modified from time to time to the extent permitted by the
applicable provisions thereof and by this Agreement.
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"Acquisition Agreement" means the Stock Purchase Agreement
between EIC and General Electric Credit Corporation dated as or July 14, 1995.
"Balance Sheet" shall mean the unaudited consolidated Balance
Sheet of EIC as at June 30, 1995.
"Balance Sheet Dates" shall mean June 30, 1995.
"Best Efforts" shall mean reasonable good faith efforts but
shall in no event require the commencement of litigation against any third party
or the payment of any fees to any third party.
"Business Day" shall mean any weekday on which commercial
banks in San Francisco, California are open. Any action, notice or right which
is to be exercised or lapses on or by a given date which is not a Business Day
may be taken, given or exercised, and shall not lapse, until the end of the next
Business Day.
"Closing" has the meaning specified in Section 2(c) of this
Agreement.
"Closing Date" has the meaning specified in Section 2(c) of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning specified in the first Paragraph of
this Agreement.
"Company Plan" has the meaning specified in Section 3(s)(i)
of this Agreement
"Consolidated Tax Return" means any Tax Return that was, or
should have been, filed on a consolidated, combined or unitary basis for the
purpose of any type of Tax.
"Credit Agreement" means the Credit Agreement among EH&F, the
Company, Chase Manhattan Bank and the other parties thereto dated as of August
18, 1995.
"EH&F" means EH&F, Inc., a Delaware corporation, a wholly
owned Subsidiary of the Company.
"Encumbrances" shall mean any lien, security interest,
mortgage, pledge, hypothecation, easement or conditional sale or other title
retention agreement.
"Environmental Laws" shall mean any federal, state, or local
law, ordinance, regulation, order or permit pertaining to the environment,
natural resources or public health or safety as presently in effect.
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"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Financial Statements" shall mean (i) the audited consolidated
balance sheets of EIC and its Subsidiaries as at December 31, 1993 and 1994 and
the related audited consolidated Statements of Earnings and Cash Flows of EIC
and its Subsidiaries for the years then ended, certified by Xxxxxx Xxxxxxxx, and
(ii) the unaudited Balance Sheet of EIC and its Subsidiaries as at June 30, 1995
and the related unaudited consolidated statements of earnings and cash flows of
EIC and its Subsidiaries for the six month period then ended.
"Hazardous Material" shall mean hazardous wastes as presently
defined by the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
609 et. seq., as amended, and regulations promulgated thereunder and hazardous
substances as presently defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S. C. Section 9601 et. seq., as
amended (CERCLA" or "Superfund") and regulations promulgated thereunder, and
shall also mean every "hazardous material," "hazardous substance," "hazardous
waste," "toxic substances," or petroleum or petroleum products, as defined or
described in every state, local or other federal Environmental Law which is or
was applicable to the operations of the Company and its Subsidiaries.
"Holdings" has the meaning identified in the recitals of this
Agreement.
"Indebtedness" shall mean all obligations which arise from
borrowed money or the deferred purchase price of property or services (other
than accounts payable arising in the ordinary course of business).
"Investors" shall mean each of XXXX, Holdings, and any other
person holding a membership interest in Holdings, jointly and severally.
"Liability" means, with respect to any Person, any direct or
indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise.
"XXXX" has the meaning identified in the recitals of this
Agreement.
"Material Adverse Effect" shall mean a material adverse effect
on the business, operations, assets or financial condition of EIC and its
current Subsidiaries taken as a whole.
"Multiemployer Plan" has the meaning specified in Section
3(s)(i).
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"New Shares" has the meaning specified in the Recitals of this
Agreement.
"Per Share Agreed Upon Value" and "Per New Share Agreed Upon
Value" have the meanings specified in Section 2(d).
"Person" means an individual, partnership, joint venture,
association, corporation, trust, estate, limited liability company, limited
liability partnership, or any other legal entity.
"Red River" has the meaning identified in the recitals of this
Agreement.
"Shares" has the meaning specified in the Recitals of this
Agreement.
"Subsidiary" shall mean each corporation, partnership or other
entity, fifty percent (50%) or more of the outstanding voting shares of which
(or other voting interests or equity interests in the case of a partnership) are
owned or controlled directly or indirectly by a Person.
"Tax" or "Taxes" means all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all net income,
franchise, profits, gross receipts, capital, sales, use, ad valorem, value
added, transfer, transfer gains, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, real or personal property, and estimated taxes, water, rent and
sewer service charges, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts thereon, imposed by any taxing authority (federal,
state, local or foreign) and shall include any transferee liability in respect
of Taxes.
"Tax Return" means all returns, declarations, reports,
estimates, information returns and statements required to filed in respect of
any Taxes.
"WARN" shall mean the Workers Adjustment and Retraining
Notification Act of 1988 and any similar state or local plant closing law.
2. Contribution of the Shares: Closing.
(a) Contribution of the Shares. On the terms and subject to
the conditions contained in this Agreement, Holdings agrees to contribute and
deliver, or cause to be contributed and delivered to the Company on the Closing
Date, and the Company hereby agrees to accept, the number of Shares set forth on
Exhibit A, in exchange for the number of New Shares set forth on Exhibit B.
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(b) Delivery of Shares. At the Closing, Holdings shall deliver
to the Company the stock certificate or certificates representing the Shares,
duly endorsed in blank or accompanied by duly executed instrument of transfer,
or registered in the name of the Company and the Company shall deliver to
Holdings a stock certificate or certificates representing the New Shares, duly
endorsed in blank or accompanied by duly executed instrument of transfer, or
registered in the name of Holdings.
