ASSET PURCHASE AGREEMENT
dated as of
August 15, 1996
by and between
BRIGHTVIEW COMMUNICATIONS GROUP, INC.
and
XXXXXXXX PUBLISHING COMPANY
TABLE OF CONTENTS
Page
ARTICLE I
SALE OF ASSETS, ASSUMPTION OF LIABILITIES
AND RELATED TRANSACTIONS ................. 1
1.1 Purchase and Sale of Assets...................................... 1
1.2 Assumed Liabilities and Excluded Liabilities..................... 6
1.3 Amount Payable at Closing........................................ 7
1.4 Allocation of Purchase Price..................................... 8
1.5 Determination of Working Capital as of the
Closing.......................................................... 8
1.6 Deposit.......................................................... 10
ARTICLE II
CLOSING............................ 10
2.1 Closing Date..................................................... 10
2.2 Items to be Delivered at the Closing By Seller................... 10
2.3 Items to be Delivered at the Closing by Buyer.................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER......................... 12
3.1 Organization and Related Matters................................. 12
3.2 Financial Statements; No Other Liabilities....................... 12
3.3 Inventories...................................................... 13
3.4 Notes and Accounts Receivable.................................... 13
3.5 Taxes............................................................ 13
3.6 Material Contracts............................................... 14
3.7 Absence of Certain Developments.................................. 14
3.8 Title; Condition of Assets....................................... 15
3.9 Leases........................................................... 15
3.10 Intangible Property.............................................. 16
3.11 Authorization; No Conflicts...................................... 16
3.12 Legal Proceedings and Certain Labor Matters...................... 17
3.13 Insurance........................................................ 18
3.14 Permits.......................................................... 18
3.15 Compliance with Law; Environmental Compliance.................... 18
3.16 Employee Benefits................................................ 18
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3.17 Bank Accounts, Powers, etc....................................... 19
3.18 No Brokers or Finders............................................ 20
3.19 Circulation...................................................... 20
3.20 Employees........................................................ 20
3.21 Barter........................................................... 20
3.22 Affiliate Transactions........................................... 20
3.23 Customer, Advertiser, Subscriber and Mailing
Lists............................................................ 20
3.24 Closing Date..................................................... 21
3.25 Health and Welfare Plans......................................... 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 21
4.1 Organization and Related Matters................................. 21
4.2 Authorization; No Conflicts...................................... 21
4.3 No Brokers or Finders............................................ 22
4.4 Legal Proceedings................................................ 22
4.5 WARN Act......................................................... 22
4.6 Disclaimer of Representations and Warranties..................... 22
ARTICLE V
COVENANTS WITH RESPECT TO CONDUCT OF SELLER
PRIOR TO CLOSING...................... 23
5.1 Access........................................................... 23
5.2 Conduct of Business.............................................. 23
5.3 Permits and Approvals............................................ 24
5.4 Government Filings............................................... 25
5.5 Sales and Transfer Taxes......................................... 25
5.6 Insurance Policies............................................... 26
ARTICLE VI
ADDITIONAL CONTINUING COVENANTS.............. 26
6.1 Seller's Post-Closing Access..................................... 26
6.2 Rights to Xxxxxxxx Intangible Property........................... 26
6.3 WARN Act......................................................... 27
6.4 Affiliate Agreements............................................. 27
6.5 Directorship..................................................... 27
6.6 Barter Bank...................................................... 27
6.7 Certain Employee Matters......................................... 27
6.8 Xxxx-Xxxxx-Xxxxxx Act Filings.................................... 29
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6.9 Further Transfers; Transition Assistance;
Accounts Receivables............................................. 30
6.10 Exclusivity...................................................... 31
6.11 Covenant Not to Compete or Solicit............................... 31
6.12 Covenant Relating to Leases...................................... 32
ARTICLE VII
GENERAL CONDITIONS OF PURCHASE.............. 33
7.1 No Orders; Legal Proceedings..................................... 33
7.2 Approvals........................................................ 33
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER.............. 33
8.1 Representations and Warranties and Covenants of
Seller........................................................... 33
8.2 No Material Adverse Change....................................... 34
8.3 Receipt of Closing Deliveries and Releases of
Encumbrances..................................................... 34
8.4 Third Party Consents............................................. 34
8.5 Amendment and Restatement of Leases.............................. 34
8.6 Delivery of Opinion of Seller's Counsel.......................... 35
8.7 Xxxxxxxx License; Change of Seller's Name........................ 35
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER............ 35
9.1 Representations and Warranties and Covenants of
Buyer............................................................ 35
9.2 Employment of Xxxxxxxx........................................... 35
9.3 Delivery of Opinion of Buyer's Counsel........................... 35
9.4 Receipt of Closing Deliveries and Release of
Encumbrances..................................................... 35
ARTICLE X
TERMINATION OF OBLIGATIONS; SURVIVAL.............. 36
10.1 Termination of Agreement......................................... 36
10.2 Effect of Termination............................................ 36
10.3 Limited Survival of Representations and
Warranties....................................................... 37
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10.4 Effect of Closing Over Known Unsatisfied
Conditions or Breached Covenants................................. 37
10.5 Notice of Breach of Representations or
Warranties....................................................... 37
ARTICLE XI
INDEMNIFICATION........................ 38
11.1 Obligations of Seller............................................ 38
11.2 Obligations of Buyer............................................. 38
11.3 Procedure........................................................ 38
11.4 Mitigation; Limitations on Indemnification....................... 39
11.5 Remedies Exclusive............................................... 40
ARTICLE XII
TAX MATTERS AND INSURANCE................... 41
12.1 Tax Returns; Audits.............................................. 41
12.2 Wage Reporting................................................... 41
12.3 Insurance Matters................................................ 42
ARTICLE XIII
PUBLICITY/CONFIDENTIALITY................... 43
13.1 Publicity and Reports............................................ 43
13.2 Confidentiality.................................................. 43
ARTICLE XIV
DEFINITIONS.......................... 44
14.1 General Provisions............................................... 44
14.2 Specific Provisions.............................................. 45
ARTICLE XV
GENERAL............................ 51
15.1 Amendments; Waivers.............................................. 51
15.2 Exhibits and Schedules; Integration.............................. 51
15.3 Best Efforts..................................................... 52
15.4 Governing Law.................................................... 52
15.5 No Assignment.................................................... 52
15.6 Headings......................................................... 52
15.7 Counterparts..................................................... 52
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15.8 Parties in Interest............................................. 52
15.9 Notices......................................................... 52
15.10 Expenses........................................................ 54
15.11 Attorneys' Fees................................................. 54
15.12 Representation By Counsel; Interpretation....................... 54
15.13 Severability.................................................... 54
15.14 Dispute Resolution; Agreement to Arbitrate...................... 54
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EXHIBITS
A - Reconciliation Statement
B - Xxxx of Sale and Assignment
C - Lease Assignment and Assumption Agreement
D - Copyright Assignment
E - Trademark Assignment
F - Assumption Agreement
G - Form of License Agreement
H - 1. Form of O'Melveny & Xxxxx Opinion
2. Form of Opinion of Xxxxxx Xxxxxxxx, Esq.
I - Form of Xxxxxxxx & Xxxxx Opinion
J - Form of Employment Agreement
K - Special Power of Attorney
L - Company Plan Assumption Agreement
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SCHEDULES
Disclosure Schedule
Schedule 1.1(a)(i) - Real Property Leases
Schedule 1.1(a)(iii) - Motor Vehicles
Schedule 1.1(a)(xiv) - Information Services Systems and Software
Schedule 1.1(a)(xix) - Publications Constituting Purchased Assets
Schedule 1.1(b)(xi) - Amounts Due From Xxxxxxxx or Any of Xxxxxxxx'x
Affiliates
Schedule 1.1(b)(xvi) - Awards and Mementos
Schedule 1.1(b)(xvii) - Works of Art and Antiques
Schedule 1.4 - Fair Market Value of the Purchased Assets
Schedule 3.1(a) - Qualifications And Good Standing
Schedule 3.2(a) - Accounting Principles
Schedule 3.2(b) - Debts, Liabilities and Obligations
Schedule 3.5 - Tax Matters
Schedule 3.6 - Material Contracts
Schedule 3.7 - Certain Development Since June 30, 1996
Schedule 3.10(a) - Intangible Property
Schedule 3.10(b) - Absence of Right to Use and Assign
Intangible Property
Schedule 3.11 - Seller's Approvals and Permits
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Schedule 3.12 - Legal Proceedings and Certain Labor
Matters
Schedule 3.13 - Insurance
Schedule 3.16(a) - Employer Benefits
Schedule 3.16(b) - Employer Benefits Compliance
Schedule 3.17 - Bank Accounts
Schedule 3.19 - Circulation
Schedule 3.21 - Barter
Schedule 4.2 - Buyer's Approvals and Permits
Schedule 6.4(a) - Affiliate Agreements that Terminate
at Closing
Schedule 6.4(b) - Affiliate Agreements that Remain in
Effect Post-Closing
Schedule 6.7(c) - Employees Entitled to Severance
Upon Termination
Schedule 6.12 - Form of Chicago Lease
Schedule 14.2(a) - Material Facilities Leases
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of August 15, 1996 by and between
BRIGHTVIEW COMMUNICATIONS GROUP, INC., a Delaware corporation ("Buyer"), and
XXXXXXXX PUBLISHING COMPANY, a California corporation ("Seller").
W I T N E S S E T H
WHEREAS, Seller owns all of the assets used in connection with its
publishing business (as further defined in Section 14.2 below, the "Business");
WHEREAS, Seller desires to sell, and Buyer desires to buy, the Purchased
Assets (as defined in Section 1.1(a) below) on the terms and conditions
hereinafter set forth;
WHEREAS, Seller desires to convey, and Buyer desires to assume, the Assumed
Liabilities (as defined in Section 1.2 below) on the terms and conditions
hereinafter set forth;
WHEREAS, Seller has invited Buyer to perform, and Buyer has performed, all
necessary due diligence and business investigations with respect to Seller, the
Purchased Assets and the Assumed Liabilities, with the intention that Buyer form
its own conclusions regarding the condition and value of the business, property,
liabilities, contracts and related matters of Seller pursuant to the parties'
express intention that the sale of the Purchased Assets and the transfer of the
Assumed Liabilities be without representation or warranty by Seller, express or
implied, except as specifically set forth herein;
WHEREAS, The R.E. & X.X. Xxxxxxxx Living Trust (the "Xxxxxxxx Trust")
currently owns all of the outstanding capital stock of Seller; and
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound, Buyer and Seller do hereby
agree as follows:
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ARTICLE I
SALE OF ASSETS, ASSUMPTION OF LIABILITIES
AND RELATED TRANSACTIONS
1.1 Purchase and Sale of Assets.
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, all
of the assets, properties, rights and contracts owned by Seller free and clear
of all Encumbrances and restrictions of whatever nature, other than Permitted
Encumbrances and other than Encumbrances to the extent arising from or securing
Assumed Liabilities (the "Purchased Assets"), except the assets specifically
identified in Section 1.1(b) (the "Excluded Assets"). The Purchased Assets
shall include, without limitation, the following:
(i) All leasehold interests in real property held by Seller and
used primarily in connection with the Business, including those set forth
as listed on Schedule 1.1(a)(i).
(ii) All fixtures and improvements attached to any leasehold
interest used primarily in connection with the Business.
(iii) All machinery, apparatus, furniture, materials, supplies
and other equipment of every type owned or leased by Seller and used
primarily in connection with the Business, and those motor vehicles set
forth on Schedule 1.1(a)(iii).
(iv) All of Seller's accounts receivable arising from the
conduct of the Business as of the date hereof ("Accounts Receivable"),
together with any additions thereto received or generated by Seller, and
subject to any reductions therefrom incurred by Seller, in operating the
Business in the ordinary course after the date hereof through the Closing
Date.
(v) All inventory of goods, including all editorial material,
manuscripts, notes and drafts, merchandise, office supplies, paper and
other raw materials,
2
work in progress and finished products held for sale (the "Inventory") and
other tangible personal property, including all trade fixtures, computers
and related software, tooling, molds, dies and furniture, used primarily in
connection with the Business as of the date hereof, together with any
additions thereto received or generated by Seller, and subject to any
reductions therefrom incurred by Seller, in operating the Business in the
ordinary course after the date hereof through the Closing Date.
(vi) Except as set forth in Section 1.1(b), all of Seller's
rights and interests arising under or in connection with any Contracts to
which Seller is a party and which relate primarily to the Business.
(vii) Except as set forth in Section 1.1(b)(xx) below, all
assets and licenses owned by, and other rights and interests of, Seller in
connection with the production, promotion or distribution of any television
programs, radio programs and other media programming, if any, including,
without limitation, "Motor Trend TV," "Hot Rod Magazine TV," and "Guns &
Ammo Presents: 'The American Shooter.'"
(viii) All rights and interests to any Internet site that is
maintained by Seller as of the date hereof and that relates to the
Business.
(ix) All of Seller's rights to organize, produce, control and
promote the Events, including without limitation, "Miss Teenage America"
and "The Great Model Search."
(x) All demonstrations, stands, exhibits and related equipment
used in connection with the Events.
(xi) The "Hot Rod Roadshow," which consists of an 18-wheel
tractor and trailer rig, a similarly painted van and the booths, racks,
demonstration areas and related equipment into which the trailer may be
converted for purposes of conducting Events, and all related assets owned
by Seller.
(xii) All transferable Permits relating primarily to the
Business.
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(xiii) Except for prepaid insurance, all of Seller's prepaid
expenses arising from the conduct of the Business as of or prior to the
date hereof including advances to Retained Employees (collectively,
"Prepaid Expenses"), together with any additions thereto and subject to any
reductions therefrom made or accrued by Seller in operating the Business in
the ordinary course after the date hereof through the Closing Date.
(xiv) Except as set forth in Section 1.1(b), the information
services systems and software used primarily in the Business, including
without limitation, those set forth on Schedule 1.1(a)(xiv) hereto.
(xv) Seller's books of account relating to the Business.
(xvi) All of Seller's tickets, licenses, passes and other
rights to skyboxes, suites and other seats to any stadiums or other venues
for any entertainment events, including without limitation professional
sporting, race car and raceway events.
(xvii) All of Seller's sales and subscription data, subscription
lists, customer lists, advertiser lists, information and records relating
to customers, suppliers, advertisers, subscribers, employees, accounts and
referral sources of the Business; mailing lists, and, if any, advertising
matter and all rights thereto used in the Business, whether current,
historical, expired, outdated or otherwise; and all studies, plans, books,
ledgers, files and business records of every kind (including all financial,
business and marketing plans and information) relating primarily to the
Business; in each case whether evidenced in writing, electronic data
(including by computer) or otherwise.
(xviii) Subject to Section 6.2 hereof, all of Seller's Intangible
Property and corporate and trade names used in the Business; all goodwill
associated with the Business; all of Seller's books and records relating
primarily to the Business and its employees.
4
(xix) All of Seller's rights, in the United States and
worldwide, to publish, sell, distribute and license those publications
published by Seller, including all that are set forth on Schedule
1.1(a)(xix) hereto (the "Publications") and their respective component
elements.
(xx) All lists of contributors, authors, correspondents,
reviewers, photographers, consultants, advisors, illustrators and editors
used in the Business.
(xxi) All inventories of back and current issues of each of the
Publications, except for the single set of bound volumes of back and
current issues held by Xxxxxxxx.
(xxii) All property reflected in Seller's barter accounts as of
the Closing Date.
