AGREEMENT OF SALE
THIS AGREEMENT OF SALE ("Agreement") made and entered as of the
30th day of September, 1999, by and between MICHIGAN COLLEGE BOOK COMPANY, INC.,
a Michigan corporation ("Michigan Book"), NED'S BERKELEY BOOK COMPANY, INC., a
California corporation ("Ned's Book"), ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ (individually and collectively referred to as the "Shareholders"),
all of whom are residents of Michigan and shareholders of Michigan Book and
Ned's Book (Michigan Book and Ned's Book are herein referred to individually and
collectively as "Seller"), and NEBRASKA BOOK COMPANY, INC., a Kansas corporation
(herein the "Buyer").
W I T N E S S E T H:
WHEREAS, Shareholders own all of the issued and outstanding
shares of capital stock of Seller;
WHEREAS, Seller conducts a college bookstore business operating
under the trade names and at the locations identified on EXHIBIT 1 attached
hereto and incorporated herein, and conducts a used college textbook wholesale
business (hereinafter collectively referred to as the "Business"); and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to
purchase from Seller all of the assets owned by Seller and in any way used in or
connected with the operation of the Business, real and personal, tangible and
intangible, and the parties hereto have reached an understanding with respect to
the sale by Seller and the purchase by Buyer of all of such assets of Seller.
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, it is agreed as
follows:
1. PURCHASE PRICE; PROPERTY. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, in reliance upon the covenants, representations, and
warranties of Seller and Shareholders contained herein and subject to the terms
and conditions of this Agreement, the Property (as hereinafter described). The
"Purchase Price" shall be an amount equal to the sum of (a) Eight Million
Dollars ($8,000,000), plus (b) the Inventory Price as described in SECTION 2
hereof.
1.1 PAYMENT OF PURCHASE PRICE. The Purchase Price, as set forth
hereinabove, shall be paid to Seller as follows:
A. GOOD FAITH DEPOSIT. Contemporaneous with the execution of this
Agreement, Buyer shall deposit the sum of Five Hundred Thousand Dollars
($500,000) (the "Deposit') with National City Bank of Michigan/Illinois, of
Lansing, Michigan (the "Escrow Agent"), pursuant to the terms of the Deposit
Escrow Agreement attached hereto as EXHIBIT 2.
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B. CLOSING PAYMENT. At the Closing, Buyer shall pay to Seller, in
immediately available funds, the Purchase Price, less the sum of (i) the
Deferred Consideration as described in SUBSECTION 1.1C below, (ii) the amount of
accounts payable of Seller assumed by Buyer as described in SECTION 3.2 hereof,
and (iii) all sums due from Seller to Buyer as of the Closing Date. Subject to
the terms of SECTION 13 hereof and the Deposit Escrow Agreement, the Deposit
shall be paid to Seller at Closing and credited to Buyer as a portion of the
Purchase Price.
C. DEFERRED CONSIDERATION. At Closing, Buyer shall pay to the
Escrow Agent the sum of (i) Two Hundred Fifty Thousand Dollars ($250,000) plus
(ii) an amount equal to claims received by Buyer, or an agent appointed by Buyer
for that purpose, under the California Uniform Commercial Code - Bulk Sales Law
(the "Act") pursuant to the notice given in accordance with Sections 6104(b) and
6105 of the Act (hereinafter referred to as the "Deferred Consideration") to be
held in an interest bearing account of Seller's choosing and payable pursuant to
the terms of this Agreement and the Final Escrow Agreement attached hereto as
EXHIBIT 3.
(i) Six (6) months after the Closing Date, the amount of Deferred
Consideration which exceeds the sum of One Hundred Thousand Dollars
($100,000) plus the amount of Claims (as defined in ARTICLE 12 hereof)
asserted prior to the date of such disbursement, shall be paid to Seller
by the Escrow Agent.
(ii) One (1) year after the Closing Date, the remaining balance of the
Deferred Consideration, less the amount of any additional Claims
asserted prior to the date of such disbursement, shall be paid to Seller
by the Escrow Agent.
1.2 PROPERTY. Seller shall sell, assign, transfer and convey to Buyer,
free of all liens, pledges, claims and encumbrances of any kind, nature or
description, as more particularly set forth herein, all right, title and
interest in and to all of the assets associated with the Business, including,
without limitation, the following:
(a) all good and saleable inventory and merchandise (including inbound
inventory in transit);
(b) all real property owned by Seller and all leasehold interests for
the retail and warehouse facilities together with all leasehold
improvements and fixtures related thereto, as described on EXHIBIT 1
(the "Leased Premises");
(c) all tangible personal property owned by Seller which are utilized in
the Business, such as equipment, vehicles, tools, supplies, furniture,
and fixtures, and which are substantially listed on the attached EXHIBIT
4;
(d) all intellectual property, including (A) patents, trademarks,
service marks, trade dress, logos, trade names (specifically including
the trade names "Ned's Bookstore" and "Ned's deN" and all other trade
names identified on EXHIBIT 1), and corporate names and registrations
and applications for registration thereof; (B) copyrights and
registrations and applications for registration thereof; (C) computer
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software, data, and documentation, trade secrets and confidential
business information (including ideas, formulas, compositions,
inventions, know-how, designs, plans, proposals, copyrightable works,
financial , marketing, and business data, pricing and cost information,
business and marketing plans); (D) customer and supplier lists and
information; (E) other proprietary rights; (F) copies and tangible
embodiments thereof (collectively referred to herein as "Intellectual
Property");
(e) prepaid expenses, goodwill and going concern value; and
(f) merchandise vendor credits as described in SECTION 1.5 hereof;
claims, deposits, sales orders, prepayments and refunds
(all of which assets shall be collectively referred to as the "Property"). It is
the intention of the parties that Buyer obtain all of the assets of Seller
presently used in or connected with the Business other than the "Excluded
Assets", as described in SECTION 1.3 hereof.
1.3 EXCLUDED ASSETS. The following assets are specifically excluded from
the sale: cash; accounts receivable; bank holding company investment; real
property which is used in the Business (and described on the Disclosure Schedule
as provided in SECTION 5 hereof) and owned by Shareholders; cash vendor credits
as described in SECTION 1.5 hereof; and the items described on EXHIBIT 5 which
constitute property of a personal nature to Shareholders which are not operating
assets of the Business.
1.4 CASH REGISTER BALANCES. At Closing, Buyer shall reimburse Seller for
the amount of cash constituting the opening cash register balance at the opening
of business of each retail store on the Closing Date (which cash shall remain in
the registers in the ordinary course of business). The amount at each store
shall be based on Seller's customary opening cash balance.
1.5 MERCHANDISE VENDOR CREDITS. At Closing, Seller shall deliver to
Buyer a list of its vendor credits which are subject to collection in exchange
for merchandise only and not for cash (the "merchandise vendor credits"), which
list is subject to approval by Buyer. Within fifteen (15) days after the end of
each calendar month following Closing, Buyer shall reimburse Seller for the
amount of Seller's merchandise vendor credits which were used by Buyer during
such prior month against amounts otherwise due from Buyer to the vendors based
on such list. Seller shall retain all vendor credits for which the credit may be
collected in cash (the "cash vendor credits"), and Buyer shall have no
obligation to assist Seller in the collection of cash vendor credits.
2. INVENTORY PRICE. The Inventory Price shall be determined by taking a
physical count of the good and saleable inventory of the Business as of the date
immediately preceding the Closing Date and applying the valuation methodology
set forth on the attached EXHIBIT 6. Representatives of Seller and Buyer shall
jointly conduct the physical count of the inventory of the Business, to be
evaluated by Buyer according to the provisions of this Agreement. Any costs
which are payable to third parties related to the physical count of inventory
shall be shared equally by Buyer and Seller.
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3. LIABILITIES OR OBLIGATIONS.
3.1 NO ASSUMPTION. Except as expressly set forth in SECTION 3.2 hereof,
Seller shall pay promptly, and Seller and Shareholders shall jointly and
severally indemnify Buyer for the payment of, all liabilities and fulfill all
obligations, debts, leases, and liabilities of Seller not expressly assumed by
Buyer hereunder as and when the same become due and payable. Buyer shall assume
only the liabilities and obligations of Seller which are specifically set forth
on EXHIBIT 7 and those described in SECTION 3.2 hereof (herein collectively
referred to as the "Assumed Liabilities"). Other than the Assumed Liabilities,
Seller shall satisfy, and Buyer does not and will not assume and will not
discharge or be liable or responsible for, any debts, liabilities, or
obligations of Seller, including, without limitation, any (i) liabilities or
obligations of Seller with respect to any transactions occurring after the
Closing; (ii) sales, transaction or use tax arising from this transaction; (iii)
payroll, income, or employment tax or other liabilities or obligations of Seller
incurred in connection with the operation of the Business prior to Closing or
the sale of the Property; (iv) amounts due to trade vendors (except those
described in SECTION 3.2 and listed on EXHIBIT 7), all of which shall be settled
promptly by Seller, but in any case before any Deferred Consideration is paid
from escrow to Seller; (v) all obligations under the leases for the Leased
Premises for taxes, common area charges, insurance, utilities and other similar
obligations and items of additional rent which accrue prior to the Closing Date
but are not yet payable thereunder; and (vi) contingent liabilities or
obligations of Seller; or (vii) contracts, written or oral, involving or
affecting the Business, except those expressly assumed by Buyer. Shareholders
shall indemnify and hold Buyer harmless from any debt, liability, or obligation
of Seller, other than the Assumed Liabilities.
