EXHIBIT A
Amended and Restated Agreement and Plan of Merger
by and among Eller Media Company, EMS, Inc.
and Metro Display Advertising, Inc. dated January 5, 1998;
and the Specific Performance Escrow Agreement, Van Wagner
Escrow Agreement, and Damages Escrow and Disbursement
Agreement related thereto
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELLER MEDIA COMPANY,
EMS, INC.,
AND
METRO DISPLAY ADVERTISING, INC.
DATED AS OF JANUARY 5, 1998
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the
"Agreement"), dated as of January 5, 1998, is by and among Metro Display
Advertising, Inc., a California corporation ("Metro"), and Eller Media Company,
a Delaware corporation ( "Eller"), and EMS, Inc. ("EMS"), a California
corporation and wholly-owned subsidiary of Eller.
RECITALS
A. The respective Boards of Directors of Metro, Eller and EMS have
determined that it is in the best interests of their respective stockholders
that EMS merge with and into Metro (the "Merger"), in accordance with the Laws
of the State of California ("California Law"), as a result of which Metro will
be the surviving corporation in the Merger.
B. The respective Boards of Directors of Eller, Metro and EMS have
approved and adopted the Agreement and Plan of Merger dated September 8, 1997
entered into by the parties hereto (the "Original Agreement"), and have approved
the Merger and the other transactions contemplated thereby.
C. The parties now desire to amend and restate the Original
Agreement , on the terms and conditions herein set forth, which amendment and
restatement has also been approved by the respective Boards of Directors of
Metro, Eller and EMS.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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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 term.
1.1 "Affiliate" shall have the meaning specified in Rule 12b-2 of the
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regulations promulgated under the Exchange Act.
1.2 "Affiliated Group" shall mean any group of corporations with
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respect to which a consolidated tax return was, or was required to have been,
filed.
1.3 "Agreement" has the meaning specified in the first paragraph of
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this Agreement.
1.4 "Agreement of Merger" shall mean that certain Agreement of Merger
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dated as of the Closing Date, substantially in the form of Exhibit A hereto.
1.5 "BATS" shall mean Bay Area Transit Shelter.
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1.6 "BSON" shall mean Bustop Shelters of Nevada, Inc., a Nevada
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corporation.
1.7 "Balance Sheet" shall mean the audited Balance Sheet of Metro as
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of December 31, 1996.
1.8 "Balance Sheet Date" shall mean December 31, 1996.
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1.9 "Bankruptcy and Equity Exceptions" shall mean applicable
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bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
1.10 "Best Efforts" shall mean reasonable good faith efforts but
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shall in no event require the commencement of litigation against any third party
or the payment of any fees to any third party.
1.11 "Bus Shelter Contracts" shall mean all contracts, permits, or
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other rights in existence on the Closing Date authorizing Metro to construct bus
shelters and related outdoor advertising display faces and listed on Schedule
4.10.
1.12 "Business Day" shall mean any weekday on which commercial banks
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in New York City 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.
1.13 "California Law" has the meaning specified in Recital A of this
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Agreement.
1.14 "Cash Merger Consideration" has the meaning specified in Section
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3.5(a) of this Agreement.
1.15 "Certificates" has the meaning specified in Section 3.9(a) of
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this Agreement.
1.16 "Closing" has the meaning specified in Section 2.1 of this
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Agreement.
1.17 "Closing Date" has the meaning specified in Section 2.1 of this
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Agreement.
1.18 "Commission" shall mean the Securities and Exchange Commission.
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1.19 "Consulting Agreement" has the meaning specified in Section 6.8
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of this Agreement.
1.20 "Damages Escrow Agreement" shall have the meaning specified in
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Section 3.11 of this Agreement.
1.21 "Damages Escrow Fund" shall have the meaning specified in
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Section 3.11 of this Agreement.
1.22 "Damages Escrow Merger Consideration" shall have the meaning
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specified in Section 3.5(a) of this Agreement.
1.23 "Disbursement Agent" shall mean the bank or trust company
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designated by Metro to serve as the agent of Metro for disbursing the aggregate
Cash Merger Consideration.
1.24 "Disclosure Schedules" shall mean the schedules prepared and
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delivered by Metro to Eller and EMS setting forth the exceptions to the
representations and warranties contained in Article IV of this Agreement and
certain other information called for by this Agreement. Unless otherwise
specified, each reference in this Agreement to any numbered schedule is a
reference to that numbered schedule which is included in the Disclosure
Schedules.
1.25 "Dissenting Shares" shall mean Shares held by any Stockholder
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who becomes entitled to the payment of the fair value for such Shares under
California Law, if such laws provide for such payment in connection with the
Merger.
1.26 "Effective Date" has the meaning specified in Section 3.2 of
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this Agreement.
1.27 "Eller" has the meaning specified in the first paragraph of this
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Agreement.
1.28 "EMS" has the meaning specified in the first paragraph of this
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Agreement.
1.29 "Employee Bonuses" has the meaning specified in Section 3.6 of
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this Agreement.
1.30 "Encumbrances" shall mean any lien, security interest, mortgage,
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deed of trust, pledge, hypothecation, easement or conditional sale or other
title retention agreement; provided, however, that Encumbrances shall not
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include any Permitted Encumbrance.
1.31 "Environmental Laws" shall mean any federal state, or local law,
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ordinance, regulation, order or permit pertaining to the environment, natural
resources or public health or safety as presently in effect.
1.32 "ERISA" shall mean the Employee Retirement Income Security Act
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of 1974, as amended.
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1.33 "Escrow Agent" shall have the meaning specified in Section 3.11.
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1.34 "Exchange Act" shall mean the Securities Exchange Act of 1934,
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as amended, and the rules and regulations promulgated thereunder.
1.35 "Excluded Assets" shall mean the assets of Metro listed on
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Schedule 1.39 hereto.
1.36 "Financial Statements" shall mean (a) the audited consolidated
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Balance Sheet of Metro as of December 31, 1996, and the related audited
consolidated Statements of Earnings and Cash Flows of Metro for the year then
ended, certified by Peck & Lopez of Newport Beach, California; (b) the unaudited
consolidated Balance Sheet of Metro as of May 31, 1997, and as of the end of
each month thereafter that ends prior to the Closing Date (excluding only those
balance sheets not available after Metro has exercised its best efforts to
complete such balance sheets), adjusted to reflect the elimination of the
Excluded Assets, and all debt to or from BSON; and (c) the unaudited
consolidated Statements of Earnings and Cash Flows of Metro for the period from
January 1, 1997, through May 31, 1997 and for each month thereafter that ends
prior to the Closing Date (excluding only those statements of earnings and cash
flows not available after Metro has exercised its best efforts to complete such
balance sheets).
1.37 "Hazardous Materials" shall mean hazardous wastes as presently
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defined by the Resource Conservation and Recovery Act of 1976, 42 U.S.C. (S) 609
et seq., as amended, and regulations promulgated thereunder and hazardous
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substances as presently defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. (S) 9601 et seq., as amended
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("CERCLA" or "Superfund") and regulations promulgated thereunder, and shall also
mean every "hazardous material," "hazardous substance," "hazardous waste,"
"toxic substance," 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 Metro and its Subsidiaries.
1.38 "Indebtedness" shall mean all obligations which arise from
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borrowed money or the deferred purchase price of property or services (other
than accounts payable arising in the ordinary course of business).
1.39 "Material Adverse Effect" shall mean a material adverse effect
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on any portion of the business, operations, assets or financial condition of
Metro.
1.40 "Material Lease" or "Material Leases" has the meaning specified
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in Section 4.12 of this Agreement.
1.41 "Merger" has the meaning specified in Recital A of this
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Agreement.
1.42 "Merger Consideration" shall mean the aggregate of the Cash
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Merger Consideration and the Damages Escrow Merger Consideration.
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1.43 "Metro" has the meaning specified in the first paragraph of this
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Agreement.
1.44 "Metro Common Stock" shall mean the Common Stock, no par value,
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of Metro.
1.45 "Metro's Net Accounts Receivable Balance" shall mean Metro's
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aggregate accounts receivable balance less the aggregate allowance for
uncollectible accounts, determined in accordance with generally accepted
accounting principles consistently applied, provided that in no case shall such
allowance exceed eight percent (8%) of such aggregate accounts receivable
balance.
1.46 "Metro Plans" has the meaning specified in Section 4.21 of this
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Agreement.
1.47 "Metro SEC Documents" has the meaning specified in Section 4.8
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of this Agreement.
1.48 "Metro Stock Rights" shall mean the employee stock options of
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Metro, and the warrants to acquire capital stock of Metro, existing on the date
of the Agreement and set forth on Schedule 4.2 hereto.
1.49 "Permitted Encumbrances" shall mean (a) Encumbrances imposed by
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any governmental authority for Taxes, assessments or charges not yet due and
payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of Metro in accordance with generally accepted accounting principles; (b)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
Encumbrances arising in the ordinary course of business which are not overdue
for a period of more than 30 days or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of Metro in accordance with generally accepted
accounting principles; (c) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation; (d)
deposits to secure the performance of any or all of the following: bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (e) easements, rights-of-way,
restrictions and other similar encumbrances on real property incurred in the
ordinary course of business and encroachments (whether or not in the ordinary
course of business) which, in the aggregate, are not substantial in amount, and
which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business thereon,
and (f) all the exceptions to title reflected on Schedule 4.16.
1.50 "Price Adjustment Schedule" has the meaning specified in Section
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7.19 of this Agreement.
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1.51 "Requisite Stockholder Approval" shall mean the vote in favor of
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this Agreement and the Merger by the holders of a majority of the Shares issued
and outstanding as of the record date set for the Stockholders Meeting.
1.52 "Securities Act" shall mean the Securities Act of 1933, as
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amended, and the rules and regulations promulgated thereunder.
1.53 "Shares" shall mean all of the issued and outstanding shares of
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Metro common stock, and for purposes of allocating the Merger Consideration
pursuant to Section 3.5 of this Agreement, "Shares" shall include all shares of
Metro capital stock subject to unexercised Metro Stock Rights less shares of
common stock withheld by Metro in satisfaction of the withholding taxes
applicable to the excess of the fair market value of the stock over the exercise
price in connection with the exercise of the Metro Stock Rights.
1.54 "Specific Performance Escrow Agreement" has the meaning
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specified in Section 3.7(b) of this Agreement.
1.55 "Specific Performance Escrow Fund" has the meaning specified in
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Section 3.7(b) of this Agreement.
1.56 "Specific Performance Escrow Merger Consideration" has the
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meaning specified in Section 3.5(b) of this Agreement.
1.57 "Stockholders" shall mean the holders of Metro Common Stock
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immediately prior to the Merger.
1.58 "Stockholders' Meeting" has the meaning specified in Section 3.1
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of this Agreement.
1.59 "Stockholder Representatives" has the meaning specified in the
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Damages Escrow Agreement attached hereto as Exhibit D.
1.60 "Subsidiary" shall mean each corporation, partnership or other
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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 another entity.
1.61 "Surviving Corporation" means Metro.
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1.62 "Tax Returns" means all returns, declarations, reports,
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estimates, information returns and statements required to be filed in respect of
any Taxes.
1.63 "Taxes" means all taxes, charges, fees, imposts, levies or other
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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,
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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.
1.64 "Van Wagner" shall mean Van Wagner Communications, Inc, and/or
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vw Martin Company, a California joint venture, comprised of Martin
Communications, Inc., and Van Wagner Communications, Inc., a New York
corporation and/or Van Wagner Communications, Inc.
1.65 "Van Wagner Agreements" shall mean all agreements of any kind
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between Metro and Van Wagner, including, but not limited to, all agreements
relating to sales, and marketing programs, joint ventures, options and rights of
first refusal.
1.66 "Van Wagner Escrow Merger Consideration" has the meaning
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specified in Section 3.5(b) of this Agreement.
1.67 "Van Wagner Escrow Agreement" has the meaning specified in
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Section 3.7(c) of this Agreement.
1.68 "Van Wagner Escrow Fund" has the meaning specified in Section
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3.7(c) of this Agreement.
1.69 "Van Wagner Group" has the meaning specified in Section 3.7(a)
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of this Agreement.
1.70 "Van Wagner Litigation" has the meaning specified in Section
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3.7(a) of this Agreement..
ARTICLE II
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CLOSING DATE; CLOSING
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2.1 Time and Place. Except as hereinafter provided, the closing
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hereunder (the "Closing") shall take place at the office of Troy & Gould, P.C.,
1801 Century Park East, Suite 1600, Los Angeles, CA 90067-2302, at 10:00 A.M.,
local time, on the seventh (7/th/) Business Day after all the conditions
precedent to the Closing shall have been satisfied or waived in writing, unless
otherwise mutually agreed to in writing by Eller, EMS and Metro. Subject to the
provisions of Section 9.4, failure to consummate the transactions contemplated
hereby on the date and time and at the place determined pursuant to this Section
2.1 shall not result in the termination of this Agreement and shall not relieve
a party of any obligation for breaching this Agreement. The date of the Closing
is referred to in this Agreement as the "Closing Date."
2.2 Proceedings and Deliveries Simultaneous. All proceedings to be
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taken and all documents to be executed and delivered by all parties at the
Closing shall be deemed to have been
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taken and executed simultaneously and no proceedings shall be deemed taken nor
any documents executed or delivered until all have been taken, executed and
delivered.
ARTICLE III
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THE MERGER
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3.1 Approval of the Merger. The Merger shall be submitted for
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adoption and approval to the Stockholders at a meeting to be duly held for this
purpose by Metro (the "Stockholders' Meeting"). Eller, EMS and Metro shall
coordinate and cooperate with respect to the timing of such Stockholders'
Meeting. The Board of Directors of Metro shall recommend that the Stockholders
approve this Agreement and the Merger.
3.2 The Merger; Effective Date. On the Closing Date, the parties
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hereto will cause the Merger to be consummated by filing with the Secretary of
State of California the Agreement of Merger (the time of such filing being the
"Effective Date"). At the Effective Date, in accordance with this Agreement and
California Law, EMS shall be merged with and into Metro, the separate existence
of EMS (except as may be continued by operation of law) shall cease, and Metro
shall continue as the surviving corporation under the corporate name it
possesses immediately prior to the Effective Date. EMS and Metro are sometimes
referred to herein as the "Constituent Corporations," and Metro is sometimes
referred to herein as the "Surviving Corporation."
3.3 Effect of the Merger. At and after the Effective Date: (a) the
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Surviving Corporation shall possess all of the rights, privileges, powers and
franchises of a public as well as of a private nature of each of the Constituent
Corporations; (b) the Surviving Corporation shall be subject to all of the
restrictions, disabilities and duties of each of the Constituent Corporations;
(c) all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as stock subscriptions and
all other things in action or belonging to each of the Constituent Corporations,
shall be vested in the Surviving Corporation; (d) all property, rights,
privileges, powers and franchises, and all and every other interest of each of
the Constituent Corporations shall be thereafter the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired; (e) all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired; and (f) all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if said debts
and liabilities had been incurred by it.
3.4 Charter Documents; Directors; Officers. Upon the Effective Date,
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the Articles of Incorporation and the Bylaws of Metro shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation, as in effect immediately
prior to the Effective Date, until thereafter amended as provided therein and
under California Law, provided that, at the Effective Date the officers and
directors of EMS immediately prior to the Effective Date shall become the
officers and directors of the Surviving Corporation, until their successors are
elected and qualified.
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3.5 Merger Consideration. At the Effective Date, subject to the
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price adjustment provision of Section 3.6 below and the Van Wagner resolution
provisions of Section 3.7 below, Eller shall have available in cash Forty-One
Million Eight Hundred Thousand and No/100 Dollars ($41,800,000.00). By virtue
of the Merger and without any action on the part of any party hereto, the
Surviving Corporation, or any holder of Shares, at the Effective Date:
(a) Except for Dissenting Shares, each Share shall be canceled and
extinguished and become the right to receive (i) Thirty-Six Million Eight
Hundred Thousand and No/100 Dollars ($36,800,000.00), less any price
adjustment provided for in Section 3.6 below, divided by the number of
Shares (the "Cash Merger Consideration")and (ii) the aggregate amount to be
distributed from time to time to the Stockholders from the Damages Escrow
Fund (initially, Five Million and No/100 Dollars ($5,000,000.00)) pursuant
to the Damages Escrow Agreement, divided by the number of Shares (the
"Damages Escrow Merger Consideration").
(b) If Section 3.7(b) is applicable, this Section 3.5(b) shall replace
Section 3.5(a) above. Except for Dissenting Shares, each Share shall be
canceled and extinguished and become the right to receive (i) the aggregate
amount to the distributed from time to time to the Stockholders from the
Specific Performance Escrow Fund (initially, Thirty-Six Million Eight
Hundred Thousand and No/100 Dollars ($36,800,000.00), less the aggregate
Van Wagner Escrow Merger Consideration (defined below)) less any price
adjustment provided for in Section 3.6 below, divided by the number of
Shares (the "Specific Performance Escrow Merger Consideration"), (ii) the
aggregate Damages Escrow Merger Consideration, divided by the number of
Shares, and (iii) the aggregate amount to be distributed from time to time
to the Stockholders from the Van Wagner Escrow Fund (initially, Five
Million and No/100 dollars ($5,000,000.00) less the amount set forth in
Section 3.6(d) below) pursuant to the Van Wagner Escrow Agreement, divided
by the number of Shares (the "Van Wagner Escrow Merger Consideration").
(c) If Section 3.7(c) is applicable, this Section 3.5(c) shall replace
Section 3.5(a) above. Except for Dissenting Shares, each Share shall be
canceled and extinguished and become the right to receive (i) the Cash
Merger Consideration, less the aggregate Van Wagner Escrow Merger
Consideration, divided by the number of Shares, (ii) the aggregate Damages
Escrow Merger Consideration, divided by the number of Shares and (iii) the
aggregate Van Wagner Escrow Merger Consideration, divided by the number of
Shares.
(d) Each Share held in treasury by Metro shall be canceled and
retired, and no payment shall be made with respect thereto.
(e) Each share of EMS common stock issued and outstanding immediately
prior to the Effective Date shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation. Each stock certificate
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of EMS shall continue to evidence ownership of such shares of common stock
of the Surviving Corporation.
