EXHIBIT 2.1
PURCHASE AGREEMENT
among
ZD INC.,
ZD HOLDINGS (EUROPE) LTD.
and
WS-ZD Acquisition, Inc.
Dated as of December 6, 1999
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS........................................................................... 2
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SECTION 1.1 DEFINITIONS........................................................................... 2
ARTICLE II SALE AND PURCHASE OF ASSETS AND SHARES................................................ 5
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SECTION 2.1 SALE AND PURCHASE OF ASSETS........................................................... 5
SECTION 2.2 SALE AND PURCHASE OF SHARES........................................................... 6
SECTION 2.3 EXCLUDED ASSETS....................................................................... 6
SECTION 2.4 ASSUMPTION OF LIABILITIES............................................................. 8
SECTION 2.5 PURCHASE PRICES....................................................................... 10
SECTION 2.6 PAYMENT OF PURCHASE PRICE............................................................. 12
SECTION 2.7 THE CLOSING........................................................................... 13
SECTION 2.8 POST-CLOSING PURCHASE PRICE ADJUSTMENTS............................................... 13
SECTION 2.9 CERTAIN EUROPEAN RESTRUCTURING MATTERS................................................ 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS............................................. 16
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SECTION 3.1 ORGANIZATION AND GOOD STANDING........................................................ 16
SECTION 3.2 CAPITALIZATION........................................................................ 16
SECTION 3.3 CORPORATE AUTHORITY................................................................... 17
SECTION 3.4 CONSENTS AND APPROVALS................................................................ 17
SECTION 3.5 No VIOLATIONS......................................................................... 17
SECTION 3.6 FINANCIAL STATEMENTS.................................................................. 18
SECTION 3.7 ABSENCE OF CERTAIN CHANGES AND EVENTS................................................. 18
SECTION 3.8 LITIGATION; ORDERS.................................................................... 20
SECTION 3.9 TAXES................................................................................. 20
SECTION 3.10 EMPLOYEE BENEFITS; ERISA.............................................................. 22
SECTION 3.11 EMPLOYEES; LABOR MATTERS.............................................................. 23
SECTION 3.12 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS..................................... 24
SECTION 3.13 REAL PROPERTY......................................................................... 24
SECTION 3.14 CONTRACTS, LEASES AND AGREEMENTS; NO DEFAULT.......................................... 25
SECTION 3.15 ENVIRONMENTAL MATTERS................................................................. 27
SECTION 3.16 INSURANCE............................................................................. 28
SECTION 3.17 BROKERS AND FINDERS................................................................... 29
SECTION 3.18 NO UNDISCLOSED LIABILITIES............................................................ 29
SECTION 3.19 INTELLECTUAL PROPERTY................................................................. 29
SECTION 3.20 TRANSFERRED ASSETS.................................................................... 29
SECTION 3.21 YEAR 2000 COMPLIANCE.................................................................. 30
SECTION 3.22 SEC FILINGS........................................................................... 30
SECTION 3.23 RELATED PARTY TRANSACTIONS............................................................ 30
SECTION 3.24 CAPITALIZATION........................................................................ 30
SECTION 3.25 LIABILITIES........................................................................... 31
SECTION 3.26 NO OTHER REPRESENTATIONS OR WARRANTIES; DISCLAIMER OF REPRESENTATIONS AND WARRANTIES.. 31
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.............................................. 31
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SECTION 4.1 ORGANIZATION AND GOOD STANDING....................................................... 31
SECTION 4.2 CORPORATE AUTHORITY.................................................................. 31
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS................................................ 31
SECTION 4.4 SECURITIES ACT....................................................................... 32
SECTION 4.5 BROKERS AND FINDERS.................................................................. 32
SECTION 4.6 FINANCING............................................................................ 32
SECTION 4.7 LITIGATION........................................................................... 33
SECTION 4.8 NO OTHER REPRESENTATIONS OR WARRANTIES............................................... 33
ARTICLE V COVENANTS............................................................................. 33
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SECTION 5.1 CONDUCT OF BUSINESS................................................................... 33
SECTION 5.2 ACCESS................................................................................ 34
SECTION 5.3 REQUIRED CONSENTS, APPROVALS AND ACTIONS.............................................. 35
SECTION 5.4 COMMERCIALLY REASONABLE EFFORTS....................................................... 36
SECTION 5.5 PUBLICITY............................................................................. 36
SECTION 5.6 EXPENSES.............................................................................. 37
SECTION 5.7 ZDMI NON-SOLICITATION................................................................. 37
SECTION 5.8 EMPLOYEES............................................................................. 37
SECTION 5.9 INTERCOMPANY LIABILITIES.............................................................. 40
SECTION 5.10 INTERCOMPANY PROGRAMS................................................................. 40
SECTION 5.11 TRANSITION SERVICES AND SUBLEASES..................................................... 40
SECTION 5.12 RETENTION OF RECORDS.................................................................. 41
SECTION 5.13 ASSET SELLER'S TRADEMARKS............................................................. 41
SECTION 5.14 TAX MATTERS........................................................................... 42
SECTION 5.15 FURTHER ASSURANCES.................................................................... 43
SECTION 5.16 NON-ASSIGNABLE AGREEMENTS............................................................. 43
SECTION 5.17 AUDITED FINANCIAL STATEMENTS.......................................................... 44
SECTION 5.18 CONFIDENTIALITY....................................................................... 45
SECTION 5.19 STOCKHOLDERS MEETING; INFORMATION SUPPLIED............................................ 46
SECTION 5.20 INSURANCE............................................................................. 47
SECTION 5.21 SALE OF INVESTMENTS................................................................... 48
SECTION 5.22 ESTOPPEL LETTERS...................................................................... 48
SECTION 5.23 UNREGISTERED TRADEMARKS............................................................... 48
SECTION 5.24 INTER@CTIVE INVESTOR.................................................................. 48
ARTICLE VI CONDITIONS TO CLOSING................................................................. 49
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SECTION 6.1 CONDITIONS TO OBLIGATIONS OF BUYER.................................................... 49
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLERS.................................................. 52
ARTICLE VII TERMINATION........................................................................... 53
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SECTION 7.1 TERMINATION........................................................................... 53
SECTION 7.2 EFFECT OF TERMINATION................................................................. 54
ARTICLE VIII INDEMNIFICATION; REMEDIES............................................................. 54
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SECTION 8.1 SURVIVAL................................................................................ 54
SECTION 8.2 INDEMNIFICATION BY BUYER AND SELLERS.................................................... 55
SECTION 8.3 TAX INDEMNIFICATION BY STOCK SELLER; PROCEDURE.......................................... 55
SECTION 8.4 TAX INDEMNIFICATION BY BUYER; PROCEDURE................................................. 57
ARTICLE IX MISCELLANEOUS.......................................................................... 59
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SECTION 9.1 ASSIGNMENTS; NO THIRD PARTY RIGHTS..................................................... 59
SECTION 9.2 ENTIRE AGREEMENT....................................................................... 60
SECTION 9.3 AMENDMENT OR MODIFICATION.............................................................. 60
SECTION 9.4 NOTICES................................................................................ 60
SECTION 9.5 GOVERNING LAW.......................................................................... 61
SECTION 9.6 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.......................................... 61
SECTION 9.7 SEVERABILITY........................................................................... 62
SECTION 9.8 WAIVER OF CONDITIONS................................................................... 62
SECTION 9.9 ACTIONS OF THE COMPANIES............................................................... 63
SECTION 9.10 DESCRIPTIVE HEADINGS; CONSTRUCTION..................................................... 63
SECTION 9.11 COUNTERPARTS........................................................................... 63
SECTION 9.12 KNOWLEDGE.............................................................................. 63
SECTION 9.13 MATERIALITY............................................................................ 63
EXHIBITS
Exhibit A The Companies
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Exhibit B Magazines and other Publications
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Exhibit C The Investments
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Exhibit D Commitment Letters
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Exhibit E Xxxx of Sale and Assignment
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Exhibit F ZDNet License Agreement
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Exhibit G "ZD" Xxxx License Agreement
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Exhibit H Services Agreement
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Exhibit I Assumption Agreement
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SELLER'S DISCLOSURE SCHEDULE
Schedule 2.1 Assets Not Related to the Business
Schedule 2.4(i) Special Bonus - Excluded Liability
Schedule 3.2(d) Ownership by the Companies
Schedule 3.4 Governmental Consents and Approvals
Schedule 3.5(b) Violations
Schedule 3.5(c) Consents
Schedule 3.6 Financial Statements
Schedule 3.7 Absence of Certain Changes and Events
Schedule 3.8(a) Litigation
Schedule 3.8(c) Claims by Freelance Employees or Independent Contractors
Schedule 3.9(a) Taxes
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Schedule 3.10(a) Benefit Plans
Schedule 3.11(a) Employees of the Division and the Companies
Schedule 3.11(b) Other Employees
Schedule 3.13(a) Real Property
Schedule 3.13(b) Transferability, Enforceability, Encumbrances, Etc.
Schedule 3.14(a) Certain Contracts
Schedule 3.14(b) Enforceability and Compliance under Certain Contracts
Schedule 3.16 Insurance
Schedule 3.19 Intellectual Property
Schedule 3.23 Related Party Transactions
Schedule 5.1(e) New, Terminated or Modified Applicable Contracts
Schedule 5.1(i) Transfer of Assets by Stock Seller
Schedule 5.8(a) Employees on Disability Leave, Authorized Leave or Military
Service
Schedule 5.8(c) Enhanced Severance Benefit Plan
Schedule 5.8(e) Retention Costs and Special Bonuses
Schedule 5.11(a) Use Agreements
Schedule 5.11(b) Subleases
Schedule 5.15 Performance Bond, Letter of Credit or Similar Instrument
Schedule 5.22 Certain Leased Real Property
Schedule 9.12 Persons Deemed to Have Knowledge
Schedule 9.13 Financial Projections
BUYER'S DISCLOSURE SCHEDULE
Schedule 4.3 Consents and Approvals
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PURCHASE AGREEMENT, dated as of December 6,1999 (this Agreement"), by
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and between ZD INC., a Delaware corporation ("Asset Seller"), ZD HOLDINGS
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(EUROPE) LTD., a company incorporated under the laws of the United Kingdom
("Stock Seller") and WS-ZD Acquisition, Inc., a Delaware corporation ("Buyer")
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and any permitted assignee of Buyer under Section 9.1. Asset Seller and Stock
Seller are sometimes referred to herein individually as a "Seller" or the
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"Applicable Seller" and collectively as "Sellers", as the context requires.
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WHEREAS, except as set forth in Exhibit A hereto, Stock Seller owns,
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directly or indirectly, all of the issued and outstanding shares of capital
stock of, or other equity interest in, the corporations and the other entities
set forth in Exhibit A (each a "Company" and, collectively, the "Companies").
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WHEREAS, Asset Seller, through its ZD Publishing division (the
"Division"), and the Companies are engaged in the business of publishing
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magazines and other publications about computers, the Internet, gaming and other
technology related topics, which magazines and other publications are set forth
in Exhibit B hereto, including the businesses of developing and distributing
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benchmarks for measuring performance of Internet, computer and network products
and systems and the provision of testing services for technology vendors
(collectively, the "Business").
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WHEREAS, the parties have agreed that Asset Seller shall sell,
transfer and assign to Buyer certain assets of Asset Seller related to the
Business, and Buyer shall assume certain liabilities of Asset Seller related to
the Business, in each case upon the terms and subject to the conditions set
forth herein.
WHEREAS, the parties have agreed that Stock Seller shall sell and
Buyer or any permitted assignee of Buyer under Section 9.1 shall purchase from
Stock Seller all of the issued and outstanding shares of capital stock of, or
other equity interests in, the Companies (the "Shares") upon the terms and
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subject to the conditions set forth herein.
WHEREAS, Xxxx-Xxxxx Inc. holds, directly or indirectly, all of the
outstanding capital stock of Asset Seller and Stock Seller, and SOFTBANK America
Inc. ("SOFTBANK") is holder of 71,619,355 shares of Xxxx-Xxxxx Inc.-ZD Common
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Stock and, contemporaneously with the execution hereof, SOFTBANK is executing
and delivering to Buyer an agreement and irrevocable proxy (the "Voting
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Agreement") to vote all of its shares of Xxxx-Xxxxx Inc.'s stock to approve the
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transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties and arrangements set forth herein, and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
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The following terms are defined in the sections indicated.
DEFINED TERM SECTION
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"Accounting Expert"...................................... Section 2.8(e)
"Action"................................................. Section 3.8(a)
"Affiliate".............................................. Section 2.3(c)
"Agreement".............................................. Recitals
"Annual Financial Statements"............................ Section 3.6
"Applicable Contracts"................................... Section 3.5(c)
"Applicable Seller"...................................... Recitals
"Asset Purchase"......................................... Section 2.1
"Asset Purchase Price"................................... Section 2.5(a)
"Asset Seller"........................................... Recitals
"Asset Seller Benefit Plans"............................. Section 3.10(a)
"Assumed Liabilities".................................... Section 2.4
"Benefit Plans".......................................... Section 3.10(a)
"Books and Records"...................................... Section 2.1(g)
"Business"............................................... Recitals
"Buyer".................................................. Recitals
"Buyer's Plan"........................................... Section 5.8(d)
"Closing"................................................ Section 2.7
"Closing Date"........................................... Section 2.7
"Closing Date Tangible Net Worth"........................ Section 2.8(a)
"Code"................................................... Section 8.3(a)
"Companies".............................................. Recitals
"Company"................................................ Recitals
"Company Benefit Plans".................................. Section 3.10(a)
"Confidentiality Agreement".............................. Section 7.2
"Consideration".......................................... Section 5.14(c)
"Contract"............................................... Section 3.5(b)
"Division"............................................... Recitals
"DOJ".................................................... Section 5.3(b)
"Draft Financial Statements"............................. Section 5.17(a)
"Draft 1999 EBITDA"...................................... Section 2.5(c)(1)
"EBITDA Accounting Expert"............................... Section 2.5(c)(4)
"EBITDA Review Period"................................... Section 2.5(c)(2)
"EBITDA Statement of Objections"......................... Section 2.5(c)(3)
"Enforceability Exceptions".............................. Section 3.3
"Environmental Law"...................................... Section 3.15(b)
"ERISA".................................................. Section 3.10(a)
"Excluded Assets"........................................ Section 2.3
"Excluded Employment Liabilities"........................ Section 5.8(a)
"Excluded Liabilities"................................... Section 2.4(d)
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DEFINED TERM SECTION
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"Filings and Approvals".................................. Section 6.1(c)
"Final Asset Purchase Adjustments"....................... Section 2.8(h)
"Financial Statements"................................... Section 3.6
"Financial Statements Accounting Expert"................. Section 5.17(d)
"Financial Statements Review Period"..................... Section 5.17(b)
"Financial Statements Statement of Objections"........... Section 5.17(c)
"FTC".................................................... Section 5.3(b)
"GAAP"................................................... Section 2.8(a)
"Governmental Authorizations"............................ Section 3.12(b)
"Governmental Entity".................................... Section 3.4
"Governmental Prohibition"............................... Section 6.1(d)
"Hazardous Substance".................................... Section 3.15(b)
"HSR Act"................................................ Section 2.7
"HSR Filing"............................................. Section 3.4
"Initial Cash Purchase Price"............................ Section 2.5(a)
"Initial Cash Purchase Price for the Assets""............ Section 2.5(a)
"Insignificant Items".................................... Section 5.23(a)
"Intellectual Property".................................. Section 2.1(a)
"International Plan"..................................... Section 3.10(g)
"Interim Financial Statements"........................... Section 3.6
"Inventory Unregistered Trademarks"...................... Section 5.23
"Investments"............................................ Section 2.1
"IRS".................................................... Section 2.5(a)
"IT Asset"............................................... Section 3.21
"Law".................................................... Section 3.5(d)
"Lease".................................................. Section 2.4(k)
"Leased Real Property"................................... Section 3.13(a)
"Liabilities"............................................ Section 3.18
"Liens".................................................. Section 3.2(b)
"1999 Draft Financial Statements"........................ Section 5.17(a)
"1999 EBITDA"............................................ Section 2.5(b)
"Non-Assignable Rights".................................. Section 5.16
"Order".................................................. Section 3.5(d)
"Parent"................................................. Section 2.1
"Parent Stockholders".................................... Section 5.19(a)
"Person"................................................. Section 2.3(c)
"Plans".................................................. Section 3.10(b)
"Pre-1999 Draft Financial Statements".................... Section 5.17(a)
"Proxy Statement"........................................ Section 5.19(b)
"Purchase Price for the Shares".......................... Section 2.5(a)
"Related to the Business"................................ Section 2.1
"Representatives"........................................ Section 7.2
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DEFINED TERM SECTION
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"Review Period".......................................... Section 2.8(c)
"SEC".................................................... Section 3.22
"SEC Reports"............................................ Section 3.22
"Securities Act"......................................... Section 4.4
"Seller"................................................. Recitals
"Seller Health Plans".................................... Section 5.8(c)(2)
"Seller Life Plan"....................................... Section 5.8(c)(3)
"Seller Material Adverse Effect"......................... Section 9.13
"Sellers"................................................ Recitals
"September 30 Tangible Net Worth"........................ Section 2.8(a)
"Shares"................................................. Recitals
"Significant Items"...................................... Section 5.23(a)
"SOFTBANK"............................................... Recitals
"Statement of Objections"................................ Section 2.8(d)
"Stock Purchase"......................................... Section 2.2
"Stock Seller"........................................... Recitals
"Stockholders Meeting"................................... Section 5.19(a)
"Subsidiary"............................................. Section 9.1(a)
"Tangible Net Worth"..................................... Section 2.8(a)
"Tangible Net Worth Adjustment Amount"................... Section 2.8(h)(3)
"Tax".................................................... Section 8.3(a)
"Tax Package"............................................ Section 8.4(e)
"Tax Returns"............................................ Section 3.9(a)
"Transfer Taxes"......................................... Section 5.14(a)
"Transferred Assets"..................................... Section 2.1
"Transition Period"...................................... Section 5.13
"Unregistered Trademarks"................................ Section 2.1
"Voting Agreement"....................................... Recitals
"Year 2000 Compliant".................................... Section 3.21
"ZD Market Intelligence Business"........................ Section 5.7
"ZD Plan"................................................ Section 2.8(h)(2)
"ZD Stock"............................................... Section 3.24
"ZDNet Stock"............................................ Section 3.24
ARTICLE II
SALE AND PURCHASE OF ASSETS AND SHARES
Section 2.1 Sale and Purchase of Assets. Upon the terms and subject to
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the conditions set forth in this Agreement, Asset Seller hereby agrees to, and
to cause Xxxx-Xxxxx Inc. ("Parent") and each of its Affiliates (other than the
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Companies) to, sell, convey, transfer, assign and deliver to Buyer free and
clear of all Liens, and Buyer hereby agrees to purchase from Asset Seller, at
the Closing (i) the stock, partnership interests and member interests in the
Companies
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and other entities set forth in Exhibit C hereto (the "Investments"), (ii) all
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of Asset Seller's and each of its Affiliates' (other than the Companies) right,
title and interest in and to the trademarks, trade names, trade dress, service
marks and logos (other than "EQUIP", "Inter@ctive Investor" and derivatives
thereof) which are not registered or the subject of a pending application for
registration, were created for use in the Business (whether or not also created
for use in other businesses of Asset Seller or any of its Affiliates) or
initially used in the Business and were at some point used in the Business
(collectively, the "Unregistered Trademarks"), (iii) all of Asset Seller's and
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each of its Affiliates' (other than the Companies) right, title and interest in
and to the registered copyrights, trademark and service xxxx applications and
registrations and domain names listed on Schedule 3.19 of the Disclosure
Schedule, the xxxx "eShopper" and derivatives thereof and (iv) all of Asset
Seller's and each of its Affiliates' (other than the Companies) respective
right, title and interest in and to all of its assets that are primarily related
to, or used or held by it for use primarily in connection with, the Business
immediately prior to the Closing ("Related to the Business"), whether or not
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reflected on the books of Asset Seller or Parent or any Affiliate of either of
the foregoing and whether tangible or intangible, real, personal or mixed, other
than the Excluded Assets (the "Transferred Assets") (which assets (together with
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those assets set forth in Schedule 2.1 of the Disclosure Schedule (which are not
Transferred Assets)) are sufficient to enable Buyer to operate and continue
after the Closing the Business as it is presently conducted), including the
following assets of the Asset Seller or Parent to the extent they are Related to
the Business:
(a) all intellectual property (including software, databases, know-
how, inventions, data, trademarks, trade names, trade dress, service marks,
domain names, logos, patents, trade secrets and copyrights, including the
trademarks, trade names, trade dress, service marks, domain names and logos
that include "Xxxx-Xxxxx"), licenses and sublicenses granted or obtained in
connection therewith, rights to, and applications for, protection thereof
and rights and remedies with respect to any infringement thereof (the
"Intellectual Property");
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(b) all marketing information, marketing research and data and
customer and mailing lists, including works in progress;
(c) all furniture, fixtures, furnishings, machinery, vehicles,
computers, equipment, supplies and other tangible personal property;
(d) all inventory and all raw materials, work in process, finished
products, wrapping, supply and packaging items;
(e) all prepaid expenses, accounts receivable and other current assets
as of the Closing Date;
(f) all contracts, purchase or other orders, leases, licenses,
commitments, instruments and other agreements to which Asset Seller is a
party and all rights thereunder;
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(g) subject to Section 2.3(f) and Section 5.12(b), the originals and
all copies of all books, records, ledgers, files, reports, accounts, data,
plans and operating records, whether in hard copy, electronic format,
magnetic or other media ("Books and Records");
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(h) all promotional and advertising materials, whether existing in
print, video, online, magnetic or other media, and all stationery, forms,
labels and other materials;
(i) all licenses, permits, approvals, registrations and similar rights
or authorizations obtained from governmental entities;
(j) all goodwill and other intangible assets Related to the Business;
and
(k) all claims, causes of action and other rights of recovery, set off
or recoupment.