(xxiii) All of Seller's choses of action, rights and interests
arising under any insurance policy under which Seller is a beneficiary, but
only to the extent that a claim under such policy would relate to the
Purchased Assets or Assumed Liabilities, in each case to the full extent
assignable under the terms thereof, and all other claims, causes of action,
rights of recovery and rights to indemnification or set-off of any kind to
the extent relating to the Purchased Assets or the Assumed Liabilities.
(b) Excluded Assets. The assets that constitute Excluded
Assets shall include only:
(i) The consideration delivered to Seller pursuant to this
Agreement.
(ii) The assets, properties, rights and contracts owned or
held by Seller and not used primarily in connection with the Business.
(iii) Any inventory or other property sold by Seller in the
ordinary course of business during the period of time from the date hereof
until the Closing Date, to the extent not sold in breach of Section 5.2.
(iv) All fee interests in real property owned by Seller,
including, without limitation, all direct or
5
indirect rights and interests in duck club and ranch properties, and boat
moorings, water companies and water rights.
(v) Except as set forth in Section 1.1(a)(xxiii), Seller's
insurance policies and related choses in action, rights and interests
pursuant to which Seller is insured or is a beneficiary.
(vi) Any automobiles owned by Seller, whether or not used in
connection with the Business, other than those set forth on Schedule
1.1(a)(iii)
(vii) Any rights to indemnification in favor of Xxxxxxxx or any
of Seller's other employees, officers or directors; and except as set forth
in Section 1.1(a)(xxiii), any rights of Seller to indemnification,
recovery, or set off of any kind.
(viii) All of Seller's rights and interests to any software
developed for Seller or the Business by Nth Degree.
(ix) Seller's articles of incorporation, non-transferable
franchises, corporate seals, minute books, stock books and other corporate
records relating to the corporate organization and capitalization of Seller
and all income tax records and nontransferable Permits or Permits not
relating primarily to the Business.
(x) Any Tax refund.
(xi) All amounts due from Xxxxxxxx or any of his Affiliates, to
the extent set forth on Schedule 1.1(b)(xi).
(xii) Cash on hand and in all bank accounts and cash
equivalents.
(xiii) Any goods or other assets on consignment or otherwise held
for third parties.
(xiv) Except as set forth in Section 1.1(a)(xv), all files and
records of Seller that do not relate primarily to the Business; provided
that Buyer shall receive
6
reasonable access (including after the Closing) to the information therein
that pertains to the Business.
(xv) Goods received by or purchased from Seller in barter
transactions, reflected in Seller's barter accounts prior to the Closing
Date and distributed to the shareholder of Seller pursuant to Section 6.6.
(xvi) Any awards or mementos received by Xxxxxxxx or any
employee of Seller, and any personal office or boardroom furniture or
fixtures, including, without limitation, any items set forth on Schedule
1.1(b)(xvi) hereto.
(xvii) Any works of art and antiques (other than those held
solely for publication in the Publications or display at Events) owned by
Seller, including, without limitation, any items set forth on Schedule
1.1(b)(xvii) hereto.
(xviii) Any Intangible Property described in Section 6.2 hereof.
(xix) Xxxxxxxx'x single set of bound volumes of back and
current issues of each of the Publications.
(xx) Assets and licenses held by, and other rights and
interests of, Seller relating solely to the production, promotion or
distribution of television programs or music which were produced and aired
prior to or during 1985.
(xxi) Any Note in favor of Seller secured by a mortgage on real
property.
(xxii) All club memberships and hunting licenses held in
Seller's name.
1.2 Assumed Liabilities and Excluded Liabilities. At the Closing,
Buyer shall assume, and agree to pay, perform, fulfill and discharge all debts,
claims, obligations and liabilities of Seller (collectively, the "Assumed
Liabilities"); provided, however, that the Assumed Liabilities shall not include
the following (collectively, the "Excluded Liabilities"):
7
(i) Any debts, claims, obligations or liabilities to the
extent (A) not arising from the Business or (B) relating to any software
developed for Seller or the Business by Nth Degree.
(ii) Any liability of Seller for Taxes, including Taxes that
could be imposed on account of a disqualification of any employee benefit
plan.
(iii) Any of Seller's liabilities or obligations under this
Agreement or the agreements contemplated hereby.
(iv) Except as contemplated by Sections 1.5, 5.3, 5.5 and 5.6,
any of Seller's liabilities or obligations for expenses or fees incident to
or arising out of the negotiation, preparation, approval or authorization
of this Agreement or the consummation (or preparation for the consummation)
of the transactions contemplated hereby (including all attorneys,'
accountants,' investment banking, financial advisory, and brokerage fees
and expenses).
(v) Except with respect to those plans assumed by Buyer pursuant
to Section 6.7(a), any liability or obligation under or with respect to any
Company Plan or any other employee benefit plan, program, policy or
arrangement presently or formerly maintained or contributed to by any
member of the controlled group of companies (as such term is defined in
Section 414 of the Code) of which Seller is or was a member, or with
respect to which Seller or such controlled group member has any liability.
(vi) Any of Seller's liabilities or obligations for indebtedness
for borrowed money, or guarantees thereof.
(vii) Any liabilities or obligations to the extent related to any
of the Excluded Assets (including under any contracts, leases, commitments
or understandings related thereto or any fee interest in real estate) or
the Excluded Liabilities.
(viii) Any liability or obligation to Xxxxxxxx, the Xxxxxxxx
Trust, the Xxxxxxxx Automotive Museum or any other director, shareholder or
Affiliate of Seller, any individual related by blood or marriage to or
beneficiary of any such
8
Person or any entity in which any such Person or individual owns any
beneficial interest, except pursuant to the Wilshire Lease or the Chicago
Lease, and except for the obligation to reimburse Xxxxxxxx for business
expenses (so long as Xxxxxxxx gives Buyer written notice thereof prior to
the determination of Working Capital pursuant to Section 1.5 and the
calculation thereof is adjusted to include all such amounts).
For purposes of this Section 1.2 and Section 10.5 below, "Seller"
shall be deemed to include all predecessors to Seller and any Person with
respect to which Seller is a successor-in-interest (including by operation of
law, merger, liquidation, consolidation, assignment, assumption or otherwise).
Seller hereby acknowledges that it is retaining the Excluded
Liabilities, and Seller shall pay, discharge and perform all such liabilities
and obligations promptly when due. Buyer hereby acknowledges that it is assuming
the Assumed Liabilities, and Buyer shall pay, discharge and perform all such
liabilities and obligations promptly when due.
1.3 Amount Payable at Closing. The purchase price to be paid to Seller
by Buyer for the Purchased Assets shall be (a) the assumption of the Assumed
Liabilities plus (b) $450,000,000, payable as described in the following
sentence and subject to adjustment as provided in Section 1.5. At the Closing,
Buyer shall (i) assume the Assumed Liabilities, and (ii) pay Seller $450,000,000
(less the amount of the Deposit and Accrued Interest, which shall be retained by
Seller). Such cash purchase price payable at Closing, plus or minus the amounts
paid pursuant to Section 1.5, as finally adjusted pursuant to Section 1.5, is
hereinafter referred to as the Final Purchase Price.
1.4 Allocation of Purchase Price. Buyer and Seller shall negotiate in
good faith to determine the fair market value of the Purchased Assets; provided,
however, that for purposes of this Section 1.4 all accounts receivable shall be
valued at their face value, net of reserves. If the Buyer and Seller are unable
to agree prior to the Closing on such fair market value, Buyer shall secure an
appraisal (the expense of which shall be borne equally by Buyer and Seller) of
the Purchased Assets whose value is disputed as soon as reasonably practicable
following the Closing (a draft as well as final copies of which shall be
9
furnished to Seller within ten days after receipt by Buyer), to determine the
fair market value of such Purchased Assets. Buyer and Seller shall mutually
agree upon an appraiser within 30 days after closing to conduct the valuation
contemplated by this Section 1.4. Upon receipt of such appraisal, Buyer and
Seller shall negotiate in good faith based upon such appraisal to determine the
fair market value of the Purchased Assets. If within fifteen Business Days after
their receipt of the appraisal, Buyer and Seller have not agreed on fair market
value, the appraised value of the Purchased Assets whose value is disputed shall
be their fair market value and the other Purchased Assets shall be valued at
their agreed value. After Buyer and Seller so agree on the fair market value of
the Purchased Assets, Buyer and Seller shall set forth such fair market values
on Schedule 1.4 which shall be deemed to be part of this Agreement. For tax
purposes, the Final Purchase Price shall be allocated among the Purchased Assets
consistent with the fair market values thereof set forth on Schedule 1.4 and in
accordance with Section 1060 of the Code. In such case, neither Buyer nor
Seller, nor any of their respective affiliates, shall take any position in any
income tax return or income tax audit which is inconsistent with Schedule 1.4
unless required to do so by applicable law. Buyer and Seller shall exchange
drafts of any information returns required by Section 1060 of the Code, and any
similar state statute that is applicable, at least 60 days prior to filing such
returns and shall discuss in good faith any modification suggested by the
receiving party.
1.5 Determination of Working Capital as of the Closing.
(a) Within 120 days after the Closing Date, Seller shall deliver
to Buyer a balance sheet (the "Statement") of the Purchased Assets and Assumed
Liabilities immediately prior to the opening of business on the Closing Date,
including as a schedule thereto a statement of Working Capital as of such time
(the "Adjustment Schedule"). In connection with the preparation of the Statement
and the Adjustment Schedule, Seller shall take and prepare a physical count of
the Inventory. Seller shall engage the Auditors to observe the physical count of
the Inventory and to audit the Statement, and the fees and expenses of the
Auditors in connection therewith shall be borne equally by Buyer and Seller.
Representatives of Buyer (which may, at Buyer's election, include
representatives of Ernst & Young's Chicago office) shall
10
be permitted to observe such physical count. Seller's delivery of the Statement
and the Adjustment Schedule to Buyer shall be certified by the Auditors to the
effect that the Statement and Adjustment Schedule have been prepared based upon
the Agreed Accounting Principles and reviewed by the Auditors in accordance with
this Section 1.5. During the period immediately following Buyer's receipt of the
Statement and the Adjustment Schedule and until the Working Capital is finally
determined pursuant to this Section 1.5, Buyer and its representatives and
agents shall be permitted to review Seller's books and records and working
papers related to Seller's preparation of the Statement and the Adjustment
Schedule and determination of the Working Capital. The Statement and the
Adjustment Schedule shall become final and binding upon the parties 30 days
following Buyer's receipt thereof or, if Buyer so elects, 90 days after the
Closing, unless Buyer gives written notice of its disagreement ("Notice of
Disagreement") to Seller prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. If a
timely Notice of Disagreement is received by Seller, then the Statement and the
Adjustment Schedule (as revised in accordance with clause (x) or (y) below)
shall become final and binding upon the parties on the earliest of (x) the date
Buyer and Seller resolve in writing any differences they have with respect to
the matters specified in the Notice of Disagreement or (y) the date all matters
in dispute are finally resolved in writing by the Accounting Firm (as defined
below) pursuant to this Section 1.5. During the 30 days following delivery of a
Notice of Disagreement, Buyer and Seller shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such period, Seller shall be
permitted to review Buyer's working papers relating to the Notice of
Disagreement. At the end of such 30-day period, Buyer and Seller shall submit to
a mutually satisfactory independent "big-six" accounting firm other than the
Auditors (the "Accounting Firm") for review and resolution all matters which
remain in dispute which were included in the Notice of Disagreement, and the
Accounting Firm shall make a final determination of Working Capital in
accordance with the guidelines and procedures set forth in this Agreement. If
Buyer and Seller are unable to mutually agree on an Accounting Firm, Buyer and
Seller shall select a "big-six" Accounting Firm by lot (after excluding the
Auditors and one big- six accounting firm selected by each of Buyer and Seller).
The fees and expenses of the Accounting Firm
11
shall be shared equally by Buyer and Seller. Working Capital shall then be
determined pursuant to the Statement and the Adjustment Schedule.
(b) If the amount of Working Capital as finally determined pursuant to
Section 1.5(a) is greater than the amount of Working Capital reflected in the
Reconciliation Statement attached hereto as Exhibit A (the "Reconciliation
Statement"), Buyer shall, within three days of such final determination pursuant
to Section 1.5(a) pay to Seller, in immediately available funds, the amount of
such difference, together with interest thereon at the Agreed Rate from the
Closing Date. If the amount of Working Capital as finally determined pursuant
to Section 1.5(a) is less than the amount of Working Capital reflected in the
Reconciliation Statement, Seller shall, within three days of such final
determination pursuant to Section 1.5(a), pay to Buyer, in immediately available
funds, the amount of such difference, together with interest thereon at the
Agreed Rate from the Closing Date.
1.6 Deposit. Immediately following the execution of this Agreement
by both parties, Buyer shall deliver to Seller by wire transfer in immediately
available funds, a deposit in the amount of two million dollars ($2,000,000)
(the "Deposit"), which Seller shall deposit in an interest-bearing account in
Seller's name at a nationally-recognized banking institution. At the Closing,
Seller shall retain the Deposit plus any interest accrued thereon from the date
the Deposit was deposited by Seller ("Accrued Interest"). In the event that
this Agreement is terminated (i) by Seller in accordance with Section 10.1(d) or
(ii) on account of any condition to Closing (over which Buyer has control) not
being satisfied, Buyer agrees that, in addition to any other rights and remedies
available to Seller, Seller shall have the right to retain the Deposit and the
Accrued Interest and Buyer shall have no claim to, or interest in, the Deposit
and the Accrued Interest. In the event that this Agreement terminates for any
other reason, Seller shall promptly refund to Buyer the amount of the Deposit
plus the Accrued Interest. Buyer acknowledges that the retention of the Deposit
by Seller shall not constitute a measure of Seller's damages for any claim for
breach against Buyer brought under this Agreement.
12
ARTICLE II
CLOSING
2.1 Closing Date. The Closing of the transaction shall take place at
the offices of O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx, on September 30, 1996 or on such later date that the last to be
satisfied of the conditions specified in Articles VII, VIII, and IX is satisfied
or waived, or at such other location or time as Seller and Buyer may agree.
2.2 Items to be Delivered at the Closing By Seller. At the Closing,
Seller shall deliver or cause to be delivered to Buyer:
(a) A Xxxx of Sale and Assignment, in substantially the form of
Exhibit B.
(b) An Assignment, Assumption and Estoppel Certificate and Agreement
in the form of Exhibit C, with respect to each material Lease, executed and
acknowledged by Seller and each lessor with respect thereto.
(c) A Copyright Assignment, in substantially the form of Exhibit D.
(d) A Trademark Assignment, in substantially the form of Exhibit E.
(e) Such other instruments of transfer necessary or appropriate to
transfer to and vest in Buyer all of Seller's right, title and interest in and
to the Purchased Assets.
(f) Copies of all Permits and Approvals described in Schedule 3.11,
certified resolutions of Seller's board of directors authorizing and approving
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, certified copies of Seller's
certificate of incorporation and bylaws, a short-form certificate of good
standing (certified by an appropriate government official of Seller's
jurisdiction of incorporation as of a date not more than three business days
prior to the Closing Date) and a certificate of the Secretary or Assistant
Secretary of Seller as to the incumbency of the officer(s) of Seller (who shall
not be
13
such Secretary or Assistant Secretary) executing this Agreement and the other
agreements contemplated hereby to be executed and delivered by Seller.
