1
EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
between
AMERICAN BUSINESS INFORMATION, INC.
and
Xxxxxx Xxxxxxxx
and
Xxxxxxx Xxxxxxxxx
and
AO Capital Corp.
Dated as of February 23, 1998
2
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
----
SECTION 1. Purchase and Sale .................................................. 2
SECTION 2. Several Representations and Warranties of Sellers................... 2
SECTION 3. Joint and Several Representations And Warranties Of Sellers......... 4
SECTION 4. Representations and Warranties of Buyer............................. 13
SECTION 5. Additional Covenants................................................ 15
SECTION 6. The Closing......................................................... 15
SECTION 7. Conditions Precedent to the Obligations of Buyer.................... 16
SECTION 8. Conditions Precedent to the Obligations of Sellers.................. 19
SECTION 9. Conduct of Business Prior to Closing................................ 21
SECTION 10. Indemnification..................................................... 23
SECTION 11. Termination; Modification or Waiver................................. 25
SECTION 12. Costs Incident to Preparation of Agreement.......................... 26
SECTION 13. Parties in Interest and Assignment.................................. 27
SECTION 14. Investigation by Buyer; Confidentiality............................. 27
SECTION 15. Miscellaneous....................................................... 28
SIGNATURES .................................................................... 31
Schedules and Exhibits
3
THIS STOCK PURCHASE AGREEMENT dated as of February 23, 1998
("Agreement") between Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxxx and AO Capital Corp.
("Sellers"), and American Business Information, Inc., a Delaware corporation
("Buyer")
W I T N E S S E T H :
WHEREAS, Sellers are the owners of all of the outstanding common stock,
no par value per share, and warrants to purchase 74 shares of said common stock
(together referred to hereinafter as the "Shares"), of Armonk List Companies
Corp., a New York corporation (the "Company"), in the amounts set forth on
Schedule I hereto; and
WHEREAS, Sellers desire to sell, and Buyer desires to acquire, all of
the Shares; and
WHEREAS, as inducement to the Buyer to execute this Agreement, Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxx Xxxxxxx have agreed to enter into
employment agreements and confidentiality and noncompete agreements, each
effective upon the Closing (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth, the covenants and
agreements herein contained, the employment agreements and confidentiality and
noncompete agreements to be entered into pursuant to this Agreement and the
purchase of the Shares pursuant hereto, and the payment of the purchase price
hereinafter provided, the parties hereto do hereby represent, warrant, covenant
and agree as follows:
SECTION 1. Purchase and Sale.
Subject to the terms and conditions of this Agreement, Buyer agrees to
pay and deliver to Sellers, in the respective amounts set forth opposite
Sellers' names on Schedule I hereto, on the Closing Date, the purchase price
(the "Purchase Price") in the amount of Fifteen Million Two Hundred Fifty-Six
Thousand Four Hundred Seventy-Three Dollars ($15,256,473), subject to
adjustment as contemplated by Exhibit D hereto, by certified or bank check or
wire transfer in immediately available funds and assume the debt outstanding as
detailed on Exhibit D attached hereto and incorporated herein by reference, and
Sellers agree to sell and deliver to Buyer, on the Closing Date, the Shares.
SECTION 2. Several Representations and Warranties of Sellers.
Each Seller hereby represents and warrants severally (and as to itself
only) and not jointly to Buyer that the statements contained in this Section 2,
including the disclosure schedules thereto, are correct and complete as of the
date of this Agreement and, when supplemented by additional or amended
disclosure schedules, if any, provided by the Sellers on or prior to the
Closing Date, will be correct and complete as of the Closing Date and as
follows:
(a) Title to Shares. Such Seller is the true and lawful
owner, of record and beneficially, of the Shares set forth next to such
Seller's name on Schedule I, free and clear of all liens, security interests,
pledges, assessments, charges, adverse claims, leases, licenses, restrictions,
options and other encumbrances of any nature whatsoever (collectively,
"Liens"), except as set forth on Schedule 2(a) hereto. At the Closing, such
Seller will validly transfer the Shares owned by it free and clear of all
Liens. Other than the rights and obligations arising under this Agreement,
none of the Shares owned by such Seller is subject to any rights of any other
person to acquire the same. None of the Shares owned by such Seller is subject
to any restrictions on transfer thereof, except (i) as set forth on Schedule
2(a) and (ii) for restrictions imposed by applicable federal and state
securities laws.
(b) Authority Relative to Agreement. Such Seller has full
power and authority to enter into this Agreement and to perform his obligations
hereunder. This Agreement has been duly executed and delivered by such Seller
and constitutes the legal, valid and binding obligation of such Seller,
enforceable against him in accordance with its terms. The execution and
delivery of this Agreement by such Seller and performance of his obligations
hereunder will not conflict with or result in a breach, default (or an event
which, with notice or lapse of time or both, would constitute a default) or
violation of any of the terms, provisions or conditions of any agreement,
document, or instrument, or any
4
judgment, decree, court order, statute, regulation, ordinance or law to which
such Seller is subject, except such as would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below) on such Seller's
authority to enter into this Agreement, ability to consummate the transactions
contemplated hereby or ability to perform his obligations hereunder. Except as
contemplated by Sections 7(g) and 8(f) hereof, no permit, authorization,
consent or approval of, or filing with or notification to, any court or public
body or authority or expiration of any governmentally imposed waiting period,
and no authorization, consent, or approval of, or release by, any other third
party, is necessary for the consummation by such Seller of the sale of the
Shares owned by him as contemplated by this Agreement and the performance of
his obligations hereunder.
