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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
EMP ACQUISITION CORP.
AND
AMERICAN MEDIA, INC.
DATED
FEBRUARY 16, 1999
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TABLE OF CONTENTS
ARTICLE I. THE MERGER......................................................... 1
SECTION 1.1. The Merger.................................................. 1
SECTION 1.2. Closing..................................................... 1
SECTION 1.3. Effective Time.............................................. 2
SECTION 1.4. Effects of the Merger....................................... 2
SECTION 1.5. Certificate of Incorporation and By-Laws of the Surviving 2
Corporation.................................................
SECTION 1.6. Directors................................................... 2
SECTION 1.7. Officers.................................................... 2
ARTICLE II. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS...................................................... 2
SECTION 2.1. Effect on Capital Stock..................................... 2
SECTION 2.2. Company Option Plan......................................... 3
SECTION 2.3. Consent Statement; Action by Written Consent................ 3
SECTION 2.4. Releases.................................................... 4
ARTICLE III. DISSENTING SHARES; PAYMENT FOR SHARES............................ 4
SECTION 3.1. Dissenting Shares........................................... 4
SECTION 3.2. Payment for Shares.......................................... 5
SECTION 3.3. The Debt Offer.............................................. 6
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................... 7
SECTION 4.1. Organization and Qualification; Subsidiaries................ 7
SECTION 4.2. Certificate of Incorporation and By-Laws.................... 7
SECTION 4.3. Capitalization.............................................. 7
SECTION 4.4. Authority Relative to this Agreement........................ 8
SECTION 4.5. No Conflict; Required Filings and Consents.................. 9
SECTION 4.6. SEC Reports and Financial Statements........................ 9
SECTION 4.7. Information................................................. 10
SECTION 4.8. Litigation.................................................. 10
SECTION 4.9. Compliance with Applicable Laws............................. 10
SECTION 4.10. Employee Benefit Plans...................................... 11
SECTION 4.11. Intellectual Property....................................... 12
SECTION 4.12. Environmental Matters....................................... 12
SECTION 4.13. Material Adverse Change..................................... 13
SECTION 4.14. Certain Approvals........................................... 14
SECTION 4.15. Opinion of Financial Advisor................................ 14
SECTION 4.15.1. Brokers..................................................... 14
SECTION 4.16. Contracts, etc.............................................. 14
SECTION 4.17. Labor Matters............................................... 15
SECTION 4.18. Tax Matters................................................. 15
SECTION 4.19. Make Goods; Advertising Credits............................. 16
SECTION 4.20. Insurance................................................... 16
SECTION 4.21. Year 2000................................................... 16
SECTION 4.22. Soap Opera Sale............................................. 16
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF NEWCO............................ 16
SECTION 5.1. Organization and Qualification.............................. 16
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SECTION 5.2. Authority Relative to this Agreement........................ 17
SECTION 5.3. No Conflict; Required Filings and Consents.................. 17
SECTION 5.4. Information................................................. 17
SECTION 5.5. Financing................................................... 18
SECTION 5.6. Newco Not an Interested Stockholder or an Acquiring 18
Person......................................................
SECTION 5.7. Newco....................................................... 18
SECTION 5.8. Brokers..................................................... 18
ARTICLE VI. COVENANTS......................................................... 18
SECTION 6.1. Conduct of Business of the Company.......................... 18
SECTION 6.2. Access to Information; Interim Financials................... 21
SECTION 6.3. Reasonable Best Efforts..................................... 21
SECTION 6.4. Consents.................................................... 22
SECTION 6.5. Public Announcements........................................ 22
SECTION 6.6. Employee Benefits Matters................................... 22
SECTION 6.7. Indemnification............................................. 23
SECTION 6.8. No Solicitation............................................. 23
SECTION 6.9. Notification of Certain Matters............................. 24
SECTION 6.10. State Takeover Laws......................................... 24
SECTION 6.11. Disposition of Litigation................................... 24
SECTION 6.12. Stop Transfer Order......................................... 24
SECTION 6.13. Financing................................................... 24
SECTION 6.14. Newco Action................................................ 24
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER......................... 25
SECTION 7.1. Conditions of Each Party's Obligation to Consummate the 25
Merger......................................................
SECTION 7.2. Conditions to Obligation of Newco........................... 25
SECTION 7.3. Conditions to Obligation of the Company..................... 26
ARTICLE VIII. TERMINATION; AMENDMENT; WAIVER.................................. 26
SECTION 8.1. Termination................................................. 26
SECTION 8.2. Effect of Termination....................................... 27
SECTION 8.3. Expenses.................................................... 27
SECTION 8.4. Amendment................................................... 28
SECTION 8.5. Extension; Waiver........................................... 28
ARTICLE IX. MISCELLANEOUS..................................................... 28
SECTION 9.1. Non-Survival of Representations and Warranties.............. 28
SECTION 9.2. Entire Agreement; Assignment................................ 28
SECTION 9.3. Validity.................................................... 28
SECTION 9.4. Notices..................................................... 29
SECTION 9.5. Governing Law; Jurisdiction................................. 29
SECTION 9.6. Waiver of Jury Trial........................................ 29
SECTION 9.7. Descriptive Headings........................................ 30
SECTION 9.8. Counterparts................................................ 30
SECTION 9.9. Parties in Interest......................................... 30
SECTION 9.10. Certain Definitions......................................... 30
SECTION 9.11. Specific Performance........................................ 32
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DISCLOSURE SCHEDULE
EXHIBITS
EXHIBIT A Form of Certificate of Incorporation of Company immediately after the
Effective Time.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 16, 1999, by and between
EMP ACQUISITION CORP., a Delaware corporation ("Newco"), and AMERICAN MEDIA,
INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Newco and the Company have
declared this Agreement to be advisable and determined that the merger of Newco
with and into the Company (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "GCL") and upon the terms and
subject to the conditions set forth in this Agreement, would be fair to and in
the best interests of their respective stockholders, and such Boards of
Directors have approved such Merger, pursuant to which each share of Class A
Common Stock, par value $.01 per share (the "Class A Shares"), and each share of
Class C Common Stock, par value $.01 per share (the "Class C Shares" and,
collectively with the Class A Shares, the "Shares"), in each case which is
issued and outstanding immediately prior to the Effective Time (as defined in
Section 1.3) and not owned directly or indirectly by Newco or the Company will
be converted into the right to receive $7.00 in cash;
WHEREAS, all of the issued and outstanding Common Stock, par value $.01 per
share (the "Newco Shares"), of Newco is owned by EMP Group LLC or an affiliate
thereof;
WHEREAS, the adoption of this Agreement requires the approval of a majority
of the voting power of the outstanding Shares, voting as a single class (with
each Class A Share having one vote per share and each Class C Share having three
votes per share) (the "Company Stockholder Approval");
WHEREAS, as a condition to their willingness to enter into this Agreement
and consummate the transactions contemplated hereby, Newco has required that
Boston Ventures Limited Partnership III, Boston Ventures Limited Partnership
IIIA, Boston Ventures Company Limited Partnership III, Pemima, L.P. and Xxxxxxx
X. Xxxxxx (each, a "Principal Stockholder") agree, among other things, to
execute a written consent in favor of adoption of this Agreement on the date
hereof in accordance with the provisions of Section 228 of the GCL, vote the
Shares beneficially owned by each of them in accordance with the Voting
Agreement and comply with the other provisions of such Voting Agreement; and in
order to induce Newco to enter into this Agreement, each Principal Stockholder
has executed and delivered the Voting Agreement, dated as of the date hereof,
with Newco (the "Voting Agreement");
WHEREAS, Newco and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS, certain capitalized terms used herein are defined or
cross-referenced in Section 9.10.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Newco
and the Company agree as follows:
ARTICLE
THE MERGER
SECTION The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time (as defined in
Section 1.3) Newco shall be merged with and into the Company. Following the
Merger, the separate corporate existence of Newco shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation").
SECTION Closing. Unless this Agreement shall . have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on the second business day after satisfaction or waiver of the
conditions set forth in Article VII (the "Closing Date"), at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another date, time or place is agreed to in writing by the parties
hereto; provided that Newco may, upon
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written notice given to the Company no later than one business day before the
date on which the Closing would otherwise occur, as contemplated by this Section
1.2 cause the Closing to be postponed to a date specified in such notice so long
as such date is not more than 85 days after the date hereof, Newco states in
such notice that such delay is necessary to permit completion of the offering of
Senior Subordinated Notes (as defined in and contemplated by the Commitment
Letters) and such notice is accompanied by a letter from the initial purchaser
in respect of such offering and addressed to the Company to the effect that such
initial purchaser agrees with the aforesaid statement.
SECTION Effective Time. As soon as practicable after the satisfaction or
waiver of the conditions set forth in Article VII, the Company shall execute in
the manner required by the GCL and deliver to the Secretary of State of the
State of Delaware a duly executed certificate of merger, and the parties shall
take such other and further actions as may be required by law to make the Merger
effective. The time the Merger becomes effective in accordance with applicable
law is referred to as the "Effective Time."
SECTION Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the GCL.
SECTION Certificate of Incorporation and By-Laws of the Surviving
Corporation.
The certificate of incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be amended in the Merger so as to read in its
entirety in the form set forth as Exhibit A hereto and, as so amended, shall be
the certificate of incorporation of the Surviving Corporation, until thereafter
amended in accordance with the provisions thereof and applicable law.
Subject to the provisions of Section 6.7, the by-laws of Newco in effect at
the Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and applicable law.
SECTION Directors. Subject to applicable law, the directors of Newco
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
SECTION Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
SECTION Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the Company, Newco or the
holders of Shares or Newco Shares:
Conversion of Shares. Each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares held by Newco or any
wholly-owned subsidiary of Newco, in the treasury of the Company or by any
wholly-owned subsidiary of the Company), which Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
canceled and retired and shall cease to exist with no payment being made
with respect thereto, and other than Dissenting Shares (as defined in
Section 3.1) shall be converted into the right to receive following the
Merger an amount in cash equal to $7.00 (the "Merger Price").
Cancellation and Retirement of Shares. As of the Effective Time, all
Shares (other than Shares referred to in Section 2.1(a) which shall be
canceled and retired in connection therewith and Dissenting Shares) issued
and outstanding immediately prior to the Effective Time shall be converted
into the right to receive the Merger Price, without interest thereon, shall
no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate which immediately prior to
the Effective Time represented any such Shares so converted (a
"Certificate") shall cease to have any rights with respect thereto, except
the right to receive the Merger Price, without interest thereon.
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Conversion of Newco Shares. As of the Effective Time, each Newco
Share that was issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION Company Option Plan. (a) Newco and the Company shall take all
actions necessary so that, immediately prior to the Effective Time, (i) each
outstanding option to purchase Shares (an "Option") granted under the Company's
Amended and Restated Stock Option Plan (the "Option Plan"), whether or not then
exercisable or vested, shall become fully exercisable and vested, (ii) each
Option which is then outstanding shall be canceled and (iii) in consideration of
such cancellation, and except to the extent that Newco and the holder of any
such Option otherwise agree, as soon as practicable following the Effective
Time, the Company shall pay to such holders of Options an amount in respect
thereof equal to the product of (A) the excess of the Merger Price over the
exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of taxes required by law to be withheld with respect thereto).
Effective as of the Effective Time, the Company shall use its reasonable
best efforts to take all such action as is necessary prior to the Effective Time
to terminate the Option Plan so that on and after the Effective Time no current
or former employee or director shall have any Option to purchase shares of
common stock or any other equity interest in the Company under the Option Plan.
The Company shall use its reasonable best efforts to obtain any consents
necessary to release the Company from any liability in respect of any Options.
SECTION Consent Statement; Action by Written Consent.