The transactions contemplated by this Section 2.1 are sometimes referred to
herein as the "Asset Purchase."
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Section 2.2 Sale and Purchase of Shares. Upon the terms and subject to
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the conditions set forth in this Agreement, at the Closing Stock Seller hereby
agrees to sell to Buyer or any permitted assignee of Buyer under Section 9.1,
and Buyer (and any assignee) hereby agrees to purchase from Stock Seller all of
the Shares, free and clear of all Liens. The transactions contemplated by this
Section 2.2 are sometimes referred to herein as the "Stock Purchase."
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Section 2.3 Excluded Assets. Notwithstanding anything in this
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Agreement to the contrary, Asset Seller shall retain from and after the Closing
all of its right, title and interest in and to, and there shall be excluded from
the Asset Purchase and the Transferred Assets, the following (collectively, the
"Excluded Assets"):
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(a) cash, bank accounts and marketable securities (other than the
Investments);
(b) subject to Section 5.20, all rights under all insurance policies,
including insurance policies in respect of directors and officers and to
all claims against insurance carriers;
(c) all amounts owed by Asset Seller or any Affiliate of Asset Seller
(other than the Companies or the Division) to any Company or the Division,
whether or not Related to the Business ("Person" means any individual,
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corporation (including any non-profit corporation), general or limited
partnership, limited liability company, Governmental Entity, joint venture,
estate, trust, association, organization or other entity of any kind or
nature; "Affiliate" shall mean, with respect to Sellers, Parent or any
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direct or indirect Subsidiary of Parent and, with respect to Buyer, any
Person that controls, is controlled by, or under common control with,
Buyer);
(d) all Books and Records Related to the Business which Asset Seller
is required by law to retain, so long as accurate and complete copies of
such Books and Records are included in the Transferred Assets;
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(e) all rights to the name "SOFTBANK" and any derivation or other
variation of such term whether or not Related to the Business;
(f) subject to the license agreements contemplated by Section 6.1(h),
all rights to the name "ZD", "Ziff" and any derivation or other variation
of such terms whether or not Related to the Business and all other
trademarks and trade names, service marks, trade dress, domain names or
logos of Asset Seller or any of its Affiliates not Related to the Business;
(g) all rights, claims, credits, causes of action or rights of set-off
against third parties pertaining to the Excluded Assets, except to the
extent related to the "ZD" xxxx and the logo associated therewith as used
in the Business;
(h) subject to Section 5.16, Asset Seller's rights under any lease,
agreement, contract, purchase order, instrument or other similar
arrangement Related to the Business for which consent to assignment is
required and has not been obtained as of the Closing Date;
(i) any Unregistered Trademark that is deemed to be an Excluded Asset
as contemplated by Section 5.23;
(j) Computer Shopper magazine and, subject to Section 2.1(a), any
special editions thereof, such as the special issue distributed under the
name Computer Shopper eShopper in 1999; and
(k) the marks "EQUIP" and "Inter@ctive Investor" and derivatives
thereof.
Section 2.4 Assumption of Liabilities. Upon the terms and subject to
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the conditions set forth herein, at the Closing Buyer agrees to assume and
become solely responsible for all debts, liabilities or obligations whatsoever
of Asset Seller to the extent arising out of or relating to the ownership of the
Transferred Assets or the operation of the Business, or of any of Asset Seller's
Affiliates to the extent arising out of or relating to the ownership of the
Transferred Assets or the operation of the Business, whether arising before or
after the Closing and whether known or unknown, fixed or contingent, but
excluding the Excluded Liabilities (the "Assumed Liabilities"), including the
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following:
(a) all liabilities and obligations of Asset Seller under the
agreements, contracts, leases, licenses and other arrangements included in
the Transferred Assets;
(b) all liabilities with respect to all actions, suits, proceedings,
disputes, claims or investigations that arise out of or relate to the
ownership of the Transferred Assets or the operation of the Business;
(c) employee benefit, compensation, retention and severance
liabilities and other similar liabilities associated with employees of
Asset Seller engaged in the operation of the Business, including the
Liability for the retention costs and special bonuses set forth in Schedule
5.8(e) of the Disclosure Schedule; and
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(d) all liabilities of Asset Seller and its Affiliates for Taxes with
respect to the operation of the Business or the Transferred Assets (other
than Taxes imposed with respect to any gain realized as a result of the
transactions contemplated by this Agreement) for any taxable year or period
beginning before and ending after the Closing Date, for the portion of such
taxable year or period after the Closing Date determined in accordance with
Section 8.3(b).
Notwithstanding the foregoing, Assumed Liabilities shall not include (and the
following, collectively, shall constitute the "Excluded Liabilities"):
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(a) any Liabilities of the Companies (since these liabilities will
continue to be owed by the Companies);
(b) any Liabilities owed to Asset Seller or any of its Affiliates
(other than the Companies or the Division) by any Company or Asset Seller
(with respect to the Business or the Division) that arise prior to the
Closing Date except for those that will continue under Section 5.10;
(c) any Liabilities owed by Asset Seller or any of its Affiliates
(other than the Companies or the Division) to any Company or the Division
that arise prior to the Closing Date;
(d) any Liabilities for borrowed money owed by Asset Seller or any of
its Affiliates to third parties;
(e) any Liabilities of Asset Seller or Stock Seller pursuant to this
Agreement or relating to the transfer of assets or stock hereunder;
(f) subject to the license agreements contemplated by Section 6.1(h),
any Liability arising out of or relating to any asset that is not a
Transferred Asset and is not owned by any of the Companies, except to the
extent that such Liability shall have been accrued on the Closing Date
Balance Sheet;
(g) any Liability to the extent arising out of or relating to Excluded
Assets;
(h) all Liability arising out of or resulting from (i) the claims and
Actions listed on Schedule 3.8(a) of the Disclosure Schedule, including any
successor or related claims or Actions, (ii) any claims or Actions which
are not disclosed on Schedule 3.8(a) of the Disclosure Schedule if, as a
result of the failure to disclose such claims or Actions on such Schedule,
the representation set forth in Section 3.8(a) is not true and correct as
of the date of execution of this Agreement (ignoring for this purpose the
reference to Seller Material Adverse Effect but including only claims and
Actions that, individually or in the aggregate, could reasonably be
expected to result in a liability in excess of $1,000,000), and (iii) any
claims or Actions which are not disclosed on Schedule 3.8(a) of the
Disclosure Schedule if, as a result of the failure to disclose such claims
or Actions in such Schedule, the representation in Section 3.8(a) would not
be true and correct as of the Closing Date if restated on the Closing Date;
-8-
(i) Excluded Employment Liabilities, as defined in Section 5.8(a), any
Liability in respect of or relating to the issuance or grant of stock
options, stock appreciation rights, performance shares or capital stock to
employees of or consultants to any of the Sellers and their Affiliates, any
Liability in respect of retention costs and special bonuses (including
those set forth on Schedule 2.4(i) of the Disclosure Schedule but not
including those set forth in Schedule 5.8(e) of the Disclosure Schedule)
and any Liability in respect of any agreement set forth in clause 1(q) of
Schedule 3.10(a) of the Disclosure Schedule;
(j) any Liabilities of Asset Seller or any of its Affiliates for Taxes
with respect to the operation of the Business or the Transferred Assets for
any taxable year or period ending on or before the Closing Date and, with
respect to any taxable year or period beginning before and ending after the
Closing Date, for the portion of such taxable year or period ending on the
Closing Date as determined in accordance with Section 8.3; and
(k) any obligation to contribute any or all amounts in excess of
$19,250,000.00 incurred by 63 Madison Associates, L.P., as landlord, in its
renovation of the real estate and improvements subject to the Lease of
Asset Seller under that certain Agreement of Lease, dated January 15, 1998,
by and between 63 Madison Associates, L.P. and Xxxx-Xxxxx Inc. (the
"Lease").
-----
Buyer is not assuming or becoming responsible for any debts, liabilities or
obligations other than the Assumed Liabilities.
Section 2.5 Purchase Prices.
---------------
(a) Purchase Price. The purchase price for the Transferred Assets and
--------------
the Shares shall be $780,000,000 minus, if 1999 EBITDA (as defined in
Section 2.5(b) and calculated in accordance with Section 2.5(c)) is less
than $88,400,000 (90% of projected 0000 XXXXXX), 7.9 times the amount by
which 1999 EBITDA is less than $98,200,000 (100% of projected 1999 EBITDA)
(the "Initial Cash Purchase Price"), plus the Assumed Liabilities, minus
---------------------------
the Final Asset Purchase Adjustments (as defined in Section 2.8). The
Initial Cash Purchase Price shall be paid in accordance with Section 2.6
hereof. The parties will, prior to the Closing, negotiate in good faith and
agree upon a reasonable allocation of the purchase price between the
Transferred Assets and the Shares of each of the Companies, respectively.
The value so allocated to the Shares is herein referred to as the "Purchase
--------
Price for the Shares" and an amount equal to the Initial Cash Purchase
--------------------
Price minus that value is herein referred to as the "Initial Cash Purchase
---------------------
Price for the Assets". An amount equal to the Initial Cash Purchase Price
--------------------
for the Assets plus the Assumed Liabilities minus the Final Asset Purchase
Adjustments (collectively, the "Asset Purchase Price") shall be allocated
--------------------
among the Transferred Assets in accordance with Section 5.14(c) below. Each
party shall use these allocations in all tax and governmental filings,
except as otherwise required by a tax or governmental authority in
connection with an audit or by a court decision. To the extent that
disclosures of these allocations are required to be made by a party to the
Internal Revenue Service (the "IRS"), such party will disclose such reports
---
to the other prior to filing with the IRS.
-9-
(b) EBITDA. For purposes of this Agreement, "1999 EBITDA" shall mean
------ -----------
net income of the Asset Seller in respect of the Division and the Companies
for 1999 plus, to the extent previously deducted in the calculation
thereof, the sum of (i) interest expense for indebtedness for borrowed
money, (ii) income tax expense and (iii) depreciation expense, amortization
expense and other non-cash charges, in each case in 1999. Except as
otherwise provided below, each of the foregoing amounts shall be determined
on a consolidated basis in accordance with GAAP on a basis consistent with
the basis on which the unaudited pro-forma combined statement of operations
of the Division and the Companies as of September 30, 1999 referred to in
Section 3.6 were prepared.
(c) Calculation of 1999 EBITDA.
--------------------------
(1) Not later than the later of February 1, 2000 and the date on
which the Draft Audited Financial Statements are delivered to
Buyer pursuant to Section 5.17, Sellers shall prepare and
deliver to Buyer a draft calculation of 1999 EBITDA (the
"Draft 1999 EBITDA").
-----------------
(2) Upon receipt of the Draft 1999 EBITDA, Buyers shall have 15
days (the "EBITDA Review Period") to review the Draft 1999
--------------------
EBITDA. During the EBITDA Review Period, Sellers shall give
Buyer full access at all reasonable times to all books,
records, premises and facilities and other materials relating
to the Division and the Companies, and to Sellers' personnel
and advisors and any work papers prepared by or for Sellers,
in each case as they may require for the purpose of reviewing
such Draft 1999 EBITDA.
(3) On or prior to the last day of the EBITDA Review Period, Buyer
may object to the Draft 1999 EBITDA by delivering to Sellers a
written statement setting forth in reasonable detail Buyer's
objections to the Draft 1999 EBITDA (the "EBITDA Statement of
-------------------
Objections"). If Buyer does not deliver an EBITDA Statement of
----------
Objections within the EBITDA Review Period, the Draft 1999
EBITDA shall be deemed to have been accepted by the Buyer and
shall be final and binding on the parties and EBITDA reflected
in the Draft 1999 EBITDA shall be the 1999 EBITDA used in
computing the Asset Purchase Price described in Section 2.5(a)
above. If Buyer delivers a EBITDA Statement of Objections
within the EBITDA Review Period, Sellers and Buyer shall
negotiate in good faith to resolve such objections, and any
objections that are resolved by a written agreement between
Buyer and Sellers shall be final and binding on the parties
and the amount of EBITDA for 1999 so agreed shall be the 1999
EBITDA used in computing the Asset Purchase Price in Section
2.5(a) above.
(4) If the Sellers and Buyer fail to reach an agreement with
respect to all of the matters set forth in the EBITDA
Statement of Objections, then the matters still in dispute
shall, not later than 5 business days after the
-10-
earlier of the end of the EBITDA Review Period or the first
date on which one of the parties affirmatively terminates
discussions in writing with respect to the EBITDA Statement of
Objections, be submitted for resolution to the New York office
of one of the five largest United States independent certified
public accountants that has no material business relationships
with Buyer or either of the Sellers, as selected by Buyer and
the Sellers jointly (the "EBITDA Accounting Expert") who,
------------------------
acting as an expert and not as an arbitrator, shall resolve
the matters still in dispute and adjust the Draft 1999 EBITDA
to reflect such resolution. The EBITDA Accounting Expert's
resolution of the matters in dispute shall be final and
binding on the parties and the Draft 1999 EBITDA, as adjusted
in accordance with the EBITDA Accounting Expert's resolution
of the matters in dispute shall be the 1999 EBITDA for
purposes of Section 2.5(a). The EBITDA Accounting Expert shall
make a determination as soon as practicable and in any event
within 10 business days (or such other time as the parties
hereto shall agree in writing) after its engagement. The
parties hereto agree that all adjustments shall be made
without regard to materiality.
(5) Buyer shall pay one-half and the objecting Seller shall pay
one-half of the fees and expenses of the EBITDA Accounting
Expert.
(6) Sellers and Buyer shall each make readily available to the
EBITDA Accounting Expert all relevant work papers and books
and records in their possession or to which they have the
power to grant access relating to the Division, the Companies,
and the Draft 1999 EBITDA.
Section 2.6 Payment of Purchase Price. At the Closing, Buyer agrees to
-------------------------
pay to Asset Seller the Initial Cash Purchase Price for the Assets and Buyer
agrees to pay to Stock Seller the Purchase Price for the Shares, in each case in
cash by wire transfer of immediately available funds to an account designated by
the Applicable Seller, and the Buyer additionally agrees to assume the Assumed
Liabilities.
Section 2.7 The Closing. The closing of the Asset Purchase and the
-----------
Stock Purchase (collectively, the "Closing") shall take place at 9:30 a.m. local
-------
time on the second business day following the first date on which (a) all
waiting periods applicable to the Asset Purchase or the Stock Purchase under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), or similar applicable waiting periods under the European Union merger
regulations or other applicable national laws, shall have expired or been
terminated and (b) all the other conditions to Closing set forth in Article VI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) shall
have been satisfied or waived, or at such other time, place and date as Buyer
and Sellers may mutually agree; provided, however, that in no event shall the
-------- -------
Closing occur prior to February 15, 2000. The date on which the Closing occurs
is referred to as the "Closing Date."