(c) Closing Date. The closing of the contribution of the
Shares in exchange for the New Shares (the "Closing") shall take place at 9:00
a.m. local time on August 18, 1995 (the "Closing Date") at the offices of
Milbank, Tweed, Xxxxxx & XxXxxx, or at such other place and time as the Company
and Holdings may agree in writing.
(d) Agreed Upon Value of the Shares. The parties agree that
for purposes of this Agreement the value of the Shares, corresponding to the
value of the New Shares, is $1,422 per Share (the "Per Share Agreed Upon
Value"), and $100,000 per New Share (the "Per New Share Agreed Upon Value").
(e) Contribution. Immediately following receipt of the Shares,
the Company shall contribute the Shares to EH&F.
3. Representations and Warranties of XXXX and Holdings.
XXXX and Holdings, jointly and severally, hereby represent and
warrant to the Company that as of the date of this Agreement and immediately
before Closing:
(a) Organization and Good Standing.
(i) Each of EIC and XXXX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona, and each of EIC and XXXX has full corporate power and authority to own
its properties and carry on its business as it is now being conducted. Each of
EIC and XXXX is duly qualified as a foreign corporation and in good standing
under the laws of (1) each jurisdiction in which it owns real property and (2)
each other jurisdiction in which the conduct of its business or the ownership of
its assets requires such qualification. The copies of EIC's and LOEL's
Certificates of Incorporation and By-Laws (together with all amendments thereto)
which have been previously delivered or made available to the Company are
correct and complete.
(ii) Holdings is a duly organized and validly existing
limited liability company organized under the laws of Arizona and as such has
full power and authority to own its properties and carry on its business as it
is proposed to be conducted. The management of the business of Holdings is
vested in Xxxxx, who has the sole power to act for Holdings in respect of all
matters relating to this Agreement. Holdings is duly
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qualified to do business as a foreign limited liability company in any
jurisdiction where it owns real property or where the conduct of its business or
the ownership of its assets require such qualification. Copies of Holdings
operating agreement and limited liability company certificate which have been
previously delivered to or made available to the Company are correct and
complete.
(b) Capitalization. The authorized capital stock of
EIC consists of 2,000 shares of Class A Common Stock, of which no shares will be
outstanding immediately following the Closing, 25,000 shares of Class B Common
Stock, of which 20,000 shares are issued and outstanding as of the date hereof
(all of which are included within the "Shares"), and 35,000 shares of preferred
stock (20,000 of which are designated Series A-1 and 15,000 of which are
designated Series B), 17,000 of which Series A and 14,997 of which Series B
shares are issued and outstanding. All outstanding shares of Preferred Stock
will be redeemed at Closing for $3,588,198. All of the outstanding shares of EIC
have been validly issued and are fully paid and non-assessable. Other than
warrants held by the Canadian Imperial Bank of Commerce ("CIBC") and Banque
Paribas to acquire in the aggregate 10% of the shares of Class B Common Stock
(the "Warrants"), which Warrants will be cancelled in consideration of a payment
by EIC of $3.16 million at the Closing, there is no existing option, warrant,
call, commitment or other security or agreement of any kind to which EIC is a
party requiring, and there are no convertible securities of EIC outstanding
which upon conversion would require, the issuance of any additional shares of
capital stock of EIC or other securities convertible into shares of capital
stock or any debt or equity security of EIC of any kind.
(c) Subsidiaries. EIC has no Subsidiaries, except as
listed on Schedule 3(c) hereto. The authorized and outstanding capital stock or
equity interests of each Subsidiary is as set forth on Schedule 3(c) hereto. All
of such outstanding shares or equity interests have been validly issued and are
fully paid, non-assessable and, except as set forth on Schedule 3(c), owned by
EIC as indicated thereon, free and clear of any and all Encumbrances other than
a security interest in favor of CIBC which will be released at Closing. There is
no existing option, warrant, call, commitment or other security or agreement of
any kind to which any Subsidiary is a party requiring, and there are no
convertible securities of any Subsidiary outstanding which upon conversion would
require, the issuance of any additional shares of capital stock or equity
interests of any Subsidiary or other securities convertible into shares of
capital stock or any other debt or equity security of any kind of any
Subsidiary. Each Subsidiary is duly incorporated or organized and validly
existing and in good standing under the laws of its respective state of
incorporation or organization. Each Subsidiary has all requisite corporate power
and authority to own its properties and carry on its business as presently
conducted. There have been delivered or made available to the Company complete
and correct
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copies of the Certificate of Incorporation and By-Laws (together with all
amendments thereto) of each Subsidiary.
(d) Ownership of Shares and Execution of Agreement. Holdings
will be at Closing the record and beneficial owner of the Shares, free and clear
of any and all Encumbrances other than a security interest in favor of CIBC
which will be released at Closing. XXXX has the corporate power and authority,
and Holdings has the limited liability company power and authority, to enter
into this Agreement, and each has the corporate or limited liability company
power and authority to sell, transfer, assign and deliver the Shares as provided
in this Agreement, and such delivery will convey to the Company good and
marketable title to the Shares, free and clear of any and all Encumbrances
(other than the security interest in favor of Chase Manhattan Bank to be granted
pursuant to the Credit Agreement). The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate or limited liability company action on the
part of XXXX and Holdings. This Agreement has been duly executed and delivered
by XXXX and Holdings and constitutes the legal, valid and binding obligation of
XXXX and Holdings, enforceable against each of XXXX and Holdings in accordance
with its terms.
