Privileged & Confidential
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ASSET PURCHASE AGREEMENT
by and among
LIBERTY GROUP PUBLISHING, INC.,
GREEN EQUITY INVESTORS II, L.P.
(for the limited purposes described herein),
LIBERTY GROUP OPERATING, INC.,
AMERICAN PUBLISHING COMPANY OF ILLINOIS,
▇▇▇▇▇▇▇▇▇ INTERNATIONAL INC.
APAC-90, INC.,
AMERICAN PUBLISHING (1991) INC. and
APAC-95, INC.
Dated as of
November 21, 1997
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TABLE OF CONTENTS
Page
SECTION 1. Transfer of Assets.............................. 2
(a) Acquired Assets................................... 2
(b) Retained Assets................................... 5
SECTION 2. Assumption of Liabilities....................... 6
(a) Liabilities Assumed............................... 6
(b) No Other Liabilities Assumed...................... 7
SECTION 3. Consideration................................... 9
(a) Assumption of Assumed Liabilities................. 9
(b) Transfer of Funds................................. 9
(c) Working Capital Adjustment........................ 9
(d) Determination of 1998 Net Cash Position; Payment
of 1998 Estimated Net Cash........................ 10
(e) Uncollected Accounts Receivable................... 11
(f) Pro Forma Calculation............................. 12
(g) Purchase Price Allocation......................... 12
(h) Proration of Taxes................................ 13
SECTION 4. Closing......................................... 13
(a) Closing........................................... 13
(b) Payments.......................................... 13
SECTION 5. Representations and Warranties of Seller........ 13
SECTION 6. Representations and Warranties of Buyer and
Investor........................................ 15
SECTION 7. Employee Matters................................ 16
(a) Transferred Employees............................. 16
(b) Employee Benefits................................. 16
(c) Severance Claims.................................. 17
(d) WARN Act Liability................................ 17
(e) Undue Hardship to Buyer........................... 17
SECTION 8. Documents Delivered at the Closing.............. 18
SECTION 9. Nonassignable Contracts......................... 19
SECTION 10. Covenants of the Seller........................ 19
(a) Consents and Authorizations....................... 20
(b) Conduct of the Business........................... 20
(c) Access............................................ 21
(d) Permits........................................... 22
(e) Further Assurances................................ 22
(f) No Default........................................ 22
(g) Compliance with Laws.............................. 22
(h) Supplemental Information.......................... 22
(i) [Reserved]........................................ 23
(j) Transitional Services............................. 23
(k) Employees......................................... 23
(l) Amended Disclosure Schedule....................... 24
(m) Insurance......................................... 24
(n) Vehicular Titles.................................. 24
(o) UCC Termination Statements........................ 24
(p) Real Estate Conveyance Documents and Lease
Assignments....................................... 24
SECTION 11. Covenants of Buyer and Investor................ 24
(a) Cooperation by Buyer.............................. 25
(b) Preservation of Books and Records................. 25
(c) Employees......................................... 26
SECTION 12. Conditions to Buyer's Obligations.............. 26
(a) Representations, Warranties and Covenants of
Seller............................................ 26
(b) Consents.......................................... 26
(c) No Prohibitions................................... 27
(d) Closing Documents................................. 27
(e) Opinion of Counsel................................ 27
(f) Simultaneous Closings............................. 28
(g) Additional Conditions............................. 28
SECTION 13. Conditions to Seller's Obligations............. 28
(a) Representations, Warranties and Covenants
of Buyer.......................................... 28
(b) Consents.......................................... 28
(c) No Prohibitions................................... 28
(d) Closing Documents................................. 29
(e) Opinion of Counsel................................ 29
SECTION 14. Termination, Amendment and Waiver.............. 29
(a) Termination....................................... 29
(b) Effect on Obligations............................. 30
SECTION 15. Indemnification................................ 30
(a) Survival.......................................... 30
(b) Indemnification by the Company, the Associated
Subsidiaries and Seller........................... 31
(c) Indemnification by Buyer.......................... 32
(d) Matters Involving Third Parties................... 32
SECTION 16. Expenses....................................... 35
SECTION 17. Assignment..................................... 35
SECTION 18. Notices........................................ 36
SECTION 19. Miscellaneous.................................. 37
(a) Publicity......................................... 37
(b) Severability...................................... 38
(c) Captions.......................................... 38
(d) Refunds........................................... 38
(e) Governing Law; Consent to Jurisdiction............ 38
(f) Counterparts...................................... 39
(g) Amendment......................................... 39
(h) Interpretation.................................... 39
(i) Further Assurances................................ 40
(j) Extension; Waiver................................. 40
SECTION 20. Guarantee...................................... 40
SECTION 21. Limited Guarantee.............................. 40
ASSET PURCHASE AGREEMENT (the "Agreement")
is entered into this 21st day of November 1997,
by and among AMERICAN PUBLISHING COMPANY OF
ILLINOIS, a Delaware corporation ("Seller"),
LIBERTY GROUP PUBLISHING, INC., a Delaware
corporation (the "Investor"), LIBERTY GROUP
OPERATING, INC., a Delaware corporation
("Buyer"), ▇▇▇▇▇▇▇▇▇ INTERNATIONAL INC., a
Delaware corporation (the "Company"), APAC-90
INC., a Delaware corporation and an indirect
wholly owned subsidiary of the Company
("APAC-90"; the term APAC-90 shall include
subsidiaries of APAC-90 unless the context
otherwise provides), AMERICAN PUBLISHING (1991)
INC., a Delaware corporation and an indirect
wholly owned subsidiary of the Company ("AP-91";
the term AP-91 shall include subsidiaries of AP-
91 unless the context otherwise provides),
APAC-95 INC., a Delaware corporation and an
indirect wholly owned subsidiary of the Company
("APAC-95"; the term APAC-95 shall include
subsidiaries of APAC-95 unless the context
otherwise provides)(APAC-90, AP-91 and APAC-95
are collectively referred to herein as the
"Associated Subsidiaries") and, for the limited
purposes described herein, Green Equity
Investors II, L.P., a Delaware limited
partnership (the "Guarantor").
W I T N E S S E T H:
WHEREAS, Seller is engaged in, among other things, the
business of publishing, marketing and distributing certain community
newspapers and other publications as identified in Schedule 1 and
operating the printing presses associated therewith (the
"Business").
WHEREAS, Buyer wishes to purchase from Seller the right,
title and interest of Seller in and to the Business, including all
assets of the Seller relating to or used in connection with the
Business, except as specified herein, and to the liabilities related
thereto which are specified herein, all as more fully described
below, on the terms and conditions set forth herein.
WHEREAS, Liberty Group Publishings, Inc., Buyer, the
Company, the Associated Subsidiaries and Green Equity Investors II,
L.P. have entered into an Asset Purchase
Agreement, dated November 21, 1997 (the "Asset Purchase Agreement").
NOW, THEREFORE, in consideration of the promises and of
the respective representations, warranties, covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Transfer of Assets.
(a) Acquired Assets. Subject to the terms and conditions
hereof, Seller agrees to sell to Buyer, and Buyer agrees to purchase
from Seller, at the Closing (as defined in Section 4) all of the
right, title and interest of Seller in and to the Business and all
properties, assets and rights of every nature, kind and description
of Seller used or held for use primarily in connection with the
Business wherever located (collectively, other than the Retained
Assets (as defined in Section 1(b) hereof), the "Assets"), including
the following:
(i) all of the rights of Seller to prepare, produce,
publish, print, sell and/or distribute, as the case may be, the
community newspapers and other publications which constitute
the Business, together with the goodwill of or relating to the
Business;
(ii) all of the real property owned by Seller and
primarily used in the operation of the Business (the "Owned
Real Property") which Owned Real Property is listed on Schedule
3.18 of the Disclosure Schedule to the Asset Purchase Agreement
to the extent relating to the Business, and all of the
buildings, fixtures and improvements (the "Improvements")
located in, on and under the Owned Real Property;
(iii) all of the rights of Seller in any real property
leased or subleased by Seller and used primarily in the
operation of the Business (the "Leased Real Property"), which
Leased Real Property is listed on Schedule 3.19 of the
Disclosure Schedule to the Asset Purchase Agreement to the
extent relating to the Business, and all of the Improvements
located in, on and under the Leased Real Property to the extent
pro vided in the lease or sublease;
(iv) all of the materials, raw materials (including
paper), supplies, work in progress and other inventory
owned by Seller and to the extent used or held for use in the
operation of the Business;
(v) all rights of Seller to fixed and other tangible
personal property, whether owned or leased, including
furniture, equipment, computers and related items, fixtures,
machinery and tools owned by Seller and primarily used in the
operation of the Business;
(vi) all rights, subscription rights, obligations and
benefits of contracts, licenses (whether Seller is a licensee
or licensor) or arrangements of Seller primarily relating to
the Business and the Assets (collectively, the "Assumed
Contracts"), including the items listed on Schedules 3.10(a)
through (j) of the Disclosure Schedule to the Asset Purchase
Agreement to the extent relating to the Business;
(vii) all files, books and records of Seller dating back
at least five full fiscal years from the date of the Closing
primarily relating to the Business (but not minute books and
corporate governance records of Seller) which are not
physically located at the Owned Real Property or the Leased
Real Property and all files, books and records of the Business
which are physically located at the Owned Real Property or the
Leased Real Property, including financial statements and
records, advertising space reservations, advertising insertion
orders, promotional materials, all available records of current
and former advertisers in the newspapers and other publications
which comprise the Business or relating to the Business;
provided that the Seller shall retain copies of all such files,
books and records;
(viii) all credits, prepaid costs and expenses, deposits
and retentions held by third parties under leases, licenses,
contracts and other arrangements, in each case to the extent
relating to the Business;
(ix) all current assets (except for cash and cash
equivalents), but specifically including accounts receivable;
provided that following the Effective Date (as defined in
Section 3(c)) Buyer shall have the right to assign certain
accounts receivable to Seller in accordance with the terms of
Section 3(e) of this Agreement.
(x) all subscription, distribution, circulation and
mailing lists relating primarily to the Business and all
records and data relating to such lists;
(xi) any available editorial and photographic morgues and
any available back issues of the newspapers and other
publications which comprise the Business;
(xii) all registered United States and foreign patents,
trademarks, service marks, trade names, mastheads, copyrights
and applications set forth on Schedule 3.9 of the Disclosure
Schedule to the Asset Purchase Agreement to the extent relating
to the Business (including rights to ▇▇▇ for and remedies
against present and future infringements thereof and rights of
priority and protection of interests) and the goodwill and
going concern value related thereto;
(xiii) all licenses and permits of any government or state
(or any subdivision thereof), whether domestic or foreign, or
any agency, authority, bureau, commission, department or
similar body or instrumentality thereof, or any governmental
court or tribunal, federal, state and local ("Government
Authority"), to the extent they are transferable, relating
primarily to the Business or the Assets;
(xiv) all guaranties, warranties, indemnities and similar
rights in favor of Seller to the extent related to the Assets
or the Business; and
(xv) all rights of Seller under any provision or covenant
of any contract, agreement or understanding in favor of Seller
or their Affiliates to the extent relating to the Business
limiting the ability of any party to sell any products or
services, engage in any line of business or compete with or to
obtain products or services from any person and any causes of
action, lawsuits, claims and demands available to Seller in
respect of the foregoing whether arising before or after the
Closing.