As soon as practicable following the date of this Agreement, the Company
and Newco shall prepare and file with the SEC a consent statement (the "Consent
Statement") in connection with the solicitation of written consents in favor of
the adoption of this Agreement (the "Consent Solicitation"). The Company and
Newco shall use their reasonable best efforts to have the Consent Statement
approved by the SEC as promptly as practicable after such filing and the Company
shall use its reasonable best efforts to cause the Consent Statement to be
mailed to its stockholders as promptly as practicable after receipt of such
approval. The Company will notify Newco of the receipt of any comments from the
SEC or its staff or of any request by the SEC or its staff for amendments or
supplements to the Consent Statement or for additional information and will
supply Newco with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Consent Statement prior to its being filed with the SEC and
shall give Newco and its counsel the reasonable opportunity to review the
Consent Statement and all amendments and supplements thereto and all responses
to requests for additional information and replies to comments prior to their
being filed with or sent to the SEC. The Company agrees to use its reasonable
best efforts, after consultation with Newco, to respond promptly to all such
comments of and requests by the SEC. The Company will cause the Consent
Statement to comply as to form in all material respects with the applicable
provisions of the Exchange Act. If at any time prior to the Effective Time any
information relating to Newco or the Company, or any of their respective
affiliates, officers or directors, should be discovered by Newco or the Company
that should be set forth in an amendment or supplement to the Consent Statement
so that such document would not include a misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other party hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company. The Company shall include in the Consent
Statement the recommendation of the Company's Board of Directors that the
shareholders consent to the adoption of this Agreement.
Upon approval of the Consent Statement by the SEC, the Company shall
solicit written consents for the adoption of this Agreement in compliance with
the applicable rules of the New York Stock Exchange and the SEC. Notwithstanding
the foregoing, the parties understand that, pursuant to the Voting Agreement,
immediately following the execution of this Merger Agreement, the Principal
Shareholders will effect the adoption of this Agreement by the stockholders of
the Company by taking action by written consent of the
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stockholders of the Company in lieu of calling a meeting of stockholders
pursuant to, and in accordance with, the requirements set forth in Section 228
of the GCL. The Company shall use its best efforts in the making of the Consent
Solicitation and in causing the approval of this Agreement and the Merger to
become effective as soon as practicable after the date of this Agreement,
including but not limited to, fixing a record date for the purpose of
determining the holders of Shares entitled to consent to the adoption of this
Agreement and distributing the consents to the holders of Shares. The Company
shall deliver to Newco, promptly after receipt, but in no case, more than two
business days after receipt, notice of receipt of all consents received pursuant
to the Consent Solicitation and filing of such consents with the Secretary of
the Company. The Company shall promptly file with the Secretary of the Company
after receipt, but in no case, more than one (1) business day after receipt, all
consents received pursuant to the Consent Solicitation. The Company shall ensure
that the Consent Solicitation is conducted in accordance with applicable laws.
SECTION Releases.
Effective upon the Effective Time, the Company hereby releases and forever
discharges each person who is now, or has been at any time prior to the date
hereof, an officer, director or stockholder (and any direct or indirect partner
of any stockholder that is a partnership), trustee or agent of the Company or
any of its subsidiaries and each person controlling any of the foregoing persons
(individually, a "Released Party" and collectively, the "Released Parties"),
from any and all claims, rights, obligations, debts, liabilities, actions or
causes of action of every kind and nature, whether foreseen or unforeseen,
contingent or actual, and whether now known or hereafter discovered, which the
Company or any of its subsidiaries had, now has or may in the future have, in
law or in equity, against any Released Party in any way arising out of,
pertaining to or incurred in connection with acts or omissions or alleged acts
or omissions by any of them in their capacity as an officer, director or
stockholder which acts or omissions existed or occurred at or prior to the
Effective Time other than acts or omissions or alleged acts or omissions
involving criminal activity, willful misconduct or fraudulent activity by such
Released Party (a "Released Claim"). This Section 2.4 shall not apply to loans
from the Company to any Released Party.
The Company shall pay all expenses, including attorneys' fees, that may be
incurred by any Released Party in enforcing the obligations provided for in this
Section 2.4 and all expenses, including attorneys' fees, that may be incurred by
any Released Party in defending any Released Claim; provided, that the Company
shall not be obligated to pay any such expenses incurred by an officer, director
or stockholder in the event that the Company is purchasing a claim against such
officer, director or stockholder for acts or omissions or alleged acts or
omissions involving criminal activity, willful misconduct or fraudulent activity
unless such person is determined not to have committed such acts or omissions.
The rights of each Released Party hereunder shall be in addition to any
other rights such Released Party may have under the charter or by-laws of the
Company, under applicable law or otherwise, the provisions of this Section 2.4
shall survive the Merger and each Released Party shall, for all purposes, be a
third-party beneficiary of the covenants and agreements of the Company under
this Section 2.4 and, accordingly, shall be treated as a party to this Agreement
for purposes of the rights and remedies relating to enforcement of such
covenants and agreements and shall be entitled to enforce any such rights and
exercise any such remedies directly.
ARTICLE
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who demands in writing appraisal for such Shares in accordance
with Section 262 of the GCL, if such Section 262 provides for appraisal rights
for such Shares in the Merger ("Dissenting Shares"), shall not be converted into
the right to receive the Merger Price as provided in Section 2.1(a), but shall
be entitled to receive the consideration as shall be determined pursuant to
Section 262 of the GCL unless and until such holder fails to perfect or
withdraws or otherwise loses his right
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to appraisal and payment under the GCL. If any such holder fails to perfect or
withdraws or loses his right to appraisal, such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Price, if any, to which such holder is entitled,
without interest or dividends thereon. The Company shall give Newco prompt
notice of any demands received by the Company for appraisal of Shares,
withdrawals of such demands and any other instruments served pursuant to the GCL
and received by the Company and, prior to the Effective Time, Newco shall have
the right to participate in all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, except with
the prior written consent of Newco, make any payment with respect to, or settle
or offer to settle, any such demands.
SECTION Payment for Shares.
From and after the Effective Time, a bank or trust company mutually
acceptable to Newco and the Company shall act as paying agent (the "Paying
Agent") in effecting the payment of the Merger Price. Immediately prior to the
Effective Time, Newco shall deposit, or cause to be deposited, in trust with the
Paying Agent the aggregate Merger Price to which holders of Shares shall be
entitled at the Effective Time pursuant to Section 2.1(a).
Promptly after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail to each record holder of Certificates (other than
Certificates representing Dissenting Shares and Certificates representing Shares
held by Newco, any wholly-owned subsidiary of Newco, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) (i) a form of letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and which shall be in such form and have such
other provisions as Newco may reasonably specify and to which the Company
consents (such consent not to be unreasonably withheld or delayed) and (ii)
instructions for use in surrendering such Certificates and receiving the
aggregate Merger Price in respect thereof. Upon the surrender of each such
Certificate, duly completed and validly executed in accordance with the
instructions thereto, the Paying Agent shall pay the holder of such Certificate
the Merger Price multiplied by the number of Shares formerly represented by such
Certificate in consideration therefor, and such Certificate shall forthwith be
canceled. Until so surrendered, each such Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Shares held by
Newco, any wholly-owned subsidiary of Newco, in the treasury of the Company or
by any wholly-owned subsidiary of the Company) shall represent solely the right
to receive the aggregate Merger Price relating thereto. No interest or dividends
shall be paid or accrued on the Merger Price. If the Merger Price (or any
portion thereof) is to be delivered to any person other than the person in whose
name the Certificate formerly representing Shares surrendered therefor is
registered, it shall be a condition to such right to receive such Merger Price,
that the Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise be in proper form for transfer and that the person
surrendering such Certificates shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
Promptly following the date which is 180 days after the Effective Time, the
Paying Agent shall deliver to the Surviving Corporation all cash, Certificates
and other documents in its possession relating to the transactions described in
this Agreement, and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Certificate formerly representing Shares who has not theretofore
complied with Article II and this Article III shall look only to the Surviving
Corporation (as a general creditor thereof) for payment of its claim for the
Merger Price (without any interest or dividends thereon).
No Liability. None of Newco, the Company or the Paying Agent shall be
liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law to the
extent any such law so provides.
Investment in Exchange Fund. The Paying Agent shall invest the Merger
Price as directed by the Surviving Corporation (within guidelines approved by
the Company prior to the Closing Date, which approval
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shall not be unreasonably withheld or delayed). Any interest resulting from such
investment shall be paid to the Surviving Corporation.
Stock Transfer Books. After the Effective Time, there shall be no
registrations of transfers on the stock transfer books of the Surviving
Corporation of any Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates formerly representing
Shares are presented to the Surviving Corporation or the Paying Agent, they
shall be surrendered and canceled in return for the payment of the aggregate
Merger Price relating thereto, as provided in this Article III.
No Further Ownership Rights in Shares Exchanged For Cash. All cash paid
upon the surrender for exchange of Certificates formerly representing Shares in
accordance with the terms of this Article III shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares formerly represented
by such Certificates.
Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
and customary amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to the Certificate,
the Paying Agent shall deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Price with respect thereto.
Withholding Rights. The Surviving Corporation shall be entitled to deduct
and withhold from the consideration otherwise payable to any holder of Shares
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or under any provision of state, local or
foreign Tax law.
SECTION The Debt Offer.
Provided that this Agreement shall not have been terminated in accordance
with Section 8.1, the Company shall, as soon as practicable following execution
of this Agreement (but in no event later than 15 calendar days after the public
announcement of the execution of this Agreement), commence an offer to purchase
all of the outstanding aggregate principal amount of the Company's 11.63% Senior
Subordinated Notes due 2004 (the "Subordinated Notes") on the terms set forth in
Section 3.3 of the Company Disclosure Schedule (as defined in Article IV) and
such other customary terms and conditions as are reasonably acceptable to Newco
(the "Debt Offer"). The Company shall waive any of the conditions (other than
that the Merger shall have been consummated) to the Debt Offer and make any
other changes in the terms and conditions of the Debt Offer as reasonably
requested by Newco, and the Company shall not, without Newco's prior consent,
waive any condition to the Debt Offer or make any changes to the terms and
conditions of the Debt Offer. Notwithstanding anything in this Agreement,
including the immediately preceding sentence, to the contrary, Newco shall not
request that the Company make any change to the terms and conditions of the Debt
Offer that, in the Company's reasonable judgment, is adverse to the holders of
the Subordinated Notes or the Shares or that reasonably could be expected to
delay or impair consummation of the Merger or the transactions contemplated
hereby unless such change was previously approved by the Company in writing. The
Company covenants and agrees that, subject to the terms and conditions of this
Agreement, including but not limited to the conditions to the Debt Offer, it
will accept for payment and pay for the Subordinated Notes as soon as the
condition set forth in Section 7.2(f) is satisfied or waived and immediately
prior to the Effective Time so long as it is permitted to do so under applicable
law.
Promptly following the date of this Agreement, Newco and the Company shall
prepare an offer to purchase the Subordinated Notes (or portions thereof) and
forms of the related letter of transmittal (the "Letter of Transmittal")
(collectively, the "Offer to Purchase") and summary advertisement, as well as
all other information and exhibits (collectively, the "Offer Documents"). Newco
and the Company will cooperate with each other in the preparation of the Offer
Documents. All mailings to the holders of Subordinated Notes in connection with
the Debt Offer shall be subject to the prior review, comment and reasonable
approval of Newco. The Company will use its reasonable best efforts to cause the
Offer Documents to be mailed to the holders of the Subordinated Notes as
promptly as practicable following commencement of the Debt Offer in
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accordance with Section 3.3(a). The Company agrees promptly to correct any
information in the Offer Documents that shall be or have become false or
misleading in any material respect.
In connection with the Debt Offer, if requested by Newco, the Company shall
promptly furnish Newco with security position listings, any non-objecting
beneficial owner lists and any available listings or computer files containing
the names and addresses of the beneficial owners and/or record holders of
Subordinated Notes, each as of a recent date, and shall promptly furnish Newco
with such additional information (including but not limited to updated lists of
holders of the Subordinated Notes, mailing labels, security position listings
and non-objecting beneficial owner lists) and such other assistance as Newco or
its agents may reasonably require in communicating the Debt Offer to the record
and beneficial holders of Subordinated Notes.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Newco that (i) except as set forth
in the Company Disclosure Schedule delivered to Newco prior to the execution of
this Agreement (the "Company Disclosure Schedule"), but, with respect to any
representation or warranty, only to the extent that it would be reasonably
apparent that a reference on the Company Disclosure Schedule relates to such
representation or warranty, and (ii) except as fairly reflected in the notes to
the financial statements described in Section 4.6(b) hereof.