3.6 Price Adjustment. The aggregate amount of the Cash Merger
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Consideration or the Specific Performance Escrow Fund, as applicable, shall be
reduced by the sum of (a) an amount equal to Metro's Net Accounts Receivable
Balance as of the Closing Date, plus (b) the amounts to be paid as bonuses to
Metro's employees (the "Employee Bonuses"); plus (c) the amounts Metro is
obligated to pay in the form of federal and state taxes, withholdings,
applicable FICA and medicare taxes, and all other applicable federal and state
employment taxes or withholdings, in connection with the Employee Bonuses and
the exercise of the Metro Stock Rights; plus (d) an amount equal to the legal
fees and costs incurred by Metro through the Closing Date in connection with the
Van Wagner Litigation; (e) plus an amount for other expenses relating to this
transaction and incurred by Metro through the Closing, provided, however, that
the aggregate of such other transaction expenses plus the amount of 3.6(d)
herein shall not exceed Four Hundred Thousand and No/100 Dollars ($400,000.00);
plus (f) any damages awarded against Metro as a result of the Van Wagner
Litigation, or payable pursuant to a settlement of the Van Wagner Litigation;
plus (g) any accounts receivable written off by Metro after June 30, 1997
through the Closing; plus (h) the amount by which (if at all) Metro's
liabilities as of the Closing Date, determined in accordance with generally
accepted accounting principals consistently applied, exceed Two Million Three
Hundred Forty-Three Thousand Seven Hundred Forty-One and 64/100 Dollars
($2,343,741.64). The aggregate amount of the Cash Merger Consideration shall be
increased by the amounts, if any, recovered by Metro for legal fees, costs
and/or damages in connection with the Van Wagner Litigation. From and after the
Closing Date, Eller shall cause Metro to pay the amounts set forth in Sections
3.6(b) through (f) above, and shall also cause Metro to pay the ongoing legal
fees and costs incurred by Metro in connection with the Van Wagner Litigation.
3.7 Van Wagner Resolution.
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(a) Cash Holdback. Eller shall pay the Cash Merger Consideration only
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if, as of the Closing Date, (i) Stockholder Representatives have delivered
written evidence of the termination of the Van Wagner Agreements in form
and substance reasonably acceptable to Eller and (ii) Metro has resolved,
or provided for the resolution of, all pending and threatened litigation
(the "Van Wagner Litigation"), in a manner acceptable to Eller in its sole
reasonable discretion, between Metro and or any all of the following
(collectively, the "Van Wagner Group"): Van Wagner; Outdoor Systems, Inc.,
a New York corporation; Outdoor Systems - New York, Inc., a New York
corporation; and all affiliates of the foregoing. For purposes of this
Section 3.7(a), "a manner acceptable to Eller" includes providing evidence
acceptable to Eller in its sole reasonable discretion that the only remedy
available to the Van Wagner Group is monetary damages.
(b) Specific Performance Escrow. If the conditions 3.7(a) above have
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not been satisfied, then Eller shall remain obligated to provide the
aggregate Merger Consideration on the Closing Date in accordance with the
procedures set forth in Sections 3.5(b), 3.6 and
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3.10, except that, in addition to funding the Damages Escrow Fund with the
aggregate Damages Escrow Merger Consideration, and funding the Van Wagner
Escrow Fund with the aggregate Van Wagner Escrow Merger Consideration, an
amount equal to the aggregate Specific Performance Escrow Consideration
shall be withheld from the aggregate Merger Consideration and held in
escrow (the " Specific Performance Escrow Fund") by the Escrow Agent
pursuant to the escrow agreement in the form attached hereto as Exhibit B
(the "Specific Performance Escrow Agreement").
(c) Van Wagner Damages Escrow. Notwithstanding anything to the
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contrary herein, if the conditions set forth in Section 3.7(a) have been
satisfied, but there is no final, non-appealable determination on damages
in the Van Wagner Litigation, then Eller shall remain obligated to provide
the aggregate Merger Consideration on the Closing Date in accordance with
the procedures set forth in Sections 3.5(c), 3.6 and 3.9, except that, in
addition to funding the Damages Escrow Fund with the aggregate Damages
Escrow Merger Consideration, an amount equal to the aggregate Van Wagner
Escrow Merger Consideration shall be withheld from the aggregate Cash
Merger Consideration and held in escrow (the "Van Wagner Escrow Fund") by
the Escrow Agent pursuant to the escrow agreement in the form attached
hereto as Exhibit C (the "Van Wagner Escrow Agreement ").
3.8 Dissenting Shares. The holders of Dissenting Shares, if any,
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shall be entitled to payment for such Shares only to the extent permitted by and
in accordance with the provisions of California Law. Notwithstanding the
foregoing, if in accordance with such laws, any holder of Dissenting Shares
shall forfeit such right to payment of the fair value of such Shares, such
Shares shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Date, the right to receive the Merger
Consideration on the same terms as the holders of non-Dissenting Shares in
accordance with this Agreement.
3.9 Payment Mechanics; Exchange of Certificates. If the conditions
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set forth in Section 3.7(a) have been met, then the following provisions for
payment of the aggregate Merger Consideration and the exchange of certificates
shall apply (except as limited by Section 3.7(c)):
(a) As soon as practicable (and in no event later than five (5) days
after the Effective Date), the Disbursement Agent shall mail to each record
holder of certificates of Metro Common Stock (the "Certificates"), which
immediately prior to the Effective Date represented Shares, a letter of
transmittal and instructions for use in surrendering such Certificates and
receiving the Merger Consideration therefor.
(b) From and after the Effective Date, the Disbursement Agent shall
act as exchange agent in effecting the exchange of Certificates for the
Cash Merger Consideration. On or before the Closing Date, subject to
Section 3.7 above, Eller shall deliver to the Escrow Agent and Disbursement
Agent cash in an amount equal to the aggregate Merger Consideration. The
Disbursement Agent shall hold the aggregate Cash Merger Consideration, and
the Escrow Agent shall invest the aggregate Damages Escrow Merger
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Consideration and the aggregate Van Wagner Escrow Merger Consideration (if
applicable), in an interest bearing account, United States Treasury
obligations and/or other obligations guaranteed by the United States
Government or any agency thereof, as determined by Eller exercising
reasonable and prudent discretion and consistent with having the aggregate
Cash Merger Consideration available to make all distributions provided for
herein in a timely manner. Upon the surrender of each Certificate and the
payment by the Disbursement Agent of the Cash Merger Consideration, in
exchange therefor, less the Van Wagner Escrow Merger Consideration (if
applicable), such Certificate shall forthwith be canceled. Until so
surrendered and exchanged, each Certificate (other than Certificates
representing Dissenting Shares) shall represent solely the right to receive
the Merger Consideration multiplied by the number of Shares represented by
such Certificate. Upon the surrender and exchange of a Certificate, the
holder shall receive the Cash Merger Consideration into which the Shares
represented by such Certificate were converted, less the Van Wagner Escrow
Merger Consideration (if applicable), and shall retain a proportionate
interest in the Damages Escrow Merger Consideration, and the Van Wagner
Escrow Merger Consideration (if applicable). Interest on the aggregate Cash
Merger Consideration shall accrue and be paid to the Stockholders.
(c) Promptly following the date which is nine (9) months after the
Effective Date, the Disbursement Agent shall return to Eller all Cash
Merger Consideration (and interest accrued thereon) in its possession.
Thereafter, each holder of a Certificate representing a Share may surrender
such Certificate to Eller, request payment therefrom, and (subject to
applicable abandoned property, escheat and similar laws) receive the Cash
Merger Consideration.
(d) From and after the Effective Date, the stock transfer books of
Metro shall be closed and no transfer of Shares shall thereafter be made.
(e) All administrative expenses of the Disbursement Agent shall be
paid by Eller.
3.10 Payment Mechanics; Exchange of Certificates Pursuant to Section
---------------------------------------------------------------
3.7. If the conditions set forth in Section 3.7(a) have not been met, then the
- ---
following provisions for payment of the aggregate Merger Consideration and the
exchange of Certificates shall apply:
(a) As soon as practicable (and in no event later than five (5) days
after the Effective Date), the Disbursement Agent shall mail to each record
holder of Certificates, which immediately prior to the Effective Date
represented Shares, a letter of transmittal and instructions for use in
surrendering such Certificates.
(b) From and after the Effective Date, the Disbursement Agent shall
act as exchange agent to effect the exchange of Certificates. Upon receipt
of each Certificate, the Disbursement Agent shall cancel such Certificate.
Until so surrendered and exchanged, each Certificate (other than
Certificates representing Dissenting Shares) shall represent solely the
12
right to receive the Merger Consideration multiplied by the number of
Shares represented by such Certificate. Upon the surrender and exchange of
a Certificate, the holder shall retain a proportionate interest in the
Specific Performance Merger Consideration, the Damages Escrow Merger
Consideration and the Van Wagner Escrow Merger Consideration. The
Disbursement Agent shall also act as the disbursement agent to effect the
quarterly distribution (commencing April 1, 1998), to Stockholders who have
surrendered their Certificates (other than those holding Dissenting
Shares), of the interest accruing on the aggregate Specific Performance
Merger Consideration in accordance with the Stockholders' proportionate
interest therein.
(c) Promptly following each date which is nine (9) months after the
date an interest payment is made by the Disbursement Agent, the
Disbursement Agent shall return to Eller all unpaid interest payments (and
interest accrued thereon) in its possession. Thereafter, each holder of a
Certificate representing a Share may surrender such Certificate to Eller,
request payment therefrom, and (subject to applicable abandoned property,
escheat and similar laws) receive the unpaid interest payments (and
interest accrued thereon).
(d) From and after the Effective Date, the stock transfer books of
Metro shall be closed and no transfer of Shares shall thereafter be made.
(e) All administrative expenses of the Disbursement Agent shall be
paid by Eller.
3.11 Escrow Fund. Five Million and No/100 Dollars ($5,000,000.00)
-----------
(the "Damages Escrow Fund") of the Merger Consideration shall be held in Escrow
by the Disbursement Agent, acting as an "Escrow Agent," pursuant to a Damages
Escrow and Disbursement Agreement (the "Damages Escrow Agreement") in the form
attached hereto as Exhibit D.
ARTICLE IV
----------
REPRESENTATIONS AND
-------------------
WARRANTIES OF METRO
-------------------
Metro hereby represents and warrants to Eller and to EMS that, except
as otherwise set forth in the Disclosure Schedules, the following
representations and warranties are, as of the date hereof, and will be, as of
the Effective Date, true and correct:
4.1 Organization and Good Standing. Metro is a corporation duly
------------------------------
organized, validly existing and in good standing under California Law and has
full corporate power and authority to own its properties and carry on its
business as presently conducted. Metro is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Material Adverse
13
Effect. The copies of Metro's Bylaws (together with all amendments thereto)
which have been previously delivered to Eller and to EMS are correct and
complete as of the date hereof.
4.2 Capitalization. The authorized capital stock of Metro consists
--------------
of (a) 5,000,000 shares of Metro Common Stock, no par value, of which 943,030
shares are issued and outstanding as of the date hereof, and (b) 1,000,000
shares of Preferred Stock, no par value ("Preferred Stock"), of which no shares
are issued and outstanding as of the date hereof. All of the outstanding Shares
of Metro have been validly issued and are fully paid and non-assessable. No
shares of Metro Common Stock or Preferred Stock are held by Metro as treasury
stock. Except as set forth on Schedule 4.2, there is no existing option,
warrant, call, commitment or other security or agreement of any kind to which
Metro is a party requiring, and there are no convertible securities of Metro
outstanding which upon conversion would require, the issuance of any additional
shares of capital stock of Metro or other securities convertible into shares of
capital stock or any debt or equity security of Metro of any kind.
4.3 Subsidiaries. Metro has no Subsidiaries, except for BSON, which
------------
is an Excluded Asset.
4.4 Execution and Effect of Agreement. Metro has the corporate power
---------------------------------
and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Metro and the consummation by
Metro of the transactions contemplated hereby have been duly authorized by the
Board of Directors of Metro and no other corporate proceeding on the part of
Metro is necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, except for the Requisite
Stockholder Approval. This Agreement has been duly executed and delivered by
Metro and constitutes the legal, valid and binding obligation of Metro,
enforceable in accordance with its terms, except as limited by Bankruptcy and
Equity Exceptions.
4.5 Financial Statements. Metro has delivered to Eller and EMS
--------------------
copies of the Financial Statements through November 30, 1997. Each of the
Financial Statements has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby; and, with respect to the unaudited Financial Statements,
subject to the addition of footnotes and to normal year-end audit adjustments,
present fairly in all material respects the financial position, results of
operations and cash flows of Metro and its Subsidiaries at the dates and for the
periods indicated.
4.6 No Undisclosed Liabilities. As of the Balance Sheet Date,
--------------------------
neither Metro nor any of its Subsidiaries had any Indebtedness or other
liabilities (whether accrued, absolute, contingent or otherwise, and whether due
or to become due) which are not shown on the Balance Sheet (including the
footnotes thereto), which would normally be disclosed on a balance sheet
(including its footnotes) prepared in accordance with generally accepted
accounting principles if such Indebtedness or other liabilities had been known
at the time of the balance sheet's preparation, and which undisclosed
Indebtedness or liabilities would result in a Material Adverse Effect.
14
4.7 No Material Adverse Change; No Dividends. Except as set forth on
----------------------------------------
Schedule 4.7, since the Balance Sheet Date, no material adverse change has
occurred in the assets, business, financial condition, or results of operations
of Metro. Since the Balance Sheet Date, no dividends or distributions of any
kind have been declared or paid on or made with respect to the Shares or any
other equity interests of Metro, nor have any Shares been repurchased or
redeemed.
4.8 SEC Reports. Since January 1, 1995, Metro has filed with the
-----------
Commission all forms, reports, schedules, statements and other documents
required to be filed by it and its Subsidiaries under the Exchange Act or the
Securities Act (collectively, the "Metro SEC Documents"). As of their
respective dates or, if amended, as of the date of the last such amendment, the
Metro SEC Documents:
(a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and
(b) complied in all material respects with the applicable requirements
of the Exchange Act and the Securities Act, as the case may be.
4.9 Taxes.
-----
(a) Except as set forth on Schedule 4.9 hereto, (i) all material Tax
Returns required to be filed by or on behalf of Metro or its Subsidiaries
or any Affiliated Group of which Metro or its Subsidiaries is or was a
member have been filed 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 Metro or its 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; (ii) all such Tax Returns, insofar as
they relate to Metro or its Subsidiaries, are true, correct and complete in
all material respects; (iii) no waivers of statutes of limitation have
been given or requested with respect to Metro or its Subsidiaries in
connection with any Tax Returns covering Metro or its Subsidiaries; and
(iv) all Taxes that Metro or its Subsidiaries are required by law to
withhold or collect have been duly withheld or collected, and have been
timely paid to the appropriate tax authorities.
(b) Except as set forth on Schedule 4.9 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 Metro or its Subsidiaries have been fully paid; no unpaid deficiencies
have been asserted or assessments made by any taxing authority against
Metro or its Subsidiaries; and no audits are currently pending or issues
raised in writing by any taxing authority in connection with Tax Returns of
Metro or its Subsidiaries.
15
(c) Except as set forth on Schedule 4.9 hereto, neither Metro, 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 Metro or its
Subsidiaries.
(d) Neither Metro nor any of the Subsidiaries is a foreign person
within the meaning of Section 1445 of the Code.
(e) Except for the Affiliated Group of which they are now members,
neither Metro nor any of its Subsidiaries has been a member of an
Affiliated Group of companies under Section 1504 of the Code.
(f) Except as set forth on Schedule 4.9 hereto, no property owned by
Metro or its Subsidiaries (i) 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, (ii) constitutes
"tax-exempt use property" within the meaning of Section 168(h)(l) of the
Code, or (iii) is tax-exempt bond financed property within the meaning of
Section 16B(g) of the Code.
(g) Neither Metro nor any of its Subsidiaries has any liability for
the Taxes of any person, other than Metro and its Subsidiaries under
Sections 1.1502-6 or 1.1502-78 of Title 26 of the Code of Federal
Regulations (or any similar provisions of state, local or foreign income
tax law).
(h) Schedule 4.9 sets forth the amounts and years of expiration of all
federal and state net operating losses of Metro and its Subsidiaries that
have not been taken as tax deductions by Metro or its Subsidiaries for
federal or state income tax purposes with respect to any taxable period
ending prior to the date of this Agreement.
4.10 Bus Shelter Contracts. Schedule 4.10 attached hereto contains
---------------------
a complete and accurate list of every Bus Shelter Contract and includes the
following information for each such contract:
(a) the names of all contracting parties and the date of the original
agreement and each amendment thereto or extension or renewal thereof;
(b) the termination date of each Bus Shelter Contract and a
description of any renewal or option rights with respect to the Bus Shelter
Contract;
(c) the number of bus shelters and the number of display faces Metro
currently operates under each Bus Shelter Contract;
16
(d) the number of bus shelters and the number of display faces Metro
is obligated to construct (and that are not yet constructed) and the time
deadlines for such construction under each Bus Shelter Contract;
(e) the number of bus shelters and the number of display faces Metro
is authorized to construct (and that are not yet constructed) pursuant to
each such Bus Shelter Contract; and
(f) whether any consent, approval, or notice is required by the
contracting governmental authority for Metro to continue to exercise all of
its contractual rights under each Bus Shelter Contract subsequent to the
Effective Date.
All Bus Shelter Contracts are in full force and effect and are enforceable
against the parties thereto in accordance with their terms, subject to the
Bankruptcy and Equity Exceptions. Except as set forth on Schedule 4.10, Metro
is not in default under any Bus Shelter Contract, which default would constitute
a Material Adverse Effect; to the best of Metro's knowledge, no event exists
which with the passage of time or the giving of notice would constitute a
default under any Bus Shelter Contract and which would have a Material Adverse
Effect; and to the best of Metro's knowledge, no other party to a Bus Shelter
Contract is in default under such Bus Shelter Contract or would be in default
but for the passage of time or the giving of notice, which default would
constitute a Material Adverse Effect. Except as set forth on Schedule 4.10, all
Bus Shelter Contracts are free and clear of all Encumbrances. Except as set
forth on Schedule 4.10, neither the execution or delivery of this Agreement by
Metro nor the consummation by Metro 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, or constitute a
default under, any Bus Shelter Contract, or result in the creation of an
Encumbrance upon any of Metro's right, title and interest under any Bus Shelter
Contract; and except as disclosed on Schedule 4.10 hereto, from and after the
Effective Date, Metro shall continue to hold all right, title and interest in
and to each Bus Shelter Contract, and shall be entitled to continue its business
pursuant to each Bus Shelter Contract as presently conducted, without the
consent of, approval by, or notice to, any governmental entity or any other
person, whether or not such person is a party to such Bus Shelter Contract.
4.11 Patents, Trademarks and Copyrights. Schedule 4.11 hereto
----------------------------------
contains a complete and correct list of each material patent, trademark, trade
name, service mark and copyright owned or used by Metro and pending applications
therefor, and each license or other agreement relating thereto. Except as set
forth on Schedule 4.11 hereto, each of the foregoing is owned by the party shown
on such Schedule as owning the same, free and clear of all Encumbrances. To the
best of Metro's knowledge, no claims have been asserted and are still pending,
contending that any of the foregoing is invalid or conflicts with the asserted
rights of others. Metro possesses all patents, patent licenses, trade names,
trademarks, service marks, brand marks, brand names, copyrights, know-how, and
other proprietary and trade rights necessary for the conduct of its business as
now conducted, except for those the absence of which would not result in a
Material Adverse Effect.