(g) All documentation required (pursuant to Treasury Regulation
Section 1.1445-2(b)(2)) to exempt Seller from the withholding requirement of
Section 1445 of the Code, consisting of (a) an affidavit from Seller to Buyer
stating under penalty of perjury that Seller is not a foreign person and
providing Seller's U.S. taxpayer identification number, or (b) a sworn affidavit
of Seller that it is not a "U.S. real property holding corporation," as defined
in Section 897 of the Code or (c) a "qualifying statement" obtained by Seller
from the Internal Revenue Service.
(h) The certificates, consents and other documents referred to herein
as then deliverable by Seller.
(i) The keys to all locks located on or in the Purchased Assets (and
any and all cards, devices or things necessary to access any Purchased Assets).
2.3 Items to be Delivered at the Closing by Buyer.
At the Closing, Buyer shall deliver to Seller:
(a) An Assumption Agreement, in substantially the form of Exhibit E,
pursuant to which Buyer shall assume the Assumed Liabilities.
(b) The amount set forth in Section 1.3.
(c) Such instruments as reasonably requested by any creditor, lessor
or any other person whose consent is required to consummate the transactions
contemplated by this Agreement and to evidence the assumption by Buyer of the
Assumed Liabilities.
(d) The certificates, consents and other documents referred to herein
as then deliverable by Buyer.
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise indicated on the Disclosure Schedule, Seller
represents and warrants to Buyer as follows:
3.1 Organization and Related Matters. Seller is a corporation duly
organized, validly existing and in good standing under the laws of California.
The outstanding shares of Seller's capital stock consists of 5,000 shares of
common stock, par value $100 per share, all of which are owned by the Xxxxxxxx
Trust. Except for such as are included in the Excluded Assets, Seller does not
own or control (directly or indirectly) any stock, partnership interest, joint
venture interest, equity participation or other security of interest in any
other Person. Seller has all necessary corporate power and authority necessary
to execute, deliver and perform this Agreement and to own its properties and
assets and to carry on its businesses as now conducted and is duly qualified or
licensed to do business as a foreign corporation in good standing in the
jurisdictions listed in Schedule 3.1, which constitute all of the jurisdictions
in which the ownership of the Purchased Assets or the conduct of Business
requires it to be so qualified, except for jurisdictions where the failure to be
so qualified does not have a material adverse effect on the Business, taken as a
whole, as currently conducted.
3.2 Financial Statements; No Other Liabilities.
(a) Seller has made available to Buyer balance sheets for Seller at
November 30, 1993, 1994 and 1995 and the related statements of income and cash
flows for the periods then ended, all of which have been audited by the Auditors
whose reports thereon are included with such financial statements. Seller has
also made available to Buyer unaudited balance sheets for Seller, at June 30,
1996 ("Latest Balance Sheet") and the related statements of income and cash
flows for the seven month period then ended ("Latest Financial Statements").
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is consistent with the books and records of Seller and presents
fairly, in all material respects, the financial condition and results of
operations of Seller, in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby
15
except as disclosed in the footnotes to the annual statements or as described in
Schedule 3.2(a) hereto; provided, however, that the Latest Financial Statements
are subject to normal year end adjustments (which, individually or in the
aggregate, would not reasonably expected to be material) and lack footnotes and
other presentation items.
(b) Except as set forth on Schedule 3.2(b), Seller has no debts,
liabilities or obligations of any nature (whether accrued, absolute, contingent,
direct, indirect, perfected, inchoate, unliquidated or otherwise, whether due or
to become due) arising out of transactions entered into at or prior to the
Closing, or any transaction, series of transactions, action or inaction at or
prior to the Closing, or any state of facts or condition existing at or prior to
the Closing (regardless of when any such liability or obligation is asserted),
except liabilities and obligations that (i) are included in the Excluded
Liabilities, (ii) arise under Leases or Contracts included in the Purchased
Assets, (iii) are reflected and reserved against on the Latest Balance Sheet in
accordance with GAAP or disclosed in the notes to the most recent audited
statements, (iv) are incurred in the ordinary course of business and consistent
with past practice since the date of the Latest Balance Sheet or (v) arise in
connection with the matters disclosed in Schedules 3.7, 3.10(b), 3.12 or
3.16(b).
3.3 Inventories. The inventories of Seller are properly reflected on
Seller's books and records in accordance with GAAP.
3.4 Notes and Accounts Receivable. All material notes and accounts
receivable of Seller (a) are valid receivables incurred in the ordinary course
of business and (b) are properly reflected on Seller's books and records in
accordance with GAAP.
3.5 Taxes.
(a) Seller has made available to Buyer copies of all federal and all
material state and local income and franchise Tax Returns of Seller for its
taxable years ending in calendar years 1993, 1994 and, if available, 1995. All
Taxes shown as due on such Tax Returns have been paid and, to the knowledge of
Seller, all such Tax Returns are correct and complete in all material respects.
Except as set forth on Schedule 3.5, as of the date
16
hereof, there is no taxing authority proceeding or audit pending with respect to
Seller.
(b) Seller currently is, and has at all times since its taxable year
beginning December 1, 1983, qualified to be taxed as an "S corporation" for
federal income tax purposes. The Seller is also taxed as an "S corporation" or
the equivalent thereof in California (since December 1, 1987), Michigan (since
December 1, 1983), New York (since December 1, 1993), Georgia (since December 1,
1993), Ohio (since December 1, 1983) and Illinois (since December 1, 1983).
3.6 Material Contracts. Schedule 3.6 lists, as of the date hereof,
each Contract which is a Material Contract. True copies of all Material
Contracts have been made available to Buyer. Each Material Contract is valid and
subsisting, Seller has duly performed all its obligations under each Material
Contract to which it is a party to the extent that such obligations to perform
have accrued, and no breach or default, or, to Seller's knowledge, alleged
breach or default, or event which would (with the passage of time, notice or
both) constitute a breach or default by Seller thereunder, or, to Seller's
knowledge, any other party or obligor thereunder, has occurred or, assuming that
the requisite Approvals and Permits set forth on Schedule 3.11 are sought and
obtained, as a result of the execution, delivery and performance of this
Agreement will occur, except in each case for such as would not have a material
adverse effect on the Business, taken as a whole.
3.7 Absence of Certain Developments.
(a) Except as set forth on Schedule 3.7, since June 30, 1996 to the
date hereof, there has been no material adverse change in the assets,
liabilities, condition (financial or otherwise), operating results, business or
cash flows of the Business, taken as a whole.
(b) Except in connection with the transactions contemplated hereby
or as set forth on Schedule 3.7, since June 30, 1996 to the date hereof, Seller
has conducted the Business in the ordinary course of business consistent with
past practice, and Seller has not:
17
(i) sold, assigned or transferred any of the Purchased Assets
(or assets which, had they been retained by Seller, would be described by
the definition of Purchased Assets), except such sale, assignment or
transfer of inventory in the ordinary course of business consistent with
past practice or which do not have a material adverse effect on the
Business, taken as a whole, or mortgaged, pledged or subjected any of the
Purchased Assets to any material Encumbrance, except for Permitted
Encumbrances;
(ii) made or granted any bonus or any wage, salary or other
compensation increase to any employee, officer, director, consultant or
adviser or made any other material change in terms or employment or
engagement for any employee, officer, director, consultant or adviser,
other than (A) the hiring and firing of employees in the ordinary course of
business (B) any increase or bonus mandated by any of the Company Plans,
(C) any increase or bonus in connection with a promotion in the ordinary
course of business, and (D) annual merit salary increases in the ordinary
course of business consistent with past practice;
(iii) made or granted any material increase in, or amended or
terminated, any existing Company Plan, or material amended or entered into
any new collective bargaining agreement or multiemployer plan;
(iv) made any capital expenditures or commitments therefor such
that the aggregate outstanding amount of unpaid obligations and commitments
with respect thereto shall comprise in excess of $500,000 of Assumed
Liabilities on the Closing Date;
(v) suffered any extraordinary loss, damage, destruction or
casualty loss; or
(vi) committed to any of the foregoing.
(c) Seller has not at any time made or committed to make any unlawful
payments for political contributions or to the knowledge of Seller made any
bribes, kickback payments or other illegal payments.
18
3.8 Title; Condition of Assets. Seller has good and marketable title
to all of the Purchased Assets, free and clear of any Encumbrance other than
Permitted Encumbrances, and the Purchased Assets constitute all of the assets
necessary to operate the Business as currently conducted. Seller has all rights,
power and authority to sell, convey, assign, transfer and deliver the Purchased
Assets to Buyer in accordance with the terms of this Agreement. At the Closing,
Seller will convey good and marketable title to all of its real and personal
property included within the Purchased Assets, free and clear of all
Encumbrances other than Permitted Encumbrances. No software developed for Seller
or the Business by Nth Degree is necessary to enable Buyer to operate the
business in the same manner as currently operated by Seller. The buildings,
improvements, fixtures, machinery, equipment and other tangible assets (whether
owned or leased) included in the Purchased Assets are, to the knowledge of
Seller, and except for ordinary wear and tear, in commercially reasonable
condition and repair and are usable in the ordinary course of business and all
such assets have been installed and maintained in accordance with all applicable
laws, regulations and ordinances, except, in each instance, for such
deficiencies and failures as do not have a material adverse effect on the
Business, taken as a whole. None of the property reflected in Seller's barter
accounts is used in the conduct of the Business.
3.9 Leases.
(a) All material leasehold properties that constitute part of the
Purchased Assets held by Seller as lessee are held under valid, binding and
enforceable leases, subject only to such exceptions as are not, individually or
in the aggregate, material to the Business, taken as a whole.
(b) Seller has heretofore made available to Buyer a true, correct
and complete copy of each leasehold interest comprising a portion of the
Purchased Assets (each a "Lease"), together with all material amendments,
modifications, alterations, and other changes thereto.
(c) As of the date hereof, all conditions precedent to the
enforceability of each Lease have been satisfied and, to the knowledge of
Seller, there exists no breach or default, nor state of facts which, with the
passage of time, notice, or both, would
19
result in a breach or default on the part of either Seller or the lessor
thereunder.
3.10 Intangible Property. Schedule 3.10(a) sets forth a complete and
correct list of all: (i) patented or registered Intangible Property and pending
patent applications or other applications for registrations of Intangible
Property owned or filed by or on behalf of the Business and (ii) all material
trade names and unregistered trademarks and service marks owned or used by the
Business. The Intangible Property included in the Purchased Assets, together
with the property licensed under the Xxxxxxxx License, comprises all of the
intellectual property necessary for the operation of the Business as currently
conducted. Except as set forth in Schedule 3.10(b): (i) Seller owns and
possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Intangible Property necessary for the operation
of the Business as currently conducted subject to such exceptions as do not have
a material adverse effect on the Business, taken as a whole; (ii) to Seller's
knowledge, no claim by any third party contesting the validity, enforceability,
use or ownership of any of such Intangible Property is currently outstanding or
is threatened, subject to such exceptions as do not have a material adverse
effect on the Business, taken as a whole; (iii) Seller has not received any
notices of any infringement or misappropriation by the Business, or conflict
with any third party with respect to the Intangible Property owned by Seller or
used in the Business (including, without limitation, any demand or request that
Seller license any rights from a third party) subject to such exceptions as do
not have a material adverse effect on the Business, taken as a whole; and (iv)
to Seller's knowledge, in the conduct of the Business, Seller is not infringing,
misappropriating or otherwise conflicting with any Intangible Property or other
rights of any third parties, except in each case such as do not have a material
adverse effect on the Business, taken as a whole.
3.11 Authorization; No Conflicts. The execution, delivery and
performance by Seller of this Agreement, the other agreements contemplated
hereby and the transactions contemplated hereby and thereby have been duly and
validly authorized by Seller and no other corporate act or proceeding on the
part of Seller, its Board of Directors or its shareholder is necessary to
authorize the execution, delivery or performance by Seller of this Agreement or
any other agreement contemplated hereby or the
20
consummation of the transactions contemplated hereby or thereby. This Agreement,
the Xxxxxxxx License and each other agreement contemplated hereby or executed in
connection herewith has been duly executed and delivered by Seller (and in the
case of the Xxxxxxxx License, Xxxxxxxx) and each constitutes the legally valid
and binding obligation of Seller, enforceable against Seller (and in the case of
the Xxxxxxxx License, Xxxxxxxx) in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally. The execution, delivery and performance by
Seller of this Agreement, the Xxxxxxxx License and each other agreement
contemplated hereby or executed in connection herewith by it and the execution,
delivery and performance by Xxxxxxxx of the Xxxxxxxx License and by Xxxxxxxx of
the Employment Agreement in the form attached hereto as Exhibit J (the
"Employment Agreement"), will not (a) violate, conflict with, result in any
breach of, constitute a default under, result in the termination or acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice (whether upon lapse of time and/or the occurrence of any act
or event or otherwise) under the Seller's Articles of Incorporation or bylaws or
any Material Contract to which Seller (and in the case of the Xxxxxxxx License
and the Employment Agreement, Xxxxxxxx) is a party, (b) result in the imposition
of any Encumbrance against the Business, any Purchased Asset or any other
property of Seller (and in the case of the Xxxxxxxx License and the Employment
Agreement, Xxxxxxxx), or (c) violate any Law the violation of which would have a
material adverse effect on the Business, taken as a whole. Schedule 3.11 lists,
as of the date hereof, all material Approvals and Permits required to be
obtained by Seller to consummate the purchase and sale of the Purchased Assets.
Except for matters identified on Schedule 3.11, the execution, delivery and
performance of this Agreement by Seller will not require any filing or
registration with, or the issuance of any Approval or Permit by, any third party
or Governmental Entity, except for such actions which, if not accomplished, do
not have a material adverse effect on the Business, taken as a whole, as
currently conducted.
3.12 Legal Proceedings and Certain Labor Matters. Except as listed on
Schedule 3.12 as of the date of this Agreement, there is no Order or Action
pending, or, to the knowledge of Seller, threatened, against or affecting Seller
or
21
any of its properties or assets or by which the Purchased Assets are bound (or
the Buyer is bound with respect to the Purchased Assets) that individually or
when aggregated with one or more other such Orders or Actions has, or is
reasonably expected as of the date of this Agreement to have, a material adverse
effect on the Business, taken as a whole, the Purchased Assets, the Assumed
Liabilities or the Seller's ability to perform this Agreement. Except as listed
on Schedule 3.12 as of the date of this Agreement, there is no organized labor
strike, dispute, slowdown or stoppage, or collective bargaining or unfair labor
practice claim pending or, to the knowledge of Seller, threatened, against or
affecting Seller or the Business nor any union or collective bargaining
representation question or issue respecting employees of Seller so pending or
threatened.
3.13 Insurance. Schedule 3.13 lists, as of the date hereof, all
insurance policies currently owned by Seller and in force under which Seller is
insured, that are material to the conduct of the Business, taken as a whole.
Under the terms thereof, Seller is insured with reputable insurers against all
risks normally insured against by companies in similar lines of business. All of
such insurance policies, to the extent Seller is insured thereby, are in full
force and effect and Seller is not in material default thereunder.
3.14 Permits. Seller holds all Permits that are required by any
Governmental Entity to conduct its Business as now conducted and operate the
Purchased Assets as they are now operated, and all such Permits are valid and in
full force and effect, except, in each case, for such as do not, if not held,
valid or in force, have a material adverse effect on the Business, taken as a
whole, as currently conducted. To Seller's knowledge, Seller is in compliance
with the terms and conditions of such Permits and has received no notices that
it is in violation of any of the terms or conditions of such Permits except for
such failures in compliance and violations as do not have a material adverse
effect on the Business, taken as a whole, as currently conducted. To Seller's
knowledge, no loss of any Permit that is material to the Business, taken as a
whole, is threatened or pending other than pursuant to expiration in accordance
with the terms thereof.