The Assets shall be transferred free and clear of all
liens, easements, licenses, possessory rights, sales contracts,
building and use restrictions, reservations and limitations,
encumbrances, security interests, charges, pledges, mortgages, deeds
of trust, deed to secure debt, liabilities, debts, options or, to
the best knowledge of Seller, any other adverse claims, restrictions
or third party rights of any kind and nature whatsoever (the
"Encumbrances"), except for the following (the "Permitted
Encumbrances"): (i) liens for current Taxes not yet due and payable,
(ii) the encumbrances disclosed on Schedule 3.8(a) of the Disclosure
Schedule to the Asset Purchase Agreement to the extent relating to
the Business, (iii) mechanics',
carriers', workmen's, repairmen's or other like liens arising or
incurred in the ordinary course of business, liens arising under
original purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of
business, and which are routinely and regularly extinguished by
payment of the charges to which they relate and which do not,
individually or in the aggregate, materially impair the continued
use and operation of the assets to which they relate in the
Business, taken as a whole, as presently conducted or (iv) other
imperfections of title or encumbrances, if any, which do not,
individually or in the aggregate, materially impair the continued
use and operation of the assets to which they relate in the
Business, taken as a whole, as presently conducted.
(b) Retained Assets. Except as set forth in Section 2(a),
Seller shall retain the real and personal property and other assets
of Seller or any of its Affiliates (as used herein the term
"Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Security Exchange Act of 1934, as amended) that relate primarily to
the businesses of Seller or any of its Affiliates other than the
Business (the "Retained Business") and not primarily related to the
Business or that relate primarily to the Retained Liabilities
(collectively, the "Retained Assets"), including:
(i) all bank accounts and cash and cash equivalents of
Seller;
(ii) all rights, claims and credits of Seller to the
extent relating to any other Retained Asset or any Retained
Liability (as defined in Section 2(b)), including any such
items arising under insurance policies, and all guarantees,
warranties, indemnities and similar rights in favor of Seller
or any of its Affiliates in respect of any other Retained Asset
or any Retained Liability;
(iii) [Reserved];
(iv) all rights of Seller and its Affiliates under this
Agreement, the Asset Purchase Agreement, the Transitional
Services Agreement (as defined in Section 10(j)) and the other
agreements and instruments executed and delivered in connection
with this Agreement;
(v) all documents prepared in connection with the sale of
the Business and the Assets to Buyer, exclusive
of documents prepared in the ordinary course of business in
connection with the operation of the Business;
(vi) all financial and Tax records relating to the
Business that form part of Seller's (or any of its Affiliates')
general ledger and all other files, books and records not
referred to in Section 1(a)(vii) which Seller or any of its
Affiliates have in their possession; provided that upon
reasonable request by Buyer, Buyer shall be provided with
copies of the portions of such records that reasonably relate
to the Business (other than copies of the Seller's
consolidated, combined or unitary income Tax returns, provided
that copies of back up for such returns may reasonably be
requested by Buyer); and
(vii) the Retained Assets described in Exhibit 1.1(b) to
the Asset Purchase Agreement to the extent relating to the
Business.
SECTION 2. Assumption of Liabilities.
(a) Liabilities Assumed. On the Closing Date, Buyer will
assume and agree to pay, perform and discharge as and when due the
liabilities and obligations, whether fixed, absolute or contingent,
matured or unmatured, (the "Assumed Liabilities") relating to the
Business as the same exist on the Closing Date which are specified
below (provided, that in no event shall the Assumed Liabilities
include any Retained Liabilities, and Buyer shall assume no other
liabilities whatsoever of Seller or its Affiliates):
(i) all accounts payable and trade obligations to the
extent relating to the Business, including those which are owed
to Seller or its Affiliates which were incurred in the ordinary
course of business;
(ii) all prepaid subscription and advertising obligations
to the extent relating to the Business;
(iii) all liabilities and obligations arising from
commitments (in the form of issued purchase orders or
otherwise) to purchase or acquire inventory, supplies or
services to the extent relating to the Business and reflected
on a balance sheet of the Business as of the Closing Date as
accounts payable or accrued expenses;
(iv) all liabilities and obligations under existing
licenses, permits, authorizations, leases or contracts which
are to be assigned to Buyer hereunder other than
liabilities or obligations for breaches or default that
occurred prior to the Closing;
(v) all liabilities or obligations for accrued but unpaid
vacation pay, sick pay and holiday pay for Employees (as
defined in Section 7(a)) to the extent such pay is reflected in
the Net Liabilities (as defined in Section 3(c)) of the
Business as of the Effective Date; and
(vi) all liabilities, other than Retained Liabilities
(including Tax (as defined in Section 3.14 of the Asset
Purchase Agreement) liabilities), which are reflected in the
balance sheet included in the Financial Statements (as defined
in Section 3.6 of the Asset Purchase Agreement) to the extent
relating to the Business (except to the extent discharged prior
to the Closing Date) or incurred by the Business since the date
of such balance sheet not in breach of any representation or
covenant in this Agreement and in the ordinary course of
business which are of the type that would be reflected in a
balance sheet prepared in conformity with GAAP and consistent
with the Financial Statements.
(b) No Other Liabilities Assumed. Notwith standing
anything to the contrary contained herein, except as provided in
Section 2(a), the parties agree that Buyer has not agreed to pay,
shall not assume and shall not have any liability or obligation with
respect to, the following liabilities and obligations (collectively,
the "Retained Liabilities"):
(i) any liability or obligation for any Tax of any kind
(including income, payroll, personnel, property, bulk transfer,
sales, use, ad valorem or franchise Taxes or assessments) owed
prior to or at Closing, or which may thereafter become due, to
any foreign, federal, state, local or other taxing authority
which liability relates to any transaction or period prior to
or upon the Closing (including as a result of Treasury
Regulation ss.1.1502-6(a) or any similar provision under state
or local law);
(ii) any liability or obligation relating to, resulting
from or arising out of workers' compensation claims resulting
from any injury, disease or disability which injury, disease or
disability occurred prior to Closing (whether or not any such
claim was filed prior to the Closing);
(iii) any liability or obligation relating to, resulting
fromor arising out of any violation of law (whether knownor
unknown) or license, which violation occurred on or prior to
the Closing Date;
(iv) any liability relating to the Owned Real Property or
Leased Real Property, or relating to discharges of hazardous
substances in violation of or giving rise to liability pursuant
to any Environmental Law (as defined below) by the Business,
the basis for which liability occurred or existed prior to the
Closing, including any investigation and remediation
liabilities to the extent arising under standards established
by any and all foreign, federal, state or local laws, rules,
orders, regulations, consent decrees, settlement agreements,
injunctions, statutes or requirements imposed by any
governmental authority relating to or concerning protection of
the environment and natural resource damages, including surface
water, soil, air and ground water ("Environmental Law") as
enacted or enforced on or prior to the Closing Date;
(v) any liability or obligation for severance, redundancy,
termination, payment in lieu of notice, indemnity or other
payments resulting from the transactions contemplated by this
Agreement or arising prior to the Transfer Date, and any
liability or obligation arising prior to the Transfer Date to
or with respect to any employee or any employee matters,
including any employee benefit plan, other than those which are
expressly assumed by Buyer, pursuant to Section 7;
(vi) any liability or obligation of or incurred by Seller
or its Affiliates to the extent related to the Retained Assets
or not arising from the Business;
(vii) any liability or obligation under licenses, permits,
authorizations, leases or contracts, which are not assigned to
Buyer hereunder;
(viii) any liability or obligation for medical, dental and
disability benefits and any other welfare benefit, whether
insured or self-insured, incurred or existing at any time on or
prior to the Transfer Date, for current or past employees of
the Business;
(ix) all liability of Seller and its Affiliates or former
Affiliates arising from indebtedness, including guaranty and
similar obligations, for borrowed money or long-term debt,
except as provided in Section 2(a);
(x) any liability or obligation relating to or resulting
from breach of contract or tort claims where the event giving
rise to such claim occurred prior to the Closing Date;
(xi) any other liability or obligation of Seller
whatsoever not expressly assumed by Buyer hereunder;
(xii) liabilities for officers and directors of Seller
with respect to pre-Closing conduct;
(xiii) any liability or obligation for any intercompany
notes of Seller; and
(xii) liability for travel vouchers or cash of $4,000 for
each publisher who exceeded budgeted gross operating profits
for 1997 by 10%.
SECTION 3. Consideration. The consideration for the
transfer of the Assets described in Section 1(a) from Seller to
Buyer shall be as follows:
(a) Assumption of Assumed Liabilities. Buyer shall assume
and agree to pay as they shall become due or discharge the Assumed
Liabilities as described in Section 2(a) hereof.
(b) Transfer of Funds. Upon the Closing, Buyer shall
deliver to Seller immediately available funds in the amount of forty
four million four hundred nineteen thousand one hundred sixteen
dollars ($44,419,116).
(c) Working Capital Adjustment. Within sixty (60) days
following the Closing, KPMG Peat Marwick LLP or such other firm of
independent public accountants mutually agreed by Buyer and Seller
(the "Accounting Firm") shall (i) on a basis consistent with U.S.
generally accepted accounting principles as applied in the Financial
Statements (as defined in Section 3.6 of the Asset Purchase
Agreement) ("GAAP") (x) determine the Net Current Assets (as defined
below) and the Net Liabilities (as defined below) of the Business as
of December 31, 1997 (the "Effective Date") (the "Current Asset
Calculation") and (y) determine the amount of the Adjustment (as
defined below), if any, and (ii) deliver a letter (the "Accountant's
Certificate") (x) setting forth the calculation of the Adjustment
and its components and (y) certifying that each of such calculations
was made in compliance with this Section 3(c). Such determinations
and calculations shall be conclusive absent manifest error. If the
Adjustment is a positive number in excess of $1,000,000, Buyer shall
pay such excess to Seller within three (3)
business days following delivery of the Accountant's Certificate. If
the Adjustment is a negative number, the absolute value of which is
greater than $1,000,000, Seller shall pay such excess to Buyer
within three (3) business days following delivery of the
Accountant's Certificate. All payments pursuant to this Section 3(c)
shall be by wire transfer of immediately available funds (or by
interbank transfer, if applicable).
For purposes of this Section 3(c),
(1) "Net Current Assets" shall mean current assets
determined in a manner consistent with GAAP, but excluding (i) cash
and cash equivalents, (ii) current and deferred Taxes and (iii) any
other Retained Assets.
(2) "Net Liabilities" shall mean liabilities determined in
a manner consistent with GAAP but excluding (i) current and deferred
Tax liabilities and (ii) any other Retained Liabilities.
(3) The "Adjustment" means the amount (whether positive or
negative) equal to Net Current Assets minus Net Liabilities.