(e) Financial Statements. Xxxxx has delivered to the Company
copies of the Financial Statements. Each of the Financial Statements is in
accordance with the books and records of EIC and its Subsidiaries as of the
dates and for the periods indicated, has been prepared in accordance with
generally accepted accounting principles and in conformity with the practices
consistently applied by EIC in the immediately preceding fiscal periods, and,
with respect to the unaudited interim financial statements, subject to normal
year-end audit adjustments and the absence of footnotes, presents fairly in all
material respects the financial position, results of operations and cash flows
of EIC and its Subsidiaries as at the dates and for the periods indicated.
(f) No Undisclosed Liabilities. As at the Balance Sheet Date,
neither EIC nor its Subsidiaries had any Indebtedness or material Liabilities
which are not shown on the Balance Sheet or disclosed herein or in a schedule
hereto or in the Financial Statements (including the footnotes thereto). Except
as set forth in the Balance Sheet, neither EIC nor any Subsidiary will have
outstanding on the Closing Date any material Indebtedness or Liability other
than those incurred since the Balance Sheet Date in the ordinary course of
business or disclosed herein or in a schedule hereto or in any document referred
to in a schedule or in the Financial Statements (including the footnotes
thereto).
(g) No Material Adverse Change: No Dividends. Since the
Balance Sheet Date. Since the Balance Sheet Data there has been no material
adverse change in the business, operations,
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assets or financial condition of EIC and its Subsidiaries taken as a whole.
Since the Balance Sheet Date no dividends or distributions have been declared or
paid on or made with respect to the shares of capital stock or other equity
interests of EIC or the Subsidiaries, nor have any such shares been repurchased
or redeemed, other than dividends or distributions paid to EIC, redemptions of
Class A Shares pursuant to EIC's advertising agreement with Circle K
Corporation, and the redemption by EIC of the remaining Class A Shares, which
redemption will be effected at the Closing without payment of any consideration
by EIC or its Subsidiaries.
(h) Taxes. (i) Except as set forth on Schedule 3(h) hereto,
(A) all material Tax Returns required to be filed by or on behalf of EIC or its
Subsidiaries have been timely filed (or timely extended) with the appropriate
taxing authorities in all jurisdictions in which such Tax Returns are required
to be filed, and all amounts shown on such Tax Returns (including interest and
penalties) as due from EIC or the Subsidiaries either directly, as part of a
Consolidated Tax Return, or otherwise, have been fully and timely paid or are
adequately provided for on the Balance Sheet; (B) all such Tax Returns are true,
correct and complete in all material respects; and (C) no waivers of statutes of
limitation have been given or requested with respect to EIC or the Subsidiaries
in connection with any Tax Returns covering EIC or the Subsidiaries.
(ii) Except as set forth on Schedule 3(h) hereto, all
deficiencies asserted or assessments made as a result of any examinations by the
Internal Revenue Service or any other taxing authority of the Tax Returns of or
covering EIC or the Subsidiaries have been fully paid, and there are no unpaid
deficiencies asserted-or assessments made by any taxing authority against EIC or
the Subsidiaries.
(iii) Except as set forth on Schedule 3(h) hereto, neither EIC
nor its Subsidiaries, nor any other person on their behalf has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by EIC or its Subsidiaries.
(iv) None of Red River, XXXX, EIC or its Subsidiaries is a
foreign person within the meaning of Section 1445 of the Code.
(v) Except as set forth on Schedule 3(h) hereto, no property
owned by EIC or its Subsidiaries (A) is property required to be treated as being
owned by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (B) constitutes "tax-exempt use
property" within the meaning of Section 168(h)(1)
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of the Code or (C) is tax-exempt bond financed property within the meaning of
Section 168(g) of the Code.
(i) Patents, Trademarks and Copyrights. Schedule 3(i) hereto
contains a complete and correct list of each material patent, trademark, trade
name, service xxxx and copyright owned or used by EIC or a Subsidiary and
pending applications therefor, and each license or other agreement relating
thereto. Except as set forth on Schedule 3(i) hereto, each of the foregoing is
owned by the party shown on such Schedule as owning the same, free and clear of
all Encumbrances other than a security interest in favor of CIBC which will be
terminated at Closing and the security interest in favor of Chase Manhattan Bank
that will be granted pursuant to the Credit Agreement. No claims have been
asserted in writing, which are still pending, that any of the foregoing is
invalid or conflicts with the asserted rights of others. EIC and each of its
subsidiaries possess all patents, patent licenses, trade names, trademarks,
service marks, brand marks, brand names, copyrights, know-how, formulas and
other proprietary and trade rights necessary for the conduct of their respective
business as now conducted.
