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EXHIBIT 2.1
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 8, 1998
AMONG
HARCOURT BRACE & COMPANY
▇▇▇▇▇ PARENT CORP.,
▇▇▇▇▇ ACQUISITION CORP.,
THE TIMES MIRROR COMPANY
AND
▇▇▇▇▇, INC.
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGER .......................................................................... 3
SECTION 1.1. The Merger .............................................................. 3
SECTION 1.2. Effective Time .......................................................... 3
SECTION 1.3. Closing of the Merger ................................................... 3
SECTION 1.4. Effects of the Merger ................................................... 3
SECTION 1.5. Articles of Incorporation and Bylaws .................................... 4
SECTION 1.6. Directors ............................................................... 4
SECTION 1.7. Officers ................................................................ 4
SECTION 1.8. Conversion of Shares .................................................... 4
(a) Merger Consideration ................................................ 4
(b) Conversion of Stock of MergerSub .................................... 4
(c) Cancellation of Treasury Shares ..................................... 5
SECTION 1.9. Exchange of Certificates ................................................ 5
(a) Delivery of Certificates Representing Merger Consideration .......... 5
(b) Delivery of Certificates Representing Shares ........................ 5
(c) Effect of Exchange .................................................. 5
ARTICLE 2 CONDITIONS TO CLOSING ............................................................... 5
SECTION 2.1. Conditions to All Parties' Obligations .................................. 5
(a) HSR Act; Other Governmental Approvals ............................... 5
(b) No Order ............................................................ 6
(c) Certain Agreements .................................................. 6
SECTION 2.2. Conditions to Acquiror, ▇▇▇▇▇ Parent and MergerSub's Obligations ........ 6
(a) Representations, Warranties and Covenants ........................... 6
(b) Certificates of Good Standing ....................................... 7
(c) Resolutions ......................................................... 7
(d) Third-Party Consents ................................................ 7
(e) Legal Opinion ....................................................... 7
SECTION 2.3. Exception to the Conditions to Acquiror, ▇▇▇▇▇ Parent and MergerSub's
Obligations ............................................................. 7
SECTION 2.4. Conditions to Times Mirror and ▇▇▇▇▇'▇ Obligations ...................... 8
(a) Representations, Warranties and Covenants ........................... 8
(b) Certificates of Good Standing ....................................... 8
(c) Resolutions ......................................................... 8
(d) Third-Party Consents ................................................ 9
(e) Legal Opinions ...................................................... 9
SECTION 2.5. Substitution Transaction ................................................ 9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TIMES MIRROR ...................................... 10
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SECTION 3.1. Organization and Good Standing of ▇▇▇▇▇ ................................. 10
SECTION 3.2. Authority of ▇▇▇▇▇ ...................................................... 10
SECTION 3.3. No Breach ............................................................... 11
SECTION 3.4. Consents and Approvals .................................................. 11
SECTION 3.5. Capital Stock of ▇▇▇▇▇ .................................................. 11
SECTION 3.6. Equity Interests ........................................................ 12
SECTION 3.7. Financial Statements .................................................... 12
(a) Audited Financial Statements ........................................ 12
(b) Unaudited Pro Forma Asset and Liability Statement ................... 12
(c) Unaudited Interim Financial Statements .............................. 12
(d) Absence of Undisclosed Liabilities .................................. 13
SECTION 3.8. Nonforeign Certification ................................................ 13
SECTION 3.9. Assets Other Than Real Property ......................................... 13
SECTION 3.10. Real Property .......................................................... 13
(a) Owned Property ..................................................... 13
(b) Leased Property .................................................... 13
(c) Title to Real Property ............................................. 14
SECTION 3.11. Intellectual Property .................................................. 14
(a) Trademarks ......................................................... 14
(b) Copyrights ......................................................... 14
(c) Licenses ........................................................... 15
(d) Claims ............................................................. 15
(e) No Restrictions .................................................... 15
SECTION 3.12. Contracts .............................................................. 15
(a) Employment, Independent Contractor and Consulting Agreements ....... 15
(b) Collective Bargaining Agreements ................................... 15
(c) Non-Competition Agreements ......................................... 16
(d) Agreements with Officers, Directors or Employees ................... 16
(e) Leases of Real Property ............................................ 16
(f) Personal Property Leases ........................................... 16
(g) Supply and Service Agreements ...................................... 16
(h) Indebtedness ....................................................... 16
(i) Guarantees ......................................................... 16
(j) Partnerships and Joint Ventures .................................... 17
(k) Author Contracts ................................................... 17
(l) Professional Association or Society Journals ....................... 17
(m) Executory Sale or Acquisition Contracts ............................ 17
(n) Other Agreements ................................................... 17
SECTION 3.13. Litigation; Decrees .................................................... 17
SECTION 3.14. Employee and Related Matters; ERISA .................................... 18
(a) Plans .............................................................. 18
(b) Compliance with ERISA and the Code ................................. 19
(c) Multiemployer Plan Liabilities ..................................... 19
(d) Accumulated Funding Deficiencies; Liens ............................ 19
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(e) Employee Welfare Benefit Plans ..................................... 19
(f) Foreign Plans ...................................................... 19
SECTION 3.15. Absence of Changes or Events ........................................... 20
SECTION 3.16. Compliance with Applicable Laws ........................................ 20
(a) General ............................................................ 20
(b) Hazardous Materials ................................................ 20
(c) Notices of Certain Environmental Matters ........................... 20
(d) Definitions ........................................................ 21
SECTION 3.17. Taxes .................................................................. 21
(a) Tax Returns and Taxes .............................................. 21
(b) Withholding Taxes .................................................. 21
(c) Other Taxes ........................................................ 21
(d) Definitions ........................................................ 22
SECTION 3.18. Employee and Labor Relations ........................................... 22
SECTION 3.19. Working Capital ........................................................ 23
SECTION 3.20. Transition Services Agreements ......................................... 23
(a) ▇▇▇▇▇/MB Transition Services Agreement ............................. 23
(b) StayWell/▇▇▇▇▇ Transition Services Agreement ....................... 23
(c) ▇▇▇▇▇/StayWell Transition Services Agreement ....................... 23
SECTION 3.21. Transactions with Affiliates ........................................... 23
SECTION 3.22. Returns ................................................................ 24
SECTION 3.23. Organization and Good Standing of Times Mirror ......................... 24
SECTION 3.24. Authority of Times Mirror .............................................. 24
SECTION 3.25. Brokers ................................................................ 24
SECTION 3.26. Sufficiency of Assets .................................................. 24
SECTION 3.27. Legal Opinion .......................................................... 25
ARTICLE 4 [INTENTIONALLY OMITTED] ............................................................. 25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACQUIROR, ▇▇▇▇▇ PARENT AND MERGERSUB .............. 25
SECTION 5.1. Organization and Good Standing of Acquiror, ▇▇▇▇▇ Parent and MergerSub .. 25
(a) As to Acquiror ...................................................... 25
(b) As to ▇▇▇▇▇ Parent .................................................. 25
(c) As to MergerSub ..................................................... 25
SECTION 5.2. Authority ............................................................... 25
SECTION 5.3. No Breach ............................................................... 26
SECTION 5.4. Consents and Approvals .................................................. 26
SECTION 5.5. Funding ................................................................. 26
SECTION 5.6. Brokers ................................................................. 27
SECTION 5.7. No Prior Activities ..................................................... 27
ARTICLE 6 COVENANTS OF ▇▇▇▇▇ AND TIMES MIRROR ................................................ 27
SECTION 6.1. Delivery of Interim Financial Statements ................................ 27
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SECTION 6.2. Access .................................................................. 27
SECTION 6.3. Ordinary Conduct ........................................................ 28
(a) Charter and Bylaws .................................................. 28
(b) Dividends ........................................................... 28
(c) Capital Stock ....................................................... 28
(d) Employee Matters .................................................... 28
(e) Compensation ........................................................ 28
(f) Indebtedness ........................................................ 29
(g) Encumbrances ........................................................ 29
(h) Cancellation of Indebtedness ........................................ 29
(i) Related Party Transactions .......................................... 29
(j) Accounting Policies ................................................. 29
(k) Reorganizations ..................................................... 29
(l) Capital Expenditures ................................................ 29
(m) Asset Dispositions .................................................. 30
(n) Material Contracts .................................................. 30
(o) Write Downs ......................................................... 30
(p) Change in Business .................................................. 30
(q) Loans ............................................................... 30
(r) Agreements .......................................................... 30
SECTION 6.4. Insurance ............................................................... 30
SECTION 6.5. Assignment of Confidentiality Agreements ................................ 31
SECTION 6.6. No Transfer of ▇▇▇▇▇ Parent Shares ...................................... 32
SECTION 6.7. Lease of 11830 Westline Property ........................................ 32
ARTICLE 7 COVENANTS OF ACQUIROR, ▇▇▇▇▇ PARENT AND MERGERSUB ................................... 32
SECTION 7.1. Certain Pre-Effective Time Transactions ................................. 32
(a) Issuance of MergerSub Common Stock and MergerSub Preferred Stock .... 32
(b) Issuance of ▇▇▇▇▇ Parent Preferred Stock ............................ 32
(c) Issuance of ▇▇▇▇▇ Parent Common Stock ............................... 33
SECTION 7.2. Formation of Eagle Publishing Investments, LLC .......................... 33
SECTION 7.3. No Changes in ▇▇▇▇▇ Parent or MergerSub Charter ......................... 33
SECTION 7.4. Confidentiality ......................................................... 33
SECTION 7.5. No Additional Representations ........................................... 33
SECTION 7.6. Action Contrary to Tax-Free Treatment ................................... 34
SECTION 7.7. MergerSub Debt .......................................................... 34
SECTION 7.8. Enforceability of LLC Agreement ......................................... 34
ARTICLE 8 MUTUAL COVENANTS ................................................................... 34
SECTION 8.1. Cooperation ............................................................. 34
SECTION 8.2. Publicity ............................................................... 34
SECTION 8.3. Antitrust Notification .................................................. 35
SECTION 8.4. Records ................................................................. 35
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SECTION 8.5. Closing Asset and Liability Statement; Closing Financial Reporting (FDC)
Package ................................................................. 36
(a) Closing Asset and Liability Statement ............................... 36
(b) Closing Financial Reporting (FDC) Package ........................... 37
SECTION 8.6. Further Assurances ...................................................... 37
SECTION 8.7. Contribution of Intercompany Debt ....................................... 37
SECTION 8.8. Non-Competition ......................................................... 37
ARTICLE 9 TERMINATION; AMENDMENT; WAIVER ..................................................... 38
SECTION 9.1. Termination ............................................................. 38
SECTION 9.2. Termination Fee ......................................................... 39
SECTION 9.3. Return of Confidential Information ...................................... 39
SECTION 9.4. Effects of Termination .................................................. 40
ARTICLE 10 EMPLOYEE AND RELATED MATTERS ...................................................... 40
SECTION 10.1. Continuation of Employment ............................................. 40
(a) Offers of Employment ............................................... 40
(b) No Termination ..................................................... 41
(c) WARN Act and Other Matters ......................................... 41
SECTION 10.2. Continuation of Plans .................................................. 41
SECTION 10.3. Acquiror's and MergerSub's Benefit Responsibilities .................... 41
SECTION 10.4. 401(k) Plan Interests .................................................. 42
SECTION 10.5. Indemnification for Certain Matters .................................... 42
(a) Indemnification by Times Mirror .................................... 43
(b) Indemnification by Acquiror ........................................ 43
(c) Cooperation ........................................................ 43
(d) No Inference ....................................................... 43
(e) Relationship to Section 2.3 and Article 11 ......................... 43
SECTION 10.6. Transfer of Times Mirror Defined Benefit Plan .......................... 44
SECTION 10.7. Continuation of Certain Welfare Benefits Through Effective Time ........ 45
SECTION 10.8. Modifications .......................................................... 45
SECTION 10.9. Mutual Cooperation ..................................................... 45
(a) General ............................................................ 45
(b) Performance Bonus Payments; Stock Options .......................... 46
SECTION 10.10. Certain Definitions ................................................... 46
ARTICLE 11 INDEMNIFICATION ................................................................... 47
SECTION 11.1. Tax Indemnification by Times Mirror .................................... 47
(a) Tax Indemnity ...................................................... 47
(b) Apportionment of Taxes ............................................. 47
SECTION 11.2. Other Indemnification by Times Mirror .................................. 48
SECTION 11.3. Indemnification by Acquiror ............................................ 48
SECTION 11.4. Losses Net of Insurance ................................................ 49
SECTION 11.5. Termination of Indemnification ......................................... 49
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SECTION 11.6. Procedures Relating to Indemnification (Except Under Section 11.1) ..... 49
SECTION 11.7. Procedures Relating to Indemnification of Tax Claims ................... 51
SECTION 11.8. Exclusive Remedy ....................................................... 52
SECTION 11.9. Waiver of Certain Claims ............................................... 52
(a) Waivers Related to ▇▇▇▇▇ Parent .................................... 52
(b) Waivers Related to ▇▇▇▇▇ ........................................... 52
(c) Transferees Bound .................................................. 52
ARTICLE 12 TAX MATTERS ........................................................................ 53
SECTION 12.1. Taxes .................................................................. 53
(a) Returns and Payments ............................................... 53
(b) Transfer Taxes ..................................................... 53
SECTION 12.2. Cooperation ............................................................ 53
SECTION 12.3. Tax Sharing Agreements ................................................. 53
ARTICLE 13 MISCELLANEOUS ...................................................................... 54
SECTION 13.1. Expenses ............................................................... 54
SECTION 13.2. Attorneys' Fees ........................................................ 54
SECTION 13.3. Assignment ............................................................. 54
SECTION 13.4. No Third-Party Beneficiaries ........................................... 54
SECTION 13.5. Notices ................................................................ 54
SECTION 13.6. Counterparts ........................................................... 56
SECTION 13.7. Entire Agreement ....................................................... 56
SECTION 13.8. Severability ........................................................... 56
SECTION 13.9. Amendment .............................................................. 56
SECTION 13.10. Extension; Waiver ..................................................... 56
SECTION 13.11. Dispute Resolution .................................................... 57
(a) Accounting Disputes ............................................... 57
(b) Other Disputes .................................................... 57
SECTION 13.12. Interpretation of this Agreement ...................................... 58
(a) Construction ...................................................... 58
(b) Knowledge ......................................................... 58
(c) Governing Law ..................................................... 58
(d) Headings, Exhibits and Schedules .................................. 58
(e) Representation By Counsel; Interpretation ......................... 59
SECTION 13.13. Survival of Representations ........................................... 59
SECTION 13.14. No Punitive Damages ................................................... 59
SECTION 13.15. Adjustments ........................................................... 59
SECTION 13.16. Specific Performance .................................................. 59
SECTION 13.17. Amendment and Restatement ............................................. 60
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TABLE OF EXHIBITS
Exhibit A............................Restated Certificate of Incorporation of ▇▇▇▇▇ Parent
Exhibit B..................................Restated Articles of Incorporation of MergerSub
Exhibit C....................Certificate of Formation of Eagle Publishing Investments, LLC
Exhibit D.........Limited Liability Company Agreement of Eagle Publishing Investments, LLC
Exhibit E..............................................▇▇▇▇▇ Parent Stockholders Agreement
Exhibit F.................................................MergerSub Shareholders Agreement
Exhibit G...........................................▇▇▇▇▇/MB Transition Services Agreement
Exhibit H.....................................StayWell/▇▇▇▇▇ Transition Services Agreement
Exhibit I.....................................▇▇▇▇▇/StayWell Transition Services Agreement
TABLE OF SCHEDULES
3.1 ▇▇▇▇▇ Foreign Jurisdictions 3.13 Litigation; Decrees
3.3 ▇▇▇▇▇ and Times Mirror Conflicts 3.14(a) Plans
3.6 ▇▇▇▇▇ Subsidiaries 3.14(b) Compliance with ERISA and Code
3.7(a) ▇▇▇▇▇ Financial Statements 3.14(c) Multiemployer Plans
3.7(b) ▇▇▇▇▇ Pro Forma Asset and Liability Statement 3.14(e) Employee Welfare Benefit Plans
3.7(c) Unaudited Interim Financial Statements 3.14(f) Foreign Plans
3.7(d) Undisclosed Liabilities 3.15 Changes or Events
3.9 Certain Liens 3.16 Compliance with Applicable Laws
3.10(a) Owned Property 3.17(a) Tax Returns and Taxes
3.10(b) Leased Property 3.17(c) Other Taxes
3.11(a) Intellectual Property 3.18 Employee and Labor Relations
3.11(b) Top 200 Publications 3.21 Transactions with Affiliates
3.11(c) Licenses 3.22 Rights of Return
3.11(d) Claims 6.3 Ordinary Conduct
3.12(a) Employment, etc. Agreements 6.3(l) ▇▇▇▇▇ 1998 Capital Expenditure Budget
3.12(b) Collective Bargaining Agreements 6.4 ▇▇▇▇▇ Insurance Policies
3.12(c) Non-Competition Agreements 10.3 Severance Benefits
3.12(d) Agreements with Officers, Directors or Employees
3.12(e) Leases of Real Property
3.12(f) Personal Property Leases
3.12(g) Supply and Service Agreements
3.12(h) Indebtedness
3.12(i) Guarantees
3.12(j) Partnerships and Joint Ventures
3.12(k) Author Contracts
3.12(l) Professional Association Society Journals
3.12(m) Executory Sale or Acquisition Contracts
3.12(n) Other Agreements
3.12(o) Contract Defaults
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TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
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Acquiror Entity Section 10.5(a) 39
Acquiror Material Adverse Effect Section 5.1(a) 23
Acquiror Preamble 1
Agreement Preamble 1
Closing Asset and Liability Statement Section 8.5 33
Closing Date Section 1.3 3
Closing Section 1.3 3
Code Recitals 2
Confidentiality Agreement Section 6.2 25
Contracts Section 3.13 14
DOJ Section 8.3 32
Eagle Publishing Investments, LLC Recitals 2
Effective Time Section 1.2 3
Enforceability Exceptions Section 3.2 10
Environmental Law Section 3.16(d)(ii) 19
ERISA Affiliate Section 3.14(a) 17
ERISA Section 3.14(b) 17
Existing Merger Agreement Recitals 1
FTC Section 8.3 32
GAAP Section 3.7(a) 11
Hazardous Material Section 3.16(d)(i) 19
HSR Act Section 2.1(a) 5
Indemnified party Section 11.6 45
Interim Period Section 11.1(a) 43
IRS Section 12.1(a) 48
Leased Properties Section 3.10(b) 12
Lien Section 3.3 10
LLC Agreement Recitals 2
LLC Certificate of Formation Recitals 2
Losses Section 2.3 7
Merger Certificate Section 1.2 3
Merger Consideration Section 1.8(a) 4
Merger Section 1.1 3
MergerSub Articles of Incorporation Recitals 1
MergerSub Common Stock Recitals 1
MergerSub Debt Recitals 2
MergerSub Participating Preferred Stock Recitals 1
MergerSub Preferred Stock Recitals 1
MergerSub Preamble 1
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Cross Reference
Term in Agreement Page
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MGBCL Section 1.1 3
▇▇▇▇▇ Asset and Liability Statement Section 3.7(a) 11
▇▇▇▇▇ Claims Section 6.4(b) 28
▇▇▇▇▇ Employee Section 10.10 42
▇▇▇▇▇ Liabilities Section 6.4(b) 28
▇▇▇▇▇ Material Adverse Effect Section 3.1 9
▇▇▇▇▇ Net Working Capital Section 3.19 21
▇▇▇▇▇ Parent Certificate of Incorporation Recitals 1
▇▇▇▇▇ Parent Common Stock Recitals 2
▇▇▇▇▇ Parent Preferred Stock Recitals 2
▇▇▇▇▇ Parent Preamble 1
▇▇▇▇▇ Personnel Section 10.10 42
▇▇▇▇▇ Plan Section 3.14(a) 17
▇▇▇▇▇ Pro Forma Asset and Liability Statement Section 3.7(b) 11
▇▇▇▇▇ Retirees Section 10.10 42
▇▇▇▇▇ Preamble 1
Net ABO Section 10.6 40
Net Intercompany Debt Section 8.7 34
Non-Income Taxes Section 11.1(a) 43
Owned Properties Section 3.10(a) 12
Permitted Liens Section 3.9 12
Plans Section 3.14(a) 17
Pre-Closing Periods Section 11.1(a) 43
Preliminary Transfer Amount Section 10.6 40
Real Properties Section 3.10(b) 12
Records Section 8.4(a) 32
Renegotiation Period Section 2.5 8
Revision Date Section 2.5 8
SFAS 87 Section 10.6 40
Share or Shares Section 1.8(a) 4
Substitution Transaction Section 2.5 9
Surviving Corporation Section 1.1 3
Tax Claim Section 11.7 47
Tax or Taxes Section 3.17(c)(i) 20
Tax Return Section 3.17(c)(ii) 20
Third-Party Claim Section 11.6 45
Times Mirror 401(k) Plan Section 10.4 39
Times Mirror Entity Section 10.5(a) 39
Times Mirror Insurance Policies Section 6.4(b) 28
Times Mirror Pension Plan Section 10.6 40
Times Mirror Plan Section 3.14(a) 17
Times Mirror Preamble 1
Top 200 Publications Section 3.11(b) 13
Top Ten Journals Section 3.11(b) 13
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Cross Reference
Term in Agreement Page
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Trademarks Section 3.11(a) 13
Transfer Amount Section 10.6 40
Voting Power Recitals 1
Westline Property Section 6.7 29
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of October 8, 1998 is among THE TIMES MIRROR COMPANY, a
Delaware corporation, ("Times Mirror"), ▇▇▇▇▇, INC., a Missouri corporation and
a wholly owned subsidiary of Times Mirror ("▇▇▇▇▇"), HARCOURT BRACE & COMPANY, a
Delaware corporation ("Acquiror"), ▇▇▇▇▇ PARENT CORP., a Delaware corporation
("▇▇▇▇▇ Parent"), and ▇▇▇▇▇ ACQUISITION CORP., a Missouri corporation
("MergerSub").