SECTION Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of the Company's subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company and each of its subsidiaries has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, reasonably could not,
individually or in the aggregate, be expected to have a Material Adverse Effect
on the Company. The term "Material Adverse Effect on the Company", as used in
this Agreement, means any change, effect, event, occurrence or development that
is (i) materially adverse to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of the
Company and its subsidiaries taken as a whole except for any change or effect
resulting from (a) general economic, financial or market conditions, (b) any
change or effect resulting from conditions or circumstances generally affecting
the newspaper or magazine publishing industry so long as such change or effect
does not have a materially disproportionate effect on the Company, or (c)
changes in laws of general applicability or applicable generally to the
newspaper or magazine publishing industry so long as such change or effect does
not have a materially disproportionate effect on the Company or (ii) materially
adversely affects the ability of the Company to perform its obligations under
this Agreement.
SECTION Certificate of Incorporation and By-Laws. The Company has
heretofore delivered to Newco a complete and correct copy of the certificate of
incorporation and the by-laws, each as amended to the date hereof, of the
Company and of each of its subsidiaries. Such certificates of incorporation and
by-laws are in full force and effect and no other organizational documents are
applicable to or binding upon the Company or its subsidiaries, as applicable.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its certificate of incorporation or by-laws.
SECTION Capitalization. The authorized capital stock of the Company
consists of 155,000,000 Shares divided into 100,000,000 Class A Shares,
20,000,000 shares of Class B Common Stock, par value $.01 per share (the "Class
B Shares"), 25,000,000 Class C Shares and 10,000,000 shares of Serial Preferred
Stock, par value $.01 per share (the "Preferred Stock"), none of which preferred
shares are outstanding. As of the close of business on February 8, 1999, there
were 21,793,184 Class A Shares issued and outstanding. As of the date of this
Agreement, there were no Class B Shares and 20,702,005 Class C Shares issued and
outstanding. The Company has no shares of capital stock reserved for issuance,
except that (i), as of the close of business
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on February 8, 1999, there were 1,672,912 Class A Shares issuable upon exercise
of outstanding Options (with an average exercise price of $6.02) and (ii) as of
the date of this Agreement, there are 20,702,005 Class A Shares issuable upon
conversion of Class C Shares. Except as set forth above, as of the close of
business on February 8, 1999, or the date of this Agreement, as the case may be,
no shares of capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding. All the outstanding Shares are, and all
Shares which may be issued pursuant to the exercise of outstanding Options or
the conversion of Class C Shares will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable and free of preemptive (or similar) rights. There are no bonds,
debentures, notes or other indebtedness or securities having general voting
rights (or convertible into securities having such rights) ("Voting Debt") of
the Company or any of its subsidiaries issued and outstanding. Except as set
forth above, there are no existing options, warrants, calls, subscriptions or
other rights, agreements, arrangements or commitments of any character, relating
to the issued or unissued capital stock of the Company or any of its
subsidiaries, obligating the Company or any of its subsidiaries to issue,
deliver, transfer or sell or cause to be issued, delivered, transferred or sold
any shares of capital stock or Voting Debt of, or other equity or voting
interest in, the Company or any of its subsidiaries or securities convertible
into or exchangeable or exercisable for such shares or equity or voting
interests or obligations of the Company or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment. All Options were granted under the
Option Plan. Since the close of business on February 8, 1999 and prior to the
execution of this Agreement, there have been no Options, Shares or any other
voting securities or capital stock issuances by the Company or any subsidiary
except for issuances of Shares pursuant to the exercise of Options. Except for
the Company's obligations to accept surrendered Class C Shares upon conversion
thereof into Class A Shares, there are no outstanding obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire, or make
any payment in respect of, any Shares or the capital stock of the Company or any
of its subsidiaries, or to provide funds or make any investment (in the form of
a loan, capital contribution or otherwise) in, any other person (other than cash
equivalents, trade receivables and investments in wholly owned subsidiaries). To
the knowledge of the Company, there are no irrevocable proxies with respect to
Shares of the Company or any shares of capital stock of any subsidiary of the
Company. Section 4.3 of the Company Disclosure Schedule constitutes a true and
complete list of the subsidiaries and associated entities of the Company and
evidences the amount of capital stock or other equity interests owned by the
Company, either directly or indir ectly, in such subsidiaries or associated
entities. Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of the Company's subsidiaries are 100% owned by
the Company or by a subsidiary of the Company (other than the shares of
Frontline Marketing, Inc. and Biocide, Inc. (collectively, the "Special Subs"),
the shares of which are each 80% owned by the Company), in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance, agreement, limitation on voting rights and restriction of any kind
(any of the foregoing being a "Lien"). For the purposes of this Agreement, the
Special Subs are considered to be wholly-owned subsidiaries of the Company. No
entity in which the Company owns, directly or indirectly, less than a 50% equity
interest is, individually or when taken together with all such other entities,
material to the business of the Company and its subsidiaries taken as a whole.
SECTION Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board and no other corporate proceedings on the part of the
Company are necessary to authorize or approve this Agreement or to consummate
the transactions contemplated hereby (other than, with respect to the Merger,
the adoption of this Agreement by holders of the Shares to the extent required
by the Company's certificate of incorporation and by applicable law). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due and valid authorization, execution and delivery of this
Agreement by Newco, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other
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similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity (whether
considered in a proceeding in equity or in law).
SECTION No Conflict; Required Filings and Consents.
None of the execution, delivery and performance of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof (in each case
other than in respect of the financing to be obtained contemplated by the
Commitment Letters or any other financing obtained in connection with the
transactions contemplated hereby) will (i) conflict with or violate any
provision of the certificate of incorporation or by-laws of the Company or the
comparable organizational documents of any of its subsidiaries, (ii) subject to
the governmental filings and of matters referred to in Section 4.5(b), conflict
with or violate any statute, ordinance, rule, regulation, order, judgment or
decree applicable to the Company or its subsidiaries, or by which any of them or
any of their respective properties or assets may be bound or affected, or (iii)
result in a violation or breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in any loss of any material benefit, or the creation of any Lien on any
of the property or assets of the Company or any of its subsidiaries (any of the
foregoing referred to in clause (ii) or this clause (iii) being a "Violation")
pursuant to, any loan or credit agreement, note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties may be bound or affected, except in the case of the foregoing clauses
(ii) or (iii) for any such Violations which, individually or in the aggregate,
reasonably could not be expected to have a Material Adverse Effect on the
Company.
None of the execution, delivery and performance of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof (in each case
other than in respect of the financing contemplated by the Commitment Letters or
any other financing obtained in connection with the transactions contemplated
hereby) will require any consent, waiver, approval, authorization or permit of,
or registration or filing with or notification to (any of the foregoing being a
"Consent"), any administrative, government or regulatory authority, agency,
court, commission, tribunal or body, domestic, foreign or supranational (a
"Governmental Entity"), except for (i) compliance with any applicable
requirements of the Exchange Act, (ii) the filing of a certificate of merger,
pursuant to the GCL, (iii) applicable state takeover statutes, (iv) compliance
with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and any requirements of any foreign or supranational Antitrust Laws
(as hereinafter defined) and (v) Consents, the failure of which to obtain or
make, individually or in the aggregate, could not be reasonably expected to have
a Material Adverse Effect on the Company.
SECTION SEC Reports and Financial Statements.
The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements (collectively, and in
each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the "SEC Reports") required to be filed by
the Company with the SEC since December 31, 1995. Other than American Media
Operations, Inc. ("Operations"), no subsidiary of the Company is required to
file any form, report, schedule, registration statement or proxy statement with
the SEC. As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
Each of the audited and unaudited consolidated financial statements of the
Company (including any related notes and schedules, if any, thereto) included in
the SEC Reports complies as to form in all material respects with all applicable
accounting requirements and with the published rules and regulations of the SEC
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with respect thereto, represents fairly, in all material respects, the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates or
for the periods presented therein and has been prepared in conformity with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved except as otherwise noted therein,
including in the notes thereto. Except as set forth in the consolidated balance
sheet of the Company at September 28, 1998, included in the SEC Reports, as of
such date, neither the Company nor any of its subsidiaries has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise)
that (i) is required by GAAP to be reflected on a consolidated balance sheet of
the Company as of such date, and (ii) individually or in the aggregate,
reasonably could be expected to have a Material Adverse Effect on the Company.
Except as set forth in the consolidated balance sheet of the Company at
September 30, 1998, included in the SEC Reports, neither the Company nor any of
its subsidiaries had any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be required by GAAP to
be reflected on a consolidated balance sheet of the Company, except for
liabilities or obligations (i) incurred in the ordinary course of business since
September 28, 1998, or (ii) which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. As of January 31,
1999, the aggregate Funded Debt of the Company and its subsidiaries was less
than $483 million.
SECTION Information. None of the information supplied by the Company for
inclusion or incorporation by reference in (i) the Offer Documents, (ii) the
Consent Statement or (iii) any other document to be filed with the SEC or any
other Governmental Entity in connection with the transactions contemplated by
this Agreement (the "Other Filings") will, at the respective times filed with
the SEC or other Governmental Entity and, in addition, in the case of the
Consent Statement, at the date it or any amendment or supplement is mailed to
stockholders, and at the Effective Time, and, in the case of the Offer
Documents, at the time the Offer Documents or any amendments or supplements are
first published or sent or given to Holders of the Subordinated Notes, as the
case may be, or at the time the Debt Offer is consummated, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading except, in
each case, as the same may be amended or supplemented prior to the Effective
Time. The Consent Statement will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by the Company with respect to statements
made therein based on information supplied by Newco in writing specifically for
inclusion in the Consent Statement. For purposes of this Agreement, the parties
agree that statements made and information in the Consent Statement relating to
the Federal income tax consequences of the transactions herein contemplated to
holders of Shares shall be deemed to be supplied by the Company and not by
Newco.
SECTION Litigation. As of the date hereof: there is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries that,
individually or in the aggregate, reasonably could be expected to (x) have a
Material Adverse Effect on the Company or (y) prevent or delay in any material
respect the consummation of the transactions contemplated by this Agreement, nor
is there any judgment, decree, injunction or order of any Governmental Entity,
administrative or regulatory authority or body, or arbitrator outstanding
against the Company or any of its subsidiaries that reasonably could be expected
to (x) have, individually or in the aggregate, a Material Adverse Effect on the
Company or (y) prevent or delay in any material respect the consummation of the
transactions contemplated by this Agreement. Neither the Company nor any of its
subsidiaries nor any of their respective properties is or are subject to any
order, writ, judgment, injunction, decree, determination or award which
reasonably could be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or would enjoin or prohibit the
consummation of the transactions contemplated hereby.
SECTION Compliance with Applicable Laws. Each of the Company and its
subsidiaries has been and is in compliance with all permits, licenses and
franchises from Governmental Entities required to conduct its business as now
being conducted, except to the extent that the failure to have been or comply
with such permits, licenses and franchises reasonably could not, individually or
in the aggregate, be expected to have a Material Adverse Effect on the Company.
The Company and its subsidiaries are, and are conducting their
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15
respective business operations, in compliance with all laws, regulations and
orders of any Governmental Entity applicable to any of them, except for such
failures so to comply which, individually or in the aggregate, reasonably could
not be expected to have a Material Adverse Effect on the Company.
SECTION Employee Benefit Plans.
Section 4.10 of the Company Disclosure Schedule includes a complete list of
each material "employee benefit plan" (within the meaning of section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(including, without limitation, multiemployer plans within the meaning of ERISA
section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not
under which any employee or former employee of the Company or any of its
subsidiaries has any present or future right to benefits or under which the
Company or any of its subsidiaries has any present or future liability. All such
plans, agreements, programs, policies and arrangements shall be collectively
referred to as the "Plans."
With respect to each Plan, the Company has made available to Parent a true,
correct and complete copy of: (i) all plan documents, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii)
the current summary plan description, if any, and other written communications;
(iv) the three most recent annual financial reports, if any; (v) the three most
recent actuarial reports, if any; and (vi) the most recent determination letter
from the Internal Revenue Service (the "IRS"), if any.
Each Plan has been established and administered in accordance with its
terms, and in compliance with the applicable provisions of ERISA, the Code and
other applicable laws, rules and regulations except for such violations or
non-compliances, which, individually or in the aggregate, reasonably could not
be expected to have a Material Adverse Effect on the Company. With respect to
each Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("Qualified Plans"), the IRS has issued a favorable
determination letter and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
All contributions required to be made to any Plan by applicable law or
regulation or by any plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Plan, for
any period through the Effective Time have been timely made or paid in full or,
to the extent not required to be made or paid on or before the date hereof, have
been fully reflected in the financial statements of the Company to the extent
required under GAAP.
No Plan is subject to Title IV or Section 302 of ERISA or Section 412 or
4971 of the Code. There does not now exist, nor do any circumstances exist that
could reasonably be expected to result in, any material liability under (i)
Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the
Code or (iv) the continuation coverage requirements of section 601 et seq. of
ERISA and section 4980B of the Code.
(i) With respect to any Plan, no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or threatened
and no facts or circumstances exist which could give rise to any such actions,
suits or claims; (ii) neither the Company nor any other party has engaged in a
prohibited transaction, as such term is defined under Code section 4975 or ERISA
section 406, which would subject the Company, any of its subsidiaries or the
Buyer to any taxes, penalties or other liabilities under Code section 4975 or
ERISA sections 409 or 502(i); (iii) no event has occurred and no condition
exists that would subject the Company or any of its subsidiaries, either
directly or by reason of its affiliation with any member of its Controlled Group
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to
any tax, fine or penalty imposed by ERISA, the Code or other applicable laws,
rules and regulations; (iv) no Plan provides for an increase in benefits on or
after the Closing Date; and (v) each Plan, excluding individual employment
agreements or individual contracts with employees, may be amended or terminated
without obligation or liability (other than those
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obligations and liabilities for which specific assets have been set aside in a
trust or other funding vehicle or reserved for on the Company's balance sheet).
Except as set forth in Section 4.10 of the Company Disclosure Schedule, no
Plan exists which could result in the payment to any employee of the Company or
any of its subsidiaries of any money or other property or rights or accelerate
or provide any other rights or benefits to any employee of the Company or any of
its subsidiaries as a result of the transaction contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of Code section 280G, and whether or not some other subsequent action or
event would be required to cause such payment, acceleration or provision to be
triggered.
SECTION Intellectual Property.
Schedule 4.11(a) sets forth (i) all patents, registrations and applications
for Intellectual Property owned, held or used by the Company or any of its
subsidiaries, (ii) all material unregistered Intellectual Property owned, held
or used by the Company or any of its subsidiaries, and (iii) all material
licenses, sublicenses, consent-to-use agreements and other agreements concerning
Intellectual Property to which the Company or any of its subsidiaries is a party
("IP Licenses"). The Company or any of its subsidiaries owns or has the right to
use all the Intellectual Property listed on Schedule 4.11(a), and all the
Intellectual Property necessary or desirable for the operation of the Company or
any of its subsidiaries as each is currently operated and consistent with past
practice.
Except as set forth on Schedule 4.11(b), and except for such matters that,
individually or in the aggregate, reasonably could not be expected to have a
Material Adverse Effect on the Company, (i) all of the Intellectual Property
owned or used by the Company or any of its subsidiaries is valid, enforceable
and unexpired, is free of all Liens, has not been abandoned, does not infringe
or impair the Intellectual Property of any third party and is not being
infringed or impaired by any third party; (ii) no judgment, decree, injunction,
rule or order has been rendered or, to the Company's knowledge, is threatened by
any Governmental Entity which would limit, cancel or question the validity of
(or the Company's or any of its subsidiaries' rights regarding ownership or use
of) any Intellectual Property owned, held or used by the Company or any of its
subsidiaries; (iii) no action, suit or proceeding is pending, or to the
Company's knowledge, threatened that seeks to limit, cancel or question the
validity of (or the Company's or any of its subsidiaries' rights regarding
ownership or use of) any Intellectual Property owned, held or used by the
Company or any of its subsidiaries; and (iv) the Company and its subsidiaries
are not in breach of or default under any IP License, nor to the Company's
knowledge, does a valid basis exist for any other party to any IP License to
claim same.
For purposes of this Section 4.11, "Intellectual Property" shall mean all
U.S., state and foreign intellectual property, including without limitation all
(i) (A) patentable inventions, discoveries, processes, designs, techniques,
developments, technology, and related improvements and know-how; (B) copyrights
in works of authorship in any language or media, including computer software,
databases and related items, textual works, graphics, artwork, photography,
advertising and promotional materials, designs, web site content, and all
authors' rights and waivers; (C) trademarks, service marks, trade names, brand
names, corporate names, domain names, logos, trade dress and all elements
thereof, the goodwill of any business symbolized thereby, and all common-law
rights relating thereto; and (D) trade secrets, subscriber and advertiser lists
and other confidential information; (ii) all registrations, applications,
recordings, licenses and other agreements related thereto; and (iii) all rights
to obtain renewals, extensions, continuations, continuations-in-part, reissues,
divisions or similar legal protections related thereto.
SECTION Environmental Matters. Except for items referred to below which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company, (a) each of the Company and each of its
subsidiaries complies and has complied with all Environmental Laws applicable to
the properties, assets or businesses of the Company and its subsidiaries, and
possesses and complies with and has possessed and complied with all
Environmental Permits required under such laws; (b) no modification, revocation,
reissuance, alteration, transfer, or amendment of any of the Environmental
Permits, or any review by, or approval of, any third party of any of the
Environmental Permits is required in connection with the execution or delivery
of this Agreement or the consummation of the transactions contemplated hereby or
the
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continuation of the business of the Company and its subsidiaries following such
consummation; (c) no judicial or administrative proceeding is pending or to the
knowledge of the Company threatened relating to liability for any off-site
disposal or contamination; (d) none of the Company or any of its subsidiaries
has received any Environmental Claim, and none of the Company or any of its
subsidiaries is aware after reasonable inquiry of any threatened Environmental
Claim; (e) none of the Company or any of its subsidiaries has assumed,
contractually or by operation of law, any liabilities or obligations under any
Environmental Laws; (f) there are and have been no Hazardous Materials at any
property owned, operated or otherwise used by the Company or any subsidiary now
or in the past that reasonably could be expected to give rise to liability that
could reasonably be expected to have a Material Adverse Effect on the Company or
any subsidiary under any Environmental Law; (g) there are no past or present
events, conditions, circumstances, practices, plans or legal requirements that
could reasonably be expected to result in liability to the Company or any of its
subsidiaries under Environmental Laws or prevent or increase either the
Company's or any of its subsidiaries' burden of complying with Environmental
Laws, in either case, such that, individually or in the aggregate, such matters
could reasonably be expected to have a Material Adverse Effect; and (h) none of
the Company or any of its subsidiaries has entered into or agreed to any
consent, decree, order or agreement under any Environmental Law, and none of the
Company or any of its subsidiaries is subject to any judgment, decree or order
relating to compliance with any Environmental Law or to investigation, cleanup,
remediation or removal of Hazardous Materials. For purposes of this Agreement,
the following terms shall have the following meanings:
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability arising out of, relating to,
based on or resulting from (i) the presence, discharge, emission, release
or threatened release of any Hazardous Materials at any location, whether
or not owned, leased or operated by the Company or any of its subsidiaries
or (ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Law or Environmental Permit or (iii)
otherwise relating to obligations or liabilities under any Environmental
Laws.
"Environmental Laws" means all applicable federal, state and local
statutes, rules, regulations, ordinances, orders, decrees and common law,
as they exist at the date hereof, relating in any manner to contamination,
pollution or protection of human health or the environment, including
without limitation the Comprehensive Environmental Response, Compensation
and Liability Act, the Solid Waste Disposal Act, the Resource Conservation
and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Occupational Safety and Health Act, the
Emergency Planning and Community-Right-to-Know Act, the Safe Drinking Water
Act, all as amended, and similar state laws.
"Environmental Permits" means all permits, licenses, registrations and
other governmental authorizations required for the Company and the
operations of the Company's and its subsidiaries' facilities and otherwise
to conduct its business under Environmental Laws.
"Hazardous Materials" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing
materials, pollutants, contaminants and all other materials and substances
regulated pursuant to, or that could form the basis of liability under, any
Environmental Law.
SECTION Material Adverse Change. Since September 28, 1998, the Company and
its subsidiaries have conducted their businesses only in the ordinary course of
business consistent with past practice (except with respect to the Soap Opera
Sale) in all material respects, and, since such date, there has not been (a) any
change, effect, event, occurrence or development in the business, operations,
assets, liabilities, condition (financial or otherwise), results of operations
or prospects of the Company or any of its subsidiaries that reasonably could be
expected to be materially adverse to the Company and its subsidiaries taken as a
whole except for any change resulting from (i) general economic, financial or
market conditions, (ii) conditions or circumstances generally affecting the
newspaper or magazine publishing industry so long as such change does not have a
materially disproportionate effect on the Company, or (iii) changes in laws of
general applicability or applicable generally to the newspaper or magazine
publishing industry so long as such change does not have
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a materially disproportionate effect on the Company, (b) any action by the
Company or any of its subsidiaries which, if taken after the date of this
Agreement, would constitute a breach of any provision of Section 6.1 (other than
Section 6.1(i) and (n)) or (c) any change, effect, event, occurrence of
development which reasonably could be expected to prevent or delay in any
material respect the consummation of the transactions contemplated by this
Agreement.
SECTION Certain Approvals.
The Board of Directors of the Company, at a meeting duly called and held,
has by unanimous vote of the directors present and with the written consent of
the one director not present (who together constituted 100% of the directors
then in office) (a) declared this Agreement advisable and determined that the
transactions contemplated hereby, including the Merger and the Debt Offer, are
fair to and in the best interests of the stockholders of the Company, (b) duly
approved this Agreement and the transactions contemplated hereby, including the
Merger and the Debt Offer, and the Voting Agreement and (c) resolved to
recommend that the holders of Shares adopt this Agreement. The Board of
Directors of the Company has taken appropriate action such that, assuming the
accuracy of Newco's representation in Section 5.6 of this Agreement, the
provisions of Section 203 of the GCL will not apply to Newco, any "affiliate" or
"associate" (each as defined in Section 203) of Newco or any of the transactions
contemplated by this Agreement or the Voting Agreement.
The Company Stockholder Vote is the only vote of the holders of any class
or series of the Company's voting securities necessary to approve this Agreement
and the transactions contemplated hereby. There is no vote of the holders of any
class or series of the Company's securities necessary to approve the Voting
Agreement.
SECTION Opinion of Financial Advisor. The Company has received the written
opinion of Lazard Freres & Co., LLC ("Lazard Freres") to the effect that the
Merger Price is fair to the holders of the Shares from a financial point of
view.
SECTION Brokers. Except for the engagement of Lazard Freres, none of the
Company, any of its subsidiaries, or any of their respective officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. The Company is obligated to pay to Lazard Freres
at the Effective Time an aggregate fee of $3.45 million plus its costs and
expenses.
SECTION Contracts, etc. Section 4.16 of the Company Disclosure Schedule
contains a complete and accurate list of all material contracts (written or
oral), plans, undertakings, commitments or agreements to which the Company or
any of its subsidiaries is a party or by which any of them is bound as of the
date of this Agreement ("Contracts") (other than Contracts between or solely
among the Company and any of its wholly owned subsidiaries), including those
agreements included in the following categories.