(j) Real Property: Leases of Real Property. Except as set
forth on Schedule 3(j) hereto, neither EIC nor its Subsidiaries own any real
property. EIC has delivered to the Company and HFCP III a complete and correct
list in all material respects of all leases, subleases, license agreements or
other rights of possession or occupancy of real property to which EIC or any
Subsidiary is a party (as tenant, occupier or possessor). Except where no
Material Adverse Effect would result, all of the leases are in full force and
effect and enforceable in accordance with their terms subject to bankruptcy and
other laws limiting creditors' rights and subject to equitable principles. No
consent is required of any landlord or other third party to any lease to
consummate the transactions contemplated hereby except for cases where the
failure to obtain such consent would not have a Material Adverse Effect, and
upon consummation of the transactions contemplated hereby, each lease will
continue to entitle EIC or its Subsidiaries, as the case may be, to the use and
possession of the real property specified in such lease and for the purposes for
which such real property is now being used by EIC or its Subsidiaries,
respectively, except where failure to enjoy such use or possession would not
have a Material Adverse Effect. Except as set forth in such Schedule, neither
EIC nor its Subsidiaries is in default beyond any applicable notice or grace
period or has received written notice of default still outstanding on the date
hereof under any such lease, and on the date hereof, there exists no uncured
default thereunder by any third party, which in either case would be reasonably
likely to result in a Material Adverse Effect.
(k) Permits: Compliance with Laws. EIC and its Subsidiaries
have all necessary permits, licenses and governmental authorizations required
for the ownership or occupancy of their respective properties and assets and the
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carrying on of their respective business as presently conducted except where the
failure to have such permits, licenses or authorizations would not have a
Material Adverse Effect.
(l) Insurance. EIC and its Subsidiaries have maintained
insurance policies in type and amount appropriate for a company of their size
engaged in their business, including, without limitation, policies of life,
fire, theft, employee fidelity and other casualty and liability insurance, and
such policies are (and will remain after the Closing) in full force and effect.
The policy limits and deductibles under such policies are appropriate in light
of the business of EIC and its Subsidiaries.
(m) Material Contracts. Except as listed in Schedule 3(m)
hereto or any other Schedule hereto, neither EIC nor any subsidiary is a party
to any (i) material contract not made in the ordinary course of business; (ii)
contract for the employment of any officer or employee (other than oral
agreements for employment at will); (iii) advertising agreement (other than
those entered into in the ordinary course of business; (iv) franchise,
distributorship or sales agency agreement; (v) contract for the future purchase
of materials, supplies, services, merchandise or equipment not capable of being
fully performed or not terminable within a period of one year from the date
hereof or in excess of normal operating requirements; (vi) agreement for the
sale or lease of any of its assets other than in the ordinary course of
business; (vii) contract or commitment for capital expenditures in excess of
$100,000 in the aggregate; (viii) mortgage, pledge, conditional sales contract,
security agreement, factoring agreement, or other similar agreement with respect
to any of its real or personal property; (ix) lease of machinery or equipment
involving annual payments in excess of $25,000; (x) loan agreement, promissory
note issued by it, guarantee, subordination or similar type of agreement; (xi)
stock option, retirement, severance, pension, bonus, profit sharing, group
insurance, medical or other fringe benefit plan or program providing employee
benefits; (xii) consulting agreement; or (xiii) municipal or other governmental
franchise agreements. Complete and correct copies of each such agreement have
been made available to the Company. Except as set forth in Schedule 3(m) hereto,
the Company and its Subsidiaries have performed all of the obligations required
to be performed by them to date and are not in default under any of the
agreements, leases, contracts or other documents to which they are a party
listed on Schedule 3(m) except where the failure to so perform would not have a
Material Adverse Effect. Except as set forth in Schedule 3(m) hereto, no party
with whom EIC or its Subsidiaries has such a scheduled agreement is in default
thereunder except where such default would not have a Material Adverse Effect.
Except as disclosed herein or in Schedule 3(m) hereto, neither EIC nor its
Subsidiaries is a party to any non-compete or similar agreement which restricts
in any material way the current operation of their businesses.
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(n) Title to Properties; Absence of Encumbrances. EIC and its
Subsidiaries have good and marketable title to all of their respective
properties and assets shown as owned on the Balance Sheet (except for assets
disposed of in the ordinary course of business since the Balance Sheet Date or
as set forth in Schedule 3(n) hereto), free and clear of any and all
Encumbrances, except for liens in favor of CIBC that will be terminated at
Closing, and liens granted to Chase pursuant to the Credit Agreement or
permitted under the Credit Agreement. All material property, plant and equipment
shown thereon is in good condition and has been properly maintained, normal wear
and tear excepted.
(o) Restrictions. Except as set forth in Schedules 3(j), 3(m)
or 3(o) hereto, neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby will conflict with or
result in a breach of, or give rise to a right of termination of, or accelerate
the performance required by, any terms of any lease or material contract to
which EIC or its Subsidiaries is a party, or constitute a default thereunder, or
result in the creation of any Encumbrance upon any of their respective assets,
except where such conflict, default or Encumbrance would not have a Material
Adverse Effect, nor will it violate any of the provisions of their respective
Certificates of Incorporation or By-Laws or, as to non-corporate Subsidiaries,
organizational documents, or violate any judgment or decree by which they are
bound.
(p) Litigation: Consents. There is no action, suit, proceeding
or formal governmental inquiry or investigation pending against EIC or its
Subsidiaries which seeks to restrain or prohibit or otherwise challenges the
consummation, legality or validity of the transactions contemplated hereby.
There is no action, suit, proceeding or formal governmental inquiry or
investigation pending against EIC or the Subsidiaries which is reasonably likely
to result in a liability to EIC or any of its Subsidiaries in an amount that
exceeds applicable insurance coverage by more than $100,000 or which otherwise
would have a Material Adverse Effect. No consent, approval or authorization of
any governmental authority on the part of Xxxxx, XXXX, Holdings, EIC or its
Subsidiaries is required in connection with the execution and delivery of this
Agreement or the consummation of any of the transactions contemplated hereby
except such has have been obtained or made.
