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Exhibit 10.10.1
AGREEMENT FOR PURCHASE
AND SALE OF STOCK
THIS AGREEMENT made January 9, 1998, between and among NEBRASKA BOOK
COMPANY, INC., a Kansas corporation ("NBC") and XXXXXX X. XXXXXX, an individual
residing in Princeton, New Jersey, and XXXXXX X. XXXXXX, as trustee of the
Xxxxxx X. Xxxxxx Grantor Trust, and XXXXXX X. XXXXXX, as trustee of the Xxxxxxxx
X. Xxxxxx Grantor Trust (referred to herein individually as a "Shareholder" and
collectively as the "Shareholders"), who collectively own all of the issued and
outstanding stock of the COLLEGIATE STORES CORPORATION (the "Company"), a New
Jersey corporation, and is made with reference to the following:
A. Shareholders own all of the issued and outstanding shares of capital
stock of the Company;
B. Shareholders desire to sell all of the shares of capital stock of the
Company to NBC; and
C. NBC desires to buy from Shareholders all of the issued and outstanding
shares of capital stock of the Company;
NOW, THEREFORE, for and in consideration of the foregoing premises,
the mutual covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
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1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
herein contained, at the Closing (as hereinafter defined) Shareholders shall
sell, transfer, assign and deliver to NBC, and NBC shall purchase from
Shareholders, all of the issued and outstanding shares of capital stock of the
Company, $0 par value, consisting of ninety (90) shares of voting common stock
and one thousand two hundred seventy-five (1,275) shares of nonvoting common
stock (collectively, the "Stock").
2. CLOSING; CLOSING DATE. The closing ("Closing") of the purchase
and sale of Stock and of the other transactions contemplated herein shall take
place on or before January 23, 1998, at 10:00 a.m., local time, at the offices
of MarketSource Corporation, 00 Xxxxx Xxxx, in Cranbury, New Jersey, or at such
other time, date or place as may be mutually agreed upon by Shareholders and
NBC. The day of the Closing is sometimes referred to herein as the Closing Date.
3. PURCHASE PRICE; PAYMENT; ADJUSTMENTS.
3.1 Purchase Price. The total consideration to be paid to
Shareholders for the Stock shall consist of the sum of Four Million Dollars
($4,000,000) (the "Cash Consideration") subject to adjustment as provided
herein.
3.2 Payment Terms. At the Closing, NBC shall pay to
Shareholders the Cash Consideration less an amount equal to One Hundred Thousand
Dollars ($100,000) (the "Deferred Consideration"). The Deferred Consideration
shall be payable, subject to the terms and provisions of Section 3.3 hereof on
or before six (6) months after the Closing Date. Cash payments shall be made by
cashier's check, certified funds or wire transfer, as designated by the
Shareholders subject to any
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adjustments required herein to be made to the Cash Consideration by the
provisions of this Agreement.
3.3 Deferred Consideration. The "Deferred Consideration"
payable to Shareholders shall be subject to reduction as provided in Section 9.3
of this Agreement. If NBC incurs any Damages as described in Section 9.1, NBC
shall have the right to set-off any such amounts against the Deferred
Consideration as described in Section 9.3 in addition to any other remedies to
which it may be entitled. As of the Closing, the Deferred Consideration shall be
deposited into an interest bearing trust account with U.S. Bank, N.A., Lincoln,
Nebraska, subject to the terms and conditions of the Escrow Agreement attached
hereto as Exhibit A.
3.4 Net Worth Deficiency. Shareholders shall be liable to NBC
on a dollar for dollar basis for the entire amount that the stockholders' equity
of the Company as of the Closing Date is less than zero dollars ($ 0) on the
Closing Balance Sheet (such amount less than zero dollars is herein referred to
as the "Net Worth Deficiency"), provided that the maximum amount of the
Shareholders' liability for a Net Worth Deficiency shall not exceed One Hundred
Thousand Dollars ($100,000). For this purpose, "stockholders' equity of the
Company" shall be the difference of total assets minus total liabilities of the
Company, determined in accordance with generally accepted accounting principles;
provided that the amount of the Net Worth Deficiency shall be adjusted by adding
back all or some portion of the Tax Liability in Section 3.5 hereof in an amount
up to but not to exceed the amount of the Net Worth Deficiency, and the Net
Worth Deficiency after this adjustment shall
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be the basis for determining the Shareholders' liability to the Company under
this Section 3.4.
3.5 Distribution for Income Taxes. The parties acknowledge
that the Company has elected to be taxed as an "S" Corporation under the
Internal Revenue Code of 1986, as amended (the "Code"). Prior to Closing, the
Company shall distribute to the Shareholders the sum of $553,026.11 (the "Tax
Estimate"), which is an amount estimated by the Shareholders to equal the amount
of federal and state income taxes due by the Shareholders based on their
estimate of $1,119,033 of taxable income of the Company for 1997, and based on
their estimate of $0 of taxable income of the Company for the portion of 1998
prior to Closing. The Tax Estimate is based on the pro forma income statement
and balance sheet attached hereto as Exhibit B. The amount of income tax shall
be calculated at a combined federal and state effective rate of 49.42% times the
actual taxable income of the Company for such periods and the aggregate amount
of such income tax for both 1997 and 1998 is herein referred to as the "Tax
Liability." A copy of the 1997 and 1998 income tax returns will be sent to the
Shareholders upon filing by the Company. If the Tax Liability based on this
calculation is less than the Tax Estimate, the excess shall be promptly refunded
to the Company by the Shareholders; and if the Tax Liability based on this
calculation exceeds the Tax Estimate, NBC shall cause the Company to distribute
to the Shareholders additional sums equal to the excess. The parties shall
mutually agree upon an independent accounting firm to prepare the Company's
returns. An election shall be made pursuant to ss. 1362(e)(3) of the Code to
taxes for
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1998 to be based on an actual physical closing of the books of the Company as of
the Closing Date.
4. PHYSICAL INVENTORY; CLOSING BALANCE SHEET; WARRANTEES. A physical
inventory for the Company shall be taken at the time of Closing, with
representatives of NBC and Shareholders participating and, within thirty (30)
days after the Closing, a balance sheet and related financial statements of the
Company (the "Closing Balance Sheet") shall be prepared as of the Closing Date
in accordance the generally accepted accounting principles consistently applied
to fairly present the financial condition, assets and liabilities of the Company
as of such date. In the event that NBC determines that there is a Net Worth
Deficiency, it shall notify Shareholders, who shall have the right to have the
Closing Balance Sheet reviewed by their independent accountants at their sole
cost and expense. Shareholders have prepared a pro forma balance sheet as of
December 31, 1997, as set forth in the pro forma financial statements attached
as Exhibit B which was prepared consistent with past practices of the Company.