3.15 Compliance with Law; Environmental Compliance. Seller has
conducted its businesses in accordance with applicable
22
Law, except for such failures as do not have a material adverse effect on the
Business, taken as a whole, as currently conducted. There has not been any
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Substance in connection with the conduct of the Business in violation
of any Environmental Law which has created any liability of Seller having a
material adverse effect on the Business, taken as a whole. To Seller's
knowledge, there has been no discharge, release or disposal of any Hazardous
Substance on, under or from the Real Property subject to the Leases or
previously owned or operated in the Business having a material adverse effect on
the Business, taken as a whole.
3.16 Employee Benefits. Schedule 3.16(a) sets forth, as of the date
hereof, a complete list of all material Employee Pension Benefit Plans (as
defined in Section 3(2) of ERISA), Employee Welfare Benefit Plans (as defined in
Section 3(1) of ERISA) and any other material employee benefit arrangements
maintained by Seller or to which Seller contributes (collectively, the "Company
Plans"). No such Company Plan is subject to Title IV of ERISA. Except as
described in Schedule 3.16(b), with respect to each Company Plan, to Seller's
knowledge:
(a) such Company Plan, to the extent it is subject to any
requirements under ERISA, complies therewith, except for any non-compliance
which would not be reasonably likely to have a material adverse effect on
the Business, taken as a whole;
(b) all contributions payable by Seller which are due, if any, to
such Company Plan and all benefits payable by Seller which are due, if any,
with respect to each Company Plan have been paid in full;
(c) Each such Company Plan that is an Employee Pension Benefit
Plan that is intended to meet the requirements of a "qualified plan" under
Section 401(a) of the Code has received a favorable determination letter
from the IRS with respect to the Tax Reform Act of 1986 within the remedial
amendment period;
(d) Seller has made available to Buyer complete copies of the
current plan documents, if any, and summary plan
23
descriptions, if applicable, with respect to each Company Plan, together
with copies of any and all amendments thereof adopted through the date of
this Agreement, the most recent determination letter received from the IRS,
and the most recent Form 5500 Annual Report with all attachments, in each
instance if required under ERISA;
(e) there is no pending or threatened legal action, proceeding
or, to Seller's knowledge, investigation against a Company Plan or the
assets of any of the trusts under a Company Plan that would be reasonably
likely to have a material adverse effect on the Business, taken as a whole;
and
(f) there have been no non-exempt "prohibited transactions"
within the meaning of Section 406 of ERISA and Section 4975 of the Code or
breaches of fiduciary duty with respect to a Company Plan that would be
reasonably likely to have a material adverse effect on the Business, taken
as a whole.
3.17 Bank Accounts, Powers, etc. Schedule 3.17 lists, as of the date
of this Agreement, each bank, trust company, savings institution, brokerage
firm, mutual fund or other financial institution with which Seller has an
account or safe deposit box and the names and identification of all Persons
authorized to draw thereon or to have access thereto.
3.18 No Brokers or Finders. No agent, broker, finder, or investment
or commercial banker, or other Person or firm engaged by or acting on behalf of
Seller or any of its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this Agreement
is or will be entitled to any brokerage or finder's or similar fee or other
commission as a result of this Agreement or such transactions, except for
Xxxxxxx, Xxxxx & Co., as to which Seller shall have full responsibility.
3.19 Circulation. Accurate and fair copies of the two most recent
six-month audit reports issued by the Audit Bureau of Circulations ("ABC") with
respect to each Publication, the circulation of which is audited by ABC, are
attached to Schedule 3.19 hereto. To Seller's knowledge, each such audit report
is accurate and fair in all material respects.
24
3.20 Employees. Seller is not a party to or bound by any written or
oral contract with any labor union or collective bargaining agreement. Seller is
not aware that it has any labor relations problems (including, without
limitation, any union organization activities, threatened or actual strikes or
work stoppages or material grievances) that are reasonably expected to have
adverse monetary consequences for the Business in excess of $500,000 in the
aggregate.
3.21 Barter. Schedule 3.21 sets forth all obligations of Seller with
respect to the Business which arise therefrom or relate thereto to the extent
such obligations exceed $250,000 alone or in the aggregate.
3.22 Affiliate Transactions. Contracts, arrangements and transactions
between Seller and any Seller Affiliate (including use by Seller of assets in
which any Seller Affiliate has any interest) in effect with respect to the
period included in any financial statements described in Section 3.2(a) were, in
the aggregate, on terms no more favorable to Seller than terms available to
Seller from unrelated third parties, except to the extent that such contracts,
arrangements and transactions did not have the effect of increasing revenues or
decreasing expenses of Seller in any material respect. For purposes hereof,
"Seller Affiliate" means Xxxxxxxx or any other officer, director, shareholder or
Affiliate of Seller, any individual related by blood or marriage to any such
Person or any entity in which any such Person or individual owns any significant
beneficial interest.
3.23 Customer, Advertiser, Subscriber and Mailing Lists. Seller has
maintained and currently possesses all subscriber lists, customer lists,
advertiser lists and mailing lists used in connection with the conduct of the
Business as currently conducted, including all such lists necessary to continue
the operation of the Business consistent with current practice, and all of such
lists are in such condition as required in connection with the operation of the
Business, as currently conducted.
3.24 Closing Date. All of the representations and warranties of
Seller in this Article III and elsewhere in this Agreement and all information
delivered in any schedule, attach ment or exhibit hereto or in any certificate
delivered by Seller,
25
the Xxxxxxxx Trust or Xxxxxxxx to Buyer are true and correct in all material
respects on the date of this Agreement and will be true and correct in all
material respects on the Closing Date; provided, however, that until the date
which is the second Business Day preceding the Closing, Seller shall be
permitted to update the Disclosure Schedule to reflect any changes in facts or
circumstances, or events, actions or failures to act, that occur after the date
hereof. Such updated disclosure shall not, however, relieve Seller of any
liability arising from the inaccuracy of a representation and warranty made as
of the date hereof.
3.25 Health and Welfare Plans. Seller has paid, or will have paid, the
premiums on all of its health and welfare insurance plans for all periods up to
the Closing, and, to the Seller's knowledge, with respect to any policies where
premiums would be adjusted in future periods to reflect loss experience in
excess of the insurer's reserves for claims, the insurer's reserves are adequate
to cover related claims exposure. Except for liabilities that will be reflected
in Working Capital as of the Closing, such health and welfare insurance plans
are not subject to any uninsured liabilities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Related Matters. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Buyer has all necessary corporate power and
authority to execute, deliver and perform this Agreement and to carry on its
business as now being conducted.
4.2 Authorization; No Conflicts. The execution, delivery and
performance of this Agreement by Buyer has been duly and validly authorized by
the Board of Directors of Buyer and by all other necessary corporate action on
the part of Buyer. This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and
26
equitable principles relating to or limiting creditors' rights generally. The
execution, delivery and performance of this Agreement by Buyer will not (a)
violate, or constitute a breach or default (whether upon lapse of time and/or
the occurrence of any act or event or otherwise) under, the charter documents or
by-laws of Buyer, (b) violate, or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event or otherwise) under any
Contract to which Buyer is a party, (c) result in the imposition of any
Encumbrance against any material asset or property of Buyer or its Affiliates,
or (d) violate any Law the violation of which would have a material adverse
effect on Buyer's ability to perform its obligations under this Agreement.
Schedule 4.2 lists, as of the date hereof, all material Approvals and Permits
required to be obtained by Buyer to consummate the purchase and sale of the
Purchased Assets. Except for matters identified on Schedule 4.2, the execution,
delivery and performance of this Agreement by Buyer will not require any
material filing or registration with, or the issuance of any material Approval
or Permit by, any third party or Governmental Entity.
4.3 No Brokers or Finders. No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or acting on behalf of
Buyer or its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this Agreement
is or will be entitled to any broker's or finder's or similar fees or other
commissions as a result of this Agreement or such transactions.
4.4 Legal Proceedings. There is no Order or Action pending or, to the
knowledge of Buyer, threatened, against or affecting Buyer or any of its
properties or assets that individually or when aggregated with one or more other
Actions has or, if determined adversely to the interest of Buyer, might
reasonably be expected to have, a material adverse effect on Buyer's ability to
perform this Agreement.
4.5 WARN Act. Buyer is not planning or contemplating, and has not
made or taken, any decisions or actions concerning Seller after the Closing that
would require the service of notice under the Worker Adjustment and Retraining
Act of 0000 (xxx "XXXX Xxx").
27
4.6 Disclaimer of Representations and Warranties. Buyer acknowledges
and agrees that the purchase and sale of the Purchased Assets hereunder shall be
without representation or warranty by Seller, express or implied, except as
specifically set forth in Article III or in any certificates delivered in
connection herewith at the Closing.
ARTICLE V
COVENANTS WITH RESPECT TO CONDUCT OF SELLER
PRIOR TO CLOSING
5.1 Access. Commencing upon the execution hereof by Seller, Seller
shall afford, and cause its officers, directors, employees, attorneys,
accountants and other agents to afford, to Buyer and its representatives (which
term shall be deemed to include its independent accountants, counsel and
lenders, and their respective counsel and advisors) reasonable access during
normal business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of their respective businesses, to all
of Seller's respective properties, facilities, books, records, operating
instructions and procedures, personnel, business, financial, legal, tax,
compensation and other data and information concerning the Business and its
affairs and operations, and all other information with respect to the Business
as Buyer may request, for the purposes of familiarizing Buyer and its
representatives with the Business, the Purchased Assets and the Assumed
Liabilities, obtaining any necessary Approvals of or Permits for the
transactions contemplated by this Agreement or otherwise consummating the
transactions contemplated hereby.
5.2 Conduct of Business. Seller agrees that, prior to the Closing,
it will not without the prior written consent of Buyer (which consent shall not
be unreasonably withheld):
(a) conduct the Business in any manner except in the ordinary course
consistent with past practice (including, without limitation, maintaining the
level and amount of subscription and other sales promotion expenditures,
programs and activities in the ordinary course of the business):
(b) terminate or fail to use its commercially reasonable efforts to
renew or preserve any Permits material to
28
the conduct of the Business or otherwise fail to use commercially reasonable
efforts to preserve intact its business organization and goodwill, fail to use
its commercially reasonable efforts to keep available the services of its
officers and employees, or fail to use commercially reasonable efforts to
maintain satisfactory relationships with material brokers, distributors,
suppliers, customers, advertisers, subscribers and others having material
business relationships with the Business;
(c) enter into, amend or modify any employment or severance agreement
or arrangement with any employee (other than the hiring and firing of employees
in the normal course of business) or grant any increase in any rate of pay
benefits (whether salary or bonus) to or for, or commit to pay any special bonus
to, any salaried employee, or grant any general or uniform increase in the rates
of pay to or benefits for, or commit to pay any special bonus to, any employee
compensated based upon an hourly rate (an "Hourly Employee") or any class
thereof, or (ii) grant any increase in any rate of pay (whether salary or bonus)
or benefits to or for, commit to pay any special bonus to, any Hourly Employee,
except in each case for (A) any increase or bonus mandated by any of the Company
Plans, (B) any increase or bonus in connection with a promotion and consistent
with prior practices, and (C) annual merit salary increases in the ordinary
course of business consistent with past practice;
(d) fail to use commercially reasonable efforts to: (i) maintain the
Purchased Assets in adequate operating condition and repair; (ii) maintain
insurance reasonably comparable to that in effect on the date of the Latest
Balance Sheet; (iii) maintain Inventory, supplies and spare parts at customary
operating levels consistent with past practices; and (iv) in the event of a
casualty, loss or damage to any of such Purchased Assets prior to the Closing
Date for which Seller is insured, either repair or replace such Purchased
Assets, or, if Buyer agrees, transfer the proceeds of such insurance to Buyer;
(e) fail in any material respect to maintain its books, accounts and
records in accordance with past custom and practice as used in the preparation
of the Latest Balance Sheet and the financial statements described in Section
3.2 above;
(f) enter into any new, or amend or terminate any existing, material
contracts, agreements or commitments relating
29
to the Business other than any advertising contract entered into in the normal
course of business or any contract that obligates Seller to pay amounts, and
otherwise exposes Seller to liabilities, less than $250,000 in the aggregate;
(g) institute any material change in the conduct of the Business; or
(h) agree to or make any commitment to take any actions prohibited by
this Section 5.2.
5.3 Permits and Approvals. Seller and Buyer shall cooperate and
endeavor to obtain, and will promptly prepare, all registrations, filings and
applications, requests and notices preliminary to, all Approvals and Permits
identified on Schedule 3.11 or Schedule 4.2. Seller shall bear all out-of-
pocket costs, expenses incurred or fees paid to third parties or Governmental
Entities set forth on Schedule 3.11 in order to obtain such Approvals and
Permits; provided, however, that Buyer and Seller shall each bear half of any
fees paid or expenses incurred by either party in connection with any and all
filings or proceedings required under the Xxxx-Xxxxx-Xxxxxx Act. To the extent
that the Approval of a third party with respect to any Contract is required for
the assignment of such Contract or to avoid a loss of contractual benefits
thereunder in connection with the transactions contemplated by this Agreement
but is not obtained prior to the Closing Date, this Agreement shall not be
deemed to constitute an assignment of any such Contract, and Buyer shall assume
no obligations or liabilities under any such Contract. Seller shall use its best
efforts to advise Buyer promptly in writing with respect to any Contract which
Seller knows or has substantial reason to believe will or may not be subject to
assignment to Buyer hereunder. Without in any way limiting Seller's obligation
to obtain consents and waivers necessary for the sale, transfer, assignment and
delivery of the Purchased Assets, including all Contracts, to Buyer hereunder,
if any such consent is not obtained or if such assignment is not permitted
irrespective of consent and the Closing hereunder is consummated, Seller shall
cooperate with Buyer in good faith to develop an alternative arrangement to
ensure that Buyer obtains the benefits of each such Contract, subject to Buyer
bearing the costs thereof, consistent with the economic results intended by this
Agreement including enforcement for the benefit of Buyer of any and all rights
of Seller against any other party arising out
30
of any breach or cancellation of any such Contract by such other party and, if
requested by Buyer, acting as an agent on behalf of Buyer or as Buyer shall
otherwise reasonably require.
Buyer shall bear the costs of obtaining any non-governmental
Approvals, if the party from whom such Approval is required has refused to grant
such Approval because of Buyer's anticipated credit quality.
5.4 Government Filings. Buyer and Seller shall make any and all
filings required under the Xxxx-Xxxxx-Xxxxxx Act (in accordance with Section 6.8
hereof) and any other Law requiring filings with any Governmental Entity with
respect to the transactions contemplated hereby. Seller and Buyer shall furnish
each other such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings or
submissions under the provisions of such Laws. Seller and Buyer will
immediately supply to each other copies of all correspondence, filings or
communications, including file memoranda evidencing telephonic conferences, by
such party or its Affiliates with any Governmental Entity or members of its
staff, with respect to the transactions contemplated by this Agreement and any
related or contemplated or inconsistent transactions, except for documents filed
pursuant to Item 4(c) of the Xxxx-Xxxxx Xxxxxx Notification and Report Form or
communications regarding the same.
5.5 Sales and Transfer Taxes. Buyer and Seller shall each pay 50% of
all real and personal property transfer taxes, if any, and all sales, use and
other similar taxes, if any, imposed on or in connection with the purchase, sale
or transfer of the Purchased Assets to, and the assumption of the Assumed
Liabilities by, Buyer pursuant to this Agreement. Seller will, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such transfer, sales, use, and other similar taxes and fees, and, if
required by applicable law, Buyer will, and will cause its affiliates to, join
in the execution of any such Tax Returns and other documentation.