SECTION 3. Joint and Several Representations And Warranties Of
Sellers.
AO Capital Corp. warrants and represents severally from the other
Sellers (and only to the extent of the actual knowledge of any one or more of
the following named persons: Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxx X
Xxxxx, Xxxx xxx Xxxx or Xxxxxxx X. Xxxxxx ("Actual Knowledge")) and Xxxxxx
Xxxxxxxx and Xxxxxxx Xxxxxxxxx, jointly and severally, to the best of their
knowledge,represent and warrant to, and agree with, Buyer that the statements
contained in this Section 3, including the disclosure schedules thereto, are
correct and complete as of the date of this Agreement and, when supplemented by
additional or amended disclosure schedules, if any, provided by the Sellers on
or prior to the Closing Date, will be correct and complete as of the Closing
Date and as follows:
(a) Corporate Organization. Each of the Company, Xxxxxx Xxxx,
Inc., Xxxxxx Xxxx List Management, Inc. (formerly, Qualified Lists Corp.), List
Maintenance Corp. and Armonk Facilities Corp. (each, a "Subsidiary";
collectively, the "Subsidiaries"), is a corporation duly incorporated, validly
existing and in good standing under the laws of New York with full corporate
power and authority to carry on its business as presently conducted by it and
to own, lease and operate its properties where such properties are now owned,
leased or operated, and is qualified to do business in all foreign
jurisdictions where the failure to be so qualified individually or in the
aggregate would have a material adverse effect on the condition (financial or
otherwise), properties, assets and operations of the Company and the
Subsidiaries, taken as a whole (as used here or elsewhere in this Agreement, a
"Material Adverse Effect"). The Company has no subsidiaries other than the
Subsidiaries.
(b) Capitalization. (i) The authorized capital stock of the
Company consists of 200 shares of Common Stock, no par value per share. The
only shares of capital stock of the Company issued and outstanding are the
Shares. All of the Shares were duly authorized and validly issued and are
fully paid and non-assessable. None of the Shares were issued in violation of
any preemptive or preferential right. Except as set forth on Schedule 3(b),
there are no outstanding conversion or exchange rights, subscriptions, options,
warrants or other arrangements or commitments obligating the Company to issue
or transfer any shares of its capital stock or other securities.
(ii) All of the outstanding shares of capital stock of the
Subsidiaries were duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company free and clear of all Liens, except
as set forth on Schedule 2(a). None of the shares of the Subsidiaries was
issued in violation of any preemptive or preferential rights. Except as set
forth in Schedule 3(b), there are no outstanding conversion or exchange rights,
subscriptions, options, warrants or other arrangements or commitments
obligating the Company or the Subsidiary to issue or transfer any shares of
capital stock or other securities of the Subsidiary.
(c) Charter Documents, Etc. Sellers previously have delivered
to Buyer true and accurate copies of the Certificate of Incorporation (or other
instrument of incorporation) and By-laws as of the date hereof of the Company
and each of the Subsidiaries and no action has been taken or authorized to
amend such Certificates of Incorporation or By-laws or to liquidate or dissolve
the Company or any Subsidiaries.
(d) No Violation. Neither the execution and delivery of this
Agreement by Sellers and the performance by Sellers hereunder, nor the
consummation of the transactions contemplated hereby, will violate, conflict
with, result in the breach of or accelerate the performance required by any of
the terms, conditions or provisions of the Certificate of Incorporation or
By-laws of the Company or any Subsidiary or any order, ruling, decree,
judgment, arbitration award or stipulation to which the Company or any
Subsidiary is subject, or constitute a default thereunder or result in the
creation or imposition of
5
any Lien upon any of the assets of the Company or any material assets of any
Subsidiary, or terminate any lease of real property of the Company or material
lease of any Subsidiary, except as set forth on Schedule 3(i)(2), which
violations, conflicts, breaches, defaults, liens, charges or encumbrances or
terminations, individually or in the aggregate, would have a Material Adverse
Effect.
(e) Consents and Approvals of Governmental Authorities and
Others. Except as set forth in Schedule 3(e) hereto, no approval or
authorization of, filing or registration with, or notification to, any
governmental or regulatory authority is required by or on behalf of the Company
or any Subsidiary in connection with the execution and delivery of this
Agreement by Sellers, the performance of their obligations hereunder or the
consummation of the transactions contemplated hereby or for the prevention of
any termination of any right, privilege, license or agreement of the Company or
any Subsidiary. All such approvals, authorizations, filings, registrations and
notifications set forth on Schedule 3(e) hereto have been or will be obtained
on or prior to the Closing Date. The Company and the Subsidiaries each
currently has and will maintain in effect until the Closing Date such licenses,
permits and other authorizations from all federal, state and local authorities
as are necessary for the conduct of its business and which the failure to have
maintained would, individually or in the aggregate, have a Material Adverse
Effect. No suspension or cancellation of any such license, permit or other
authorization is, to the knowledge of Sellers, threatened and none of such
licenses, permits and authorizations, individually or in the aggregate, will be
affected to the material detriment of the business of the Company and the
Subsidiaries by consummation of the transactions contemplated in this
Agreement.