To the extent not already listed in the Company Disclosure Schedule,
employment contracts, including, without limitation, contracts to employ
executive officers and other contracts with officers or directors of the Company
or the Principal Stockholders (or their affiliates), and all severance, change
in control or similar arrangements with any officers, employees or agents of the
Company that will result in any obligation (absolute or contingent) of the
Company or any of its subsidiaries to make any payment to any officers,
employees or agents of the Company following either the consummation of the
transactions contemplated hereby, termination of employment or both;
(i) Contracts for the purchase of inventory/supplies which are not
cancelable (without penalty, cost or other liability in excess of $100,000)
within one (1) year and (ii) other contracts made in the ordinary course of
business involving future annual expenditures or liabilities of the Company and
its subsidiaries in excess of $100,000 which are not cancelable (without
penalty, cost or other liability in excess of $100,000) within ninety (90) days;
Promissory notes, loans, agreements, indentures, evidences of indebtedness
or other instruments providing for the lending of money in excess of $1,000,000,
whether as borrower, lender or guarantor;
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Contracts containing covenants limiting the freedom of the Company or any
of its subsidiaries to engage in any line of business or compete with any person
or operate at any location;
Joint venture or partnership agreements or joint development or similar
agreements pursuant to which any third party is entitled to develop any products
on behalf of the Company or its subsidiaries;
Any Contract pending or the acquisition or disposition, directly or
indirectly (by merger or otherwise) of assets with fair market value or book
value in excess of $100,000 (other than inventory) or capital stock of another
person;
Any Contract with an affiliate of the Company or any of its subsidiaries;
Any other Contract containing "change of control" provisions which would be
triggered upon the Merger, sale of the Company or any of its subsidiaries or
similar transaction; and
All Contracts governing the material distribution of the publications,
subscription servicing and any other material Contract governing the operations
of the Company or any subsidiary.
True and complete copies of the written Contracts identified on Section
4.16 of the Company Disclosure Schedule have been filed with the SEC as exhibits
to the Company SEC Reports or delivered to Newco, including, without limitation,
all schedules, exhibits and annexes to such contracts. Except as set forth in
Section 4.16 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries nor any other party to any Contract is in default under, or in
breach or violation of, any Contract and, to the knowledge of the Company, no
event has occurred which, with the giving of notice or passage of time or both
would constitute a default under any Contract, except for such defaults,
breaches and violations which, individually or in the aggregate, reasonably
could not be expected to have a Material Adverse Effect on the Company. Other
than contracts which have terminated or expired in accordance with their terms,
each of the Contracts is valid, binding and enforceable in accordance with its
terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered on
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing) and is in full force and effect. No event (except for the execution,
delivery and performance of this Agreement) has occurred which either entitles,
or would, on notice or lapse of time or both, entitle, the holder of any
indebtedness for borrowed money of the Company or any of its subsidiaries to
accelerate, or which does accelerate, the maturity of any indebtedness affecting
the Company or any of its subsidiaries.
SECTION Labor Matters. The Company is not a party to any agreement
pursuant to which a labor organization is certified under applicable labor law
as a bargaining agent for any of the Company's or any of its subsidiaries'
employees, nor is such an agreement being negotiated. There are no
representation or certification proceedings, or petitions seeking a
representation proceeding pending or, to the knowledge of the Company,
threatened to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority; and there are not any organizing
activities or strikes involving the Company or any of its subsidiaries with
respect to any group of employees of the Company or its subsidiaries.
SECTION Tax Matters. Except as set forth on Section 4.18 of the Company
Disclosure Schedule: the Company and each of its subsidiaries and any
consolidated, combined, unitary or aggregate group for Tax purposes of which the
Company or any of its subsidiaries is a member has timely filed all material Tax
Returns required to be filed by it in the manner provided by law, has timely
paid all material Taxes and has provided adequate reserves as required by GAAP
in its financial statements with respect to any liability for Taxes not yet due
and payable. Except as set forth in Section 4.18 of the Company Disclosure
Schedule: (i) no deficiencies for any United States federal income Taxes have
been proposed, asserted or assessed in writing against the Company or any of its
subsidiaries that are not adequately reserved for as required by GAAP; (ii) no
audit of any United States Tax Return of the Company or any of subsidiaries is
being conducted by a Tax authority; (iii) no extension of the statute of
limitations on the assessment of any Taxes has been granted by the Company or
any of its subsidiaries and is currently in effect; (iv) neither the Company nor
any of its subsidiaries (x) has been a member of an affiliated group filing a
consolidated Federal income Tax Return (other than a group the common parent of
which was the Company) or (y) has any liability for the Taxes of
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20
any person (other than the Company and its subsidiaries) arising from the
application of Treasury Regulations sec. 1.1502-6 or any analogous provision of
state, local or foreign law; (v) no consent under Section 341(f) of the Code has
been filed with respect to the Company or any of its subsidiaries; (vi) neither
the Company nor any of its subsidiaries has issued or assumed any obligations
described in Section 279(a) of the Code that remains outstanding; (vii) no claim
for unpaid Taxes has become a Lien against the property of the Company or any of
its subsidiaries or is being asserted against the Company or any of its
subsidiaries; and (viii) neither the Company nor any of its subsidiaries has
made any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments, that will not be
deductible under Sections 162(m) or 2180G of the Code. As used herein, "Taxes"
shall mean any taxes of any kind including but not limited to those on or
measured by or referred to as income, gross receipts, capital, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes.
SECTION Make Good; Advertising Credits. Set forth in Section 4.19 of the
Company Disclosure Schedule is a description of the policies of the Company and
its subsidiaries regarding "make good" and advertising credit requests for each
publication.
SECTION Insurance. Section 4.20 of the Company Disclosure Schedule
contains a correct and complete description of all performance bonds, policies
or binders of insurance held by or on behalf of the Company or its subsidiaries
exclusively, or providing coverage for any of their respective properties or
assets (in each case specifying the insurer, the amount of coverage the type of
insurance, the risks insured, the expiration date, and the policy number).
Except as set forth in Section 4.20 of the Company Disclosure Schedule, to the
best of the Company's knowledge, no state or fact exists and no event has
occurred which reasonably might form the basis of any claim against or relating
to the Company and its subsidiaries which might substantially increase the
insurance premiums payable under or result in the cancellation or nonrenewal of
any of the policies or binders listed on such schedule.
SECTION Year 2000. The statement set forth in Section 4.21 of the Company
Disclosure Schedule is, as of the date hereof, materially true and correct.
SECTION Soap Opera Sale. On February 3, 1999, the Soap Opera Sale was
consummated.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco represents and warrants to the Company that, except as set forth in
the Newco Disclosure Schedule delivered to the Company prior to the execution of
this Agreement (the "Newco Disclosure Schedule"), but, with respect to any
representation or warranty, only to the extent that it would be reasonably
apparent that a reference on the Newco Disclosure Schedule relates to such
representation or warranty:
SECTION Organization and Qualification. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in,
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Newco. The term "Material Adverse Effect on Newco",
as used in this Agreement, means any change in or effect on the business,
operations or financial condition of Newco or any of its subsidiaries that (a)
materially and adversely affects the ability of Newco to perform its obligations
under this Agreement or (b) prevents or delays in any material respect
consummation of the transactions contemplated by this Agreement (including, in
each case and without limitation, the
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financing contemplated by the Commitment Letters or any other financing obtained
in connection with the transactions contemplated hereby).
SECTION Authority Relative to this Agreement. Newco has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby (including the financing contemplated by the Commitment
Letters or any other financing obtained in connection with the transactions
contemplated hereby). The execution, delivery and performance of this Agreement
by Newco and the consummation by Newco of the transactions contemplated hereby
have been duly and validly authorized and approved by all necessary corporate
actions on the part of Newco and no other corporate proceedings on the part of
Newco are necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (including the financing contemplated by the
Commitment Letters or any other financing obtained in connection with the
transactions contemplated hereby). This Agreement has been duly executed and
delivered by Newco and, assuming the due and valid authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of Newco
enforceable against it in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights (whether considered in a
proceeding in equity or in law) generally and (ii) is subject to general
principles of equity.
SECTION No Conflict; Required Filings and Consents.
None of the execution, delivery and performance of this Agreement by Newco,
the consummation by Newco of the transactions contemplated hereby or compliance
by Newco with any of the provisions hereof will (i) conflict with or violate any
provision of the organizational documents of Newco, (ii) subject to the
governmental filings and other matters referred to in Section 5.3(b) below,
conflict with or violate any statute, ordinance, rule, regulation, order,
judgment or decree applicable to Newco, or any of its subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a Violation pursuant to any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Newco or any its
subsidiaries is a party or by which any of their respective properties or assets
may be bound or affected, except in the case of the foregoing clauses (ii) and
(iii) for any such Violations which reasonably could not be expected to have a
Material Adverse Effect on Newco.
None of the execution, delivery and performance of this Agreement by Newco,
the consummation by Newco of the transactions contemplated hereby (including the
financing contemplated by the Commitment Letters or any other financing obtained
in connection with the transactions contemplated hereby) or compliance by Newco
with any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) the filing of a certificate of merger, pursuant to the GCL,
(iii) applicable state takeover and environmental statutes, (iv) compliance with
the HSR Act and any requirements of any foreign or supranational Antitrust Laws,
and (v) Consents, the failure of which to obtain or make reasonably could not be
expected to have a Material Adverse Effect on Newco.
SECTION Information. None of the information supplied or to be supplied by
Newco in writing specifically for inclusion in (i) the Offer Documents, (ii) the
Consent Statement or (iii) the Other Filings will, at the respective times filed
with the SEC or such other Governmental Entity and, in addition, in the case of
the Consent Statement, at the date it or any amendment or supplement is mailed
to stockholders, and at the Effective Time, and, in the case of the Offer
Documents, at the time the Offer Documents or any amendments or supplements are
first published or sent or given to holders of the Subordinated Notes, as the
case may be, or at the time the Debt Offer is consummated, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, except,
in each case, as the same may be amended or supplemented prior to the Effective
Time. Notwithstanding the foregoing, Newco makes no representation or warranty
with respect to any information supplied by the Company or its subsidiaries or
any
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of their respective representatives which is contained in or incorporated by
reference in the Consent Statement.
SECTION Financing. Attached as Annex A-1 to A-2 of the Newco Disclosure
Schedule are true and complete copies of the letters addressed to the Company,
dated the date hereof, issued in connection with the financing of the
transactions contemplated by this Agreement (collectively, the "Commitment
Letters"). The terms and conditions of the letters attached as Annex A-1 to A-2
of the Newco Disclosure Schedule are satisfactory to Newco.
SECTION Newco Not an Interested Stockholder or an Acquiring Person.
Except as a result of the execution of this Agreement or the Voting Agreement,
as of the date of this Agreement Newco is not an "Interested Stockholder" of the
Company as such term is defined in Section 203 of the GCL.
SECTION Newco.
Except as contemplated by this Agreement, none of Newco, Evercore Capital
Partners L.P., any of their affiliates controlled by any of them, Evercore
Partners LLC or any of its affiliates are engaged in the magazine or newspaper
publishing business, and there is no intention as of the date hereof, on the
part of Newco, Evercore Capital Partners L.P., any of their affiliates
controlled by any of them, Evercore Partners LLC or any of its affiliates, to
cause Newco to become affiliated with any person engaged in the magazine or
newspaper publishing business.
Newco has not engaged in any business, and has (and prior to the Effective
Time will have) no liabilities except for costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including costs and expenses of providers of the financing contemplated by the
Commitment Letters) in connection with the transactions contemplated hereby),
liabilities under this Agreement and liabilities to the providers of finance
pursuant to the Commitment Letters as described in the Commitment Letters.
None of the Commitment Letters requires that Newco or its affiliates make
any payments (other than reimbursement of costs and expenses as therein
provided) before the Effective Time.