5.6 Insurance Policies. Prior to the Closing, Seller shall use its
commercially reasonable efforts to cause Buyer to be named an additional insured
party under each of Seller's insurance policies covering the Business and any
insured period which includes the Closing Date, but only in respect of the
31
Purchased Assets and Assumed Liabilities for periods prior to the Closing, and
shall promptly provide Buyer with evidence thereof; provided, however, that
Seller reserves the right to terminate any such policies after the Closing Date
upon 90 days prior notice to Buyer; and provided further that Buyer shall
reimburse Seller for any increased premiums or other costs resulting from the
addition of Buyer as an additional insured to such insurance policies.
ARTICLE VI
ADDITIONAL CONTINUING COVENANTS
6.1 Seller's Post-Closing Access. Buyer and Seller shall fully
cooperate with the other party, as and to the extent reasonably requested by the
other party, at the other party's sole expense, to make available to the other
party such assistance and financial, Tax and other information (including the
Books and Records) in connection with (a) any audit or other investigation by
any taxing authority or any required reports or submissions (including any Tax
Returns or other statutory reporting obligations of Seller) to Governmental
Entities with respect to Seller relating to any period (or portion thereof)
ending on or before the Closing Date, and (b) matters relating to insurance
coverage of Seller, third-party litigation, claims, proceedings and
investigations involving Seller, if any. Buyer and Seller shall preserve such
information and the Books and Records for at least three years after the Closing
Date, and thereafter to dispose thereof only after it shall have given the other
party 90 days' prior written notice of such impending disposition and the
opportunity (at the other party's expense) to remove and retain such information
and the Books and Records. Any information obtained pursuant to this Section 6.1
or pursuant to any other section hereof providing for the sharing of information
or the review of any Tax Return or other schedule relating to Taxes shall be
subject to Section 13.2.
6.2 Rights to Xxxxxxxx Intangible Property. Buyer acknowledges and
agrees that it shall not have, and Buyer shall not acquire pursuant to this
Agreement, any rights of ownership or use whatsoever with respect to the names
and Marks "Xxxxxxxx," "Xxxxxxxx Publishing Company" and any derivatives thereof
(even if used in the Publications or included in masthead or other designations
of the Publication name); provided, however, that
32
Seller, Xxxxxxxx and Buyer shall deliver at Closing a perpetual, royalty-free
license to use the names "Xxxxxxxx," "Xxxxxxxx Publishing Company" and
derivatives thereof in connection with the Business and the Publications and
ancillary and related businesses (including, among other things, any future
publications of Buyer) upon the terms of the license attached as Exhibit G
hereto (the "Xxxxxxxx License"). Seller agrees that, effective as of the Closing
and except as otherwise contemplated by the Xxxxxxxx License, it shall
immediately cease and desist from any use of any such Intangible Property.
6.3 WARN Act. Buyer agrees that it will not take any action which
causes the notice provisions of the WARN Act to be applicable to the
transactions contemplated by this Agreement.
6.4 Affiliate Agreements.
(a) Termination. Buyer and Seller acknowledge and agree that all of
the contracts, agreements and other arrangements, whether written or oral,
described on Schedule 6.4(a), between Seller on the one hand, and Xxxxxxxx or
any of his Affiliates (other than Seller or the Xxxxxxxx Trust) on the other
hand, shall be terminated as of the Closing without further payment by or
obligation of either such party thereto to the other.
(b) Honor Continuing Agreements. Subject to Section 6.12, Buyer
agrees to honor from and after the Closing all obligations owing to Xxxxxxxx or
his Affiliates pursuant to the terms of the leases and agreements listed on
Schedule 6.4(b). Buyer further agrees that it shall not attempt to better or
otherwise re-negotiate the express terms of any lease or agreement listed on
Schedule 6.4(b).
6.5 Directorship. At Seller's request, Buyer shall cause each of
Xxxxxxxx and Xxxxxxxx XxXxxxx Xxxxxxxx to be appointed as a director of the
Buyer promptly following the Closing and to be nominated by Buyer for re-
election as a director in the slate of directors recommended by management of
Buyer, if he should so desire, or she should so desire, respectively, at Buyer's
next- ensuing meeting of stockholders at which directors, or the class of
directors to which he is appointed, stand for election.
33
6.6 Barter Bank. Notwithstanding anything to the contrary in Section
5.2, at any time prior to the Closing, Xxxxxxxx may cause the Seller to
distribute to Xxxxxxxx or the Xxxxxxxx Trust any goods received by Seller in
barter transactions (or proceeds thereof) and that are not used in the conduct
of the Business.
6.7 Certain Employee Matters.
(a) Benefits - Generally. Buyer shall indemnify Seller for all
claims for severance arising from Buyer's termination of Retained Employees.
Buyer will offer employment to each of Seller's employees who is employed with
respect to the Business. Each such employee who becomes employed by Buyer shall
be referred to herein as a "Retained Employee", and all such employees who
become so employed by Buyer shall be referred to herein collectively as the
"Retained Employees". For the benefit of all Retained Employees, Buyer shall
continue to maintain through December 31, 1996 all health and welfare plans of
Seller. Subject to the foregoing sentence, Buyer shall employ each Retained
Employee at a total compensation level, including wages, salary and benefits,
which is substantially equivalent in the aggregate to or greater than that
provided to such Retained Employee by Seller with respect to the previous year;
provided that, notwithstanding the foregoing, Buyer may modify such compensation
level at any time subsequent to the Closing Date. Nothing in this Agreement
shall limit Buyer's ability to terminate the employment of any Retained Employee
at any time after the Closing and for any reason, including without cause;
provided, however, that in addition to any severance payments that might be
payable to any Retained Employee so terminated, Buyer shall also pay to any such
Retained Employee an amount equal to any accrued and unpaid bonuses owing to
such Retained Employee.
(b) Company Plans. Subject to the fourth sentence of Section 6.7(a)
and otherwise notwithstanding any other provision of this Agreement, on and
after the Closing Date Seller shall retain the sponsorship of all Company Plans
and all assets of and liabilities attributable to the Company Plans, including
any obligations, liabilities or commitments with respect to the Retained
Employees arising under Part 6 of Title I of ERISA and Section 4980B of the Code
relating to any qualifying event occurring on or before the Closing Date. Buyer
shall have no
34
right, title, interest, obligation, duty or liability with respect to the
Company Plans or any other "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) that is maintained or contributed to by (or
required to be maintained or contributed to by) any person or entity that,
together with Seller, is at any time treated as a single employer under Section
414 of the Code (each such employee pension benefit plan, an "ERISA Affiliate
Plan"), and Seller shall indemnify and hold Buyer harmless against all claims,
suits, damages, losses, costs and expenses arising out of any liabilities,
obligations or commitments with respect to the Company Plans and the ERISA
Affiliate Plans.
(c) Benefit Arrangements for Retained Employees. As of the Closing
Date, Seller shall vest, if so required in accordance with the terms thereof,
all Retained Employees in all benefits accrued through the Closing Date under
any Company Plan that is intended to be qualified within the meaning of Section
401(a) of the code. Effective as of the Closing Date and through July 31, 1997,
Buyer shall provide to and on behalf of the Retained Employees such employee
benefit plans, programs and compensation as it deems appropriate to fulfill its
obligation under Section 6.7(a).
(d) Mutual Cooperation. Subject to applicable privacy laws, Seller
shall provide promptly to Buyer, at Buyer's request, any information or copies
of personnel records (including addresses, dates of birth, dates of hire and
dependent information) relating to the Retained Employees or relating to the
service of Retained Employees with Seller (and predecessors of Seller, as
applicable) prior to the Closing Date. Seller and Buyer shall each cooperate
with the other and shall provide to the other such documentation, information
and assistance as is reasonably necessary to effect the provisions of this
Section 6.7.
(e) Severance. If, after the Closing, the employment of any employee
who is identified on Schedule 6.7(e) hereto is terminated, Buyer shall
supplement any severance payments otherwise due to such terminated employee or,
if no such severance payments are due to the employee, make severance payments,
in either case such that the terminated employee shall receive, in a lump sum,
severance payments at least equal to 18 months of such employee's then current
base salary (or base
35
salary for the year preceding Closing, if greater); provided, however, that
Buyer shall not be obligated to make any such payments to any employee whose
employment is (i) terminated by the employee (except in the case of Constructive
Termination Without Cause by the employee) or (ii) terminated by Buyer on
account of a material breach of the employee's duties (which duties shall not be
more demanding than the level of performance required of the employee as of the
date hereof). For purposes of this Section 6.7(e), "Constructive Termination
Without Cause" means the occurrence of any of the following events without the
express written consent of the employee: (i) relocation from his principal
office as of the date hereof (other than to an office in the same metropolitan
area), (ii) any material breach by Buyer of the terms of the employee's
employment or (iii) the assignment to the employee of a significantly lower
position in the organization in terms of his responsibility, authority and
status, requiring the employee to perform services not commensurate with the
employee's ability, experience and qualifications, in any such case other than
as a result of disability or retirement.
(f) Profit Sharing Plan. Buyer shall contribute $1,300,000 to the
Seller Profit Sharing Plan with respect to the period ending November 30, 1996.
Buyer agrees that it shall not amend the plan to expand the coverage of the plan
unless it increases such contribution to the plan in proportion to such
inclusion or expansion.
6.8 Xxxx-Xxxxx-Xxxxxx Act Filings.
(a) Buyer and Seller shall each promptly make or cause to be made the
filings required of such party under the Xxxx-Xxxxx-Xxxxxx Act in accordance
with Section 5.4 hereof and, as soon as reasonably practicable and after
consultation with the other party, provide to the appropriate Governmental
Entity any documentary material or other information that may be necessary in
order to satisfy any request under the Xxxx-Xxxxx-Xxxxxx Act for additional
information or otherwise to obtain any governmental approval; (b) Buyer and
Seller shall each use its best efforts to resolve any objections that are
asserted by any person under the antitrust or other laws with respect to the
transactions contemplated by this Agreement and to avoid the entry of, or have
vacated or terminated, any order, decree, judgment or ruling of any Governmental
Entity restraining or
36
preventing the consummation of the transactions contemplated by this Agreement
and any proceedings that might result in such entry; and (c) Buyer shall commit
(by consent decree or otherwise) to sell, divest, hold separate or dispose of
such assets or businesses of Buyer or the Business as may be necessary in order
to obtain any needed consents or approvals or to avoid the entry of any such
order, decree, judgment or ruling or proceeding that might result in such entry.
6.9 Further Transfers; Transition Assistance; Accounts Receivables.
(a) Seller shall execute and deliver such further instruments of
conveyance and transfer and take such additional action as Buyer may reasonably
request to effect, consummate, confirm or evidence the transfer to Buyer of the
Purchased Assets, the assumption by Buyer of the Assumed Liabilities and the
conduct by Buyer of the Business (including with respect to obtaining and
maintaining all licenses, permits, authorizations, accreditations and consents
necessary or desirable in connection therewith), and Seller shall execute such,
documents as may be reasonably requested to assist Buyer in preserving or
perfecting its rights in the Purchased Assets and its ability to conduct the
Business. Following the Closing, Seller agrees to cooperate with Buyer and to
provide Buyer with all information and documentation reasonably necessary to
permit the preparation and filing of all federal, state, local and other tax
returns with respect to the Business; provided that Buyer shall reimburse the
other party for such other party's reasonable out-of-pocket expenses in
connection therewith.
(b) Seller agrees that subsequent to the Closing it shall refer all
customer, advertiser or subscriber inquiries with respect to the Business to
Buyer.
(c) Seller shall promptly forward to Buyer any and all proceeds from
accounts receivable relating to the Business that are received by Seller but are
for the account of Buyer, and for the period ending at the last of the sixth
full calendar month after the Closing, shall furnish Buyer with a reasonably
detailed monthly accounting with respect to any payments made to Seller under
this Section 6.9(c), which accountings shall be subject to audit by Buyer (which
audits shall contain normal auditing procedures and techniques).
37
6.10 Exclusivity. Seller shall not, directly or indirectly, through
any officer, director, employee, agent, affiliate or otherwise (including
through any investment banker, attorney or accountant retained by any of the
foregoing), solicit, initiate or encourage the submission of any proposal or
offer from any person or entity (including any of such person's or entity's
officers, directors, employees, agents or other representatives) relating to any
acquisition, direct or indirect, of all or a significant part of the assets used
in the Business (other than sales of Inventory in the ordinary course of
business consistent with past practice) or any other similar extraordinary
transaction of any kind relating to the Business (including any merger or sale
of substantially all of the stock of Seller), or participate in any discussions
or negotiations regarding, or furnish to any other person or entity any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage any effort or attempt by any other
person or entity to do or seek to do any of the foregoing. Seller shall
immediately cease and cause to be terminated any and all discussions and
negotiations with third parties regarding any of the foregoing. Seller shall
promptly notify Buyer if any proposal with respect to the foregoing is made.
6.11 Covenant Not to Compete or Solicit.
(a) Seller agrees that, and agrees that it shall cause Xxxxxxxx, for a
period of three years following the Closing Date, to ensure that no affiliate of
either Seller or Xxxxxxxx, directly or indirectly, either for itself or himself
or through any other person, partnership, corporation or entity shall (i) engage
in, participate in, or permit its or his name to be used by any enterprise
engaging in or participating in, the business of publishing, printing,
distributing or selling magazines in the United States, Canada, Mexico, Korea or
elsewhere in the world, or otherwise in the conduct of any business competing
with the Business, induce or attempt to induce any employee of the Seller or any
subsidiary (other than Xxxxxxxx'x assistants) to leave the employ of the Seller
or such subsidiary, (ii) hire or solicit the hiring of any person who was a
Retained Employee (other than Xxxxxxxx'x secretaries or personal assistants), or
(iii) induce or attempt to induce any customer, advertiser, subscriber,
supplier, licensee or other business relation of Seller who becomes a customer,
advertiser, subscriber, supplier, licensee or
38
other business relation of Buyer to cease doing business with Buyer. For
purposes of this Agreement, the term "participate" includes any direct or
indirect interest in any enterprise, whether as a stockholder, partner, joint
venturer, franchiser, franchisee or otherwise (other than ownership of less than
five percent (5%) of the stock of a publicly held corporation without any other
material participation therein). Each of Seller and Xxxxxxxx agrees that this
covenant is reasonably designed to protect Buyer's substantial investment and is
reasonable with respect to its duration, geographical area and scope.
(b) If, at the time of enforcement of any of the provisions of this
Section 6.11, a court determines that the restrictions stated herein are
unreasonable under the circumstances then existing, then the parties hereto
agree that the maximum period, scope or geographical area reasonable under the
circumstances shall be substituted for the stated period, scope or area. The
parties further agree that such court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope or geographical
area permitted by law.
(c) If Seller or Xxxxxxxx or any of its or his affiliates (the
"Restricted Persons") breaches, or threatens to commit a breach of, any of the
provisions of this Section 6.11 (the "Restrictive Covenants"), Buyer shall have
the right and remedy to have the Restrictive Covenants specifically enforced by
any court of competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
Buyer and that money damages would not provide an adequate remedy to Buyer. Such
rights and remedies shall be independent of the others and severally
enforceable, and shall be in addition to, and not in lieu of, any other rights
and remedies available to Buyer at law or in equity.