(f) Financial Statements. The draft, unaudited financial
statements of the Company and the Subsidiaries, on a consolidated basis, for
the year ended September 30, 1997 and for the three months ended December 31,
1997 (the "Financial Statements"), as set forth on Schedule 3(f)(1), were
prepared in accordance with generally accepted accounting principles
consistently applied, except for the unaudited financial statements for the
three months ended December 31, 1997 which may be subject to year end
adjustment and except as set forth on Schedule 3(f)(3). Additional information
regarding excess rent provisions are set forth on Schedule 3(f)(2). The
Financial Statements are accurate in all material respects and present fairly,
except that the Financial Statements will not have financial statement notes
attached to them, the assets and liabilities and results of operations of the
Company and its Subsidiaries, on a consolidated basis, at the dates and for the
periods specified therein on a basis that is consistent in all material
respects. Since the most recent dates of the Financial Statements, except as
disclosed in the Schedules to this Stock Purchase Agreement, there have not
been (1) any changes, individually or in the aggregate, in the business, assets
or operations of the Company and the Subsidiaries; or (2) any actual or, to the
knowledge of Sellers, threatened damages, losses, conversions, terminations,
cancellations, defaults or takings by eminent domain or other actions by
governmental authority which, individually or in the aggregate, would have a
Material Adverse Effect. All accounts receivable reflected on the Financial
Statements, and to be reflected on the books and records of the Company and the
Subsidiaries as of the Closing Date, are and will be bona fide and arose in the
ordinary course of business at the aggregate amounts thereof less the reserve
for doubtful accounts with respect thereto. On the Closing Date, no person
will have any Lien on such receivables, or any part thereof. No agreement for
deduction, free goods, discount or other material deferred price or quantity
adjustment has been made with respect to any of such receivables other than in
the ordinary course of business and consistent with historical practice. The
reserve for doubtful accounts has been established in accordance with the
experience of the Company and the Subsidiaries.
(g) Equipment, Etc. The list of material items of machinery
and equipment and of vehicles owned or leased by the Company or its
Subsidiaries set forth in Schedule 3(g) hereto is a complete and accurate list
in all material respects of all such items owned by the Company and the
Subsidiaries as of December 31, 1997 and included in the balance sheet dated
December 31, 1997 included in the Financial Statements, except for dispositions
and acquisitions in the ordinary course of the Business since December 31,
1997.
(h) Title to Assets, Etc. The Company and the Subsidiaries
have good and marketable title to or valid leasehold interests in or the right
to use the assets which they purport to own and use in their business.
(i) Contracts and Other Agreements. Schedule 3(i) hereto
accurately identifies (i) all leases, whether of real or personal property, to
which the Company or any Subsidiary is a party,
6
(ii) all written consignment agreements with suppliers to which the Company or
any Subsidiary is a party, (iii) all distribution and agency agreements to
which the Company or any Subsidiary is a party and (iv) all other contracts,
agreements or understandings, including purchase contracts and sale contracts
or orders for amounts, in either case, equal to or exceeding $25,000, to which
the Company or any Subsidiary is a party. Neither the Company nor any
Subsidiary is in default under any of such leases, contracts, agreements, plans
or understandings, and none has breached any provision of any such lease,
contract, agreement, plan or understanding, which breach, except for notice or
the passage of time, would render it in default thereunder.
(j) Litigation. Except as set forth in Schedule 3(j), there
are no outstanding orders, rulings, decrees, judgments or stipulations or
proceedings in connection with their business to which the Company or any
Subsidiary is a party or by which any thereof is bound, by or with any court,
arbitrator or administrative agency, nor to the best of Sellers' knowledge are
any threatened.
(k) Taxes. Except as disclosed in Schedule 3(k) hereto,
neither the Company nor any Subsidiary is in default in the filing of any tax
returns and tax reports required to be filed by it and all taxes (including,
without limitation, all Federal, state and local property, sales, franchise,
use and other similar taxes) that are set forth on such returns have been paid
or adequately provided for in the Financial Statements.
(l) Intellectual Property. Neither the Company nor any
Subsidiary owns any patent, patent application, copyright, trademark, trade
name, service xxxx or other intellectual property, except as set forth on
Schedule 3(1) hereto. The Company or a Subsidiary has and owns all right,
title and interest to the intellectual property set forth on Schedule 3(1) as
owned by it and there are no claims or proceedings pending or, to the knowledge
of Sellers, threatened against the Company or any Subsidiary asserting that the
use by any thereof of such intellectual property infringes the rights of any
other person.
(m) Compensation and Benefit Plans.
(i) Except as set forth on Schedule 3(m) hereto, neither the
Company nor any Subsidiary is a party to (A) any collective bargaining or
similar agreement, (B) any pension, retirement, savings, profit sharing,
deferred compensation, bonus, health, welfare or incentive plan or agreement,
(C) any plan or policy providing for fringe benefits to its employees,
including, but not limited to, vacation, severance, disability, sick leave,
medical, dental, hospitalization, life insurance and other insurance plans, and
related benefits or (D) any express written employment agreement. True,
correct and complete copies of all current documents providing for any such
plan, agreement or policy will be made available to Buyer.
(ii) Except as set on Schedule 3(j) hereto, no present or
former employee of the Company or any Subsidiary has made any claims, and to
the knowledge of each of Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxxx no claim has
been threatened, against the Company or any Subsidiary on account of or for (A)
overtime pay, other than overtime pay for the current payroll period, (B)
accrued sick leave pay, (C) wages or salary (excluding amounts accruing under
pension and profit sharing plans) for any period other than the current payroll
period, (D) vacation, time off or pay in lieu of vacation or time off, other
than that earned in respect of the current vacation year or carried over from
prior years in an amount consistent with the ordinary course of business
consistent with past practice, or (E) any violation of any statute, ordinance
or regulation relating to minimum wages or maximum hours of work not
specifically reserved for on the Closing Balance Sheet.