(d) Determination of 1998 Net Cash Position; Payment of
1998 Estimated Net Cash.
(i) During the period from the Effective Date through the
Closing Date (the "1998 Period"), Seller shall maintain financial
records showing all cash and cash equivalents received by or on
behalf of the Business during the 1998 Period (the "1998 Gross
Cash") and all amounts of cash or cash equivalents used to discharge
accounts payable and other obligations of the Business in the
ordinary course consistent with past practice, but excluding (w)
interest on indebtedness for borrowed money, (x) intercompany
payments, but excluding management fees charged at 1.6% of revenue
for the 1998 Period, (y) fees and expenses relating to the
transactions contemplated by this Agreement and (z) income Taxes,
but excluding Taxes for the 1998 Period (the "1998 Cash
Disbursements"). The excess, if any, of the 1998 Gross Cash over the
1998 Cash Disbursements shall be the "1998 Net Cash Position".
(ii) At the Closing, Seller shall pay or cause to be paid
to Buyer, by wire transfer of immediately available funds (or by
intrabank transfer, if practicable), an amount equal to an estimate
determined in good faith by Seller of the 1998 Net Cash Position
(the "Estimated 1998 Net Cash Position").
(iii) Within sixty (60) days following the Closing, the
Accounting Firm (as defined in Section 3(c)) shall (x) determine (1)
the amount of the 1998 Net Cash Position (as so determined, the
"1998 Final Cash Position") and (2) the 1998 Final Cash Position
minus the 1998 Estimated Cash Position (the "1998 Cash Position
Adjustment", which may be positive or negative) and (y) deliver a
letter (the "1998 Cash Certification") (1) setting forth the
calculation of the 1998 Cash Position Adjustment and its components
and (2) certifying that such calculations were made in compliance
with this Section 3(d). Such determinations and calculations will be
conclusive absent manifest error. If the 1998 Cash Position
Adjustment is a positive number, Seller shall pay such amount to
Buyer within three (3) business days of delivery of the 1998 Cash
Certification. If the 1998 Cash Position Adjustment is a negative
number, Buyer shall pay an amount equal to the absolute value of
such number to Seller within three (3) business days of delivery of
the 1998 Cash Certification. All payments pursuant to this Section
3(d) shall be made by wire transfer of immediately available funds
(or by interbank transfer, if practicable).
(e) Uncollected Accounts Receivable. Within 135 days after
the Effective Date, Buyer shall have the right to (i) notify Seller
in writing (the "Receivables Notice") of the dollar amounts of the
accounts receivable of the Business existing on the Effective Date
that have not been collected by Buyer by the date of such notice and
which are more than 120 days past due as of the date of such notice
(the "Greater than 120-Day Receivables") and (ii) at its option,
assign to Seller 100% of the then-outstanding Greater than 120-Day
Receivables. If so assigned, Seller shall purchase the Greater than
120-Day Receivables for a price equal to (x) the face amount of the
Greater than 120- Day Receivables less (y) the full amount of the
reserve for receivables reflected in the Net Current Assets, plus
(z) interest on (x) minus (y) accrued from the Effective Date at a
rate equal to the 30-day Treasury ▇▇▇▇ rate in effect on the
Effective Date, payable by wire transfer of immediately available
funds to (or by interbank transfer, if applicable) Buyer within
three (3) business days following receipt of the Receivables Notice.
In determining the amount collected with regard to any account
receivable, all amounts received from any obligor shall be allocated
to the receivable specified by such obligor, or if not specified, to
the receivables of such obligor in the order in which such
receivables arose. From and after the Closing, Buyer shall continue
collecting accounts receivable in all material respects in
accordance with the past practice of the Business prior to the
Closing Date and shall provide
Seller reasonable access to review all information relating to the
foregoing, including all write-offs. From and after the date Buyer
exercises its option to assign the Greater than 120-Day Receivables
to the Seller, Buyer shall continue collecting such Greater than
120-Day Receivables on behalf of the Seller for a reasonable fee to
be agreed upon by the parties in proportion to the services
rendered.
(f) Pro Forma Calculation. Notwithstanding anything to the
contrary contained in this Agreement or the Asset Purchase
Agreement, no payments shall be made under Sections 3(c), (d) and
(e) of this Agreement unless such payment would be required to be
made if the determinations and calculations required by such
sections are made on a pro forma basis as if the Business as defined
in this Agreement and the Business as defined in the Asset Purchase
Agreement were treated as a single business (subject to a single
$1,000,000 threshold for the purposes of calculating the Adjustment
pursuant to Section 3(c) of this Agreement and the comparable
provision of the Asset Purchase Agreement), and in such event the
portion of any such payment to be made pursuant to this Agreement
shall be equal to 44/309ths of such payment, and the balance of such
payment shall be made pursuant to the Asset Purchase Agreement.
(g) Purchase Price Allocation. The purchase price for the
Assets (including the Assumed Liabilities) shall be allocated among
the Assets in accordance with Schedule 1.3(i) to the Asset Purchase
Agreement, to the extent relating to the Business, to be prepared by
the Buyer and delivered to the Seller within 180 days after the
Closing Date. Such allocation shall be subject to Seller's consent,
such consent not to be unreasonably withheld. Following the Closing,
the Buyer and the Seller in connection with their respective U.S.
federal, state and local income Tax returns and other filings
(including, without limitation Internal Revenue Service Form 8594),
shall not take any position inconsistent with such allocation. Any
adjustment to the purchase price shall be allocated as provided by
Temp.Treas.Reg.ss.1.1060-1T(f). For purposes of this Section 3(g),
the withholding by Seller of its consent to a proposed allocation of
purchase price to an asset or class of assets shall be deemed to be
reasonable if, within 30 days after receiving a copy of Schedule
1.3(i) to the Asset Purchase Agreement, Seller provides to Buyer a
written notice setting forth its proposed allocation of purchase
price to such asset or class of assets, and such proposed allocation
differs by more than 25% from the amount allocated on Schedule
1.3(i) to the Asset Purchase Agreement to such asset or class of
assets, but compliance with this sentence shall not be necessary for
such withholding of
consent by Seller to be deemed reasonable. The parties shall
negotiate in good faith to timely resolve any differences regarding
such allocation.
(h) Proration of Taxes. All real estate, personal property
and ad valorem Taxes relating to the Assets which shall have accrued
and become payable prior to the Closing Date shall be paid by
Seller. All such Taxes which shall be accrued but unpaid shall be
prorated to the Closing Date. In connection with such proration of
Taxes, in the event that actual Tax figures are not available at the
Closing Date, proration of Taxes shall be based upon actual Taxes
for the preceding year for which actual Tax figures are available
and re-prorated when actual Tax figures become available. The amount
due one party as a result of such proration shall be paid to the
other party at the Closing, and the amount due one party as a result
of a re-proration of Taxes for a taxing jurisdiction shall be paid
to such party within 30 days after actual Tax figures become a
available for such taxing jurisdiction.
SECTION 4. Closing.
(a) Closing. The closing of the transactions contemplated
hereby (the "Closing") shall be held at the offices of ▇▇▇▇▇, ▇▇▇▇▇
& ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
commencing at 9:00 a.m., Chicago time, on January 30, 1998, or as
soon as practicable thereafter after the satisfaction or waiver of
the conditions to closing set forth in Sections 12 and 13 of this
Agreement, or at such other place, time or date as Buyer and Seller
may agree; provided that the Closing shall occur simultaneously with
the Closing under the Asset Purchase Agreement (as defined in
Section 2.1 of the Asset Purchase Agreement) (the "Closing Date").
(b) Payments. All payments hereunder shall be in U.S.
dollars, and shall be made no later than 12:00 noon on the Closing
Date by wire transfer of immediately available funds (or interbank
transfer, if applicable) to an account or accounts of Seller or
Buyer, as applicable, at a bank or banks specified by Seller or
Buyer, as applicable.
SECTION 5. Representations and Warranties of Seller. The
Company and Seller represent and warrant to Buyer and Investor as
follows:
(a) Seller and the Company hereby make each of the
Representations and Warranties set forth in Article III of the Asset
Purchase Agreement, but modified so that:
(i) references to the "Business" shall refer to the
Business as defined in this Agreement and so that references to
the "business relating to the Relinquished Property" or similar
phrases shall refer to the Business as defined in the Asset
Purchase Agreement;
(ii) references to the "Closing", the "Closing Date", the
"Transfer Date" and the "Effective Date" shall refer to the
Closing, Closing Date, Transfer Date and the Effective Date,
respectively, as defined in this Agreement;
(iii) references to the "transactions contemplated hereby"
shall refer to transactions contemplated by this Agreement;
(iv) the Asset Purchase Agreement shall be substituted for
the Like Kind Exchange Agreement in the definition of
"Associated Agreements";
(v) references to "this Agreement" shall refer to this
Agreement rather than the Asset Purchase Agreement;
(vi) references to "including the closing of the Like Kind
Exchange and the contribution of the Relinquished Property to
CNCO" or similar phrases shall refer to "including the closing
under the Asset Purchase Agreement"; and
(vii) capitalized terms used therein which are not
otherwise defined herein or addressed in this section are used
with the meanings ascribe to such terms in the Asset Purchase
Agreement; and terms which are defined therein which are not
otherwise defined herein or addressed in this section are used
throughout this Agreement with the meanings so ascribed to such
terms.
For the convenience of the parties, the Disclosure
Schedule referred to in the Asset Purchase Agreement should also
apply to this Agreement to the extent the disclosures set forth
therein relate to the Business as defined in this Agreement.
SECTION 6. Representations and Warranties of Buyer and
Investor. Buyer and Investor hereby represent and warrant to the
Company and Seller as follows:
(a) Buyer hereby makes each of the representations and
warranties set forth in Article IV of the Asset Purchase Agreement,
but modified so that:
(i) references to the "Business" shall refer to the
Business as defined in this Agreement and so that references to
the "business relating to the Relinquished Property" or similar
phrases shall refer to the Business as defined in the Asset
Purchase Agreement;
(ii) references to the "Closing", the "Closing Date", the
"Transfer Date" and the "Effective Date" shall refer to the
Closing, Closing Date, Transfer Date and the Effective Date,
respectively, as defined in this Agreement;
(iii) references to the "transactions contemplated hereby"
shall refer to transactions contemplated by this Agreement;
(iv) the Asset Purchase Agreement shall be substituted for
the Like Kind Exchange Agreement in the definition of
"Associated Agreements";
(v) references to "this Agreement" shall refer to this
Agreement rather than the Asset Purchase Agreement;
(vi) references to "including the closing of the Like Kind
Exchange and the contribution of the Relinquished Property to
CNCO" or similar phrases shall refer to "including the closing
under the Asset Purchase Agreement"; and
(vii) capitalized terms used therein which are not
otherwise defined herein or addressed in this section are used
with the meanings ascribed to such terms in the Asset Purchase
Agreement; and terms which are defined therein which are not
otherwise defined herein or addressed in this section are used
throughout this Agreement with the meanings so ascribed to such
terms.
