EXHIBIT 2.1
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PURCHASE AND CONTRIBUTION AGREEMENT
By and Among
WEIDER HEALTH AND FITNESS,
WEIDER HEALTH AND FITNESS, LLC,
WEIDER INTERACTIVE NETWORKS, INC.,
WEIDER PUBLICATIONS, LLC,
EMP GROUP L.L.C.
and
AMERICAN MEDIA OPERATIONS, INC.
Dated as of November 26, 2002
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS............................................................................................2
Section 1.1. Certain Definitions....................................................................2
Section 1.2. Terms Generally.......................................................................13
ARTICLE II. PURCHASE AND SALE OF THE TRANSFERRED UNITS AND CONTRIBUTION OF RETAINED LLC UNITS....................13
Section 2.1. Contribution..........................................................................13
Section 2.2. Mergers...............................................................................13
Section 2.3. Purchase and Sale of the Transferred Units and Contribution of Retained LLC
Units.................................................................................14
Section 2.4. Purchase Price and Non-Compete Payments; Contribution.................................14
Section 2.5. Post-Signing Purchase Price Adjustment................................................17
Section 2.6. Closing...............................................................................17
Section 2.7. Closing Deliveries....................................................................18
Section 2.8. Satisfaction of Conditions............................................................19
Section 2.9. Transfer Taxes........................................................................19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF WHF PARENT AND THE SELLERS........................................19
Section 3.1. Organization and Authority of WHF Parent, the Sellers and the Company.................19
Section 3.2. Noncontravention......................................................................20
Section 3.3. Capitalization and LLC Units; Title...................................................21
Section 3.4. Subsidiaries of the Company...........................................................21
Section 3.5. Government Authorizations.............................................................22
Section 3.6. WPI Financial Statements..............................................................23
Section 3.7. Undisclosed Liabilities...............................................................23
Section 3.8. Absence of Certain Changes............................................................23
Section 3.9. Tax Matters...........................................................................24
Section 3.10. Property 24
Section 3.11. Intellectual Property.................................................................25
Section 3.12. Environmental Matters.................................................................26
Section 3.13. Contracts.............................................................................27
Section 3.14. Insurance.............................................................................28
Section 3.15. Litigation............................................................................28
Section 3.16. Employees.............................................................................29
Section 3.17. Employee Benefits.....................................................................29
Section 3.18. Legal Compliance......................................................................30
Section 3.19. Brokers' Fees.........................................................................30
Section 3.20. Entire Business.......................................................................30
Section 3.21. Condition of Assets...................................................................30
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Section 3.22. Affiliate Arrangements................................................................31
Section 3.23. Solvency 31
Section 3.24. Certain Information...................................................................31
Section 3.25. Investment............................................................................32
Section 3.26. Financial Condition...................................................................32
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND EMP......................................................32
Section 4.1. Organization..........................................................................32
Section 4.2. Authorization.........................................................................33
Section 4.3. Noncontravention......................................................................33
Section 4.4. Government Authorizations.............................................................33
Section 4.5. Investment............................................................................33
Section 4.6. Litigation............................................................................34
Section 4.7. Brokers' Fees.........................................................................34
Section 4.8. Information...........................................................................34
Section 4.9. Capitalization and EMP Sold Units; Title..............................................34
Section 4.10. Subsidiaries of EMP...................................................................35
Section 4.11. Tax Treatment.........................................................................35
Section 4.12. Debt Financing........................................................................35
Section 4.13. Equity Financing......................................................................35
Section 4.14. Valuation.............................................................................36
ARTICLE V. COVENANTS.............................................................................................36
Section 5.1. Conduct of the Business...............................................................36
Section 5.2. Access to Information; Confidentiality................................................38
Section 5.3. Reasonable Best Efforts...............................................................39
Section 5.4. HSR Act Compliance; Government Approvals..............................................40
Section 5.5. Public Announcements..................................................................40
Section 5.6. Notification of Certain Matters.......................................................41
Section 5.7. Employee Matters......................................................................41
Section 5.8. Post-Closing Access; Preservation of Records..........................................42
Section 5.9. Tax Matters...........................................................................43
Section 5.10. Financing Cooperation.................................................................43
Section 5.11. Negotiations with Third Parties.......................................................44
Section 5.12. Affiliate Transactions................................................................44
Section 5.13. Interim Financial Statements and Reports..............................................45
Section 5.14. Non-Competition.......................................................................45
Section 5.15. Further Assurances....................................................................46
Section 5.16. Closing Transactions..................................................................46
Section 5.17. Financing.............................................................................46
Section 5.18. IFBB Contract.........................................................................46
Section 5.19. Branding Agreement....................................................................47
Section 5.20. Debt Payoff...........................................................................47
Section 5.21. Insurance.............................................................................48
Section 5.22. Registered Intellectual Property......................................................48
Section 5.23. Retained LLC Unit Certificate.........................................................48
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Section 5.24. Financial Condition...................................................................48
Section 5.25. Board Right...........................................................................48
ARTICLE VI. CONDITIONS TO CLOSING................................................................................49
Section 6.1. Conditions Precedent to Obligations of Buyer and the Sellers..........................49
Section 6.2. Conditions Precedent to Obligation of the Sellers.....................................49
Section 6.3. Conditions Precedent to Obligations of Buyer..........................................50
ARTICLE VII. INDEMNIFICATION.....................................................................................51
Section 7.1. General Indemnification by WHF Parent and the Sellers.................................51
Section 7.2. General Indemnification by Buyer and EMP..............................................51
Section 7.3. Tax Indemnification...................................................................52
Section 7.4. Certain Limitations...................................................................53
Section 7.5. Indemnification Procedures............................................................55
Section 7.6. Tax Treatment of Indemnification Payments.............................................56
Section 7.7. Exclusive Remedy......................................................................56
Section 7.8. Mitigation............................................................................57
ARTICLE VIII. TERMINATION........................................................................................57
Section 8.1. Termination Events....................................................................57
Section 8.2. Effect of Termination.................................................................58
ARTICLE IX. MISCELLANEOUS........................................................................................58
Section 9.1. Parties in Interest...................................................................58
Section 9.2. Assignment............................................................................58
Section 9.3. Notices...............................................................................58
Section 9.4. Amendments and Waivers................................................................60
Section 9.5. Exhibits and Disclosure Schedule......................................................60
Section 9.6. Headings..............................................................................61
Section 9.7. Construction..........................................................................61
Section 9.8. No Other Representations or Warranties................................................61
Section 9.9. Entire Agreement......................................................................62
Section 9.10. Severability..........................................................................62
Section 9.11. Expenses 62
Section 9.12. Governing Law.........................................................................62
Section 9.13. Consent to Jurisdiction; Waiver of Jury Trial.........................................63
Section 9.14. Counterparts..........................................................................63
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PURCHASE AND CONTRIBUTION AGREEMENT
Purchase and Contribution Agreement (this "Agreement") dated
as of November 26, 2002 by and among Weider Health and Fitness, a Nevada
corporation ("WHF Parent"), Weider Interactive Networks, Inc., a Delaware
corporation ("WIN"), Weider Health and Fitness, LLC, a Delaware limited
liability company ("WHF") (each of WHF and WIN, a "Seller" and, collectively,
the "Sellers"), Weider Publications, LLC, a Delaware limited liability company
(the "Company"), EMP Group L.L.C., a Delaware limited liability company ("EMP"),
American Media Operations, Inc., a Delaware corporation ("Buyer"), and, with
respect to Section 5.14 and Article IX of this Agreement, Xxx Xxxxxx, Xxx Xxxxxx
and Xxxx Xxxxxx. The Sellers, the Company, WHF Parent, EMP, Buyer, Xxx Xxxxxx,
Xxx Xxxxxx and Xxxx Xxxxxx are referred to collectively herein as the "Parties."
WITNESSETH:
WHEREAS, WPI (as defined herein) and WIN are engaged in the
business of publishing, distributing and providing services with respect to
certain healthy living or fitness-related publications and conducting other
activities related thereto (the "Business");
WHEREAS, the Sellers desire to sell to Buyer, and Buyer
desires to acquire from the Sellers, the Business;
WHEREAS, the Sellers have formed the Company to, among other
things, operate the Business;
WHEREAS, prior to the Closing (as defined herein), WPI and WIN
will contribute to the Company as a capital contribution all of the Contributed
Assets (as defined herein) and the Company will assume the Assumed Liabilities
(as defined herein) in exchange for receipt by WPI and WIN of the LLC Units (as
defined herein), on the terms set forth in the Contribution Agreement (as
defined herein);
WHEREAS, WHF Parent has formed WHF as a wholly owned
subsidiary;
WHEREAS, prior to the Closing and the WPI Merger (as defined
herein), Weider Holdings (International) Ltd., a Nevada corporation, shall be
merged with and into WPI with WPI surviving (the "Weider Holdings Merger");
WHEREAS, prior to the Closing, WPI shall be merged with and
into WHF with WHF surviving (the "WPI Merger"), and all of the LLC Units to be
received by WPI pursuant the Contribution Agreement shall be transferred to WHF
by operation of law;
WHEREAS, the Sellers desire to sell to Buyer, and Buyer
desires to purchase from the Sellers, all of the Transferred Units (as defined
herein), on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, each of the Sellers desires to contribute its
retained LLC Units ("Retained LLC Units") to EMP for an initial capital account
balance of EMP equal to the
Contribution Amount (as defined herein) and the EMP Sold Units (as defined
herein), on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and promises herein made, and in consideration of the
representations and warranties, herein contained, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Parties hereto, intending to become legally bound, hereby
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement,
the following terms shall have the following meanings:
"ABC" has the meaning set forth in Section 3.24(a).
"Acquired Subsidiaries" means Weider Publications Group Ltd, a
company organized pursuant to the laws of the United Kingdom ("WPG"), Weider
Publishing Ltd., a company organized pursuant to the laws of the United Kingdom
("WPL"), Weider Publishing Italia SRL, an Italian company ("WP Italia"), SYL
Communications, a California corporation ("SYL"), and Media Fit SARL, a French
company ("MediaFit") taken together.
"Acquired Subsidiaries Shares" has the meaning set forth in
Section 3.4.
"Acquisition Proposal" has the meaning set forth in Section
5.11.
"Action" means any action, suit, arbitration, alternative
dispute resolution mechanism or proceeding by or before any court, other
Governmental Authority or arbitration or dispute resolution body.
"Actual LTM EBITDA" means the EBITDA of the Business for the
12-month period ending September 30, 2002, as derived from the Reviewed
Financial Statements (excluding the following items: costs and expenses relating
to the transactions contemplated hereby and the related sale process (including
the fees and expenses of Xxxxxx & Xxxxxxx and Xxxxxxxxxx, Inc. and employee
bonuses)) and calculated in a manner consistent with the calculation of Target
LTM EBITDA.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliate Transactions" has the meaning set forth in Section
3.22.
"Agreement" means this Purchase Agreement, including all
Exhibits and Schedules hereto (including the Disclosure Schedule), as the same
may be amended, modified or supplemented from time to time in accordance with
its terms.
"Allocation Schedule" has the meaning set forth in Section
5.9(a).
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"Assumed Liabilities" means the WPI Liabilities (other than
the WPI Excluded Liabilities) and the WIN Liabilities (other than the WIN
Excluded Liabilities).
"Basket" has the meaning set forth in Section 7.4(b).
"Branding Products" has the meaning set forth in Section 5.19.
"Business" has the meaning set forth in the recitals to this
Agreement.
"Business Day" means any day other than Saturday, Sunday or
any other day on which banking institutions in
New York or California are not
open for the transaction of normal banking business.
"Business Intellectual Property" means all Intellectual
Property owned or held by WPI or WIN and used in the Business, including without
limitation those items listed or described in Section 3.11 of the Disclosure
Schedule.
"Business IP Licenses" means all licenses, license agreements,
covenants, grants of permission, contracts, agreements and the like relating to
the use of Business Intellectual Property by WPI, WIN, the Acquired Subsidiaries
or third parties.
"Buyer" has the meaning set forth in the preamble to this
Agreement.
"Buyer Group" has the meaning set forth in Section 7.1.
"Buyer Plans" has the meaning set forth in Section 5.7(e).
"Cash Percentage" means 100% less the Retained LLC Unit
Percentage.
"Closing" has the meaning set forth in Section 2.6.
"Closing Balance Sheet" has the meaning set forth in Section
2.4(c).
"Closing Date" means the date the Closing occurs pursuant to
Section 2.6.
"Closing Date Payment Amount" has the meaning set forth in
Section 2.4(a)(i).
"Closing Date Schedule Supplement" has the meaning set forth
in Section 9.5(c).
"Closing Working Capital" has the meaning set forth in Section
2.4(c).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company DC Plan" has the meaning set forth in Section 5.7(b).
"Company Property" has the meaning set forth in Section
3.10(a).
"Competing Business" has the meaning set forth in Section
5.14.
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"Confidentiality Agreement" means the Confidentiality
Agreement dated September 13, 2002 between Evercore Capital Partners L.P., on
behalf of American Media, Inc. and WPI.
"Consents" means consents, approvals, exemptions, waivers,
authorizations, filings, registrations and notifications.
"Continued Employees" has the meaning set forth in Section
5.7(a).
"Contributed Assets" means the WPI Assets and the WIN Assets
(as each such term is defined in the Contribution Agreement).
"Contribution" means the contribution of the Contributed
Assets and the assumption of the Assumed Liabilities pursuant to the
Contribution Agreement.
"Contribution Agreement" means the Asset Contribution
Agreement to be entered into by the Company, WPI and WIN in substantially the
form attached hereto as Exhibit A, as the same may be amended, modified or
supplemented from time to time in accordance with its terms.
"Contribution Amount" means an amount equal to (x) the
Retained LLC Unit Percentage multiplied by (y) $340,000,000, subject to
adjustment as set forth in Sections 2.4 and 2.5.
"Control" means, with respect to any Person, the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or partnership interests, by contract or otherwise.
"CPA Firm" has the meaning set forth in Section 2.4(e).
"Damages" means all losses, Liabilities, claims, damages,
payments, Taxes, Liens, costs and expenses (including costs and expenses of
Actions, amounts paid in connection with any assessments, judgments or
settlements relating thereto, interest and penalties recovered by a third party
with respect thereto and out-of pocket expenses and reasonable attorneys' fees
and expenses reasonably incurred in defending against any such Actions or in
enforcing an Indemnified Party's rights hereunder).
"Debt Commitment Letters" has the meaning set forth in Section
4.12.
"Debt Financing" has the meaning set forth in Section 4.12.
"Disclosure Schedule" means the disclosure schedule delivered
by the Sellers to Buyer on the date hereof, as may be supplemented in accordance
with the terms hereof.
"EBITDA" means, with respect to any Person for any period,
earnings before interest, income taxes, depreciation and amortization as each
such item is calculated in accordance with GAAP.
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"EBITDA Difference" means, in the event Actual LTM EBITDA is
less than Target LTM EBITDA, the number calculated by subtracting Actual LTM
EBITDA from Target LTM EBITDA.
"EBITDA Multiplier" means 12.99.
"EMP" has the meaning set forth in the preamble to this
Agreement.
"EMP LLC Agreement" means the Third Amended and Restated
Limited Liability Company Agreement and Investors Rights Agreement of EMP GROUP
L.L.C., a Delaware limited liability company, dated as of February 13, 2002, as
amended, by and among Evercore Capital Partners L.P., a Delaware limited
partnership, Circulation, LLC, a Connecticut limited liability company, X.X.
Xxxxxx Partners (BHCA), L.P. (formerly Chase Equity Associates, L.P.), a
California limited partnership, Tandem Journalism Investments, L.P., a Delaware
limited partnership, BG Media Investors L.P., a Delaware limited partnership,
Xxxxx X. Xxxxxx, American Media, Inc., a Delaware corporation, and the other
parties signatory thereto.
"EMP Sold Units" means that number of EMP Units to be issued
by EMP to the Sellers on the terms set forth on Schedule A.
"EMP Units" means the Class H Units of EMP, the terms of which
are set forth in the EMP LLC Agreement.
"Employee Benefit Plan" means all "employee benefit plans," as
defined in ERISA Section 3(3), including, without limitation, multiemployer
plans within the meaning of ERISA Section 3(37), and any stock purchase, stock
option, severance pay, employment, change-in-control, fringe benefit, collective
bargaining, vacation pay, company awards, salary continuation, sick leave,
excess benefit, supplemental retirement, deferred compensation, bonus or other
incentive compensation, stock purchase, life insurance, and all other employee
benefit plans, contracts, programs, policies or other arrangements, whether or
not subject to ERISA, whether formal or informal, material oral or written,
under which any present or former employee of the Business has any present or
future right to benefits sponsored or maintained by the Sellers or the Acquired
Subsidiaries and under which the Sellers or the Acquired Subsidiaries has any
present or future Liability.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
"Environmental Laws" means any applicable Law that deals with
(i) pollution or protection of natural resources or the environment or (ii)
exposure of persons to toxic or hazardous substances, raw materials or
chemicals, including any Law relating to worker safety or product liability
matters to the extent it relates to such matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ERISA Affiliate" means each entity which is treated as a
single employer with WPI for purposes of Code Section 414.
"Evercore" has the meaning set forth in Section 4.13.
"Final Closing Balance Sheet" has the meaning set forth in
Section 2.4(e).
"Final Closing Working Capital" has the meaning set forth in
Section 2.4(e).
"Forced Sale Notice" has the meaning set forth in Section
2.5(a).
"Funding Date" means January 29, 2003, as such date may be
adjusted pursuant to Section 5.10.
"GAAP" means United States generally accepted accounting
principles.
"Governmental Authority" means any foreign, federal, state or
local government, court of competent jurisdiction, administrative agency or
commission or other governmental or regulatory authority or instrumentality.
"Hazardous Materials" shall mean any substance that (i) is or
contains asbestos, polychlorinated biphenyls, petroleum or petroleum derived
substances or wastes, (ii) requires removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous waste,"
"sold waste" or "hazardous substance" thereunder, or (iii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated as such by any Governmental Authority under
any Environmental Law or could reasonably result in the imposition of Liability
under any Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"IFBB" has the meaning set forth in Section 5.18.
"IFBB Events" has the meaning set forth in Section 5.18(c).
"Indemnified Claim" has the meaning set forth in Section
7.5(f).
"Indemnified Party" means any member of the Seller Group or
the Buyer Group who or which may seek indemnification under this Agreement.
"Indemnifying Party" means a Party against whom
indemnification may be sought under this Agreement.
"Indemnity Reduction Amounts" has the meaning set forth in
Section 7.4(c).
"Infringe" has the meaning set forth in Section 3.11(c).
"Injunction" has the meaning set forth in Section 5.3.
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"Insurance Period" has the meaning set forth in Section
5.21(a).
"Intellectual Property" means all U.S., state and foreign
intellectual property, including without limitation (i) (a) all patents, patent
disclosures, inventions, discoveries, processes, designs, techniques,
developments, tools, creations, composition, formulas, algorithms, procedures,
ideas, technology and related improvements and know-how, whether or not patented
or patentable; (b) all trademarks, service marks, trade names, brand names,
corporate names, domain names, logos and trade dress, and all other source
indicators, together with the goodwill symbolized thereby, and all common-law
rights relating thereto ("Trademarks"); (c) all copyrights and all works of
authorship in any media, including textual works, computer software, data,
databases and related items, graphics, photographs, drawings, artwork,
advertising and promotional materials, designs, Internet site content, and all
other authors' rights, including "moral rights," whether or not copyrighted or
copyrightable; (d) all trade secrets and confidential information (including
ideas, research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, current and potential customer and user lists, and business and
marketing plans and proposals); (ii) all applications, registrations, renewals,
recordings and licenses or other agreements related thereto; (iii) all rights to
obtain renewals, extensions, continuations, continuations-in-part, reissues,
divisions or similar legal protections related thereto; and all rights to bring
an action at law or in equity for the infringement, misappropriation, dilution,
impairment or other violation of the foregoing before the Closing Date,
including the right to receive all proceeds and Damages therefrom.