5. REPRESENTATIONS AND WARRANTIES.
5.1 By Shareholders. Except as otherwise qualified in the
Disclosure Schedule attached hereto as Exhibit C and incorporated herein as the
same may be amended between the date hereof and the Closing Date (such
qualifications making specific reference to the respective (sub)section of this
Agreement to which they apply) (the "Disclosure Schedule"), Shareholders hereby
jointly and severally represent and warrant to NBC that the following
representations and warranties are true and correct in all material respects,
and shall be deemed remade at and as of the
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Closing Date, provided that representations and warranties herein which refer to
the Disclosure Schedule shall only be true and correct as of the Closing Date:
(a) Organization, Power and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of New Jersey, and has all requisite corporate power and authority to own or
hold under lease its properties and assets and to carry on its business as now
conducted. The Company is qualified to do business and is in good standing in
every jurisdiction in which a failure to so qualify could have a material
adverse effect on its assets, business or prospects. The Company possesses all
governmental and other permits, licenses and approvals necessary to own or lease
its properties and assets and to carry on its business as now conducted, and
such permits, licenses and approvals are listed on the Disclosure Schedule. True
and complete copies of the articles of incorporation, as amended to date, and
the by-laws, as amended to date, of the Company have been furnished to NBC.
(b) Authorization by Shareholders. Shareholders, and each of
them, have full power and authority to execute and deliver this Agreement and
all other documents to be executed and delivered pursuant hereto and to
consummate the transactions contemplated hereby. This Agreement constitutes the
valid and binding agreement of Shareholders, enforceable against each
Shareholder in accordance with its terms, except to the extent limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors' rights. The trust Shareholders are duly
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organized, validly existing, and the trustee thereof has the power and authority
to execute, deliver and perform hereunder.
(c) Authorization by Company. The execution and delivery by
the Company of each document described in this Agreement to which the Company is
a party and the performance by each of its obligations thereunder have been duly
authorized and approved by all necessary corporate action prior to the date of
this Agreement. Each such document to which the Company is a party has been duly
and validly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights.
(d) No Violation By Company. The execution, delivery and
performance by the Company of each document described in this Agreement to which
the Company is a party, the consummation by the Company of the transactions
contemplated thereby and the compliance by the Company with the provisions
thereof, will not, with or without the giving of notice or the passage of time,
(a) violate any law, ordinance, rule or regulation applicable to the Company,
(b) violate any judgment, writ, injunction, order or decree of any court,
arbitrator or governmental authority applicable to the Company or (c) result in
the breach of or conflict with any term, covenant, condition or provision of,
result in the modification or termination of, constitute a default or an event
of acceleration under, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company pursuant to its articles of incorporation or by-
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laws, or any commitment, contract, indenture, mortgage, note or other agreement
or instrument to which the Company is a party or by which any of its properties
or assets are bound.
(e) No Violation by Shareholders. The execution, delivery and
performance by Shareholders of this Agreement, the consummation by the
Shareholders of the transactions contemplated hereby and the compliance by the
Shareholders with the provisions hereof and of each document described in this
Agreement to which the Shareholders are parties, will not, with or without the
giving of notice or the passage of time, (a) violate any law, ordinance, rule or
regulation applicable to the Shareholders, (b) violate any judgment, writ,
injunction, order or decree of any court, arbitrator or governmental authority
applicable to Shareholders or (c) result in the breach of or conflict with any
term, covenant, condition or provision of, result in the modification or
termination of, constitute a default or an event of acceleration under, or
result in the creation or imposition of any lien, security interest, charge or
encumbrance upon the Stock pursuant to any commitment, contract, indenture,
mortgage, note or other agreement or instrument to which any Shareholder is a
party or by which the Stock is bound. No consent of, or notice to, any federal,
state, or local authority, or any other person or entity is required to be
obtained or made by any Shareholder in connection with the execution, delivery
and performance of this Agreement and the other documents to be executed,
delivered and performed pursuant hereto by Shareholders.
(f) Stock Ownership. Shareholders are the lawful and
beneficial owner of record of 1,365 shares of Stock free and clear of all
pledges,
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liens, encumbrances, claims and other charges of every kind, including, without
limitation, subscriptions, options, warrants, rights, or other agreements
granting to any person, firm or corporation any interest in or right to acquire
from any Shareholder at any time, or upon the happening of any stated event, any
shares (or interests therein) of the Stock owned by Shareholders.
(g) Accuracy of Closing Balance Sheet. The Closing Balance
Sheet will present fairly the financial condition, assets and liabilities of the
Company in accordance with generally accepted accounting principles consistently
applied as of the Closing Date, and the net worth of the Company shall not be
less than zero dollars ($ 0) as described in Section 3.4 hereof, and subject to
the adjustment, if any, provided in Section 3.4.
(h) Capitalization.
(i) Shares. The authorized capital stock of the Company
consists of 2,500 shares of common stock, $0 par value, of which ninety
(90) shares of voting common stock, and no more, and one thousand two
hundred and seventy-five (1,275) shares of nonvoting common stock, and no
more, are issued and outstanding and owned of record by the Shareholders.
No other shares are issued and outstanding and owned of record by the
Shareholders or anyone else.
(ii) No Restrictions. All of the issued and outstanding
shares of capital stock of the Company are duly authorized, validly issued
and outstanding, fully paid and nonassessable, and have not been issued in
violation of any shareholder rights under applicable law, or its articles
of
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incorporation or by-laws, or the terms of any agreement to which it is a
party or by which it is bound. All of the issued and outstanding shares of
the Company's capital stock have been issued in compliance with all
applicable securities laws. The Company has no outstanding subscriptions,
options, warrants, rights or other agreements granting to any person, firm
or corporation any interest in or right to acquire from it at any time, or
upon the happening of any stated event, any shares of the capital stock of
the Company, or any interests therein.
(i) Investments. The Company does not own, directly or
indirectly, any stocks, bonds or securities or any equity or other proprietary
interest in any corporation, partnership, joint venture, business enterprise or
other entity of any nature whatsoever.
(j) Financial Statements. Shareholders have delivered to NBC
true and complete copies of (i) the balance sheets of the Company as at December
31, 1996, and the related statements of income and funds flow (collectively, the
"1996 Financial Statements"); and (ii) the unaudited balance sheets of the
Company as at the most recent month-end for which such statements are presently
available, and the related statements of income and funds flow (collectively,
together with all subsequent unaudited month-end statements, referred to as the
"Interim Statements"). Shareholders shall cause additional unaudited month-end
statements to be prepared and delivered to NBC as soon as reasonably possible
after the end of such period. A Closing Balance Sheet as defined in Section 4
hereof and related statements of income and funds flow for the period then ended
shall also be
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prepared. All such balance sheets and related financial statements have been or
will be prepared in accordance with generally accepted accounting principles
consistently applied and have or will fairly present the assets and liabilities
of the Company as at the dates thereof and the results of the operations of the
Company for the periods covered thereby.
