Exhibit 10.7
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ST. LUCIE PRESS, INC.,
ST. LUCIE PRESS (U.K.) LTD.
AND
CRC PRESS LLC
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ASSET PURCHASE AGREEMENT
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Dated as of January 8, 1997
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TABLE OF CONTENTS
Page
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Recitals.....................................................................1
1. DEFINITIONS.............................................................1
2. PURCHASE AND SALE OF THE PURCHASED PROPERTY.............................6
2.1. Transfer of Assets..............................................6
2.2. Sale at Closing Date............................................8
2.3. Subsequent Documentation........................................8
2.4. Assumption of Liabilities.......................................9
3. PURCHASE PRICE.........................................................10
3.1. Purchase Price.................................................10
3.2. Payment of Purchase Price......................................10
3.3. Post-Closing Adjustment to Purchase Price......................11
4. CLOSING................................................................12
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................12
5.1. Corporate Organization.........................................12
5.2. Qualification to Do Business...................................12
5.3. Authorization and Validity of Agreement........................12
5.4. No Conflict or Violation.......................................13
5.5. Consents and Approvals.........................................13
5.6. Financial Statements...........................................13
5.7. Absence of Certain Changes or Events...........................14
5.8. Tax Matters....................................................15
5.9. Absence of Undisclosed Liabilities.............................16
5.10. Real Property..................................................16
5.11. Equipment and Machinery........................................16
5.12. Intellectual Property..........................................16
5.13. Licenses, Permits and Governmental Approvals...................18
5.14. Compliance with Law; Licenses..................................18
5.15. Litigation.....................................................19
5.16. Contracts......................................................19
5.17. Receivables....................................................20
5.18. Inventories....................................................20
5.19. Employee Plans.................................................20
5.20. Customers, Suppliers and Competitors...........................21
5.21. Insurance......................................................21
5.22. Transactions with Directors, Officers and Affiliates...........22
5.23. Labor Matters..................................................22
5.24. Environmental Matters..........................................23
5.25. Accuracy of Information........................................23
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5.26. Survival.......................................................23
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER............................24
6.1. Corporate Organization.........................................24
6.2. Qualification to Do Business...................................24
6.3. Authorization and Validity of Agreement........................24
6.4. No Conflict or Violation.......................................24
6.5. Approvals and Consents.........................................24
7. COVENANTS OF THE SELLERS...............................................25
7.1. Conduct of Business Before the Closing Date....................25
7.2. Consents and Approvals.........................................27
7.3. Access to Properties and Records...............................27
7.4. Negotiations...................................................27
7.5. Further Assurances.............................................28
7.6. Best Efforts...................................................28
7.7. Covenant Not To Compete........................................28
7.8. Non-Solicitation of Employees..................................29
7.9. Notice of Breach...............................................29
7.10. Bulk Sales Compliance..........................................29
7.11. Assignment of Contracts and Warranties.........................29
8. COVENANTS OF THE BUYER.................................................30
8.1. Actions Before Closing Date....................................30
8.2. Consents and Approvals.........................................30
9. EMPLOYEES AND EMPLOYEE PLANS...........................................30
9.1. Offer of Employment............................................30
9.2. Employee Benefits..............................................30
9.3. Liability......................................................30
9.4. Rights.........................................................30
10. TAXES.................................................................31
10.1. Allocation of Purchase Price and Purchase Price
Allocation Forms............................................31
11. INDEMNIFICATION.......................................................31
11.1. Indemnification by the Sellers................................31
11.2. Procedures for Indemnification by the Seller..................32
11.3. Indemnification by the Buyer..................................32
11.4. Procedures for Indemnification by the Buyer...................33
11.5. Successors and Assigns........................................34
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12. CONDITIONS TO OBLIGATIONS OF THE SELLERS..............................34
12.1. Representations and Warranties of the Buyer...................34
12.2. Performance of the Obligations of the Buyer...................34
12.3. Consents and Approvals........................................34
12.4. No Violation of Orders........................................34
12.5. Buda Employment Agreement.....................................34
13. CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER..................34
13.1. Representations and Warranties of the Sellers.................35
13.2. Performance of the Obligations of the Sellers.................35
13.3. Consents and Approvals........................................35
13.4. No Violation of Orders........................................35
13.5. No Material Adverse Change....................................35
13.6. Opinion of Counsel............................................35
13.7. Other Closing Documents.......................................37
13.8. Legal Matters.................................................37
13.9. CRC Acquisition...............................................37
13.10. Buda Employment Agreement.....................................37
14. TERMINATION...........................................................37
14.1. Conditions of Termination.....................................37
14.2. Effect of Termination.........................................37
15. MISCELLANEOUS.........................................................37
15.1. Successors and Assigns........................................37
15.2. Governing Law; Jurisdiction...................................38
15.3. Expenses......................................................38
15.4. Broker's and Finder's Fees....................................38
15.5. Severability..................................................38
15.6. Notices.......................................................38
15.7. Amendments; Waivers...........................................39
15.8. Public Announcements..........................................40
15.9. Entire Agreement..............................................40
15.10. Parties in Interest...........................................40
15.11. Scheduled Disclosures.........................................40
15.12. Section and Paragraph Headings................................40
15.13. Counterparts..................................................40
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INDEX TO SCHEDULES
2.1(a) Publications
2.1(b) Retained Assets: Promissory Note, Equipment and Office
Furniture
2.4(b) Direct Marketing Mailing Expense
5.2 Qualification
5.5 Consents, Waivers, Authorizations and Approvals
5.6 Financial Statements
5.7 Material Changes or Events
5.8 Tax Matter Exceptions
5.9 Undisclosed Liabilities
5.10 Leases
5.11 Equipment and Machinery
5.12 Intellectual Property and Intangible Assets
5.13 Licenses, Permits and Governmental Approvals
5.14 Exceptions to Compliance with Law
5.15 Litigation
5.16 Contracts
5.17 Counterclaims and Set-Offs of Accounts Receivable
5.19(a) Employee Plans
5.20 Customers, Suppliers and Competitors
5.21 Insurance
5.22 Transactions with Directors, Officers and Affiliates
5.23(a) Employment and Labor Agreements
5.23(b) Exceptions to Compliance with Employment Laws
9.1 Employees
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of January 8, 1997 by and
between ST. LUCIE PRESS, INC., a Florida corporation (the "Company"), ST. LUCIE
PRESS (U.K.) LTD., a United Kingdom corporation ("St. Lucie UK"), ▇▇▇▇▇▇ ▇▇▇▇
("▇▇▇▇" and, together with the Company and St. Lucie UK, the "Sellers"), and CRC
PRESS LLC, a Delaware limited liability company (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and St. Lucie UK (collectively, the
"Companies") are engaged in the business of publishing scientific, technical and
business books; and
WHEREAS, the Buyer desires to purchase the assets of the Companies
from the Sellers, and the Sellers desire to sell such assets to the Buyer, in
each case upon the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement (including the recitals and Schedules
hereto), the following terms shall have the following meanings (such meanings to
be applicable equally to both singular and plural forms of the terms defined):
"Accounts Receivable" shall mean all accounts and notes receivable
of the Companies existing on the Closing Date;
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise) of such
Person;
"Allocation Statement" shall have the meaning set forth in Section
10.1 hereof;
"Assigned Contracts" shall mean the rights of the Companies under
the Contracts;
"Assumed Liabilities" shall have the meaning set forth in Section
2.4 hereof;
"Buda Employment Agreement" shall mean the Employment Agreement, to
be dated the Closing Date, between the Buyer and Buda, in substantially the form
of Exhibit A hereto.
"Business" shall mean that all the business activities and
operations of the Companies, including without limitation, publishing
scientific, technical and business books;
"Business Day" shall mean days other than Saturdays, Sundays and
other legal holidays or days on which the principal office of Citibank, N.A. is
closed;
"Buyer" shall have the meaning set forth in the Preamble hereto;
"Buyer Event of Breach" shall have the meaning set forth in Section
11.3 hereof;
"Buyer Indemnitees" shall have the meaning set forth in Section 11.1
hereof;
"Closing" shall have the meaning set forth in Section 4 hereof;
"Closing Date" shall have the meaning set forth in Section 4;
"Closing Date Accounts Payable" shall have the meaning set forth in
Section 3.3(a) hereof;
"Code" shall mean the Internal Revenue Code of 1986, as amended;
"Companies" shall have the meaning set forth in the first recital
hereof.