For the convenience of the parties, the Disclosure
Schedule referred to in the Asset Purchase Agreement should also
apply to this Agreement to the extent the disclosures
set forth therein relate to the Business as defined in this
Agreement.
SECTION 7. Employee Matters.
(a) Transferred Employees. Prior to the date on which
employees of the Business are transferred to Buyer (the "Transfer
Date", which date shall be the Closing Date or such later date as
the parties shall mutually agree in accordance with Section 7(c)),
Buyer shall offer employment to each employee of the Business set
forth on Exhibit 5.14 to the Asset Purchase Agreement to the extent
relating to the Business (other than any such employees whose
employment has been terminated prior to the Transfer Date) and each
other person so employed on the Transfer Date whose employment
primarily relates to the Business (the "Employees") on such terms
and conditions (including salary and benefit level) that are not
materially less favorable (exclusive of any equity incentive
compensation provided by Seller), when taken in the aggregate to the
terms and conditions of the employee's employment with Seller or its
subsidiaries, as the case may be, immediately prior to the Transfer
Date. Buyer will give Employees credit for accrued but unpaid
vacation pay, sick pay and holiday pay to the extent such pay is
reflected in the Net Liabilities of the Business as of the Effective
Date.
(b) Employee Benefits. Buyer shall recognize each
Employee's prior service with Seller and all members of Seller's
controlled group within the meaning of Section 414(b), (c), (m), and
(o) of the Internal Revenue Code of 1986, as amended (the "Code")
for all purposes (other than benefit accrual under a defined benefit
plan) under each employee benefit plan, policy or arrangement of
Buyer. Seller shall retain, and be solely responsible for, all
benefits and compensation payable to and with respect to Employees,
or other employees of Seller, with respect to services performed,
and claims incurred, in each case, prior to the Transfer Date under
any welfare plan, pension plan, deferred compensation plan, stock
based plans, employee benefit pension plans (as defined in the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any other plans, agreements, policies or arrangements
related to compensation, severance or other employee benefits and
all liabilities with respect to such plans, agreements, policies or
arrangements prior to the Transfer Date. For purposes of this
Section, disability claims are incurred on the date on which the
disability was incurred or, in the case of a disability which is not
incurred on a single, identifiable date, the date on which the
disability was diagnosed; medical and dental services are incurred
when an individual
is provided with medical or dental care; death benefit claims are
incurred at the time of death of the insured notwithstanding any
other provision of any welfare benefit plan to the contrary. Seller
shall be responsible for all qualifying events under Part 6 of Title
I of ERISA and Section 4980B of the Code ("COBRA") and COBRA claims
incurred under the welfare plans of Seller on or before the Transfer
Date.
(c) Severance Claims. Seller shall be responsible for any
claim of severance by a person who refuses Buyer's offer of
employment made in accordance with Section 7(a) hereof pursuant
hereto. Buyer shall be responsible for any claim of severance made
by any person who accepts such offer of employment, who becomes an
employee of Buyer and whose employment is thereafter terminated.
Buyer shall reimburse Seller for any payments made in respect of
severance to any person who does not accept Buyer's offer of
employment pursuant hereto but who is employed by Buyer or a
subsidiary or Affiliate within one year after the Transfer Date.
(d) WARN Act Liability. Seller shall be responsible for
any claims or liabilities relating to the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Sections 2101-2109 (the "WARN
Act") which arise in connection with the Business or the Employees
prior to the Closing Date (whether or not filed prior to the Closing
Date) or arise as a result of the transactions contemplated by this
Agreement (exclusive of any action taken by or on behalf of Buyer
after the Closing).
(e) Undue Hardship to Buyer. Notwithstanding anything to
the contrary herein, if taking the actions required pursuant to
Section 7(a) prior to the Closing Date, in the judgment of Buyer and
Seller as mutually and reasonably agreed, would be impracticable or
would cause undue hardship to Buyer or the Investor, or any of their
Affiliates or subsidiaries then (i) compliance with Section 7(a)
shall not be required on the Closing Date and (ii) the Employees
shall remain employees of Seller and its subsidiaries, as
applicable, until such date as it becomes practicable for Buyer to
comply with Section 7(a); provided that the Transfer Date may be no
later than 90 days following the Closing Date. Without duplication
of any other provision of this Agreement, if the Transfer Date is
not the Closing Date, Buyer shall indemnify, defend and hold
harmless Seller and its subsidiaries, and their officers, directors,
employees, advisors, agents and representatives (except to the
extent any such person is an Employee, in which case this
indemnification shall not apply to such
person) from and against any and all demands, claims, complaints,
actions or causes of action, suits, proceedings, investigations,
arbitrations, assessments, losses, settlements, Taxes, damages,
liabilities, costs and expenses, including interest, penalties and
reasonable attorneys' and accounting fees and disbursements
(including, but not limited to, all administrative costs and
expenses incurred as a result of the Employees remaining employees
of Seller or its subsidiaries after the Closing Date) (including
those relating to the enforcement of this indemnity) related to
Employees which arise between the Closing Date and the Transfer Date
as a result of the fact that the Transfer Date was not the Closing
Date; provided that Buyer shall not be required to make any
indemnification in connection with liabilities and obligations
relating to severance which arise prior to the Transfer Date or with
respect to any Employee to the extent he or she is not an employee
of the Business between the Closing Date and the Transfer Date. No
deductible shall apply to Buyer's indemnification obligation under
this Section 7(e). Without limiting the foregoing, if the Transfer
Date is not the Closing Date, Seller shall deliver to Buyer as
promptly as practicable after the Transfer Date a statement
itemizing all costs, expenses and obligations of any kind whatsoever
with respect to Employees, including all compensation and benefits
costs and Taxes related thereto but specifically excluding severance
costs and liabilities, incurred by Seller between the Closing Date
and the Transfer Date. Buyer shall pay the amount set forth in such
statement, unless it is disputed, to Seller in immediately available
funds within three (3) business days after receiving such statement.
Disputes as to such amount shall be resolved by the Accounting Firm.
SECTION 8. Documents Delivered at the Closing. On the
Closing Date, the parties shall exchange documents as follows:
(a) Seller shall execute and deliver (i) ▇▇▇▇ of Sale,
Assignment and Assumption substantially in the form of Exhibit
A hereto and (ii) Trademark and Trade Name Assignments
substantially in the form of Exhibit B hereto (the "Trademark
and Trade Name Assignments");
(b) American Publishing Management Services Inc. and Buyer
shall have executed and delivered the Transitional Services
Agreement;
(c) [Reserved];
(d) Simultaneously with the Closing, Seller shall have
paid to Buyer an amount equal to the Estimated Net Cash
Position;
(e) [Reserved];
(f) Simultaneously with the Closing, Buyer shall have made
the cash payments required under Section 3 and shall have
assumed the Assumed Liabilities.
SECTION 9. Nonassignable Contracts. Anything contained
herein to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Assumed Contract or other
commitment or asset if an assignment or attempted assignment of the
same without the consent of the other party or parties thereto would
constitute a breach thereof or in any way impair the rights of
Seller thereunder. If any consent necessary to convey any Asset is
not obtained or if an attempted assignment would be ineffective or
would impair any party's rights under any such Assumed Contract or
other Asset so that Buyer would not receive all such rights, then
(x) Seller shall use commercially reasonable efforts (it being
understood that such efforts shall not include any requirement of
Seller, the Company, Buyer or the Investor to expend money or offer
or grant any financial accommodation) to provide or cause to be
provided to Buyer, to the extent permitted by law, the benefits of
any such Assumed Contract or other Asset, and Seller shall promptly
pay or cause to be paid to Buyer, when received, all moneys received
by Seller with respect to any such Assumed Contract or other Asset
and (y) in consideration thereof Buyer shall pay, perform and
discharge on behalf of Seller debts, liabilities, obligations and
commitments thereunder in a timely manner and in accordance with the
terms thereof. In addition, Seller shall take such other actions (at
the expense of Buyer, as designated by Buyer) as may reasonably be
requested by Buyer in order to place Buyer, insofar as reasonably
possible, in the same position as if such Assumed Contract or other
Asset had been transferred as contemplated hereby and so all the
benefits and burdens relating thereto, including possession, use,
risk of loss, potential for gain and dominion, control and command
are to inure to Buyer. If and when such consents and approvals are
obtained, the transfer of the applicable asset shall be effected in
accordance with the terms of this Agreement.
SECTION 10. Covenants of the Seller. The Company and
Seller hereby covenant and agree with the Buyer and the Investor as
follows:
(a) Consents and Authorizations. Seller shall use all
commercially reasonable efforts and cooperate with Buyer to secure
all necessary consents, approvals, authorizations, beneficial
assignments, exemptions and waivers from third parties (collectively
"Consents") as shall be required in order to enable Buyer to effect
the transactions contemplated hereby and to prevent a breach of, a
default under, or a termination, change in the terms or conditions
or modification of, any instrument, contract, lease, license or
other agreement to which the Seller is a party or is bound, and
shall otherwise use all commercially reasonable efforts to cause the
consummation of such transactions in accordance with the terms and
conditions hereof. Without limiting the provisions set forth in this
Section 10(a), Seller shall file, or cause to be filed, with the
Department of Justice and the Federal Trade Commission a Pre-Merger
Notification and Report Form pursuant to the HSR Act in respect of
the transactions contemplated hereby within ten business days of the
date of this Agreement and Seller shall use, and shall cause each of
its subsidiaries and Affiliates to use, all reasonable efforts to
take or cause to be taken all actions necessary, including to
promptly and fully comply with any requests for information from
regulatory authorities, to obtain any consent, waiver, approval or
authorization relating to the HSR Act that is necessary to enable
the parties to consummate the transactions contemplated by this
Agreement. Notwithstanding the foregoing, no provision of this
Agreement shall be construed as requiring Seller to make payments of
any kind in order to obtain Consents.
(b) Conduct of the Business. (A) During the period from
the date of this Agreement to the Closing, except as otherwise
contemplated by this Agreement or as Buyer shall otherwise agree in
writing in advance with respect to the Business, Seller covenants
and agrees to (i) conduct the Business in the ordinary and usual
course in a manner consistent with past practice, (ii) use its best
efforts to preserve intact its present business organization, (iii)
make available to Buyer the services of the officers and employees
of the Business, (iv) preserve the good will and relationships with
customers, suppliers and others having business dealings with the
Business and (v) not take any action which would cause any of the
representations and warranties of Seller in Section 5 to be untrue
or incorrect in any material respect as of the Closing. From
December 31, 1997 through the Closing Date Seller will not (i)
declare, set aside or pay any dividends with respect to its capital
stock, or redeem or otherwise acquire any of its capital stock or
other securities (except for payments of cash dividends and
redemptions for cash) or
(ii) pay any indebtedness or accounts payable except for
indebtedness or accounts payable of the Business to third parties in
the ordinary course of business (it being expressly understood that
no payments will be made on any intercompany notes).