(k) Liabilities and Obligations. The Company has no
liabilities or obligations of any nature whatsoever, whether arising out of
contract, tort, statute or otherwise, including federal or state income tax
liabilities, which are not reflected, reserved against, or given affect to, in
the 1996 Financial Statements except: (i) those disclosed specifically in the
Disclosure Schedule; (ii) those reflected, reserved against or given effect to
in the Interim Statements; and (iii) liabilities and obligations reasonably
incurred in the ordinary course of the Company's business between the date of
the Interim Statements and the date hereof. There is no basis for assertion
against the Company of any liabilities or obligations not reflected, reserved
against or given effect to in the 1996 Financial Statements, the Interim
Statements or in the Disclosure Schedule except for liabilities and obligations
described in clause (iii) of this paragraph (k), and Shareholders shall disclose
or cause to be disclosed all such liabilities or obligations to NBC's
representatives preparing the Closing Balance Sheet.
(l) Absence of Certain Changes. Since December 31, 1996, there
has not been: (i) any material adverse change in the condition (financial or
otherwise), results of operations, assets, liabilities, or business of the
Company; (ii) any damage, destruction or loss (whether or not covered by
insurance) adversely
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affecting the properties, assets, liabilities, or business of the Company; (iii)
any declaration, setting aside, or payment of any dividend or other distribution
in respect of the capital stock of the Company or any direct or indirect
redemption, retirement purchase or other acquisition of any of such capital
stock or any issuance of shares of capital stock or the granting, issuance or
exercise of any right, warrant, option or similar commitment relating to the
Company's authorized or issued capital stock; (iv) any increase in the
compensation, commissions or perquisites payable or to become payable by the
Company to any director, officer, employee or agent of the Company other than
increases consistent with past practices in the ordinary course of business, or
any payment of any bonus (other than payments consistent with past practices in
the ordinary course of business), profit sharing or other extraordinary
compensation to any employee of the Company; (v) any change in the accounting
methods or practices followed by the Company or any change in the amortization
policies or rates theretofore adopted by the Company; (vi) any cancellation of
the debts owed to or claims held by the Company; or (vii) any sale, lease,
abandonment or other disposition by the Company of any real property or (other
than in the ordinary course of business), of any machinery, equipment or other
operating properties, or any intangible assets utilized in the business of the
Company. In addition, Shareholders shall not make or cause any such changes
through the Closing Date, and they shall report all such changes that any
Shareholder becomes aware of to NBC's representatives preparing the Closing
Balance Sheet.
(m) Tax Returns and Reports. All federal, state, local and
foreign income, excise, property, sales, payroll and other tax returns and
reports
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required to be filed by the Company (the "Tax Returns") have been filed with the
appropriate governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, and all such returns and reports properly
reflect the taxes owed by the Company for the periods covered thereby. All
federal, state, local and foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions which are
called for as due by the Tax Returns to any taxing authority from the Company
(the "Taxes"), have been properly accrued or paid, provided that as an "S"
corporation, the Company has not accrued or paid any federal or state income
taxes. The Company has not received any notice of assessment or proposed
assessment by the Internal Revenue Service or any other taxing authority in
connection with any Tax Returns and there are no pending tax examinations of or
tax claims asserted against the Company or its properties. There are no tax
liens on any of the properties or assets of the Company except for liens of
current taxes not yet due and payable. There is no basis for any additional
assessment of any Taxes. The Company has not waived any law or regulation
fixing, or consented to the extension of, any period of time for assessment of
any Taxes which waiver or consent is currently in effect.
(n) Title and Condition of Assets. The Company owns and has
good marketable title to all of its properties and assets, including those
assets and properties reflected in the 1996 Financial Statements and the Interim
Statements and the Closing Balance Sheet and all properties and assets acquired
by it after the respective dates thereof, free and clear of all mortgages,
liens, pledges, charges or encumbrances or other third party interests of any
nature whatsoever, except for
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(i) the lien of current taxes not yet due and payable, (ii) properties and
assets disposed of by the Company since the respective dates thereof in the
ordinary course of business for fair value, and (iii) such secured indebtedness
as is disclosed in the 1996 Financial Statements or the Interim Statements or
the Closing Balance Sheet. The properties and assets of the Company that are
utilized in the operation of its business (including all buildings), are in good
operating condition and repair, normal wear and tear excepted, and usable in the
ordinary course of its business and conform to all applicable statutes,
ordinances and regulations relating to their construction, use and operation.
(o) Real Estate and Leases. The Company owns no real property.
There is set forth in the Disclosure Schedule a brief description of all real
estate (including buildings and improvements) leased by the Company according to
the character of the property and the location thereof. The Company has good and
marketable title to such leased real estate, in each case free and clear of any
encumbrances whatsoever except as set forth on the Disclosure Schedule or the
lien of current taxes not yet due and payable. There is also set forth in the
Disclosure Schedule a brief description (including in each case the annual
rental payable, the expiration date, a brief description of the property covered
and the name of the lessor, including for each lessor in which any Shareholder
has, directly or indirectly, any beneficial interest, and a description of the
extent of such interest) of every lease or agreement (written or oral) under
which the Company is lessee of, or holds or operates, any property, real or
personal, owned by any third party. Each of such leases and agreements is in
full force and effect and constitutes a legal, valid and
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binding obligation of the respective parties thereto. Neither the Company nor
any other party thereto is in default under any such lease or agreement nor has
any event occurred which with the passage of time or giving of notice would
constitute such a default. To the best of Shareholders' knowledge, the real
property and the buildings thereon utilized by the Company in the conduct of its
business do not violate any present building, zoning or other laws or
ordinances, or any agreements applicable thereto, and no notice of any such
violation has been received by the Company.
(p) Contracts. All written or oral contracts, agreements,
leases, mortgages and commitments ("Contracts"), to which the Company is a party
or by which it may be bound (including without limitation, any and all guaranty
and indemnification Contracts; warranty Contracts; marketing, dealership,
distributorship, franchise and similar Contracts; powers of attorney; patent,
trademark and similar licenses; real and personal property leases, indentures,
deeds of trust, mortgages, chattel mortgages and similar Contracts; conditional
sales Contracts; labor and collective bargaining Contracts; employment
Contracts; and pension, profit sharing, bonus, incentive, deferred compensation,
group insurance, severance pay, retirement or other employee benefit Contracts
to which the Company is a party, or under which the Company may be obligated, or
to which the Company or any of the rights, properties or assets of the Company
may be subject or bound), but (i) excluding Contracts which involve a payment to
or by the Company of less than $1,000 and which can be terminated by the Company
within 30 days after written notice without liability or penalty to the Company
and (ii) excluding sales orders entered into in the ordinary course of business
involving future payments to the Company of less than
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$1,000 individually and (iii) excluding purchase orders entered into in the
ordinary course of business involving future payment by the Company of less than
$5,000 individually, are listed and briefly described in the Disclosure
Schedule. All Contracts constitute legal, valid and binding obligations of the
respective parties thereto, are in full force and on the date hereof, and
neither the Company nor any other party thereto has violated any provision of,
or committed or failed to perform any act which with notice, lapse of time or
both would constitute a default under the provisions of any Contract, the
termination of which could have an adverse effect upon the assets, liabilities,
financial condition, business or results of operations of the Company. Correct
and complete copies of all written Contracts disclosed on the Disclosure
Schedule have been made available to NBC.