"Contracts" shall mean, collectively, Purchase Orders, Sales Orders
and Other Contracts;
"Controlled Group" shall have the meaning set forth in Section
5.19(d) hereof;
"Employment and Labor Agreements" shall have the meaning set forth
in Section 5.23(a) hereof;
"Environmental Laws" shall have the meaning set forth in Section
5.24 hereof;
"Equipment and Machinery" shall mean (i) all the equipment,
machinery, furniture, fixtures and improvements, supplies and vehicles owned or
leased by the Companies on the Closing Date (including, without limitation, all
such items as set forth on the October Balance Sheet with additions thereto (net
of dispositions) in the ordinary course of business), (ii)
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all the replacements for any of the foregoing owned or leased by the Companies,
(iii) any rights of the Companies to the warranties (to the extent assignable)
and licenses received from manufacturers and sellers of the aforesaid items and
(iv) any related claims, credits, rights of recovery and set-off with respect
thereto;
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
"ERISA Affiliate" shall have the meaning set forth in Section 5.19
hereof;
"Excluded Liabilities" shall have the meaning set forth in Section
2.4 hereof;
"Files and Records" shall mean all files and records, whether in
hard copy or magnetic format, of the Companies specifically relating to the
Business or the Purchased Property, including, without limitation, the following
types of files and records specifically relating to the Business: customer and
supplier files, equipment maintenance records, equipment warranty information,
plant plans, specifications and drawings, trade secrets and customer
specifications and all files relating to employees of the Business employed by
the Buyer following the Closing, correspondence with national, state and local
governmental agencies relating to the operation of the Business and related
files and records of the Companies;
"Financial Statements" shall have the meaning set forth in Section
5.6 hereof;
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date on which the document or calculation to
which it refers relates, applied on a consistent basis throughout the periods
covered thereby;
"Government" shall mean any agency, division, subdivision, audit
group or procuring office of the Government of the United States or any foreign
government, including the employees or agents thereof;
"Intangible Assets" shall mean all intangible personal property
rights, including, without limitation, all rights on the part of the Companies
to proceeds of any insurance policies and all claims on the part of the
Companies for recoupment, reimbursement and coverage under any insurance
policies, in each case in connection with the Business and all goodwill of the
Sellers relating to the Business;
"Intellectual Property" shall have the meaning set forth in Section
5.12 hereof;
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"Inventory" shall mean (i) all the finished goods, raw materials,
work in progress and inventoriable supplies owned by the Companies on the
Closing Date (including, without limitation, all such items as set forth on the
October Balance Sheet with additions thereto (net of dispositions) in the
ordinary course of business) specifically for use in the operations of the
Business, including inventory owned and held on consignment by any distributor
and/or customer of the Companies and (ii) any and all rights of the Companies to
the warranties received from its suppliers with respect to such inventory (to
the extent assignable) and related claims, credits, rights of recovery and
set-off with respect thereto;
"Leases" shall have the meaning set forth in Section 5.10 hereof;
"Licenses" shall have the meaning set forth in Section 5.12(c)
hereof;
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other) or conditional sale agreement;
"Listed Employee" shall have the meaning set forth in Section 9.1
hereof;
"Losses" shall have the meaning set forth in Section 11.1 hereof;
"Material Adverse Effect" shall mean a material adverse affect on
the business, operations, assets, properties, condition (financial or otherwise)
or prospects of the Companies taken as a whole;
"Multiemployer Pension Plan" shall have the meaning set forth in
Section (3)(37) of ERISA;
"Net Working Capital" shall have the meaning set forth in Section
3.3(a) hereof;
"NLRB" shall have the meaning set forth in Section 5.23(b) hereof;
"Obsolete Inventory" shall have the meaning set forth in Section
5.18 hereof;
"October Balance Sheet" shall have the meaning set forth in Section
5.6 hereof;
"Other Contracts" shall mean all Equipment and Machinery leases, and
all indentures, loan agreements, security agreements, all author, editor,
subscriber, license and distribution agreements or contracts, and all other
contracts, commitments, partnership or joint venture agreements, license
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agreements, service contracts, employment, commission, and consulting
agreements, suretyship contracts, letters of credit, reimbursement agreements,
contracts or commitments limiting or restraining the Companies or Buda with
respect to the Business from engaging or competing in any lines of business or
with any person, firm or corporation, documents granting the power of attorney
with respect to the affairs of the Companies, agreements not made in the
ordinary course of business of the Business, options to purchase any assets or
property rights of the Business, working capital maintenance or other form of
guaranty agreements, and all other agreements to which either of the Companies
is a party and which are related to the operation of the Business, but excluding
Leases, Purchase Orders, Sales Orders, severance pay plans, Employee Plans and
Benefit Plans;
"Permits" shall have the meaning set forth in Section 5.13 hereof;
"Person" shall mean and include any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, any other unincorporated organization or Government;
"Plans" shall have the meaning set forth in Section 5.19(a) hereof;
"Publications" shall have the meaning set forth in Section 2.1
hereof;
"Purchase Orders" shall mean all the Companies' outstanding purchase
orders, contracts or other commitments to suppliers of goods and services for
materials, supplies or other items used in the Business;
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof;
"Purchased Property" shall have the meaning set forth in Section
2.1(a) hereof;
"Reproduction Materials" shall have the meaning set forth in Section
2.1(a) hereof;
"Restricted Period" shall have the meaning set forth in Section
7.7(a) hereof;
"Retained Assets" shall have the meaning set forth in Section 2.1(b)
hereof;
"Sales Orders" shall mean all the Companies' sales orders, contracts
or other commitments to purchasers of goods and services of the Business;
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"Seller Indemnitees" shall have the meaning set forth in Section
11.3 hereof;
"Sellers" shall have the meaning set forth in the Preamble hereto;
"Sellers' Event of Breach" shall have the meaning set forth in
Section 11.1 hereof;
"Surplus Inventory" shall have the meaning set forth in Section 5.18
hereof;
"Taxes" shall mean for all purposes of this Agreement all taxes
(including, without limitation, excise taxes, ad valorem taxes and transfer
taxes and fees) and other Governmental charges of any nature imposed upon a
Person, including without limitation, all taxes or Governmental charges of any
nature imposed upon any of the properties, tangible or intangible assets,
income, receipts, payrolls, transactions, stock transfers, capital, net worth or
franchises of a Person (including, without limitation, all sales, use,
withholding or other taxes which a Person is required to collect and/or pay over
to any Government), and all additions to tax, penalties or interest paid or
payable which relate in any way to such taxes and other Governmental charges, or
any assessment or collection thereof;
"Tax Returns" shall mean any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes.
"Transferred Employee" shall have the meaning set forth in Section
9.2 hereof;
"Working Capital Statement" shall have the meaning set forth in
Section 3.3(a) hereof;
"Working Capital Statement Report" shall have the meaning set forth
in Section 3.3(a) hereof.
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY.
SECTION 2.1. Transfer of Assets.
(a) Subject to the terms and conditions herein set forth, the
Sellers shall sell, convey, transfer, assign and deliver to the Buyer, free and
clear of any Lien, and the Buyer shall purchase and accept from the Sellers, on
the Closing Date, all right, title and interest of the Sellers and its
affiliates in and to all of the Companies' assets, properties, rights and
business, tangible and intangible, of every type and description,
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wherever located, used or employed in connection with the Business as they exist
or shall exist on the Closing Date (all of such assets, properties, rights and
business being hereinafter collectively referred to as the "Purchased
Property"), including without limitation:
(i) the Accounts Receivable, Assigned Contracts, Equipment and
Machinery, Files and Records, Intangible Assets, Intellectual Property,
Inventory, Licenses and Permits (to the extent transferable by the
Companies), Premises and any prepaid expenses and other assets relating to
the operations of the Business on the Closing Date (including, without
limitation, all such items as are set forth on the October Balance Sheet
with additions thereto (net of dispositions) in the ordinary course of
business) and including all the tangible and intangible assets of the
Seller and its affiliates used in the Business and related thereto;
(ii) all right, title and interest in and to the publications
produced by the Companies, all of which are listed in Schedule 2.1 hereto,
whether complete, published, unpublished, in process or under contract
(the "Publications") including, without limitation, all updates,
supplements and revisions thereto, and other accompanying materials
relating to the Publications, and the literary content of all of the
above;
(iii) all camera-ready copy used for making negative films, film,
plates, plate-making film, paste-ups, tapes, illustrations and other
artwork, and other reproduction materials for the Publications
(collectively, the "Reproduction Materials"), permissions (to the extent
transferable) and vendor information, including, without limitation,
specifications for all published titles, and all manuscripts, proofs,
reviews, designs, artwork, covers, photographs and production-related
material for all unpublished titles;
(iv) all mailing lists for the Business and lists of present, former
and prospective customers to, and recipients of, any of the Publications
(both in hard copy and all available machine readable formats), including
names, addresses, expiration dates and other information customarily
maintained by the Companies, and all other lists, files and marketing and
promotional materials relating to the Business;
(v) all existing files specifically relating to the Business
including, without limitation, files relating to authors, author
prospects, editorial matters, reviewers, and unsigned projects;
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(vi) all right, title and interest in, and claims under, series
titles and titles of Publications;
(vii) all audio and video tapes, manuscripts, editorial material
(including, without limitation, revisions, plans, reviews, reviews of
competitive works, production records and author correspondence), back
issues and superseded editions of every sort and in any medium used in or
prepared for the Business; and
(viii) all databases, software, software programs, object codes,
source codes, systems documentation and user manuals used in connection
with the Business, and all proprietary information, trade secrets,
research records, test information, market surveys, marketing know-how,
inventions, processes and procedures owned or licensed to the Companies
and used in connection with the Business; and
(ix) all other assets, properties, and rights of every kind used
primarily in the Business, on the Closing Date, known or unknown, fixed or
unfixed, accrued, absolute, contingent or otherwise, whether or not
specifically referred to in this Agreement.
(b) Notwithstanding anything herein to the contrary, the Purchased
Property shall not include the following assets (the "Retained Assets"):
(i) any cash and cash equivalent items determined in
accordance with GAAP, including without limitation, checking
accounts, bank accounts, certificate of deposit, time deposits and
securities of the Companies on or prior to the Closing Date;
(ii) a certain promissory note set forth in Schedule 2.1(b);
(iii) the equipment and office furniture set forth in Schedule
2.1(b); and
(iv) any minute books, Tax Returns or other corporate
documents of the Companies.
SECTION 2.2. Sale at Closing Date. The sale, transfer, assignment
and delivery by the Sellers of the Purchased Property to the Buyer, as herein
provided, shall be effected on the Closing Date by deeds, bills of sale,
endorsements, assignments and other instruments of transfer and conveyance
satisfactory in form and substance to counsel for the Buyer.
SECTION 2.3. Subsequent Documentation. The Sellers shall, at any
time and from time to time after the Closing Date, upon the request of the Buyer
and at the expense of the Sellers, do, execute, acknowledge and deliver, or
cause to be done,
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executed, acknowledged and delivered, all such further deeds, assignments,
transfers and conveyances as may be required for the better assigning,
transferring, granting, conveying and confirming to the Buyer or its successors
and assigns, or for aiding and assisting in collecting and reducing to
possession, any or all of the Purchased Property. The Sellers hereby constitute
and appoint, effective as of the Closing Date, the Buyer, its successors and
assigns as the true and lawful attorney of the Sellers with full power of
substitution in the name of the Buyer or in the name of the Sellers but for the
benefit of the Buyer (a) to collect for the account of the Buyer all Accounts
Receivable and any other item of Purchased Property and (b) to institute and
prosecute all proceedings which the Buyer may in its discretion deem proper in
order to collect the Accounts Receivable or to assert or enforce any right,
title or interest in, to or under the Purchased Property and to defend or
compromise (subject to Section 11 hereof, if applicable) any and all actions,
suits or proceedings in respect of any of the Purchased Property. The Buyer
shall be entitled to retain for its own account any amounts collected pursuant
to the foregoing powers, including any amounts payable as interest in respect
thereof.