(B) During the period from the date of this Agreement to
the Closing, except as otherwise provided for in this Agreement or
Section 5.2 of the Disclosure Schedule to the Asset Purchase
Agreement as it relates to the Business or as the Buyer shall
otherwise consent, Seller covenants and agrees that, with respect to
the Business, it shall not:
(i) other than (a) sales of products in the ordinary
course of business, or (b) sales of obsolete plants and
equipment in the ordinary course of business, sell, transfer,
convey, assign or otherwise dispose of, or agree to sell,
transfer, convey, assign or otherwise dispose of, any of its
assets or properties, or suffer or permit the creation of any
Encumbrance, other than in the ordinary course of business;
(ii) other than (a) Commitments to distributors in the
ordinary course of business consistent with past practice or
(b) in the ordinary course of business consistent with past
practice (x) take any action, or enter into or authorize any
Commitment or transaction or (y) terminate, modify, amend or
otherwise alter any material terms or provisions of any of its
Commitments, except as expressly contemplated by this
Agreement;
(iii) abandon, sell, pledge, alter, amend or enter into
any licensing or contractual arrangements with respect to any
Intellectual Property Rights;
(iv) fail to pursue the collection of receivables in the
ordinary course of business, fail to discharge its payables in
the ordinary course of business or otherwise make any material
change in the course of dealing with customers or suppliers as
a whole; or
(v) agree or commit to any of the foregoing.
(c) Access. From the date hereof and prior to the Closing,
Seller shall provide Buyer with such information as Buyer may from
time to time reasonably request with respect to Seller and the
transactions contemplated by this Agreement, provide Buyer and its
representatives reasonable access during regular business
hours and upon reasonable notice to the properties, books and
records of the Seller as Buyer may from time to time reasonably
request, provided that the Seller shall not be obligated to provide
Buyer with any information which would violate (i) any law, rule or
regulation or term of any Commitment, or (ii) any confidentiality
provision of any contract, or if the provision thereof would
adversely affect the ability of Seller to assert attorney client,
attorney work product or other similar privilege. Notwithstanding
the foregoing, Buyer shall have the absolute right to review any
Commitment or other Assumed Contract.
(d) Permits. Seller agrees to use commercially reasonable
efforts to assist Buyer in obtaining all Permits required for the
Business to the extent they cannot be transferred to Buyer pursuant
to this Agreement. Notwithstanding the foregoing, Buyer shall have
the right to direct Seller to forego one or more applications for
Permits. Seller shall pay the costs of such Permits.
(e) Further Assurances. At any time after the Closing
Date, Seller shall promptly execute, acknowledge and deliver any
other assurances or documents reasonably requested by Buyer and
necessary for Buyer to satisfy its obligations hereunder or obtain
the benefits contemplated hereby.
(f) No Default. Neither Seller nor its subsidiaries shall
do any act or omit to do any act, or permit any act or omission to
act, which will cause a breach of any Commitment to which the Seller
or its subsidiaries are a party or by which any of them or their
assets are bound or the Business are subject, the breach of which
would have a Material Adverse Effect.
(g) Compliance with Laws. Through the close of business on
the Closing Date, Seller shall comply with all laws, statutes,
regulations, rules and orders applicable to the Business or the
operation of Seller, except where the failure to comply therewith,
individually or in the aggregate, does not have a Material Adverse
Effect.
(h) Supplemental Information. From time to time prior to
the Closing, Seller will promptly disclose in writing to Buyer any
matter hereafter arising which, if existing, occurring or known at
the date of this Agreement would have been required to be disclosed
to Buyer or which would render inaccurate any of the
representations, warranties or statements set forth in Section 5
hereof. No information provided to a party pursuant to this Section
shall be deemed to cure any breach of any representation, warranty
or covenant made in this Agreement.
(i) [Reserved].
(j) Transitional Services. Seller agrees to provide
transition management and administrative services ("Transitional
Services") to Buyer for a period of up to 3 years pursuant to the
Transitional Services Agreement substantially in the form of Exhibit
5.12 to the Asset Purchase Agreement (the "Transitional Services
Agreement"). Buyer must approve any and all changes to the form of
Transitional Services Agreement that is an exhibit to the Asset
Purchase Agreement.
(k) Employees. Seller agrees to cooperate with Buyer with
respect to Buyer's making of employment offers to the employees of
the Business pursuant to Section 7(a). Exhibit 5.14 to the Asset
Purchase Agreement includes a list of employees of the Business.
Seller will provide Buyer by November 25, 1997 with a substituted
Exhibit 5.14 to the Asset Purchase Agreement containing a list of
the employees of the Business as of the date hereof. At the request
of Buyer, Seller will forward employment offers on behalf of Buyer
to the employees of the Business. Seller will permit Buyer to
discuss employment offers with employees of the Business during
business hours and to make presentations to the employees of the
Business during business hours. Seller agrees that beginning on the
date of this Agreement until the second anniversary of the Transfer
Date (as defined in Section 7(a)), neither it nor any of its
Affiliates or subsidiaries will directly or indirectly solicit any
employees of Buyer with respect to employment, without the prior
written consent of Buyer. However, nothing herein prevents Seller or
its Affiliates from placing any general advertisements for employees
or from hiring any employees of Buyer at any time who initiate
employment discussions with Seller or its Affiliates or who respond
to any general advertisement for employees placed by Seller or its
Affiliates. During the period commencing on the date hereof through
the Closing Date, Seller will not increase the compensation of
employees of the Business, except that any employee receiving a
merit based promotion in the ordinary course of business and
resulting in increased responsibilities may receive a raise
appropriate to reflect such employee's new position. Bonuses paid to
employees of the Business for 1997 in amounts determined by the
Company in the ordinary course of business shall be reflected in Net
Liabilities of the Business for purposes of Section 3(c), and,
unless Buyer consents otherwise, Buyer will pay such bonuses after
the Closing Date. Buyer consents to the
payment of such bonuses by Seller if the Closing Date is later than
January 30, 1998.
(l) Amended Disclosure Schedule. Seller may provide an
amended Disclosure Schedule to the Asset Purchase Agreement to the
extent relating to the Business, adding solely matters that have
arisen since the date of this Agreement, to Buyer 48 hours prior to
Closing; provided, however, that such amended Disclosure Schedule to
the Asset Purchase Agreement shall not affect any representation or
warranty or obligation of Seller to satisfy the conditions to
Closing set forth in Section 12(a). The purpose of the additions to
the Disclosure Schedule to the Asset Purchase Agreement shall solely
be to provide Buyer with information for purposes of Section 12(a)
below about the extent, if any, to which Seller's representations
and warranties will not be true and correct as of the Closing, and
any failure of the Seller's representations and warranties to be
true and correct as of the Closing disclosed by such additions shall
not give rise to liability after the Closing if the Closing occurs.
(m) Insurance. Seller agrees to maintain existing
insurance on the Business for the benefit of Buyer with respect to
events happening on or prior to the Closing Date.
(n) Vehicular Titles. Seller agrees to provide the
certificates transferring title to Buyer for all Assets which are
motor vehicles (the "Vehicular Titles") on the Closing Date.
(o) UCC Termination Statements. Seller agrees to deliver
to Buyer on the Closing Date UCC termination statements, releases of
mortgages and/or deeds of trust and any other documents as are
necessary for the discharge of all Encumbrances (other than
Permitted Encumbrances) affecting the Business or any other of the
assets.
(p) Real Estate Conveyance Documents and Lease
Assignments. Seller agrees to deliver to Buyer on the Closing Date
real estate conveyance documents and lease assignments, as
applicable, with respect to all of the real property set forth on
Sections 3.18 and 3.19, as applicable, of the Disclosure Schedule to
the Asset Purchase Agreement, to the extent relating to the
Business, as amended as of the Closing Date.
SECTION 11. Covenants of Buyer and Investor. Buyer and
Investor hereby covenant and agree with Seller and the Company:
(a) Cooperation by Buyer. From the date hereof and prior
to the Closing, Buyer shall use all reasonable efforts, and shall
cooperate with the Seller, to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties
as shall be required in order to enable Seller to effect the
transactions contemplated hereby, and shall otherwise use all
reasonable efforts to cause the consummation of such transactions in
accordance with the terms and conditions hereof. Without limiting
the provisions set forth in this Section, Buyer shall file with the
Department of Justice and the Federal Trade Commission a Pre-Merger
Notification and Report Form pursuant to the HSR Act in respect of
the transactions contemplated hereby within ten (10) business days
of the date of this Agreement, and Buyer shall use, and shall cause
each of its Affiliates to use, all reasonable efforts to take or
cause to be taken all actions necessary, including to promptly and
fully comply with any requests for information from regulatory
authorities, to obtain any consent, waiver, approval or
authorization relating to the HSR Act that is necessary to enable
the parties to consummate the transactions contemplated by this
Agreement.
(b) Preservation of Books and Records. For a period of (i)
five years from the Closing Date with respect to Books and Records
(as defined below) relating to litigation, Tax or environmental
matters and (ii) three years from the Closing Date with respect to
Books and Records relating to all other matters:
(i) Buyer shall not dispose of or destroy any of the books
and records of the Business relating to periods prior to the
Closing ("Books and Records") without first offering to turn
over possession thereof to Seller by written notice to Seller
at least 90 days prior to the proposed date of such disposition
or destruction.
(ii) Buyer shall allow Seller and its agents access to all
Books and Records on reasonable notice and at reasonable times
at Buyer's principal place of business or at any location where
any Books and Records are stored, and Seller shall have the
right, at their own expense, to make copies of any Books and
Records; provided, however, that any such access or copying
shall be had or done in such manner so as not to unduly
interfere with the normal conduct of Buyer's business and
provided that Seller shall maintain the confidentiality of such
Books and Records.
(c) Employees. Buyer agrees that for the period beginning
as of the date hereof and ending on the second anniversary of the
date of the Transfer Date, without the prior written consent of
Seller, Buyer shall not directly or indirectly solicit any employees
of Seller with respect to employment other than persons employed by
the Business at the Transfer Date. However, nothing herein prevents
Buyer from placing any general advertisement for employees or from
hiring any employees of Seller at any time who initiate employment
discussions with Buyer or who respond to any general advertisement
for employees placed by Buyer.
SECTION 12. Conditions to Buyer's Obligations. The
obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the
following conditions:
(a) Representations, Warranties and Covenants of Seller.
Seller shall have complied in all material respects with each of its
agreements and covenants contained herein to be complied with on or
prior to the Closing Date. All the representations and warranties of
Seller set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of Seller set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement, and as of the Closing
Date as though made on and as of the Closing Date, with future tense
references in Section 3.1 of the Asset Purchase Agreement to the
extent modified by Section 5 of this Agreement being deemed to be
present tense references as of the Closing Date, except that the
accuracy of representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be
determined as of such date; provided that this condition shall not
be unsatisfied unless it would be unsatisfied if the representations
and warranties of Seller in this Agreement were deemed to refer to
the Business as defined in this Agreement and the "Business" as
defined in the Asset Purchase Agreement, taken as a whole, and the
Disclosure Schedule to the Asset Purchase Agreement is read to apply
to such combination of both such Businesses. Buyer shall have
received a certificate executed by or on behalf of Seller, dated as
of the Closing Date, certifying as to the fulfillment of the
conditions set forth in this Section.