WHEREAS, Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇ Parent and MergerSub have
entered into an Agreement and Plan of Merger dated as of May 6, 1998 (the
"Existing Merger Agreement");
WHEREAS, Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇ Parent and MergerSub
desire to amend and restate the Existing Merger Agreement on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in anticipation of the Merger (as defined in Section 1.1),
▇▇▇▇▇ Parent will file a Restated Certificate of Incorporation of ▇▇▇▇▇ Parent,
substantially in the form attached hereto as Exhibit A (the "▇▇▇▇▇ Parent
Certificate of Incorporation") with the Secretary of State of the State of
Delaware;
WHEREAS, in anticipation of the Merger, MergerSub will file a Restated
Articles of Incorporation of MergerSub substantially in the form attached hereto
as Exhibit B (the "MergerSub Articles of Incorporation") with the Secretary of
State of the State of Missouri;
WHEREAS, immediately prior to the Effective Time (as defined in Section
1.2), in consideration of an amount in cash equal to $415,000,000 less the net
proceeds received by MergerSub from the MergerSub Debt (as defined below) from
Acquiror, MergerSub will issue to Acquiror (i) 1,650 shares of Common Stock, par
value $.01 per share, of MergerSub ("MergerSub Common Stock"), which MergerSub
Common Stock will have 20% of the voting power of all of the outstanding shares
of capital stock entitled to vote in an election of directors ("Voting Power")
and such other designations, preferences, voting powers, rights and
qualifications as are set forth in the MergerSub Articles of Incorporation, (ii)
100% of the authorized shares of Nonvoting Participating Preferred Stock, par
value $.01 per share, of MergerSub ("MergerSub Participating Preferred Stock"),
and (iii) 100% of the authorized shares of Voting Preferred Stock, par value
$.01 per share, of MergerSub ("MergerSub Preferred Stock"), which MergerSub
Preferred Stock will have 80% of the Voting Power and such other designations,
preferences, voting powers, rights and qualifications as are set forth in the
MergerSub Articles of Incorporation;
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WHEREAS, immediately prior to the Effective Time (as defined in Section
1.3), MergerSub will borrow up to $200,000,000 on terms not inconsistent with
the terms set forth in Section 7.7 ("MergerSub Debt") from Acquiror;
WHEREAS, immediately prior to the Effective Time, in consideration for
100% of the authorized and outstanding shares of MergerSub Preferred Stock and
100% of the authorized and outstanding shares of MergerSub Participating
Preferred Stock held by Acquiror, ▇▇▇▇▇ Parent will issue to Acquiror 100% of
the authorized shares of Voting Preferred Stock, par value $.01 per share, of
▇▇▇▇▇ Parent ("▇▇▇▇▇ Parent Preferred Stock"), which ▇▇▇▇▇ Parent Preferred
Stock will have 80% of the Voting Power and such other designations,
preferences, voting powers, rights and qualifications as are set forth in the
▇▇▇▇▇ Parent Certificate of Incorporation;
WHEREAS, immediately prior to the Effective Time, in consideration for
$415,000,000, ▇▇▇▇▇ Parent will issue to MergerSub 100% of the authorized shares
of Common Stock, par value $.01 per share, of ▇▇▇▇▇ Parent ("▇▇▇▇▇ Parent Common
Stock"), which ▇▇▇▇▇ Parent Common Stock will have 20% of the Voting Power and
such other designations, preferences, voting powers, rights and qualifications
as are set forth in the ▇▇▇▇▇ Parent Certificate of Incorporation;
WHEREAS, in anticipation of the Merger, ▇▇▇▇▇ Parent will cause Eagle
Publishing Investments, LLC, a single-member Delaware limited liability company
("Eagle Publishing Investments, LLC") to be formed under the laws of the State
of Delaware prior to the Effective Time by the filing of the Certificate of
Formation of Eagle Publishing Investments, LLC which is attached hereto as
Exhibit C (the "LLC Certificate of Formation");
WHEREAS, in anticipation of the Merger, ▇▇▇▇▇ Parent and Times Mirror
will enter into the Limited Liability Company Agreement of Eagle Publishing
Investments, LLC pursuant to which, immediately after the Effective Time, Times
Mirror will be appointed the manager of Eagle Publishing Investments, LLC, which
is attached hereto as Exhibit D (the "LLC Agreement");
WHEREAS, immediately after the Effective Time, in accordance with the
terms of the Eagle Publishing Investments, LLC Agreement, ▇▇▇▇▇ Parent will make
a contribution to Eagle Publishing Investments, LLC in the amount of
$415,000,000;
WHEREAS, the Boards of Directors of Times Mirror, ▇▇▇▇▇, Acquiror,
▇▇▇▇▇ Parent and MergerSub have each (i) determined that the Merger is fair and
in the best interests of their respective stockholders and (ii) approved the
Merger in accordance with this Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
qualify as a reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986 as amended (the "Code").
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
intending to be legally bound hereby the Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇
Parent and MergerSub hereby agree as follows:
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ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time (as defined in Section
1.3) and upon the terms and subject to the conditions of this Agreement and in
accordance with the Missouri General and Business Corporation Law (the "MGBCL"),
MergerSub shall be merged with and into ▇▇▇▇▇ (the "Merger"). Following the
Merger, ▇▇▇▇▇ shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of MergerSub shall cease. The
Merger is intended to qualify as a tax-free reorganization under Section 368 of
the Code.
SECTION 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, Articles of Merger in the form and substance complying
with all applicable provisions of the MGBCL (the "Merger Certificate") shall be
duly executed and acknowledged by ▇▇▇▇▇ and MergerSub and thereafter delivered
to the Secretary of State of the State of Missouri for filing pursuant to the
MGBCL on the Closing Date (as defined in Section 1.3). The Merger shall become
effective upon the issuance of a certificate of merger by the Secretary of State
of the State of Missouri in accordance with the MGBCL (the time the Merger
becomes effective being referred to herein as the "Effective Time").
SECTION 1.3. Closing of the Merger. The closing of the Merger and the
other transactions contemplated by this Agreement and by the LLC Agreement (the
"Closing") will take place at 11:59:59 P.M. on a date (the "Closing Date") which
shall be on the fifth business day following the satisfaction or waiver of the
conditions set forth in Section 2.1 occurs at the offices of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless
another time, date or place is agreed to in writing by the parties hereto.
SECTION 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the MGBCL. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time all the properties, rights, privileges,
powers and franchises of ▇▇▇▇▇ and MergerSub shall vest in the Surviving
Corporation and all debts, liabilities and duties of ▇▇▇▇▇ and MergerSub
(including any debts, liabilities and duties arising under this Agreement after
the Effective Time) shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.5. Articles of Incorporation and Bylaws. The Articles of
Incorporation of ▇▇▇▇▇ shall be amended and restated at the Effective Time in
accordance with the MGBCL to be substantially identical to the MergerSub
Articles of Incorporation as in effect immediately prior to the Effective Time
and, as so amended and restated, the Articles of Incorporation of ▇▇▇▇▇ shall be
the Articles of Incorporation of the Surviving Corporation. The Bylaws of
MergerSub in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 1.6. Directors. The directors of MergerSub at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Articles
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of Incorporation and Bylaws of the Surviving Corporation until such director's
successor is duly elected or appointed and qualified.
SECTION 1.7. Officers. The officers of MergerSub at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 1.8. Conversion of Shares.
(a) Merger Consideration. At the Effective Time, each share of
common stock, par value $100.00 per share, of ▇▇▇▇▇ (individually a "Share" and
collectively the "Shares") issued and outstanding immediately prior to the
Effective Time (other than Shares held in ▇▇▇▇▇'▇ treasury or by any of ▇▇▇▇▇'▇
subsidiaries) shall, by virtue of the Merger and without any action on the part
of MergerSub, ▇▇▇▇▇ or the holder thereof, be converted into and exchanged for a
number of the fully paid and nonassessable shares of ▇▇▇▇▇ Parent Common Stock
held by MergerSub immediately prior to the Effective Time equal to a fraction,
the numerator of which is the number of shares of ▇▇▇▇▇ Parent Common Stock held
by MergerSub immediately prior to the Effective Time and the denominator of
which is the number of Shares outstanding immediately prior to the Effective
Time (the "Merger Consideration").
(b) Conversion of Stock of MergerSub. At the Effective Time,
(i) each share of the MergerSub Common Stock issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common stock,
par value $.01 per share, of the Surviving Corporation having designations,
preferences, voting powers, rights and qualifications identical to those of the
MergerSub Common Stock, (ii) each share of the MergerSub Participating Preferred
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into one share of nonvoting participating preferred stock, par value
$.01 per share, of the Surviving Corporation having designations, preferences,
voting powers, rights and qualifications identical to those of the MergerSub
Participating Preferred Stock and (iii) each share of MergerSub Preferred Stock
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of preferred stock, par value $.01 per share, of the
Surviving Corporation having designations, preferences, voting powers, rights
and qualifications identical to those of the MergerSub Preferred Stock.
(c) Cancellation of Treasury Shares. At the Effective Time,
each Share held in the treasury of ▇▇▇▇▇ or by any direct or indirect wholly
owned subsidiary of ▇▇▇▇▇ immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of MergerSub, ▇▇▇▇▇ or
the holder thereof, be canceled, retired and cease to exist and no Merger
Consideration shall be delivered with respect thereto.
SECTION 1.9. Exchange of Certificates.
(a) Delivery of Certificates Representing Merger
Consideration. At the Effective Time, MergerSub shall deliver to Times Mirror
certificates representing the number of
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shares of ▇▇▇▇▇ Parent Common Stock to be delivered pursuant to Section 1.8(a)
in exchange for certificates representing outstanding Shares.
(b) Delivery of Certificates Representing Shares. At the
Effective Time, Times Mirror shall deliver to MergerSub for cancellation in
accordance with this Article 1 certificates representing the Shares.
(c) Effect of Exchange. All shares of ▇▇▇▇▇ Parent Common
Stock delivered upon the surrender of certificates representing Shares in
accordance with the terms hereof shall be deemed, to the fullest extent
permitted by applicable law, to have been delivered in full satisfaction of all
rights pertaining to such Shares, and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately prior to the
Effective Time.
ARTICLE 2
CONDITIONS TO CLOSING
SECTION 2.1. Conditions to All Parties' Obligations. The respective
obligations of the parties hereto to consummate the Merger shall be subject to
the satisfaction (or waiver by each party) as of the Effective Time of the
following conditions:
(a) HSR Act; Other Governmental Approvals. Any waiting period
applicable to the consummation of the Merger contemplated under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act") shall have expired or have been
terminated, and any other notice or approvals to or of any federal, state or
foreign governmental authority with respect to the Merger shall have been either
filed, in the case of notices, or received, in the case of approvals.
(b) No Order. No federal, state or foreign governmental
authority or other agency or commission or court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which remains in effect, and which has the effect of making the
transactions contemplated hereby illegal or otherwise prohibiting consummation
of the transactions contemplated by this Agreement.
(c) Certain Agreements. (i) Acquiror, ▇▇▇▇▇ Parent and Times
Mirror each will have executed and delivered the ▇▇▇▇▇ Parent Stockholders
Agreement, substantially in the form attached hereto as Exhibit E, (ii)
Acquiror, ▇▇▇▇▇ Parent and MergerSub each will have executed and delivered the
MergerSub Stockholders Agreement, substantially in the form attached hereto as
Exhibit F, (iii) ▇▇▇▇▇ Parent shall have adopted bylaws in form and substance
reasonably satisfactory to the parties hereto and not inconsistent with the
terms of this Agreement, (iv) MergerSub shall have adopted bylaws in form and
substance reasonably satisfactory to the parties hereto and not inconsistent
with the terms of this Agreement and (v) ▇▇▇▇▇ Parent and Times Mirror shall
have executed and delivered the LLC Agreement.
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SECTION 2.2. Conditions to Acquiror, ▇▇▇▇▇ Parent and MergerSub's
Obligations. The obligations of Acquiror, ▇▇▇▇▇ Parent and MergerSub to
consummate the Merger are subject to the satisfaction (or waiver by each of
Acquiror, ▇▇▇▇▇ Parent and MergerSub) as of the Effective Time of the following
conditions:
(a) Representations, Warranties and Covenants. Subject to
Section 2.3, the representations and warranties of Times Mirror made in this
Agreement and qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Effective Time, unless such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such earlier date), as though made at and as of the
Effective Time and each of ▇▇▇▇▇ and Times Mirror shall have performed or
complied with, or shall have caused to be performed or complied with, in all
material respects all obligations and covenants required by this Agreement to be
performed or complied with by ▇▇▇▇▇, Times Mirror or any affiliate of Times
Mirror by the Effective Time; and Acquiror, ▇▇▇▇▇ Parent and MergerSub shall
have received from Times Mirror a certificate dated the Closing Date and signed
by an authorized officer of Times Mirror confirming the foregoing.
(b) Certificates of Good Standing. Acquiror, ▇▇▇▇▇ Parent and
MergerSub shall have received (i) certificates as to ▇▇▇▇▇ and Times Mirror
issued by the appropriate governmental authority of the state of incorporation
of each of ▇▇▇▇▇ and Times Mirror, (ii) certificates as to ▇▇▇▇▇ issued by the
appropriate governmental authority of each of the states set forth on Schedule
3.1, (iii) certificates as to each of the corporations and other entities set
forth on Schedule 3.6 issued by the appropriate governmental authority of each
of the jurisdictions or states of incorporation or organization of such
corporations or other entities and (iv) from Eagle Publishing Investments, LLC,
a certificate as to Eagle Publishing Investments, LLC issued by the appropriate
governmental authority of the jurisdiction of formation of Eagle Publishing
Investments, LLC, in each case evidencing such corporation or other entity's
good standing in such jurisdiction or state as of a date not more than ten days
prior to the Effective Time.
(c) Resolutions. Acquiror, ▇▇▇▇▇ Parent and MergerSub shall
have received (i) from ▇▇▇▇▇ certified copies of resolutions duly adopted by the
Board of Directors of ▇▇▇▇▇ authorizing the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
and (ii) from Times Mirror certified copies of resolutions duly adopted by the
Board of Directors of Times Mirror authorizing the execution, delivery and
performance of this Agreement and of the LLC Agreement and the consummation of
the transactions contemplated hereby and thereby, and all such resolutions shall
not have been revoked and shall remain in full force and effect.
(d) Third-Party Consents. ▇▇▇▇▇ and Times Mirror shall have
obtained in writing any third-party consents required under any of the Contracts
indicated by an asterisk on Schedule 3.3.
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(e) Legal Opinion. Acquiror, ▇▇▇▇▇ Parent and MergerSub shall
have received the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, legal counsel to Times
Mirror and ▇▇▇▇▇, (or, with respect to matters of Missouri law, local counsel
admitted to practice law in the State of Missouri) in form and substance
reasonably satisfactory to each of them.
SECTION 2.3. Exception to the Conditions to Acquiror, ▇▇▇▇▇ Parent and
MergerSub's Obligations. The language of Section 2.2 notwithstanding, the
conditions to the obligations of Acquiror, ▇▇▇▇▇ Parent and MergerSub to
consummate the Closing contained in Sections 2.2(a) and 2.2(d) shall be deemed
satisfied if Times Mirror delivers to Acquiror, ▇▇▇▇▇ Parent and MergerSub a
certificate dated the Closing Date and signed by an authorized officer of Times
Mirror setting forth any failure of any condition contained in Section 2.2(a) or
2.2(d) and undertaking to indemnify Acquiror, ▇▇▇▇▇ Parent and MergerSub with
respect to any and all damage, loss (including any diminution in the value of
the assets of ▇▇▇▇▇), liability and expense (including reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding) ("Losses"); provided, however, that the exception
set forth in this Section 2.3 shall apply only in the case where (i) the Losses
are readily quantifiable, (ii) the failure of the applicable condition results
in Losses which are capable of being adequately recompensed by the payment of
money, and (iii) the aggregate amount of any such Losses that would reasonably
be expected to arise as a result of the failure of any representations and
warranties to be true and correct or of any such consent to be received in the
aggregate does not exceed an amount equal to $41,500,000; provided still
further, however, that any indemnification provided pursuant to this Section 2.3
shall be subject to the provisions of Sections 11.4 and 11.6. In the absence of
fraud or willful misconduct on the part of either Times Mirror or ▇▇▇▇▇, or any
of their respective officers, directors, employees or agents in connection with
the negotiation, execution or delivery of this Agreement or the consummation of
the transactions contemplated hereby, the remedy contained in this Section 2.3
shall constitute the sole and exclusive remedy of Acquiror with respect to any
failure of the conditions to the obligations of Acquiror to consummate the
Closing contained in Sections 2.2(a) and 2.2(d) to be satisfied as of the
Closing and, without limitation, Acquiror shall have no right to indemnification
pursuant to Section 11.1 or 11.2 for any Losses incurred as a result of any such
failure.
SECTION 2.4. Conditions to Times Mirror and ▇▇▇▇▇'▇ Obligations. The
obligations of Times Mirror and ▇▇▇▇▇ to consummate the Merger are subject to
the satisfaction (or waiver by each of Times Mirror and ▇▇▇▇▇) as of the
Effective Time of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of each of Acquiror, ▇▇▇▇▇ Parent and MergerSub
made in this Agreement and qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, as of the date of this Agreement and as of the Effective Time, unless
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date); as though made as of the
Effective Time, and each of Acquiror, ▇▇▇▇▇ Parent and MergerSub shall have
performed or complied in all material respects with all obligations and
covenants required
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by this Agreement to be performed or complied with by Acquiror, ▇▇▇▇▇ Parent,
MergerSub or any affiliate of Acquiror, ▇▇▇▇▇ Parent or MergerSub by the
Effective Time; and ▇▇▇▇▇ and Times Mirror shall have received from each of
Acquiror, ▇▇▇▇▇ Parent and MergerSub a certificate dated the Closing Date and
signed by an authorized officer of each of Acquiror, ▇▇▇▇▇ Parent and MergerSub
confirming the foregoing.
(b) Certificates of Good Standing. ▇▇▇▇▇ and Times Mirror
shall have received certificates as to MergerSub, ▇▇▇▇▇ Parent and Acquiror
issued by the appropriate governmental authority of the jurisdiction of
incorporation of each of MergerSub, ▇▇▇▇▇ Parent and Acquiror evidencing its
good standing in such jurisdiction or state as of a date not more than ten days
prior to the Effective Time.
(c) Resolutions. ▇▇▇▇▇ and Times Mirror shall have received
(i) from MergerSub certified copies of resolutions duly adopted by the Board of
Directors of MergerSub authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
(ii) from ▇▇▇▇▇ Parent certified copies of resolutions duly adopted by the Board
of Directors of ▇▇▇▇▇ Parent authorizing the execution, delivery and performance
of this Agreement and the LLC Agreement and the consummation of the transactions
contemplated hereby and thereby and (iii) from Acquiror certified copies of
resolutions duly adopted by the Board of Directors of Acquiror authorizing the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, and all such resolutions shall not have
been revoked and shall remain in full force and effect.
(d) Third-Party Consents. Acquiror shall have obtained in
writing any material third-party consents required under any of the contracts to
which Acquiror is a party.
(e) Legal Opinions.
(i) ▇▇▇▇▇ and Times Mirror shall have received the
opinion of Simpson, Thacher & ▇▇▇▇▇▇▇▇, legal counsel to Acquiror,
▇▇▇▇▇ Parent and MergerSub, (or, with respect to matters of Missouri
law, local counsel admitted to practice law in the State of Missouri)
in form and substance reasonably satisfactory to each of them.
(ii) Times Mirror shall have received a favorable
opinion of its legal counsel, in form and substance reasonably
satisfactory to it, as to the qualification of the Merger as a
reorganization under the provisions of Section 368 of the Code.