------------
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Section 2.8 Post-Closing Purchase Price Adjustments.
---------------------------------------
(a) Calculation of Tangible Net Worth. As soon as practicable, but in
---------------------------------
no event later than 90 days after the Closing Date, Buyer shall deliver a
computation of Tangible Net Worth as of September 30, 1999 ("September 30
------------
Tangible Net Worth") and a computation of Tangible Net Worth as of the
------------------
Closing Date ("Closing Date Tangible Net Worth"). For purposes of this
-------------------------------
Agreement, "Tangible Net Worth" shall mean the Transferred Assets and all
------------------
assets of the Companies (excluding in each case all intangible assets)
minus all liabilities of the Division and the Companies. Except as
otherwise provided below, Tangible Net Worth shall be determined in
accordance with generally accepted United States accounting principles
("GAAP"). For purposes of calculating Tangible Net Worth, liabilities shall
----
not include any liabilities that this Agreement expressly provides shall be
retained or discharged by Sellers. In addition, Tangible Net Worth shall
reflect all Assumed Liabilities and all Liabilities of the Companies, but
shall not include any Excluded Assets, any liabilities of the Division
other than the Assumed Liabilities, any current or non-current deferred tax
assets, any current or non-current deferred tax liabilities, any intangible
assets or any Liabilities for the matters referred to in Section 2.8(h)(i)
and Section 2.8(h)(ii).
(b) Access to Buyer. Upon reasonable notice to Sellers, Sellers shall
---------------
provide Buyer full access at all reasonable times to such historical
financial information (to the extent still in Sellers' possession or to
which Sellers have power to grant access) relating to the Division or the
Companies as Buyer shall reasonably request to prepare and deliver the
computations of September 30 Tangible Net Worth and Closing Date Tangible
Net Worth in accordance with Section 2.8(a) and to respond to any Statement
of Objections.
(c) Examination by Sellers. Upon receipt of the computations of
----------------------
September 30 Tangible Net Worth and Closing Date Tangible Net Worth,
Sellers shall have 45 days (the "Review Period") to review such
-------------
computations. During the Review Period, Buyer shall give Sellers full
access at all reasonable times to all books, records, premises and
facilities and other materials relating to the Division and the Companies,
and to Buyer's personnel and advisors and any work papers prepared by or
for Buyer, in each case as they may require for the purpose of reviewing
such computations.
(d) Objection by Sellers. On or prior to the last day of the Review
Period, Asset Seller may object to the computation of September 30 Tangible
Net Worth and/or Closing Date Tangible Net Worth by delivering to Buyer a
written statement setting forth in reasonable detail Asset Seller's
objections (the "Statement of Objections"). If Asset Seller does not
-----------------------
deliver a Statement of Objections within the Review Period, the
computations of September 30 Tangible Net Worth and Closing Date Tangible
Net Worth shall be deemed to have been accepted by Asset Seller and shall
be final and binding on the parties, and those computations shall be used
in computing the Tangible Net Worth Adjustment Amount described in Section
2.8(h) below. If Asset Seller delivers a Statement of Objections within the
Review Period, Asset Seller and Buyer shall negotiate in good faith to
resolve such objections, and if the objections are resolved by a written
-12-
agreement between Buyer and Asset Seller, that resolution shall be final
and binding on the parties and shall be used in computing such Tangible Net
Worth Adjustment Amount.
(e) Resolution of Disputes. If Asset Seller and Buyer fail to reach an
----------------------
agreement with respect to all of the matters set forth in a Statement of
Objections, then the matters still in dispute shall, not later than 10
business days after the earlier of the end of the Review Period or the
first date on which one of the parties affirmatively terminates discussions
in writing with respect to the Statement of Objections, be submitted for
resolution to the New York office of one of the five largest United States
independent certified public accountants that has no material business
relationships with Buyer or either of the Sellers, as selected by Buyer and
Asset Seller jointly (the "Accounting Expert") who, acting as an expert and
-----------------
not as an arbitrator, shall resolve the matters still in dispute and adjust
the computation of the Tangible Net Worth Adjustment Amount to reflect such
resolution. The Accounting Expert's resolution of the matters in dispute
shall be final and binding on the parties. The Accounting Expert shall make
a determination as soon as practicable and in any event within 30 days (or
such other time as the parties hereto shall agree in writing) after its
engagement. The parties hereto agree that all adjustments shall be made
without regard to materiality.
(f) Fees and Expenses of the Accounting Expert. Buyer shall pay one-
------------------------------------------
half and Asset Seller shall pay one-half of the fees and expenses of the
Accounting Expert.
(g) Access to Supporting Documentation. Sellers and Buyer shall each
----------------------------------
make readily available to the Accounting Expert all relevant work papers
and books and records in their possession or to which they have the power
to grant access relating to the Division, the Companies and the
computations of September 30 Tangible Net Worth and Closing Date Tangible
Net Worth.
(h) Final Asset Purchase Adjustments. As used herein, the term "Final
-------------------------------- -----
Asset Purchase Adjustments" shall mean the sum of:
--------------------------
(1) The actual amounts paid in connection with the retention costs
and special bonuses set forth in Schedule 5.8(e) of the
Disclosure Schedule;
(2) The amount of the discretionary contributions to be made under
the Xxxx-Xxxxx Retirement & Savings Plan (the "ZD Plan"), to
the extent accrued as of the Closing Date as contemplated in
the last sentence of Section 5.8(d); and
(3) If (i) the Closing Date Tangible Net Worth is less than (ii)
the September 30 Tangible Net Worth minus $5,000,000, an
amount equal to the September 30 Tangible Net Worth minus the
Closing Date Tangible Net Worth (such amount, the "Tangible
--------
Net Worth Adjustment Amount").
---------------------------
-13-
(i) Payment of Adjustment Amounts. Within two business days after the
-----------------------------
date on which the computations of September 30 Tangible Net Worth and
Closing Date Tangible Net Worth become final and binding pursuant to this
Section 2.8, Sellers shall collectively pay to Buyer the Final Asset
Purchase Adjustments together with interest thereon at a rate equal to the
rate announced from time to time by The Bank of New York as its base rate
during the period from the Closing Date to the date of the payment
calculated on the basis of a 365-day year and the actual number of days
elapsed. Any payments by Sellers pursuant to the preceding sentence shall
be allocated to them in such proportion as they shall determine in their
absolute discretion, and Buyer shall have no liability with respect to such
allocation. Notwithstanding the foregoing sentence, the obligation to pay
Buyer the foregoing adjustment shall be a joint and several obligation of
each Seller. Any such payments shall be made by wire transfer of
immediately available funds to a bank account or accounts as shall be
designated in writing by the recipient no later than one business day prior
to the payment date.
Section 2.9 Certain European Restructuring Matters. Notwithstanding
--------------------------------------
anything to the contrary herein, the parties hereto agree that prior to the
Closing, Stock Seller shall be permitted to cause the Companies to transfer all
assets and liabilities of the Companies Related to the Business to one or more
to-be-formed subsidiaries of the Companies and if Stock Seller does so,
references herein to the Companies shall be deemed references to such
subsidiaries, where appropriate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Buyer as follows:
Section 3.1 Organization and Good Standing.
------------------------------
(a) Each Seller and each Company is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization,
with full corporate or limited liability company power and authority, as
applicable to conduct its businesses and to own or use its assets as
currently conducted, owned and used. Each Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which it is required to be so licensed or qualified, except for any
failures to be so licensed, qualified or in such good standing that,
individually or in the aggregate, is not reasonably likely to have a Seller
Material Adverse Effect.
Section 3.2 Capitalization.
--------------
(a) All of the issued and outstanding shares of capital stock of, or
other equity interests in, each Company have been duly authorized and are
validly issued, fully paid and nonassessable and free of any transfer
restriction.
(b) Stock Seller is, and on the Closing Date will be, the sole record
and beneficial owner of the Shares (other than a de minimis number of
directors' qualifying shares that is
-14-
not greater than the minimum required by applicable Law), free and clear of
all liens, claims, mortgages, security interests, charges, title
imperfections, restrictions or other encumbrances (collectively, "Liens").
-----
(c) There are no shares of capital stock of, or other equity interests
in, any Company reserved for issuance or subject to preemptive rights or
any outstanding subscriptions, options, warrants, calls, rights or
convertible or exchangeable securities or any other agreements or
instruments in effect giving any Person the right to acquire from Stock
Seller or any of its Affiliates any shares of capital stock, or other
equity, profits or interests in, any Company or requiring the Stock Seller
or any Company to repurchase, redeem or otherwise acquire any of its
capital stock or other securities.
(d) Except as set forth in Schedule 3.2(d), none of the Companies owns
shares of capital stock of, or other equity interests in, any Person.
Section 3.3 Corporate Authority. Each Seller has the corporate power
-------------------
and authority, and has taken all corporate action necessary, to execute, deliver
and perform its obligations under this Agreement and each of the agreements
contemplated hereby. This Agreement has been duly executed and delivered by each
Seller and constitutes a valid and legally binding agreement of each Seller,
enforceable against each Seller in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (collectively, the "Enforceability
--------------
Exceptions").
----------
Section 3.4 Consents and Approvals. Except for the notification and
----------------------
report form required to be filed under the HSR Act (an "HSR Filing"), European
----------
Union merger regulations and except as set forth in Schedule 3.4 of the
Disclosure Schedule, no notices, reports, consultations, registrations or other
filings are required to be made by Sellers or any Company with, nor are any
consents, approvals, opinions or authorizations required to be obtained by
Sellers or any Company from, any court or other governmental, judicial,
administrative or regulatory authority in the United States or elsewhere (each,
a "Governmental Entity"), or any third party (including, without limitation, any
-------------------
work council or other labor entity) in connection with the execution, delivery
or the performance of this Agreement by Sellers and the consummation of the
transactions contemplated hereby, except for any such matters the failure of
which to make or obtain, individually or in the aggregate, would not have a
Seller Material Adverse Effect.
Section 3.5 No Violations. The execution, delivery and performance of
-------------
this Agreement by Sellers will not:
(a) violate or contravene any provision of the certificate of
incorporation or by-laws (or other comparable governing documents) of
either Seller or any Company;
(b) violate, conflict with, or constitute or result in a default,
acceleration or creation of a Lien under, or a termination of (in each case
with or without notice or lapse of time or both), any provision of any
agreement, license, lease, contract, loan, note, franchise, mortgage,
indenture, or other obligation (each, a "Contract"), to which either
--------
-15-
Seller or any Company is a party or by which any of their respective assets
are bound, in each case other than (i) as set forth in Schedule 3.5(b) of
the Disclosure Schedule and (ii) for any such matters that, individually or
in the aggregate, would not have a Seller Material Adverse Effect;
(c) require either Seller or any Company to obtain the consent,
waiver, authorization or approval of any Person under any Contract to which
either Seller or any Company is a party or by which any of their respective
assets are bound (collectively, "Applicable Contracts"), in each case other
--------------------
than (i) as set forth in Schedule 3.5(c) of the Disclosure Schedule and
(ii) for any such matters that, individually or in the aggregate, would not
have a Seller Material Adverse Effect:
(d) violate, contravene or conflict with any foreign or domestic
(federal, state or local) statute, law, rule, regulation or ordinance
(each, a "Law"), or any award, judgment, decree, injunction or other order
---
(each, an "Order"), of any Governmental Entity having jurisdiction over
-----
either Seller, any Company or any of their respective assets or businesses.
Section 3.6 Financial Statements. Schedule 3.6 of the Disclosure
--------------------
Schedule contains (i) unaudited combined pro-forma statements of operations of
the Division and the Companies for each of the years ended December 31, 1997 and
1998 (collectively, the "Annual Financial Statements") and (ii) an unaudited
---------------------------
combined pro-forma statement of tangible net worth of the Division and the
Companies as of September 30, 1999 and the related unaudited combined pro-forma
statement of operations for the nine months then ended (collectively, the
"Interim Financial Statements" and, together with the Annual Financial
----------------------------
Statements, the "Financial Statements"). The Financial Statements have been
--------------------
prepared in accordance with GAAP consistently applied throughout the periods
covered by such statements and fairly present the combined financial condition
and results of operations of the Division and the Companies as of the respective
dates and for the periods then ended, as applicable, except that the Financial
Statements are subject to (i) the absence of the level of detail and full
financial footnotes that would be required in regular financial statements, (ii)
the assumptions, qualifications and adjustments set forth in the Basis of
Presentation contained in Schedule 3.6 of the Disclosure Schedule, (iii) the
absence of line items below earnings before interest and taxes in the unaudited
consolidated pro forma statements of operations and (iv) in the case of the
Interim Financial Statements, normal year-end adjustments that are not expected
to be material in amount or effect.
Section 3.7 Absence of Certain Changes and Events.
-------------------------------------
(a) Except as set forth in Schedule 3.7 of the Disclosure Schedule,
since September 30, 1999, there has not occurred any matter, circumstance,
event or effect which has had or is reasonably likely to have a Seller
Material Adverse Effect.
(b) Except as set forth in Schedule 3.7 of the Disclosure Schedule,
since December 31, 1998:
-16-
(1) each of Asset Seller (but solely with respect to the Division)
and each Company has conducted its business only in the
ordinary course of business, consistent with past practice;
(2) neither Asset Seller nor any Company has sold, leased or
otherwise disposed of, or incurred any Lien on, any
Intellectual Property or any other asset material to the
Business other than sales in the ordinary course of business
consistent with past practice;
(3) neither Seller nor any Company has settled, compromised,
waived, released or assigned any material rights or claims it
has under or in respect of any Action, Applicable Contract,
Tax matter or insurance policy relating to the Business or the
Companies or made any material modification or material
amendment with respect to any Applicable Contract;
(4) there has not been any change in the accounting practices,
methods or principles used by Asset Seller (but solely with
respect to the Division) or any Company;
(5) there has not been any material increase in the benefits
under, or the establishment, amendment or termination of, any
bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan covering any of the
employees of the Division or any of the Companies, or any
other material increase in the compensation payable or to
become payable to, or any other material change in the
employment terms for any officer of the Division or any
Company or any other employee of the Division or any of the
Companies earning in excess of $100,000 per year;
(6) there has not been any entry by Asset Seller (with respect to
the Division) or any Company into an employment, consulting,
severance, termination or indemnification agreement with any
officer of Asset Seller with respect to the Business or the
Division or any Company or any other employee of Asset Seller
with respect to the Business or the Division or any of the
Companies earning in excess of $100,000 per year;
(7) neither Asset Seller (with respect to the Division) nor any
Company has incurred any material Liabilities, other than
Liabilities incurred in the ordinary course of business
consistent with past practice;
(8) neither Asset Seller (with respect to the Division) nor any
Company has entered into any Contract or engaged in any
transaction requiring
-17-
the performance of services or the delivery of goods or
materials by or to Asset Seller or any Company for
consideration exceeding $1,000,000 in any one year or which is
likely to result in the incurrence of Liabilities by Asset
Seller (but only with respect to the Division) or any Company
in excess of $1,000,000; and
(9) neither Asset Seller (with respect to the Division) nor any
Company has entered into any Contract or commitment with
respect to any of the foregoing.
Section 3.8 Litigation, Orders.
------------------
(a) Except as set forth in Schedule 3.8(a) of the Disclosure
Schedule, there are no actions, suits or other legal or administrative
proceedings by or before any Governmental Entity or other Person (each,
an "Action") pending or, to the knowledge of Sellers, threatened against
------
any Seller, any Company or any of their respective assets that relate to
the Business or any Company, other than any such Actions that,
individually or in the aggregate, would not cause a Seller Material
Adverse Effect and are not reasonably likely to prohibit, materially
restrict or delay the performance of this Agreement by Sellers.
(b) Neither Seller, nor any Company nor any of their respective
assets is subject to any Order except for those that, individually or in
the aggregate, are not material and are not reasonably likely to
prohibit, materially restrict or delay the performance of this Agreement
by Sellers.
(c) Except as set forth in Schedule 3.8(c), there are no Actions
pending or, to the knowledge of Sellers, threatened, as of the date
hereof or within the past three years, against Asset Seller (with respect
to the Division), any Company or any of their respective assets, brought
by or on behalf of any freelance employee or independent contractor that
are related to copyright infringement.
Section 3.9 Taxes.
-----
(a) Each of Asset Seller and each Company has filed or caused to be
filed (on a timely basis since May 5, 1998) all Tax Returns that are or
were required to be filed by or with respect to any of them, either
separately or as a member of a group of corporations, pursuant to
applicable Law, and all such Tax Returns are or, with respect to Tax
Returns filed after the date hereof, will be true and complete in all
material respects and comply with all applicable Laws. Each of Asset
Seller and each Company has paid, or made provision for the payment of,
all Taxes that have or are reasonably likely to become due pursuant to
those Tax Returns or otherwise, or pursuant to any assessment received by
Asset Seller or any Company, except such Taxes as are listed in Schedule
3.9(a) of the Disclosure Schedule or are being contested in good faith
and for which adequate reserves have been established in the Financial
Statements and the Interim Financial Statements in accordance with GAAP.
"Tax Returns" means all returns, reports, notices, forms, declarations,
-----------
claims for
-18-
refund, estimates, elections, information statements or other documents
relating to any Tax, including any schedule or attachment thereto, and
any amendment thereof.
(b) The charges, accruals and reserves with respect to Taxes of
Asset Seller and each Company provided in the Financial Statements are
adequate (determined in accordance with GAAP) and all Taxes that Asset
Seller or any Company is or was required by Law to withhold or collect
have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity or other Person.
(c) There are no Liens on any of the Transferred Assets or the
assets of any Company that arose in connection with any failure (or
alleged failure) of Asset Seller or any Company to pay any Tax for any
period prior to the Closing Date nor will any such Liens arise in the
future.
(d) No foreign, federal, state or local tax audits or administrative
or judicial Tax proceedings are pending or being conducted with respect
to the Asset Seller or any Company and neither the Asset Seller nor any
Company has received from any foreign, federal, state or local taxing
authority any (i) written notice indicating an intent to open an audit or
other review, (ii) request for information related to Tax matters or
(iii) notice of deficiency or proposed adjustment for any amount of Tax
proposed, asserted or assessed by any taxing authority against the Asset
Seller or any Company.
(e) None of the Companies is a party to or bound by any Tax
allocation or Tax sharing agreement.