(b) Consents. The applicable waiting period under the HSR
Act shall have expired or been terminated and all other consents,
approvals, authorizations, exemptions and waivers by, or filing
with, notice to or permit from
governmental agencies or other persons that shall be required in
order to enable Buyer to consummate the transactions contemplated
hereby shall have been obtained (except for such consents,
approvals, authorizations, exemptions and waivers, filings, notices
or permits, the absence of which would not prohibit consummation of
such transactions or render such consummation illegal).
(c) No Prohibitions. No statute, rule or regulation or
order or decree of any court or governmental body shall be in effect
which prohibits Buyer from consummating the transactions
contemplated by this Agreement.
(d) Closing Documents. In addition to other documents
expressly referenced in this Section or Section 8, Seller shall have
delivered or caused to be delivered the following closing documents
in form and substance satisfactory to Buyer:
(i) a copy of the resolution or resolutions duly adopted
by the board of directors of Seller authorizing the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby, certified by the Secretary or an Assistant
Secretary of Seller;
(ii) a certificate of the Secretary or an Assistant
Secretary of Seller as to the incumbency and signatures of the
officers executing this Agreement;
(iii)certificates issued by the Secretary of State of the
State of Delaware, as of a recent date, as to the good standing
of Seller;
(iv) certificates issued by the Secretary of State of each
jurisdiction in which Seller is licensed or qualified to do
business as a foreign corporation, as of a recent date, as to
the good standing of Seller;
(v) copies of all governmental consents, approvals and
filings which have been obtained by Seller pursuant hereto; and
(vi) such other documents relating to the transactions
contemplated hereby as Buyer or its counsel may reasonably
request.
(e)Opinion of Counsel. Buyer shall have received an
opinion of Cravath, Swaine & ▇▇▇▇▇, counsel for Seller,
substantially in the form of Exhibit 7.5-1 to the
Asset Purchase Agreement and the opinion of internal counsel of
Seller, substantially in the form of Exhibit 7.5-2 to the Asset
Purchase Agreement.
(f) Simultaneous Closings. The closing of the Asset
Purchase Agreement shall occur simultaneously with the Closing.
(g) Additional Conditions. The conditions set forth in
Sections 7.6 and 7.9 of the Asset Purchase Agreement shall have been
satisfied.
SECTION 13. Conditions to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the
following conditions:
(a) Representations, Warranties and Covenants of Buyer.
Buyer shall have complied in all material respects with each of its
agreements and covenants contained herein to be complied with on or
prior to the Closing Date. All the representations and warranties of
Buyer set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of Buyer set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement, and as of the Closing
Date as though made on and as of the Closing Date, except that the
accuracy of representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be
determined as of such date. Seller shall have received a certificate
executed by or on behalf of Buyer, dated as of the Closing Date,
certifying as to the fulfillment of the conditions set forth in this
Section 13(a).
(b) Consents. The applicable waiting period under the HSR
Act shall have expired or been terminated and all other consents,
approvals, authorizations, exemptions by, or filing with, notice to
or permit from governmental agencies or other persons that shall be
required in order to enable Seller to consummate the transactions
contemplated hereby shall have been obtained (except for such
consents, approvals authorizations, exemptions, filings, notices or
permits, the absence of which would not prohibit consummation of
such transactions or render such consummation illegal).
(c) No Prohibitions. No statute, rule or regulation or
order or decree of any court or governmental
body shall be in effect which prohibits Seller from consummating the
transactions contemplated by this Agreement.
(d) Closing Documents. In addition to other documents
expressly referenced in this Section 13 or Section 8, Buyer shall
have delivered or caused to be delivered the following closing
documents in form and substance satisfactory to Seller:
(i) a copy of the resolution or resolutions duly adopted
by the board of directors of Buyer authorizing the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby;
(ii) a certificate of the Secretary, or an Assistant
Secretary of Buyer as to the incumbency and signatures of the
officers executing the Agreement;
(iii) certificates issued by the Secretary of State of
Delaware as to the good standing of Buyer; and
(iv) such other documents relating to the transactions
contemplated hereby as Seller or its counsel may reasonably
request.
(e) Opinion of Counsel. Seller shall have received an
opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel for Buyer, substantially in
the form of Exhibit 8.5 to the Asset Purchase Agreement.
SECTION 14. Termination, Amendment and Waiver.
(a) Termination. This Agreement may be terminated by
either party, by a written notice to the other parties, prior to
Closing:
(i) by the mutual written consent of Seller and Buyer;
(ii) by either Buyer or Seller if the Closing shall not
have occurred on or before February 28, 1998; provided that
this right to terminate shall not be available to any party
whose breach of this Agreement has been the cause of, or
resulted in, the Closing not occurring; or
(iii) by Buyer if the Lenders' Consent as defined in
Section 7.9 of the Asset Purchase Agreement has not been
received by three (3) weeks from the date of execution hereof.
(b) Effect on Obligations. (i) Termination of this
Agreement pursuant to this Section shall terminate all rights and
obligations of the parties hereunder and none of the parties shall
have any liability to the other party hereunder, except that
Sections 16, 17, 18 and 19 shall remain in effect, and provided that
neither anything herein nor the termination of this Agreement shall
relieve any party from liability for any breach of this Agreement
prior to such termination.
(ii) In the event of a termination by Seller or Buyer
pursuant to Section 14(a), written noti ce thereof shall forthwhile
be given to the other party. In addition, Buyer shall return all
documents and other material received from Seller relating to the
transactions contemplated hereby, whether obtained before or after
the execution hereof, to Seller and shall destroy all analyses,
notes, reports, and other documents prepared in connections with the
transactions contemplated by this Agreement and shall deliver to
Seller a certificate signed by an officer of Buyer certifying as to
such destruction.
SECTION 15. Indemnification.
(a) Survival. All of the representations and warranties
contained in this Agreement or in any certificates delivered
pursuant to this Agreement will survive the Closing (except for
Section 3.14 of the Asset Purchase Agreement, to the extent modified
by Section 5 of this Agreement, which shall not survive the Closing)
and continue in full force and effect (i) in the case of the
representations and warranties contained in Sections 3.1, 3.2,
3.8(a), 3.21, 4.1 and 4.2 of the Asset Purchase Agreement, to the
extent modified by Sections 5 and 6 of this Agreement, indefinitely,
(ii) in the case of representations and warranties contained in
Section 3.20 of the Asset Purchase Agreement, to the extent modified
by Section 5 of this Agreement, until the third anniversary of the
Closing Date and (iii) in the case of any other representation or
warranty contained in this Agreement or in any certificate delivered
pursuant to this Agreement, until eighteen months following the
Closing Date; provided, however, that if a written claim for a
breach of any representation or warranty is made before the
expiration thereof, such representation or warranty shall be deemed
to survive indefinitely for purposes of that claim. The covenants
and agreements contained in this Agreement or in any certificates
delivered pursuant to this Agreement shall survive the Closing and
continue in full force and effect indefinitely except for the
covenants contained in Sections 10(b), (f) and (g) of this Agreement
which shall
survive the Closing and remain in full force and effect until
eighteen months following the Closing Date.
(b) Indemnification by the Company, the Associated
Subsidiaries and Seller. Subject to the limitations of this Section
15(b) and the conditions and provisions of Section 15(d), the
Company, the Associated Subsidiaries and Seller agree to indemnify,
defend and hold harmless Buyer the Investor and their respective
officers, directors, employees, agents, advisors, representatives
and Affiliates (collectively, "Buyer Indemnitees") from and against
any and all demands, complaints, actions or causes of action, suits,
proceedings, investigations, arbitrations, assessments, losses,
settlements, Taxes, claims, judgments, damages, liabilities, costs
and expenses, including interest, penalties, reasonable attorneys'
and accounting fees and disbursements and costs of investigation
(including those relating to the enforcement of this indemnity)
("Buyer Damages"), asserted against, imposed upon or incurred by any
Buyer Indemnitee, directly or indirectly, by reason of, relating to
or resulting from (i) any Retained Assets or Retained Liabilities,
(ii) any nonfulfillment of any agreement on the part of the Company,
the Associated Subsidiaries or Seller contained herein, or (iii) any
breach of representation or warranty on the part of the Company, the
Associated Subsidiaries or Seller contained herein. Breaches are to
be determined for these purposes without regard to any materiality,
Material or Material Adverse Effect standard or qualifier set forth
in any representation or warranty, covenant or certificate; provided
that such materiality, Material and Material Adverse Effect
qualifiers shall apply to (i) any obligation to list matters on the
Disclosure Schedule to the Asset Purchase Agreement where the
representation or warranty specifies that only Material matters are
to be so listed and (ii) Section 3.7 of the Asset Purchase Agreement
to the extent incorporated by Section 5 of this Agreement and
Sections 10(f) and 10(g) of this Agreement. Notwithstanding the
foregoing, Seller will not have any obligation to indemnify Buyer
from and against any Buyer Damages with respect to breaches of
representations and warranties or of the covenant set forth in
Section 10(b) of this Agreement except to the extent that Buyer
Damages arising from any breaches of representations and warranties
of this Agreement and the Asset Purchase Agreement or of the
covenants set forth in Section 5.2 to the Asset Purchase Agreement
or Section 10(b) of this Agreement, taken together, are equal to or
are greater than $1,000,000 (the "Deductible"), whereupon Seller
shall pay the Buyer for all such Buyer Damages in excess of the
Deductible. The Deductible shall not apply except as specifically
provided in the preceding sentence, and the
circumstances under which the Deductible shall not apply include (w)
breaches of Section 3.8(a) to the Asset Purchase Agreement to the
extent incorporated by Section 5 of this Agreement, (x) breaches of
covenants or obligations hereunder other than Section 10(b), (y)
Retained Assets or Retained Liabilities or (z) adjustments pursuant
to Section 3 of this Agreement. Recovery pursuant to indemnification
for Retained Liabilities shall be for any and all Buyer Damages even
if (i) the facts giving rise to such indemnification may also give
rise for a claim of breach of the representation and warranties of
this Agreement or the Asset Purchase Agreement or (ii) facts
relating to such Retained Liability appear on the Disclosure
Schedule to the Asset Purchase Agreement to the extent related to
this Business. In addition to any indemnification of any Buyer
Indemnitee pursuant to this Section, such Buyer Indemnitee shall be
entitled to its rights and remedies pursuant to this Agreement, and
otherwise at law or in equity.
(c) Indemnification by Buyer. Subject to the limitations
of this Section 15(c) and the conditions and provisions of Section
15(d), Buyer agrees to indemnify, defend and hold harmless the
Company, Seller and the Associated Subsidiaries, and their officers,
directors, employees, agents, advisors, representatives and
Affiliates (collectively, "Seller Indemnitees") from and against any
and all demands, complaints, actions or causes of action, suits,
proceedings, investigations, arbitrations, assessments, losses,
settlements, Taxes, claims, judgments, damages, liabilities, costs
and expenses, including, but not limited to, interest, penalties and
reasonable attorneys' and accounting fees and disbursements and
costs of investigation (including those relating to the enforcement
of this indemnity) ("Seller Damages"), asserted against, imposed
upon or incurred by any Seller Indemnitee, directly or indirectly,
by reason of, relating to or resulting from (i) all liabilities and
obligations of Buyer relating to or arising out of the conduct of
the Business or the use of the Assets following the Closing or the
Assumed Liabilities following the Closing or (ii) nonfulfillment of
any agreement on the part of Buyer contained herein. In addition to
any indemnification of any Seller Indemnitee pursuant to this
Section 15(c), such Seller Indemnitee shall be entitled to its
rights and remedies pursuant to this Agreement, and otherwise at law
or in equity.