SECTION Brokers. Neither Newco nor any of its subsidiaries, officers,
directors or employees, has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement for or with respect to
which the Company is or might be liable.
ARTICLE
COVENANTS
SECTION Conduct of Business of the Company. Except as expressly
contemplated by this Agreement (and, for purposes of Section 4.13, the Soap
Opera Sale) or with the prior written consent of Newco, during the period from
the date of this Agreement to the Effective Time, the Company will, and will
cause each of its subsidiaries to, conduct its operations only in the ordinary
course of business consistent with past practice and in compliance with
applicable laws and will use its reasonable efforts, and will cause each of its
subsidiaries to use its reasonable efforts, to preserve intact the business
organization of the Company and each of its subsidiaries, to keep available the
services of its and their present officers and employees, and to preserve the
good will of those having business relationships with it. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement, the Company Disclosure Schedule (or for purposes of Section
4.13, the Soap Opera Sale), the Company will not, and will not permit any of its
subsidiaries to, prior to the Effective Time, without the prior written consent
of Newco:
adopt any amendment to its certificate of incorporation or by-laws or
comparable organizational documents;
except for issuances of capital stock of the Company's subsidiaries to
the Company or a wholly-owned subsidiary of the Company, issue, reissue,
deliver, sell, pledge or otherwise encumber, agree or commit to issue,
reissue, deliver, sell, pledge or otherwise encumber, or authorize the
issuance,
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reissuance, delivery, sale, pledge or encumbrance of shares of capital
stock of any class, any other voting securities or equity equivalents
(including, without limitation, stock appreciation rights) or securities
convertible into, or exchangeable for capital stock or equity equivalents,
or any rights, warrants or options to acquire any convertible securities,
capital stock, voting securities or equity equivalents other than the
issuance of Class A Shares pursuant to the exercise of the Options
outstanding on September 30, 1998, and in accordance with their terms as of
the date of this Agreement or pursuant to the conversion of Class C Shares;
declare, set aside or pay any dividend or other distribution (whether
in cash, securities or property or any combination thereof) in respect of
any class or series of its capital stock or rights, warrants or options to
acquire any such securities, except for the Debt Offer and the purchase of
the Subordinated Notes and transactions between or among the Company and
any of its wholly-owned subsidiaries;
split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem, purchase or otherwise acquire, any shares of
its capital stock, or any of its other securities or rights, warrants or
options to acquire any such shares or securities, except for the Debt Offer
and the purchase of the Subordinated Notes and transactions between or
among the Company and any of its wholly owned subsidiaries;
(i) except for increases in salary or wages, benefits of officers
or of employees of the Company or its subsidiaries (who are not officers
of the Company or Operations) in the ordinary course of business and in
accordance with past practice, (ii) increases in salary, wages and
benefits granted to officers and employees of the Company or its
subsidiaries (who are not officers of the Company or Operations) in
conjunction with new hires, promotions or other changes in job status or
(iii) increases in salary, wages and benefits to employees of the
Company pursuant to collective bargaining agreements entered into in the
ordinary course of business or pursuant to agreements disclosed in
Sections 4.10 or 4.16 of the Company Disclosure Schedule, increase the
compensation or fringe benefits payable or to become payable to its
directors, officers or key employees (whether from the Company or any of
its subsidiaries), or pay any benefit not required by any existing plan
or arrangement (including, without limitation, the granting of stock
options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance or termination pay to (except
pursuant to existing agreements, plans or policies), or enter into any
employment, consulting or severance agreement with, any director,
officer or other key employee of the Company or any of its subsidiaries
or establish, adopt, enter into, or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, savings, welfare, deferred compensation,
employment termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or welfare
of any directors, officers or current or former employees (any of the
foregoing being an "Employee Benefit Arrangement"), except in each case
to the extent required by applicable law or regulation;
acquire, sell, lease, license, mortgage, encumber or dispose of any
assets (other than inventory) or securities (including capital stock of the
Company's subsidiaries), or enter into any commitment to do any of the
foregoing, in each case outside the ordinary course of business, other than
transactions between or among the Company and any of its wholly owned
subsidiaries;
merge or consolidate with, or purchase an equity interest in or a
substantial portion of the assets of, any corporation, partnership,
association or other business organization or any division or business
thereof other than transactions between or among the Company or any of its
fully owned subsidiaries;
(i) incur, assume or pre-pay any long-term debt, incur or assume
any short-term debt, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any of its
subsidiaries (other than transactions between or among the Company and
any of its wholly-owned subsidiaries or (except for incurring Funded
Debt in the ordinary course of business consistent with past practice so
long as the aggregate amount of Funded Debt does not to exceed $474
million at any one time outstanding) except that the Company and its
subsidiaries may incur, assume or pre-pay debt to the extent necessary
to effect the Debt Offer and except that the $474
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million limitation shall not apply to periods prior to the date hereof;
(ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person (other than checks in collection and
transactions between or among the Company and any of its wholly owned
subsidiaries) or (iii) make any loans, advances or capital contributions
to, or investments in, any other person except for loans, advances,
capital contributions or investments between or among the Company and
any of its wholly owned subsidiaries and investments in cash equivalents
or trade receivables; or
take any other action that reasonably could be expected to result in
any of the representations and warranties of the Company set forth in this
Agreement becoming untrue or any of the conditions to the Merger set forth
in Section 7.1 or 7.2 hereof not being satisfied;
adopt a plan of complete or partial liquidation or resolutions
provided for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization of Company
or any of its subsidiaries;
change any assumption underlying, or method of calculating, any bad
debt, contingency or other reserve, or change any other material accounting
principles or practices used by it (except changes that may be necessary or
appropriate in order to comply with a change in GAAP that takes effect
after the date of this Agreement);
(i) pay, discharge or satisfy any claims (including claims of
stockholders or repayment of debt otherwise permitted), liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction of (A)
liabilities in the ordinary course consistent with past practices, and
(B) costs relating to this Agreement and the transactions contemplated
hereby, (ii) other than in connection with a settlement otherwise
permitted under clause (iii) below, waive, release, grant or transfer
any rights of material value or terminate, modify or change in any
material respect any existing material license, lease, contract or other
document or (iii) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement) other than settlements or
compromises of litigation in the ordinary course of business consistent
with past practice if the amount paid (after giving effect to insurance
proceeds actually received or to be received) in settlement or
compromise does not exceed $75,000; provided that the aggregate amount
paid (after giving effect to insurance proceeds actually received or to
be received) in connection with the settlement or compromise of all such
litigation matters shall not exceed $1 million (exclusive, in the case
of Section 4.13 hereof, of amounts paid in settlement or compromise of
litigation after September 28, 1998, but before December 28, 1998);
enter into any collective bargaining agreement or any successor
collective bargaining agreement to any collective bargaining agreement;
make or agree (other than pursuant to contracts or arrangements that
are terminable by the Company after nor more than 90 days notice and
without penalty or cost in excess of $100,000) to make any new capital
expenditure or expenditures which exceed, in the aggregate, $5 million if
such expenditures are made in the ordinary course of business consistent
with past practice
engage in any transaction with, or enter into any agreement,
arrangement or understanding with, directly or indirectly, any of the
Company's affiliates (other than wholly-owned subsidiaries of the Company);
make or change any material Tax election, file any material amended
Tax Return, settle or compromise any material federal, state, local or
foreign Tax liability, change any annual Tax accounting period, change any
method of Tax accounting, enter into any material closing agreement
relating to any Tax, surrender any right to claim a material Tax refund, or
consent to any extension or waiver of the limitations period applicable to
any material Tax claim or assessment;
(i) grant any material bonus, free or make good space to any
advertiser or change the discount structure for any of the Company's
advertising customers other than in the ordinary course of
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business consistent with past practice, (ii)(x) change the 52-week
subscription pricing of any of the publications, (y) change the other
subscription pricing in any of the publications other than, in the case
of this clause (y), in the ordinary course of business consistent with
past practice or (z) enter into, amend or terminate any material
arrangements with any subscription agents, (iii) change any cover
prices, wholesaler discounts or any other changes to the Company's
incentive sales programs (wholesale or retail), (iv) enter into any
material licensing agreement, arrangement or understanding with respect
to television, radio, Internet or other media or enter into any material
licensing agreement, arrangement or understanding with respect to any
"branded" merchandise bearing any of the trademarks or tradenames owned
or licensed by the Company or any subsidiary; (v) enter into, amend or
terminate any agreements or arrangements with the national distributor
of the publications; or (vi) take any action with respect to the
publications in contravention of the advice of the Company's litigation
counsel; or
authorize any of, or commit, contract, arrange or agree in writing or
otherwise to take any of the foregoing actions.
SECTION Access to Information; Interim Financials.
From the date hereof until the Effective Time, the Company will, and will
cause its subsidiaries, and each of their respective officers, directors,
employees, counsel, advisors and representatives (collectively, the "Company
Representatives") to, provide Newco and its respective officers, employees,
counsel, advisors and representatives (collectively, the "Newco
Representatives") reasonable access (subject, however, to existing
confidentiality and similar non-disclosure obligations), during normal business
hours and upon reasonable notice, to the offices and other facilities and to the
books and records and personnel of the Company and its subsidiaries, as will
permit Newco to make inspections of such as it may reasonably require, and will
cause the Company Representatives and the Company's subsidiaries to furnish
Newco and the Newco Representatives to the extent available with such other
information with respect to the business and operations of the Company and its
subsidiaries as Newco may from time to time reasonably request. Unless otherwise
required by law, Newco will, and will cause the Newco Representatives to, hold
any such information in confidence to the extent required by, and in accordance
with, the Confidentiality Agreement (as hereinafter defined).
No investigation pursuant to this Section 6.2 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto
As promptly as practicable after their completion, the Company shall
deliver to Newco copies of monthly consolidated balance sheets, statements of
operations and cash flows to the extent customarily prepared by the Company in
the ordinary course of business and in a manner consistent with past practice.
SECTION Reasonable Best Efforts.
Subject to the terms and conditions herein provided, each of the parties
hereto agrees to, and shall cause each of its subsidiaries to, use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, and to assist and cooperate with the other parties hereto in
doing, as promptly as practicable, all things necessary, proper or advisable to
ensure that the conditions set forth in Article VII are satisfied and to
consummate and make effective, in the most expeditious manner practicable, the
Merger, the Debt Offer and the other transactions contemplated by this Agreement
and the Voting Agreement.
The Company agrees to provide, and will cause its subsidiaries and its and
their respective officers, employees and advisers to provide, all necessary
cooperation in connection with the arrangement of any financing to be
consummated contemporaneous with or at or after the Closing in respect of the
transactions contemplated by this Agreement, including without limitation,
participation in meetings, due diligence sessions, road shows, the preparation
of offering memoranda, private placement memoranda, prospectuses and similar
documents, the execution and delivery of any commitment letters, underwriting or
placement agreements, pledge documents, or other definitive financing documents
including a certificate of the chief financial officer (without personal
liability thereto) of the Company with respect to solvency matters, comfort
letters of accountants and legal opinions as may be requested by Newco. In
addition, in conjunction with the obtaining of any such financing, the Company
agrees, at the request of Newco, to call for prepayment or
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redemption, or to prepay, redeem and/or renegotiate, as the case may be, any
then existing indebtedness of the Company. Anything in this Agreement to the
contrary notwithstanding, none of the actions, agreements or documents described
in this Section 6.3(b) shall impose any liability on the Company or its
subsidiaries until after the Effective Time and Newco shall reimburse the
Company for all Expenses incurred thereby (or by its subsidiaries) in respect of
the foregoing to the extent provided in Section 8.3 hereof (and all costs of
litigation in respect of the Debt Offer as described in Section 6.11 hereof).
If at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, including the execution
of additional instruments, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
The Company shall not take any action with respect to any transaction or
proposed transaction with a third party with the intention of impeding,
interfering with, preventing or materially delaying the Debt Offer or the Merger
or diluting the benefits to Newco of the transactions contemplated by this
Agreement. The Company agrees not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which the company
is a party. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations conducted heretofore by or on
behalf of the Company with respect to any of the foregoing.