SECTION 2.5. Substitution Transaction. In the event that (a) Times
Mirror shall have notified Acquiror that the condition contained in Section
2.4(e)(ii) cannot be satisfied or (b) the condition to the obligation of Times
Mirror to consummate the Closing contained in Section 2.4(e)(ii) is not
satisfied or waived by 180 days after the date of this Agreement or such earlier
date on which all other conditions in Section 2.1, 2.2 and 2.4 have been
satisfied or waived (the earlier of the date of such notice or the date on which
all other conditions have been satisfied or waived, the "Revision Date") then
(i) this Agreement shall not, notwithstanding any provision of Section
9.1(b)(ii), terminate prior to December 20, 1998, (ii) for a period of 45 days
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from the Revision Date (the "Renegotiation Period"), Acquiror and Times Mirror
shall enter into negotiations with a view to determining whether agreement can
be reached as to the terms and conditions upon which the transactions
contemplated by this Agreement may be restructured so as to replicate the
relative economic benefits that each party and their Affiliates would have
derived from the transactions contemplated by this Agreement (any such
restructured transaction hereafter referred to as the "Substitution
Transaction"), it being understood that (A) Acquiror shall not be required to
agree to any Substitution Transaction that would diminish the economic benefits
to be derived by it from the transactions contemplated by this Agreement and (B)
neither Times Mirror nor Acquiror shall be under any obligation to accept any
restructured transaction proposed by the other party, (iii) unless the parties
agree to the terms and conditions of a Substitution Transaction during the
Renegotiation Period, as soon as practicable following the expiration of such
period, Times Mirror shall sell to Acquiror and Acquiror shall purchase from
Times Mirror, all the outstanding shares of ▇▇▇▇▇ for a cash purchase price of
$415,000,000 and (iv) the terms and conditions of this Agreement shall apply
mutatis mutandis, to the sale and purchase referred to in (iii) above, except
that the reference in Section 9.1(b)(ii) to "180 days after the date hereof"
shall be replaced with a reference to "December 20, 1998" and Section 2.4(e)(ii)
shall be deleted. Times Mirror agrees to promptly notify Acquiror if it shall at
any time become aware that the condition contained in Section 2.4(e)(ii) cannot
be satisfied at the Effective Time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TIMES MIRROR
Times Mirror hereby represents and warrants to each of Acquiror, ▇▇▇▇▇
Parent and MergerSub as follows:
SECTION 3.1. Organization and Good Standing of ▇▇▇▇▇. ▇▇▇▇▇ is a
corporation duly organized and validly existing under the laws of the State of
Missouri. ▇▇▇▇▇ and each of its subsidiaries has all requisite corporate power
and authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to carry on its business as
presently conducted other than such franchises, licenses, permits,
authorizations and approvals the lack of which would not, individually or in the
aggregate, have a material adverse effect on the business, assets (including
intangible assets), liabilities, financial condition or results of operations of
▇▇▇▇▇ and its subsidiaries, taken as a whole (a "▇▇▇▇▇ Material Adverse
Effect"). ▇▇▇▇▇ and its subsidiaries are duly qualified and in good standing to
do business in the jurisdictions set forth on Schedule 3.1, which jurisdictions
constitute each jurisdiction in which the nature of the business or the
ownership, leasing or holding of property by ▇▇▇▇▇ or its subsidiaries makes
such qualification necessary, except such jurisdictions where the failure be so
qualified or in good standing would not, individually or in the aggregate, have
a ▇▇▇▇▇ Material Adverse Effect. Times Mirror has made available to Acquiror,
▇▇▇▇▇ Parent and MergerSub true and complete copies of (a) the Articles of
Incorporation, as amended to date, and the Bylaws, as in effect on the date of
this Agreement, of ▇▇▇▇▇ and (b) the stock certificates and transfer records and
the minute books of ▇▇▇▇▇.
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SECTION 3.2. Authority of ▇▇▇▇▇. ▇▇▇▇▇ has all requisite corporate
power and authority to execute and deliver this Agreement and each agreement and
document contemplated by this Agreement to be executed by ▇▇▇▇▇ and to
consummate the transactions contemplated hereby and thereby. All necessary
corporate and stockholder action required to have been taken by or on behalf of
▇▇▇▇▇ by applicable law or its charter documents or bylaws has been taken to
authorize (a) the approval, execution and delivery on behalf of ▇▇▇▇▇ of this
Agreement and each agreement and document contemplated by this Agreement to be
executed by ▇▇▇▇▇ and (b) the performance by ▇▇▇▇▇ of its obligations under this
Agreement and each agreement and document contemplated by this Agreement to be
executed by ▇▇▇▇▇ and the consummation of the transactions contemplated hereby
and thereby. This Agreement constitutes, and each agreement and document
contemplated by this Agreement to be executed by ▇▇▇▇▇, when so executed, will
constitute, a valid and binding agreement of ▇▇▇▇▇, enforceable against it in
accordance with its terms, except (i) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers and (ii) for the limitations imposed by general
principles of equity (the foregoing exceptions set forth in clauses (i) and (ii)
being referred to as the "Enforceability Exceptions").
SECTION 3.3. No Breach. The execution and delivery of this Agreement by
▇▇▇▇▇ and Times Mirror do not, and the consummation of the transactions
contemplated hereby will not, (a) violate or conflict with the Articles of
Incorporation or Bylaws of ▇▇▇▇▇ or any of its subsidiaries or the Certificate
of Incorporation or Bylaws of Times Mirror, or (b) except as set forth on
Schedule 3.3 hereto, (i) constitute a breach or default or give rise to any
third-party right of termination, cancellation, material modification or
acceleration under, or require any consent under, any of the Contracts, (ii)
violate or conflict with any law, rule or regulation to which it or any material
portion of its assets is subject or (iii) result in the imposition of any
mortgage, lien, claim, charge, pledge, option, security interest, easement,
covenant, right-of-way or other restriction or encumbrance of any nature
whatsoever (any of the foregoing a "Lien") upon any of ▇▇▇▇▇'▇ assets, except in
the case of clauses (ii) and (iii) to the extent that any such conflict,
violation or Lien would not, individually or in the aggregate, have a ▇▇▇▇▇
Material Adverse Effect.
SECTION 3.4. Consents and Approvals. Neither the execution and delivery
of this Agreement by ▇▇▇▇▇ or Times Mirror nor the consummation of the
transactions contemplated hereby will require any consent, approval,
authorization or permit of, or filing with or notification to, any federal,
state or foreign governmental or regulatory authority, except (a) for
notification pursuant to, and expiration or termination of the waiting period
under, the HSR Act and (b) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, (i) would not
prevent either of them from performing its obligations under this Agreement and
(ii) would not, individually or in the aggregate, have a ▇▇▇▇▇ Material Adverse
Effect.
SECTION 3.5. Capital Stock of ▇▇▇▇▇. The authorized capital stock of
▇▇▇▇▇ consists of 300 shares of common stock, par value $100.00 per share, of
which 20 shares, constituting the
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Shares, are duly authorized and validly issued and outstanding, fully paid and
nonassessable. Times Mirror is the record owner of the Shares and has good and
marketable title thereto, free and clear of any Liens. Except for the Shares,
there are no shares of capital stock or other equity securities of ▇▇▇▇▇
outstanding. The Shares have not been issued in violation of, and none of the
Shares is subject to, any preemptive or subscription rights. There are no
outstanding warrants, options, "phantom" stock rights, agreements, convertible
or exchangeable securities or other commitments (other than this Agreement)
pursuant to which ▇▇▇▇▇ is or may become obligated to issue, sell, purchase,
return or redeem any shares of capital stock or other securities of ▇▇▇▇▇ or any
of its subsidiaries, and no equity securities of ▇▇▇▇▇ are reserved for issuance
for any purpose. Other than this Agreement, the Shares are not subject to, and
Times Mirror is not a party to, any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of any of the Shares.
SECTION 3.6. Equity Interests. Except as set forth on Schedule 3.6,
▇▇▇▇▇ does not directly or indirectly own any capital stock of or other equity
interests in any corporation, partnership or other entity. Except as set forth
on Schedule 3.6, ▇▇▇▇▇ has good and marketable title to all such capital stock
or other equity interests described on Schedule 3.6, free and clear of any
Liens.
SECTION 3.7. Financial Statements.
(a) Audited Financial Statements. The financial statements set
forth on Schedule 3.7(a), which consist of the audited combined statements of
assets and liabilities of ▇▇▇▇▇ and the notes thereto as of December 31, 1996
and December 31, 1997 (the "▇▇▇▇▇ Asset and Liability Statement"), and the
audited combined statements of operations and the notes thereto for the years
ended December 31, 1996 and 1997, and the audited combined statement of cash
flows for the year ended December 31, 1997, audited by Ernst & Young LLP, whose
report thereon is included therewith, were prepared in accordance with generally
accepted accounting principles ("GAAP"), and present fairly, in all material
respects, ▇▇▇▇▇'▇ combined financial position and the combined results of its
operations and cash flows as of the dates thereof and for the periods covered
thereby. Such statements reflect the consummation of the transactions presented
as Pro Forma adjustments in the Unaudited Pro Forma Asset and Liability
Statement.
(b) Unaudited Pro Forma Asset and Liability Statement. The
unaudited pro forma combined statement of assets and liabilities of ▇▇▇▇▇ as of
December 31, 1997 (the "▇▇▇▇▇ Pro Forma Asset and Liability Statement") is as
set forth on Schedule 3.7(b), and reflects the pro forma adjustments as set
forth in the notes thereto. The ▇▇▇▇▇ Pro Forma Asset and Liability Statement
has been prepared in accordance with GAAP on a basis consistent with the ▇▇▇▇▇
Asset and Liability Statement, except for the adjustments described in the notes
thereto.
(c) Unaudited Interim Financial Statements. The financial
statements set forth on Schedule 3.7(c) , which consist of the unaudited
condensed combined statement of
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assets and liabilities of ▇▇▇▇▇ as of March 31, 1998, and the unaudited
condensed combined statement of operations and cash flows for the three months
ended March 31, 1998, were prepared in accordance with GAAP, consistently
applied, except that such financial statements do not include all of the
schedules and footnotes required by GAAP for complete financial statements, and
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of ▇▇▇▇▇'▇ combined financial position and the combined
results of its operations and cash flows as of the date thereof and for the
period covered thereby, and present fairly, in all material respects, ▇▇▇▇▇'▇
combined financial position and the combined results of its operations as of the
date thereof and for the period covered thereby.
(d) Absence of Undisclosed Liabilities. ▇▇▇▇▇ does not have
any liabilities or obligations with respect to financings or financial
transactions except for (i) liabilities that are fully and adequately reflected
in the ▇▇▇▇▇ Asset and Liability Statement in accordance with GAAP, (ii)
liabilities disclosed on Schedule 3.7(d) or (iii) liabilities incurred since the
date of the ▇▇▇▇▇ Asset and Liability Statement in the ordinary course of
business, consistent with past practice.
SECTION 3.8. Nonforeign Certification. Times Mirror is not a "foreign
person" within the meaning of Section 1445 of the Code.
SECTION 3.9. Assets Other Than Real Property. ▇▇▇▇▇ or one of its
subsidiaries, as the case may be, has good title to all material assets, except
as otherwise specified below in this Section 3.9, reflected on the ▇▇▇▇▇ Asset
and Liability Statement or thereafter acquired, except those sold or otherwise
disposed of since the date of the ▇▇▇▇▇ Asset and Liability Statement in the
ordinary course of business consistent with past practice, free and clear of all
Liens, except (a) such as are disclosed on Schedule 3.9 and (b) Permitted Liens.
For purposes of this Agreement, "Permitted Liens" shall mean (i) mechanics',
carriers', workmen's, warehousemen's, repairmen's or other like liens arising in
the ordinary course of business, (ii) liens arising under the original purchase
price conditional sale contracts and equipment leases with third parties entered
into in the ordinary course of business, consistent with past practice, (iii)
liens for Taxes and other governmental obligations which are not due and payable
or which may thereafter be paid without penalty and (iv) other imperfections of
title, restrictions or encumbrances, if any, which liens, imperfections of
title, restrictions or other encumbrances do not materially impair the continued
use in or operation of the business of the respective owner thereof, and
operation and value of the specific assets to which they relate.
This Section 3.9 does not relate to real property or interests in real
property, which are the subject of Section 3.10, or to intellectual property,
which is the subject of Section 3.11.
SECTION 3.10. Real Property.
(a) Owned Property. Schedule 3.10(a) sets forth a complete
list of all real property and interests in real property owned in fee by ▇▇▇▇▇
or any of its subsidiaries ("Owned Properties").
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(b) Leased Property. Schedule 3.10(b) sets forth a complete
list of all real property and interests in real property leased by ▇▇▇▇▇ or any
of its subsidiaries ("Leased Properties," and together with the Owned
Properties, "Real Properties") and identifies any leases relating to the Leased
Properties.
(c) Title to Real Property. ▇▇▇▇▇ or one of its subsidiaries,
as the case may be, has (i) good and marketable fee title to all Owned Property
and (ii) good and marketable title to the leasehold estates in all Leased
Property, in each case free and clear of all Liens, except (A) Permitted Liens,
(B) easements, covenants, rights-of-way and other similar restrictions of record
and (C) (x) zoning, building and other similar restrictions, (y) Liens that have
been placed by any developer, landlord or other third party on property over
which ▇▇▇▇▇ has easement rights or on any Leased Property and subordination or
similar agreements relating thereto and (z) unrecorded easements, covenants,
rights-of-way or other similar restrictions, none of which items set forth in
clauses (x), (y) and (z) above materially impairs the continued use of such
assets in the business of ▇▇▇▇▇ or such subsidiary, as the case may be, and
operation and value of the property to which they relate.
SECTION 3.11. Intellectual Property.
(a) Trademarks. Schedule 3.11(a) sets forth a true and
complete list of all United States and foreign registered trademarks, trade
names, service marks and applications therefor (collectively, "Trademarks ")
that are registered or filed in the name of ▇▇▇▇▇ or any of its subsidiaries.
With respect to registered Trademarks, Schedule 3.11(a) contains a list of all
United States and foreign jurisdictions in which such trademarks are registered
or applied for and all registration and application numbers. ▇▇▇▇▇ or one of its
subsidiaries has the right to use all Trademarks as currently being used by
▇▇▇▇▇ or any of its subsidiaries, except where any failure to have such rights
would not, individually or in the aggregate, have a ▇▇▇▇▇ Material Adverse
Effect.
(b) Copyrights. Schedule 3.11(b) sets forth a true and
complete list of the United States copyright registrations with respect to the
top 200 publications (based on revenue) of ▇▇▇▇▇ (the "Top 200 Publications").
The Top 200 Publications accounted for approximately 25% of ▇▇▇▇▇'▇ revenues
during the fiscal year ended December 31, 1997. Schedule 3.11(b) also sets forth
a true and complete list of the United States copyright registrations with
respect to the top ten journal publications (based on revenue) of ▇▇▇▇▇ (the
"Top Ten Journals") for the year ended December 31, 1997. The Top Ten Journals
accounted for approximately 12% of ▇▇▇▇▇'▇ revenues during the fiscal year ended
December 31, 1997. As to any works set forth on Schedule 3.11(b) as to which
copyright registration has not yet been applied for or received, to the
Knowledge of Times Mirror, there is no reason why such copyright cannot be
registered. ▇▇▇▇▇ or one of its subsidiaries owns the copyrights to or otherwise
has all rights sufficient to reproduce, publish and distribute all of the
publications of ▇▇▇▇▇ as currently being reproduced, published or distributed by
▇▇▇▇▇ or any of its subsidiaries, free and clear of any Liens, except where any
failure to own such copyright or to otherwise have such rights would not,
individually or in the aggregate, have a ▇▇▇▇▇ Material Adverse Effect.
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(c) Licenses. Except as disclosed on Schedule 3.11(c), neither
▇▇▇▇▇ nor any of its subsidiaries has licensed to any third party, on an
exclusive basis, the right to use or exploit any of the Top 200 Publications in
any jurisdiction.
(d) Claims. Except as set forth on Schedule 3.11(d), no claims
are pending or, to the Knowledge of Times Mirror, threatened in writing against
▇▇▇▇▇ or any of its subsidiaries by any person with respect to the ownership,
validity, enforceability or use of any Trademarks listed on Schedule 3.11(a) or
any of the copyrights with respect to the Top 200 Publications or the Top Ten
Journals or otherwise challenging or questioning the validity or effectiveness
of any such Trademarks or copyrights or the use thereof by ▇▇▇▇▇ or any of its
subsidiaries, except for any such claims that would not, individually or in the
aggregate, have a ▇▇▇▇▇ Material Adverse Effect. Except as set forth on Schedule
3.11(d), no claims are pending or, to the Knowledge of Times Mirror, threatened
in writing against ▇▇▇▇▇ or any of its subsidiaries as of the date of this
Agreement by any person in which such person alleges that any activities or
conduct of business of ▇▇▇▇▇ or any of its subsidiaries infringes upon or
violates the intellectual property rights of any third party except for any such
claims that would not, individually or in the aggregate, have a ▇▇▇▇▇ Material
Adverse Effect.
(e) No Restrictions. Neither ▇▇▇▇▇ nor any of its subsidiaries
(nor, to the Knowledge of Times Mirror, any third party) is in breach of any
license or other agreement set forth on Schedule 3.11(c), except for such
breaches as have not had and would not, individually or in the aggregate, have a
▇▇▇▇▇ Material Adverse Effect.
SECTION 3.12. Contracts. Schedules 3.12(a) through 3.12(n) set forth a
true and complete list of each of the following types of contracts to which
▇▇▇▇▇ or any of its subsidiaries is a party (together with the leases related to
the Leased Properties "Contracts"):
(a) Employment, Independent Contractor and Consulting
Agreements. (i) Any employment agreement, employment contract or any agreement
or contract providing for the payment of any severance compensation to any ▇▇▇▇▇
Employee (as defined in Section 10.10) or for the provision, vesting and/or
acceleration or other alteration of any employee benefits following a change of
ownership or control of ▇▇▇▇▇ or any of its subsidiaries and (ii) any
independent contractor or consulting agreement (except those described in
Section 3.12(k)) that has an aggregate liability after the Closing Date in
excess of $250,000 and is not terminable by notice of less than 60 calendar days
for a cost of less than $250,000; provided, however, that in no event would any
of the foregoing agreements or contracts result in any excess parachute payments
within the meaning of Section 280G of the Code;
(b) Collective Bargaining Agreements. Any employee collective
bargaining agreement or other contract with any labor union;
(c) Non-Competition Agreements. Any covenant or agreement that
restricts the ability of ▇▇▇▇▇ or any of its subsidiaries to compete in any line
of business in any place in the world;
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(d) Agreements with Officers, Directors or Employees. Any
agreement or contract with any officer, director or employee of ▇▇▇▇▇ or any of
its subsidiaries (other than employment agreements covered by paragraph (a)
above);
(e) Leases of Real Property. Any lease or similar agreement
under which ▇▇▇▇▇ or any of its subsidiaries is a lessor or sublessor of, or
makes available for use by any third party, any Real Property;
(f) Personal Property Leases. Any lease or similar agreement
under which (i) ▇▇▇▇▇ or any of its subsidiaries is lessee of, or holds or uses,
any machinery, equipment, vehicle or other tangible personal property owned by a
third party or (ii) ▇▇▇▇▇ or any of its subsidiaries is a lessor or sublessor
of, or makes available for use by any third party, any tangible personal
property owned or leased by ▇▇▇▇▇ or any of its subsidiaries, in any such case
which has an aggregate liability after the Closing Date in excess of $250,000
and is not terminable by notice of less than 60 calendar days for a cost of less
than $250,000;
(g) Supply and Service Agreements. (i) Any continuing
agreement or contract for the future purchase by ▇▇▇▇▇ or any of its
subsidiaries of materials, supplies or equipment (other than purchase contracts
and orders for inventory in the ordinary course of business consistent with past
practice) or (ii) any advertising agreement or arrangement (including any
advertising agreements or arrangements to which any of Times Mirror, ▇▇▇▇▇ or
any of its subsidiaries is a party and that is applicable to ▇▇▇▇▇ or any of its
subsidiaries), in any such case which has an aggregate liability after the
Closing Date in excess of $250,000 and is not terminable by notice of less than
60 calendar days for a cost of less than $250,000;
(h) Indebtedness. Any agreement or contract under which ▇▇▇▇▇
or any of its subsidiaries has borrowed or loaned any money or issued any note,
bond, indenture or other evidence of indebtedness or directly or indirectly
guaranteed indebtedness, liabilities or obligations of others (other than
endorsements for the purpose of collection in the ordinary course of business),
or any other note, bond, indenture or other evidence of indebtedness;
(i) Guarantees. Any agreement or contract under which any
other person has directly or indirectly guaranteed indebtedness, liabilities or
obligations of ▇▇▇▇▇ or any of its subsidiaries (other than endorsements for the
purpose of collection in the ordinary course of business);
(j) Partnerships and Joint Ventures. Any partnership agreement
or other joint venture agreement to which ▇▇▇▇▇ or any of its subsidiaries is a
party;
(k) Author Contracts. Any agreement or contract under which
▇▇▇▇▇ or any of its subsidiaries is obligated to pay royalties to any person in
connection with the development, reproduction, publication or distribution of
any of the Top 200 Publications;
(l) Professional Association or Society Journals. Any contract
with any professional association or society relating to the publication of any
journals by ▇▇▇▇▇ or any of its subsidiaries;
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(m) Executory Sale or Acquisition Contracts. Any executory
agreement or contract to sell, transfer, or otherwise dispose of all or any
substantial portion of the assets of ▇▇▇▇▇ or any of its subsidiaries, or to
acquire the stock or all or substantially all of the assets of any other person,
other than the sale of inventory in the ordinary course of business consistent
with past practice; and
(n) Other Agreements. Any other agreement, contract, lease,
license (including exclusive copyright or Trademark licenses), commitment or
instrument to which ▇▇▇▇▇ or any of its subsidiaries is a party or by or to
which the assets or business of ▇▇▇▇▇ or any of its subsidiaries is bound or
subject which in any case has an aggregate liability after the Closing Date in
excess of $250,000 and is not terminable by notice of less than 60 calendar days
for a cost of less than $250,000 (other than purchase contracts and orders for
inventory in the ordinary course of business consistent with past practice).
Except as disclosed on Schedule 3.12(o) or the other schedules hereto, each
Contract is in full force and effect, and ▇▇▇▇▇ or one of its subsidiaries, as
applicable, has performed all material obligations required to be performed by
it to date under the Contracts and it is not in breach or default in any
material respect thereunder and, to the Knowledge of ▇▇▇▇▇, no other party to
any of the Contracts is in breach or default in any material respect thereunder.
