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EXHIBIT 2.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
AMONG
TRANSWESTERN PUBLISHING COMPANY LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
UNIVERSAL PHONE BOOKS, INC.
A MICHIGAN CORPORATION,
AND
UNIVERSAL PHONE BOOKS OF XXXXXXX, INC.
A MICHIGAN CORPORATION,
DATED
AS OF
NOVEMBER 20, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1 - DEFINITIONS...................................................................1
ARTICLE 2 - PURCHASE AND SALE.............................................................5
2.1 Purchased Assets..............................................................5
(a) Asset Purchase.........................................................5
(b) Limited Assumed Liabilities............................................6
(c) Excluded Liabilities...................................................7
2.2 Purchase Price................................................................7
2.3 Closing Date Transactions.....................................................8
(a) Closing................................................................8
(b) Deliveries on the Closing Date.........................................8
2.4 Payment of Pre-Paid Costs on the Closing Date.................................8
2.5 Seller Note Adjustment........................................................9
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES...............................................11
3.1 Representations and Warranties of Sellers....................................11
(a) Organization, Qualification and Corporate Power.......................11
(b) Authorization of Transaction..........................................11
(c) Noncontravention......................................................11
(d) Governmental Consent..................................................12
(e) Recent Events.........................................................12
(f) Intellectual Property.................................................13
(g) Contracts and Commitments.............................................13
(h) Financial Statements..................................................14
(i) Accuracy of Information Furnished.....................................14
(j) Customer Contract Receivables; Advance Payments.......................14
(k) Employees and Employee Benefit Plans..................................15
(l) Legal Compliance with Laws............................................15
(m) Litigation; Proceedings...............................................15
(n) Title and Sufficiency of Assets.......................................15
(o) Directory Listings....................................................16
(p) Brokers' Fees.........................................................16
(q) Tax Matters...........................................................16
(r) Leases................................................................18
(s) Customers and Suppliers...............................................20
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(t) Disclosure............................................................20
(u) Closing Date..........................................................20
3.2 Representations and Warranties of TransWestern...............................21
(a) Organization..........................................................21
(b) Authorization of Transaction..........................................21
(c) Noncontravention......................................................21
(d) Governmental Consent..................................................21
(e) Brokers' Fees.........................................................21
(f) Closing Date..........................................................22
ARTICLE 4 - COVENANTS....................................................................22
4.1 Pre-Closing Covenants........................................................22
(a) Affirmative Covenants Concerning the Business.........................22
(b) Negative Covenants Concerning the Business Prior to Closing...........23
(c) Exclusivity...........................................................24
(d) General Obligation to Close...........................................25
4.2 Other Covenants..............................................................25
(a) Full Access...........................................................25
(b) Notice of Developments................................................25
(c) Employee Matters......................................................25
4.3 TransWestern's Post-Closing Collection Obligation............................26
ARTICLE 5 - CONDITIONS...................................................................26
5.1 Conditions To Closing........................................................26
(a) Conditions to Closing Obligations of TransWestern.....................26
(b) Conditions to Closing Obligations of Sellers..........................28
ARTICLE 6 - TERMINATION...................................................................29
6.1 Termination..................................................................29
6.2 Effect of Termination........................................................30
ARTICLE 7 - ADDITIONAL AGREEMENTS........................................................30
7.1 Post-Closing Assistance......................................................30
7.2 Confidentiality..............................................................31
(a) Information Concerning the Parties....................................31
(b) Notice of Compulsory Disclosure.......................................31
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7.3 Non-Competition..............................................................31
7.4 Indemnification..............................................................32
7.5 Arbitration..................................................................34
7.6 Miscellaneous................................................................36
(a) Representations and Warranties........................................36
(b) Press Releases and Announcements; Notice to Customers.................36
(c) Further Transfers and Assurance.......................................37
(d) Name and Logos of Parties.............................................37
(e) No Third Party Beneficiaries..........................................37
(f) Entire Agreement......................................................37
(g) Succession and Assignment.............................................37
(h) Counterparts..........................................................37
(i) Headings..............................................................38
(j) Notices...............................................................38
(k) Governing Law.........................................................38
(l) Amendments and Waivers................................................38
(m) Severability..........................................................39
(n) Expenses..............................................................39
(o) Taxes; Recording Charges..............................................39
(p) Construction..........................................................39
(q) Incorporation of Exhibits and Schedules...............................40
(r) Number and Gender.....................................................40
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EXHIBITS
Exhibit A Pro Forma
Exhibit B Form of Seller Note
Exhibit C-1 &C-2 Form of Bills of Sale
Exhibit D Form of Opinion of Sellers' Counsel
SCHEDULES Section Reference
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Receivables Schedule Definitions
Pre-Paid Deferred Costs Schedule Definitions
Pre-Paid Direct Costs Schedule Definitions
Contracts Schedule 2.1(a)(vi)
Assumed Lease Schedule 2.1(a)(vii)
Fixed Assets Schedule 2.1(a)(xii)
Assumed Liability Schedule 2.1(b)(ii)
Purchase Price Allocation Schedule 2.2(b)
Recent Events Schedule 3.1(e)
Intellectual Property Schedule 3.1(f)
Financial Statements Schedule 3.1(h)
Litigation Schedule 3.1(m)
Taxes Schedule 3.1(q)
Real Property Schedule 3.1(r)
Employee Schedule 4.2(c)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of November 20, 1998, by and among TransWestern Publishing Company LLC,
a Delaware limited liability company ("TransWestern"), Universal Phone Books,
Inc., a Michigan corporation, and Universal Phone Books of Xxxxxxx, Inc., a
Michigan corporation (each a "Seller" and collectively, "Sellers"). TransWestern
and Sellers sometimes are referred to herein individually as a "Party" and
collectively as the "Parties."
Each of Sellers and TransWestern are in the business of printing,
publishing and distributing telephone directory "yellow pages." Subject to the
terms and conditions set forth herein, TransWestern desires to acquire from
Sellers and Sellers desire to sell to TransWestern substantially all of their
businesses, assets and properties including all of their businesses and assets
of or relating to each of the Tri-Cities Directory, the Lansing & Tri-County
Area Directory, the Xxx Arbor, Ypsilanti & Washtenaw County Area Directory, and
the Xxxxxxx & Xxxxxxx County Area Directory (each as defined below and sometimes
referred to herein collectively as the "Directories"; each, a "Directory").
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
"Accounts Receivable Measurement Date" means the First Accounts
Receivable Measurement Date or Second Accounts Receivable Measurement Date, as
applicable.
"Actual Net Collection Amount" means the aggregate amount of cash
received by TransWestern or Sellers, including recoveries, after the Closing
Date through the period ending on each of the Accounts Receivable Measurement
Dates, as applicable, with respect to any unpaid Customer Contract associated
with the Fiscal Year Receivables.
"Advance Payment" means a customer payment received by either Seller (or
TransWestern, as the case may be) with respect to any Customer Contract
associated with any edition of any Directory prior to publication of such
edition.
"Affiliated Group" means an affiliated group as defined in Section 1504
of the Code (or any analogous combined, consolidated or unitary group defined
under state, local or foreign income Tax law).
"Xxx Arbor, Ypsilanti & Washtenaw County Area Directory" means the
telephone directory owned by Universal Phone Books, Inc. as of the date hereof
and projected to cover those areas in Michigan which fall within the following
zip codes: 48103, 48104, 48105, 48106, 48107,
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48108, 48109, 48111, 48113, 48116, 48118, 48130, 48158, 48160, 48165, 48169,
48170, 48176, 48178, 48179, 48189, 48191 48197 and 48198. The "1998, 0000 Xxx
Xxxxx Xxxxxxxxx & Xxxxxxxxx Xxxxxx Xxxx Directory," for example, means the
edition of such Directory published in March, 1998.
"Auditors" means the accountants engaged by TransWestern to perform an
audit of Sellers' financial books and records for the twelve-month period ended
September 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations promulgated thereunder.
"Collected Accounts Receivable" means, with respect to any edition of
any Directory, all cash amounts collected by any Party with respect to any
Customer Contract relating to such edition of such Directory after the date of
the publication of such edition.
"Customer Contract" means any written contract or agreement (other than
trade contracts) between Sellers and any of their customers (or under which
Sellers have rights) which has been entered into and signed by the parties
thereto in connection with the publication of the Directories and corresponding
provision of Directory Services.
"Deferred Costs" means, collectively, determined with respect to any
Directory (or edition thereof) the categories of indirect costs and expenses
which are allocated to such Directory in the Ordinary Course of Business, only
as set forth on the attached "Pre-Paid Deferred Costs Schedule."
"Direct Costs" means, collectively, determined with respect to any
Directory (or edition thereof) all (i) sales commissions, salaries, benefits,
payroll taxes and related travel expenses for account executives only to the
extent allocable to or associated with such Directory (or edition thereof), (ii)
license fees for white pages, and (iii) third party paper, printing, production
(including, without limitation, ad creation, colorization, listing and keying)
and shipping costs and (iv) distribution costs, in each case, as set forth in
the Pro Forma.
"Directory Services" means the printing and publishing of advertisements
in any Directory.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations promulgated thereunder.
"Estimated Bad Debt Reserve" means $408,000 minus the aggregate amount
of all adjustments to and write-offs (which shall not include trade credits)
with respect to any Fiscal Year Receivables, as set forth on the Receivables
Schedule.
"Estimated Net Collection Amount" means the Fiscal Year Receivables as
of the Closing Date, minus the Estimated Bad Debt Reserve.
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"First Accounts Receivable Measurement Date" means the last day of the
9-month period following the Closing Date.
"Fiscal Year Receivables" means the aggregate amount of the outstanding
accounts receivable as of the Closing Date for Prior Directories published
during the Sellers' fiscal year ending September 30, 1998, as set forth in the
"Receivables Schedule" attached hereto.
"Future Edition Customer Contract" means any Customer Contract
associated with any Future Edition, but excluding the Lansing & Tri-County Area
Directory published in December, 1998.
"Future Edition" means any edition of any of the Directories which is
published after the Closing Date, but excluding the Lansing & Tri-County Area
Directory published in December, 1998.
"GAAP" means United States generally accepted accounting principles
applied in a manner consistent with the Latest Balance Sheet (as defined in
Section 3.1(h)).
"Intellectual Property" means all (i) patents, patent applications,
patent disclosures, and improvements thereto, (ii) trademarks, service marks,
trade dress, logos, trade names, and corporate names and registrations and
applications for registration thereof (including without limitation the name
"Universal Phone Books" or any similar name), (iii) copyrights and registrations
and applications for registration thereof, (iv) mask works and registrations and
applications for registration thereof, (v) computer software, data and
documentation, (vi) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
software products in development, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial (excluding employee
benefit plans), marketing, and business data, pricing and cost information,
business and marketing plans, and customer and supplier lists and information),
and (vii) copies and tangible embodiments thereof (in whatever form or medium).
"Xxxxxxx & Xxxxxxx County Area Directory" means the telephone directory
owned by Universal Phone Books of Xxxxxxx, Inc. as of the date hereof which
covers those areas of Michigan which fall within the following zip codes: 49201,
49202, 49203, 49204, 49224, 49230, 49234, 49237, 49240, 49241, 49246, 49251,
49258, 49259, 49264, 49269, 49272, 49277, 49284, 49283, 49285, 49261, and 49254.
"1998, 1999 Xxxxxxx & Xxxxxxx County Directory," for example, means the edition
of such Directory published in April 1998.
"Lansing & Tri-County Area Directory" means the telephone directory
owned by Universal Phone Books, Inc. as of the date hereof which covers those
areas of Michigan which fall within the following zip codes: 48824, 48825,
48826, 48827, 48835, 48836, 48837, 48840, 48842, 48848, 48851, 48853, 48854,
48857, 48860, 48861, 48864, 48872, 48873, 48875, 48876, 48879, 48882, 48890,
48892, 48894, 48895, 48906, 48910, 48911, 48912, 48913, 48915, 48917, 48918,
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48919, 48921, 48922, 48933, 49076, 49096, 49264, 49285. "1998, 1999 Lansing &
Tri-County Area Directory," for example, means the edition of such Directory
published in December 1997.
"Liability" or "Liabilities" means any liability (whether known or
unknown, whether asserted or not asserted, whether absolute or contingent,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for taxes.
"Loss" means any loss, Liability, damage or expense, whether or not
arising out of third party claims (including, without limitation, interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid in
investigation, defense or settlement of any of the foregoing).
"Material Adverse Effect" means any change, event or occurrence which
has a material adverse effect upon the assets, business, operations, prospects
or condition (financial or otherwise) of any Directory or the Directories
considered as a whole or Sellers and the Directories considered as a whole.
"Ordinary Course of Business" means the ordinary course of business of
Sellers consistent with past custom and practice of Sellers (including with
respect to quantity and frequency).
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity.
"Pre-Paid Deferred Costs" means the good faith estimate of Sellers of
any Deferred Costs as associated with any Future Editions which are paid, or
will be paid, by Sellers as of the Closing Date as set forth in the "Pre-Paid
Deferred Costs Schedule" attached hereto.
"Pre-Paid Direct Costs" means the good faith estimate of Sellers of any
Direct Costs associated with any Future Editions which are paid, or will be
paid, by Sellers as of the Closing Date as set forth in the "Pre-Paid Direct
Costs Schedule" attached hereto, and which are evidenced by a receipt in the
amounts set forth on the Pro Forma attached hereto.
"Prime Rate" means the prime rate of interest as published from time to
time in the Wall Street Journal.
"Prior Edition" means all editions of any Directory which have a
publication date prior to the Closing Date, and shall also include the 1998,
1999 Lansing & Tri-County Area Directory.
"Pro Forma" means the pro forma statement of Advance Payments and Direct
Costs (separately identifying the Pre-Paid Direct Costs and other Direct Costs)
delivered by Sellers to TransWestern on the Closing Date and attached hereto as
Exhibit A on the Closing Date.