(f) None of the Companies shall be required to include any items of
income in, or exclude any item of deduction or loss from, taxable income
for any taxable year or period ending after the Closing Date as a result
of any prepaid amount received by the Company on or prior to the Closing
Date.
(g) None of the Companies is a party to, and none of the Assumed
Liabilities constitutes, an agreement, contract, arrangement or plan that
has resulted or would result, separately or in the aggregate in the
payment of any "excess parachute payment" within the meaning of Section
280G of the Code (or any corresponding provision of state, local or
foreign Tax law).
Section 3.10 Employee Benefits; ERISA.
------------------------
(a) Sellers have delivered or otherwise made available to Buyer a
true, complete and correct copy of, and Schedule 3.10(a) of the
Disclosure Schedule sets forth a true, complete and correct list of, each
profit-sharing, pension, severance pay, thrift, savings, incentive,
change of control, employment, retirement, bonus, deferred compensation,
group life and health insurance and other employee benefit plan,
agreement, arrangement or commitment, including any such plan, agreement,
arrangement or commitment or any other plan or program that constitutes
an
-19-
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), (i) that
-----
provides benefits for or pertains to any Division employee or to which
Asset Seller makes contributions on behalf of any Division employee or is
otherwise bound in connection with the Division ("Asset Seller Benefit
--------------------
Plans") or (ii) that provides benefits for or pertains to any current or
-----
former employee of any Company or to which any Company makes
contributions on behalf of any of its current or former employees or is
otherwise bound (all of which are hereinafter referred to as "Company
-------
Benefit Plans" and, collectively with Asset Seller Benefit Plans, the
-------------
"Benefit Plans").
-------------
(b) All Benefit Plans that are employee benefit plans (the "Plans"),
-----
to the extent subject to ERISA or the Code, are in substantial compliance
with their terms, ERISA, the Code and any other applicable Law. Each Plan
that is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA and that is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS.
There is no material pending or, to the knowledge of Sellers, threatened
litigation relating to the Plans. No action has been taken with respect
to any Benefit Plan either to terminate such Benefit Plan or to cause
distributions, other than in the ordinary course of business, to
participants under such Benefit Plan.
(c) Neither Asset Seller, nor any Company, nor any entity that is
considered one employer with Asset Seller or any Company under Section
4001(b)(1) of ERISA or Section 414(b) or (c) of the Code has maintained,
or made or been obligated to make, contributions to any plan subject to
Part 3 of Title I or Title IV of ERISA at any time within the last six
years.
(d) All contributions required to be made under the terms of any
Benefit Plan have been timely made when due.
(e) Neither Asset Seller nor any Company has any commitments or
obligations nor made any representations regarding continuation of
welfare benefits after termination of employment under any of the Benefit
Plans, except as required by Part 6 of Title I of ERISA or similar laws.
Neither Asset Seller (with respect to the Division) nor any Company has
any obligations for retiree health or life benefits. Except to the extent
limited by applicable Law, there are no restrictions on the rights of
Asset Seller or any Company to amend or terminate any such Benefit Plan
without incurring Liability thereunder.
(f) Neither Asset Seller nor any Company has any obligations for
retiree health or life benefits other than as provided under any Benefit
Plan. Except to the extent limited by applicable Law, there are no
restrictions on the rights of Asset Seller or any Company to amend or
terminate any Benefit Plan without incurring Liability thereunder.
(g) Each Benefit Plan covering employees of the Companies (an
"International Plan") has been maintained in substantial compliance with
------------------
its terms and with the
-20-
requirements prescribed by any and all applicable Laws (including any
special provisions relating to qualified plans where such International
Plan was intended to so qualify) and has been maintained in good standing
with applicable regulatory authorities. The fair market value of the
assets of each funded International Plan (or the liability of each funded
International Plan funded through insurance) is sufficient to procure or
provide for the benefits accrued thereunder through the Closing Date
according to the actuarial assumptions and valuations most recently used
to determine employer contributions to the International Plan. The
Companies conform in all material respects with the provisions of any
applicable national law or regulations in relation to staff delegates and
workers' committees, and in a more general manner in relation to the
representation of the employees within the Companies.
Section 3.11 Employees; Labor Matters. Schedule 3.11(a) of the
------------------------
Disclosure Schedule contains a true, complete and correct list, as of the date
of this Agreement, of the name, job title, current compensation, and date of
hire of each employee of (i) Asset Seller working for the Division and (ii) the
Companies, including each employee on leave of absence or layoff status.
Schedule 3.11(b) of the Disclosure Schedule contains a true, complete and
correct list, as of the date of this Agreement, of the name, job title, current
compensation, and date of hire of each employee of Asset Seller that provides
services to the Division or the Business but is not listed in Schedule 3.11(a),
including each employee on leave of absence or layoff status. Neither Asset
Seller nor any Company is a party to, or bound by, any collective bargaining
agreement or other labor Contract nor is any such collective bargaining
agreement or other labor Contract currently being negotiated, none of the
employees of Asset Seller (with respect to the Division) or any Company is
represented by any union or labor organization nor, to the knowledge of Sellers,
are there any activities or proceedings of any labor union or labor organization
to organize any employees of Asset Seller (with respect to the Division), the
Companies or any of the employees listed in Schedule 3.11(b). Each of Asset
Seller (but solely with respect to the Division) and each Company is in
compliance with all Laws in respect of employment and employment practices,
terms and conditions of employment, wages, hours of work, equal opportunity and
occupational health and safety except for such instances of non-compliance that,
individually or in the aggregate, are not reasonably likely to have a Seller
Material Adverse Effect. To the knowledge of Sellers, no employee of Asset
Seller (with respect to the Division) or of any Company that receives
compensation at an annual rate in excess of $200,000 has given notice or has
otherwise informed Asset Seller that he or she intends to terminate employment
with Asset Seller or the applicable Company.
Section 3.12 Compliance with Laws; Governmental Authorizations. Except
-------------------------------------------------
for any such matters that, individually or in the aggregate, have not had and
are not reasonably likely to result in a Seller Material Adverse Effect:
(a) each of Asset Seller (but solely with respect to the Division) and
each Company is in compliance with each Law applicable to it or to its
conduct or operation of the Business and no notice has been received by
Asset Seller or any Company alleging a failure to comply with such Laws;
-21-
(b) each of Asset Seller (but solely with respect to the Division) and
each Company has all licenses, permits, certificates and other approvals or
authorizations from Governmental Entities that are necessary to permit it
to lawfully conduct and operate the Business in the manner it currently
does and to permit it to own and use its assets in the manner in which it
currently does ("Governmental Authorizations"); and
---------------------------
(c) each of Asset Seller (but solely with respect to the Division) and
each Company is in full compliance in all material respects with all of the
terms and requirements of each of its Governmental Authorizations and no
notice has been received by Asset Seller or any Company alleging a failure
to comply with such terms and requirements.
Section 3.13 Real Property.
-------------
(a) Schedule 3.13(a) of the Disclosure Schedule contains a true,
complete and correct list, as of the date of this Agreement, of all leased
and subleased real property included in the Transferred Assets or leased or
subleased by any Company (the "Leased Real Property"). Sellers have
--------------------
delivered or made available to Buyer true, complete and correct copies of
the deeds, leases or other instruments and all amendments thereto
(collectively, the "Leases") by which such real property is leased. As of
------
the date of this Agreement, neither Seller nor any Company owns any real
property Related to the Business. There is no significant default under any
Leases relating to the Leased Real Property by Asset Seller or any Company
or, to the knowledge of Sellers, by the other parties thereto, and no event
has occurred which with the giving of notice, lapse of time or both would
constitute such a significant default.
(b) Each of the Leases are in full force and effect. Except as set
forth in Schedule 3.13(b) of the Disclosure Schedule, each Lease will
continue to be enforceable on substantially identical terms following the
Closing; neither Asset Seller nor any Company has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in any
Lease and each Lease is fully assignable to Buyer without the necessity of
any consent.
(c) Each of Asset Seller and each Company has a valid leasehold
interest in the Leased Real Property held by it free and clear of all Liens
except: (i) mortgages or security interests shown on the Financial
------
Statements as securing specified Liabilities or obligations, all of which
shall be discharged by Sellers at or prior to Closing, (ii) Liens for
current Taxes and assessments and other charges by Governmental Entities
not yet due and payable or which may thereafter be paid without penalty or
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the Financial Statements and the
Interim Financial Statements in accordance with GAAP, and (iii)
imperfections of title that do not materially impair the use of such
properties by the Asset Seller or the applicable Company, as applicable, or
the value of the leasehold interests of such Leased Real Property.
Section 3.14 Contracts, Leases and Agreements; No Default.
--------------------------------------------
-22-
(a) Except as set forth in Schedule 3.14(a) of the Disclosure
Schedule, there are no Applicable Contracts included among the Transferred
Assets or to which any Company is a party or by which any of them are
bound:
(1) evidencing indebtedness for borrowed money in excess of
$1,000,000 or pursuant to which Asset Seller (but solely with
respect to the Division) or any Company has guaranteed any
obligation of any other Person in excess of $1,000,000;
(2) prohibiting, restricting or limiting the ability of Asset
Seller or any Company to engage in any line of business, to
compete with any Person or to carry on the Business or any
other business activity anywhere in the world;
(3) leasing real property;
(4) requiring the performance of services or delivery of goods or
materials by or to Asset Seller or any Company for
consideration exceeding $1,000,000 in any one year that are
not terminable by Asset Seller or the relevant Company within
one year without penalty;
(5) representing an employment agreement (i) in the case of
employees of the Asset Seller, that cannot be cancelled with
less than 30 days notice and without penalty or special
payment (other than severance in an amount not to exceed
$100,000) and (ii) in the case of employees of any of the
Companies, that cannot be cancelled without penalty or special
payment (other than severance in an amount not to exceed
$250,000);
(6) that pertain to significant Intellectual Property including
license agreements, indemnification agreements or other
similar arrangements;
(7) that create any joint venture or other similar arrangements
(other than as specifically contemplated by Section 6. 1 (h))
or prohibit it from freely engaging in any business or
competing anywhere in the world;
(8) that are between the Asset Seller (with respect to the
Business or the Division) or any Company, on the one hand, and
any Affiliate of Asset Seller (other than the Division or any
Company), on the other hand;
(9) requiring any Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or other securities or
that are shareholder agreements, voting trust agreements,
registration rights agreements or other Contracts between any
Company and its current or former security holders;
-23-
(10) in the case of employees of any of the Companies, which is an
employment agreement for which there exists contractual
liability (and excluding any statutory liability) related to
severance in an amount in excess of $100,000;
(11) constituting capital leases; or
(12) that are otherwise material to the Business.
Sellers have delivered or made available to Buyer a true, complete and
correct copy of each Applicable Contract listed in Schedule 3.14(a) of the
Disclosure Schedule.
(b) Except as set forth in Schedule 3.14(b) of the Disclosure Schedule
or for any such matters that, individually or in the aggregate, would not
have a Seller Material Adverse Effect with respect to each Applicable
Contract listed in Schedule 3.14(a) of the Disclosure Schedule:
(1) such Applicable Contract is a valid and legally binding
obligation of Asset Seller or the Company party thereto and,
to the knowledge of Sellers, the other parties thereto;
(2) Asset Seller or the Company that is a party to such Applicable
Contract is in substantial compliance with all material terms
and requirements of such Applicable Contract;
(3) to the knowledge of Sellers, each other Person that is a party
to such Applicable Contract is in substantial compliance with
all material terms and requirements of such Applicable
Contract;
(4) to the knowledge of Sellers, no event has occurred or
circumstance exists that (with or without the giving of
notice, the lapse of time or both) gives any Person the right
to declare a default, exercise any remedy under, accelerate
the maturity or performance of, or terminate such Applicable
Contract;
(5) except as set forth in Section 3.5(b) of the Disclosure
Schedule, to the knowledge of Sellers upon the consummation of
the transactions contemplated by this Agreement and subject to
the receipt of consents set forth in Schedule 3.5(c) of the
Disclosure Schedule, each Applicable Contract listed in
Schedule 3.14(a) of the Disclosure Schedule will be a valid
and binding obligation of Buyer, enforceable in accordance
with its terms.
Section 3.15 Environmental Matters.
---------------------
(a) Except for any such matters that, individually or in the aggregate
would not have a Seller Material Adverse Effect:
-24-
(1) each of Asset Seller (but solely with respect to the Division)
and each Company is in substantial compliance with all
applicable Environmental Laws;
(2) neither Asset Seller (but solely with respect to the Division)
nor any Company has received any written notice from any
Governmental Entity alleging the violation of any applicable
Environmental Laws other than for matters that have been
resolved prior to the date hereof;
(3) neither Asset Seller (but solely with respect to the Division)
nor any Company is subject to any Order arising under any
Environmental Law; and
(4) to the knowledge of Sellers, neither Asset Seller (but solely
with respect to the Division) nor any Company has generated,
stored, used, transported, disposed of or released any
Hazardous Substance except as permitted under applicable
Environmental Laws.
(b) This Section 3.15 constitutes the sole representation and warranty
of Asset Seller and the Companies with respect to any Environmental Law or
Hazardous Substance notwithstanding any other representation and warranty
in this Article III. For purposes of this Agreement, the term
"Environmental Law" means any applicable law, regulation, code, license,
-----------------
permit, order, judgment, decree or injunction promulgated by any
Governmental Entity (i) for the protection of the environment (including
air, water, soil and natural resources) or (ii) regulating the use,
storage, handling, release or disposal of Hazardous Substances, in each
case as presently in effect. For purposes of this Agreement, the term
"Hazardous Substance" means any substance to the extent listed, defined,
-------------------
designated or classified as hazardous, toxic or radioactive under any
applicable Environmental Law including petroleum and any derivative or by-
product thereof.
Section 3.16 Insurance. Schedule 3.16 of the Disclosure Schedule sets
---------
forth a true, complete and correct list of all insurance policies covering the
Division, the Companies and any of their assets or operations, including a
description of any and all programs of self-insurance. The insurance policies
listed in Schedule 3.16 of the Disclosure Schedule are sufficient in all
material respects to comply with applicable Laws and any requirements of the
Applicable Contracts. No notice of cancellation or termination of any insurance
policy listed in Schedule 3.16 of the Disclosure Schedule has been received with
respect to any such policy and, to the knowledge of Sellers, each such policy is
in full force and effect.
Section 3.17 Brokers and Finders. Except for Xxxxxx Xxxxxxx & Co.
-------------------
Incorporated, whose fees shall be paid by Sellers, no agent, broker, investment
banker, intermediary, finder, Person or firm acting on behalf of Sellers or any
Company will be entitled to any broker's or finder's fee or any other commission
or similar fee, directly or indirectly, from any of the parties hereto in
connection with the execution of this Agreement or upon consummation of the
transactions contemplated hereby.
-25-
Section 3.18 No Undisclosed Liabilities. The Assumed Liabilities do
--------------------------
not include, and the Companies do not have, any Liabilities except for (a)
Liabilities disclosed in the Disclosure Schedule, (b) Liabilities reflected or
reserved against in the Financial Statements, (c) current liabilities incurred
since September 30, 1999 in the ordinary course of business consistent with past
practice, and (d) any other Liabilities that, individually or in the aggregate,
are not material. "Liabilities" means any debts, liabilities, commitments or
-----------
obligations of any kind, character or nature whatsoever, whether known or
unknown, contingent or absolute, due or to become due.
Section 3.19 Intellectual Property. Except as set forth in Schedule
---------------------
3.19 of the Disclosure Schedule, Asset Seller and the Companies own or have the
valid and enforceable right to use all of the Intellectual Property used by them
in the conduct of the Business. Schedule 3.19 of the Disclosure Schedule lists
all registered copyrights, material trademark and service xxxx applications and
registrations and domain names held by Asset Seller and the Companies in
connection with the Business, except for such copyrights, registrations or
applications for trademarks or domain names that are not being used, or that
individually or in the aggregate are not material. Except as set forth in
Schedule 3.19 of the Disclosure Schedule, no proceedings or claims are pending
or, to the knowledge of Sellers, threatened alleging that the use by Sellers or
any Company of any Intellectual Property infringes on the rights of any third
party and no written claim has been received by Sellers or any Company alleging
any such infringement, other than any such infringements, proceedings or claims
that, individually or in the aggregate, would not have a Seller Material Adverse
Effect. Except as set forth in Schedule 3.19 of the Disclosure Schedule, to the
knowledge of Sellers, no Person is infringing any of the Intellectual Property
in any material respect.
Section 3.20 Transferred Assets. Asset Seller has, and at the Closing
------------------
Buyer will receive, good and marketable title to all of the Transferred Assets,
in each case free and clear of any Lien, except for such Liens that would not
materially interfere with the ownership of the Transferred Assets or operation
of the Business, taken as a whole, and which would not reasonably be expected to
interfere with or adversely affect the financing contemplated by Section 6.1(k).
All tangible assets constituting Transferred Assets are in good operating
condition and repair, ordinary wear and tear excepted. Except for the Excluded
Assets, and except for the assets listed on Schedule 2.1 of the Disclosure
Schedule, the Transferred Assets will constitute all of the material assets of
the Asset Seller or any of its Affiliates used in the operation of the Business
as conducted on the Closing Date.
Section 3.21 Year 2000 Compliance. To the knowledge of Sellers, all
--------------------
hardware, software and embedded technology used by Asset Seller or any Company
in the conduct of the Business (each such item, an "IT Asset") is Year 2000
--------
Compliant, except for such failures to be Year 2000 Compliant that, individually
or in the aggregate, are not reasonably likely to be material. "Year 2000
---------
Compliant" means, with respect to any IT Asset, that the IT Asset can accurately
---------
recognize, manage, accommodate and manipulate date-dependent data, computations,
outputs and other functions for dates on or after January 1, 2000 (including
single-and multi-century formulas and leap years).
-26-
Section 3.22 SEC Filings. All forms, reports, statements and other
-----------
documents (the "SEC Reports") filed by Parent with the Securities and Exchange
-----------
Commission ("SEC") have been prepared in all material respects in accordance
---
with the requirements of the Securities Act of 1933, as amended, and the
Exchange Act of 1934, as amended, and the rules and regulations of the SEC
thereunder applicable to such SEC Reports and, to the extent covering
information or matters related to the Business, did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstance under which they were made, not
misleading. Neither Asset Seller nor any other direct or indirect Subsidiary of
Parent is subject to the periodic reporting requirements of the Exchange Act of
1934, as amended.