(n) Certain Fees. Except for fees payable to Gordian Group,
L.P. (which shall be paid by Sellers), none of the Sellers nor any of their
affiliates has incurred any claims for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(o) Insurance. Schedule 3(o) hereto contains a complete and
accurate list of all policies of insurance of the Company and the Subsidiaries
currently in force, including, without limitation, such policies covering
public and product liability and personnel, properties, buildings, machinery,
equipment, furniture, fixtures and operations and such insurance is adequate to
cover the potential risks customarily insured against by a person carrying on
the same business as the Company.
(p) Consents and Conditions. Sellers will use their best
efforts to obtain such written consents or take such measures and actions as
may be necessary or appropriate to allow the consummation of the transactions
contemplated hereby and will use their best efforts to satisfy all the
conditions applicable to them to be satisfied to effect the transactions
contemplated hereby.
(q) Environmental Matters. Except as set forth on Schedule
3(q) hereto, neither the Company nor any Subsidiary is in material violation of
any existing federal, state or local law, statute or
7
regulation, or any existing decree, order or arbitration award or any license
or permit issued by any federal, state or local governmental authority relating
to occupational health and safety or pollution or protection of the environment
(the "Environmental Laws"), including, without limitation, Environmental Laws
relating to treatment, storage, disposal, generation and transportation of
pollutants or contaminants, toxic or hazardous substances or solid or hazardous
waste regulated under Environmental Laws ("Hazardous Materials") or the release
or threatened release into the environment of Hazardous Materials and Seller
has received no notice or complaint of any violation of the Environmental Laws.
(r) Full Disclosure. All of the information provided by the
Company and the Sellers herein or in the schedules hereto, taken as a whole, is
true, correct and complete in all material respects, and no representation,
warranty or statement made by the Company or the Sellers in or pursuant to this
Agreement or the schedules hereto contains any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make such
representation, warranty or statement not misleading.
SECTION 4. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Sellers that the statements
contained in this Section 4, including the disclosure schedules thereto, are
correct and complete as of the date of this Agreement and, when supplemented by
additional or amended disclosure schedules, if any, provided by the Buyer on or
prior to the Closing Date, will be correct and complete as of the Closing Date
and as follows:
(a) Corporate Organization. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
carry on its business. Buyer is, or prior to the Closing will be, duly
qualified to do business as a foreign corporation in all jurisdictions where
the failure to be so qualified, individually or in the aggregate, would
materially and adversely affect Buyer's consummation of the transactions
contemplated by this Agreement.
(b) Charter Documents, Etc. The Certificate of Incorporation
and By-laws of Buyer which have been delivered to Sellers are true and accurate
copies thereof as of the date hereof and Buyer will not, without the prior
written consent of Sellers, cause such Certificate or Articles of Incorporation
or By-laws to be amended in any manner or respect which would adversely affect
the rights of Sellers conferred by this Agreement or by any other instrument
delivered to either Seller pursuant hereto.
(c) Corporate Authority. Buyer has full corporate power and
authority to execute and deliver this Agreement and the other instruments and
documents delivered or to be delivered by it pursuant to this Agreement and to
consummate the transactions contemplated hereby and thereby. This Agreement
and the other documents delivered or to be delivered by it pursuant to this
Agreement have been duly authorized and approved by all necessary and proper
corporate action of Buyer and constitute, or will constitute when executed and
delivered, the valid and binding obligations of Buyer enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally and by general equity
principles, regardless of whether such enforceability is considered in
proceeding in equity or at law.
(d) Certain Fees. Neither Buyer nor any of its officers,
directors, employees or other affiliates has incurred any claims for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
(e) Consents and Conditions. Buyer will use its best efforts
to obtain such written consents or take such measures and actions as may be
necessary or appropriate to allow the consummation of the transactions
contemplated hereby and will use its best efforts to satisfy all the conditions
applicable to it to be satisfied to effect the transactions contemplated
hereby.
SECTION 5. Additional Covenants.
(a) Further Assurances. From time to time after the Closing, Sellers
will execute and deliver such other and further instruments of conveyance,
assignment and transfer and take such other action as Buyer may reasonably
request to consummate the transactions contemplated under this Agreement.
(b) Access to Company. From time to time after the Closing, at the
reasonable request of either Seller, Buyer will make available its employees to
such Seller during normal business hours for the
8
purpose of preparing tax returns for periods which are, in whole or in part,
prior to the Closing Date or in connection with general and tax audits or
asserting, prosecuting or defending claims and litigation.
SECTION 6. The Closing.
The closing of the sale and purchase of the Shares (the "Closing") shall
take place at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx beginning at 10:00 a.m. local
time on such date (not later than March 31, 1998 as may be agreed to in writing
by Seller and Buyer (such date being herein sometimes referred to as the
"Closing Date") if all of the conditions set forth in Sections 7 and 8 hereof
have been satisfied or waived on or before such date; provided, however, that
if on March 31, 1998 the conditions to Closing set forth in Sections 7(g) and
8(f) of this Agreement shall not have been fulfilled, then the Closing Date
shall be extended to that date which is five business days after the
fulfillment of the conditions to Closing in Sections 7(g) and 8(f) subject to
Section 11(a)(ii) of this Agreement.
SECTION 7. Conditions Precedent to the Obligations of Buyer.