SECTION 2.4. Assumption of Liabilities. From and after the Closing,
the Buyer shall assume and the Buyer hereby agrees to pay, perform and discharge
when due (a) trade payables of the Companies arising in the ordinary course of
business in an amount not to exceed $50,000 except that this amount shall not
include printers' invoices for books shipped after December 20, 1996, provided,
however, that the aggregate liability for such printer's invoices does not
exceed Thirty Thousand Dollars ($30,000), (b) direct marketing mailing expenses
of the Companies for mailings entering the postal system after December 20,
1996, including paid for items designed for end of year mailing as set forth on
Schedule 2.4(b) which are expected to be approximately Ninety-Five Thousand
Dollars ($95,000) but in no event shall exceed One Hundred Thousand Dollars
($100,000), (c) all obligations of the Companies arising pursuant to the terms
of Contracts referred to in Schedule 5.16 (other than liabilities relating to
any breach or default of any Contract prior to the Closing Date), and (d) all
obligations of the Buyer arising after the Closing Date (collectively, the
"Assumed Liabilities"). Anything in this Agreement to the contrary
notwithstanding, the Sellers shall be responsible for all of the liabilities and
obligations not hereby expressly assumed by Buyer and Buyer shall not assume, or
in any way be liable or responsible for, any liabilities or obligations of the
Sellers except as specifically provided by this Section 2.4 (the "Excluded
Liabilities"). Without limiting the generality of the foregoing, Buyer shall not
assume any of the following:
(a) any liability or obligation under Contracts or Plans and other
agreements to which the Companies are a party or
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by or to which it or any of its assets, properties or rights are bound or
subject which are not reflected on Schedule 5.16;
(b) any liability or obligation of the Sellers arising out of (i)
the conduct of the Business prior to the Closing Date, or (ii) any liability or
obligation of the Sellers to any employees of the Companies, or, (iii) except
with respect to liabilities and obligations under the Contracts assumed by Buyer
pursuant to this Section 2.4 hereof, agents or contractors;
(c) any liability or obligation of the Companies owing to any
shareholder, subsidiary or Affiliate of the Companies;
(d) any liability or obligation of the Sellers arising out of or in
connection with the preparation of this Agreement and the consummation and
performance of the transactions contemplated by this Agreement, including, but
not limited to, (i) any tax liability so arising, or (ii) any liability to which
any of the parties may become subject as a result of the fact that the
transactions contemplated by this Agreement are being effected, at the request
of Sellers, without compliance with the provisions of any bulk sales act or any
similar statute as enacted in any jurisdiction;
(e) any liability or obligation of the Companies under any Lease;
(f) any liabilities arising under Environmental Law attributable to
or incurred as a result of any acts, omissions, or conditions prior to the
Closing Date, including, but not limited to, liabilities for the treatment,
storage or disposal of hazardous materials;
(g) any liability for Taxes imposed on any of the Sellers; and
(h) any royalty payments relating to any sales made on or prior to
the Closing Date.
SECTION 3. PURCHASE PRICE.
SECTION 3.1. Purchase Price. Upon the terms and subject to the
conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the parties contained herein, the
purchase price for the sale and transfer of the Purchased Property is Two
Million Five Hundred Thousand Dollars ($2,500,000.00) in cash (the "Purchase
Price"), which price is payable and deliverable in accordance with Section 3.2
hereof and is subject to adjustment as provided in Section 3.3 hereof.
SECTION 3.2. Payment of Purchase Price. In payment for the Purchased
Property, the Buyer will pay to the Companies on the Closing Date the Purchase
Price by wire transfer of
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immediately available funds to the account of the Company at Citibank, Account
No. 3200120482. On the Closing Date, the Buyer shall in addition execute and
deliver to the Companies an instrument of assumption of liabilities with respect
to the Assumed Liabilities.
SECTION 3.3. Post-Closing Adjustment to Purchase Price. The Purchase
Price shall be subject to adjustment after the Closing as follows:
(a) Working Capital Statement. Within forty-five (45) calendar days
after the Closing Date, the Buyer shall deliver to the Sellers a Statement (the
"Working Capital Statement") which shall set forth the following information:
(i) the Accounts Receivable as of the Closing Date, determined in accordance
with GAAP, (ii) the accounts payable as of the Closing Date, adjusted to
eliminate any direct mailing expenses assumed by the Buyer pursuant to Section
2.4 hereof, determined in accordance with GAAP (the "Closing Date Accounts
Payable") and (iii) a calculation of the Accounts Receivable less the Closing
Date Accounts Payable (the "Net Working Capital"). During the period of any
dispute with respect to the application of this Section 3.3, the Buyer shall
provide the Sellers full access to the books, records, facilities and employees
of the Business, and shall cooperate with the Sellers to the extent reasonably
requested by the Sellers to investigate the basis for such dispute. Not later
than forty-five (45) calendar days after receipt of the Working Capital
Statement, the Sellers shall provide the Buyer with a list of those items, if
any, to which the Sellers take exception and the Sellers' proposed adjustment
(the "Working Capital Statement Report"). If the Sellers fail to deliver to the
Buyer the Working Capital Statement Report within forty-five (45) calendar days
following receipt of the Working Capital Statement, the Sellers shall be deemed
to have accepted the Working Capital Statement for the purposes of any Purchase
Price adjustment under Section 3.3(b) hereof. If the Buyer does not give the
Sellers notice of objections within thirty (30) calendar days following receipt
of the Working Capital Statement Report, the Buyer shall be deemed to have
accepted the Working Capital Statement Report for the purposes of any Purchase
Price adjustment under Section 3.3(b) hereof. If the Buyer gives the Sellers
notice of objections to the Working Capital Statement Report, and if the Buyer
and the Sellers are unable, within fifteen (15) calendar days after receipt by
the Sellers of the notice by the Buyer of objections, to resolve the disputed
exceptions, such disputed exceptions will be referred to a firm of independent
certified public accountants ("Independent Accounting Firm") mutually acceptable
to the Buyer and the Sellers. The Independent Accounting Firm shall, within
sixty (60) days following its selection, deliver to the Buyer and the Sellers a
written report determining such disputed exceptions, and its determinations will
be conclusive and binding upon the parties thereto for the purposes of any
Purchase Price adjustment under Section 3.3(b) hereof. The fees and
disbursements of the
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Independent Accounting Firm acting under this Section shall be shared equally by
the Buyer and the Sellers.
(b) Purchase Price Adjustment. Within three (3) calendar days
following the preparation or computation and final determination, pursuant to
Section 3.3(a) hereof, of the Working Capital Statement, and based upon such
final determination the Sellers shall promptly pay to the Buyer in immediately
available funds the amount, if any, by which the Net Working Capital is less
than Three Hundred Thousand Dollars ($300,000) or the Buyer shall promptly pay
to the Sellers by wire transfer of immediately available funds to the account of
the Company as set forth in Section 3.2, the amount if any, by which the Net
Working Capital is greater than Three Hundred Thousand Dollars ($300,000).
SECTION 4. CLOSING. The closing of the sale and purchase of the
Purchased Property (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ at One Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on January 13, 1997, or at such other place and time as
may be mutually agreed to by the parties hereto (the "Closing Date").
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Sellers
hereby, jointly and severally, represent and warrant to the Buyer as follows:
SECTION 5.1. Corporate Organization. Each of the Companies is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and has all requisite corporate power and
authority to own its properties and assets and to conduct its businesses as now
conducted. Copies of the Certificate or Articles of Incorporation and By-laws
(or equivalent documents) of the Companies, with all amendments thereto to the
date hereof, have been furnished to the Buyer or its representatives, and such
copies are accurate and complete as of the date hereof.
SECTION 5.2. Qualification to Do Business. Each of the Companies are
duly qualified to do business as a foreign corporation and are each in good
standing in every jurisdiction in which the character of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect. Schedule 5.2 sets forth all jurisdictions in
which the each of the Companies is qualified to do business.
SECTION 5.3. Authorization and Validity of Agreement. Each of the
Companies has all requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance of the Companies' obligations hereunder
have been duly authorized by all necessary corporate action by the Board of
Directors and stockholders of the
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Companies, and no other corporate proceedings on the part of the Companies are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by the Sellers and constitutes their valid and binding
obligations, enforceable against each of them in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors' rights
generally and except for the limitations imposed by general principles of
equity.
SECTION 5.4. No Conflict or Violation. The execution, delivery and
performance by each of the Sellers of this Agreement do not and will not violate
or conflict with any provision of the Certificate or Articles of Incorporation
or By-laws (or equivalent documents) of the Companies and do not and will not
violate any provision of law, or any order, judgment or decree of any court or
other governmental or regulatory authority, nor violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which either of the Sellers is a
party or by which either of them is bound or to which any of their respective
properties or assets is subject, nor will result in the creation or imposition
of any Lien upon any of the Purchased Property, nor will result in the
cancellation, modification, revocation or suspension of any of the licenses,
franchises, permits, authorizations or approvals referred to in Section 5.13
hereof.
SECTION 5.5. Consents and Approvals. Schedule 5.5 sets forth a true
and complete list of each consent, waiver, authorization or approval of any
governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation, and each declaration to or filing or registration
with any such governmental or regulatory authority, that is required in
connection with the execution and delivery of this Agreement by the Sellers or
the performance by the Sellers of their obligations hereunder.
SECTION 5.6. Financial Statements. Except as disclosed in Schedule
5.6, the balance sheets of the Company as of October 31, 1996 (the "October
Balance Sheet") and as of December 31, 1995 fairly present the financial
position of the Company in accordance with GAAP as of such dates, and the
related statements of income for the periods ended on such dates fairly present
the Company's results of operations in accordance with GAAP for the respective
periods indicated (collectively, the "Financial Statements"). The Financial
Statements including the schedules and notes thereto, (a) were prepared in
accordance with GAAP, (b) present fairly the financial condition of the Business
as of such date, (c) are complete, correct and in accordance with the books of
account and records of the Company, (d) can be legitimately reconciled with the
financial statements and the financial records maintained and the accounting
methods applied
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by the Company for federal income tax purposes and (e) reflects accurately all
accrued costs and expenses of the Company related to the Business.
SECTION 5.7. Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 5.7, since December 31, 1995,
there has not been:
(i) any adverse change in the business, operations,
properties, assets, condition (financial or other) or prospects of
the Business, or any event that had had or is reasonably likely to
have a Material Adverse Effect, and no factor or condition exists
and no event has occurred that would be likely to result in any such
change;
(ii) any material loss, damage, destruction or other casualty
to the Purchased Property (whether or not insurance awards have been
received or guaranteed); or
(iii) any change in any method of accounting or accounting
practice of the Companies.