6.12 Covenant Relating to Leases.
At or prior to the Closing, Seller shall, and shall cause the Xxxxxxxx
Trust to, (i) amend the lease described on Schedule 6.4(b) with respect to the
Wilshire Property (the "Wilshire Lease") so that Section 4 of such lease reads
in its entirety as follows:
4.1 For the period commencing with the Closing (as defined in
the Asset Purchase Agreement dated August 15,
39
1996, to which Lessee is a party) and ending November 30, 1996, an amount
equal to Three Hundred Forty-One Thousand Nine Hundred Fifty-One Dollars
($341,951) per month.
4.2 For the period commencing December 1, 1996 and ending
November 30, 1997, an amount equal to Three Hundred Forty-Seven Thousand
Nine Hundred Twenty-One Dollars ($347,921) per month.
4.3 For the period commencing December 1, 1997 and ending
November 30, 1998, an amount equal to Three Hundred Fifty-Three Thousand
Nine Hundred Ninety-Two Dollars ($353,992) per month.
4.4 For the period commencing December 1, 1998 and ending
November 30, 1999, an amount equal to Three Hundred Sixty Thousand One
Hundred Eighty-Five Dollars ($360,185) per month.
4.5 For the period commencing December 1, 1999 and ending
November 30, 2009, rent per month shall be increased by 1 3/4% per annum.
and (ii) prepare and execute a written form of the lease described on Schedule
6.4(b) with respect to the property located at 000 X. XxXxxxx Xx., Xxxxxxx
Xxxxxxxx (the "Chicago Lease"), in the form attached hereto as Schedule 6.12.
The amendment and lease referred to in clauses (i) and (ii) above, respectively,
are to be effective as of the Closing.
ARTICLE VII
GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be subject
to the following conditions:
7.1 No Orders; Legal Proceedings. No Law or Order shall have been
enacted, entered, issued, promulgated or enforced by any Governmental Entity,
nor shall any Action have been instituted and remain pending by any Governmental
Entity at what would otherwise be the Closing Date, which prohibits or restricts
or would (if successful) prohibit or restrict the transactions contemplated by
this Agreement.
40
7.2 Approvals. To the extent required by applicable Law, all Permits
and Approvals required to be obtained from any Governmental Entity in connection
with the sale of the Purchased Assets hereunder or Buyer's ownership or
operation of the Business following the Closing shall have been received or
obtained, or shall have been transferred to Buyer, on or prior to the Closing
Date, except those which, if not obtained or so transferred, would not have
total adverse monetary consequences in excess of 1.5% of the Final Purchase
Price, and any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act shall
have expired or been terminated.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
8.1 Representations and Warranties and Covenants of Seller. The
representations and warranties of Seller herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time, Seller shall have in all material respects performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and Seller
shall have delivered to Buyer a certificate of Seller dated as of the Closing
Date to such effect; provided, however, that in the event that (i) one or more
representations or warranties of Seller is untrue or partially untrue at the
Closing, but (ii) such fact does not have, or cannot reasonably be expected to
have, total adverse monetary consequences to Buyer in excess of 1.5% of the
Final Purchase Price, such fact shall not relieve Buyer of any of its
obligations under this Agreement.
8.2 No Material Adverse Change. Since the date of the Latest Balance
Sheet, there shall not have been, occurred or arisen any change or development
in, or event affecting, the Business, taken as a whole, or any of the Purchased
Assets or Assumed Liabilities that have, or can reasonably be expected to have,
a material adverse effect on the condition (financial or otherwise), operating
results, assets, liabilities, operations or
41
business of Seller taken as a whole (but excluding, for such purposes, the
Excluded Assets and Excluded Liabilities), except for changes, developments and
events affecting generally the magazine publishing industry, including, but not
limited to, changes in or affecting interest rates, securities markets, paper
prices, mailing costs, general levels of advertising and advertising rates,
accounting principles, practices or conventions, applicable Laws or comparable
events. For purposes of this Section 8.2, any such adverse changes, developments
or events having, or reasonably expected to have, total adverse monetary
consequences in an amount less than or equal to 1.5% of the Final Purchase Price
shall not be considered to have had a material adverse effect on the Business,
taken as a whole.
8.3 Receipt of Closing Deliveries and Releases of Encumbrances. Seller
shall have delivered to Buyer each of the deliveries required to be delivered
pursuant to Section 2.2 and shall have obtained releases of all material
encumbrances relating to the Purchased Assets (other than the Permitted
Encumbrances).
8.4 Third Party Consents. Seller shall have received or obtained all
third party consents and approvals (including, without limitation, governmental
approvals and permits) that are necessary for Seller to consummate the
transactions contemplated hereby or that are required in order to prevent a
breach of or default under, a termination or modification of, or acceleration of
the terms of, any Contract identified with an asterisk on Schedule 3.6, in each
case on terms reasonably satisfactory to Buyer, and except to the extent the
absence thereof would not have a material adverse effect on the Business, taken
as a whole, as currently conducted or on Buyer's ability to conduct the
Business, taken as a whole, as currently conducted by Seller.
8.5 Amendment and Restatement of Leases. The Wilshire Lease shall
have been amended in accordance with Section 6.12 and not otherwise amended and
shall be in full force and effect, and the Chicago Lease shall have been
executed by the Xxxxxxxx Trust and delivered to Buyer.
8.6 Delivery of Opinion of Seller's Counsel. Buyer shall have
received from O'Melveny & Xxxxx LLP, special counsel to Seller, and Xxxxxx
Xxxxxxxx, Esq., counsel to Seller, opinions in form and substance as set forth
in Exhibits H(1) and H(2),
42
respectively, in each case addressed to Buyer and dated as of the Closing. Such
counsel shall also, at Buyer's request, deliver reliance letters in customary
form to the senior secured creditors of Buyer from whom funds are received to
pay the purchase price hereunder.
8.7 Xxxxxxxx License; Change of Seller's Name. Xxxxxxxx shall have
executed and delivered to Buyer the Xxxxxxxx License, and the Xxxxxxxx License
shall be in full force and effect; Seller shall have amended its certificate of
incorporation to change its name from "Xxxxxxxx Publishing" to a name which does
not include "Publishing" or any other word relating to publishing,
communications or media, or businesses related thereto, and shall have ceased
using the name "Xxxxxxxx Publishing" in any of its business activities.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Closing shall be subject to
the following conditions, except to the extent waived in writing by Seller:
9.1 Representations and Warranties and Covenants of Buyer. The
representations and warranties of Buyer herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time, Buyer shall have in all material respects performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and Buyer
shall have delivered to Seller a certificate of Buyer, dated the Closing Date
and signed by its President to such effect; provided, however, that in the event
that (i) one or more representations or warranties of Buyer is untrue or
partially untrue at the Closing, but (ii) such fact does not have, and can not
reasonably be expected to have, total adverse monetary consequences to Seller in
excess 1.5% of the Final Purchase Price, such fact shall not relieve Seller of
any of its obligations under this Agreement.
9.2 Employment of Xxxxxxxx. Buyer shall have entered into an
employment contract with Xxxxxxxx, in the form attached hereto as Exhibit J.
43
9.3 Delivery of Opinion of Buyer's Counsel. Seller shall have
received from Xxxxxxxx & Xxxxx, counsel to Buyer, an opinion in form and
substance as set forth in Exhibit I attached hereto, addressed to Seller and
dated the Closing Date.
9.4 Receipt of Closing Deliveries and Release of Encumbrances. Buyer
shall have delivered to Seller each of the deliveries required to be delivered
pursuant to Section 2.3.
ARTICLE X
TERMINATION OF OBLIGATIONS; SURVIVAL
10.1 Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated by this
Agreement shall automatically terminate, without any notice, demand or action by
either party, if the Closing does not occur on or before the close of business
on December 31, 1996 (so long as the party so electing termination is not in
material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement) unless extended by mutual consent in
writing of Buyer and Seller and otherwise may be terminated at any time before
the Closing as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer and
Seller.
(b) Conditions to Buyer's Performance Not Met. By Buyer by
written notice to Seller if any event occurs or condition exists which
would render impossible the satisfaction of one or more conditions to the
obligations of Buyer to consummate the transactions contemplated by this
Agreement as set forth in Articles VII or VIII.
(c) Conditions to Seller's Performance Not Met. By Seller by
written notice to Buyer if any event occurs or condition exists which would
render impossible the satisfaction of one or more conditions to the
obligation of Seller to consummate the transactions contemplated by this
Agreement as set forth in Articles VII or IX.
(d) Material Breach. By Buyer or Seller if there has been a
material misrepresentation or other material breach
44
by the other party in its representations, warranties and covenants set
forth herein; provided, however, that (i) in the case of a breach of
covenant the breaching party shall have 10 business days after receipt of
notice from the other party of its intention to terminate this Agreement if
such breach continues, in which to cure such breach and (ii)
misrepresentations by any one party having total adverse monetary
consequences to the other party in an amount less than or equal to 1.5% of
the Final Purchase Price, shall not be considered material for purposes of
this Section 10.1(d).
10.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 10.1, all further obligations of the parties
under this Agreement shall terminate; provided that, subject to Section 10.3,
the obligations of the parties contained in (i) Sections 1.6, 13.2, 15.10, 15.11
and 15.14, (ii) the second sentence of Section 5.3 and (iii) the Confidentiality
Agreement, shall survive any such termination, and that a termination under
Section 10.1 shall not relieve either party of any liability for a breach of, or
for any misrepresentation under this Agreement, or be deemed to constitute a
waiver of any available remedy for any such breach or misrepresentation.
10.3 Limited Survival of Representations and Warranties. The
representations and warranties in this Agreement delivered by Buyer or Seller to
the other party in connection with this Agreement shall continue through the
Closing and shall expire as follows:
(i) the representations and warranties in any of Sections 3.5
(Taxes) and 3.16 (Employee Benefits) shall continue through the expiration
of the applicable statute of limitations, with respect to the liabilities
in question;
(ii) all other representations and warranties shall expire six
(6) months after the Closing (with the exception of the first clause of the
first sentence of Section 3.8 (Title; Condition of Assets) which shall
continue unabated); and
(iii) if a claim or notice is given under Article XI with respect
to any representation or warranty prior to the
45
applicable expiration date, such claim shall continue indefinitely until it
is finally resolved.
10.4 Effect of Closing Over Known Unsatisfied Conditions or Breached
Covenants. If Buyer or Seller elects to proceed with the Closing aware of any
respect in which any condition in its favor has not been satisfied or any
representation, warranty or covenant by the other has been breached (the "Known
Breach"), the Known Breach shall be deemed to be waived by such party, and such
party shall be deemed to fully release and forever discharge the other party on
account of any and all claims, demands or charges, known or unknown, to the
extent arising from such Known Breach; provided, however, that no waiver of the
Known Breach of a covenant shall be deemed to have occurred if the party aware
of the other's breach so notifies the other prior to Closing.
10.5 Notice of Breach of Representations or Warranties. Seller shall
give prompt notice to Buyer, and Buyer shall give prompt notice to Seller, of
the occurrence, or failure to occur, of any event known to Seller or Buyer, as
the case may be, that would cause any of its representations or warranties
contained in this Agreement to be untrue in any material respect at any time
from the date of this Agreement to the Closing Date; provided that in the case
of Seller, "known" shall mean actual knowledge of any senior executive officer
of Seller after due inquiry.
ARTICLE XI
INDEMNIFICATION
11.1 Obligations of Seller. Subject to the provisions of Section
11.4, from and after the Closing, Seller agrees to indemnify and hold harmless
Buyer from and against any and all Losses (as and when incurred) arising from,
as a result of, or based upon any breach or nonperformance of any of the (a)
representations or warranties (subject to survivability under Section 10.3), or
(b) covenants or agreements, made by Seller in or pursuant to this Agreement,
including in any certificate delivered at the Closing in connection herewith;
provided, however, that Losses as a result of, or based upon or arising from,
any Environmental Law or any violation thereof shall be limited to those in
connection with claims brought by third
46
parties (including Governmental Entities) and remediations necessary to comply
with any Environmental Law; and
11.2 Obligations of Buyer. Subject to the provisions of Section
11.4, from and after the Closing, Buyer agrees to indemnify and hold harmless
Seller from and against any Losses (as and when incurred) arising from, as a
result of, or based upon, (a) any breach or nonperformance of any of the
representations or warranties (subject to survivability under Section 10.3), or
(b) covenants or agreements, made by Buyer in or pursuant to this Agreement,
including in any certificate delivered in connection herewith.
11.3 Procedure.
(a) Notice. Any party seeking indemnification of any Loss or
potential Loss arising from a claim asserted by a third party shall give written
notice to the party from whom indemnification is sought. Written notice to the
Indemnifying Party of the existence of a third-party claim shall be given by the
Indemnified Party within 30 days after its receipt of a written assertion of
liability from the third party. The Indemnified Party shall not be foreclosed
from obtaining all of its rights hereunder by any failure to provide timely
notice of the existence of a third party claim to the Indemnifying Party except
if, and then only to the extent that, the Indemnifying Party incurs an out-of-
pocket expense or otherwise has been materially prejudiced as a direct result of
such delay.
(b) Defense. The Indemnifying Party shall be entitled to assume the
defense and control of any action giving rise to an Indemnified Party's claim
for indemnification under Article XI unless (x) the Indemnified Party reasonably
believes an adverse determination with respect to the action, lawsuit,
investigation, proceeding or other claim giving rise to such claim for
indemnification is likely to be materially detrimental to or materially injure
the Indemnified Party's future business prospects or (y) the claim seeks an
injunction or equitable relief against the Indemnified Party that is likely to
have a material adverse effect on the business of the Indemnified Party, taken
as a whole. If the Indemnifying Party assumes the defense of any Indemnifiable
Claim, it shall retain experienced counsel reasonably satisfactory to the
Indemnified Party and the Indemnified Party may participate in the defense of
such claim
47
and employ counsel of its choice for such purpose; provided that the fees and
expenses of such separate counsel shall be borne by the Indemnified Party (other
than any fees and expenses of such separate counsel that are incurred prior to
the date the Indemnifying Party effectively assumes control of such defense). If
the Indemnifying Party does not assume such defense, the Indemnified Party may
compromise or settle the claim on behalf of and for the account and risk of the
Indemnifying Party, who shall be bound by the result; provided, however, that
the Indemnifying Party (i) shall be responsible only for the reasonable costs of
defense and (ii) shall be entitled to participate (at its cost and with counsel
of its choice) in the defense of any Action in which the Indemnified Party
retained the defense thereof under clause (x) or (y) of the first sentence of
this Section 11.3(b); and provided further, that the Indemnifying Party shall
not be liable for any settlement or compromise of any such Action of which the
Indemnified Party has retained the defense, that is effected without its prior
written consent (which consent shall not be withheld unreasonably).
(c) Settlement Limitations. Notwithstanding anything in this Section
11.3 to the contrary, the Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any third party Action or
permit a default or consent to entry of any judgment unless the claimant and the
Indemnifying Party provide to the Indemnified Party a release from all liability
in respect of the claim. Notwithstanding the foregoing, if a settlement offer
solely for money damages is made by the applicable third party claimant, and the
Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying
Party's willingness to accept the settlement offer and pay the amount called for
by such offer, and the Indemnified Party declines to accept such offer, the
Indemnified Party may continue to contest such claim, free of any participation
by the Indemnifying Party, and the amount of any ultimate liability with respect
to such Indemnifiable Claim that the Indemnifying Party has an obligation to pay
hereunder shall be limited to the lesser of (i) the amount of the settlement
offer that the Indemnified Party declined to accept, or (ii) the aggregate
Losses of the Indemnified Party with respect to such claim. If the Indemnifying
Party makes any payment on any claim, the Indemnifying Party shall be
subrogated, to the extent of such payment, to all rights and remedies of the
Indemnified Party to any insurance benefits (to the extent not used to offset
Losses incurred by the
48
Indemnified Party in respect of which the Indemnified Party has not received
indemnity payments from the Indemnifying Party).