The obligation of Buyer to acquire the Shares as provided hereunder is
subject to the satisfaction, or waiver in writing by Buyer, on or prior to the
Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects on and as of the Closing Date, giving effect to any
additional or revised disclosure schedules provided by the Sellers on or before
the Closing Date, with the same effect as though all such representations and
warranties had been made on and as of such date and there shall have been
delivered to Buyer certificates to that effect, dated the Closing Date, signed
by Sellers. Notwithstanding any provision in this Agreement to the contrary,
if any of the representations or warranties of any of the Sellers made as of
the date of this Agreement is not true or correct when made or at the Closing
Date, the Buyer may terminate this Agreement if the Buyer reasonably determines
that such failure to be true or correct relates to a condition which is a
Material Adverse Effect or the breach is of such a nature as to effectively
prevent the Buyer from owning or operating the Company in a manner as presently
conducted by the Company.
(b) Performance of Obligations. Each and all of the covenants
and agreements of Sellers to be performed or complied with pursuant to this
Agreement shall have been duly performed and complied with in all material
respects or duly waived and there shall have been delivered to Buyer a
certificate to that effect, dated the Closing Date, signed by Sellers.
(c) Instruments of Conveyance, Etc. Sellers shall have
delivered to Buyer certificates for the Shares, duly endorsed, and such other
instruments of transfer and assignment as shall be reasonably required by Buyer
for the transfer to Buyer of all of Sellers' right, title and interest to and
in the Shares free and clear of all Liens.
(d) Consents. There shall have been obtained all consents
necessary to the assignment of all contracts, leases, licenses and agreements,
except for the consents relating to the leases set forth on Schedule 3(i)(2)
hereto.
(e) Opinion of Counsel. Buyer shall have been furnished an
opinion, dated the Closing Date, of Smith, Ranscht, Connors, Mutino, Xxxxxxx &
Xxxxxxxxx, P.C., counsel for the Company, Xxxxxx Xxxxxxxx and Xxxxxxx
Xxxxxxxxx, or of other counsel reasonably satisfactory to Buyer, substantially
to the effect set forth in Exhibit A hereto.
(f) Governmental Approvals. All approvals and authorizations
of, filings and registrations with, and notifications to, any governmental or
regulatory authority required for the execution, delivery and performance of
this Agreement by Sellers and the consummation of the transactions contemplated
by this Agreement, including the consents set forth on Schedule 3(e) hereto,
shall have been duly obtained or made and shall be in full force and effect.
(g) HSR. Sellers shall have made all filings required and
satisfied all requests for additional information under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act (the "HSR Act"), and the required statutory periods
under such Act shall have expired and neither the Antitrust Division or the
U.S. Department of Justice (the "Antitrust Division") nor the U.S. Federal
Trade Commission (the "FTC") shall have indicated its objection to, or its
intent to challenge as violative of any federal laws, any of the transactions
contemplated by this Agreement.
(h) Litigation. At the date of the Closing, there shall be no
litigation pending or
9
threatened in which any injunction or material damages are sought against or
from Buyer in connection with the transactions contemplated hereby.
(i) Employment Agreements and Noncompete Agreements. At or
prior to the Closing, and in consideration of the payment of the Purchase
Price, each of Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxxx shall have executed and
delivered an Employment Agreement and a Confidentiality and Noncompete
Agreement substantially in the form of Exhibit B-1 hereto and AO Capital Corp.
shall have executed and delivered a Confidentiality and Noncompete Agreement
substantially in the form of Exhibit B-2 hereto. Additionally, at or prior to
the Closing, Xxxxx Xxxxxxx shall have executed and delivered an Employment
Agreement and a Confidentiality and Noncompete Agreement substantially in the
form of Exhibit B-3.
(j) Payment of Receivables. At or prior to the Closing, the
total amount of Receivables from Shareholders set forth on Exhibit D hereto
shall be paid to the Company.
(k) Financial Statements. At least five days prior to the
Closing Date, Buyer shall have received the financial statements of the Company
and the Subsidiaries, on a consolidated basis, for the year ended September 30,
1997, audited by Coopers & Xxxxxxx LLP, prepared in accordance with generally
accepted accounting principles consistently applied. The net worth of the
Company and its Subsidiaries as reflected on the balance sheet of such audited
financial statements shall be an amount not more than $100,000 less than the
net worth of the Company and its Subsidiaries as reflected on the balance sheet
of the draft unaudited financial statements as of September 30, 1997 set forth
in Schedule 3(f).
(l) Termination of Consulting Agreement. At or prior to the
Closing Date, the Consulting Agreement between the Company and AO Capital Corp.
entered into on September 3, 1991 shall be terminated.
SECTION 8. Conditions Precedent to the Obligations of Sellers.
The obligation of Sellers to sell the Shares hereunder is subject to the
satisfaction, or waiver in writing by Sellers, on or prior to the Closing Date
of each of the following conditions:
(a) Corporate Action. All corporate and other actions
necessary to authorize and effectuate the consummation of the transactions
contemplated hereby by Buyer shall have been duly taken prior to the Closing,
and Buyer shall have delivered to Sellers a certificate of a duly authorized
officer to that effect, together with certified copies of resolutions of its
Board of Directors authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
(b) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though all such representations and warranties had been made on and as of that
date, and there shall have been delivered to Sellers a certificate to that
effect, dated the Closing Date, signed by a duly authorized officer of Buyer.
(c) Performance of Obligations. Each and all of the covenants
and agreements of Buyer to be performed or complied with pursuant to this
Agreement shall have been duly performed and complied with in all material
respects or duly waived, and there shall have been delivered to Sellers a
certificate to that effect, dated the Closing Date, signed by a duly authorized
officer of Buyer.