17
4.12 Real Property; Leases of Real Property. Except as set forth on
--------------------------------------
Schedule 4.12 hereto, Metro does not own any real property. Schedule 4.12 hereto
contains 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 (excluding the Bus Shelter Contracts) to which Metro is a party (as
tenant, occupier or possessor) pursuant to which the current net annual rent
payable by Metro currently exceeds $10,000 (a "Material Lease" and collectively
the "Material Leases"). Except as set forth on Schedule 4.12 hereto, all of the
Material Leases are in full force and effect. Complete and correct copies of
each Material Lease have been furnished or made available to Eller and EMS.
Except as disclosed on Schedule 4.12 hereto, no consent is required of any
landlord or other third party to any Material Lease to consummate the
transactions contemplated hereby; and upon consummation of the transactions
contemplated hereby, each Material Lease will continue to entitle Metro to the
use and possession of the real property specified in such Material Lease and for
the purposes for which such real property is now being used by Metro. Except as
set forth in such Schedule 4.12 hereto, Metro is not on the date hereof in
default, or in default but for the passage of time or giving of notice, under
any such Material Lease; and to Metro's knowledge, on the date hereof, no
uncured default by any third party exists thereunder, which defaults would
result in a Material Adverse Effect. All Material Leases are in full force and
effect and are enforceable against the parties thereto in accordance with their
terms subject to the Bankruptcy and Equity Exceptions.
4.13 Permits; Compliance with Laws. Metro has all necessary permits,
-----------------------------
licenses and governmental authorizations required for the ownership or occupancy
of its properties and assets and the carrying on of its business, including but
not limited to, its business pursuant to the Bus Shelter Contracts, except where
the failure to have any such permit, license or governmental authorization would
not result in a Material Adverse Effect.
4.14 Insurance. Schedule 4.14 hereto contains a complete and correct
---------
list in all material respects of all policies of insurance of any kind or nature
covering Metro, including, without limitation, policies of life, fire, theft,
employee fidelity and other casualty and liability insurance, and such policies
are in full force and effect. Complete and correct copies of each such policy
have been furnished or made available to Eller and EMS.
4.15 Material Contracts. Except as listed on Schedule 4.15 hereto or
------------------
any other schedule hereto, Metro is not a party to any:
(a) contract not made in the ordinary course of business;
(b) contract for the employment of any officer or employee;
(c) advertising agreement with a remaining term in excess of one year
and a payment obligation in excess of $10,000;
(d) franchise, distributorship or sales agency agreement;
18
(e) contract for the future purchase of materials, supplies,
services, merchandise or equipment for an amount in excess of $10,000 or
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;
(f) agreement for the sale or lease of any of its assets;
(g) contract or commitment for capital expenditures in excess of
$25,000;
(h) mortgage, pledge, conditional sales contract, security agreement,
factoring agreement, or other similar agreement with respect to any of its
real or personal property;
(i) lease of machinery or equipment involving annual payments in
excess of $10,000;
(j) agreement with a labor union or labor association;
(k) loan agreement, promissory note issued by it, guarantee,
subordination, indemnity or similar type of agreement;
(l) stock option, retirement, severance, pension, bonus profit
sharing, group insurance, medical or other fringe benefit plan or program
providing employee benefits; or
(m) consulting agreement involving annual payments in excess of
$10,000.
Complete and correct copies of each such agreement have been furnished or made
available to Eller and EMS. Except as set forth on Schedule 4.15 hereto, Metro
has performed all of the obligations required to be performed by it to date and
is not in default, or in default but for the passage of time or giving of
notice, under any of the agreements, leases, contracts or other documents to
which it is a party listed on Schedule 4.15 hereto, other than those failures to
perform and defaults which would not result in a Material Adverse Effect.
Except as set forth on Schedule 4.15 hereto, to the best of Metro's knowledge,
no party with whom Metro has such a scheduled agreement is in default
thereunder, or is in default but for the passage of time or giving of notice,
which default would result in a Material Adverse Effect. All such scheduled
agreements are in full force and effect and are enforceable against the parties
thereto in accordance with their terms subject to the Bankruptcy and Equity
Exceptions. Except as disclosed herein or on Schedule 4.15 hereto, Metro is not
a party to any non-compete or similar agreement which restricts in any way the
current operation of its business.
4.16 Title to Properties; Absence of Encumbrances. Metro has good
--------------------------------------------
and marketable title to all of its properties and assets, free and clear of any
and all Encumbrances, except as set forth on Schedule 4.16 hereto or except for
Permitted Encumbrances.
19
4.17 Restrictions. Except as set forth on Schedule 4.17 hereto and
------------
except for leases which do not constitute Material Leases, neither the execution
or delivery of this Agreement by Metro, nor the consummation by Metro of the
transactions contemplated hereby, will violate its Articles of Incorporation or
Bylaws, or any judgment or decree, or 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 agreement to which Metro is a party, or constitute a
default thereunder, or result in the creation of any Encumbrance upon any of its
assets, except for such conflicts, breaches, rights of termination or
acceleration, defaults and Encumbrances that would not result in a Material
Adverse Effect.
4.18 Litigation; Consents. No action, suit, proceeding or formal
--------------------
governmental inquiry or investigation is pending against Metro which seeks to
restrain or prohibit or otherwise challenge the consummation, legality or
validity of the transactions contemplated hereby. Except as disclosed on
Schedule 4.18 hereto, no action, suit, proceeding or formal governmental inquiry
or investigation is pending against Metro. Other than as required to comply
with the provisions of the Hart-Scott-Rodino Act, the Securities Act, the
Exchange Act, the "takeover" or 'blue sky" laws of various states, and as set
forth on Schedule 4.10, no consent, approval or authorization of any
governmental authority is required in connection with the execution and delivery
of this Agreement or the consummation of any of the transactions contemplated
hereby, except where the failure to obtain any consent, approval or
authorization would not have a Material Adverse Effect.
4.19 Environmental Matters. Except as disclosed on Schedule 4.19:
---------------------
(a) the operations of Metro and its Subsidiaries are in compliance
with applicable Environmental Laws, except for such noncompliance which
would not result in a Material Adverse Effect;
(b) neither Metro nor any of its Subsidiaries is subject to any
pending or threatened judicial or administrative proceeding alleging the
violation of any Environmental Law, which proceeding would result in a
Material Adverse Effect;
(c) neither Metro nor any of its Subsidiaries has received any written
notice from any governmental authority that it is a potentially responsible
party at any Superfund site;
(d) neither Metro nor any of its Subsidiaries has disposed of or
released Hazardous Materials (nor are underground storage tanks present)
on, in or at any real property owned or leased by Metro or its Subsidiaries
in any quantity which would result in a Material Adverse Effect;
(e) Metro and its Subsidiaries have not disposed of or released any
Hazardous Materials in or at any other real property in any quantity which
would result in a Material Adverse Effect;
20
(f) neither Metro nor any of its Subsidiaries has agreed to indemnify
any predecessor or other party, including a buyer, seller, landlord or
tenant, with respect to any environmental liability, other than customary
indemnity arrangements contained in leases where Metro or any of its
Subsidiaries is a landlord or tenant; and
(g) no other party has released Hazardous Materials at a concentration
or level which requires remedial action under any applicable Environmental
Law at any property now or formerly owned or operated by Metro or any of
its Subsidiaries or in a location that would threaten or contaminate such
properties in any material respect.
4.20 Collective Bargaining Agreements and Labor.
------------------------------------------
(a) Neither Metro nor any of its Subsidiaries is a party to any labor
or collective bargaining agreement; no labor or collective bargaining
agreements exist which pertain to employees of Metro or its Subsidiaries;
and no proceeding for the recognition of a labor union is pending.
(b) Except as set forth on Schedule 4.20 hereto, no pending
complaints, charges or claims against Metro or its Subsidiaries have been
filed with any public or governmental authority, arbitrator or court based
upon the employment or termination of employment by, or any act of
discrimination or harassment by, Metro or its Subsidiaries.
(c) Except as set forth on Schedule 4.20 hereto, Metro and its
Subsidiaries are in compliance with all laws, regulations and orders
relating to the employment of labor, including all such laws, regulations
and order 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, except for such non-compliance as would not result in a
Material Adverse Effect.
4.21 Employee Benefit Plans; ERISA.
-----------------------------
(a) Schedule 4.21 hereto sets forth all material, written "employee"
benefit plans," as defined in Section 3(3) of ERISA, maintained by Metro or
its Subsidiaries or to which Metro or its Subsidiaries contributed or are
obligated to contribute thereunder for current or former employees of Metro
or its Subsidiaries (the "Metro Plans"). Schedule 4.21 hereto separately
identifies each Metro Plan which is a multiemployer plan, as defined in
Section 3(37) of ERISA ("Multiemployer Plan").
(b) True, correct and complete copies of the following documents, with
respect to each of Metro Plans (other than the Multiemployer Plans) have
been delivered to Eller and EMS by Metro 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
21
determination letter, if applicable; (iv) summary plan description; and (v)
the last actuarial valuation if the plan is a "defined benefit plan" as
defined in Section 3(35) of ERISA.
(c) Metro 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 Metro Plans, which would cause the loss of
such qualification or exemption or the imposition of any liability, penalty
or tax under ERISA or the Code which would result in a Material Adverse
Effect.
(d) The Metro 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, except where the failure to so maintain would not result in a
Material Adverse Effect.
4.22 Employees At Will. Except for employees who are parties to the
-----------------
employment agreements set forth on Schedule 4.22, all of which shall be
terminated without cost to Metro effective on the Closing Date, all Metro
employees are employees at will whose employment with Metro may be terminated at
any time without cause.
4.23 Tangible Personal Property. Except for the Excluded Assets,
--------------------------
Schedule 4.23 sets forth a list of all of Metro's automobiles, trucks and cranes
and a description in reasonable detail of Metro's other tangible personal
property.
ARTICLE V
---------
REPRESENTATIONS AND
-------------------
WARRANTIES OF ELLER AND EMS
---------------------------
Each of Eller and EMS hereby represents and warrants to Metro that the
following representations and warranties are, as of the date hereof, and will
be, as of the Effective Date, true and correct:
5.1 Organization and Good Standing. Each of Eller and EMS is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation. Each of Eller and EMS has full corporate power
and authority to own its properties and carry on its business as it is now being
conducted. Each of Eller and EMS is duly qualified to do business as a foreign
corporation and is in good standing under the laws of:
(a) each jurisdiction in which it owns real property; and
(b) each other jurisdiction in which the conduct of its business or
the ownership of its assets requires such qualification and where a failure
to be so qualified or in good standing would not have a Material Adverse
Effect.
22
5.2 Execution and Effect of Agreement. Each of Eller and EMS has the
---------------------------------
corporate power and authority to enter into this Agreement, to perform its
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each of Eller and EMS
and the consummation by each of Eller and EMS of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of each of Eller and EMS, and no other corporate proceeding on the part of Eller
and EMS is necessary to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Eller and EMS and constitutes the
legal, valid and binding obligation of each of Eller and EMS, enforceable
against each of them in accordance with its terms, except as limited by
Bankruptcy and Equity Exceptions.
5.3 Restrictions. Neither the execution or delivery of this
------------
Agreement by Eller and EMS nor the consummation of the transactions contemplated
hereby:
(a) will violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or restriction of any
government, governmental agency to which Eller or EMS is a party or by or
to which either of them is bound or subject, or the provisions of the
charter or bylaws of Eller or EMS; or
(b) 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 agreement to which Eller or EMS is a party, or constitute a
default thereunder, or result in the creation of any lien, security
interest, mortgage, deed of trust, pledge, hypothecation, easement or
conditional sale or other title retention agreement upon any of their
respective assets, except for such violations, conflicts, breaches, rights
of termination or acceleration, defaults and encumbrances that would not
have a Material Adverse Effect.
5.4 Litigation; Consents. No action, suit, proceeding or formal
--------------------
governmental inquiry or investigation is pending against Eller or EMS seeking
to restrain or prohibit or otherwise challenge the consummation, legality or
validity of the transactions contemplated hereby; and, except as expressly
contemplated hereby, no consent, approval or authorization of any governmental
authority on the part of Eller or EMS is required in connection with the
execution and delivery of this Agreement or the consummation of any of the
transactions contemplated hereby. No action, suit, proceeding or formal
governmental inquiry or investigation is pending against Eller or EMS which
would have a Material Adverse Effect.
5.5 Available Funds. Eller has authorized and available all funds
---------------
necessary to satisfy all of Eller's and EMS's obligations under this Agreement
in connection with the transactions contemplated by this Agreement, including
without limitation, the obligation to pay the aggregate Merger Consideration and
the BSON Capital Contribution pursuant to Article III hereof. The payment of
the aggregate Merger Consideration will not result in a violation of any federal
or state law.
23
ARTICLE VI
----------
COVENANTS OF METRO,
-------------------
ELLER AND EMS
-------------
6.1 Commission and Other Filings; Other Actions. Upon the terms and
-------------------------------------------
subject to the conditions contained herein:
(a) Metro shall prepare and file with the Commission as soon as is
reasonably practicable a proxy statement with respect to obtaining the
Requisite Stockholder Approval of the transactions contemplated by this
Agreement;
(b) Metro shall take all such action as reasonably may be required to
comply with the Exchange Act, the Securities Act, and all applicable state
statutes and the regulations thereunder;
(c) each of the parties hereto shall cooperate with one another in
determining whether any filings are required to be made with or consents or
permits required to be obtained from, any governmental authority in any
jurisdiction under any regulation, or from any lender, lessor or other
third party in connection with the contracts (including but not limited to
the Bus Shelter Contracts), the proprietary rights and leases, or
otherwise, prior to the Effective Date, in connection with the consummation
of the transactions contemplated hereby and cooperate in making any such
filings promptly and in seeking timely to obtain any such consents and
permits;
(d) each of the parties hereto shall furnish to each other party
hereto all such information in its possession as may be necessary for the
completion of such filings and submissions to be filed by the other party
hereto;
(e) each of the parties hereto shall use its Best Efforts to defend
all actions challenging this Agreement or the consummation of the Merger;
and to use its Best Efforts to lift or rescind any injunction or
restraining order or other court order adversely affecting the ability of
the parties to consummate the Merger; and
(f) each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
6.2 Access to Information. From and after the date hereof and until
---------------------
the Closing Date, Metro shall make available for inspection by Eller or EMS or
their respective representatives, upon reasonable advance notice, during normal
business hours and in a manner so as not to interfere with normal business
operations, all of Metro's corporate records, books of account, contracts and
all other documents in Metro's possession or control that are reasonably
requested by Eller or EMS, or
24
by Eller's managerial employees, counsel and auditors in order to permit Eller,
EMS and their representatives to make reasonable inspection and examination of
the business and affairs of Metro. Metro shall cause its managerial employees,
counsel and regular independent certified public accountants to be available
upon reasonable advance notice to answer questions of Eller's and EMS's
representatives concerning the business and affairs of Metro. Each of Eller and
EMS and their respective representatives shall treat and hold as confidential
any information they receive from Metro in the course of the reviews
contemplated by this Section 6.2; shall not use any of the confidential
information except in connection with this Agreement; and if this Agreement is
terminated for any reason whatsoever, shall return to Metro all tangible
embodiments (and all copies) of such confidential information in their
possession.
6.3 Conduct of Business. From and after the date hereof and until
-------------------
the Closing Date, Metro shall cause the business of Metro to be conducted in the
ordinary course, consistent with the present conduct of its business. During
such period of time, except upon the prior written consent of Eller which
consent shall not be unreasonably withheld, Metro shall not:
(a) amend its Articles of Incorporation or Bylaws or comparable
organizational documents;
(b) issue any additional shares of capital stock, or issue, sell or
grant any option or right to acquire or otherwise dispose of or commit to
dispose of any of its authorized but unissued capital stock or other
corporate securities, except upon conversion or exercise of options and
other rights currently outstanding and set forth by name of option holder
and number of Shares subject to the option on Schedule 4.2 hereto;
(c) declare or pay any dividends or make any other distribution in
cash or property on its capital stock or other equity interests, except the
distributions of Excluded Assets;
(d) repurchase or redeem any shares of its capital stock or other
equity interests;
(e) incur any Indebtedness or other obligation or liability, except
obligations and liabilities incurred in the ordinary course of business or,
with the prior written consent of Eller in connection with the acquisition
of assets or capital stock for the purpose of expanding Metro's bus shelter
advertising business;
(f) enter into any employment agreement or become liable for any
bonus, profit-sharing incentive, or severance payment to any of its
officers, directors or employees, or otherwise change personnel policies,
compensation programs or benefit plans;
(g) grant any kind of Encumbrance with respect to any part of its
assets, real or personal, tangible or intangible, except Permitted
Encumbrances;
25
(h) sell, transfer (other than the transfer of the Excluded Assets and
the elimination of all debt to or from BSON) or acquire (except in the
ordinary course of business) any properties or assets, real or personal,
tangible or intangible, including but not limited to, discounting or
transferring for less than full value any account receivable, without the
prior written consent of Eller;
(i) merge or consolidate with any corporation, acquire control or
acquire any capital stock or other securities of any other corporation or
business entity, or take any steps incident to or in furtherance of any
such actions whether by entering into an agreement providing therefor or
otherwise, without the prior written consent of Eller; nor
(j) take any other action not contemplated hereby which would cause
any of the representations and warranties made by Metro in this Agreement
not to be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
6.4 Notification of Certain Matters. Metro shall give prompt written
-------------------------------
notice to Eller and EMS, and Eller and EMS shall give prompt written notice to
Metro, of:
(a) the occurrence, or failure to occur, of any event which occurrence
or failure would cause any representation or warranty contained in this
Agreement, the Disclosure Schedules or any written certificate or schedule
delivered pursuant hereto to be untrue or inaccurate in any material
respect at any time from the date of this Agreement through the Effective
Date; and
(b) any material failure of Metro, Eller, EMS or any of their
Affiliates, as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied under this Agreement; provided,
however, that no such notification shall affect the representations or
warranties of the parties or the conditions to the obligations to the
parties.
6.5 Employment of Accounting Personnel. From and after the Closing
----------------------------------
Date, Eller shall cause Metro to employ Ingrid Auld in the position of
Controller for a period of one year after the Closing Date. Metro shall cause
BSON to reimburse Eller monthly one-half of all wages and employment taxes,
resulting from such employment. This agreement between Eller and Metro shall
not create third-party beneficiary rights of any kind whatsoever, and Metro
shall have the right subsequent to the Closing Date to terminate such employee
with or without cause, provided that any termination without cause shall
constitute a breach of Eller's obligations to Metro under this Section.
6.6 Excluded Assets. Metro shall take all actions necessary or
---------------
appropriate to transfer the Excluded Assets to BSON (and the stock of BSON to
its new shareholders) on or before the Closing Date.