(q) Inventory. The inventory of the Company reflected in the
1996 Financial Statements and the Interim Statements and to be reflected in the
Closing Balance Sheet, and the inventory acquired since the dates thereof
consists of items of quantity and quality which are usable and salable in the
ordinary course of the business of the Company consistent with past practice at
prices at least equal to the values on its books.
(r) Receivables. All accounts receivable of the Company shown
on the 1996 Financial Statements and the Interim Statements and on the Closing
Balance Sheet (except to the extent reserved against thereon as being
uncollectible) and any such receivables which arose since the respective dates
thereof (except to the extent reserved against on the books and records of the
Company as being uncollectible consistent with past practices) are valid
receivables subject to no
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setoffs or counterclaims. The amount of vendor credits are true and correct and
the Company shall be entitled to the entire amount of each such credit against
future purchases.
(s) No Default, Violation or Litigation. The Company is not in
violation of any law or order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitation, laws, regulations, orders and restrictions
applicable to environmental standards and controls, wages and hours, civil
rights and occupational health and safety), which violation would have an
adverse effect upon the assets, liabilities, financial condition, or results of
operation of the Company or its right to conduct its business as presently
conducted, nor has it received any notice of noncompliance. There are no
lawsuits, proceedings, claims or governmental investigations pending or
threatened against, or involving the Company or its properties or business.
There is no basis for any action which would have an adverse effect upon the
assets, liabilities, financial condition, or results or operations of the
Company or its right to conduct its business as presently conducted. There are
no judgments, consents, decrees, injunctions, or any other judicial or
administrative mandates outstanding against the Company which could adversely
affect the assets, liabilities, financial condition, or operations of the
Company or its right to conduct its business as presently conducted.
(t) Bank Accounts. The Disclosure Schedule sets forth a list
of all accounts and deposit boxes maintained by the Company at any bank or other
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financial institution and the names of the persons authorized to effect
transactions in such accounts and with access to such boxes.
(u) Insurance. The Disclosure Schedule contains a list of all
insurance policies (specifying the insurer, the amount of the coverage, the type
of insurance, the policy number and any pending claims thereunder) maintained by
or on behalf of the Company on its properties, assets, business or personnel.
All such policies are in full force and effect, and the Company is not in
default with respect to any provision contained in any insurance policy, nor
failed to give any notice or present any claim thereunder in due and timely
fashion. The Company will keep all such policies in full force and effect to the
Closing Date.
(v) Employment and Labor Relations. The Company is not a party
to or otherwise bound by any contracts, agreements or other commitments
respecting employment or compensation of any of its officers, directors, agents
or employees. There is no unfair labor practice complaint, labor disturbance or
other controversy respecting persons or past employees pending, threatened or
proposed against, or affecting the business of the Company, and no Shareholder
has knowledge of any facts or circumstances which would indicate that any
claims, complaints or litigation could be brought against the Company in
connection with employment matters. To the best of Shareholders' knowledge, the
Company is in compliance with all laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and it is not
engaged in any unfair labor practice. The Company is not a party to any
collective bargaining agreement with any labor union or organization, and none
of the employees of the Company are represented by
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any labor union or organization. The Disclosure Schedule lists all current
full-time employees and part-time employees, showing the date each employee
started working for the Company and showing his or her current hourly or monthly
earnings.
(w) Employee Benefits. For purposes of this Agreement, the
term "Employee Plan" includes any pension, retirement, disability, medical,
dental or other health plan, life insurance or other death benefit plan, profit
sharing, deferred compensation, stock option, bonus or other incentive plan,
vacation benefit plan, severance plan, or other employee benefit plan or
arrangement, including without limitation, any pension plan ("Pension Plan") as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and any welfare plan as defined in Section 3(l) of ERISA
("Welfare Plan"), whether or not any of the foregoing is funded, and whether
written or oral, (a) to which the Company is a party or by which it is bound or
(b) with respect to which the Company has made any payments or contributions, or
may otherwise have any liability (including any such plan or arrangement
formerly maintained by the Company).
(i) There are no Employee Plans other than those listed
in the Disclosure Schedule, and the Company has never been a party to any
multi-employer plan.
(ii) No Pension Plan is a "defined benefit plan" as
defined in ERISA.
(iii) To the best of Shareholders' knowledge, each
Employee Plan, the administrator and fiduciaries of each Employee Plan,
and the Company has at all times complied in all material respects with
the
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applicable requirements of ERISA, including but not limited to the
fiduciary responsibilities imposed by ERISA, and any other applicable law
(including regulations and rulings thereunder) governing each Employee
Plan, and each Employee Plan has at all times been properly administered
in all material respects in accordance with all such requirements of law.
No lawsuits or complaints to, or by, any person or governmental entity
have been filed or are pending and no Shareholder has knowledge of any
state of facts or contemplated event which could give rise to any such
lawsuit or complaint with respect to any Employee Plan. Without limiting
the foregoing, the following are true with respect to each Employee Plan
to the best of Shareholders' knowledge:
(A) The Company has filed or caused to be filed on
a timely basis each and every return, report, statement, notice,
declaration and other document required by any government agency,
federal, state and local (including, without limitation, the
Internal Revenue Service and the Department of Labor) with respect
to each Employee Plan.
(B) The Company has delivered or caused to be
delivered to every participant, beneficiary and other party entitled
to such material, all plan descriptions, returns, reports,
schedules, notices, statements and similar materials, including,
without limitation, summary descriptions and reports, as are
required under Title I of ERISA and/or the Internal Revenue Code, as
amended ("Code").
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(C) The Company is not delinquent as to
contributions or payments to or in respect of any Employee Plan.
(iv) To the best of Shareholders' knowledge, with
respect to each Employee Plan, there has not occurred, nor is any person
or entity contractually bound to enter into, any transaction giving rise
to any tax under Section 4975 of the Code or Section 406 of ERISA, or
liability under Section 502(i) of ERISA.
(v) To the best of Shareholders' knowledge, the
financial statements, if any, for each Employee Plan accurately reflect
the financial condition and funding of the Employee Plan as of the date of
such financial statements, and no adverse change has occurred with respect
to the financial condition or funding of the Employee Plan since the date
of such financial statements.
(x) Environmental Provisions. With respect to all real estate
leased by the Company:
(i) No claim, lawsuit, agency proceeding, or other
legal, quasi-legal or administrative challenge is pending or threatened
concerning the property, the operation of the property, or the existence
of any hazardous substances thereon.
(ii) To the best of Shareholders' knowledge, the
property has never been used for any industrial or commercial operation
that utilizes hazardous substances.