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"Sales/Use Tax Liability" means any state sales and use Tax Liability
for periods (or portions thereof) ending on or prior to the Closing Date
relating to or arising in connection with Sellers business or operations.
"Second Accounts Receivable Measurement Date" means the last day of the
18-month period following the Closing Date.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, lien or charge, of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale of receivables with recourse against Sellers, any Affiliate of
Sellers or any filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to Sellers under a lease which is
not in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, communications, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transaction, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, information report or filing with respect
to Taxes, including any schedules attached thereto and including any amendment
thereof.
"Tri-Cities Directory" means the telephone directory owned by Universal
Phone Books, Inc. as of the date hereof which covers those areas of Michigan
which fall within the following zip codes: 48415, 48417, 48457, 48460, 48601,
48602, 48603, 48605, 48606, 48607, 48608, 48609, 48611, 48614, 48616, 48618,
48623, 48626, 48628, 48631, 48634, 48637, 48640, 48641, 48642, 48650, 48655,
48657, 48701, 48706, 48707, 48708, 48722, 48724, 48732, 48733, 48734, 48747,
48757, 48758 and 48768. "1997, 1998 Tri-Cities Directory," for example, means
the edition of such Directory published in October 1997.
ARTICLE 2 - PURCHASE AND SALE
2.1 Purchased Assets.
(a) Asset Purchase. On the terms and subject to the conditions set forth
in this Agreement, at the closing of the transactions contemplated herein
(the "Closing"), TransWestern agrees to purchase from Sellers, and Sellers
agrees to sell, transfer, convey and
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deliver to TransWestern, free and clear of any Security Interest, all of
Sellers' right, title and interest in and to the following assets
(collectively, the "Purchased Assets"):
(i) customer files and records and data contained therein
(including, without limitation, customer lists, customer correspondence
and customer telephone numbers) relating to any edition of any
Directory, together with copies of all Customer Contracts;
(ii) all Customer Contracts with respect to all Future Editions;
(iii) Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions, in
each case associated with, relating to or used by Sellers in connection
with the ownership, operation or publication of any Directories;
(iv) all Advance Payments and all accounts, notes and other
receivables arising in connection with any Future Editions of the
Directories;
(v) all Pre-Paid Direct Costs and all Pre-Paid Deferred Costs;
(vi) agreements, contracts, purchase orders, contractual rights and
other similar arrangements identified as "Other Assumed Contracts" on
the attached "Contracts Schedule";
(vii) the leases set forth on the attached "Assumed Leases
Schedule";
(viii) all claims, refunds, rights of recovery, rights of set off
and rights of recoupment of any kind relating to any Future Editions;
(ix) all franchises, approvals, permits, licenses, orders,
registrations, certificates, variances and similar rights obtained from
governments and governmental agencies associated with, relating to or
arising out of or as a result of the ownership or operation of the
Directories;
(x) rights to receive mail (except mail solely involving the
post-Closing Date operation of the Sellers' businesses (other than the
ownership and operation of the Directories) and subject to the right of
Sellers to review all mail relating to pre-Closing Date matters),
telephone calls and other communications addressed to or directed at
Sellers (including mail, telephone calls and other communications from
customers (including, without limitation, any customer inquiries
regarding the terms or provision of Directory Services pursuant to any
Customer Contract), suppliers, distributors, agents and others) and
payments relating to the Purchased Assets;
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(xi) ad-copy, drawings, specifications, advertising and promotional
materials, studies, reports and other printed or written materials
relating to, associated with or used by Sellers in connection with the
ownership or publication of any Directories;
(xii) the fixed assets set forth on the attached "Fixed Assets
Schedule"; and
(xiii) all other assets, rights, properties and interests of every
kind and nature, whether tangible or intangible, and wherever located
and possessed and owned by Sellers or used by Sellers or in connection
with the operations of Sellers' business as of the Closing Date to the
extent such assets relate to the ownership of any Directories as now and
as proposed to be owned and operated or the advertising, publication or
printing of any Future Editions in a manner consistent with Sellers' and
TransWestern's current practice and the intent of the Parties as
expressed in this Agreement.
(b) Limited Assumed Liabilities. Notwithstanding anything herein to the
contrary, from and after the Closing Date, TransWestern will not assume or in
any way be responsible for any Liabilities of Sellers or any other Liabilities
whatsoever arising out of or relating to the condition or operation of the
Directories at any time as of or prior to the Closing Date or, except as set
forth in the following sentence, any other Liabilities. Subject to the terms and
satisfaction of the conditions in this Agreement, from and after the Closing
Date, TransWestern will assume and agree to pay, defend, discharge and perform
as and when due only the following specific Liabilities of Sellers that relate
exclusively to the ownership and operation of the Directories after the Closing
(the "Assumed Liabilities"):
(i) Liabilities accruing on or after the Closing Date pursuant to
the contracts and leases which are set forth on the attached "Contracts
Schedule" or the "Assumed Lease Schedule," but only to the extent such
contracts or leases are actually assigned to TransWestern (but excluding
any Liability relating to or arising out of such contracts and leases as
a result of (A) any breach of such contracts or leases occurring on or
prior to the Closing Date, (B) any violation of law, breach of warranty,
tort or infringement occurring on or prior to the Closing Date, (C)
event or condition occurring or existing prior to the Closing Date or
(D) with respect to the foregoing items (A), (B) and (C), any related
charge, complaint, action, suit, proceeding, hearing, investigation,
claim or demand); and
(ii) current Liabilities arising in the Ordinary Course of Business
and classified as such on the Latest Balance Sheets or incurred in the
Ordinary Course of Business after the date of the Latest Balance Sheets
(as defined in Section 3.1(h)) to the extent such current Liabilities
are reflected on the attached Assumed Liability Schedule and not paid
prior to the Closing Date.
(c) Excluded Liabilities. TransWestern shall not assume or be liable for
any Liability of, or on behalf of, Sellers other than the Assumed Liabilities
(such other Liabilities
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being collectively referred to herein as the "Excluded Liabilities") regardless
of whether such other Liability is disclosed herein or on any schedule hereto.
Without in any way limiting the generality of the foregoing sentence, Excluded
Liabilities specifically includes any Liability resulting from any error,
omission or illegality arising out of, relating to or in connection with sales
into, or the printing or publication of any Prior Editions. Sellers each
acknowledge that Sellers are retaining the Excluded Liabilities and that
Sellers, severally, shall have full responsibility to pay, discharge and perform
any Excluded Liabilities promptly when due.
2.2 Purchase Price.
(a) The total purchase price payable by TransWestern to Sellers for the
Purchased Assets (the "Purchase Price") shall be equal to the result of:
(i) the assumption by TransWestern of the Assumed Liabilities; plus
(ii) $13,367,000, as adjusted pursuant to Section 2.4 (the "Base
Purchase Price"); plus
(iii) a promissory note with a term of 18 months from the date of
issue, bearing interest at a rate equal to the Prime Rate per annum, in
an aggregate principal amount of $2,000,000, subject to adjustment
pursuant to Sections 2.5, in the form set forth in Exhibit B (the
"Seller Note").
(b) The Purchase Price shall be allocated among the Purchased Assets and
the noncompetition agreement in Section 7.3 as set forth in the "Purchase Price
Allocation Schedule" attached hereto. The allocation of the Purchase Price among
the Purchased Assets and the noncompetition agreement set forth in Section 7.3
hereof shall be made in a manner consistent with the provisions of Section 1060
of the Code and applicable Treasury Regulations thereunder, and mutually
agreeable to the parties. Such determination shall be used by the Parties in
allocating the Purchase Price and in preparing (a) Form 8594, Asset Acquisition
Statement, for each of TransWestern and Sellers, and (b) all Tax Returns. Each
of TransWestern and Sellers shall file Form 8594, prepared in accordance with
this section, with its federal income Tax Return for its Tax period including
the Closing Date.
2.3 Closing Date Transactions.
(a) Closing. Subject to the terms and conditions set forth in this
Agreement, the Closing shall take place via facsimile and wire transfer of funds
upon the earlier of five (5) business days after satisfaction of all of the
conditions set forth in Article V or such other date which is mutually
acceptable to the parties, and November 30, 1998 (the "Closing Date").
(b) Deliveries on the Closing Date. On the Closing Date:
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(i) TransWestern shall deliver to Sellers the Base Purchase Price,
by wire transfer of immediately available funds to an account designated
by Sellers.
(ii) TransWestern shall deliver to Sellers the Seller Note.
(iii) TransWestern shall deliver to Sellers (A) the various
certificates, instruments and documents referred to in Section 5.1(b)
and (B) such other instruments of assumption as Sellers may reasonably
request in form reasonably satisfactory to Sellers and consistent with
the provisions of this Agreement.
(iv) Sellers shall deliver to TransWestern bills of sale in the form
attached hereto as Exhibits C-1 and C-2.
(v) Sellers shall deliver to TransWestern (A) the various
certificates, instruments and documents referred to in Section 5.1(a)
and (B) all other documents, instruments of sale, transfer, conveyance
and assignment as TransWestern may reasonably request with respect to
the Purchased Assets in form and substance reasonably satisfactory to
TransWestern and consistent with the provisions of this Agreement.
(vi) Sellers shall deliver to TransWestern evidence that all
security interests and other liens or encumbrances in any of the
Purchased Assets have been released.
2.4 Payment of Pre-Paid Direct Costs on the Closing Date. On the Closing
Date, TransWestern shall acquire the Pre-Paid Direct Costs and the Pre-Paid
Deferred Costs from Sellers by offsetting the aggregate amount of the Pre-Paid
Direct Costs and the Pre-Paid Deferred Costs against the aggregate amount of the
Advance Payments included in the Purchased Assets. The PrePaid Deferred Costs
are set forth on the attached Pre-Paid Deferred Costs Schedule. At least three
(3) but no more than five (5) business days prior to the Closing Date, Sellers
shall deliver to TransWestern a Pro Forma statement setting forth Sellers'
estimate as of the Closing of the aggregate Advance Payments included in the
Purchased Assets and of the Pre-Paid Direct Costs and Pre-Paid Deferred Costs.
TransWestern shall have the opportunity to review such Pro Forma statement and
raise questions or objections regarding the estimates of the Advance Payments,
the Pre-Paid Direct Costs and the Pre-Paid Deferred Costs set forth therein and
Sellers shall deliver to TransWestern all documentation requested by
TransWestern or used by Sellers in calculating such estimates. The Parties shall
use their respective best efforts to agree on the aggregate amount of such
Advance Payments and the amount of Pre-Paid Direct Costs and Pre-Paid Deferred
Costs as of the Closing Date, which agreement shall be reflected on the Pro
Forma and which shall be final and binding on the Parties. If the aggregate
amount of the Advance Payments included in the Purchased Assets exceeds the
aggregate amount of Pre-Paid Direct Costs and Pre-Paid Deferred Costs, the Base
Purchase Price shall be reduced dollar-for-dollar by the amount of such excess.
If the aggregate amount of Pre-Paid Direct Costs and Pre-Paid Deferred Costs
exceed the aggregate amount of such Advance Payments, the Base Purchase Price
shall be increased dollar-by-dollar by the amount of such difference.
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2.5 Seller Note Adjustment.
(a) For purposes of determining the Estimated Net Collection Amount,
Sellers and TransWestern, at least two (2) business days prior to the Closing
Date, shall attempt in good faith to agree on such amount. If the parties are
unable to agree on the Estimated Net Collection Amount, such amount shall be
determined by the President of each Seller in good faith based on each Sellers'
most recently available books and records.
(b) Not later than twenty (20) business days following each Accounts
Receivable Measurement Date, TransWestern shall in good faith prepare and
deliver to each Seller a statement (the "Net Collections Statement") setting
forth, as of such date, its calculation of the Actual Net Collection Amount as
of such Accounts Receivable Measurement Date, together with a statement of
Collected Accounts Receivable and Advance Payments received since the Closing
Date, with respect to each edition of each Directory. The Net Collections
Statement shall be based on Seller's' and TransWestern's books and records and
customer checks, bank statements and other documentation. Sellers shall review
the Net Collections Statement and raise questions or objections regarding the
Net Collections Statement and the Parties shall use their respective best
efforts to agree on such Actual Net Collection Amount as soon as practicable but
in any event within five (5) business days of TransWestern's delivery of the Net
Collections Statement to Sellers.
(c) In the event that Sellers dispute TransWestern's calculation of the
Actual Net Collection Amount as set forth on the Net Collections Statement, or
any of the components thereof, and TransWestern and Sellers are unable to
resolve any such disputed matters regarding the Net Collections Statement within
twenty (20) business days after the delivery of the Net Collections Statement to
Sellers, TransWestern and Sellers shall refer all remaining disputes concerning
the Net Collections Statement to a certified public accounting firm mutually
agreed to by the Parties (the "Independent Accounting Firm"). The Parties shall
instruct the Independent Accounting Firm to promptly (and in any event within
twenty (20) business days after submission of the disputes to the Independent
Accounting Firm) resolve such disputed matters; provided, that Sellers and
TransWestern are unable to agree upon an Independent Accounting Firm within five
(5) days, Sellers and TransWestern shall, within five (5) days thereafter select
a nationally recognized accounting firm by lot (after Sellers and TransWestern
each exclude one such accounting firm). TransWestern and Sellers will make
available to the Independent Accounting Firm at reasonable times and upon
reasonable notice during the pendency of any dispute under this clause (b) the
work papers and back-up materials used in preparing the Net Collections
Statement and the books and records of Sellers and shall have the right to meet
with the Independent Accounting Firm during this period and to present their
respective positions. The resolution of disputes by the Independent Accounting
Firm and its determination of the Actual Net Collection Amount will be set forth
in writing and will be conclusive and binding upon the Parties.