3.2 ASSUMED ACCOUNTS PAYABLE. Buyer shall have the right to assume the
payment of accounts payable of Seller to certain suppliers of new textbooks as
set forth on EXHIBIT 7 which identifies such creditors and the amount due to
them. Seller and Buyer shall mutually work to obtain the consent of such
creditors to the assumption of liability by Buyer and release of Seller from
liability therefor. This schedule will be updated as of the Closing Date and
shall be subject to the approval of both Seller and Buyer. The amount of such
assumed accounts payable shall result in a corresponding decrease in the amount
of the Purchase Price equal to the amount of the assumed accounts payable.
4. CLOSING; POSSESSION. The closing of this sale shall take place on or
about November 1, 1999, and as of close of business on October 31, 1999, or as
soon thereafter as the parties may mutually agree, which date is herein referred
to as the "Closing Date" or the "Closing", provided that the Closing Date shall
be extended for a reasonable period of time to permit Seller to cure any default
hereunder as provided in SECTION 13 hereto. Closing shall occur at a location in
Ann Arbor, Michigan, which is mutually determined by the parties.
A. PRORATIONS. If the effective date of Closing is on a day other than
the last day of a calendar month, the parties shall pro-rate on a per diem basis
expenses of prepaid rent and insurance paid for the month that Closing occurs,
and obligations related to the Contracts to be assumed by Buyer.
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B. POSSESSION; RISK OF LOSS. Seller shall deliver possession of the
Property to Buyer on the Closing Date. Risk of loss to the Business and the
Property shall be upon Seller until the Closing and thereafter shall be upon
Buyer. Until Closing, Seller shall continue in force all insurance now in force
on the Business.
5. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS. Except as
otherwise qualified in the schedule attached hereto as EXHIBIT 8 (herein
referred to as the "Disclosure Schedule") (such qualifications making specific
reference to the respective (sub)section of this Agreement to which they apply),
Seller and Shareholders, and each of them jointly and severally, represent and
warrant to Buyer, its successors and assigns, that the following representations
and warranties are true and correct in all material respects, and shall be true
and correct in all material respects at and as of the Closing Date (except for
factual changes in the information contained in the Disclosure Schedule or
attachments hereto occurring after the execution of this Agreement and before
Closing, which changes shall be noted on amendments to such information at
Closing, subject to the reasonable review and approval by Buyer):
5.1 ORGANIZATION, POWER AND QUALIFICATION. Michigan Book is a
corporation duly organized, validly existing and in good standing under the laws
of Michigan. Ned's Book is a corporation duly organized, validly existing and in
good standing under the laws of California. Seller has all requisite corporate
power and authority to own or hold under lease its properties and assets and to
carry on its business as now conducted; to execute, deliver and perform its
obligations hereunder; to consummate the transactions contemplated thereby, and
to convey the Property as required hereby. Each Seller is qualified to do
business and is in good standing in every jurisdiction in which a failure to do
so could have an adverse effect on its assets, business or prospects. The states
in which Seller is qualified to do business as a foreign corporation are listed
on the Disclosure Schedule.
5.2 AUTHORIZATION. The execution and delivery by Seller of this
Agreement and each other document to which either is a party executed in
connection herewith, and the performance of each of its obligations hereunder
and thereunder, have been duly authorized and approved by all necessary
corporate action prior to the date of this Agreement. This Agreement and each
other document to which either Seller or Shareholders is a party executed in
connection herewith have been duly and validly executed and delivered by Seller
or Shareholders, as the case may be, and constitute a valid and binding
obligation of Seller or Shareholders, as the case may be, enforceable against it
or them in accordance with its terms. No approval of any other person is
required for the performance of Seller's or Shareholders' obligations hereunder.
5.3 FINANCIAL STATEMENTS. Reference is made to Seller's (i) financial
statements for the years ending December 31, 1998 and 1997 (the "Annual
Statements") , (ii) interim statement for the period of January 1 through July
31, 1999 (the "Interim Statement") and (iii) the monthly interim financial
statements to be delivered by Seller to Buyer pursuant to SECTION 7.3 hereof
(the "SECTION 7.3 Statements"). The Annual Statements, Interim Statement and the
SECTION 7.3 Statements are referred to collectively as the "Financial
Statements." The Annual Statement and Interim Statement are attached hereto as
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EXHIBIT 9, and the SECTION 7.3 Statements shall be attached to the updated
Disclosure Statement as an exhibit. Seller shall cause the Financial Statements
to be formatted to report on the Business separately from all other activities
of Seller, such format to be made by including three columns. The first column
will report Seller's amounts on the Financial Statements; the second column will
report adjustments of amounts which are not related to the Business, and the
third column will report amounts applicable solely to the Business net of such
adjustments. Except as described on the Disclosure Schedule, the Financial
Statements have been prepared in conformance with [modified accrual basis]
applied on a consistent basis throughout the entire periods covered thereby; are
true, correct and complete in all material respects; and are consistent with the
books and records of Seller (which books and records are true, correct and
complete in all material respects). The Financial Statements fully and
accurately reflect the assets, liabilities, cash flow, results of operations and
financial condition of the Business as of the date of the respective statements;
the Business has been run only in the normal and ordinary course since such
date; and since January 1, 1999, there has been no change in the accounting
methods or practices followed by Seller or any change in the amortization
policies or rates theretofore adopted by Seller.
5.4 TITLE AND CONDITION OF ASSETS.
(a) Except for the exceptions identified on the Disclosure
Schedule, Seller owns and has good marketable title to all of the Property, and
as of the Closing Date, free of all mortgages, liens, pledges, charges or
encumbrances or other third party interests of any nature whatsoever. Transfer
of the Property from Seller to Buyer will vest Buyer with good and valid title
to the Property, free of all liens, encumbrances, claims and charges whatsoever,
except as set forth on the Disclosure Schedule.
(b) All the tangible and intangible assets necessary for and
utilized in the operation of the Business are included in the Property described
in SECTION 1.2 hereof, and Shareholders do not own or have any claim with
respect to any such tangible or intangible assets, except those assets set forth
in the Disclosure Schedule.
(c) The Property consisting of fixtures and tangible personal
property utilized in the operation of the Business as of the Closing Date: (i)
is in good operating condition and repair, normal wear and tear excepted; (ii)
is adequate for the uses to which they are being put and for the continued
conduct of the Business after the Closing in substantially the same manner as
prior to Closing; and (iii) conforms to all applicable statutes, ordinances and
regulations now in effect relating to their use and operation. Except as set
forth in the Disclosure Schedule, none of the Property is subject to any written
or unwritten commitment or other arrangement for their use by any third party
which is not terminable within 30 days.
5.5 LIABILITIES. The Disclosure Schedule sets forth a list of all
secured liabilities of Seller related to the Business as of September 29, 1999
setting forth the name and amount due to each such creditor and a true and
correct copy of any financing statements relating to such indebtedness, which
list shall be updated as of the Closing Date. Any liens affecting the Property
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shall be terminated or released at the Closing except those specifically assumed
by Buyer. All unsecured liabilities related to the Business shall have been paid
or otherwise satisfied on or before Closing, except to the extent that the same
are due after Closing, in which event Seller shall satisfy the same when due in
accordance with the terms thereof. Seller has no liabilities (and there is no
basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against Seller) except for (i)
liabilities set forth on Financial Statements and (ii) liabilities which have
arisen in the ordinary course of business after the most recent fiscal period
reflected in the Financial Statements, none of which relates to any breach of
contract, breach of warranty, tort, infringement, or violation of law or arose
out of any charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand). Shareholders shall indemnify and hold Buyer harmless from any
debt, liability, or obligation of Seller, other than the Assumed Liabilities.
5.6 REAL ESTATE AND LEASES. There is set forth in the Disclosure
Schedule a brief description of all real estate (including buildings and
improvements) owned by Seller according to the character of the property and the
location thereof, together with a legal description of such real estate. Seller
has good and marketable title to such owned real estate in fee simple free and
clear of any encumbrances whatsoever except as set forth on the Disclosure
Schedule or the lien of current taxes not yet due and payable. There is also set
forth in the Disclosure Schedule a brief description (including in each case the
monthly rental payable, the expiration date, a brief description of the property
covered and the name of the lessor, including for each lessor in which Seller
has, directly or indirectly, any beneficial interest, the name and extent of
such interest and name thereof) of every lease or agreement (written or oral)
under which Seller is lessee of, or holds or operates, any property, real or
personal, owned by any third party. Each of such leases and agreements is in
full force and effect and constitutes a legal, valid and binding obligation of
the respective parties thereto. Neither Seller nor any other party thereto is in
default under any such lease or agreement nor has any event occurred which with
the passage of time or giving of notice would constitute such a default or
permit termination, modification, or acceleration thereunder. There are no
disputes, oral agreements, or forbearance programs in effect as to any lease. To
Seller's and Shareholders' knowledge, the real property and the buildings
thereon owned or utilized by Seller in the conduct of the Business do not
violate any present building, zoning or other laws or ordinances, or any
agreements applicable thereto, and no notice of any such violation has been
received by Seller (it being understood that Seller is not assuming additional
responsibility other than obligations for which it otherwise would have been
liable). Such real estate and improvements presently are, and at Closing will
be, structurally sound to Seller's knowledge, in operating condition and repair
(ordinary wear and tear excepted), and have been duly maintained in accordance
with normal industry practice and applicable laws, rules, and regulations (it
being understood that Seller is not assuming additional responsibility other
than obligations for which it otherwise would have been liable).