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(iii) To the best of Shareholders' knowledge, there has
been no spill, discharge, release, deposit, or emplacement of any
hazardous substance on the property, whether in containers or other
impoundments, or directly in the lands or waters of the property.
(iv) To the best of Shareholders' knowledge, there is no
asbestos-containing or other hazardous materials in the structures on the
property.
(v) No electrical transformers, fluorescent light
fixtures or other electrical equipment containing PCBs have been affixed
or installed on or in the property.
(vi) There are no storage tanks, barrels, sumps,
impoundments, or other containers or equipment (movable or fixed) for the
containment of hazardous substances in any part of the property.
(vii) No governmental entity has served upon the Company
any notice claiming any violation of any statutes, ordinance, or
regulations or noting the need for any repair, construction, alteration,
or installation with respect to the property and hazardous substances or
requiring any change in the means or methods of those conducting
operations thereon.
The Company has, at all times, complied with all federal, state and local laws,
ordinances and regulations relating to and involving (A) industrial hygiene or
to environmental conditions on, under or about such real estate, including, but
not limited to, soil and groundwater conditions; and (B) the use, generation,
manufacture, storage, disposal and transportation of hazardous materials.
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(y) Intellectual Property. The Company owns all patents,
trademarks, trade names, service marks, franchises, and the technology necessary
for the conduct of its business as presently conducted without infringing upon
or conflicting with the rights of others, and the Company has not received any
notice from a party claiming such an infringement or conflict; and no
Shareholder is aware of any facts or circumstances which would indicate that
such an infringement or conflict could exist. All such patents, trademarks,
trade names, service marks and franchises are described on the Disclosure
Schedule and the Company's interest therein is similarly described.
(z) Conflicts of Interest. Except for MarketSource Corporation
and its affiliates, no Shareholder, director, officer or, to the best of
Shareholders' knowledge, employee of the Company controls or is an employee,
officer, director or agent of any corporation, firm, association, partnership or
other business entity which is a competitor, supplier or customer of the
Company.
(aa) Disclosure; Capacity. Shareholders have disclosed to NBC
all facts known to them to be material to the assets, liabilities or business of
the Company. No representation or warranty of Shareholders made hereunder or in
the Disclosure Schedule or in any certificate, statement, or other document
delivered by or on behalf of the Shareholders hereunder contains any untrue
statement or omission of a material fact known to Shareholders which would cause
the general interpretation of the statements to be misleading. Copies of all
documents referred to on the Disclosure Schedule have been delivered or made
available to NBC, are true, correct and complete copies thereof, and include all
amendments, supplements or modifica-
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tions thereto or waivers thereunder. All representations and warranties by
Shareholders hereunder are made from knowledge acquired in their capacities as
an individual, shareholder, officer, director, employee and from any other
relationship of Shareholders to the Company.
(bb) Indebtedness. As of the Closing Date, the Company has no
Indebtedness. For the purposes hereof, "Indebtedness" means, without duplica
tion, (i) all indebtedness of or any obligation of the Company for borrowed
money, whether current, short-term, or long-term, secured or unsecured, (ii) all
indebtedness of the Company for the deferred purchase price for purchases of
property outside the ordinary course which is not evidenced by trade payables,
(iii) all lease obligations of the Company under leases which are capital leases
in accordance with generally accepted accounting principles, (iv) all
off-balance sheet financings including, without limitation, synthetic leases and
project financing, (v) any payment obligations of the Company in respect of
bankers' acceptances or letters of credit (other than stand-by letters of credit
in support of ordinary course trade payables), (vi) any liability of the Company
with respect to interest rate swaps, collars, caps and similar hedging
obligations, (vii) any present, future or contingent obligations of the Company
under (A) any phantom stock or equity appreciation rights, plan or agreement,
(B) any deferred pay-out or earn-out arrangements in connection with the
purchase of any business or entity or (C) any non-competition agreement, (viii)
the amount of any liability as of the Closing of the Company under deferred
compensation plans and (ix) any accrued and unpaid interest or any contractual
prepayment premiums,
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penalties or similar contractual charges resulting from the transactions
contemplated hereby or the discharge of such obligations with respect to any of
the foregoing.
5.2 By NBC. NBC represents and warrants to Shareholders that
the following representations and warranties are true and correct in all
material respects, and shall be deemed remade at and as of the Closing Date:
(a) Organization and Good Standing. NBC is a corporation
duly organized, validly existing and in good standing under the laws of Kansas,
with full corporate power and authority to conduct its business as now
conducted.
(b) Authorization. NBC has all requisite corporate power
and authority to execute and deliver this Agreement and all other documents to
be executed and delivered pursuant hereto by it and to carry out the
transactions contemplated hereby. The execution and delivery of this Agreement
and all other documents to be executed and delivered pursuant hereto by NBC, and
the consumma tion of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of NBC and this Agreement and all
other documents to be executed and delivered pursuant hereto by NBC constitute
the valid and binding agreements of NBC, enforceable against NBC in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights. No consent of, or notice to, any federal,
state or local authority, or any other person or entity is required to be
obtained or made by NBC in connection with the execution,
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delivery or performance of this Agreement and the other documents to be
executed, delivered and performed by NBC pursuant hereto.
(c) Acknowledgment by NBC. As of the Closing Date, NBC
acknowledges that it shall have conducted to its satisfaction, an independent
investigation and verification of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the
Company and, in making its determination to proceed with the transactions
contemplated by this Agreement, NBC shall have relied on the results of its own
independent investigation and verification and the representations and
warranties of the Company. NBC acknowledges that the New Book Rewards program
has been an historical source of revenues and profits which is not expected to
continue in the future.
(d) Payables. The Company will pay its payables to
MarketSource Corporation in accordance with a list of the payables and the due
dates to be prepared by the Company prior to Closing in accordance with the
terms of Section 6(e) hereof.
6. ORDINARY COURSE. Shareholders shall cause the Company to operate
its business in the ordinary course until the Closing Date. In connection
therewith:
(a) Ordered Merchandise. The Company shall maintain usual and
customary inventory levels, collect accounts receivable, pay expenses, and
continue general promotional activities.
(b) Right to Inspect. At any time after the date of this
Agreement, NBC shall have the right to conduct any inspections or investigations
with
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respect to the business of the Company and its properties, either individually
or by utilizing a third party.
(c) Access. From and after the date hereof, representatives of
NBC shall have free access to the business and records pertaining to the Company
in order that NBC may have full opportunity to make such investigation as it
shall desire of the affairs of the Company relating to its business, provided
that NBC provides the Company reasonable prior notice of its desire to such
access; and such activities by NBC shall not interfere with the Company's normal
business operations. Each party hereto shall have the right to make copies of
all books and records received or retained by the other party hereunder.
(d) Subsequent Events. If Shareholders become aware of any
fact or circumstance which would change or affect the accuracy of a representa
tion or warranty in this Agreement, they shall immediately give written notice
of any change, fact or circumstance to NBC, but such notice shall not relieve
Shareholders of their liabilities or obligations with respect thereto.