"Investor Equity" has the meaning set forth in Section 4.13.
"Knowledge" means, with respect to the Sellers, the Company or
WHF Parent, the actual knowledge, after reasonable inquiry, of any individual
set forth on Schedule B1, and, with respect to Buyer, the actual knowledge,
after reasonable inquiry, of any individual set forth on Schedule B2.
"Laws" means all applicable laws, statutes, constitutions,
rules, regulations, judgments, common law, rulings, orders, decrees, permits,
licenses, franchises and Injunctions of Governmental Authorities.
"Leased Property" has the meaning set forth in Section
3.10(a).
"Leases" has the meaning set forth in Section 3.10(a).
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Lien" means any mortgage, pledge, lien, encumbrance, claim,
charge or security interest or other restriction of any kind or nature.
"LLC Agreement" means the Limited Liability Company Agreement
to be entered into by WHF, WIN and Buyer substantially in the form attached
hereto as Exhibit B, as
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the same may be amended, modified or supplemented from time to time in
accordance with its terms.
"LLC Units" means the WHF Units and the WIN Units.
"Long-Term Leave Employees" has the meaning set forth in
Section 5.7(a).
"Mariz" has the meaning set forth in Section 6.3(f).
"Material Adverse Effect" means (a) with respect to the
Business or the Company, as applicable, a material adverse effect on the ability
of the Sellers and WHF Parent to perform their obligations under, or to
consummate the transactions contemplated by, this Agreement or a material
adverse effect on the business, operations, assets or condition (financial or
otherwise) or results of operations of the Business, taken as a whole, or the
Company (other than, in any case, any such effect resulting from or arising out
of or in connection with (i) industry-wide developments (including changes in
the application, interpretation or enforcement of Laws, including as set forth
in Section 3.8 of the Disclosure Schedule) similarly affecting other Persons in
businesses similar to the Business or the Company, as applicable, including the
magazine publishing business, (ii) events, changes, occurrences, developments,
circumstances or conditions affecting the U.S. economy generally, (iii) acts of
war (whether or not declared), armed hostilities and terrorism or (iv) changes
resulting from the announcement of Buyer's intended purchase of the Business),
and (b) with respect to Buyer or EMP, a material adverse effect on the ability
of Buyer or EMP to perform its obligations under, or to consummate the
transactions contemplated by, this Agreement.
"Material Contracts" has the meaning set forth in Section
3.13(a).
"MediaFit Shares" has the meaning set forth in Section 3.4.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
"Objection" has the meaning set forth in Section 2.4(d).
"October Balance Sheet" means the unaudited combined
consolidated balance sheet of WPI and its Subsidiaries and WIN as of October 31,
2002.
"Other Parties" has the meaning set forth in Section 3.13(b).
"Outside Date" means February 14, 2003, as such date may be
adjusted pursuant to Section 5.10.
"Party" has the meaning set forth in the preamble to this
Agreement.
"Permitted Liens" means any (a) mechanic's, materialmen's,
laborer's, workmen's, repairmen's, carrier's and similar Liens, including all
statutory Liens, arising or incurred in the ordinary course of business, (b)
Liens for Taxes, assessments and other governmental charges not yet due and
payable or, if due, (i) not delinquent or (ii) being contested in good faith
through appropriate proceedings, (c) purchase money Liens and Liens securing
rental payments under capital lease arrangements, (d) pledges or deposits under
workers'
8
compensation legislation, unemployment insurance Laws or similar Laws, (e) good
faith deposits in connection with bids, tenders, leases, contracts or other
agreements, including rent security deposits, (f) pledges or deposits to secure
public or statutory obligations or appeal bonds, (g) Liens specifically set
forth in the WPI Financial Statements (other than with respect to the Credit
Agreement between WPI and Fleet Bank), (h) other Liens not incurred in
connection with the borrowing of money which do not interfere with or impair, in
any material respect, the present operation of the Business, and (i) in the case
of property owned or held by WPI or WIN, easements, covenants and other
restrictions which do not materially impair the current use, occupancy or value
of the property subject thereto.
"Per LLC Unit Purchase Price" means the amount equal to the
Purchase Price minus the Closing Date Payment Amount divided by the number of
Transferred Units.
"Person" means an individual, partnership, limited liability
partnership, corporation, limited liability company, association, joint stock
company, trust, estate, joint venture, unincorporated organization, or
governmental entity (or any department, agency, or political subdivision
thereof).
"Post-Closing Partial Period" has the meaning set forth in
Section 7.3(b).
"Post-Closing Period" has the meaning set forth in Section
7.3(b).
"Pre-Closing Partial Period" has the meaning set forth in
Section 7.3(a).
"Pre-Closing Period" has the meaning set forth in Section
7.3(a).
"Prohibited Transaction" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"Purchase Price" means an amount equal to (x) the Cash
Percentage multiplied by (y) $340,000,000, subject to adjustment pursuant to
Sections 2.4 and 2.5.
"Reduction Amount" has the meaning set forth in Section
2.5(a).
"Registered Intellectual Property" means any U.S., state or
foreign registration, issuance, recording or application relating to the
Business Intellectual Property, including without any limitation, any domain
name, patent, Trademark registration, or registered copyright.
"Registered IP Status Report" has the meaning set forth in
Section 6.3(f).
"Related Party Agreements" means the Trademark License
Agreement between WHF Parent and the Company in substantially the form attached
hereto as Exhibit C, the Services Agreement, the Athlete Endorsement Cooperative
Agreement between WHF Parent and the Company in substantially the form attached
hereto as Exhibit E, the Advertising Agreement among Weider Nutrition
International, Inc., WHF Parent and the Company in substantially the form
attached hereto as Exhibit F and the Assignment and Assumption of Industrial
Real Estate Lease between WHF Parent and the Company, as consented to by Xxxxx
Xxxxxx, in substantially the form attached hereto as Exhibit G.
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"Remedies Exception" means (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and other Laws of general application,
heretofore or hereafter enacted or in effect, affecting the rights and remedies
of creditors generally, and (ii) the exercise of judicial or administrative
discretion in accordance with general equitable principles, particularly as to
the availability of the remedy of specific performance or other injunctive
relief.
"Retained LLC Unit Percentage" means 5.15% or, in the event
Buyer elects to reduce such percentage, the percentage between 2.5% and 5.15%
selected by Buyer pursuant to the certificate delivered to the Sellers no later
than five (5) Business Days prior to the Closing Date in accordance with Section
5.23.
"Retained LLC Units" has the meaning set forth in the
recitals.
"Retirement Agreements" means the Executive Retirement Program
Benefits Agreements between certain current and former employees of WPI, on the
one hand, and WHF Parent on the other hand.
"Reviewed Financial Statements" has the meaning set forth in
Section 5.10.
"Right" means any option, warrant, convertible or exchangeable
security or other right, however denominated, to subscribe for, purchase or
otherwise acquire any equity interest or other security of any class, with or
without payment of additional consideration in cash or property, either
immediately or upon the occurrence of a specified date or a specified event or
the satisfaction or happening of any other condition or contingency.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Seller DC Plan" has the meaning set forth in Section 5.7(b).
"Seller Group" has the meaning set forth in Section 7.2.
"Sellers" has the meaning set forth in the preamble to this
Agreement.
"Services Agreement" means the Services Agreement between WHF
Parent and the Company in substantially the form attached hereto as Exhibit D.
"Software" has the meaning set forth in Section 3.11(b).
"Subsidiary," when used with respect to any Person, means any
other Person of which (a) in the case of a corporation, at least (i) a majority
of the equity and (ii) a majority of the voting interests are owned or
Controlled, directly or indirectly, by such first Person, by any one or more of
its Subsidiaries, or by such first Person and one or more of its Subsidiaries or
(b) in the case of any Person other than a corporation, such first Person, one
or more of its Subsidiaries, or such first Person and one or more of its
Subsidiaries (i) owns a majority of the equity interests thereof and (ii) has
the power to elect or direct the election of a majority of the
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members of the governing body thereof, but excluding for each of clauses (a) and
(b), any immaterial or inactive Persons.
"SYL Shares" has the meaning set forth in Section 3.4.
"Target LTM EBITDA" means 31,296,544, which amount has been
calculated as set forth in Schedule D.
"Tax" means any federal, state, local, or foreign tax, charge,
duty, fee, levy or other assessment, including income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind whatsoever, imposed by
any Governmental Authority, and including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof, required to
be filed with any Governmental Authority.
"Tax Sharing Agreement" means that Tax Sharing Agreement,
dated as of June 1, 1992, by and between WPI and WHF Parent, as amended.
"Terminating Event" has the meaning set forth in Section
2.5(a).
"Terminating Notice" has the meaning set forth in Section
2.5(a).
"Third Party" has the meaning set forth in Section 5.11.
"Third Party Claim" has the meaning set forth in Section
7.5(a).
"Trademarks" has the meaning set forth in the definition of
Intellectual Property.
"Transaction Documents" means the Contribution Agreement, the
LLC Agreement, the Related Party Agreements and all other instruments,
certificates and documents delivered or required to be delivered by the Company
or any Party pursuant to this Agreement.
"Transferred Units" means the WIN Sold Units and the WHF Sold
Units.
"Weider Holdings Merger" has the meaning set forth in the
recitals.
"Weider Titles" means the titles of the following publications
being acquired by Buyer pursuant to this Agreement: Muscle & Fitness; Muscle &
Fitness Hers; Flex; Men's Fitness; Shape; Fit Pregnancy; and Natural Health.
"WHF" has the meaning set forth in the preamble to this
Agreement.
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"WHF LLC Interests" means all of WHF's rights, title and
interests in the Company, including WHF's right to vote and WHF's right to
allocations, if any, and disbursements from the Company.
"WHF Parent" has the meaning set forth in the preamble to this
Agreement.
"WHF Sold Units" means the number of WHF Units representing
the Cash Percentage multiplied by the aggregate amount of WHF LLC Interests.
"WHF Units" means the units evidencing WHF LLC Interests.
"WIN" has the meaning set forth in the preamble to this
Agreement.
"WIN Assets" has the meaning set forth in the Contribution
Agreement.
"WIN Excluded Assets" means the assets of WIN that are not
being assumed by the Company pursuant to the Contribution Agreement as
enumerated in the definition of "WPI Assets" therein.
"WIN Excluded Liabilities" has the meaning set forth in the
Contribution Agreement.
"WIN Liabilities" has the meaning set forth in the
Contribution Agreement.
"WIN LLC Interests" means all of WIN's rights, title and
interests in the Company, including WIN's right to vote and WIN's right to
allocations, if any, and disbursements from the Company.
"WIN Sold Units" means the number of WIN Units representing
the Cash Percentage multiplied by the aggregate amount of the WIN LLC Interests.
"WIN Units" means the units evidencing WIN LLC Interests.
"WPG Shares" has the meaning set forth in Section 3.4.
"WPI" means Weider Publications, Inc., a Delaware corporation.
"WPI Assets" has the meaning set forth in the Contribution
Agreement.
"WPI Excluded Assets" means the assets of WPI that are not
being assumed by the Company pursuant to the Contribution Agreement as
enumerated in the definition of "WPI Assets" therein.
"WPI Excluded Liabilities" has the meaning set forth in the
Contribution Agreement.
"WPI Financial Statements" has the meaning set forth in
Section 3.6.
"WPI Liabilities" has the meaning set forth in the
Contribution Agreement.
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"WP Italia Shares" has the meaning set forth in Section 3.4.
"WPI Merger" has the meaning set forth in the recitals to this
Agreement.
"WPL Shares" has the meaning set forth in Section 3.4.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." The words "herein", "hereof" and
"hereunder" and words of similar import refer to this Agreement (including the
Exhibits to this Agreement and the Disclosure Schedule) in its entirety and not
to any part hereof unless the context shall otherwise require. All references
herein to Articles, Sections, Exhibits and the Disclosure Schedule shall be
deemed references to Articles and Sections of, and Exhibits and the Disclosure
Schedule to, this Agreement unless the context shall otherwise require. Unless
the context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any successor
provisions). 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. Any reference in this
Agreement to a "day" or a number of "days" (without explicit reference to
"Business Days") shall be interpreted as a reference to a calendar day or number
of calendar days. If any action is to be taken or given on or by a particular
calendar day, and such calendar day is not a Business Day, then such action may
be deferred until the next Business Day.
ARTICLE II.
PURCHASE AND SALE OF THE TRANSFERRED UNITS AND
CONTRIBUTION OF RETAINED LLC UNITS
Section 2.1. Contribution. Upon the terms set forth in the
Contribution Agreement and subject to the conditions of this Agreement, WPI, WIN
and the Company agree to enter into the Contribution Agreement and consummate
the Contribution in accordance with the terms of the Contribution Agreement
prior to the Closing.
Section 2.2. Mergers. Immediately prior to the Closing and the
WPI Merger, Weider Holdings (International) Ltd. shall be merged with and into
WPI. Following the Weider Holdings Merger, the separate corporate existence of
Weider Holdings (International) Ltd. shall cease and WPI shall continue as the
surviving corporation. Immediately prior to the Closing, WPI shall be merged
with and into WHF. Following the WPI Merger, the separate corporate existence of
WPI shall cease and WHF shall continue as the surviving limited liability
company.
Section 2.3. Purchase and Sale of the Transferred Units and
Contribution of Retained LLC Units.
(a) Upon the terms and subject to the conditions of this
Agreement, Buyer agrees to purchase from the Sellers, and each Seller,
separately and not jointly, agrees to sell to Buyer, the Transferred Units at
the Closing, for the consideration specified in Section 2.4.
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(b) Upon the terms and subject to the conditions of this
Agreement, each of the Sellers agree to contribute its Retained LLC Units to EMP
at the Closing, and EMP agrees to issue to the Sellers EMP Sold Units
(representing an amount of capital in EMP equal to the Contribution Amount) at
the Closing. The Parties intend that the foregoing contribution be treated as a
tax-free contribution of the Retained LLC Units to the capital of EMP within the
meaning of Section 721(a) of the Code, and the Parties agree to report the
transaction consistent with this intent on their federal and applicable state
income tax returns.
Section 2.4. Purchase Price and Non-Compete Payments;
Contribution.
(a) As consideration for the sale by the Sellers of the
Transferred Units and the entry by each of Xxx Xxxxxx, Xxx Xxxxxx and Xxxx
Xxxxxx into the agreements set forth in Section 5.14, Buyer shall, at the
Closing:
(i) wire transfer to the lenders set forth on Schedule C, to
the accounts designated in writing by such lenders prior to the Closing
Date, immediately available funds in an aggregate amount equal to the
total amount specified by such lenders in a written notice provided by
WHF Parent to Buyer at least three (3) Business Days prior to the
Closing Date as the aggregate outstanding amount of indebtedness owed
by the Sellers to those lenders on the Closing Date (the "Closing Date
Payment Amount");
(ii) wire transfer to each Seller immediately available funds
in an amount equal to the product of the number of WHF Sold Units or
WIN Sold Units, as the case may be, multiplied by the Per LLC Unit
Purchase Price (such amounts to be wire transferred to such banks and
accounts as is specified in writing by such Seller at least three (3)
Business Days prior to the Closing Date);
(iii) wire transfer to Xxx Xxxxxx immediately available funds
in an amount equal to $6,000,000 (such amount to be wire transferred to
such bank account as is specified in writing by Xxx Xxxxxx at least
three (3) Business Days prior to the Closing Date);
(iv) wire transfer to Xxx Xxxxxx immediately available funds
in an amount equal to $3,000,000 (such amount to be wire transferred to
such bank account as is specified in writing by Xxx Xxxxxx at least
three (3) Business Days prior to the Closing Date); and
(v) wire transfer to Xxxx Xxxxxx immediately available funds
in an amount equal to $1,000,000 (such amount to be wire transferred to
such bank account as is specified in writing by Xxxx Xxxxxx at least
three (3) Business Days prior to the Closing Date);
(b) As consideration for the contribution of the Retained LLC
Units, EMP shall, at the Closing, deliver to the Seller the EMP Sold Units, free
and clear of any Liens.
(c) Within 60 days after the Closing Date, the Sellers will
prepare, or cause to be prepared, an unaudited combined consolidated balance
sheet of WPI and WIN and their respective Subsidiaries as of the close of
business on the day prior to the Closing Date prior to
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any purchase accounting adjustments (the "Closing Balance Sheet"), and the
Sellers shall deliver to Buyer a certificate based on such Closing Balance Sheet
setting forth the Sellers' calculation of Closing Working Capital. The Closing
Balance Sheet shall (i) fairly present the consolidated financial position of
WPI and WIN as of the Closing Date in accordance with GAAP applied on a basis
consistent with the most recent balance sheet contained in the WPI Financial
Statements, excluding all WPI Excluded Assets, WIN Excluded Assets, WPI Excluded
Liabilities and WIN Excluded Liabilities, and (ii) include line items
substantially consistent with those in the most recent balance sheet contained
in the WPI Financial Statements. Buyer will assist and cooperate with the
Sellers in the preparation of the Closing Balance Sheet, including by providing
the Sellers and their accountants access to the books and records of WPI and WIN
and their respective Subsidiaries and to any other information necessary to
prepare the Closing Balance Sheet. "Closing Working Capital" means the aggregate
amount of consolidated current assets of WPI and WIN as shown on the Closing
Balance Sheet minus the aggregate amount of consolidated current liabilities of
WPI and WIN as shown on the Closing Balance Sheet, with the following
adjustments: less any provision for deferred and current Tax assets or Tax
Liabilities, as calculated in a manner consistent with the calculation set forth
on Schedule 2.4(c) (except Closing Working Capital shall not contain a
($500,000) allowance for the Brentwood litigation matter).
(d) Buyer shall, within 30 days after the delivery by the
Sellers of the Closing Balance Sheet and certificate of Closing Working Capital,
complete its review thereof. In the event that Buyer determines that the Closing
Balance Sheet and certificate of Closing Working Capital have not been prepared
on a basis consistent with the requirements of Section 2.4(c), Buyer shall, on
or before the last day of such 30-day period, inform the Sellers in writing (the
"Objection"), setting forth a specific description in reasonable detail of the
basis of the Objection, the adjustments to the Closing Balance Sheet which Buyer
believes should be made and Buyer's calculation of Closing Working Capital, and
Buyer shall be deemed to have accepted any items not specifically disputed in
the Objection. Failure to so notify the Sellers shall constitute acceptance and
approval of the Sellers' calculation of Closing Working Capital.
(e) The Sellers shall then have 30 days following the date
they receive the Objection to review and respond to the Objection. If the
Sellers and Buyer are unable to resolve all of their disagreements with respect
to the determination of the foregoing items by the 30th day following the
Sellers' response thereto, after having used their good faith efforts to reach a
resolution, they shall refer their remaining differences to another nationally
recognized firm of independent public accountants as to which the Sellers and
Buyer mutually agree (the "CPA Firm"), who shall, acting as experts in
accounting and not as arbitrators, determine on a basis consistent with the
requirements of Section 2.4(c), and only with respect to the specific remaining
accounting related differences so submitted, whether and to what extent, if any,
the Closing Balance Sheet and Closing Working Capital require adjustment. The
Sellers and Buyer shall request the CPA Firm to use its best efforts to render
its determination within 45 days. The CPA Firm's determination shall be
conclusive and binding upon the Sellers and Buyer. The Sellers and Buyer shall
each pay one-half of the fees and expenses, including any retainers, of the CPA
Firm in performing services pursuant to this Section 2.4(e). The Sellers and
Buyer shall make reasonably available to the CPA Firm all relevant books and
records, any work papers (including those of the parties' respective
accountants) and supporting documentation relating to the Closing Balance Sheet
and all other items reasonably requested by the CPA Firm. The
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"Final Closing Balance Sheet" and "Final Closing Working Capital", as
applicable, shall be (i) the Closing Balance Sheet and the Sellers' calculation
of Closing Working Capital in the event that (x) no Objection is delivered to
the Sellers during the initial 30-day period specified above or (y) the Sellers
and Buyer so agree, (ii) the Closing Balance Sheet and the Closing Working
Capital, adjusted in accordance with the Objection, in the event that (x)
Sellers do not respond to the Objection during the 30-day period specified above
following receipt by the Sellers of the Objection or (y) the Sellers and Buyer
so agree or (iii) the Closing Balance Sheet and the Closing Working Capital, as
adjusted pursuant to the agreement of Buyer and the Sellers or as adjusted by
the CPA Firm together with any other modifications to the Closing Balance Sheet
and Closing Working Capital agreed upon by the Sellers and Buyer.
(f) If the Final Closing Working Capital is less than
$(4,800,000) (negative), the Sellers shall pay an amount in cash equal to (x)
the Cash Percentage multiplied by the amount of such deficiency plus (y)
interest computed at the prime rate of interest published in The Wall Street
Journal, Eastern Edition, for the period from the Closing Date to the date of
such payment, in immediately available funds to Buyer within three (3) Business
Days after the ultimate determination of the Final Closing Working Capital as
provided in this Section 2.4, and the Sellers' capital account balances in EMP
shall be retroactively reduced, pro rata, by an amount equal to the Retained LLC
Unit Percentage multiplied by the amount of such deficiency. If the calculation
of the Final Closing Working Capital is greater than $(4,800,000) (negative),
Buyer shall pay an amount in cash equal to (1) the Cash Percentage multiplied by
the amount of such excess plus (2) interest computed at prime rate of interest
published in The Wall Street Journal, Eastern Edition, for the period from the
Closing Date to the date of such payment, in immediately available funds to the
Sellers, within three (3) Business Days after the ultimate determination of the
Final Closing Working Capital as provided in this Section 2.4 and the Sellers'
capital account balances in EMP shall be retroactively increased, pro rata, by
the Retained LLC Unit Percentage multiplied by the amount of such excess.
(g) Any amounts payable to or from the Sellers after the
Closing under this Section 2.4 shall be paid pro rata among the Sellers based on
the portion of the Purchase Price and Contribution Amount paid to each Seller.
Buyer and Sellers agree to treat any amounts payable after the Closing pursuant
to this Section 2.4 pro rata as an adjustment to the Purchase Price and an
adjustment to the Sellers' capital contributions to EMP.
Section 2.5. Post-Signing Purchase Price Adjustment.
(a) Following delivery of the Reviewed Financial Statements,
in the event that the EBITDA Difference is greater than $500,000 (a "Terminating
Event"), then Buyer shall have the right to terminate this Agreement by
providing written notice (a "Terminating Notice") to Sellers within 5 Business
Days following the delivery of such Reviewed Financial Statements. If Buyer does
not elect to terminate following a Terminating Event within such 5 Business Day
period, then the Sellers and Buyer shall be obligated to close the transaction
as provided herein without any adjustment to the Purchase Price. If Buyer does
elect to terminate following a Terminating Event, and the EBITDA Difference is
less than $3,000,000, the Sellers shall have the right to force Buyer to close,
and thereby render Buyer's Terminating Notice null and void, if the Sellers
deliver a written notice to Buyer (a "Forced Sale Notice") within 5 Business
Days following delivery of the Terminating Notice in which the Sellers agree to
consummate the transaction as provided herein with a reduced Purchase Price and
Contribution Amount
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determined as follows: the Purchase Price and the Contribution Amount shall be
decreased in the aggregate by an amount (the "Reduction Amount") equal to the
product of (x) the EBITDA Multiplier and (y) the EBITDA Difference (with the
Purchase Price decreased by the Cash Percentage multiplied by the Reduction
Amount and the Contribution Amount being decreased by the Retained LLC Unit
Percentage multiplied by the Reduction Amount). If Buyer delivers a Terminating
Notice and the Sellers do not deliver a Forced Sale Notice within the time
period set forth above or the EBITDA Difference is equal to or exceeds
$3,000,000, then this Agreement shall terminate in accordance with Section
8.1(d).
(b) If the EBITDA Difference is less than $500,000, or if the
Actual LTM EBITDA is greater than Target LTM EBITDA, then neither Buyer nor the
Sellers shall have the right to terminate this Agreement or adjust the Purchase
Price pursuant to this Section 2.5.
(c) Notwithstanding anything to the contrary contained herein,
the adjustment to the Purchase Price, if any, under this Section 2.5 and Buyer's
right of termination under Section 8.1(d) shall constitute (i) Buyer's sole and
exclusive remedy for Actual LTM EBITDA being less than Target LTM EBITDA.
(d) In the event that a Terminating Event has occurred, Buyer
shall not have the right to terminate this Agreement and Sellers shall not have
the right to provide a Forced Sale Notice under this Section 2.5 unless an audit
for the applicable period has been performed.
Section 2.6. Closing. Unless this Agreement shall have been
terminated pursuant to Article VIII and subject to the satisfaction or, when
permissible, waiver of the conditions set forth in Article VI, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
(i) at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. local time on the day which is
one Business Day after the date on which the last of the conditions set forth in
Article VI (other than any such conditions which by their terms are not capable
of being satisfied until the Closing Date) is satisfied or, when permissible,
waived, or (ii) on such other date and/or at such other time and/or place as the
Parties may mutually determine.
Section 2.7. Closing Deliveries.
(a) At the Closing, the Sellers will deliver or cause to be
delivered the following:
(i) to Buyer, the Transferred Units, free and clear of any
Liens as evidenced by instruments of transfer covering the Transferred
Units in form and substance reasonably satisfactory to Buyer;
(ii) to Buyer, the LLC Agreement, executed by the Company, WHF
and WIN;
(iii) to Buyer, the certificates referred to in Sections
6.3(a) and (b);
(iv) to Buyer, the Related Party Agreements, executed by the
Company, WHF Parent and the other signatories thereto;
17
(v) to Buyer, evidence of the receipt of the required
Consents;
(vi) to Buyer, stock certificates or other documentation
representing the shares or interests in the Acquired Subsidiaries, free
and clear of any Liens;
(vii) to Buyer, an affidavit from each Seller in form and
substance reasonably satisfactory to Buyer, providing under penalties
of perjury among other things such Seller's taxpayer identification
number and that such Seller is not a foreign person pursuant to Section
1445(b)(2) of the Code;
(viii) to EMP, the Retained LLC Units, free and clear of any
Liens as evidenced by instruments of transfer covering the Retained LLC
Units in form and substance reasonably satisfactory to EMP;
(ix) to Buyer or EMP, all other documents required to be
delivered by the Sellers or the Company to Buyer or EMP, as applicable,
at the Closing pursuant to this Agreement; and
(x) to Buyer, the Registered IP Status Report, the assignments
or other instruments of conveyance, and the other documents referred to
in Section 6.3(f).
(b) At the Closing, Buyer or EMP, as applicable, will deliver
or cause to be delivered the following to Seller or such other parties, as
applicable:
(i) Buyer will deliver the certificates referred to in
Sections 6.2(a) and (b);
(ii) Buyer will deliver the payments required by Section
2.4(a);
(iii) EMP will deliver the EMP Sold Units, free and clear of
any Liens as evidenced by instruments of transfer covering the EMP Sold
Units in form and substance reasonably satisfactory to the Sellers;
(iv) Buyer will deliver the LLC Agreement executed by Buyer;
and
(v) Buyer and EMP, as applicable, will deliver all other
documents required to be delivered by Buyer or EMP, as applicable, to
the Sellers at the Closing pursuant to this Agreement.
Section 2.8. Satisfaction of Conditions. All conditions to the
obligations of the Sellers and Buyer to proceed with the Closing under this
Agreement will be deemed to have been fully and completely satisfied or waived
for all purposes upon the Closing.
Section 2.9. Transfer Taxes. All applicable sales and transfer
taxes (including any stock transfer taxes due as a result of the sale of the
Transferred Units or contribution of the Retained LLC Units in exchange for the
EMP Sold Units and taxes, if any, imposed upon the transfer of real and personal
property) and filing, recording, registration, stamp, documentary and other
similar taxes and fees payable in connection with this Agreement, the
Contribution Agreement, the transactions contemplated by this Agreement or the
Contribution Agreement or the documents giving effect to such transactions will
be the responsibility of and be paid by
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Buyer. Buyer and the Sellers shall cooperate in providing information and
executing documents that may be necessary to claim any exemption from transfer
taxes covered by this Section.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF WHF PARENT AND THE SELLERS
Each of WHF Parent and the Sellers, jointly and severally,
represents and warrants to Buyer, as of the date hereof and as of the Closing
Date, except as set forth in the Disclosure Schedule, as follows:
Section 3.1. Organization and Authority of WHF Parent, the
Sellers and the Company.
(a) WHF Parent is duly incorporated, validly existing and in
good standing under the laws of Nevada, and WHF Parent has all requisite
corporate power and authority to carry on its business as it is currently
conducted and to own, lease and operate its properties where such properties are
now owned, leased or operated. WHF Parent is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing would
not, individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on the Business.
(b) Each of the Sellers is duly organized, validly existing
and in good standing under the laws of Delaware, and each Seller has all
requisite organizational power and authority to carry on its respective business
as it is currently conducted and to own, lease and operate its properties where
such properties are now owned, leased or operated. Each of the Acquired
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and (ii) has all requisite
organizational power and authority to carry on its business as it is currently
conducted and to own, lease and operate its properties where such properties are
now owned, leased or operated, except in all cases where any failures of the
representations in this sentence to be true would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
the Business. Each Seller and the Acquired Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or license necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed or in good
standing would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on the Business.
(c) The Company is duly organized, validly existing and in
good standing under the laws of Delaware, and the Company has all requisite
organizational power and authority to carry on its business as it is currently
conducted and to own, lease and operate its properties where such properties are
now owned, leased or operated. The Company is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except in such jurisdictions
where the failure to be so duly
19
qualified or licensed or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on the Business. A true and complete
copy of the Certificate of Formation of the Company has previously been
delivered or made available to Buyer.
(d) Each of the Sellers, WHF Parent and the Company have all
requisite power and authority to execute and deliver this Agreement and each
Transaction Document to which it is a party, to perform their respective
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each
Seller, WHF Parent and the Company of this Agreement and each Transaction
Document to which it is a party and the consummation of the transactions
contemplated hereby and thereunder have been duly authorized by all necessary
corporate or other organizational action on the part of each Seller, WHF Parent
and the Company. This Agreement has been and, at the Closing, each Transaction
Document to which it is a party will be duly executed and delivered by each
Seller, WHF Parent and the Company and constitutes or, with respect to the
Transaction Documents to be delivered at Closing, will constitute at the Closing
a legal, valid and binding obligation of each Seller, WHF Parent and the
Company, enforceable against each Seller, WHF Parent and the Company in
accordance with its terms, subject to the Remedies Exception.
Section 3.2. Noncontravention. Neither the execution and
delivery of this Agreement or any Transaction Document to which it is a party by
WHF Parent, the Sellers or the Company, nor the consummation by WHF Parent, the
Sellers or the Company of the transactions contemplated hereby or thereby,
including the Merger will (i) conflict with any provision of the Certificate of
Formation of the Company or the LLC Agreement, (ii) conflict with any provision
of the Certificates of Incorporation, Certificate of Formation or Bylaws of each
of the Company, the Sellers or the Acquired Subsidiaries, (iii) conflict with
any provision of the Certificate of Incorporation or Bylaws of WHF Parent, (iv)
except as set forth in Section 3.2 of the Disclosure Schedule, violate or result
in a breach of any Material Contract, or (v) subject to the Consents of
Governmental Authorities described in Section 3.5, violate any Law to which the
Company, the Sellers, WHF Parent, WPI or any of the Acquired Subsidiaries is
subject, except, in the case of clauses (iv) and (v) for such violations or
breaches which would not, individually or in the aggregate, have or reasonably
be expected to have a Material Adverse Effect on the Business.
Section 3.3. Capitalization and LLC Units; Title.
(a) As of the Closing Date, the Company's total outstanding
membership interests will consist solely of 2,000 LLC Units. As of the Closing
Date, all of the LLC Units will be duly authorized and validly issued and will
be fully paid and nonassessable. Except as set forth in this Agreement, there
are no (i) outstanding Rights or other contracts, commitments, arrangements or
understandings relating to the issuance by the Company of additional LLC Units,
(ii) profit participation or similar rights with respect to the Company, or
(iii) voting trusts, proxies, or other agreements or understandings with respect
to the LLC Units to which the Company is party.
(b) At the Closing, each Seller will have title to, and will
be the legal and beneficial owner of, the Transferred Units set forth in Section
3.3 of the Disclosure Schedule, free and clear of any Liens. Upon transfer and
delivery to Buyer at the Closing, Buyer will have full title to such Seller's
Transferred Units, free and clear of any Liens, except for any Liens
20
created by this Agreement and the LLC Agreement and Liens arising under federal
or state securities laws. Except for this Agreement and the LLC Agreement, there
are no (i) outstanding options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts relating to such Seller's
Transferred Units, (ii) outstanding profit participation, or similar rights with
respect to such Seller's Transferred Units, (iii) voting trusts, proxies, or
other contracts or understandings with respect to the voting of such Seller's
Transferred Units or (iv) transfer restrictions with respect to such Seller's
Transferred Units.
Section 3.4. Subsidiaries of the Company. As of the date of
this Agreement, the Company does not have any Subsidiaries. As of the date
hereof, WIN does not have any Subsidiaries. Section 3.4 of the Disclosure
Schedule sets forth for each of WPI's Subsidiaries (i) its name and jurisdiction
of organization, (ii) its form of organization and (iii) the capital stock or
membership interests held by WPI as of the date of this Agreement, directly or
indirectly, in such Subsidiary. As of the date of this Agreement, WPI is the
sole beneficial and record owner of the outstanding shares of capital stock or
other interests in each of its Subsidiaries, free and clear of all Liens, except
as set forth in Section 3.4 of the Disclosure Schedule. WPG's authorized capital
stock consists solely of 100,000 shares of Ordinary Stock ("WPG Shares"). As of
the date hereof, 1,000 WPG Shares are issued and outstanding, all of which are
owned by WPH. WPH has title to, and is the legal and beneficial owner of, all of
the outstanding shares of WPG, free and clear of any Liens. MediaFit's
authorized capital stock consists solely of the membership interests ("MediaFit
Shares") owned by WPI. As of the date hereof, 500 MediaFit Shares are issued and
outstanding, all of which are owned by WPG. WPG has title to, and is the legal
and beneficial owner of, all of the outstanding shares of and interests in
MediaFit SARL, free and clear of any Liens. WPL's authorized capital stock
consists solely of 20,000 shares of Ordinary Stock ("WPL Shares"). SYL's
authorized capital stock consists solely of 100,000 shares of common stock ("SYL
Shares"). As of the date hereof, 1,000 SYL Shares are issued and outstanding,
all of which are owned by WPI. WPI has title to, and is the legal and beneficial
owner of, all of the outstanding shares of SYL, free and clear of any Liens. As
of the date hereof, 1,000 WPL Shares are issued and outstanding, all of which
are owned by WPG. WPG has title to, and is the legal and beneficial owner of,
all of the outstanding shares of and interests in WPL, free and clear of any
Liens. WP Italia's authorized capital stock consists solely of the membership
interests ("WP Italia Shares," and together with WPG Shares, MediaFit Shares,
WPL Shares, SYL Shares and WP Italia Shares, the "Acquired Subsidiaries Shares")
owned by WPI. As of the date hereof, 10,000 WP Italia Shares are issued and
outstanding, 500 of which are owned by WPG and 9,500 of which are owned by WPI.
WPG and WPL have title to, and are the legal and beneficial owners of, all of
the outstanding shares of and interests in WP Italia, free and clear of any
Liens. All of the Acquired Subsidiaries Shares have been duly authorized and
validly issued and are fully paid and nonassessable, and free and clear of all
Liens. Except as set forth in Section 3.4 of the Disclosure Schedule or
otherwise described in this Section 3.4 or in this Agreement, there are no (i)
outstanding Rights or other contracts, commitments, arrangements or
understandings relating to the issuance of any shares of any of the Acquired
Subsidiaries, (ii) outstanding stock appreciation, phantom stock, profit
participation, performance units or similar rights with respect to any of the
Acquired Subsidiaries, or (iii) voting trusts, proxies, or other agreements or
understandings with respect to the voting of shares of Common Stock to which any
of the Acquired Subsidiaries is party. Except as set forth in Section 3.4 of the
Disclosure Schedule or otherwise described in this Section 3.4, WPI does not
have any Subsidiaries. As of the Closing Date, the Company will be
21
the sole and beneficial and record owner of the outstanding shares of capital
stock or other interests in each of WPI's Subsidiaries set forth in Section 3.4
of the Disclosure Schedule, free and clear of all Liens, except as set forth in
Section 3.4 of the Disclosure Schedule.
Section 3.5. Government Authorizations. Except for (i)
required filings under the HSR Act, (ii) compliance with any applicable
requirements of the Securities Act, (iii) compliance with any other applicable
securities laws and (iv) filings and notices not required to be made or given
until after the Closing, no Consent of, or filing with or to any Governmental
Authority is required to be obtained or made by the Sellers, WHF Parent, the
Company or any of their respective Subsidiaries in connection with the execution
and delivery of this Agreement or the Transaction Documents or the consummation
of the transactions contemplated hereby or thereby, other than any such
requirement that is applicable solely as a result of the specific legal or
regulatory status of Buyer or as a result of any other facts that specifically
relate to the business or activities in which Buyer is or proposes to be
engaged, other than the Business.
Section 3.6. WPI Financial Statements. Set forth in Section
3.6 of the Disclosure Schedule are (i) an audited consolidated balance sheet of
WPI and its Subsidiaries as of December 31, 2001 and as of December 31, 2000,
and the related consolidated statements of income, stockholders' equity and cash
flow for the fiscal year ended December 31, 2000 and the seven months ended
December 31, 2000 and (ii) an unaudited combined consolidated balance sheet of
WPI and its Subsidiaries and WIN as of September 30, 2002, and the related
combined consolidated statements of income, for the nine months ended September
30, 2002 (collectively, the "WPI Financial Statements"). Except as set forth
therein, the WPI Financial Statements present fairly, in all material respects,
the combined and/or the consolidated financial position, results of operations,
changes in stockholders' equity and cash flows of WPI and its Subsidiaries at
the respective dates set forth therein and for the respective periods covered
thereby, and were prepared in accordance with GAAP (except, in the case of the
interim financial statements, for the absence of footnotes and any year-end
adjustments), consistently applied. The WPI Financial Statements and the October
Balance Sheet have been prepared from the books of account and financial records
of WPI and WIN. The inventories included in the WPI Financial Statements are
stated at a value determined in accordance with GAAP consistently applied.
Except to the extent reserved against in the WPI Financial Statements, all of
WPI's and WIN's receivables are valid and, to WHF Parent's Knowledge,
collectible in the aggregate amount thereof in the ordinary course of business
consistent with past practices, subject to normal and customary trade discounts.
Section 3.7. Undisclosed Liabilities. WPI and WIN do not have,
and at the Closing the Company will not have, any Liabilities which would be
required under GAAP to be reflected or reserved against in the latest balance
sheet (including the notes thereto) included in the WPI Financial Statements,
except for (i) Liabilities set forth, reflected in, reserved against or
disclosed in the latest balance sheet (including the notes thereto) included in
the WPI Financial Statements, (ii) Liabilities incurred in the ordinary course
of business since September 30, 2002, (iii) Liabilities disclosed in Section 3.7
of the Disclosure Schedule, (iv) Liabilities under Material Contracts disclosed
in the Disclosure Schedule, (v) Liabilities under contracts or agreements not
required to be disclosed in the Disclosure Schedule, and (vi) such other
Liabilities which would not, in the aggregate, have or reasonably be expected to
have a Material Adverse Effect on the Business.
22
Section 3.8. Absence of Certain Changes. Since September 30,
2002, except as contemplated by or disclosed in this Agreement or as set forth
in Section 3.8 of the Disclosure Schedule, WPI and WIN and their respective
Subsidiaries have conducted their businesses only in the ordinary course, and
there has not been (i) any event or development that would, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse Effect
on the Business, (ii) any damage, destruction or loss, whether or not covered by
insurance, that would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on the Business, (iii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property other than cash dividends) with respect to
the capital stock of WPI and WIN or any of the Acquired Subsidiaries, (iv) any
change in accounting methods, principles or practices affecting WPI and WIN,
except as required or permitted by GAAP or (v) any action taken by WPI or WIN
which would require the consent of Buyer pursuant to Section 5.1 (other than
Section 5.1(iv)), if such action was taken by WPI or WIN after the date hereof.
Section 3.9. Tax Matters.
(a) Except as set forth in Section 3.9 of the Disclosure
Schedule, WPI and WIN and each of their respective Subsidiaries has (i) filed,
or caused to be filed, all Tax Returns that it was required to file on or before
the date hereof and (ii) paid or caused to be paid all Taxes due and payable
(whether or not shown to be due and payable on such Tax Returns), except as
otherwise set forth, reflected in, reserved against or disclosed in the WPI
Financial Statements. All such Tax Returns were correct and complete in all
material respects.
(b) As of the date of this Agreement, there is no outstanding
dispute or claim concerning any Liability for Taxes of WPI or WIN or any of
their respective Subsidiaries that has been claimed or raised by any
Governmental Authority in writing and received by WPI or WIN. Except as set
forth in Section 3.9 of the Disclosure Schedule, no Tax Return of WPI or WIN or
any of their respective Subsidiaries is currently the subject of an audit by any
taxing authority and no written notice of such an audit has been received by any
of WPI or WIN.
(c) Except as set forth in Section 3.9 of the Disclosure
Schedule, neither WPI or WIN nor any of their respective Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(d) None of the WPI Assets or the WIN Assets (each as defined
in the Contribution Agreement) is tax-exempt use property within the meaning of
Section 168(h) of the Code and none of the WPI Assets or the WIN Assets (each as
defined in the Contribution Agreement) is property that is or will be required
to be treated as being owned by another person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and as in
effect immediately prior to the enactment of the Tax Reform Act of 1986.
(e) There are no material Liens for Taxes upon any of the WPI
Assets or the WIN Assets (each as defined in the Contribution Agreement) that
arose in connection with any failure (or alleged failure) to pay any Tax, except
for Liens for Taxes not yet due and payable.
23
(f) The Company is, and at all times has been, properly
treated as a partnership, and not as an association or publicly traded
partnership for United States federal income tax purposes.
Section 3.10. Property.
(a) Except for WPI Excluded Assets and WIN Excluded Assets and
except as set forth in Section 3.10 of the Disclosure Schedule, to the extent
material to the Business, each of WPI and WIN has and immediately after Closing,
Buyer will have good and valid title to all property, equipment and other assets
reflected on the most recent balance sheet of WPI contained in the WPI Financial
Statements or acquired by WPI or WIN after the date of such balance sheet
(except for property, equipment and other assets sold since the date of such
balance sheet in the ordinary course of business consistent with past practices)
(the "Company Property"), free and clear of any Lien, except for Permitted
Liens. The Sellers and the Acquired Subsidiaries do not own any real property
that is used in connection with the Business. Section 3.10(a) of the Disclosure
Schedule lists all of the agreements (the "Leases") pursuant to which WPI, WIN
and the Acquired Subsidiaries lease, sublease, license or otherwise occupy
(whether as landlord, tenant, or other occupancy arrangement) any real property
used in connection with the Business as it is presently conducted (the "Leased
Property"). WPI, WIN and the Acquired Subsidiaries have and immediately after
the Closing, Buyer or the Acquired Subsidiaries, as the case may be, will have,
good and valid leasehold estate to the Leased Property, free and clear of any
Liens other than the Permitted Liens. Each of WPI, WIN and the Acquired
Subsidiaries has valid and enforceable leases for the Leased Property and the
equipment, furniture and fixtures purported to be leased by them except for
leases, the failure of which to have or be enforceable, would not have or
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Business. Except as set forth in Section 3.10(a) of the
Disclosure Schedule, with respect to each Lease, (i) there is no default or
event which, with notice or lapse of time or both, would constitute a default on
the part of a Seller, Acquired Subsidiary or WPI, as the case may be (nor to the
Sellers' Knowledge, the other parties thereto), and (ii) WPI or WIN have not
received any notice of termination from the other party.
(b) There are no pending lawsuits or administrative
proceedings concerning the Company Property or Leased Property that, if
adversely determined against the Sellers, would have a Material Adverse Effect
on the Business, and, to Sellers' Knowledge, no such proceeding or lawsuit is
currently threatened.
(c) Upon the consummation of the Contribution, the Company
will have, and at the Closing the Buyer will have, acquired good and valid title
in and to, or a valid leasehold interest in, the WPI Assets and the WIN Assets.
Section 3.11. Intellectual Property.
(a) Section 3.11 of the Disclosure Schedule lists all material
Trademarks of any of the Sellers or the Acquired Subsidiaries, and all domain
names, that are part of the Business Intellectual Property. Each item of
Registered Intellectual Property has been duly registered in, filed in or issued
by the United States Copyright Office, the United States Patent and Trademark
Office, the appropriate offices in the various states of the United States
and/or the appropriate offices of foreign jurisdictions as applicable to such
item of Registered Intellectual
24
Property. The registrations for all of the Registered Intellectual Property are
enforceable and unexpired, and have not been abandoned. The Sellers and the
Acquired Subsidiaries do not own or license any rights to any patents that are
used in the Business. Except as set forth in Section 3.11 of the Disclosure
Schedule, (i) each of the Sellers and Acquired Subsidiaries owns, possesses, or
licenses all Intellectual Property necessary for the conduct of the Business as
currently conducted and as currently proposed to be conducted and (ii) the
Trademarks for the Weider Titles, and to the Seller's Knowledge, all of the
other Business Intellectual Property, are free of any adverse ownership claims,
including without limitation, claims by current and former employees, freelance
authors or independent contractors.
(b) Sellers have taken reasonable precautions to (i) protect
the confidentiality, integrity and security of all software, databases, systems,
networks and Internet sites and all information stored or contained therein or
transmitted thereby ("Software") from any unauthorized use, access, interruption
or modification by third parties; (ii) comply with all Laws with respect to the
privacy of all on-line users and customers and any information related thereto;
(iii) maintain the security and integrity of transactions executed through its
Software; (iv) verify the correct identity of its users and customers; and (v)
ensure the enforceability of any transactions executed through its Internet web
sites.
(c) Except as disclosed in Section 3.11 and Section 3.15 of
the Disclosure Schedule, (i) with respect to the Trademarks for the Weider
Titles, and to the Sellers' Knowledge with respect to all of the other Business
Intellectual Property, the conduct of the Business as currently conducted,
including the use of any Business Intellectual Property, does not infringe,
dilute, misappropriate, impair or otherwise violate ("Infringe") any
Intellectual Property rights of any third party and (ii) to the Sellers'
Knowledge, no Person is Infringing upon any Intellectual Property rights of the
Companies or any of their respective Subsidiaries. Except as disclosed in
Section 3.11 and Section 3.15 of the Disclosure Schedule, as of the date of this
Agreement there are no Actions, claims, causes of action, suits at law or
equity, decrees, settlement, Injunctions, rules, orders, verdicts, judgments,
interferences or other contested proceedings naming any of the Sellers or the
Acquired Subsidiaries that have been rendered, are pending, or to the Sellers'
Knowledge are threatened, by or in any Governmental Authority that would limit,
cancel or question the validity, enforceability, ownership or use of any of the
Business Intellectual Property. The execution and delivery of this Agreement by
the Sellers and the consummation of the transactions contemplated hereby will
not result in the loss of, or any encumbrance on, the rights of the Business
with respect to the Business Intellectual Property and will not limit,
terminate, nullify or avoid the rights of the Business pursuant to the Business
IP Licenses.
Section 3.12. Environmental Matters. Except as set forth in
Section 3.12 of the Disclosure Schedule and except as would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on the Business, (i) none of WPI or WIN or the Acquired Subsidiaries has
received any written communication that remains outstanding and alleges that any
of such entities is not in compliance with, or is subject to Liability under,
any Environmental Laws; (ii) the current and former operations of the Sellers
and the current and former operations of the Acquired Subsidiaries are, and
regarding the Acquired Subsidiaries were at all times, in compliance with all
Environmental Laws; (iii) none of WPI or WIN or the Acquired Subsidiaries has
received written notice of or entered into any judgment, decree or order issued
by any Governmental Authority pertaining to the conduct of the
25
Business relating to compliance with or Liability under any Environmental Law or
to any investigation or cleanup of Hazardous Materials under any Environmental
Law; (iv) each of WPI or WIN and the Acquired Subsidiaries has all permits
required under applicable Environmental Laws for the operation of the Business
as presently conducted; and (v) Hazardous Materials have not been generated,
transported, treated, stored, disposed of, arranged to be disposed of, released
or threatened to be released at, on, from or under any of the properties or
facilities currently owned, leased or otherwise used by WPI or WIN, or currently
or formerly owned, leased or otherwise used by the Acquired Subsidiaries, in
violation of, or in a manner or to a location that could give rise to Liability
under, any Environmental Laws. Notwithstanding the generality of any other
representations and warranties contained in this Agreement, this Section 3.12
contains the sole and exclusive representations and warranties of WHF Parent and
the Sellers with respect to the Business and the Acquired Subsidiaries and
Affiliates in this Agreement in respect of environmental matters or
Environmental Laws.
Section 3.13. Contracts.
(a) Section 3.13 of the Disclosure Schedule lists the
following written agreements relating to the Business to which either of WPI or
WIN or any of their respective Subsidiaries is a party and which are in effect
on the date hereof:
(i) any loan agreement, credit agreement, security agreement,
promissory note, mortgage, indenture or other contract that provides
for the borrowing of money by or extensions of credit to either of WPI
or WIN or any of their respective Subsidiaries or the guaranty by
either of WPI or WIN or any of their Subsidiaries of obligations in
respect of the borrowings of money by or extensions of credit to any
other Person, in any case involving in excess of $100,000 of
indebtedness or committed credit;
(ii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan
or arrangement for the benefit of the current or former directors,
officers or employees of either WPI or WIN or any of their respective
Subsidiaries;
(iii) any employment or consulting agreement for a term in
excess of one year or which involves the payment of annual compensation
in excess of $50,000;
(iv) any agreement providing for indemnification of any Person
with respect to Liabilities;
(v) any agreements for the purchase or sale of any business,
corporation, partnership, limited liability partnership, limited
liability company, joint venture, association or other business
organization;
(vi) any agreement under which the consequences of a default
or termination would have or reasonably be expected to have a Material
Adverse Effect on the Business;
(vii) any Business IP License granting exclusive rights to any
Business Intellectual Property or granting rights to any Registered
Trademarks or the Trademarks for the Weider Titles;
26
(viii) any other agreement of either of WPI or WIN or any of
their respective Subsidiaries (or group of related agreements) the
performance of which involves consideration in excess of $250,000,
except those that may be canceled by either of WPI or WIN or a
Subsidiary of either of WPI or WIN, as the case may be, without
material penalty upon not more than 90 days' notice; and
(ix) any agreement that contains any noncompetition obligation
or otherwise restricts in any material way the Business; and
(x) any agreement otherwise material to the Business, and not
required to be listed pursuant to clauses (i) through (ix) above.
All contracts and agreements set forth in Section 3.13 of the Disclosure
Schedule are referred to herein as "Material Contracts."
(b) Except as set forth in Section 3.13 of the Disclosure
Schedule, (i) each Material Contract is in full force and effect and is the
legal, valid and binding obligation of either of WPI and WIN or the respective
Subsidiary thereof which is a party to such Material Contract, subject to the
Remedies Exception and, to WHF Parent's Knowledge, the other parties thereto
(the "Other Parties"), and (ii) none of WPI and WIN or their respective
Subsidiaries or, to WHF Parent's Knowledge, any of the Other Parties to any
Material Contract is in breach, violation or default, and, to WHF Parent's
Knowledge, no event has occurred which with notice or lapse of time or both
would constitute a breach, violation or default by any such party, or permit
termination, modification, or acceleration by the Other Parties, under such
Material Contract, except (A) for breaches, violations or defaults which would
not, individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on the Business, and (B) that in order to avoid a
default, violation or breach under any Material Contract the Consent of the
Other Parties set forth in Section 3.2 of the Disclosure Schedule may be
required in connection with the transactions contemplated hereby.
Section 3.14. Insurance. Section 3.14 of the Disclosure
Schedule sets forth a list of all material insurance policies in force as of the
date of this Agreement owned or held directly by each of WPI and WIN and their
respective Subsidiaries or owned or held directly by WHF Parent for the benefit
of WPI and WIN and their respective Subsidiaries. All such policies are in full
force and effect, all premiums due and payable have been paid, and no written
notice of cancellation or termination has been received with respect to such
policies.
Section 3.15. Litigation. Except as set forth in Section 3.15
of the Disclosure Schedule, (i) there are no Actions pending or, to WHF Parent's
Knowledge, threatened in law or in equity or before any Governmental Authority
against either of WPI and WIN or any of their respective Subsidiaries which are
reasonably likely to result in material Liability for either of WPI and WIN or
any of their respective Subsidiaries, and (ii) there are no outstanding
Injunctions, judgments, orders, decrees, rulings, or charges to which either of
WPI and WIN or any of their respective Subsidiaries is a party or by which it is
bound by or with any Governmental Authority which could reasonably be expected
to be material to the Business.
Section 3.16. Employees. None of WPI, the Sellers or WHF
Parent nor any of their respective Subsidiaries is presently a party to any
collective bargaining agreement, subject
27
to a legal duty to bargain with any labor organization on behalf of employees or
operating under an expired collective bargaining agreement. To WHF Parent's
Knowledge, there are no organizational efforts presently being made or
threatened by or on behalf of any labor union with respect to employees of WPI,
WIN or any of their respective Subsidiaries. Since January 1, 1999, none of WPI,
WIN or any of their respective Subsidiaries is or has been a party to or subject
to any pending strike, work stoppage, organizing attempt, picketing, boycott or
similar activity.
Section 3.17. Employee Benefits.
(a) Section 3.17 of the Disclosure Schedule lists each
material Employee Benefit Plan.
(b) Each such Employee Benefit Plan complies and has been
maintained in all material respects with its terms and the applicable
requirements of ERISA, the Code, and other applicable Laws and each of the
Employee Benefit Plans intended to qualify under Section 401 of the Code is so
qualified and has either received a current and valid determination letter (or
opinion letter if applicable) from the Internal Revenue Service or the remedial
amendment period with respect to such Employee Benefit Plan has not yet expired
and nothing has occurred, whether by action or failure to act, that could
reasonably be expected to cause the loss of such qualification.
(c) The Sellers have delivered or made available to Buyer
correct and complete copies of each such Employee Benefit Plan and, to the
extent applicable, a favorable determination letter (or opinion letter if
applicable) from the Internal Revenue Service.
(d) Except as set forth on Section 3.17 (d) of the Disclosure
Schedule:
(i) None of the Sellers or the Acquired Subsidiaries, nor any
ERISA Affiliate of each maintains any Employee Pension Benefit Plan
subject to Title IV of ERISA or Section 412 of the Code or has any
Liability under any such Employee Pension Benefit Plan that remains
unsatisfied.
(ii) There have been no Prohibited Transactions with respect
to any such Employee Pension Benefit Plan for which there is no
exemption and with respect to which either of the Sellers or the
Acquired Subsidiaries incurred any material Liability.
(iii) None of the Sellers or the Acquired Subsidiaries or any
ERISA Affiliate contributes to any Multiemployer Plan or has any
Liability (including withdrawal Liability) under any Multiemployer
Plan.
(iv) None of the Sellers or the Acquired Subsidiaries
maintains or contributes to any Employee Welfare Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for
current or future retired or terminated employees of such Company or
Subsidiary or, their spouses, or their dependents (other than in
accordance with Part 6 of Title I of ERISA or Code Section 4980B).
28
(v) Each of the Sellers and the Acquired Subsidiaries has
complied in all material respects with the applicable requirements of
Parts 6 and 7 of Title I of ERISA with respect to any Employee Welfare
Benefit Plan providing health benefits to employees of such Company or
Subsidiary, or their spouses or dependents.
(vi) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby (whether alone or
in connection with a subsequent event) will result in the acceleration
of the time of payment or vesting of any material compensation or
employee benefits under any Employee Benefit Plans, whether or not any
such payment, right or benefit would constitute a parachute payment
within the meaning of Section 280G of the Code.
Section 3.18. Legal Compliance. Except for Environmental Laws
(which are addressed exclusively in Section 3.12), none of WPI, WIN or any of
their respective Subsidiaries is in violation of or has violated or failed to
comply with any Law, permit or license or other authorization or approval of any
Governmental Authority applicable to its business or operations, except for
violations and failures to comply that would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
the Business.
Section 3.19. Brokers' Fees. Except for Rothschild Inc., whose
fee will be paid pursuant to an engagement agreement and will not be paid by
Buyer, the Company or any of their respective Affiliates, none of the Sellers,
WHF Parent or the Company has entered into or will assume as of the Closing Date
any contract or other arrangement or understanding (written or oral, express or
implied) with any Person which may result in the obligation of Buyer or any of
its Affiliates to pay any fees or commissions to any broker or finder as a
result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement.
Section 3.20. Entire Business. The WPI Assets and the WIN
Assets (each as defined in the Contribution Agreement) constitute all the
assets, properties and rights utilized by WPI and WIN to conduct the Business in
all material respects as currently conducted.
Section 3.21. Condition of Assets. There are no defects in the
normal operating condition and repair of the WPI Assets and the WIN Assets,
taken as a whole, which defects would individually or in the aggregate
materially impair the operations of the Business.
Section 3.22. Affiliate Arrangements. There are no agreements
or arrangements between or among WPI, WIN or the Acquired Subsidiaries and any
Affiliate of any of WPI and WIN ("Affiliate Transactions") that would survive
the Closing other than as set forth in the Transaction Documents or as set forth
on Section 3.22 of the Disclosure Schedule.
Section 3.23. Solvency. On the Closing Date, each of the
Sellers is solvent, has tangible and intangible assets having a fair value in
excess of the amount required to pay its probable Liabilities on its existing
debts as they become absolute and matured, and has access to adequate capital
for the conduct of its business and the ability to pay its debts from time to
time incurred in connection therewith as such debts mature.
Section 3.24. Certain Information.
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(a) Audit Reports and Publishers' Statements. To WHF Parent's
Knowledge the number of paid subscribers of the periodicals of the Business for
the last issue mailed prior to June 30, 2002 for Audit Bureau of Circulations
("ABC") purposes (i.e., exclusive of grace copies, newsstand sales and other
single copy sales) was not less in any material respect than the number of
subscribers for such issue set forth on Section 3.24(a) of the Disclosure
Schedule. To WHF Parent's Knowledge, the information in the ABC Annual Audit
Reports for the twelve-month period ended June 30, 2002 for each of the
periodicals of WPI and the 2001 Publishers' Statements is true and correct in
all material respects.
(b) Subscription and Circulation Information. WPI and WIN have
heretofore provided to Buyer a true, complete and correct copy of the most
recent reports with respect to subscription and circulation data. Section
3.24(b) of the Disclosure Schedule is a summary of the most current available
subscription and circulation data with respect to the periodicals of the
Business prepared by WPI and WIN. Other than as reflected on Section 3.24(b) of
the Disclosure Schedule, all current subscriptions to the periodicals of the
Business have been sold in material compliance with the ABC rules and
regulations for qualified circulation.