11.4 Mitigation; Limitations on Indemnification.
(a) The Indemnified Party shall take all commercially reasonable steps
to mitigate all Losses, including, but not limited to, availing itself of any
reasonable and prudent defenses, limitations, rights of contribution, and claims
against third parties and other rights at Law (it being understood that any out-
of-pocket costs paid to third parties in connection with such mitigation shall
constitute Losses), and shall provide such evidence and documentation of the
nature and extent of any Loss as may be reasonably requested by the Indemnifying
Party.
Notwithstanding any other provision of this Agreement, subject to the
compliance by Buyer with the last sentence of Section 11.4(b), for purposes of
determining whether a representation or warranty of Seller has been breached
under clause (a) in the first sentence of Section 11.1, the representations and
warranties of the Seller shall not be considered to include any of the
materiality qualifiers or standards with respect to any effect of a matter or
circumstance upon the Business.
(b) Any recovery pursuant to Article XI shall be net of (i) any Tax
benefits realized or realizable by the Indemnified Party based on the present
value thereof by reason of such Losses, and (ii) the dollar amount of aggregate
insurance proceeds receivable by the Indemnified Party with respect to such
Losses in excess of the amount of the Basket. Seller shall not be required to
indemnify any Person under Section 11.1 for a breach of a representation or
warranty unless the aggregate of all amounts for which indemnity would otherwise
be payable by Seller exceeds $3,250,000 (the "Basket"), and, in such event,
Seller shall be responsible for the full amount of all Losses. Seller's
indemnity obligations under Section 11.1 for a breach of representation or
warranty shall be limited, in the aggregate, to 15% of the Final Purchase Price.
In addition, for purposes of determining whether the amount of the Basket has
been exceeded, no breach of a representation or warranty which results in losses
of $37,500 or less shall be considered.
49
11.5 Remedies Exclusive. The remedies provided for in this Article
XI shall constitute the sole and exclusive remedy for any post-Closing claims
made for breach of this Agreement in connection with the transactions
contemplated hereby, except for claims arising out of any breach of Section
13.2. Except for the remedies against Seller specifically provided for in this
Agreement (and except as to remedies for Actual Fraud, as defined below), none
of Buyer or any of its Affiliates shall have any recourse against Seller or
Xxxxxxxx in connection with, and Buyer hereby waives and forever releases and
discharge Seller, Xxxxxxxx and their respective Affiliates from and against, any
and all Losses, directly or indirectly, as a result of, or based upon or arising
from the conduct of the Business and any act or omission with respect to the
Business prior to the Closing. Each party hereby waives any provision of law to
the extent that it would limit or restrict the agreement contained in this
Section 11.5, except with respect to one party's claim against the other for
actual knowing fraud by Seller ("Actual Fraud"). Notwithstanding anything to
the contrary elsewhere in this Agreement, no party or its Affiliates shall seek
or be liable for any punitive or consequential damages, including, but not
limited to loss of business reputation or opportunity relating to any breach or
alleged breach of a representation or warranty set forth in this Agreement;
provided that Buyer may seek, and Seller may be held liable for, consequential
damages in the event of (i) a breach of Seller's obligation to transfer the
Purchased Assets and Assumed Liabilities at Closing pursuant to the terms of
this Agreement; (ii) a breach of Seller's obligations set forth in Section 6.10
or (iii) an intentional breach of any provision of this Agreement if such breach
would reasonably be expected to frustrate the consummation of the sale of the
Purchased Assets and assumption of the Assumed Liabilities contemplated by this
Agreement.
ARTICLE XII
TAX MATTERS AND INSURANCE
12.1 Tax Returns; Audits.
(a) Seller shall file when due all Tax Returns required to be filed by
it, whether relating to periods ending before or after the Closing Date, and
shall have the responsibility for, and sole right to control, compromise, settle
or appeal any Tax audit or other proceeding in connection with
50
any matter that pertains to Seller's or Xxxxxxxx'x liability for Taxes. Buyer
shall promptly (and in any event within 15 business days) notify Seller in
writing upon receipt by Buyer of notice of any pending or threatened audits or
assessments relating to Seller's or Xxxxxxxx'x liability for Taxes.
(b) Seller shall have no liability under this Agreement for, and Buyer
will indemnify Seller and Xxxxxxxx against, (i) any Tax attributable to or
resulting from the ownership of the Purchased Assets or the conduct of the
Business by Buyer after the Closing and (ii) any Tax resulting from a breach of
a representation, warranty or covenant of Buyer under this Agreement.
12.2 Wage Reporting. Buyer acknowledges that, at the Closing, Buyer
will be purchasing substantially all the property used in the Business, and in
connection therewith Buyer will employ individuals who immediately before the
Closing Date were employed in such Business by Seller. Accordingly, pursuant to
IRS Revenue Procedure 84-77, 1984-2 C.B. 753, provided that Seller provides
Buyer with all necessary payroll records, Buyer shall furnish a Form W-2 for the
year ended December 31, 1996 to each transferred employee which shall include
all wage and other compensation paid to, and taxes withheld from, such employee
by Seller during such period, and Seller shall be relieved of the responsibility
to do so.
(a) Employee Withholding Allowance Certificate (Form W-4). In
accordance with IRS Procedure 84-77, Seller shall transfer to Buyer any
Employee Withholding Allowance Certificate (Form W-4) in Seller's
possession for each transferred Employee.
(b) Calculation of "Annual Wage Limitation" for FICA. In
accordance with IRS Regulation (S) 31.3121(a)(1)-1(b), in determining the
"annual wage limitation" of each transferred employee for purposes of the
Federal Income Contribution Act (FICA) for the year ending December 31,
1996, Buyer will include any remuneration received by such employee from
Seller during such period.
12.3 Insurance Matters. With respect to the insurance policies
covered by Section 1.1(a)(xxiii), including those as to
51
which Buyer is named an additional insured pursuant to Section 5.6, Buyer and
Seller agree as follows:
(a) Claims. Buyer is entitled to obtain the benefits under
insurance policies held by Seller which are not assigned to Buyer at the
Closing but which relate to (but only to the extent they relate to) the
Purchased Assets or the Assumed Liabilities (the "Subject Policies").
Seller agrees, at Buyer's request, to file claims under the Subject
Policies that relate to the Purchased Assets or Assumed Liabilities
("Claims"); provided, that Seller will have no obligation to file any Claim
after December 31, 2000, or other than to the extent the Special Power of
Attorney to be provided to Buyer as described below is insufficient to
permit Buyer to file any Claim. Seller shall file any such Claim within 30
business days after presentation thereof by Buyer. The form of any such
claims shall be prepared by Buyer. Seller shall have no obligation to
ascertain or advise Buyer of the existence of any insurable claim under the
Subject Policies. After a Claim has been filed, Seller shall not take any
action with respect thereto or compromise or settle any Claim unless
directed to do so by Buyer. Seller shall take all lawful actions in respect
of Claims as are reasonably requested by Buyer, including the prosecution
of Claims against insurers providing the Subject Policies, using counsel
selected by Buyer; but only if Buyer pays any out-of-pocket costs of
Seller, as they are incurred, in connection with the prosecution of Claims.
Buyer shall have the right, as the attorney-in-fact of Seller, to make any
filing and to prosecute, settle or compromise any Claim under a Subject
Policy in the name of and on behalf of Seller. In furtherance thereof,
Seller shall, on the Closing Date, execute a Special Power of Attorney in
the form of Exhibit I hereto.
(b) Assignment of Benefits; Payment. To the extent permitted by
Law and the terms of the relevant Subject Policies, Seller shall, upon
making a Claim requested by Buyer under the Subject Policies, notify the
relevant insurer(s) that it has assigned to Buyer any amounts to be paid by
such insurer(s) pursuant to such Claim and that all payments of insurance
proceeds or benefits relating to such Claim should be paid directly to
Buyer. In addition, Seller shall promptly pay to Buyer all insurance
proceeds (net of
52
expenses) received by Seller in respect of Claims under the Subject
Policies.
(c) Preservation of Documents. Seller agrees to preserve all of
its papers, records, correspondence or other documents or materials
comprising or evidencing the existence of the Subject Policies, including
the binders and policies relating to the same until December 31, 2000, and
to provide true, correct and complete copies of the same to Buyer upon
request as promptly as practicable.
(d) No Effect on Seller Rights. The provisions of this Section
12.3 shall not limit or impair the right of Seller and its present or
former Affiliates to file and prosecute claims under any insurance policy
heretofore, now or hereafter maintained by Seller or its present or former
Affiliates, including the Subject Policies. Buyer acknowledges that the
Subject Policies contain coverage limitations that may now or in the future
be exceeded by claims filed by Seller and its present or former Affiliates,
and that Seller has no obligation to reimburse deductibles or allocate or
maintain the availability of any coverage under the Subject Policies for
the benefit of Buyer. Seller will have no responsibility for the accuracy
or completeness of any information submitted by or on behalf of Buyer in
connection with the filing or prosecution of Claims. Buyer hereby agrees to
indemnify and hold Seller harmless from any Losses resulting from or
arising in connection with the filing or prosecution of any Claims
hereunder other than Losses resulting from or arising in connection with
Seller's bad faith; provided, that for purposes of such indemnification,
the parties agree that "Losses" shall not include diminutions in coverage
remaining under policy limits due to the assertion and payment of Claims.
ARTICLE XIII
PUBLICITY/CONFIDENTIALITY
13.1 Publicity and Reports. Seller and Buyer shall coordinate all
publicity relating to the transactions contemplated by this Agreement, and
neither party shall issue any press release, publicity statement or other public
notice relating to the identity of Buyer or the Final Purchase Price (or
53
any component thereof) hereunder without consulting with the other party, except
that neither party shall be precluded from making such filings or giving such
notices as may be required by Law or the rules of any stock exchange.
13.2 Confidentiality. All information disclosed by any party or
its representatives, whether before or after the date hereof, in connection with
the transactions contemplated by, or the discussions and negotiations preceding,
this Agreement to any other party or its representatives shall be kept
confidential by such other party and its representatives and shall not be used
by any such Persons other than as contemplated by this Agreement, except to the
extent that such information (i) was known by the recipient when received, (ii)
is or hereafter becomes lawfully obtainable from other sources, (iii) is
necessary or appropriate to disclose to a Governmental Entity having
jurisdiction over the parties, (iv) as may otherwise be required by law, (v) was
developed by such party or its representatives independent of any information
which is otherwise confidential pursuant to this Section 13.2 or (vi) to the
extent such duty as to confidentiality is waived in writing by the other party.
If this Agreement is terminated in accordance with its terms, each party shall
return all documents and reproductions thereof received by it or its
representatives from the other party and, in the case of reproductions, all such
reproductions made by the receiving party that include information not within
the exceptions contained in the first sentence of this Section 13.2, unless the
recipients provide assurances satisfactory to the requesting party that such
documents have been destroyed. If the transactions contemplated hereby are
consummated, Seller shall maintain as confidential and shall not use or disclose
(except as required by law or as authorized in writing by Buyer) any material
confidential or proprietary information or materials relating to the Business.
At the Closing, Seller shall assign to Buyer all of its rights under all
confidentiality agreements with prospective bidders entered into in connection
with the process leading to the sale of the Business; provided, however, that
Seller shall have no obligation to obtain consents or approvals from any Person
in connection with such assignments and Seller makes no representation as to the
effectiveness of any such assignment. In addition, Seller shall request the
return or destruction as promptly as possible of all confidential information
delivered to prospective buyers. In the event any party hereto is required by
law to disclose any confidential
54
information, such party shall promptly notify each other party in writing, which
notification shall include the nature of the legal requirement and the extent of
the required disclosure, and shall cooperate with each other party to preserve
the confidentiality of such information consistent with applicable law.
ARTICLE XIV
DEFINITIONS
14.1 General Provisions. For all purposes of this Agreement,
except as otherwise expressly provided:
(a) the terms defined in this Article XIV have the meanings
assigned to them in this Article XIV and include the plural as well as the
singular;
(b) all accounting terms used herein have the meanings assigned
to them under generally accepted accounting principles, except to the
extent otherwise provided herein;
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions and to "Exhibits" and "Schedules" are to
the designated Articles, Sections and other subdivisions of the body of
this Agreement and to the Exhibits and Schedules to this Agreement;
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(e) whenever the term "including" is used in this Agreement
(whether or not that term is followed by the phrase "without limitation" or
words of similar effect) in connection with a listing of items within a
particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or an
exclusive listing of, the items within that classification;
(f) whenever the phrase "ordinary course of business" is used in
this Agreement, it means the usual and ordinary course of business
consistent with past practice, including with respect to quantity and
frequency; and
55
(g) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
14.2 Specific Provisions. As used in this Agreement the following
definitions shall apply:
"Accounts Receivable" has the meaning specified in Section
1.1(a)(iv).
"Action" means any investigation, charge, claim, complaint,
petition, suit or other proceeding, whether civil or criminal, in law or in
equity, by or before any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person.
"Agreed Accounting Principles" means the accounting principles,
policies and practices applied in the preparation of Seller's audited financial
statements as of and for the fiscal year ended November 30, 1995 referred to in
Section 3.2(a), without regard to whether with respect to any matter there is
more than one generally accepted accounting principle, or generally accepted
accounting principles would permit or allow for more than one treatment or
approach and without regard to any purchase accounting adjustments arising out
of the consummation of the transactions contemplated hereby (it being understood
that such principles, policies and practices are GAAP as in effect on the date
hereof, except as specified to the contrary in the notes to such audited
financial statements); and except that any provision for deferred Taxes shall be
disregarded.
"Agreed Rate" means, as of the date of any determination of
interest to be made by reference thereto, the interest rate established on such
date by Xxxxx Fargo Bank, N.A. as its "prime" rate, or, if that rate is no
longer established or published, a comparable interest rate.
"Agreement" means this Agreement between Buyer and Seller, as
amended or supplemented together with all Exhibits and Schedules hereto.
56
"Approval" means any approval, authorization, consent, qualification
or registration, or any waiver of any of the foregoing, required to be obtained
from any Governmental Entity or any other Person in order to comply with any
applicable law or to prevent a breach or default under, a termination or a
material modification of, or acceleration of the terms of, any material
contract, understanding or arrangement.
"Assumed Liabilities" is defined in Section 1.2.
"Auditors" means Ernst & Young L.L.P., Los Angeles office,
independent public accountants to Seller.
"Books and Records" means all books, ledgers, files, reports,
documents, plans and operating records of or maintained by Seller relating to or
otherwise reasonably required for the operation of the Business.
"Business" means the business, assets and properties, operating as a
going concern, which constitutes Seller's publishing and media businesses and
all related and ancillary businesses, including the production and promotion of
Events; provided, however, that the term Business shall not include any business
conducted by Seller solely with the Excluded Assets and Excluded Liabilities.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Chicago, Illinois or Los Angeles, California.
"Closing" means the consummation of the transactions contemplated by
this Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Plan" is defined in Section 3.16.
"Confidentiality Agreement" is defined in Section 15.2.
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"Contract" means any written or oral agreement, arrangement, bond,
commitment, contract, franchise indemnity, indenture, instrument, lease or
license.
"Deposit" is defined in Section 1.6.