(e) Use of Cash. The Company shall, and the Shareholders shall
cause the Company to, use its cash and cash equivalents from the date hereof
until the Closing only for ordinary course working capital purposes consistent
with past practices; provided, that the Company shall use such cash to pay the
following obligations prior to or at Closing: (i) for the repayment of existing
shareholder loans in an amount not to exceed $255,478, and then to the extent of
remaining cash and cash equivalents, and (ii) to distribute to the Shareholders
for the payment of the Tax Estimate as provided in Section 3.5 of this
Agreement. Upon payment of the items
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set forth above, the Company shall repay the Company's outstanding balance due
to MarketSource Corporation as set forth on the Company's financial statements,
which amount was estimated to be $755,079 as of December 31, 1997, as such
amount may change in the ordinary course of business based on services rendered
by MarketSource Corporation prior to Closing, provided that prior to Closing,
the Shareholders shall cause the preparation of a list of the components of such
payable by MarketSource and the Company, and the items and amounts of such list
shall be subject to the reasonable approval by NBC.
7. DELIVERIES AT CLOSING
7.1 Deliveries by Shareholders. At the Closing, Share holders
covenant and agree to deliver, or cause to be delivered, to NBC the following:
(a) Stock Certificates. The certificate or certificates
representing the number of shares of Stock of the Company set forth opposite
each Shareholder's name on Exhibit D, duly endorsed in blank (or with a stock
power duly endorsed in blank and affixed to such certificate(s)), in proper form
for transfer, free and clear of all options, liens, claims, charges,
restrictions, equities and other encumbrances of any nature whatsoever.
(b) Resignations. The written resignations of all
directors and officers of the Company from those positions, effective as at the
Closing, and release of claims.
(c) Corporate Records. All minute books, stock record
books and transfer ledgers, securities and corporate seals of the Company.
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(d) Opinion of Counsel. An opinion of legal counsel to
the Company dated the Closing Date and satisfactory to NBC and its counsel to
the effects set forth on Exhibit E hereto.
(e) No Litigation. A certificate dated the Closing Date
and signed by Shareholders, the truth and accuracy of which shall be a condition
to NBC's obligation to consummate the transactions contemplated herein, to the
effect that other than as described on the Disclosure Schedule, there is no
action, suit or other proceeding pending before any court, tribunal or
governmental authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking to
obtain substantial damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree or
regulation of any governmental authority having appropriate jurisdiction.
(f) Accuracy of Representations; Performance of
Covenants. A certificate dated the Closing Date and signed by Shareholders, the
truth and accuracy of which shall be a condition to NBC's obligation to
consummate the transactions contemplated herein, to the effect that, other than
as described on the Disclosure Schedule, the representations and warranties of
Shareholders contained in this Agreement (except for factual changes in the
information contained in the Disclosure Schedule or attachments hereto occurring
after the execution of this Agreement and before Closing, which changes shall be
noted on amendments to such information at Closing which are subject to approval
by NBC in its sole and absolute discretion) are true and correct as of the
Closing Date, and that Shareholders have
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duly performed or complied with all of the obligations to be performed or
complied with by them under the terms of this Agreement on or prior to Closing.
(g) Marketing Services. MarketSource Corporation, a
Delaware corporation, an affiliate of Shareholders, and NBC shall execute a
marketing services agreement whereby MarketSource will provide certain
advertising and promotional services, such as a used book buy-back program. The
contract period will begin April 1, 1998, and extend through March 31, 2000.
There will be a minimum annual fee of $125,000 (2 years - $250,000) for services
rendered. Any and all third party and/or production fees will be billed
additional subject to NBC's prior approval. The fee for the first year of
$125,000 is due at April 1, 1998 and the fee for year two is due on April 1,
1999.
(h) Further Assurances. At and following the Closing,
Shareholders, without further consideration, shall execute and deliver such
other documents and instruments and take such further actions as NBC may
reasonably request in order to complete and perfect the transactions
contemplated herein.
7.2 Deliveries by NBC. NBC hereby covenants and agrees with
each Shareholder, that at the Closing, NBC will deliver, or cause to be
delivered, the following:
(a) Consideration for Stock. The difference between the
Cash Consideration and the Deferred Consideration referred to in Section 3
hereof, apportioned to each Shareholder based on the number of shares of Stock
owned by such Shareholder.
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(b) Accuracy of Representations; Performance of
Covenants. A certificate signed by an officer of NBC, the truth and accuracy of
which shall be a condition to Shareholders' obligation to consummate the
transactions contemplated herein, to effect that the representations and
warranties of NBC contained in this Agreement are true and correct as of the
Closing Date, and that NBC has duly performed or complied with all of the
obligations to be performed or complied with by it under the terms of this
Agreement on or prior to Closing.
(c) Further Assurances. At and following the Closing,
NBC, without further consideration, shall execute and deliver such other
documents and instruments and take such further actions as Shareholders may
reasonably request in order to complete and perfect the transactions
contemplated herein.
8. CONDITIONS OF CLOSING.
8.1 Conditions to NBC's Obligations. All obligations of NBC
under this Agreement are subject to the fulfillment at Closing of each of the
following conditions:
(a) Shareholders' representations and warranties
contained in this Agreement shall be true and correct in all material respects
at the time of Closing as though such representations and warranties were made
at such time;
(b) Shareholders shall have performed and complied with
all agreements and conditions required by this Agreement to be performed or
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complied with by Shareholders prior to or at Closing, including without
limitation the preparation of the Disclosure Schedules described in Section 5.1
of this Agreement;
(c) Shareholders shall make, or cause to be made, all
deliveries described in Section 7.1 of this Agreement;
(d) The Company shall have entered into the following
agreements, all of which shall be on terms and conditions reasonably
satisfactory to NBC: (i) a lease agreement for its premises in Cranbury, New
Jersey, on terms substantially similar to those set forth in the lease agreement
attached hereto as Exhibit F; (ii) an agreement with MarketSource Corporation
for accounting services after Closing; and (iii) an employee leasing agreement
with MarketSource Corporation whereby the services of Xxxxxx X'Xxxxx will be
leased to the Company;
(e) Between the date of the Interim Statements and the
Closing, no material adverse change shall have occurred in the condition of the
business, the leased premises, the capital or the property of Company;
(f) All equipment, inventories, the leased premises, and
other physical elements of the property shall be in good condition, fully usable
in the ordinary course of the operation of the business, and NBC shall be
reasonably satisfied with any inspections it shall conduct or have conducted
with respect to the properties of the Company, including any environmental
inspections or audits;
(g) NBC shall be reasonably satisfied that the business
has been conducted only in the ordinary course from and after the date of the
Interim Statement through the Closing Date;
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(h) NBC shall have been satisfied in its sole discretion
with the results of the physical inventory described in Section 4 hereof and
with the other asset and liability listings as of the date of the physical
inventory and as of the Closing Date;
(i) NBC shall have received a certificate of search for
all UCC or other liens against the assets of the Company, certified on or about
the Closing Date, indicating that there are no liens or claims against such
assets or the Stock other than as disclosed in the Disclosure Schedule; and
(j) NBC shall have been satisfied in its sole discretion
with the amendments to the Disclosure Schedule submitted by the Company and
approved the same in writing and with the payables list described in Sec tion
5.2(d) hereof.