(d) Matters Involving Third Parties. The party or parties
making a claim for indemnification under this Section 15 shall be
for the purposes of this Agreement, referred to as the "Indemnified
Party" and the party or
parties against whom such claims are asserted under this Section 15
shall be, for the purposes of this Agreement, referred to as the
"Indemnifying Party". All claims by any Indemnified Party under this
Section 15 shall be asserted and resolved as follows:
(i) In the event that (x) any claim, demand or action is
asserted or instituted by any person other than the parties to
this Agreement or their Affiliates which could give rise to
Buyer Damages or Seller Damages, as applicable, for which an
Indemnifying Party could be liable to an Indemnified Party
under this Agreement (such claim or demand or action, a "Third
Party Claim" or (y) any Indemnified Party under this Agreement
shall have a claim to be indemnified by any Indemnifying Party
under this Agreement which does not involve a Third Party Claim
(such claim, a "Direct Claim"), the Indemnified Party shall
with reasonable promptness send to the Indemnifying Party a
written notice specifying the nature of such claim, demand or
action and the amount or estimated amount thereof, provided
that a delay in notifying the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations under this
Agreement except to the extent that (and only to the extent
that) such failure shall have caused the Buyer Damages or
Seller Damages, as applicable, for which the Indemnifying Party
is obligated to be greater than such Buyer Damages or Seller
Damages, as applicable, would have been had the Indemnified
Party given the Indemnifying Party prompt notice (which amount
or estimated amount shall not be conclusive of the final
amount, if any, of such claim, demand or action) (a "Claim
Notice").
(ii) Except as provided below, in the event of a Third
Party Claim, the Indemnifying Party shall be entitled to
control the defense of such Third Party Claim and to appoint
counsel of the Indemnifying Party's choice at the expense of
the Indemnifying Party to represent the Indemnified Party and
any others the Indemnifying Party may reasonably designate in
connection with such claim, demand or action (in which case the
Indemnifying Party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by any
Indemnified Party except as set forth below); provided that
such counsel is reasonably acceptable to the Indemnified Party.
Notwithstanding an Indemnifying Party's election to appoint
counsel to represent an Indemnified Party in connection with a
Third Party Claim, an Indemnified Party shall have the right to
participate in the defense of such claim and
to employ counsel of its choice for such purpose; provided that
the fees and expenses of such separate counsel shall be borne
by the Indemnified Party (except as provided below and except
for any fees and expenses of such separate counsel that are
incurred prior to the date the Indemnifying Party effectively
assumes control of such defense which, notwithstanding the
foregoing, shall be borne by the Indemnifying Party). If
requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its counsel
in contesting any claim, demand or action which the
Indemnifying Party defends, or, if appropriate and related to
the claim, demand or action in question, in making any
counterclaim against the person asserting the Third Party
Claim, or any cross-complaint against any person. The
Indemnifying Party shall not be entitled to assume control of
the defense of a Third Party Claim and shall pay the reasonable
fees and expenses of counsel retained by the Indemnified Party
(provided that such counsel is reasonably acceptable to the
Indemnifying Party) if (i) the claim for indemnification
relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation,
(ii) an adverse determination with respect to the action,
lawsuit, investigation, proceeding or other claim giving rise
to such claim for indemnification would reasonably be likely to
be materially detrimental to the Indemnified Party's reputation
or business, (iii) the claim seeks an injunction or equitable
relief against the Indemnified Party or (iv) the claim involves
liabilities under environmental laws that require remedial
action at facilities that were transferred pursuant to this
Agreement, in which case the Indemnified Party shall have
control and management authority over the resolution of such
claims, including hiring environmental consultants and
conducting environmental investigations and cleanups; provided
that the Indemnified Party shall keep the Indemnifying Party
apprised of any major developments relating to any such
environmental claim and provided further that, in the case of
any of (i) through (iv) above, (x) the Indemnified Party shall
not agree to any stipulation to or the entry of a court order
that adversely affects the Indemnifying Party without the
Indemnifying Party's consent and (y) the Indemnifying Party
shall have the right to retain counsel of its choice at its own
expense and participate in the defense of the Third Party
Claim, in which case the third sentence of this Section
15(d)(ii) shall be fully applicable. No Third Party Claim
(regardless of whether the Indemnifying
Party has assumed control of such Third Party Claim or such
Third Party Claim falls into any of the categories set forth in
(i) through (iv) above) may be settled or compromised (i) by
the Indemnified Party without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld or delayed or (ii) by the Indemnifying Party without
the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld or delayed. In the
event any Indemnified Party settles or compromises or consents
to the entry of any judgment with respect to any Third Party
Claim without the prior written consent of the Indemnifying
Party, each Indemnified Party shall be deemed to have waived
all rights against the Indemnifying Party for indemnification
under this Section 15.
SECTION 16. Expenses. Seller, on the one hand, and Buyer,
on the other hand, shall pay all costs and expenses incurred by such
party or on its behalf in connection with this Agreement and the
transactions contemplated hereby, including without limiting the
generality of the foregoing, fees and expenses of its financial
consultants, accountants and counsel. All excise, sales, use,
transfer (including real property transfer or gains), stamp,
documentary, filing recordation or other Taxes, if any, incident to
the transfer of the Assets to Buyer or which may be imposed or
assessed as a result of the transactions contemplated hereby and all
of the expenses relating to obtaining any governmental permits,
licenses and authorizations, approvals, exemptions, certificates or
similar instruments or documents which are necessary for the conduct
of the Business immediately after the Closing Date shall be paid by
Seller; provided that Buyer shall pay all of the expenses relating
to the qualification of Buyer to do business in such foreign
jurisdictions as are necessary for the conduct of the Business
immediately after the Closing Date.
SECTION 17. Assignment. The terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns; provided, however, that neither this Agreement nor any of
the rights, interests, or obligations hereunder may be assigned by
any of the parties hereto without the prior written consent of the
other parties, except (i) as set forth in the following sentence and
(ii) Buyer and, after the Closing, Seller may assign any or all of
their respective rights and obligations hereunder to any of their
Affiliates without the consent of the other parties; provided, that
any such assignment under the
foregoing clauses (i) and (ii) shall not relieve Seller or Buyer, as
the case may be, from any liability hereunder. Seller desires that
the purchase and sale of the Assets be effectuated in a transaction
that will qualify, to the maximum extent possible, as a "like-kind
exchange" under Section 1031 of the Code and the applicable Treasury
regulations, and the parties to this Agreement hereby agree to
cooperate with each other and to take all such actions as may be
necessary to effectuate, to the extent reasonably practicable, the
purchase and sale of the Assets in such a way as to so qualify,
including, but not limited to, (i) the assignment by Seller prior to
the Closing of its rights to receive the purchase price referred to
in Section 3(b), but not its obligations, under this Agreement to an
entity which meets the requirement of Section 1031 of the Code with
respect to a qualified intermediary and which is mutually acceptable
to the parties and (ii) the execution of such agreements and other
documents as may be necessary to complete and otherwise effectuate
such "like-kind exchange"; provided, however, that (i) Buyer's
agreement to cooperate in accordance herewith shall not require it
to take any actions that would delay the Closing beyond the closing
of the Asset Purchase Agreement and (ii) Seller agrees to reimburse
Buyer for any liabilities, costs, and expenses, including reasonable
legal expenses, incurred by Buyer in connection with any action
taken by them at Seller's request pursuant to this Section.
SECTION 18. Notices. Any notice, payment or other
communication required or permitted hereunder shall be sufficiently
given (and will be deemed to have been duly given upon receipt) if
given in writing and delivered in person, or by facsimile (where a
facsimile number is indicated), or by overnight courier or by
registered or certified mail, postage prepaid, as follows:
(a) To Buyer:
Liberty Group Operating, Inc.
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) To Seller:
American Publishing Company of Illinois
c/▇ ▇▇▇▇▇▇▇▇▇ International Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice)
to:
▇▇▇▇▇▇▇▇▇ Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attn: Vice President and General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like
notice.
SECTION 19. Miscellaneous.
(a) Publicity. No public release or announcement
concerning the transactions contemplated hereby shall be issued by
any party without the prior consent of the other party (which
consent shall not be unreasonably withheld), except as such release
or announcement may be required by law or the rules or regulations
of any United States or foreign securities exchange, in which case
the party required to make the release or announcement shall give
the other party notice in advance of such issuance.
(b) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any adverse manner to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in
an acceptable manner so that the transactions contemplated hereby
are fulfilled to the greatest extent possible.
(c) Captions. The Section and other headings contained in
this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All
references to Sections contained herein mean Sections of this
Agreement unless otherwise stated. All capitalized terms defined
herein are equally applicable to both the singular and plural forms
of such terms.
(d) Refunds. Seller shall be entitled to any refunds or
credits of Taxes for any Taxable period (or portion thereof) ending
on or prior to the Closing Date. Buyer shall be entitled to any
refunds or credits of Taxes for any Taxable period (or portion
thereof) beginning after the Closing Date.
(e) Governing Law; Consent to Jurisdiction. This Agreement
shall be construed in accordance with and governed by the laws of
the State of Delaware applicable to agreements made and to be
performed wholly within such jurisdiction. All disputes, litigation,
proceedings or other legal actions by any party to this Agreement in
connection with or relating to this Agreement or any matters
described or contemplated in this Agreement shall be instituted in
the courts of the State of Delaware or of the United States sitting
in the State of Delaware. Each party to this Agreement irrevocably
submits to the exclusive jurisdiction of the courts of the State of
Delaware and of the United States sitting in the State of Delaware
in connection with any such dispute, litigation, action or
proceeding arising out of or relating to this Agreement. Each party
to this Agreement will maintain at all times a duly appointed agent
in the State of Delaware for the service of any process or summons
in connection with any such dispute, litigation, action or
proceeding brought in any such court and, if it fails to maintain
such an agent
during any period, any such process or summons may be served on it
by mailing a copy of such process or summons to it at its address
set forth, and in the manner provided, in Section 18, with such
service deemed effective on the fifteenth day after the date of such
mailing.
Each party to this Agreement irrevocably waives the right
to a trial by jury in connection with any matter arising out of this
Agreement and, to the fullest extent permitted by applicable law,
any defense or objection it may now or hereafter to have the laying
of venue of any proceeding under this Agreement brought in the
courts of the State of Delaware or of the United States sitting in
the State of Delaware and any claim that any proceeding under this
Agreement brought in any such court has been brought in an
inconvenient forum.