26
6.7 Pending Litigation. Metro shall enter into, and shall cause BSON
------------------
to enter into, an agreement, effective on the Closing Date, in the form of the
Litigation Responsibility Agreement attached here to as Exhibit E, pursuant to
which BSON shall assume the financial responsibility to diligently pursue in a
reasonable and prudent manner the litigation listed on Items 3 through 5 on
Schedule 4.18. BSON shall be entitled to all financial benefits from
settlements or judicial awards or orders resulting from the pursuit of such
litigation.
6.8 Consulting Agreement. Metro shall cause BSON to enter into a
--------------------
Consulting Agreement with Eller effective on the Closing, and Eller shall enter
into such Agreement, in the form of the Consulting Agreement attached hereto as
Exhibit F (the "Consulting Agreement").
6.9 Van Wagner Litigation. From and after the Closing, Eller shall
---------------------
cause Metro to permit the Stockholder Representatives to (a) manage the conduct
of the Van Wagner Litigation; subject to consultation with Eller and Metro, and
(b) approve all costs, expenditures and settlements relating to the Van Wagner
Litigation prior to payment of such by Metro. All decisions regarding such
costs, expenditures and settlements shall be reasonably made by the Stockholder
Representatives and any differences shall be settled through arbitration in
accordance with the procedures set forth in Section 14.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO
-----------------------
ELLER'S AND EMS' OBLIGATIONS
----------------------------
The obligations of Eller and EMS to consummate the transactions
contemplated hereby are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions, with the exception that in the event of the
failure of the conditions contained in Sections 7.8 and 7.16 below, Eller shall
remain obligated to consummate the transaction as provided herein pursuant to
Sections 3.5, 3.7, 3.9 and 3.10, as applicable, provided all of the other
conditions have been satisfied:
7.1 Representations and Warranties True. Each of the representations
-----------------------------------
and warranties of Metro contained in Article IV hereof shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as though each had been made on and as of the Closing Date, except for (a) those
given as of a particular date, which shall be true and correct in all material
respects as of such date, and (b) those under Section 4.2 above for which
indemnification has been specifically provided pursuant to Section 5.1(d) of the
Damages Escrow Agreement.
7.2 Covenants Performed. Metro shall have performed and complied in
-------------------
all material respects with the covenants and provisions in this Agreement
required herein to be performed or complied with by Metro between the date
hereof and the Closing Date.
7.3 No Judicial or Administrative Restraint. No action or proceeding
---------------------------------------
shall have been instituted against Eller, EMS, Metro or its Subsidiaries before
any court or other governmental body,
27
seeking to restrain or prohibit the consummation of the transactions
contemplated hereby, which in the reasonable opinion of Eller or EMS makes it
inadvisable to consummate such transactions. No governmental action or
proceeding shall have been instituted or threatened against Eller, EMS, Metro or
its Subsidiaries seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, which in the reasonable opinion of Eller or
EMS makes it inadvisable to consummate such transactions.
7.4 Stockholder Approval. This Agreement and the Merger shall have
--------------------
been approved and adopted by the Requisite Stockholder Approval.
7.5 Officer's Certificate. Eller and EMS shall have received a
---------------------
certificate to the effect set forth in Sections 7.1, 7.2 and 7.4 above, dated
the Closing Date, signed by a duly authorized officer of Metro.
7.6 Board Approval. Eller and EMS shall have received a certificate
--------------
of a duly authorized officer of Metro, dated the Closing Date, setting forth
resolutions of the Board of Directors of Metro authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and certifying that such resolutions were duly adopted and have not been
rescinded or amended as of the Closing Date.
7.7 Damages Escrow Agreement. The Damages Escrow Agreement shall
------------------------
have been fully executed and delivered.
7.8 Van Wagner Agreements. Metro shall have terminated the Van
---------------------
Wagner Agreements and shall have delivered to Eller written evidence of their
termination in form and substance reasonably acceptable to Eller.
7.9 Consulting Agreement. Eller and BSON shall have entered into the
--------------------
Consulting Agreement.
7.10 Pending Litigation. Metro and BSON shall have entered into the
------------------
Litigation Responsibility Agreement.
7.11 Metro Stock Rights. All Metro Stock Rights shall have been
------------------
exercised.
7.12 BSON Reimbursement. Eller shall have received from BSON a
------------------
written undertaking, in form and substance reasonably acceptable to Eller, to
reimburse Eller for certain employee costs as set forth in Section 6.5 above.
7.13 Bus Shelter Contract Consents. Eller shall have received, in
-----------------------------
form and substance reasonably acceptable to Eller, the written consent to the
transaction contemplated by this Agreement, or the written confirmation that no
such consent is needed, from the government entities that are parties to the Bus
Shelter Contracts that are listed on Schedule 7.14 hereto.
28
7.14 Opinion of Counsel. Eller shall have received a legal opinion
------------------
from Troy & Gould, P.C., counsel for Metro, dated as of the Closing Date, in
substantially the form set forth on Exhibit G hereto.
7.15 Bankruptcy Court Approval. Eller shall have received such
-------------------------
orders or other approvals of the transactions contemplated by this Agreement as
Eller reasonably deems necessary or appropriate from the United States
Bankruptcy Court for the Central District of California.
7.16 Pending Van Wagner/OSI Litigation. Metro shall have resolved,
---------------------------------
or provided for the resolution of, all pending and threatened litigation, in a
manner acceptable to Eller in its sole discretion, between Metro and the Van
Wagner Group.
7.17 Agreement of Merger. The Agreement of Merger duly executed by
-------------------
the parties shall have been filed with the Secretary of State of the State of
California.
7.18 Additional Escrow Agreements. If required by Section 3.7, the
----------------------------
Van Wagner Escrow Agreement and the Specific Performance Escrow Agreement shall
have been fully executed and delivered.
7.19 Price Adjustment Schedule. Eller shall have received and
-------------------------
approved a price adjustment schedule which sets forth the amounts of items
referenced in Section 3.6 (the "Price Adjustment Schedule").
ARTICLE VIII
------------
CONDITIONS PRECEDENT
--------------------
TO METRO'S OBLIGATION
---------------------
The obligations of Metro to consummate the transactions contemplated
hereby are subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
8.1 Representations and Warranties True. Each of the representations
-----------------------------------
and warranties of Eller and EMS contained in Article V hereof shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as though the same had been made on and as of the Closing Date, except
for changes herein permitted or contemplated hereby.
8.2 Covenants Performed. Eller and EMS shall have performed and
-------------------
complied in all material respects with the covenants and provisions in this
Agreement required herein to be performed or complied with by Eller and EMS
between the date hereof and the Closing Date.
8.3 No Judicial or Administrative Restraint. No action or
---------------------------------------
proceeding, shall have been instituted against Eller, EMS, Metro or its
Subsidiaries before any court or other governmental body, seeking to restrain or
prohibit the consummation of the transactions contemplated hereby, which in
29
the reasonable opinion of Metro makes it inadvisable to consummate such
transactions. No governmental action or proceeding shall have been instituted
or threatened against Eller, EMS, Metro or its Subsidiaries seeking to restrain
or prohibit the consummation of the transactions contemplated hereby, which in
the reasonable opinion of Metro makes it inadvisable to consummate such
transactions.
8.4 Stockholder Approval. This Agreement and the Merger shall have
--------------------
been approved and adopted by the Requisite Stockholder Approval.
8.5 Officers Certificate. Metro shall have received a certificate to
--------------------
the effect set forth in Sections 8.1 and 8.2 above, dated the Closing Date and
signed by a duly authorized officer of each of Eller and EMS.
8.6 Board Approval. Metro shall have received a certificate of a
--------------
duly authorized officer of each of Eller and EMS, dated the Closing Date,
setting forth the resolutions of the respective Board of Directors of each of
Eller and EMS authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and certifying that such
resolutions were duly adopted and have not been rescinded or amended as of the
Closing Date.
8.7 Merger Consideration. As provided in Sections 3.5 and 3.7 above,
--------------------
Eller shall have made the deliveries required therein.
8.8 Damages Escrow Agreement. Eller, EMS and Metro shall have
------------------------
executed the Damages Escrow Agreement.
8.9 Pending Litigation. Metro and BSON shall have entered into the
------------------
Litigation Responsibility Agreement.
8.10 Consulting Agreement. Metro and Eller shall have entered into
--------------------
the Consulting Agreement.
8.11 No Action Letter or Registration. Metro shall have received
--------------------------------
from the Securities and Exchange Commission's staff a letter to the effect that
either (a) the distribution of the stock of BSON does not constitute a "sale" of
such stock under Section 2(3) of the Securities Act or (b) that the Securities
and Exchange Commission's staff shall not recommend enforcement action if the
distribution is effected without registration under the Securities Act or the
Securities Exchange Act of 1934; or, alternatively, if such letter does not
issue, appropriate registration under the securities laws shall have become
effective.
8.12 Agreement of Merger. The Agreement of Merger duly executed by
-------------------
the parties shall have been filed with the Secretary of State of the State of
California.
30
8.13 Additional Escrow Agreements. If required by Section 3.7, the
----------------------------
Van Wagner Escrow Agreement and Specific Performance Escrow Agreement shall have
been fully executed and delivered.
ARTICLE IX
----------
MISCELLANEOUS
-------------
9.1 No Brokers. Metro represents to Eller and EMS, and Eller and EMS
----------
represent to Metro, that they respectively have had no dealings with any broker
or finder in connection with the transactions contemplated by this Agreement.
9.2 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties contained in this Agreement shall survive for a
period of three years following the Closing Date. Notwithstanding such
survival, Eller and EMS's sole recourse with respect to any breach by Metro of a
representation or warranty shall be as provided for in the Escrow Agreement.
9.3 Specific Performance. The parties hereto acknowledge that
--------------------
irreparable damage would result if this Agreement is not specifically enforced.
Therefore, the rights and obligations of the parties under the Agreement,
including, without limitation, their respective rights and obligations to effect
the Merger, shall be enforceable by a decree of specific performance issued by
any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
9.4 Termination. Anything contained in this Agreement to the
-----------
contrary notwithstanding, any of the parties may terminate this Agreement
without the prior authorization of its Board of Directors (whether before or
after stockholder approval) as provided below:
(a) At any time on or prior to the Effective Date, by the mutual
consent in writing of Eller, EMS and Metro;
(b) Eller and EMS may terminate this Agreement by giving written
notice to Metro at any time prior to the Effective Date (i) in the event
Metro has breached any material representation, warranty or covenant
contained in this Agreement in any material respect, Eller or EMS has
notified Metro of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach, or (ii) if the Closing
shall not have occurred on or before January 31, 1998, by reason of the
failure of any condition precedent under Article VI hereof (unless the
failure results primarily from Eller or EMS breaching any representation,
warranty or covenant contained in this Agreement);
(c) Metro may terminate this Agreement by giving written notice to
Eller and EMS at any time prior to the Effective Date (i) in the event
Eller or EMS has breached any
31
material representation, warranty or covenant contained in this Agreement
in any material respect, Metro has notified Eller and EMS of the breach,
and the breach has continued without cure for a period of 30 days after
notice of breach, or (ii) if the Closing shall not have occurred on or
before January 31, 1998, by reason of the failure of any condition
precedent under Article VII hereof (unless the failure results primarily
from Metro breaching any representation, warranty or covenant contained in
this Agreement);
(d) Any party may terminate this Agreement by giving written notice to
the other parties at any time after the Stockholders' Meeting in the event
this Agreement and the Merger fail to receive the Requisite Stockholder
Approval.
In the event that this Agreement shall be terminated pursuant to this Section
9.4, (i) each party shall redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same, and (ii) all further obligations of the parties under this
Agreement shall terminate without further liability of any party to any other
party (except for any liability of any party then in breach); provided, however,
that Sections 9.5 and 9.11 below shall survive such termination.
Notwithstanding the foregoing any willful or intentional breach of any
representation, warranty, covenant or agreement set forth in this Agreement by
any party to this Agreement, prior to the Effective Date, shall not limit or
restrict the availability of specific performance or other injunctive relief to
the extent that specific performance or such other relief would otherwise be
available to a party hereunder.
9.5 Confidentiality; Press Releases.
-------------------------------
(a) Eller and EMS agree to keep non-public information regarding Metro
confidential and agree that they shall only use such information in
connection with the transactions contemplated by this agreement and not
disclose any of such information other than (i) to Eller's, EMS's, and
Clear Channel Communication, Inc.'s directors, officers, employees,
representatives, and agents who are involved with the transactions
contemplated by this Agreement, (ii) to the extent such information
presently is or hereafter becomes available, on a non-confidential basis,
from a source other than Metro, and (iii) to the extent disclosure is
required by law, regulation or judicial order by any governmental
authority.
(b) Metro agrees to keep non-public information regarding Eller and
EMS confidential and agrees that it shall only use such information in
connection with the transactions contemplated by this Agreement and not
disclose any of such information other than (i) to Metro's directors,
officers, employees, representatives, and agents who are involved with the
transactions contemplated by this Agreement, (ii) to the extent such
information presently is or hereafter becomes available, on a non-
confidential basis, from a source other than Eller or EMS, and (iii) to the
extent disclosure is required by law, regulation or judicial order by any
governmental authority.
32
(c) Prior to any disclosure required by law, regulation or judicial
order, Eller, EMS or Metro, as the case may be, shall advise each of the
others of such requirement so that it may seek a protective order.
(d) None of Eller, EMS or Metro shall make any press release or public
announcement in connection with the transactions contemplated hereby
without the prior written consent of the other party or, if required by
law, without prior consultation with the other party.
9.6 Notices. Any notices or other communications required or
-------
permitted hereunder, shall be sufficiently given if in writing and personally
delivered or sent by pre-paid first class mail, overnight courier, telex or
facsimile, addressed as follows or to such other address as the parties shall
have given notice of pursuant hereto:
In the case of Eller or EMS:
Scott S. Eller, President
Eller Media Company
2850 East Camelback Road, Ste. 300
Phoenix, AZ 85016
Fax: 602/957-8602
With a copy to:
Paul J. Meyer, General Counsel
Eller Media Company
2850 East Camelback Road, Ste. 300
Phoenix, AZ 85016
Fax: 602/381-5740
In the case of Metro:
Scott A. Kraft, President
and Chief Executive Officer
Metro Display Advertising, Inc.
15265 Alton Parkway
Irvine, CA 92618
Fax: 714/727-9145
With a copy to:
33
Martin T. Goldblum
Troy & Gould, P.C.
1801 Century Park East
Suite 1600
Los Angeles, CA 90067-2302
Fax: 310/201-4746
All such notices and communications shall be deemed to have been duly given:
when personally delivered; three business days after being deposited in the
mail, as aforesaid; next day, if by overnight courier with guaranteed delivery;
when answered back, if telexed; and when receipt is acknowledged; if transmitted
by facsimile.
9.7 Entire Agreement. This Agreement together with all exhibits and
----------------
schedules hereto (including the Disclosure Schedules) represents the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof and supersedes all prior understandings and agreements, whether
written or oral, and can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference to
this Agreement signed by the party against whom enforcement of any such
amendment, supplement modification or waiver is sought. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
9.8 Successors. This Agreement shall be binding upon and shall inure
----------
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement and all rights and obligations
hereunder may not be assigned or transferred without the prior written consent
of the other parties hereto, and except that the Stockholders may not assign any
rights and/or obligations which they may have hereunder. Eller may assign its
rights hereunder to a wholly-owned subsidiary of Eller or to Clear Channel
Communications, Inc.
9.9 Choice of Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with California Law
(without reference to the choice of law provisions of California Law) except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
9.10 Amendments to Disclosure Schedules. Notwithstanding the
----------------------------------
foregoing, between the date hereof and the Closing Date, Metro may add to the
Disclosure Schedules by notification in writing to Eller and EMS of the matter
to be added or amended. If Eller and EMS shall not object to such addition or
amendment within five days of notice (as provided in Section 9.6 above) or by
the Closing Date, whichever is earlier, Eller and EMS shall be deemed to have
accepted such addition or amendment. If Eller or EMS timely notifies Metro of
their objection to any such addition or amendment, and if the parties are unable
to reach agreement with respect to the proposed addition or amendment for a
period of ten days after Eller's or EMS's notice of objection, then this
Agreement may be terminated by either party without any liability of any party
to the other.
34
9.11 Expenses. Whether or not the transactions contemplated hereby
--------
are consummated, the parties hereto shall pay their own respective legal,
accounting, out-of-pocket and other expenses, except that Eller and Metro shall
divide and share equally filing fees in connection with government filings
necessary to consummate the transactions contemplated hereby. If the
transactions contemplated by this Agreement are consummated, such expenses of
Metro shall be paid by the Disbursement Agent from the aggregate Cash Merger
Consideration.
9.12 Severability. If at any time subsequent to the date hereof, any
------------
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall have no
effect upon and shall not impair the enforceability of any other provision of
this Agreement.
9.13 Titles. The titles, captions or headings of the Sections herein
------
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
9.14 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
9.15 No Third-Party Beneficiaries. No person (other than parties to
----------------------------
this Agreement or their respective successors or permitted assigns) shall have
or be construed to have any legal or equity right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
9.16 Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue or authorship of any provision
of this Agreement.
9.17 Cumulative Remedies. All rights and remedies of any party
-------------------
hereto are cumulative of each other and of every right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
9.18 Amendment and Modification. At any time prior to the filing of
--------------------------
the Agreement of Merger with the California Secretary of State, this Agreement
may be terminated by the agreement of the Boards of Directors of Eller, EMS and
Metro notwithstanding approval thereof by the stockholders of Metro; and such
Boards of Directors may amend this Agreement at any time prior to the filing of
such Certificate with the Secretary of State of the State of California provided
that an amendment made subsequent to the adoption of this Agreement by the
stockholders of Metro
35
shall be approved by all of such Boards of Directors and shall not (a) alter or
change the amount of the Merger Consideration or (b) alter or change any of the
terms and conditions of this Agreement or the Agreement of Merger if such
alteration or change would adversely affect the holders of any Shares of Metro.
9.19 Metro Sales Agreement Indemnity. Metro shall indemnify and hold
-------------------------------
harmless Eller, its stockholders, directors and officers, from and against all
losses claims, demands, liabilities, obligations, damages, deficiencies,
assessments, judgments, payments, penalties, costs and expenses (including
without limitation reasonable attorneys fees, any amounts paid in investigation,
defense or settlement of any of the foregoing) incurred in connection with,
arising out of, resulting from or incident to the execution, delivery and
performance by Eller of that certain Interim Sales Agreement entered into by
Eller and Metro and dated as of May 27, 1997.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
METRO DISPLAY ADVERTISING, INC.,
a California corporation
By ______________________________
Scott A. Kraft, President
and Chief Executive Officer
ELLER MEDIA COMPANY
a Delaware corporation
By _______________________________
Scott S. Eller, President
EMS, INC., a California corporation
By _______________________________
Scott S. Eller, President
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EXHIBIT B
SPECIFIC PERFORMANCE ESCROW AGREEMENT
THIS SPECIFIC PERFORMANCE ESCROW AGREEMENT, dated as of this____day of
____________199_ (this "Agreement"), is among Eller Media Company, a Delaware
corporation ("Eller") and a subsidiary of Clear Channel Communications, Inc., a
Delaware corporation ("Clear Channel); Scott A. Kraft, Allan L. Ross, M.D., and
Robert C. Lamb, as stockholder representatives (such stockholder representatives
and their successors, as determined in accordance with this Agreement, shall be
referred to collectively herein as the "Stockholder Representatives"), and
________________, as escrow agent, a national banking association with its
office at ________________________(the "Escrow Agent").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Eller
is acquiring all of the issued and outstanding shares of capital stock of Metro
Display Advertising, Inc., a California corporation (the "Company"), pursuant to
an Amended and Restated Agreement and Plan of Merger, dated as of December__,
1997 (the "Merger Agreement"), between Eller and the Company.