"Disclosure Schedule" means the Disclosure Schedule of even date
herewith delivered by Seller to Buyer which sets forth certain exceptions to the
representations and warranties made by Seller in Article III.
"Employee Pension Benefit Plan" is defined in Section 3.16.
"Employee Welfare Benefit Plan" is defined in Section 3.16.
"Encumbrance" means any charge, mortgage, encumbrance, security
interest or lien, whether imposed by agreement, understanding, law, equity or
otherwise, provided, however, that "Encumbrance" shall not mean any restrictions
on transfer generally arising under any applicable federal or state securities
laws.
"Environmental Laws" means any and all Laws for the purposes of
regulating pollution and protecting the environment in effect as of the Closing
Date.
"Equity Securities" means any capital stock or other equity interest
or any securities convertible into or exchangeable for capital stock or any
other rights, warrants or options to acquire any of the foregoing securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related regulations and published interpretations.
"ERISA Affiliate" means any Person other than Seller or any
Subsidiary who is a member of a group which is under common control with
Xxxxxxxx who together with Xxxxxxxx is treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the Code.
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"Events" means the exhibits, public events and other promotional
opportunities relating to the Publications including ones that are produced by
Seller's Events & Promotions Department.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" is defined in Section 1.1(b).
"Excluded Liabilities" is defined in Section 1.2.
"Final Purchase Price" is defined in Section 1.3.
"GAAP" means generally accepted accounting principles in the United
States as in effect as of the respective dates of the financial statements
referred to in Section 3.2(a).
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
regulatory body or authority, tribunal or other instrumentality of any
government, whether federal, state or local, domestic or foreign.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the related regulations and published
interpretations.
"Hazardous Substance" means substances that are defined or listed in,
or otherwise classified pursuant to, any applicable Environmental Laws or common
law as "hazardous substances," "hazardous materials," "hazardous wastes" or
"toxic substances."
"Intangible Property" means any trade secret, secret process or know-
how and any and all Marks; provided, however, that "Intangible Property" shall
not mean retail or "shrink-wrap" computer software licenses held by Seller.
"Inventory" is defined in Section 1.1(a)(v).
"IRS" means the Internal Revenue Service or any successor entity.
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"Law" means any constitutional provision, statute, permit, order,
ordinance or other law, rule or regulation, of any Governmental Entity, common
law and any Order.
"Lease" is defined in Section 3.9.
"Loss" means any loss, cost, damage, expense, liability, obligation,
fine or penalty of any kind or nature, including, but not limited to, interest
or other carrying costs, penalties, legal, accounting and other professional
fees and expenses, whether or not arising out of third party claims or paid or
incurred in the investigation, collection, prosecution and defense or settlement
of claims, that may be imposed on or otherwise incurred or suffered by the
specified person; provided, however, that Loss shall not include any
consequential damages, or any cost, damage, expense, liability, obligation or
penalty, that could not reasonably have been foreseen by the parties at the
Closing Date.
"Xxxx" means any brand name, copyright, patent, service xxxx,
trademark, tradename, and all registrations or applications for registration of
any of the foregoing.
"Material Contract" means each Contract to which Seller is a party
that (a) is a Material Facilities Lease, (b) by its terms obligates Seller to
pay an amount in excess of $250,000 per year and which cannot be terminated or
cancelled by Seller without liability or penalty upon 30 days' or less prior
notice, (c) limits or restricts Seller from freely competing or conducting its
business in any manner or place, (d) is a credit agreement, note, bond,
mortgage, deed of trust or indenture evidencing any indebtedness of Seller for
borrowed money, is a guaranty by Seller, or is an interest rate swap agreement
or other derivative, (e) contains a right or obligation, other than pursuant to
any Company Plan or Lease, of any Affiliate, officer or director, of Xxxxxxxx or
Seller, from or to Seller, (f) is a contract with any labor union, (g) is an
agreement, arrangement or understanding (oral or written) with any officer,
stockholder or other insider or affiliate of Seller (other than for employment
on customary terms), (h) is an employment contract providing for payments in
excess of $100,000, other than Seller's severance policy previously disclosed to
Buyer, or (i) represents a contract upon which the Business is substantially
dependent or
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which is otherwise material to the Business; provided, however, that "Material
Contract" shall not mean any of the Company Plans.
"Material Facilities Leases" means each of the real property leasehold
interests of Seller used in the Business and listed on Schedule 14.2(a).
"Order" means any decree, injunction, judgment, order, ruling or writ.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Permitted Encumbrance" means any Encumbrance that:
(i) is a lien in respect of an Assumed Liability of a landlord,
carrier, warehouseman, mechanic, materialman, or any other statutory lien
arising in the ordinary course of business;
(ii) is a lien for Taxes not yet due or being contested in good
faith;
(iii) with respect to the right of a lessee to use any property
leased from Seller pursuant to a Lease disclosed on a schedule hereto or
not required by this Agreement to be so disclosed, arises solely with
respect to such leased property by the terms of the applicable lease;
(iv) with respect to the right of Seller to use any property
leased to Seller pursuant to a Lease disclosed on a schedule hereto or not
required by this Agreement to be so disclosed, arises solely with respect
to such leased property by the terms of the applicable lease;
(v) is an Assumed Liability that is a purchase money security
interest arising in the ordinary course of business;
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(vi) with respect to interests in any partnership or trust, is an
Assumed Liability and arises by the terms of the applicable partnership
agreement or trust agreement (provided that such partnership or trust
agreement is described on a schedule hereto or not required by this
Agreement to be so disclosed), and not on account of a breach thereof; or
(vii) with respect to any Material Contract disclosed on a
schedule hereto, or any Contract which is not a Material Contract and not
otherwise required to be disclosed on a schedule hereto, is an Assumed
Liability and arises by the terms of the applicable Contract, and not on
account of a breach thereof.
"Person" means an association, a corporation, a limited liability
company, an individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Xxxxxxxx" means Xxxxxx X. Xxxxxxxx, Chairman of the Board and founder
of Seller.
"Xxxxxxxx Trust" means the R.E. & X. X. Xxxxxxxx Living Trust.
"Xxxxxxxx License" is defined in Section 6.2.
"Publications" is defined in Section 1.1(a)(xix).
"Purchased Assets" is defined in Section 1.1(a).
"Real Property" means interests in real property, appurtenances
thereto, and rights in connection therewith, owned or held by Seller, as the
case may be.
"Reconciliation Principles" mean the accounting principles described
on the Reconciliation Statement as adjustments to Seller's current assets and
current liabilities (as set forth on the Latest Balance Sheet) required to
remove assets not included in Purchased Assets and liabilities not included in
the Assumed Liabilities.
"Reconciliation Statement" means the statement of Working Capital at
June 30, 1996 attached hereto as Exhibit A.
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"Tax" means any (A) foreign, federal, state, county or local income,
sales and use, excise, franchise, real and personal property, transfer, gross
receipt, capital stock, production, business and occupation, employment,
payroll, severance or withholding tax or charge imposed by any Governmental
Entity, any interest and penalties (civil or criminal) related thereto or to the
nonpayment thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability or other tax, of any kind
whatsoever; (B) liability of Seller for the payment of any amounts of the type
described in clause (A) arising as a result of being (or ceasing to be) a member
of any Affiliated Group (or being included (or required to be included) in any
Tax Return relating thereto); and (C) liability of Seller for the payment of any
amounts of the type described in clause (A) as a result of any express or
implied obligation to indemnify or otherwise assume or succeed to the liability
of any other person, other than an Assumed Liability.
"Tax Return" means a report, return or other information required to
be supplied to a Governmental Entity with respect to Taxes.
"WARN Act" is defined in Section 4.5.
"Working Capital" means the amount, if any, by which the current
assets included in Purchased Assets (excluding cash and cash equivalents) exceed
the current liabilities included in the Assumed Liabilities, as determined in
accordance with the Agreed Accounting Principles, the Reconciliation Principles
and Section 1.5.
ARTICLE XV
GENERAL
15.1 Amendments; Waivers. This Agreement and any Exhibit or Schedule
attached hereto may be amended only by agreement in writing of both parties. No
waiver of any provision nor consent to any exception to the terms of this
Agreement shall be effective unless in writing and signed by the party to be
bound and then only to the specific purpose, extent and instance so provided,
except as provided in Section 10.4.
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15.2 Exhibits and Schedules; Integration. Each Exhibit and Schedule
delivered pursuant to the terms of this Agreement shall be in writing and shall
constitute a part of this Agreement, although such Exhibits and Schedules need
not be attached to each copy of this Agreement. This Agreement, together with
such Exhibits and Schedules, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith, except for
the confidentiality agreement dated June 3, 1996 by and between Xxxxxxx, Xxxxx &
Co., as agent for Seller, and Xxxxxx Xxxxx & Partners, L.P. (the
"Confidentiality Agreement").
15.3 Best Efforts. Subject to Section 5.3, each party will use its
best efforts to cause all conditions to its obligations hereunder to be timely
satisfied, to the end that the transactions contemplated by this Agreement shall
be effected substantially in accordance with its terms as soon as reasonably
practicable.
15.4 Governing Law. This Agreement, the legal relations between the
parties and any Action, whether contractual or non- contractual, instituted by
any party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and performed in such State and without regard to conflicts of
law doctrines.
15.5 No Assignment. Neither this Agreement nor any rights or
obligations under it are assignable, except that Buyer may assign all or any
portion of its rights and obligations hereunder to any wholly-owned subsidiary
of Buyer, and may assign all or any portion of its rights hereunder to one or
more of its lenders, so long as Buyer remains liable with respect to its
liabilities and obligations hereunder.
15.6 Headings. The descriptive headings of the Articles, Sections
and subsections of this Agreement are for convenience only and do not constitute
a part of this Agreement.
15.7 Counterparts. This Agreement and any amendment hereto or any
other agreement or document delivered pursuant hereto may be executed in one or
more counterparts and by
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different parties in separate counterparts. All of such counterparts shall
constitute one and the same agreement or other document and shall become
effective unless otherwise provided therein when one or more counterparts have
been signed by each party and delivered to the other party.
15.8 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of each party, and (except as contemplated by Section 11.5)
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
15.9 Notices. Any notice or other communication hereunder must be
given in writing and (a) delivered in person, (b) transmitted by telex, telefax
or telecommunications mechanism provided that any notice so given is also mailed
or sent as provided in clause (c), or (c) mailed by certified or registered
mail, postage prepaid, receipt requested or sent by reputable overnight courier
as follows:
If to Buyer, addressed to:
BrightView Communications Group, Inc.
c/o Xxxxxx Xxxxx & Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Avy X. Xxxxx
Xxxxxx X. Xxxxxxxxxx
With a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxxxx, Esq.
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If to Seller or Xxxxxxxx, addressed to:
Xxxxxxxx Publishing Company
0000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
With copies to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xx.
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: C. Xxxxx Xxxxx, Esq.
and:
Xxxxxx X. Xxxxxxxx, Esq.
000 X. Xxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, on the
Business Day on which it is transmitted (or if not transmitted on a Business
Day, then on the first Business Day following the date of such transmission) to
the applicable number specified in (or pursuant to) this Section 15.9 and an
appropriate answerback is received, (ii) if given by mail or courier or any
other means, when actually delivered.
15.10 Expenses. Except as otherwise provided herein, Seller and
Buyer shall each pay their own expenses incident to the negotiation, preparation
and performance of this Agreement and the transactions contemplated hereby,
including, but not limited to, the fees, expenses and disbursements of their
advisers.
15.11 Attorneys' Fees. In the event of any Action by any party
arising under or out of, in connection with or in respect of this Agreement,
including any participation in
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bankruptcy proceedings to enforce against a party a right or claim in such
proceedings, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and expenses incurred in such Action. Attorneys' fees incurred in
enforcing any judgement in respect of this Agreement are recoverable as a
separate item. The parties intend that the preceding sentence be severable from
the other provisions of this Agreement, survive any judgment and, to the maximum
extent permitted by law, not be deemed merged into such judgment.
15.12 Representation By Counsel; Interpretation. Seller and Buyer
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of Law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intent of Buyer and Seller.
15.13 Severability. If any provision of this Agreement is
determined to be invalid, illegal or unenforceable by any Governmental Entity,
the remaining provisions of this Agreement shall remain in full force and effect
provided that the essential terms and conditions of this Agreement for both
parties remain valid, binding and enforceable. To the extent permitted by Law,
the parties hereby to the same extent waive any provision of Law that renders
any provision hereof prohibited or unenforceable in any respect.
15.14 Dispute Resolution; Agreement to Arbitrate. Except to the
extent that any specific dispute resolution mechanism has been otherwise
provided for with respect to any specific provision of this Agreement (unless
such mechanism has been pursued to its conclusion and either the dispute in
question remains unresolved or the resolution reached by such process has not
been honored), in the event that any dispute arises between Buyer and Seller
with respect to this Agreement or the transactions contemplated hereby, the
following procedures shall apply.
(a) The parties will attempt in good faith to resolve any
dispute, controversy or claim under, arising out of,
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relating to or in connection with this Agreement, including, but not
limited to, the negotiation, execution, interpretation, construction,
performance, non-performance, breach, termination, validity, scope,
coverage or enforceability of this Agreement or any alleged fraud in
connection therewith, promptly by negotiations between representatives of
the parties. If any such dispute, controversy or claim should arise, duly
authorized representatives of Buyer and Seller will meet at least once and
will attempt to resolve the matter. Either representative may request the
other to meet again within 14 days thereafter, at a mutually agreed time
and place. If the matter has not been resolved within 30 days after the
first meeting of the representatives (which period may be extended by
mutual agreement), the parties will attempt in good faith to resolve the
controversy or claim in accordance with the Center for Public Resources
Model Procedure for Mediation of Business Disputes.
(b) If the matter has not been resolved pursuant to the foregoing
procedures within 60 days after the first meeting (which period may be
extended by mutual agreement), the matter shall be resolved, at the request
of either party, by arbitration conducted in accordance with the provisions
of the Federal Arbitration Act (9 U.S.C. (S)(S)1-16) and in accordance with
the Center for Public Resources Rules for Non- Administered Arbitration of
Business Disputes, by one arbitrator mutually selected by the parties. If
the parties are unable to agree on the selection of an arbitrator, they
shall select an arbitrator through the procedures established by the Center
for Public Resources Rules for Non-Administered Arbitration of Business
Disputes. The arbitration of such issues, including the determination of
any amount of damages suffered by any party hereto by reason of the acts or
omissions of any party, shall be final and binding upon the parties, except
that the arbitrator shall not be empowered to act as amiable compositeur or
authorized to award punitive damages with respect to any such claim,
dispute or controversy. No party shall seek any punitive damages relating
to any matters under, arising out of, in connection with or relating to
this Agreement. Equitable remedies shall be available in any such
arbitration. The parties intend that this agreement to arbitrate be valid,
binding, enforceable and irrevocable.
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The substantive law of the State of California shall apply to any such
arbitration proceedings. The place of any such arbitration shall be Los
Angeles, California. Judgment upon the award rendered by the arbitrators
may be entered by any court having jurisdiction thereof.
(c) Notwithstanding the provisions of this Section 15.14, either
party may seek injunctive or other equitable relief to maintain the status
quo before any court of competent jurisdiction in connection with any
claim, dispute or controversy arising out of this Agreement.
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IN WITNESS WHEREOF, each of Buyer and Seller has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
BUYER:
BRIGHTVIEW COMMUNICATIONS GROUP, INC.,
a Delaware corporation
By:__________________________
Name:________________________
Title:_______________________
SELLER:
XXXXXXXX PUBLISHING COMPANY,
a California corporation
By:__________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman of the Board
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