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Exhibit 2(y)
FIRST AMENDMENT
TO
AMENDED AND RESTATED
STOCK TRANSFER AND EXCHANGE AGREEMENT
This first amendment (this "Amendment") is made and entered into
______________, 1997, to be effective as of August 1, 1996, among United
Magazine Company, an Ohio corporation ("Unimag"), Ohio Periodical Distributors,
Inc., an Ohio corporation ("OPD"), and all of OPD's shareholders (individually,
an "OPD Shareholder" and collectively, the "OPD Shareholders").
BACKGROUND INFORMATION
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A. Effective August 1, 1996, Unimag and OPD entered into an Asset Transfer
and Exchange Agreement (the "Original Agreement") which provided for, among
other things, Unimag's acquisition of substantially all of the assets and
business operations of OPD which comprise, are used in, and relate to, OPD's
wholesale magazine, book newspaper and sundries distribution and related
business (the "Wholesale Periodical Business").
B. Unimag, OPD, and the OPD Shareholders modified and amended the Original
Agreement by entering into an Amended and Restated Stock Transfer and Exchange
Agreement among all of them (the "Exchange Agreement"), in order to provide for
Unimag's acquisition of the Wholesale Periodical Business through an exchange,
pursuant to which OPD's common shares, voting, without par value, (each an "OPD
Share" and collectively, the "OPD Shares"), outstanding at the Escrow Closing
(defined in Section 1.2 of the Exchange Agreement) shall bE exchanged for (1)
Unimag's common shares, without par value ("Unimag Shares"), and (2) senior and
subordinated debentures of Unimag. The terms and provisions of the Exchange
Agreement are hereby incorporated herein by reference and, unless otherwise
specifically defined in this Amendment, all capitalized terms used in this
Amendment shall have the same meaning as such terms are defined in the Exchange
Agreement.
C. Unimag, OPD, and the OPD Shareholders now desire to modify and amend the
Exchange Agreement in order to provide for Unimag's acquisition of the Wholesale
Periodical Business through a merger of OPD with and into Unimag, with Unimag
being the surviving entity of the merger (the "Merger"). This Amendment, along
with the Exchange Agreement, is intended to constitute an agreement of merger
under O.R.C. Section 1701.78.
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STATEMENT OF AGREEMENT
The parties to this Amendment (each a "Party," and collectively, the
"Parties") hereby acknowledge the accuracy of the above Background Information
and, in consideration of the covenants and agreements set forth in this
Amendment, the Parties agree as follows:
Section 1. If any inconsistencies exist between the provisions of this
Amendment and the provisions of the Exchange Agreement, then the provisions of
this Amendment shall control and supersede the inconsistent provisions of the
Exchange Agreement. Unless otherwise specifically indicated, all references to
sections are to sections of the Exchange Agreement.
Section 2. The Exchange Agreement is amended by deleting the current
Sections 1.2 and 1.3 in their entirety and inserting the following in their
place:
Section 1.2 THE MERGER. Upon the terms and subject to the conditions
described in this Agreement, and in accordance with the provisions of Ohio
Revised Code Chapter 1701 (the "Ohio Statute"), OPD shall be merged with
and into Unimag. The Merger shall be consummated by filing with the Ohio
Secretary of State a Certificate of Merger in a form to be prepared by
Unimag and approved by OPD (the "Certificate of Merger"). Following the
Merger, the separate corporate existence of OPD shall cease and Unimag
shall continue as the surviving corporation and shall continue its
existence under the Ohio Statute. Unimag, in its capacity as the surviving
corporation of the Merger, is sometimes referred to in this Agreement as
the "Surviving Corporation."
Section 1.3 ESCROW CLOSING; CLOSING; EFFECTIVE TIME. The escrow
closing of the Merger and the other transactions contemplated by this
Agreement (the "Escrow Closing") shall be held at the offices of Xxxxx &
Xxxxxxxxx, 00 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000, commencing at 10:00
a.m. Columbus, Ohio time on such date (the "Escrow Closing Date") as may be
reasonably designated by Unimag; provided that the Escrow Closing shall be
held not later than August 31, 1997. As provided in Section 6.5, after the
Escrow Closing the only conditions to the release of this Agreement and the
other documents executed in connection with the transactions contemplated
by this Agreement (the "Additional Documents") from the Document Escrow
Agreement (defined in Section 6.4) shall be the approval of the Merger by
the shareholders of Unimag and the escrow closing of certain other
acquisitions. Within ten days after such approvals (the "Closing Date"),
the Parties will cause the Agreement and the Additional Documents to be
delivered to the appropriate Party in accordance with the terms and
conditions of the Document Escrow Agreement and the Parties will close the
Merger (the "Closing"). In no event shall the Closing be held later than
September 30, 1997. Promptly following the Closing, OPD and Unimag shall
cause the Certificate of Merger to be filed with the Ohio Secretary of
State and the Merger shall become effective when the Certificate of Merger
has been so filed (the "Effective Time").
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Section 1.4 ARTICLES OF INCORPORATION; CODE OF REGULATIONS. The
articles of incorporation of the Surviving Corporation existing at the
Effective Time shall be the articles of incorporation of the Surviving
Corporation after the Merger, until amended in accordance with the Ohio
Statute. The code of regulations of the Surviving Corporation existing at
the Effective Time shall be the code of regulations of the Surviving
Corporation after the Merger, until amended in accordance with the Ohio
Statute.