(d) The Independent Accounting Firm will determine the allocation of its
costs and expenses in determining the Actual Net Collection Amount based upon
the percentage which the portion of the contested amount not awarded to each
Party bears to the amount
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actually contested by such Party. For example, if Sellers claims the Actual Net
Collection Amount is $1,000 greater than the amount determined by TransWestern
and its accountants, and TransWestern contests only $500 of the amount claimed
by Sellers, and if the Independent Accounting Firm ultimately resolves the
dispute by awarding Sellers $300 of the $500 contested, then the costs and
expenses of arbitration will be allocated 60% (i.e., 300 divided by 500) to
TransWestern and 40% (i.e., 200 divided by 500) to Sellers.
(e) If as of the First Accounts Receivable Measurement Date: (i) Fiscal
Year Receivables minus the Actual Net Collection Amount determined in connection
with such Accounts Receivable Measurement Date is equal to or less than
$800,000; and cumulative write-offs and adjustments to the Fiscal Year
Receivables have not exceeded $408,000, then TransWestern shall within 2 days
following such determination prepay an amount of principal on the Seller Note
equal to $1,500,000 and any accrued but unpaid interest on the Seller Note at
such time.
(f) Following the Second Accounts Receivable Measurement Date, within 2
business days after the Actual Net Collection Amount has been determined
pursuant to this Section 2.5,
(i) if the Actual Net Collection Amount exceeds the Estimated Net
Collection Amount (such excess, the "Excess Margin Amount"), then the
principal amount of the Seller Note shall be increased automatically
effective as of the Closing Date by an amount equal to the product of
(x) 3.0 multiplied by (y) the Excess Margin Amount; and
(ii) if the Actual Net Collection Amount is less than the Estimated
Net Collections (such difference, the "Deficient Collections Amount"),
then the principal amount of the Seller Note shall be reduced
automatically effective as of the Closing Date by an amount equal to the
product of (x) 3.0 multiplied by (y) the Deficient Collections Amount.
In no event shall TransWestern have recourse against Sellers for the
portion (if any) of the Deficient Collections Amount which exceeds the
principal amount of the Seller Note.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sellers. As a material inducement
to TransWestern to enter into this Agreement and to consummate the transactions
contemplated hereby, Sellers hereby jointly and severally represent and warrant
to TransWestern that:
(a) Organization, Qualification and Corporate Power. Sellers are
corporations duly organized, validly existing, and in good standing
under the laws of the State of Michigan, and which jurisdiction
represents the sole jurisdiction in which the conduct of their business
or their ownership of property require them to be so qualified.
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(b) Authorization of Transaction. Sellers have full requisite
corporate power and authority and all material licenses, permits and
authorization necessary to own and operate the Directories, provide
Directory Services and carry on their telephone directory business as
now conducted and as proposed to be conducted, to execute and deliver
this Agreement and the other agreements contemplated hereby to which
they are a party and to perform their respective obligations hereunder
and thereunder. Without limiting the generality of the foregoing,
Sellers have obtained all consents and approvals that are necessary for
Sellers to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Sellers. Each
of this Agreement and each of the other agreements contemplated hereby
to which Sellers are a party, respectively, constitutes the valid and
legally binding obligations of such Person, enforceable against such
Person in accordance with its respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement and the other agreements contemplated hereby, nor the
consummation of the transactions contemplated hereby or thereby will
violate, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any authorization,
consent, approval, execution or other action by or notice to any third
party under, Sellers' certificates of incorporation or bylaws or any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement, instrument of indebtedness, Lien, or other
arrangement by which Sellers are bound or affected or to which any of
the Purchased Assets is subject, or any law, statute, rule, regulation,
order, judgment, decree, stipulation, injunction, charge or other
restriction, to which Sellers are subject or to which any of the
Purchased Assets is subject.
(d) Governmental Consent. Sellers are not required to give any
notice to, make any material declaration to or registration or filing
with, or to obtain any permit, license, consent, accreditation,
exemption, approval or authorization from, any governmental or
regulatory authority in connection with the execution, delivery or
performance of this Agreement or the consummation of any of the
transactions contemplated hereby.
(e) Recent Events. Except as described in the attached Recent
Events Schedule, since September 30, 1998, Sellers have not experienced
any change that has had a Material Adverse Effect. Without limiting the
generality of the foregoing, since such date:
(i) Sellers have not sold, leased, transferred or assigned
any of the Purchased Assets, except pursuant to this Agreement;
(ii) Sellers have not entered into any agreement,
contract, lease or license with respect to the Directories (or
any series of related agreements, contracts, leases or licenses)
other than in the Ordinary Course of Business;
(iii) no party has, accelerated, terminated, modified or
canceled any contract, lease, sublease, license or sublicense (or
series of related contracts, leases,
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subleases, licenses and sublicenses) involving more than $10,000
to which Sellers are a party or by which Sellers are bound and no
party intends to take such action;
(iv) Sellers have not delayed or postponed the payment of
accounts payable relating to or affecting the Directories or the
operation of the Directories or other Liabilities associated with
the operation of the Directories outside the Ordinary Course of
Business;
(v) there has not been any other material occurrence,
event, incident, action, failure to act or other transaction
outside the Ordinary Course of Business;
(vi) Sellers have not increased or decreased billing rates
under their Customer Contracts and Sellers have not agreed to
payment terms under any Customer Contract other than in the
Ordinary Course of Business;
(vii) Sellers have not disclosed any information required
to be kept confidential pursuant to Section 7.2 hereof to any
Person other than TransWestern and TransWestern's agents,
attorneys and accountants;
(viii) Sellers have not suffered any extraordinary loss,
damage, destruction or casualty loss or waived any rights to any
Purchased Asset or any other asset which, if it existed and was
held by Sellers on the Closing Date, would constitute a Purchased
Asset, whether or not covered by insurance and whether or not in
the Ordinary Course of Business;
(ix) Sellers have not received any indication that any
customer or supplier will cease, reduce or adversely affect the
rate of business done with Sellers with respect to the
Directories or in connection with the publication of the
Directories, other than in the Ordinary Course of Business;
(x) Sellers have not entered into any other transaction
relating to or affecting the Directories, individually or as a
whole, other than in the Ordinary Course of Business; and
(xi) Sellers have not committed to any of the foregoing.
(f) Intellectual Property. The attached "Intellectual Property
Schedule" contains a complete and accurate list of all Intellectual
Property owned or used by Sellers in connection with their ownership and
publication of the Directories owned and such Intellectual Property
comprises all proprietary or other intellectual property rights
necessary for operation and publication of the Directories as currently
operated and published. The Intellectual Property Schedule identifies
each license, agreement, or other permission which Sellers have granted
to any third party with respect to any of their Intellectual Property
(together with any exceptions). With respect to each item of
Intellectual Property that Sellers own in connection with the operation
of the Directories: (i) the identified owner possesses
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all right, title, and interest in and to the item; (ii) the item is not
subject to any outstanding judgment, order, decree, stipulation,
injunction, or charge; and (iii) no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand is pending or, is
threatened which challenges the legality, validity, enforceability, use,
or ownership of the item. Sellers have taken all necessary or desirable
action to protect each item of Intellectual Property that either Seller
owns or uses.
(g) Contracts and Commitments. Except as set forth on the
attached "Contracts Schedule," other than Customer Contracts, Sellers
are not party to any contract or any written or oral contract or
commitment that relates to the provision of Directory Services in
connection with any Directories or any of the Purchased Assets
(including, without limitation, any contract with a third party or
parties relating to the purchase or sale of services or products
relating to any Directories), or any agreement material to the
publication of any Directories, whether or not entered into in the
Ordinary Course of Business. Sellers have delivered or otherwise made
available to TransWestern a correct and complete copy of the standard
forms of Customer Contract used in connection with any Directories and
each written agreement (including all amendments thereto) identified on
the Contracts Schedule. The Contracts Schedule identifies all contracts
(other than Customer Contracts) associated with the Prior Editions and,
to the extent available, the Future Editions, and identifies all Other
Assumed Contracts included in the Purchased Assets. Sellers have
delivered, or otherwise made available to TransWestern a true and
complete list of all Customer Contracts associated with the Directories.
With respect to each agreement identified on the Contracts Schedule and
each of Customer Contracts: (A) such agreement is legal, valid, binding,
enforceable, and will continue to be in full force and effect after the
consummation of the transactions contemplated hereby; (B) such agreement
will continue to be legal, valid, binding, and enforceable and in full
force and effect on identical terms immediately after the Closing Date;
and (C) Neither Sellers nor any other party are in breach or default,
and no event has occurred which with notice or lapse of time would
constitute a breach or default by Sellers or permit termination,
modification, or acceleration (in each case, other than by Sellers),
under such agreement. Sellers have not waived or modified any limitation
on liability or similar provision in any Customer Contract.
(h) Financial Statements. The attached "Financial Statements
Schedule" contains the following financial statements (the "Financial
Statements"):
(i) the reviewed or compiled balance sheets of Sellers as
of September 30, 1996 and 1997, and the related statements of
income and changes in stockholders' equity for the twelve-month
periods then ended; and
(ii) the unaudited balance sheets of Sellers as of
September 30, 1998 (the "Latest Balance Sheets") and the related
statements of income and changes in stockholders' equity for the
twelve-month period then ended.
Each of the foregoing Financial Statements (including in all cases the
notes thereto, if any) is accurate and complete in all material
respects, is consistent with the books and records of
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Sellers (which, in turn, are accurate and complete in all material
respects) and presents fairly the financial condition and results of
operations of Sellers in accordance with GAAP throughout the periods
covered thereby, except for accrued vacation pay not reflected on the
Financial Statements other than the Latest Balance Sheets.
(i) Accuracy of Information Furnished. No representation or
warranty of Sellers contained in this Agreement or in any document
delivered to TransWestern by Sellers in connection with the transactions
contemplated hereby (including, without limitation, any Customer
Contract, customer list, or other records or data compiled in connection
with the Directories) contains or will contain as of the date such
representation and warranty is made or other document has been, is or
will be furnished, any untrue statement of a material fact or omitted,
omits, or will omit to state as of the date such representation or
warranty is made or such document is or will be furnished, any material
fact which is necessary not to make the statement contained herein or
therein not misleading.
(j) Customer Contract Receivables; Advance Payments. The
receivables associated with Customer Contracts reflected on the books
and records of Sellers as of the Closing Date are bona fide receivables
recorded in the Ordinary Course of Business. The Advance Payments
associated with Customer Contracts reflected on the books and records of
Sellers as of the Closing Date are bona fide Advance Payments recorded
in the Ordinary Course of Business. Such books and records of Sellers,
either directly or indirectly, identify receivables associated with the
Prior Editions and the Future Editions, respectively.
(k) Employees and Employee Benefit Plans. To each of Sellers'
knowledge, no employee of either Seller has any plans to terminate
employment with such Seller prior to the Closing. None of the Purchased
Assets is subject to any lien under ERISA or the Code; and Sellers have
no liability or potential liability under Title IV of ERISA. No employee
of either Seller is owed any sales commissions or bonus, other than in
the Ordinary Course of Business.
(l) Legal Compliance with Laws. Sellers have complied and are in
compliance with all applicable laws, rules or regulations of any
federal, state, local or foreign government or agency thereof with
respect to any of the Directories and no notice, claim, charge,
complaint, action, suit, proceeding, investigation or hearing has been
received by either Seller or filed, commenced or, threatened in writing
against either Seller alleging any such violation.
(m) Litigation; Proceedings. Except as set forth in the attached
"Litigation Schedule," there are no actions, suits, proceedings,
hearings, orders, investigations, charges, complaints or claims, pending
or threatened, against or affecting, Sellers, or any of the Directories
or the Purchased Assets or to which Sellers, the Directories or the
Purchased Assets may be bound or affected, at law or in equity, or
before or by any federal, state, municipal, foreign or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and there is no basis for any of
the foregoing; Sellers are not subject to any judgment, order or decree
of any court or governmental agency; Sellers
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have not received any opinion or memorandum or legal advice from legal
counsel to the effect that they or any of the Directories or the
Purchased Assets is exposed, from a legal standpoint, to any liability
or disadvantage which may be material to its business and Sellers are
not engaged in any legal action to recover monies due it or for damages
sustained by them.
(n) Title and Sufficiency of Assets. Sellers own good and
marketable title, free and clear of all Liens, to all personal and
intangible personal property and assets used by Sellers, located on
Sellers' premises or shown on the Latest Balance Sheets. At the Closing,
Sellers will convey good and marketable title to all of their property
and assets included within the Purchased Assets, free and clear of all
Liens (other than Liens and other restrictions which do not impair the
current use, occupancy value or marketability of title and for current
Taxes not yet due and payable for which adequate reserves have been
properly recorded). The Purchased Assets so conveyed will include all of
those assets (real, personal, tangible and intangible) used in
connection with the ownership and operation of the Directories during
the twelve months prior to the Closing Date (other than inventory or raw
materials used, sold or consumed in the Ordinary Course of Business and
worn out or obsolete fixed assets disposed of in the Ordinary Course of
Business, other than office space and office equipment leased by Sellers
in the Ordinary Course of Business) and will enable TransWestern to own
and operate Directories in the same manner as operated by and conducted
by Sellers prior to and as of the Closing Date.
(o) Directory Listings. Each of the directory listings associated
with the Directories has been published in the Ordinary Course of
Business and in accordance with customary practices currently prevailing
in the telephone directory industry for companies of a size comparable
to Sellers. No such listing has been published in violation of any
applicable law, code or regulation. Sellers have provided TransWestern
with, or made available to TransWestern, copies of all invoices (or
other evidence reasonably satisfactory to TransWestern) relating to the
purchase by Sellers of the white page listings and yellow page listings
used or to be used in connection with the printing and publication of
any Directory.
(p) Brokers' Fees. Sellers have no Liability to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement or which TransWestern or any
other party could become liable or obligated.
(q) Tax Matters.
(i) Sellers have timely filed all Tax Returns required to
be filed by them, each such Tax Return has been prepared in
compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all respects. Except as set
forth in the attached "Taxes Schedule," all Taxes due and payable
by Sellers (whether or not shown on any Tax Return) have been
paid.