Each of the parties agrees to cooperate with each other in taking, or
causing to be taken, all actions necessary to delist the Shares from the New
York Stock Exchange; provided, that such delisting shall not be effective until
after the Effective Time. The parties also acknowledge that it is Newco's intent
that the Shares following the Merger will not be listed on any national
securities exchange or quoted on NASDAQ/NMS.
SECTION Consents. Each of the parties will use its reasonable best efforts
to obtain as promptly as practicable all Consents of any Governmental Entity or
any other person required in connection with, and waivers of any Violations that
may be caused by, the consummation of the Merger, the Debt Offer and the other
transactions contemplated by this Agreement and the Voting Agreement (provided
that the Company shall not pay or agree to pay any material amount to obtain a
Consent without the prior approval of Newco).
SECTION Public Announcements. So long as this Agreement is in effect,
Newco and the Company agree to use reasonable efforts to consult with each other
before issuing, and provide each other with a reasonable opportunity to review
and comment upon, any press release or otherwise making any public statement
with respect to the transactions contemplated by this Agreement and the Voting
Agreement. The parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement and the
Voting Agreement shall be mutually agreed upon prior to the issuance thereof.
SECTION Employee Benefits Matters.
Except as contemplated herein, the Surviving Corporation, for a period of
at least six months from the Effective Time, shall provide employee benefits
under plans, programs and arrangements (other than equity-based plans) which, in
the aggregate, will provide benefits to all employees of the Surviving
Corporation or its subsidiaries which are no less favorable, in the aggregate,
than those provided pursuant to the plans, programs and arrangements of the
Company and its subsidiaries in effect and disclosed to Newco as of the date
hereof; provided, however, that nothing herein shall (i) require that the
Surviving Corporation provide or permit investment in the securities of the
Surviving Corporations or (ii) interfere with the Surviving Corporation's right
or obligation to make such changes as are necessary to conform with applicable
law or (iii) prevent the amendment or termination of any such plan, program or
arrangement, so long as in each such case the aggregate of benefits provided to
all employees of the Surviving Corporation or its subsidiaries for such six
month period are no less favorable than those provided pursuant to the plans,
programs and arrangements of the Company and its subsidiaries in effect and as
disclosed to Newco as of the date hereof.
Newco and the Company agree that, for purposes of the Employee Severance
Policy as reflected in Section 6.6 of the Company Disclosure Schedule the
resignations contemplated by Section 7.2(h) hereof from persons who are also
employees of the Company or any of its subsidiaries shall not affect the rights
of such resigning directors under such severance policy.
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SECTION Indemnification.
Newco agrees that all rights to indemnification now existing in favor of
any current or former employee, agent, director or officer of the Company and
its subsidiaries (the "Indemnified Parties") as provided in their respective
certificates of incorporation or by-laws, in an agreement between an Indemnified
Party and the Company or one of its subsidiaries, in effect on the date hereof
and disclosed in Section 6.7 of the Company Disclosure Schedule shall survive
the Merger and shall continue in full force and effect for a period of six years
from the Effective Time; provided that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until final disposition of
any and all such claims.
Subject to the terms hereof, Newco agrees that the Company and, from and
after the Effective Time, the Surviving Corporation shall cause to be maintained
in effect for six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time. Prior to
the Effective Time, the Company shall endeavor to, and shall be permitted to,
satisfy its obligations under the preceding sentence by extending coverage under
such insurance policies pursuant to a six-year "tail" policy if the terms of
such "tail" policy are agreed to in writing by Newco. If such a "tail" policy
cannot be purchased on such terms prior to the Effective Time, then the Company
shall endeavor to obtain coverage contemplated by the first sentence of this
Section 6.7(b) at the lowest premium cost available; provided, that the
Surviving Corporation shall not be required to pay an annual premium in excess
of 200% of the last annual premium paid by the Company prior to the date hereof
and if the Surviving Corporation is unable to obtain the insurance required by
this Section 6.7(b) within such limitation it shall obtain as much comparable
insurance as possible for an annual premium equal to such maximum amount; and
provided, further, that during such six-year period the Surviving Corporation
shall review, not less than annually, the feasibility of purchasing tail
coverage for the balance of such six-year period and shall endeavor to purchase
such coverage if it is available at a cost not exceeding the maximum amount that
the Surviving Corporation would otherwise be obligated to pay for such remaining
period under the first proviso to this sentence. The Company represents and
warrants that the current annual premium for such insurance coverage is
$182,200.
The provisions of this Section 6.7 shall survive the Merger, and each
Indemnified Party shall, for all purposes, be a third-party beneficiary of the
covenants and agreements of Newco and the Company under this Section 6.7 and,
accordingly, shall be treated as a party to this Agreement for purposes of the
rights and remedies relating to enforcement of such covenants and agreements and
shall be entitled to enforce any such rights and exercise any such remedies
directly.
SECTION No Solicitation. The Company agrees that, prior to the Effective
Time, it and each of its subsidiaries shall not, and shall not authorize or
permit any of its or its subsidiaries' directors, officers, employees, agents,
advisors or representatives, directly or indirectly, to (a) solicit, initiate or
encourage or knowingly facilitate the submission of any inquiries or the making
of any proposal (a "Takeover Proposal") with respect to any acquisition or
purchase of a significant amount of assets of the Company and its subsidiaries,
taken as a whole (other than inventory), or of over 15% of any class of equity
securities of the Company or any of its subsidiaries or any tender offer
(including a self tender offer) or exchange offer that if consummated would
result in any person beneficially owning 15% or more of any class of equity
securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, reclassification, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries other than the
transactions contemplated by this Agreement and the Voting Agreement (an
"Acquisition Transaction"), (b) negotiate, explore or otherwise participate in
discussions with any person (other than Newco or its directors, officers,
employees, agents and representatives) with respect to any Acquisition
Transaction, or furnish to any person (other than Newco or its directors,
officers, employees, agents and representatives) any information with respect to
its business, properties or assets or any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person (other than Newco or its directors,
officers, employees,
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agents and representatives) to do or seek any of the foregoing, in each case, in
respect of an Acquisition Transaction or (c) enter into any agreement,
arrangement or understanding with respect to, or endorse, any Takeover Proposal.
SECTION Notification of Certain Matters. Newco and the Company shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (ii) to cause
any covenant, condition or agreement hereunder not to be complied with or
satisfied in all material respects and (b) any failure of the Company or Newco,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder or shall limit or otherwise affect the remedies available
hereunder to the parties receiving such notice.
SECTION State Takeover Laws. The Company shall, upon the request of Newco,
take all reasonable steps to assist in any challenge by Newco to the validity or
applicability to the transactions contemplated by this Agreement, including the
Merger and the Voting Agreement, of any state takeover law.
SECTION Disposition of Litigation. The Company will not voluntarily
cooperate with any third party which has sought or may hereafter seek to
restrain or prohibit or otherwise oppose the Debt Offer or the Merger and will
cooperate with Newco to resist any such effort to restrain or prohibit or
otherwise oppose the Debt Offer or the Merger.
SECTION Stop Transfer Order. The Company shall notify the Company's
transfer agent that there is a stop transfer order with respect to all of the
Subject Shares (as defined in the Voting Agreement) and that the Voting
Agreement places limits on the voting of the Subject Shares.
SECTION Financing.
Newco shall use its reasonable best efforts (including complying with the
provisions of the Commitment Letters) to obtain the debt and equity financing
necessary to consummate the Merger.
Newco shall (i) fully enforce its rights under the Commitment Letters and
the documents contemplated thereby and (ii) not amend, modify or terminate any
of the Commitment Letters in a manner which reasonably could be expected to
result in a Material Adverse Effect on Newco.
Newco shall not include any information concerning the Company or its
subsidiaries in any offering document to be used in connection with a sale of
securities contemplated by the Commitment Letters to which the Company
reasonably objects and Newco shall provide the Company with copies of all such
material to enable the Company to comment thereon.
At the Effective Time, Newco shall provide the Company with a copy of each
solvency opinion (if any) delivered to any source of financing in respect of the
transactions contemplated hereby. Such opinion shall state that it may be relied
upon by the Board of Directors of the Company.
None of Newco, Evercore Capital Partners L.P., any of their affiliates
controlled by any of them, Evercore Partners LLC or any of its affiliates shall
announce, or announce any intention to pursue, any transaction that, if
announced on the date hereof, could reasonably be expected to have a Material
Adverse Effect on Newco.
SECTION Newco Action. Newco shall not take any action that reasonably
could be expected to result in any of the representations and warranties of
Newco set forth in this Agreement becoming untrue or any of the conditions to
the Merger set forth in Section 7.1 or 7.3 not being satisfied.
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ARTICLE
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION Conditions of Each Party's Obligation to Consummate the
Merger. The respective obligations of Newco and the Company to consummate the
Merger are subject to the satisfaction, at or before the Effective Time, of each
of the following conditions:
Stockholder Approval. The stockholders of the Company shall have duly
approved the transactions contemplated by this Agreement, pursuant to the
requirements of the Company's certificate of incorporation and applicable law.
HSR Act. The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired.
Injunctions; Illegality. The consummation of the Merger, shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity and there
shall not have been any statute, rule or regulation enacted, promulgated or
deemed applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger; provided, however, that each of the parties shall
have used their reasonable best efforts to prevent the entry of such order,
judgment, decree, injunction or ruling and to appeal as promptly as practicable
any such order, judgment, decree, injunction or ruling.
SECTION Conditions to Obligation of Newco. The obligations of Newco to
effect the Merger are further subject to the satisfaction at or prior to the
Effective Time of the following conditions:
Representations and Warranties. The representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality shall
be true and correct and any such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date. Newco shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer of
the Company (with no personal liability thereto) to the effect set forth in this
paragraph.
Performance of Obligations of the Company. The Company shall have
performed, in all material respects, the obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
Consents, etc. Newco shall have received evidence, in form and substance
reasonably satisfactory to it, that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities, the failure
of which to obtain reasonably could be expected to have a Material Adverse
Effect on the Company, have been obtained.
No Material Litigation. There shall not be pending by any Governmental
Entity or any other third party any suit, action or proceeding which has a
reasonable likelihood of success (i) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement or the Voting Agreement or seeking to obtain from
Newco or any of its affiliates any damages that are material (assuming that the
Merger had been consummated) to any party, (ii) seeking to prohibit or limit the
ownership or operation by the Company or any of its subsidiaries of any material
portion of the business or assets of the Company or any of its subsidiaries or
(iii) seeking to impose limitations on the ability of Newco (or any designee of
Newco pursuant to the Voting Agreement) or any stockholder of Newco or the
Company to acquire or hold, or exercise full rights of ownership of, any Shares,
including, without limitation, the right to vote the Company's shares on all
matters properly presented to the stockholders of the Company.
Financing. Newco shall have received the proceeds of financing on the
terms and conditions set forth in Annexes A-1 through A-2 of the Newco
Disclosure Schedule or upon terms and conditions which are substantially
equivalent thereto and to the extent that any terms and conditions are not set
forth in Annexes A-1 through A-2 of the Newco Disclosure Schedule, on terms and
conditions reasonably satisfactory to Newco.
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Subordinated Notes. Newco shall have received evidence that the terms of
the Subordinated Notes shall have been amended as contemplated by the terms of
the Debt Offer. The Company shall have purchased at least that principal amount
of Subordinated Notes as equals the minimum condition of the Debt Offer.
Appraisal Rights. Stockholders comprising no more than 20% of the
outstanding Shares shall have demanded appraisal rights under Section 262 of the
GCL.
Resignations of Company Directors. Each director of the Company shall have
resigned as a director of the Company pursuant to a letter of resignation signed
thereby and delivered to Newco and the Company.