(d) Payment. Buyer shall have paid to Sellers the Purchase
Price.
(e) Opinion of Counsel. Sellers shall have been furnished an
opinion, dated the Closing Date, of Xxxxx Xxxx, counsel for Buyer, or of other
counsel reasonably satisfactory to Sellers, substantially to the effect set
forth in Exhibit C hereto.
(f) Filings. Buyer shall have made all filings required and
satisfied all requests for additional information under the HSR Act and the
required statutory periods under such Act shall have expired and neither the
Antitrust Division nor the FTC shall have indicated its objection to, or its
intent to challenge as violative of any Federal laws, any of the transactions
contemplated by this Agreement.
(g) Litigation. At the Closing Date, there shall be no
litigation pending or threatened in which any injunction or material damages
are sought against or from Sellers in connection with the transaction
contemplated hereby.
(h) Noncompete and Employment Agreements. At or prior to the
Closing, and in consideration of the payment of the Purchase Price, each of
Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxxx
10
shall have executed and delivered an Employment Agreement and a Confidentiality
and Noncompete Agreement substantially in the form of Exhibit B-1 hereto and AO
Capital Corp. shall have executed and delivered a Confidentiality and
Noncompete Agreement substantially in the form of Exhibit B-2 hereto.
Additionally, at or prior to the Closing, Xxxxx Xxxxxxx shall have executed and
delivered an Employment Agreement and a Confidentiality and Noncompete
Agreement substantially in the form of Exhibit B-3.
(i) Payment of Principal, Interest and Fees. At or prior to
the Closing, the total amount of the principal on the note payable to AO
Capital Corp. and interest and fees payable to AO Capital Corp. set forth on
Exhibit D hereto shall be paid to AO Capital Corp.
SECTION 9. Conduct of Business Prior to Closing.
From the date hereof through the Closing Date, Sellers will cause the
Company and the Subsidiaries to (i) conduct their business for their own
accounts in the ordinary course and consistent with historical practices, (ii)
preserve their business and their material properties intact, (iii) maintain in
force and effect all insurance policies listed in Schedule 3(o) hereto and (iv)
maintain in effect all their existing material qualifications, business
permits, licenses, registrations and authorizations. Sellers will cause the
Company and the Subsidiaries not to change their accounting policies or
procedures, prior to the Closing Date, from those used in prior years. From
the date hereof through the Closing Date, Sellers will cause the Company and
the Subsidiaries, without the prior written consent of Buyer:
(1) not to incur any material obligation or liability
(absolute or contingent), except as set forth in Schedule 9(1) and obligations
or liabilities incurred under leases, contracts and other agreements listed in
Schedule 3(i) hereto or under purchase and sale contracts and orders entered
into in the ordinary course of business and consistent with historical
practice;
(2) not to mortgage, pledge or subject to (or suffered to be
subjected to) lien, charge or other encumbrance or leased or placed under
option or right of first refusal any material assets;
(3) not to otherwise sell, transfer or dispose of any material
assets or cancel any debts or claims, except in the ordinary course of business
and consistent with historical practice or cancel or terminate any material
real property lease;
(4) except as set forth in Schedule 9(4), not to grant any
general increase in wage or salary rates or in employee benefits for their
employees, or grant any material increase in salary or in employment,
retirement or other benefits to any employee, other than merit increases
granted in the ordinary course of business and consistent with historical
practices or such changes in retirement or other benefits which are deemed
necessary or appropriate in order to comply with applicable requirements of
law, or to enter into any employment contract with any person providing for the
continued employment of such person in excess of one month or made any
extraordinary payment to employees;
(5) not to waive any rights or claims of substantial value;
(6) not to offer any material discounts, terms, free goods,
other price adjustments or returns, rebilling or other trade practices to
customers inconsistent with its normal historical business practice;
(7) not to make any capital expenditures or additions in
excess of $10,000;
(8) not to declare any dividends, or to make any transfers of
funds or assets to the Sellers or any party affiliated with Sellers other than
Sellers normal salaries.
SECTION 10. Indemnification.
(a) Sellers' Indemnification. Subject to the terms and conditions of
this Section 10, from and after the Closing, AO Capital Corp. will severally,
but not jointly, indemnify and hold Buyer harmless from and against all
damages, losses, liabilities, costs (including, without limitation, response
costs) and expenses (including reasonable attorneys' fees and disbursements)
(hereinafter in this Section 10 referred to collectively as "Losses") arising
out of or resulting from the breach or failure to be true and correct of any
representation or warranty or certification of AO Capital Corp. contained
herein, in any Schedule hereto or in any certificate delivered pursuant hereto,
in each case to the extent that the breach or failure related to information
within the Actual Knowledge of AO Capital Corp. Subject to the terms and
conditions of this Section 10, from and after the Closing, Xxxxxx Xxxxxxxx and
Xxxxxxx Xxxxxxxxx shall jointly and severally indemnify and hold Buyer harmless
from and against all damages, losses, liabilities, costs (including, without
limitation, response costs) and expenses (including
11
reasonable attorneys' fees and disbursements) (hereinafter in this Section 10
referred to collectively as "Losses") arising out of or resulting from the
breach or failure to be true and correct of any representation or warranty or
certification made by either of them contained herein, in any Schedule hereto
or in any certificate delivered pursuant hereto, in each case to the extent
that the breach or failure related to information within the knowledge of
Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxxx.