(q) Environmental Matters. Except as disclosed in Schedule
3(q) hereto, (i) the operations of EIC and its Subsidiaries are and always have
been in compliance with applicable Environmental Laws, except where the failure
to so comply would not have a Material Adverse Effect, (ii) neither EIC nor its
Subsidiaries is subject to any pending or threatened judicial or administrative
proceeding alleging the violation of any Environmental Law, (iii) neither EIC
nor its Subsidiaries has received any written notice from any governmental
authority that it is a potentially responsible party at any Superfund site; and
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(iv) neither XXXX, Holdings, or EIC is aware of the presence of any Hazardous
Materials on any real property owned or leased by EIC or any Subsidiary that
have not been (or are not being) handled, removed or disposed of in accordance
with applicable Environmental Laws, except where the failure to so handle,
remove or dispose would not have a Material Adverse Effect.
(r) Collective Bargaining Agreements and Labor. (i) Except as
set forth in Schedule 3(r) hereto, none of EIC or the Subsidiaries is a party to
any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements (other than oral agreements for employment at
will) which pertain to employees of EIC or the Subsidiaries.
(ii) Except as set forth in Schedule 3(r) hereto, there are no
pending strikes, work stoppages, slowdowns, lockouts, arbitrations or other
material labor disputes against EIC or the Subsidiaries.
(iii) Except as set forth in Schedule 3(r) hereto, there are
no pending complaints, charges or claims against EIC or the Subsidiaries filed
with any public or governmental authority, arbitrator or court based upon the
employment or termination of employment by EIC or the Subsidiaries of any
individual.
(iv) Except as set forth in Schedule 3(r) hereto, EIC and the
Subsidiaries are in compliance with all laws, regulations and orders relating to
the employment of labor, including all such laws, regulations and orders
relating to wages, hours, WARN, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and payment
of withholding and/or social security taxes and any similar tax.
(s) ERISA. (i) Schedule 3(s) hereto sets forth all material,
written "employee benefit plans", as defined in Section 3(3) of ERISA,
maintained by EIC or the Subsidiaries or to which EIC or the Subsidiaries
contributed or are obligated to contribute thereunder for current or former
employees of EIC or the Subsidiaries (the "Company Plans"). Schedule 3(s) hereto
separately identifies each Company Plan which is a multiemployer plan, as
defined in Section 3(37) of ERISA ("Multiemployer Plan").
(ii) True, correct and complete copies of the following
documents, with respect to each of the Company Plans (other than the
Multiemployer Plans), have been made available or delivered to the Company with
respect to EIC or its Subsidiaries: (i) any plans and related trust documents,
and amendments thereto; (ii) the most recent Forms 5500; (iii) the last Internal
Revenue Service determination letter, if applicable; and (iv) summary plan
descriptions.
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(iii) The Company Plans intended to qualify under Section 401
of the Code and the trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501 of the Code, and nothing has occurred with
respect to the operation of the Company Plans which could cause the loss of such
qualification or exemption or the imposition of any Liability, penalty or tax
under ERISA or the Code.
(iv) The Company Plans have been maintained in accordance with
their terms and with all provisions of the Code and ERISA (including rules and
regulations thereunder) and other applicable federal and state laws and
regulations.
(t) Brokers and Finders, Neither Xxxxx, XXXX, Holdings, EIC or
its Subsidiaries nor any person acting on their behalf has engaged any broker,
agent or finder or incurred any liability for any brokerage fees, agents'
commissions or finders' fees in connection with the transactions contemplated
herein and each of EIC and its Subsidiaries, jointly and severally, shall
indemnify the Company with respect to any claim which any person engaged by
Xxxxx, XXXX, Holdings, EIC or its Subsidiaries may make with respect to the
subject matter of this Agreement and the other Agreements referred to herein.
(u) Employee and Director Indebtedness. Except as set forth in
Schedule 3(v), no current or former officer, director or employee of EIC or its
Subsidiaries or any affiliate of EIC or its Subsidiaries or any person related
to any of such persons is indebted to EIC or its Subsidiaries nor is EIC or its
Subsidiaries indebted to any current or former officer, director or employee of
EIC or its Subsidiaries or any affiliate of EIC or its Subsidiaries or any
person related to any of such persons other than for current employee salary and
benefits accrued in the ordinary course of business, but in the ordinary course
of business not yet paid, all of which indebtedness (except for advances of
compensation) shall be discharged or paid prior to the Closing.
(v) No Material Interests. No shareholder, officer, employee
or agent of EIC or its Subsidiaries, nor any affiliate, spouse, ancestor or
descendant thereof, has any direct or indirect material interest in any
creditor, competitor, supplier or lessor of EIC or its Subsidiaries nor is any
such person a party to or bound by any contract or the holder of any interest in
any proprietary right of or used by EIC or its Subsidiaries.
(w) Investment Representations
(a) Investment. Each Investor is an accredited investor within
the meaning of Regulation D promulgated by the Securities and Exchange
Commission, and is acquiring its interest in the New Shares to be acquired by
Holdings for such Investor's own account, and not for the account of any other
person. Each Investor is acquiring its interest in
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the New Shares for investment and not with a view to distribution or resale
thereof except in compliance with applicable laws regulating securities.