Section 3.23 Related Party Transactions. Except as set forth in
--------------------------
Schedule 3.23 of the Disclosure Schedule, since September 30, 1999, none of
Asset Seller (with respect to the Division) and the Companies is party to any
agreement, contract, commitment, transaction or proposed transaction with any of
its Affiliates (excluding the Division and the Companies), except agreements,
contracts, commitments, transactions and proposed transactions which have been
entered into and conducted on an arm's-length basis.
Section 3.24 Capitalization. The issued and outstanding capital stock
--------------
of Parent consists solely of (i) 103,366,373 shares of Xxxx-Xxxxx Inc.-ZD Common
Stock ("ZD Stock"), of which 71,619,366 shares are owned by SOFTBANK, and (ii)
--------
13,707,063 shares of Xxxx-Xxxxx Inc.-ZDNet Common Stock ("ZDNet Stock"), of
-----------
which no shares are owned by SOFTBANK. Based on the market value of Xxxx-Xxxxx
Inc.-ZD Common Stock and Xxxx-Xxxxx Inc.-ZDNet Common Stock as of the date
hereof, SOFTBANK is entitled to approximately 59.4% of the voting power of
Parent on matters generally presented for a vote of stockholders of Parent,
including the matters contemplated by this Agreement. SOFTBANK is able to vote,
without limitation, all shares of ZD Stock it owns until this Agreement
terminates, or, if sooner, the date after the day on which any Stockholders
Meeting convened in accordance with Section 5.19 is held. There are no options
to purchase shares of ZD Stock or ZDNet Stock other than 10,005,060 options to
purchase ZD Stock and 12,852,277 options to purchase ZDNet Stock.
Section 3.25 Liabilities. All of the Liabilities related to the
-----------
Business or the Transferred Assets are Liabilities of Asset Seller or the
Companies.
Section 3.26 No Other Representations or Warranties; Disclaimer of
-----------------------------------------------------
Representations and Warranties.
------------------------------
(a) Except for the representations and warranties contained in this
Article III, neither of the Sellers nor any other Person makes any express
or implied representation or warranty on behalf of or with respect to
Sellers, any Company, the Transferred Assets, the Division or the Business,
and Sellers hereby disclaim any representation or warranty not contained in
this Article III or in any other agreement, instrument or document
delivered by any of Sellers and the Companies upon execution hereof or at
the Closing.
(b) Except as set forth in the first sentence of Section 3.20, the
Sellers do not make any express or implied representation or warranty with
respect to the Investments or
-27-
the business conducted by the Companies or entities in which such
Investments were made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
Section 4.1 Organization and Good Standing. Buyer is duly organized,
------------------------------
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Buyer has full corporate power and authority to conduct its
businesses and to own or use its assets as it currently does.
Section 4.2 Corporate Authority. Buyer has the corporate power and
-------------------
authority, and has taken all corporate action necessary, to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly
executed and delivered by Buyer and constitutes a valid and legally binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
subject to the Enforceability Exceptions.
Section 4.3 Consents and Approvals; No Violations.
-------------------------------------
(a) Except for an HSR Filing, European Union merger regulations and
except as set forth in Schedule 4.3 of Buyer's Disclosure Schedule, no
notices, reports, registrations or other filings are required to be made by
Buyer with, nor are any consents, approvals or authorizations required to
be obtained by Buyer from, any Governmental Entity or third-party in
connection with the execution, delivery or performance of this Agreement by
Buyer, in each case except for those the failure of which to make or
obtain, individually or in the aggregate, are not material to Buyer's
ability to perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by Buyer
will not:
(1) violate or contravene any provision of the certificate of
incorporation or by-laws (or other comparable governing
documents) of Buyer;
(2) violate, conflict with, or constitute or result in a default,
acceleration or creation of a Lien under, or a termination of
(in each case with or without notice, lapse of time or both),
any provision of any Contract to which Buyer is a party or by
which any of its assets are bound;
(3) require Buyer to obtain the consent, waiver, authorization or
approval of, any Person under any Contract to which Buyer is a
party or by which any of its assets are bound; or
-28-
(4) violate, contravene or conflict with any Law or Order of any
Governmental Entity having jurisdiction over Buyer or any of
its assets.
Section 4.4 Securities Act. Buyer is acquiring the Shares for its own
--------------
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act of 1933 (the "Securities Act") in any manner that
--------------
would be in violation of the Securities Act. Buyer has not, directly or
indirectly, offered the Shares to anyone or solicited any offer to buy the
Shares from anyone in any manner that would bring the offer and sale of the
Shares pursuant hereto within the registration requirements of the Securities
Act. Buyer will not sell, convey, transfer or offer for sale any of the Shares
except upon compliance with the Securities Act and any applicable state
securities laws or pursuant to any exemption therefrom.
Section 4.5 Brokers and Finders. No agent, broker, investment banker,
-------------------
intermediary, finder, Person or firm acting on behalf of Buyer is or will be
entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, from any of the parties hereto, other than Buyer, in
connection with the execution of this Agreement or upon consummation of the
transactions contemplated hereby.
Section 4.6 Financing. Upon funding of the commitment letters attached
---------
as Exhibit D hereto in accordance with customary terms reasonably satisfactory
---------
to Buyer, on the Closing Date Buyer will have available immediately available
funds sufficient to enable it to purchase the Transferred Assets and Shares on
the terms and conditions of this Agreement. Except as set forth in such
commitment letters, Buyer's obligations hereunder are not subject to any
conditions regarding Buyer's ability to obtain financing for the consummation of
the transactions contemplated herein.
Section 4.7 Litigation. As of the date hereof, there are no Actions
----------
pending or, to the knowledge of Buyer, threatened against Buyer or any of its
Affiliates other than Actions that, individually or in the aggregate, are not
material to its ability to perform its obligations hereunder and are not
reasonably likely to prohibit or materially restrict or delay the performance of
this Agreement by Buyer.
Section 4.8 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Article IV, neither Buyer nor
any other Person makes any other express or implied representation or warranty
on behalf of or with respect to Buyer and Buyer hereby disclaims any
representation or warranty not contained in this Article IV.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business. Prior to the Closing, except as
-------------------
requested or consented to by Buyer in writing, which consent shall not be
unreasonably withheld or delayed and except as otherwise expressly contemplated
hereby, Asset Seller shall, and Stock Seller shall cause the Companies to,
conduct the Business only in the ordinary course of business consistent
-29-
with past practice and use their commercially reasonable efforts to preserve
intact the Business and the relationships of the Division and the Companies with
their employees, suppliers and others having business relationships with them
and Asset Seller shall not (but solely with respect to the Division) and Stock
Seller shall ensure that the Companies shall not:
(a) grant, modify or increase any bonus, salary, severance,
termination or other compensation or benefits to any employee of the
Division or any Company other than in the ordinary course of business
consistent with past practice or adopt or enhance any Benefit Plans;
(b) sell, lease, license or otherwise dispose of, mortgage, pledge or
otherwise subject to a Lien any assets in excess of $1,000,000 Related to
the Business and owned by the Asset Seller or any Company other than (i)
dividends of cash or other Excluded Assets; (ii) sales, licenses or
dispositions in the ordinary course of business consistent with past
practice; and (iii) nonconsensual statutory or common law Liens incurred in
the ordinary course of business of a nature that would not reasonably be
expected to interfere with or adversely affect the financing contemplated
by Section 6.1(k).
(c) acquire or make any investment of more than $1,000,000 in any
other Person or assets, including without limitation by merger,
consolidation or share exchange;
(d) make or commit to make any capital expenditures in excess of
$1,000,000;
(e) except as set forth in Schedule 5.1(e) of the Disclosure Schedule,
enter into any Applicable Contract that would have been required to be
listed in Schedule 3.14(a) of the Disclosure Schedule if it had been in
effect as of the date of this Agreement or terminate, modify in any
material respect or waive any material rights under any Applicable Contract
listed in such Schedule in each case other than in the ordinary course of
business consistent with past practice;
(f) settle, compromise, waive, release or assign any material claims
or rights it has in respect of any Actions related to the Business or any
Company to which it is a party or by which it is bound;
(g) incur any indebtedness for borrowed money other than indebtedness
to Sellers or their Affiliates or guaranty any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire any debt
securities, or grant or incur any Liens for borrowed money or that could
reasonably be expected to adversely affect the Buyer's ability to obtain
the financing contemplated by this Agreement with respect to any of the
Transferred Assets or any assets of any of the Companies;
(h) change any of its accounting methods, policies or practices;
(i) enter into any material transaction or Contract which, if entered
into prior to the date hereof, would have required disclosure under Section
3.23 above; or
(j) enter into any agreement to do any of the foregoing.
-30-
Notwithstanding the foregoing, at any time before the Closing, Stock
Seller may cause any Company to (i) transfer, by dividend or otherwise, to Stock
Seller or any of its Affiliates any cash, bank accounts, certificates of
deposit, commercial paper, annuities, treasury notes and bills or other
marketable securities and any of the assets listed in Schedule 5.1(i) of the
Disclosure Schedule and (ii) discharge any Liability owed to or by Sellers or
any of their Affiliates.
Section 5.2 Access.
------
(a) Between the date of this Agreement and the Closing Date, Sellers
shall, and shall cause the Companies to, afford Buyer full and free access,
at all reasonable times during normal business hours, to the personnel,
premises, properties, Applicable Contracts, books and records and other
documents and data relating to the Division and the Companies as Buyer may
reasonably request. The foregoing shall not require Sellers or any Company
to permit any inspection, or to disclose any information, that in their
reasonable judgment is reasonably likely to result in the disclosure of any
trade secrets of third parties or violate any of their obligations with
respect to confidentiality if the Applicable Seller or the Company, as the
case may be, shall have used reasonable efforts to obtain the consent of
such third party to such inspection or disclosure. All requests for
information made pursuant to this Section 5.2(a) shall be directed to an
executive officer of the Applicable Seller.
(b) Following the Closing, Buyer shall, and shall cause the Companies
and any other Subsidiary of Buyer to (i) afford Sellers full and free
access, upon reasonable notice at all reasonable times during normal
business hours, to the personnel, premises, properties, Applicable
Contracts, books and records and other documents and data relating to the
Division and the Companies as Sellers shall reasonably request, (ii)
furnish Sellers with copies of all such Applicable Contracts, books and
records and other existing documents and data as Sellers may reasonably
request and (iii) furnish Sellers with such additional financial, operating
and other data and information as Sellers may reasonably request, in each
case to the extent necessary to prepare its financial statements, Tax
Returns and other documents and reports Sellers or any of its Affiliates
are required to file with Governmental Entities or which Sellers reasonably
require in connection with any Action against, or tax examination of,
Sellers or any of its Affiliates (other than any Action by or against Buyer
or any of its Affiliates); provided that Buyer shall not be obligated to
comply with any of the foregoing unless and until Sellers shall have
executed a confidentiality agreement in customary form. The foregoing shall
not require Buyer, any Company or any of Buyer's other Affiliates to permit
any inspection, or to disclose any information, that in their reasonable
judgment is reasonably likely to result in the disclosure of any trade
secrets of third parties or violate any of their obligations with respect
to confidentiality if Buyer, the Companies or Buyer's other Affiliates
shall have used reasonable efforts to obtain the consent of such third
party to such inspection or disclosure. All requests for information made
pursuant to this Section 5.2(b) shall be directed to an executive officer
of Buyer.
Section 5.3 Required Consents, Approvals and Actions.
----------------------------------------
-31-
(a) Sellers shall use their commercially reasonable efforts to
promptly prepare and file all necessary documentation, to effect all
necessary notices, reports, registrations or other filings and documents
and to obtain as promptly as practicable all necessary consents, approvals
and authorizations of all third parties and Governmental Entities necessary
or advisable or to take such other actions necessary or advisable under any
Law to consummate the transactions contemplated herein. Buyer shall provide
reasonable assistance to and cooperate with Sellers' efforts with respect
to the matters described in the preceding sentence. Each party shall have
the right to review in advance, and to the extent practicable each will
consult the other on, in each case subject to applicable Laws relating to
the exchange of information, all the information relating to Buyer or any
Seller or Company that appears in any filing made with, or written
materials submitted to, all third parties and Governmental Entities in
connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of Buyer and Sellers shall act
reasonably and as promptly as practicable. Buyer and Sellers agree that
they will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein, including promptly
furnishing the other with copies of notice or other communications received
by Buyer, Sellers or the Companies, from all third parties and Governmental
Entities with respect to the transactions contemplated herein.
(b) Without limiting the generality of the foregoing, Buyer and
Sellers each agree to promptly prepare and file an HSR Filing with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
---
Department of Justice (the "DOJ"). Each party hereby covenants to request
---
early termination of the waiting period required by the HSR Act and to
cooperate with the other such party to the extent reasonably necessary to
assist in making reasonable supplemental presentations to the FTC or the
DOJ, and if requested by the FTC or the DOJ, to promptly amend or furnish
additional information thereunder. Buyer agrees to use its best efforts to
do all things necessary, proper or advisable to avoid or eliminate any
impediment under any antitrust law that may be asserted by any of the FTC,
the DOJ or any other Person to the consummation of the acquisition of the
Transferred Assets or the Shares by the Buyer in accordance with the terms
of this Agreement.
Section 5.4 Commercially Reasonable Efforts. Between the date of this
-------------------------------
Agreement and the Closing Date, each of the parties hereto shall use their
respective commercially reasonable efforts to cause the conditions set forth in
Sections 6.1 and 6.2, as applicable, to be satisfied.
Section 5.5 Publicity. The initial press release announcing the
---------
transactions contemplated herein shall be released jointly after consultation
between the parties hereto and thereafter the parties hereto shall consult with
each other to the extent practicable prior to issuing any press releases or
otherwise making public announcements with respect to the transactions
contemplated herein and prior to making any filings with any Governmental Entity
or with any national securities exchange or interdealer quotation service with
respect thereto.
Section 5.6 Expenses. Except as otherwise expressly provided herein,
--------
whether or not the transactions contemplated herein are consummated, all costs
and expenses incurred in
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connection with this Agreement and the transactions contemplated herein shall be
paid by the party incurring such expense; provided that all fees and expenses
arising from the assignment of trademarks or service marks by Asset Seller or
any of its Affiliates to Buyer shall be borne 50% by Buyer and 50% by Asset
Seller. In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by the other party.
Section 5.7 ZDMI Non-Solicitation. Buyer hereby covenants and agrees
---------------------
that for a period of two years following October 1, 1999, Buyer shall not employ
in competition with the ZD Market Intelligence Business any person formerly
employed by Asset Seller's ZD Market Intelligence division who became an
employee of Xxxxx-Xxxxx, Inc. in connection with the sale of the ZD Market
Intelligence Business. "ZD Market Intelligence Business" means the development,
-------------------------------
compilation and distribution of information on installed and planned technology
hardware and software purchases and the provision of customized service
solutions utilizing such information as conducted by the ZD Market Intelligence
division of Asset Seller before October 1, 1999.
Section 5.8 Employees.
---------
(a) Schedule 5.8(a) of the Disclosure Schedule sets forth, as of the
date hereof, a true, complete and correct list of employees of the Division
and the Companies who are on disability leave, authorized leave of absence
or military service. On the Closing Date, Buyer shall (i) offer employment
to all active employees of Asset Seller listed on Schedules 3.11(a) and
3.11(b) of the Disclosure Schedule and who are still employees of Asset
Seller as of the Closing Date, including the employees of Asset Seller who
are temporarily absent from work for short-term disability, military
service, worker's compensation or Family Medical and Leave Act reasons and
identified as such on Schedule 5.8(a) of the Disclosure Schedule, for cash
compensation substantially comparable to that set forth on Schedules
3.11(a) and (b) of the Disclosure Schedule as increased in accordance with
the terms of Section 5.1(a), and (ii) offer employment to all active
employees of Asset Seller hired in the ordinary course of business after
the date hereof but prior to the Closing Date (provided, however, that
neither Asset Seller nor any Company shall hire any person for annual
compensation in excess of $150,000 without the prior written consent of
Buyer) for cash compensation equal to that amount for which they were hired
(in the case of persons hired after the date hereof) as increased in
accordance with the terms of Section 5.1(a) in connection with similar
increases for all other employees similarly situated. Notwithstanding any
other provision of this Agreement to the contrary, Buyer shall not be
obligated to offer employment to any person except as required pursuant to
the immediately preceding sentence. Buyer shall have no liability or
obligation for (i) any active employee of Asset Seller who does not accept
employment with Buyer or (ii) any non-active or former employee of Asset
Seller (such Liabilities with respect to the foregoing being referred to as
"Excluded Employment Liabilities"). Asset Seller shall use its reasonable
-------------------------------
efforts to ensure the orderly transfer of such employees to Buyer.
-33-
(b) Buyer shall comply in all material respects with all Laws
respecting employment and employment practices in connection with the
transfer of any employees of Asset Seller to Buyer or the retention of
employees by the Companies after the Closing Date.
(c) During the period commencing at the Closing Date and ending on the
first anniversary thereof, Buyer shall, or shall cause one of its
Affiliates to, continue to provide to the employees of the Division and
employees of each Company employee benefit plans, programs, policies and
arrangements (other than stock option or other plans involving the
potential issuance of securities) which in the aggregate are no less
favorable than those provided under the applicable employee benefit plans,
programs, policies and arrangements of the Division or the relevant Company
in effect on the Closing. Without limiting the generality of the foregoing,
(1) Buyer shall cause each of the Division and each Company to
continue the Enhanced Severance Benefit Plan set forth in
Schedule 5.8(c) of the Disclosure Schedule for a period of at
least 60 days after the Closing. Employees of the Division and
each Company shall (1) be permitted to carry over up to four
weeks of vacation time accrued during his or her employment by
Asset Seller and (2) be given credit under each employee
benefit plan, program, policy or arrangement of Buyer or any
of its Affiliates in which the employees are eligible to
participate for all service with the Division, each Company or
any predecessor employer (to the extent such credit was given
by the Division or the relevant Company) for purposes of
eligibility, vesting, benefit accrual, severance and vacation
entitlement.