5.7 DISCLOSURE OF AGREEMENTS. There are no presently existing contracts
or commitments affecting the Property, the Leased Premises, or the Business
other than the leases for the Leased Premises, supply contracts, service
contracts and the other contracts which are described on EXHIBIT 10 (the
"Contracts"). The Contracts constitute legal, valid and binding obligations of
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the respective parties thereto, are in full force and effect on the date hereof,
and neither Seller nor any other party thereto has violated any provision of, or
committed or failed to perform any act which with notice, lapse of time or both
would constitute a default under the provisions of any Contract, the termination
of which could have a material adverse effect upon Seller, the Property, the
Leased Premises, or the Business. Correct and complete copies of all written
Contracts have been given to Buyer. Other than the Contracts, there is no
presently existing contract, loan, guarantee, lease, or other commitment with
respect to the Business or the Property extending beyond the Closing Date.
Seller is not a party to any written or oral agreement for the franchise
operation, lease, agreement, service, sale or encumbrance of the Property, or
for any item comprising the Property which is not set forth on EXHIBIT 10.
5.8 INVENTORY. The inventory and merchandise to be conveyed to Buyer is
merchantable and fit for the purpose for which it was procured, and any of which
is slow-moving, obsolete, damaged, or defective have been appropriately
reflected in the inventory pricing consistent with the inventory valuation
methodology set forth on EXHIBIT 6. All such inventory is good and saleable as
priced in the ordinary course of business.
5.9 PERMITS. The Disclosure Schedule contains a listing of all federal,
state and local licenses, permits, franchises, certificates, approvals and
authorizations held by Seller and/or Shareholders for the conduct of the
Business, all of which Seller and/or Shareholders shall assign to Buyer, to the
extent lawfully assignable, without charge on the Closing Date. The Business as
presently conducted does not require any other license, permit, franchise,
certificate, approval or other authorization from any governmental body, whether
federal, state, local or foreign, which has not been obtained.
5.10 ENVIRONMENTAL PROVISIONS. With respect to the Leased Premises:
(i) No claim, lawsuit, agency proceeding, or other legal,
quasi-legal or administrative challenge is pending or threatened against
Seller and/or Shareholders concerning the Leased Premises, the operation
of the Leased Premises, or the existence of any hazardous substances
thereon.
(ii) Except as set forth in the Disclosure Schedule, the Leased
Premises have never been used by Seller and/or Shareholders for any
industrial or commercial operation that utilizes hazardous substances
(other than those commonly used in the Business such as bleach,
batteries, and copier fluid, it being understood that Seller is not
being released of any responsibility or obligation for which Seller
and/or Shareholder otherwise would have been liable), and to Seller's
and Shareholders' knowledge which knowledge shall not require
investigation, the Leased Premises have never been used by anyone other
than Seller for any industrial or commercial operation that utilizes
hazardous substances (other than those commonly used in the Business
such as bleach, batteries, and copier fluid, it being understood that
Seller is not being released of any responsibility or obligation for
which Seller and/or Shareholder otherwise would have been liable).
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(iii) Except as set forth in the Disclosure Schedule, there has
been no spill, discharge, release, deposit, or emplacement of any
hazardous substance on the Leased Premises, whether in containers or
other impoundments, or directly in the lands or waters of the Leased
Premises by Seller and or Shareholders (other than those commonly used
in the Business such as bleach, batteries, and copier fluid, it being
understood that Seller is not being released of any responsibility or
obligation for which Seller and/or Shareholder otherwise would have been
liable), and to Seller's and Shareholders' knowledge which knowledge
shall not require investigation, there has been no such spill,
discharge, release, deposit, or emplacement of any hazardous substance
on the Leased Premises by anyone other than Seller (other than those
commonly used in the Business such as bleach, batteries, and copier
fluid, it being understood that Seller is not being released of any
responsibility or obligation for which Seller and/or Shareholder
otherwise would have been liable).
(iv) Except as set forth in the Disclosure Schedule, to Seller's
and Shareholders' knowledge which knowledge shall not require
investigation, there is no asbestos-containing or other hazardous
materials in the structures on the Leased Premises.
(v) Except as set forth in the Disclosure Schedule, to Seller's
and Shareholders' knowledge which knowledge shall not require
investigation, no electrical transformers, fluorescent light fixtures or
other electrical equipment containing PCBs have been affixed or
installed on or in the Leased Premises.
(vi) Except as set forth in the Disclosure Schedule, neither
Seller nor Shareholder has caused any storage tanks, barrels, sumps,
impoundments, or other containers or equipment (movable or fixed) for
the containment of hazardous substances in, on or under any part of the
Leased Premises (other than those commonly used in the Business such as
bleach, batteries, and copier fluid, it being understood that Seller is
not being released of any responsibility or obligation for which Seller
and/or Shareholder otherwise would have been liable), and except as set
forth in the Disclosure Schedule, to Seller's and Shareholders'
knowledge which knowledge shall not require investigation, there are no
storage tanks, barrels, sumps, impoundments, or other containers or
equipment (movable or fixed) for the containment of hazardous substances
in, on or under any part of the Leased Premises (other than those
commonly used in the Business such as bleach, batteries, and copier
fluid, it being understood that Seller is not being released of any
responsibility or obligation for which Seller and/or Shareholder
otherwise would have been liable).
(vii) No governmental entity has served upon Seller or
Shareholders or, to Seller's and Shareholders' knowledge, upon any
landlord with respect to any Leased Premises, any notice claiming any
violation of any statutes, ordinance, or regulations or noting the need
for any repair, construction, alteration, or installation with respect
to the Leased Premises and hazardous substances or requiring any change
in the means or methods of those conducting operations thereon.
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(viii) With respect to all operations of the Business by Seller,
Seller has, at all times, complied with all federal, state and local
laws, ordinances and regulations relating to and involving (A)
industrial hygiene or to environmental conditions on, under or about
such real estate, including, but not limited to, soil and groundwater
conditions; and (B) the use, generation, manufacture, storage, disposal
and transportation of hazardous materials.
Notwithstanding the representations and warranties under this SECTION 5.10
hereof, neither Seller nor Shareholders are assuming any responsibility or
obligations for which they otherwise would not have been liable.
5.11 CLAIMS. Except as set forth in the Disclosure Schedule, no person
or party employed in connection with the Business has any claim under which
Seller or the Business has any liability under any health, sickness, disability,
medical, surgical, hospital or similar benefit plan or arrangement (whether
legally binding or not) maintained by Seller, which is not fully covered by
insurance maintained with reputable, financially responsible insurers or
pursuant to any worker's compensation or similar law.
5.12 ABSENCE OF CERTAIN CHANGES. Since January 1, 1999, there has not
been: (i) any material adverse change in the Business, condition (financial or
otherwise), results of operations, assets or liabilities of Seller and/or the
Business; (ii) any material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Business, the Property, or financial
condition of Seller; (iii) any increase in the compensation, commissions or
perquisites payable or to become payable by Seller to any employee or agent of
Seller except those incurred in the ordinary course of the operation of the
Business consistent with past practice, or any payment of any bonus, profit
sharing or other extraordinary compensation to any employee of Seller except
those incurred in the ordinary course of the operation of the Business
consistent with past practice, (iv) other than in the ordinary course of the
operation of the Business, any cancellation of the debts owed to or claims held
by Seller; (v) other than in the ordinary course of the operation of the
Business, any sale, lease, abandonment or other disposition by Seller or
Shareholders of any real property or of any machinery, equipment or other
operating properties, or any intangible assets utilized in the Business; or (vi)
any notice given to Shareholders or a management or executive employee of Seller
that any customer involving annual sales in excess of $1,000 has discontinued or
intends to discontinue doing business with Seller and/or the Business, or
substantially reduce the volume of such business. In addition, Seller shall not
make or cause any such changes in the Business through the Closing Date, and
they shall report all such changes they become aware of in writing to Buyer
pursuant to the notice provisions set forth in SECTION 14.2 of this Agreement.
5.13 TAX RETURNS. Proper, accurate, and complete applicable state,
local, and federal income, personal property, franchise, payroll, sales, use,
and other tax returns of Seller have been or will be filed by Seller for all
fiscal years and periods ending prior to the Closing Date and all such taxes, if
any, payable for such years have, and on the Closing Date will have been paid or
adequate provision made therefor; and no unexpired waivers, executed by Seller
of the statute of limitations with respect to such taxes are in effect; to the
extent any such taxes or returns therefore are due after the Closing Date,
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Seller covenants and agrees to properly prepare and file any such returns and to
pay, or make arrangements to pay, any tax due in connection with Seller's
operation of the Business and the Property prior to the Closing Date; there are
no outstanding or unsatisfied deficiency assessments with respect to any such
taxes affecting the Business or the operation thereof. There are no tax liens on
any of the properties or assets of Seller.