(b) Buyer's Indemnification. Subject to the terms and conditions of
this Section 10, from and after the Closing, Buyer will indemnify and hold
Sellers harmless from and against (i) all Losses arising out of or resulting
from any breach or failure of any representation or warranty or certification
of Buyer contained herein, in any Schedule hereto or in any certificate
delivered pursuant hereto to be true and correct or (ii) the operations of the
Company and the Subsidiaries after the Closing.
(c) Time Limitation on Indemnities. Notwithstanding the foregoing,
no claim may be made or suit instituted under Section 10(a) or 10(b)(i) after
one year following the Closing Date except for any claims for unpaid taxes
which indemnification shall continue until the statute of limitation for such
tax period shall terminate unless there has been notice from a taxing
authority, in which case the indemnification shall continue until the tax issue
identified in such notice has been resolved.
(d) No Indemnity for Net Operating Losses. Notwithstanding any other
provision of this Agreement, no claim may be made or suit instituted by Buyer
for any Loss related to the denial, for tax purposes, by a taxing authority of
the net operating losses of the Company.
(d) Monetary Limits on Indemnities. No claim may be made under this
Section 10 for any individual Loss in an amount less than $15,000 or for any
Loss until Losses in the aggregate total at least $150,000 (in which event,
such claim shall be for Losses for the amount incurred). The aggregate
liability of all Sellers under this Section 10 is limited to $2,000,000.
(e) Third-Party Actions. In the event any claim is made, suit is
brought or tax audit or other proceeding instituted against an indemnified
party which involves or appears reasonably likely to involve a Loss for
purposes of this Section 10, the indemnified party will, promptly after receipt
of notice of any such claim, suit or proceeding for which indemnification may
be sought, notify the indemnifying party of the commencement thereof. The
failure to so notify the indemnifying party of the commencement of any such
claim, suit or proceeding will relieve the indemnifying party from liability
under Section 10 hereof only to the extent that such failure materially
adversely affects the ability of the indemnifying party to defend its interest
in such claim, action or proceeding. The indemnified party (at its expense)
shall have the right and shall be given the opportunity to associate with an
indemnifying party in the defense of such claim, suit or proceeding, provided
that counsel for the indemnifying party shall act as lead counsel in all
matters pertaining to the defense or settlement of such claim, suit or
proceeding. An indemnified party shall not make any settlement with respect to
any such claim, suit or proceeding without the prior consent of the
indemnifying party. In the event that an indemnified party determines to
settle any such claim, suit or proceeding without the prior consent of the
indemnifying party, the indemnifying party shall have no indemnification
obligations under this Section 10 with respect to such claim, suit or
proceeding.
(f) Sole Remedy. The provision of this Section 10 shall constitute
the sole remedy for Losses arising out of the transactions contemplated by this
Agreement.
(g) Escrow. Seller's indemnification obligation shall be paid and
secured through an Escrow Account in the amount of two million dollars
($2,000,000) which shall be governed by the provisions of the Escrow Agreement
substantially in the form attached hereto as Exhibit E.
SECTION 11. Termination; Modification or Waiver.
(a) Termination. This Agreement may be terminated at any time prior
to the Closing:
(i) by mutual written agreement of Buyer and Sellers;
(ii) by Buyer or either Seller, by notice to the other parties,
if the Closing shall not have taken place prior to March 31, 1998 (or such
later date as agreed to by all parties in writing), subject to any rights
accruing to the date of such notice on account of any breach of this Agreement
by the opposite party hereto; provided, however, that if on March 31, 1998 the
Buyer shall not have received the audited financial statements as set forth in
Section 7(k) of this Agreement then such termination date shall be extended from
March 31, 1998 to April 5, 1998 and provided further that the conditions to
Closing set forth in Sections 7(g) and 8(f) of this Agreement shall not have
been fulfilled, then such termination date shall be extended from March 31,
1998 to April 30, 1998; or
12
(iii) by Buyer or either Seller, if an order is issued by any
court, agency, governmental body or public authority to restrain, enjoin or
prohibit the consummation of the transactions contemplated by this Agreement,
or a proceeding for any such order occurs.
(b) Modification. This Agreement may be amended, modified or
supplemented only by written agreement of all parties hereto.
(c) Waiver. Any failure of Sellers, on the one hand, or Buyer, on
the other, to comply with any obligation, covenant, agreement or condition
contained herein may be expressly waived in writing by Buyer in the case of any
such failure by Sellers or by Sellers in the case of any such failure by Buyer,
but such waiver or failure to insist upon strict compliance shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any
party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11(c).
SECTION 12. Costs Incident to Preparation of Agreement.
Each of the parties hereto shall pay, without right or reimbursement
from the others, all costs incurred by it incident to the preparation,
execution and delivery of this Agreement and the performance of its obligations
hereunder, whether or not the transactions contemplated by this Agreement shall
be consummated, including, without limitation, fees and disbursements of legal
counsel, accountants, investment bankers and consultants employed by the
respective parties hereto in connection with the transactions contemplated by
this Agreement.
SECTION 13. Parties in Interest and Assignment.
(a) This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
This Agreement is not made for the benefit of any person, firm, corporation or
other entity not a party hereto, and nothing in this Agreement will be
construed as giving any person, firm, corporation or other entity, other than
the parties hereto and their respective successors and permitted assigns, any
right, remedy or claim under or in respect of this Agreement, or any provision
hereof.
(b) This Agreement may not be assigned by any party hereto without
the prior written consent of all of the other parties hereto.
SECTION 14. Investigation by Buyer; Confidentiality.