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(ii) Except as set forth in the Taxes Schedule:
(A) with respect to each taxable period of each
Seller either such taxable period has been audited by the
relevant taxing authority or the time for assessing or
collecting income Tax with respect to each such taxable
period has closed and such taxable period is not subject
to review by any relevant taxing authority;
(B) no deficiency or proposed adjustment which has
not been settled or otherwise resolved for any amount of
Tax has been proposed, asserted or assessed by any taxing
authority against either Seller;
(C) Sellers have not consented to extend the time in
which any Tax may be assessed or collected by any taxing
authority;
(D) Sellers have not requested or been granted an
extension of the time for filing any Tax Return to a date
later than the Closing Date;
(E) there is no action, suit, taxing authority
proceeding or audit now in progress, pending or threatened
against or with respect to either Seller with respect to
any Tax;
(F) Sellers have not been members of an Affiliated
Group or filed or been included in a combined,
consolidated or unitary income Tax Return (other than
consolidated Tax Return filed by Sellers);
(G) Neither Seller is a party to or bound by any Tax
allocation or Tax sharing agreement and Sellers have no
current or potential contractual obligation to indemnify
any other Person with respect to Taxes;
(H) Sellers do not reasonably expect any taxing
authority to claim or assess any additional Taxes for any
period;
(I) the Assumed Liabilities do not include any
obligation to make any payment that will be non-deductible
under Section 280G of the Code (or any corresponding
provision of state, local or foreign Tax law);
(J) no claim has ever been made by a taxing authority
in a jurisdiction where Sellers do not pay Tax or file Tax
Returns that Sellers are or may be subject to Taxes
assessed by such jurisdiction;
(K) Sellers have withheld and paid all Taxes required
to have been withheld and paid in connection with amounts
paid or owing to any employee, creditor, independent
contractor or other third party;
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(L) Neither Seller has been a United States real
property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified
in Code Section 897(c)(1)(A)(ii).
(iii) Sellers are required to file Tax Returns only with
the Federal Government of the United States, the State of
Michigan, the City of Jackson, Michigan, and Xxxxxxxx Township,
Michigan and in no other jurisdictions.
(iv) Sellers' unpaid Taxes (x) did not, as of the Latest
Balance Sheets, exceed the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the faces
of Latest Balance Sheets (rather than in any notes thereto) and
(y) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom
and practice of the division in filing its Tax Returns.
(r) Leases.
(i) The attached "Real Property Schedule" contains a brief
description of each parcel of real property used, whether owned
or leased, in the conduct of each Seller's businesses (showing
the record owner, legal description, permanent index number and
location) (collectively, the "Real Property") and of each option
held by Sellers to acquire any Real Property and each option held
by Sellers to acquire any other parcels of real property. Sellers
do not own any real property used in the conduct of their
businesses and the operation of the Directories. Except as set
forth on the Real Property Schedule, there are no contracts
relating to any interest in the Real Property or the use and
occupancy thereof.
(ii) The attached "Assumed Lease Schedule" identifies all
of the Real Property leased or subleased to Sellers. Sellers have
delivered to TransWestern correct and complete copies of the
leases and subleases listed in the Assumed Lease Schedule
(collectively, the "Assumed Leases"). Each of the Assumed Leases
is legal, valid, binding, enforceable and in full force and
effect. Neither Sellers nor any other party to such leases are in
breach or default of such Assumed Lease and no event has occurred
which, with notice or lapse of time, would constitute such a
breach or default or permit terminations, modification or
accelerations under the Assumed Leases. Neither Sellers nor any
party to the Assumed Leases have repudiated any provision thereof
and there are no disputes, oral agreements, or forbearance
programs in effect as to the Assumed Lease. The Assumed Leases
have not been modified in any respect, except to the extent that
such modifications are disclosed by the documents delivered to
TransWestern, and Sellers have not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest
in the Assumed Leases.
(iii) with respect to each parcel of Real Property:
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(A) Sellers have not received notice of any
condemnation proceedings with regard to all or any part of
such Real Property and to Sellers' knowledge, there are no
such proceedings contemplated by any governmental
authority;
(B) to Sellers' knowledge, all governmental
licenses which are necessary to permit the lawful access,
use and operation of the building and improvements thereon
for their present and intended use have been obtained, are
in full force and effect, and there is no pending threat
of modification or cancellation of any such governmental
licenses; no improvements located on such Real Property
depend on any variance, grandfather rights, special use
permit or other special municipal approval for their
continuing legality; all utilities required for the
operation of such Real Property either enter such Real
Property through adjoining public streets or, if they pass
through adjoining private land, do so in accordance with
valid public or private easements which will inure to the
benefit of TransWestern; and all utilities are installed
and operating and all installation and connection charges
have been paid for in full;
(C) to Sellers' knowledge, the present maintenance,
operation, use and occupancy of such Real Property as an
office, warehouse, distribution and/or manufacturing
facility does not violate any law, including any zoning,
building, health, environmental, pollution, fire or
similar law, ordinance or regulation; Sellers have not
received any notices from any governmental body in respect
to such Real Property that have not been corrected; and to
Sellers' knowledge, there is no plan, study, or effort by
any governmental body or any nongovernmental person or
agency which may adversely affect the present use of such
Real Property;
(D) to Sellers' knowledge, the structural
components of the buildings on such Real Property are in a
good state of repair and all electrical, plumbing, water,
sewer, air conditioning, heating, ventilating, mechanical
and other building systems are in good working order and
repair; the roofs of such buildings are free from leaks
and the improvements are free from insect infestation; and
there are no latent defects in the condition of such Real
Property or in the soil or geology of the land;
(E) Sellers have not received any notice and have
no knowledge of any increase in any of the factors
comprising the real estate Tax bills for such Real
Property, including without limitation, the assessed
valuation and the Tax rate; to Sellers' knowledge, there
are no assessments, general or special, which have been,
or are in the process of being levied against such Real
Property, and Sellers have no knowledge of any
contemplated assessments;
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(F) to Sellers' knowledge, there is not (i) any
intended public improvement which may involve any charge
being levied or assessed or which may result in the
creation of any Security Interest upon such Real Property;
(ii) any intended or proposed federal, state, or local
statute, ordinance, order, requirement, law, or regulation
(including, but not limited to, zoning changes) which may
adversely affect the current or planned use of such Real
Property; or (iii) any legal proceeding threatened or
pending against or affecting such Real Property nor, to
Sellers' knowledge, is there any basis for any such
matters;
(G) to Sellers' knowledge, there are no
encroachments onto such Real Property from any
improvements on adjoining property and no improvements
located on such Real Property encroach on any adjoining
property;
(H) to Sellers' knowledge, no portion of such Real
Property lies within a flood hazard zone.
(s) Customers and Suppliers. Sellers have not received any notice
that any material customer or supplier intends to terminate or
materially reduce its business with Sellers and no material customer or
supplier has terminated or materially reduced its business with Sellers
in the last twelve (12) months other than in the Ordinary Course of
Business.
(t) Disclosure. Neither this Section 3.1, the schedules hereto
nor any writing delivered by Sellers to TransWestern in connection with
the transactions contemplated hereby contain any untrue statement of a
material fact or omit a material fact by Sellers necessary to make the
statements contained herein or therein, in light of the circumstances in
which they were made, not misleading. There is no material fact which
has not been disclosed to TransWestern which materially adversely
affects or could reasonably be anticipated to materially adversely
affect the Directories. Except for the representations and warranties
contained in this Agreement and in any schedule, exhibit or other
written material delivered in connection with this Agreement, Sellers
have not made any representation or warranty in connection with the
transactions contemplated by this Agreement (including, without
limitation, any oral representations or warranties or any representation
or warranty regarding any financial projections heretofore delivered to
TransWestern).
(u) Closing Date. All of the representations and warranties made
by Sellers contained in this Section 3.1 and elsewhere in the Agreement
and all information delivered in any schedule, attachment or exhibit
hereto or in any certificate delivered by Sellers to TransWestern shall
be true and correct in all material respects (excluding such
representations and warranties which by their own terms are already so
qualified) on the Closing Date as though then made, except as affected
by the transactions expressly contemplated by this Agreement and except
as expressly disclosed in writing to TransWestern by Sellers prior to
the Closing. Prior to the Closing Date, Sellers shall notify
TransWestern of any information that came into existence after the date
hereof and would
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have been required to be disclosed on one or more schedules or reflected
in such representations or warranties if such information was in
existence on the date hereof and may or supplement the disclosure
schedules attached hereto to reflect such information; it being
understood, however, that such revisions, supplements, amendments or
modifications, if any, permitted to be made pursuant to this Section
3.1(u) shall not modify the representations and warranties set forth
herein for purposes of determining whether the condition set forth in
Section 5.1 has been satisfied and shall not cure any default existing
as a result of a breach of any of Sellers' representations or warranties
contained in this Agreement.
3.2 Representations and Warranties of TransWestern. As a material
inducement to Sellers to execute this Agreement and consummate the transactions
contemplated hereby, TransWestern hereby represents and warrants to Sellers
that:
(a) Organization. TransWestern is a limited liability company
duly organized, validly existing and in good standing under the laws of
the State of Delaware. TransWestern is qualified to conduct business in
each other jurisdiction wherein the nature of its business or ownership
of property requires it to be so qualified except where failure to so
qualify would not materially adversely effect the assets, business,
operations or financial condition of TransWestern.
(b) Authorization of Transaction. TransWestern has the power and
authority to execute and deliver this Agreement and the other agreements
contemplated hereby to which it is a party and to perform its
obligations hereunder and thereunder. This Agreement and the other
agreements contemplated hereby to which TransWestern is a party have
been duly executed and delivered by TransWestern and constitute the
valid and legally binding obligations of TransWestern, enforceable
against TransWestern in accordance with their respective terms.
(c) Noncontravention. The consummation of the transactions
contemplated hereby will not violate or conflict with any statute,
regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or
court to which TransWestern is subject or any provision of the Operating
Agreement of Limited Liability Company of TransWestern.
(d) Governmental Consent. TransWestern is not required to give
any notice to, make any material declaration to or registration or
filing with, or to obtain any material permit, license, consent,
accreditation, exemption, approval or authorization from, any
governmental or regulatory authority in connection with the execution,
delivery or performance of this Agreement or the consummation of any of
the transactions contemplated hereby.
(e) Brokers' Fees. TransWestern has no Liability to pay any fees
or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Sellers could
become liable or obligated.
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(f) Closing Date. All of the representations and warranties of
TransWestern contained in this Section 3.2 and elsewhere in this
Agreement and all information delivered in any schedule, attachment or
exhibit hereto or in any certificate delivered by TransWestern shall be
true and correct in all material respects (excluding those
representations and warranties which by their own terms are already so
qualified) on the Closing Date as though then made and except as
expressly disclosed in writing to Sellers by TransWestern prior to the
Closing. Prior to the Closing Date, TransWestern shall notify Sellers of
any information that came into existence after the date hereof and would
have been required to be disclosed on one or more schedules or reflected
in such representations or warranties if such information was in
existence on the date hereof, may supplement this Agreement with
disclosure schedules, or otherwise amend or modify its representations
and warranties hereunder to reflect such information; it being
understood, however, that such revisions, supplements, amendments or
modifications, if any, permitted to be made pursuant to this Section
3.2(f), shall not modify the representations and warranties set forth
herein for purposes of determining whether the condition set forth in
Section 5.2 has been satisfied and shall not cure any default existing
as a result of a breach of any of TransWestern's representations or
warranties contained in this Agreement.
ARTICLE 4 - COVENANTS
4.1 Pre-Closing Covenants.
(a) Affirmative Covenants Concerning the Business. At all times
prior to the Closing Date, Sellers shall operate only in the Ordinary
Course of Business. Without limiting the foregoing, Sellers covenant and
agree that:
(i) Sellers' telephone directory businesses and operations
shall be conducted only in the Ordinary Course of Business and
Sellers shall use their best efforts to preserve intact Sellers'
business organizations and keep available satisfactory
relationships with suppliers, customers and others having
business relationships with it and promote the ordinary and
smooth transition of each Sellers' businesses and the Purchased
Assets to TransWestern;
(ii) Sellers' cash management practices (including, without
limitation, the collection of receivables and the payment of
payables) and Sellers' policies, practices and procedures
(including, without limitation, with respect to collection of
trade receivables and receivables associated with Customer
Contracts, establishment of reserves for uncollectible accounts,
accrual of accounts receivable, inventory control, prepayment of
expenses, payment of trade accounts payable, accrual of other
expenses, deferral of revenue, acceptance of Advance Payments or
other customer deposits and maintenance of the quality of the
Directories) shall be maintained and conducted in the Ordinary
Course of Business;
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(iii) Sellers' current insurance policies (to the extent
such policies relate to operation of the Directories) shall not
to be canceled or terminated and no action shall be taken (or
fail to be taken) to cause any of the coverage thereunder to
lapse, unless, simultaneously with such termination, cancellation
or lapse, replacement policies providing coverage equal to or
greater than the coverage under the canceled, terminated or
lapsed policies to the extent practicable for market premiums are
in full force and effect;
(iv) Sellers shall use their respective best efforts to
retain the present employees and to maintain Sellers'
relationships with their agents, distributors, licensees,
suppliers and customers relating to the operation of the
Directories;
(v) Sellers' books, accounts and records shall be maintained
in accordance with GAAP;
(vi) Sellers' corporate name shall be maintained in full
force and effect;
(vii) Sellers shall comply (and remain in compliance with)
all legal requirements and contractual obligations applicable to
or binding upon Sellers;
(viii) Sellers' city or county business licenses shall be
maintained in full force and effect; and
(ix) Sellers shall duly and timely file (by the due date or
any duly granted extension thereof) all income Tax reports and
returns and non-income Tax reports and returns required to be
filed with federal, state, county, local, foreign and other Tax
authorities, promptly pay all Taxes indicated by such returns or
otherwise lawfully levied or assessed upon Sellers or any of
Sellers' properties, unless Sellers are contesting such levy or
assessment in good faith and, if appropriate, have established
reasonable reserves therefor, and withhold or collect and pay to
the proper governmental authorities or hold in separate bank
accounts for such payment all Taxes required by law to be so
withheld or collected.