(b) Business Experience. Each Investor is capable of
evaluating the merits and risks of Investor's direct or indirect investment in
the Company evidenced by the purchase of the New Shares by Holdings.
(c) Relation of Company. Each Investor is familiar with the
business, affairs, financial condition, and results of operations of the
Company.
(d) Access to Information. Each Investor has had the
opportunity to ask questions of, and to receive answers from, appropriate
executive officers of the Company with respect to the terms and conditions of
the transactions contemplated hereby and with respect to the business, affairs,
financial condition, and results of operations of the Company. Each Investor has
had access to such financial and other information as is necessary in order for
such Investor to make a fully-informed decision as to investment in the Company
by way of purchase of the New Shares by Holdings, and has had the opportunity to
obtain any additional information necessary to verify any of such information to
which such Investor has had access.
(e) Speculative Investment. Each Investor's investment in the
Company represented by the New Shares to be acquired by Holdings is highly
speculative in nature and is subject to a high degree of risk of loss in whole
or in part. The amount of such investment is within such Investor's risk capital
means and is not so great in relation to such Investor's total financial
resources as would jeopardize the financial needs of such Investor or such
Investor's family in the event such investment were lost in whole or in part.
(f) Registration. Each Investor may bear the economic risk of
investment for an indefinite period of time because the sale to Holdings of the
New Shares has not been registered under the Securities Act of 1933 (the "Act")
and the New Shares cannot be transferred by Holdings unless such transfer is
registered under the Act or an exemption from such registration is available.
The Company has made no agreements, covenants or undertakings whatsoever to
register the transfer of any of the Stock under the Act. The Company has made no
representations, warranties, or covenants whatsoever as to whether any exemption
from the Act, including without limitation any exemption for limited sales in
routine brokers' transactions pursuant to Rule 144, will be available; if the
exemption under Rule 144 is available at all, it will not be available until at
least two years after payment of cash for the Stock and not then unless: (i) a
public trading market then exists in the Company's common stock; (ii) adequate
information as to the Company's financial and other affairs and operations is
then available to
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the public; and (iii) all other terms and conditions of Rule 144 have been
satisfied.
(g) Public Trading. None of the Company's securities is
presently publicly traded, and the Company has made no representation, covenant
or agreement as to whether there will be a public market for any of its
securities.
(h) Tax Advice. The Company has made no warranties or
representations to such Investor with respect to the income tax consequences of
the transactions contemplated by this Agreement and such Investor is in no
manner relying on the Company or its representatives for an assessment of such
tax consequences.
4. Representations and Warranties of the Company relating to the
Company and the New Shares.
The Company hereby represents and warrants to XXXX and
Holdings that as of the date of this Agreement and immediately before Closing:
(a) Due Execution and Delivery; Validity and Enforceability.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid, and binding obligation of the Company enforceable
against it in accordance with its terms. No consent, approval, authorization,
regulation, qualification, designation, declaration, filing with any
governmental authority or third party is required in connection with the
consummation of the transactions contemplated by this Agreement except such as
have been obtained or made. Upon receipt of the consideration for the New Shares
as set forth in Exhibit A hereto, such shares will be duly authorized, validly
issued, fully paid and nonassessable.
(b) organization. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware
and has the corporate power to own and lease its properties and to carry on its
business as now being conducted.
(c) Capitalization of the Company. At Closing the authorized
capital stock of the Company shall consist of 10,000 shares of Common Stock, par
value $0.01 per share, 1916 of which shall be issued and outstanding, and 2,000
shares of Preferred Stock, par value $0.01 per share, none of which will be
issued and outstanding immediately following the Closing. All of the issued and
outstanding shares of Common Stock shall be validly issued, fully paid, and
nonassessable. Except as described in Schedule 4(c), the Company does not have
outstanding any convertible securities, options, warrants, scrip, rights to
subscribe, calls, or commitments of any character relating to any of its capital
stock.
(d) Assets and Liabilities of the Company. The Company is a
newly incorporated entity that does not have any
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assets or Liabilities other than those contemplated by this Agreement, the
Stockholders Agreement, the Stock Purchase Agreement, the Acquisition Agreement
and the Credit Agreement. The Company has engaged in no business other than the
transactions contemplated or referred to by such agreements.
5. Conditions to the Obligations of the Company.
Except as otherwise specifically set forth herein, all
obligations of the Company under this Agreement are subject to the fulfillment
prior to or on the Closing Date of each of the following conditions, any one or
more of which may be waived by the Company:
(a) Delivery of Certificates. Holdings shall have delivered to
the Company the certificate or certificates for the number of Shares set forth
on Exhibit A, duly endorsed to the Company or accompanied by duly executed stock
powers in favor of the Company, together with such evidence as the Company or
its counsel may reasonably require of the authority of any corporate officer
executing such endorsement or stock power.
(b) Representations and Warranties True at Closing. If the
Closing occurs subsequent to the date hereof, the representations and warranties
of XXXX and Holdings contained in this Agreement shall be made again at and as
of the Closing Date with respect to the state of facts then existing and shall
then be true in all material respects on and as of the Closing Date. XXXX and
Holdings shall have delivered to the Company a certificate to such effect with
respect to such representations and warranties.
(c) Covenants Performed. Each of the obligations of XXXX and
Holdings to be performed on or before the Closing Date pursuant to this
Agreement shall have been performed.