Except for Contracts the loss of which, individually or in the aggregate, could
not reasonably be expected to have a ▇▇▇▇▇ Material Adverse Effect, no author or
customer of, professional association or society having a relationship with, or
supplier to, ▇▇▇▇▇ or any of its subsidiaries has advised ▇▇▇▇▇ or such
subsidiaries in writing within the 90 day period prior to the date hereof of an
intent to cancel or amend (or is currently attempting or threatening to cancel
or amend) any commitments under any of the Contracts.
SECTION 3.13. Litigation; Decrees. Schedule 3.13 sets forth a list, as
of the date of this Agreement, of all pending and, to the Knowledge of ▇▇▇▇▇,
threatened lawsuits, actions, proceedings or claims (other than lawsuits or
claims related to Taxes with respect to which Times Mirror is obligated to
indemnify Acquiror pursuant to Section 11.1) by or against ▇▇▇▇▇ or any of its
subsidiaries or any of the properties, assets, operations or businesses or ▇▇▇▇▇
or any of its subsidiaries and which (a) involve a claim by or against ▇▇▇▇▇ or
any of its subsidiaries of more than $250,000, (b) seek any injunctive relief or
(c) relate to the transactions contemplated by this Agreement. The matters
listed on Schedule 3.13 have not had, and are not reasonably likely to have,
individually or in the aggregate, a ▇▇▇▇▇ Material Adverse Effect; and except as
disclosed on Schedule 3.13, neither ▇▇▇▇▇ nor any of its subsidiaries is in
default under any judgment, order or decree of any court, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, applicable to ▇▇▇▇▇ or any of its subsidiaries or any of the
properties, assets, operations or businesses of ▇▇▇▇▇ or any of its
subsidiaries; except where such default would not have a ▇▇▇▇▇ Material Adverse
Effect.
SECTION 3.14. Employee and Related Matters; ERISA.
(a) Plans. Schedule 3.14(a) sets forth each employee benefit
plan (within the meaning of Section 3 of ERISA), including any pension,
retirement, profit sharing, stock bonus,
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stock option, stock purchase, incentive, deferred compensation, welfare,
hospitalization, medical, dental, vision, life insurance, accidental death and
dismemberment insurance, business travel insurance, cafeteria and flexible
spending, sick pay, disability, severance, golden parachute or other plan, fund,
program, policy, contract or arrangement, whether or not subject to ERISA
(including any contracts or agreements with certain employees of ▇▇▇▇▇ or any of
its subsidiaries that relate to the transactions contemplated by this Agreement)
providing employee benefits that is maintained or contributed to by Times
Mirror, ▇▇▇▇▇ or any of its subsidiaries in which any ▇▇▇▇▇ Personnel have
participated or under which any ▇▇▇▇▇ Personnel have accrued and remain entitled
to any benefits (the "Plans"). Each Plan covering only ▇▇▇▇▇ Personnel (a "▇▇▇▇▇
Plan") is identified as such on Schedule 3.14(a). Each Plan not so identified
shall, for purposes of this Agreement, be referred to as a "Times Mirror Plan."
▇▇▇▇▇ has delivered to Acquiror true, complete and correct copies of (i) each
Plan (or, in the case of any unwritten Plans, descriptions thereof), (ii) the
most recent annual report on Form 5500 filed with the IRS with respect to each
Plan (if any such report was required) and audited financial statements and any
actuarial reports in respect of each Plan, (iii) the most recent summary plan
description for each Plan for which such a summary plan description is required
and (iv) each trust agreement and group annuity contract relating to any Plan.
Neither ▇▇▇▇▇ nor any corporation or trade or business (whether or not
incorporated) which would be treated as a member of the controlled group
including ▇▇▇▇▇ under Section 4001(a)(14) of ERISA (as defined in Section
3.14(b)) (an "ERISA Affiliate") would be liable for any amount pursuant to
Section 4062, 4063 or 4064 of ERISA, if any Plan which is subject to Title IV of
ERISA were to terminate. Except as disclosed on Schedule 3.14(a), no ▇▇▇▇▇
Employee is entitled to any benefit under any Plan by reason of the transactions
contemplated hereby, and no Plan includes any common stock or other security
issued by Times Mirror or any ERISA Affiliate among its assets.
(b) Compliance with ERISA and the Code. None of Times Mirror,
▇▇▇▇▇ or any of the Plans or any trust created thereunder, or any trustee or
administrator thereof, has engaged in a transaction in connection with which
▇▇▇▇▇ or any of its subsidiaries would be subject to either a material liability
or civil penalty assessed pursuant to Sections 406, 409, 502(i) or 502(1) of
ERISA or a material Tax imposed pursuant to Section 4971, 4972, 4974, 4975, 4976
or 4980B of the Code. Except as described on Schedule 3.14(b), each of the Plans
has been operated and administered in all material respects in accordance with
its terms and applicable laws, including the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and the Code. Each Plan intended to be a
qualified plan under Code Section 401 has received a favorable determination
letter to that effect (a copy of which has been delivered to Acquiror) and
nothing has occurred since the issuance of such letter that would adversely
affect the Tax qualification of any such Plan. There are no pending or, to the
Knowledge of ▇▇▇▇▇, threatened claims by or on behalf of any of the Plans, by
any employee or beneficiary covered under any such Plan, or otherwise involving
any such Plan (other than ordinary course claims for benefits).
(c) Multiemployer Plan Liabilities. Except as disclosed on
Schedule 3.14(c), none of Times Mirror, ▇▇▇▇▇ or any ERISA Affiliate is, or has
been within the last six years, obligated to contribute, on behalf of any
current or former employee of ▇▇▇▇▇, to a
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multiemployer plan (as defined in Section 3(37) of ERISA) and no such ERISA
Affiliate is liable or reasonably expected to be liable for any withdrawal
liability under Section 4201 of ERISA.
(d) Accumulated Funding Deficiencies; Liens; Reportable
Events. None of the Plans or any trust established thereunder has incurred any
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Plans. No contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under Section 302(f) of
ERISA. No event or condition exists which could be deemed a "reportable event"
(as defined in Section 4043 of ERISA) that could reasonably be expected to
constitute a material liability to ▇▇▇▇▇ or any ERISA Affiliate.
(e) Employee Welfare Benefit Plans. With respect to any Plan
that is an employee welfare benefit plan, except as disclosed on Schedule
3.14(e), (i) no such Plan is unfunded or funded through a welfare benefits fund,
as such term is defined in Section 419(e) of the Code and (ii) to the Knowledge
of ▇▇▇▇▇ each such Plan that is a group health plan, as such term is defined in
Section 5000(b)(1) of the Code, complies with the applicable requirements of
Section 4980B(f) of the Code.
(f) Foreign Plans. With respect to any employee benefit plan
established or maintained by Times Mirror, ▇▇▇▇▇ or any affiliates outside the
United States in which ▇▇▇▇▇ Employees participate ("Foreign Plans"): (i) all
Foreign Plans are in compliance with all applicable statutes, laws, ordinances,
rules, orders, decrees, judgments, writs, and regulations of any controlling
governmental authority or instrumentality; (ii) all Foreign Plans are either
adequately funded or adequate reserves therefor have been established on the
accounting statements of the applicable entity; and (iii) no material liability
exists with respect to such Foreign Plans that has not been disclosed on
Schedule 3.14(f).
SECTION 3.15. Absence of Changes or Events. Except as set forth on
Schedule 3.15, since the date of the ▇▇▇▇▇ Asset and Liability Statement, there
has not been any change, event or development which has had, or is reasonably
likely to have, a ▇▇▇▇▇ Material Adverse Effect, other than changes relating to
the economy in general or the United States health science information industry
in general and not specifically relating to ▇▇▇▇▇. Except as disclosed on
Schedule 3.15 or as contemplated by this Agreement, since the date of the ▇▇▇▇▇
Asset and Liability Statement, the business of ▇▇▇▇▇ and its subsidiaries has
been conducted in the ordinary course, consistent with past practice.
SECTION 3.16. Compliance with Applicable Laws. Except as set forth on
Schedule 3.16:
(a) General. ▇▇▇▇▇ and each of its subsidiaries is in
compliance with all applicable statutes, laws, ordinances, rules, orders and
regulations of any governmental authority or instrumentality, domestic or
foreign, including Environmental Laws, except for any such incidents of
noncompliance that would not, individually or in the aggregate, have a ▇▇▇▇▇
Material Adverse Effect. This Section 3.16 does not relate to matters with
respect to Taxes or any other taxes.
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(b) Hazardous Materials. Except as disclosed on Schedule 3.16,
(i) to the Knowledge of Times Mirror, there were no releases of any Hazardous
Material originating at, on, or from any of the Real Properties prior to the
period that ▇▇▇▇▇ or any of its divisions or subsidiaries owned or leased such
Real Property, except for any such releases that would not, individually or in
the aggregate, have a ▇▇▇▇▇ Material Adverse Effect, and (ii) there has been no
release of any Hazardous Material originating at, on, or from any of the Real
Properties during the period that ▇▇▇▇▇ or any of its divisions or subsidiaries
has owned or leased such Real Property, except for any such releases that would
not have a ▇▇▇▇▇ Material Adverse Effect.
(c) Notices of Certain Environmental Matters. Except as
disclosed on Scheduled 3.16, ▇▇▇▇▇ has not received written notice of any
alleged violation of Environmental Law or liability arising out of the presence
or release of any Hazardous Material in connection with the present or past
business or properties of ▇▇▇▇▇ or any of its subsidiaries, and there exists no
writ, injunction, decree, order or judgment outstanding, nor any lawsuit,
proceeding, citation, summons or government agency investigation relating
thereto, except for any such matters that would not have a ▇▇▇▇▇ Material
Adverse Effect. All material reports, assessments, audits or other similar
documents addressing actual or potential non-compliance with or liability under
any Environmental Law or actual or potential liability with respect to any
Hazardous Material, regarding ▇▇▇▇▇ or any of its subsidiaries or any entity for
which ▇▇▇▇▇ or any of its subsidiaries is or may be liable, have been provided
to Acquiror.
(d) Definitions. For purposes of Sections 3.16(b) and 3.16(c):
(i) "Hazardous Material" means any chemical substance
the presence of which requires investigation or remediation under any
Environmental Law or common law; or which is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) or the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.); or which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
regulated as such by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States or
state or any political subdivision thereof.
(ii) "Environmental Law" means any statute,
regulation, rule, ordinance, code, license or order, of any
governmental agency, department, commission, board, bureau or
instrumentality of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory
decrees, judgments and orders relating to the protection of human
health or the environment or with respect to Hazardous Materials.
SECTION 3.17. Taxes.
(a) Tax Returns and Taxes. Except as set forth on Schedule
3.17(a), all Tax Returns (including estimated Tax Returns) relating to ▇▇▇▇▇ and
its subsidiaries (including any
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Tax Returns filed on behalf of an affiliated, consolidated, combined or unitary
group that included or includes ▇▇▇▇▇ or its subsidiaries) have been timely
filed. All such Tax Returns are correct and complete in all material respects.
All material Taxes required to be paid in respect of ▇▇▇▇▇ and its subsidiaries
have been timely paid. There are no material Tax liens or assessments against
▇▇▇▇▇ or its subsidiaries or any property or assets of ▇▇▇▇▇ or its
subsidiaries, other than liens for Taxes that are not due and payable or which
may thereafter be paid without penalty.
(b) Withholding Taxes. All Taxes required to be withheld,
collected or deposited by ▇▇▇▇▇ and its subsidiaries have been timely withheld,
collected or deposited and, to the extent required, have been paid to the
relevant governmental authorities.
(c) Other Taxes. Except as set forth on Schedule 3.17(c):
(i) No consent under section 341(f) of the Code has
been filed with respect to ▇▇▇▇▇ or any of its subsidiaries.
(ii) Neither ▇▇▇▇▇ nor any of its subsidiaries has
agreed to make any material adjustment under Section 481(a) of the Code
by reason of a change in accounting method or otherwise, and no issue
raised on audit could, by application of similar principles, be
reasonably expected to increase Taxes payable by ▇▇▇▇▇ or any of its
subsidiaries in post-Closing periods.
(iii) No property owned by ▇▇▇▇▇ or its subsidiaries
(A) is property required to be treated as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior the enactment
of the Tax Reform Act of 1986; (B) constitutes "tax exempt use
property" within the meaning of Section 168(h)(1) of the Code; or (C)
is tax exempt bond financed property within the meaning of Section
168(g) of the Code.
(iv) No power of attorney that is currently in force
has been granted by ▇▇▇▇▇ or its subsidiaries with respect to any
matter relating to Taxes.
(v) There are no material rulings, closing agreements
or similar arrangements with any Tax authority in effect with respect
to ▇▇▇▇▇ or its subsidiaries.
(vi) Neither ▇▇▇▇▇ nor any of its subsidiaries is a
party to any material agreement that obligates it to make any payment
computed by reference to Taxes of any person.
(d) Definitions. For purposes of this Agreement:
(i) "Tax" (including "Taxes") means all federal,
state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, withholding, payroll, employment, excise, stamp,
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premium, property or other taxes of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
with respect thereto; and
(ii) "Tax Return" means any return, report, statement
or information statement required to be filed with respect to Taxes.
SECTION 3.18. Employee and Labor Relations. Except as set forth on
Schedule 3.18, (a) there is no labor strike, dispute, or work stoppage or
lockout pending or, to the Knowledge of Times Mirror, threatened against or
affecting ▇▇▇▇▇ or any of its subsidiaries; (b) to the Knowledge of Times
Mirror, no union organizing campaign is in progress with respect to the
employees of ▇▇▇▇▇ and no question concerning representation exists with respect
to such employees; (c) there is no unfair labor practice charge or complaint
against ▇▇▇▇▇ pending or, to the Knowledge of Times Mirror, threatened before
the National Labor Relations Board, (d) there is no pending or, to the Knowledge
of Times Mirror, threatened grievance that would have a ▇▇▇▇▇ Material Adverse
Effect and (e) no charges with respect to or relating to ▇▇▇▇▇ or any of its
subsidiaries are pending before the Equal Employment Opportunity Commission or
any state or local agency responsible for the prevention of unlawful employment
practices, other than those which, if adversely determined, would not,
individually or in the aggregate, have a ▇▇▇▇▇ Material Adverse Effect.
SECTION 3.19. Working Capital. As of the Effective Time, the total
current assets of ▇▇▇▇▇ (net of appropriate reserves as determined in accordance
with GAAP and excluding any current portion of deferred income tax assets) minus
total current liabilities of ▇▇▇▇▇ (excluding any current portion of deferred
income tax liabilities and restructuring liabilities), all as determined in
accordance with GAAP, consistently applied with the ▇▇▇▇▇ Asset and Liability
Statement, as finally determined pursuant to Section 8.5 (the "▇▇▇▇▇ Net Working
Capital") shall not be less than the ▇▇▇▇▇ Net Working Capital shown on the
unaudited condensed combined statement of assets and liabilities of ▇▇▇▇▇ as of
March 31, 1998 delivered pursuant to Section 3.7(c). ▇▇▇▇▇ Net Working Capital
shall be determined without giving effect to intercompany receivables or
payables (other than trade receivables or payables incurred in the ordinary
course of business consistent with past practice).
SECTION 3.20. Transition Services Agreements.
(a) ▇▇▇▇▇/MB Transition Services Agreement. ▇▇▇▇▇ has entered
into a Transition Services Agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company,
Incorporated, a copy of which is attached hereto as Exhibit G, pursuant to which
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Incorporated will provide to ▇▇▇▇▇ certain specified
transition services for a specified period of time after the Effective Time.
(b) StayWell/▇▇▇▇▇ Transition Services Agreement. ▇▇▇▇▇ has
entered a Transition Services Agreement with The StayWell Company, a copy of
which is attached hereto as Exhibit H, pursuant to which ▇▇▇▇▇ will provide to
The StayWell Company certain specified transition services for a specified
period of time after the Effective Time.
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(c) ▇▇▇▇▇/StayWell Transition Services Agreement. Prior to the
Effective Time ▇▇▇▇▇ will enter into a Transition Services Agreement with The
StayWell Company, substantially in the form attached hereto as Exhibit I,
pursuant to which The StayWell Company will provide to ▇▇▇▇▇ certain specified
transition services for a specified period of time after the Effective Time.
SECTION 3.21 Transactions with Affiliates. Except for agreements set
forth on Schedule 3.12(a), as described in Section 3.20 or as set forth on
Schedule 3.21, ▇▇▇▇▇ is not a party to any agreement with Times Mirror or any of
its affiliates, including any of ▇▇▇▇▇'▇ or Times Mirror's officers or directors
(other than any agreements between ▇▇▇▇▇ and any officer or director of ▇▇▇▇▇ or
Times Mirror entered into in the ordinary course of business). Except as
described in Section 3.20 or as set forth on Schedule 3.21, no affiliate of
▇▇▇▇▇ (a) owns any property or right, tangible or intangible, which is used by
▇▇▇▇▇ in its business, (b) has any claim or cause of action against ▇▇▇▇▇, or
(c) owes any money to ▇▇▇▇▇.
SECTION 3.22 Returns. Schedule 3.22 sets forth the amount of ▇▇▇▇▇'▇
reserve for returns as of March 31, 1998, which reserve was calculated and
established in accordance with GAAP. No products sold or distributed by ▇▇▇▇▇ or
any of its subsidiaries are subject to any guaranty, warranty, right of return
or other indemnity beyond such product return policy.
SECTION 3.23. Organization and Good Standing of Times Mirror. Times
Mirror is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Times Mirror has all requisite
corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to carry
on its business as presently conducted other than such franchises, licenses,
permits, authorizations and approvals the lack of which would not prevent Times
Mirror from performing its obligations under this Agreement.
SECTION 3.24. Authority of Times Mirror. Times Mirror has all requisite
corporate power and authority to execute and deliver this Agreement and each
agreement and document contemplated by this Agreement to be executed by Times
Mirror and to consummate the transactions contemplated hereby and thereby. All
necessary corporate and stockholder action required to have been taken by or on
behalf of Times Mirror by applicable law or its charter documents or bylaws has
been taken to authorize (a) the approval, execution and delivery on behalf of
Times Mirror of this Agreement and each agreement and document contemplated by
this Agreement to be executed by Times Mirror and (b) the performance by Times
Mirror of its obligations under this Agreement and each agreement and document
contemplated by this Agreement to be executed by Times Mirror and the
consummation of the transactions contemplated hereby and thereby. This Agreement
and each agreement and document contemplated by this Agreement to be executed by
Times Mirror, when so executed, will constitute a valid and binding agreement of
Times Mirror, enforceable against it in accordance with their terms, except as
the same may be limited by the Enforceability Exceptions.
SECTION 3.25. Brokers. No broker, finder or investment banker other
than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees are being paid by Times Mirror, is
entitled to any brokerage, finder's or
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other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Times Mirror or ▇▇▇▇▇.
SECTION 3.26. Sufficiency of Assets. Except for assets that are related
to matters covered by the Transition Services Agreements described in Section
3.20, ▇▇▇▇▇ or its subsidiaries own or have the right to use all the assets
necessary to conduct the business of ▇▇▇▇▇ and its subsidiaries in all material
respects as currently conducted.
SECTION 3.27. Legal Opinion. Times Mirror has been advised by ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP that ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP will at the Effective Time
deliver the legal opinion referred to in Section 2.4(e)(ii), absent a change in
circumstances from the date hereof affecting, in any material respect, ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP's ability to deliver such opinion.
ARTICLE 4
[INTENTIONALLY OMITTED]
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR, ▇▇▇▇▇ PARENT AND MERGERSUB
Acquiror, ▇▇▇▇▇ Parent and MergerSub hereby represent and warrant to
each of Times Mirror and ▇▇▇▇▇ as follows:
SECTION 5.1. Organization and Good Standing of Acquiror, ▇▇▇▇▇ Parent
and MergerSub.
(a) As to Acquiror. Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Acquiror has
all requisite corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to carry on its business as presently conducted other than such franchises,
licenses, permits, authorizations and approvals the lack of which would not,
individually or in the aggregate, have a material adverse effect on the ability
of Acquiror to perform its obligations under this Agreement (an "Acquiror
Material Adverse Effect")
(b) As to ▇▇▇▇▇ Parent. ▇▇▇▇▇ Parent is a corporation duly
organized and validly existing under the laws of the State of Delaware. Acquiror
has made available to each of Times Mirror and ▇▇▇▇▇ a true and complete copy of
the Bylaws, as in effect on the date of this Agreement, of ▇▇▇▇▇ Parent.
(c) As to MergerSub. MergerSub is a corporation duly organized
and validly existing under the laws of the State of Missouri.
SECTION 5.2. Authority. Each of Acquiror, ▇▇▇▇▇ Parent and MergerSub
has all requisite corporate power and authority to execute and deliver this
Agreement and each
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agreement and document contemplated by this Agreement to be executed by
Acquiror, ▇▇▇▇▇ Parent or MergerSub and to consummate the transactions to which
Acquiror, ▇▇▇▇▇ Parent or MergerSub is a party contemplated hereby and thereby.
All necessary corporate and stockholder action required to have been taken by or
on behalf of each of Acquiror, ▇▇▇▇▇ Parent and MergerSub by applicable law or
its respective charter documents or bylaws has been taken to authorize (a) the
approval, execution and delivery on behalf of Acquiror, ▇▇▇▇▇ Parent and
MergerSub of this Agreement and each agreement and document contemplated by this
Agreement to be executed by Acquiror, ▇▇▇▇▇ Parent or MergerSub and (b) the
performance by Acquiror, ▇▇▇▇▇ Parent or MergerSub of its respective obligations
under this Agreement and each agreement and document contemplated by this
Agreement to be executed by Acquiror, ▇▇▇▇▇ Parent or MergerSub and the
consummation of the transactions contemplated hereby and thereby. This Agreement
and each agreement and document contemplated by this Agreement to be executed by
Acquiror, ▇▇▇▇▇ Parent or MergerSub, when so executed, will constitute a valid
and binding agreement of each of Acquiror, ▇▇▇▇▇ Parent and MergerSub,
enforceable against each of them in accordance with its terms, except as the
same may be limited by the Enforceability Exceptions.