(c) Advertising Contracts. Sellers have heretofore delivered
to Buyer a complete and correct list for each of the periodicals of the Business
of the largest (in terms of each of pages and advertising revenue) 20
advertisers for fiscal 2001. Except as set forth and described on Section
3.24(c) of the Disclosure Schedule, no advertiser which was one of the largest
(in terms of pages and/or advertising revenue) 20 advertisers for fiscal 2001
for any of the periodicals of the Business has given written notification of its
intent to cancel advertising placed or to suspend, modify in a manner adverse to
the Business or otherwise terminate its relationship with such publication.
(d) Rate Cards. All rate cards currently in effect with
respect to the periodicals of the Business have been previously delivered to
Buyer, and all material changes proposed to be made to any current rate card
rates are annexed hereto as Section 3.24(d) of the Disclosure Agreement.
Section 3.25. Investment. Each of WPI and WIN is aware that
the EMP Sold Units being issued to WPI and WIN pursuant to the transactions
contemplated hereby have not been registered under the Securities Act or under
any state securities laws. Neither of WPI nor WIN is an underwriter, as such
term is defined under the Securities Act, and each of WPI and WIN is purchasing
the EMP Sold Units solely for investment and not with a view toward, or for sale
in connection with, any distribution thereof within the meaning of the
Securities Act, nor with any present intention of distributing or selling any of
the EMP Sold Units. Each of WPI and WIN and their respective Subsidiaries and
Affiliates will not sell or otherwise dispose of the EMP Sold Units except in
compliance with the registration requirements or exemption provisions under the
Securities Act and the rules and regulations promulgated thereunder, or any
other applicable securities laws.
Section 3.26. Financial Condition. Following the Closing, WHF
Parent will have a net worth in excess of $100,000,000.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND EMP
Each of Buyer and EMP, jointly and severally, represents and
warrants to the Sellers and WHF Parent as follows:
Section 4.1. Organization.
(a) Buyer is duly organized, validly existing, and in good
standing under the laws of Delaware and Buyer has all requisite organizational
power and authority to carry on its business as it is currently conducted and to
own, lease and operate its properties where such properties are now owned,
leased or operated. Buyer is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or license necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Buyer.
(b) EMP is duly organized, validly existing, and in good
standing under the laws of Delaware and EMP has all requisite organizational
power and authority to carry on its business as it is currently conducted and to
own, lease and operate its properties where such properties are now owned,
leased or operated. EMP is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or license necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on EMP.
Section 4.2. Authorization. Each of Buyer and EMP have all
requisite power and authority to execute and deliver this Agreement and each
Transaction Document to which it is a party, to perform their respective
obligations hereunder and thereunder and to consummate the transaction
contemplated hereby and thereby. The execution, delivery and performance by each
of Buyer and EMP of this Agreement and each Transaction Document to which it is
a party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary organizational action on the part of
Buyer and EMP. This Agreement has been and, at the Closing, each Transaction
Document to which it is a party will be duly executed and delivered by Buyer and
EMP and constitutes or, with respect to the Transaction Documents to be
delivered at the Closing, will constitute at the Closing a legal, valid and
binding obligation of Buyer and EMP, enforceable against Buyer and EMP in
accordance with its terms, subject to the Remedies Exception.
Section 4.3. Noncontravention. Neither the execution and
delivery of this Agreement or any Transaction Document to which it is a party by
Buyer or EMP, nor the consummation by Buyer or EMP of the transactions
contemplated hereby or thereby will (i) conflict with any provision of the
Certificate of Formation, EMP LLC Agreement, the Certificate of Incorporation or
Bylaws of Buyer or other governing documents of Buyer or EMP, or (ii) violate or
result in a breach of any material agreement, contract, lease, license,
instrument or other arrangement to which Buyer, EMP or any of their respective
Subsidiaries is a party or by which any of their respective properties are
bound, or (iii) subject to compliance with the HSR
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Act, violate any Law to which Buyer, EMP or any of their respective Subsidiaries
is subject, except, in the case of clauses (ii) and (iii), for such violations
or breaches which would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on EMP.
Section 4.4. Government Authorizations. Except for required
filings under the HSR Act, no Consent of, or filing with or to any Governmental
Authority is required to be obtained or made by or with respect to Buyer, EMP or
any of their respective Subsidiaries or Affiliates in connection with the
execution and delivery of this Agreement or the Transaction Documents or the
consummation of the transactions contemplated hereby or thereby.
Section 4.5. Investment. Buyer is aware that the Transferred
Units being acquired by Buyer pursuant to the transactions contemplated hereby
have not been registered under the Securities Act or under any state securities
laws. Buyer is not an underwriter, as such term is defined under the Securities
Act, and Buyer is purchasing the Transferred Units solely for investment and not
with a view toward, or for sale in connection with, any distribution thereof
within the meaning of the Securities Act, nor with any present intention of
distributing or selling any of the Transferred Units. Buyer and its respective
Subsidiaries and Affiliates will not sell or otherwise dispose of the
Transferred Units except in compliance with the registration requirements or
exemption provisions under the Securities Act and the rules and regulations
promulgated thereunder, or any other applicable securities laws.
Section 4.6. Litigation. There are no Actions pending or, to
Buyer's Knowledge, threatened in law or in equity or before any Governmental
Authority against Buyer, EMP or any of their respective Affiliates which are
reasonably likely to result in a material Liability for EMP or have,
individually or in the aggregate, a Material Adverse Effect on EMP, and there
are no outstanding Injunctions, judgments, orders, decrees, rulings, or charges
to which Buyer, EMP or any of their respective Affiliates is a party or by which
it is bound by or with any Governmental Authority which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
EMP or a material adverse effect on the business of EMP.
Section 4.7. Brokers' Fees. None of Buyer, EMP or any of their
respective Affiliates has any contract or other arrangement or understanding
(written or oral, express or implied) with any Person which may result in the
obligation of WHF Parent, the Sellers, the Company or any of their respective
Affiliates to pay any fees or commissions to any broker or finder as a result of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement.
Section 4.8. Information. WHF Parent and the Sellers have
provided Buyer with such access to the facilities, books, records and personnel
of each of WPI, WIN and their respective Subsidiaries and Affiliates as Buyer
has deemed necessary and appropriate in order for Buyer to investigate to its
satisfaction the business and properties of each of WPI, WIN and their
respective Subsidiaries and Affiliates sufficiently to make an informed
investment decision to purchase the Transferred Units and to enter into this
Agreement. Buyer (either alone or together with its advisors) has such knowledge
and experience in financial and business matters so as to be capable of
evaluating the merits and risks of its purchase of the Transferred Units and is
capable of bearing the economic risks of such purchase. Buyer agrees to accept
the
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Transferred Units on the Closing Date based upon its own investigation,
examination and determination with respect thereto as to all matters and without
reliance upon any express or implied representations or warranties of any nature
made by or on behalf of or imputed to WHF Parent or the Sellers, except as
expressly set forth in this Agreement.
Section 4.9. Capitalization and EMP Sold Units; Title.
(a) As of the Closing Date, EMP's total outstanding membership
interests will consist solely of 235,000 Class A Units, 5,000 Class A-1 Units,
32,198 Class B Units, 3,485 Class C Units, 1,343 Class E Xxxxx, 000 Class G
Units and 3,757 Profit Units (other than the Class H Units that will be issued
by EMP as contemplated hereby). As of the Closing Date, all of the EMP Sold
Units will be duly authorized and validly issued and will be fully paid and
nonassessable.
(b) At the Closing, each of WPI and WIN will have title to,
and will be the legal and beneficial owner of, the EMP Sold Units free and clear
of any Liens. Upon transfer and delivery to WPI and WIN at the Closing, WPI and
WIN will have full title to such EMP Sold Units, free and clear of any Liens,
except for any Liens created by this Agreement and the Liens arising under
federal or state securities laws. Except for this Agreement and the EMP LLC
Agreement, there are no (i) outstanding options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
relating to such EMP Sold Units, (ii) outstanding profit participation, or
similar rights with respect to such EMP Sold Units, (iii) voting trusts,
proxies, or other contracts or understandings with respect to the voting of such
EMP Sold Units or (iv) transfer restrictions with respect to such EMP Sold
Units.
Section 4.10. Subsidiaries of EMP. Section 4.10 of the
Disclosure Schedule sets forth for each of EMP's Subsidiaries (i) its name and
jurisdiction of organization, (ii) its form of organization and (iii) the
capital stock or membership interests held by EMP as of the date of this
Agreement, directly or indirectly, in such Subsidiary. As of the date of this
Agreement, EMP is the sole beneficial and record owner of the outstanding shares
of capital stock or other interests in each of its Subsidiaries. As of the
Closing Date, EMP will be the sole and beneficial and record owner of the
outstanding shares of capital stock or other interests in each of EMP's
Subsidiaries set forth in Section 4.10 of the Disclosure Schedule.
Section 4.11. Tax Treatment. EMP is, and at all times has
been, properly treated as a partnership, and not as an association or publicly
traded partnership, for US federal income tax purposes.
Section 4.12. Debt Financing. Buyer has delivered to Sellers
and WHF Parent true and complete copies of the commitment letters from JPMorgan
Chase Bank, X.X. Xxxxxx Securities Inc., Bear Xxxxxxx Corporate Lending Inc. and
Bear, Xxxxxxx & Co. Inc. (the "Debt Commitment Letters") to provide to Buyer,
subject to the terms and conditions thereof, the amount of debt financing set
forth in the Debt Commitment Letters that when funded, along with the Investor
Equity (as hereinafter defined), will provide Buyer with the funds necessary to
consummate the transactions contemplated by this Agreement and pay all fees,
expenses and costs in connection with negotiation, execution and performance of
this Agreement by Buyer and EMP. The financing to be provided thereunder is
referred to herein as the "Debt Financing."
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Section 4.13. Equity Financing. Buyer and EMP represent that
they have received a commitment to fund at least $32.5 million from Evercore
Capital Partners L.P. ("Evercore"), subject to no contingencies other than the
conditions to Buyer's obligation set forth herein (the "Investor Equity").
Sellers acknowledge that contribution of the Investor Equity is subject to
preemptive rights as set forth in the EMP LLC Agreement and that EMP may obtain
the Investor Equity, in whole or in part, from Persons other than Evercore. EMP
acknowledges and agrees that if Evercore or any other investor defaults in its
obligations to provide the Investor Equity, EMP and Buyer shall be obligated to
fund any portion of such unfunded Investor Equity.
Section 4.14. Valuation. The EMP Sold Units issued to Sellers
hereunder in exchange for the Retained LLC Units shall be issued using the same
valuation for EMP and shall have the same rights to distributions and
liquidation payments as the Class H Units issued to investors in EMP in exchange
for contribution of the Investor Equity to EMP. The valuation methodology used
to determine the number of EMP Sold Units shall be reasonable and made in good
faith. EMP shall provide Sellers with all reasonably necessary and appropriate
information with respect to the determination of such valuation.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of the Business. Each of WHF Parent and
the Sellers covenants and agrees that, except as otherwise contemplated by this
Agreement (including the Schedules and Exhibits hereto), during the period
commencing on the date hereof and ending on the Closing Date, WHF Parent and the
Sellers will cause each of WPI and WIN to use their reasonable efforts to
conduct the Business in the ordinary course consistent with past practices, to
keep available the services of the employees of WPI and WIN, to preserve the
relationships of WPI and WIN with their customers, suppliers, advertisers,
distributors and other Persons with which WPI and WIN have significant
relations, to make payments and collect receivables in a manner consistent with
past practice, and to maintain and preserve intact the Business in all material
respects with a view toward preserving to and after the Closing Date the
Business and the assets and the goodwill of WPI and WIN (it being understood
that such efforts will not include any requirement or obligation to pay any
consideration not otherwise required to be paid by the terms of an existing
agreement or offer or grant any financial accommodation or other benefit not
otherwise required to be made by the terms of an existing agreement). Until the
Closing, except as otherwise contemplated by this Agreement (including the
Schedules and Exhibits hereto) or any Transaction Document, permitted by the Tax
Sharing Agreement, required by any change in applicable Law or otherwise
approved in writing by Buyer (which approval shall not be unreasonably withheld
or delayed), each of WHF Parent and the Sellers will cause WPI, WIN and the
Company not to take any of the following actions:
(i) (a) amend its Certificate of Incorporation or Bylaws; (b)
authorize for issuance, issue, grant, sell, deliver, dispose of, pledge
or otherwise encumber any shares of its capital stock or issue any
Rights to subscribe for or acquire any shares of its capital stock; (c)
amend the Certificate of Formation of the Company; or (d) authorize for
issuance, issue, grant, sell, deliver, dispose of, pledge or otherwise
encumber any LLC Units;
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(ii) declare, set aside, pay or make any dividend or other
distribution with respect to its shares of capital stock, except for
cash dividends and any dividend or distribution to WHF Parent in
respect of indebtedness owed by WHF Parent to WPI;
(iii) except as required by GAAP, change any accounting
methods, principles or practices;
(iv) sell, transfer, license, grant permission to use or
otherwise dispose of or encumber any of the assets pertaining to the
Business, including the Business Intellectual Property or rights
related thereto, other than in the ordinary course of business
consistent with past practice;
(v) (a) create, incur or assume any long-term debt that will
be transferred to the Company in the Contribution, (b) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any material obligations of
any Person, (c) make any loans, advances or capital contributions to or
investments in any Person other than the Sellers, WPI or the Acquired
Subsidiaries (except for customary loans or advances to employees), (d)
fail to preserve or protect their rights in all material Business
Intellectual Property or to renew, maintain, or take such steps or make
such payments and filings, in each case, as may be reasonably necessary
to preserve the validity and enforceability of all Registered
Intellectual Property, or (e) breach, terminate, nullify, fail to
renew, allow to lapse or otherwise act or fail to act in such a manner
as to diminish any of WPI's or WIN's rights under the Business IP
Licenses;
(vi) (a) grant any increase in the compensation of employees
of the Business, except for year end salary adjustments and year end
bonuses made in the ordinary course of business consistent with past
practice, (b) hire new employees other than in the ordinary course of
business consistent with past practice, (c) enter into any new
employment, severance, consulting or other compensation agreement with
any director, officer or employee of WPI or WIN, except for the
employment agreements disclosed in Section 5.1(a)(vi) of the Disclosure
Schedule in the forms previously delivered to Buyer (which employment
agreements and the Liabilities relating thereto shall be assumed by
Buyer at the Closing), or (d) adopt or commit to any pension,
profit-sharing, deferred-compensation, group insurance, severance pay,
retirement or other Employee Benefit Plan, fund or similar arrangement
or amend or terminate in any respect or commit itself to amend any
Employee Benefit Plan;
(vii) waive any claims or rights relating to the Business,
other than in the ordinary course of business consistent with past
practice;
(viii) make any material Tax election, change any method of
accounting with respect to a material Tax, file any material amended
Tax Return, or settle or compromise any proceeding with respect to a
material Tax Liability, in each case with respect to the Acquired
Subsidiaries;
(ix) (a) grant any material bonus, free or make good space to
any advertiser or change the discount structure for any of the
Business' advertising customers, other than
35
in the ordinary course of business consistent with past practice, (b)
(1) change the subscription pricing of any of the publications of the
Business or (2) enter into, amend or terminate any material
arrangements with any subscription agents, (c) change any cover prices,
wholesaler discounts or make any other changes to the incentive sales
programs (wholesale or retail) of the Business, (d) enter into any
material licensing agreement, arrangement or understanding with respect
to television, radio, Internet or other media or enter into any
material licensing agreement, arrangement or understanding with respect
to any "branded" merchandise bearing any of the trademarks or
tradenames used in the Business owned or licensed by the Sellers or the
Acquired Subsidiaries; (e) enter into, amend or terminate any
agreements or arrangements with the national distributor of the
publications; or (f) take any action with respect to the publications
of the Business in contravention of the advice of the litigation
counsel of the Business;
(x) enter into any contract, arrangement or commitment with
respect to the Business involving the payment of more than $100,000 or
otherwise material to the Business;
(xi) cancel any material third party indebtedness owed to any
Seller or Acquired Subsidiary;
(xii) in connection with the transactions contemplated by the
Contribution Agreement, offer, or cause or permit the Company to offer
employment to any employees of the Business, such offers of employment
shall be made by the Buyer pursuant to Section 5.7(a) of this
Agreement; or
(xiii) agree, whether in writing or otherwise, to do any of
the foregoing.
Section 5.2. Access to Information; Confidentiality.
(a) Prior to the Closing Date, or, if earlier, the date this
Agreement is terminated pursuant to Section 8.1, Buyer may make or cause to be
made such investigation of the Business and properties of WPI and WIN and their
respective Subsidiaries and of their respective financial and legal condition as
Buyer deems reasonably necessary or advisable. Each of WHF Parent and the
Sellers shall, and shall cause WPI and WIN and their respective Subsidiaries to,
permit Buyer and its authorized agents or representatives, including its
independent accountants, to have reasonable access to the properties, books and
records of WPI and WIN and their respective Subsidiaries during normal business
hours to review information and documentation relative to the properties, books,
contracts, commitments and other records of WPI and WIN and their respective
Subsidiaries; provided, that such investigation shall only be upon reasonable
notice and shall not unreasonably disrupt personnel and operations of the
Business and shall be at Buyer's sole cost and expense. All requests for access
to the offices, properties, books and records of WPI and WIN and their
respective Subsidiaries shall be made to such representatives of WPI as WPI
shall designate, who shall be solely responsible for coordinating all such
requests and all access permitted hereunder. It is further agreed that neither
Buyer nor its representatives shall contact any of the employees, customers,
suppliers or joint venture partners of WPI, WIN or any of their respective
Subsidiaries or Affiliates in connection with the transactions contemplated
hereby, whether in person or by telephone, mail or other means of communication,
without the specific prior authorization of such representatives of
36
WPI. Any access to the offices, properties, books and records of any of WPI and
WIN and their respective Subsidiaries shall be subject to the following
additional limitations: (a) such access shall not violate any Law or agreement
to which the Sellers, WHF Parent, WPI or any of their respective Subsidiaries is
a party or otherwise expose the Sellers, WHF Parent, WPI or any of their
respective Subsidiaries to a material risk of Liability; (b) Buyer shall give
WPI notice at least two (2) Business Days before conducting any inspections or
communicating with any third party relating to any property of the Sellers or
any of their respective Subsidiaries, and a representative of WPI shall have the
right to be present when Buyer or its representatives conducts its or their
investigations on such property; (c) none of Buyer and its representatives shall
damage the property of the Sellers and their respective Subsidiaries or any
portion thereof; and (d) Buyer shall: (i) use its reasonable best efforts to
perform all on-site due diligence reviews and all communications with any Person
on an expeditious and efficient basis; and (ii) indemnify, defend and hold
harmless WHF Parent, the Sellers, WPI and their respective Subsidiaries and each
of their respective employees, directors and officers from and against all
Damages resulting from or relating to the activities of Buyer or its
representatives under this paragraph. The foregoing indemnification obligation
shall survive the Closing or termination of this Agreement.
(b) Buyer and its Subsidiaries, Affiliates and representatives
will hold in confidence all confidential information obtained from the Sellers,
WHF Parent, WPI, the Company and their respective Subsidiaries or their
respective officers, agents, representatives or employees, whether or not
relating to the Business, in accordance with the provisions of the
Confidentiality Agreement which, notwithstanding anything contained therein,
shall remain in full force and effect following the execution of this Agreement
and shall survive any termination of this Agreement; provided that it shall not
restrict Buyer with respect to information regarding the Business following the
Closing.