(d) Shareholders Agreement. Each of HFCP III, the Company,
Holdings and the other parties thereto shall have executed and delivered the
Shareholders Agreement and an executed copy shall have been delivered to the
Company.
(e) Opinion of Counsel. The Company shall have been furnished
with an opinion of Meyer, Hendricks, Xxxxxx, Xxxxxxx & Xxxxxx, counsel for XXXX
and Holdings, dated the Closing Date, substantially in the form set forth in
Exhibit C hereto.
(f) Delivery of Documents: Schedule of Delivery. All schedules
and exhibits to this Agreement shall have been completed and delivered to the
Company and shall be in form and content reasonably satisfactory to the Company.
All actions, proceedings, instruments, resolutions, certificates, and documents
reasonably requested by the Company to be executed and delivered in order to
carry out this Agreement, and all legal matters relating hereto, shall be
reasonably satisfactory to counsel for the Company.
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(g) Other Agreements. Except to the extent any such
agreements include the Closing hereunder as a condition to any parties
obligations thereunder, the conditions to closing under each of the Acquisition
Agreement and the Credit Agreement shall have been satisfied.
6. Conditions to the Obligations of XXXX and Holdings. Except
as otherwise specifically set forth herein, all obligations of Xxxxx, XXXX and
Holdings under this Agreement are subject to the fulfillment and satisfaction
prior to or on the Closing Date of each of the following conditions, any one or
more of which may be waived in writing by Xxxxx, XXXX or Holdings.
(a) Representations and Warranties True at Closing. The
representations and warranties of the Company contained in this Agreement shall
be made again at and as of the Closing Date with respect to the state of facts
then existing and shall then be true in all material respects on and as of the
Closing Date.
(b) Legal Matters. All legal matters incident to this
Agreement and the consummation of the transactions contemplated hereby shall be
reasonably satisfactory to counsel to Holdings
(c) Stockholders Agreement. Each party to the Stockholders
Agreement shall have executed and delivered such agreement.
(d) HFCP III Contribution. The Closing under the Stock
Purchase Agreement shall have occurred.
(e) Employment Agreement. Xxxxx and the Company shall have
entered into an Employment Agreement in form and substance satisfactory to
Xxxxx.
(f) Other Agreements. Except to the extent any such agreements
include the Closing hereunder as a condition to any party's obligations
thereunder, the conditions to closing under each of the Acquisition Agreement
and the Credit Agreement shall have been satisfied.
7. Covenants of XXXX and Holdings.
(a) Access to Properties and Records. Throughout the period
(if any) between the date of this Agreement and the Closing, XXXX and Holdings
shall give or cause to be given to the Company and its representatives full
access, during reasonable business hours to the premises, properties, contracts,
commitments, books, records, and affairs of EIC and shall provide the Company
with such financial, technical, and operating data and other information
pertaining to the business of EIC as the Company may reasonably request.
(b) Conduct of Business Prior to Closing. After the date of
this Agreement and prior to the Closing, except as
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otherwise expressly permitted or required by this Agreement or expressly
consented to by officers of the Company in writing:
(a) The business of EIC shall be conducted in the ordinary
course and in a normal, businesslike fashion; and
(b) Neither EIC, XXXX or Holdings shall take any action, or
suffer any action to be taken against it, that would cause any material adverse
change in any of the items or matters concerning EIC covered by the
representations and warranties of XXXX and Holdings contained in this Agreement.
(c) Notice of Events. Throughout the period between the date
of this Agreement and the Closing Date, XXXX and Holdings shall promptly advise
the Company of any and all material events or developments concerning financial
positions of EIC, results of operations, assets, Liabilities, or businesses or
any of the items or matters concerning EIC covered by the representations and
warranties of XXXX and Holdings contained in this Agreement.
(d) Best Efforts to Close. XXXX and Holdings shall use their
best efforts to fulfill the conditions set forth in this Agreement over which
they have control or influence and to consummate the transactions contemplated
by this Agreement on the Closing Date.
8. Indemnification
(a) XXXX and Holdings, jointly and severally, shall indemnify
the Company and hold the Company harmless from and against any and all losses,
liabilities, claims, damages, and expenses of whatever type or description,
including attorney fees and other costs of investigation and defense ("Losses")
resulting from or arising out of or in connection with (a) the inaccuracy of any
warranty or representation made by XXXX or Holdings pursuant to this Agreement
and (b) the partial or total nonperformance of any covenant of XXXX or Holdings.
It is expressly agreed that a diminution in the value of the business or
properties of EIC by reason of any of the matters described in the foregoing
clauses (a) and (b) shall be deemed a Loss to the Company for purposes of this
indemnification.
(b) The Company shall have the option to either (i) demand
payment of the Loss in cash, (ii) demand the restitution of the number of New
Shares resulting by multiplying the number of the New Shares by a fraction, at
the numerator of which there will be total amount of the Losses, and at the
denominator of which will be the New Per Share Agreed Upon Value multiplied by
the number of New Shares, or (iii) a combination of (i) and (ii).
(c) In the event that any legal proceedings shall be
instituted or any claims or demand shall be asserted by any person (including
the Company) in respect of which payment may be sought by the Company from XXXX
or Holdings (jointly and
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severally, the "Indemnifying Parties") under the provisions of this Section 8,
the Company shall promptly cause written notice of the assertion of any such
claim of which it has knowledge to be forwarded to the Indemnifying Parties and
the Indemnifying Parties shall at their own expense then defend against,
negotiate, settle or otherwise deal with any proceeding, claim or demand which
relates to any loss, liability, damage of deficiency indemnified against
hereunder; provided, however, that no settlement shall be made without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed; and provided further, that if the Indemnifying Parties in fact
defend the Company may nonetheless participate in any such proceeding with
counsel of its choice, provided that such participation shall be at its expense
unless the Company reasonably believes that there is a conflict of interest
between the Company and the Indemnifying Parties that renders separate
representation advisable. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand.