8.2 Noncompliance. If any one or more of the conditions
precedent set forth in this Section shall not be in effect or complied with on
the Closing Date, after a reasonable period of time to correct by Shareholders,
NBC may, by written notice to Shareholders, elect in its sole and absolute
discretion to either (i) cancel this Agreement and all obligations of NBC
hereunder, or (ii) execute a written waiver of compliance with any one or more
of the said conditions precedent and close this transaction, provided that such
waiver shall not release or relieve Shareholders from any liability if such
waiver causes Damages to NBC as provided in Section 9 hereunder.
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8.3 Conditions to Shareholders' Obligations. All obligations
of Shareholders under this Agreement are subject to the fulfillment at Closing
of the following conditions:
(a) The representations and warranties of NBC contained
in this Agreement shall be true and correct in all material respects at the time
of Closing as though such representations and warranties were made at such time;
(b) NBC shall have performed and completed all
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing Date;
(c) NBC shall make all deliveries described in Section
7.2 of this Agreement;
(d) The parties shall agree upon a mutually acceptable
joint press release announcing the sale; and
(e) The Shareholders shall have approved the amendments
to the Disclosure Schedule.
8.4 Failure of Conditions. In the event of default by any
party which is not cured prior to the Closing Date, the non-defaulting party
shall have the option to rescind this Agreement in addition to all other
remedies at law or in equity arising from such default, including the remedy of
specific performance.
9. INDEMNIFICATION; SETOFF.
9.1 Indemnification by Shareholders. Subject to the
limitations set forth in this Article IX, from and after the Closing,
Shareholders
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jointly and severally covenant and agree to reimburse and indemnity and hold NBC
(which term, for the purposes hereof shall include NBC and the Company) harmless
from, against and in respect of any and all damage, loss, liability or
deficiency resulting from any of the following (collectively referred to as
"Damages"):
(a) any misrepresentation or omission, breach of
warranty or nonfulfillment of any covenant or agreement of Shareholders or the
Company under this Agreement, including without limitation, the Disclosure
Schedule, or any other written statement, list, certificate or other instrument
furnished to NBC by or on behalf of Shareholders or Company pursuant to this
Agreement; and
(b) any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines, judgments, costs and other
expenses (including, without limitation, reasonable audit and legal fees)
arising out of or resulting from (i) any misrepresentation, breach of warranty
or nonfulfillment of any covenant or agreement by Shareholders; or (ii) the
operation of the Company prior to the Closing; and
(c) the amount of the Net Worth Deficiency, if any, as
determined in the Closing Balance Sheet, on a dollar for dollar basis up to a
maximum amount of One Hundred Thousand Dollars ($100,000). Any incident, amount
or omission described under paragraphs (a), (b), and (c) above is herein
referred to as a "Claim." No Damages shall result for (i) uncollected accounts
receivable, payment or collection of which is not guaranteed by the
Shareholders; (ii) any portion of a Claim based on Section 5.1(q) hereof based
on a lower value on the Closing Balance Sheet caused solely by a new edition of
such
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books released by the publisher; (iii) the cost or loss to NBC or the Company
after having taken into account any insurance proceeds payable to NBC or the
Company in connection therewith; or (iv) in connection with the Closing Balance
Sheet, the amount that any individual asset or liability may be under- or
overstated in an amount which is not material. Materiality for purposes of the
Closing Balance Sheets shall be $15,000 for any individual asset or liability,
or $50,000 for a class of such assets or liabilities, provided that this
materiality clause shall not waive or modify the covenants and warranties
related to the Net Worth Deficiency.
9.2 Method of Asserting Claims, etc. Within 45 days after NBC
discovers or it receives notice of any Claim which might give rise to Damages
under Section 9.1 hereof, NBC will give written notice to Shareholders of such
Claim stating the nature, basis and (to the extent known) amount thereof. If the
Claim under Section 9.1 involves a suit by a third party or by any governmental
body, or any legal, administrative or arbitration proceeding, Shareholders shall
be entitled to participate therein, and, to the extent desired by Shareholders,
to assume the defense thereof, and after notice from Shareholders to NBC of the
election so to assume the defense hereof, Shareholders will not be liable to NBC
for any legal or other expenses subsequently incurred by NBC in connection with
the defense thereof, other than reasonable costs of investigation, unless
Shareholders do not actually assume the defense thereof following notice of such
election. NBC and Shareholders will render to each other such assistance as may
reasonably be required of each other in order to insure proper and adequate
defense of any such suit, claim or proceeding. NBC will not settle any Claim and
incur any Damages without the written consent of the
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Shareholders, which consent shall not be unreasonably withheld. NBC and/or the
Company shall assign to Shareholders all right, title and interest in any Claim
which is paid by Shareholders hereunder.
9.3 Right of Setoff. In order to secure Shareholders'
obligations pursuant to this Agreement, NBC shall have the right to offset its
Damages against the Deferred Consideration described in Section 3.3 hereof,
provided, however, that the amount of Damages that NBC may be entitled to
recover from Shareholders pursuant to this right of indemnity shall not be
limited to the Deferred Consideration, and NBC shall have the right to pursue
any other remedies at law or in equity to which it may be entitled.
Notwithstanding any other provision in this Agreement to the contrary, NBC may
withhold payment of any portion of the Deferred Consideration at the expiration
of the six (6) month period which NBC reasonably estimates may be required to
offset Damages which it may incur based on Claims which have been made known to
NBC prior to such date.
9.4 Limitation on Amendment. Shareholders shall have no
liability to indemnify NBC pursuant to misrepresentations or breaches of
warranties set forth in Sections 5.01(d), (e), (g), (i), (j), (k) (l), (o), (p),
(q), (s), (t), (u), (,v), (w), (x), (y), (z) and (aa), and liability under
Section 9.1(b) of this Agreement, for an aggregate amount which exceeds
$4,000,000. With respect to the representations and warranties set forth in
Sections 5.1(a), (b), (c), (f), (h), (m), (n) and (ab), there shall be no limit.
9.5 Indemnification by NBC. NBC hereby agrees to indemnify and
hold Xxxxxx X. Xxxxxx harmless from, against and in respect of any
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and all damage, loss, liability or deficiency, including costs and other
expenses (including, without limitation, reasonable legal fees) incurred by the
Shareholders arising out of or resulting from a default by NBC with respect to
the indemnified obligations set forth in this Section 9.5, resulting from (i)
any misrepresentation or breach of warranty or nonfulfillment of the
representations set forth in Section 5.2 of this Agreement, and (ii) Xxxxxx X.