B. Eller, the Company and the Stockholder Representatives have agreed to
set aside a portion of the Merger Consideration to be paid to the Stockholders
pursuant to Section 3.5 of the Merger Agreement for the purposes of providing
Eller with a remedy in the event that any member of the Van Wagner Group is
granted specific performance of any part of the Van Wagner Agreements and/or in
the event that Eller is granted an arbitration award pursuant to the terms set
forth herein.
C. A material condition to the consummation of the transactions
contemplated by the Merger Agreement is that the parties hereto enter into this
Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Except as hereinafter defined, capitalized terms used in
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this Agreement will have the meanings assigned to such terms in the Merger
Agreement.
1.1 "Claim" shall mean a claim by Eller for Damages pursuant to
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Section 5 of this Agreement.
1.2 "Claim Expiration Date" shall mean the earlier of (a) the date on
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which Eller receives evidence acceptable to Eller in its sole
reasonable discretion that the only remedy available to the Van
Wagner Group in the Van Wagner Litigation is monetary damages and
(b) 90 days after entry of a final non-appealable determination as
to Estimated Damages.
1.3 "Claim Notice" shall have the meaning set forth in Section 5 of
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this Agreement.
1.4 "Company" shall have the meaning set forth in Recital A of this
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Agreement.
1.5 "Company Common Stock" shall mean the common stock, no par value,
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of the Company.
1.6 "Damages" shall have the meaning set forth in Section 4 of this
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Agreement.
1.7 "Estimated Damages" shall have the meaning set forth in Section 5
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of this Agreement.
1.8 "Eller" shall have the meaning set forth in the first (1st)
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paragraph of this Agreement.
1.9 "Escrow Agent" shall have the meaning set forth in the first
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(1st) paragraph of this Agreement.
1.10 "Escrow Fund" shall mean all or that portion of the aggregate
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Specific Performance Escrow Merger Consideration being held by
the Escrow Agent subject to the terms of this Agreement.
1.11 "Final Instruction" shall mean a written notice, signed both by
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Eller and the Stockholder Representatives (except as otherwise
provided in Sections 6.2 or 6.4 below), and given to the Escrow
Agent directing the disbursement to Eller of an amount of Damages
or Estimated Damages, as applicable, with respect to a Claim.
1.12 "Merger Agreement" shall have the meaning set forth in Recital A
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of this Agreement.
1.13 "Stockholder Representatives" shall have the meaning set forth in
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the first (1st) paragraph of this Agreement.
1.14 "Stockholder" or "Stockholders" shall mean the record owners of
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the Company Common Stock on the Closing Date pursuant to the
Merger Agreement.
2. APPOINTMENT OF ESCROW AGENT. Eller and the Stockholder Representatives
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hereby designate and appoint__________________as Escrow Agent for the purposes
set forth in this Agreement, and__________________hereby accepts such
appointment on the terms herein provided.
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3. DEPOSIT AND INVESTMENT OF THE MERGER CONSIDERATION.
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3.1 Simultaneously with the execution and delivery of this Agreement,
Eller shall deliver to the Escrow Agent the Merger Consideration, which includes
the aggregate Specific Performance Escrow Merger Consideration, by wire
transfer.
3.2 The Escrow Agent shall invest the Merger Consideration in such
money market accounts, United States Treasury obligations, and other obligations
guaranteed by the United States Government or an agency thereof, reasonably
determined by Eller.
3.3 Except as otherwise set forth herein, the Escrow Agent, acting in
its capacity as Disbursement Agent, shall disburse to the Stockholders during
the term of this Agreement, pro rata in accordance with their percentage
interest in the Shares, the accrued interest from the Escrow Fund in consecutive
quarterly installments, commencing with April 1, 1998.
4. ELLER'S RIGHTS TO INDEMNIFICATION. Eller, the Company, and any other
---------------------------------
affiliate of either, shall be entitled to indemnification from the Escrow Fund
from and against all actual and estimated losses, claims, demands, liabilities,
obligations, damages, deficiencies, assessments, judgments, payments, penalties,
costs and expenses (including without limitation reasonable attorneys fees), any
amounts paid in investigation, defense or settlement of any of the foregoing
(collectively, "Damages") actually incurred or which are estimated to be
incurred in connection with, arising out of, resulting from or incident to an
award of specific performance of any part of the Van Wagner Agreements.
5. PROCEDURE FOR ASSERTING CLAIM TO ESCROW FUND. Eller shall have the
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right to make one or more claims for Damages or Estimated Damages, as
applicable, (a "Claim") on or prior to the Claim Expiration Date by delivering a
notice of such Claim (a "Claim Notice") to the Stockholder Representatives and
the Escrow Agent. Such Claim Notice shall state with particularity the basis for
the Claim together with sufficient facts to enable the Stockholder
Representatives to reasonably evaluate the Claim, and Eller's estimate of the
aggregate amount of the resulting Damages. If Eller has not received, prior to
the fifth anniversary of the date hereof, evidence acceptable to it in its sole
reasonable discretion that the only remedy available to the Van Wagner Group in
the Van Wagner Litigation is monetary damages, then the following issues shall
be submitted to arbitration in accordance with the procedures set forth in
Section 14 below:
(1) the percentage likelihood that a court having competent
jurisdiction over the matter will rule that the Van Wagner Group or
any member thereof is entitled to specific performance of any portion
of the Van Wagner Agreements; and
(2) the estimated amount of Eller's and/or Metro's losses if specific
performance of any portion of the Van Wagner Agreements were
available.
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The figures set forth above, as determined by the arbitrator, shall then be
multiplied to determine the "Estimated Damages."
6. DETERMINATION OF VALID ELLER CLAIM; FINAL INSTRUCTION. A Final
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Instruction shall be delivered to the Escrow Agent with respect to a Claim under
the following circumstances and accompanied by the indicated documentation.
6.1 If the Stockholder Representatives dispute either the validity,
amount or calculation of the Claim, they shall give written notice of such
dispute to Eller, with a copy to the Escrow Agent, within twenty (20) Business
Days after the delivery of the Claim Notice by Eller to the Stockholder
Representatives. In such circumstances, no Final Instruction may be given to the
Escrow Agent except as provided in Sections 6.3 or 6.4 below.
6.2 If the Stockholder Representatives fail to respond to the Claim
Notice within twenty (20) Business Days after it is delivered to the Stockholder
Representatives and the Escrow Agent, or if the Stockholder Representatives
notify the Escrow Agent that the Claim is not disputed, Eller shall have the
right to deliver to the Escrow Agent a Final Instruction with respect to the
Claim, signed only by Eller.
6.3 If the Stockholder Representatives and Eller reach an agreement on
the proper amount of the Claim, the Stockholder Representatives and Eller shall
give to the Escrow Agent a Final Instruction with respect to the Claim, signed
by both the Stockholder Representatives and Eller.
6.4 If the Stockholder Representatives and Eller are unable to reach an
agreement with respect to the proper determination of the Claim, the disputed
Claim shall be submitted by Eller and the Stockholder Representatives to
arbitration pursuant to Section 14 below. Upon final, nonappealable resolution
of such disputed Claim, either the Stockholder Representatives or Eller shall
have the right to deliver to the Escrow Agent a Final Instruction with respect
to the Claim based on and in compliance with the final, nonappealable resolution
of the Claim, signed only by the Stockholder Representatives or by Eller, and
accompanied by a copy of any arbitration award, or judgment or any court order
with respect thereto.
6.5 Upon receipt of a Final Instruction in accordance with this
Section, the Escrow Agent shall disburse to Eller from the Escrow Fund such
amount of Damages or Estimated Damages, as applicable and if any, as shall be
set forth in the Final Instruction, and shall distribute any remaining portion
of the Escrow Fund in accordance with Section 7 below. Under no circumstances
shall the Escrow Agent distribute any portion of the Escrow Fund with respect to
any Claim Notice received by the Escrow Agent after the Claim Expiration Date.
6.6 Damages to which Eller is entitled pursuant to a Final Instruction
shall be paid thirty (30) days following receipt of the Final Instruction.
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7. DISTRIBUTION OF ESCROW FUND. If Eller fails to make a Claim on or prior
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to the Claim Expiration Date, then as promptly as practicable thereafter (and in
no event later than ten (10) Business Days following the Claim Expiration Date),
the Escrow Agent shall disburse the Escrow Fund (including any interest thereon)
to the Stockholders pro rata in accordance with their respective ownership of
Company Common Stock on the Closing Date. If Eller timely makes a Claim, and if
at or after the expiration of the Claim Expiration Date, Eller's Claims (whether
or not in dispute) aggregate less than the remaining amount of the Escrow Fund,
then the Escrow Agent shall deliver the remaining amount of the Escrow Fund
(less 110% of the amount of Eller's Claims) to the Stockholders pro rata in
accordance with their respective ownership of Company Common Stock on the
Closing Date, and the balance, if any, after resolution of Eller's Claims. If,
however, Eller timely makes a Claim or Claims in accordance with Section 5
above, and if at the expiration of the Claim Expiration Date, such Claim or
Claims (whether or not in dispute) aggregate more than the remaining amount of
the Escrow Fund, then, only after the Escrow Agent's receipt of (and
distributions of Damages with respect to) Final Instructions for all such
Claims, shall the Escrow Agent deliver any remaining portion of the Escrow Fund
to the Stockholders pro rate in accordance with their respective ownership of
Company Common Stock on the Closing Date.
8. RELIANCE BY ESCROW AGENT; LIABILITY OF ESCROW AGENT. The Escrow Agent
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shall be protected in acting upon any written notice, request, waiver, consent,
certificate, receipt, authorization or other paper or document that the Escrow
Agent believes to be genuine and what it purports to be. The Escrow Agent may
confer with its own corporate or outside legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof, or
its duties hereunder, and shall incur no liability and shall be fully protected
in acting in accordance with the written opinions of such counsel. The duties of
the Escrow Agent hereunder will be limited to the observance of the express
provisions of this Agreement. The Escrow Agent will not be subject to, or be
obliged to recognize, any other agreement between the parties hereto or
directions or instructions not specifically set forth as provided for herein.
The Escrow Agent will not make any payment or disbursement from or out of the
Escrow Fund that is not expressly authorized pursuant to this Agreement. The
Escrow Agent may rely upon and act upon any instrument received by it pursuant
to the provisions of this Agreement that it reasonably believes to be genuine
and in conformity with the requirements of this Agreement. The Escrow Agent
undertakes to use the same degree of care and skill in performing its services
hereunder as an ordinary prudent person would do or use under the circumstances
in the conduct of his or her own affairs. The Escrow Agent will not be liable
for any action taken or not taken by it under the terms hereof in the absence of
breach of its obligations hereunder or gross negligence or willful misconduct on
its part.
9. INDEMNIFICATION OF ESCROW AGENT. Eller, on the one hand, and the
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Stockholders collectively, on the other, will indemnify and hold the Escrow
Agent harmless from and against any and all losses, costs, damages or expenses
(including but not limited to, reasonable attorneys' fees) it may sustain by
reason of its service as Escrow Agent hereunder, and except such losses, costs,
damages or expenses (including but not limited to, reasonable attorneys' fees)
incurred by reason of such acts or omissions for which the Escrow Agent is
liable or responsible under Section 8 of this Agreement. Any indemnification
amounts payable pursuant to this Section 9 shall be paid one-half
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by Eller, on the one hand, and one-half solely from the Escrow Fund by the
Stockholders collectively, on the other.
10. STOCKHOLDER REPRESENTATIVES; SUCCESSOR STOCKHOLDER REPRESENTATIVES.
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10.1 The Stockholders have made, constituted and appointed the
Stockholder Representatives as their agent and authorized and empowered them to
fulfill the role of Stockholder Representatives hereunder. The Stockholder
Representatives shall act on the basis of majority vote, and any writing on
behalf of the Stockholders Representatives, including instructions and notices
under this Agreement, shall be valid and effective for all purposes if signed by
any two (2) Stockholder Representatives.
10.2 The Stockholders entitled to receive a majority of the Escrow
Fund may remove the Stockholder Representatives at any time. If a Stockholder
Representative should die, resign, become incapacitated or be removed by the
Stockholders pursuant to this Section 10.2, his successor shall be Mark Boileau;
and if he or another Stockholder Representative should refuse to serve, die,
resign, become incapacitated, or be removed, the next successor shall be Michael
Slater. Thereafter, the remaining Stockholders entitled to receive a majority
of the Escrow Fund shall appoint each successor within twenty-one (21) days of a
Stockholder Representative's resignation, death, incapacity or removal. Such
successor shall be either a Stockholder or shall otherwise be acceptable to
Eller. If the Stockholders fail to appoint a successor within such twenty-one
(21)-day period, then Eller shall have the right to appoint the successor from
among the Stockholders. The choice of a successor Stockholder Representative
appointed in any manner permitted above shall be final and binding upon all of
the Stockholders. The decisions and actions of any successor Stockholder
Representative shall be, for all purposes, those of a Stockholder Representative
as if originally named herein.
10.3 Each Stockholder has made, constituted and appointed the
Stockholder Representatives as such person's true and lawful attorney in fact
and agent, for such person and in such person's name, (a) to receive all notices
and communications directed to such Stockholder under this Agreement and the
Merger Agreement, (b) to execute and deliver any and all documents required to
be executed and delivered by such holder pursuant to this Agreement or the
Merger Agreement in order to effect the transactions contemplated hereby, and
(c) to execute and deliver all instruments and documents of every kind incident
to the foregoing with the same effect as such Stockholder could do personally.
10.4 The designation of the Stockholder Representatives as
attorney-in-fact is coupled with an interest and is binding upon the
Stockholders notwithstanding the death, incapacity or dissolution of any
Stockholder. If any such event shall occur prior to the completion of the
transactions contemplated by this Agreement, the Stockholder Representatives
are, nevertheless, to the extent that they are legally able to do so, authorized
and directed to complete all transactions and act pursuant to this authority as
if such event had not occurred. Eller is entitled to deal solely with the
Stockholder Representatives in connection with this Agreement and is entitled to
rely upon the
6
provisions hereof and the authority granted to the Stockholder Representatives
to act on behalf of the Stockholders.
10.5 The Stockholder Representatives' acceptance of their duties under
this Agreement is subject to the following terms and conditions, which the
parties hereto agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Stockholder Representatives (but not
in their capacity as a Stockholder or as an officer, director, or employee of
the Company):
(a) The Stockholder Representatives make no representation and
have no responsibility as to the validity of this Agreement or of any
other instrument referred to herein, or as to the correctness of any
statement contained herein, and they shall not be required to inquire
as to the performance of any obligation under this Agreement.
(b) The Stockholder Representatives shall be protected in acting
upon written notice, request, waiver, consent, receipt or other paper
or document, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth of any
information therein contained, which they in good faith believe to be
genuine and what it purports to be.
(c) The Stockholder Representatives shall not be liable for any
error of judgment, or for any act done or step taken or omitted by them
in good faith, or for any mistake of fact or law, or for anything which
they may do or refrain from doing in connection therewith, except as a
result of their own gross negligence or willful misconduct.
(d) The Stockholder Representatives may consult with competent
and responsible legal counsel selected by them and they shall not be
liable for any action taken or omitted by them in good faith in
accordance with the advice of such counsel.
(e) The Stockholders shall bear pro rata all expenses incurred by
the Stockholder Representatives in connection with their duties
hereunder and shall indemnify them against and save them harmless from
any and all claims, liabilities, costs, payments and expenses,
including fees of counsel (who may be selected by the Stockholder
Representatives), for anything done or omitted by them in the
performance of this Agreement or the Merger Agreement, except as a
result of their own gross negligence or willful misconduct.
(f) The Stockholder Representatives shall have no duties or
responsibilities except those expressly set forth herein and in the
Merger Agreement. They shall not be bound by any modification under
this Agreement or the Merger Agreement unless it is in writing and
signed by the other parties hereto or thereto,
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and if their duties as Stockholder Representatives hereunder or
thereunder are affected, unless they shall have given prior written
consent thereto.
11. FEES AND EXPENSES OF THE ESCROW AGENT. All fees of the Escrow Agent
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for its services hereunder, together with any expenses it reasonably incurs in
connection with this Agreement, shall be paid by Eller.
12. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign from its
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duties hereunder by giving each of the parties hereto not less than (60) days
prior written notice of the effective date of such resignation. A substitute
Escrow Agent shall be appointed by mutual agreement of Eller and the Stockholder
Representatives to fulfill the duties of the Escrow Agent hereunder for the
remaining term of this Agreement. If on or before the effective date of such
resignation, a substitute Escrow Agent has not been appointed, the Escrow Agent
shall thereupon deposit the Escrow Fund into the registry of a court of
competent jurisdiction.
13. DESIGNEES FOR INSTRUCTIONS. Eller, may, by notice to the Escrow
--------------------------
Agent, designate one or more persons who will execute notices and from whom the
Escrow Agent may take instructions hereunder. Such designations may be changed
from time to time upon notice to the Escrow Agent from Eller. The Escrow Agent
shall be entitled to rely conclusively on any notices or instructions from any
person so designated by Eller.
14. ARBITRATION. Any dispute arising under this Agreement, or arbitration
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proceeding required by Section 5 for purposes of determining Estimated Damages,
shall be resolved by binding arbitration conducted in Los Angeles, California,
after written demand from one party to the other. If the parties cannot agree on
a single arbitrator within thirty (30) days after written demand for
arbitration, the arbitrator shall be selected pursuant to the rules and
regulations of the American Arbitration Association governing commercial
transactions. The arbitration proceeding shall be conducted within ninety (90)
days of any demand for arbitration. If reasonable, as determined by the
arbitrator, it shall be conducted on a single day with each party being allowed
an equal amount of time to present its case. No discovery shall be allowed
except that each party shall submit to the other and to the arbitrator, no later
than thirty (30) days prior to the proceeding, copies of all documents to be
presented, the names and occupations of all proposed witnesses, and a written
summary of the substance of their proposed testimony. The arbitrator shall
exclude any evidence not presented within such time period to the other party
and the arbitrator as required by this Section. The parties shall submit such
legal briefing or other statements of position as the arbitrator may request.