(2) Buyer shall take all such action as is necessary or
appropriate in order to ensure that employees of the Division
who accept employment by Buyer and employees of each Company
and their spouses and dependent children covered by the group
health plans sponsored by Sellers or their Affiliates (the
"Seller Health Plans") as of the Closing Date become eligible
-------------------
for coverage under a substantially comparable group health
plan maintained by Buyer or its Affiliates effective
immediately after the Closing. Buyer shall cause the group
health plan maintained by it or its Affiliates to (i) waive
any waiting periods, evidence of insurability requirements or
preexisting condition limitations and (ii) honor any
deductible, co-payment and out-of-pocket expenses incurred by
the employees and their beneficiaries under the Seller Health
Plans during the portion of 1999 preceding the Closing.
(3) Buyer shall take all such action as is necessary or
appropriate in order to assure that employees of the Division
and each Company covered by the group term life insurance plan
sponsored by Sellers or their Affiliates (the "Seller Life
-----------
Plan") as of the Closing Date become
----
-34-
eligible for substantially comparable coverage under a group
term life insurance plan maintained by Buyer or its Affiliates
effective immediately after the Closing. Buyer shall cause such
plan to waive any medical certification for such employees up to
the amount of coverage the employees had under the Seller Life
Plan (but subject to any limits on the maximum amount of
coverage under Buyer's group term life insurance plan).
(d) The account balances under the ZD Plan of all current and former
employees of the Division and the each Company, (i) if not forfeited under
the terms of the ZD Plan prior to the Closing Date, shall become 100%
vested and non-forfeitable upon the Closing Date, and (ii) shall be
transferred to a tax-qualified defined contribution plan maintained by
Buyer or any of its Affiliates ("Buyer's Plan") in a so-called "trust-to-
------------
trust" transfer satisfying the applicable requirements of Section 414(l) of
the Code. An amount equal to 8% of the eligible earnings earned in the year
2000 prior to the Closing Date of all employees of the Division or any
Company shall be accrued as a liability on the Closing Date Balance Sheet;
provided, however, that Buyer shall use such amount to make a discretionary
-------- -------
contribution to Buyer's own retirement plan for the benefit of such
employees.
(e) Employees of the Division and each Company who are on long-term
disability as of the Closing Date shall continue disability coverage under
Sellers' disability plan until such time as they are no longer disabled.
Employees of the Division and each Company who are on short-term disability
as of the Closing Date shall be covered under a short-term disability plan
maintained by Buyer or its Affiliate effective immediately after the
Closing Date, and shall be transferred to a plan maintained by Buyer or its
Affiliates upon becoming permanently disabled or otherwise entitled to
long-term disability benefits under such plan.
Buyer shall pay to employees of the Division and each Company the
retention costs and special bonuses set forth in Schedule 5.8(e) of the
Disclosure Schedule in accordance with such Schedule.
Section 5.9 Intercompany Liabilities. Except as otherwise provided in
------------------------
Section 5.10, Sellers shall take all actions necessary so that, as of the
Closing Date, neither Asset Seller (with respect to the Division) nor any of the
Companies shall have any Liability (other than with respect to trade receivables
arising in the ordinary course of business consistent with past practice which
will be reflected on the Closing Date Balance Sheet and included in the
calculation of Closing Net Worth) to any of Sellers and their Affiliates (other
than the Division or any Company) after the Closing, including all borrowings by
Asset Seller (with respect to the Division) or any Company from any of Sellers
and their Affiliates (other than Asset Seller, with respect to the Division or
any Company) or any obligation to pay a dividend to any of Sellers and their
Affiliates (other than Asset Seller, with respect to the Division or any
Company).
Section 5.10 Intercompany Programs. Prior to the Closing, Asset Seller
---------------------
and its Affiliates have proposed or agreed upon transactions with third parties
whereby products or
-35-
services of the Division and the Companies are offered or sold to such third
parties bundled with other products or services of Asset Seller and/or its
Affiliates. Prior to the Closing, Buyer and Asset Seller shall, and Asset Seller
shall cause its Affiliates to, negotiate in good faith and, if such Persons
agree, execute definitive agreements embodying, the terms on which Buyer (with
respect to the Business and the Division), Asset Seller and such Affiliates
shall provide such products or services to such third parties. In connection
with such negotiations, none of Buyer, Asset Seller and its Affiliates shall be
obligated to accept any payment or other terms, provided that each will afford
to the others the favorable terms which such Person generally offers third
parties buying such products or services from such Person in similar quantities.
Buyer acknowledges that prior to the Closing Date, certain current Affiliates of
Asset Seller may be sold by Asset Seller or its parent company, Xxxx-Xxxxx Inc.
Section 5.11 Transition Services and Subleases.
---------------------------------
(a) Prior to Closing, Sellers and Buyer shall negotiate in good faith
and execute an agreement covering (i) certain services that Seller will
provide to Buyer for a period of up to six months following the Closing, at
a price equal to the Asset Seller's or Parent's, as appropriate, cost of
providing such services, and (ii) terms on which Buyer will make available
to Affiliates of Sellers office space at a price equal to a pro rata
portion of the lease payments and other costs related to the use of the
office space, based on the amount of space used by such Affiliate.
(b) Asset Seller shall, and shall cause its Affiliates to, and Buyer
shall, enter into a sublease as contemplated by Schedule 5.11(b) of the
Disclosure Schedule.
Section 5.12 Retention of Records.
--------------------
(a) Buyer shall retain, and cause its Affiliates to retain, all books
and records relating to the conduct of the Business prior to the Closing
Date for a period of at least six years from the date hereof. After the end
of such six-year period, any such document or record may be disposed of by
Buyer or its Affiliates only if Buyer or such Affiliate first offers to
surrender possession thereof to Sellers at Sellers' expense and Sellers
decline such offer. Upon reasonable notice to Buyer and with Buyer's prior
consent, which consent Buyer will not withhold or delay unreasonably,
Sellers may inspect and make copies of any such records for any reasonable
purpose during business hours, subject to Sellers' obligations under
Section 5.18.
(b) Subject to Sellers' obligations under Section 5.18, Sellers may
retain (i) one copy of the materials included in the data room organized by
Sellers in connection with the Asset Purchase and the Stock Purchase,
together with a copy of all documents referred to in such materials, (ii)
all internal correspondence and memoranda, valuations, investment banking
presentations and bids received from others in connection with the Asset
Purchase and the Stock Purchase and (iii) a copy of all combined,
consolidating and consolidated financial information and all other
accounting records prepared or used in connection with the preparation of
the Financial Statements. Sellers shall deliver to Buyer all other books
and records relating to the Business and the Companies.
-36-
Section 5.13 Asset Seller's Trademarks. Effective as of the Closing
-------------------------
Date, any license agreement pursuant to which Asset Seller or any of its
Affiliates has granted to the Division or any Company the right to use
trademarks, trade names, trade dress, service marks, domain names or logos that
include the words "ZD", "Ziff" or "SOFTBANK" shall be cancelled. Except as
provided in the license agreement contemplated by Section 6.1(h), as promptly as
is practicable after the Closing, Buyer shall, and agrees to cause each Company
to, eliminate the words "ZD", "Ziff" or "SOFTBANK" and every word or expression
derived therefrom from the names under which the Division and the Companies do
business. Except as provided in the license agreement contemplated by Section
6.1(h), within 60 days after the Closing (the "Transition Period"), Buyer shall,
and shall cause each Company to, remove any such trademarks, trade names, trade
dress, service marks, domain names and logos from its respective properties,
stationery and literature, and thereafter neither Buyer nor the Companies shall
use any such trademarks, trade names, trade dress, service marks, domain names
or logos.
Section 5.14 Tax Matters.
-----------
(a) Transfer Taxes. All excise, sales, use, transfer, documentary,
--------------
filing, recordation and other similar taxes and fees that may be imposed or
assessed as a result of the transactions effected pursuant to this
Agreement, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties
("Transfer Taxes"), shall be borne 50% by Buyer and 50% by Sellers. Buyer
--------------
and Sellers shall cooperate in the timely preparation and filing of any Tax
Returns that must be filed in connection with any Transfer Taxes. Buyer
shall promptly and timely pay all Transfer Taxes. Any Transfer Taxes or
fees resulting from any subsequent transfer of the Transferred Assets or
Assumed Liabilities or any transfer of property on or subsequent to the
Closing shall be borne entirely by Buyer, and Buyer shall indemnify Sellers
for any liabilities arising in connection therewith.
(b) Remittance of Transfer Taxes. Transfer Taxes described in Section
----------------------------
5.14(a) shall be remitted as provided by applicable law, and where the
paying party is entitled to reimbursement, such reimbursement will be made
by the non-paying party in immediately available funds in United States
dollars not later than five business days after the payment of such taxes.
(c) Determination and Allocation of Consideration. Asset Seller and
---------------------------------------------
Buyer agree to determine the amount of and allocate the total consideration
transferred by Buyer to Asset Seller pursuant to this Agreement (the
"Consideration") in accordance with the fair market value of the assets and
-------------
liabilities transferred and in accordance with Section 1060 of the Code.
Buyer shall provide Asset Seller with one or more schedules allocating the
Consideration. If Asset Seller disagrees with any items reflected on the
schedules so provided, Asset Seller shall have the right to notify Buyer of
such disagreement and its reasons for so disagreeing, in which case Asset
Seller and Buyer shall attempt to resolve the disagreement. If Asset Seller
and Buyer cannot resolve the disagreement, the disagreement shall be
referred to the Accounting Expert whose decision shall be final and binding
and whose expenses shall be borne by the party that the Accounting Expert
determines has lost the dispute. Asset Seller and Buyer agree to prepare
and file an IRS
-37-
Form 8594 in a timely fashion in accordance with the rules under Section
1060 of the Code. To the extent that the Consideration is adjusted after
the Closing Date, the parties agree to revise and amend the schedule and
IRS Form 8594 in the same manner and according to the same procedure. The
determination and allocation of the Consideration derived pursuant to this
subsection shall be binding on Asset Seller and Buyer for all Tax reporting
purposes.
(d) Employee Withholding and Reporting Matters. With respect to those
------------------------------------------
employees who are employed by Buyer within the same calendar year as the
Closing, Buyer shall, in accordance with and to the extent permitted
pursuant to Revenue Procedure 96-60, 1996-2C.B.399, assume all
responsibility for preparing and filing Form W-2, Wage and Tax Statement,
Form W-3, Transmittal of Income and Tax Statements, Form 941, Employer's
Quarterly Federal Tax Return, Form W-4, Employee's Withholding Allowance
Certificate, and Form W-5, Earned Income Credit Advance Payment
Certificate. Sellers and Buyer agree to comply with the procedures
described in Section 5 of Revenue Procedure 96-60.
Section 5.15 Further Assurances. At any time and from time to time
------------------
after the Closing Date, the parties hereto agree to (a) furnish upon request to
each other such further assurances, information, documents and instruments of
transfer or assignment, (b) promptly execute, acknowledge, and deliver any such
further assurances, documents and instruments of transfer or assignment, and (c)
do all such further acts and things, in each case that the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to herein. In the event either Seller is the obligor
on a performance bond, letter of credit or similar instrument described on
Schedule 5.15 of the Disclosure Schedule which secures the payment or
performance of an Assumed Liability, Buyer shall use its commercially reasonable
efforts to cause such Seller to be released from such obligations and shall take
such actions as are necessary to reimburse the Applicable Seller for any
payments it makes in respect of such obligations.
Section 5.16 Non-Assignable Agreements. Buyer acknowledges that
-------------------------
certain agreements between Asset Seller and third parties require that such
third parties consent to the assignment of such agreements. Asset Seller shall
use commercially reasonable efforts to obtain all consents and approvals
necessary or desirable in connection with the consummation of the transactions
contemplated by this Agreement, in form and substance reasonably satisfactory to
Buyer, including the assignment to Buyer of all agreements, contracts, purchase
orders, instruments or other similar arrangements which, but for Section 2.3(h),
would be Transferred Assets. Without in any way limiting the foregoing, Buyer
shall reasonably cooperate with and provide assistance to Asset Seller in
obtaining all such consents and approvals. If any consent for any agreement is
not obtained, such agreement shall not be assigned, but Asset Seller shall, to
the extent possible without incurring any liability to any third party, keep the
agreement in effect and give the Buyer the benefit of the agreement to the same
extent as if it had been assigned including, without limitation, (i) cooperating
with Buyer in holding any rights under agreements for which no consent to assign
rights to Buyer is obtained ("Non-Assignable Rights") in trust for Buyer or
---------------------
acting as an agent for Buyer; (ii) enforcing any rights of Asset Seller arising
from such Non-Assignable Rights against the issuers thereof or the other party
or parties thereto; (iii) taking
-38-
all such actions and doing, or causing to be done, all such things at the
request of Buyer as shall be reasonably necessary and proper in order that the
value of any Non-Assignable Rights shall be preserved and shall inure to the
benefit of Buyer and (iv) paying over to Buyer all monies or other assets
collected by or paid to Asset Seller in respect of such Non-Assignable Rights.
Buyer shall perform the obligations under the agreement relating to the benefit
obtained by Buyer. Nothing in this Agreement shall be construed as an attempt to
assign any agreement or other instrument that is by its terms non-assignable
without the consent of the other party.
Section 5.17 Audited Financial Statements.
----------------------------
(a) Delivery. Sellers will use their commercially reasonable efforts
--------
to deliver to Buyer (i) by January 15, 2000 draft audited consolidated
balance sheets of Asset Seller (with respect to the Division) and the
Companies as of December 31, 1997 and 1998 and the related draft audited
consolidated statements of operations and cash flow for Asset Seller (with
respect to the Division) and the Companies for the successive fiscal year
periods ended on such dates (the "Pre-1999 Draft Financial Statements") and
-----------------------------------
(ii) by February 1, 2000 a draft audited consolidated balance sheet of
Asset Seller (with respect to the Division) and the Companies as of
December 31, 1999, and the related draft audited consolidated statements of
operations and cash flow for Asset Seller (with respect to the Division)
and the Companies for the fiscal year period ended on such date (the "1999
----
Draft Financial Statements" and, together with the Pre- 1999 Draft
--------------------------
Financial Statements, the "Draft Financial Statements"). The parties hereto
--------------------------
agree that each such draft audited balance sheet shall include only assets
Related to the Business, the assets of the Companies and the liabilities to
the extent Related to the Business, and shall exclude the Excluded Assets
and the Excluded Liabilities in each case as of, or for, the date or period
referred to in such financial statements, and that the audited financial
statements shall, in each case, be in form and substance consistent with
the requirements of the SEC for a registered offering.
(b) Review by Buyer. Upon receipt of all of the Draft Financial
---------------
Statements, Buyer shall have 15 days (the "Financial Statements Review
---------------------------
Period") to review the Draft Financial Statements. From and after the date
------
hereof, Sellers shall give Buyer and Buyer's personnel and advisors
reasonable access at all reasonable times to all books, records and other
materials relating to the Division and the Companies and any work papers
prepared by or for Sellers (including accountant's work papers), in each
case as is reasonably requested.
(c) Objection by Buyer. On or prior to the last day of the Financial
------------------
Statements Review Period, Buyer may object to the Draft Financial
Statements by delivering to Seller a written statement setting forth in
reasonable detail such Seller's objections to the Draft Financial
Statements (the "Financial Statements Statement of Objections"). If Buyer
--------------------------------------------
does not deliver a Financial Statements Statement of Objections within the
Financial Statements Review Period, the Draft Financial Statements shall be
deemed to have been accepted by the Buyers and, assuming the final audited
version thereof does not depart therefrom, the condition set forth in
Section 6.1(l) shall be deemed to have been satisfied. If Buyer delivers a
Financial Statements Statement of Objections within the Financial
-39-
Statements Review Period, Sellers and Buyer shall negotiate in good faith
to resolve such objections, and any objections that are resolved by a
written agreement between Buyer and Sellers shall be final and binding on
the parties. If all objections are so resolved and the final audited
financial statements do not depart from that resolution, the condition set
forth in Section 6.1(l) shall be deemed to have been satisfied.
(d) Resolution of Disputes. If the Seller and Buyer fail to reach an
----------------------
agreement with respect to all of the matters set forth in the Financial
Statements Statement of Objections, then the matters still in dispute
shall, not later than 5 business days after the earlier of the end of the
Financial Statements Review Period or the first date on which one of the
parties affirmatively terminates discussions in writing with respect to the
Financial Statements Statement of Objections, be submitted for resolution
to the New York office of one of the five largest United States independent
certified public accountants that has no material business relationships
with Buyer or either of the Sellers, as selected by Buyer and the Sellers
jointly (the "Financial Statements Accounting Expert") who, acting as an
--------------------------------------
expert and not as an arbitrator, shall resolve the matters still in
dispute. The Financial Statements Accounting Expert's resolution of the
matters in dispute shall be final and binding on the parties. The Financial
Statements Accounting Expert shall make a determination as soon as
practicable and in any event within 10 days (or such other time as the
parties hereto shall agree in writing) after its engagement. The parties
hereto agree that all adjustments shall be made without regard to
materiality. If the final audited financial statements do not depart from
such resolution, the condition set forth in Section 6.1(l) shall be deemed
to have been satisfied.
(e) Fees and Expenses. Buyer shall pay one-half and the objecting
-----------------
Seller shall pay one-half of the fees and expenses of the Financial
Statements Accounting Expert.
(f) Access to Supporting Documentation. Sellers and Buyer shall each
----------------------------------
make readily available to the Financial Statements Accounting Expert all
relevant work papers and books and records in their possession or to which
they have the power to grant access relating to the Division, the
Companies, and the Draft Financial Statements.
Section 5.18 Confidentiality.
---------------
(a) Confidentiality. Each Seller shall treat and hold as confidential
---------------
any information concerning the business and affairs of the Company that is
not already generally available to the public (the "Confidential
------------
Information"), refrain from using any of the Confidential Information
-----------
except in connection with this Agreement, and (except for any information
that this Agreement expressly permits Sellers to retain) deliver promptly
to Buyer, at the request and option of Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in its possession or
under its control. If Seller is required to disclose any Confidential
Information in order to avoid violating any Law, Sellers will provide the
Buyer with prompt notice of such requirement. To the extent legally
permissible and at Buyer's expense, Sellers shall provide the Buyer, in
advance of any such disclosure, with copies of any Confidential Information
Sellers intend to disclose (and, if applicable, the text of the disclosure
language itself) and to
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cooperate with Buyers to the extent Buyer may seek to limit such
disclosure. If, in the absence of a protective order or the receipt of a
waiver from the Buyer after a request in writing therefor is made by
Sellers, and after complying with the foregoing, Sellers are, on the advice
of counsel, by Law required to disclose Confidential Information, Sellers
may do so without liability hereunder.