(b) Negative Covenants Concerning the Business Prior to Closing.
At all times prior to the Closing Date, Sellers covenant and agree that
Sellers will not:
(i) forgive, cancel, or waive any rights or any debts or
other material obligations owed to Sellers without obtaining
TransWestern's prior written consent;
(ii) merge or consolidate with, or purchase substantially
all of the stock or assets of, or otherwise acquire, any
corporation, partnership, association or other business
organization or entity or division thereof;
(iii) institute any material change in the methods of
purchase, sale, lease or accounting from those used in the
Ordinary Course of Business or in the collection
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of accounts receivable (including receivables associated with
Customer Contracts) or the payment of accounts payable other than
to the extent consistent with the Ordinary Course of Business;
(iv) mortgage, pledge or subject to any Security Interest
(except those for Taxes not yet due and payable) any of the
Purchased Assets;
(v) sell, assign or transfer any of the Purchased Assets;
(vi) sell, assign or transfer any of Sellers' patents or
other Intellectual Property or other intangible assets, or
disclose any proprietary information to any Person;
(vii) terminate or in any way encourage the resignation of
any employee or sales representative for any reason other than
such employee's gross negligence or wilful misconduct;
(viii) pay or commit to pay commissions on Customer
Contracts outside of the Ordinary Course of Business; or
(ix) enter into a binding commitment to do any of the
foregoing.
(c) Exclusivity. Sellers will not (and neither will not permit
any Affiliate of or Persons acting in concert with Sellers to) at any
time prior to the Closing Date: (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to any (A)
liquidation, dissolution, or recapitalization, (B) merger or
consolidation or share exchange, (C) acquisition or purchase of
securities or assets, or (D) similar transaction or business combination
involving Sellers, the Directories or any Purchased Assets or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, execute, sign,
deliver or enter into any agreement (whether written or oral) relating
to, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. Sellers (as the case may be)
will notify TransWestern immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing and the
terms thereof, the terms thereof and their response thereto.
(d) General Obligation to Close. Each of the Parties will use
their respective reasonable best efforts to take all actions and to do
all things necessary or desirable to consummate and make effective the
transactions contemplated by this Agreement (including, without
limitation, satisfaction, but not waiver, of the closing conditions set
forth in Article 5) and to cause the other conditions to TransWestern's
and Sellers' obligations hereunder to be satisfied as soon as
practicable but in any event no later than required to permit the
Closing to occur on or prior to November 30, 1998.
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4.2 Other Covenants.
(a) Full Access. At all times prior to the Closing Date, Sellers
shall permit TransWestern and its respective employees, accountants,
legal counsel and other representatives to have full access (at all
reasonable times based upon the intent of the Parties that this
transaction be confidential until the Closing Date and upon reasonable
notice and in a manner so as not to interfere with Sellers' normal
business operations) to their premises, properties, personnel, books,
records, contracts, Tax records, and documents of or pertaining to
Sellers, the Purchased Assets or the Directories, as is reasonably
necessary or (in the opinion of TransWestern) desirable to consummate
all of the transactions contemplated herein. All information given to
TransWestern and its representatives shall be subject to the
confidentiality provisions set forth in Section 7.2(a).
(b) Notice of Developments. At all times prior to the Closing
Date, (i) Sellers will give prompt written notice to TransWestern of any
development affecting the condition, operation, results of operations,
or future prospects of the Directories or any Purchased Assets, and (ii)
each Party will give prompt written notice to the other of any
development affecting the ability of the notifying Party to consummate
the transactions contemplated by this Agreement. No disclosure by any
Party pursuant to this Section 4.2(b) shall be deemed to amend or
supplement the schedules attached hereto delivered by such Party or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant by such Party.
(c) Employee Matters. Immediately prior to the Closing, Sellers
shall terminate the employment of all of the employees identified (the
"Employees") on the attached "Employee Schedule," which schedule shall
be prepared and delivered by TransWestern to Sellers at least two (2)
business days prior to the Closing. Immediately after the Closing,
TransWestern will offer employment to the active Employees. Nothing in
this Agreement shall obligate TransWestern to offer employment to any
employee of Sellers or any other individual other than the Employees;
and nothing in this Agreement shall limit the ability of TransWestern to
terminate the employment of any Employee at any time and for any reason,
whether for cause or without cause. From and after the Closing Date,
Sellers shall retain all Liabilities arising under or in connection with
any "employee benefit plan" (as such term is defined in Section 3(3) of
ERISA) or any other employee benefit plan or arrangement at any time
maintained or contributed to by Sellers, including, but not limited to,
those Liabilities arising under Part 6 of Title I of ERISA and Section
4980B of the Code. Sellers shall be additionally responsible for all
Liabilities (i) relating to compensation (including insurance benefits)
of any Employee for periods prior to the Closing Date and of any other
employee of Sellers for any period and/or (ii) arising as a result of
the transactions contemplated by this Agreement, including, but not
limited to, severance compensation and bonus payments, except for
Liabilities identified on the Assumed Liability Schedule, which shall
include all accrued vacation pay for the Employees.
4.3 TransWestern's Post-Closing Collection Obligation. From and
after the Closing, TransWestern shall assume responsibility for all billing and
collection activities associated with any Prior Edition of any Directory,
including, but not limited to, collection of all trade accounts
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receivable outstanding as of the Closing (including local, foreign and national
advertising accounts) (which accounts receivable collectively are referred to as
"Sellers' Closing Accounts Receivable"). TransWestern shall apply any payments
(including interest (if any)) collected by it hereunder first, to payment of
Sellers' Closing Accounts Receivable on a customer-by-customer basis (with
priority over payments owed to the Company by the same creditor for advertising
services on Future Editions) until either Sellers' Closing Accounts Receivable
are paid in full or the occurrence of the Accounts Receivable Measurement Date
and shall remit such applicable amounts collected to Sellers on a weekly basis.
During such time, TransWestern agrees to use collection methods consistent with
its past custom and collection practice. TransWestern shall not settle or
compromise amounts due under any Sellers' Closing Accounts Receivable without
providing Sellers with seven (7) days prior notice of the proposed settlement or
compromise, and Sellers and TransWestern shall cooperate and work jointly to
reach agreement during such seven (7) day period with respect to all
adjustments, settlements and write-offs to be taken in connection with any such
settlement or compromise. Sellers agree to respond to all requests by
TransWestern to evaluate any such settlement in a timely manner (and, in any
event, shall respond to such notice by TransWestern within three (3) business
days after receipt thereof). TransWestern shall deliver aging reports and a
"cash received" journal for Customer Contracts to Sellers on a monthly basis
prior to the Accounts Receivable Measurement Date. After such date, TransWestern
in its discretion may terminate, without any further obligation to the Sellers
hereunder or Sellers may require termination regarding, any collection efforts
with respect to such Sellers' Closing Accounts Receivable. Sellers and their
accountants reserve the right to examine (at their own expense, at reasonable
times upon prior notice, and on a scope limited to the collection records at
issue) the books and records of TransWestern during the period of time when
TransWestern is responsible for the collection of Sellers' Closing Accounts
Receivable to verify the aging report given to Sellers.
ARTICLE 5 - CONDITIONS
5.1 Conditions To Closing.
(a) Conditions to Closing Obligations of TransWestern. The
obligation of TransWestern to consummate the transactions contemplated
hereby is subject to satisfaction at or prior to the Closing Date of the
following conditions:
(i) Sellers' representations and warranties set forth in
Section 3.1 shall be true and correct in all material respects,
in each case at and as of the Closing Date, as though the Closing
Date were substituted for the date hereof throughout such
representations and warranties (without giving effect to any
disclosures made after the date hereof pursuant to Section
3.1(u)), except for representations and warranties that are made
by their terms as of a specified date, which shall be true and
correct as of a specified date and except for changes
contemplated by this Agreement.
(ii) Sellers shall have performed and complied in all
material respects with all of their respective covenants and
agreements set forth in this Agreement through the Closing Date.
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(iii) All governmental or third party filings, licenses,
consents, authorizations, waivers and approvals (including,
without limitation, any consent or approval that may be required
from TransWestern's lenders) that are required to be made or
obtained for the transfer to TransWestern of the Purchased Assets
will have been duly made and obtained without conditions or
requirements that are materially adverse to TransWestern.
(iv) As of the Closing Date, no suit, action or proceeding
before any court or quasi-judicial or administrative agency shall
be pending or threatened wherein any adverse judgment, decree,
order or injunction would (i) prevent the consummation of the
transactions contemplated by this Agreement, (ii) cause any of
such transactions to be rescinded following consummation of the
transactions contemplated by this Agreement, (iii) materially and
adversely affect the right of TransWestern to operate or control
the Directories or (iv) result in a Material Adverse Effect (and
no such judgment, decree, order or injunction shall be in
effect).
(v) There shall have occurred no Material Adverse Effect
since September 30, 1998.
(vi) Sellers shall have delivered to TransWestern a
certificate signed by officers of Sellers to the effect that each
of the conditions specified above in subsections (a)(i)-(vii),
inclusive, are satisfied in all respects.
(vii) X.X. Xxxx, III, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxx,
III shall have entered into non-compete agreements in form and
substance satisfactory to TransWestern and such agreements shall
not have been amended or modified and shall be in full force and
effect.
(viii) TransWestern shall have received from Xxxxxx,
Xxxxxx & Thomson, P.C., counsel to Sellers, an opinion with
respect to the matters set forth in Exhibit D attached hereto,
addressed to TransWestern and dated as of the Closing Date; and
(ix) On or prior to the Closing Date, Sellers will have
delivered, or made available, to TransWestern each of the
following:
(A) copies of all governmental licenses, consents,
authorizations, accreditations, waivers and approvals and
of all consents, waivers and approvals by third parties
that are required to be obtained pursuant to subsection
(iii) above;
(B) short-form good standing certificates for each
Seller issued by the Corporation, Securities and Land
Development Bureau, Department of Consumer and Industry
Services of the State of Michigan, each dated as of a date
within ten (10) days prior to the Closing Date;
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(C) the certificates of incorporation of each
Seller, certified as of a date within ten (10) days prior
to the Closing Date by the Corporation, Securities and
Land Development Bureau, Department of Consumer and
Industry Services of Michigan, and bylaws of each Seller
certified by each Seller's respective Secretary; and
(D) copies of all of the invoices or other
documentation satisfactory to TransWestern of all Pre-Paid
Direct Cost and Pre-Paid Deferred Costs associated with
each of the Future Editions, (ii) a copy of the licensing
agreement entered into by Sellers for the licensing of
white pages in connection with publication of each of the
Future Editions, (iii) copies of printing quotes obtained
in connection with publication of each of the Future
Editions, if available and (iv) the Pro Forma.
(x) TransWestern shall have completed to its satisfaction
a business, legal, environmental and financial due diligence
review of Sellers, the Directories and the Purchased Assets.
(b) Conditions to Closing Obligations of Sellers. The obligation
of Sellers to consummate the transactions contemplated hereby is subject
to satisfaction at or prior to the Closing Date of the following
conditions:
(i) TransWestern's representations and warranties set
forth in Section 3.2 shall be true and correct in all material
respects, in each case at and as of the Closing Date, as though
the Closing Date were substituted for the date hereof throughout
such representations and warranties (without giving effect to any
disclosures made after the date hereof pursuant to Section
3.2(f)) except for representations and warranties that are made
by their terms as of a specified date, which shall be true and
correct as of a specified date and except for changes
contemplated by this Agreement;
(ii) TransWestern shall have performed and complied in all
material respects with all of its covenants and agreements set
forth in this Agreement through the Closing Date;
(iii) All governmental or third party filings, licenses,
consents, authorizations, waivers and approvals that are required
to be made or obtained by TransWestern for the transfer to
TransWestern of the Purchased Assets will have been duly made and
obtained without conditions or requirements that are materially
adverse to Sellers;
(iv) TransWestern shall have delivered to Sellers a
certificate signed by an officer of TransWestern to the effect
that each of the conditions specified in subsections (b)(i)
through (iii) are satisfied in all respects;
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(v) TransWestern shall have paid the Base Purchase Price
to Sellers and shall have delivered the Seller Note to Sellers.
All actions to be taken by any Party in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
other Party. Any Party may waive any condition to such Party's obligation, in
whole or in part, specified in this Section 5.1 if it executes a writing so
stating at or prior to the Closing Date or if the Closing occurs; provided,
however, that consummation of the Closing shall not operate as a waiver of any
indemnification rights such Party may otherwise have hereunder as a result of
any breach of any representation, warranty or covenant of the other Party
contained herein.
ARTICLE 6 - TERMINATION
6.1 Termination. The Parties may terminate this Agreement as
provided below:
(a) TransWestern and Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing.
(b) TransWestern may terminate this Agreement by giving written
notice to Sellers at any time prior to the Closing Date in the event
Sellers are in breach of any representation, warranty, covenant or
closing condition (or if such closing condition has not been satisfied
by its own terms) contained in this Agreement; provided, that the Seller
shall have five (5) days upon such notice to cure any breach specified
therein.
(c) Sellers may terminate this Agreement by giving written notice
to TransWestern at any time prior to the Closing Date in the event
TransWestern is in breach of any representation, warranty, covenant or
closing condition contained in this Agreement; provided, that
TransWestern shall have five (5) days upon such notice to cure any
breach specified therein.
(d) TransWestern may terminate this Agreement at any time prior
to the Closing Date if the Closing shall not have occurred on or prior
to the close of business on December 31, 1998 as a result of Sellers'
inability to satisfy the conditions set forth in Article 5; provided
that TransWestern is not in material breach of any of its
representations, warranties or covenants contained in this Agreement;
and provided, further, that TransWestern will not be entitled to
terminate this Agreement pursuant to this Section 6.1(d) if
TransWestern's willful or knowing breach of this Agreement has prevented
the consummation of the transactions contemplated hereby.