Eller shall pay one-half of the costs of any such arbitrator, and the
Stockholders shall be responsible for paying one-half of such costs solely out
of the Escrow Fund. Any arbitration decision or award shall be final and not
subject to appeal to any court of law, except in the case of a manifest error in
the application of law. Eller and the Stockholder Representatives on behalf of
the Stockholders specifically covenant to one another that they shall not
commence litigation against one another with respect to any dispute subject to
arbitration hereunder for any reason except as may be necessary to enforce this
Section or an arbitrator's decision or award. In the event litigation shall be
required to enforce this Section or the arbitrator's decision or award, the
prevailing party shall be paid its reasonable attorney's fees and costs.
8
15. INSPECTION. All property held as part of the escrow shall at all
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times be clearly identified as being held by the Escrow Agent hereunder. Any
party hereto may at any time during normal business hours (with reasonable
notice) inspect any records or reports relating to the Specific Performance
Escrow Merger Consideration.
16. NOTICES. All notices, requests, demands and other communications
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which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
----
upon receipt, if sent by certified or registered mail, return receipt requested.
Notwithstanding the foregoing, a Claim Notice delivered pursuant to Section 5
hereof and a Final Instruction provided pursuant to Section 6 hereof shall be
deemed to have been duly given only if delivered personally, by recognized
overnight delivery or by certified registered mail and if receipt of such Claim
Notice or such Final Instruction, as the case may be, was acknowledged in
writing. In each case notice shall be sent to:
If to Eller:
Scott S. Eller, President
ELLER MEDIA COMPANY
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Fax: 602/957-8602
With a copy to:
Paul J. Meyer, General Counsel
ELLER MEDIA COMPANY
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Fax: 602/381-5740
If to the Stockholder Representatives:
Scott A. Kraft, President
and Chief Executive Officer
c/o BUSTOP SHELTERS OF NEVADA
5425 South Valley View, Suite 103
Las Vegas, NV 89118
Fax: 702/795-3658
With a copy to:
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Martin T. Goldblum
TROY & GOULD, P.C.
1801 Century Park East
Suite 1600
Los Angeles, CA 90067-2302
Fax: 310/201-4746
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
17. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
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rights or obligations hereunder may be assigned by any party without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
18. AMENDMENT AND TERMINATION. This Agreement may be amended or modified
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by and upon written notice to the Escrow Agent given jointly by Eller and the
Stockholder Representatives, but the duties and responsibilities of the Escrow
Agent may not be increased without its written consent. This Agreement will
terminate on the date on which all the Escrow Fund has been distributed in
accordance with the terms set forth herein.
19. COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. SEVERABILITY AND FURTHER ASSURANCES. This Agreement and the Specific
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Performance Escrow Agreement constitute the entire agreement among the parties
and supersedes all prior and contemporaneous agreements and undertakings on the
parties in connection herewith. No failure or delay of the Escrow Agent in
exercising any right, power or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power or remedy
preclude any other or further exercise of any right, power or remedy. In the
event that any one or more of the provisions contained in this Agreement, shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
then to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement. Each
of the parties hereto shall, at the request of the other party, deliver to the
requesting party all further documents or other assurances as may reasonably be
necessary or desirable in connection with this Agreement.
21. TITLES. The titles, captions or headings of the Sections herein are
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for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
22. GOVERNING LAW. This Agreement shall be construed and enforced in
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accordance with the laws of the State of California without regard to the
principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date first written above.
ELLER MEDIA COMPANY
By ___________________________________
Scott S. Eller, President
ESCROW AGENT
By ___________________________________
Name:
Title:
STOCKHOLDER REPRESENTATIVES
By ___________________________________
Scott A. Kraft
By:__________________________________
Allan L. Ross, M.D.
By:__________________________________
Robert C. Lamb
EXHIBIT C
VAN WAGNER ESCROW AGREEMENT
THIS VAN WAGNER ESCROW AGREEMENT, dated as of this ______ day of _____
__________ 199__ (this "Agreement"), is among Eller Media Company, a Delaware
corporation ("Eller") and a subsidiary of Clear Channel Communications, Inc., a
Delaware corporation ("Clear Channel); Scott A. Kraft, Allan L. Ross, M.D., and
Robert C. Lamb, as stockholder representatives (such stockholder representatives
and their successors, as determined in accordance with this Agreement, shall be
referred to collectively herein as the "Stockholder Representatives"), and
_________________________, as escrow agent, a national banking association with
its office at ______________________ (the "Escrow Agent").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Eller
is acquiring all of the issued and outstanding shares of capital stock of Metro
Display Advertising, Inc., a California corporation (the "Company"), pursuant to
an Amended and Restated Agreement and Plan of Merger, dated as of December ___,
1997 (the "Merger Agreement"), between Eller and the Company.
B. Eller, the Company and the Stockholder Representatives have agreed to
set aside a portion of the Merger Consideration to be paid to the Stockholders
pursuant to Section 3.5 of the Merger Agreement for the purposes of providing
Eller with a remedy in the event Metro is required to pay damages as a result of
the Van Wagner Litigation.
C. A material condition to the consummation of the transactions
contemplated by the Merger Agreement is that the parties hereto enter into this
Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Except as hereinafter defined, capitalized terms used in
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this Agreement will have the meanings assigned to such terms in the Merger
Agreement.
1.1 "Claim" shall mean a claim by Eller for Damages pursuant to
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Section 5 of this Agreement.
1.2 "Claim Expiration Date" shall mean the earlier of (a) 90 days
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after entry of a final non-appealable determination on damages in
the Van Wagner Litigation, and (b) 90 days after the execution of
a binding settlement agreement between the parties to the Van
Wagner Litigation which determines all damages, if any, payable
by Metro as a result of the Van Wagner Litigation.
1.3 "Claim Notice" shall have the meaning set forth in Section 5 of
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this Agreement.
1.4 "Company" shall have the meaning set forth in Recital A of this
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Agreement.
1.5 "Company Common Stock" shall mean the common stock, no par value,
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of the Company.
1.6 "Damages" shall have the meaning set forth in Section 4 of this
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Agreement.
1.7 "Eller" shall have the meaning set forth in the first (1st)
-----
paragraph of this Agreement.
1.8 "Escrow Agent" shall have the meaning set forth in the first
------------
(1st) paragraph of this Agreement.
1.9 "Escrow Fund" shall mean all or that portion of the aggregate Van
-----------
Wagner Escrow Merger Consideration being held by the Escrow Agent
subject to the terms of this Agreement.
1.10 "Final Instruction" shall mean a written notice, signed both by
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Eller and the Stockholder Representatives (except as otherwise
provided in Section 6.2 or 6.4 below), and given to the Escrow
Agent directing the disbursement to Eller of an amount of Damages
with respect to a Claim.
1.11 "Merger Agreement" shall have the meaning set forth in Recital A
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of this Agreement.
1.12 "Stockholder Representatives" shall have the meaning set forth in
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the first (1st) paragraph of this Agreement.
1.13 "Stockholder" or "Stockholders" shall mean the record owners of
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the Company Common Stock on the Closing Date pursuant to the
Merger Agreement.
2. APPOINTMENT OF ESCROW AGENT. Eller and the Stockholder Representatives
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hereby designate and appoint _____________________________ as Escrow Agent for
the purposes set forth in this Agreement, and ___________________ hereby accepts
such appointment on the terms herein provided.
3. DEPOSIT AND INVESTMENT OF THE MERGER CONSIDERATION.
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3.1 Simultaneously with the execution and delivery of this Agreement,
Eller shall deliver to the Escrow Agent the Merger Consideration, which includes
the aggregate Van Wagner Escrow Merger Consideration, by wire transfer.
2
3.2 The Escrow Agent shall invest the Merger Consideration in such
money market accounts, United States Treasury obligations, and other obligations
guaranteed by the United States Government or an agency thereof, reasonably
determined by Eller.
3.3 Except as otherwise set forth herein, the Escrow Agent, acting in
its capacity as Disbursement Agent, shall disburse to the Stockholders, pro rata
in accordance with their percentage interest in the Shares, the accrued interest
from the Escrow Fund in consecutive quarterly installments, commencing with
April 1, 1998.
4. ELLER'S RIGHTS TO INDEMNIFICATION. Eller, the Company, and any other
---------------------------------
affiliate of either, shall be entitled to indemnification from the Escrow Fund
from and against all losses, claims, demands, liabilities, obligations, damages,
deficiencies, assessments, judgments, payments, penalties, costs and expenses
(including without limitation reasonable attorneys fees, any amounts paid in
investigation, defense or settlement of any of the foregoing (collectively,
"Damages") incurred in connection with, arising out of, resulting from or
incident to, the Van Wagner Litigation, including, all Damages (as defined in
the Specific Performance Escrow Agreement), arising out of an award to any
member of the Van Wagner Group of specific performance of any portion of the Van
Wagner Agreements. The above-described indemnity for Damages arising out of an
award of specific performance shall be applicable nonwithstanding (a) that Eller
may have received an award or other determination for such Damages under the
Specific Performance Escrow Agreement or (b) that the Specific Performance
Escrow Agreement may have expired or been terminated; provided, however, that
-----------------
the indemnity under this Agreement, whether for "Damages" as defined herein or
"Damages" as defined in the Specific Performance Escrow Agreement, shall only be
provided to the extent such "Damages," respectively, exceed the award, if any,
provided to Eller under the Specific Performance Escrow Agreement, except that
if an award of solely monetary damages rather than specific performance is
granted in the Van Wagner Litigation, the maximum aggregate award to Eller under
this Agreement and the Specific Performance Escrow Agreement shall be Five
Million Dollars ($5,000,000.00)
5. PROCEDURE FOR ASSERTING CLAIM TO ESCROW FUND. Eller shall have the
--------------------------------------------
right to make one or more claims for Damages (a "Claim") on or prior to the
Claim Expiration Date by delivering a notice of such Claim (a "Claim Notice") to
the Stockholder Representatives and the Escrow Agent. Such Claim Notice shall
state with particularity (a) the basis for the Claim together with sufficient
facts to enable the Stockholder Representatives to reasonably evaluate the
Claim, and (b) Eller's estimate of the aggregate amount of the resulting
Damages.
6. DETERMINATION OF VALID ELLER CLAIM; FINAL INSTRUCTION. A Final
-----------------------------------------------------
Instruction shall be delivered to the Escrow Agent with respect to a Claim under
the following circumstances and accompanied by the indicated documentation.
6.1 If the Stockholder Representatives dispute either the validity,
amount or calculation of the Claim, they shall give written notice of such
dispute to Eller, with a copy to the Escrow Agent, within twenty (20) Business
Days after the delivery of the Claim Notice by Eller to
3
the Stockholder Representatives. In such circumstances, no Final Instruction may
be given to the Escrow Agent except as provided in Sections 6.3 or 6.4 below.
6.2 If the Stockholder Representatives fail to respond to the Claim
Notice within twenty (20) Business Days after it is delivered to the Stockholder
Representatives and the Escrow Agent, or if the Stockholder Representatives
notify the Escrow Agent that the Claim is not disputed, Eller shall have the
right to deliver to the Escrow Agent a Final Instruction with respect to the
Claim, signed only by Eller.
6.3 If the Stockholder Representatives and Eller reach an agreement
on the proper amount of the Claim, the Stockholder Representatives and Eller
shall give to the Escrow Agent a Final Instruction with respect to the Claim,
signed by both the Stockholder Representatives and Eller.
6.4 If the Stockholder Representatives and Eller are unable to reach
an agreement with respect to the proper determination of the Claim, the disputed
Claim shall be submitted by Eller and the Stockholder Representatives to
Arbitration pursuant to Section 14 below. Upon final, nonappealable resolution
of such disputed Claim, either the Stockholder Representatives or Eller shall
have the right to deliver to the Escrow Agent a Final Instruction with respect
to the Claim based on and in compliance with the final, nonappealable resolution
of the Claim, signed only by the Stockholder Representatives or by Eller, and
accompanied by a copy of any arbitration award, or judgment or any court order
with respect thereto.
6.5 Upon receipt of a Final Instruction in accordance with this
Section, the Escrow Agent shall disburse to Eller from the Escrow Fund such
amount of Damages, if any, as shall be set forth in the Final Instruction, and
shall distribute any remaining portion of the Escrow Fund in accordance with
Section 7 below. Under no circumstances shall the Escrow Agent distribute any
portion of the Escrow Fund with respect to any Claim Notice received by the
Escrow Agent after the Claim Expiration Date.
6.6 Damages to which Eller is entitled pursuant to a Final
Instruction shall be paid thirty (30) days following receipt of the Final
Instruction.
7. DISTRIBUTION OF ESCROW FUND. If Eller fails to make a Claim on or
---------------------------
prior to the Claim Expiration Date, then as promptly as practicable thereafter
(and in no event later than ten (10) Business Days following the Claim
Expiration Date), the Escrow Agent shall disburse the Escrow Fund (including any
interest thereon) to the Stockholders pro rata in accordance with their
respective ownership of Company Common Stock on the Closing Date. If Eller
timely makes a Claim, and if at or after the expiration of the Claim Expiration
Date, Eller's Claims (whether or not in dispute) aggregate less than the
remaining amount of the Escrow Fund, then the Escrow Agent shall deliver the
remaining amount of the Escrow Fund (less 110% of the amount of Eller's Claims)
to the Stockholders pro rata in accordance with their respective ownership of
Company Common Stock on the Closing Date, and the balance, if any, after
resolution of Eller's Claims. If, however, Eller timely makes a Claim or Claims
in accordance with Section 5 above, and if at the expiration of the
4
Claim Expiration Date, such Claim or Claims (whether or not in dispute)
aggregate more than the remaining amount of the Escrow Fund, then, only after
the Escrow Agent's receipt of (and distributions of Damages with respect to)
Final Instructions for all such Claims, shall the Escrow Agent deliver any
remaining portion of the Escrow Fund to the Stockholders pro rata in accordance
with their respective ownership of Company Common Stock on the Closing Date.
8. RELIANCE BY ESCROW AGENT; LIABILITY OF ESCROW AGENT. The Escrow Agent
---------------------------------------------------
shall be protected in acting upon any written notice, request, waiver, consent,
certificate, receipt, authorization or other paper or document that the Escrow
Agent believes to be genuine and what it purports to be. The Escrow Agent may
confer with its own corporate or outside legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof, or
its duties hereunder, and shall incur no liability and shall be fully protected
in acting in accordance with the written opinions of such counsel. The duties of
the Escrow Agent hereunder will be limited to the observance of the express
provisions of this Agreement. The Escrow Agent will not be subject to, or be
obliged to recognize, any other agreement between the parties hereto or
directions or instructions not specifically set forth as provided for herein.
The Escrow Agent will not make any payment or disbursement from or out of the
Escrow Funds that is not expressly authorized pursuant to this Agreement. The
Escrow Agent may rely upon and act upon any instrument received by it pursuant
to the provisions of this Agreement that it reasonably believes to be genuine
and in conformity with the requirements of this Agreement. The Escrow Agent
undertakes to use the same degree of care and skill in performing its services
hereunder as an ordinary prudent person would do or use under the circumstances
in the conduct of his or her own affairs. The Escrow Agent will not be liable
for any action taken or not taken by it under the terms hereof in the absence of
breach of its obligations hereunder or gross negligence or willful misconduct on
its part.
9. INDEMNIFICATION OF ESCROW AGENT. Eller, on the one hand, and the
-------------------------------
Stockholders collectively, on the other, will indemnify and hold the Escrow
Agent harmless from and against any and all losses, costs, damages or expenses
(including but not limited to, reasonable attorneys' fees) it may sustain by
reason of its service as Escrow Agent hereunder, and except such losses, costs,
damages or expenses (including but not limited to, reasonable attorneys' fees)
incurred by reason of such acts or omissions for which the Escrow Agent is
liable or responsible under Section 8 of this Agreement. Any indemnification
amounts payable pursuant to this Section 9 shall be paid one-half by Eller, on
the one hand, and one-half solely from the Escrow Fund by the Stockholders
collectively, on the other.
10. STOCKHOLDER REPRESENTATIVES; SUCCESSOR STOCKHOLDER REPRESENTATIVES.
------------------------------------------------------------------
10.1 The Stockholders have made, constituted and appointed the
Stockholder Representatives as their agent and authorized and empowered them to
fulfill the role of Stockholder Representatives hereunder. The Stockholder
Representatives shall act on the basis of majority vote, and any writing on
behalf of the Stockholders Representatives, including instructions and notices
under this Agreement, shall be valid and effective for all purposes if signed by
any two (2) Stockholder Representatives.
5
10.2 The Stockholders entitled to receive a majority of the Escrow Fund
may remove the Stockholder Representatives at any time. If a Stockholder
Representative should die, resign, become incapacitated or be removed by the
Stockholders pursuant to this Section 10.2, his successor shall be Mark Boileau;
and if he or another Stockholder Representative should refuse to serve, die,
resign, become incapacitated, or be removed, the next successor shall be Michael
Slater. Thereafter, the remaining Stockholders entitled to receive a majority of
the Escrow Fund shall appoint each successor within twenty-one (21) days of a
Stockholder Representative's resignation, death, incapacity or removal. Such
successor shall be either a Stockholder or shall otherwise be acceptable to
Eller. If the Stockholders fail to appoint a successor within such twenty-one
(21)-day period, then Eller shall have the right to appoint the successor from
among the Stockholders. The choice of a successor Stockholder Representative
appointed in any manner permitted above shall be final and binding upon all of
the Stockholders. The decisions and actions of any successor Stockholder
Representative shall be, for all purposes, those of a Stockholder Representative
as if originally named herein.
10.3 Each Stockholder has made, constituted and appointed the
Stockholder Representatives as such person's true and lawful attorney in fact
and agent, for such person and in such person's name, (a) to receive all notices
and communications directed to such Stockholder under this Agreement and the
Merger Agreement, (b) to execute and deliver any and all documents required to
be executed and delivered by such holder pursuant to this Agreement or the
Merger Agreement in order to effect the transactions contemplated hereby, and
(c) to execute and deliver all instruments and documents of every kind incident
to the foregoing with the same effect as such Stockholder could do personally.
10.4 The designation of the Stockholder Representatives as attorney-in-
fact is coupled with an interest and is binding upon the Stockholders
notwithstanding the death, incapacity or dissolution of any Stockholder. If any
such event shall occur prior to the completion of the transactions contemplated
by this Agreement, the Stockholder Representatives are, nevertheless, to the
extent that they are legally able to do so, authorized and directed to complete
all transactions and act pursuant to this authority as if such event had not
occurred. Eller is entitled to deal solely with the Stockholder Representatives
in connection with this Agreement and is entitled to rely upon the provisions
hereof and the authority granted to the Stockholder Representatives to act on
behalf of the Stockholders.