Section 5.3. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement and applicable Law, each of the Parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable Laws and regulations or otherwise to consummate
and make effective the transactions contemplated by this Agreement as soon as
practicable, including such actions or things as any other Party hereto may
reasonably request in order to cause any of the conditions to such other Party's
obligation to consummate such transactions specified in Article VI to be fully
satisfied. Without limiting the generality of the foregoing, the Parties shall
(and shall cause their respective directors, officers and Subsidiaries, and use
their reasonable best efforts to cause their respective Affiliates, employees,
agents, attorneys, accountants and representatives, to) consult and fully
cooperate with and provide reasonable assistance to each other in (i) obtaining
all necessary Consents or other permission or action by, and giving all
necessary notices to and making all necessary filings with and applications and
submissions to, any Governmental Authority or other Person, (ii) lifting any
permanent or preliminary injunction or restraining order or other similar order
issued or entered by any court or Governmental Authority (an "Injunction") of
any type referred to in Section 6.1(a) and (iii) in general, consummating and
making effective the transactions contemplated hereby; provided, however, that
in order to obtain any Consent, approval, waiver, license, permit,
authorization, registration, qualification, or other permission or action or the
lifting of any Injunction referred to in clause (i) or (ii) of this sentence, no
Party shall be required
37
to pay any consideration, to divest itself of any of, or otherwise rearrange the
composition of, its assets or to agree to any conditions or requirements which,
individually or in the aggregate, would have a Material Adverse Effect on the
Business, on the one hand, or Buyer, on the other hand, or materially adversely
affect the benefits of the transactions contemplated by this Agreement to Buyer.
Section 5.4. HSR Act Compliance; Government Approvals.
(a) Buyer (and any ultimate parent entity of Buyer), on the
one hand, WHF Parent and the Sellers, on the other hand, shall timely and
promptly make all filings which may be required for the satisfaction of the
condition set forth in Section 6.1(b) by each of them in connection with the
consummation of the transactions contemplated hereby. In furtherance and not in
limitation of the foregoing, each of the Parties agrees to use its reasonable
best efforts to file Notification and Report Forms under the HSR Act and similar
applications with any other applicable Governmental Authority whose approval is
required in connection with the consummation of the purchase by Buyer of the
Transferred Units as promptly as practicable following the date of this
Agreement and in any event no later than seven Business Days following the date
of this Agreement. The Sellers, WHF Parent and Buyer agree, and shall cause each
of their respective Subsidiaries and Affiliates, to cooperate and to use their
respective reasonable best efforts to obtain any governmental Consents required
for the Closing (including through compliance with the HSR Act, to respond to
any governmental requests for information. Each Party shall furnish to the other
Party such necessary information and assistance as such other Party may
reasonably request in connection with the preparation of any necessary filings
or submissions by it to any Governmental Authority referred to in Section
6.1(b). Without in any way limiting the foregoing, the Parties will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any Party
in connection with proceedings under or relating to the HSR Act.
(b) Each of the Parties shall notify and keep the other Party
advised as to (i) any material communication from the Federal Trade Commission,
the United States Department of Justice or any other Governmental Authority
regarding any of the transactions contemplated hereby and (ii) any Action
pending and known to such Party, or to its Knowledge threatened, which
challenges the transactions contemplated hereby. Subject to the provisions of
Article VIII, none of the Parties shall take any action inconsistent with their
obligations under this Agreement or, without prejudice to Buyer's rights under
this Agreement, which would materially hinder or delay the consummation of the
transactions contemplated by this Agreement.
Section 5.5. Public Announcements. Except to the extent
otherwise required by applicable Law or the rules of any exchange on which Buyer
or an Affiliate thereof has publicly traded securities (and then only after
consultation with WHF Parent), none of the Parties will issue any press release
or make any other public announcements concerning the transactions contemplated
hereby or the contents of this Agreement without the prior written consent of
the other Parties.
Section 5.6. Notification of Certain Matters. Between the date
hereof and the Closing Date, each Party will give prompt written or electronic
notice to the other Party of:
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(i) any information that indicates that, to its Knowledge, any of its
representations or warranties contained herein are not true and correct (except
for changes permitted or contemplated by this Agreement); provided, however,
that the failure of any Party to comply with this Section 5.6 will not subject
such Party to any Liability hereunder in respect of any claim asserted after the
relevant expiration date for the relevant representation or warranty; and
provided, further, that no Party may separately recover pursuant to Article VII
or otherwise for both a breach of this Section 5.6 and any related breach of the
relevant representation or warranty, (ii) the occurrence or non-occurrence of
any event which will result, or would reasonably be expected to result, in the
failure of any condition, covenant or agreement contained in this Agreement to
be complied with or satisfied, (iii) any failure of any Party to comply with or
satisfy any condition, covenant or agreement to be complied with or satisfied by
it hereunder, and (iv) any notice or other communication from any third party
alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement or that such
transactions otherwise may violate the rights of or confer remedies upon such
third party.
Section 5.7. Employee Matters.
(a) Buyer will offer employment to each of the active
employees of the Business who are employed by the Business (including those who
are (i) on maternity leave or short-term disability, or (ii) on layoff, leave
(other than maternity leave), long-term disability or other permitted absence
from employment (such employees described in (ii), the "Long-Term Leave
Employees")) immediately prior to the Closing Date; provided, however, that (i)
with respect to the Long-Term Leave Employees, such offer of employment shall be
effective when such Long-Term Leave Employee is able to return to active
employment with the Buyer, (ii) Long-Term Leave Employees who receive disability
benefits under a disability benefit plan of WPI shall be entitled to continue
participation in such disability benefit plan until such Long-Term Leave
Employee recovers from such disability or otherwise ceases to be eligible for
benefits under such plan and (iii) nothing contained in this Section 5.7 is
intended to confer upon any Continued Employee any right to continued employment
after the Closing Date. The employees who accept employment with the Buyer and
continue in such employment with the Business following the Closing Date are
herein referred to as "Continued Employees." Buyer agrees that for a period of
12 months following the Closing Date, Continued Employees will be entitled to
severance pay that is no less favorable than the severance pay such Continued
Employees would be entitled to under the severance plan or policy of the
Business immediately prior to the Closing Date which is described in Section
5.7(a) of the Disclosure Schedule. Except as set forth in the immediately
preceding sentence, for a period of twelve months following the Closing Date,
Buyer will or will cause its Subsidiaries (as applicable) to provide to
Continued Employees salary or wage levels no less favorable than salary or wage
levels of Continued Employees immediately prior to Closing and employee benefits
that are comparable in the aggregate to those employee benefits provided to
similarly situated employees of Buyer.
(b) Effective as of the Closing Date, Buyer shall establish,
or shall cause to be established, a new defined contribution plan and a trust
related thereto to cover Continued Employees (the "Company DC Plan"). The
Company DC Plan (i) shall be qualified under Sections 401(a) and 401(k) of the
Code and (ii) shall contain provisions that permit Continuing Employees to roll
over their accounts from the Weider Health and Fitness 401(k) Plan (the
39
"Seller DC Plan"). As of the Closing Date, each Continuing Employee shall be
fully vested in his or her account balance under the Seller DC Plan.
(c) Following the Closing Date, the Company shall provide WHF
with such payroll and benefit plan administration services as are set forth in
the Services Agreement.
(d) Without limiting the obligations of Seller in Section
5.7(g) of this Agreement, with respect to the Retirement Agreements between WHF
and the individuals set forth on Section 5.7(d) of the Disclosure Schedule, WHF
shall make payments to such individuals pursuant to the terms of the applicable
Retirement Agreements.
(e) Following the Closing Date, Buyer shall cause all
applicable employee benefit plans, programs and arrangements of Buyer to provide
that a Continued Employee's period of employment with WHF, WPI, the Company, or
any Affiliate of such shall be treated as service for Buyer for purposes of
eligibility and vesting under Buyer's employee benefit plans, programs and
arrangements ("Buyer Plans"). Buyer further agrees to recognize the vacation and
sick leave days accumulated by the Continued Employees during the time they were
employed by WHF, WPI, the Company, or any Affiliate of such. Additionally, any
and all pre-existing condition limitations and eligibility waiting periods under
any Buyer Plan shall be waived with respect to the Continuing Employees and
their eligible dependents, and Continuing Employees shall be given credit for
amounts paid under any Seller Plan for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the Buyer Plans.
(f) Following the Closing Date, the Company and Buyer shall
use reasonable best efforts to cause all payroll taxes with respect to the
Continued Employees to be assigned under the "alternative procedure" described
in Section 5 of Rev. Proc. 96-60.
(g) Notwithstanding any other provisions of this Agreement,
Sellers shall assume or retain all Liabilities under or relating to any Employee
Benefit Plan, whether or not such Liability arises prior to, on or after the
Closing Date only to the extent that such Liabilities are WPI Excluded
Liabilities or WIN Excluded Liabilities.
Section 5.8. Post-Closing Access; Preservation of Records.
(a) From and after the Closing, Buyer will make or cause to be
made available to Sellers all books, records and documents of the Company and
any Subsidiaries (and the assistance of employees responsible for such books,
records and documents) during regular business hours as may be reasonably
necessary for (i) investigating, settling, preparing for the defense or
prosecution of, defending or prosecuting any Action, (ii) preparing reports to
stockholders and Government Authorities or (iii) such other purposes for which
access to such documents is believed by the Sellers and WHF Parent to be
reasonably necessary; provided, however, that access to such books, records,
documents and employees will not interfere with the normal operations of the
Company and its Subsidiaries and the reasonable out-of-pocket expenses of the
Company and its Subsidiaries incurred in connection therewith will be paid by
the Sellers. Buyer will cause the Company and its Subsidiaries to maintain and
preserve all such books, records and other documents for the greater of (A)
seven years after the Closing Date or (B) any applicable statutory or regulatory
retention period, as the same may be extended.
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(b) From and after the Closing, the Sellers and WHF Parent
will make or cause to be made available to Buyer all books, records and
documents of the Sellers and WHF Parent relating to the Business (and the
assistance of employees responsible for such books, records and documents)
during regular business hours for the same purposes, to the extent applicable,
as set forth in Section 5.2(a); provided, however, that access to such books,
records, documents and employees will not interfere with the normal operations
of the Sellers and WHF Parent and the reasonable out-of-pocket expenses of the
Sellers incurred in connection therewith will be paid by Buyer.
Section 5.9. Tax Matters.
(a) The Sellers and Buyer shall cooperate in the preparation
of, a joint schedule (the "Allocation Schedule") allocating the Purchase Price
(including any adjustments thereto pursuant to Section 2.4) among the
Contributed Assets in accordance with Sections 755 and 1060 of the Code and the
Treasury Regulations promulgated thereunder; provided that, if the Parties are
unable to agree upon the Allocation Schedule, the Parties shall each file their
own Allocation Schedule reflecting all matters agreed upon on a consistent
basis. The Parties shall make all required federal, state and local income tax
filings consistent with the Allocation Schedule. The Sellers and Buyer shall
provide the other promptly with any other information required to complete the
Allocation Schedule and to cooperate in the preparation of any Tax filings in
the manner required by applicable Law.
(b) The Sellers will cause the Company to have in effect a
Code Section 754 election for the taxable year of the Company that includes the
Closing. The Parties acknowledge and agree that, for federal income tax
purposes, the purchase by Buyer of the Transferred Units pursuant to this
Agreement will result in an increase to the basis of the assets of the Company
pursuant to Sections 743 and 755 of the Code and the Treasury Regulations
promulgated thereunder.
Section 5.10. Financing Cooperation. WHF Parent, the Sellers
and the Company each agree to use their reasonable efforts to cooperate, and to
cause each of their respective officers and employees and representatives to
cooperate in connection with the arrangement of the financing described in this
Agreement and the Debt Commitment Letters to be consummated at or prior to the
Closing in respect of the transactions contemplated by this Agreement,
including, without limitation, participation in meetings, due diligence sessions
and road shows, drafting sessions for the documents (including, but not limited
to, information memoranda, offering memoranda and other marketing documents),
and obtaining "comfort letters" and Consents from auditors; provided that
nothing herein will require WHF Parent or any of its Affiliates to execute any
document prior to the Closing. WHF Parent shall provide to Buyer, by December 3,
2002 (or as soon thereafter as reasonably practicable), (a) audited combined
consolidated statements of operations, stockholders' equity and cash flows for
WPI and WIN for the fiscal years ended May 31, 1999 and May 31, 2000, the seven
months ended December 31, 2000 and the fiscal year ended December 31, 2001 and
(b) the combined consolidated balance sheet of WPI and WIN as of September 30,
2002, and the related consolidated statements of operations and cash flows,
including WIN, for the nine months ended September 30, 2002, each of which have
been reviewed by Deloitte & Touche LLP pursuant to SAS No. 71 (it being
understood and agreed that Buyer shall pay for all costs in connection with
obtaining such SAS No. 71 review) (such financial statements, following review,
the "Reviewed Financial
41
Statements"); provided that to the extent such financial statements are
delivered after December 3, 2002, each of the Funding Date and the Outside Date
shall be extended by the number of days that elapsed between December 3, 2002
and the actual date such financial statements are delivered.
Section 5.11. Negotiations with Third Parties. From the date
hereof through the Funding Date or, if earlier, the termination of this
Agreement pursuant to Article VIII, none of WHF Parent, the Sellers or WPI will
directly or indirectly, through any director, employee, Affiliate,
representative, agent or otherwise (i) solicit, initiate, encourage or assist in
the submission of any inquiries, proposals or offers from any corporation,
partnership, person, or other entity or group (as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) (other than Buyer, and its
Affiliates and authorized representatives of Buyer or such Affiliates)
(collectively, "Third Parties") relating to any acquisition or purchase of a
substantial portion of assets of, or any equity interest in, the Business or any
form of recapitalization transaction, merger, consolidation, business
combination, spin-off, liquidation or similar transaction involving, directly or
indirectly, the Business (each, an "Acquisition Proposal"), (ii) participate in
any discussions or negotiations regarding an Acquisition Proposal or furnish to
any Third Party (other than in connection with the consummation of the
transactions contemplated hereby) any information concerning the Business or the
transactions contemplated hereby or (iii) otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or attempt by
any Third Party to make or enter into an Acquisition Proposal. Should the
Sellers or any of their Affiliates (A) receive any inquiry, proposal or offer to
enter into any transaction of the type referred to in clauses (i), (ii) or (iii)
above or (B) engage in any of the actions referred to in clauses (i), (ii) or
(iii) following January 15, 2003 while this Agreement is still in effect, the
Sellers will, in the case of clause (A), promptly inform Buyer of the terms
thereof and the identity of the party making such inquiry, proposal or offer
and, in the case of clause (B), promptly inform Buyer of the taking of such
actions.
Section 5.12. Affiliate Transactions. Except to the extent set
forth on Section 5.12 of the Disclosure Schedule, on or prior to the Closing
Date, Sellers shall terminate all Affiliate Transactions.
Section 5.13. Interim Financial Statements and Reports. (a) As
promptly as practicable and in any event no later than thirty days after the end
of each fiscal month ending after the date hereof and before the Closing Date
(other than the last fiscal month) or ninety days after the end of each fiscal
year ending after the date hereof and before the Closing Date, as the case may
be, WHF Parent will deliver to Buyer true and complete copies of (in the case of
any such fiscal year) the audited and (in the case of any such fiscal month) the
unaudited consolidated balance sheets and the related audited or unaudited
consolidated statements of income and cash flows of WPI and WIN as of and for
the fiscal year then ended or as of and for each such fiscal month and the
portion of the fiscal year then ended, as the case may be, together with the
notes, if any, relating thereto, which financial statements shall be prepared on
a basis consistent with the WPI Financial Statements; and (b) as promptly as
practicable, the WHF Parent will deliver to Buyer true and complete copies of
such other regularly-prepared financial statements, reports and analyses as may
be prepared by WPI, WIN or the Acquired Subsidiaries relating to the Business.
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Section 5.14. Non-Competition. As a condition to Buyer's
willingness to enter into the Agreement and in order that Buyer and its
Affiliates may have and enjoy the full benefit of the Business and for
consideration as set forth in Section 2.4(a) equal to $10,000,000 in the
aggregate, in any geographic area in which the Business is operated at the
Closing Date and (i) with respect to Xxx Xxxxxx, for a period of seven years
after the Closing Date, (ii) with respect to Xxx Xxxxxx, for a period of five
years after the Closing Date and (iii) with respect to Xxxx Xxxxxx and WHF
Parent, a period of five years after the Closing Date, in each case, shall not,
without the express written approval of Buyer, directly or indirectly (including
through a Controlled Affiliate), invest, own, manage, operate, finance, Control
or otherwise have a material direct or indirect interest in any business
involved in publishing of healthy living or fitness-related publications in any
and all media, now known or hereafter created, including but not limited to
magazines, books, newsletters, Internet sites, videos and by all other audio,
visual and audio-visual products (but not including paid endorsements or
advertising for other goods or services or any book, video or movie produced or
made by Xxx Xxxxxx relating to himself or any other Weider family member or any
book, video or movie in which he is featured) (a "Competing Business") (it being
understood and agreed that the business currently conducted by Weider Nutrition,
Inc. and business relating thereto shall not be considered a Competing Business
for purposes hereof). Notwithstanding the foregoing, (i) none of Xxx Xxxxxx, Xxx
Xxxxxx, Xxxx Xxxxxx or WHF shall be precluded from having a passive investment
representing less than 5% of the equity or capital of any entity that is engaged
in a Competing Business. The Parties agree that Xxxx Xxxxxx shall in no way be
restricted from serving as an officer or an employee of any entity which owns or
operates a Competing Business that represents less than 25% of such entity's
total business, so long as Xxxx Xxxxxx does not manage, operate, oversee or
Control any such Competing Business. The Parties agree that, if any provision of
this Section 5.14 should be adjudicated to be invalid or unenforceable, such
provision shall be deemed deleted from this section with respect, and only with
respect, to the operation of such provision in the particular jurisdiction in
which such adjudication was made. To the extent any such provisions may be valid
and enforceable in such jurisdiction by limitations on the scope of the
activities, geographical area or time period covered, the Parties agree that
such provision instead shall be deemed limited to the extent, and only to the
extent, necessary to make such provision enforceable to the fullest extent
permissible under the Laws and public policies in such jurisdiction. The parties
agree that the foregoing amounts shall be paid to the estate of Xxx Xxxxxx, Xxx
Xxxxxx or Xxxx Xxxxxx, as the case may be, if any such individuals should become
deceased prior to Closing.
Section 5.15. Further Assurances. The Parties shall cooperate
reasonably with each other in connection with any steps required to be taken as
part of their respective obligations under this Agreement, and shall (a) furnish
upon request such further information; (b) execute and deliver such other
documents; and (c) do such other acts and things, all as the other Party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the contemplated transactions. In furtherance and not in limitation of the
foregoing, from time to time after the Closing Date, the Sellers and their
Affiliates shall execute, acknowledge and deliver, or cause to be executed,
acknowledged or delivered, such instruments of conveyance, assignment, transfer
and delivery and will take or cause to be taken such other actions as Buyer may
reasonably request in order to more effectively sell, transfer, convey, assign,
protect and deliver to Buyer any of the WPI Assets or the WIN Assets (each as
defined in the Contribution
43
Agreement) (including good and valid title thereto), or to enable Buyer or its
Affiliates to exercise and enjoy all rights and benefits with respect thereto.
Section 5.16. Closing Transactions. Immediately prior to the
Closing, WHF Parent shall (i) cause WPI and WIN to enter into the Contribution
Agreement and to consummate the Contribution in accordance with the terms
thereof and (ii) consummate the Merger.
Section 5.17. Financing. Buyer and EMP covenant and agree to
use their reasonable best efforts to (i) assure that the financing condition set
forth in Section 6.3(c) is satisfied (including, without limitation, using their
reasonable best efforts to (a) amend Buyer's existing credit facility and pay
reasonable consent fees in connection therewith, (b) satisfy leverage
requirements and (c) obtain rating agency approvals) and (ii) cause the funding
of the Debt Financing and Investor Equity to occur no later than the Funding
Date (including requiring Buyer to draw its "bridge" facility if the bond
financing cannot be consummated by such date), assuming all other conditions to
each Party's obligation to close hereunder are satisfied or waived by such date
that are capable of being satisfied by such date (provided that if such
conditions are not satisfied by the Funding Date, Buyer and EMP shall cause the
funding to occur at such later date as such conditions are satisfied).