Section 1.5 DIRECTORS AND OFFICERS. The directors and officers of the
Surviving Corporation shall continue to hold such offices after the Merger
and shall serve pursuant to the code of regulations of the Surviving
Corporation.
Section 1.6 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 1701.78 of the Ohio Statute.
Section 1.7 TAX EFFECT OF THE MERGER. The Parties intend that the
Merger constitute a "reorganization" with in the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended, and that the
adoption of this amendment constitutes the adoption of a plan of
reorganization for purposes thereof.
Section 3. The Exchange Agreement is amended by deleting the current
opening sentence of Section 2.1 and all of Section 2.1(a) in their entirety and
inserting the following in their place:
Section 2.1 CONVERSION OF CAPITAL STOCK. At the Effective Time and by
virtue of the Merger:
(a) OUTSTANDING OPD SHARES. Each OPD Share which is issued and
outstanding immediately prior to the Effective Time shall be converted
into the right to receive, subject to the provisions of Section 2.2,
and subject to the adjustments provided for in Sections 2.1(b) and
3.3, (i) 20,381.55 Unimag Shares (an aggregate of 10,190,774 Unimag
Shares for all OPD Shares converted), and (ii) $14,961.64 principal
amount of Unimag Debentures (an aggregate of $7,480,820 principal
amount of Unimag debentures for all OPD Shares converted) (the "Unimag
Debentures"). The Unimag Debentures shall be issued pursuant to the
terms of the Debenture Agreement attached hereto as Exhibit A. An
aggregate of $6,415,419 principal amount of the Unimag Debentures
($12,830.98 per OPD Share converted) will be Senior Debentures (as
defined in the Debenture Agreement), and the balance of the Unimag
Debentures will be Subordinated Debentures (as defined in the
Debenture Agreement).
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Section 4. The Exchange Agreement is amended by deleting the current last
paragraph of Section 2.1(b) in its entirety.
Section 5. The Exchange Agreement is amended by adding the following new
subsection Section 2.1(d) after existing subsection Section 2.1(c):
(d) UNIMAG SHARES HELD BY OPD. OPD currently owns 5,000,000 shares of
Unimag Stock. At the Closing, OPD shall surrender to Unimag the
certificates evidencing such 5,000,000 Unimag Shares and such certificates
will be canceled.
Section 6. The Exchange Agreement is amended by adding the following new
section Section 2.3 after the existing section Section 2.2:
Section 2.3 EXCHANGE OF KDR NOTE. The promissory note dated July, 1992
between OPD, as debtor, and KDR Limited, an Ohio limited liability company
("KDR"), as creditor, with a principal amount of $5,000,000 (the "KDR
Note"), together with accrued interest thereon, if any, will not be assumed
by Unimag in the Merger. At the Effective Time, the KDR Note, together with
accrued interest thereon, if any, will be exchanged for (a) cash in the
amount of $500,000 plus any accrued interest, and (b)Unimag Subordinated
Debentures in the aggregate principal amount of $4,500,000.
Section 7. The Parties acknowledge that the percentages in the first
paragraph of Section 2.1(b) of the Exchange Agreement (67.142% with regard to
Unimag Shares and 32.858% with regard to Unimag Debentures) were calculated
based upon initial percentages of 51% and 49%, respectively, and then making an
adjustment based upon the 5,000,000 Unimag Shares currently owned by OPD. These
5,000,000 Unimag Shares (valued at $1.50 per share for a total value of
$7,500,000) were deducted from the total valuation of $22,766,980 in determining
the aggregate amount of Unimag Debentures to be issued to the OPD Shareholders
in connection with the Merger ($22,766,980 - $7,500,000) x 49% = $7,480,820) and
this $7,480,820 amount is approximately 32.858% of $22,766,980. The difference
between these two amounts ($15,286,160) represents the portion of the total
valuation used to determine the aggregate number of Unimag Shares (15,286,160 /
$1.5 = 10,190,774) to be issued to the OPD Shareholders in connection with the
Merger and this $15,286,160 amount is approximately 67.142% of $22,766,980.
Section 8. The Exchange Agreement is amended such that in Section 2.2, the
Unimag Shares to be issued to each OPD Shareholder in connection with the Merger
shall not be issued by Unimag at the Closing, but shall be issued by Unimag
immediately after the Effective Time.
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Section 9. The Exchange Agreement is amended such that all references in
the Exchange Agreement to the "Exchange" shall be deemed to be references to the
"Merger."
UNITED MAGAZINE COMPANY
By
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Xxxxx X. Xxxxxxxx, Treasurer
OHIO PERIODICAL DISTRIBUTORS, INC.
By
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Xxxxxx X. Xxxxxxx, President
OPD SHAREHOLDERS:
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Bank One Trust Company, NA, Trustee
under the Xxxxx X. Xxxxxxx Agreement of
Trust FBO Xxxxxx X. Xxxxxxx dated June
14, 1979
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Bank One Trust Company, NA, Trustee
under the Xxxxx X. Xxxxxxx Agreement of
Trust FBO Xxxxx Xxxxxx Xxxxxxx dated
June 14, 1979
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XXX XXXX
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