10.5 The Stockholder Representatives' acceptance of their duties under
this Agreement is subject to the following terms and conditions, which the
parties hereto agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Stockholder Representatives (but not
in their capacity as a Stockholder or as an officer, director, or employee of
the Company):
(a) The Stockholder Representatives make no representation and
have no responsibility as to the validity of this Agreement or of any
other instrument referred to herein, or as to the correctness of any
statement contained herein, and they shall
6
not be required to inquire as to the performance of any obligation
under this Agreement.
(b) The Stockholder Representatives shall be protected in acting
upon written notice, request, waiver, consent, receipt or other paper
or document, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth of any
information therein contained, which they in good faith believe to be
genuine and what it purports to be.
(c) The Stockholder Representatives shall not be liable for any
error of judgment, or for any act done or step taken or omitted by
them in good faith, or for any mistake of fact or law, or for anything
which they may do or refrain from doing in connection therewith,
except as a result of their own gross negligence or willful
misconduct.
(d) The Stockholder Representatives may consult with competent
and responsible legal counsel selected by them and they shall not be
liable for any action taken or omitted by them in good faith in
accordance with the advice of such counsel.
(e) The Stockholders shall bear pro rata all expenses incurred
by the Stockholder Representatives in connection with their duties
hereunder and shall indemnify them against and save them harmless from
any and all claims, liabilities, costs, payments and expenses,
including fees of counsel (who may be selected by the Stockholder
Representatives), for anything done or omitted by them in the
performance of this Agreement or the Merger Agreement, except as a
result of their own gross negligence or willful misconduct.
(f) The Stockholder Representatives shall have no duties or
responsibilities except those expressly set forth herein and in the
Merger Agreement. They shall not be bound by any modification under
this Agreement or the Merger Agreement unless it is in writing and
signed by the other parties hereto or thereto, and if their duties as
Stockholder Representatives hereunder or thereunder are affected,
unless they shall have given prior written consent thereto.
11. FEES AND EXPENSES OF THE ESCROW AGENT. All fees of the Escrow Agent
-------------------------------------
for its services hereunder, together with any expenses it reasonably incurs in
connection with this Agreement, shall be paid by Eller.
12. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign from its
---------------------------
duties hereunder by giving each of the parties hereto not less than sixty (60)
days prior written notice of the effective date of such resignation. A
substitute Escrow Agent shall be appointed by mutual agreement of Eller and the
Stockholder Representatives to fulfill the duties of the Escrow Agent hereunder
for the remaining term of this Agreement. If on or before the effective date of
such
7
resignation, a substitute Escrow Agent has not been appointed, the Escrow Agent
shall thereupon deposit the Escrow Fund into the registry of a court of
competent jurisdiction.
13. DESIGNEES FOR INSTRUCTIONS. Eller, may, by notice to the Escrow Agent,
--------------------------
designate one or more persons who will execute notices and from whom the Escrow
Agent may take instructions hereunder. Such designations may be changed from
time to time upon notice to the Escrow Agent from Eller. The Escrow Agent shall
be entitled to rely conclusively on any notices or instructions from any person
so designated by Eller.
14. ARBITRATION. Any dispute arising under this Agreement shall be resolved
-----------
by binding arbitration conducted in Los Angeles, California, after written
demand from one party to the other. If the parties cannot agree on a single
arbitrator within thirty (30) days after written demand for arbitration, the
arbitrator shall be selected pursuant to the rules and regulations of the
American Arbitration Association governing commercial transactions. The
arbitration proceeding shall be conducted within ninety (90) days of any demand
for arbitration. If reasonable, as determined by the arbitrator, it shall be
conducted on a single day with each party being allowed an equal amount of time
to present its case. No discovery shall be allowed except that each party shall
submit to the other and to the arbitrator, no later than thirty (30) days prior
to the proceeding, copies of all documents to be presented, the names and
occupations of all proposed witnesses, and a written summary of the substance of
their proposed testimony. The arbitrator shall exclude any evidence not
presented within such time period to the other party and the arbitrator as
required by this Section. The parties shall submit such legal briefing or other
statements of position as the arbitrator may request. Eller shall pay one-half
of the costs of any such arbitrator, and the Stockholders shall be responsible
for paying one-half of such costs solely out of the Escrow Fund. Any arbitration
decision or award shall be final and not subject to appeal to any court of law,
except in the case of a manifest error in the application of law. Eller and the
Stockholder Representatives on behalf of the Stockholders specifically covenant
to one another that they shall not commence litigation against one another with
respect to any dispute subject to arbitration hereunder for any reason except as
may be necessary to enforce this Section or an arbitrator's decision or award.
In the event litigation shall be required to enforce this Section or the
arbitrator's decision or award, the prevailing party shall be paid its
reasonable attorneys' fees and costs.
15. INSPECTION. All property held as part of the escrow shall at all times
----------
be clearly identified as being held by the Escrow Agent hereunder. Any party
hereto may at any time during normal business hours (with reasonable notice)
inspect any records or reports relating to the Merger Consideration.
16. NOTICES. All notices, requests, demands and other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
----
upon receipt, if sent by certified or registered mail, return receipt requested.
Notwithstanding the foregoing, a Claim Notice delivered pursuant to Section 5
hereof and a Final Instruction provided pursuant to
8
Section 6 hereof shall be deemed to have been duly given only if delivered
personally, by recognized overnight delivery or by certified registered mail and
if receipt of such Claim Notice or such Final Instruction, as the case may be,
was acknowledged in writing. In each case notice shall be sent to:
If to Eller:
Scott S. Eller, President
ELLER MEDIA COMPANY
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Fax: 602/957-8602
With a copy to:
Paul J. Meyer, General Counsel
ELLER MEDIA COMPANY
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Fax: 602/381-5740
If to the Stockholder Representatives:
Scott A. Kraft, President
and Chief Executive Officer
c\o BUSTOP SHELTERS OF NEVADA
5425 South Valley View, Suite 103
Las Vegas, NV 89118
Fax: 702/795-3658
With a copy to:
Martin T. Goldblum
TROY & GOULD, P.C.
1801 Century Park East
Suite 1600
Los Angeles, CA 90067-2302
Fax: 310/201-4746
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
17. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
--------------------------
rights or obligations hereunder may be assigned by any party without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
9
18. AMENDMENT AND TERMINATION. This Agreement may be amended or modified
-------------------------
by and upon written notice to the Escrow Agent given jointly by Eller and the
Stockholder Representatives, but the duties and responsibilities of the Escrow
Agent may not be increased without its written consent. This Agreement will
terminate on the date on which all the Escrow Fund has been distributed in
accordance with the terms set forth herein.
19. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. SEVERABILITY AND FURTHER ASSURANCES. This Agreement constitutes the
-----------------------------------
entire agreement among the parties and supersedes all prior and contemporaneous
agreements and undertakings on the parties in connection herewith. No failure
or delay of the Escrow Agent in exercising any right, power or remedy may be, or
may be deemed to be, a waiver thereof; nor may any single or partial exercise of
any right, power or remedy preclude any other or further exercise of any right,
power or remedy. In the event that any one or more of the provisions contained
in this Agreement, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement. Each of the parties hereto shall, at the request of the
other party, deliver to the requesting party all further documents or other
assurances as may reasonably be necessary or desirable in connection with this
Agreement.
21. TITLES. The titles, captions or headings of the Sections herein are
------
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
22. GOVERNING LAW. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of California without regard to the
principles of conflicts of laws.
10
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date first written above.
ELLER MEDIA COMPANY
By ______________________________
Scott S. Eller, President
ESCROW AGENT
By ______________________________
Name:
Title:
STOCKHOLDER REPRESENTATIVES
By ______________________________
Scott A. Kraft
By:______________________________
Allan L. Ross, M.D.
By:______________________________
Robert C. Lamb
EXHIBIT D
DAMAGES ESCROW AND DISBURSEMENT AGREEMENT
THIS DAMAGES ESCROW AND DISBURSEMENT AGREEMENT, dated as of this __ day of
________ 199_ (this "Agreement"), is among Eller Media Company, a Delaware
corporation ("Eller") and a subsidiary of Clear Channel Communications, Inc., a
Delaware corporation ("Clear Channel"); Scott A. Kraft, Allan L. Ross, M.D., and
Robert C. Lamb, as stockholder representatives (such stockholders
representatives and their successors as determined in accordance with this
Agreement, shall be referred to collectively herein as the "Stockholder
Representatives"), and __________, as escrow agent, a national banking
association with its office at _______________ (the "Escrow Agent").
RECITALS
A. Concurrently with the execution and delivery of this Agreement, Eller is
acquiring all of the issued and outstanding shares of capital stock of Metro
Display Advertising, Inc., a California corporation (the "Company"), pursuant to
an Amended and Restated Agreement and Plan of Merger, dated as of December __,
1997, with all of its attached schedules and exhibits (collectively, the "Merger
Agreement"), between Eller and the Company.
B. Eller, the Company and the Stockholder Representatives have agreed to
set aside a portion of the aggregate Merger Consideration to be paid to the
Stockholders pursuant to Section 3.5 of the Merger Agreement for the purposes of
(1) providing Eller with a remedy in the event of a breach by the Company of the
representations, warranties and covenants made in the Merger Agreement, and (2)
compensating Eller for certain potential losses as more specifically set forth
herein.
C. Eller, the Company, and the Stockholder Representatives have agreed to
authorize the Escrow Agent to serve in the additional capacity of Disbursement
Agent pursuant to (1) Section 3.9 of the Merger Agreement or (2) Section 3.10 of
the Merger Agreement.
D. A material condition to the consummation of the transactions
contemplated by the Merger Agreement is that the parties hereto enter into this
Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions. Except as hereinafter defined, capitalized terms used in
-----------
this Agreement will have the meanings assigned to such terms in the Merger
Agreement.
1.1 "Claim" shall mean a claim by Eller for Damages pursuant to
-----
Section 6 of this Agreement.
1.2 "Claim Expiration Date" shall mean the third (3rd) anniversary of
---------------------
the date of this Agreement.
1.3 "Claim Notice" shall have the meaning set forth in Section 6
------------
of this Agreement.
1.4 "Company" shall have the meaning set forth in Recital A of
-------
this Agreement.
1.5 "Company Common Stock" shall mean the common stock, no par
--------------------
value, of the Company.
1.6 "Damages" shall have the meaning set forth in Section 5.1 of
-------
this Agreement.
1.7 "Damages Escrow Fund" shall mean all or that portion of the
-------------------
aggregate Damages Escrow Merger Consideration being held by
the Escrow Agent subject to the terms of this Agreement.
1.8 "Disbursement Agent" shall mean the Escrow Agent acting
------------------
pursuant to Sections 4 and 8 of this Agreement.
1.9 "Eller" shall have the meaning set forth in the first (1st)
-----
paragraph of this Agreement.
1.10 "Eller Transit" shall mean all of the following entities if
-------------
they are engaged in operating a bus shelter outdoor
advertising business: Eller, Clear Channel and their
respective subsidiaries and affiliates, including Metro and
its subsidiaries.
1.11 "Escrow Agent" shall have the meaning set forth in the first
------------
(1st) paragraph of this Agreement, and shall include the
Escrow Agent acting as Disbursement Agent for purposes of
Sections 4 and 8 below.
1.12 "Final Instruction" shall mean a written notice, signed both
-----------------
by Eller and the Stockholder Representatives (except as
otherwise provided in Sections 7.2 or 7.4, below), and given
to the Escrow Agent directing the disbursement to Eller of an
amount of Damages with respect to a Claim.
1.13 "Merger Agreement" shall have the meaning set forth in Recital
----------------
A of this Agreement.
1.14 "Stockholder Representatives" shall have the meaning set forth
---------------------------
in the first (1st) paragraph of this Agreement.
1.15 "Stockholder" or "Stockholders" shall mean the record owners
-----------------------------
of the Company Common Stock on the Closing Date pursuant to
the Merger Agreement.
2
2. Appointment of Escrow Agent and Disbursement Agent. Eller and the
--------------------------------------------------
Stockholder Representatives hereby designate and appoint ____________ as Escrow
Agent and Disbursement Agent for the purposes set forth in this Agreement, and
____________ hereby accepts such appointment on the terms herein provided.
3. Deposit and Investment of the Merger Consideration.
--------------------------------------------------
3.1 Simultaneously with the execution of this Agreement, Eller shall
deliver to the Escrow Agent the aggregate Merger Consideration, which includes
the aggregate Damages Escrow Merger Considerations, by wire transfer.
3.2 The Escrow Agent shall invest the aggregate Merger Consideration in
such money market accounts, United States Treasury obligations, and other
obligations guaranteed by the United States Government or an agency thereof, as
reasonably determined by Eller.
4. Disbursement Obligations.
------------------------
4.1 If the conditions set forth in Section 3.7(a) of the Merger
Agreement are satisfied on or prior to the Closing, the Escrow Agent shall
discharge the obligations of the Disbursement Agent set forth in Section 3.9 of
the Merger Agreement and, if applicable, Section 3.7(c) of the Merger Agreement.
A copy of such subsections is attached hereto as Exhibit B-1. If the conditions
set forth in Section 3.7(a) of the Merger Agreement are not satisfied on or
prior to the Closing, the Escrow Agent, shall discharge the obligations of the
Disbursement Agent set forth in Section 3.10 of the Merger Agreement. A copy of
such subsection is attached hereto as Exhibit B-2.
4.2 Except as otherwise set forth herein, during the first two (2) years
of this Agreement, the Escrow Agent, acting in its capacity as Disbursement
Agent, shall disburse to the Stockholders, pro rata in accordance with their
percentage interest in the Shares, the accrued interest from the Damages Escrow
Fund in eight (8) consecutive quarterly installments, commencing with April 1,
1998. Thereafter, the interest shall be paid to the Stockholders in accordance
with Section 8 below, subject to a prior right to distribution by Eller to
satisfy any interest owed to Eller pursuant to section 7.6 below.
5. Eller's Rights to Indemnification.
---------------------------------
5.1 Eller, the Company, and any other affiliate of either, shall be
entitled to indemnification from the Escrow Fund from and against all losses,
claims, demands, liabilities, obligations, damages, deficiencies, assessments,
judgments, payments, penalties, costs and expenses (including without limitation
reasonable attorneys fees, any amounts paid in investigation, defense or
settlement of any of the foregoing) (collectively, "Damages") incurred in
connection with, arising out of, resulting from or incident to, the following:
(a) any breach of a representation or warranty made by the Company the
Merger Agreement;
3
(b) any breach of a covenant or agreement of the Company set forth in
the Merger Agreement;
(c) any litigation pending against the Company on the Closing Date
other than the Van Wagner Litigation;
(d) except as disclosed in Schedule 4.2 to the Merger Agreement, any
option, warrant, call, commitment or other security or agreement of any
kind requiring the issuance of the capital stock of the Company or any
other security convertible into capital stock of the Company;
(e) the loss of the ability to utilize any federal or state net
operating loss carry forwards listed on Schedule 4.9 to the Merger
Agreement because of the tax treatment of any transaction resulting in
the transfer of an Excluded Asset (including the stock of BSON) from the
Company to BSON or any other party; and
(f) all fees payable to any party to a Bus Shelter Contract, if such
fees become payable as a result of consummation of the transactions
contemplated by the Merger Agreement.
5.2 Eller shall also be entitled to recover from the Damages Escrow Fund
Damages incurred in connection with, arising out of, resulting from or incident
to, the termination of the right to operate bus shelter displays that are
authorized by the Bus Shelter Contracts listed on Schedule 5.2 hereto if the
termination of such right results from any of the following:
(a) the failure to obtain from any party to a Bus Shelter Contract any
consent requested of such party to the indirect transfer of a Bus
Shelter Contract as a result of the transactions contemplated by the
Merger Agreement;
(b) the failure to obtain the renewal of any Bus Shelter Contract that
by its terms expires, resulting in the termination of Metro's operations
pursuant to such Bus Shelter Contract, during the term of this
Agreement; or
(c) the termination of any Bus Shelter Contract on Schedule 5.2 as a
result of the nonillumination of certain bus shelters thereunder or the
termination of the Redding Bus Areas Bus Authority Contract for failure
to provide any of the thirty (30) additional advertising benches
requested by the Redding Area Bus Authority, provided that Eller shall
have used Best Efforts to cure such default after receiving notice from
the third parties thereto.
Eller shall not be obligated to pursue litigation as a pre-requisite to its
entitlement to recover Damages under this Section 5.2. The amount of such
Damages shall be determined as follows:
4
(i) the number of bus shelter display faces that Eller is legally
entitled to operate on the Claim Expiration Date (including those
display faces not yet constructed by Eller Transit and display faces
that Eller voluntarily relinquishes the legal right to operate) for each
Category of Bus Shelter Contracts listed on Schedule 5.2 shall be
subtracted from (ii) the number of bus shelter display faces listed for
each Category on Schedule 5.2; and any resulting excess of (ii) over (i)
for each such Category shall be multiplied by the dollar amounts for
each Category as set forth on Schedule 5.2, provided that the foregoing
calculation shall be made on a contract-by-contract basis for all Bus
Shelter Contracts listed in Category I on Schedule 5.2.
6. PROCEDURE FOR ASSERTING CLAIM TO ESCROW FUND. Eller shall have the
--------------------------------------------
right to make one or more claims for Damages (a "Claim") on or prior to the
Claim Expiration Date by delivering a notice of such Claim (a "Claim Notice")
to the Stockholder Representatives and the Escrow Agent. Such Claim Notice shall
state with particularity (a) the basis for the Claim together with sufficient
facts to enable the Stockholder Representatives to reasonably evaluate the
Claim, and (b) Eller's estimate of the aggregate amount of the resulting
Damages. Upon notice of any Claim based on subsection (a), (b) or (f) of
Section 5.1 above, the Stockholder Representatives shall have thirty (30) days
to meet with any third parties for the purpose of resolving the Claim to Eller's
satisfaction before Eller shall resort to Arbitration pursuant to Section 15
below.
7. DETERMINATION OF VALID ELLER CLAIM; FINAL INSTRUCTION. A Final
-----------------------------------------------------
Instruction shall be delivered to the Escrow Agent with respect to a Claim under
the following circumstances and accompanied by the indicated documentation.
7.1 If the Stockholder Representatives dispute either the validity,
amount or calculation of the Claim, they shall give written notice of such
dispute to Eller, with a copy to the Escrow Agent, within twenty (20) Business
Days after the delivery of the Claim Notice by Eller to the Stockholder
Representatives. In such circumstances, no Final Instruction may be given to the
Escrow Agent except as provided in 7.3 or 7.4 below.
7.2 If the Stockholder Representatives fail to respond to the Claim
Notice within twenty (20) Business Days after it is delivered to the Stockholder
Representatives and the Escrow Agent, or if the Stockholder Representatives
notify the Escrow Agent that the Claim is not disputed, Eller shall have the
right to deliver to the Escrow Agent a Final Instruction with respect to the
Claim, signed only by Eller.