SECTION 5.3. No Breach. The execution and delivery of this Agreement by
each of Acquiror, ▇▇▇▇▇ Parent and MergerSub do not, and the consummation of the
transactions to which Acquiror, ▇▇▇▇▇ Parent or MergerSub is a party
contemplated hereby will not, (a) violate or conflict with the organizational
documents of Acquiror, ▇▇▇▇▇ Parent or MergerSub or (b) (i) constitute a breach
or default or give rise to any third-party right of termination, cancellation,
material modification or acceleration under, or require consent under, any
material agreement, understanding or undertaking to which Acquiror is a party or
by which it is bound, (ii) violate or conflict with any law, rule or regulation
to which it or any portion of its assets is subject or (iii) result in the
imposition of any Lien upon the assets of Acquiror, except in the case of
clauses (ii) and (iii) to the extent that any such conflict, violation or Lien
would not, individually or the aggregate, have an Acquiror Material Adverse
Effect.
SECTION 5.4. Consents and Approvals. Neither the execution and delivery
of this Agreement by any of Acquiror, ▇▇▇▇▇ Parent or MergerSub nor the
consummation of the transactions to which Acquiror, ▇▇▇▇▇ Parent or MergerSub is
a party contemplated hereby will require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority on the part of Acquiror, ▇▇▇▇▇ Parent or MergerSub, except (a) for
notification pursuant to, and expiration or termination of the waiting period
under, the HSR Act, (b) any consent, approval, authorization, permit, filing or
notice required under the federal or state securities or state blue sky laws in
connection with the transactions contemplated by Sections 7.1 and 7.2 of this
Agreement and (c) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, (i) would not
prevent Acquiror from performing its obligations under this Agreement and (ii)
would not have an Acquiror Material Adverse Effect.
SECTION 5.5. Funding. Acquiror has in full force and effect financing
commitments which, together with the cash and cash equivalent assets of
Acquiror, are not and will not at the Effective Time be less than the sum of
$415,000,000 plus the aggregate amount of expenses and
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fees payable by Acquiror, ▇▇▇▇▇ Parent or MergerSub in connection with this
Agreement and the transactions contemplated hereby.
SECTION 5.6. Brokers. No broker, finder or investment banker other than
Lazard Freres & Co., LLC, whose fees shall be paid by Acquiror, is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror, ▇▇▇▇▇ Parent or MergerSub.
SECTION 5.7. No Prior Activities. Except for obligations expressly set
forth in this Agreement, including the exhibits, or incurred in connection with
its incorporation or organization or the negotiation and consummation of this
Agreement and the transactions contemplated hereby and, in the case of ▇▇▇▇▇
Parent, by the LLC Agreement, neither ▇▇▇▇▇ Parent nor MergerSub has incurred
any obligation or liability or engaged in any business or activity of any type
or kind whatsoever or entered into any agreement or arrangement with any person.
ARTICLE 6
COVENANTS OF ▇▇▇▇▇ AND TIMES MIRROR
SECTION 6.1. Delivery of Interim Financial Statements. As soon as
practicable and in any event not later than 45 days after the end of any fiscal
quarter of ▇▇▇▇▇ ending after March 31, 1998 and prior to the Effective Time,
Times Mirror shall cause ▇▇▇▇▇ to, deliver to Acquiror the unaudited condensed
combined statement of assets and liabilities of ▇▇▇▇▇ as of the end of such
fiscal quarter and the unaudited condensed combined statements of operations and
cash flows for the fiscal quarter then ended, which shall be prepared in
accordance with GAAP, applied in a manner consistent with the preparation of the
financial statements set forth on Schedule 3.7(a), except for changes reflected
in the ▇▇▇▇▇ Pro Forma Asset and Liability Statement and except that the
financial statements delivered pursuant to this Section 6.1 will be interim
financial statements and will not include all of the schedules and footnotes
required by GAAP for complete financial statements, and will include all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of ▇▇▇▇▇'▇ combined financial position and the combined results of
its operations and cash flows as of the date thereof and for the period covered
thereby. Such statements will reflect the consummation of the transactions
presented as Pro Forma adjustments in the Unaudited Pro Forma Asset and
Liability Statement. The financial statements delivered pursuant to this Section
6.1 shall be accompanied by a certificate of the Chief Financial Officer of
▇▇▇▇▇ confirming that such financial statements have been prepared as described
above.
SECTION 6.2. Access. Prior to the Closing, ▇▇▇▇▇ and Times Mirror and
their officers, directors, employees, advisors, representatives and authorized
agents will provide Acquiror, MergerSub and their respective representatives,
employees, counsel and accountants reasonable access at reasonable times,
including during normal business hours, and in a manner not unreasonably
disruptive to the conduct of the business of ▇▇▇▇▇ or any of ▇▇▇▇▇'▇ officers,
directors, employees, advisors, representatives or authorized agents, access to
the personnel,
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properties, contracts, books and records of ▇▇▇▇▇, including access to ▇▇▇▇▇
Employees for the purpose of pre-enrolling such ▇▇▇▇▇ Employees in any employee
benefit or welfare plans of Acquiror; and, subject to any applicable
confidentiality agreements, Times Mirror shall make available to Acquiror's
representatives copies of any contracts, agreements, information and other
documentation related to the business and operations of ▇▇▇▇▇ reasonably
requested by Acquiror; provided, however, that all information and documentation
made available pursuant to the terms of this Section 6.1 shall be subject to the
terms of the Confidentiality Agreement between Acquiror and Times Mirror dated
as of January 28, 1998 (the "Confidentiality Agreement").
SECTION 6.3. Ordinary Conduct. Except as contemplated by this Agreement
or as set forth on Schedule 6.3, from the date of this Agreement to the Closing
Date, Times Mirror shall cause ▇▇▇▇▇ to, and ▇▇▇▇▇ shall, conduct its business
in the ordinary course in substantially the same manner as presently conducted
and consistent with past practices and will make all reasonable efforts,
substantially consistent with past practices, to preserve its relationships with
customers, authors, suppliers and others with whom ▇▇▇▇▇ deals. Except as
contemplated by this Agreement, Times Mirror shall not permit ▇▇▇▇▇ to, and
▇▇▇▇▇ shall not, do any of the following, without the prior written consent of
Acquiror:
(a) Charter and Bylaws. Amend its Charter or Bylaws;
(b) Dividends. Declare or pay any non-cash dividend or make
any other non-cash distributions to Times Mirror whether or not upon or in
respect of any shares of its capital stock; provided, however, that ▇▇▇▇▇ may
declare and make a non-cash distribution to Times Mirror of any intercompany
receivable owing from Times Mirror to ▇▇▇▇▇ as of the Effective Time;
(c) Capital Stock. Redeem, purchase or otherwise acquire any
shares of its capital stock or issue any capital stock or any option, warrant or
other right relating thereto or any securities convertible into or exchangeable
for any shares of capital stock or make any change in its issued and outstanding
capital stock;
(d) Employee Matters. Adopt or amend in any material respect
any Plan or agree to be bound by any collective bargaining agreement, except as
required by law, or adopt any plan, program or arrangement that would constitute
a Plan;
(e) Compensation. (i) Grant to any executive officer or
employee any increase in compensation or benefits or any rights to receive
severance payments or other benefits upon a termination of employment or a
change of ownership or control of the employer, except (A) as may be required
under existing agreements, (B) in the ordinary course of business consistent
with past practice, (C) retention and severance agreements having terms
substantially similar to those provided to key employees as set forth on
Schedule 3.12(a) and to other employees as set forth on Schedule 10.3 with any
employees of ▇▇▇▇▇ hired after the date of this Agreement or (D) any increases,
payments or benefits for which Times Mirror shall be solely obligated, including
any such increases, payments or benefits contemplated by Section 10.9(b) and
(c), or (ii) hire or terminate any executive officer or employee other than in
the ordinary
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course of business consistent with past practice. In furtherance and not in
limitation of the foregoing, Times Mirror will, if requested by Acquiror and
confirmed in writing to be for Acquiror's account, put into place for employees
of ▇▇▇▇▇ such other "stay bonus" programs as may be requested by Acquiror;
(f) Indebtedness. Incur or assume any liabilities, obligations
or indebtedness for borrowed money or guarantee any such liabilities,
obligations or indebtedness, other than (i) any indebtedness owing to Times
Mirror and (ii) any indebtedness owed to any other person incurred in the
ordinary course of business consistent with past practice; provided that in no
event shall ▇▇▇▇▇ incur, assume or guarantee any long-term indebtedness for
borrowed money;
(g) Encumbrances. Permit, allow or suffer any of its assets to
be subjected to any Lien, other than those excepted from the representations set
forth in Sections 3.9 and 3.10;
(h) Cancellation of Indebtedness. Cancel any indebtedness
owing to ▇▇▇▇▇, or waive or settle any claims or rights, other than
cancellations or waivers that cover any indebtedness, claims or rights that,
individually, have a value of less than $50,000 and that, in the aggregate, have
a value of less than $250,000; provided, further, however, that ▇▇▇▇▇ may, in
accordance with Section 8.7, cancel any intercompany receivable owing from Times
Mirror to ▇▇▇▇▇ as of the Closing Date;
(i) Related Party Transactions. Except for (i) dividends or
distributions not prohibited under clause (b) above, (ii) indebtedness not
prohibited by clause (f) above and (iii) intercompany transactions permitted
under clause (h) above or in the ordinary course of business and consistent with
past practice, pay, loan or advance any amount to, or sell, transfer or lease
any of its assets to, or enter into any agreement or arrangement with Times
Mirror or any affiliate of Times Mirror;
(j) Accounting Policies. Make any change in any method of
accounting or accounting practice or policy other than those required by GAAP;
(k) Reorganizations. Acquire or agree to acquire by merging or
consolidating with, or by purchasing the stock of, or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than acquisitions of
inventory in the ordinary course of business, consistent with past practices);
(l) Capital Expenditures. Make or incur any capital
expenditures other than those made or incurred in accordance with Times Mirror's
fiscal year 1998 capital expenditure budget with respect to ▇▇▇▇▇ heretofore
disclosed to Acquiror set forth on Schedule 6.3(l);
(m) Asset Dispositions. Sell, lease or otherwise dispose of,
or agree to sell, lease or otherwise dispose of, any of its assets, except in
the ordinary course of business and except for sales, leases or dispositions of
assets that, individually, have a value of less than $250,000 and, in the
aggregate, have a value of less than $500,000;
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(n) Material Contracts. (i) Enter into any agreement of the
types described in Section 3.12 other than (A) severance and retention
agreements entered into pursuant to Section 6.3(e) and (B) in the ordinary
course of business, consistent with past practices or (ii) terminate or amend in
any material respect any Contract set forth on Schedule 3.12, other than in the
ordinary course of business, consistent with past practices;
(o) Write Downs. Write down the value of any tangible assets
or write off as uncollectible any debt, notes or accounts receivable, or make
any other write-downs and write-offs other than write-downs and write-offs which
do not, individually or in the aggregate, have a ▇▇▇▇▇ Material Adverse Effect
and which are done in the ordinary course of business in accordance with GAAP
and consistent with past practices;
(p) Change in Business. Change the nature of its business in
any material respect or enter into any new line of business;
(q) Loans. (i) Make any loans, advances or capital
contributions to, or investments in, any other person other than in the ordinary
course of business, consistent with past practices, or (ii) pay, discharge,
settle or satisfy any material claims, liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise) other than
those that become due by their terms and payments in the ordinary course of
business consistent with past practice; or
(r) Agreements. Agree, whether in writing or otherwise, to do
any of the foregoing.
SECTION 6.4. Insurance.
(a) Times Mirror and ▇▇▇▇▇ shall keep, or cause to be kept,
all insurance policies presently maintained relating to ▇▇▇▇▇ and its
properties, or suitable replacements therefor, in full force and effect through
the close of business on the Closing Date. Schedule 6.4 sets forth all the
insurance policies presently owned and maintained by ▇▇▇▇▇. Any and all
insurance policies not listed on Schedule 6.4 presently maintained relating to
▇▇▇▇▇ are maintained by Times Mirror. Except as otherwise provided in Sections
6.4(b) and (c), neither ▇▇▇▇▇, MergerSub nor Acquiror will have any rights under
any such insurance policies not listed on Schedule 6.4 from and after the
Effective Time. As of the Effective Time, Times Mirror shall assign to Acquiror
and to ▇▇▇▇▇ any and all rights which Times Mirror may have under such insurance
policies covering claims relating to the period on or prior to the Effective
Time; provided, however, that Times Mirror shall retain all rights of
subrogation under such Insurance Policies.
(b) Notwithstanding the foregoing, to the extent that (i) any
insurance policies controlled by Times Mirror and its affiliates ("Times Mirror
Insurance Policies"), cover any loss, liability, claim, damage or expense
relating to ▇▇▇▇▇ or its business, assets or current or former employees ("▇▇▇▇▇
Liabilities") and relating to or arising out of occurrences prior to the
Effective Time and (ii) Times Mirror Insurance Policies permit claims to be made
thereunder with respect to ▇▇▇▇▇ Liabilities relating to or arising out of
occurrences prior to the Effective
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Time ("▇▇▇▇▇ Claims"), Times Mirror shall cooperate and cause its affiliates to
cooperate with Acquiror and ▇▇▇▇▇ in submitting ▇▇▇▇▇ Claims (or pursuing ▇▇▇▇▇
Claims previously made) on behalf of Acquiror or ▇▇▇▇▇ under Times Mirror's
Insurance Policies; provided that Times Mirror shall be under no obligation to
commence or maintain litigation to enforce any ▇▇▇▇▇ Claim, unless Acquiror has
agreed in writing to hold Times Mirror harmless in connection therewith, in
which case Acquiror shall reimburse, indemnify and hold Times Mirror and its
affiliates harmless from all liabilities, costs and expenses (including all
deductibles, legal and administrative costs, attorney's fees, overhead and costs
of compliance under Times Mirror Insurance Policies) of any nature actually
incurred by Times Mirror or its affiliates as a result of ▇▇▇▇▇ Claims made
under Times Mirror Insurance Policies. Upon the incurrence or accrual of any
such liability, cost or expense relating to ▇▇▇▇▇ Claims made under Times Mirror
Insurance Policies and upon receipt from Times Mirror of a statement of the
amount of such liabilities, costs and expenses in reasonable detail, from time
to time, ▇▇▇▇▇ agrees to pay promptly to Times Mirror or its affiliates the
amount indicated in such statement.
(c) To the extent that, after the Effective Time, ▇▇▇▇▇ or
Times Mirror requires any information regarding claim data, payroll or other
information in order to make filings with insurance carriers or self insurance
regulators, Times Mirror shall promptly supply such information to ▇▇▇▇▇ and
Acquiror shall cause ▇▇▇▇▇ promptly to supply such information to Times Mirror,
as the case may be.
SECTION 6.5. Assignment of Confidentiality Agreements. As of the
Effective Time, Times Mirror shall assign to Acquiror its rights under all
confidentiality agreements entered into by Times Mirror with any person in
connection with the proposed sale of ▇▇▇▇▇ but only to the extent such rights
relate to ▇▇▇▇▇ and its subsidiaries. At the Closing, Times Mirror shall provide
Acquiror a list of the names of any person party to any such confidentiality
agreement, unless such disclosure is prohibited by such confidentiality
agreement, in which case the name of such person shall be disclosed to Acquiror
by Times Mirror promptly after such time, if ever, that such confidentiality
agreement terminates in accordance with its terms. To the extent ▇▇▇▇▇ has a
reasonable basis for belief that any person has breached its obligations under
any such confidentiality agreement and Times Mirror shall not, as of such time,
have provided Acquiror with such person's name or a copy of the applicable
agreement, Times Mirror shall, upon ▇▇▇▇▇'▇ request, confirm whether Times
Mirror has any rights under any confidentiality agreement with such person in
respect of ▇▇▇▇▇.
SECTION 6.6 No Transfer of ▇▇▇▇▇ Parent Shares. Times Mirror shall not,
for a period of two years after the Effective Time, directly or indirectly,
sell, transfer or otherwise dispose of any of its shares of the capital stock of
▇▇▇▇▇ Parent.
SECTION 6.7. Lease of 11830 Westline Property. On or prior to the
Closing Date, Times Mirror will cause the sublease dated as of August 8, 1997 by
and between Times Mirror as sublessor and ▇▇▇▇▇ as sublessee with respect to the
property and facility located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ (the "Westline Property") to be amended to provide that ▇▇▇▇▇ may
further sublease the Westline Property without the consent Times
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Mirror or any other third party, provided that, at the time of such further
sublease, Acquiror provides a guarantee to Times Mirror of the obligations of
any such sublessee.
ARTICLE 7
COVENANTS OF ACQUIROR, ▇▇▇▇▇ PARENT AND MERGERSUB
SECTION 7.1. Certain Pre-Effective Time Transactions. Each of Acquiror,
▇▇▇▇▇ Parent and MergerSub will consummate, immediately prior to the Effective
Time, each of the transactions described below to which it is a party:
(a) Issuance of MergerSub Common Stock and MergerSub Preferred
Stock. In consideration for an amount in cash equal to $415,000,000, less the
net proceeds received by MergerSub from the issuance of the MergerSub Debt to
Acquiror, MergerSub will issue to Acquiror (i) 1,650 shares of MergerSub Common
Stock, which MergerSub Common Stock will have 20% of the Voting Power and such
other designations, preferences, voting powers, rights and qualifications as are
set forth in the MergerSub Articles of Incorporation, (ii) 100% of the
authorized shares of MergerSub Participating Preferred Stock, which MergerSub
Participating Preferred Stock will have no Voting Power and such other
designations, preferences, voting powers, rights and qualifications as are set
forth in the MergerSub Articles of Incorporation and (iii) 100% of the
authorized shares of MergerSub Preferred Stock, which MergerSub Preferred Stock
will have 80% of the Voting Power and such other designations, preferences,
voting powers, rights and qualifications as are set forth in the MergerSub
Articles of Incorporation.
(b) Issuance of ▇▇▇▇▇ Parent Preferred Stock. In consideration
for 100% of the authorized and outstanding shares of MergerSub Preferred Stock
and 100% of the authorized and outstanding shares of MergerSub Participating
Preferred Stock held by Acquiror, ▇▇▇▇▇ Parent will issue to Acquiror 100% of
the authorized shares of ▇▇▇▇▇ Parent Preferred Stock, which ▇▇▇▇▇ Parent
Preferred Stock will have 80% of the Voting Power and such other designations,
preferences, voting powers, rights and qualifications as are set forth in the
▇▇▇▇▇ Parent Certificate of Incorporation.
(c) Issuance of ▇▇▇▇▇ Parent Common Stock. In consideration
for an amount in cash equal to $415,000,000, ▇▇▇▇▇ Parent will issue to
MergerSub 100% of the authorized shares of ▇▇▇▇▇ Parent Common Stock, which
▇▇▇▇▇ Parent Common Stock will have 20% of the Voting Power and such other
designations, preferences, voting powers, rights and qualifications as are set
forth in the ▇▇▇▇▇ Parent Certificate of Incorporation.
SECTION 7.2. Formation of Eagle Publishing Investments, LLC. ▇▇▇▇▇
Parent shall form Eagle Publishing Investments, LLC by filing with the Secretary
of State of Delaware the LLC Certificate of Formation. Immediately after the
Effective Time, ▇▇▇▇▇ Parent will, and Acquiror will cause ▇▇▇▇▇ Parent to, in
accordance with the terms of the LLC Agreement, make a contribution to Eagle
Publishing Investments, LLC in the amount of $415,000,000.
SECTION 7.3. No Changes in ▇▇▇▇▇ Parent or MergerSub Charter. From the
date of this Agreement until the Effective Time, none of Acquiror, ▇▇▇▇▇ Parent
or MergerSub will,
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without the prior written consent of Times Mirror, amend or cause to be amended
the ▇▇▇▇▇ Parent Certificate of Incorporation or the MergerSub Articles of
Incorporation or the Bylaws of either of ▇▇▇▇▇ Parent or MergerSub.
SECTION 7.4. Confidentiality. Each of Acquiror, ▇▇▇▇▇ Parent and
MergerSub acknowledges that the information being provided to it by or on behalf
of ▇▇▇▇▇ and Times Mirror is subject to the terms of the Confidentiality
Agreement, the terms of which are incorporated herein by reference. Effective
upon, and only upon, the Closing, the Confidentiality Agreement will terminate
only with respect to information to the extent it relates solely to ▇▇▇▇▇, and
each of Acquiror, ▇▇▇▇▇ Parent and MergerSub acknowledges that any and all other
information provided to it by Times Mirror or Times Mirror's representatives
concerning any other subsidiary of Times Mirror or any other operations of Times
Mirror shall remain subject to the terms and conditions of the Confidentiality
Agreement after the Effective Time.