(b) Since December 31, 1995, the Sellers have operated the Business
in the ordinary course of its business consistent with past practice and, except
as set forth in Schedule 5.7 hereto, has not:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) relating to the
operations of the Companies except in the ordinary course of
business consistent with past practice;
(ii) failed to discharge or satisfy any Lien or pay or satisfy
any obligation or liability (whether absolute, accrued, contingent
or otherwise) arising from the operation of the Business, other than
liabilities being contested in good faith and for which adequate
reserves have been provided and Liens arising in the ordinary course
of business that do not, individually or in the aggregate, interfere
materially with the use, operation, enjoyment or marketability of
any of the Purchased Property;
(iii) mortgaged, pledged or subjected to any Lien any of the
Purchased Property, except for mechanics' liens and Liens for taxes
not yet due and payable and Liens arising in the ordinary course of
business that do not, individually or in the aggregate, interfere
materially with the use, operation, enjoyment or marketability of
any of the Purchased Property;
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(iv) sold or transferred any of the assets of the Business
material to the Business or canceled any debts or claims or waived
any rights material to the Business relating to the operations of
the Business, except in the ordinary course of business consistent
with past practice;
(v) disposed of any patents, trademarks or copyrights or any
patent, trademark, or copyright applications used in the operations
of the Business;
(vi) defaulted on any material obligation relating to the
operations of the Business;
(vii) entered into any transaction material to the Business or
relating to the Business, except in the ordinary course of business
consistent with past practice;
(viii) written down the value of any Inventory or written off
as uncollectible any accounts receivable specifically relating to
the Business or any portion thereof not reflected in the October
Balance Sheet;
(ix) granted any increase in the compensation or benefits of
employees of the Business other than increases in accordance with
past practice not exceeding 10% or entered into any employment or
severance agreement or arrangement with any of them;
(x) made any capital expenditure in excess of Twenty Thousand
Dollars ($20,000), or additions to property, plant and equipment
used in the operations of the Business other than ordinary repairs
and maintenance;
(xi) laid off any employees;
(xii) incurred any obligation or liability for the payment of
severance benefits; or
(xiii) entered into any agreement or made any commitment to do
any of the foregoing.
SECTION 5.8. Tax Matters. Except as set forth in Schedule 5.8, all
Tax Returns required to be filed before the Closing Date in respect of the
Companies have been (or will have been by the Closing Date) filed, and the
Sellers have (or will have by the Closing Date) paid, accrued or otherwise
adequately reserved for the payment of all Taxes required to be paid in respect
of the periods covered by such returns and have (or will have by the Closing
Date) adequately reserved for the payment of all Taxes with respect to periods
ended on or before the Closing Date for which Tax Returns have not yet been
filed. All Taxes of
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the Sellers have been paid or adequately provided for and the Sellers know of no
proposed additional tax assessment against them. The Company has validly elected
to be treated as an "S corporation" under Section 1236(a) of the Code and
corresponding provisions of state law for tax years beginning after 1992 through
the present.
SECTION 5.9. Absence of Undisclosed Liabilities. Except as set forth
on Schedule 5.9, the Companies do not have any indebtedness or liability,
absolute or contingent, known or unknown, which is not shown or provided for on
the October Balance Sheet other than liabilities as shall have been incurred or
accrued in the ordinary course of business since October 31, 1996. Except as
shown in the October Balance Sheet or on Schedule 5.9, the Companies are not
directly or indirectly liable upon or with respect to (by discount, repurchase
agreements or otherwise), or obliged in any other way to provide funds in
respect of, or to guarantee or assume, any debt, obligation or dividend of any
person, except endorsements in the ordinary course of business in connection
with the deposit, in banks or other financial institutions, of items for
collection.
SECTION 5.10. Real Property. The Companies own no real property.
Schedule 5.10 sets forth a list of all properties in which either of the
Companies has a leasehold interest (each, a "Lease" and collectively, the
"Leases").
SECTION 5.11. Equipment and Machinery. Schedule 5.11 sets forth a
complete and correct list and brief description of each item of Equipment and
Machinery having an original purchase cost or aggregate lease cost exceeding
$5,000. Except as set forth in Schedule 5.11, the Companies have good title,
free and clear of all title defects and objections, Liens (other than the Lien
of current property taxes and assessments not in default, if any) to the
Equipment and Machinery owned by it, except for sales and dispositions in the
ordinary course of business since such date. None of the title defects,
objections or Liens (if any) listed in Schedule 5.11 adversely affects the value
of any of the items of Equipment and Machinery or interferes with its use in the
conduct of the Business. Except as set forth in Schedule 5.11, the Companies
hold good and transferable leaseholds in all of the Equipment and Machinery
leased by it, in each case under valid and enforceable leases. The Companies are
not in default with respect to any item of Equipment and Machinery purported to
be leased by it, and no event has occurred that constitutes or with due notice
or lapse of time or both may constitute a default under any lease thereof. The
Equipment and Machinery is sufficient and adequate to carry on the Business as
presently conducted and as proposed by the Companies to be conducted, and all
items thereof are in good operating condition and repair.
SECTION 5.12. Intellectual Property.
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(a) "Intellectual Property" shall mean all of the following that are
owned or used in the operations of the Business or relating to the Purchased
Property: (i) trademarks and service marks (registered or unregistered), trade
dress, trade names and other names and slogans embodying business or product
goodwill or indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated therewith;
(ii) patents, patentable inventions, discoveries, improvements, ideas, know-how,
formula methodology, processes, technology and computer programs, software and
databases (including source code, object code, development documentation,
programming tools, drawings, specifications and data) and all applications or
registrations in any jurisdiction pertaining to the foregoing, including all
reissues, continuations, divisions, continuations-in-art, renewals or extensions
thereof; (iii) trade secrets, including confidential and other non-public
information, and the right in any jurisdiction to limit the use or disclosure
thereof; (iv) copyrights in writings, sound recordings, software, artwork,
designs, mask works or other works, and registrations or applications for
registration of copyrights in any jurisdiction; (v) Internet Web sites, domain
names and registrations or applications for registration thereof; (vi) licenses,
immunities, covenants not to ▇▇▇ and the like relating to any of the foregoing;
(vii) books and records describing or used in connection with any of the
foregoing; and (viii) claims or causes of action arising out of or related to
infringement or misappropriation of any of the foregoing. The Companies own all
right, title and interest in the Intellectual Property except as set forth in
Schedule 5.12(b). Schedule 5.12(a) sets forth a complete list of all
applications and registrations for Intellectual Property other than copyrights
in one of the Company's name in all jurisdictions.
(b) Copyrights. Schedule 5.12(b) sets forth a list of (i) each
agreement, contract or license under which either of the Companies is or has
been obligated to pay fees or royalties to any Person in connection with the
reproduction, publication or distribution of any of the Publications and (ii)
all United States and foreign copyright registrations and applications for
registration with respect to all Publications. Except as disclosed in Schedule
5.12(b), the Companies have secured from all relevant authors of text,
illustrations, photographs or other contributions to the Publications and all
licensors or other Persons all copyrights in the Publications for the initial
term of copyright and all extensions or renewals thereof, in all territories
throughout the world and all languages in all media now known or hereafter
devised.
(c) Licenses. Except as disclosed on Schedule 5.12(c), none of the
Sellers or any Affiliate of them has licensed to any third party any right to
use or exploit any of the Publications in any jurisdiction. All rights in any of
the Publications granted to third parties are or have been set forth
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in written and executed contracts that, to the knowledge of Sellers has not been
breached by said third parties. Schedule 5.12(c) sets forth each agreement,
contract or license under which either of the Companies has licensed any rights
in any of the Publications to another Person (such agreements, contracts or
licenses and those referred to in clause (i) of Section 5.12(b) hereof, being
referred to collectively as the "Licenses").
(d) Claims. Except as set forth on Schedule 5.12(d), no claims are
pending, or, to the knowledge of Sellers, threatened, against or by either of
the Companies by or against any Person with respect to the ownership, validity,
enforceability or use of any Intellectual Property or otherwise challenging or
questioning the validity or effectiveness of any such Intellectual Property
except for any such claims that individually, or in the aggregate, have not had,
and would not be reasonably expected to have, a Material Adverse Effect. Except
as set forth on Schedule 5.12(d), no claims are pending, or, to the knowledge of
the Sellers, threatened, by or against either of the Companies against or by any
Person in which such Person alleges that any activities or conduct of business
of either of the Companies infringes upon the intellectual property rights of
any Person or that any product packaging design infringes upon a proprietary
packaging design of any Person, except for any such claims that individually, or
in the aggregate, have not had and would not be reasonably expected to have a
Material Adverse Effect.
SECTION 5.13. Licenses, Permits and Governmental Approvals. Schedule
5.13 sets forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to either of the Companies with
respect to the Business by the Government, any state or local government, any
foreign national or local government, or any department, agency, board,
commission, bureau or instrumentality of any of the foregoing (the "Permits"),
and all pending applications therefor. Such list contains a summary description
of each such item and, where applicable, specifies the date issued, granted or
applied for, the expiration date and the current status thereof. Each Permit has
been duly obtained, is valid and in full force and effect, and is not subject to
any pending or threatened administrative or judicial proceeding to revoke,
cancel or declare such Permit invalid in any respect. The Permits are sufficient
and adequate in all respects to permit the continued lawful conduct of the
Business in the manner now conducted and as has been proposed by the Sellers to
be conducted, and none of the operations of the Business are being conducted in
a manner that violates any of the terms or conditions under which any Permit was
granted. Except as set forth in Schedule 5.13, no such Permit will in any way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement.
SECTION 5.14. Compliance with Law; Licenses. Except as set forth in
Schedule 5.14, the operations of the Business
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have been conducted in accordance with all applicable laws, regulations, orders
and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over either of the Companies and their
respective assets, properties and operations. Except as set forth in Schedule
5.14, neither of the Sellers has received notice of any violation of any such
law, regulation, order or other legal requirement, and the Companies are not in
default with respect to any order, writ, judgment, award, injunction or decree
of any national, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, applicable to the Business or any of its
assets, properties or operations. The Sellers do not have knowledge of any
proposed change in any such laws, rules or regulations (other than laws of
general applicability) that would materially and adversely affect the
transactions contemplated by this Agreement or all or a material part of the
Business or the Purchased Property.
SECTION 5.15. Litigation. Except as set forth in Schedule 5.15,
there are no claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the best knowledge of the Sellers, threatened,
before any national, state or local court or governmental or regulatory
authority, domestic or foreign, or before any arbitrator of any nature, brought
by or against either of the Companies or any of its officers, directors,
employees, agents or affiliates involving, affecting or relating to the
Business, the Purchased Property or the transactions contemplated by this
Agreement, nor is any basis known to the Sellers or any of the Companies'
directors or officers for any such action, suit, proceeding or investigation.
Schedule 5.15 sets forth a list and a summary description of all such pending
actions, suits, proceedings, disputes or investigations. Neither the Business
nor the Purchased Property is subject to any order, writ, judgment, award,
injunction or decree of any national, state or local court or governmental or
regulatory authority or arbitrator, domestic or foreign, that affects or might
affect the Business or the Purchased Property, or that would or might interfere
with the transactions contemplated by this Agreement.
SECTION 5.16. Contracts.
(a) Schedule 5.16 sets forth a complete and correct list and a
summary description of all Contracts (as in effect on the date hereof).
(b) Each Contract is valid, binding and enforceable against the
parties thereto in accordance with its terms, and in full force and effect on
the date hereof. The Companies have performed all obligations required to be
performed by it to date under, and is not in default or delinquent in
performance, status or any other respect (claimed or actual) in connection with,
any Contract, and no event has occurred which, with due notice or lapse of time
or both, would constitute such a default. To the
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best knowledge of the Sellers, no other party to any Contract is in default in
respect thereof, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default. The Sellers have delivered to the
Buyer or its representatives true and complete originals or copies of all the
Contracts.
SECTION 5.17. Receivables. Except as set forth in Schedule 5.17, all
accounts receivable payable to or for the benefit of the Business reflected on
the October Balance Sheet, or acquired by the Companies after the date thereof
and before the Closing Date have been collected or are (or will be) current and
collectible in amounts not less than the aggregate amount thereof (net of
reserves established in accordance with prior practice) carried (or to be
carried) on the books of the Companies, and are not subject to any counterclaims
or set-offs.
SECTION 5.18. Inventories. The Inventories are carried at not more
than the lower of cost or net realizable value, and do not include any Obsolete
Inventory or Surplus Inventory. As used herein, "Obsolete Inventory" is
Inventory which, at October 31, 1996, was not usable or saleable in the lawful
and ordinary course of business of the Business as now conducted and has been
proposed by the Companies to be conducted because of legal restrictions, failure
to meet specifications, loss of market, damage, physical deterioration or for
any other cause in each case net of reserves provided therefor on the October
Balance Sheet; and "Surplus Inventory" is Inventory that, at October 31, 1996
exceeded known or anticipated requirements in the reasonable business judgment
of the Sellers.
SECTION 5.19. Employee Plans.
(a) Except for those plans set forth on Schedule 5.19(a) hereto (the
"Plans"), neither the Companies nor any member of the Companies' "controlled
group" (within the meaning of Section 4971(e)(2)(B) of the Code) that includes
either of the Companies (hereinafter referred to as an "ERISA Affiliate") has
ever maintained or contributed to, or has any liability or contingent liability
with respect to, any "employee benefit plans," as that term is defined in
Section 3(3) of ERISA, or any other employee benefit arrangements, policies or
payroll practices, including, without limitation, severance pay, sick leave,
vacation pay, salary continuation for disability, retirement, deferred
compensation, bonus, stock purchase, hospitalization, medical insurance, life
insurance and scholarship programs, maintained by the Companies or to which
either of the Companies contributed or is obligated to contribute thereunder for
current or former employees of the Companies. None of the Plans is a
Multiemployer Plan. With respect to the Plans, the requirements of ERISA and the
Code, as applicable, have been fulfilled in all respects, including, without
limitation, any legally mandated continuation of health care coverage with
respect to any "group health plan" (as such term is
-20-
defined in Section 607(1) of ERISA and Section 5001(b)(1) of the Code) as may be
required under Part 6 of Title I of ERISA and Section 4980B of the Code, and no
event has occurred nor does any condition exist which would subject the
Companies to any penalty, excise tax, or liability. The Buyer assumes no
liability or obligation with respect to, and receives no right or interest in,
any of such Plans.
(b) Neither the Companies nor any ERISA Affiliate of the Companies
has ever (i) failed to satisfy the minimum funding requirements of Section 412
of the Code and Section 302 of ERISA (or the quarterly contribution requirements
of Section 412(m) of the Code and Section 302(e) of ERISA), (ii) terminated an
"employee pension benefit plan," as defined in Section 3(2) of ERISA, subject to
Title IV of ERISA or (iii) contributed to any Multiemployer Plan or has effected
either a "complete withdrawal" or a "partial withdrawal," as those terms as
defined in Sections 4203 and 4205, respectively, of ERISA, from any such
Multiemployer Plan.
SECTION 5.20. Customers, Suppliers and Competitors. Schedule 5.20
sets forth a complete and correct list of (a) all customers whose purchases
exceeded five percent (5%) of the aggregate net sales of the Companies during
fiscal year 1995 and the period from January 1, 1996 through October 31, 1996,
and (b) the suppliers by dollar volume of the Business and the aggregate dollar
volume of purchases (broken down by principal categories) by the Business from
such suppliers for such periods. Except as set forth in Schedule 5.20, none of
such customers or suppliers has, or to the best knowledge of the Sellers,
intends to terminate or change significantly its relationship with the Business.
SECTION 5.21. Insurance. Schedule 5.21 lists the aggregate coverage
amount and type and generally applicable deductibles of all policies of title,
liability, fire, casualty, business interruption, workers' compensation and
other forms of insurance insuring the Business and the Purchased Property. The
Sellers have furnished a true, complete and accurate copy of all such policies
and bonds to the Buyer. Except as set forth in Schedule 5.21, all such policies
and bonds are in full force and effect, underwritten by financially sound and
reputable insurers and sufficient for all applicable requirements of law and
will not in any way be affected by or terminated or lapsed by reason of the
consummation of the transactions contemplated by this Agreement. The Companies
shall maintain the coverage under all policies and bonds listed in Schedule 5.21
in full force and effect through the Closing Date. The Companies are not in
material default under any provisions of any such policy of insurance nor has
received notice of cancellation of any such insurance. There is no claim pending
under any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds.
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SECTION 5.22. Transactions with Directors, Officers and Affiliates.
Since January 1, 1995, except as set forth on Schedule 5.22, there have been no
transactions between the Companies and any director, officer, employee,
stockholder or other Affiliate of the Companies. To the best knowledge of the
Sellers, during the past three years none of the officers, directors or
employees of the Companies, or any spouse or relative of any of such persons,
has been a director or officer of, or has had any direct or indirect interest
in, any firm, corporation, association or business enterprise which during such
period has been a supplier, customer or sales agent of the Companies or has
competed with or been engaged in any business of the kind being conducted by the
Business. No Affiliate of the Companies owns or has any rights in or to any of
the assets, properties or rights used by the Business in the ordinary course of
its business.
SECTION 5.23. Labor Matters.
(a) Except as set forth in Schedule 5.23(a): (i) neither of the
Companies is a party to any outstanding employment or consulting agreements or
contracts with officers or employees of the Business that are not terminable at
will, or that provide for the payment of any bonus or commission; (ii) neither
of the Companies is a party to any agreement, policy or practice that requires
it to pay termination or severance pay to salaried, non-exempt or hourly
employees of the Business (other than as required by law); (iii) neither of the
Companies is a party to any collective bargaining agreement or other labor union
contract applicable to employees of the Business nor does either of the Sellers
know of any activities or proceedings of any labor union to organize any such
employees. The Sellers have furnished to the Buyer complete and correct copies
of all such agreements ("Employment and Labor Agreements"). The Companies have
not breached or otherwise failed to comply with any provisions of any Employment
or Labor Agreement, and there are no grievances outstanding thereunder.
(b) Except as set forth in Schedule 5.23(b): (i) each of the
Companies is in compliance with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment; (ii)
there is no unfair labor practice charge or complaint pending before the
National Labor Relations Board ("NLRB"); (iii) there is no labor strike,
material slowdown or material work stoppage or lockout pending or, to the best
knowledge of the Sellers, threatened against or affecting the Business, and
neither of the Companies has experienced any strike, material slow down or
material work stoppage, lockout or other collective labor action; (iv) there is
no representation claim or petition pending before the NLRB or any similar
foreign agency and no question concerning representation exists relating to the
employees of the Business; (v) there are no charges with respect to or relating
to the Companies or the Business pending before the Equal Employment
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Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices and (vi) neither of the Sellers has
received any notice from any national, state, local or foreign agency
responsible for the enforcement of labor or employment laws of an intention to
conduct an investigation of the Companies and no such investigation is in
progress.
SECTION 5.24. Environmental Matters. Each of the Companies has
obtained and maintained in effect all licenses, permits and other authorizations
required under all applicable laws, regulations and other requirements of
governmental or regulatory authorities relating to pollution or to the
protection of the environment ("Environmental Laws") and are in compliance with
all Environmental Laws and with all such licenses, permits and authorizations.
The Companies have not performed or suffered any act which could give rise to,
or has otherwise incurred, liability to any Person (governmental or not) under
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss. 9601 et seq. or any other Environmental Laws, nor have the Sellers
received notice of any such liability or any claim therefor or submitted notice
pursuant to Section 103 of such Act to any governmental agency with respect to
any of its assets. No hazardous substance, hazardous waste, contaminant,
pollutant or toxic substance (as such terms are defined in any applicable
Environmental Law) has been released, placed, dumped or otherwise come to be
located on, at, beneath or near any of the Purchased Assets or any surface
waters or groundwaters thereon or thereunder. Neither of the Companies owns or
operates, or has ever owned or operated, an underground storage tank containing
a regulated substance, as such term is defined in Subchapter IX of the Resource
Conservation and Recovery Act, 42 ▇.▇.▇.▇▇. 6991 et seq.
SECTION 5.25. Accuracy of Information. None of the Sellers'
representations, warranties or statements contained in this Agreement, or in the
exhibits hereto, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make any of such representations,
warranties or statements in light of the circumstances under which they were
made not misleading. All information relating to the Business that is known or
would on reasonable inquiry be known to the Sellers and that may be material to
a purchaser for value of the Purchased Property has been disclosed in writing to
the Buyer and any such information arising on or before the Closing Date will
forthwith be disclosed in writing to the Buyer.
SECTION 5.26. Survival. Each of the representations and warranties
set forth in this Article 5 shall be deemed represented and made by the Sellers
at the Closing as if made at such time and shall survive the Closing
notwithstanding any investigation on the part of the Buyer for a period
terminating on the third (3rd) anniversary the Closing Date, provided,
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however, that representations and warranties contained in Sections 5.8, 5.24 and
10 hereof shall survive indefinitely.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
hereby represents and warrants to the Sellers as follows:
SECTION 6.1. Corporate Organization. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite corporate power and
authority to own its properties and assets and to conduct its businesses as now
conducted.
SECTION 6.2. Qualification to Do Business. The Buyer is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse affect on the business, operations, assets, properties, condition
(financial or otherwise) or prospects of the Buyer.
SECTION 6.3. Authorization and Validity of Agreement. The Buyer has
all requisite power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and the
performance of the Buyer's obligations hereunder have been duly authorized by
all necessary corporate action by the Buyer, and no other proceedings on the
part of the Buyer are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by the Buyer and constitutes
its valid and binding obligation, enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws of general application relating to or affecting creditors'
rights generally and except for the limitations imposed by general principles of
equity.
SECTION 6.4. No Conflict or Violation. The execution, delivery and
performance by the Buyer of this Agreement do not and will not violate or
conflict with any provision of the Certificate of Formation or Limited Liability
Company Agreement of the Buyer and do not and will not violate any provision of
law, or any order, judgment or decree of any court or other governmental or
regulatory authority, nor violate nor will result in a breach of or constitute
(with due notice or lapse of time or both) a default under any contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which the Buyer is a party or by which it is bound or to which
any of its properties or assets is subject.
SECTION 6.5. Approvals and Consents. The execution, delivery and
performance of this Agreement on behalf of the Buyer does not require the
consent or approval of, or filing with, any
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government, governmental body or agency or other entity or person except (i) as
may be required to transfer any Permits, and (ii) such consents, approvals and
filings, the failure to obtain or make would not, individually or in the
aggregate, have a material adverse effect on the ability of the Buyer to
consummate the transactions contemplated hereby.
SECTION 7. COVENANTS OF THE SELLERS.
The Sellers covenant as follows:
SECTION 7.1. Conduct of Business Before the Closing Date.
(a) Without the prior written consent of the Buyer, between the date
hereof and the Closing Date, the Companies shall not, except as required or
expressly permitted pursuant to the terms hereof:
(i) make any material change in the conduct of the Business or enter
into any transaction other than in the ordinary course of business
consistent with past practices;
(ii) make any sale, assignment, transfer, abandonment or other
conveyance of the Purchased Property or any part thereof, except
transactions pursuant to existing contracts set forth in the Schedules
hereto and dispositions of inventory or of worn-out or obsolete equipment
for fair or reasonable value in the ordinary course of business consistent
with past practice;
(iii) subject any of the Purchased Property, or any part thereof, to
any Lien or suffer such to exist other than such Liens as may arise in the
ordinary course of business consistent with past practice by operation of
law and that will not, individually or in the aggregate, have a Material
Adverse Effect;
(iv) acquire any assets, raw materials or properties, or enter into
any other transaction, other than in the ordinary course of business
consistent with past practice;
(v) enter into any new (or amend any existing) employee benefit
plan, program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general increase
in the compensation of officers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or
commitment) or grant any increase in the compensation payable or to become
payable to any employee, except in accordance with pre-existing
contractual provisions or consistent with past practice;
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(vi) make or commit to make any capital expenditure in excess of Ten
Thousand Dollars ($10,000);
(vii) pay, lend or advance any amount to, or sell, transfer or lease
any properties or assets to, or enter into any agreement or arrangement
with, any of its Affiliates;
(viii) fail to keep in full force and effect insurance comparable in
amount and scope to coverage maintained in respect of the Business;
(ix) take any other action that would cause any of the
representations and warranties made by them in this Agreement not to
remain true and correct;
(x) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change
required by reason of a concurrent change in GAAP or write down the value
of any inventory or write off as uncollectible any accounts receivable
except in the ordinary course of business consistent with past practice;
(xi) settle, release or forgive any claim or litigation or waive any
right;
(xii) make, enter into, modify, amend in any material respect or
terminate any Contract or expenditure with respect to the Business, where
such Contract, bid or expenditure is for (A) a Contract entailing payments
in excess of Ten Thousand Dollars ($10,000) or (B) a or Contract having a
term in excess of ninety (90) days; or
(xiii) commit to do any of the foregoing.
From and after the date hereof and until the Closing Date, the
Companies shall:
(i) continue to maintain, in all material respects, the Purchased
Property in accordance with present practice in a condition suitable for
its current use;
(ii) file, when due or required, national, state, foreign and other
tax returns and other reports required to be filed and pay when due all
taxes, assessments, fees and other charges lawfully levied or assessed
against them, unless the validity thereof is contested in good faith and
by appropriate proceedings diligently conducted;
(iii) continue to conduct the Business in the ordinary course
consistent with past practice;
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(iv) keep its books of account, records and files in the ordinary
course and in accordance with existing practice; and
(v) continue to maintain existing business relationships with
suppliers and customers other than relationships not economically
beneficial to the Business.
SECTION 7.2. Consents and Approvals. The Sellers (a) shall, at their
cost and expense, use their best efforts to obtain all necessary consents,
waivers, authorizations and approvals of all governmental and regulatory
authorities, domestic and foreign, and of all other Persons required in
connection with the execution, delivery and performance by it of this Agreement,
and (b) shall diligently assist and cooperate with the Buyer in preparing and
filing all documents required to be submitted by the Buyer to any governmental
or regulatory authority, domestic or foreign, in connection with such
transactions and in obtaining any governmental consents, waivers, authorizations
or approvals which may be required to be obtained by the Buyer in connection
with such transactions (which assistance and cooperation shall include, without
limitation, timely furnishing to the Buyer all information concerning the Seller
that counsel to the Buyer determines is required to be included in such
documents or would be helpful in obtaining any such required consent, waiver,
authorization or approval).
SECTION 7.3. Access to Properties and Records. The Sellers shall
afford to the Buyer, and to the accountants, counsel and representatives of the
Buyer, full access during normal business hours throughout the period prior to
the Closing Date (or the earlier termination of this Agreement pursuant to
Section 14 hereof) to all properties, books, contracts, commitments and records
of the Companies relating to the Business and, during such period, shall furnish
promptly to the Buyer all other information concerning the Business, its
properties and its personnel as the Buyer may reasonably request, provided that
no investigation or receipt of information pursuant to this Section 7.3 shall
qualify any representation or warranty of the Sellers or the conditions to the
obligations of the Buyer. The Sellers shall also afford the Buyer full access to
the Business, all operations of the Business and to all Purchased Property
throughout the period prior to the Closing Date.
SECTION 7.4. Negotiations. From and after the date hereof, neither
the Sellers, nor their officers or directors nor anyone acting on behalf of the
Sellers or such persons shall, directly or indirectly, encourage, solicit,
engage in discussions or negotiations with, or provide any information to, any
person, firm, or other entity or group (other than the Buyer or its
representatives) concerning any merger, sale of substantial assets, purchase or
sale of shares of capital stock or similar transaction involving the Companies
or the Business or any other transaction inconsistent with the transactions
contemplated
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hereby. The Sellers shall promptly communicate to the Buyer any inquiries or
communications concerning any such transaction which they may receive or of
which they may become aware.
SECTION 7.5. Further Assurances. Upon the request of the Buyer at
any time after the Closing Date, the Sellers shall forthwith execute and deliver
such further instruments of assignment, transfer, conveyance, endorsement,
direction or authorization and other documents as the Buyer or its counsel may
request to perfect title of the Buyer and its successors and assigns to the
Purchased Property or otherwise to effectuate the purposes of this Agreement.
SECTION 7.6. Best Efforts. Upon the terms and subject to the
conditions of this Agreement, the Sellers will use their best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with applicable law to consummate and
make effective in the most expeditious manner practicable the transactions
contemplated hereby.
SECTION 7.7. Covenant Not To Compete.
(a) The Sellers acknowledges that the agreements and covenants
contained in this Section 7.7 are essential to protect the value of the Business
being acquired by the Buyer. Therefore, the Sellers agree that for the period
commencing on the Closing Date and ending on the fifth (5th) anniversary of the
Closing Date (such period is hereinafter referred to as the "Restricted
Period"), the Sellers shall not participate or engage, directly or indirectly,
for themselves or on behalf of or in conjunction with any Person, whether as an
employee, agent, officer, director, shareholder, partner, joint venturer,
investor or otherwise, in any publishing business undertaken or expressly
contemplated to be undertaken by the Buyer or any of its Affiliates; provided,
however, that the foregoing shall not prohibit Buda from serving as an officer
and employee of the Buyer or any affiliate of the Buyer nor shall it prohibit
the ownership by the Sellers of equity securities of a public company in an
amount not to exceed 2% of the issued and outstanding shares of such company.
Notwithstanding the foregoing, in the event Buda's employment is terminated by
the Buyer prior to the second (2nd) anniversary of the date hereof without Just
Cause (as defined in the Buda Employment Agreement), the Restricted Period shall
mean the second anniversary of the date hereof.
(b) The Sellers agree that a monetary remedy for a breach of the
agreement set forth in Section 7.7(a) hereof will be inadequate and
impracticable and further agree that such a breach would cause the Buyer
irreparable harm, and that the Buyer shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages. In
the event of such a breach, the Sellers agree that the Buyer shall be entitled
to such injunctive relief, including temporary restraining
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orders, preliminary injunctions and permanent injunctions as a court of
competent jurisdiction shall determine.
(c) If any provision of this Section 7.7 is invalid in part, it
shall be curtailed, as to time, location or scope, to the minimum extent
required for its validity under the laws of the United States and shall be
binding and enforceable with respect to the Sellers as so curtailed.
SECTION 7.8. Non-Solicitation of Employees. The Sellers agree, for
the Restricted Period, not to make, offer, solicit or induce to enter into, any
written or oral arrangement, agreement or understanding regarding employment or
retention as a consultant with any person who was, on the date hereof, a
full-time employee of either of the Companies, and in each case to cause its
Affiliates not to engage in any such action, without the written consent of the
Buyer.
SECTION 7.9. Notice of Breach. Through the Closing Date, the Sellers
shall promptly give the Buyer written notice with particularity upon having
knowledge of any matter that may constitute a breach of any representation,
warranty, agreement or covenant contained in this Agreement.
SECTION 7.10. Bulk Sales Compliance. The Buyer hereby waives
compliance by the Companies with any applicable laws relating to bulk transfers
in connection with the transactions contemplated hereby. The Sellers shall
indemnify the Buyer with respect to any failure to comply with such bulk
transfer laws.
SECTION 7.11. Assignment of Contracts and Warranties. At the Closing
and effective as of the Closing Date, the Companies shall assign to the Buyer
all their respective rights under the Contracts. Notwithstanding the foregoing,
no Contract shall be assigned contrary to law or the terms of such Contract and,
with respect to Contracts that cannot be assigned to the Buyer at the Closing
Date, the performance obligations of the Companies thereunder shall, unless not
permitted by such Contract, be deemed to be subleased or subcontracted to the
Buyer until such Contract has been assigned. The Companies shall (i) use their
best efforts to obtain all necessary consents, (ii) cooperate with the Buyer in
any arrangement designed to provide to the Buyer the benefits (including the
exercise of the Companies' rights) under any such Contracts, including
enforcement for the benefit of the Buyer (and at the Buyer's expense) of any and
all rights of the Companies against a third party thereto arising out of the
breach or cancellation by such third party or otherwise, (iii) hold all monies
paid thereunder in trust for the account of the Buyer and (iv) remit such money
to the Buyer as promptly as possible.
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SECTION 8. COVENANTS OF THE BUYER.
SECTION 8.1. Actions Before Closing Date. The Buyer shall not take
any action which shall cause it to be in breach of any representations,
warranties, covenants or agreements contained in this Agreement. The Buyer shall
use its best efforts to perform and satisfy all conditions to Closing to be
performed or satisfied by the Buyer under this Agreement as soon as possible,
but in no event later than the Closing Date.
SECTION 8.2. Consents and Approvals. The Buyer shall use its best
efforts to obtain all consents and approvals of third parties required to be
obtained by the Buyer to effect the transactions contemplated by this Agreement.
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS.
SECTION 9.1. Offer of Employment. Schedule 9.1 hereto sets forth a
true and complete list of all individual who are employees of the Business as of
the date hereof ("Listed Employees"). The Buyer may offer employment, under
substantially similar terms as those offered by the Companies, to as many Listed
Employees as is consistent with, and subject to, the Buyer's requirements and
employment policies. The Buyer shall notify the Seller in writing, with respect
to any determination made no later than two weeks after the Closing of (i) all
Listed Employees who will be offered a position with the Buyer following the
Closing and (ii) all Listed Employees with whom discussions regarding employment
with the Buyer have been terminated for any reason.
SECTION 9.2. Employee Benefits. The Listed Employees who accept the
Buyer's offer of employment (the "Transferred Employees") shall participate in
the employee benefit plans, programs, policies and arrangements of the Buyer in
accordance with the terms thereof generally applicable to employees of the
Buyer.
SECTION 9.3. Liability. Neither the Buyer nor its Affiliates shall
assume or have any direct or indirect obligation or liability of any nature,
whether matured or unmatured, accrued or contingent, due or to become due or
otherwise, to any Transferred Employee or other present or former employee of
the Seller or its affiliates or independent contractor regularly used by the
Companies, or to any dependent, survivor or beneficiary thereof, arising out of
or in relation to such person's employment with the Seller or its affiliates or
the termination of such employment prior to the Closing Date.
SECTION 9.4. Rights. Nothing herein expressed or implied shall
confer upon any Transferred Employee or other employee or former employee of the
Sellers or legal representatives thereof, any rights or remedies, including,
without limitation, right to employment or continued employment
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for any specified period, of any nature or kind whatsoever or any right to
specific terms or conditions of employment (including rate of pay, fringe
benefits or position under or by reason of this Agreement.
SECTION 10. TAXES.
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. Allocation of Purchase Price and Purchase Price
Allocation Forms. The Buyer shall, as promptly as practicable after the Closing
Date, submit to the Seller a statement of the Buyer's allocation of the Purchase
Price to the different items of Purchased Property (the "Allocation Statement").
The Allocation Statement shall be, subject to further adjustment on the basis of
the Post-Closing Adjustment pursuant to Section 3.3 hereof, binding and
conclusive upon the parties hereto, unless the Seller objects in writing to any
item or items shown on the Allocation Statement within ten Business Days after
delivery thereof to the Seller. If the Buyer and the Seller shall be unable to
resolve any dispute with regard to the Allocation Statement within ten Business
Days after delivery of the Seller's written objections, the matter or matters in
dispute shall be submitted (at the expense of the Buyer) to the Buyer's
Accountant. The decision of the Buyer's Accountant shall be conclusive and
binding upon the Buyer and the Seller.
Promptly after the Closing Date (but not before a resolution of all
disputes, if any, with regard to the Allocation Statement and the Post Closing
Adjustment Statement), the Buyer's Accountant shall prepare, in consultation
with the Seller or the Seller's Accountant, those statements or forms (including
Form 8594 if available) required by Section 1060 of the Code and the regulations
promulgated thereunder with respect to the allocation of the Purchase Price.
Such statements or forms shall be prepared consistently with the allocation of
Purchase Price. Such statements or forms shall be filed by the parties on their
respective national income tax returns as required by Section 1060 of the Code
and the regulations promulgated thereunder and each party shall provide the
other party with a copy of such statement or form as filed.
SECTION 11. INDEMNIFICATION.
SECTION 11.1. Indemnification by the Sellers. Notwithstanding the
Closing or the delivery of the Purchased Property and regardless of any
investigation at any time made by or on behalf of the Buyer or of any knowledge
or information that the Buyer may have, the Sellers shall, jointly and
severally, indemnify and fully defend, save and hold the Buyer, any Affiliate of
the Buyer and its directors, officers and employees (the "Buyer Indemnities"),
harmless if any Buyer Indemnitee shall at any time or from time to time suffer
any damage, liability,
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loss, cost, expense (including all reasonable attorneys' fees), deficiency,
interest, penalty, impositions, assessments or fines (collectively, "Losses")
arising out of or resulting from, or shall pay or become obliged to pay any sum
on account of, any and all the Sellers' Event of Breach. As used herein,
"Sellers' Event of Breach" shall be and mean any one or more of the following:
(a) any untruth or inaccuracy in any representation of the Seller or
the breach of any warranty of the Seller contained in this Agreement;
(b) any failure of the Sellers duly to perform or observe any term,
provision, covenant, agreement contained herein on the part of the Sellers to be
performed or observed;
(c) any claim or cause of action by any party against any Buyer
Indemnitee, with respect to the Excluded Liabilities,
provided, however, that the Sellers shall have no obligation to make any payment
under Section 11.1(a) hereof with respect to any representation or warranty
unless the aggregate amount to which all Buyer Indemnitees, are entitled by
reason of all such claims exceeds Ten Thousand Dollars ($10,000), it being
understood that once such amount is exceeded, the aggregate of all such claims
shall be payable jointly and severally by the Sellers on demand by the Buyer.
SECTION 11.2. Procedures for Indemnification by the Seller. If a
Sellers' Event of Breach occurs or is alleged and a Buyer Indemnitee asserts
that the Sellers have become obligated to such Buyer Indemnitee pursuant to
Section 11.1 hereof, or if any suit, action, investigation, claim or proceeding
is begun, made or instituted as a result of which the Sellers may become
obligated to a Buyer Indemnitee hereunder, such Buyer Indemnitee shall give
written notice to the Sellers. The Sellers agree to defend, contest or otherwise
protect the Buyer Indemnitee against any such suit, action, investigation, claim
or proceeding at their sole cost and expense. The Buyer Indemnitee shall have
the right, but not the obligation, to participate at its own expense in the
defense thereof by counsel of the Buyer Indemnitee's choice and shall in any
event cooperate with and assist the Sellers to the extent reasonably possible.
If the Sellers fail timely to defend, contest or otherwise protect against such
suit, action, investigation, claim or proceeding, the Buyer Indemnitee shall
have the right to do so, including, without limitation, the right to make any
compromise or settlement thereof, and the Buyer Indemnitee shall be entitled to
recover the entire cost thereof from the Seller, including, without limitation,
reasonable attorneys' fees, disbursements and amounts paid as the result of such
suit, action, investigation, claim or proceeding.
SECTION 11.3. Indemnification by the Buyer. Notwithstanding the
Closing or the delivery of the Purchased
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Property, the Buyer shall indemnify and agree to fully defend, save and hold the
Sellers, any Affiliate of the foregoing, and its directors, officers and
employees (the "Seller Indemnitees"), harmless if any Seller Indemnitee shall at
any time or from time to time suffer any Losses arising out of or resulting
from, or shall pay or become obligated to pay any sum on account of, any and all
the Buyer Events of Breach. As used herein, "Buyer Event of Breach" shall be and
mean any one or more of the following:
(a) any untruth or inaccuracy in any representation of the Buyer or
the breach of any warranty of the Buyer contained in this Agreement;
(b) any failure of the Buyer duly to perform or observe any term,
provision, covenant, agreement or condition contained in this Agreement on the
part of the Buyer to be performed or observed;
(c) any claim or cause of action by any party arising after the
Closing Date against any Seller Indemnitees with respect to Assumed Liabilities,
provided, however, that the Buyer shall have no obligation to make any payment
under Section 11.3(a) hereof with respect to any representation or warranty
unless the aggregate amount to which all Seller Indemnitees are entitled by
reason of all such claims exceeds Ten Thousand Dollars ($10,000), it being
understood that once such amount is exceeded, the aggregate of all such claims
shall be payable by the Buyer on demand by the Sellers.
SECTION 11.4. Procedures for Indemnification by the Buyer. If a
Buyer Event of Breach occurs or is alleged and a Seller Indemnitee asserts that
the Buyer has become obligated to it pursuant to Section 11.3 hereof, or if any
suit, action, investigation, claim or proceeding is begun, made or instituted as
a result of which the Buyer may become obligated to a Seller Indemnitee
hereunder, such Seller Indemnitee shall give written notice to the Buyer. The
Buyer agrees to defend, contest or otherwise protect such Seller Indemnitee
against any such suit, action, investigation, claim or proceeding at its sole
cost and expense. Such Seller Indemnitee shall have the right, but not the
obligation, to participate, at its own expense, in the defense thereof by
counsel of its choice and shall in any event cooperate with and assist the Buyer
to the extent reasonably possible. If the Buyer fails timely to defend, contest
or otherwise protect against such suit, action, investigation, claim or
proceeding, such Seller Indemnitee shall have the right to do so, including,
without limitation, the right to make any compromise or settlement thereof, and
such Seller Indemnitee shall be entitled to recover the entire cost thereof from
the Buyer including without limitation, reasonable attorneys' fees,
disbursements and amounts paid as the result of such suit, action,
investigation, claim or proceeding.
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SECTION 11.5. Successors and Assigns. All of the rights and
obligations of the Sellers and the Buyer pursuant to this Section 11 shall
survive any sale, assignment or other transfer by the Buyer of title to or
interest in any of the Premises or any part thereof and shall apply to and bind
each and every successor and assign of the Buyer to any of the Premises.
SECTION 12. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which may be waived by the Sellers in
their sole discretion:
SECTION 12.1. Representations and Warranties of the Buyer. All
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as if again
made by the Buyer on and as of such date, and the Seller shall have received a
certificate dated the Closing Date and signed by a duly authorized
representative of the Buyer to that effect.
SECTION 12.2. Performance of the Obligations of the Buyer. The Buyer
shall have performed in all material respects all obligations required under
this Agreement to be performed by it on or before the Closing Date, and the
Sellers shall have received a certificate dated the Closing Date and signed a
duly authorized representative of the Buyer to that effect.
SECTION 12.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other Person, required in connection with the
execution, delivery and performance of this Agreement shall have been duly
obtained and shall be in full force and effect on the Closing Date.
SECTION 12.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares this
Agreement invalid or unenforceable in any respect or which prevents the
consummation of the transactions contemplated hereby shall be in effect
SECTION 12.5. Buda Employment Agreement. The Buyer shall have
executed and delivered to Buda the Buda Employment Agreement.
SECTION 13. CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER.
The obligations of the Buyer to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following
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conditions, any one or more of which may be waived by the Buyer in its sole
discretion:
SECTION 13.1. Representations and Warranties of the Sellers. All
representations and warranties made by the Sellers in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
again made by the Sellers on and as of such date, and the Buyer shall have
received a certificate dated the Closing Date and signed by the Chairman of the
Board or President and by the chief financial officer of the Companies and by
Buda to that effect.
SECTION 13.2. Performance of the Obligations of the Sellers. The
Sellers shall have performed in all material respects all obligations required
under this Agreement to be performed by them on or before the Closing Date, and
the Buyer shall have received a certificate dated the Closing Date and signed by
the Chairman of the Board or President and the chief financial officer of the
Companies and by Buda to that effect.
SECTION 13.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of this Agreement shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
SECTION 13.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents the consummation of the transactions contemplated hereby, shall be in
effect.
SECTION 13.5. No Material Adverse Change. During the period from
October 31, 1996 to the Closing Date, there shall not have been any material
adverse change in the assets, properties, business, operations, prospects, net
income or financial condition of the Business.
SECTION 13.6. Opinion of Counsel. The Buyer shall have received a
favorable opinion, dated as of the Closing Date, from ▇▇▇ ▇▇▇, counsel to the
Sellers, in form and substance reasonably satisfactory to the Buyer and its
counsel, that:
(a) Each of the Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and each of the Companies has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted. The Companies are duly qualified to do business as a
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foreign corporation and is in good standing in every jurisdiction where the
character of the properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary and in which the absence of
such qualification could have a Material Adverse Effect.
(b) Each of the Companies has the corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance of the obligations of the Companies
hereunder have been duly authorized by the Board of Directors and stockholders
of the Companies, and no other corporate proceedings on the part of the
Companies are necessary to authorize such execution, delivery and performance.
This Agreement has been duly executed by the Sellers and constitutes the legal,
valid and binding obligation of the Sellers, enforceable against each Seller in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforceability of creditors' rights generally and except that the remedy of
specific performance or similar equitable relief may be subject to equitable
defenses and to the discretion of the court before which enforcement is sought.
(c) The execution, delivery and performance by the Companies of this
Agreement do not and will not violate or conflict with any provision of the
charter documents or By-laws of the Companies and do not and will not violate
any provision of law or, to such counsel's knowledge, any order, judgment or
decree of any court or other governmental or regulatory authority, nor violate
nor will result in a breach of or constitute (with due notice or lapse of time
or both) a default under any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument known to such
counsel (after inquiry of appropriate officers of the Companies) to which either
of the Companies is a party or by which it is bound or to which its properties
or assets is subject, nor will result in the creation or imposition of any Lien
upon any of the properties or assets of the Companies.
(d) To the best of such counsel's knowledge after inquiry of
appropriate officers of the Companies, there are no claims, actions, suits,
proceedings, labor disputes or investigations of any nature pending or
threatened before any national, state or local court or governmental or
regulatory authority, domestic or foreign, or before any arbitrator, brought by
or against the Sellers, any of its officers, directors, employees, agents or
Affiliates involving, affecting or relating to the Purchased Property, the
Business or the transactions contemplated by this Agreement.
In rendering such opinion, such counsel may rely upon certificates
of public officials, upon opinions of local counsel and, as to matters of fact,
upon certificates of officers of the Seller or its Affiliates, and such counsel
may assume that this
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Agreement has been duly authorized, executed and delivered by the Buyer.
SECTION 13.7. Other Closing Documents. The Buyer shall have received
such other certificates, instruments and documents in confirmation of the
representations and warranties of the Sellers or in furtherance of the
transactions contemplated by this Agreement as the Buyer or its counsel may
reasonably request.
SECTION 13.8. Legal Matters. All certificates, instruments, opinions
and other documents required to be executed or delivered by or on behalf of the
Sellers under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Sellers in furtherance
of the transactions contemplated hereby, shall be reasonably satisfactory in
form and substance to counsel for the Buyer.
SECTION 13.9. CRC Acquisition. The acquisition of certain assets of
CRC Press, Inc. pursuant to the Asset Purchase Agreement, dated December 4,
1996, by and among The Times Mirror Company, CRC Press, Inc. and Information
Ventures LLC shall have been consummated.
SECTION 13.10. Buda Employment Agreement. Buda shall have executed
and delivered to the Buyer the Buda Employment Agreement.
SECTION 14. TERMINATION.
SECTION 14.1. Conditions of Termination. Notwithstanding anything to
the contrary contained herein, this Agreement may be terminated at any time
before the Closing (a) by mutual consent of the Sellers and the Buyer, (b) by
the Sellers if the conditions set forth in Section 12 hereof are not satisfied
or waived by the Closing Date, (c) by the Buyer if the conditions set forth in
Section 13 hereof are not satisfied or waived by the Closing Date or (d) by
either party hereto if the Closing shall not have occurred on or prior to March
31, 1997.
SECTION 14.2. Effect of Termination. In the event of termination
pursuant to Section 14.1 hereof, this Agreement shall become null and void and
have no effect, with no liability on the part of the Sellers or the Buyer, or
their directors, officers, agents or stockholders, with respect to this
Agreement, except for the (i) liability of a party for expenses pursuant to
Section 15.3 hereof and (ii) liability for breach of this Agreement.
SECTION 15. MISCELLANEOUS.
SECTION 15.1. Successors and Assigns. Except as otherwise provided
in this Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto and
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any such attempted assignment without such prior written consent shall be void
and of no force and effect, provided, that the Buyer may assign its rights
hereunder to an Affiliate and to any party providing financing in connection
with the transactions contemplated hereby, provided further, that no such
assignment shall reduce or otherwise vitiate any of the obligations of the
Sellers hereunder. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
SECTION 15.2. Governing Law; Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York, without giving effect to the principles of conflicts
of laws thereof. The parties hereto irrevocably elect as the sole judicial forum
for the adjudication of any matters arising under or in connection with this
Agreement, and consent to the jurisdiction of, the courts of the State of New
York located in New York, New York.
SECTION 15.3. Expenses. Except as otherwise provided herein, each of
the parties hereto shall pay its own expenses in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, any
legal and accounting fees, whether or not the transactions contemplated hereby
are consummated. The Sellers shall pay all state and local sales, transfer,
excise, value-added or other similar taxes, and all recording and filing fees
that may be imposed by reason of the sale, transfer, assignment and delivery of
the Purchased Property.
SECTION 15.4. Broker's and Finder's Fees. Each of the parties
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Agreement and, insofar as it
knows, no other broker or other person is entitled to any commission or finder's
fee in connection with any of these transactions.
SECTION 15.5. Severability. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect.
SECTION 15.6. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(iii) on the day after delivery to Federal Express or similar overnight courier
or the Express Mail service
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maintained by the United States Postal Service or (iv) on the fifth day after
mailing, if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid and properly addressed, to the
party as follows:
If to the Seller:
St. Lucie Press, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇ ▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer:
CRC PRESS LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for the purpose of this Section by
giving the other party written notice of its new address in the manner set forth
above.
SECTION 15.7. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as further or continuing
waiver of any such condition, or of the breach of any other provision, term,
covenant, representation or warranty of this Agreement.
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SECTION 15.8. Public Announcements. The parties agree that after the
signing of this Agreement, neither party shall make any press release or public
announcement concerning this transaction without the prior written approval of
the other party unless a press release or public amendment is required by law.
If any such announcement or other disclosure is required by law, the disclosing
party agrees to give the nondisclosing party prior notice and an opportunity to
comment on the proposed disclosure.
SECTION 15.9. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the transactions
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to such
transactions. All schedules hereto and any documents and instruments delivered
pursuant to any provision hereof are expressly made a part of this Agreement as
fully as though completely set forth herein.
SECTION 15.10. Parties in Interest. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the Sellers, and the Buyer and their respective
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligations or liability of any third persons to the
Sellers or the Buyer. No provision of this Agreement shall give any third
persons any right of subrogation or action over or against the Sellers or the
Buyer.
SECTION 15.11. Scheduled Disclosures. Disclosure of any matter, fact
or circumstance in a Schedule to this Agreement shall not be deemed to be
disclosure thereof for purposes of any other Schedule hereto.
SECTION 15.12. Section and Paragraph Headings. The section and
paragraph headings in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
SECTION 15.13. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
ST. LUCIE PRESS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
ST. LUCIE PRESS (U.K.) LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
CRC PRESS LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇
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