5.14 NO ACTIONS. Neither Seller nor Shareholders is in violation of any
law or order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality (including,
without limitation, laws, regulations, orders and restrictions applicable to
environmental standards and controls, wages and hours, civil rights and
occupational health and safety), which violation would have a material adverse
effect upon the Property, the Leased Premises, the Business, or the financial
condition or results of operation of Seller or their right to conduct the
Business as presently conducted, nor has Seller received any notice of
noncompliance. There are no lawsuits, proceedings, claims or governmental
investigations pending or threatened against, or involving Seller, Shareholders,
the Property, the Leased Premises or the Business. There is no basis known to
Seller or Shareholders for any action which would have an adverse effect upon
Seller, the Property, the Leased Premises, the Business, or the financial
condition or results or operations of Seller or their right to conduct the
Business as presently conducted. There are no judgments, consents, decrees,
injunctions, or any other judicial or administrative mandates outstanding
against Seller which could adversely affect the assets, liabilities, financial
condition, or operations of Seller or their right to conduct the Business as
presently conducted or which would impair the transfer or free use of their
assets.
5.15 ABSENCE OF RESTRICTIONS. The execution and delivery of this
Agreement by Seller and Shareholders and the consummation of the transactions
contemplated hereby:
(i) Do not conflict with or result in a breach of any of the
terms, provisions, or conditions of the Articles of Incorporation or
Bylaws of Seller;
(ii) Do not violate any provision or rule of law or impair any
legally enforceable rights of any third party;
(iii) Are not contrary to any existing order of any court or
administrative agency to which either Seller or Shareholders is subject;
or
(iv) Do not conflict with, violate, result in a breach of the
terms and conditions of, accelerate any provision of, constitute a
default under, or constitute an event which with notice or the lapse of
time or both would become a default under or result in the creation of
any lien, security interest, charge or encumbrance upon the Property,
any lease, contract, mortgage, note, bond, indenture, license, security
or loan agreement, or other agreement or other instrument to which
Seller is a party or by which Seller or the Property may be bound or
affected; and the consummation of this transaction will not accelerate,
nor permit the acceleration of, any commitment or obligation of Seller.
11
5.16 COMPLIANCE. Seller and Shareholders have complied and are complying
with all applicable statutes, laws, ordinances, orders, rules and regulations
promulgated by any federal, state, or local governmental authority relating to
the use, operation, and conduct of the Business and the Property; there are no
violations of any such statute, ordinance, order, rule or regulation, and there
are no such statutes, ordinances, orders, rules or regulations outstanding which
require further actions or expenditures by Seller or Shareholders, or by Buyer
upon transfer of the Property to it based upon conditions existing prior to
Closing, in respect to the Property or the Business; neither Seller nor
Shareholders have received any notice of alleged violation of any applicable
zoning regulation or order, OSHA regulation or order, building code regulation
or order, or other law, order, regulation or requirement relating to the
Property or the Business.
5.17 LABOR MATTERS. Seller:
(i) Is not a party to any collective bargaining agreement
covering or relating to any of its employees, and has not recognized, is
not required to recognize, and has not currently received demand for
recognition by any collective bargaining representative;
(ii) Except as set forth on the Disclosure Schedule, is not a
party to any oral or written contract with any of its employees, which
is not terminable at will by it or its assignee without breach, premium
or penalty;
(iii) Has not promulgated any pension, profit sharing,
retirement, stock purchase, stock option, deferred compensation or other
plan providing similar benefits to any employees which shall become, in
whole or in part, the obligation of Buyer by reason of this transaction;
(iv) Has complied with applicable laws, rules, and regulations
relating to the employment of labor, including those relating to wages
or hours, and its hiring, firing and employment practices, which, if not
complied with, would have an adverse effect on the Business;
(v) Has complied with applicable laws, rules and regulations
relating to withholding any payment of employment taxes and
contributions, and has withheld any payments required by law or
agreement to be withheld from the wages or salaries of its employees,
and is not liable for the arrears of wages or for any tax or penalty for
failure to comply with the foregoing; and
(vi) Has not engaged in any unfair labor practice, and is not a
party to any material controversies, pending or threatened, between it
and any of its employees, which, if not complied with, would have an
adverse effect on the Business.
5.18 EMPLOYEE BENEFITS. For purposes of this Agreement, the term
"Employee Plan" includes any pension, retirement, disability, medical, dental or
12
other health plan, life insurance or other death benefit plan, profit sharing,
deferred compensation, stock option, bonus or other incentive plan, vacation
benefit plan, severance plan, or other employee benefit plan or arrangement,
including without limitation, any pension plan ("Pension Plan") as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any welfare plan as defined in Section 3(1) of ERISA ("Welfare
Plan"), whether or not any of the foregoing is funded, and whether written or
oral, (a) to which either Seller is a party or by which either is bound or (b)
with respect to which either Seller has made any payments or contributions, or
may otherwise have any liability (including any such plan or arrangement
formerly maintained by either Seller).
(i) There are no Employee Plans other than those listed in the
Disclosure Schedule, and Seller has never been a party to any
multi-employer plan.
(ii) No Pension Plan to which Seller is a party is a "defined
benefit plan" as defined in ERISA.
(iii) Each Employee Plan, the administrator and fiduciaries of
each Employee Plan, and Seller has at all times complied in all material
respects with the applicable requirements of ERISA, including but not
limited to the fiduciary responsibilities imposed by ERISA, HIPAA (the
Health Insurance Portability and Accountability Act of 1996, and any
other applicable law (including regulations and rulings thereunder)
governing each Employee Plan, and each Employee Plan has at all times
been properly administered in all material respects in accordance with
all such requirements of law. No lawsuits or complaints to, or by, any
person or governmental entity have been filed or are pending and neither
Seller nor Shareholders has knowledge of any state of facts or
contemplated event which could give rise to any such lawsuit or
complaint with respect to any Employee Plan. Without limiting the
foregoing, the following are true with respect to each Employee Plan:
(A) Seller has filed or caused to be filed on a timely
basis each and every return, report, statement, notice,
declaration and other document required by any government agency,
federal, state and local (including, without limitation, the
Internal Revenue Service and the Department of Labor) with
respect to each Employee Plan.
(B) Seller has delivered or caused to be delivered to
every participant, beneficiary and other party entitled to such
material, all plan descriptions, returns, reports, schedules,
notices, statements and similar materials, including, without
limitation, summary descriptions and reports, as are required
under Title 1 of ERISA and/or the Internal Revenue Code, as
amended ("Code").
(C) Seller is not delinquent as to contributions or
payments to or in respect of any Employee Plan.
(iv) With respect to each Employee Plan, there has not occurred,
nor is any person or entity contractually bound to enter into, any
transaction giving rise to any tax under Section 4975 of the Code or
Section 406 of ERISA, or liability under Section 502(i) of ERISA.
(v) The financial statements for each Employee Plan accurately
reflect the financial condition and funding of the Employee Plan as of
the date of such financial statements, and no adverse change has
occurred with respect to the financial condition or funding of the
Employee Plan since the date of such financial statements. A description
of each financial statement is set forth on the Disclosure Schedule for
each Employee Plan, or if there is no financial statement, it is so
noted.
(vi) Buyer will not be legally obligated or required to make
contributions to any Employee Plans or assume any liability in respect
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to any present or former employee of Seller, or otherwise incur any
present or continuing liability to any present or former employee of
Seller as a result of acquiring the Property.
5.19 INTELLECTUAL PROPERTY. Seller owns or has the right to use all
Intellectual Property necessary for the conduct of its business as presently
conducted without infringing upon or conflicting with the rights of others, and
Seller has not received any notice from a party claiming such an infringement or
conflict; and neither Seller nor Shareholders is aware of any facts or
circumstances which would indicate that such an infringement or conflict could
exist. Each item of Intellectual Property owned or used by Seller immediately
prior to the Closing will be owned or available for use by Buyer on identical
terms and conditions immediately subsequent to the Closing hereunder. To
Seller's and Shareholders' knowledge, Seller has taken all action that it deemed
to be necessary or desirable to protect each item of Intellectual Property that
it owns or uses. All such patents, trademarks, trade names, service marks and
franchises are described on the Disclosure Schedule and Seller's interest
therein is similarly described.
5.20 Y2K COMPLIANCE. Seller has taken reasonable and prudent action to
assure that the Business will not be materially affected by any products,
equipment or software failing to be year 2000 compatible, and to Seller's and
Shareholders' knowledge, the operation of the Business will not be materially
adversely affected by failure to be year 2000 compatible.
5.21 CONFLICTS OF INTEREST. No Seller, Shareholders, or director,
officer or employee of Seller, controls or is an employee, officer, director or
agent of any corporation, firm, association, partnership, limited liability
company or partnership, or other business entity which is a competitor, supplier
or customer of Seller.
5.22 NO BROKER. Except for ▇▇▇▇▇▇▇▇ Associates, no person, firm or
corporation has acted in the capacity of broker or finder on Seller's or
Shareholders' behalf to bring about the negotiation or consummation of this
Agreement or the purchase of any assets of Seller, and Seller is solely
responsible for payment of the fee to ▇▇▇▇▇▇▇▇ Associates.