SECTION 7.5. No Additional Representations. Each of Acquiror, ▇▇▇▇▇
Parent and MergerSub acknowledges that none of Times Mirror, ▇▇▇▇▇ or any other
person has made any representation or warranty, expressed or implied, as to the
accuracy or completeness of any information regarding ▇▇▇▇▇ except as expressly
set forth in this Agreement or the schedules hereto, and none of Times Mirror,
▇▇▇▇▇ or any other person will have or be subject to any liability or
indemnification obligation to Acquiror, ▇▇▇▇▇ Parent or MergerSub or any other
person resulting from the distribution to Acquiror, ▇▇▇▇▇ Parent or MergerSub,
or Acquiror, ▇▇▇▇▇ Parent or MergerSub's use of, any such information, including
the Confidential Offering Memorandum dated March 1998 prepared by ▇▇▇▇▇▇▇, Sachs
& Co. related to ▇▇▇▇▇ and any information, document, or material made available
to Acquiror, ▇▇▇▇▇ Parent or MergerSub in certain "data rooms," management
presentations or in any other form in expectation of the transactions
contemplated by this Agreement, it being understood that the foregoing shall not
foreclose Acquiror from seeking indemnification or other remedy in respect of
any breach of any representation or warranty of Times Mirror contained herein.
SECTION 7.6. Action Contrary to Tax-Free Treatment. Neither Acquiror
nor ▇▇▇▇▇ Parent has any plan or intention to, and for a period of two years
after the Effective Time shall not, (a) liquidate ▇▇▇▇▇, (b) merge ▇▇▇▇▇ into
another corporation, (c) in the case of ▇▇▇▇▇ Parent, sell or otherwise dispose
of the stock of ▇▇▇▇▇ or (d) without the prior written consent of Times Mirror
(which consent shall not be unreasonably withheld or delayed) cause or permit
▇▇▇▇▇ to sell or otherwise dispose of any of its assets outside of the ordinary
course of business.
SECTION 7.7. MergerSub Debt. The MergerSub Debt shall include the
following terms and conditions: (i) the principal amount of such debt shall not
exceed $200,000,000; (ii) interest shall be payable at least annually at an
annual rate not less than 5% nor greater than 7-1/2%; (iii) the maturity date
shall be 7 years from the date of initial issuance (but may be repaid and/or
reborrowed within such term); and (iv) the debt shall be unsecured and not
subordinated to any other indebtedness of MergerSub or the Surviving
Corporation. For a period of five years from the date of issuance, the Surviving
Corporation's aggregate indebtedness for money borrowed shall not exceed
$200,000,000.
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SECTION 7.8. Enforceability of LLC Agreement. None of Acquiror, ▇▇▇▇▇
Parent or MergerSub will maintain or join any action (at law or otherwise) that
asserts that the LLC Agreement is unenforceable, other than in the case of
fraud.
ARTICLE 8
MUTUAL COVENANTS
SECTION 8.1. Cooperation. Subject to the terms and conditions of this
Agreement, each of Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇ Parent and MergerSub
shall use its reasonable best efforts to take, or cause to be taken, all action
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing all things necessary, proper or advisable to cause the Closing
to occur. Each of Times Mirror, ▇▇▇▇▇, Acquiror and ▇▇▇▇▇ Parent shall cooperate
with each other and shall cause their respective officers, employees,
affiliates, agents, auditors and representatives to cooperate with each other
after the Effective Time to ensure the orderly transfer of ▇▇▇▇▇ to Acquiror and
to minimize any disruption to the respective businesses of ▇▇▇▇▇ or Acquiror
that might result from the transactions contemplated hereby.
SECTION 8.2. Publicity. Each of Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇
Parent and MergerSub agrees that, from the date of this Agreement through the
Effective Time, no public release or announcement concerning the transactions
contemplated hereby shall be issued by any party without the prior consent of
each other party (which consent shall not be unreasonably withheld), except as
such release or announcement may be required by law or the rules or regulations
of any United States or foreign securities exchange, in which case the party
required to make the release or announcement shall use all reasonable efforts to
allow each other party reasonable time within any constraints specifically
imposed by such law, rule or regulation, to comment on such release or
announcement in advance of such issuance.
SECTION 8.3. Antitrust Notification. Each of Times Mirror and Acquiror
will as promptly as practicable, but in no event later than ten Business Days
following the execution and delivery of this Agreement, file with the United
States Federal Trade Commission (the "FTC") and the United States Department of
Justice (the "DOJ") the notification and report form, if any, required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act, and make similar filings within,
to the extent reasonably practicable, a similar time frame with any other
governmental entity for which such filing is required. Any such notification and
report form and supplemental information will be in substantial compliance with
the requirements of the HSR Act or other applicable antitrust regulation. Each
of Times Mirror and Acquiror shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission which is necessary under the
HSR Act or other applicable antitrust regulation. Times Mirror and Acquiror
shall request early termination of the waiting period under the HSR Act and any
other applicable antitrust regulation; shall respond with reasonable diligence
and dispatch to any request for additional information made in response to such
filings; and shall keep each other apprised of the status of any communications
with, and inquiries or requests for additional information from, the FTC and the
DOJ and shall comply promptly with
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any such inquiry or request. Each of Times Mirror and Acquiror will use its
reasonable best efforts to obtain any clearance required under the HSR Act or
other applicable antitrust regulation for the consummation of the transactions
contemplated hereby.
SECTION 8.4. Records.
(a) At the Effective Time, Times Mirror shall deliver or cause
to be delivered to Acquiror all original agreements, documents, books, records
and files, whether in paper, electronic or other format (collectively,
"Records"), in the possession of Times Mirror related to the business and
operations of ▇▇▇▇▇ to the extent not then in the possession of ▇▇▇▇▇, subject
to the following exceptions:
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc., may retain all
Records related to or prepared in connection with the services to be
provided by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. pursuant to the ▇▇▇▇▇
Transition Services Agreement until the expiration of the term thereof
and Times Mirror shall ensure that Acquiror and ▇▇▇▇▇ receive copies of
the relevant portions thereof;
(ii) Each of Acquiror, ▇▇▇▇▇ Parent and MergerSub
recognizes that certain Records may contain incidental information
relating to ▇▇▇▇▇ or may relate primarily to subsidiaries or divisions
of Times Mirror other than ▇▇▇▇▇ or businesses of ▇▇▇▇▇ previously
sold, and that Times Mirror may retain such Records and shall provide
copies of the relevant portions thereof to Acquiror, ▇▇▇▇▇ Parent and
▇▇▇▇▇;
(iii) Times Mirror may retain all Records prepared in
connection with the Merger, including confidentiality agreements and
bids received from other parties and analyses relating to ▇▇▇▇▇; and
(iv) Times Mirror may retain any Tax Returns or Tax
records, and Acquiror, ▇▇▇▇▇ Parent and ▇▇▇▇▇ shall be provided with
copies of such Tax Returns or Tax records, only to the extent that they
relate to ▇▇▇▇▇'▇ Tax Returns for taxable periods ending after the
Effective Time.
(b) After the Effective Time, upon reasonable written notice,
Times Mirror, Acquiror, ▇▇▇▇▇ Parent and ▇▇▇▇▇ agree to furnish or cause to be
furnished to each other and their representatives, employees, counsel and
accountants access, during normal business hours, to such information (including
Records pertinent to ▇▇▇▇▇) and assistance relating to ▇▇▇▇▇ as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any Tax Returns or the defense of any Tax Claim or assessment;
provided, however, that such access does not unreasonably disrupt the normal
operations of Times Mirror, Acquiror, ▇▇▇▇▇ Parent or ▇▇▇▇▇.
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SECTION 8.5. Closing Asset and Liability Statement; Closing Financial
Reporting (FDC) Package.
(a) Closing Asset and Liability Statement. As soon as
practicable and in any event not later than 45 days after the last day of the
calendar month during which the Effective Time occurs, Times Mirror will deliver
to Acquiror an unaudited combined statement of assets and liabilities of ▇▇▇▇▇
as of the Effective Time (the "Closing Asset and Liability Statement") and a
calculation of the ▇▇▇▇▇ Net Working Capital. The Closing Asset and Liability
Statement shall be prepared in accordance with GAAP used in preparing, and on a
basis consistent with, the unaudited condensed combined statement of assets and
liabilities of ▇▇▇▇▇ as of March 31, 1998 delivered pursuant to Section 3.7(c),
and shall present fairly, in all material respects, the condensed combined
financial condition of ▇▇▇▇▇ as of the Effective Time. Such statements will
reflect the consummation of the transactions presented as Pro Forma adjustments
in the Unaudited Pro Forma Asset and Liability Statement. The Closing Asset and
Liability Statement shall be accompanied by a certificate of the Chief Financial
Officer of Times Mirror confirming that the Closing Asset and Liability
Statement has been prepared as described above. Each of Acquiror and MergerSub
agrees to cooperate with Times Mirror, including providing to Times Mirror
access to any Records of ▇▇▇▇▇ necessary to the preparation of the Closing Asset
and Liability Statement, in the preparation of the Closing Asset and Liability
Statement. Times Mirror agrees to provide Acquiror, ▇▇▇▇▇ Parent and ▇▇▇▇▇ with
copies of all working papers prepared in connection with the preparation of the
Closing Asset and Liability Statement.
(b) Closing Financial Reporting (FDC) Package. Each of
Acquiror and MergerSub agrees to cooperate with Times Mirror, including
providing to Times Mirror a closing Financial Reporting (FDC) Package of ▇▇▇▇▇,
in any manner reasonably requested by Times Mirror to assist Times Mirror in
complying with any financial reporting requirements of Times Mirror under the
rules and regulations promulgated by the Securities and Exchange Commission for
any period ending at or prior to the Effective Time.
SECTION 8.6. Further Assurances. From time to time, as and when
requested by any party hereto, the other parties shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions as such requesting
party may reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
SECTION 8.7. Contribution of Intercompany Debt. If, as of the Closing
Date, the Net Intercompany Debt (as defined below) shall consist of a net
indebtedness of ▇▇▇▇▇ and its subsidiaries to Times Mirror or any of Times
Mirror's affiliates other than ▇▇▇▇▇, Times Mirror shall, prior to or
simultaneously with the Closing, contribute or cause to be contributed such Net
Intercompany Debt to the equity of ▇▇▇▇▇. If, as of the Closing Date, the Net
Intercompany Debt shall consist of a net indebtedness of Times Mirror and its
affiliates other than ▇▇▇▇▇ to ▇▇▇▇▇, Times Mirror shall, prior to or
simultaneously with the Closing, cause ▇▇▇▇▇ to cancel such indebtedness or
distribute it as a dividend to Times Mirror. As used herein, the term "Net
Intercompany Debt" shall mean (a) all intercompany payables of ▇▇▇▇▇ to Times
Mirror and its affiliates (other than trade payables incurred in the ordinary
course of business consistent with
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past practice and other than any intercompany payable of ▇▇▇▇▇ to The StayWell
Company incurred in connection with the Transition Services Agreement described
in Section 3.20(c)) less (b) the sum of all intercompany receivables due to
▇▇▇▇▇ from Times Mirror and its affiliates (other than trade receivables
incurred in the ordinary course of business). For purposes of this Agreement,
intercompany payables and intercompany receivables shall be deemed to include
any obligations of ▇▇▇▇▇ or any of its subsidiaries to Times Mirror or any of
its affiliates for Taxes for periods through the Closing Date.
SECTION 8.8. Non-Competition. Times Mirror covenants and agrees that
if the Closing shall occur:
(a) (i) for a period of 36 months following the Effective Time
(the "Restricted Period"), Times Mirror and its subsidiaries will not, in the
United States, Canada, Japan, Australia, and the European Community, directly or
indirectly (A) engage in any business which competes with or is substantially
similar to the business of ▇▇▇▇▇ Health Science Publishing in any medium (the
"Competing Business") or (B) invest in (to the extent of more than 5% of the
outstanding ownership interest or outstanding debt) any company that derives
more than 5% of its consolidated revenue from the Competing Business; provided,
however, that the foregoing restrictions shall not apply to (1) the business of
developing, producing, publishing, marketing, selling or distributing in any
form or medium, now known or hereafter developed, anywhere in the world,
products, programs and services providing or relating to wellness, health or
safety information intended to educate lay persons to, among others, health care
professionals, health care organizations, managed care organizations, employers,
educational institutions, government agencies, participants in the health care
market (including pharmaceutical companies), participants in first aid, safety,
cardiopulmonary resuscitation and other emergency services and programs, and
participants in swimming, diving and lifeguarding activities and programs; (2)
any business, conducted by Times Mirror or any Times Mirror subsidiary in the
newspaper, magazine, aviation-related publishing and training business; and (3)
any entity at the time it ceases to be a direct or indirect subsidiary of Times
Mirror.
(ii) during the Restricted Period, Times Mirror and
its subsidiaries shall not take any action which could reasonably be expected to
interfere with the relationship, insofar as it relates to the Competing
Business, between ▇▇▇▇▇ and any author, customer or supplier of ▇▇▇▇▇; and
(iii) for a period of 12 months from the Effective
Time, Times Mirror and its subsidiaries shall not solicit the employment of any
managerial or editorial employee of ▇▇▇▇▇ or any of its subsidiaries.
(b) The parties hereto agree (i) that no portion of the Merger
Consideration is allocable to the foregoing non-competition covenants and (ii)
not to allocate any portion of the Merger Consideration to the foregoing
covenants on any Tax Returns.
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ARTICLE 9
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of Times Mirror, ▇▇▇▇▇,
Acquiror, ▇▇▇▇▇ Parent and MergerSub;
(b) by Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇ Parent or
MergerSub if (i) any federal, state or foreign governmental authority or other
agency or commission or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any order, decree or ruling which
remains in effect, and which has the effect of making the transactions
contemplated hereby illegal or otherwise prohibiting consummation of the
transactions contemplated by this Agreement and such order, decree, ruling or
other action is or shall have become nonappealable or (ii) the Merger has not
been consummated by 180 days after the date hereof; provided that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure to
fulfill any of its obligations under this Agreement shall have been the reason
that the Effective Time shall not have occurred on or before said date;
(c) by Times Mirror or ▇▇▇▇▇ if (i) there shall have been a
breach of any representation or warranty on the part of Acquiror, ▇▇▇▇▇ Parent
or MergerSub set forth in this Agreement or if any representation or warranty of
Acquiror, ▇▇▇▇▇ Parent or MergerSub shall have become untrue, and such breach
shall not have been cured or such representation or warranty shall not have been
made true within ten business days after notice by Times Mirror or ▇▇▇▇▇
thereof, provided that neither Times Mirror nor ▇▇▇▇▇ has breached any of its
obligations hereunder; (ii) there shall have been a breach by Acquiror, ▇▇▇▇▇
Parent or MergerSub of any of its covenants or agreements hereunder having an
Acquiror Material Adverse Effect or materially adversely affecting (or
materially delaying) the consummation of the Merger, and Acquiror, ▇▇▇▇▇ Parent
or MergerSub, as the case may be, has not cured such breach within ten business
days after notice by Times Mirror or ▇▇▇▇▇ thereof, provided that neither Times
Mirror nor ▇▇▇▇▇ has breached any of their respective obligations hereunder; or
(d) by Acquiror, ▇▇▇▇▇ Parent or MergerSub, subject to Section
2.3, if (i) there shall have been a breach of any representation or warranty on
the part of ▇▇▇▇▇ or Times Mirror set forth in this Agreement or if any
representation or warranty of ▇▇▇▇▇ or Times Mirror shall have become untrue,
and such breach shall not have been cured or such representation or warranty
shall not have been made true within ten business days after notice by Acquiror
or MergerSub thereof, provided that neither Acquiror, ▇▇▇▇▇ Parent nor MergerSub
has breached any of its obligations hereunder; (ii) there shall have been a
breach by ▇▇▇▇▇ or Times Mirror of any of its covenants or agreements hereunder
having a ▇▇▇▇▇ Material Adverse Effect or materially adversely affecting (or
materially delaying) the consummation of the Merger, and ▇▇▇▇▇ or Times Mirror,
as the case may be, has not cured such breach within ten business days after
notice by Acquiror, ▇▇▇▇▇ Parent or MergerSub thereof, provided that neither
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Acquiror, ▇▇▇▇▇ Parent nor MergerSub has breached any of their respective
obligations hereunder.
SECTION 9.2. Termination Fee. In the event that this Agreement is
terminated by Times Mirror or ▇▇▇▇▇ pursuant to Section 9.1(b) or (c)(ii) as a
result of Acquiror, ▇▇▇▇▇ Parent or MergerSub's failure to obtain any regulatory
or other approval necessary under the HSR Act for the consummation of the
transactions contemplated hereby (including expiration of the waiting period
under the HSR Act), Acquiror shall promptly pay to Times Mirror a fee in an
amount equal to $12,000,000. Such fee shall be paid in immediately available
funds concurrently with the termination of this Agreement and, if not paid at
such time, shall bear interest at the London Inter-Bank Offered Rate for 3-month
deposits in U.S. Dollars as quoted on Telerate Page 3750 on the date of the
termination of this Agreement.
SECTION 9.3 Return of Confidential Information. In the event of
termination by any party pursuant to Section 9.1, written notice thereof shall
forthwith be given to the other parties and the transactions contemplated by
this Agreement shall be terminated, without further action by any party. If the
transactions contemplated by this Agreement are terminated as provided herein:
(a) Acquiror, ▇▇▇▇▇ Parent and MergerSub shall return and
cause to be returned all documents and copies and other material received from
or on behalf of Times Mirror or ▇▇▇▇▇ relating to the business of Times Mirror,
▇▇▇▇▇ or any other subsidiary of Times Mirror or to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
Times Mirror; and
(b) All confidential information received by Acquiror, ▇▇▇▇▇
Parent and MergerSub with respect to the businesses of Times Mirror, ▇▇▇▇▇ or
any other subsidiary of Times Mirror shall be treated in accordance with the
Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement.
SECTION 9.4 Effects of Termination. If this Agreement is terminated and
the transactions contemplated hereby are abandoned pursuant to Section 9.1, this
Agreement shall become void and of no further force and effect, except for the
provisions of (a) Section 7.4 relating to the obligation of each of Acquiror,
▇▇▇▇▇ Parent and MergerSub to keep confidential certain information and data
obtained by it, (b) Section 7.5 relating to the acknowledgment by each of
Acquiror, ▇▇▇▇▇ Parent and MergerSub that no additional representations were
made by or on behalf of Times Mirror or ▇▇▇▇▇ other than those set forth in this
Agreement and the LLC Agreement, (c) Section 8.2 relating to publicity, (d)
Section 13.1 relating to expenses generally, (e) Section 13.2 relating to
attorneys' fees and expenses, (f) Section 13.5 relating to notices, (g) Section
13.11 relating to arbitration and consent to jurisdiction and (h) this Article
9. Nothing in this Article 9 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement.
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ARTICLE 10
EMPLOYEE AND RELATED MATTERS
SECTION 10.1. Continuation of Employment.
(a) Offers of Employment. ▇▇▇▇▇ shall assume responsibility
for all active Employees on substantially the same terms and conditions to which
such employees were subject immediately prior to the Effective Time, subject to
the provisions of this Article 10. Any ▇▇▇▇▇ Employee who is not actively
employed at the Effective Time shall be offered employment with ▇▇▇▇▇ following
the expiration of such leave of absence only to the extent that ▇▇▇▇▇ would have
been obligated to offer active employment to any such employee. Times Mirror
shall retain the obligation to provide worker's compensation, short-term
disability, long-term disability and other benefits to any employee described in
the previous sentence to the extent that such benefit is insured under a Times
Mirror Plan and the event giving rise to such benefit occurred prior to the
Effective Time; but only until such time as such ▇▇▇▇▇ Employee is offered
employment by the Acquiror.
(b) No Termination. The consummation of the transactions
contemplated hereby shall not be considered a termination of employment of any
▇▇▇▇▇ Employee; provided that nothing in this Agreement shall be construed to
limit Acquiror's or ▇▇▇▇▇'▇ ability to terminate the employment of any employee,
including any ▇▇▇▇▇ Employee, at any time at or after the Effective Time,
subject to any rights that such employee may have with respect to such
termination under Applicable Law or otherwise, including any rights any ▇▇▇▇▇
Employee may have under any agreement set forth on Schedule 3.12(a) or 3.14(a).
(c) WARN Act and Other Matters. ▇▇▇▇▇ shall be fully
responsible for any liability arising under the Worker Adjustment and Retraining
Notification (WARN) Act arising in connection with the transactions contemplated
by this Agreement. Except as expressly otherwise provided herein, all
liabilities related to the termination of the employment of any of ▇▇▇▇▇
Employees on or after the Effective Time shall be the responsibility of
Acquiror.
SECTION 10.2. Continuation of Plans. As of the Effective Time, ▇▇▇▇▇
Employees shall cease to participate in or be covered by all Times Mirror Plans,
and neither Times Mirror nor any other affiliate of Times Mirror shall have any
responsibility for the accrual of benefits under such Plans on or after the
Effective Time. As of the Effective Time, Acquiror or ▇▇▇▇▇ shall become or
continue as the sponsor of each ▇▇▇▇▇ Plan, and neither Times Mirror nor any
other affiliate of Times Mirror shall have any responsibility for benefits or
other liabilities under any such Plan. Without limiting the foregoing, Times
Mirror shall retain all liability with respect to (i) benefits for ▇▇▇▇▇
Retirees and their beneficiaries and (ii) "performance bonuses" and similar
bonuses payable as a result of the consummation of the Merger in accordance with
Section 10.9(b). Without limiting the foregoing, Acquiror or ▇▇▇▇▇ shall be
solely responsible for providing and continuing benefits under COBRA to ▇▇▇▇▇
Employees and qualified beneficiaries with respect to "qualifying events", as
such term is used in Section 4980B of the Code, with respect to such qualifying
events occurring at or after the Effective Time.