Xxxxxx'x personal guarantee set forth in ss. 14.10 of the Agreement for Sale of
Assets and Assumption of Liabilities dated October 1, 1995, by and among the
Collegiate Stores Cooperative, Inc., a California consumer cooperative (the
"Coop"), CSC, Inc., a New Jersey corporation and Xxxxxx X. Xxxxxx (the "Coop
Agreement") of the following: (i) the obligation to provide free memberships to
the 14 founding members until February 28, 2001 as provided in ss. 2.02(i) of
the Coop Agreement; and (ii) the unpaid aggregate balance not to exceed $280,000
for consulting payments to the 14 founding members of the Coop; provided that
the amount of the indemnification obligation hereunder shall not exceed the
amounts represented by Shareholders to be due pursuant to such obligations.
10. MISCELLANEOUS.
10.1 Survival. All statements made by Shareholders herein or
in the Disclosure Schedule, or in any other document, instrument, certificate,
schedule or list delivered to NBC hereunder shall be deemed representations and
warranties of Shareholders regardless of any investigation made by or on behalf
of NBC. All representations, warranties, agreements, covenants and
indemnifications made by the parties in this Agreement, specifically including,
without limitation, the right to indemnification and setoff against the Deferred
Consideration, or in any
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document delivered pursuant hereto, shall survive the Closing regardless of any
investigation at any time made by or on behalf of NBC; provided, however, that
the representations and warranties by Shareholders set forth in the following
subsections of Section 5.1 of this Agreement shall only survive until September
30, 1998: (d), (e), (g), (i), (j), (k), (l), (o), (p), (q), (s), (t), (u), (v),
(w), (x), (y), (z) and (aa); and provided, further, that the representation and
warranty set forth in Section 5.01(r) shall not survive Closing. All other
representations, warranties, agreements, covenants and indemnifications made by
Shareholders hereunder shall survive until March 31, 2001. The non-competition
agreement in Section 10.5 shall survive for the full term set forth therein.
10.2 Waiver of Terms. Any of the terms or conditions of this
Agreement may be waived at any time by the party or parties entitled to the
benefit thereof but only by a written notice signed by the party or parties
waiving such terms or conditions.
10.3 Amendment of Agreement. This Agreement may be amended or
supplemented at any time only by written instrument duly executed by NBC and
Shareholders.
10.4 Payment of Expenses. Each party shall be solely
responsible for, and shall pay all of its own expenses associated with this
transaction, including but not limited to its accounting, consultants, legal
fees, and out-of-pocket expenses incurred in connection with this Agreement and
the transactions herein contemplated.
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10.5 Non-Competition. The Company is in the business of
providing group buying services, including the purchase and distribution of new
textbooks for independent college bookstores in the United States. In
consideration of NBC's agreement to enter into this Agreement, Xxxxxx Xxxxxx
covenants and agrees that for a period of 3 years from and after the Closing
Date, not to engage directly or indirectly in any business that provides group
buying services, including the purchase and distribution of new textbooks, for
independent college bookstores in the United States. NBC acknowledges that
Xxxxxx Xxxxxx enjoys a substantial reputation in the college store industry and
nothing in this non-competition clause is intended to interfere with his ability
to conduct his on-going business affairs. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this subsection is
invalid or unenforceable, the parties hereto agree that the court making the
determinations of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed. This Section 10.5 shall be
governed by, construed and enforced in accordance with the laws of the State of
New Jersey.
10.6 Entire Agreement, Assignment, etc. This Agreement sets
forth the entire understanding of the parties with respect to the subject matter
hereof. Any previous agreements or understanding between the parties regarding
the
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subject matter hereof are merged into and superseded by this Agreement. All
representations, warranties, covenants, terms and conditions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective heirs, legal representatives, successors and assigns of the parties
hereto and the Company; provided, however, that none of the rights or
obligations of any of the parties hereto may be assigned without the prior
written consent of, in the case of assignment by Shareholders, NBC, or, in the
case of assignment by NBC, the Shareholders, which consent shall not
unreasonably be withheld.
10.7 Notices. All notices, consents, waivers or other
communications which are required or permitted hereunder shall be in writing and
shall be deemed to have been duly given on the date delivered personally or when
the same shall be deposited in the mails, registered or certified first-class
mail, return receipt requested, postage prepaid, as follows:
If to NBC:
Nebraska Book Company, Inc.
Attn: Xxxx X. Xxxxxxxx, President
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
or to such other person or address as NBC may designate in writing.
If to Shareholders:
Xxxxxx X. Xxxxxx
c/o MarketSource Corporation
00 Xxxxx Xxxx
Xxxxxxxx, XX 00000
or to such other person or address as the Shareholders may designate in writing.
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10.8 Commission and Finder's Fees. NBC and the Shareholders
mutually represent and warrant each to the other that none of them has retained
or used the services of any individual, firm or corporation in such manner as to
entitle such individual, firm or corporation to any compensation for brokers' or
finders' fees with respect to the transactions contemplated hereby for which the
other or the Company may be liable.
10.9 Severability. In the event that any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions of this Agreement shall not be in any way impaired.
10.10 Counterparts. This Agreement may be executed simul-
taneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.11 Headings. The headings of the Sections and the
subsections of this Agreement are inserted for the convenience of reference only
and shall not constitute a part hereof.
10.12 Governing Law. Except as provided in Section 10.5
hereof, this Agreement shall be governed, construed and enforced in accordance
with the laws of the State of Nebraska
10.13 Exhibits. All Exhibits attached to this Agreement and
the Disclosure Schedule are incorporated herein and made a part of this
Agreement.
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43
IN WITNESS WHEREOF, this Agreement had been duly executed by the
parties hereto on the day and year first above written.
ATTEST: NEBRASKA BOOK COMPANY, INC.
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- -------------------------------------
Secretary Its President
Shareholders:
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, Trustee of the
Xxxxxx X. Xxxxxx Grantor Trust
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, Trustee of the
Xxxxxxxx X. Xxxxxx Grantor Trust
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44
STATE OF NEBRASKA )
) ss.:
COUNTY OF LANCASTER )
The foregoing instrument was acknowledged before me this 9th day of
January, 1998, by Xxxx X. Xxxxxxxx, President of NEBRASKA BOOK COMPANY, INC., a
Kansas corporation, on behalf of the corporation.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Notary Public
STATE OF ____________)
) ss.:
COUNTY OF ___________)
The foregoing instrument was acknowledged before me this 9th day of
January, 1998, by Xxxxxx X. Xxxxxx
(SEAL)
/s/ Xxxx X. Xxxxxxxx
---------------------------------
Notary Public
STATE OF ____________)
) ss.:
COUNTY OF ___________)
The foregoing instrument was acknowledged before me this 9th day of
January, 1998, by Xxxxxx X. Xxxxxx, Trustee, on behalf of the Xxxxxx X. Xxxxxx
Grantor Trust.
(SEAL)
/s/ Xxxx X. Xxxxxxxx
---------------------------------
Notary Public