The indemnity by the Indemnifying Parties contained in this
Section shall be effective only if, and to the extent that, Losses indemnified
against exceed $1,000,000. For purposes of determining Seller's indemnification
obligations hereunder, each representation and warranty set forth in Section 3
hereof shall be deemed to exclude any materiality standard, exception or
qualification stated therein, including without limitation any exceptions
therein for matters that would not or are not reasonably likely to have a
Material Adverse Effect.
9. Legends
All certificates representing the New Shares subject to the
provisions of this Agreement shall have endorsed thereon the following legend:
(a) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) Any legend required to be placed thereon by the California
Commissioner of Corporations.
(c) Any other legends required by the Shareholders Agreement
or that the Company or its counsel deem appropriate.
10. Miscellaneous.
(a) Several Obligations. Any obligations of Xxxxx, XXXX and
Holdings pursuant to this Agreement shall be joint and several.
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(b) Expenses. The parties each will pay their own costs and
expenses, including legal and accounting expenses, relating to the transactions
contemplated by this Agreement regardless of when incurred. Any legal expenses
incurred by the Company in connection with such transactions shall be borne by
the Company.
(c) Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be given by personal delivery
or by certified mail with return receipt requested. Notices shall be deemed
delivered at the time of personal delivery or five days after such mailing.
Notices shall be addressed as follows:
If to the Company: Xxxxx Media Company
0000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
with copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Heller, Ehrman, White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to XXXX
or Holdings: 0000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx
with copy to: Xxxx Xxxxx, Esq.
Meyer, Hendricks, Xxxxxx,
Xxxxxxx & Xxxxxx, P.L.C.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
or to such other address (or with copies to such other person) as any party may
specify in a notice delivered to each other party as provided in this Section.
(d) Survival of Terms. All representations, warranties, and
covenants contained in this Agreement or in any certificate or other instrument
delivered by or on behalf of the parties pursuant hereto shall be continuous and
shall survive the Closing.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to the conflicts of laws principles thereof.
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(f) Dispute Resolution. Any dispute among the parties arising
out of or in connection with this Agreement shall be referred to and finally
resolved by arbitration in Los Angeles, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
force which rules are deemed to be incorporated by reference into this Section .
A party may commence such arbitration at any time at least ten (10) calendar
days after giving notice to each of the others describing the dispute generally
and stating an intention to commence such arbitration if the matter is not
resolved within such 10-day period. The arbitrator shall be appointed by the
American Arbitration Association. An arbitral award may include monetary
damages, specific performance or other equitable relief, as the arbitrator may
determine. The running of any time periods specified herein shall be tolled
during the pendency of any arbitration, unless otherwise ordered by the
arbitrator. The parties agree that judgment may be entered upon award of the
arbitrator which shall be final and binding and may be enforced in any court of
competent jurisdiction. All costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in connection with any such arbitration
proceeding shall be borne by the party against which the decision is rendered,
or, if no decision is rendered or if the decision is a compromise, equally by
such parties.
(g) Captions. The captions in this Agreement and the attached
exhibit and schedules are for convenience only and shall not be construed so as
to change the meaning of the provisions of this Agreement or the disclosure
requirements of such exhibits or schedules.
(h) Severability. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, the remainder of this Agreement shall be deemed valid and
enforceable and enforced to the fullest extent possible in a manner consistent
with the intent of the parties as evidenced by this Agreement as executed.
(i) Waiver. The waiver by any party of any term or condition
of this Agreement shall not be construed as a waiver of a subsequent breach or
failure of the same or any other term of this Agreement.
(j) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Xxxxx and XXXX may assign this Agreement to Holdings,
which will assume all rights and obligations under this Agreement. Xxxxx and
XXXX shall not be relieved of any of their obligations pursuant to this
Agreement but shall remain jointly and severally liable vis-a-vis the Company.
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(k) Counterparts. This Agreement may be executed in one or
more separate counterparts all of which together shall constitute one and the
same instrument.
(l) Entire Agreement and Modification. This Agreement and the
attached exhibit and schedules together with the other agreements referred to
herein constitute and contain the entire agreement of the parties with respect
to the subject matter hereof and supersede any and all prior negotiations,
correspondence, understandings, and agreements among the parties. This Agreement
may only be amended by a written instrument signed by each of the parties
hereto.
(m) Further Assurances. Each of the parties hereto agrees that
subsequent to the Closing, at the request of any other party will execute and
deliver, or cause to be executed and delivered, to the other parties such
further instruments of transfer and conveyance and take such other action as may
be necessary to carry out the transfer of the Shares to the Company and the New
Shares to Holdings and the consummation of the transactions contemplated by this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
XXXXX MEDIA COMPANY
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Its Treasurer and Secretary
----------------------------------
XXXX, INC.
By /s/ Xxxx Xxxxx
----------------------------------
Its President
----------------------------------
EM Holdings LLC
By /s/ Xxxx Xxxxx
----------------------------------
Its Chairman
----------------------------------
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