(e) Sellers may terminate this Agreement by giving written notice
to TransWestern at any time prior to the Closing Date if the Closing
shall not have occurred on or before the close of business on December
31, 1998 as a result of TransWestern's inability to satisfy the
conditions set forth in Article 5; provided that Sellers are not in
material breach
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of any of their representations, warranties or covenants contained in
this Agreement; and provided, further, that Sellers will not be entitled
to terminate this Agreement pursuant to this Section 6.1(e) if Sellers'
willful or knowing breach of this Agreement has prevented the
consummation of the transactions contemplated hereby.
6.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 6.1(a), all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach); provided, however, that Sections 7.2,
7.5 and 7.6(n) shall survive such termination.
ARTICLE 7 - ADDITIONAL AGREEMENTS
7.1 Post-Closing Assistance. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement and to effect, consummate, confirm or evidence the
consummation of the transactions contemplated hereby (including, without
limitation, with respect to the sales into, printing and publication of each of
the Future Editions and with respect to TransWestern's collection obligations
under Section 4.4), each of the Parties will take such further action
(including, without limitation, the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Section 7.3). During the six-year
period following the Closing Date, TransWestern shall have reasonable access to
Sellers' books and records (and to make copies thereof at TransWestern's
expense) for any proper purpose set forth by TransWestern in a writing delivered
to Sellers. After the Closing Date, Sellers may destroy or otherwise dispose of
such books and records; provided, that TransWestern has received notice of such
intentions and has had a reasonable opportunity to review or copy such records
prior to their destruction or disposal.
7.2 Confidentiality.
(a) Information Concerning the Parties. Regardless of whether the
transactions hereunder are consummated, (i) TransWestern and its
Affiliates shall keep confidential all information regarding Sellers'
telephone directory business which is or has been furnished to
TransWestern or its directors, officers, employees, representatives,
advisors or Affiliates by or on behalf of Sellers and (ii) Sellers shall
keep confidential all information regarding TransWestern's business
which is or has been furnished to Sellers, or any of their shareholders,
partners, directors, officers, employees, representatives, advisers or
Affiliates by or on behalf of TransWestern. In the event the
transactions contemplated by this Agreement are not consummated, the
Parties shall return (or certify the destruction of) all materials in
their possession containing confidential information belonging to
another Party and shall not use any such information for any purpose
whatsoever. The foregoing notwithstanding, none of the provisions in
this Section 7.2(a) shall apply to any information which (x) is already
in a Party's possession (provided that such information is not subject
to another confidentiality agreement with or other legal or fiduciary
obligation of secrecy to the Party to which the information relates
(such agreements and obligations being referred to as
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"Confidentiality Obligations")); (y) becomes generally available to the
public other than as a result of any breach of this Section 7.2(a) or a
Confidentiality Obligation; or (z) becomes available to a Party on a
non-confidential basis from a source other than the Party to which the
information relates (provided that such source is not bound by a
Confidentiality Obligation with, or other legal or fiduciary obligation
of, secrecy to the Party to which the information relates).
(b) Notice of Compulsory Disclosure. In the event any Party
hereto is required to disclose any confidential information pursuant to
applicable law, such Party shall promptly notify each other Party in
writing, which notification shall include the nature of the legal
requirement and the extent of the required disclosure, and shall
cooperate with each other Party to preserve the confidentiality of such
information consistent with applicable law.
7.3 Non-Competition.
(a) As a material inducement to TransWestern to enter into and
perform its obligations under this Agreement, for a period of five years
following the Closing Date (the "Noncompetition Period"), neither
Sellers nor any of their successors or affiliates will, directly or
indirectly, either for themselves or for any partnership, individual,
corporation, joint venture or any other entity participate in any
business (including, without limitation, any division, group or
franchise of a larger organization) which engages in or proposes to
engage in the promotion, sale, distribution, production or printing of
telephone directory "yellow pages" or similar products or related
services in any county of Michigan which is covered by the Directories
or any county in the United States covered by any other yellow-page
directory owned or published by TransWestern or any of its affiliates
during the Noncompetition Period. For purposes of this Agreement, the
term "participate in" shall include, without limitation, having any
direct or indirect interest in any corporation, partnership, joint
venture or other entity, whether as a sole proprietor, owner,
shareholder, partner, joint venturer, creditor or otherwise, or
rendering any direct or indirect service or assistance to any individual
corporation, partnership, joint venture and other business entity
(whether as a director, officer, manager, supervisor, employee, agent,
consultant or otherwise); provided, that "participate in" shall not
include ownership of less than 2% of the stock of a publicly-held
corporation whose stock is traded on a national stock exchange or in the
over-the-counter market.
(b) Sellers agree that TransWestern would suffer irreparable harm
from a breach by such Party of any of the covenants or agreements
contained in Section 7.3(a). Accordingly, in the event of an alleged or
threatened breach by Sellers or any of their affiliates of any of the
provisions of this Section 7.2(c), TransWestern or its successors or
assigns may, in addition to all other rights and remedies existing in
its favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof equal to the length of
the violation of this Section 7.3(a).
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(c) If, at the time of enforcement of this Section 7.3(a), a
court shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the Parties
agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or
area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted
by law. Sellers agree that the restrictions contained in subsection
7.3(a) are reasonable.
(d) During the Non-Competition Period, none of Sellers or any of
their affiliates shall (i) induce or attempt to induce any employee of
TransWestern to leave the employ of TransWestern, or in any way
interfere with the relationship between TransWestern and any employee
thereof, (ii) hire directly or through another entity any person who was
an employee of TransWestern at any time during the Noncompetition
Period, or (iii) induce or attempt to induce any customer, supplier,
licensee or other business relation of TransWestern to cease doing
business with TransWestern, or in any way interfere with the
relationship between any such customer, supplier, licensee or business
relation and TransWestern (including, without limitation, making any
negative statements or communications concerning TransWestern).
(e) Each Party agrees that the covenants made in this Section 7.3
shall be construed as an agreement independent of any other provision of
this Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Agreement.
7.4 Indemnification.
(a) In addition to all rights and remedies available to
TransWestern at law or in equity, Sellers shall jointly and severally
indemnify TransWestern, its affiliates, members, managers, officers,
employees, agents, representatives, permitted successors and assigns
(collectively, the "TransWestern Indemnities") in respect of, and save
and hold each TransWestern Indemnitee harmless against, and pay on
behalf of or reimburse each TransWestern Indemnitee for, as and when
incurred at any time after the Closing Date or such earlier date when
this Agreement may be terminated pursuant to Article 6, any Loss which
any such TransWestern Indemnitee may suffer, sustain or become subject
to, as a result of, in connection with, relating or incidental to or by
virtue of:
(i) any breach of any representation, warranty, covenant
or agreement made by Sellers in this Agreement or any facts or
circumstances constituting such a breach;
(ii) any Excluded Liability; or
(iii) any Sales/Use Tax Liability.
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(b) In addition to all rights and remedies available to Sellers
at law or in equity, TransWestern shall indemnify Sellers and their
affiliates, officers, directors, employees, agents, representatives and
permitted successors and assigns (collectively, "Seller Indemnitees") in
respect of, and save and hold each of them harmless from and against,
and pay on behalf of or reimburse each Seller Indemnitee for, as and
when incurred at any time after the Closing Date or such earlier date
when this Agreement may be terminated pursuant to Article 6, any Loss
which such Seller Indemnitee may suffer, sustain or become subject to,
as the result of, in connection with, relating to or incidental to or by
virtue of the breach by TransWestern of any representation, warranty,
covenant or agreement made by TransWestern contained in this Agreement,
or any facts or circumstances constituting such a breach, or any Assumed
Liability.
(c) If a party hereto seeks indemnification under this Section
7.4, such party (the "Indemnified Party") shall give written notice to
the other party (the "Indemnifying Party") of the facts and
circumstances giving rise to the claim. In that regard, if any suit,
action, claim, liability or obligation (a "Proceeding") shall be brought
or asserted by any third party which, if adversely determined, would
entitle the Indemnified Party to indemnity pursuant to this Section 7.4,
the Indemnified Party shall within thirty (30) days notify the
Indemnifying Party of the same in writing, specifying in detail the
basis of such claim and the facts pertaining thereto; provided, that the
failure to so notify an Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent
such failure shall have harmed the Indemnifying Party. The Indemnifying
Party, if it so elects, shall assume and control the defense of such
Proceeding (and shall consult with the Indemnified Party with respect
thereto), including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of expenses; provided however,
that in the event any Proceeding shall be brought or asserted by any
third party which, if adversely determined, would not entitle the
Indemnified Party to full Indemnity pursuant to Section 7.4, the
Indemnified Party may elect to participate in a joint defense of such
Proceeding (a "Joint Defense Proceeding") for which the expenses of such
joint defense will be shared equally by such parties and the employment
of counsel shall be reasonably satisfactory to both parties. If the
Indemnifying Party elects to assume and control the defense of a
Proceeding, it will provide notice thereof within thirty (30) days after
the Indemnified Party has given notice of the matter and if such
Proceeding is not a Joint Defense Proceeding, the Indemnified Party
shall have the right to employ counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel employed by
the Indemnified Party shall be at the expense of the Indemnified Party
unless (i) the employment thereof has been specifically authorized by
the Indemnifying Party in writing or (ii) the Indemnifying Party has
failed to assume the defense and employ counsel. The Indemnifying Party
shall not be liable for any settlement of any Proceeding, the defense of
which it has elected to assume, which settlement is effected without the
written consent of the Indemnifying Party; provided that no settlement
of a Joint Defense Proceeding may be effected without the written
consent of both parties. If there shall be a settlement to which the
Indemnifying Party consents or a final judgment for the plaintiff in any
Proceeding, the defense of which the Indemnifying Party has elected to
assume, the Indemnifying Party shall indemnify the Indemnified Party
with respect to the settlement or
-33-
39
judgment. If the Indemnifying Party elects to assume and control the
defense or in the event of a Joint Defense Proceeding, the Indemnified
Party shall take all reasonable efforts necessary to assist the
Indemnifying Party in such defense.
(d) The Indemnifying Party shall pay the Indemnified Party in
immediately available funds promptly after the Indemnified Party
provides the Indemnifying Party with written notice of any Loss incurred
by the Indemnified Party hereunder but in any event not later than
thirty (30) days after Indemnifying Party received notice of a Loss.
(e) In addition to any other remedies, TransWestern shall be
entitled to set-off any amounts due or payable by Sellers to
TransWestern pursuant to, under or in connection with this Agreement
against any amount (including, without limitation, in respect of the
Seller Note) otherwise due or payable by TransWestern to Sellers under
this Agreement.
7.5 Arbitration.
(a) The arbitration procedure set forth below shall be the sole
and exclusive method for resolving and remedying claims for money
damages arising out of the provisions of Section 7.3 (the "Disputes"),
provided that, nothing in this Section 7.4 shall prohibit a party hereto
from instituting litigation to enforce any Final Determination or
availing itself of the remedies set forth in Section 7.2(c). The Parties
hereby agree and acknowledge that, except as otherwise provided in this
Section 7.4 or in the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time, the arbitration
procedures and any Final Determination hereunder shall be governed by,
and shall be enforced pursuant to the Uniform Arbitration Act and
applicable provisions of Michigan law.
(b) In the event that any Party asserts that there exists a
Dispute, such Party shall deliver a written notice to each other Party
involved therein specifying the nature of the asserted Dispute and
requesting a meeting to attempt to resolve the same. If no such
resolution is reached within ten business days after such delivery of
such notice, the Party delivering such notice of Dispute (the "Disputing
Person") may, within 45 business days after delivery of such notice,
commence arbitration hereunder by delivering to each other Party
involved therein a notice of arbitration (a "Notice of Arbitration") and
by filing a copy of such Notice of Arbitration with the Detroit,
Michigan office of the American Arbitration Association. Such Notice of
Arbitration shall specify the matters as to which arbitration is sought,
the nature of any Dispute, the claims of each Party to the arbitration
and shall specify the amount and nature of any damages, if any, sought
to be recovered as a result of any alleged claim, and any other matters
required by the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time to be included therein, if
any.
(c) Sellers, jointly, and TransWestern each shall select one
independent arbitrator expert in the subject matter of the Dispute (the
arbitrators so selected shall be referred to herein as "Sellers'
Arbitrator" and "TransWestern's Arbitrator," respectively). In the event
that either Party fails to select an independent arbitrator as set forth
herein within 20 days
-34-
40
from delivery of a Notice of Arbitration, then the matter shall be
resolved by the arbitrator selected by the other Party. Sellers'
Arbitrator and TransWestern's Arbitrator shall select a third
independent arbitrator expert in the subject matter of the dispute, and
the three arbitrators so selected shall resolve the matter according to
the procedures set forth in this Section 7.4. If Sellers' Arbitrator and
TransWestern's Arbitrator are unable to agree on a third arbitrator
within 20 days after their selection, Sellers' Arbitrator and
TransWestern's Arbitrator shall each prepare a list of three independent
arbitrators. Sellers' Arbitrator and TransWestern's Arbitrator shall
each have the opportunity to designate as objectionable and eliminate
one arbitrator from the other arbitrator's list within 7 days after
submission thereof, and the third arbitrator shall then be selected by
lot from the arbitrators remaining on the lists submitted by Sellers'
Arbitrator and TransWestern's Arbitrator.
(d) The arbitrator(s) selected pursuant to clause (c) will
determine the allocation of the costs and expenses of arbitration based
upon the percentage which the portion of the contested amount not
awarded to each Party bears to the amount actually contested by such
Party. For example, if TransWestern submits a claim for $1,000, and if
Sellers contest only $500 of the amount claimed by TransWestern, and if
the arbitrator(s) ultimately resolves the dispute by awarding
TransWestern $300 of the $500 contested, then the costs and expenses of
arbitration will be allocated 60% (i.e. 300 divided by 500) to Sellers
and 40% (i.e. 200 divided by 500) to TransWestern.