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5.23 DISCLOSURE; CAPACITY. Seller and Shareholders have disclosed to
Buyer all facts material to the assets, liabilities and the Business, and
responded to all inquiries and requests for information made by Buyer. No
representation or warranty of Seller or Shareholders made hereunder or in the
Disclosure Schedule or in any certificate, statement, or other document
delivered by or on behalf of Seller or Shareholders hereunder contains any
untrue statement or omission of a material fact which would cause the general
interpretation of the statements to be misleading in any material respect.
Copies of all documents referred to on the Disclosure Schedule have been
delivered or made available to Buyer, are true, correct and complete copies
thereof, and include all amendments, supplements or modifications thereto or
waivers thereunder. All representations and warranties by Seller and
Shareholders hereunder are made from knowledge acquired after reasonable
investigation and discussions with the Shareholders and the officers, directors,
managers and key employees of Seller.
6. BUYER'S WARRANTIES AND REPRESENTATIONS. Buyer warrants and represents
to Seller, its successors and assigns, that the following representations and
warranties are true and correct in all material respects, and shall be deemed
remade at and as of the Closing Date:
6.1 ORGANIZATION. Buyer is duly incorporated, validly existing and in
good standing under the laws of the State of Kansas; has all requisite corporate
power and authority to own or hold under lease its properties and assets and to
carry on its business as now conducted; to execute this Agreement and to deliver
and perform its obligations hereunder; and to consummate the transactions
contemplated thereby. This Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable in accordance with its terms.
6.2 AUTHORIZATION. At the Closing, Buyer shall deliver to Seller
certified copies of the resolution of the Board of Directors of Buyer
authorizing the execution of this Agreement and all said documents.
6.3 KNOWLEDGE OF CLAIMS. Buyer has no knowledge of any Claims which
would result in any Damages to Buyer immediately subsequent to Closing as
provided in ARTICLE 12 of this Agreement except as set forth in the certificate
described in SECTION 9.2D of this Agreement.
7. PRE-CLOSING COVENANTS. From the date of this Agreement until the
Closing Date, Seller shall:
7.1 ORDINARY COURSE. Operate the Business in the ordinary course, and in
connection therewith, all its business activities, including, without
limitation, each of the following activities shall be operated in the ordinary
course: ordering merchandise; maintaining usual and customary inventory levels;
collecting accounts receivables; payment of expenses; continuation of general
business and promotional activities; keeping the Business and the Property
substantially intact including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers and employees; and Seller will not dispose of any capital assets of
the Business except in the ordinary course of business, nor agree to any
significant contract or order for capital expenditures to be performed or
incurred after Closing, without the prior written consent of Buyer;
15
7.2 RIGHT TO INSPECT. Afford Buyer the right to conduct any inspections
or investigations with respect to the Business and the Property, either by its
own personnel or by utilizing a third party. Representatives of Buyer shall have
free access to the business and records pertaining to the Business in order that
Buyer may have full opportunity to make such investigation as it shall desire of
the affairs of Seller relating to its assets, liabilities and the Business,
provided that Buyer provides Seller reasonable prior notice of its desire to
such access; and such activities by Buyer shall not interfere with Seller's
normal business operations. Each party hereto shall have the right to make
copies of all books and records received or retained by the other party
hereunder;
7.3 INTERIM FINANCIAL STATEMENTS. Within twenty-five (25) days after the
end of each calendar month prior to Closing, deliver to Buyer a copy of the
internally prepared financial statements and a report on results of operation
for each location of the Business and consolidating statements (such statement
being herein referred to as the "SECTION 7.3 Statements");
7.4 SUBSEQUENT EVENTS. Immediately give written notice to Buyer of any
fact or circumstance which would materially change or affect the Business, the
Property or the accuracy of any representation or warranty in this Agreement,
but such notice shall not relieve Seller or Shareholders of their liabilities or
obligations with respect thereto;
7.5 LEASE EXTENSIONS AND ASSIGNMENTS. Obtain (i) an assignment of each
lease or sublease of the Leased Premises; (ii) provide such information and
assistance as shall be reasonably requested by Buyer with respect to entering
into a written lease for such Leased Premises in form and substance satisfactory
to Buyer to become effective on or before the Closing Date, and a reasonable
extension of the term thereof with respect to Neb's C.O.B. Bookstore at ▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; and (iii) a lease or sublease with respect to
all other locations of the Leased Premises used in the Business, including those
referenced in SECTION 10.8 hereof.
7.6 EMPLOYEE RELATIONS. Make no changes in the salaries, fringe benefits
or perquisites of any officer or employee, without the prior written consent of
Buyer; provided that Seller may give bonuses payable at or prior to Closing, and
after prior written notice to Buyer, may provide annual raises (not to exceed 3%
individually) given in the ordinary course of business, without the consent of
Buyer.
7.7 PERMITS AND LICENSES. Provide reasonable assistance to Buyer related
to the assignment or issuance of any permits or licenses necessary for Buyer to
operate the Business and the Leased Premises in its present manner from and
after Closing;
7.8 NOTICES AND CONSENTS. Give any notices to third parties, with a copy
to Buyer, and use its best efforts to obtain any third party consents that Buyer
may request in connection with the matters pertaining to the Business disclosed
or required to be disclosed in the Disclosure Schedule; and
16
7.9 EXCLUSIVITY. Not, on its own behalf or by or through Shareholders,
solicit, initiate, or encourage, either on its own or by or through any agent,
the submission of any proposal or offer from any person relating to any (A)
merger or consolidation, (B) acquisition or purchase of securities or assets, or
(C) any similar transaction or business combination involving Seller, the
Business or the Property or participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person to do or seek
any of the foregoing.
7.10 BULK SALES ACT COMPLIANCE. Provide to Buyer, no later than October
6, 1999, the information required by Sections 6104(a) and 6105(a) of the
California Uniform Commercial Code - Bulk Sales.
8. EMPLOYEES. Seller shall deliver to Buyer a true, complete, and
accurate list of all of the officers and regular, full-time employees of Seller
and their respective annual rates of compensation as of the date of this
Agreement. Buyer shall have no obligation to interview or hire any of Seller's
present employees. Seller shall be liable and responsible for any and all
claims, causes of action and damages which such employees may have as a result
of this transaction, including without limitation severance or termination
payments. Notwithstanding the foregoing, Seller hereby consents and approves
that Buyer may interview and hire any of the present employees of the Business.
In the event that Buyer hires any of Seller's employees, Seller shall be liable
and responsible for salary and all fringe benefits and termination rights to
which such employees may be entitled up to the Closing Date.
8.1 RETENTION OF KEY PERSONNEL. Seller and Shareholders will assist
Buyer to identify and hire key operating personnel of the Business.
8.2 RESTRICTION ON HIRING. For a period of three (3) years after
Closing, neither Seller nor Shareholders shall employ or hire any employee of
the Business other than the Shareholders without the prior written consent of
Buyer, which consent shall not be unreasonably withheld,.
9. DELIVERIES AT CLOSING.
9.1 DELIVERIES BY SELLER. At Closing, Seller and Shareholders shall
deliver, or cause to be delivered to Buyer, the following:
A. TITLE TRANSFER DOCUMENTS. Documents of transfer to the Property in
due and proper form to convey good and marketable title to Buyer, free of all
liens, encumbrances, restrictions, and charges whatsoever, or if such Property
is not owned by Seller, to convey the interest of Seller therein. Seller shall
generally convey the Property by delivering to Buyer a General Assignment and
▇▇▇▇ of Sale wherein Seller warrants its title to the Property. Seller shall
further execute and deliver such further documents as may be necessary or
advisable to effectuate the transfer of all items constituting the Property,
together with proper warranties.
17
B. OPINION OF COUNSEL. An opinion of Seller's legal counsel, dated the
Closing Date, in a form and substance as set forth on EXHIBIT 11.
C. CORPORATE CERTIFICATES A certificate executed by the Shareholders and
the President and directors of Seller, dated the Closing Date, the truth and
accuracy of which shall be a condition to Buyer's obligation to consummate the
transactions contemplated herein, to the effect that other than as described on
the Disclosure Schedule, and certifying in such detail as Buyer may specify to
the fulfillment or satisfaction of the conditions set forth in this Agreement,
including, without limitation, the following:
(i) there is no action, suit or other proceeding pending before any
court, tribunal or governmental authority seeking or threatening to
restrain or prohibit the consummation of the transactions contemplated
by this Agreement, or seeking to obtain substantial damages in respect
thereof, or involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any governmental
authority having appropriate jurisdiction; and
(ii) each of the conditions of closing specified in SUBSECTIONS 10.1
through SUBSECTION 10.3, inclusive, is satisfied in all respects.
D. LEASES ASSIGNMENTS. Leases or assignment of leases for the existing
places of business for the locations identified on EXHIBIT 1, each in form and
content satisfactory to Buyer.
E. CHANGES IN COMPENSATION. A list of all changes in compensation,
commissions or perquisites payable or to become payable by Seller to any
salaried employee of the Business since January 1, 1999, and a list of all
bonuses paid or payable as described in the Disclosure Schedule.