(a) Until the Closing Date or the date this Agreement is terminated
pursuant to Section 11 hereof, if earlier, Buyer, through its agents and
employees, may conduct an investigation of the Business and the financial
condition of the Business. During the course of such investigation, Sellers
agree to cause the facilities, books, records, personnel and accountants of the
Company and the Subsidiaries to be made available for review (or interviews in
the case of personnel) by such agents and employees and to cause to be provided
to Buyer such other information as it shall reasonably request, at reasonable
times and upon reasonable notice. In the event that the transactions
contemplated by this Agreement are not consummated, Buyer shall return to the
Company all copies of documents furnished to or obtained by them in the course
of such investigation.
(b) Any information provided or obtained pursuant to clause (a) above
shall be held by Buyer in accordance with, and shall be subject to, that
certain letter with respect to confidentiality entered into with respect to the
transaction set forth in this Agreement between Buyer and the Company.
SECTION 15. Miscellaneous.
(a) Any notice, request, consent, waiver or other communication
required or permitted to be given hereunder shall be effective only if in
writing and shall be deemed sufficiently given only if delivered in person or
sent by telegram, cable, telecopy or certified or registered mail, postage
prepaid, return receipt requested, addressed as follows:
13
If to Sellers: Xxxxxx Xxxxxxxx
000 Xxxxxxxxxx Xxxx
Xxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx
00 Xxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx, XX 00000
AO Capital Corp.
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Vice President and General Counsel
If to Buyer: American Business Information, Inc.
0000 Xxxxx 00 Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Chief Financial Officer
With a copy to: Xxxxxxx X. Xxxxxxxx
Corporate Counsel
American Business Information, Inc.
0000 Xxxxx 00 Xxxxxx
Xxxxx, XX 00000
or to such other person or address as any such party may have specified in a
notice duly given to the sender as provided herein. Such notice or
communication shall be deemed to have been given as of the date so delivered,
telegraphed, telecopied or cabled or, if mailed, three days after being mailed.
(b) This Agreement (including the Exhibits and Schedules attached
hereto) and the documents referred to herein as having been entered into by any
of the parties hereto or delivered by a party hereto to another party hereto
constitute the entire agreement and understanding of the parties relating to
the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings, representations and warranties, whether oral or
written, relating to the subject matter hereof. The terms of this Agreement
cannot be changed, modified, released or discharged orally.
(c) No delay or failure on the part of any party in exercising any
rights hereunder, and no partial or single exercise thereof, will constitute a
waiver of such rights or of any other rights hereunder.
(d) THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
(e) The unenforceability or invalidity of any Section or subsection
or provision of this Agreement shall not affect the enforceability or validity
of the balance of this Agreement.
(f) The headings of the Sections and subsections contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning, interpretation, enforceability or validity of this Agreement.
(g) This Agreement may be executed in any number of counterparts,
each of which so executed will be deemed to be an original, but all of which
together will constitute one and the same agreement.
(h) No public disclosure pertaining to this Agreement or the
transaction contemplated hereby shall be made by any party unless approved by
the other party prior to release.
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: BUYER:
AMERICAN BUSINESS INFORMATION, INC.
By:
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxxx
AO Capital Corp.
By
15
Schedules
I - Ownership of Shares
II - Certain Key Executives
2(a) - Restrictions on Transfer
3(b) - Rights to Acquire Capital Stock
3(e) - Consents/Approvals Required
3(f) - Financial Statements
3(g) - Machinery, Equipment and Vehicles
3(i)(1) - Contracts and Other Agreements
3(i)(2) - Consents Under Existing Contracts
3(j) - Litigation, Orders and Judgments
3(k) - Defaults in Tax Filings
3(1) - Patents, Copyrights, Trademarks, Etc.
3(m)(1) - Employee Benefit Plans
3(m)(2) - Employment and Related Agreements
3(o) - Insurance Policies
3(q) - Environmental Matters
9(1) - Additional Absolute or Contingent Liability
9(4) - Compensation Changes
Exhibits
A - Form of Opinion of Sellers' Counsel
B - Form of Employment Agreements and Noncompete
Agreements
C - Form of Opinion of Buyer's Counsel
D - Price Schedule
E - Form of Escrow Agreement
16
Exhibit D
Transaction Value Allocation
Enterprise Value 19,000,000
Plus: September Cash Balance 366,964
19,366,964
Liabilities to be paid at closing:
Note to AO Capital Corp. $ 2,684,667
Interest and Fees Due AO Capital Corp. 788,902
Liabilities Paid at Closing (3,473,569)
(estimate)
Non-Working Capital Liabilities Assumed:
Net Pension Liability $ 87,620
State of Connecticut Note 450,000
Accumulated Interest State of Connecticut
Note 99,302
Total Non-Working Capital Liabilities Assumed (636,922)
Proceeds to Equity Holders (estimate) $15,256,473
Amounts due from Shareholders
Xxxxxxxx (estimate) (211,459)
Zaslansky (estimate) (251,310)
(462,769)
Represents the amount due through December 31, 1997, which amount will be
increased $1,014 per day thereafter until the date it is paid, except to the
extent actually paid prior to Closing. The amount due through September 30,
1997 was $748,372.
Represents the amount due through December 31, 1997, which amount will be
increased $75 per day thereafter until the date it is paid, except to the
extent actually paid prior to Closing.
Represents the amount due through December 31, 1997, which amount will be
increased $42 per day for each Shareholder until the date it is paid, except to
the extent actually paid prior to Closing.