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SECTION 10.3. Acquiror's and MergerSub's Benefit Responsibilities. For
a period of at least two years starting at the Effective Time, Acquiror or ▇▇▇▇▇
shall provide benefits to ▇▇▇▇▇ Employees which are substantially comparable in
the aggregate to those provided to employees of Acquiror similarly situated to
▇▇▇▇▇ Employees, as such benefits are in effect from time to time during such
period, including defined benefit plan benefits, defined contribution plan
benefits (including a cash or deferred arrangement under Code Section 401(k)),
comprehensive group health insurance (providing medical, hospitalization,
prescription drug, mental health, substance abuse, employee assistance, dental
and vision care benefits), life insurance and similar welfare benefits,
including health insurance and life insurance for ▇▇▇▇▇ Retirees, and vacation,
personal and sick leave benefits and severance benefits; provided that, neither
Acquiror nor MergerSub may terminate or amend, in a manner that would reduce the
benefits or other rights or features available for the benefit of the ▇▇▇▇▇
Employees of the defined contribution plan established or to be established by
Acquiror or MergerSub as described in the first sentence of Section 10.4 or the
defined benefit plan established or to be established by Acquiror or MergerSub
as described in the first sentence of Section 10.6 for a period of two years
from the Effective Time. In connection with such benefits, Acquiror and ▇▇▇▇▇
shall recognize all service performed by ▇▇▇▇▇ Employees under the Plans prior
to the Effective Time (i) for purposes of eligibility and vesting only, under
all employee benefit plans maintained by Acquiror or ▇▇▇▇▇ at or after the
Effective Time in which ▇▇▇▇▇ Employees participate; and (ii) (in addition to
recognizing vacation accrual of each ▇▇▇▇▇ Employee prior to the Effective Time,
in accordance with the terms of the relevant Plan) for purposes of benefit
accrual, under vacation, severance and pension plans maintained by Acquiror or
▇▇▇▇▇ at or after the Effective Time in which ▇▇▇▇▇ Employees participate.
Acquiror and ▇▇▇▇▇ shall waive all preexisting condition exclusions under any
health insurance plans maintained by Acquiror or ▇▇▇▇▇ after the Effective Time
with respect to ▇▇▇▇▇ Employees to the extent such ▇▇▇▇▇ Employees had
satisfied, prior to the Effective Time, the conditions for waiving corresponding
exclusions under the Plans. In addition, Acquiror or ▇▇▇▇▇ shall assume sole
responsibility for all individual agreements or plans or other arrangements to
provide severance benefits to certain ▇▇▇▇▇ Employees, as set forth on Schedule
10.3 as amended through the Effective Time, provided, however, that such ▇▇▇▇▇
Employees shall not be entitled to both the severance benefits as set forth on
Schedule 10.3 and severance benefits otherwise provided under any Plan
established or maintained by Acquiror or ▇▇▇▇▇ after the Effective Time. For
purposes of this Article 10, "comparable" shall mean benefits that are
substantially similar in nature, scope, eligibility requirements and employee
cost sharing.
SECTION 10.4. 401(k) Plan Interests. Acquiror or ▇▇▇▇▇ shall, as soon
as practicable after the Effective Time, establish, to the extent it does not
already maintain, a defined contribution plan that is intended to meet the
qualification requirements of Code Section 401(a) that includes a cash or
deferred arrangement under Code Section 401(k), and that covers ▇▇▇▇▇ Employees,
subject to minimum eligibility service requirements permitted under the Code
(taking into account, however, prior service required to be taken into account
under Section 10.3). Acquiror or ▇▇▇▇▇, as the case may be, agrees that its
defined contribution plan shall provide, or shall be amended to provide,
contributions and features similar to those provided under the Times Mirror
Savings Plus Plan ("Times Mirror 401(k) Plan"). As of the Effective Time, all
▇▇▇▇▇ Employees shall be made fully vested in their account balances under the
Times
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Mirror 401(k) Plan (subject to valuation and revaluation in accordance with the
terms of the Times Mirror 401(k) Plan). Distributions under the Times Mirror
401(k) Plan shall be available to ▇▇▇▇▇ Employees in accordance with the
provisions of the Times Mirror 401(k) Plan and Applicable Law.
SECTION 10.5. Indemnification for Certain Matters.
(a) Indemnification by Times Mirror. Times Mirror shall
indemnify each Acquiror Entity (as defined below) and each of their respective
officers, directors, employees and agents and hold them harmless from any Losses
(other than a Loss arising from an indemnification obligation under clause (b)
below) suffered or incurred by any such indemnified party as a result of a
Third-Party Claim (as defined in Section 11.6) which would not have been
suffered or incurred by such indemnified party but for the treatment of any
Times Mirror Entity and any Acquiror Entity as members, as a result of the
transactions contemplated by this Agreement, of the same "controlled group"
under Section 414 of the Code or Title IV of ERISA. For purposes of this Section
10.5, "Acquiror Entity" means Acquiror and any of its affiliates thereof
(including ▇▇▇▇▇ Parent and Surviving Corporation) that is treated as a member
of a controlled group that includes Acquiror under Section 414 of the Code or
Title IV of ERISA and "Times Mirror Entity" means Times Mirror and any entity,
other than an Acquiror Entity, that is treated as a member at any time of a
controlled group that includes Times Mirror under Section 414 of the Code or
Title IV of ERISA.
(b) Indemnification by Acquiror. Acquiror shall indemnify each
Times Mirror Entity and each of their respective officers, directors, employees
and agents and hold them harmless from any Losses (other than a Loss arising
from an indemnification obligation under clause (a) above) suffered or incurred
by any such indemnified party as a result of a Third-Party Claim which would not
have been suffered or incurred by such indemnified party but for the treatment
of any Times Mirror Entity and Acquiror Entity as members, as a result of the
transactions contemplated by this Agreement, of the same "controlled group"
under Section 414 of the Code or Title IV of ERISA.
(c) Cooperation. After the Effective Time, Times Mirror and
Acquiror shall, to the extent reasonably requested by either such party, share
information concerning the funded status of retirement plans maintained by the
Times Mirror Entities and the Acquiror Entities, respectively, including copies
of actuarial valuations and similar reports.
(d) No Inference. No provision of this Section 10.5 shall be
interpreted as giving rise to any inference that any Times Mirror Entity and any
Acquiror Entity are or should be treated as members of the same "controlled
group" for purposes of Section 414 of the Code, Title IV of ERISA, or any other
purpose.
(e) Relationship to Section 2.3 and Article 11. Any
indemnification under this Section 10.5 shall be subject to the procedures set
forth in Section 11.6. Any indemnification under this Section 10.5 shall be
subject to the provisions of Section 11.4 in the same manner as if this Section
10.5 were a part of Article 11. The indemnification provided under this Section
10.5 shall be exclusive of any indemnification provided pursuant to Section
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2.3 or pursuant to Article 11. The obligations of Times Mirror and Acquiror set
forth in this Section 10.5 shall not terminate.
SECTION 10.6. Transfer of Times Mirror Defined Benefit Plan. Acquiror
or ▇▇▇▇▇, as the case may be, shall, as soon as practicable after the Effective
Time, amend a defined benefit plan that is intended to meet the qualification
requirements of Code Section 401(a) to cover those ▇▇▇▇▇ Employees who are
currently participants in the Times Mirror Pension Plan (the "Times Mirror
Pension Plan"), subject to minimum eligibility service requirements permitted
under the Code (taking into account, however, prior service required to be taken
into account under Section 10.3). As of the Effective Time, the benefits of each
▇▇▇▇▇ Employee accrued under the Times Mirror Pension Plan through the Effective
Time shall be fully vested by Times Mirror. Acquiror or ▇▇▇▇▇, as the case may
be, agrees that its defined benefit plan shall provide, or shall be amended to
provide, all forms of benefit provided under the Times Mirror Pension Plan with
respect to assets and corresponding liabilities to be transferred from the Times
Mirror Pension Plan to Acquiror's or ▇▇▇▇▇'▇ defined benefit plan as provided in
this Section 10.6, to the extent required by the provisions of Code Section
411(d)(6). Subsequent to delivery to Times Mirror of a favorable determination
letter issued by the IRS with respect to the qualification of Acquiror's or
▇▇▇▇▇'▇ plan under Code Section 401(a), receipt of such other evidence of plan
qualification as Times Mirror reasonably may require, Times Mirror shall direct
the trustee of the trust under the Times Mirror Pension Plan to transfer from
that trust to the trust under Acquiror's or ▇▇▇▇▇'▇ defined benefit plan an
amount in cash of a preliminary estimate (the "Preliminary Transfer Amount") of
$7,000,000 within forty-five (45) days after the Effective Time and following
receipt by Times Mirror of a favorable determination letter issued by the IRS
with respect to the qualification of Acquiror's or ▇▇▇▇▇'▇ plan, as a prepayment
of the final amount that shall be equal to the accumulated benefit obligations
attributable to the Accrued Benefits with respect to ▇▇▇▇▇ Employees, determined
as of the Effective Time under the terms of the Times Mirror Pension Plan as in
effect on the date of this Agreement ("Net ABO"), calculated with respect to the
Pension participants in accordance with the provisions of Statement of Financial
Accounting Standards No. 87 ("SFAS 87") (the "Transfer Amount"). The Transfer
Amount shall in no event be less than the amount required to be transferred by
Code Section 414(l). Notwithstanding the foregoing, the Transfer Amount,
calculated in accordance with the provisions of this Section 10.6, shall be
reduced by the actuarial value (determined in a manner consistent with the
manner of determining ABO) of the Preliminary Transfer Amount and any benefit
payments made by the Times Mirror Pension Plan to ▇▇▇▇▇ Employees prior to the
date of the transfer of assets contemplated herein. The Net ABO to be
transferred shall be calculated using the same actuarial assumptions that are
used for purposes of preparing the pension disclosure information in the notes
to the financial statements (at December 31, 1997) set forth on Schedule 3.7 in
accordance with the provisions of SFAS 87 adjusted to include the effect of the
full vesting of ▇▇▇▇▇ Employees with respect to their accrued benefits under the
Times Mirror Pension Plan in accordance with this Section 10.6. The Transfer
Amount will be adjusted for the period between the Effective Time and the date
of transfer at a rate of interest based on the weighted average annualized short
term applicable federal rate (within the meaning of Section 1274(d) of the
Code), reflecting monthly compounding, as published by the Secretary of the
Treasury for the months included in such period. If the Transfer Amount cannot
be agreed to by the actuaries for Times Mirror and Acquiror or ▇▇▇▇▇, as the
case may be, a third actuary chosen by the Chief
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Financial Officer of Acquiror or ▇▇▇▇▇, as the case may be, and the Chief
Financial Officer of Times Mirror, whose expenses shall be shared equally by
Acquiror or MergerSub, as the case may be, and Times Mirror, shall be retained
and its determination of the Transfer Amount shall be binding on the parties. At
the time of transfer of the amount set forth in this Section 10.6, Acquiror's or
▇▇▇▇▇ defined benefit plan shall assume and be solely responsible for any and
all liabilities and obligations whatsoever for all benefit liabilities under the
Times Mirror Pension Plan in respect of ▇▇▇▇▇ Employees, and Times Mirror shall
be relieved of all such liabilities and obligations for such benefits. Acquiror
or ▇▇▇▇▇, as the case may be, and Times Mirror shall provide each other with
such records and information as may be necessary or appropriate to carry out
their obligations under this Section 10.6 or for the purposes of administration
of Acquiror's or ▇▇▇▇▇'▇ defined benefit plan, and shall cooperate in the filing
of all documents required for the transfer of assets and liabilities described
herein. Notwithstanding anything contained herein to the contrary, no such
transfer shall take place until the 31st day following the filing of all
required Federal Forms 5310-A in connection therewith, which the parties shall
file at the Effective Time.
SECTION 10.7. Continuation of Certain Welfare Benefits Through
Effective Time. Times Mirror agrees to continue coverage of ▇▇▇▇▇ Personnel
under the Times Mirror Group Benefit Plan up to the Effective Time and to
provide benefits to or reimburse covered ▇▇▇▇▇ Personnel for eligible health
care and other eligible welfare expenses and services incurred up to the
Effective Time in accordance with the terms of such Plan. For purposes of the
foregoing, an expense or service is deemed to be incurred when the medical
services are performed or, with respect to welfare benefits other than medical
or dental benefits, when the event giving rise to such expense or service
occurs.
SECTION 10.8. Modifications. Neither Times Mirror nor ▇▇▇▇▇ will change
the employment status of any ▇▇▇▇▇ Employee so as to promise employment for any
specified term of employment. Notwithstanding the foregoing, from and after the
date of this Agreement, Times Mirror and ▇▇▇▇▇ may enter into employment
contracts on behalf of ▇▇▇▇▇; provided, however, that, except as contemplated by
Section 6.2(e)(i)(C), any such action must be taken in accordance with the
ordinary and usual course of business consistent with past practices.
SECTION 10.9. Mutual Cooperation.
(a) General. Each of Times Mirror, Acquiror and ▇▇▇▇▇ agrees
to cooperate, and agrees to use its best efforts to cause its affiliates to
cooperate and in a complete, diligent and timely manner to provide each other
such party with such compensation, service, payroll and other pertinent census
data as may be required by such party for purposes of calculating or effecting
distribution of benefits to which any ▇▇▇▇▇ Personnel may be entitled under any
benefit plan established, maintained or contributed to by Times Mirror, Acquiror
or ▇▇▇▇▇.
(b) Performance Bonus Payments; Stock Options. Acquiror
acknowledges that Times Mirror or ▇▇▇▇▇ may have an obligation after the
Effective Time to make payments of all or a portion of performance bonuses owing
to ▇▇▇▇▇ Employees pursuant to agreements set forth on Schedule 3.12(a) or
3.12(d) and all or a portion of cash payments in lieu of options to
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purchase common stock of Times Mirror granted to ▇▇▇▇▇ employees pursuant to
agreements set forth on Schedule 3.12(a) or 3.12(d) and that Times Mirror will
transfer to ▇▇▇▇▇ or to one of ▇▇▇▇▇'▇ affiliates, prior to the Effective Time,
or otherwise make provision for the payment of, an amount at least equal to the
amount necessary to pay any amount of performance bonuses and any amount of any
cash payments in lieu of options to purchase common stock of Times Mirror owing
to ▇▇▇▇▇ Employees after the Effective Time. Acquiror agrees to pay, or to cause
any of its affiliates (including ▇▇▇▇▇) to pay, any amount of performance
bonuses and any amount of any cash payments in lieu of options to purchase
common stock of Times Mirror owing to ▇▇▇▇▇ Employees after the Effective Time.
Acquiror shall bear its own expenses for personnel and overhead related to the
making of the payments contemplated by this Section 10.9(b) and Acquiror and
Times Mirror shall provide each other with any books, records, accountings or
reconciliations related to any such payments. Acquiror further acknowledges that
the payments contemplated by this Section 10.9(b) shall not be treated for any
purpose, including with respect to Taxes, as a compensation expense of Acquiror
and Acquiror agrees not to claim any compensation expense deduction on any Tax
Return with respect to such payments. Times Mirror acknowledges that neither
Acquiror nor ▇▇▇▇▇ will incur any Taxes or other expenses with respect to the
payments contemplated by this Section 10.9(b).
SECTION 10.10. Certain Definitions. For purposes of this Agreement:
(a) "▇▇▇▇▇ Employee" means (i) all persons actively employed
at the Effective Time by ▇▇▇▇▇ or any of its subsidiaries and (ii) all persons
not so actively employed but who are, as of the Effective Time, with respect to
▇▇▇▇▇ or any of its subsidiaries, on any authorized leave of absence, on either
short or long-term disability leave, on worker's compensation leave or on
vacation.
(b) "▇▇▇▇▇ Retirees" means all persons formerly employed by
▇▇▇▇▇ or any of its subsidiaries who are eligible to receive benefits under any
Plans of Times Mirror or ▇▇▇▇▇.
(c) "▇▇▇▇▇ Personnel" means all ▇▇▇▇▇ Employees and ▇▇▇▇▇
Retirees.
ARTICLE 11
INDEMNIFICATION
SECTION 11.1. Tax Indemnification by Times Mirror.
(a) Tax Indemnity. From and after the Closing Date, Times
Mirror shall indemnify and hold harmless Acquiror, ▇▇▇▇▇ and their respective
subsidiaries against the following Taxes and, against any loss, damage,
liability or expense, including, but not limited to, reasonable fees for
attorneys and other outside consultants, incurred in contesting or otherwise in
connection with any such Taxes: (i) Taxes imposed on Times Mirror or ▇▇▇▇▇ and
its subsidiaries with respect to taxable years or periods ending on or before
the Closing Date; (ii) with respect to taxable years or periods beginning before
the Closing Date and ending after the Closing Date, Taxes imposed on Times
Mirror or ▇▇▇▇▇ and its subsidiaries which are allocable, pursuant to Section
11.1(b) below, to the portion of such taxable year or period ending
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on the Closing Date (an "Interim Period") (Interim Periods and any taxable years
or periods that end on or prior to the Closing Date being referred to
collectively hereinafter as "Pre-Closing Periods"); and (iii) Taxes imposed on
any member of an affiliated group with which ▇▇▇▇▇ or any of its subsidiaries
files or has filed a Tax Return on a consolidated, combined or unitary basis for
a taxable year or period ending on or before the Closing Date. Times Mirror
shall not have any obligation to indemnify ▇▇▇▇▇ and its subsidiaries with
respect to Taxes that are not measured with respect to income ("Non-Income
Taxes") until all such Non-Income Taxes shall, in the aggregate, exceed $500,000
and then only to the extent of such excess. The tax indemnity under this Section
11.1(a) shall not cover tax liabilities resulting from transactions of ▇▇▇▇▇ not
in the ordinary course of business that occurred on the Closing Date but after
the Effective Time. The parties agree that the tax consequences of any such
transaction shall be reflected on the post-Closing Date Tax Returns of ▇▇▇▇▇ as
provided under Section 1.1502-76(b)(ii)(B) of the Treasury Regulations and any
similar state, local or foreign tax provisions.
(b) Apportionment of Taxes. In order to apportion
appropriately any Taxes relating to any taxable year or period that includes an
Interim Period, the parties hereto shall, to the extent permitted under
applicable law, elect with the relevant Tax authority to treat for all purposes,
the Closing Date as the last day of the taxable year or period of ▇▇▇▇▇ and its
subsidiaries, and such Interim Period shall be treated as a short taxable year
and a Pre-Closing Period for purposes of this Section 11.1. In any case where
applicable law does not permit ▇▇▇▇▇ and its subsidiaries to treat the Closing
Date as the last day of the taxable year or period with respect to Taxes that
are payable with respect to an Interim Period, the portion of any such Tax that
is allocable to the portion of the Interim Period ending on the Closing Date
shall be:
(x) in the case of Taxes that are either (1) based
upon or related to income or receipts, or (2) imposed in connection
with any sale or other transfer or assignment of property (real or
personal, tangible or intangible), deemed equal to the amount which
would be payable if the taxable year or period ended on the Closing
Date (except that, solely for purposes of determining the marginal tax
rate applicable to income or receipts during such period in a
jurisdiction in which such tax rate depends upon the level of income or
receipts, annualized income or receipts may be taken into account, if
appropriate, for an equitable sharing of such Taxes); and
(y) in the case of Taxes not described in
subparagraph (x) above that are imposed on a periodic basis, deemed to
be the amount of such Taxes for the entire period (or, in the case of
such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period) multiplied by a fraction the
numerator of which is the number of calendar days in the Interim Period
ending on the Closing Date and the denominator of which is the number
of calendar days in the entire relevant period.
SECTION 11.2. Other Indemnification by Times Mirror. From and after the
Effective Time, Times Mirror shall indemnify Acquiror and its affiliates
(including ▇▇▇▇▇ Parent and ▇▇▇▇▇) and each of their respective officers,
directors, employees and agents against and hold them harmless from any Losses
suffered or incurred by any such indemnified party to the extent arising from
(a) any failure of any representation or warranty of Times Mirror contained in
this
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Agreement or in any other document or certificate delivered pursuant to the
terms hereof, other than the representations and warranties contained in Section
3.17, to be true and correct as of the date of this Agreement or as of the
Effective Time, (b) any breach by Times Mirror of any covenant contained in this
Agreement requiring performance after the Effective Time or by ▇▇▇▇▇ of any
covenant contained in this Agreement to be performed prior to the Effective Time
or (c) the matters set forth on Schedule 3.16 or any environmental liabilities
associated with the property located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇; provided, however, that except with respect to the
representation set forth in Section 3.19, Times Mirror shall not have any
liability under clause (a) of this Section 11.2 unless the aggregate of all
Losses relating thereto for which Times Mirror would, but for this provision, be
liable exceeds on a cumulative basis an amount equal to $5,000,000, in which
case Times Mirror shall be responsible for all such Losses; and provided
further, however, that except with respect to the representation set forth in
Section 3.19, Times Mirror's aggregate liability under clause (a) of this
Section 11.2 shall in no event exceed an amount equal to $83,000,000. The
indemnification provided under this Section 11.2 shall be exclusive of any
indemnification provided by Times Mirror pursuant to Section 2.3 and shall be
provided only with respect to matters discovered by Acquiror after the Effective
Time.