7.3 If the Stockholder Representatives and Eller reach an agreement on
the proper amount of the Claim, the Stockholder Representatives and Eller shall
give to the Escrow Agent a Final Instruction with respect to the Claim, signed
by both the Stockholder Representatives and Eller.
7.4 If the Stockholder Representatives and Eller are unable to reach an
agreement with respect to the proper determination of the Claim, the disputed
Claim shall be submitted by Eller
5
and the Stockholder Representatives to Arbitration pursuant to Section 15 below.
Upon final, nonappealable resolution of such disputed Claim, either the
Stockholder Representatives or Eller shall have the right to deliver to the
Escrow Agent a Final Instruction with respect to the Claim based on and in
compliance with the final, nonappealable resolution of the Claim, signed only by
the Stockholder Representatives or by Eller, and accompanied by a copy of any
arbitration award, or judgment or any court order with respect thereto.
7.5 Upon receipt of a Final Instruction in accordance with this
Section, the Escrow Agent shall disburse to Eller from the Damages Escrow Fund
such amount of Damages, if any, as shall be set forth in the Final Instruction,
and shall distribute any remaining portion of the Damages Escrow Fund in
accordance with Section 8 below. Under no circumstances shall the Escrow Agent
distribute any portion of the Damages Escrow Fund with respect to any Claim
Notice received by the Escrow Agent after the Claim Expiration Date.
7.6 Damages to which Eller is entitled pursuant to a Final Instruction
shall be paid at the end of the first calendar quarter following receipt of the
Final Instruction. Eller shall receive all interest earned on any portion of the
Damages Escrow Fund distributed to Eller as Damages pursuant to Section 5.2
above, and Eller shall receive such amount of the Damages Escrow Fund principal
to cover any shortfall in such interest payment.
8. DISTRIBUTION OF ESCROW FUND. If Eller fails to make a Claim on or prior
---------------------------
to the Claim Expiration Date, then as promptly as practicable thereafter (and in
no event later than ten (10) Business Days following the Claim Expiration Date),
the Escrow Agent shall disburse the Damages Escrow Fund (including any accrued
but unpaid interest thereon) to the Stockholders pro rata in accordance with
their respective ownership of Company Common Stock on the Closing Date. If
Eller timely makes a Claim, and if at or after the expiration of the Claim
Expiration Date, Eller's Claims (whether or not in dispute) aggregate less
than the remaining amount of the Damages Escrow Fund, then the Escrow Agent
shall deliver the remaining amount of the Damages Escrow Fund (less 110% of the
amount of Eller's Claims) to the Stockholders pro rata in accordance with their
respective ownership of Company Common Stock on the Closing Date, and the
balance, if any, after resolution of Eller's Claims. If, however, Eller timely
makes a Claim or Claims in accordance with Section 6 above, and if at the
expiration of the Claim Expiration Date, such Claim or Claims (whether or not in
dispute) aggregate more than the remaining amount of the Damages Escrow Fund,
then, only after the Escrow Agent's receipt of (and distributions of Damages
with respect to) Final Instructions for all such Claims, shall the Escrow Agent
deliver any remaining portion of the Damages Escrow Fund (including any interest
not distributed pursuant to Section 7.6 above) to the Stockholders pro rata in
accordance with their respective ownership of Company Common Stock on the
Closing Date.
9. RELIANCE BY ESCROW AGENT; LIABILITY OF ESCROW AGENT. The Escrow Agent
---------------------------------------------------
shall be protected in acting upon any written notice, request, waiver, consent,
certificate, receipt, authorization or other paper or document that the Escrow
Agent believes to be genuine and what it purports to be. The Escrow Agent may
confer with its own corporate or outside legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof, or
its duties hereunder, and shall incur no liability and shall be fully protected
in acting in accordance with the written opinions
6
of such counsel. The duties of the Escrow Agent hereunder will be limited to the
observance of the express provisions of this Agreement. The Escrow Agent will
not be subject to, or be obliged to recognize, any other agreement between the
parties hereto or directions or instructions not specifically set forth as
provided for herein. The Escrow Agent will not make any payment of disbursement
from or out of the Escrow Fund that is not expressly authorized pursuant to this
Agreement. The Escrow Agent may rely upon and act upon any instrument received
by it pursuant to the provisions of this Agreement that it reasonably believes
to be genuine and in conformity with the requirements of this Agreement. The
Escrow Agent undertakes to use the same degree of care and skill in performing
its services hereunder as an ordinary prudent person would do or use under the
circumstances in the conduct of his or her own affairs. The Escrow Agent will
not be liable for any action taken or not taken by it under the terms hereof in
the absence of breach of its obligations hereunder or gross negligence or
willful misconduct on its part. This Section also shall apply to the Escrow
Agent acting in the capacity of Disbursement Agent.
10. INDEMNIFICATION OF ESCROW AGENT. Eller, on the one hand, and the
-------------------------------
Stockholders collectively, on the other, will indemnify and hold the Escrow
Agent harmless from and against any and all losses, costs, damages or expenses
(including but not limited to, reasonable attorneys' fees) it may sustain by
reason of its service as Escrow Agent hereunder, and except such losses, costs,
damages or expenses (including but not limited to, reasonable attorneys' fees)
incurred by reason of such acts or omissions for which the Escrow Agent is
liable or responsible under Section 9 of this Agreement. This Section also shall
apply to the Escrow Agent acting in the capacity of Disbursement Agent. Any
indemnification amounts payable pursuant to this Section 10 shall be paid one-
half by Eller, on the one hand, and one-half solely from the Escrow Fund by the
Stockholders collectively, on the other.
11. STOCKHOLDER REPRESENTATIVES; SUCCESSOR STOCKHOLDER REPRESENTATIVES.
------------------------------------------------------------------
11.1 The Stockholders have made, constituted and appointed the
Stockholder Representatives as their agent and authorized and empowered them to
fulfill the role of Stockholder Representatives hereunder and under the Merger
Agreement (including any exhibit attached thereto). The Stockholder
Representatives shall act on the basis of majority vote, and any writing on
behalf of the Stockholders Representatives, including instructions and notices
under this Agreement, shall be valid and effective for all purposes if signed by
any two (2) Stockholder Representatives.
11.2 The Stockholders entitled to receive a majority of the Damages
Escrow Fund may remove the Stockholder Representatives at any time. If a
Stockholder Representative should die, resign, become incapacitated or be
removed by the Stockholders pursuant to this Section 11.2, his successor shall
be Mark Boileau; and if he or another Stockholder Representative should refuse
to serve, die, resign, become incapacitated, or be removed, the next successor
shall be Michael Slater. Thereafter, the remaining Stockholders entitled to
receive a majority of the Damages Escrow Fund shall appoint each successor
within twenty-one (21) days of a Stockholder Representative's resignation,
death, incapacity or removal. Such successor shall be either a Stockholder or
shall otherwise be acceptable to Eller. If the Stockholders fail to appoint a
successor within such twenty-one (21) day period, then Eller shall have the
right to appoint the successor from among the
7
Stockholders. The choice of a successor Stockholder Representative appointed in
any manner permitted above shall be final and binding upon all of the
Stockholders. The decisions and actions of any successor Stockholder
Representative shall be, for all purposes, those of a Stockholder Representative
as if originally named herein.
11.3 Each Stockholder has made, constituted and appointed the
Stockholder Representatives as such person's true and lawful attorney in fact
and agent, for such person and in such person's name, (a) to receive all notices
and communications directed to such Stockholder under this Agreement and the
Merger Agreement (and any exhibit attached thereto) and any document executed in
connection therewith, (b) to execute and deliver any and all documents required
to be executed and delivered by such holder pursuant to this Agreement and the
Merger Agreement (and any exhibit attached thereto) in order to effect the
transactions contemplated hereby and thereby, and (c) to execute and deliver all
instruments and documents of every kind incident to the foregoing with the same
effect as such Stockholder could do personally.
11.4 The designation of the Stockholder Representatives as
attorney-in-fact is coupled with an interest and is binding upon the
Stockholders notwithstanding the death, incapacity or dissolution of any
Stockholder. If any such event shall occur prior to the completion of the
transactions contemplated by this Agreement, the Stockholder Representatives
are, nevertheless, to the extent that they are legally able to do so, authorized
and directed to complete all transactions and act pursuant to this authority as
if such event had not occurred. Eller is entitled to deal solely with the
Stockholder Representatives in connection with this Agreement and the Merger
Agreement (and any exhibit attached thereto), and is entitled to rely upon the
provisions hereof and the authority granted to the Stockholder Representatives
to act on behalf of the Stockholders.
11.5 The Stockholder Representatives' acceptance of their duties under
this Agreement and the Merger Agreement (and any exhibit attached thereto) is
subject to the following terms and conditions, which the parties hereto agree
shall govern and control with respect to the rights, duties, liabilities and
immunities of the Stockholder Representatives (but not in their capacity as a
Stockholder or as an officer, director, or employee of the Company):
(a) The Stockholder Representatives make no representation and
have no responsibility as to the validity of this Agreement, the Merger
Agreement (or any exhibit attached thereto) or of any other instrument
referred to herein, or as to the correctness of any statement contained
herein, and they shall not be required to inquire as to the performance
of any obligation under this Agreement or the Merger Agreement (or any
exhibit attached thereto).
(b) The Stockholder Representatives shall be protected in acting
upon written notice, request, waiver, consent, receipt or other paper or
document, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth of any
information therein contained, which they in good faith believe to be
genuine and what it purports to be.
8
(c) The Stockholder Representatives shall not be liable for any
error of judgment, or for any act done or step taken or omitted by
them in good faith, or for any mistake of fact or law, or for anything
which they may do or refrain from doing in connection therewith,
except as a result of their own gross negligence or willful
misconduct.
(d) The Stockholder Representatives may consult with competent
and responsible legal counsel selected by them and they shall not be
liable for any action taken or omitted by them in good faith in
accordance with the advice of such counsel.
(e) The Stockholders shall bear pro rata all expenses incurred
by the Stockholder Representatives in connection with their duties
hereunder and under the Merger Agreement (and any exhibit attached
thereto) and shall indemnify them against and save them harmless from
any and all claims, liabilities, costs, payments and expenses,
including fees of counsel (who may be selected by the Stockholder
Representatives), for anything done or omitted by them in the
performance of this Agreement or the Merger Agreement (and any exhibit
attached thereto), except as a result of their own gross negligence or
willful misconduct.
(f) The Stockholder Representatives shall have no duties or
responsibilities except those expressly set forth herein and in the
Merger Agreement (or any exhibit attached thereto). They shall not be
bound by any modification under this Agreement or the Merger Agreement
(or any exhibit attached thereto) unless in writing and signed by the
other parties hereto or thereto, and if their duties as Stockholder
Representatives hereunder or thereunder are affected, unless they
shall have given prior written consent thereto.
12. Fees and Expenses of the Escrow Agent. All fees of the Escrow Agent
-------------------------------------
and Disbursement Agent for its services hereunder, together with any expenses it
reasonably incurs in connection with this Agreement, shall be paid by Eller.
13. Resignation of Escrow Agent. The Escrow Agent and the Disbursement
---------------------------
Agent may resign from its duties hereunder by giving each of the parties hereto
not less than sixty (60) days prior written notice of the effective date of such
resignation. A substitute Escrow Agent and Disbursement Agent shall be appointed
by mutual agreement of Eller and the Stockholder Representatives to fulfill the
duties of the Escrow Agent and Disbursement Agent hereunder for the remaining
term of this Agreement. If on or before the effective date of such resignation,
a substitute Escrow Agent has not been appointed, the Escrow Agent shall
thereupon deposit the Escrow Fund into the registry of a court of competent
jurisdiction.
14. Designees for Instructions. Eller, may, by notice to the Escrow Agent
--------------------------
and Disbursement Agent, designate one or more persons who will execute notices
and from whom the Escrow Agent and Disbursement Agent may take instructions
hereunder. Such designations may be changed from time to time upon notice to the
Escrow Agent and Disbursement Agent from Eller. The
9
Escrow Agent and Disbursement Agent shall be entitled to rely conclusively on
any notices or instructions from any person so designated by Eller.
15. Arbitration. Any dispute arising under this Agreement shall be
-----------
resolved by binding arbitration conducted in Los Angeles, California, after
written demand from one party to the other. If the parties cannot agree on a
single arbitrator within thirty (30) days after written demand for arbitration,
the arbitrator shall be selected pursuant to the rules and regulations of the
American Arbitration Association governing commercial transactions. The
arbitration proceeding shall be conducted within ninety (90) days of any demand
for arbitration. If reasonable, as determined by the arbitrator, it shall be
conducted on a single day with each party being allowed an equal amount of time
to present its case. No discovery shall be allowed except that each party shall
submit to the other and to the arbitrator, no later than thirty (30) days prior
to the proceeding, copies of all documents to be presented, the names and
occupations of all proposed witnesses, and a written summary of the substance of
their proposed testimony. The arbitrator shall exclude any evidence not
presented within such time period to the other party and the arbitrator as
required by this Section. The parties shall submit such legal briefing or other
statements of position as the arbitrator may request. Eller shall pay one-half
of the costs of any such arbitrator, and the Stockholders shall be responsible
for paying one-half of such costs solely out of the Escrow Fund. Any arbitration
decision or award shall be final and not subject to appeal to any court of law,
except in the case of a manifest error in the application of law. Eller and the
Stockholder Representatives on behalf of the Stockholders specifically covenant
to one another that they shall not commence litigation against one another with
respect to any dispute subject to arbitration hereunder for any reason except as
may be necessary to enforce this Section or an arbitrator's decision or award.
In the event litigation shall be required to enforce this Section or the
arbitrator's decision or award, the prevailing party shall be paid its
reasonable attorneys' fees and costs, provided that, Eller's recovery thereof
shall be limited solely to the Escrow Fund.
16. Inspection. All property held as part of the escrow shall at all times
----------
be clearly identified as being held by the Escrow Agent and Disbursement Agent
hereunder. Any party hereto may at any time during normal business hours (with
reasonable notice) inspect any records or reports relating to the Merger
Consideration.
17. Notices. All notices, requests, demands and other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g.; Federal Express); and
---
upon receipt, if sent by certified or registered mail, return receipt requested.
Notwithstanding the foregoing, a Claim Notice delivered pursuant to Section 6
hereof and a Final Instruction provided pursuant to Section 7 hereof shall be
deemed to have been duly given only if delivered personally, by recognized
overnight delivery or by certified registered mail and if receipt of such Claim
Notice or such Final Instruction, as the case may be, was acknowledged in
writing. In each case notice shall be sent to:
10
If to Eller:
Scott S. Eller, President
Eller Media Company
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Fax: 602/957-8602
With a copy to:
Paul J. Meyer, General Counsel
Eller Media Company
2850 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Fax: 602/381-5740
If to the Stockholder Representatives:
Scott A. Kraft, President
and Chief Executive Officer
c/o Bustop Shelters of Nevada
5425 South Valley View, Suite 103
Las Vegas, NV 89118
Fax: 702/795-3658
With a copy to:
Martin T. Goldblum
Troy & Gould, P.C.
1801 Century Park East
Suite 1600
Los Angeles, CA 90067-2302
Fax: 310/201-4746
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
18. Assignment; Binding Effect. Neither this Agreement not any of the
--------------------------
rights or obligations hereunder may be assigned by any party without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
19. Amendment and Termination. This Agreement may be amended or modified
-------------------------
by and upon written notice to the Escrow Agent and Disbursement Agent given
jointly by Eller and the Stockholder Representatives, but the duties and
responsibilities of the Escrow Agent and
11
Disbursement Agent may not be increased without its written consent. This
Agreement will terminate on the date on which all the Escrow Fund has been
distributed in accordance with the terms set forth herein.
20. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. Severability and Further Assurances. This Agreement constitutes the
-----------------------------------
entire agreement among the parties and supersedes all prior and contemporaneous
agreements and undertakings on the parties in connection herewith. No failure or
delay of the Escrow Agent and Disbursement Agent in exercising any right, power
or remedy may be, or may be deemed to be, a waiver thereof; nor may any single
or partial exercise of any right, power or remedy preclude any other or further
exercise of any right, power or remedy. In the event that any one or more of the
provisions contained in this Agreement, shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement. Each of the parties hereto shall,
at the request of the other party, deliver to the requesting party all further
documents or other assurances as may reasonably be necessary or desirable in
connection with this Agreement.
22. Titles. The titles, captions or headings of the Sections herein are
------
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
23. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of California without regard to the
principles of conflicts of laws.
[SIGNATURE PAGE TO FOLLOW]
12
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date first written above.
ELLER MEDIA COMPANY
By _____________________________
Scott S. Eller, President
ESCROW AGENT
By _____________________________
Name:
Title:
STOCKHOLDER REPRESENTATIVES
By _____________________________
Scott A. Kraft
By: _____________________________
Allan L. Ross, M.D.
By: _____________________________
Robert C. Lamb
13
SCHEDULE 5.2
I. Damages for the net loss of the legal entitlement to operate less than the
number of advertising display faces set forth after each of the following Bus
Shelter Contracts shall be $13,000.00 per advertising display face:
- Buena Park 176 - Newport Beach 42
- County of Los Angeles 716 - Seal Beach 54
- Huntington Beach 322
II. Damages for the net loss of the legal entitlement to operate less than an
aggregate of 988 advertising display faces under the following Bus Shelter
Contracts shall be $13,000.00 per advertising display face:
LOS ANGELES COUNTY
------------------
- Diamond Bar - Signal Hill
- Glendale Community - Pomona
ORANGE COUNTY
-------------
- Brea - Mission Viejo
- County of Orange - Orange Mall
- Disneyland Hotel - Santa Ana
- Fountain Valley - Stanton
- Garden Grove - Westminster #1
- La Habra #1 - Westminster #2
- La Habra #2 - Westminster Mall
- Laguna Hills
SAN BERNARDINO COUNTY
---------------------
- Sunrise Airport Parking (Ontario) - Victor Valley College
SAN DIEGO COUNTY
----------------
- Mira Costa College (Oceanside) - Oceanside
SHASTA COUNTY
-------------
- Bus Authority
14
III. Damages for the loss of the legal entitlement to operate less than an
aggregate of 1,124 advertising display faces under the following Bus
Shelter Contracts shall be $11,000.00;
LOS ANGELES COUNTY
------------------
. AVTA (Lancaster) . Baldwin Park
. College of the Canyon . Commerce
(Santa Clarita) . Grants Parking
. Harvey Capital (Commerce) . Hawaiian Gardens
. Huntington Park . Lakewood
. Lawndale . Montebello
. Norwalk . San Fernando
. Santa Clarita . Santa Fe Springs
. South El Monte
SAN BERNARDINO COUNTY
---------------------
. City of San Bernardino . County of San Bernardino
. Fontana . Grand Terrace
. Ontario #1 . Rialto
RIVERSIDE COUNTY
----------------
. Corona . Moreno Valley
NOTE: No adjustment shall be made for the loss of advertising display faces
under any other Bus Shelter Contract.
15