No Material Adverse Change. Since March 31, 1998, there shall not have
occurred any change, effect, event, occurrence or development that is materially
adverse to the business, operations, assets, liabilities, condition (financial
or otherwise), results of operations or prospects of the Company and its
subsidiaries taken as a whole except for any change or effect resulting from (i)
general economic, financial or market conditions, (ii) any change or effect
resulting from conditions or circumstances generally affecting the newspaper or
magazine publishing industry so long as such change or effect does not have a
materially disproportionate effect on the Company or (iii) changes in laws of
general applicability or applicable generally to the newspaper or magazine
publishing industry so long as such change or effect does not have a materially
disproportionate effect on the Company.
SECTION Conditions to Obligation of the Company. The obligations of the
Company to effect the Merger are further subject to the satisfaction at or prior
to the Effective Time of the following conditions.
Representations and Warranties. The representations and warranties of
Newco set forth in this Agreement that are qualified as to materiality shall be
true and correct and any such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date. The Company shall have
received a certificate signed on behalf of Newco by an authorized officer of
Newco (with no personal liability thereto) to the effect set forth in this
paragraph.
Performance of Obligations of Newco. Newco shall have performed, in all
material respects, the obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
ARTICLE
TERMINATION; AMENDMENT; WAIVER
SECTION Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company or of Newco:
by the mutual written consent of Newco and the Company;
by Newco or the Company if any court or other Governmental Entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger, the Debt Offer
or any of the transactions contemplated by the Merger Agreement, or
otherwise altering the terms of any of the forgoing in any material respect
and such order, judgment, decree, injunction, ruling or other action shall
have become final and nonappealable;
by the Company if there shall have occurred, on the part of Newco, a
breach of any representation, warranty, covenant or agreement contained in
this Agreement which would give rise to the failure of a condition set
forth in Section 7.3(a) or 7.3(b) and which is not curable or, if curable,
is not cured within 30 calendar days after written notice of such breach is
given by the Company to Newco or cannot be cured by the termination date
set forth in Section 8.1(e) (provided that the Company is not then in
breach of any representation, warranty covenant or agreement contained in
this Agreement which would give rise to a failure of a condition set forth
in Section 7.2(a) or 7.2(b));
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by Newco if there shall have occurred, on the part of the Company, a
breach of any representation, warranty, covenant or agreement contained in
this Agreement which would give rise to the failure of a condition set
forth in Section 7.2(a) or 7.2(b) and which is not curable or, if curable,
is not cured within 30 calendar days after written notice of such breach is
given by Newco to the Company or cannot be cured by the termination date
set forth in Section 8.1(e) (provided that Newco is not then in breach of
any representation, warranty, covenant or agreement contained in this
Agreement which would give rise to a failure of a condition set forth in
Section 7.3(a) or 7.3(b));
by Newco or the Company, if the Merger shall not have been consummated
on or before the earlier of (i) the later of 120 days after the date hereof
or 25 business days after the first date on which the Company is permitted
to disseminate the Consent Statement to its stockholders pursuant to the
rules and regulations under the Exchange Act and the NYSE or (ii) 140 days
after the date hereof; provided, that the right to terminate this Agreement
under this Section 8.1(e) shall not be available to the party whose action
or failure to act has been the cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to act
constitutes a material breach of any representation, warranty or covenant
in this Agreement;
by Newco, if the Company Stockholder Approval shall not have been
obtained.
SECTION Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of this Section
8.2, Section 8.3, the last sentence of Section 6.2 and Article IX, which shall
survive any such termination. Nothing contained in this Section 8.2 or Section
8.3 shall relieve any party from liability for any willful breach of any
agreement or covenant of such party prior to termination of this Agreement or
for any breach of the Confidentiality Agreement.
SECTION Expenses.
Whether or not the Merger is consummated (unless otherwise provided in
Section 8.2 or this Section 8.3), all costs and expenses incurred in connection
with this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such expenses; provided, however, if the Merger as
contemplated by this Agreement is consummated, then the fees and expenses
incurred by Newco and its affiliates in connection with this transaction shall
be paid by the Company.
If this Agreement is terminated pursuant to Section 8.1(e), then Newco
shall pay to the Company all Expenses incurred by the Company in respect of the
performance of the Company's obligations in Sections 3.3, 6.3 and 6.11 hereof in
respect of the Debt Offer and the financing contemplated by the Commitment
Letters.
If this Agreement is terminated by Newco pursuant to Section 8.1(d) or
8.1(f), then the Company shall pay to Newco all Expenses incurred by Newco and
its affiliates. Any payment pursuant to this Section 8.3(c) shall reduce damages
otherwise obtainable by Newco in respect of a willful breach by the Company of
this Agreement.
If this Agreement is terminated by the Company pursuant to Section 8.1(c),
then Newco shall pay to the Company all Expenses incurred by the Company
thereby. Any payment pursuant to this Section 8.3(d) shall reduce damages
otherwise obtainable by the Company in respect of a willful breach by Newco of
this Agreement.
"Expenses" means all out-of-pocket fees and expenses actually incurred by
any party hereto or on its behalf, whether before or after the execution and
delivery of this Agreement, in connection with the transactions contemplated by
this Agreement, including the Merger and the Debt Offer, and the Voting
Agreement, including without limitation the costs and expenses payable by such
party or its affiliates to all banks, investment banking firms and other
financial institutions, and the fees and expenses of their respective agents and
counsel, all fees and expenses of counsel, accountants, experts and consultants
to such party or its affiliates, and, in the case of Newco and its affiliates,
all salary and bonus payments, expense reimbursements
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and other payments (not to exceed an amount disclosed to the Company in a letter
dated the date hereof from Newco to the Company) made by Newco or its affiliates
to Xxxxx Xxxxxx and, further, including without limitation fees and expenses of
the party attempting to collect such Expenses that are incurred in connection
with, any litigation or other proceedings to collect the Expenses if such party
prevails in such litigation or proceeding. Expenses shall not include fees to
any person (or its affiliates) providing, directly or indirectly, equity finance
or costs of employee compensation or overhead thereof.
SECTION Amendment. This Agreement may be amended by the Company and Newco
at any time before or after any approval of this Agreement by the stockholders
of Newco or of the Company but, after any such approval, no amendment shall be
made which under applicable law requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein by any other party or in
any document, certificate or writing delivered pursuant thereto by any other
party or (iii) subject to applicable law, waive compliance with any of the
agreements of any other party or with any conditions to its own obligations. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE
MISCELLANEOUS
SECTION Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Sections 2.4 and 3.2, Section 6.3(c) and Sections 6.6 and 6.7 shall survive the
Effective Time indefinitely (except to the extent a shorter period of time is
explicitly specified therein).
SECTION Entire Agreement; Assignment.
This Agreement (including the documents and the instruments referred to
herein) and the letter agreement, by and between Purchaser and the Company (the
"Confidentiality Agreement"), constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof.
Neither this Agreement nor any of the rights, interests or obligations
hereunder will be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party;
provided, that Newco may assign its rights hereunder to any of its affiliates,
but no such assignment shall relieve Newco of its obligations hereunder or cause
any representation or warranty of the Company or Newco herein to be materially
incorrect or, in the Company's reasonable judgment, materially delay the Closing
or the consummation of the transactions contemplated hereby. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
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SECTION Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Newco:
EMP Acquisition Corp.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
If to the Company:
American Media, Inc.
000 Xxxxx Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION Governing Law; Jurisdiction. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
In addition, each of the parties hereto (i) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the State of Delaware.
SECTION Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
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AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.6.
SECTION Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except with respect to
Sections [2.4 and] 6.6(b), 6.7, 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.
SECTION Certain Definitions. As used in this Agreement:
"Acquisition Transaction" shall have the meaning set forth in Section 6.8.
"affiliate", as applied to any person, shall mean any other person directly
or indirectly controlling, controlled by, or under common control with, that
person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise;
"Certificate" shall have the meaning set forth in Section 2.1(b).
"Class A Shares" shall have the meaning set forth in the Recitals hereto.
"Class B Shares" shall have the meaning set forth in Section 4.3.
"Class C Shares" shall have the meaning set forth in the Recitals hereto.
"Code" shall have the meaning set forth in Section 3.2(i).
"Commitment Letters" shall have the meaning set forth in Section 5.5.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Company Disclosure Schedule" shall have the meaning set forth in Article
4.
"Company Representatives" shall have the meaning set forth in Section 6.2.
"Confidentiality Agreement" shall have the meaning set forth in Section
9.2(a).
"Consent" shall have the meaning set forth in Section 4.5(b).
"Consent Statement" shall have the meaning set forth in Section 2.3(a).
"control" shall have the meaning set forth in the definition of affiliate.
"Dissenting Shares" shall have the meaning set forth in Section 3.1.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Employee Benefit Arrangement" shall have the meaning set forth in Section
6.1(e).
"Environmental Law" shall have the meaning set forth in Section 4.12.
"ERISA" shall have the meaning set forth in Section 4.10(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Funded Debt" means, in respect of the Company and its subsidiaries as of
any date, all indebtedness of such person which by its terms or by the terms of
any instrument or agreement relating thereto matures one
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year or more from, or is directly or indirectly renewable or extendible at the
option of the obligor in respect thereof to a date one year or more (including
without limitation an option of such obligor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more) from, the date of the creation thereof, and shall also include the
current maturities of any such indebtedness as of such date.
"GAAP" shall have the meaning set forth in Section 4.6(b).
"GCL" shall have the meaning set forth in the Granting Clauses.
"Governmental Entity" shall have the meaning set forth in Section 4.5(b).
"HSR Act" shall have the meaning set forth in Section 4.5(b).
"Hazardous Substance" shall have the meaning set forth in Section 4.12.
"IRS" shall have the meaning set forth in Section 4.10(c).
"Indemnified Parties" shall have the meaning set forth in Section 6.7(a).
"Intellectual Property" shall have the meaning set forth in Section
4.11(c).
"Interested Stockholder" shall have the meaning set forth in Section 5.6.
"Lazard Freres" shall have the meaning set forth in Section 4.15.
"Lien" shall have the meaning set forth in Section 4.3.
"Material Adverse Effect on the Company" shall have the meaning set forth
in Section 4.1.
"Material Adverse Effect on Parent" shall have the meaning set forth in
Section 5.1.
"Merger" shall have the meaning set forth in the Granting Clauses.
"Merger Price" shall have the meaning set forth in Section 2.1.
"Operations" shall have the meaning set forth in Section 4.6(a).
"Option" shall have the meaning set forth in Section 2.2.
"Option Plan" shall have the meaning set forth in Section 2.2.
"Other Filings" shall have the meaning set forth in Section 4.7.
"Paying Agent" shall have the meaning set forth in Section 3.2(a).
"person" shall include individuals, corporations, partnerships, trusts,
other entities and groups (which term shall include a "group" as such term is
defined in Section 13(d)(3) of the Exchange Act).
"Plans" shall have the meaning set forth in Section 4.10(a).
"Preferred Stock" shall have the meaning set forth in Section 4.3.
"Released Claim" shall have the meaning set forth in Section 2.4.(a).
"Released Party" shall have the meaning set forth in Section 2.4(a).
"SEC" means the Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 4.6(a).
"Shares" shall have the meaning set forth in the Granting Clauses.
"Soap Opera Sale" means the sale of the assets of the Company and its
subsidiaries pursuant to the agreements and documents included in Section 4.22
of the Company Disclosure Schedule.
"Special Subs" shall have the meaning set forth in Section 4.3.
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"subsidiary" or "subsidiaries" means, with respect to Newco, the Company or
any other person, any corporation, partnership, joint venture or other legal
entity of which Newco, the Company or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns, directly
or indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Tax Return" shall have the meaning set forth in Section 4.19.
"Taxes" shall have the meaning set forth in Section 4.19.
"Violation" shall have the meaning set forth in Section 4.5(a).
"Voting Debt" shall have the meaning set forth in Section 4.3.
SECTION Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any federal court located in the
State of Delaware or any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
EMP ACQUISITION CORP.
By:
--------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
AMERICAN MEDIA, INC.
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman,
Publishing Operations
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ANNEX I