F. CONSENTS. All consents or approvals of the third parties identified
on the Disclosure Schedule identified under SUBSECTION 5.7 hereof.
G. ORDINARY COURSE OF BUSINESS. A written description of actions taken
by Seller out of the ordinary course of business as described in SUBSECTION 7.1
hereof.
H. CORPORATE DOCUMENTS. A copy of the following documents certified by
the respective Secretaries of Seller: the By-laws of Seller, and the resolutions
of the Board of Directors and shareholders of Seller authorizing this Agreement
and sale; and the current Articles of Incorporation of Seller together with a
Certificate of Good Standing, each certified by the Secretary of State of the
state of organization of Seller.
I. COVENANTS NOT TO COMPETE. Non-competition agreement substantially in
the form attached hereto as EXHIBIT 12 from each Seller, each Shareholder, each
18
member of the immediate family of the Shareholders (for the consideration from
Buyer herein paid as the Purchase Price), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
J. ESTOPPEL CERTIFICATES. Estoppel certificates, in form and content
satisfactory to Buyer, executed by the landlords of each of the real estate
properties associated with the Business, verifying that each lease is in full
force and effect, the remaining term and extension periods, rent payments are
current, amount of security deposit, that no defaults of landlord or tenant
exist, and waiving any landlord liens.
K. FURTHER ASSURANCES. At and following the Closing, Seller and
Shareholders, without further consideration, shall execute and deliver such
other certificates, documents and instruments and take such further actions as
Buyer may reasonably request in order to complete and perfect the transactions
contemplated herein.
9.2 DELIVERIES BY BUYER. At the Closing, Buyer will deliver, or cause to
be delivered, the following:
A. CONSIDERATION. The Purchase Price on the terms provided herein, and
certificate with respect to adoption of the resolutions referenced in SUBSECTION
6.2 hereof.
B. COVENANTS NOT TO COMPETE. Non-competition agreement substantially in
the form attached hereto as EXHIBIT 11 with each Seller, each Shareholder, each
member of the immediate family of the Shareholders, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and the
first payment under the covenant not to compete agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
C. BOARD RESOLUTION. A certified copy of the resolution of Buyer's Board
of Directors authorizing and approving this Agreement and the consummation of
each and every transaction contemplated by this Agreement, together with a
certificate of incumbency certified by Buyer's Secretary.
D. ACCURACY OF REPRESENTATIONS; PERFORMANCE OF COVENANTS. A certificate
signed by an officer of Buyer, the truth and accuracy of which shall be a
condition to Seller's obligation to consummate the transactions contemplated
herein, to the effect that (i) the representations and warranties of Buyer
contained in this Agreement are true and correct as of the Closing Date;
provided that Buyer shall list any exceptions to the representation set forth in
SECTION 6.3 in said certificate; and (ii) that Buyer has duly performed or
complied with all of the obligations to be performed or complied with by it
under the terms of this Agreement on or prior to Closing.
E. FURTHER ASSURANCES. At and following the Closing, Buyer, without
further consideration, shall execute and deliver such other documents and
instruments and take such further actions as Seller may reasonably request in
order to complete and perfect the transactions contemplated herein.
19
10. CONDITIONS TO BUYER'S OBLIGATIONS. All obligations of Buyer under
this Agreement are subject to the fulfillment at Closing of each of the
following conditions:
10.1 Seller's and Shareholders' representations and warranties contained
in this Agreement are true and correct in all material respects at the time of
Closing as though such representations and warranties were made at such time.
10.2 Seller and Shareholders shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by Seller and Shareholders prior to or at Closing.
10.3 Between the date of the most recent Financial Statement and the
Closing, no material adverse change shall have occurred in the condition of the
Business, the Leased Premises, or the Property.
10.4. Buyer shall be reasonably satisfied that the Business has been
conducted only in the ordinary course from and after the date of the most recent
Financial Statement through the Closing Date.
10.5 Seller and Shareholders shall make all deliveries described in
SECTION 9.1 of this Agreement, and Seller shall provide verification to Buyer
that all sales, use, withholding, payroll, and other taxes related to the
Business are paid current.
10.6 Buyer shall have received a certificate of search for all UCC liens
or other liens against the Property which it deems necessary, certified on or
about the Closing Date, indicating that there are no liens or claims against
Seller or the Property, or evidence satisfactory to Buyer that all such liens
and claims shall be released at Closing.
10.7 Buyer shall have received an audit report (with an unqualified
opinion) and an agreed upon procedures report issued by its independent
certified public accounting firm with respect to the Business, which reports
shall confirm in all material respects (i) the financial information and results
of operations previously provided by Seller to Buyer and (ii) the findings by
Buyer in its due diligence investigations.
10.8 Seller (and any Shareholders owning an equity interest in the fee
title to the real estate) and Buyer are mutually obligated to negotiate a lease
of the Michigan warehouse operation and the Eastern Michigan University retail
store on financial terms based on the amounts shown on the current Financial
Statements, with annual cost of living adjustments based on increases in the
consumer price index (including an initial increase from the 12 months preceding
Closing), and a term of five (5) years with options to renew for one additional
period of five (5) years at market rent.
10.9 ▇▇▇▇▇ County Community College and Concordia College shall have
consented and approved to assignments of the operating agreements with Michigan
20
Book, the terms of which are satisfactory to Buyer in all material respects
determined in Buyer's sole and absolute discretion, which terms shall include an
agreement by Seller to complete the improvements required under the current
operating agreement..
If any one or more of the conditions precedent set forth in this Section shall
not be in effect or complied with on the Closing Date, Buyer may, by written
notice to Seller, either cancel this Agreement and all obligations of Buyer
hereunder, or Buyer may execute a written waiver of compliance with any one or
more of the said conditions precedent and close this transaction; provided if
compliance can be achieved by the payment of a readily ascertainable and
specific amount of money, Buyer may deduct such amount from the proceeds
otherwise due to Seller at Closing and proceed with Closing. If compliance by
Seller with the conditions noted in Buyer's written waiver of compliance cannot
be achieved by the payment of a readily ascertainable and specific amount of
money, then Buyer is prohibited after Closing from seeking Damages resulting
from such condition in accordance with ARTICLE 12 hereof.
11. CONDITIONS TO SELLER'S OBLIGATIONS. All obligations of Seller under
this Agreement are subject to the fulfillment prior to or at Closing of each of
the following conditions:
11.1 The representations and warranties of Buyer contained in this
Agreement shall be true at the Closing as though such representations and
warranties were made at such time; and
11.2 Buyer shall have performed and completed all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
11.3 Buyer shall make all deliveries described in SECTION 9.2 of this
Agreement.
12. INDEMNIFICATIONS; SETOFF.
12.1 INDEMNIFICATION OF BUYER. Subject to the limitations set forth in
this ARTICLE 12, from and after the Closing, Seller and Shareholders, and each
of them jointly and severally, covenant and agree to reimburse and indemnify and
hold Buyer harmless from, against and in respect of any and all Damages (as
defined in SECTION 12.4 hereof) asserted against, imposed upon or incurred by
Buyer by reason of or resulting from any of the following, including, without
limitation, any and all actions, suits, claims, proceedings, investigations,
audits, demands, assessments, fines, judgments, costs and other expenses
(including, without limitation, reasonable audit and legal fees) arising out of
or resulting from:
(a) Any misrepresentation or omission, breach of warranty or
nonfulfillment of any covenant or agreement of Seller and/or Shareholders under
this Agreement, including without limitation, the Disclosure Schedule, or any
other written agreement, statement, list, certificate or other instrument
furnished to Buyer by or on behalf of Seller and/or Shareholders pursuant to
this Agreement;
21
(b) Any breach by Seller or Shareholders of pre-closing
obligations described in ARTICLE 7 hereof, provided that Buyer shall assert such
Claim(s) within eighteen (18) months after the Closing Date;
(c) Any violation of laws (including without limitation
environmental laws), which violations arise from or relate to Seller's
operations prior to, or the conditions of the Property at the time of, Closing,
except for those violation of laws (i) which are set forth on the Disclosure
Schedule or (ii) which are unknown to Seller and Shareholders and are discovered
by Buyer prior to Closing to be a violation of law prior to Closing;
(d) Obligations with respect to employees of Seller under any
retirement, pension or profit sharing plan, incentive, bonus, deferred
compensation, severance, medical, life insurance or other plan or vacation,
holiday or sick leave policy relating to any time prior to Closing, and in
particular obligations for medical or life insurance benefits of any former or
retired employees or their dependents.
(e) Any right to payment, whether or not the right is reduced to
judgment, liquidated, fixed, matured, disputed, secured, legal or equitable,
asserted against the Seller and received by Buyer or an agent appointed by Buyer
for that purpose, under the California Uniform Commercial Code - Bulk Sales Law
(the "Act") pursuant to the notice given in accordance with Sections6104(b) and
6105 of the Act.
Any incident, amount or omission described under paragraphs (a), (b), (c), (d)
or (e) above are herein referred to as a "Claim".
12.2 METHOD OF ASSERTING CLAIMS, ETC. Buyer will give prompt written
notice to Seller of any Claim which it discovers or of which it receives notice
and which might give rise to Damages under SECTION 12.1 hereof, stating the
nature, basis and (to the extent known) amount thereof. If the Claim under
SECTION 12.1 involves a suit by a third party or by any governmental body, or
any legal, administrative or arbitration proceeding, Seller shall be entitled to
participate therein, and, to the extent desired by Seller, to assume the defense
thereof, and after notice from Seller to Buyer of the election so to assume the
defense thereof, neither Seller nor Shareholders will not be liable to Buyer for
any legal or other expenses subsequently incurred by Buyer in connection with
the defense thereof, unless Seller or Shareholders do not actually assume the
defense thereof following notice of such election. Buyer and Seller will render
to each other such assistance as may reasonably be required of each other in
order to insure proper and adequate defense of any such suit, claim or
proceeding. Buyer will not settle any Claim and incur any Damages without the
written consent of Seller (or the appropriate Seller), which consent shall not
be unreasonably withheld. Buyer and/or Seller or Shareholders, as the case may
be, shall assign to the party(ies) paying such Claim all right, title and
interest in any Claim which is paid hereunder.
12.3 RIGHT OF SETOFF. In order to secure Seller's and Shareholders'
obligations pursuant to this Agreement, Buyer shall have the right to offset its
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Damages against the Deferred Consideration described in SUBSECTION 1.1 C hereof,
provided, however, that the amount of Damages that Buyer may be entitled to
recover from Seller or Shareholders pursuant to this right of indemnity shall
not be limited to the Deferred Consideration, and Buyer shall have the right to
pursue any other remedies at law or in equity to which it may be entitled.
Notwithstanding any other provision in this Agreement to the contrary, and
pursuant to the terms of the Final Escrow Agreement, Buyer may instruct the
escrow agent to withhold payment of any portion of the Deferred Consideration at
the expiration of the six (6) month and one (1) year periods described in
SUBSECTION 1.1 C hereof which Buyer reasonably estimates may be required to
offset Damages which it may incur based on Claims which have been made known to
Buyer on or prior to such date.
12.4 DAMAGES. "Damages" as used in this ARTICLE 12 shall mean demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
judgments, settlements, fines, out of pocket costs and expenses, including,
without limitation, interest and penalties, and reasonable and actual attorneys'
fees, disbursements and expenses. "Damages" shall not include (i) any loss
reimbursed to Buyer from any insurance proceeds in connection with such loss or
damage to the extent of such reimbursement, and Buyer shall use its best efforts
to cause any such insurance policies to contain waiver of subrogation rights
against Seller and Shareholders; nor (ii) an aggregate amount of Damages up to,
but not exceeding, Five Thousand Dollars ($5,000).
13. DEFAULT. In the event of default by Seller or Shareholders prior to
the Closing Date, Buyer shall give written notice to Seller describing the
default, and if such default is not cured within a reasonable period of time not
to exceed thirty (30) days after receipt of such notice, Buyer shall have the
option to rescind this Agreement in addition to all other remedies at law or in
equity arising from such default, including the remedy of specific performance.
If the transaction described in this Agreement fails to close because of (i) the
occurrence of a material adverse change or event to the Business, (ii) a breach
by Seller or Shareholders of the representations and warranties contained in
this Agreement other than SECTION 5.16; (iii) a material breach of the
representations and warranties set forth in SECTION 5.16 hereof; (iv) a
condition to Closing set forth in SECTION 10.1 hereof is not satisfied by Seller
or Shareholders, (v) the condition to Closing with respect to completion of
Buyer's due diligence as stated in SECTION 10.7 is not satisfied, or (vi) the
condition to Closing with respect to operating agreements with ▇▇▇▇▇ Community
College and Concordia College as stated in SECTION10.9 is not satisfied, the
Deposit shall be refunded to Buyer. If Buyer fails to close for any other
reason, the Deposit shall be paid to Seller as liquidated damages.
14. MISCELLANEOUS.
14.1 SURVIVAL. All statements made by Seller and Shareholders herein,
including the Disclosure Schedule, or contained in any certificate or other
instrument delivered by or on behalf of Seller or Shareholders pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed
representations and warranties by Seller and Shareholders hereunder. All
representations, warranties, agreements, covenants and indemnifications made by
Seller and Shareholders in this Agreement, specifically including, without
limitation, the right to indemnification and setoff, or in any document
delivered pursuant hereto shall survive the Closing; provided, however, that the
23
representations and warranties by Seller and Shareholders set forth in the
following subsections of SECTION 5 hereof shall only survive for a period of
eighteen (18) months after the Closing Date: 5.3, 5.4(C), 5.5, 5.6, 5.7, 5.8,
5.9, 5.11, 5.12, and SECTIONS 5.15 through 5.23, inclusive, and provided
further, that the representations and warranties set forth in the following
subsections of SECTION 5 shall survive indefinitely after the Closing Date: 5.2,
5.4(A), 5.4(B), 5.10, 5.13 AND 5.14. Notwithstanding the foregoing survival
periods with respect to the representations and warranties of SECTION 5 hereof,
any condition described in the written waiver of compliance executed by Buyer
pursuant to SECTION 10 hereof shall not survive Closing.
14.2 NOTICES. All notices, consents, waivers or other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date (i) delivered by hand (with written confirmation of receipt),
(ii) sent by telecopier (with written confirmation of receipt) with a copy
mailed by certified mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), to the person and address set forth below:
If to Seller or Shareholders: Michigan College Book Company, Inc. and
Ned's Berkeley Book Company, Inc.
c/▇ ▇▇▇▇▇▇▇▇ Associates, Inc.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. Palms, Esq.
Miller, Canfield, Paddock & Stone
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other person or address as Seller may designate in writing.
If to Buyer: Nebraska Book Company, Inc.
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.:(▇▇▇) ▇▇▇-▇▇▇▇
24
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Rembolt ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Buyer may designate in writing.
14.3 EXPENSES. Each party shall be solely responsible for, and shall pay
all of its own expenses associated with the transaction described in this
Agreement, including but not limited to its accounting, consultants, legal fees,
and out-of-pocket expenses incurred in connection with this Agreement, or the
transactions herein contemplated.
14.4 COUNTERPARTS. This Agreement may be executed simultaneously in such
counterparts as the parties may desire, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
14.5 ENTIRE AGREEMENT. All negotiations between the parties are merged
in this Agreement and the Exhibits to this Agreement and there are no
understandings or agreements other than those incorporated herein. This
Agreement, together with the Exhibits and Schedules attached hereto and which
are incorporated herein by this reference, constitute the entire agreement
between the parties and no negotiations, warranties, covenants, promises or
representations which are not contained in this Agreement shall have any force
or effect. This Agreement supersedes any letter of intent or memorandum of
understanding entered into between the parties or their predecessors. This
Agreement may not be modified except by an instrument, in writing, duly executed
by the parties.
14.6 AMENDMENT AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any party of any default, misrepresentation, or breach
of any warranty, covenant or agreement hereunder, whether intentional or not,
shall be effective unless it is in writing, and no such waiver shall be deemed
to waive any prior or subsequent default, misrepresentation, or breach of any
warranty, covenant or agreement hereunder, or to affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
14.7 ADDITIONAL DOCUMENTS. Any party hereto shall deliver to the other
party upon request any documents reasonably needed to effect the intent and
purposes of this Agreement.
14.8 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of Seller and Buyer. In the
event that Buyer causes the Property, the Leased Premises, or the Business of
Seller to be transferred to some other party by liquidation, merger, or
otherwise, the rights of Buyer may be enforced by such other party in its own
name.
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14.9 INVALID PROVISIONS. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and the Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
14.10 EXPLANATORY PROVISIONS. The words "Buyer" and "Seller" and
"Shareholders" shall be taken to include the parties hereto and their respective
successors and assigns, and shall be taken in the plural sense whenever the
context requires, and all pronouns used herein and referring to said parties
shall be construed accordingly, regardless of the number or gender thereof.
Headings of the various paragraphs herein are inserted merely as a matter of
convenience and for reference and shall not be considered as in any manner
defining, limiting, or describing the scope or intent of the particular
paragraphs to which they refer or as affecting the meaning or construction of
the language in the body of such paragraphs.
14.11 CONFIDENTIALITY. The parties hereby ratify the Confidentiality
Agreement dated March 23, 1999, between them, and further understand and agree
that the terms of this Agreement are to be held in strictest confidence. Each
party covenants and agrees with the other to make no public or private
announcement or disclosure of the transactions contemplated herein except as
authorized to do so in advance by such other party. After Closing, either party
may make a public announcement with the consent of the other, provided that such
consent shall not be unreasonably withheld.
14.12 EXHIBITS. All Exhibits attached to this Agreement are incorporated
herein and made a part of this Agreement.
14.13 THIRD PARTY BENEFICIARIES/PARTIES IN INTEREST. This Agreement has
been made and is made solely for the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the parties to it and their respective successors and
permitted assigns. Nothing in this Agreement is intended to relieve or discharge
the obligations or liability of any third persons to any party to this
Agreement.
26
IN WITNESS WHEREOF, the parties have hereunto set their hands the day
and year first above written.