Section 5.18. IFBB Contract. The Sellers, the Company and WHF
Parent shall use their reasonable best efforts to cause the Company to enter
into a contract with the International Federation of Body Builders (the "IFBB")
on an exclusive basis to the extent the current arrangements between WPI and
IFBB are exclusive with respect to the matters enumerated below. Such contract
will provide that for a period of 5 years, without additional consideration
therefor:
(a) Muscle & Fitness or Flex shall have the right to promote
itself as the official magazine of the IFBB;
(b) the Company shall have the right to print IFBB endorsement
columns in its magazines and print IFBB news in Flex consistent with
past practice;
(c) the Company shall have use of a promotional booth at the
Mr. Olympia, Ms. Olympia, Xxxxxx Classic and other similar IFBB
competition expositions ("IFBB Events"), at no additional cost to the
Company;
(d) the Company is named as the exclusive magazine sponsor of
the IFBB Events, at no additional cost to the Company;
(e) the Company is granted exclusive backstage photography
rights at the IFBB Events, at no additional cost to the Company;
(f) the Company shall provide the IFBB with advertising space
for the IFBB Events in certain of its magazines, at no additional cost
to the IFBB, consistent with past practice;
44
(g) the Company designs the advertisements listed in (f) above
free of charge, at no additional cost to the IFBB;
(h) the Company designs, produces and prints the applicable
IFBB Event competition program, at no additional cost to IFBB;
(i) the Company is provided with advertising space in the
applicable IFBB Event program, at no additional cost to the Company;
and
(j) the Company solicits advertisers to place advertisements
in the applicable IFBB Event program in exchange for a commission which
is paid by the IFBB to the Company.
Section 5.19. Branding Agreement. Each of Buyer, EMP and WHF
Parent hereby agree to negotiate in good faith and use their reasonable best
efforts to explore an arm's length agreement for the license of certain
Trademarks in connection with the development and sale of Trademarks in
connection with specific products in certain regions of a type similar to the
draft Branding Agreement that was provided by WHF Parent to Buyer prior to the
date hereof ("Branding Products"). Without limiting the foregoing, Buyer and EMP
hereby grant to WHF Parent for a period of three years and six months from the
Closing Date a right of first refusal to serve as the Buyer's and EMP's third
party outsourcing agent with respect to any Branding Products that Buyer or EMP
have developed or plan to develop in the regions specified in the draft Branding
Agreement.
Section 5.20. Debt Payoff. On or prior to the Closing, WHF
Parent shall cause WPI and WIN to pay all outstanding indebtedness for borrowed
money owed by WPI, WIN or the Acquired Subsidiaries, including such indebtedness
owed to the lenders set forth on Schedule C, and obtain a release (including all
Liens) from the lenders in respect of such indebtedness.
Section 5.21. Insurance.
(a) For four months following Closing, WHF Parent and the
Sellers shall use their reasonably best efforts to assist the Buyer in obtaining
insurance for the Business. Following the Closing and until the earlier of (i)
three months from the Closing Date and (ii) the time the Buyer obtains insurance
for the Business (such period, the "Insurance Period"), WHF Parent shall use its
reasonable best efforts to maintain the insurance policies it has on the
Business for the benefit of the Buyer; provided, that the Buyer pays all of WHF
Parent's out-of-pocket costs incurred in connection with maintaining such
insurance during the Insurance Period, including all deductibles and increases
in premiums.
(b) Following the Closing, if the Buyer suffers any Damages in
connection with the operation of the Business in respect of which coverage
exists under the insurance policies maintained by WHF Parent, WHF Parent shall
use its reasonable best efforts to submit and process claims under such policies
on behalf of the Buyer and remit any proceeds paid to WHF Parent under such
policies to Buyer; provided that Buyer pays all of WHF Parent's out-of-pocket
costs in connection therewith and under such policies, including any deductibles
and increases in premiums.
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Section 5.22. Registered Intellectual Property. Prior to the
Closing, WHF Parent and the Sellers shall use their reasonable best efforts to
obtain duly executed and attested documents reflecting any transfer of title
ownership in the Registered Intellectual Property to any of them, and reflecting
the release of any security interest in the Registered Intellectual Property
granted by WHF Parent or the Sellers and released prior to the Closing Date,
sufficient to permit the proper recordation of any such transfer or release
which is not shown as having been properly recorded with the relevant
Governmental Authority in the public files of such Governmental Authority.
Section 5.23. Retained LLC Unit Certificate. No later than
five (5) Business Days prior to the Closing Date, Buyer and EMP shall deliver a
certificate to Sellers setting forth (i) Buyer's election, if any, to reduce the
Retained LLC Unit Percentage and (ii) the number of EMP LLC sold units to be
issued to the Sellers pursuant to this Agreement and the calculation thereof.
Section 5.24. Financial Condition. For one year following the
Closing, WHF Parent shall maintain a net worth of not less than $35,000,000. For
eighteen months following the Closing, WHF Parent shall maintain a net worth of
not less than $20,000,000.
Section 5.25. Board Right. So long as the Sellers retain 50%
or more of the interests in EMP that they will own immediately after the
Closing, at the election of WHF, EMP shall promptly designate Xxxx Xxxxxx as a
member of the Board of Directors of EMP or appoint him as an observer of the
Board of Directors of EMP, in each case in accordance with the terms of the EMP
LLC Agreement. In the event Xxxx Xxxxxx elects to serve as an observer on the
EMP Board of Directors, EMP shall provide him with the same information that is
provided by EMP to the members of its Board of Directors and shall allow him to
attend all meetings of the Board.
ARTICLE VI.
CONDITIONS TO CLOSING
Section 6.1. Conditions Precedent to Obligations of Buyer and
the Sellers. The respective obligations of each Party to consummate the
transactions contemplated by this Agreement are subject to the satisfaction (or,
where legally permissible, waiver by such Party) at or prior to the Closing Date
of each of the following conditions:
(a) No Adverse Order. There shall be no Injunction,
restraining order or decree of any nature of any Governmental Authority of
competent jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby, or permits such
consummation only subject to any condition or restriction that has or would
reasonably be expected to have a Material Adverse Effect on the Company or the
Business, or a material adverse effect on Buyer or EMP or a material adverse
effect on WHF Parent's or the Sellers' or Buyer's or EMP's ability to perform
their respective obligations under, or to consummate the transactions
contemplated by, this Agreement.
(b) Regulatory Authorizations. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or been
terminated.
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Section 6.2. Conditions Precedent to Obligation of the
Sellers. The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (or waiver by the
Sellers) at or prior to the Closing Date of each of the following additional
conditions:
(a) Accuracy of Buyer's Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement (x)
that are qualified as to materiality or Material Adverse Effect shall
be true and correct in all respects and (y) that are not so qualified
shall be true and correct in all material respects, in each case on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date,
except to the extent such representations and warranties are by their
express provisions made as of an earlier date, in which case they shall
be true and correct, or true and correct in all material respects, as
the case may be, as of such date, except for the effect of any
activities or transactions which are contemplated by this Agreement;
and the Sellers shall have received a certificate signed by a duly
authorized officer of Buyer confirming the foregoing as of the Closing
Date.
(b) Covenants and Agreements of Buyer. Buyer shall have
performed and complied with all of its covenants and agreements
hereunder in all material respects through the Closing; and the Sellers
shall have received a certificate signed by a duly authorized officer
of Buyer confirming the foregoing as of the Closing Date.
Section 6.3. Conditions Precedent to Obligations of Buyer. The
obligation of Buyer to consummate the transactions contemplated by this
Agreement is subject to the satisfaction (or waiver by Buyer) at or prior to the
Closing Date of each of the following additional conditions:
(a) Accuracy of WHF Parent's and the Sellers' Representations
and Warranties. The representations and warranties of WHF Parent and the Sellers
contained in this Agreement (x) that are qualified as to materiality or Material
Adverse Effect shall be true and correct in all respects and (y) that are not so
qualified shall be true and correct in all material respects, in each case on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date, except to the
extent such representations and warranties are by their express provisions made
as of an earlier date, in which case they shall be true and correct, or true and
correct in all material respects, as the case may be, as of such date, except
for the effect of any activities or transactions which are contemplated by this
Agreement; and Buyer shall have received a certificate from each Seller and WHF
Parent signed by a duly authorized officer of such Seller or WHF Parent
confirming the foregoing as of the Closing Date with respect to the
representation and warranties made by such Seller or WHF Parent.
(b) Covenants and Agreements of WHF Parent and the Sellers.
WHF Parent and the Sellers shall have performed and complied with all of their
respective covenants and agreements hereunder in all material respects through
the Closing; and Buyer shall have received a certificate from each Seller and
WHF Parent signed by a duly authorized officer of such Seller or WHF Parent
confirming the foregoing as of the Closing Date with respect to the covenants
and agreements of such Seller or WHF Parent.
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(c) Required Consents. All Consents, of entities other than
Governmental Authorities, the failure of which to have been obtained on or prior
to the Closing that would have or reasonably be expected to have a Material
Adverse Effect on the Business, shall have been obtained.
(d) Financing. The Buyer shall have received the proceeds of
financing on terms and conditions set forth in the Debt Commitment Letters or
upon terms and conditions which are substantially equivalent thereto.
(e) No Material Adverse Effect on the Business. There shall
not have occurred and be continuing any changes, occurrences or developments
that have had, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Business.
(f) Intellectual Property. Sellers shall have provided to
Buyer: (i) a report of all actions necessary (including filing of documents or
payment of fees) within 90 days after the Closing Date to maintain or preserve
the validity or status of any Registered Intellectual Property (the "Registered
IP Status Report"); (ii) duly executed and attested assignments of transfer, or
such other instruments of conveyance as may be required under local Law,
sufficient to permit the proper recordation of transfer of title ownership in
all Registered Intellectual Property from WHF Parent or the Sellers to the
Company, to the extent that WHF Parent and Sellers are able to deliver such
documents without affirmative action by unrelated third parties; (iii) duly
executed and attested documents reflecting any transfer of title ownership in
the Registered Intellectual Property to the Sellers, or reflecting the release
of any security interest in the Registered Intellectual Property granted by WHF
Parent or the Sellers and released prior to the Closing Date, sufficient to
permit the proper recordation of any such transfer or release which is not shown
as having been properly recorded with the relevant Governmental Authority in the
public files of such Governmental Authority, to the extent that Sellers are able
to deliver such documents without affirmative action by unrelated third parties;
and (iv) a copy of (A) the consent of Mariz Gestao E Investimentos Limitada
("Mariz") to the assignment to the Company of the License Agreement entered into
on December 21, 2001 between Mariz and WPI and (B) a duly executed and attested
amendment to the license agreement between WHF Parent and Xxx Xxxxxx originally
entered into in 1985 expanding the territory for use of the trade name "Xxx
Xxxxxx" from the continental United States to the entire United States, Mexico
and Canada, together with such other documents which WHF Parent and Sellers may
acknowledge are necessary to make their representations and warranties in
Section 3.11 hereof true and correct with respect to such trade name.
(g) Debt Payoff. Buyer shall have received evidence, in form
and substance reasonably satisfactory to Buyer, that the covenants set forth in
Section 5.20 shall have been complied with in all respects.
ARTICLE VII.
INDEMNIFICATION
Section 7.1. General Indemnification by WHF Parent and the
Sellers. Following the Closing and subject to the terms and conditions of this
Article VII, WHF Parent
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and the Sellers will, jointly and severally, indemnify, defend and hold harmless
Buyer and each of its employees, directors, officers and Affiliates
(collectively, the "Buyer Group") from and against any and all Damages incurred
by any member of the Buyer Group based upon or arising out of (i) any breach of
any covenant of WHF Parent, WPI's or the Sellers contained in this Agreement or
the Contribution Agreement, (ii) any breach of any of WHF Parent's, WPI's or the
Sellers' representations and warranties contained in this Agreement or the
Contribution Agreement, (iii) any WPI Excluded Liabilities or (iv) any WIN
Excluded Liabilities.
Section 7.2. General Indemnification by Buyer and EMP.
Following the Closing and subject to the terms and conditions of this Article
VII, Buyer and EMP will indemnify, defend and hold harmless, each of WHF Parent,
WPI, the Sellers and each of their respective employees, directors, officers and
Affiliates (collectively, the "Seller Group") from and against, any and all
Damages actually incurred by any member of the Seller Group based upon or
arising out of (i) any breach of any covenant of Buyer contained in this
Agreement, (ii) any breach of any of Buyer's or EMP's representations and
warranties contained in this Agreement, (iii) any breach of any of the covenants
of the Company contained in the Contribution Agreement or (iv) any Assumed
Liabilities.
Section 7.3. Tax Indemnification.
(a) WHF Parent will indemnify, defend and hold harmless Buyer
Group from and against any and all Taxes of the Acquired Subsidiaries (i) with
respect to all periods ending on or prior to the Closing Date (a "Pre-Closing
Period"), (ii) with respect to any period beginning before the Closing Date and
ending after the Closing Date, but only with respect to the portion of such
period up to and including the Closing Date (such portion, a "Pre-Closing
Partial Period"), or (iii) payable as a result of a material breach of any
representation or warranty set forth in Section 3.9 (Tax matters). WHF Parent
will be entitled to any net refunds of Taxes of the Acquired Subsidiaries
(including interest thereon) with respect to the periods described in clauses
(i) and (ii) above.
(b) Buyer and EMP will indemnify, defend and hold harmless
Seller Group from and against (i) any and all Taxes of the Acquired Subsidiaries
with respect to all periods beginning after the Closing Date (the "Post-Closing
Period"), (ii) any and all Taxes of the Acquired Subsidiaries with respect to
any period beginning before and ending after the Closing Date, but only with
respect to the portion of such period beginning after the Closing Date (the
"Post-Closing Partial Period"), (iii) any and all Liability for Taxes of the
Acquired Subsidiaries arising on the Closing Date after the Closing with respect
to transactions other than in the ordinary course and (iv) any and all
Liabilities for Taxes attributable to any elections made or deemed made under
Section 338 of the Code with respect to the acquisition of any of the Acquired
Subsidiaries.
(c) Any Taxes of the Acquired Subsidiaries for a period
including a Pre-Closing Partial Period and a Post-Closing Partial Period shall
be apportioned between such Pre-Closing Partial Period and such Post-Closing
Partial Period, based, in the case of real and personal property Taxes, on a per
diem basis and, in the case of other Taxes, on the actual activities, taxable
income or taxable loss of the applicable entity during such Pre-Closing Partial
Period and such Post-Closing Partial Period.
49
(d) WHF and Buyer agree to give prompt notice to each other of
any proposed adjustment to Taxes of the Acquired Subsidiaries for any
Pre-Closing Period or any Pre-Closing Partial Period. WHF and Buyer shall
cooperate with each other in the conduct of any audit or other proceedings
involving the Acquired Subsidiaries for such periods and each may participate at
its own expense, provided WHF has the right to control the conduct of any such
audit or proceeding.
Section 7.4. Certain Limitations.
(a) Notwithstanding anything contained herein to the contrary,
(i) the maximum aggregate Liability of WHF Parent, WPI and the Sellers to all
members of the Buyer Group, taken together for all Damages under Section
7.1(ii), shall be limited to $35,000,000 and (ii) the maximum aggregate
Liability of WHF Parent, WPI, the Sellers, on the one hand, and Buyer and EMP,
on the other hand, to all members of the Buyer Group or the Seller Group, as the
case may be, taken together for all Damages under Article VII, shall be limited
to the amount of the Purchase Price received by the Sellers.
(b) Notwithstanding anything contained herein to the contrary,
WHF Parent, WPI, the Sellers and Buyer shall not be obligated to make any
indemnification payment under Section 7.1(ii) (other than with respect to Taxes
or title for the Transferred Units) or Section 7.2(ii) (other than title to the
EMP Sold units), unless and until the aggregate Damages sustained by the Buyer
Group or the Seller Group, as the case may be, exceed on a cumulative basis,
$5,000,000 (the "Basket"), at which point WHF Parent, WPI and the Sellers, on
the one hand, or Buyer, on the other hand, as the case may be, shall be
obligated to indemnify the Buyer Group or the Seller Group, as the case may be,
from and against all cumulative Damages in excess of the Basket.
(c) The amount which an Indemnifying Party is or may be
required to pay to an Indemnified Party in respect of Damages for which
indemnification is provided under this Agreement will be reduced by any amounts
actually received (including amounts received under insurance polices net of any
expenses incurred in connection with the receipt of such proceeds or premium
increases related to any insurance claims) by or on behalf of the Indemnified
Party from third parties (such amounts are referred to herein as "Indemnity
Reduction Amounts"). If any Indemnified Party receives any Indemnity Reduction
Amounts in respect of an Indemnified Claim for which indemnification is provided
under this Agreement after the full amount of such Indemnified Claim has been
paid by an Indemnifying Party or after an Indemnifying Party has made a partial
payment of such Indemnified Claim and such Indemnity Reduction Amounts exceed
the remaining unpaid balance of such Indemnified Claim, then the Indemnified
Party will promptly remit to the Indemnifying Party an amount equal to the
excess (if any) of (i) the amount theretofore paid by the Indemnifying Party in
respect of such Indemnified Claim, less (ii) the amount of the indemnity payment
that would have been due if such Indemnity Reduction Amounts in respect thereof
had been received before the indemnity payment was made. An insurer or other
third party who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to any benefit they would not be entitled to
receive in the absence of the indemnification provisions by virtue of the
indemnification provisions hereof. WHF Parent, the Sellers, the Company and
Buyer, as
50
appropriate, will, or will cause each Indemnified Party to, use its reasonable
best efforts to pursue promptly any claims or rights it may have against all
third parties which would reduce the amount of Damages for which indemnification
is provided under this Agreement.
(d) Notwithstanding anything contained herein to the contrary,
no member of the Seller Group and no member of the Buyer Group will be entitled
after the Closing to any recovery under this Agreement for its own special,
punitive, consequential, incidental or indirect Damages or lost profits;
provided, however, that nothing herein shall prevent any member of the Seller
Group or the Buyer Group from being indemnified for all components of awards
against them in claims by third parties, including special, punitive,
consequential, incidental or indirect Damages or lost profits components of such
claims.
(e) In the event that, prior to Closing, any Party to this
Agreement obtains actual Knowledge of any breach of warranty or
misrepresentation of another Party, such first-named Party shall immediately
notify the other Party thereof and shall, subject to the termination rights set
forth in Section 8.1(b), afford the other Party a reasonable period of time, not
to exceed 45 days, in which to cure such breach or take such action as may be
appropriate to correct the circumstances giving rise to the breach of warranty
or misrepresentation.
(f) Each and every representation and warranty of WHF Parent,
the Sellers and Buyer contained in this Agreement and the Contribution Agreement
(other than WHF Parent's and the Sellers' representations and warranties set
forth in Sections 3.1 (organization and authority), 3.3 (capitalization and LLC
units; title), 3.9 (Tax matters), 3.17 (employee benefits) and 3.19 (brokers'
fees), and Buyer's and EMP's representations and warranties set forth in
Sections 4.1 (organization), 4.2 (authorization), 4.7 (brokers' fees), Section
4.9 (capitalization and EMP Sold Units; title) shall survive the Closing and
expire 18 months after the Closing Date. WHF Parent's and the Sellers'
representations and warranties set forth in Section 3.3 (capitalization and LLC
Units; title) and Buyer's and EMP's representation and warranties set forth in
Section 4.9 (capitalization and EMP Sold Units; title) will survive the Closing
Date, solely for purposes of Sections 7.1 and 7.2 without time limitation. WHF
Parent's and the Sellers' representations and warranties set forth in Sections
3.1 (organization and authorization), 3.9 (Tax matters), 3.17 (employee
benefits) and 3.19 (brokers' fees) will survive the Closing Date solely for
purposes of Sections 7.1 or 7.3 until, and will expire when, in each case, the
applicable statutes of limitations with respect to the subject matter of such
representations and warranties have expired. Buyer's and EMP's representations
and warranties set forth in Sections 4.1 (organization), 4.2 (authorization) and
4.7 (brokers' fees) will survive the Closing Date solely for purposes of Section
7.2 until, and will expire when, in each case, the applicable statutes of
limitation with respect to the subject matter of such representations and
warranties have expired.