SECTION 11.3. Indemnification by Acquiror. From and after the Effective
Time, Acquiror shall indemnify Times Mirror and its officers, directors,
employees and agents against and hold them harmless from any Losses suffered or
incurred by any such indemnified party to the extent arising from (a) any
failure of any representation or warranty of Acquiror, ▇▇▇▇▇ Parent or MergerSub
contained in this Agreement or in any other document or certificate delivered
pursuant to the terms hereof to be true and correct as of the Effective Time or
(b) any breach by Acquiror, ▇▇▇▇▇ Parent or MergerSub of any covenant contained
in this Agreement requiring performance after the Effective Time; provided,
however, that Acquiror shall not have any liability under clause (a) of this
Section 11.3 unless the aggregate of all Losses relating thereto for which
Acquiror would, but for this provision, be liable exceeds on a cumulative basis
an amount equal to $5,000,000, in which case Acquiror shall be responsible for
all such Losses; and provided further, however, that Acquiror's aggregate
liability under clause (a) of this Section 11.3 shall in no event exceed an
amount equal to $83,000,000.
SECTION 11.4. Losses Net of Insurance. The amount of any Losses for
which indemnification is provided under this Article 11 shall be net of any
amounts actually recovered by the indemnified party under insurance policies
with respect to such Losses. The indemnified party shall promptly make all
appropriate claims with respect to such Losses under applicable insurance
policies and shall use all reasonable efforts to recover such Losses under any
such insurance policies.
SECTION 11.5. Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, (a) pursuant to Section 11.1, shall
terminate 120 days after the time the applicable statutes of limitations with
respect to the Tax liabilities in question expire (giving effect to any
extension thereof by waiver or otherwise), (b) pursuant to clause (a) of
Sections 11.2 and 11.3, shall terminate when the applicable representation or
warranty terminates pursuant to Section 13.13, and (c) pursuant to clauses (b)
and (c) of Section 11.2 and clause (b)
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of Section 11.3, shall not terminate; provided, however, that as to clauses (a)
and (b) above, such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be indemnified or
the related party hereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice (setting forth the
detailed basis of such claim) to the indemnifying party.
SECTION 11.6. Procedures Relating to Indemnification (Except Under
Section 11.1). In order for a party (the "indemnified party") to be entitled to
any indemnification provided for under this Agreement (other than under Section
11.1) in respect of, arising out of or involving a claim or demand made by any
person, firm, governmental authority or corporation against the indemnified
party (a "Third-Party Claim"), such indemnified party must notify the
indemnifying party in writing, and in reasonable detail, of the Third-Party
Claim within 10 Business Days after receipt by such indemnified party of written
notice of the Third-Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure (except that the indemnifying party shall not be liable
for any expenses incurred during the period in which the indemnified party
failed to give such notice). Thereafter, the indemnified party shall deliver to
the indemnifying party, within 5 Business Days after the indemnified party's
receipt thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Third-Party Claim.
If a Third-Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the indemnified
party thereafter, to assume the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party. Should
the indemnifying party so elect to assume the defense of a Third-Party Claim,
the indemnifying party will not be liable to the indemnified party for legal
fees and expenses subsequently incurred by the indemnified party in connection
with the defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by the
indemnifying party, it being understood that the indemnifying party shall
control such defense, provided, that the indemnifying party shall not take any
action in the conduct of such defense that would adversely affect the
indemnified party without the consent of the indemnified party. The indemnified
party shall also have the right to employ no more than one separate counsel for
each indemnified party (and one local counsel in each jurisdiction where it is
reasonably necessary) not reasonably objected to by the indemnifying party, at
the expense of the indemnifying party, but only if: (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party or parties
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or are in addition to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall in writing authorize the indemnified party to
employ separate counsel at
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the expense of the indemnifying party. In addition, the indemnifying party shall
be liable for the fees and expenses of counsel employed by the indemnified party
for any period during which the indemnifying party has not assumed the defense
thereof (other than during any period in which the indemnified party shall have
failed to give notice of the Third-Party Claim as provided above). If the
indemnifying party chooses to defend or prosecute any Third-Party Claim, all the
parties hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information
which are reasonably relevant to such Third-Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. If the indemnifying party
chooses to defend or prosecute any Third-Party Claim, the indemnifying party
shall not, without the consent of the indemnified party, consent to the entry of
any judgment or enter into any settlement (x) that provides for injunctive or
other nonmonetary relief affecting the indemnified party or any affiliate
thereof, or (y) that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each indemnified party that is the
subject of such Third-Party Claim of a release from all liability with respect
to such claim. Whether or not the indemnifying party shall have assumed the
defense of a Third-Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third-Party
Claim without the indemnifying party's prior written consent (which consent
shall not be unreasonably withheld). All Tax Claims shall be governed by Section
11.7.
Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Third-Party Claim (and shall be liable for
the reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Third-Party Claim) if the Third-Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the indemnified party which the indemnified party reasonably determines,
after conferring with its outside counsel, cannot be separated from any related
claim for money damages. If such equitable relief or other relief portion of the
Third-Party Claim can be so separated from that for money damages, the
indemnifying party shall be entitled to assume the defense of the portion
relating to money damages. The indemnification required by Sections 11.2 and
11.3 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
SECTION 11.7. Procedures Relating to Indemnification of Tax Claims. If
a claim shall be made by any taxing authority, which, if successful, would
result in an indemnity payment to ▇▇▇▇▇ or one of its subsidiaries pursuant to
Section 11.1 (a "Tax Claim"), ▇▇▇▇▇ shall promptly notify Times Mirror in
writing of such Tax Claim stating the nature and basis of such Tax Claim and the
amount thereof, to the extent known by ▇▇▇▇▇. If notice of a Tax Claim is not
given to Times Mirror within a sufficient period of time to allow Times Mirror
to effectively contest such Tax Claim, or in reasonable detail to apprise Times
Mirror of the nature of the Tax Claim, in each case taking into account the
facts and circumstances with respect to such Tax Claim, Times Mirror shall not
be liable to ▇▇▇▇▇ or any of its affiliates to the extent that Times Mirror's
ability to effectively contest such Tax Claim is actually prejudiced as a result
thereof.
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With respect to any Tax Claim, Times Mirror shall control all
proceedings taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto and may, in its sole
discretion, either pay the Tax claimed and ▇▇▇ for a refund where applicable law
permits such refund suits or contest the Tax Claim in any permissible manner,
provided, however, that Times Mirror shall consult with Acquiror and shall act
in good faith in the settlement or compromise of any such issue or matter that
may have a material adverse effect on the Tax Liability of ▇▇▇▇▇ or its
subsidiaries for a Post-Closing taxable year or period or an Interim Period.
Acquiror, ▇▇▇▇▇ Parent and ▇▇▇▇▇ and each of their respective affiliates shall
cooperate with Times Mirror in contesting any Tax Claim, which cooperation shall
include the retention and (upon Times Mirror's request) the provision to Times
Mirror of records and information which are reasonably relevant to such Tax
Claim, and making employees available on a mutually convenient basis to provide
additional information or explanation of any material provided hereunder or to
testify at proceedings relating to such Tax Claim. ▇▇▇▇▇ may defend any audit or
proceedings, without any effect on its right to indemnification under Section
11.1, if Times Mirror does not answer such defense.
SECTION 11.8. Exclusive Remedy. In the absence of fraud or willful
misconduct on the part of the indemnifying party, or any of its officers,
directors, employees or agents in connection with the negotiation, execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby, following the Closing the remedy contained in Sections 11.1, 11.2 and
11.3 shall constitute the sole and exclusive remedy of the indemnified party
(and its affiliates and each of their respective officers, directors, employees
and agents) against the indemnifying party for Losses suffered or incurred in
connection with this Agreement and the transactions contemplated hereby.
SECTION 11.9. Waiver of Certain Claims.
(a) Waivers Related to ▇▇▇▇▇ Parent. Times Mirror understands,
agrees and acknowledges (i) that in discharging their fiduciary duties under
applicable law, the directors of ▇▇▇▇▇ Parent elected by Acquiror shall be
permitted to consider only the interests of the stockholders that elected them
and (ii) that Acquiror is entering into this Agreement in reliance upon, among
other things, this Section 11.9. Times Mirror hereby agrees, on behalf of itself
and its affiliates, to waive, and to release and hold harmless any officers or
employees of any of Acquiror, ▇▇▇▇▇ Parent or ▇▇▇▇▇, or any individuals serving
at the request of any of the foregoing, who serve as directors of ▇▇▇▇▇ Parent
from, any liability whatsoever in respect of any breach or alleged breach of
fiduciary duty in the discharge of such persons' duties as directors of ▇▇▇▇▇
Parent, to the extent that any such claim would arise from such directors'
acting in the interests solely of the stockholders that elected them.
(b) Waivers Related to ▇▇▇▇▇. ▇▇▇▇▇ Parent understands, agrees
and acknowledges (i) that in discharging their fiduciary duties under applicable
law, the directors of ▇▇▇▇▇ shall be permitted to consider only the interests of
the stockholders that elected them and (ii) Acquiror is entering into this
Agreement in reliance upon, among other things, this
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Section 11.9. ▇▇▇▇▇ Parent hereby agrees, on behalf of itself and its
affiliates, to waive and to release and hold harmless any officers or employees
of any of Acquiror, ▇▇▇▇▇ Parent or ▇▇▇▇▇, or any individuals serving at the
request of any of the foregoing, who serve as directors of ▇▇▇▇▇ from, any
liability whatsoever in respect of any breach or alleged breach of fiduciary
duty in the discharge of such persons' duties as directors of ▇▇▇▇▇, to the
extent that any such claim would arise from the directors' acting in the
interests solely of the stockholders that elected them.
(c) Transferees Bound. Times Mirror agrees to cause any
transferee of the ▇▇▇▇▇ Parent Common Stock to sign an agreement whereby it
agrees to the foregoing clauses (a) and (b).
ARTICLE 12
TAX MATTERS
SECTION 12.1. Taxes.
(a) Returns and Payments. Times Mirror shall timely prepare
and file with the Internal Revenue Service (the "IRS") all federal income and
with the appropriate state agencies all California, Minnesota, Kansas, Utah,
Colorado, Illinois and Connecticut income and franchise Tax Returns required to
be filed by Times Mirror and its affiliated group with respect to ▇▇▇▇▇ and its
subsidiaries for all taxable years ending on or before the Closing Date, and
shall pay all Taxes due with respect to such Tax Returns. ▇▇▇▇▇ shall timely
prepare and file with the appropriate Tax authorities all other Tax Returns
required to be filed by ▇▇▇▇▇ and its subsidiaries, and, subject to its right of
indemnification under Section 11.1, shall pay all Taxes due with respect to such
Tax Returns.
(b) Transfer Taxes. Acquiror shall pay 50% of all transfer
Taxes resulting from the transactions contemplated by this Agreement.
SECTION 12.2. Cooperation. Times Mirror, Acquiror, ▇▇▇▇▇ Parent and
▇▇▇▇▇ shall reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all returns, reports and forms relating to
Taxes, including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits with
respect to all Taxable periods relating to Taxes. Each of Acquiror, ▇▇▇▇▇
Parent, ▇▇▇▇▇ and Times Mirror recognizes that Times Mirror will need access,
from time to time, after the Effective Time, to certain accounting and Tax
records and information held by ▇▇▇▇▇ to the extent such records and information
pertain to events occurring prior to the Effective Time; therefore, ▇▇▇▇▇
agrees, and Acquiror and ▇▇▇▇▇ Parent agree to cause ▇▇▇▇▇, (a) to properly
retain and maintain such records until such time as Acquiror, ▇▇▇▇▇ Parent,
▇▇▇▇▇ and Times Mirror agree in writing that such retention and maintenance is
no longer necessary and (b) to allow Times Mirror and its agents and
representatives, at times and dates mutually acceptable to the parties, to
inspect, review and make copies of such records as Times Mirror or such
representatives may deem necessary or appropriate from time to time, such
activities to be conducted during normal business hours and at Parent's expense.
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12.3. Tax Sharing Agreements. As of the Closing Date, any and all Tax
sharing, indemnity or allocation agreements in effect between ▇▇▇▇▇ or its
subsidiaries, on the one hand, and Times Mirror or any of its affiliates, on the
other hand, shall terminate. After the Closing Date, no Taxes or other amounts
shall be paid or reimbursed by ▇▇▇▇▇ or its subsidiaries under any such
agreement, regardless of the taxable year or period for which such Taxes are
imposed.
ARTICLE 13
MISCELLANEOUS
SECTION 13.1. Expenses. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise provided in this Agreement, all
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs or expenses.
SECTION 13.2. Attorneys' Fees. Should any arbitration or litigation be
commenced concerning this Agreement or the rights and duties of any party with
respect to it, the party prevailing shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for such party's attorneys' fees
and expenses determined by the court in such arbitration or litigation or in a
separate action brought for that purpose.
SECTION 13.3. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by Times Mirror, ▇▇▇▇▇,
Acquiror, ▇▇▇▇▇ Parent or MergerSub without the prior written consent of the
other parties hereto (except that nothing herein shall be construed (a) as
obligating Times Mirror to obtain the consent of ▇▇▇▇▇ or ▇▇▇▇▇ to obtain the
consent of Times Mirror to any of the transactions described above or (b) as
obligating (i) Acquiror to obtain the consent of ▇▇▇▇▇ Parent or MergerSub, (ii)
▇▇▇▇▇ Parent to obtain the consent of Acquiror or MergerSub or (iii) MergerSub
to obtain the consent of ▇▇▇▇▇ Parent or Acquiror to any of the transactions
described above); provided, however, that Acquiror shall be permitted to assign
its rights and/or obligations hereunder to any of its wholly owned subsidiaries,
so long as Acquiror remains secondarily and unconditionally liable hereunder for
the obligations of such subsidiary and that no assignment otherwise permitted in
accordance with this Section 13.3 shall limit or affect the assignor's
obligations hereunder.
SECTION 13.4. No Third-Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder, except for the persons referred to in Section 11.9. Without
limiting the foregoing, nothing herein shall be construed to give any ▇▇▇▇▇
Employee or any other person any right to employment or continued employment, or
to participate in or receive benefits under any employee benefit plan.
SECTION 13.5. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand or telecopied, or if mailed, three
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days after mailing (one Business Day in the case of express mail or overnight
courier service), as follows:
(i) if to Acquiror, ▇▇▇▇▇ Parent or Merger Sub or,
after the Effective Time, ▇▇▇▇▇,
Harcourt Brace & Company
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Harcourt General, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
Senior Vice President and
General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Times Mirror,
Times ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(iii) if to ▇▇▇▇▇, prior to the Effective Time, to:
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Incorporated
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
The Times Mirror Company
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Vice President and General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 13.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other party.
SECTION 13.7. Entire Agreement. This Agreement (including the exhibits
and schedules) and the Confidentiality Agreement contain the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
SECTION 13.8. Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and the parties shall negotiate in good faith to
replace such provision with one that shall as nearly as possible effectuate the
intent of the parties.
SECTION 13.9. Amendment. This Agreement may be amended only by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 13.10. Extension; Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance by any other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
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SECTION 13.11. Dispute Resolution.
(a) Accounting Disputes. Notwithstanding anything to the
contrary contained in this Section 13.11, any controversy, dispute or claim
arising under this Agreement related to or arising out of accounting matters
relating to this Agreement shall be resolved by means of discussions between the
regularly retained independent certified public accountants of Acquiror and
Times Mirror. In the event that the independent certified public accountants of
each of Acquiror and Times Mirror are unable to resolve the dispute within 60
days after the dispute is first submitted to them, then a third independent
certified public accountant of recognized national standing shall be selected by
the independent certified public accountants of each of Acquiror and Times
Mirror and the determination of such third independent certified public
accountant, with respect to the matter in dispute, shall be rendered within 45
days after the dispute has been submitted to it and such determination shall be
final and binding on all of the parties hereto. The fees, costs and expenses of
such third accounting firm shall be borne equally by Times Mirror and Acquiror.
(b) Other Disputes. Notwithstanding anything to the contrary
contained in this Section 13.11, any controversy, dispute or claim by any party
arising under this Agreement, including any claim for injunctive or other
equitable relief, including specific performance (including specific performance
of the agreement to resolve disputes related to or arising out of accounting
matters contained in Section 13.11(a)), may be brought in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York. Each of Times Mirror, ▇▇▇▇▇, Acquiror,
▇▇▇▇▇ Parent and MergerSub irrevocably submits to the exclusive jurisdiction of
(i) the Supreme Court of the State of New York, New York County and (ii) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of Times Mirror, ▇▇▇▇▇, Acquiror,
▇▇▇▇▇ Parent and MergerSub agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of New York or, if, for jurisdictional reasons, such suit, action or
other proceeding may not be brought in such court, in the Supreme Court of the
State of New York, New York County. Each of Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇
Parent and MergerSub further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
in Section 13.5 above shall be effective service of process for any action, suit
or proceeding in New York with respect to any matters to which it has submitted
to jurisdiction as set forth above in the immediately preceding sentence. Each
of Times Mirror, ▇▇▇▇▇, Acquiror, ▇▇▇▇▇ Parent and MergerSub irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (x) the Supreme Court of the State of New York, New York County or (y)
the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
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SECTION 13.12. Interpretation of this Agreement.
(a) Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, "including" is not limiting
and "or" has the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole (including the Preamble, the Recitals, the
Schedules and the Exhibits) and not to any particular provision of this
Agreement. Article, section, exhibit, schedule, recital and preamble references
in this Agreement are to those portions of this Agreement unless otherwise
specified.
(b) Knowledge. Whenever any representation or warranty of any
party contained in this Agreement or in any certificate or other document
delivered in connection with this Agreement is qualified to the "Knowledge" of
such party, such qualification shall mean the actual knowledge, after due
inquiry, of (i) in the case of Times Mirror, ▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive
Officer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Financial Officer and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General
Counsel, in each case of Times Mirror, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and
Chief Executive Officer, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President and Chief Financial
Officer, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President and General Counsel, in each case of
▇▇▇▇▇, and any person who may succeed to any of such offices prior to the
Effective Time and (ii) in the case of Acquiror, ▇▇▇▇▇ ▇. ▇▇▇▇, President and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President and Chief Financial Officer, in each case,
of Acquiror, and ▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President and Chief Financial
Officer, and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President and General Counsel, in each
case, of Harcourt General, Inc., and any person who may succeed to any of such
offices prior to the Effective Time.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State.
(d) Headings, Exhibits and Schedules. The headings contained
in this Agreement, in any Exhibit or Schedule hereto and in the Table of
Contents to this Agreement, are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Any capitalized
terms used in any Exhibit or Schedule but not otherwise defined therein shall
have the meaning as defined in this Agreement. Any matter disclosed in one
Schedule hereto shall be deemed incorporated by reference into each other
Schedule hereto and disclosed in each such Schedule to the extent that the
relevancy of such matter to each such other Schedule is reasonably apparent from
the disclosure included on the Schedule.
(e) Representation By Counsel; Interpretation. Times Mirror,
▇▇▇▇▇, Acquiror, ▇▇▇▇▇ Parent and MergerSub each acknowledges that each party to
this Agreement has been represented by counsel in connection with this Agreement
and the transactions contemplated by this Agreement. Accordingly, any rule of
law, including Section 1654 of the California Civil Code or any comparable
provision of New York law, or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be
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interpreted in a reasonable manner to effect the intent of Times Mirror, ▇▇▇▇▇,
Acquiror, ▇▇▇▇▇ Parent and MergerSub.
SECTION 13.13 Survival of Representations. The representations and
warranties in this Agreement (other than representations and warranties relating
to Taxes and environmental matters) and in any other document identified as
being delivered in connection with this Agreement shall survive the Closing
solely for purposes of Section 11.2 and 11.3 and shall terminate at the close of
business on January 31, 2000. The representations and warranties relating to
environmental matters shall survive the Closing solely for the purposes of
Sections 11.2 and 11.3 and shall terminate when the applicable statutes of
limitations with respect to the environmental liabilities in question expire
(giving effect to any extension thereof by waiver or otherwise). The
representations and warranties relating to Taxes shall terminate at the
Effective Time; however, Times Mirror's obligations under Section 11.1 shall
survive until 120 days after the expiration of the applicable statute of
limitations with respect to each Tax.
SECTION 13.14. No Punitive Damages. Notwithstanding anything to the
contrary elsewhere in this Agreement, after the Effective Time, other than in
the case of fraud or willful misconduct on the part of another party, no party
(or its affiliates) shall, in any event, be liable to any other party (or its
affiliates) for any punitive damages relating to the breach or alleged breach of
this Agreement except (x) for any willful breach of Section 7.7 and (y) to the
extent that any such damages are awarded in connection with a Third-Party claim.
SECTION 13.15. Adjustments. The per share and aggregate stated value of
the MergerSub Preferred Stock set forth in this Agreement and the Exhibits
hereto are based on the assumption that the MergerSub Debt is $200,000,000
immediately prior to the Effective Time. If the MergerSub Debt is less than
$200,000,000 immediately prior to the Effective Time, the per share and
aggregate stated value of the MergerSub Preferred Stock shall be adjusted by
mutual agreement of the parties hereto.
SECTION 13.16. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement and
the Exhibits hereto was not performed in accordance with the terms hereof and
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Federal court located in the State of New York or any
New York state court, in addition to any other remedy to which they are entitled
at law or in equity.
SECTION 13.17. Amendment and Restatement. As of the date first written
above, this Agreement shall amend, restate and supersede the Existing Merger
Agreement in its entirety.
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IN WITNESS WHEREOF, the parties have caused this Amended and
Restated Agreement and Plan of Merger to be duly executed as of the date first
written above.
THE TIMES MIRROR COMPANY
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
▇▇▇▇▇, INC.,
a Missouri corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President and General Counsel
HARCOURT BRACE & COMPANY,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
▇▇▇▇▇ PARENT CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
▇▇▇▇▇ ACQUISITION CORP.,
a Missouri corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
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