(b) Remedy for Breach. Each Seller acknowledges and agrees that in the
-----------------
event of a breach by any Seller of any of the provisions of this Section
5.18, monetary damages shall not constitute a sufficient remedy.
Consequently, in the event of any such breach, Buyer and its successors or
assigns may, in addition to other rights and remedies existing in its
favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce
or prevent any violations of the provisions hereof, in each case without
the requirement of posting a bond or proving actual damages.
(c) Enforcement. If the final judgment of a court of competent
-----------
jurisdiction declares that any term or provision of this Section 5.18 is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as
so modified after the expiration of the time within which the judgment may
be appealed.
Section 5.19 Stockholders Meeting; Information Supplied.
------------------------------------------
(a) If deemed appropriate, Parent will take all action necessary to
convene a meeting (the "Stockholders Meeting") of Parent's stockholders
--------------------
("Parent Stockholders") to occur as promptly as practicable after the date
-------------------
hereof, to approve the transactions contemplated hereby.
(b) Parent and Buyer each agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it or its
Subsidiaries for inclusion in the proxy statement (and any amendment or
supplement thereto) to be filed with the SEC by Parent in connection with
the Asset Purchase and Stock Purchase (the "Proxy Statement") will, at the
---------------
date of mailing to stockholders and at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Parent will cause the Proxy Statement to comply
as to form in all material respects with the applicable provisions of the
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) Buyer shall, upon request by Parent, furnish Parent with all
information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or
advisable in connection with the filing and mailing of the Proxy Statement.
-41-
(d) Buyer and its counsel shall be given an opportunity to review the
Proxy Statement, and all amendments or supplements thereof, prior to their
being filed with the SEC and Parent shall not make any such filing without
the approval of Buyer (which shall not be unreasonably withheld or
delayed). Parent shall advise Buyer, promptly after it receives notice
thereof, of the time when the Proxy Statement has been cleared by the SEC
or any request by the SEC for amendment of the Proxy Statement or proposed
responses thereto or requests by the SEC for additional information.
Section 5.20 Insurance. The parties acknowledge the possibility that
---------
losses Buyer may suffer after the Closing as a result of events or occurrences
affecting the Division or the Companies before the Closing may be covered by
insurance policies of Sellers or their Affiliates. The parties further
acknowledge the possibility that they may be able to put in place arrangements
that would make available to Buyer the benefit of such coverage with respect to
such losses without prejudicing Seller's other rights under such policies. The
parties agree to cooperate fully with each other and Sellers shall use their
best efforts to put such arrangements in place by naming the Buyer as an
additional insured under the insurance policies of Sellers or otherwise enable
Buyer to benefit from the insurance policies; provided that, if Buyer receives
any benefit as a result of any such arrangement in respect of any loss as to
which it has already been compensated through an adjustment in the Purchase
Price as contemplated by Section 2.8, Buyer and Seller will agree on appropriate
measures to avoid any windfall to Buyer. Buyer agrees to reimburse Sellers for
all of Sellers' reasonable expenses incurred in connection with obtaining for
Buyer the benefit of such insurance coverage with respect to such losses.
Section 5.21 Sale of Investments. Buyer acknowledges (i) that ZD APN
-------------------
Partners and Ziff-Xxxxx Xxxxxxx Media LDC hold assets that are not Related to
the Business; (ii) that, prior to Closing, Stock Seller intends to cause such
entities to transfer or other otherwise convey to Affiliates of Stock Seller
those assets not Related to the Business; and (iii) that such transfer or
conveyance may require the consent of other Persons who hold interests in such
entities. In the event that Stock Seller cannot obtain the consents contemplated
by this Section or otherwise cannot transfer such assets to Affiliates of Stock
Seller, the parties hereto shall negotiate in good faith to determine the
appropriate percentage of the interests the Companies currently hold in such
entities to remain in the Companies at Closing and the appropriate percentage of
such interests to be conveyed to Stock Seller or Affiliates of Stock Seller at
Closing in recognition that ZDNet assets are in included in such investments.
Section 5.22 Estoppel Letters. Prior to the Closing, Sellers shall use
----------------
their reasonable best efforts to obtain and deliver to Buyer at the Closing
estoppel letters with respect to the parcels of Leased Real Property listed on
Schedule 5.22 of the Disclosure Schedule.
Section 5.23 Unregistered Trademarks. The following provisions of this
-----------------------
Section 5.23 will apply solely to Unregistered Trademarks that have not been
used by the Business at any time since January 1, 1999 ("Inventory Unregistered
----------------------
Trademarks"):
----------
(a) Prior to Closing, Asset Seller may deliver a list of Inventory
Unregistered Trademarks which (i) have been used by Asset Seller since
January 1, 1999 other than in connection with the Business, and (ii) Asset
Seller reasonably believes in good faith are
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significant to it other than in connection with the Business, it being
understood that presentations of Inventory Unregistered Trademarks on the
website of a Buyer publication shall not constitute a use of such trademark
for the purposes of this Section 5.23. Buyer will then, in a reasonable and
good faith manner, determine which items on that list are or may become
significant to the Business ("Significant Items") and which items are not
Significant Items ("Insignificant Items").
(b) At Closing, Buyer and Asset Seller will enter into a quit claim
agreement, in a form reasonably satisfactory to the parties, agreeing that
neither party will object to the use of any Significant Item by the other
party. Each Insignificant Item will be deemed to be an Excluded Asset.
Section 5.24 Inter@ctive Investor. At Closing, Buyer and Asset Seller
--------------------
will enter into a license agreement, in a form reasonably satisfactory to the
parties, pursuant to which Asset Seller will grant to Buyer a perpetual license
to use the name Inter@ctive Investor and derivatives thereof in any print
--------------------
publication and in Alternative Electronic Versions (as defined in the license
agreement set forth in Exhibit F hereto) (to the fullest extent that Asset
---------
Seller has rights therein that it may so license).
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to Obligations of Buyer. The obligation of
----------------------------------
Buyer to consummate the Asset Purchase and the Stock Purchase and to take the
other actions to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived in whole or in part by Buyer):
(a) Representations and Warranties. The representations and warranties
------------------------------
of Sellers set forth in this Agreement, individually and in the aggregate,
shall have been true and correct in all material respects as of the date of
this Agreement and shall be true and correct in all material respects as of
the Closing Date as though made on and as of the Closing Date (in each case
ignoring for this purpose any qualification of any such representations and
warranties which uses the word "material" or the words "Seller Material
Adverse Effect" or any variation of either of the foregoing set forth
therein and except that any such representations and warranties that are
expressly made as of an earlier date shall be made as of such date and not
restated as of a later date); in addition, the aggregate damage to Buyer
resulting from all breaches of covenants set forth herein by Sellers or
either of them (except in respect of matters which are not within the
reasonable control of Sellers or their Affiliates) on or after the date of
execution of this Agreement and from all breaches of representations and
warranties set forth herein by Sellers or either of them as of the date of
execution of this Agreement (in each case ignoring for this purpose any
qualification of any such representations and warranties which uses the
word "material" or the words "Seller Material Adverse Effect" or any
variation of either of the foregoing set forth therein) shall not exceed
$15,000,000; and Buyer shall have received a certificate, dated the Closing
Date, signed on behalf of Sellers by one senior executive officer of each
of them to the foregoing effect.
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(b) Covenants. Sellers shall have performed in all material respects
---------
all obligations required to be performed by them under this Agreement at or
prior to tile Closing Date, and Buyer shall have received a certificate,
dated the Closing Date, signed on behalf of each of Sellers by one senior
executive officer of each of them to such effect.
(c) HSR Act; Governmental and Third Party Approvals. The waiting
-----------------------------------------------
period applicable to the Asset Purchase and the Stock Purchase under the
HSR Act shall have expired or been terminated and all the notices, reports,
registrations and other filings with, and all consents, approvals and
authorizations from, Governmental Entities listed in Schedule 3.4 of the
Disclosure Schedule and Schedule 4.3 of the Buyer's Disclosure Schedule and
all other third party consents, consultations and approvals required in
connection with the transactions contemplated hereby (collectively,
"Filings and Approvals"), shall have been made or obtained, as the case may
---------------------
be, except for any such Filings and Approvals the failure of which to make
or obtain would not, individually or in the aggregate, have a Seller
Material Adverse Effect.
(d) Litigation. No Governmental Entity of competent jurisdiction shall
----------
have enacted, issued, promulgated, enforced or entered any Law or Order
(whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits or challenges the validity or
legality of the sale of the Transferred Assets or the Shares or the other
transactions contemplated by this Agreement or seeks material damages with
respect thereto (each, a "Governmental Prohibition"), and no Governmental
------------------------
Entity or any other Person shall have instituted any Action or threatened
in writing to institute any Action seeking any Governmental Prohibition.
(e) Receipt of Shares. Buyer shall have received from Stock Seller a
-----------------
certificate or certificates evidencing all of the then issued and
outstanding Shares, free and clear of all Liens, duly endorsed in blank or
accompanied by stock powers duly executed in blank, in proper form for
transfer and with any requisite stock transfer tax stamps properly affixed
thereto, or any other documents or copies of registrations required under
Laws applicable to the Companies.
(f) Opinion of Counsel. Buyer shall have received an opinion, dated as
------------------
of the Closing Date, of counsel of Sellers in a form reasonably acceptable
to Buyer and Sellers and covering customary matters for a transaction of
this sort.
(g) Xxxx of Sale. Sellers shall have executed the Xxxx of Sale, in
------------
substantially the form of Exhibit E hereto.
---------
(h) License Agreements. Asset Seller and Buyer shall have entered into
------------------
a license agreement with terms identical to that attached as Exhibit F
---------
hereto, a license agreement with respect to the ZD name in the form
attached hereto as Exhibit G and a Services Agreement in the form of
---------
Exhibit H hereto, and each such agreement shall be in full force and
---------
effect.
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(i) Transition Services Agreement. Sellers and their Affiliates
-----------------------------
identified therein shall have executed and delivered to Buyer a Transition
Services Agreement as contemplated by Section 5.11, and such agreement
shall be in full force and effect.
(j) No Seller Material Adverse Effect. There shall not be any matter,
---------------------------------
circumstance or event which has had or is reasonably likely to have a
Seller Material Adverse Effect.
(k) Funding of Commitment Letters. Buyer shall have received the
-----------------------------
financing proceeds described in the commitment letters set forth in Exhibit
-------
D hereto on the terms and conditions set forth therein as they may be
-
modified in a manner that is reasonably acceptable to Buyer.
(l) Audited Financial Statements. Sellers shall have delivered to
----------------------------
Buyer financial statements, prepared in accordance with GAAP consistently
applied and audited by PricewaterhouseCoopers LLC (which financial
statements shall fully reflect all of the binding decisions or
recommendations of any arbitrator appointed pursuant to Section 5.17, if
any), consisting of combined balance sheets of the Companies and the Asset
Seller (with respect to the Division) as of each of December 31, 1997, 1998
and 1999 (including only the Transferred Assets and the assets of the
Companies, and excluding the Excluded Assets, and including only Assumed
Liabilities, and excluding the Excluded Liabilities) and the related
audited consolidated statements of operations and cash flows for Asset
Seller (with respect to the Division) and the Companies for the successive
fiscal year periods ended on such dates, in each case in form and substance
consistent with the requirements of the SEC for a registered offering.
(m) Ancillary Documents. Buyer shall have received from Asset Seller
-------------------
instruments of transfer, assignment and conveyance as are necessary to vest
in Buyer the right, title and interest of Sellers in accordance with this
Agreement in and to the Transferred Assets and the Shares in a form
reasonably satisfactory to the Buyer.
(n) Estoppel Letters. At or prior to Closing, Asset Seller shall have
----------------
(i) obtained and delivered to Buyer estoppel letters, in form and content
reasonably satisfactory to Buyer and Buyer's lender, from the landlords
and, if any, sublandlords for the Leased Real Property at 00 Xxxx 00xx
Xxxxxx xx Xxx Xxxx Xxxx and the Leased Real Properties in San Francisco and
Medford at which PC Computing and PC Week are based, or (ii) indemnified
Buyer against the consequence of failure to obtain such letters.
(o) Compliance with Section 5.9. Buyer shall have received evidence
---------------------------
reasonably satisfactory to Buyer that the covenant set forth in Section 5.9
has been satisfied.
(p) EBITDA Calculation. The 1999 EBITDA calculation shall have become
------------------
final.
(q) License and Quit Claim Agreements. The license agreement
---------------------------------
contemplated by Section 5.24 shall have been authorized, executed and
delivered by Asset Seller; in addition, if there are any Significant Items,
the quit claim agreement contemplated by Section 5.23 shall have been
authorized, executed and delivered by Asset Seller.
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Section 6.2 Conditions to Obligations of Sellers. The obligation of
------------------------------------
Sellers to consummate the Asset Purchase and the Stock Purchase and to take the
other actions to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived in whole or in part by Sellers):
(a) Representations and Warranties. The representations and warranties
------------------------------
of Buyer set forth in this Agreement shall have been true and correct in
all material respects as of the date of this Agreement and shall be true
and correct in all material respects as of the Closing Date as though made
on and as of the Closing Date (except that any such representations and
warranties that are expressly made as of an earlier date need only be true
in all material respects as of such earlier date and any representation
already qualified by the word "material" or any variation thereof shall be
true and correct in all respects) and Sellers shall have received a
certificate, dated the Closing Date, signed on behalf of Buyer by one of
its senior executive officers to such effect.
(b) Covenants. Buyer shall have performed in all material respects all
---------
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and Sellers shall have received a certificate, dated
the Closing Date, signed on behalf of Buyer by one of its senior executive
officers to such effect.
(c) HSR Act; Governmental Approvals. The waiting period applicable to
-------------------------------
the Asset Purchase and the Stock Purchase under the HSR Act shall have
expired or been terminated and all the Filings and Approvals shall have
been made or obtained, as the case may be, except for any such Filings and
Approvals the failure of which to make or obtain are not, individually or
in the aggregate, material.
(d) Litigation. No Governmental Entity of competent jurisdiction shall
----------
have enacted, issued, promulgated, enforced or entered any Governmental
Prohibition, and no Governmental Entity or any other Person shall have
instituted any Action or threatened in writing to institute any Action
seeking any Governmental Prohibition.
(e) Receipt of Purchase Price. Sellers shall have received from Buyer
-------------------------
the payments required to be made pursuant to Section 2.6 hereof.
(f) Opinion of Counsel. Sellers shall have received an opinion, dated
------------------
as of the Closing Date, of Xxxxxxxx & Xxxxx, counsel for Buyer, in a form
reasonably acceptable to Buyer and Sellers and covering customary matters
for a transaction of this sort.
(g) Assignment and Assignation Agreement. Buyer and its Affiliates, as
------------------------------------
appropriate, shall have executed and delivered the Assignment and
Assumption Agreement, in substantially the form of Exhibit I hereto.
---------
(h) Stockholder Approval. If a Stockholders Meeting is convened in
--------------------
accordance with Section 5.19, the Stockholders Meeting shall have been
held.
(i) EBITDA Calculation. The 1999 EBITDA calculation shall have become
------------------
final.
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(j) Quit Claim Agreement. If there are any Significant Items, the quit
--------------------
claim agreement contemplated by Section 5.23 shall have been authorized,
executed and delivered by Buyer.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Notwithstanding anything in this Agreement to
-----------
the contrary, this Agreement and the transactions contemplated herein may, by
written notice given at any time prior to the Closing, be terminated:
(a) by either Buyer or Sellers, upon their mutual written consent;
(b) by either Buyer or Sellers, without liability to the terminating
party on account of such termination if the Closing has not occurred within
120 days of the date hereof; provided, however, that a party may not effect
a termination pursuant to this Section 7.1(b) if it has breached this
Agreement and such breach has proximately contributed to the failure to
close;
(c) by either Buyer or Sellers, if the other party has breached any of
its representations, warranties or covenants contained in this Agreement in
any material respect and, if curable, such breach has not been cured within
10 days after the terminating party shall have given the other party notice
of such breach; provided, however, that termination pursuant to this
-------- -------
Section 7.1(c) shall not relieve the breaching party of liability for such
breach or otherwise;
(d) by either Buyer or Sellers, if any Governmental Entity shall have
issued, enacted, entered, promulgated or enforced any Governmental
Prohibition and such Governmental Prohibition shall have become final and
non-appealable; provided that the right to terminate this Agreement
pursuant to this Section 7.1(d) shall not be available to any party that
has failed to comply with its obligations hereunder in any manner that
shall have proximately contributed to the occurrence of such Governmental
Prohibition;
(e) by Buyer, if any of the conditions set forth in Section 6.1 have
not been satisfied as of, or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to fully comply
with its obligations hereunder) by, the date that is 120 days after the
date hereof, or
(f) by Sellers, if any of the conditions set forth in Section 6.2 have
not been satisfied as of, or if satisfaction of such a condition is or
becomes impossible (other than through the failure of any of Sellers to
fully comply with its obligations hereunder or SOFTBANK to comply with its
obligations under the Voting Agreement) by, the date that is 120 days after
the date hereof.
Section 7.2 Effect of Termination. In the event of termination of this
---------------------
Agreement pursuant to Section 7. 1, this Agreement (other than Section 5.6
(Expenses), this Section 7.2
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(Effect of Termination), Section 9.5 (Governing Law) and Section 9.6 (Consent to
Jurisdiction; Waiver of Jury Trial) and the Confidentiality Agreement between
Buyer and Sellers' agent, dated September 15, 1999 (the "Confidentiality
---------------
Agreement"), which shall remain in full force and effect) shall forthwith become
---------
null and void and no party hereto (or any of its respective Affiliates,
Representatives or stockholders) shall have any liability or further obligation
to any other party hereto, except as provided in this Section 7.2; provided,
however, that termination will not relieve a party of liability for breach of
this Agreement prior thereto. For purposes of this Agreement, the
"Representatives" of a Person include such Person's directors, officers,
---------------
employees, agents, consultants, legal counsel, accountants and financial
advisors.