(f) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one and the
same agreement. Copies of executed counterparts transmitted by
telecopy, telefax or other electronic transmission service shall be
considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is
confirmed.
(g) Amendment. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by
all parties hereto. Any party hereto may, only by an instrument in
writing, waive compliance by the other party hereto with any term or
provision hereof on the part of such other party hereto to be
performed or complied with. The waiver by any party hereto of a
breach of any term or provision hereof shall not be construed as a
waiver of any subsequent breach.
(h) Interpretation. For the purposes hereof: (i) words in
the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other gender as the
context requires; (ii) the terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of
the Schedules and Exhibits hereto) and not to any particular
provision of this Agreement, and Section, paragraph, Exhibit and
Schedule references are to the Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified; (iii) the
word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless
the context otherwise requires or unless otherwise specified; (iv)
the word "or" shall not be exclusive; and (v) this Agreement shall
be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing
any instrument to be drafted.
To the extent that a provision in this Agreement is
similarly worded to a provision in the Asset Purchase Agreement but
the wording in this Agreement is different from the wording of the
comparable provision in the Asset Purchase Agreement in a way that
is not dictated by the different transactions and Businesses covered
in each of this Agreement and the Asset Purchase Agreement, the
language in this Agreement shall be deemed to be modified to read as
the comparable language in the Asset Purchase Agreement.
(i) Further Assurances. Following the Closing, Buyer and
Seller shall each from time to time at the other's reasonable
request and without further consideration execute and deliver to the
other such additional instruments of transfer and conveyance and
take such action as may be reasonably requested in order better to
assure, convey and confirm to Buyer all of Seller's right, title,
interest in and all benefits of and to the Assets to be assigned,
conveyed and transferred hereunder.
(j) Extension; Waiver. At any time the parties may extend
the time for the performance of any of the obligations or other acts
of the other party, waive any inaccuracies in the representations
and warranties contained in this Agreement and waive compliance with
any of the agreements or conditions in this Agreement. Any agreement
on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument signed on behalf of such
party. The waiver by any party hereto of a breach of any provision
hereunder shall not operate to be construed as a waiver or any prior
or subsequent breach of the same or any other provision hereunder.
SECTION 20. Guarantee. The Company and the Associated
Subsidiaries guarantee the obligations of the Seller under this
Agreement (including the obligations pursuant to Sections 3(c)-3(i)
and indemnifications obligations), notwithstanding the assignment of
the right to receive the purchase price pursuant to the "like-kind
exchange" as described in Section 17.
SECTION 21. Limited Guarantee. Green Equity Investors II,
L.P. ("GEI II"), which shall be a party to
this Agreement solely for purposes of this Section 21 and Section
19(e), guarantees, subject to the limitations provided below, the
obligations of Buyer under this Agreement to the extent that such
obligations are to be performed on the Closing Date; provided that
GEI II's obligations hereunder shall be limited to the payment of
money not to exceed $150 million and shall terminate at the Closing
and provided further that GEI II's obligations hereunder shall be
further reduced to the extent GEI II makes payments under Article
XIII of the Asset Purchase Agreement (it being understood that GEI
II shall in no event be responsible for more than $150 million in
the aggregate under this Section 21 and Article XIII of the Asset
Purchase Agreement). GEI II agrees to be bound by the provisions of
Section 19(e) of this Agreement with respect solely to its promises
in this Section 21.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
▇▇▇▇▇▇▇▇▇ INTERNATIONAL INC.,
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
AMERICAN PUBLISHING COMPANY OF
ILLINOIS,
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
APAC-90, INC.,
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
AMERICAN PUBLISHING (1991) INC.,
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
APAC-95, INC.,
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
LIBERTY GROUP OPERATING, INC.,
By: /s/ ▇▇▇▇▇▇▇ ▇. Annick
------------------------
Name: ▇▇▇▇▇▇▇ ▇. Annick
Title: Secretary
LIBERTY GROUP PUBLISHING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Annick
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. Annick
Title: Secretary
IN WITNESS WHEREOF, the undersigned have executed
this Agreement as of the date hereof solely for the purposes
evidencing its obligations pursuant to Section 21 hereof.
GUARANTOR:
GREEN EQUITY INVESTORS II, L.P.
By: Grand Avenue Capital
Partners, L.P. its sole
general partner
By: Grand Avenue Capital
Corporation its sole
general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. Annick
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. Annick
Title: Vice President
SCHEDULE 1
ALL OF AMERICAN PUBLISHING COMPANY OF ILLINOIS'S
PUBLICATIONS AND PRINTING PRESSES IN THE
FOLLOWING LOCATIONS
ILLINOIS
--------
Albion
Canton
Carmi
Du Quoin
Eldorado
Flora
Harrisburg
Monmouth
Galesburg
Olney
West Frankfort
EXHIBIT A
[FORM OF]
▇▇▇▇ OF SALE
▇▇▇▇ OF SALE, dated as of [ ], 1998, by and
among AMERICAN PUBLISHING COMPANY OF ILLINOIS, a
Delaware corporation (the "Seller"), and LIBERTY
GROUP OPERATING, INC., a Delaware corporation
("Buyer"; the term Buyer shall include
subsidiaries of Buyer unless the context
otherwise provides).
WHEREAS pursuant to the Asset Purchase Agreement dated as
of the date hereof, among the Seller, the Investor, the Company, the
Associated Subsidiaries and Buyer (the "Asset Purchase Agreement"),
Seller has agreed to transfer to Buyer the Business and the Assets
and enter into certain ancillary agreements; and
WHEREAS pursuant to the Asset Purchase Agreement, Buyer
has agreed to assume the Assumed Liabilities.
NOW, THEREFORE, in consideration of the sale and
assignment of the Business and the Assets contemplated to be
delivered to Buyer on the date of the Closing, the assumption of the
Assumed Liabilities contemplated to be assumed by Buyer on the date
of the Closing, the payment of the purchase price for the Assets as
provided for in the Asset Purchase Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
SECTION 1. Defined Terms. All capitalized terms used and
not otherwise defined herein shall have the meanings ascribed to
them in the Asset Purchase Agreement.
SECTION 2. Sale of Assets. Upon the terms and subject to
the conditions of the Asset Purchase Agreement, Seller hereby sells,
assigns, transfers, conveys and delivers to Buyer, and Buyer hereby
accepts from Seller, effective as of the date of the Closing, all
right, title and interest of Seller and/or any of its Affiliates or
other entities in and to the Assets contemplated to be delivered to
Buyer on the Closing Date.
Whether or not all of the Assets contemplated to be
delivered to Buyer on the Closing Date shall have been legally
transferred to Buyer as of the Closing Date, Buyer shall have, and
shall be deemed to have acquired, complete and sole beneficial
ownership over all of the Assets contemplated to be delivered as of
the Closing Date.
SECTION 3. Survival of Certain Provisions. The parties
hereto acknowledge that the Asset Purchase Agreement includes
various provisions related hereto that expressly survive the Closing
Date, including, without limitation, provisions relating to
indemnification and cooperation after the Closing Date and
non-assignable contracts, and the parties agree that all such
provisions shall continue in full force and effect in accordance
with the Asset Purchase Agreement.
SECTION 4. Retained Assets. The parties hereby agree that
Seller does not hereby sell, assign, transfer, convey or deliver to
Buyer any Retained Assets.
SECTION 5. Counterparts. This ▇▇▇▇ of Sale may be executed
in one or more counterparts, each of which shall be deemed an
original and all of which shall, taken together, be considered one
and the same ▇▇▇▇ of Sale, it being understood that all parties need
not sign the same counterpart.
SECTION 6. Delaware Law. This ▇▇▇▇ of Sale shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without regard to its principles of conflicts of laws.
The parties agree that irreparable damage would occur in the event
that any of the provisions of this ▇▇▇▇ of Sale were not performed
in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this ▇▇▇▇ of Sale
and to enforce specifically the terms and provisions of this ▇▇▇▇ of
Sale in any court of the United States located in the State of
Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware state court in the event any
dispute arises out of this ▇▇▇▇ of Sale or any of the transactions
contemplated by this ▇▇▇▇ of Sale, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that it
will not bring any action relating to this ▇▇▇▇ of Sale or any of
the transactions contemplated by this ▇▇▇▇ of Sale in any court
other than a Federal court sitting in the State of Delaware or in
Delaware state court.
SECTION 7. Assignment. Each party hereto consents to the
assignment of this ▇▇▇▇ of Sale, to any
other person, in whole or in part, whether by operation of law or
otherwise, by the other party, its successors or assigns.
SECTION 8. No Third Party Beneficiaries. This ▇▇▇▇ of Sale
is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
▇▇▇▇ of Sale to be duly executed as of the day and year first above
written.
AMERICAN PUBLISHING COMPANY
OF ILLINOIS
By:
------------------------
Name:
Title:
LIBERTY GROUP OPERATING, INC.
By:
------------------------
Name:
Title:
EXHIBIT B
[FORM OF]
TRADEMARK AND TRADE NAME ASSIGNMENT
THIS TRADEMARK AND TRADE NAME ASSIGNMENT (the
"Assignment") is made as of this [ ] day of [ ], 1998, by and
between American Publishing Company of Illinois, a Delaware
corporation ("Seller"), with its principal office at [ ] and Liberty
Group Operating, Inc., a Delaware corporation ("CNCO") with its
principal office at [ ].
WHEREAS, CNCO and Seller are parties to that certain Asset
Purchase Agreement, dated as of [ ] pursuant to which Seller has
agreed to sell and CNCO has agreed to purchase certain Assets (as
defined in the Asset Purchase Agreement) including, without
limitation, the United States trademark registrations identified and
set forth on Schedule A attached hereto and incorporated herewith
(collectively, the "Marks"), the unregistered trademarks and the
trade names identified and set forth in Schedule B, attached hereto
and incorporated herewith (collectively, the "Trade Names"), and the
goodwill of the business associated therewith; and
WHEREAS, CNCO wishes to acquire Seller's entire right,
title and interest in and to the Marks, title and interest in and to
the Marks and the Trade Names, together with the goodwill of the
business in connection with which the Marks and the Trade Names are
used;
NOW THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, Seller does hereby sell and
assign to CNCO all the right, title and interest Seller has or may
have in the Marks and in any and all other marks or names owned or
used by Seller or in which Seller otherwise has any ownership
interest and which include the listed terms of said Marks alone or
in combination with other words, figures, designs or indicia,
including any rights, title and interest as service marks,
trademarks, trade names and all common law rights connected
therewith, together with the goodwill of the business with respect
to which the Marks or any such other marks or names have been used
and/or registered and all claims and causes of action relating to
infringement of said Marks or said other marks or name.
EXHIBIT B
Seller will assist in obtaining or providing any further
documents which may be required to confirm claim or title thereto.
Signed at [ ] this [ ] day of [ ].
AMERICAN PUBLISHING COMPANY OF
ILLINOIS
By:
--------------------------
Name:
Title:
Date:
LIBERTY GROUP OPERATING, INC.
By:
--------------------------
Name:
Title:
Date: