EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
by and among
FARM JOURNAL HOLDINGS, INC.
and
THE STOCKHOLDERS
of
PROFESSIONAL MARKET MANAGEMENT, INC.
dated as of
March 17, 1998
____________________________________________
Relating to the Sale and Purchase of
the Capital Stock of
PROFESSIONAL MARKET MANAGEMENT, INC.
TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE OF SHARES................................................. 1
1.1 Agreement to Purchase and Sell....................................... 1
1.2 Closing.............................................................. 1
SECTION 2. PURCHASE PRICE.............................................................. 1
2.1 Cash Purchase Price.................................................. 1
2.2 Post Closing Adjustment to Purchase Price............................ 1
SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS REGARDING COMPANY............................................. 2
3.1 Organization and Standing of the Company............................. 2
3.2 Qualification........................................................ 2
3.3 Capital Structure of the Company..................................... 2
3.4 No Restrictions Upon the Company..................................... 3
3.5 No Subsidiaries...................................................... 3
3.6 Financial Statements................................................. 3
3.7 Events Subsequent to the Balance Sheet Date.......................... 3
3.8 Liabilities.......................................................... 4
3.9 Guarantees........................................................... 4
3.10 Real Property........................................................ 5
3.11 Tangible Personal Property........................................... 5
3.12 Contracts............................................................ 5
3.13 Intellectual Property................................................ 7
3.14 Compliance with Law.................................................. 8
3.15 Environmental Matters................................................ 9
3.16 Boycott Matters...................................................... 10
3.17 Litigation........................................................... 10
3.18 Tax Matters.......................................................... 10
3.19 Certain Payments..................................................... 12
3.20 Employees............................................................ 12
3.21 Labor Relations...................................................... 12
3.22 Benefit Plans........................................................ 13
3.23 Insurance............................................................ 15
3.24 Accounts............................................................. 15
3.25 Intercompany Accounts, Working Capital and Dividends................. 16
3.26 Relationship of Assets at Closing to Assets Used in Business......... 16
3.27 Customer List........................................................ 16
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH OF THE
STOCKHOLDERS REGARDING SHARES.............................................. 16
4.1 Ownership of Stock................................................... 16
4.2 No Restrictions Upon the Stockholders................................ 17
4.3 Brokers and Finders.................................................. ▇▇
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▇▇▇▇▇▇▇ ▇. REPRESENTATIONS AND WARRANTIES OF PURCHASER................................. 17
5.1 Organization, Standing and Corporate Authority....................... 17
5.2 Brokers and Finders.................................................. 17
SECTION 6. COVENANTS OF STOCKHOLDERS................................................... 17
6.1 Conduct of the Company Pending Closing............................... 17
6.2 Access Pending Closing............................................... 19
6.3 Consents of Third Parties............................................ 19
6.4 Resignations......................................................... 19
6.5 Transfers............................................................ 19
6.6 Continuing Relationships............................................. 19
6.7 No Shop Clause....................................................... 20
6.8 Closing.............................................................. 20
6.9 Election to Treat as Asset Sale...................................... 21
6.10 Allocation of Purchase Price......................................... 21
6.11 Publicity............................................................ 21
6.12 Non-Disclosure....................................................... 21
6.13 Non-Competition...................................................... 21
6.14 Employee Benefit Matters............................................. 22
6.15 Referrals............................................................ 23
SECTION 7. COVENANTS OF PURCHASER...................................................... 23
7.1 Books and Records.................................................... 23
7.2 Closing.............................................................. 24
7.3 Continuing Relationships............................................. 24
7.4 Publicity............................................................ 24
7.5 Nonsolicitation...................................................... 24
SECTION 8. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE.............................. 24
8.1 Representations and Warranties....................................... 24
8.2 Performance.......................................................... 24
8.3 Liabilities.......................................................... 24
8.4 Shares............................................................... 25
8.5 Corporate Books...................................................... 25
8.6 Resignations......................................................... 25
8.7 Proof of Good Standing............................................... 25
8.8 Transfers and Release of Guarantees.................................. 25
8.9 Certificate of Officer............................................... 25
8.10 Opinion of Counsel................................................... 25
8.11 PFA Closing.......................................................... 26
8.12 Financing............................................................ 26
8.13 Due Diligence........................................................ 26
8.14 Further Assurances................................................... 27
SECTION 9. CONDITIONS TO OBLIGATION OF STOCKHOLDERS TO CLOSE........................... 27
9.1 Representations and Warranties....................................... 27
9.2 Performance.......................................................... 27
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9.3 PFA Closing.......................................................... 27
SECTION 10. TERMINATION................................................................ 27
10.1 Mutual Termination; Termination For Unsatisfaction of Conditions..... 27
10.2 Termination Due to Financing or Due Diligence........................ 28
10.3 Termination Due to Loss.............................................. 28
SECTION 11. INDEMNIFICATION AND SURVIVAL............................................... 28
11.1 Indemnification of the Purchaser by the Stockholders................. 28
11.2 Indemnification of the Purchaser by the Stockholders Regarding Shares 29
11.3 Indemnification of the Stockholders.................................. 29
11.4 Procedure for Indemnification........................................ 29
11.5 Survival............................................................. 30
SECTION 12. MISCELLANEOUS.............................................................. 31
12.1 Written Agreement to Govern.......................................... 31
12.2 Severability......................................................... 31
12.3 Notices.............................................................. 31
12.4 Counterparts......................................................... 32
12.5 Law to Govern........................................................ 32
12.6 Successors and Assigns............................................... 32
12.7 Further Assurances................................................... 32
12.8 Gender, Number and Headings.......................................... 32
12.9 Schedules and Exhibits............................................... 32
12.10 Waiver of Provisions................................................. 33
12.11 Expenses............................................................. 33
12.12 Recitals............................................................. 33
12.13 Knowledge of the Stockholders........................................ 33
12.14 No Third Party Beneficiaries......................................... 33
12.15 Expenses............................................................. 33
12.16 Additional Definitions............................................... 33
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EXHIBITS
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A Stockholders
SCHEDULES
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2.2 Schedule of Current Accounts Included in Price Adjustment Computation
3.1.1 Certificate of Incorporation and By-Laws
3.1.2 Officers and Directors of the Company
3.2 Trade Names and Offices
3.5 Publishing Affiliates
3.6(a) Annual Financial Statements
3.6(b) Interim Financial Statements
3.7(b) Officer Compensation Changes
3.11.1 Tangible Personal Property
3.11.2 Non-Transferred Hardware
3.12(a) Contracts
3.12(c) Subscription Agreement Exceptions
3.13(a) Intellectual Property
3.13(c).1 Licensed Property
3.13(a).2 Shared Software Not Transferred
3.13(d) WITs Product Description
3.14(a) Licenses and Permits
3.14(b) Exceptions to Compliance with Law
3.17 Litigation
3.18 Tax Matters
3.20 Compensation
3.22 Benefit Plans
3.23(a) Insurance Policies
3.23(b) Insurance Claims
3.24 Accounts
6.6(a) Retained Employees
6.10 Agreed Values
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 17/th/ day of March, 1998, by and among Farm Journal Holdings,
Inc., a Delaware corporation (the "Purchaser"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ Family Trust and ▇▇▇▇ ▇. ▇▇▇▇▇ Family Trust (collectively
the "Stockholders").
RECITALS
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WHEREAS, the Stockholders desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Stockholders that number of shares of
Common Stock (the "Shares") listed beside each Stockholder's name on Exhibit A,
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respectively, of Professional Market Management, Inc. (the "Company") together
with all rights incident thereto, including, without limitation, the goodwill of
the Company.
WHEREAS, the Company is engaged, inter alia, in the business of the
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provision of the Cash Master managed marketing program (the "Business").
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto
hereby agree as follows:
SECTION 1 PURCHASE AND SALE OF SHARES.
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1.1 Agreement to Purchase and Sell. On the Closing (as defined below),
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the Stockholders shall sell their Shares to the Purchaser, and the Purchaser
shall purchase the Shares from the Stockholders, on the terms and subject to the
conditions hereinafter provided and in reliance on the representations,
warranties, covenants, promises, agreements and undertakings contained herein.
1.2 Closing. The consummation of the purchase and sale of the Shares
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hereunder (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇ Ronon
▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, Philadelphia, Pennsylvania, at 11:00 A.M., local time, on
March 31, 1998, or such other date upon which the Purchaser and the Stockholders
may mutually agree in writing (the "Closing Date"). For all purposes hereunder,
the Closing shall be deemed to have occurred on the close of business on the
Closing Date.
SECTION 2 PURCHASE PRICE.
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2.1 Cash Purchase Price. The Purchaser shall pay to each Stockholder in
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good funds on the Closing Date $200.00 per Share held by such Stockholder,
representing an aggregate total cash purchase price of $100,000.
2.2 Post Closing Adjustment to Purchase Price . As soon as all
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transactions for the period through the Closing Date are entered into the
Company's books but in no event more than 30 days subsequent to the Closing
Date, the Stockholders shall deliver to the Purchaser a list of the balances as
of the close of business on the Closing Date of those current liability accounts
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and current asset accounts listed on Schedule 2.2. Such statement shall be
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substantially in the form of Schedule 2.2, which shows the balances of the
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referenced accounts as of December 31, 1997 (the "Balance Sheet Date"). All pre-
closing transactions shall be entered on the Company's books in accordance with
the methods and in respect to the accounts as similar transactions were recorded
prior to the Balance Sheet Date. No adjustments shall be made in the amounts
recorded in the books for collectability of receivables or for contingent or
unknown liabilities as of the Closing Date and the allowance for doubtful
accounts and general reserves accounts shall not be changed from the Balance
Sheet Date and thus shall not be included in Schedule 2.2. To the extent that
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the excess of the balances of the current asset accounts over the balances of
the current liabilities accounts listed on Schedule 2.2 as of the close of
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business on the Closing Date is more than the excess shown on Schedule 2.2 as of
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the Balance Sheet Date, the Purchaser shall pay the difference to the
Stockholders in proration to the Shares held by each. To the extent such excess
as of the close of business on the Closing Date is less than the excess shown on
Schedule 2.2 as of the Balance Sheet Date, the Stockholders shall pay the
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difference to the Purchaser in proportion to the Shares held by each. All
payments provided for herein shall be made within 15 days after the statement
required hereby is delivered to the Purchaser.
SECTION 3 COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
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REGARDING COMPANY.
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The Stockholders hereby jointly and severally represent and warrant to
the Purchaser, as of the date hereof and as of the Closing Date, as follows:
3.1 Organization and Standing of the Company. The Company is a
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corporation which is duly organized, validly existing and in good standing under
the laws of the State of Iowa. Schedule 3.1.1 contains complete and correct
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copies of the Certificates of Incorporation and By-laws, as amended, of the
Company (the "Formation Documents"). The Company has all necessary corporate
power and authority to engage in the Business as it is presently conducted, to
own all property now owned by it, and to lease all of the property used by it
under lease. A true and correct copy of the corporate minutes and stock transfer
records of the Company have been delivered to the Purchaser, and the same
constitute a complete and accurate record of the proceedings taken by its
Stockholders and directors, and a complete and accurate record of all issuances
and transfer of shares of its capital stock. Schedule 3.1.2 contains a complete
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and accurate list of the officers and directors of the Company.
3.2 Qualification. The Company is duly qualified to do business in Iowa
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and the Company is in good standing in such jurisdiction and in no others. To
the Stockholders' knowledge, without any investigation, the Company is not
required to qualify to do business in any other state. To the knowledge of the
Stockholders, Schedule 3.2 is a true and correct listing of all fictitious and
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trade names used by the Company and the addresses of all offices of the Company
and any locations where the Company's employees were based during its existence.
3.3 Capital Structure of the Company. The authorized capital stock of the
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Company consists solely of 1,000 shares of common stock, with no par value, of
which 500 shares are duly authorized, validly issued and outstanding, and fully
paid and non-assessable. No other class or series of capital stock of the
Company is or has been authorized. There is no obligation which is or may be
binding upon the Company to issue, sell, redeem, purchase or exchange any of its
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capital stock or any right relating thereto. The Stockholders are the sole
shareholders of record of the Company on the date of this Agreement.
3.4 No Restrictions Upon the Company. Except for the OCI Guaranty and the
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Lease Obligation described in Section 3.8(a), the Company is subject to no
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restriction, agreement, law, judgment or decree (including, without limitation,
any restriction contained in its Formation Documents) which would (a) prohibit
or be violated by the execution and delivery hereof or the consummation of the
transactions contemplated hereby, or (b) result in the acceleration of any
indebtedness of the Company.
3.5 No Subsidiaries. The Company has no subsidiaries, nor does it own any
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capital stock or other equity or ownership interest in any corporation,
partnership, limited liability company, association, trust, joint venture or
other entity. Schedule 3.5 sets forth the names of all entities controlled by
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the Stockholders which are engaged in the publishing business, whether in print
or electronic.
3.6 Financial Statements.
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(a) Schedule 3.6(a) contains a true copy of the Company's unaudited
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balance sheet and the statement of earnings and retained earnings, for the
fiscal years ended December 31, 1996 and December 31, 1997 (the "Balance
Sheet Date") (the "Financial Statements"). The Financial Statements have
been prepared from the Company's books and records, and were prepared
consistent therewith. The Stockholders make no other representations as to
the Financial Statements.
(b) Schedule 3.6(b) contains a copy of the Company's unaudited balance
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sheet and statement of earnings and retained earnings for the one month
period ending January 31, 1998 (the "Interim Statements"). The Interim
Statements were taken from the Company's books and records and were
prepared consistent therewith. The Stockholders make no other
representations as to the Interim Statements.
3.7 Events Subsequent to the Balance Sheet Date. Except to the extent
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provided for in Sections 3.10, 3.11, 3.12, 3.13, 3.25 and 6.6. there has not
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been since the Balance Sheet Date:
(a) Any direct or indirect redemption, purchase or other acquisition
by the Company of any capital stock of the Company, or any declaration,
setting aside or payment of any dividend or distribution on any capital
stock of the Company other than dividends or distributions which would not
violate Section 3.25 hereof;
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(b) Any increase in the compensation or benefits payable or to become
payable by the Company to any of its directors or officers except as
disclosed in Schedule 3.7(b);
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(c) Any incurrence by the Company (i) of any indebtedness for borrowed
money or (ii) of any other indebtedness or of any liability in respect
thereof, except for the incurrence of indebtedness (other than for borrowed
money), in the ordinary course of business or any commitment by the Company
for an incurrence which would violate (i) or (ii);
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(d) Any contractual commitment by the Company to any third party,
other than as provided in this Agreement or arising in the ordinary course
of the Company's business, relating to (i) the Assets or Business of the
Company, or (ii) the acquisition or disposition of Assets of the Company;
(e) Any transaction, other than in the ordinary course of business on
the same basis or terms as reflected in the Financial Statements, between
the Company and any shareholder, director, officer or affiliate of the
Company;
(f) Any change in any accounting policies and procedures or practices
by the Company; or
(g) Any discount or adjustment in accounts receivable of the Company
except as provided in Section 3.25 or arising in the ordinary course of the
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Company's business consistent with past practices or the collection of any
accounts receivable other than in the ordinary course of business
consistent with past practices.
3.8 Liabilities.
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(a) As of the Balance Sheet Date, to the knowledge of the
Stockholders, the Company had no liabilities (which liabilities when taken
individually or in the aggregate, are material) of any nature, whether
accrued, absolute, continent or otherwise, asserted or unasserted, except
liabilities stated or disclosed in the Financial Statements or disclosed in
this Agreement or Exhibits or Schedules furnished to Purchaser herewith and
except for the guaranty (the "OCI Guaranty") by the Company of the
obligations of Oster Communications, Inc. ("OCI") to American National Bank
and Trust Company of Chicago ("ANB") which will be released on Closing and
except for obligations as a co-lessor in regard to the leases for the
Leased Equipment referred to in Section 3.11 (the "Lease Obligation").
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(b) As of the date hereof and as of the Closing Date, to the knowledge
of the Stockholders, the Company does not have and will not have, any
liabilities of any nature, whether accrued, absolute, contingent or
otherwise, asserted or unasserted, except liabilities stated or disclosed
in the Financial Statements, liabilities disclosed in this Agreement or
Exhibits or Schedules furnished herewith, and except for liabilities
incurred in the ordinary course of business since the Balance Sheet Date.
(c) Since the Balance Sheet Date, the Company has paid its accounts
payable in the ordinary course of business and consistent with past
practices.
3.9 Guarantees. Except for the OCI Guaranty, which will be released on
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Closing, the Lease Obligation, which will be released on Closing except for the
Leased Equipment, and indemnity provisions in written Contracts listed in
Schedule 3.12(a), the Company is not a guarantor, indemnitor or insurer or
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otherwise liable for or in respect of any indebtedness of any person except as
an endorser of checks received by it and deposited in the ordinary course of
business.
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3.10 Real Property.
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(a) Fee Ownership. The Company does not own any real property;
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(b) Lease Obligations. On the date hereof the Company is leasing
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space in Cedar Falls, Iowa, pursuant to an oral arrangement from an
affiliate of the Stockholders. On the Closing, the Stockholders shall cause
the oral lease to be cancelled and the Company shall sublease the same
space from an affiliate of the Purchaser. The Company leases no other
space.
3.11 Tangible Personal Property . Except as set forth in Schedule 3.11.1
-------------------------- ---------------
regarding property indicated thereon as leased, the Company has or at Closing
will have good and marketable title to all equipment, computer hardware,
furniture, and other tangible personal property listed in Schedule 3.11.1
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(except for personal property disposed of in the ordinary course of business
after the date thereof and replaced with other personal property of comparable
value and utility), free and clear of any liens, claims, security interests,
options, leases, restrictions or encumbrances which adversely affect the
marketability of title thereto. The Stockholders shall cause any personal
property shown on Schedule 3.11.1 as not owned by the Company on the date hereof
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to be transferred to the Company at or prior to Closing except for personal
property listed in Schedule 3.11.1 which is leased by unrelated third parties to
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an affiliate of the Company on the date hereof (the "Leased Equipment"). On or
prior to the Closing, the Stockholders shall cause either the Leased Equipment
to be subleased to the Company or a new lease for such Leased Equipment to be
entered into between the Company and the lessor on substantially the same terms
as presently leased to the Company's affiliate and shall secure the Company's
release in regard to equipment covered by the lease other than the Leased
Equipment. The assets listed on Schedule 3.11.1 constitute all the tangible
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personal property used solely in the operation of the Company's Business as
currently conducted but do not include assets owned by affiliates of the Company
the use of which is shared by the Company other entities affiliated with the
Company. Schedule 3.11.2 lists all hardware used by the Company in the delivery
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of electronic products which is owned by and shared with affiliates of the
Company and is thus not being transferred to the Company on Closing. EXCEPT AS
EXPRESSLY PROVIDED HEREBY THE STOCKHOLDERS MAKE NO OTHER WARRANTY OR
REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, REGARDING THE PERSONAL
PROPERTY DESCRIBED IN SCHEDULE 3.11 OR ANY OTHER PERSONAL PROPERTY INCLUDING
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WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A SPECIFIC
PURPOSE. The Company does not hold any property on consignment, nor does the
Company hold title to any property in the possession of others.
3.12 Contracts.
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(a) Except as set forth in Schedule 3.12(a), except for the
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transactions with affiliates provided for in Section 6.6 or to be
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terminated on Closing pursuant to Section 3.12(d), and except as provided
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for in Section 3.11 as to Leased Equipment and Section 3.13(c) as to
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Licensed Property, the Company is not a party to, or bound by, any oral or
written contracts, agreements, commitments, arrangements or understandings
(the "Contracts"): (i) for the employment of any officer or employee which
is not terminable
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by the Company at will without penalty; (ii) for any indebtedness; (iii)
involving leasing personal property (including, without limitation, leases
for machinery and office equipment, furniture, fixtures and vehicles) which
require an annual payment in excess of $5,000 or the current term of which
exceeds two years; (iv) involving the payment or receipt of in excess of
$10,000 per annum by the Company or the current term of which exceeds one
year (other than Subscription Agreements as defined in Section 3.12(c);
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(v) providing for the services of distributors, sales representatives or
similar representatives; (vi) relating to the ownership, use or licensing
of any patents, trademarks, trade names, brand names, copyrights,
inventions, processes, know-how, formulae, technology, trade secrets or
other proprietary rights; (vii) containing covenants by or binding on the
Company not to compete or to abide by any confidentiality agreement; (viii)
for the sale of goods or services to any governmental authority, including
any open purchase order issued by such entities; (ix) relating to any joint
venture or partnership contract or agreement; (x) for the incurrence of any
capital expenditure in excess of $10,000; (xi) for or with respect to any
advertising except for advertising contracts made in the ordinary course of
business and for a duration not in excess of one year; and (xii) granting
to any person any right to purchase any of the Company's assets.
(b) Except for the transactions with affiliates provided for in
Section 6.6 or to be terminated on Closing pursuant to Section 3.12(d),
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except as provided for in Section 3.11 as to Leased Equipment and Section
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3.13(c) as to Licensed Property, and except for Subscription Agreements,
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all oral or written contracts, agreements, commitments or undertakings by
which the Company is bound, including without limitation the Contracts,
constitute legal, valid and binding obligations of the respective parties
thereto, are in full force and effect, and neither the Company or, to the
knowledge of the Stockholders, any other party thereto has violated any
provision of, or committed or failed to perform any act which with notice,
lapse of time or both would constitute a default under the provisions of
any such Contract, the termination of which could have a Material Adverse
Effect upon the Company. Correct and complete copies of all written
Contracts disclosed on Schedule 3.12(a) and all written amendments thereto
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have been delivered to the Purchaser. In respect to any oral Contract or
any oral amendment to a Contract, accurate summaries of the material terms
thereof have been delivered to the Purchaser.
(c) Except as disclosed in Schedule 3.12(c), with respect to any and
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all agreements of the Company, whether written or oral, relating to the
purchase of products or services of the Business by paying subscribers
("Subscription Agreements"):
(i) The Company is the contracting party that provides the products
or services under the Subscription Agreements;
(ii) The Subscription Agreements have all been entered into by the
Company in the ordinary course of business, and none of the Subscription
Agreements have been materially amended subsequent to the Balance Sheet
Date or provide for the Company's fees to be materially reduced below the
charges in effect thereunder on the Balance Sheet Date;
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(iii) To the Stockholders' knowledge, the satellite delivery system
utilized by the Business is currently capable of handling the volume of
data transmission services currently required by the Subscription
Agreements and no increased volume of such services has been promised by
the Company to its customers which would exceed such capability;
(iv) Since the Balance Sheet Date, claims for credits have been
adjusted in the ordinary course of business and on the Closing Date there
will be no outstanding material claims for credits, monies, or the like due
customers in regard to the Subscription Agreements;
(v) Since the Balance Sheet Date, the Company has received no
written notices of any warranty or indemnity claims by customers under any
of the Subscription Agreements which have not been settled with the
customer claimant except for claims which in the aggregate are not
material;
(vi) Since the Balance Sheet Date, any and all enhancements to
services required by the Subscription Agreements to be provided to
customers have been completed and implemented in a timely manner and no
contract for other enhancements to services has been entered into by the
Company with its customers;
(vii) Since the Balance Sheet Date, the Company has received no
written notice of default from any customer under any of the Subscription
Agreements where such default would result in a material liability;
(viii) Since the Balance Sheet Date, the Company has received no
notice of the filing by any customer of a petition in bankruptcy,
assignment for the benefit of creditors, a petition seeking reorganization,
composition, liquidation, dissolution or similar arrangement where the
impact of an adverse outcome would have a Material Adverse Effect on the
Business;
(ix) All accounts receivable arising therefrom shown on the Interim
Statements or arising thereafter, to the extent shown on the Company's
books as uncollected on the Closing, represent valid obligations incurred
by subscribers; and
(x) The Stockholders have no reason to believe that the
relationships of the Company with its customers are not good commercial
working relationships.
(d) Except as provided in Section 6.6 and 3.13(c), the Stockholders
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will cause the Company to terminate all arrangements with affiliates of the
Stockholders as of the Closing.
3.13 Intellectual Property.
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(a) The Company has good and marketable title to all domestic and
foreign patents, patent applications pending, patent applications in
process, trademarks,
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trademark registrations, trademark registration applications, copyrights,
copyright registrations, copyright registration applications, and service
marks, service ▇▇▇▇ registrations and service ▇▇▇▇ registration
applications listed in Schedule 3.13(a) (the "Intellectual Property").
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(b) There are no interference, opposition or cancellation proceedings
or infringement suits pending, or to the knowledge of the Stockholders,
threatened with respect to any Intellectual Property. To the knowledge of
the Stockholders, no other person is infringing on any Intellectual
Property and the Company is not infringing on the proprietary rights of
others and has not received any notice of a claim of such infringement
(c) The Company currently uses the software described in Schedule 3.13(c).1
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which is owned by or licensed to affiliates of the Company (the "Licensed
Property"). On or prior to the Closing, the Stockholders shall cause such
rights in the Licensed Property as such affiliates have on the date hereof
to be either transferred to or sublicensed to the Company. On the Closing,
the Company shall have the same rights to use the Licensed Property as such
affiliate had on the date hereof. The Company also uses the software on
Schedule 3.13(c).2, the right to the use of which is not being transferred
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to the Company. To the knowledge of the Stockholders, the software
described in Schedule 3.13(c).2 is all of the software owned by or licensed
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to affiliates of the Company which is being used by the Company and which
is not either owned or licensed to the Company or is Licensed Property. No
other software used by the Company through arrangements with its affiliates
except for the Licensed Property is being transferred to the Company and
all arrangements for the use of software of affiliates will be terminated
on Closing pursuant to Section 3.12(d); provided that the Stockholders
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shall cause the affiliates of the Company to permit the use of any other
software owned or licensed by affiliates of the Company which is not
transferred to be used by the Company at the Company's cost and risk after
the Closing until January 20, 1999 while the Purchaser is transitioning to
its own software systems.
(d) The Company does not have on the date hereof and shall not have on
the Closing any rights to the WITs Product or any applications thereof as
described in Schedule 3.13(d). It is the intent of the Stockholders that
----------------
the WlTs Product as so described will not compete with the Business as
currently conducted and based on the description in Schedule 3.13(d)
----------------
Purchaser concurs that the WITs Product will not compete with the Business
as presently conducted.
3.14 Compliance with Law.
-------------------
(a) The Company has the permits and licenses from governmental bodies
listed in Schedule 3.14(a) hereto. Such permits and licenses constitute all
----------------
of the permits and licenses required, to the knowledge of the Stockholders,
from federal, state or local authorities in order for the Company to
conduct the Business as currently conducted. To the Stockholders'
knowledge, the Company is in compliance with the terms and conditions of
all such permits and licenses. To the Stockholder's knowledge, no permits
and licenses will terminate on Closing.
-8-
(b) Except as disclosed in Schedule 3.14(b) hereto, to the knowledge
----------------
of the Stockholders, the Company is not in default under or in violation of
any applicable statute, law, ordinance, decree, order, rule, regulation,
franchise, permit or license of any governmental body, the violation of
which may result in a Material Adverse Effect.
3.15 Environmental Matters.
---------------------
(a) The Company has not violated, and has received no notice of any
violation of the Environmental Laws, whether on property owned, leased or
controlled by the Company or on property of others, or otherwise, and there
is no known condition with respect to the Company or its assets or its
prior actions which with the passage of time is reasonably likely to lead
to a material violation of any of the Environmental Laws. For this purpose,
"Environmental Laws" shall refer to any law, rule, or regulation of, any
federal, state or local governmental authority to which the properties,
assets, personnel or business activities of the Company are subject or to
which the Company is subject, and which relate to the environment
(including, without limitation, federal, state and local laws, statutes,
rules and regulations and the common law relating to environmental matters
and contamination of any type whatsoever, including, without limitation:
(i) treatment, storage, disposal, incineration, generation and
transportation of industrial, toxic or hazardous substances or solid or
hazardous waste; (ii) air, water and noise pollution; (iii) ground water
contamination; (iv) the release or threatened release into the environment
of industrial, toxic or hazardous substances, or solid or hazardous waste,
including, without limitation, emissions, discharges, injections, spills,
escapes, or dumping of pollutants, contaminants or chemicals; (v) the
protection of wildlife, marine sanctuaries and wetlands; (vi) the
protection of natural resources; (vii) storage tanks, vessels and related
equipment; (viii) abandoned or discarded barrels, containers and other
closed receptacles; (ix) health and safety of employees and other persons;
and (x) otherwise relating to the manufacture, processing, use,
distribution, treatment, storage, disposal, incineration, transportation,
or handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or solid or hazardous waste.
(b) The Company has obtained and maintained in good standing all
permits, inspections licenses and other authorizations which are required
under the Environmental Laws for the operation of the Company's business,
complete copies (or, if oral, a summary) of which have been provided to the
Purchaser.
(c) The Company is in compliance with all terms and conditions of such
required permits, licenses and authorizations, and it and its properties
are also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules,
timetables and other provisions contained in the Environmental Laws.
(d) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, notice of investigation,
proceeding notice or demand letter pending or, to the knowledge of the
Stockholders, threatened against the Company relating in any way to the
Environmental Laws.
-9-
(e) There are no orders from or agreements with any governmental or
any private party relating to violations of or compliance with the
Environmental Laws.
3.16 Boycott Matters. The Company is in compliance with all applicable
---------------
governmental statutes, laws, decrees, orders, rules and regulations which
prohibit or regulate the boycott of or refusal to deal with any person,
including, without limitation, the Export Administration Amendments of 1977 (50
U.S.C. App. Section 2401 et seq.), the Ribicoff Amendments to the Tax Reform Act
-- ---
of 1976 (Section 999 of the Internal Revenue Code of 1986, as amended to date
(the "Code")) and the ▇▇▇▇▇▇▇ Act (15 U.S.C. Section 1 et seq.), and all rules
-- ---
and regulations promulgated pursuant to the foregoing.
3.17 Litigation. Except as disclosed in Schedule 3.17, there is no suit,
---------- -------------
arbitration, claim, investigation, action or proceeding, in law or in equity,
now pending or, to the knowledge of the Stockholders, threatened before any
court, arbitrator, commission, administrative or regulatory body, or any
governmental agency to which the Company is a party or which may result in any
judgment, award, order, decree, liability or other determination which will or
could have a Material Adverse Effect or which will or could prevent or interfere
with the consummation of any transactions contemplated hereby. No such judgment,
order, award or decree has been entered, nor has any such determination been
made or liability been incurred, which has, or could have, such a Material
Adverse Effect.
3.18 Tax Matters.
-----------
(a) As used herein, the term "Tax" or "Taxes" means any and all
--- -----
federal, state, local or foreign income, corporation, gross receipts,
profits, gains, capital duty, franchise, withholding, payroll, social
security, unemployment, disability, property, wealth, welfare, stamp,
excise, occupation, sales, use, transfer, value added, alternative minimum,
recapture, estimated or similar tax, together with any interest, penalties
or additions in respect of the foregoing, and including any transferee or
secondary liability in respect of such taxes.
(b) Except as set forth on Schedule 3.18:
-------------
(i) the Company has timely filed in accordance with applicable law
all federal Iowa and foreign tax returns (including without limitation
information returns and other material information) (the "Returns")
required to be filed through the date hereof and shall timely file any
such returns required to be filed on or prior to the Closing Date. To
the knowledge of the Stockholders, all Returns and other information
filed are complete and accurate in all material respects. The Company
has not requested any extension of time within which to file Returns
(including without limitation information returns) in respect of any
Taxes, which Returns have not been filed except for 1997 Returns. The
Stockholders have made available to the Purchaser complete and
accurate copies of the Company's federal, state and local Tax returns
for the past three years together with all examination reports and
statements of deficiencies assessed against or agreed to by the
Company for any taxable period ended on or after January 1, 1993.
Schedule 3.18 indicates those Tax Returns of the Company filed
-------------
-10-
since January 1,1993 that have been audited and indicates those Tax
Returns that currently are the subject of audit;
(ii) all taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto have been paid in full;
(iii) There are no pending or, to the knowledge of the
Stockholders, threatened audits, investigations or claims for or
relating to any material additional liability in respect of Taxes, and
there are no matters under discussion with any governmental
authorities with respect to Taxes that in the reasonable judgment of
the Company or such Company's attorneys or accountants, is likely to
result in a material additional liability for Taxes. Except as set
forth on Schedule 3.18, no waiver or extension of a statute of
-------------
limitations relating to Taxes is in effect with respect to the
Company;
(iv) There are no liens for Taxes (other than for current Taxes
not yet due and payable) on any Company assets;
(v) The Company and each of its Stockholders made a valid election
effective as of April 1996, to be treated as an "S" corporation within
the meaning of Section 1361 of the Code for federal and applicable
state and local income Tax purposes. The Company has, for federal and
applicable state and local income Tax purposes, qualified as an "S"
corporation within the meaning of Section 1361 of the Code from the
effective date of its election to be treated as an "S" corporation
through the date of this Agreement and shall qualify as an "S"
corporation through and including the Closing Date. The Company has no
undistributed "C" corporation earnings and profits. Each Stockholder
of the Company, including the Stockholders, is and at all times has
been an individual or trust eligible to be a Stockholder of an "S"
corporation in accordance with Section 1361(b) of the Code. None of
the Stockholders of the Company or the Company has taken or omitted to
take any action which would cause the Company to cease to be treated
as an "S" corporation within the meaning of Section 1361 of the Code
for federal and applicable state and local income Tax purposes;
(vi) None of the assets of the Company (A) secures any debt the
interest on which is Tax-exempt under Section 103(a) of the Code, (B)
is "Tax-exempt use property" within the meaning of Section 168(h) of
the Code, (C) is used predominantly outside the United States within
the meaning of Proposed Treasury Regulation Section 1.168-2(g)(5), (D)
is "Tax exempt bond financing property" within the meaning of Section
1 68(g)(5) of the Code, (E) is "limited use property" with the meaning
of Revenue Procedure 76-30 or (F) shall be treated as owned by any
other person pursuant to the provisions of former Section 168(f)(8) of
the Code. The transactions contemplated by this Agreement are not
subject to Tax withholding pursuant to the provisions of Section 3406
or Subchapter A of Chapter 3 of the Code or any other provision of
applicable Law. None of the Stockholders is a person other than a
United States person within the meaning of the Code;
-11-
(vii) No claim with respect to the Company has been made on or
after January 1, 1993 by an authority in a jurisdiction where such
Company does not file Tax returns that the Company is or may be
subject to taxation by that jurisdiction;
(viii) The Company is not is a party to any Tax indemnity,
allocation or sharing agreement;
(ix) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, Stockholder or other
party, and has complied in all material respects with all laws
relating to Tax withholding;
(x) There is no unresolved dispute or claim concerning any Tax
liability of the Company either claimed or raised by any Tax authority
in writing. There are no outstanding rulings of, or requests for
rulings with, any Tax authority addressed to the Company that are, or
if issued would be, binding on the Company; and
(xi) The Company is not a party to any joint venture, partnership
or other arrangement or contract which could be treated as a
partnership for federal income Tax purposes.
3.19 Certain Payments. All payments by the Company to agents, consultants
----------------
and others have been in payment of bona fide fees and commissions and not as
bribes or illegal or improper payments. The Company has complied with all
applicable provisions of the Foreign Corrupt Practices Act of 1977 and the rules
and regulations thereunder. To the knowledge of the Stockholders, the Company
has not made any payment to or on behalf of any person with respect to which a
deduction could be disallowed under Section 162(c) of Code. Neither the Internal
Revenue Service nor any other federal, state, local or foreign government agency
or entity has initiated or threatened any investigation of any payment made by
or on behalf of the Company of, or alleged to be of, the type described in this
Section 3.19.
------------
3.20 Employees. Schedule 3.20 lists all employees employed directly by
--------- -------------
Company as of the date of this Agreement. All such individuals are employed,-
for payroll purposes, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Inc. Schedule 3.20 does not include
-------------
officers and directors of the Company who do not work full-time for the Company
or employees of affiliates of the Company who provide general, administrative,
accounting and other services for Company as well as other businesses affiliated
with Company. Schedule 3.20 includes the job title and aggregate annual cash
-------------
compensation of each individual listed as of the date of this Agreement. The
Stockholders have delivered to the Purchaser, true and correct copies of any
written employment agreements (including any non-compete agreements) with all
individuals listed on Schedule 3.20.
-------------
3.21 Labor Relations. There is neither pending nor, to the knowledge of
---------------
the Stockholders, threatened any labor dispute, labor organizing activity,
election petition or proceeding, proceeding preparatory thereto, strike, slow
down or work stoppage which affects or which may affect the Company's business,
or which may interfere with its continued operations, and neither the Company
nor any officer, director, employee or agent of the Company has
-12-
committed any unfair labor practice as defined in the National Labor Relations
Act of 1947, as amended. The Company is not a party to or bound by any
collective bargaining agreement. The Company's relations with its employees are
satisfactory and no employee paid other than on an hourly wage basis has
announced or threatened his or her intention to leave the Company's employ.
3.22 Benefit Plans.
-------------
(a) Schedule 3.22 sets forth a correct and complete list of all
-------------
employee welfare and pension benefit plans and all other employee benefit
arrangements and payroll practices providing employee benefits (including
all employment agreements; severance agreements; executive compensation
arrangements; incentive programs or arrangements; sick leave policies;
vacation pay and severance pay policies; salary continuation arrangements
for disability; consulting or similar compensation arrangements with any
Company employee; retirement plans; deferred compensation plans; bonus
programs; stock purchase arrangements; hospitalization medical or health
plans; life insurance plans; voluntary employee beneficiary associations;
tuition reimbursement or scholarship programs; and plans providing benefits
or payments in the event of a change in control, change in ownership or
sale of all or a substantial portion of the assets of the Company)
maintained by the Company or to which the Company contributes or is
required to contribute with respect to any current or former employee
(each, a "Company Plan," and collectively, the "Company Plans"). With
------------ -------------
respect to each Company Plan (other than a multiemployer plan as defined in
Section 3(37) or Section 4001(a)(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA") (a "Multiemplover Plan")):
(i) such Company Plan (and each related trust, insurance contract
or fund) complies in form, and has complied in its operation, in all
material respects with the applicable requirements of ERISA, the Code
and other applicable Laws;
(ii) all required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-l's and Summary Plan
Descriptions) have been filed or distributed in accordance with ERISA,
the Code and other applicable Laws.
(iii) all contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid
to each such Company Plan which is an Employee Pension Benefit Plan as
defined in Section 3(2) of ERISA (a "Pension Plan") and all
------------
contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Company Plan or
accrued in accordance with the past custom and practice of the
Company. All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each such
Company Plan which is a Welfare Plan (defined below);
(iv) each such Company Plan which is a Pension Plan that is
intended to meet the requirements of a "qualified plan" under Section
401 (a) of the Code, has received a currently applicable favorable
determination letter from the Internal
-13-
Revenue Service and, to the knowledge of the Stockholders, there exist
no circumstances that would adversely affect the qualified status of
any such Company Plan under Section 401(a) of the Code for which the
remedial amendment period has expired. All contributions made by the
Company to each Company Plan which is a Pension Plan are fully
deductible for federal income Tax purposes. Each transfer of assets
between Company Plans which are Pension Plans during the five year
period ending with the Closing Date is in compliance with ERISA and
the qualification requirements of Code Section 401(a);
(v) no such Company Plan (other than a Multiemployer Plan) is a
Pension Plan that is subject to Title IV of ERISA; and
(vi) the Stockholders have delivered to the Purchaser correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts and other funding
agreements which implement such Company Plan.
(b) With respect to each Company Plan which is an employee welfare
benefit plan as defined in Section 3(1) of ERISA (a "Welfare Plan") and
each Pension Plan that the Company or any member of either Company's
controlled group of entities (within the meaning of Code Sections 414(b),
(c), (m), or (o)) (each a "Controlled Group Member") maintains or ever has
-----------------------
maintained, or to which any of them contributes. ever has contributed or
ever has been required to contribute:
(i) no such Plan which is a Pension Plan is subject to Title IV of
ERISA;
(ii) the Company has not engaged in any non-exempt prohibited
transaction within the meaning of Title I of ERISA or Section
4975(c)(1) of the Code with respect to such Company Plan, nor has the
Company incurred any liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration
or investment of the assets of such Company Plan, and no action, suit,
proceeding, hearing or investigation with respect to the
administration or the investment of the assets of such Company Plan
(other than routine claims for benefits or claims relating to a
Multiemployer Plan that do not involve Company) is pending or, to the
knowledge of the Stockholders, threatened; and
(iii) neither the Company nor any Controlled Group Member has
incurred, and the Stockholders have no reason to expect that the
Company or any of its Controlled Group Members shall incur, any
liability to the PBGC (other than PBGC premium payments) or otherwise
under Title IV of ERISA (including any withdrawal liability) or under
the Code with respect to any such Plan which is a Pension Plan (other
than any Multiemployer Plan).
(c) Neither the Company, nor any Controlled Group Member contributes
to, ever has contributed to or ever has been required to contribute to any
Multiemployer Plan or
-14-
has incurred any withdrawal liability under Title IV, Subtitle E of ERISA
with respect to any Company Plan.
(d) Except as set forth on Schedule 3.22, the Company does not
-------------
maintain or ever has maintained, or does not contribute, ever has
contributed or ever has been required to contribute to any Welfare Plan
providing medical, health, life insurance or other welfare benefits for
current or future retired or terminated employees. their spouses or their
dependents (other than in accordance with Section 4980B of the Code).
(e) Except as provided for in Schedule 3.22, no payment, acceleration
-------------
or increase in benefits provided by the Company under any Company Plan
shall occur as a result of the consummation of the transactions
contemplated by this Agreement.
(f) The Company is not bound by any oral or written commitment to
provide any employee welfare or pension benefit plan or arrangement other
than the Company Plans or to modify the terms or conditions of any of the
Company Plans.
(g) After the Closing, no employees hired by the Company pursuant to
Section 6.6 hereof shall be participants in any Company Plan except as
-----------
provided in Section 6.14.
------------
3.23 Insurance.
---------
(a) Schedule 3.23(a) correctly identifies all insurance policies and
----------------
bonds covering the Company or its assets, properties, operations or
personnel and the amounts, basis of premiums and nature of coverage with
respect to each such policy. Such policies and bonds are in full force and
effect, without interruption of coverage since the date specified for each
such policy in Schedule 3.23(a), and, to the knowledge of the Stockholders,
----------------
are carried by financially responsible insurance carriers, and are in such
amounts and against such risks and losses as are ordinarily and customarily
maintained with respect to comparable businesses, assets, properties,
operations or personnel. With exceptions which are not in the aggregate
material, the Company has not received any notice of cancellation,
termination or non-renewal or denial of liability with respect to any
policy or bond. Schedule 3.23(a) indicates any such policies which will
----------------
terminate on the Closing.
(b) Schedule 3.23(b) lists all outstanding claims as of the date of
----------------
this Agreement by the Company against insurance carriers for damage to or
loss of property or income and all claims made against the Company as of
the date of this Agreement which have been referred to insurers or which
the Company believes to be covered by insurers.
3.24 Accounts. Schedule 3.24 hereto correctly identifies each bank,
-------- -------------
securities, commodities or other brokerage or similar account and safe deposit
box or other depository maintained by, or on behalf of, or for the benefit of,
the Company, and the name of each person with any power or authority to act with
respect thereto.
-15-
3.25 Intercompany Accounts, Working Capital and Dividends.
----------------------------------------------------
(a) Intercompany Receivable Account; Other Distributions. Prior to the
-------------------------------
Closing the Company has been and will be operated by all cash of the
Company being loaned to OCI and all cash required by the Company to operate
being advanced by OCI as required. The net amount due to (or from) the
Company from (or to) OCI is carried as due from (or to) related parties on
the Company's balance sheet (the "Intercompany Receivable Account"). All
-------------------------------
cash distributions to the Stockholders result in a decrease in the
Intercompany Receivable Account. The cost of acquiring the personal
property and the software required to be transferred to the Company on or
before the Closing pursuant to Sections 3.11 and 3.13(c) shall be charged
------------- -------
against and will thus reduce the Intercompany Receivable Account in the
amount of the fair market value of such property. Immediately prior to the
Closing, the Company shall distribute to the Stockholders the then balance
of the Intercompany Receivable Account or the Stockholders shall contribute
such balance to capital to the extent that such account is negative. The
Company shall make no other distributions to the Stockholders from the date
hereof to the Closing Date.
(b) Remaining Intercompany Items. On the Closing, after the
----------------------------
distribution (or contribution) of the Intercompany Receivable Account, no
amount shall be owed by (or to) affiliates of the Company or the
Stockholders to (or by) the Company.
3.26 Relationship of Assets at Closing to Assets Used in Business. After
------------------------------------------------------------
the transactions provided for in Sections 3.10, 3.11, 3.12(d), 3.13, 3.25 and
------------- ---- ------- ---- ----
6.6 and except as otherwise disclosed herein, the Assets at Closing will
---
constitute all of the tangible personal property used solely in the operation of
the Company's Business as currently conducted, all accounts receivable of the
Business except for the Intercompany Account Receivable, all Contracts and
Subscription Agreements, all Intellectual Property, all Licensed Property, all
permits and licenses from governmental bodies to the extent not terminable on a
change in control and all goodwill of the Company relating to the Business.
3.27 Customer List. The current customer lists and customer records are
-------------
the property of the Company. After the Closing, no entity controlled by the
Stockholders will be in possession of a copy of the customer list or customer
records of the Company.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF EACH OF THE STOCKHOLDERS
--------- ----------------------------------------------------------
REGARDING SHARES.
----------------
Each of the Stockholders hereby represents severally and not jointly,
as of the date hereof and as of the Closing Date, as follows:
4.1 Ownership of Stock. Each Stockholder is the lawful owner of the number
------------------
of Shares listed opposite the name of such Stockholder in Exhibit A attached
hereto, free and clear of all liens, encumbrances, restrictions and claims of
every kind except for a pledge to ANB to secure the OCI Guaranty which will be
released on Closing; each Stockholder has full legal right, power and authority
to enter into this Agreement and to sell, assign, transfer and convey such
Stockholder's Shares pursuant to this Agreement; and the delivery to Purchaser
of such
-16-
Stockholder's Shares pursuant to the provisions of this Agreement will transfer
to Purchaser valid title thereto, free and clear of all liens, encumbrances,
restrictions and claims of every kind.
4.2 No Restrictions Upon the Stockholders. Such Stockholder is not subject
-------------------------------------
to any restriction, agreement, law, judgment or levy which would prohibit or be
violated by the execution and delivery hereof or the consummation of the
transactions contemplated hereby except for a pledge to ANB to secure the OCI
Guaranty which will be released on Closing. This Agreement is the valid and
binding agreement of such Stockholder, enforceable in accordance with its terms.
4.3 Brokers and Finders. Such Stockholder has not engaged or authorized
-------------------
any broker, investment banker or other third party to act on such Stockholder's
behalf, either directly or indirectly, as a broker, finder or advisor in
connection with the sale of such Stockholder's Shares pursuant to this
Agreement.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER.
--------- -------------------------------------------
The Purchaser hereby represents and warrants to the Stockholders, as
of the date hereof and as of the Closing Date, as follows:
5.1 Organization, Standing and Corporate Authority. The Purchaser is a
----------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has full corporate power and authority to enter
into and perform this Agreement and consummate the transactions contemplated
hereby. The execution, delivery and performance hereof and the consummation of
the transactions contemplated hereby by the Purchaser have been duly authorized
by all necessary corporate action and this Agreement is a valid and binding
agreement of the Purchaser, enforceable in accordance with its terms.
5.2 Brokers and Finders. The Purchaser will be responsible for any broker,
-------------------
investment banker or other third party engaged by the Purchaser to act on its
behalf as a broker, finder or advisor in connection with the Purchaser's
purchase of the Shares.
SECTION 6 COVENANTS OF STOCKHOLDERS.
--------- -------------------------
The Stockholders hereby covenant and agree with the Purchaser as
follows:
6.1 Conduct of the Company Pending Closing. From the date hereof to and
--------------------------------------
including the Closing Date, the Stockholders shall cause the Company to operate
its business only in the usual and ordinary course, consistent with past
practice and in connection therewith, the Stockholders will not permit the
Company to (or enter into any agreement to):
(a) incur any indebtedness for borrowed money or assume, guarantee,
endorse except as an endorser of checks received by it and deposited in the
ordinary course of business or otherwise become responsible for the
obligations of any other individual, firm or corporation, or, except as
provided in Section 3.25 hereof, make any loans or advances to any
------------
individual, firm or corporation;
-17-
(b) except for dividends or distributions which would not violate
Section 3.25 hereof, make, declare or pay any dividend, or declare or make
------------
any distribution on, or redeem, purchase or otherwise acquire, any shares
of its outstanding capital stock or authorize the creation or issuance of
any additional shares of its capital stock or any options, calls or
commitments relating to its capital stock or any securities or obligations
convertible into or exchangeable for or giving any person any right to
subscribe for or acquire any shares of its capital stock;
(c) mortgage, pledge or otherwise encumber any of its properties or
assets;
(d) except as provided in Section 3.25 hereof, sell or transfer any of
------------
its properties or assets or cancel, release or assign any indebtedness owed
to them or any claims held by it, other than in the ordinary course of its
business;
(e) close any material facilities;
(f) except as provided in Sections 3.10, 3.11, 3.12, 3.13, 3.25 and
------------- ---- ---- ---- ----
6.6 hereof, make any investment of a capital nature either by purchase of
---
stock or securities, contributions to capital, property transfer or
otherwise, or by the purchase or lease of any property or assets of any
other individual, firm or corporation;
(g) enter into any joint venture, partnership or other similar
arrangement or form any other new arrangement for the conduct of its
business;
(h) except as provided in Sections 3.10, 3.11, 3.12, 3.13, 3.25 and
------------- ---- ---- ---- ----
6.6 hereof, enter into, amend or terminate any material contract, including
---
material leases, permits and licenses;
(i) increase in any manner the compensation or fringe benefits (other
than compensation or fringe benefits increases as may be required by law or
in accordance with its customary compensation practices and related changes
in fringe benefits) of any of its officers, directors or employees or pay
or agree to pay any pension or retirement allowance not required by any
existing plan or agreement to such officers, directors or employees, commit
itself to any pension, retirement or profit-sharing plan or agreement or
employment agreement (except for retainer or consulting agreements entered
into in the ordinary course of its business and except as provided in
Section 6.6, hereof) with or for the benefit of any officer, employee or
-----------
other person or, except as required by law, alter, amend, terminate in
whole or in part, or curtail or permanently discontinue distributions to,
any employee pension benefit plan;
(j) permit, to the extent within its control, any insurance policy
naming the Company as a beneficiary or a loss payable payee to be canceled
or terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination or cancellation replacement policies
providing substantially similar coverage are in full force and effect
provided, however, that this provision shall not apply to insurance which,
as disclosed in Schedule 3.23, will lapse or terminate on Closing;
-------------
(k) make any amendments to its Certificate of Incorporation or By-
laws;
-18-
(l) take any actions which would be inconsistent with keeping
available the services of its present employees and preserving its existing
relationships with its suppliers, customers and others or with the
uninterrupted maintenance of the Company's operations as a going concern;
or
(m) take or omit to take any action the effect of which could or will
render inaccurate any of the Stockholders' representations and warranties
set forth herein.
6.2 Access Pending Closing. From the date hereof to and including the
----------------------
Closing Date, the Stockholders shall cause the Purchaser and its accountants and
other representatives to have the right to full and complete access to the books
and records of the Company and the Company's employees and customers for the
purpose of making such investigation of the financial condition and operations
of the Company as the Purchaser may reasonably deem necessary; provided that any
contact with customers prior to Closing shall be on a basis mutually agreed upon
between the Stockholders and the Purchaser which is not calculated to reveal to
the customers contacted that the transactions provided for herein are
contemplated.
6.3 Consents of Third Parties. Prior to the Closing, the Stockholders
-------------------------
shall obtain, at their sole expense, all consents and other approvals from any
governmental agency, bureau or authority, or any other person (including any
lender or lessor), which are required of the Company as a result of or to
effectuate the transactions contemplated by this Agreement.
6.4 Resignations. The Stockholders who are also officers or directors of
------------
the Company shall deliver to the Purchaser on Closing their resignations as
officers and directors. On the Closing, the Stockholders shall also deliver to
Purchaser the resignations of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as officers of
the Company.
6.5 Transfers. The Stockholders shall cause the transfers to or from the
---------
Company provided for in Sections 3.10, 3.11, 3.13 and 3.25 to occur on or before
------------- ---- ---- ----
the Closing.
6.6 Continuing Relationships.
------------------------
(a) Company Employees. On the Closing, the Stockholders shall cause
-----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Inc. to terminate as employees for payroll purposes those
individuals listed in Schedule 6.6(a) and such individuals shall be offered
---------------
the opportunity to become employees of the Company on the Closing for
payroll purposes on terms and conditions, except for fringe benefits,
comparable to those paid by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Inc. to such individuals and
reimbursed by the Company. The Stockholders shall cause all wages,
salaries, commissions, bonuses, incentives, and the cost of all fringe
benefits provided to such employees (including, without limitation claims
against the Oster Communications, Inc. Health Plan arising prior to Closing
but billed thereafter) which shall have become due in the future for work
performed as of and through the Closing Date to be paid by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Inc. and credited against the Intercompany Receivable Account as of
the Closing, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Inc. shall withhold and pay all taxes in
respect of such wages, balances, commissions, bonuses, incentives and
benefits provided that the Company shall assume all obligations for accrued
vacation and sick days and shall use its best efforts to procure a waiver
of severance pay, if any, due from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Inc.
-19-
due to their termination of employment by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Inc. for any
such individuals employed by the Company pursuant to this Section. Should
the Company become liable to any such employees for severance payments
resulting from their termination pursuant to this Section which are not
waived after use of such best efforts, the Stockholders shall cause such
payments to be made by OCI on behalf of the Company and to be credited
against the Intercompany Account Receivable. All individuals who are listed
on Schedule 3.20 but are not listed on Schedule 6.6(a) shall not be
------------- ---------------
employees of the Company after the Closing Date and the Stockholders shall
be responsible for any accrued vacation, sick days, and severance due to
such individuals as a result of the transactions provided for herein. The
Stockholders shall prevent the Company from raising the compensation of
those individuals listed on Schedule 6.6(a) from that disclosed in Schedule
--------------- --------
3.20 prior to Closing without the written consent of Purchaser.
----
(b) Offers to Other Employees. In addition to those individuals listed
-------------------------
in Schedule 6.6(a), Purchaser may offer employment on the Closing by
---------------
Purchaser or an affiliate of Purchaser to ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), chief
financial officer of OCI, on the condition that (i) ▇▇▇▇▇▇▇ shall be
allowed to perform consulting services for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and any
entities controlled by the Stockholders for twelve months subsequent to
Closing provided that such consulting services do not interfere with his
employment by Purchaser or an affiliate of Purchaser, and (ii) ▇▇▇▇▇▇▇
shall waive any claims he may have for severance payments or other benefits
on termination of his employment with OCI and any related entities. Should
▇▇▇▇▇▇▇ accept employment with Purchaser or an affiliate of Purchaser on
Closing, the Purchaser or such affiliate may also offer employment to ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇'▇ secretary, provided that the Purchaser or such affiliate
shall provide her services on a half-time basis to act as secretary for
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ for twelve months subsequent to Closing or such shorter
period as ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall desire her services for a fee of $1,500
per month. Except as provided in Sections 6.6(a) and (b), during the
--------------- ---
Noncompetition Period as defined in Section 6.13, Purchaser or any
------------
affiliate of Purchaser shall not offer to employ or employ, directly or
indirectly, any individual employed on the Closing Date in any capacity by
any entity listed in Schedule 3.5 except (i) with the prior written
------------
permission of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or (ii) one year after such individual was
last employed by an entity listed in Schedule 3.5.
------------
6.7 No Shop Clause. For the period commencing on the date hereof and
--------------
ending on the date, if any, this Agreement is terminated pursuant to Section 10,
----------
the Stockholders shall not solicit, contact or have any discussion, and shall
not permit the Company to solicit, contact or have any discussion, with any
person or entity with a view to (i) the acquisition of any assets of the
Company, (ii) the acquisition of any capital stock of the Company, (iii) the
merger or consolidation of the Company, or (iv) the acquisition by the Company
of the stock or assets of any other person or entity. The Stockholders shall
give the Purchaser immediate telephonic notice regarding all details of any
attempt by any third party to solicit, contract or discuss the matters set forth
in clauses (i)-(iv) above.
6.8 Closing. The Stockholders shall use their best efforts to cause the
-------
conditions specified in Section 8 (other than Sections 8.12 and 8.13) hereof to
--------- ------------- ----
be satisfied at or as soon as practical after the date hereof.
-20-
6.9 Election to Treat as Asset Sale. The Stockholders will join the
-------------------------------
Purchaser in making an election under Section 338(h)(10) of the Internal Revenue
Code of 1986 and any corresponding elections available under state, local or
foreign law with respect to the purchase and sale of Shares (collectively,
"Election"). On the Closing, each Stockholder will deliver to Purchaser an
executed Form 8023 which Purchaser may utilize to make the Election. Pursuant to
the Election, the Company will be deemed for federal and Iowa and Illinois state
income tax purposes to have sold its assets while still owned by Stockholders
and to have immediately liquidated by distributing the proceeds of the deemed
sale to the Stockholders and the Purchaser will be deemed to have purchased such
assets in a new corporation.
6.10 Allocation of Purchase Price. The Purchaser and the Stockholders
----------------------------
agree that the modified aggregate deemed sale price as defined in Treas. Reg.
(S) 1.338(h)(10)-1(f)(1) shall be allocated to the assets of the Company for all
purposes (including tax and financial statement purposes) in a manner consistent
with the fair market value of the Company's assets set forth on Schedule 6.10 to
-------------
this Agreement.
6.11 Publicity. Prior to the Closing, the Stockholders shall not, and
---------
shall not permit the Company to, cause or permit any press release or other
announcement concerning the transactions contemplated by this Agreement or
disclose the existence or contents hereof without the prior written consent of
Purchaser, except as required to carry out the transactions provided for herein
and except for discussions with attorneys, accountants, agents and bankers
involved herein; provided that on the Closing the parties shall cooperate in the
timing and contents of a joint announcement concerning the transactions provided
for herein.
6.12 Non-Disclosure. After the Closing, the Stockholders agree to keep
--------------
confidential and shall not, except with the express prior written consent of
Purchaser, directly or indirectly, voluntarily or involuntarily, communicate,
disclose or divulge to anyone or for the benefit of anyone other than the
Purchaser any and all confidential information concerning the conduct and
details of the Company's Business including, without limitation, trade secrets,
customer lists, technology, know-how, methods, contracts, costs, policies, sales
methods, financial condition, operations, statistics and suppliers; provided
that this section shall not apply (i) to any information available from other
public sources, (ii) any information already known to the recipient unless such
knowledge emanated from a breach of this section, and (iii) to the extent
disclosure is required by law.
6.13 Non-Competition.
---------------
(a) The Stockholders agree that they shall not, during the period
commencing on the Closing and ending on the fifth annual anniversary of the
Closing (the "Non-Competition Period"), directly or indirectly, in any
capacity, whether as employee, owner, investor, lender, partner, agent,
director, officer, shareholder, or in any other capacity, for their own
benefit or for the benefit of anyone other than Purchaser:
(i) Engage in any Prohibited Activity (as defined below), provided
that nothing herein shall be construed to prevent Stockholders from
owning, on a wholly passive basis, up to an aggregate of 5% of a class
of equity securities issued by an entity that engages in any
Prohibited Activity that is publicly traded
-21-
and registered under the Securities Exchange Act of 1934, as amended.
For this purpose, "Prohibited Activity" shall mean activities that
would compete directly with the Business as presently conducted;
provided that Prohibited Activities shall not include the production
and sale of products and services currently being produced, published,
distributed or sold by OCI, FSIS and FWN and the sale of advertising
therein as well as updated and functional extensions of such products
and additional products which are similar in function and purpose or
use ("Existing Products"); provided further that until the second
anniversary of the Closing, Existing Products shall not include a
snapshot commodity quotations product delivered by satellite.
(ii) Employ or attempt to employ any individual employed on the
day following the Closing Date in any capacity by the Company,
Purchaser, Farm Journal, Inc., or MS Farm International Limited
Partnership except (i) with the written permission of Purchaser or
(ii) one year after such individual was last employed by the Company,
Purchaser, Farm Journal, Inc., or MS Farm International Limited
Partnership.
(iii) Request or advise any customer of the Business as presently
conducted to withdraw, curtail or cancel such customer's business with
the Company.
(iv) Knowingly use the Company's customer list.
(b) Any breach by the Stockholders of the provisions of this Section 6
---------
13 or Section 6.12 will result in irreparable injury to the Purchaser for
-- ------------
which money damages could not adequately compensate the Purchaser, and, in
the event of any such breach Purchaser shall be entitled to have an
injunction issued by any competent court of equity enjoining and
restraining such breach. The existence of any claim or cause of action the
Stockholders may have against the Purchaser shall not constitute a defense
or bar to the enforcement of such covenants.
(c) If any portion of Section 6.13(a) or the application thereof is
---------------
construed to be invalid or unenforceable, then the other portions of
Section 6.13(a) or the application thereof shall not be affected and shall
---------------
be given full force and effect without regard to the invalid or
unenforceable portions. If any portion of Section 6.13(a) is held
---------------
unenforceable because of the area covered, the duration thereof, or the
scope thereof, the court making such determination shall have the power to
reduce the area and/or duration and/or limit the scope thereof and the
provisions of Section 6.13(a) shall then be enforceable in reduced form.
---------------
6.14 Employee Benefit Matters.
------------------------
(a) Company Plans. The Stockholders agree that, effective as of the
-------------
Closing, the Company shall cease to be a participating employer in each
Company Plan listed in Schedule 3.22. On or before the Closing, the
-------------
Stockholders shall cause OCI and the Company to execute all necessary
documents to cause the Company to cease to be a
-22-
participating employer in each such Company Plan. The Stockholders agree
that the Purchaser shall have no liability or obligation with respect to
any such Company Plan.
(b) COBRA. The Stockholders agree that OCI shall be responsible for
-----
satisfying all liabilities under Part 6 of Title B of Title I of ERISA and
Section 3980B of the Code to provide continuation coverage and notice of
such coverage to employees of the Company and their eligible dependents who
incur a "qualifying event" on or prior to the Closing.
(c) HIPAA. The Stockholders agree that OCI shall be responsible for
-----
satisfying all liabilities under Part 7 of Subtitle B of Title I of ERISA
and Sections 9801 and 3980D of the Code to provide certifications of
coverage to employees of the Company and their eligible dependents who
become entitled to such certifications as a result of termination of
coverage or employment occurring on or prior to the Closing.
(d) OCI Cafeteria Plan. As soon as practicable following the Closing,
------------------
the Stockholders shall cause the medical spending account balances and the
dependent care account balances of employees hired by the Company pursuant
to Section 6.6(a) or 6.6(b) under the OCI Cafeteria Plan to be transferred
-------------- ------
to the Purchaser's Section 125 cafeteria plan, in accordance with the
provisions of each such plan and applicable law. The Stockholders shall
cause OCI to adopt any necessary amendments to the OCI Cafeteria Plan in
order to enable the Plan to make a transfer of accounts to the Purchaser's
cafeteria plan. The Purchaser agrees to cooperate with OCI in effecting any
such transfers of account balances from the OCI Cafeteria Plan to the
Purchaser's cafeteria plan and agrees to adopt any necessary amendments to
Purchaser's cafeteria plan in order to permit the plan to accept a transfer
of accounts from the OCI Cafeteria Plan.
(e) OCI Employee Savings Plan. On or before the Closing, the
-------------------------
Stockholders shall cause the Company to terminate its participation in the
OCI Employee Savings Plan and the account balances of employees hired by
the Company pursuant to Sections 6.6(a) or 6.6(b) under the OCI Employee
--------------- ------
Savings Plan to be distributed to such employees in accordance with the
Plan and applicable law as soon as reasonably practical after Closing.
(f) Intercompany Charge. All amounts assumed by OCI pursuant to
-------------------
Section 6.14 shall reduce the Intercompany Receivable Account.
------------
6.15 Referrals. From and after the Closing Date, the Stockholders agree to
---------
refer any and all customer inquiries received by them or any of their affiliates
relating to the Company or the Business to the Company and to promptly notify
the Company of such inquiries on a regular basis.
SECTION 7 COVENANTS OF PURCHASER.
--------- ----------------------
The Purchaser hereby covenants and agrees with the Stockholders as
follows:
7.1 Books and Records. In connection with any tax audit of the
-----------------
Stockholders, or the preparation of any tax return of the Stockholders, or the
defense of any claim brought against the
-23-
Stockholders, or any other proper purpose, the Purchaser will cause the Company
to make available to the Stockholders, at the Stockholders' request and expense
from time to time, all books and records of the Company either existing on or
relating to any transaction on or prior to the Closing Date, for inspection or
copying by the Stockholders at any reasonable time for a six year period after
the Closing Date.
7.2 Closing. The Purchaser will use its best efforts to cause the
-------
conditions specified in Section 9 and in Sections 8.12 and 8.13 hereof to be
--------- ------------- ----
satisfied at or as soon as practicable after the date hereof.
7.3 Continuing Relationships. For the periods subsequent to the Closing
------------------------
provided for therein, the Purchaser shall comply with the provisions of Sections
--------
6.6(a) and (b).
------ ---
7.4 Publicity. Prior to the Closing, the Purchaser shall not cause or
---------
permit any press release or other announcement concerning the transactions
contemplated by this Agreement or disclose the existence or contents hereof
without the prior written consent of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, except as required to
carry out the transactions provided for herein, except for discussions with
attorneys, accountants, agents and bankers involved herein and except in a
registration statement filed with the Securities and Exchange Commission;
provided that on the Closing the parties shall cooperate in the timing and
contents of a joint announcement concerning the transactions provided for
herein.
7.5 Nonsolicitation. During the Non-Competition Period, the Purchaser
---------------
shall comply with the last sentence of Section 6.6(b).
--------------
SECTION 8 CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE.
--------- ----------------------------------------------
The obligation of the Purchaser hereunder to proceed with the Closing
is subject to the satisfaction on or before the Closing Date of each of the
following conditions, unless otherwise waived in writing by the Purchaser. All
documents, instruments and opinions to be furnished by the Stockholders pursuant
hereto shall be in form and substance reasonably satisfactory to the Purchaser
and its counsel.
8.1 Representations and Warranties. The representations and warranties of
------------------------------
the Stockholders contained herein, and in any certificate or other writing
delivered pursuant hereto or in connection herewith, shall be true and correct
in all respects on and as of the Closing Date.
8.2 Performance. The Stockholders shall have duly performed or complied
-----------
with all of the covenants, acts and obligations to be performed or complied with
by them hereunder at or prior to the Closing.
8.3 Liabilities. Except for liabilities reflected in the Financial
-----------
Statements or on the Schedules hereto, and except for trade account payables
incurred by the Company since the Balance Sheet Date in the normal and ordinary
course of the Company's business on the Closing Date there shall not be any
liabilities of the Company of any kind whatsoever, whether or not accrued or
fixed, absolute or contingent, known or unknown, determined or determinable, nor
shall there be any condition or circumstance existing or which has existed, and
no event shall have occurred which could reasonably be expected to result in any
such liability, which liabilities
-24-
in any such case could, individually or in the aggregate, adversely affect (for
financial or other reasons) the ability of the Company to continue to conduct
the Business (as presently conducted) on and after the Closing Date.
8.4 Shares. Each of the Stockholders shall have delivered to the Purchaser
------
a certificate or certificates representing all of his or her Shares, duly
endorsed by such Stockholder for transfer to the Purchaser or accompanied by an
assignment of such Shares to the Purchaser duly executed by each such
Stockholder.
8.5 Corporate Books. The Stockholders shall have delivered to the
---------------
Purchaser the corporate minute books, seals (if any) and stock transfer records
of the Company.
8.6 Resignations. The Stockholders shall have delivered to the Purchaser
------------
the written resignations of all of the officers and directors of the Company
required pursuant to Section 6.4, hereof, effective as of the Closing, on the
-----------
Closing Date.
8.7 Proof of Good Standing. The Stockholders shall have delivered to the
----------------------
Purchaser (i) a certified copy of the Certificate of Incorporation of the
Company, and all amendments thereto, and (ii) a Certificate of Good Standing
with respect to the Company, dated within ten days of the Closing Date, from the
State of Iowa.
8.8 Transfers and Release of Guarantees. The transfers to and from the
-----------------------------------
Company provided for in Sections 3.10, 3.11, 3.13 and 3.25 shall have occurred,
------------- ---- ---- ----
the Lease Obligation shall be released as provided in Section 3.9, and the OCI
-----------
Guaranty shall have been released by ANB prior to or simultaneously with the
Closing.
8.9 Certificate of Officer. The Purchaser shall have received a
----------------------
certificate signed by the President of the Company, dated the Closing Date,
either (i) stating that the representations and warranties contained herein or
in any certificate or other writing delivered pursuant hereto or in connection
herewith are accurate on and as of the Closing Date and that the Stockholders
have duly performed or complied with all of the covenants, acts and obligations
to be performed or complied with by them hereunder at or prior to the Closing or
(ii) specifying in which respects such warranties and representations are not
accurate at Closing or such covenants, acts and obligations have not been
performed or complied with despite the exercise of the Stockholders' best
efforts pursuant to Section 6.8. In the event a certificate described in clause
------------
(ii) or the prior sentence is delivered to Purchaser, Purchaser shall have the
right in its sole discretion to terminate this Agreement and Purchaser shall
have no claim for breach of a warranty, representation or covenant described
therein, but such certificate shall itself be deemed a representation and
warranty by the Stockholders hereunder.
8.10 Opinion of Counsel. The Purchaser shall have received from the law
------------------
firm of Jenner & Block, counsel to the Stockholders, an opinion of such counsel,
dated the Closing Date, in form and substance reasonably acceptable to the
Purchaser and its counsel, to the effect that:
(a) This Agreement is a valid and binding agreement of the
Stockholders and is enforceable against each of them in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights, or the availability of equitable remedies.
-25-
(b) All requisite action has been taken by the Stockholders to legally
enter into and consummate the transactions contemplated by this Agreement,
including but not limited to, the transfer of each such Stockholder's
Shares to the Purchaser on the Closing Date.
(c) The authorized capital stock of the Company consists of 1,000
shares of Common Stock, with no par value, of which 500 shares are issued
and outstanding. All of the issued and outstanding Shares have been duly
authorized and validly issued, and are fully paid and non-assessable.
(d) Upon delivery of the Shares to the Purchaser by the Stockholders,
the Purchaser will acquire good and marketable title to the Shares free
from any adverse claim or restriction, except those claims, if any,
resulting from any acts of the Purchaser.
(e) Company is a corporation which is duly organized, validly existing
and in good standing under the laws of the State of Iowa and has corporate
power and authority in Iowa to own and use its assets and properties, and
to carry on its business as same was being conducted immediately prior to
the Closing Date.
(f) Neither the execution and delivery of this Agreement by the
Stockholders, nor the Stockholders' compliance with the terms and
provisions hereof, has resulted or will result in the violation or breach
of any statute or regulation of the United States of America, the State of
Iowa, or any other jurisdiction in which the Company conducts its business,
or will violate or conflict with or constitute a default or result in or
permit the acceleration of any obligation or give rise to any lien under,
the Certificate of Incorporation (or other charter document), By-laws, or
any agreement or other instrument, order, decree or award of or applicable
to the Company, known to such counsel.
(g) Except as disclosed in any Schedule hereto, such counsel has no
knowledge of any material litigation, proceeding, governmental
investigation or labor dispute, whether pending or threatened, against or
relating to the Company, or any of its property or assets.
8.11 PFA Closing. The sale of all the stock of Professional Farmers of
-----------
America, Inc. ("PFA") to Purchaser pursuant to a separate agreement between
Purchaser and Stockholders shall close simultaneously with the Closing.
8.12 Financing. The Purchaser shall have obtained financing satisfactory
---------
to Purchaser in Purchaser's sole discretion in order to complete the
transactions provided for herein. Unless Purchasers all have delivered notice to
Stockholders of termination pursuant to Section 10.2 hereof for failure to
------------
satisfy this condition before 5:00 p.m. (CST) on March 27, 1998, this condition
shall be deemed satisfied.
8.13 Due Diligence. The Purchaser shall be satisfied, in its sole
-------------
discretion, with the outcome of its due diligence investigation of the Company.
Unless Purchaser shall have delivered notice to Stockholders of termination
pursuant to Section 10.2 for failure to satisfy this condition before 5:00 p.m.
------------
(CST) on March l3, 1998, this condition shall be deemed satisfied.
-26-
8.14 Further Assurances. The Stockholders shall deliver to the Purchaser
------------------
such other documents and instruments as may be reasonably required to consummate
the transactions contemplated hereby.
SECTION 9 CONDITIONS TO OBLIGATION OF STOCKHOLDERS TO CLOSE.
--------- -------------------------------------------------
The obligation of the Stockholders to proceed with the Closing is
subject to the satisfaction on or before the Closing Date of each of the
following conditions, unless waived in writing by the Stockholders.
9.1 Representations and Warranties. The representations and warranties of
------------------------------
the Purchaser contained herein and in any certificate or other writing delivered
pursuant hereto or in connection herewith shall be true and correct in all
respects on and as of the Closing Date.
9.2 Performance. The Purchaser shall have duly performed or complied with
-----------
all of the covenants, acts and obligations to be performed or complied with by
the Purchaser hereunder on or prior to the Closing Date.
9.3 PFA Closing. The purchase of all the stock of PFA by Purchaser
-----------
pursuant to a separate agreement between Purchaser and Stockholders shall close
simultaneously with the Closing.
SECTION 10 TERMINATION.
---------- -----------
10.1 Mutual Termination; Termination For Unsatisfaction of Conditions.
----------------------------------------------------------------
This Agreement may be terminated and abandoned, without limiting or waiving any
other rights and remedies any party may have at law or in equity, at any time
prior to the consummation of the Closing on the Closing Date under the following
described circumstances:
(a) Upon the mutual written consent of the Purchaser and the
Stockholders.
(b) By the Purchaser, if the conditions set forth in Section 8 hereof
---------
(except for those set forth in Sections 8.12 and 8.13) shall not be fully
------------- ----
satisfied or waived by the Purchaser, on or before the Closing Date.
(c) By the Stockholders, if the conditions set forth in Section 9
---------
hereof shall not be fully satisfied or waived by the Stockholders, on or
before the Closing Date.
(d) By either party, in the event that the other party fails to
perform or observe any of the covenants or obligations to be performed or
observed by the other party under this Agreement, or in the event that the
other party shall breach any of the representations or warranties contained
in this Agreement. In such case, the non-breaching party shall be entitled
to any and all rights and remedies available at law or in equity,
including, without limitation, specific performance and injunctive relief,
all of which shall be cumulative.
-27-
10.2 Termination Due to Financing or Due Diligence.
---------------------------------------------
(a) If the purchaser, in its sole discretion, determines on or before
March 13, 1998 that the condition set forth in Section 8.13 has not been
------------
satisfied for any reason, the Purchaser may terminate this Agreement by
delivering written notice thereof to the Stockholders before 5:00 p.m.
(CST) on March 13, 1998, in which event this Agreement shall be null and
void.
(b) If the Purchaser, in its sole discretion, determines on or before
March 27, 1998 that the condition set forth in Section 8.12 has not been
------------
satisfied for any reason, the Purchaser may terminate this Agreement by
delivering written notice to the Stockholders before 5:00 p.m. (CST) on
March 27, 1998, in which event this Agreement shall be null and void.
10.3 Termination Due to Loss. The Purchaser shall have the right to
-----------------------
terminate this Agreement by delivering written notice thereof to the
Stockholders before the Closing Date in the event of a material loss,
destruction or damage to the Business or Assets of the Company subsequent to the
date of this Agreement as a result of fire, storm, casualty, other acts of God
or theft of a substantial amount of the Assets, whether or not such loss is
covered by insurance, in which event this Agreement shall be null and void.
SECTION 11 INDEMNIFICATION AND SURVIVAL.
---------- ----------------------------
11.1 Indemnification of the Purchaser by the Stockholders. The
----------------------------------------------------
Stockholders agree to jointly and severally indemnify, defend, and hold the
Purchaser, the Company and their respective officers, directors and
shareholders, and their respective heirs, executors, personal representatives,
successors and assigns (each, a "Purchaser Indemnified Party"), harmless from
and against any and all costs, expenses, losses, damages, fines, penalties or
liabilities (including, without limitation, interest which may be imposed in
connection therewith, court costs, litigation expenses, reasonable attorneys'
fees and accounting fees) incurred by any Purchaser Indemnified Party with
respect to, in connection with, arising from, or alleged to result from, arise
out of, or in connection with:
(a) A breach of any representation or warranty made by the
Stockholders and contained in this Agreement (except Section 4 hereof) or
---------
any exhibit or schedule attached hereto;
(b) A breach of any covenant, restriction or agreement made by or
applicable to the Stockholders and contained in this Agreement; and
(c) Any state and local Taxes (other than Iowa Taxes) incurred by the
Company for the period prior to the Closing provided that this indemnity
shall not apply to Taxes of states and localities in states in which either
(i) the Company registers to do business subsequent to the Closing or
locates an office, property or employee in subsequent to the Closing or
(ii) the Purchaser or any affiliate of the Purchaser other than the Company
is registered to do business in or paying sales taxes to or has an office,
property or employees in on or subsequent to the Closing.
-28-
11.2 Indemnification of the Purchaser by the Stockholders Regarding Shares.
---------------------------------------------------------------------
Each of the Stockholders shall indemnify, defend, and hold the Purchaser, the
Company and their respective officers, directors and shareholders, and their
respective heirs, executors, personal representatives, successors and assigns,
harmless from and against any and all costs, expenses, losses, damages, fines,
penalties or liabilities (including, without limitation, interest which may be
imposed in connection therewith, court costs, litigation expenses, reasonable
attorneys' fees and accounting fees) incurred by any of such parties with
respect to, in connection with, arising from, or alleged to result from, arise
out of, or in connection with:
(a) a breach by such Stockholder of any representation or warranty
made by such Stockholder in Section 4 of this Agreement; and
---------
(b) any activities undertaken by such Stockholders subsequent to the
Closing allegedly or purportedly acting on behalf of the Company subsequent
to the Closing except for those activities expressly provided for in this
Agreement.
11.3 Indemnification of the Stockholders. The Purchaser shall indemnify,
-----------------------------------
defend and hold the Stockholders and their respective heirs, executors, personal
representatives, successors and assigns, harmless from and against any and all
costs, expenses, losses, damages, fines, penalties or liabilities (including,
without limitation, interest that may be imposed in connection therewith, court
costs, litigation expenses, reasonable attorneys' fees and accounting fees)
incurred by any of such parties with respect to, in connection with, arising
from, or alleged to result from. arise out of, or in connection with:
(a) A breach by the Purchaser of any representation or warranty made
by the Purchaser and contained in this Agreement; and
(b) A breach by the Purchaser of any covenant, restriction or
agreement made by the Purchaser or applicable to the Purchaser and
contained in this Agreement.
11.4 Procedure for Indemnification.
-----------------------------
(a) The party which is entitled to be indemnified hereunder (the
"Indemnified Party") shall promptly give notice hereunder to the
indemnifying party after obtaining written notice of any claim as to which
recovery may be sought against the indemnifying party because of the terms
of this Section 11 and, if such indemnity shall arise from the claim of a
----------
third party, shall permit the indemnifying party to assume the defense of
any such claim and any litigation resulting from such claim.
Notwithstanding the foregoing, the right to indemnification hereunder shall
not be affected by any failure of an Indemnified Party to give such notice
or delay by an Indemnified Party in giving such notice unless, and then
only to the extent that, the rights and remedies of the indemnifying party
shall have been prejudiced as a result of the failure to give, or delay in
giving, such notice. Failure by an indemnifying party to notify an
Indemnified Party of its election to defend any such claim or action by a
third party within twenty-one days after notice thereof shall have been
given to the indemnifying party shall be deemed a waiver by the
indemnifying party of its right to defend such claim or action.
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(b) If the indemnifying party assumes the defense of such claim or
litigation resulting therefrom, the obligations of the indemnifying party
hereunder as to such claim shall include taking all steps necessary in the
defense or settlement of such claim or litigation and holding the
Indemnified Party harmless from and against any and all damages caused by
or arising out of any settlement approved by the indemnifying party or any
judgment in connection with such claim or litigation. The indemnifying
party shall not, in the defense of such claim or any litigation resulting
therefrom, consent to entry of any judgment (other than a judgment of
dismissal on the merits without costs) except with the written consent of
the Indemnified Party or enter into any settlement (except with the written
consent of the Indemnified Party) which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
the Indemnified Party a release from all liability in respect of such claim
or litigation. Anything herein to the contrary notwithstanding, the
Indemnified Party may, with counsel of its choice and at its expense,
participate in the defense of any such claim or litigation.
(c) If the indemnifying party shall not assume the defense of any such
claim by a third party or litigation resulting therefrom after receipt of
notice from such Indemnified Party, the Indemnified Party may defend
against such claims or litigation in such manner as it deems appropriate,
and unless the indemnifying party shall deposit with the Indemnified Party
a sum equivalent to the total amount demanded in such claim or litigation
plus the Indemnified Party's estimate of the costs of defending the same,
the Indemnified Party may settle such claim or litigation on such terms as
it may deem appropriate and the indemnifying party shall promptly reimburse
the Indemnified Party for the amount of such settlement and for all damage
incurred by the Indemnified Party in connection with the defense against or
settlement of such claim or litigation.
(d) The indemnifying party shall promptly reimburse the Indemnified
Party for the amount of any judgment rendered with respect to any claim by
a third party in such litigation and for all damage incurred by the
Indemnified Party in connection with the defense against such claim or
litigation, whether or not resulting from, arising out of, or incurred with
respect to, the act of a third party.
11.5 Survival. All covenants and agreements of any party hereto set forth
--------
herein shall survive the Closing. Further, all representations and warranties in
this Agreement shall survive the Closing and shall remain in effect for a period
of 24 months after the Closing except with respect to any and all
representations and warranties relating to environmental and tax matters which
shall survive for the applicable statute of limitations period. The Stockholders
agree that, notwithstanding any right of the Purchaser to fully investigate the
affairs of the Company and notwithstanding any knowledge of fact determined or
determinable by the Purchaser pursuant to such investigation or right of
investigation, the Purchaser has the right to rely fully upon the
representations, warranties, indemnities, covenants and agreements of the
Stockholders contained in this Agreement, all of which are material and none of
which supersedes any obligation of the Stockholders under any of such
representations, warranties, indemnities, covenants or restrictions.
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SECTION 12 MISCELLANEOUS.
---------- -------------
12.1 Written Agreement to Govern. This Agreement sets forth the entire
---------------------------
understanding and supersedes all prior and contemporaneous oral or written
agreements among the parties hereto relating to the subject matter contained
herein, and merges all prior and contemporaneous discussions among them. No
party hereto shall be bound by any definition, condition, representation,
warranty, covenant or provision other than as expressly stated in this Agreement
or as hereafter set forth in a written instrument executed by such party or by a
duly authorized representative of such party. Notwithstanding any of the terms
and conditions contained in this Agreement, which the parties acknowledge and
agree are substantially the same as those set forth in the separate Stock
Purchase Agreement with respect to PFA, the parties hereby agree that only those
provisions of this Agreement which directly apply and relate to the Company
shall govern the transaction contemplated by Section 1.1 hereof.
-----------
12.2 Severability. The parties hereto expressly agree that it is not the
------------
intention of any party hereto to violate any public policy, statutory or common
laws rules, regulations, treaties or decisions of any government or agency
thereof. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such provision as applied
to any fact or circumstance, such articles, sections, sentences, words, clauses
or combinations thereof shall be modified to the minimum extent necessary to
render it valid, and it shall not affect any other provision of this Agreement
or the same provisions applied to any other fact or circumstance, and the
remainder of this Agreement shall remain binding upon the Parties hereto.
12.3 Notices. Any and all notices and other communications necessary or
-------
desirable to be served hereunder shall be either personally delivered or sent by
telecopy, prepaid same-day or overnight delivery service, proof of delivery
requested, or United States certified or registered mail, postage prepaid,
return receipt requested, addressed as follows:
(a) If to the Stockholders:
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With a copy to:
Jenner & Block
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to the Purchaser:
Farm Journal Holdings, Inc.
Centre Square West
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses as any party hereto may designate for
itself from time to time in a written notice served upon the other parties
hereto in accordance herewith. Any notice sent as hereinabove provided shall be
deemed delivered upon receipt or refusal of delivery, except in the case of
certified or registered United States mail which shall be deemed delivered on
the fifth business day next following the postmark date which it bears.
12.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute one and the same agreement.
12.5 Law to Govern. The validity, construction and enforceability of this
-------------
Agreement shall be governed in all respects by the laws of the State of Illinois
without regard to its conflict of laws rules.
12.6 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
12.7 Further Assurances. At any time on or after the Closing, the parties
------------------
hereto shall each perform such acts, execute and deliver such instruments,
assignments, endorsements and other documents and do all such other things
consistent with the terms of this Agreement as may be reasonably necessary to
accomplish the transaction contemplated by this Agreement or otherwise to carry
out the purpose of this Agreement.
12.8 Gender, Number and Headings. The masculine, feminine or neuter
---------------------------
pronouns used herein shall be interpreted without regard to gender, and the use
of the singular or plural shall be deemed to include the other whenever the
context so requires. References to the Stockholders shall also be a reference to
each such Stockholder individually. The headings in this Agreement are inserted
for convenience or reference only and are not a part of this Agreement.
12.9 Schedules and Exhibits. The Schedules and Exhibits referred to herein
----------------------
and attached hereto are incorporated herein by such references as if fully set
forth in the text hereof.
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12.10 Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof shall, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
12.11 Expenses. Except as otherwise expressly provided herein, each party
--------
shall bear its own expenses incident to this Agreement and the transactions
contemplated hereby, including without limitation, all fees of counsel,
accountants and consultants.
12.12 Recitals. The recitals set forth above on the initial page of this
--------
Agreement are incorporated herein by this reference, and this Agreement shall be
construed in light thereof.
12.13 Knowledge of the Stockholders. For purposes of this Agreement, the
-----------------------------
knowledge of the Stockholders shall be deemed to include the knowledge of each
of the Stockholders or any of them after consulting with ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
12.14 No Third Party Beneficiaries. This Agreement is made solely for the
----------------------------
benefit of the parties hereto and shall not give rise to any rights of any kind
to third parties, including without limitation, any and all employees of the
Company. In no event shall this Agreement be deemed or construed to be an offer
or guarantee of continued employment to any Company employee.
12.15 Expenses. Except as otherwise expressly provided herein, the
--------
Stockholders and the Purchaser shall each pay all of the costs and expenses of
their performance and compliance with all agreements and conditions contained in
this Agreement on their part to be performed or complied with.
12.16 Additional Definitions. When used herein, the following capitalized
----------------------
terms have the following meanings. Any of such terms and any other terms defined
herein, may be used in the singular or plural, depending upon the reference,
unless the context otherwise requires.
"Assets" shall mean all of the right, title and interest in and to the
------
properties, assets and rights of any kind, wheresoever located, whether tangible
or intangible, real or personal, and shall be limited to those properties,
assets and rights constituting, or used in connection with, or related to the
Business and owned by the Company or in which the Company has any interest,
including but not limited to, all of the Company's right, title and interest in
the following:
(a) all accounts and notes receivable (whether current or non-
current), refunds, deposits, prepayments or prepaid expenses and unbilled
costs and fees (including without limitation any prepaid insurance
premiums) of the Company;
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(b) the name Professional Market Management, Inc. and the
corresponding logos and all trade names under which the Company does
business in connection with the Business, together with the goodwill of the
Business appertaining thereto;
(c) all Contract rights, to the extent transferable;
(d) all leases to which the Company is a party or by which the Company
is bound and which relate to the Business or the Assets, whether oral or
written;
(e) all furniture, fixtures, furnishings, machinery, automobiles,
trucks spare parts, supplies, equipment, molds patterns and other tangible
personal property owned by the Company and used in connection with the
Business, wherever located and including any such fixtures and equipment in
the possession of any of the Company's suppliers, including all warranty
rights, if any, with respect thereto;
(f) all inventory used in the conduct of the Business and owned by the
Company;
(g) all books and records;
(h) all proprietary rights relating to the Business;
(i) all permits and licenses, to the extent transferable;
(j) all computer hardware and, to the extent transferable, computer
software;
(k) all insurance policies;
(l) all available suppliers, sales, literature, promotional
literature, customer, supplier and distributor lists, art work, display
units, telephone and facsimile numbers and purchasing records related to
the Business;
(m) all rights under, or pursuant to, all warranties, representations
and guarantees made by third parties in connection with the Assets or
services furnished to the Company pertaining to the Business or affecting
the Assets, to the extent such warranties, representations and guarantees
are assignable; and
(n) all claims, causes of action, rights of recovery and rights of
set-off of any kind, against any person or entity, including, but not
limited to, any encumbrances or other rights to payment or to enforce
payment in connection with products delivered or services provided by the
Company on or prior to the Closing Date.
(o) all goodwill of the Company.
"Material Adverse Effect or Material Adverse Change" shall mean,
------------------------ -----------------------
individually or in the aggregate, any material adverse effect upon or material
adverse change in the following items, (a) the financial condition or results of
operation of the Company taken as a whole, or (b) the condition, prospects or
going concern value of the Business taken as a whole.
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"Affiliate of Purchaser" shall not include any entitles controlled by
the shareholder of the general partner of MS Farm International Limited
Partnership other than through MS Farm International Limited Partnership and its
successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
FARM JOURNAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Title: CEO and Chairman
----------------
SHAREHOLDERS
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ FAMILY TRUST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Trustee
▇▇▇▇ ▇. ▇▇▇▇▇ FAMILY TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Trustee
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