(g) The obligations of each Party to indemnify, defend and
hold harmless the other Party and other Persons pursuant to this Article VII
shall terminate (a) with respect to Sections 7.1(i), 7.1(iii), 7.1(iv), 7.2(i),
7.2(iii) and 7.2(iv), upon the expiration of all applicable statutes of
limitations and (b) with respect to Sections 7.1(ii) and 7.2(ii) when the
applicable representation or warranty expires pursuant to Section 7.4(f);
provided, however that such obligations to indemnify, defend and hold harmless
shall not terminate with respect to any individual item as to which an
Indemnified Party shall have, before the expiration of the
51
applicable period, previously made a claim by delivering a written notice
(stating in reasonable detail the basis of such claim) to the Indemnifying
Party.
(h) Notwithstanding anything in this Agreement or the
Contribution Agreement to the contrary, any amounts payable pursuant to the
indemnification obligations under Section 5.2(a) and Article VII shall be paid
without duplication, and in no event shall any Party (whether individually or
through the Company) be indemnified under different provisions of this
Agreement, or recover amounts under Section 2.4, for the same Damages.
Section 7.5. Indemnification Procedures.
(a) If any claim or demand is made against an Indemnified
Party with respect to any matter, or any Indemnified Party shall otherwise learn
of an assertion or of a potential claim, by any Person who is not a Party (or an
Affiliate thereof) (a "Third Party Claim") which may give rise to a claim for
indemnification against an Indemnifying Party under this Agreement, then the
Indemnified Party shall promptly notify the Indemnifying Party in writing and in
reasonable detail of the Third Party Claim (including the factual basis for the
Third Party Claim, and, to the extent known, the amount of the Third Party
Claim); provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party will relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party is actually prejudiced as a result thereof (except that the Indemnifying
Party will not be liable for any expenses incurred during the period in which
the Indemnified Party failed to give such notice); it being understood and
agreed that the failure of the Indemnified Party to so notify the Indemnifying
Party prior to settling a Third Party Claim (whether by paying a claim or
executing a binding settlement agreement with respect thereto) or the entry of a
judgment or issuance of an award with respect to a Third Party Claim shall
constitute actual prejudice to the Indemnifying Party's ability to defend
against such Third Party Claim. Thereafter, the Indemnified Party will deliver
to the Indemnifying Party, promptly after the Indemnified Party's receipt
thereof, copies of all notices and documents (including court papers) received
or transmitted by the Indemnified Party relating to the Third Party Claim.
(b) The Indemnifying Party will have the right to participate
in or to assume the defense of the Third Party Claim (in either case at the
expense of the Indemnifying Party) with counsel of its choice reasonably
satisfactory to the Indemnified Party upon notifying the Indemnified Party in
writing of its election to assume such defense and its waiver of any right to
contest the Indemnified Party's right to such indemnification in the future. The
Indemnifying Party will be liable for the reasonable fees and expenses of
counsel employed by the Indemnified Party for any period during which the
Indemnifying Party has failed to assume the defense thereof (other than during
any period in which the Indemnified Party shall have failed to give notice of
the Third Party Claim as provided above). Should the Indemnifying Party so elect
to assume the defense of a Third Party Claim, the Indemnifying Party will not be
liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof;
provided, however, that, if the Parties reasonably agree that a conflict of
interest exists in respect of such claim, such Indemnified Party will have the
right to employ separate counsel reasonably satisfactory to the Indemnifying
Party to represent such Indemnified Party and in that event the reasonable fees
and expenses of such separate counsel (but not more than one separate counsel
for all Indemnified Parties) shall be paid by such Indemnifying Party. If the
Indemnifying Party is conducting the defense of the
52
Third Party Claim, the Indemnified Party, at its sole cost and expense, may
retain separate counsel, and participate in the defense of the Third Party
Claim, it being understood that the Indemnifying Party will control such
defense.
(c) No Indemnifying Party will consent to any settlement,
compromise or discharge (including the consent to entry of any judgment) of any
Third Party Claim without the Indemnified Party's prior written consent (which
consent will not be unreasonably withheld or delayed); provided, that, if the
Indemnifying Party assumes the defense of any Third Party Claim, the Indemnified
Party will agree to any settlement, compromise or discharge of such Third Party
Claim which the Indemnifying Party may recommend and which by its terms only
obligates the Indemnifying Party to pay the full amount of money Damages in
connection with such Third Party Claim and unconditionally releases the
Indemnified Party completely from all Liability in connection with such Third
Party Claim. Whether or not the Indemnifying Party shall have assumed the
defense of a Third Party Claim, with respect to any Third Party Claim that the
Indemnifying Party has acknowledged in writing as its indemnification
obligations, the Indemnified Party will not admit any Liability, consent to the
entry of any judgment or enter into any settlement or compromise with respect to
the Third Party Claim without the prior written consent of the Indemnifying
Party (which consent will not be unreasonably withheld or delayed).
(d) If the Indemnifying Party assumes the defense of any Third
Party Claim, the Indemnifying Party will keep the Indemnified Party informed of
all material developments relating to or in connection with such Third Party
Claim. If the Indemnifying Party chooses to defend a Third Party Claim, the
Parties will cooperate in the defense thereof (with the Indemnifying Party being
responsible for all reasonable out-of-pocket expenses of the Indemnified Party
(other than for the fees and expenses of its counsel except as set forth above)
in connection with such cooperation), which cooperation will include the
provision to the Indemnifying Party of records and information which are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder.
(e) Any claim on account of Damages for which indemnification
is provided under this Agreement which does not involve a Third Party Claim will
be asserted by reasonably prompt written notice (but in any event within the
relevant period specified in Section 7.4(g)) given by the Indemnified Party to
the Indemnifying Party.
(f) In the event of payment in full by an Indemnifying Party
to any Indemnified Party in connection with any claim (an "Indemnified Claim"),
such Indemnifying Party will be subrogated to and will stand in the place of
such Indemnified Party as to any events or circumstances in respect of which
such Indemnified Party may have any right or claim relating to such Indemnified
Claim against any claimant or plaintiff asserting such Indemnified Claim or
against any other Person. Such Indemnified Party will cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim.
Section 7.6. Tax Treatment of Indemnification Payments. All
indemnification payments made pursuant to this Agreement will be treated as an
adjustment to the Purchase Price for Tax purposes unless a determination (as
defined in Section 1313 of the Code) with respect to the
53
Indemnified Party causes any such payment not to constitute an adjustment to the
Purchase Price for United States Federal Income Tax purposes.
Section 7.7. Exclusive Remedy. The remedies set forth in this
Article VII and Section 5.2(a) shall be the sole and exclusive remedy with
respect to any and all claims relating, directly or indirectly, to the subject
matter of this Agreement and the Contribution Agreement, except for matters
relating to fraud. Notwithstanding the foregoing, prior to the Closing, each
Party shall have the right to bring a contract action to enforce this Agreement.
Section 7.8. Mitigation. Each Party shall cooperate with the
other Parties with respect to resolving any claim or Liability with respect to
which one Party is obligated to indemnify the other Party hereunder, including
by making commercially reasonable efforts to mitigate or resolve any such claim
or Liability. In the event that a Party shall fail to make such commercially
reasonable efforts to mitigate or resolve any claim or Liability, then
notwithstanding anything else to the contrary contained herein, the other
Parties shall not be required to indemnify any Person for any Damages that could
reasonably be expected to have been avoided if such first Party had made such
efforts.
ARTICLE VIII.
TERMINATION
Section 8.1. Termination Events. Without prejudice to other
remedies which may be available to the Parties by Law or this Agreement, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing:
(a) by mutual written consent of WHF Parent and Buyer;
(b) by either WHF Parent or Buyer by giving written notice to
the other Party if the Closing shall not have occurred by the Outside
Date, unless extended by written agreement of WHF Parent and Buyer;
provided that the Party seeking termination pursuant to this subsection
(b) is not in default or breach hereunder and provided, further, that
the right to terminate this Agreement under this clause (b) shall not
be available (i) to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure
of the Closing to occur on or before such date or (ii) in the event
that the Closing shall not have occurred as a result of a failure of
any representation to be true and correct and the Party seeking
termination knew of such breach prior to the date of this Agreement;
(c) by either WHF Parent or Buyer by giving written notice to
the other Party if any Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall not be subject to appeal or shall
have become final and unappealable; or
54
(d) by Buyer upon delivery of the Terminating Notice as set
forth in Section 2.5(a) (subject to becoming null and void pursuant to
Section 2.5(a)), if a Terminating Event occurs.
Section 8.2. Effect of Termination. In the event of any
termination of this Agreement pursuant to Section 8.1, all rights and
obligations of the Parties hereunder shall terminate without any Liability on
the part of either Party or its Subsidiaries and Affiliates in respect thereof,
except that (a) the obligations of Buyer and the Sellers under Section 5.2
(access to information and confidentiality), Section 5.5 (public announcements),
Section 9.3 (notices), Section 9.11 (expenses), Section 9.12 (governing law) and
Section 9.13 (consent to jurisdiction) of this Agreement shall remain in full
force and effect and (b) such termination shall not relieve any Party of any
Liability for any willful breach of this Agreement.
ARTICLE IX.
MISCELLANEOUS
Section 9.1. Parties in Interest. Except as provided in this
Section 9.1, nothing in this Agreement, whether express or implied, shall be
construed to give any Person, other than the Parties or their respective
successors and permitted assigns, any legal or equitable right, remedy, claim or
benefit under or in respect of this Agreement, except for Xxx Xxxxxx, Xxx
Xxxxxx, Xxxx Xxxxxx (including their estates and legal representatives in the
event of death or disability) and the members of the Buyer Group and the Seller
Group who are entitled to the rights to indemnification provided to the Buyer
Group and the Seller Group, respectively, hereunder.
Section 9.2. Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns and, in the event a Party's death or disability, such Party's
estate, beneficiaries or legal representative. No Party may assign (by contract,
operation of Law or otherwise (other than by death)) either this Agreement or
any of its rights, interests, or obligations hereunder without the express prior
written consent of the other Parties, and any attempted assignment, without such
consent, shall be null and void; provided, however, that Buyer or EMP may assign
this Agreement or their rights and interests hereunder to an Affiliate of Buyer
or EMP without the express prior written consent of the other Parties; provided,
further, that any such assignment will not relieve such Party of its obligations
hereunder.
Section 9.3. Notices. All notices and other communications
required or permitted to be given by any provision of this Agreement shall be in
writing and mailed (certified or registered mail, postage prepaid, return
receipt requested) or sent by hand or overnight courier, or by facsimile
transmission (with acknowledgment received), charges prepaid and addressed to
the intended recipient as follows, or to such other addresses or numbers as may
be specified by a Party from time to time by like notice to the other Parties:
55
If to WHF Parent, Xxx Xxxxxx, Xxx Xxxxxx or Xxxx Xxxxxx:
Weider Health and Fitness
00000 Xxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attn.: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: R. Xxxxxx Xxxxxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Sellers: Weider Publications, Inc.
00000 Xxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attn.: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: R. Xxxxxx Xxxxxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company: Weider Publications, LLC
00000 Xxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: R. Xxxxxx Xxxxxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer or EMP: EMP Group L.L.C.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
56
American Media Operations, Inc.
0000 XX Xxxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxxx, XX 00000
Attn.: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices and other communications given in accordance with the provisions of
this Agreement shall be deemed to have been given and received when delivered by
hand or transmitted by facsimile (with acknowledgment received), three Business
Days after the same are sent by certified or registered mail, postage prepaid,
return receipt requested or one Business Day after the same are sent by a
reliable overnight courier service, with acknowledgment of receipt.
Section 9.4. Amendments and Waivers. This Agreement may not be
amended, supplemented or otherwise modified except in a written instrument
executed by each of the Parties. No waiver by any of the Parties 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. No waiver by any of the Parties of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by the
Party sought to be charged with such waiver.
Section 9.5. Exhibits and Disclosure Schedule.
(a) All Exhibits, Schedules and the Disclosure Schedule
attached hereto are hereby incorporated herein by reference and made a part
hereof. Any matter which is clearly disclosed pursuant to any Section of or
Schedule or Exhibit to this Agreement or the Disclosure Schedule (or any section
of any Schedule or Exhibit to this Agreement or the Disclosure Schedule) or in
the WPI Financial Statements in such a way as to make reasonably apparent its
relevance or applicability to any representation made elsewhere in this
Agreement or to the information called for by any other Section of or Schedule
or Exhibit to this Agreement or the Disclosure Schedule (or any other section of
any Schedule or Exhibit to this Agreement or the Disclosure Schedule) shall be
deemed to be an exception to such representations and to be disclosed with
respect to all Sections of and Schedules and Exhibits to this Agreement and the
Disclosure Schedule (and all sections of all Schedules and Exhibits to this
Agreement and the Disclosure Schedule), notwithstanding the omission of a
reference or cross-reference thereto.
(b) Neither the specification of any dollar amount in any
representation nor the mere inclusion of any item in a Schedule or in the
Disclosure Schedule as an exception to a
57
representation or warranty shall be deemed an admission by a Party that such
item represents an exception or material fact, event or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect on the
Business, on the one hand, or Buyer, on the other hand.
(c) The Sellers shall have the right to deliver to Buyer at
the Closing a supplement to Sections 3.2 and 3.13 of the Disclosure Schedule
(the "Closing Date Schedule Supplement") containing any matters arising after
the date hereof (and permitted pursuant to the terms hereof), other than
breaches by Sellers of any Material Contracts, which, if occurring prior to the
date hereof, would have been required to be set forth or described on such
Schedules. The Closing Date Schedule Supplement shall have no effect for
purposes of determining the satisfaction of the Closing conditions set forth in
Article VI. The Closing Date Schedule Supplement shall, however, for purposes of
determining whether Buyer is entitled to indemnification pursuant to Article VII
hereof, be deemed to amend Schedules hereto to reflect the matters set forth
therein.
Section 9.6. Headings. The table of contents and section
headings contained in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement or affect in any way the meaning or
interpretation of this Agreement.
Section 9.7. Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
Section 9.8. No Other Representations or Warranties. Except
for the representations and warranties expressly set forth in this Agreement,
Buyer acknowledges that none of the Sellers or any of their respective
Subsidiaries and Affiliates or any other Person makes any representation or
warranty, express or implied, at law or in equity, with respect to WHF Parent,
the Sellers, WPI, the Company or any of their respective Subsidiaries and
Affiliates, the Transferred Units, the Business or any of the assets,
Liabilities or operations of WPI, WIN or the Company or any of their respective
Subsidiaries and Affiliates, or with respect to any other information provided
to Buyer, whether on behalf of WHF Parent, the Sellers, the Company or such
other Persons, including as to the probable success or profitability of the
Company's business after the Closing. Except with respect to matters concerning
fraud, neither WHF Parent, the Sellers nor any other Person will have or be
subject to any Liability or indemnification obligation to Buyer or any other
Person resulting from the distribution to Buyer, or Buyer's use of, any such
information including the Confidential Descriptive Memorandum dated September
2002, prepared by Rothschild Inc. related to the Business, and any information,
document or material made available to Buyer in certain "data rooms," management
presentations or in any other form in expectation or contemplation of the
transactions contemplated by this Agreement.
Section 9.9. Entire Agreement. This Agreement (including the
Disclosure Schedule and the Exhibits hereto), the Transaction Documents and the
Confidentiality Agreement constitute the entire agreement among the Parties with
respect to the subject matter hereof and thereof and supersede any prior
understandings, negotiations, agreements, or
58
representations among the Parties of any nature, whether written or oral, to the
extent they relate in any way to the subject matter hereof or thereof.
Section 9.10. Severability. If any provision of this Agreement
or the application of any such provision to any Person or circumstance shall be
declared by any court of competent jurisdiction to be invalid, illegal, void or
unenforceable in any respect, all other provisions of this Agreement, or the
application of such provision to Persons or circumstances other than those as to
which it has been held invalid, illegal, void or unenforceable, shall
nevertheless remain in full force and effect and will in no way be affected,
impaired or invalidated thereby. Upon such determination that any provision, or
the application of any such provision, is invalid, illegal, void or
unenforceable, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
greatest extent possible.
Section 9.11. Expenses. Unless otherwise provided in this
Agreement or any Transaction Document, each of the Parties agrees to pay,
without right of reimbursement from the other Parties, all costs and expenses
incurred by it incident to the performance of its obligations hereunder,
including, without limitation, the fees and disbursements of counsel,
accountants, financial advisors, experts and consultants employed by the
respective Parties in connection with the transactions contemplated hereby,
whether or not the transactions contemplated by this Agreement are consummated.
Section 9.12. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal Laws of the State of
New York
applicable to contracts made and to be performed entirely within such State.
Section 9.13. Consent to Jurisdiction; Waiver of Jury Trial.
(a) Each of the Parties irrevocably submits to the exclusive
jurisdiction of (i) state courts of the State of
New York and (ii) the United
States District Court located in the borough of Manhattan in
New York City for
the purposes of any suit, action or other proceeding arising out of or relating
to this Agreement or any transaction contemplated hereby (and agrees not to
commence any action, suit or proceeding relating hereto except in such courts).
Each of the Parties further agrees that service of any process, summons, notice
or document hand delivered or sent by U.S. registered mail to such Party's
respective address set forth in Section 9.3 will be effective service of process
for any action, suit or proceeding in
New York with respect to any matters to
which it has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each of the Parties irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby in (i)
state courts of the State of
New York or (ii) the United States District Court
located in the borough of Manhattan in
New York, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. Notwithstanding the foregoing, each Party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment in any jurisdiction or in
any other manner provided in law or in equity.
59
(b) EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
Section 9.14. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
* * * * *
60
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the date first above written.
WEIDER HEALTH AND FITNESS
By: /s/ Xxxx Xxxxxx
----------------------------------------------
Name: Xxxx Xxxxxx
Title: President and Chief Executive Officer
WEIDER HEALTH AND FITNESS, LLC
By: /s/ Xxxxxxx Cartoon
----------------------------------------------
Name: Xxxxxxx Cartoon
Title: Authorized Person
WEIDER INTERACTIVE NETWORKS, INC.
By: /s/ J. Xxxxxxx Xxxxxx
----------------------------------------------
Name: J. Xxxxxxx Xxxxxx
Title: President
WEIDER PUBLICATIONS, LLC
By: /s/ Xxxxxxx Cartoon
----------------------------------------------
Name: Xxxxxxx Cartoon
Title: Authorized Person
(Signature Page to Purchase Agreement)
AMERICAN MEDIA OPERATIONS, INC.
By: /s/ Xxxx Xxxxx
----------------------------------------------
Name: Xxxx Xxxxx
Title: Executive Vice President and Chief
Financial Officer
EMP GROUP L.L.C.
By: /s/ Xxxx Xxxxxxx
----------------------------------------------
Name: Xxxx Xxxxxxx
Title: Member
XXX XXXXXX, for purposes of Section 5.14 and
Article IX herein only
By: /s/ Xxx Xxxxxx
----------------------------------------------
Name: Xxx Xxxxxx
XXX XXXXXX, for purposes of Section 5.14 and
Article IX herein only
By: /s/ Xxx Xxxxxx
----------------------------------------------
Name: Xxx Xxxxxx
(Signature Page to Purchase Agreement)
XXXX XXXXXX, for purposes of Section 5.14 and
Article IX herein only
By: /s/ Xxxx Xxxxxx
----------------------------------------------
Name: Xxxx Xxxxxx
(Signature Page to Purchase Agreement)