(e) The arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association as in effect
from time to time, except as otherwise set forth herein or as modified
by the agreement of all of the parties to this Agreement. The
arbitrator(s) shall so conduct the arbitration that a final result,
determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no
event later than 90 business days after the delivery of the Notice of
Arbitration nor later than 10 days following completion of the
arbitration. The Final Determination must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as the
case may be). The Final Determination shall be final and binding on all
parties and there shall be no appeal from or reexamination of the Final
Determination, except for fraud, perjury, evident partiality or
misconduct by an arbitrator prejudicing the rights of any Party and to
correct manifest clerical errors.
(f) TransWestern and Sellers may enforce any Final Determination
in any state or federal court having jurisdiction over the dispute. For
the purpose of any action or proceeding instituted with respect to any
Final Determination, each Party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of
process by registered mail or personal service and hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it
may have or hereafter have as to personal jurisdiction, the laying of
the venue of any such action or proceeding brought in any such court and
any claim that any such action or proceeding brought in such court has
been brought in an inconvenient forum.
-35-
41
(g) If any Party shall fail to pay the amount of any damages, if
any, assessed against it within ten (10) days of the delivery to such
Party of such Final Determination, the unpaid amount shall bear interest
from the date of such delivery at the lesser of (i) 18% and (ii) the
maximum rate permitted by applicable usury laws. Interest on any such
unpaid amount shall be compounded semi-annually, computed on the basis
of a 360-day year consisting of twelve 30-day months and shall be
payable on demand. In addition, such Party shall promptly reimburse the
other Party for any and all costs or expenses of any nature or kind
whatsoever (including but not limited to all attorneys' fees) incurred
in seeking to collect such damages or to enforce any Final
Determination.
7.6 Miscellaneous.
(a) Representations and Warranties. All of the representations
and warranties made by TransWestern in this Agreement and all of the
representations and warranties made by Sellers shall survive the
execution and delivery of this Agreement and consummation of the
transactions contemplated hereby, regardless of any investigation made
by any Party or on its behalf. Neither Party's participation in the
consummation of any transaction pursuant to this Agreement (or any
agreement contemplated hereby) nor any waiver of any condition to such
participation (including any condition that a representation or warranty
of any other Party be true and correct) will constitute a waiver by such
participating Party of any representation or warranty of any Party or
otherwise affect the survival of any such representation and warranty
which shall continue in full force and effect after the Closing.
(b) Press Releases and Announcements; Notice to Customers. All
press releases and other public announcements and all announcements to
Sellers' customers, suppliers, licensees or employees relating to the
transactions contemplated hereby (including with respect to any
termination of this Agreement pursuant to Article 6) shall be prepared
jointly by Sellers and TransWestern. Without in any way limiting the
generality of the foregoing, at the request of TransWestern, Sellers
shall assist in promptly notifying (in a manner in form and substance
mutually satisfactory to TransWestern and Sellers) each of its customers
and each other Person deemed by TransWestern to be an appropriate
recipient of such notice (i) that TransWestern will own and publish all
editions of the Directories as of the Closing Date and (ii) setting
forth such other information as TransWestern and Seller may reasonably
request to confirm or evidence the transfer of the Directories to
TransWestern. After the Closing until the Accounts Receivable
Measurement Date, TransWestern may use billing statements containing
Sellers' name in connection with its collection obligations under
Section 4.3 and to provide notice thereon of the change in billing
address resulting from the transactions contemplated herein.
(c) Further Transfers and Assurance. Each Party will execute and
deliver such other documents as the other Party may reasonably request
to effect, consummate, confirm or evidence the transfer to such other
Party of the Purchased Assets and any other transactions contemplated
hereby. Without limiting the generality of the foregoing, to the extent
there are any assets necessary or (in the opinion of TransWestern)
advisable to the ownership and publication of the Directories as
presently owned and published by Sellers
-36-
42
and as proposed to be owned and published by TransWestern that are not
transferred hereunder to TransWestern, Sellers will execute and deliver
such further instruments of conveyance and transfer and take such
additional action as may be required to transfer such assets to
TransWestern.
(d) Name and Logos of Parties. The Parties hereby agree that the
cover of the first edition of each Directory to be published after the
Closing shall, commencing with the 1999, 2000 Xxx Arbor, Ypsilanti &
Washentaw County Area Directory, be designed to reflect the names and
logos of each of TransWestern and Sellers and shall be produced in a
style and format reasonably acceptable to TransWestern and Sellers.
(e) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(f) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties
and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, that may have related in any
way to the subject matter hereof (including the letter agreement by
TransWestern to Universal Phone Books, Inc. dated September 23, 1998).
(g) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Parties hereto.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(i) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(j) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given (i) when delivered, if personally delivered, (ii) when receipt is
electronically confirmed, if faxed (with hard copy to follow via first
class mail, postage prepaid) or (iii) one day after deposit with a
reputable overnight courier, in each case addressed to the intended
recipient as set forth below:
-37-
43
If to Sellers: with a copy (which shall not constitute
notice) to:
Xx. X.X. Xxxx, III Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxxxxxxx Xx. 000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000 Post Office Xxx 000
Telecopy #: (000) 000-0000 Xxxxxxx, Xxxxxxxx 00000
Telecopy #: (000) 000-0000
and
Xxxx X. Xxxxxx, III
X.X. Xxx 00
Xxxxxxx, XX 00000
Telecopy #: (000) 000-0000
If to TransWestern: with a copy (which shall not constitute
notice) to:
TransWestern Publishing Company
0000 Xxxxxxxxxx Xxxx Xxxx. Xxxxxxxx & Xxxxx
Xxx Xxxxx, XX 00000 000 Xxxx Xxxxxxxx Xxxxx
Attn: Xxxxxxx Xxxxxx Xxxxxxx, XX 00000
Xxxx Xxxxxxx Attn: Xxxxx X. Xxxxxxxxxx, Esq.
Chief Financial Officer Telecopy #: (000) 000-0000
Telecopy #: (000) 000-0000
Any Party may change the address and/or telecopier number to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Party notice in the manner herein set forth.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF MICHIGAN,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION
OR RULE (WHETHER OF THE STATE OF MICHIGAN OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF MICHIGAN.
(l) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed
by each Party. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(m) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
-38-
44
term or provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that
any term or provision hereof is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or
area of the term or provision, to delete specific words or phrases, or
to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
(n) Expenses. Except as otherwise specifically provided herein,
Sellers and TransWestern each will bear its own costs and expenses
(including legal and broker fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
(o) Failure to Close by November 30, 1998. In the event that the
transactions contemplated herein do not close by November 30, 1998
solely by reason of TransWestern's failure to meet a prescribed material
closing condition, and if, and only if: (i) Sellers are not individually
or jointly in breach of any of the representations, warranties,
covenants or other of Sellers' requirements set forth or contemplated
herein, and (ii) Sellers have complied with each closing condition
prescribed herein as of such date, and each day during the Reimbursement
Period (as defined below), then TransWestern shall reimburse Sellers for
the deferred costs and expenses in the categories described on the
Pre-Paid Deferred Costs Schedule incurred from November 30, 1998 until
the sooner of (a) the Closing Date or (b) a termination of the Agreement
as allowed under Article Six (the "Reimbursement Period").
(p) Taxes; Recording Charges. All transfer, documentary, sales,
use, stamp, registration, conveyance, income, gains, value added or
other Taxes and fees arising out of the sale of the Purchased Assets or
otherwise incurred in connection with this Agreement or the consummation
of the transactions contemplated hereby and all charges for or in
connection with the recording of all of the documents and instruments
contemplated hereby shall be paid by Sellers.
(q) Construction. The Parties have jointly participated in the
negotiation and drafting of this Agreement. In the event of an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumptions or
burdens of proof shall arise favoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to
any federal, state, local, or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. Nothing in the disclosure
schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the disclosure schedules
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the
-39-
45
fact that there exists another representation, warranty, or covenant
relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from
or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(r) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(s) Number and Gender. Each defined term used in this Agreement
has a comparable meaning when used in its plural or singular form. Each
gender-specific term used herein has a comparable meaning whether used
in a masculine, feminine or gender-neutral form.
* * * * *
-40-
46
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
TRANSWESTERN PUBLISHING COMPANY LLC
By: TransWestern Communications Company Inc.,
its Manager
By: /s/ XXXXXXX XXXXXX
-----------------------------------
Its: CEO and President
---------------------------------
SELLERS:
UNIVERSAL PHONE BOOKS, INC.
By: /s/ X. X. XXXX, III
-----------------------------------
Its: President
----------------------------------
UNIVERSAL PHONE BOOKS OF JACKSON, INC.
By: /s/ X. X. XXXX, III
-----------------------------------
Its: President
----------------------------------
Agreed to and acknowledged this day:
/s/ X. X. XXXX, III
-------------------------------
X.X. XXXX, III
(Signature Page to Asset Purchase Agreement)
47
UNSECURED PROMISSORY NOTE
$2,000,000 November 30, 0000
Xxx Xxxxx, Xxxxxxxxxx
FOR VALUE RECEIVED, TransWestern Publishing Company LLC ("TransWestern"),
hereby promises to pay to the joint order of Universal Phone Books, Inc. and
Universal Phone Books of Jackson, Inc. ("Payee") on May 31, 2000, the original
principal sum of Two Million Dollars ($2,000,000), as may be adjusted pursuant
to the terms hereof, together with interest thereon calculated from the date
hereof.
This Promissory Note (this is being issued pursuant to an Asset Purchase
Agreement, dated as of November 20, 1998 (as amended and modified from time to
time, the "Purchase Agreement"), between TransWestern, the Payee and the
majority shareholder of the Payee, and this Note is the unsecured "Seller Note"
referred to in, and being issued to the Holder pursuant to, Section 2 of the
Purchase Agreement. The Purchase Agreement contains terms governing the rights
of the Payee, and all provisions of the Purchase Agreement are hereby
incorporated herein in full by reference. Section 2 of the Purchase Agreement
provides for adjustment to and prepayment of the principal amount of this Note
pursuant to the terms set forth therein.
Interest on the unpaid principal amount of this Note will accrue from and
including the date hereof until and including the date such principal is paid,
at the rate of the Prime Rate of interest (as published from time to time in the
Wall Street Journal) per annum or if lower, the highest rate permitted by
applicable law.
The principal indebtedness represented by this Note (as adjusted pursuant
to the Purchase Agreement) may be prepaid, in whole or in part, without the
prior written consent of the Payee at any time and from time to time and
without premium or penalty. Upon prepayment of this Note, TransWestern shall
simultaneously pay any and all interest accrued on this Note to the date of
such prepayment. In the event of a Sale of TransWestern, this Note shall become
immediately due and payable in full.
For purposes of this Note, (i) "Sale of TransWestern" means the sale of
TransWestern to an Independent Third Party or affiliated group of Independent
Third Parties pursuant to which such party or parties acquire (A) a majority of
the voting membership interests of TransWestern (whether by merger,
consolidation or sale or transfer of the TransWestern's capital stock) or (B)
all or substantially all of the TransWestern's assets determined on a
consolidated basis and (ii) "Independent Third Party" means any person, who
immediately prior to the contemplated transaction, does not own (and its
affiliates do not own), in excess of 5% of TransWestern's membership interests
on a fully-diluted basis, who is not controlling, controlled by or under common
control with any such 5% owner of the TransWestern's membership interests and
who is not the spouse or descendant (by birth or adoption) of any such 5%
owner of the TransWestern's membership interests.
48
TransWestern agrees to pay all costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements, costs of collection
and court costs, incurred or paid by the Payee in connection with the
enforcement of the Payee's rights under this Note. Except as otherwise
expressly provided herein, the provisions of this Note may be amended and
TransWestern may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if TransWestern has obtained the
written consent of the Payee.
Neither TransWestern nor the Payee may assign any of its rights or
obligations hereunder without the consent of the other Person.
After all principal and accrued interest at any time owed on this Note has
been paid in full, this Note shall be surrendered to TransWestern for
cancellation and shall not be reissued.
If any payment is due, or any time period for giving notice or taking
action expires, on a day which is a Saturday, Sunday or legal holiday in the
States of Michigan or California, the payment shall be due and payable on, and
the time period shall automatically be extended to, the next business day
immediately following such Saturday, Sunday or legal holiday, and interest
shall continue to accrue at the required rate hereunder until any such payment
is made.
This Note shall be governed by the law of the State of Michigan.
*****
49
IN WITNESS WHEREOF, the undersigned has executed this Unsecured Promissory
Note as of the date first written above.
TRANSWESTERN PUBLISHING COMPANY LLC
By: TransWestern Communications Company, Inc.
Its: sole manager
By: /s/ [SIG]
----------------------------------------
Its: V.P.-CFO, Asst. Sec'y
---------------------------------------
50
EXHIBIT A
(PRO FORMA)
SUMMARY OF COSTS ADVANCED
Xxxxxxx Xxx Arbor Totals
COSTS ELIGIBLE FOR REIMBURSEMENT
PREPAID DIRECT COSTS 299,067 519,337 818,404
PREPAID DEFERRED COSTS 43,545 97,298 140,843
------- ------- -------
SUBTOTAL 342,612 616,635 959,247
ESTIMATED DEPOSIT ON SALES 190,095 197,412 387,507
------- ------- -------
ESTIMATED AMOUNT DUE UNIVERSAL 152,517 419,223 571,740
======= ======= =======
51
RECEIVABLES SCHEDULE
Estimated FISCAL YEAR RECEIVABLES
as of November 30, 1998 $1,023,615.91
Less BAD DEBT RESERVE $ (408,000.00)
Plus ALL ADJUSTMENTS AND WRITE OFFS
as of November 30, 1998 $ 276,288.20
-------------
Estimated NET COLLECTION AMOUNT
as of November 30, 1998 $ 891,904.11
52
PRE-PAID DEFERRED COSTS
SUPPORTING SCHEDULE
JACKSON 1999-2000 DEPARTMENT 32
Actual Estimate
Thru November
10/31/98 1998 Total
---------------------------------
SALES AIDS MATERIALS 2,956 1,580 4,536
TRAINING MATERIAL 0 0 0
CONTRACT LABOR 0 0 0
APPOINTMENT SETTERS 9,054 10,000 19,054
NATIONAL SALES 1,645 1,600 3,245
MARKETING 9,456 0 9,456
EQUIPMENT LEASE 0 0 0
OFFICE SUPPLIES 427 181 608
POSTAGE & FREIGHT 11 7 18
RENT-OFFICE 840 840 1,680
SALARIES & WAGES-SALES SEC. 1,402 1,400 2,802
PROPERTY TAXES 0 0 0
TELEPHONE & FAX 1,091 1,055 2,146
---------------------------------
26,882 16,663 43,545
=================================
SUPPORTING SCHEDULE
XXX ARBOR 1999-2000 DEPARTMENT 31
SALES AIDS MATERIALS 6,951 1,308 8,259
TRAINING MATERIAL 0 0 0
CONTRACT LABOR 73 0 73
APPOINTMENT SETTERS 20,716 10,000 30,716
NATIONAL SALES 4,501 1,600 6,101
MARKETING 30,793 0 30,793
EQUIPMENT LEASE 1,141 196 1,337
OFFICE SUPPLIES 1,778 270 2,048
POSTAGE & FREIGHT 590 200 790
RENT-OFFICE 6,230 1,571 7,801
SALARIES & WAGES-SALES SEC. 2,502 1,800 4,302
PROPERTY TAXES 000 000 000
TELEPHONE & FAX 3,794 998 4,792
---------------------------------
79,212 18,086 97,298
=================================
53
PRE-PAID DIRECT COSTS SCHEDULE
SUPPORTING SCHEDULE
JACKSON 1999-2000 DEPARTMENT 32
Actual Estimate
Thru November
10/31/98 1998 Total
---------------------------------------
DISTRIBUTION-CONTRACTOR 0 1,587 1,587
PRINTING COSTS-TEXT PRINTER 0 0 0
PRODUCTION-SALARY & WAGE 0 0 0
PRODUCTION COSTS-IN HOUSE 12,119 14,000 26,119
TALX-YELLOW 0 0 0
WHITE PAGES 0 0 0
TALX-WHITE 0 0 0
TALKING PAGES 2,920 2,342 5,262
AUTO ALLOWANCE & EXP.-MGMT 1,125 0 1,125
AWARDS & INCENTIVES 1,623 500 2,123
COMMISSIONS-SALESPERSON 109,114 76,000 185,114
PER DIEM-SALES REPS 330 360 690
SALES-ADMINISTRATIVE 10,921 11,000 21,921
SALARIES-MANAGER 3,192 4,788 7,980
SALARY & WAGE-TRAINING 9,000 2,700 11,700
TAXES & FRINGE 20,370 15,076 35,446
---------------------------------------
170,714 128,353 299,067
=======================================
SUPPORTING SCHEDULE
XXX ARBOR 1999-2000 DEPARTMENT 31
DISTRIBUTION-CONTRACTOR 3,263 1,587 4,850
PRINTING COSTS-TEXT PRINTER 1,540 0 1,540
PRODUCTION COSTS-IN HOUSE 36,034 14,000 50,034
PRODUCTION-SALARY & WAGE 0 0 0
TALX-YELLOW 0 0 0
WHITE PAGES 18,390 0 18,390
TALX-WHITE 0 0 0
TALKING PAGES 3,547 2,423 5,970
AUTO ALLOWANCE & EXP.-MGMT 2,250 450 2,700
AWARDS & INCENTIVES 800 1,700 2,500
COMMISSIONS-SALESPERSON 205,569 67,050 272,619
PER DIEM-SALES REPS 2,060 929 2,989
SALES-ADMINISTRATIVE 32,466 11,000 43,466
LODGING 42,724 3,683 49,407
SALARY TRAINING 11,860 4,680 16,540
SALARIES-MANAGER 0 0 0
SALARY & WAGE 0 0 0
TAXES & FRINGE 36,275 12,057 48,332
---------------------------------------
399,778 119,559 519,337
=======================================
54
CONTRACTS SCHEDULE
(Other assumed contracts)
1. Quebecor Printing Directory Sales Corporation, formerly known
as NADCO Sales Corporation - printing.
2. Market Distribution Specialists, Inc. - provides distribution
services on a book-by-book basis, contract expired July 31, 1998.
3. Community Newspapers - distribution of 1998 Lansing Directory.
4. IT Networks - talking pages.
5. Maintenance contracts on copiers.
6. Safesys, Inc. - building security.
7. TALKS (formerly EKI) - data entry services. No written
contractual arrangement.
8. Xxxxxx Service - trash collection. May be terminated at any
time.
9. License Agreement with Ameritech - white page listings.
10. License Agreement with General Telephone - white page listings.
55
ASSUMED LEASE SCHEDULE
1. Pitney Xxxxx Credit Corporation - mail machine with scale and
three postage meters.
2. 000 X. Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxx - lease of space for
telephone relay. Rent of $100.00 per month. Extension of original lease expired
September 15, 1998 and continues on a month-to-month basis.
3. 2500 Packard, Ann Arbor, Michigan - Xxx Arbor office. Three
year extension of the original lease commencing August 1, 1998 through July 31,
2001, with a monthly rental of $1,571.50 for the first year; $1,627.62 for the
second year; and $1,683.75 for the final year of the lease with the tenant
having the right to terminate the lease effective either July 31, 1999 or July
31, 2000 upon 120 days written notice to the landlord.
4. 0000 Xxxxxxx Xxx, Xxxxxx 0 and 4, Saginaw, Michigan - Saginaw
office. Five year term commencing December 1, 1997, with a monthly rental of
$1,250 for the first year; $1,350 for the second year; $1,425 for the third
year; $1,500 for the fourth and fifth years.
5. 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxxxxx - Lansing
office. Four year term commencing October 1, 1998, with rent of $300 per month
subject to an annual cost of living adjustment.
6. 0 Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxx - Xxxxxxx office. New one
year lease between KAPB, L.L.C. and TransWestern Publishing Company, L.L.C. with
a monthly rental of $5,450 plus payment of all utilities, insurance and real
estate taxes by the tenant.
7. AT&T - telephone system for each of the offices - five separate
leases, four of which have 19 months remaining and one with 24 months remaining.
8. IKON Office Solutions - Cannon NP3050 copier for Xxx Arbor
office. Lease purchase with $1.00 buyout - 12 month lease commencing in
January, 1998.
9. IKON Office Solutions - Copier for Saginaw office. Lease
purchase with $1.00 buyout - 12 month lease commencing March, 1998.
56
FIXED ASSET SCHEDULE
# 1-COMPUTERS
1 ACT 386SX COMPUTERS (2)
1 PRU 1200 LXT PRINTER
1 HIGH SPEED PRINTER & MODEM
1 MIDMICH MICORO MAC COMPUTERS #950
1 COMPUTER SELLER MODEM
1 VARIOUS COMPUTERS
1 MAC MALL EQUIPMENT #6100
2 MAC MALL EQUIPMENT #6100
4 MAC MALL EQUIPMENT #6100
1 COMPUTER DRIVE
4 HEWLETT PACKARD 560C PRINTER
1 4MB MEMORY FOR APPLE XXX
0 XX XXXXX XXX XXX XX
0 XX-0000X PRO PHOTO MODULE-COLOR SCANNER
1 DIAD COMPUTER
1 1MB CACHE FOR GRAPHICS
1 GRAPHICS HARDWARE CLUBMAC
1 APPLE COMPUTER OR GRAPHICS-8500
1 GRAPHICS MONITOR CDW COMPUTER
1 GRAPHICS HARDWARE-POWERWAVE 604
1 TAPE BACK UP SYSTEM
1 COMPUTER XXXXXX OFFICE
1 20 MEG PRINTER, PRINTEK DEMO
1 BUICK LeSABRE
1 PEN 180 PRO
# 2-COPIERS
2 CANON XX-0000 XXXXXX
2 BROTHER 1250
4 BROTHER 1250 FAX
1 CAPITAL COMMUNICATIONS COPIER
4 MINOLTA FP 3170
3 BROTHER FAX
1 FAX MACHINE XXXXX
# 3-OFFICE EQUIPMENT
1 STEELCASE FILES
1 SECRETARIAL DESK
1 COMPUTER DESK
57
2 VARIOUS FURNITURE
3 VARIOUS FURNITURE
1 DESK
1 5 SWIVEL ARM CHAIRS
1 OVERHEAD PROJECTOR
1 FILE WITH LOCK
1 CABINET
1 FILE CABINET
1 FILE CABINET
1 OAK TABLE
1 PRINTER STAND
1 DRY ERASE BOARDS
1 2 FILE CABINETS
1 FOLDING TABLE
1 2 ROUND TABLES
1 3 FOLDING TABLES
1 LATERAL FILES
1 GREY PANELS
1 4 FOLDING TABLES
1 PUTTY FILE
1 PALLET XXXX
1 3 FILES
1 TABLE COMPUTER
1 BOOKCASE
1 3 FOLDING TABLES 30X60
1 9 TABLES
1 3 BOOKCASES
1 TABLE 36X72
1 2 CALCULATORS
1 FILE CABINET
1 2 FILE CABINETS
1 2 DESKS & HUTCHES
1 GREASE BOARD
1 CHAIRS SWIVEL
1 DESK WITH HUTCH
1 PRINTER STAND
1 4 VACUUM CLEANERS
4 8 CHAIRS & CONF TABLE
1 MAC WAREHOUSE COMPUTER EQUIPMENT
SEVERAL PC'S AND MAC'S not recorded on above list as they were expensed when
purchased. We have a total of 18 PC's, 2 PC servers, 8 Mac's and 1 Mac server.
Additional purchases of equipment made during the move to 0 Xxxxxxxxx Xxx in
the months of August, September and October of Desks, tables and chairs. These
were expensed to "Moving Costs on our records. Detail is below.
58
2 FIVE DRAWER CABINETS
1 SIDE CHAIR
2 HON SIDE CHAIRS
8 48X60 PANELS
3 36X60 PANELS
6 24X60 PANELS
2 36" OVERHEADS
HON TASK CHAIR
HON SIDE CHAIR
ALL STEEL HUTCH
XXXXXX BOOKCASE
96" FOLDING TABLE
ALL STEEL LATERAL FILE
HON VERTICAL LOCK
BLACK TWO DRAWER VERTICAL FILE
GREEN STORAGE CABINET
6 30X60 DOUBLE PEDESTAL DESK
12 TASK CHAIRS
4X8 DRY ERASE BOARD
XXXXXXXX HICKY FIVE DRAWER FILE
STEELCASE SINGLE PEDESTAL DESK
STEELCASE DESK
STEELCASE DOUBLE PEDESTAL DESK
UNITED SWIVEL CHAIR
DESK
COMPUTER TABLE
8 SIDE CHAIRS
NATIONAL CONFERENCE TABLE
OVAL CONFERENCE TABLE
8 SLED BASE STACKING CHAIRS
UNITED SWIVEL CHAIR
THREE DRAWER LATERAL FILE
STEELCASE TASK CHAIR
59
ASSUMED LIABILITY SCHEDULE
Liabilities to be assumed by TransWestern Publishing Company, L.L.C:
1. Accrued vacation pay for sellers employees hired by TransWestern.
2. Personal property taxes for the City of Xxxxxxx, Xxxxxxxx Township,
Saginaw, Xxx Arbor and Lansing due February 14, 1999 and thereafter.
3. Sales tax on any automobiles included on the Fixed Asset Schedule.
60
PURCHASE PRICE ALLOCATION SCHEDULE
Universal Phone Books, Inc.
Goodwill $9,800,000
Fixed Assets $ 67,500
----------
Total: $9,867,500
Universal Phone Books of Xxxxxxx, Inc.
Goodwill $5,500,000
----------
Total: $5,500,000
61
RECENT EVENTS SCHEDULES
None.
62
REAL PROPERTY SCHEDULE
1. Xxx Arbor office - see Assumed Lease Schedule
2. Saginaw office - see Assumed Lease Schedule
3. Lansing office - see Assumed Lease Schedule
4. Freeland office - see Assumed Lease Schedule
5. Xxxxxxx office - see Assumed Lease Schedule
63
LITIGATION SCHEDULE
None, other than routine collection actions regarding Customer Contacts.
64
TAXES SCHEDULE
None.
65
REAL PROPERTY SCHEDULE
1. Xxx Arbor Office - see Assumed Lease Schedule
2. Saginaw office - see Assumed Lease Schedule
3. Lansing office - see Assumed Lease Schedule
4. Freeland office - see Assumed Lease Schedule
5. Xxxxxxx office - see Assumed Lease Schedule
66
EMPLOYEE SCHEDULE
Xxxxxx, Xxxxxxxx
Xxxxxx, Xxxxxxx X.
Xxxxxxxxx, Xxxxx
Xxxxx, Xxxxx X.
Xxxxxxx, Xxxxxxx X.
Xxxxx, Xxxx X.
Xxxxxxx, Xxxxx X.
Xxxxx, Xxxxx X.
Xxxxxxxxxx, Xxxxx X.
Xxxx, Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx X.
Xxxxxxxx, Xxxxxxx X.
Heavy, Xxxxx X.
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx X.
Xxxxx, Xx., Xxxxxx X.
Xxxxxx, Xxxxxxxx
Xxxxxxxxxx, Xxxxxxx X.
Xxxxxx, Xxxx X.
Xxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxx
XxXxxx, Xxxxxxx X.
Xxxxxxxx, Xxxxxxxx X.
Xxxxxx, Xxxxxxxxxx X.
Xxxxx, Xxxxxx
Xxxxx, Xxxxx X.
Xxxxxx, Xxxx X.
Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxx X.
Xxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxxxx X.
Xxxx, Xxxxxxx
Xxxxxx, Xxxxxx X.
Xxxxxxxxx, Xxxxxx X.
Xxxxxxxx, Xxxxxx
Xxxx, Xxxxx
Xxxxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx X.