ARTICLE VIII
INDEMNIFICATION; REMEDIES
Section 8.1 Survival. None of the representations, warranties or
--------
covenants (other than (i) Section 5.16 (Non-Assignable Agreements) and Section
5.20 (Insurance), which will survive indefinitely, (ii) covenants to the extent
to be performed at or after the Closing which will survive indefinitely, (iii)
Section 5.1 (Conduct of Business), which will survive until the Final Asset
Purchase Adjustments shall have been finally determined in accordance with this
Agreement, but only in respect of any action or omission to the extent it has
the effect of increasing the cash the Seller is able to sweep from the Division
or the Companies or decreasing the Final Asset Purchase Adjustments, and (iv)
Section 5.18 (Confidentiality) and the final sentence of Section 5.8(a), which
will survive until the Final Asset Purchase Adjustments) of the parties
contained in this Agreement shall survive the Closing and no claims for breach
or otherwise in respect thereof may be made or continued after the Closing by
any party; provided, however that the representations set forth in Sections 3.2,
3.3, and 4.2 shall survive the Closing.
Section 8.2 Indemnification by Buyer and Sellers.
------------------------------------
(a) Buyer shall indemnify and hold harmless Sellers and (without
duplication) its successors, assigns, stockholders, Affiliates and
Representatives from and against any and all damages, losses, liabilities,
judgments and out-of-pocket expenses (including out-of-pocket costs of
investigation and defense and reasonable attorneys' and accountants' fees)
of any kind or nature whatsoever incurred or sustained by them arising out
of or resulting from any Assumed Liabilities.
(b) The Sellers shall jointly and severally indemnify and hold
harmless each of Buyer and the Companies and (without duplication) each of
its respective successors, assigns, stockholders, Affiliates and
Representatives from and against any and all damages, losses, liabilities,
judgments and out-of-pocket expenses (including out-of-pocket costs of
investigation and defense and reasonable attorneys' and accountants' fees)
of any kind or nature whatsoever incurred or sustained by them arising out
of or resulting from (i) the Excluded Liabilities, and each other Liability
of any of the Sellers and their Affiliates, other than Assumed Liabilities
and Liabilities of any of the Companies, and (ii) the failure of Asset
Seller to assign to Buyer any Nonassignable Rights.
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Section 8.3 Tax Indemnification by Stock Seller; Procedure.
----------------------------------------------
(a) Stock Seller shall be liable for, and indemnify Buyer for (i)
Taxes imposed on members (other than the Companies) of a group of
corporations that includes or included any Company for any taxable year
(including any obligation to contribute to the payment of Tax determined on
a consolidated, combined or unitary basis with respect to a group of
corporations that includes or included any Company and Tax resulting from
any Company ceasing to be a member of such group), and (ii) Tax of the
Companies for any taxable year or period ending on or before the Closing
Date and, with respect to any taxable year or period beginning before and
ending after the Closing Date, for the portion of such taxable year or
period ending on and including the Closing Date. Stock Seller shall be
entitled to any refund of Taxes of any Company received for such periods.
For purposes of this Agreement, "Tax" means any foreign, federal, state or
---
local income, gross receipts, license, severance, occupation, capital
gains, premium, environmental (including taxes under Section 59A of the
Internal Revenue Code of 1986, as amended (the "Code")), customs, duties,
----
profits, disability, registration, alternative or add-on minimum,
estimated, withholding, payroll, employment, unemployment insurance, social
security (or similar), excise, production, sales, use, value-added,
occupancy, franchise, real property, personal property, business and
occupation, mercantile, windfall profits, capital stock, stamp, transfer,
workmen's compensation or other tax, fee or imposition of any kind
whatsoever, including any interest, penalties, additions, assessments or
deferred liability with respect thereto, and any interest in respect of
such penalties, additions, assessments or deferred liability, whether
disputed or not.
(b) For purposes of Section 8.3(a), whenever it is necessary to
determine the liability for Taxes of any Company for a portion of a taxable
year or period that begins before and ends after the Closing Date, the
determination of the Taxes of any Company for the portion of the year or
period ending on, and the portion of the year or period beginning after,
the Closing Date shall be determined by assuming that such Company had a
taxable year or period which ended at the close of the Closing Date, except
that exemptions, allowances or deductions that are calculated on an annual
basis, such as the deduction for depreciation, shall be apportioned on a
time basis.
(c) Stock Seller shall pay to Buyer the Taxes for which Stock Seller
is liable pursuant to Section 8.3(a) but which are payable with Tax Returns
to be filed by Buyer pursuant to Section 8.4(c) within 10 days prior to the
due date for the filing of such Tax Returns.
(d) Stock Seller shall file or cause to be filed when due, in
accordance with past practice, all Tax Returns that are required to be
filed by or with respect to the Companies for taxable years or periods
ending on or before the Closing Date and shall remit any Taxes due in
respect of such Tax Returns.
(e) Any tax allocation or sharing agreement or arrangement, whether or
not written, that may have been entered into by any Company shall be
terminated as to any
-49-
Company as of the Closing Date, and no payments which are owed by or to the
Company pursuant thereto shall be made thereunder.
(f) Any payment of Taxes made pursuant to this Section 8.3 shall be
treated as an adjustment to the Purchase Price for the Shares.
(g) After the Closing Date, Stock Seller shall:
(1) assist, and cause its respective Affiliates to assist, Buyer
in preparing any Tax Returns or reports which Buyer is
responsible for preparing and filing in accordance with
Section 8.4(c);
(2) cooperate fully with Buyer in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of
the Companies;
(3) make available to Buyer and to any taxing authority as
reasonably requested all information, records, and documents
relating to Taxes of the Companies;
(4) provide timely notice to Buyer in writing of any pending or
threatened tax audits or assessments of the Companies for
taxable periods for which Buyer may have a liability under
Section 8.4(a); and
(5) furnish Buyer with copies of all correspondence received from
any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
(h) The obligations of Stock Seller set forth in this Section 8.3
shall remain in effect until the expiration of the relevant statutes of
limitations (including any extensions thereof).
Section 8.4 Tax Indemnification by Buyer; Procedure.
---------------------------------------
(a) Buyer shall be liable for and indemnify Stock Seller for Taxes of
the Companies for any taxable year or period that begins after the Closing
Date and, with respect to any taxable year or period beginning before and
ending after the Closing Date, for the portion of such taxable year
beginning after the Closing Date.
(b) For purposes of Section 8.4(a), whenever it is necessary to
determine the liability for Taxes of any Company for a portion of a taxable
year or period that begins before and ends after the Closing Date, the
determination of the Taxes of any Company for the portion of the year or
period ending on, and the portion of the year or period beginning after,
the Closing Date shall be determined by assuming that such Company had a
taxable year or period which ended at the close of the Closing Date, except
that exemptions, allowances or deductions that are calculated on an annual
basis, such as the deduction for depreciation, shall be apportioned on a
time basis.
-50-
(c) Buyer shall file or cause to be filed when due, in accordance with
past practice, all Tax Returns that are required to be filed by or with
respect to any Company for taxable years or periods ending after the
Closing Date and shall remit any Taxes due in respect of such Tax Returns.
(d) Buyer shall promptly notify Stock Seller in writing upon receipt
by Buyer, any of its Affiliates or any Company of notice of any pending or
threatened Tax audits or assessments which may materially affect the tax
liabilities of any Company for which Stock Seller would be required to
indemnify Buyer pursuant to Section 8.3(a). Stock Seller shall have the
sole right to represent any Company's interests in any Tax audit or
administrative or court proceeding relating to taxable periods ending on or
before the Closing Date, and to employ counsel of its choice at its
expense. Stock Seller shall be entitled to participate at its expense in
the defense of any claim for Taxes for a year or period ending after the
Closing Date which may be the subject of indemnification by Stock Seller
pursuant to Section 8.3(a) and, with the written consent of Buyer, and at
its sole expense, may assume the entire defense of such Tax claim. Neither
Buyer nor any Company may agree to settle any Tax claim for the portion of
the year or period ending on or before the Closing Date which may be the
subject of indemnification by Stock Seller under Section 8.3(a) without the
prior written consent of Stock Seller, which consent shall not be
unreasonably withheld.
(e) With respect to the taxable year of Stock Seller ending 1999 and
the period prior to the Closing Date, Buyer shall promptly cause each
Company to prepare and provide to Stock Seller a package of tax information
materials (the "Tax Package"), which shall be completed in accordance with
-----------
past practice including past practice as to providing the information,
schedules and work papers and as to the method of computation of separate
taxable income or other relevant measures of income of such Company. Buyer
shall cause the Tax Package for the portion of the taxable period ending on
the Closing Date to be delivered to Stock Seller within 120 days after the
Closing Date.
(f) Any payment of Taxes made pursuant to this Section 8.4 shall be
treated as an adjustment to the Purchase Price for the Shares.
(g) After the Closing Date, Buyer shall:
(1) assist, and cause its respective Affiliates to assist, Sellers
in preparing any Tax Returns or reports which Stock Seller is
responsible for preparing and filing in accordance with
Section 8.3(d);
(2) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of any
Company;
(3) make available to Stock Seller and to any taxing authority as
reasonably requested all information, records, and documents
relating to Taxes of the Companies;
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(4) provide timely notice to Stock Seller in writing of any
pending or threatened tax audits or assessments of any Company
for taxable periods for which Stock Seller may have a
liability under Section 8.3(a);
(5) provide to Stock Seller at least 30 days before due any Tax
Returns or reports relating to a taxable period for which
Stock Seller may have a liability under Section 8.3(a); and
(6) furnish Stock Seller with copies of all correspondence
received from any taxing authority in connection with any tax
audit or information request with respect to any such taxable
period.
(h) The obligations of Buyer set forth in this Section 8.4 shall
remain in effect until the expiration of the relevant statutes of
limitations (including any extensions thereof).
ARTICLE IX
MISCELLANEOUS
Section 9.1 Assignments; No Third Party Rights.
----------------------------------
(a) Buyer may not assign any of its rights or obligations under this
Agreement without the prior written consent of Sellers (which may not be
unreasonably withheld or delayed) and any purported assignment without such
consent shall be void. The preceding sentence notwithstanding, Buyer may
assign this Agreement or all or any part of its rights and obligations
under this Agreement, following written notice to Sellers, to a wholly
owned Subsidiary of Buyer or to a lender or financing source for collateral
purposes; provided, however, that no such assignment shall relieve Buyer of
its obligations under this Agreement. "Subsidiary" means, with respect to
----------
any Person, any corporation or other entity of which such Person has,
directly or indirectly, (i) ownership of securities or other interests
having the power to elect a majority of the Board of Directors or similar
governing body of such corporation or other entity, or (ii) the power to
direct the business and policies of that corporation or other entity.
(b) Sellers may not assign any of its rights or obligations under this
Agreement without the prior written consent of Buyer and any purported
assignment without such consent shall be void.
(c) Except as provided in Section 8.2, nothing in this Agreement,
express or implied, is intended to confer upon any Person other than the
parties hereto any rights or remedies of any nature whatsoever under or by
reason of this Agreement or any provision of this Agreement. Except as
provided in Section 8.2, this Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and permitted assigns.
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Section 9.2 Entire Agreement. This Agreement, including the Exhibits
----------------
hereto, the Disclosure Schedule, the Buyer's Disclosure Schedule and the
other agreements and written understandings referred to herein or otherwise
entered into by the parties hereto on the date hereof, and the
Confidentiality Agreement constitute the entire agreement and understanding
and supersede all other prior covenants, agreements, undertakings,
obligations, promises, arrangements, communications, representations and
warranties, whether oral or written, by any party hereto or by any
director, officer, employee, agent, Affiliate or Representative of any
party hereto. There are no covenants, agreements, undertakings or
obligations with respect to the subject matter of this Agreement other than
those expressly set forth or referred to herein and no representations or
warranties of any kind or nature whatsoever, express or implied, including
any implied warranties of merchantability or fitness for a particular
purpose, are made or shall be deemed to be made herein by the parties
hereto except those expressly made herein.
Section 9.3 Amendment or Modification. This Agreement may be amended
-------------------------
or modified only by written instrument signed by all of the parties hereto.
Section 9.4 Notices. All notices, requests, instructions, claims,
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demands, consents and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly
given (i) when delivered personally to the recipient, (ii) one business day
after being sent to the recipient by reputable overnight courier service
(charges prepaid), (iii) upon machine-generated acknowledgment of receipt
after transmittal by facsimile if so acknowledged to have been received
before 5:00 p.m. on a business day at the location of receipt and otherwise
on the next following business day, provided that each such notice, demand
or other communication is also deposited within 24 hours thereafter with a
reputable overnight courier service (charges prepaid) for delivery to the
same Person, or (iv) five days after being mailed to the recipient by
certified or registered mail, return receipt requested and postage prepaid,
to the parties at the following addresses:
If to Buyer: WS-ZD Acquisition, Inc.
x/x Xxxxxx Xxxxx & Xxxxxxxx XX, X.X.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: 312/000-0000
Facsimile: 312/422-2418
Attention: Xxxxxx X. Xxxxxxxxxx
Avy X. Xxxxx
With a copy to: Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Telephone: 312/000-0000
Facsimile: 312/861-2200
Attention: Xxxx X. Xxxxxxxxxxx
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If to Sellers: ZD Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx
With a copy to: Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
or to such other persons or addresses as the person to whom notice is given may
have previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 9.5 Governing Law. This agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State and without regard to the conflict of
law principles thereof.
Section 9.6 Consent to Jurisdiction; Waiver of Jury Trial.
---------------------------------------------
(a) The parties hereto hereby irrevocably submit to the jurisdiction
of the courts of the State of New York and the federal courts of the United
States of America located in the State of New York solely in respect of the
interpretation and enforcement of the provisions of this agreement and of
the documents referred to in this Agreement, and in respect of the
transactions contemplated herein, and hereby waive, and agree not to
assert, as a defense in any action for the interpretation or enforcement
hereof or of any such document, that it is not subject thereto or that such
action may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a New York state or federal court.
The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and
agree that mailing of process or other papers in connection with any such
action or proceeding in the manner provided in Section 9.4 hereof or in
such other manner as may be permitted by law, shall be valid and sufficient
service thereof.
(b) Each party hereto hereby acknowledges and agrees that any
controversy which may arise under this agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a
trial by jury in respect of any litigation directly or indirectly arising
out of or relating to this agreement or the transactions contemplated by
this Agreement.
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Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce the
foregoing waiver, (ii) each such party understands and has considered the
implications of this waiver, (iii) each such party makes this waiver
voluntarily, and (iv) each such party has been induced to enter into this
agreement by, among other things, the mutual waivers and certifications in
this Section 9.6.
Section 9.7 Severability. In case any one or more of the provisions
------------
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision or provisions shall be ineffective
only to the extent of such invalidity, illegality or unenforceability, without
invalidating the remainder of such provision or provisions or the remaining
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein, unless such a construction would be unreasonable.
Section 9.8 Waiver of Conditions.
--------------------
(a) To the extent permitted by applicable Law: (i) no claim or right
arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (ii) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given and (iii) no notice
to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to
take further action without notice or demand as provided in this Agreement
or the documents referred to in this Agreement.
(b) The rights and remedies of the parties hereto are cumulative and
not alternative. Except where a specific period for action or inaction is
provided herein, neither the failure nor any delay on the part of any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement shall operate as a waiver thereof,
nor shall any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise
of any other such right, power or privilege. The failure of a party to
exercise any right conferred herein within the time required shall cause
such right to terminate with respect to the transaction or circumstances
giving rise to such right, but not to any such right arising as a result of
any other transactions or circumstances.
Section 9.9 Actions of the Companies. Whenever this Agreement requires
------------------------
any Company to take any action, such requirement shall be deemed to involve,
with respect to actions to be taken at or prior to the Closing, an undertaking
on the part of the Applicable Seller to cause such Company to take such action
and, with respect to actions to be taken after the Closing, an undertaking on
the part of Buyer to cause such Company to take such action.
Section 9.10 Descriptive Headings; Construction. The descriptive
----------------------------------
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning, construction or interpretation
of, this Agreement. Unless otherwise expressly provided,
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the word "including" does not limit the preceding words or terms and shall be
deemed to be followed by the phrase "without limitation."
Section 9.11 Counterparts. For the convenience of the parties hereto,
------------
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
Section 9.12 Knowledge. When references are made in this Agreement to
---------
information being "to the knowledge of Sellers" or similar language, such
knowledge shall refer to the knowledge of the officers of Sellers and the
Companies set forth in Schedule 9.12 of the Disclosure Schedule. Such
individuals shall be deemed to have "knowledge" of a particular fact or other
matter if such individual is actually aware of such fact or other matter after
due inquiry.
Section 9.13 Materiality. Whenever (i) the terms "material,"
-----------
"materially," "in all material respects" or similar materiality qualifiers are
used in this Agreement in relation to (a) Sellers, (b) the Division, (c) the
Companies or all or any of (a), (b) and (c), they shall be deemed to refer only
to matters, circumstances or events that are material to the business, assets,
liabilities, results of operations or condition (financial or otherwise) of the
Division and the Companies taken as a whole, and (ii) the term "Seller Material
---------------
Adverse Effect" is used in this Agreement, it shall be deemed to refer to any
--------------
matters, effects, circumstances or events that have had or are reasonably likely
to have a material adverse effect on the business, assets, liabilities, results
of operations or condition (financial or otherwise) of the Division and the
Companies taken as a whole; provided, however, that whenever such terms are used
-------- -------
in connection with the performance of or failure to perform any covenant (except
in respect of matters which are not within the reasonable control of Sellers or
their Affiliates) after the date hereof or in a representation or warranty
insofar as it speaks as of the date of execution of this Agreement, such terms
shall be deemed to refer to matters, circumstances, effects or events that have
resulted in, or would result in, damages, losses, liabilities, judgments or
expenses of $15,000,000 or greater; and provided, further, that for purposes of
-------- -------
Section 6.1(j) and, to the extent relating to Section 3.7(a), Section 6.1(a), no
material adverse change that is fully reflected in the financial projections
included in Schedule 9.13 of the Disclosure Schedule shall be considered.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers duly authorized as of the date first written
above.
ZD INC.
By: /s/ Xxxxxxx X. X'Xxxxx
----------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Chief Financial Officer
ZD HOLDINGS (EUROPE) LTD.
By: /s/ Xxxxxxx X. X'Xxxxx
----------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Chief Financial Officer
WS-ZD ACQUISITION, INC.
By: /s/ Avy X. Xxxxx
----------------
Name: Avy X. Xxxxx
Title: President
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