SELLER:
WITNESS: MICHIGAN COLLEGE BOOK COMPANY, INC.,
a Michigan corporation
By By
-------------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇▇, President
WITNESS: NED'S BERKELEY BOOK COMPANY, INC.,
a California corporation
By By
-------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
WITNESS:
By
-------------------------- -------------------------------
▇▇▇ ▇▇▇▇▇
WITNESS:
By
-------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇
WITNESS:
By
-------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
BUYER:
Attest: NEBRASKA BOOK COMPANY, INC., a Kansas
corporation
By By
------------------------- -------------------------
Title: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
27
SCHEDULE OF EXHIBITS
EXHIBIT 1: TRADE NAMES AND LOCATIONS OF BOOKSTORES AND WAREHOUSE
EXHIBIT 2: GOOD FAITH DEPOSIT ESCROW AGREEMENT
EXHIBIT 3: DEFERRED CONSIDERATION ESCROW AGREEMENT
EXHIBIT 4: LIST OF EQUIPMENT, TOOLS, SUPPLIES, FURNITURE AND FIXTURES
EXHIBIT 5: EXCLUDED ASSETS
EXHIBIT 6: INVENTORY VALUATION METHODOLOGY
EXHIBIT 7: ASSUMED LIABILITIES
EXHIBIT 8: DISCLOSURE SCHEDULE
EXHIBIT 9: FINANCIAL STATEMENTS
EXHIBIT 10: SUPPLY AND SERVICE CONTRACTS OF SELLER
EXHIBIT 11: OPINION LETTER
EXHIBIT 12: NONCOMPETITION AND CONSULTING AGREEMENT
EXHIBITS 1 THROUGH 11 TO THE AGREEMENT OF SALE HAVE BEEN OMITTED FOR PURPOSES OF
FILING EXHIBIT 2.1 TO THE FORM 8-K. SUCH EXHIBITS WILL BE MADE AVAILABLE TO THE
SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
EXHIBIT 12
NONCOMPETITION AND CONSULTING AGREEMENT
This Agreement ("Agreement") is made this November __, 1999,
among NEBRASKA BOOK COMPANY, INC., a Kansas corporation ("Nebraska Book"), and
________________ ("Covenantor").
RECITALS
A. Concurrent with the execution hereof, Nebraska Book has
purchased substantially all of the assets and goodwill of Michigan College Book
Company, Inc., a Michigan corporation ("Michigan Book"), and Ned's Berkeley Book
Company, Inc., a California corporation ("Ned's Book"), pursuant to the terms of
an Agreement of Sale dated September ___, 1999, by and between Nebraska Book (as
"Buyer" thereunder), Michigan Book, Ned's Book (Michigan Book and Ned's Book are
individually and collectively referred to therein and herein as "Seller"), ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (individually and collectively referred
to as "Shareholder" thereunder and hereunder) (the "Purchase Agreement").
B. Seller operates college bookstores engaged in the sale of
books, apparel and general merchandise, which stores are located at the
addresses listed on Exhibit A attached hereto and incorporated herein by this
reference, and conducts a used college textbook wholesale business, and related
administrative activities, which together with the goodwill and going concern
value thereof are collectively referred to as the "Business";
[ C. Covenantor has a financial interest in Seller, and Covenantor
has had access to and/or acquired certain confidential and proprietary
information related to the Business;] and
D. As a condition of the Purchase Agreement, Nebraska Book
intends that Covenantor not engage in any business activity which competes with
the Business on the terms set forth herein, and in order to induce Nebraska Book
to effectuate the Purchase Agreement, Covenantor agrees to the covenants
contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Recitals. The recitals set forth above are a material part
of this Agreement and are incorporated herein by this reference.
2. Term. The term of this Agreement shall be five (5) years,
commencing on the date of execution hereof
3. Consideration. In consideration of the duties and obligations
of Covenantor hereunder, Covenantor acknowledges receipt of the consideration
paid and benefits received under the Purchase Agreement at closing as full and
adequate consideration therefor.
1
4. Non-Compete and Non-Interference Agreement. (a) Nebraska Book
desires to preserve the goodwill of the Business by preventing Covenantor from
engaging in certain activities competitive with Nebraska Book in the operation
of the Business which would diminish the value of the Business. Therefore,
Covenantor covenants and agrees that for five (5) years from and after the date
hereof, Covenantor will not separately or on behalf of or in conjunction with
any other person or entity, either directly or indirectly, own, be employed by,
render consulting services to, manage, operate, join, control or participate in
the ownership, management, operation or control of, or lease any real or
personal property to, any bookstore or college apparel business, or any related
services or retail businesses, competing with the Business, within fifteen (15)
miles in any direction from any of the retail locations described on Exhibit A
(the "Restricted Area"), other than to or with respect to Nebraska Book. It is
understood and agreed that the foregoing sentence is intended to prevent
Covenator from soliciting customers and from competing with Nebraska Book for
the business of its customers and clientele services in the Restricted Area;
provided, however, that nothing contained herein shall prohibit Covenantor from
owning less than two percent (2%) of the stock of any publicly traded company.
The parties hereby stipulate that the time period and area covered by this
Agreement are reasonable under the circumstances.
(b) Covenantor agrees that , for the term set forth in Section 2
hereof, Covenantor shall not, directly or indirectly, either for Covenantor or
on behalf of any other person, (i) solicit or induce, or attempt to solicit or
induce, any employee or officer of Nebraska Book or the Business for the
purposes of employing him or her or obtaining his or her services for hire or
otherwise causing him or her to leave his or her employment with the Nebraska
Book or the Business, or in any way interfere with the relationship between
Nebraska Book and any employee of Nebraska Book, or (ii) induce, or attempt to
induce, any person that is a customer, supplier or business relation of Nebraska
Book or the Business to cease doing business with Nebraska Book or the Business,
or in any way interfere with the business relationship between any customer,
supplier or business relation of Nebraska Book or the Business.
5. Consulting. For a period of ninety (90) days after Closing,
Covenantor agrees to be reasonably available to render and, if requested by
Nebraska Book, to render such consulting services as Nebraska Book may
reasonably request of Covenantor with respect to operating the bookstores and
the Business, and the integration of the computer systems with that of Nebraska
Book, and to respond to questions arising about the Business from Nebraska Book.
Such services shall be rendered for no additional consideration.
6. Trade Secrets. (a) Covenantor possesses certain confidential
information which was sold to and are now owned by Nebraska Book related to the
bookstore and apparel business, and which constitutes confidential trade secrets
owned solely and exclusively by Nebraska Book, and its successors and assigns.
All such confidential information is herein referred to as the "Confidential
Information", and includes, without limitation, the following: (i) financial
information, including operating statements, sales information, earnings and
reporting systems, bookkeeping and accounting; (ii) customer lists and business
plan, including growth plans and strategies; (iii) employee management related
to the Business, including training manuals, employee identification and
performance, compensation and incentives, employee selection and training
techniques; (iv) pricing and marketing strategies and advertising policies; (v)
proprietary rights in certain valuable trade names, service marks and
trademarks; and (vi) manuals covering business practices and policies.
(b) Confidential Information shall not include information which
is or becomes available to the public through no breach of this Agreement.
2
(c) Covenantor covenants and agrees to keep secret, and not use,
disclose or reveal, any portion of the Confidential Information to any person or
entity other than (i) Nebraska Book and its authorized representatives; (ii)
with the prior written consent of Nebraska Book to Covenantor; (iii) on a
professional advisers of Covenantor on a need-to-know basis related to
preparation and filing tax returns of Covenantor, provided that prior to
disclosure, Covenantor shall advise the proposed recipient of the
confidentiality requirements related to the Confidential Information; and (iv)
as a consequence of a valid and enforceable order of a duly authorized
regulatory body or court of competent jurisdiction. Covenantor shall have no
right to use or to license the use of any name, ▇▇▇▇ or other intellectual
property right associated with the Confidential Information. The covenants and
agreements set forth in this section shall continue so long as such Confidential
Information remains a trade secret of Nebraska Book and shall survive the
termination of this Agreement.
7. Severability. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the remainder of this Agreement, which shall be given full effect without regard
to the invalid portions. If any provision of this Agreement, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, Nebraska Book and Covenantor agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, such provision shall then be
enforceable.
8. Default; Remedies. The parties hereto agree that the remedy at
law for any breach of any covenant in this Agreement will be inadequate and
Nebraska Book shall be entitled to injunctive relief, including specific
performance, and setoff, in addition to any other relief to which Nebraska Book
is entitled at law or in equity.
9. Binding Effect; Assignability. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns. The interest of Covenantor under this
Agreement shall not be assignable, transferable, or subject to the claims of any
creditor. The interests of Nebraska Book under this Agreement, either in whole
or in part, may be assigned at its option to Nebraska Book or to any other party
with an interest in any of the bookstore locations constituting the Business.
10. Amendment. This Agreement may be amended at any time by a
written instrument agreed to both by Nebraska Book and Covenantor.
11. Contingencies. The parties understand and agree that, in the
event the Purchase Agreement terminates or is cancelled as provided therein,
this Agreement shall have no further force and effect and no compensation shall
be paid by Nebraska Book to Covenantor. This Agreement does not depend upon the
execution of a similar agreement with any other party to be enforceable.
3
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first above written.
ATTEST: NEBRASKA BOOK COMPANY, INC., a Kansas
corporation
________________________________ By _______________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Its President
COVENANTOR:
------------------------------------------
---------------------------
4