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EXHIBIT 10.8.1
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 Section 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 Section 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 Section 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 0000x-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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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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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
