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EXHIBIT 2.2
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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
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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
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(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
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(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
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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
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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
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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 provided 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
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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
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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:
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(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.
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(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
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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. Notwithstanding 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 Section 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 from
or 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
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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;
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(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
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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").
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(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
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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.Section
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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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(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
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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,
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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
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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
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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;
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(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
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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
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(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 notice 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
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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
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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
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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
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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
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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
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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
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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
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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: (▇▇▇) ▇▇▇-▇▇▇▇
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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.
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(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
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43
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.
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44
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
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45
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.
50
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
51
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
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2
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
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2
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:
54
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.
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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: