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EXHIBIT 2.6
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STOCK PURCHASE AGREEMENT
AMONG
TRANSWESTERN PUBLISHING COMPANY LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
DALE R. ENGBERSON
AND
RHONDA L. ENGBERSON
DATED
AS OF
JULY 16, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1 - CERTAIN DEFINITIONS............................................................. 1
ARTICLE 2 - PURCHASE AND SALE................................................................ 4
2.1 Stock Purchase................................................................ 4
2.2 Purchase Price................................................................ 4
2.3 Closing Transactions.......................................................... 5
(a) Closing................................................................ 5
(b) Closing Deliveries..................................................... 5
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY............................................................... 6
3.1 Representations and Warranties of Seller...................................... 6
(a) Organization, Qualification and Corporate Power........................ 6
(b) Authorization of Transaction; Execution and Delivery................... 6
(c) Capital Stock and Related Matters...................................... 7
(d) Subsidiaries; Investments.............................................. 7
(e) Noncontravention....................................................... 7
(f) Governmental Consent................................................... 7
(g) Recent Events.......................................................... 8
(h) Intellectual Property.................................................. 9
(i) Contracts and Commitments.............................................. 9
(j) Financial Statements.................................................. 10
(k) Accuracy of Information Furnished..................................... 10
(l) Customer Contract Receivables; Advance Payments....................... 10
(m) Legal Compliance with Laws............................................ 10
(n) Litigation; Proceedings............................................... 11
(o) Title and Sufficiency of Assets....................................... 11
(p) Directory Listings.................................................... 11
(q) Brokers' Fees......................................................... 11
(r) Tax Matters........................................................... 11
(s) Title and Condition of Real Properties................................ 13
(t) Insurance............................................................. 13
(u) Employees............................................................. 14
(v) Employee Benefit Plans................................................ 14
(w) Environmental and Safety Matters...................................... 16
(x) Affiliated Transactions............................................... 17
(y) Customers and Suppliers............................................... 17
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(z) Undisclosed Liabilities............................................... 17
(aa) Disclosure............................................................ 17
3.2 Representations and Warranties of Sellers.................................... 17
(a) Authority and Power................................................... 17
(b) No Breach............................................................. 18
(c) Title to Company Stock................................................ 18
(d) Brokerage............................................................. 18
(e) Litigation............................................................ 18
(f) Compliance with Laws.................................................. 18
(g) Company Transactions.................................................. 19
3.3 Representations and Warranties of Purchaser.................................. 19
(a) Organization.......................................................... 19
(b) Authorization of Transaction.......................................... 19
(c) Noncontravention...................................................... 19
(d) Governmental Consent.................................................. 19
(e) Brokers' Fees......................................................... 19
(f) Investment Purposes................................................... 19
ARTICLE 4 - ADDITIONAL AGREEMENTS........................................................... 20
4.1 Post-Closing Assistance...................................................... 20
4.2 Confidentiality.............................................................. 20
(a) Information Concerning the Parties.................................... 20
(b) Notice of Compulsory Disclosure....................................... 20
(c) Non-Competition....................................................... 20
4.3 Indemnification.............................................................. 21
4.4 Arbitration.................................................................. 23
4.5 Tax Matters.................................................................. 25
4.6 Miscellaneous................................................................ 25
(a) Representations and Warranties........................................ 25
(b) No Third Party Beneficiaries.......................................... 25
(c) Entire Agreement...................................................... 26
(d) Succession and Assignment............................................. 26
(e) Counterparts.......................................................... 26
(f) Headings.............................................................. 26
(g) Notices............................................................... 26
(h) Governing Law......................................................... 27
(i) Amendments and Waivers................................................ 27
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(j) Severability.......................................................... 27
(k) Expenses.............................................................. 27
(l) Taxes; Recording Charges.............................................. 27
(m) Construction.......................................................... 27
(n) Incorporation of Exhibits and Schedules............................... 28
(o) Number and Gender..................................................... 28
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SCHEDULES Section Reference
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Net Asset Value
Asset Value Methodology Schedule 2.2(b)
Contracts Schedule 3.1(i)
Qualifications Schedule 3.1(a)
Capitalization Schedule 3.1(c)(i)
Recent Events Schedule 3.1(g)
Intellectual Property Schedule 3.1(h)
Contracts Schedule 3.1(i)
Financial Statements Schedule 3.1(j)
Litigation Schedule 3.1(n)
Taxes Schedule 3.1(r)(i)
Leased Property Schedule 3.1(s)(ii)
Insurance Schedule 3.1(t)
Employees Schedule 3.1(u)
Employee Benefits Schedule 3.1(v)(ii)
Environmental Schedule 3.1(w)
Affiliated Transactions Schedule 3.1(x)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of July 16, 1998, by and among TransWestern Publishing Company
LLC, a Delaware limited liability company ("Purchaser") and Dale R. Engberson
and Rhonda L. Engberson, the sole shareholders of the Company (each, a "Seller"
and together, "Sellers"). Purchaser and Sellers sometimes are referred to
individually as a "Party" and collectively as the "Parties."
Each of the Company and Purchaser is in the business of printing,
publishing and distributing telephone directory "yellow pages."
The authorized capital stock of the Company consists of 50,000
shares of common stock, par value $1.00 per share (the "Company Stock"). Sellers
own beneficially and of record 100% of the outstanding Company Stock. On the
terms and subject to the conditions set forth in this Agreement, Purchaser
desires to acquire from each Seller and each Seller desires to sell to
Purchaser, all of the outstanding shares of Company Stock owned by such Seller.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1 - CERTAIN DEFINITIONS
"Advance Payment" means a customer payment made with respect to
any Customer Contract associated with any edition of any Directory prior to
publication of such edition.
"Code" means the Internal Revenue Code of 1986, as amended, and
all rules and regulations promulgated thereunder.
"Company" means Target Directories of Michigan, Inc., a Michigan
corporation.
"Company Transaction" means any (i) liquidation, dissolution or
recapitalization, (ii) merger or consolidation or share exchange, (iii)
acquisition or purchase of securities or assets or (iv) similar transaction or
business combination involving Sellers, the Company or the Directories, or any
proposal or offer (whether oral or written) in respect thereof.
"Customer Contract" means any written contract or agreement
(other than trade contracts) between the Company and any of its customers (or
under which the Company has rights) which has been entered into and signed by
the parties thereto in connection with the publication of the Directories and
corresponding provision of Directory Services.
"Directories" means, collectively, the Greater Lenawee Directory
and the Greater Hillsdale/Branch Directory.
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"Directory Services" means the printing and publishing of
advertisements in any Directory.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all rules and regulations promulgated thereunder.
"Escrow Agent" means Key Bank, N.A., a national banking
association.
"Escrow Agreement" means the escrow agreement dated as of the
date hereof by and among the Escrow Agent, Purchaser and Seller.
"Future Editions" means, collectively, any edition of any of the
Directories which is published after the Closing Date.
"Greater Hillsdale/Branch Directory" means the telephone
directory as owned by Seller on the date hereof which covers Hillsdale County,
Michigan and Branch County, Michigan.
"Greater Lenawee Directory" means the telephone directory owned
by Seller as of the date hereof which covers Lenawee County, Michigan.
"Intellectual Property" means all (i) patents, patent
applications, patent disclosures, and improvements thereto, (ii) trademarks,
service marks, trade dress, logos, trade names, and corpo rate names and
registrations and applications for registration thereof, (iii) copyrights and
registra tions and applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer software,
data and documentation, (vi) trade secrets and confi dential business
information (including ideas, formulas, compositions, inventions (whether patent
able or unpatentable and whether or not reduced to practice), know-how,
manufacturing and produc tion processes and techniques, research and development
information, software products in development, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial
(excluding employee benefit plans), marketing, and business data, pricing and
cost information, business and marketing plans, and customer and supplier lists
and information), and (vii) copies and tangible embodiments thereof (in whatever
form or medium).
"Liability" or "Liabilities" means any liability (whether known
or unknown, whether asserted or not asserted, whether absolute or contingent,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge, of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale of receivables with recourse against the Company or any of its
Affiliates or any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to the Company under a lease which
is not in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
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"Loss" means any loss, Liability, damage or expense, whether or
not arising out of third party claims (including, without limitation, interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid in
investigation, defense or settlement of any of the foregoing).
"Material Adverse Effect" means any change, event or occurrence
which has a material adverse effect upon the assets, business, operations or
condition (financial or otherwise) of the Company or any Directory or the
Directories considered as a whole.
"Net Asset Value" means the excess of the Company's Cash, Cash
Receivables and all fixed assets (excluding intangible assets) over the
Company's liabilities (excluding all costs and expenses incurred in connection
with the consummation of the transactions contemplated herein); provided that in
determining New Asset Value hereunder, the Parties shall take into account those
categories of items identified on, and follow the methodology and accounting
principles set forth in, the attached "Net Asset Value Schedule." In computing
Net Asset Value, all accounting entries will be taken into account regardless of
their amount, all known errors and omissions with respect to those categories of
items identified on the New Asset Value Schedule will be corrected and all known
proper adjustments will be made.
"Ordinary Course of Business" means the ordinary course of
business of the Company consistent with past custom and practice of the Company
(including with respect to quantity and frequency) during the twelve-month
period prior to the date hereof.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity.
"Prior Editions" means, collectively, all editions of any
Directory which have a publication date prior to the Closing Date.
"Tax" or "Taxes" means any federal, state, local, or foreign
income, (including the Michigan Single Business Tax), gross receipts, license,
payroll, employment, excise, communications, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transaction, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
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ARTICLE 2 - PURCHASE AND SALE
2.1 Stock Purchase. On the terms set forth in this Agreement, at
the closing of the transactions contemplated herein on the date hereof
(the "Closing"), Purchaser agrees to purchase from Seller, and Seller
agrees to sell, transfer, convey and deliver to Purchaser, free and
clear of any Liens, all of the outstanding shares of Company Stock owned
by Seller.
2.2 Purchase Price.
(a) The total purchase price payable by Purchaser to Seller for
the Company Stock owned by Seller (the "Purchase Price") shall be
$5,327,211.03 (the "Estimated Purchase Price"), as may be adjusted
pursuant to clause (e) of this Section 2.2.
(b) In connection with the determination of the Estimated
Purchase Price, as of the date hereof, Purchaser has caused its
accountants to prepare and deliver to Sellers a statement setting forth
its calculation of the Company's Net Asset Value as of June 30, 1998
(the "June Net Asset Value"), and Sellers have agreed to the June Net
Asset Value and the items set forth in such statement.
(c) As soon as practicable but not later than 45 days following
the Closing, Purchaser shall cause its accountants to prepare and
deliver to Sellers a balance sheet for the Company as of the closing of
business on the date hereof, together with a statement (the "Closing
Statement"), setting forth Purchaser's determination of the Net Asset
Value (and the components thereof) as of the Closing Date (the "Closing
Net Asset Value"). During such forty-five (45) day period, Sellers may
challenge the Closing Statement and Purchaser's calculation of the
Closing Net Asset Value. Any such challenge by Seller must be made by
delivery to Purchaser of a detailed statement setting forth such
objections thereto (the "Sellers' Statement"). If the Sellers' Statement
is not delivered to the Purchaser within such forty-five (45) day
period, the Closing Statement and the Closing Net Value set forth
therein shall immediately become final, binding and non-appealable by
the Parties.
(d) The Parties shall negotiate in good faith to resolve any
objections set forth in Sellers' Statement, but if the Parties do not
reach a final resolution within fifteen (15) days after Purchaser has
received the Sellers' Statement, Purchaser and Sellers shall select an
accounting firm mutually acceptable to both of them to resolve any
remaining objections. If such Parties are unable to agree on the choice
of an accounting firm, they shall select one of the five largest
national accounting firms (or any of their respective successors) by lot
(after excluding their respective regular outside accounting firms). The
selection of the accounting firm shall be conclusive, final, binding and
non-appealable by the Parties. The accounting firm so selected (the
"Accounting Firm") shall prepare a written report to the Parties which
shall address its resolution of the disputed items and shall make any
required adjustments to the Closing Statement and Purchaser's
calculation of the Closing Net Asset Value to reflect the resolution of
all disputed items. Purchaser, on the one hand, and Sellers, on the
other hand, shall each pay one-half of the fees and expenses of the
Accounting Firm.
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(e) Within five (5) business days after the date on which the
Closing Net Asset Value Sheet is finally determined pursuant to this
Section 2.2, the Estimated Purchase Price shall be adjusted as follows:
(i) if the Closing Net Asset Value exceeds the June Net
Asset Value, Purchaser shall deliver to Sellers an amount equal
to such excess, by wire transfer of immediately available funds
to a bank account designated by Sellers; and
(ii) if the Closing Net Asset Value is less than the
June Net Asset Value, Sellers shall deliver to Purchaser an
amount equal to such deficiency, by wire transfer of immediately
available funds to a bank account designated by Purchaser.
2.3 Closing Transactions.
(a) Closing. The Closing shall take on the date hereof in
accordance with the terms set forth herein.
(b) Closing Deliveries. In connection with the Closing, the
Parties shall take the following actions (as of, or promptly following
the deliver of funds described in (i) below)):
(i) Purchaser shall deliver to Sellers $4,527,211.03, by
wire transfer of immediately available funds to an account
jointly designated by Sellers;
(ii) Purchaser shall deliver to the Escrow Agent the
amount of $800,000 (the "Escrow Amount") to be held and
disbursed in accordance with the Escrow Agreement;
(iii) Sellers shall deliver to Purchaser stock
certificates representing all of the outstanding shares of the
Company Stock, free and clear of all Liens, together with such
warranty bills of sale, assignments, stock powers and other
documents or instruments as shall be reasonably necessary to
convey to Purchaser full right, title and interest in and to
such shares;
(iv) the Company shall deliver to Purchaser evidence
that all Liens in any of the Company's businesses, assets,
properties and operations have been released;
(v) each Seller shall certify to Purchaser that all
governmental or third party filings, licenses, consents,
authorizations, waivers and approvals that are required to be
made or obtained for the transfer to Purchaser of the Company
Stock have been duly made and obtained without conditions or
requirements that are materially adverse to Purchaser;
(vi) Purchaser shall deliver to Sellers a certificate
signed by an officer of Purchaser to the effect that all
governmental or third party filings, licenses, consents,
authorizations, waivers and approvals that are required to be
made or obtained by
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Purchaser for the transfer to Purchaser of the Company Stock
have been duly made and obtained without conditions or
requirements that are materially adverse to Sellers;
(vii) Dykema Gossett PLLC, counsel to Sellers and the
Company, shall deliver to Purchaser an opinion in form and
substance reasonably satisfactory to Purchaser;
(viii) the Company shall deliver to Purchaser a good
standing certificate of the Company issued by the Secretary of
State of the State of Michigan, dated as of a date within ten
(10) days prior to the Closing Date;
(ix) the Company shall deliver to Purchaser a copy of
its Articles of Incorporation, as effect as of the date hereof,
certified by the Secretary of State of Michigan and copy of its
bylaws as an effect as of the date hereof, as certified by an
officer of the Company; and
(x) each Seller and each of the other principals of the
Company designated by Purchaser shall execute and deliver to
Purchaser a non-compete agreement in form and substance
satisfactory to Purchaser.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
3.1 Representations and Warranties of Seller. As a material
inducement to Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, each Seller hereby represents and warrants to
Purchaser that:
(a) Organization, Qualification and Corporate Power. The Company
is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Michigan. The Company is qualified to
conduct business in each of the jurisdictions indicated on the attached
"Qualifications Schedule" which jurisdictions represent all of the
jurisdictions in which the conduct of its business or its ownership of
property require it to be so qualified.
(b) Authorization of Transaction; Execution and Delivery. The
Company has full requisite corporate power and authority and all
material licenses, permits and authorization necessary to own and
operate its business as now conducted and as proposed to be conducted,
to execute and deliver this Agreement and the other agreements
contemplated hereby to which it is a party and to perform its
obligations hereunder and thereunder. Without limiting the generality of
the foregoing, the Company has obtained all consents and approvals that
are necessary to the consummation of the transactions contemplated
hereby.
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(c) Capital Stock and Related Matters.
(i) The authorized capital stock of the Company is 50,000 shares
of common stock, of which, immediately prior to the transactions
contemplated herein, 200 shares are issued and outstanding ("Outstanding
Shares").
(ii) The Company does not have outstanding any stock or
securities convertible or exchangeable for any shares of its capital
stock or containing any profit participation features, or any rights or
options to subscribe for or to purchase its capital stock or any stock
or securities convertible into or exchangeable for its capital stock or
any stock appreciation rights or phantom stock plans. The Company is not
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any
warrants, options or other rights to acquire its capital stock. All of
the outstanding shares of the Company's capital stock are validly
issued, fully paid and nonassessable.
(iii) There are no statutory or contractual stockholders
preemptive rights or rights of first refusal with respect to the sale of
the Company Stock hereunder. The Company has not violated any applicable
federal or state securities laws in connection with the offer, sale or
issuance of any of its capital stock, and the sale of the Company Stock
hereunder do not require registration under the Securities Act or any
applicable state securities laws. There are no agreements with respect
to the voting or transfer of the Company's capital stock or with respect
to any other aspect of the Company's affairs.
(iv) The Company is not a party to or bound by any agreement with
respect to a Company Transaction other than this Agreement.
(d) Subsidiaries; Investments. The Company does not own or hold
the right to acquire any stock, partnership interest or joint venture
interest or other equity ownership interest in any other Person and the
Company does not have any Subsidiaries.
(e) Noncontravention. Neither the execution and the delivery of
this Agreement and the other agreements contemplated hereby, nor the
consummation of the transactions contemplated hereby or thereby will
violate, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, termi nate, modify, or cancel, or require any authorization,
consent, approval, execution or other action by or notice to any third
party under, the Company's articles of incorporation or bylaws, or any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement, instrument of indebtedness, Lien, or other
arrangement by which the Company is bound or affected or to which the
Company Stock or any assets of the Company is subject, or any law,
statute, rule, regulation, order, judgment, decree, stipulation,
injunction, charge or other restriction, to which the Company is subject
or to which the Company Stock or any assets of the Company is subject.
(f) Governmental Consent. The Company is not required to give any
notice to, make any material declaration to or registration or filing
with, or to obtain any permit,
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license, consent, accreditation, exemption, approval or authorization
from, any governmental or regulatory authority in connection with the
execution, delivery or performance of this Agreement or the consummation
of any of the transactions contemplated hereby.
(g) Recent Events. Except as described in the attached "Recent
Events Schedule", since December 31, 1997, the Company has not
experienced any change that has had a Material Adverse Effect. Without
limiting the generality of the foregoing, since such date:
(i) the Company has not sold, leased, transferred,
assigned encumbered, mortgaged or pledged any of its properties
or assets;
(ii) the Company has not entered into any agreement,
contract, lease or license or other transaction with respect to
the Directories (or any series of related agreements, contracts,
leases or licenses) other than in the Ordinary Course of
Business;
(iii) no party (including, without limitation, the Company
and Seller) has, accelerated, terminated, modified or canceled
any contract, lease, sublease, license or sublicense (or series
of related contracts, leases, subleases, licenses and
sublicenses) involving more than $5,000 to which the Company is a
party or by which the Company is bound and no party intends to
take such action;
(iv) the Company has not failed to make or delayed or
postponed the payment of accounts payable relating to or
affecting the Directories or the operation of the Directories or
other Liabilities associated with the operation of the
Directories outside the Ordinary Course of Business;
(v) there has not been any other material occurrence,
event, incident, action, failure to act or other transaction
outside the Ordinary Course of Business;
(vi) the Company has not increased or decreased billing
rates under its Customer Contracts and has not agreed to payment
terms under any Customer Contract other than in the Ordinary
Course of Business;
(vii) the Company has not suffered any extraordinary loss,
damage, destruction or casualty loss or waived any rights to any
asset, whether or not covered by insurance and whether or not in
the Ordinary Course of Business;
(viii) the Company has not received any indication that
any customer or supplier will cease, reduce or adversely affect
the rate of business done with it;
(ix) the Company has not made any loans or advances to,
guarantees for the benefit of, or any investments in, any Persons;
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(x) except as agreed with Purchaser in connection with
this Agreement, the Company has not granted any increase in the base
compensation of, or made any other change in the employment terms for,
any of its directors, officers and employees (other than in the ordinary
course of business) or adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract or
commitment for the benefit of any of its directors, officers and
employees (other than in the ordinary course of business); or
(xi) the Company has not committed to any of the
foregoing.
(h) Intellectual Property. The attached "Intellectual Property
Schedule" contains a complete and accurate list of all Intellectual
Property owned or used by the Company in connection with its ownership
and publication of the Directories and the operation of its business and
such Intellectual Property comprises all proprietary or other
intellectual property rights necessary for operation and publication of
the Directories as currently operated and published. The Intellectual
Property Schedule identifies each license, agreement, or other
permission which the Company has granted to any third party with respect
to any of its Intellectual Property (together with any exceptions). With
respect to each item of Intellectual Property that the Company owns in
connection with the operation of the Directories: (i) the Company
possesses all right, title, and interest in and to the item; (ii) the
item is not subject to any outstanding judgment, order, decree,
stipulation, injunction, or charge; and (iii) no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand is
pending or, to Sellers' knowledge, threatened which challenges the
legality, validity, enforceability, use, or ownership of the item. The
Company has taken all necessary or desirable action to protect each item
of Intellectual Property that it owns.
(i) Contracts and Commitments. The Company has delivered to
Purchaser a true and complete list of all Customer Contracts associated
with the Directories (the "Customer List"). Except as set forth on the
Customer List, the Company is not party to any Customer Contract or any
other written or oral contract or commitment that relates to the
provision of Directory Services in connection with any Directories
(including, without limitation, any contract with a third party or
parties relating to the purchase or sale by the Company of services or
products relating to any Directories), or any other agreement material
to the operation of the Company's businesses, whether or not entered
into in the Ordinary Course of Business. The Company has delivered or
otherwise made available to Purchaser a correct and complete copy of the
standard forms of Customer Contract used in connection with any
Directories and each written agreement (including all amendments
thereto) identified on the Contracts Schedule. The Contracts Schedule
identifies all contracts (other than Customer Contracts) associated with
the Prior Editions and, to the extent available, the Future Editions.
With respect to each written agreement so identified, except as
otherwise would result in a Material Adverse Effect: (A) the written
agreement is legal, valid, binding, enforceable, and will continue to be
in full force and effect after the consummation of the transactions
contemplated hereby; (B) the written agreement will continue to be
legal, valid, binding, and enforceable and in full force and effect on
identical terms immediately after the Closing Date; and (C) neither the
Company nor any other party is in breach or default, and no event
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has occurred which with notice or lapse of time would constitute a
breach or default by the Company or permit termination, modification, or
acceleration (in each case, other than by Seller), under the written
agreement. The Company has not waived or modified any limitation on
liability or similar provision in any Customer Contract.
(j) Financial Statements. The attached "Financial Statements
Schedule" contains the following financial statements (the "Financial
Statements"):
(i) the unaudited consolidated and consolidating balance
sheets of the Company as of December 31, 1995, December 31, 1996,
and December 31, 1997, and the related statements of income,
changes in stockholders' equity and cash flow for the
twelve-month period then ended; and
(ii) the unaudited balance sheet of Seller as of June 30,
1998 (the "Latest Balance Sheet") and the related statements of
income, changes in stockholders' equity and cash flow for the
six-month period then ended.
Each of the foregoing Financial Statements (including in all cases the
notes thereto, if any) is accurate and complete, is consistent with the
books and records of the Company (which, in turn, are accurate and
complete) and presents fairly the financial condition and results of
operations of the Company in accordance with the accounting principles
following by the Company, consistently applied throughout the periods
covered thereby.
(k) Accuracy of Information Furnished. No representation or
warranty of the Company contained in this Agreement or in any document
delivered to Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby (including, without limitation, any
Customer Contract, customer list, or other records or data compiled in
connection with the Directories) contains or will contain as of the date
such representation and warranty is made or other document has been, is
or will be furnished, any untrue statement of a material fact or
omitted, omits, or will omit to state as of the date such representation
or warranty is made or such document is or will be furnished, any
material fact which is necessary not to make the statement contained
herein or therein not misleading.
(l) Customer Contract Receivables; Advance Payments. The
receivables associated with Customer Contracts reflected on the books
and records of the Company as of the date hereof are bona fide
receivables recorded in the Ordinary Course of Business. The Advance
Payments associated with Customer Contracts reflected on the books and
records of the Company as of the Closing Date are bona fide Advance
Payments recorded in the Ordinary Course of Business. Such books and
records of the Company identify receivables associated with the Prior
Editions and the Future Editions, respectively.
(m) Legal Compliance with Laws. The Company has complied (and is
in compliance) with and has not violated any applicable law, rule or
regulation of any federal, state, local or foreign government or agency
thereof with respect to its business or any of the Directories and no
notice, claim, charge, complaint, action, suit, proceeding,
investigation
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16
or hearing has been received by the Company or filed, commenced or,
threatened in writing against the Company alleging any such violation.
The Company has complied (and is in compliance) with permits, licenses
and other authorizations required for publication of the Directories and
the provision of Directory Services. There are no permits, filings,
notices, licenses, consents, authorizations, accreditation, waivers and
approvals of, to or with any governmental or third party entity which
are (or required to be) used by the Company or required for ownership of
its assets or the publication and operation of the Directories (as
presently operated and published by the Company and as proposed to be
operated after the date hereof).
(n) Litigation; Proceedings. Except as set forth in the attached
"Litigation Schedule," there are no actions, suits, proceedings,
hearings, orders, investigations, charges, complaints or claims against
or affecting the Company or the Directories or to which the Company or
the Directories may be bound or affected, at law or in equity, or before
or by any federal, state, municipal, foreign or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, and there is no basis for any of the foregoing; the
Company is not subject to any judgment, order or decree of any court or
governmental agency; the Company has not received any opinion or
memorandum or legal advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or disadvantage which
may be material to its business and the Company is not engaged in any
legal action to recover monies due it or for damages sustained by it.
(o) Title and Sufficiency of Assets. The Company owns good and
marketable title, or has a valid and enforceable lease or license, free
and clear of all Liens, to all real property and all personal and
intangible personal property and assets used by the Company or located
on its premises or shown on the Latest Balance Sheet, except for Liens
for current Taxes not yet due and payable.
(p) Directory Listings. Each of the directory listings associated
with the Directories has been published in the Ordinary Course of
Business and in accordance with customary practices currently prevailing
in the telephone directory industry for companies of a size comparable
to the Company. No such listing has been published in violation of any
applicable law, code or regulation. The Company has provided Purchaser
with copies of all invoices (or other evidence reasonably satisfactory
to Purchaser) relating to the purchase by the Company of the white page
listings and yellow page listings used or to be used in connection with
the printing and publication of any Directory.
(q) Brokers' Fees. The Company does not have any Liability to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement or which Purchaser or
any other party could become liable or obligated.
(r) Tax Matters.
(i) The Company timely filed all Tax Returns required to
be filed by it, and all such Tax Returns are true and accurate in
all material respects. Except as set
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17
forth in the attached "Taxes Schedule," all Taxes due and
payable by the Company (whether or not shown on any Tax Return)
have been paid.
(ii) Except as set forth in the Taxes Schedule:
(A) no deficiency or proposed adjustment which has
not been settled or otherwise resolved for any amount of
Tax has been proposed, asserted or assessed by any taxing
authority against the Company;
(B) the Company has not consented to extend the
time in which any Tax may be assessed or collected by any
taxing authority;
(C) the Company has not requested or been granted
an extension of the time for filing any Tax Return to a
date later than the date hereof;
(D) there is no action, suit, taxing authority
proceeding or audit now in progress, pending or, to the
Sellers' knowledge, threatened against or with respect to
the Company with respect to any Tax;
(E) the Company has not been a member of an
Affiliated Group or filed or been included in a combined,
consolidated or unitary income Tax Return;
(F) the Company is not a party to or bound by any
Tax allocation or Tax sharing agreement and the Company
has no current or potential contractual obligation to
indemnify any other Person with respect to Taxes;
(G) the Company does not reasonably expect any
taxing authority to claim or assess any additional Taxes
for any period;
(H) the Company does not have any obligation to
make any payment that will be non-deductible under Section
280G of the Code (or any corresponding provision of state,
local or foreign Tax law);
(I) no claim has ever been made by a taxing
authority in a jurisdiction where the Company does not pay
Tax or file Tax Returns that the Company is or may be
subject to Taxes assessed by such jurisdiction;
(J) the Company has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor,
independent contractor or other third party;
(K) the Company has not been a United States real
property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified
in Code Section 897(c)(1)(A)(ii).
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18
(iii) The Company is only required to file a state Tax
Return in the State of Michigan.
(iv) The Company's unpaid Taxes attributable to all
periods (or portions thereof) ending as of the Closing Date will
not exceed the aggregate amount taken into account in the
determination of the June Net Asset Value (as such amount may be
adjusted and reflect in the final Closing Statement); provided,
however, that the foregoing representation is conditioned upon
the assumptions that (A) the Company's 1997 Tax year would have
ended on the Closing Date, and (B) no operations, tax elections
or other actions or omissions of the Company or Purchaser after
the Closing Date would be deemed to affect the obligations of the
Company for Taxes attributable to the period before the Closing
Date.
(s) Title and Condition of Real Properties.
(i) The Company does not own any real property.
(ii) Leased Properties. The attached "Leased Property
Schedule" lists and describes briefly all real property that is used or
occupied by the Company in connection with its business but not owned by
the Company and the Leases, subleases and agreements by which such
property is used and occupied (the "Leased Property").
(iii) The Company has delivered to Purchaser correct and
complete copies of the leases and subleases listed in the Leased
Property Schedule (collectively, the "Leases")). Each of the Leases is
legal, valid, binding, enforceable and in full force and effect. Neither
the Company nor any other party to such leases is, in breach or default
of such lease and no event has occurred which, with notice or lapse of
time, would constitute such a breach or default or permit terminations,
modification or accelerations under the Leases. No party to the Leases
has repudiated any provision thereof and there are no disputes, oral
agreements, or forbearance programs in effect as to the Lease. The
Leases have not been modified in any respect, except to the extent that
such modifications are disclosed by the documents delivered to
Purchaser, and the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the Leases.
(iv) All buildings and all components of all buildings,
structures and other improvements included within the Leased Property
(the "Improvements"), are in good condition and repair and adequate to
operate such facilities as currently used. All utilities and other
similar systems serving the Leased Property are installed and operating
and are sufficient to enable the Leased Property to continue to be used
and operated in the manner currently being used and operated, and any
so-call hook-up fees or other associated charges have been fully paid.
Each Improvement has direct access to a public street adjoining the
Leased Property on which such Improvement is situated over the driveways
and accessways currently being used in connection with the use and
operation of such Improvement.
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19
(t) Insurance. The attached "Insurance Schedule" sets forth a
true and complete description of each insurance policy maintained by the
Company with respect to its properties, assets and businesses, and each
such policy is in full force and effect as of the Closing. Except as
would have a Material Adverse Effect, the Company is not in default with
respect to its obligations under any insurance policy maintained by it,
and neither the Company has not been denied insurance coverage. The
Company has no self-insurance or co-insurance programs.
(u) Employees. To the Sellers' knowledge, no member of the
Company's sales force has any plans to terminate employment with the
Company. Except as set forth on the attached "Employees Schedule", none
of the employees of the Company are subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or
proposed business activities of the Company. The Company is in
compliance with all laws pertaining to the employment of employees.
(v) Employee Benefit Plans.
(i) The attached "Employee Benefits Schedule" contains an
accurate and complete list of (a) each "employee benefit plan" (as such
term is defined in Section 3(3) of ERISA at any time contributed to,
maintained or sponsored by the Company, or with respect to which the
Company has any liability or potential liability; and (b) each other
retirement, savings, thrift, deferred compensation, severance, stock
ownership, stock purchase, stock option, performance, bonus, incentive,
vacation or holiday pay, travel, fringe benefit, hospitalization or
other medical, disability, life or other insurance, and any other
welfare benefit policy, trust, understanding or arrangement of any kind,
whether written or oral, contributed to, maintained or sponsored by the
Company for the benefit of any present or former employee, officer or
director of the Company, or with respect to which the Company has any
liability or potential liability. Each such item listed on the Employee
Benefits Schedule is referred to herein as a "Benefit Plan."
(ii) The Employee Benefits Schedule contains an accurate
and complete list of each collective bargaining agreement, each other
agreement, arrangement, commitment, understanding, plan, or policy of
any kind, whether written or oral, with or for the benefit of any
current or former employee, officer or director and each other written
agreement, arrangement, commitment, understanding, plan or policy with
any consultant (including, without limitation, each employment,
compensation, termination or consulting agreement or arrangement). Each
such item listed on the Employee Benefits Schedule is referred to herein
as a "Compensation Commitment."
(iii) Each Benefit Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code and each trust which
forms a part of any such Benefit Plan (a) has received a determination
from the Internal Revenue Service (the "IRS") that such Benefit Plan is
qualified under Section 401(a) of the Code and that such related trust
is exempt from taxation under Section 501(a) of the Code, and nothing
has occurred since the date of such
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20
determination that could adversely affect the qualification of such
Benefit Plan or the exemption from taxation of such related trust; and
(b) is in compliance with the requirements of Sections 401(a)(4) and
410(b) of the Code for each plan year of such Benefit Plan commencing on
or before the Closing Date.
(iv) Except as set forth on the Employee Benefits
Schedule, the Company does not contribute to, maintain, sponsor or have
any liability with respect to any defined benefit "employee pension
benefit plan" (as such term is defined in Section 3(2) of ERISA) that is
subject to Section 302 of ERISA or Section 412 of the Code, and the
Company has not contributed to, maintained or sponsored or has any
liability with respect to any such employee pension benefit plan for any
time during the six-year period immediately preceding the date hereof.
(v) Except as set forth on the Employee Benefits Schedule,
none of the Benefit Plans or Compensation Commitments obligates the
Company to pay any separation, severance, termination or similar benefit
solely as a result of any transaction contemplated by this Agreement or
solely as a result of a change in control or ownership.
(vi) Except as set forth on the Employee Benefits
Schedule, (a) each Benefit Plan and any related trust, insurance
contract or fund has been maintained, funded and administered in
compliance in all material respects with its respective terms and the
terms of any applicable collective bargaining agreements and in
compliance with all applicable laws and regulations, including, but not
limited to, ERISA and the Code; (b) there has been no application for or
waiver of the minimum funding standards imposed by Section 412 of the
Code with respect to any Benefit Plan, and the Seller is not aware of
any facts or
(vii) Except as set forth on the Employee Benefits
Schedule, (a) the Company has complied with the health care continuation
requirements of Part 6 of Title I of ERISA ("COBRA") as applicable; and
(b) the Company has no obligation under any Benefit Plan or otherwise to
provide health benefits to former employees of the Business or any other
person, except as specifically required by COBRA.
(viii) Except as set forth on the Employee Benefits
Schedule, (a) the Company has not incurred any liability on account of a
"partial withdrawal" or a "complete withdrawal" (within the meaning of
Sections 4205 and 4203, respectively, of ERISA) from any Benefit Plan
subject to Title IV of ERISA which is a "multiemployer plan" (as such
term is defined in Section 3(37) of ERISA) (a "Multiemployer Plan"), no
such liability has been asserted, and there are no events or
circumstances which could result in any such partial or complete
withdrawal; and (b) the Company is not bound by any contract or
agreement or has any obligation or liability described in Section 4204
of ERISA.
(ix) Except as set forth on the Employee Benefits
Schedule, the actions contemplated by this Agreement will not give rise
to any liability with respect to any "employee welfare benefit plan" (as
such term is defined in Section 3(1) of ERISA) that is a "multiemployer
plan" (as such term is defined in Section 3(37) of ERISA).
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21
(x) The Company has no liability with respect to any
"employee benefit plan" (as defined in Section 3(3) of ERISA) solely by
reason of being treated as a single employer under Section 414 of the
Code with any trade, business or entity other than the Company and the
Seller.
(xi) With respect to each Benefit Plan and each
Compensation Commitment, the Company has provided Purchaser with true,
complete and correct copies of (to the extent applicable) (a) all
documents pursuant to which the Benefit Plan or Compensation Commitment
is maintained, funded and administered, (b) the most recent annual
report (Form 5500 series) filed with the IRS (with applicable
attachments), (c) the most recent financial statement, (iv) the most
recent actuarial valuation of benefit obligations, and (d) the most
recent determination letter received from the IRS and the most recent
application to the IRS for such determination letter.
(w) Environmental and Safety Matters. Except as set forth on the
attached "Environmental Schedule":
(i) The Company has complied, and is in compliance, in all
material respects, with all Environmental and Safety Requirements.
(ii) The Company has not received any material written or
oral notice, report or other information, aside from such of the
foregoing which have been substantially settled or otherwise resolved,
regarding any actual or alleged material violation of Environmental and
Safety Requirements, or any material liabilities or potentially material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any material investigatory, remedial or corrective
obligations, relating to its past or current business or facilities and
arising under Environmental and Safety Requirements.
(iii) The Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner
that has given or would give rise to material liabilities, including any
material liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, or
any investigative, corrective or remedial obligations, pursuant to
CERCLA or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental and Safety Requirements.
(iv) The Company has not, either expressly or by operation
of law, assumed or undertaken any material liability, including without
limitation any material obligation for corrective or remedial action, of
any other Person arising under Environmental and Safety Requirements.
(v) The Company has provided Purchaser all material
environmental study, assessment, audit and analytical reports in their
possession or under their reasonable
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22
control relating to the past or current properties or facilities of the
Company and all other documents materially bearing on environmental
compliance or liability issues relating to the Company.
(x) Affiliated Transactions. Except as set forth on the attached
"Affiliated Transactions Schedule," no officer, director, employee or
other Affiliate of the Company, or any individual related by blood,
marriage or adoption to any such individual or entity in which any such
Person or individual owns any beneficial interest, is a party to any
agree ment, contract, commitment or transaction with the Company or has
any material interest in any material property used by the Company.
(y) Customers and Suppliers. The Company has not received any
notice that any material customer or supplier intends to terminate or
materially reduce its business with the Company and no material customer
or supplier has terminated or materially reduced its business with the
Company in the last twelve (12) months.
(z) Undisclosed Liabilities. Except as set forth on the attached
"Liabilities Schedule," the Company does not have any material
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company, whether
due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the date hereof, or any action
or inaction at or prior to the date hereof, or any state of facts
existing at or prior to the date hereof other than: (i) liabilities set
forth on the Latest Balance Sheet (including any notes thereto) and (ii)
liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business (none of which
is a liability resulting from breach of contract, breach of warranty,
tort, infringement, claim or lawsuit and all of which will be reflected
on the Closing Balance Sheet).
(aa) Disclosure. Except for the representations and warranties
contained in this Agreement and in any schedule, exhibit or other
written material delivered in connection with this Agreement, the
Sellers have not made any representation or warranty concerning the
Company in connection with the transactions contemplated by this
Agreement (including, without limitation, any oral representations or
warranties or any representation or warranty regarding any financial
projections heretofore delivered to Purchaser).
3.2 Representations and Warranties of Sellers. As a material
inducement to Purchaser to enter into this Agreement and acquire the Company
Stock hereunder, Sellers hereby, jointly and severally, represent and warrant to
Purchaser that:
(a) Authority and Power. Each Seller has the authority and power
to enter into this Agreement and carry out the transactions contemplated
hereby. This Agreement and the other agreements contemplated hereby to
which the Sellers are party have been (or will be) duly executed and
delivered by the Sellers.
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23
(b) No Breach. This Agreement and each of the other documents,
instruments or agreements delivered hereunder to which any Seller is a
party each constitutes a valid and binding obligation of such Seller,
enforceable in accordance with its terms. The execution and delivery by
any Seller of this Agreement and all other agreements, documents or
instruments contemplated hereby to which such Seller is a party, the
sale of the Company Stock hereunder, and the fulfillment of and
compliance with the respective terms hereof and thereof by such Seller,
do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in the creation of any Lien upon such Seller's assets
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi)
require any authorization, consent, approval, exemption or other action
by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, or any law,
statute, rule or regulation to which such Seller is subject, or any
agreement, instrument, order, judgment or decree to which such Seller is
subject.
(c) Title to Company Stock. Each Seller owns beneficially and of
record and has good and marketable title to one-half of the issued and
outstanding shares of the Company Stock. Upon consummation of the
transactions contemplated herein, Purchaser shall own good and
marketable title to all of the Company Stock, which will constitute all
of the outstanding equity securities of the Company, free and clear of
all Liens, options, proxies, voting trusts or other agreements,
applicable federal and state securities law restrictions and any other
restrictions whatsoever created or suffered to exist by Sellers. Upon
consummation of the transactions contemplated herein, the Company shall
not have outstanding any stock or securities convertible or exchangeable
for any of its Company Stock or containing any profit participation
features, nor shall it have outstanding any rights or options to
subscribe for or to purchase the Company Stock (other than pursuant to
this Agreement) or any stock or securities convertible into or
exchangeable for Company Stock or any stock appreciation rights or
phantom stock plans.
(d) Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement binding upon Sellers.
(e) Litigation. There are no actions, suits or proceedings
pending or, to Sellers' knowledge, threatened against any Seller, at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic of foreign, which if determined adversely to
such Seller would have a Material Adverse Effect.
(f) Compliance with Laws. With respect to matters affecting the
Company, each Seller is in compliance with all applicable laws and
regulations of foreign, federal, state and local governments and all
agencies thereof.
(g) Company Transactions. No Seller is a party to or bound by any
agreement with respect to a Company Transaction other than this
Agreement.
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24
3.3 Representations and Warranties of Purchaser. As a material
inducement to Sellers and the Company to execute this Agreement and consummate
the transactions contemplated hereby, Purchaser hereby represents and warrants
to Sellers and the Company that:
(a) Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser is qualified to conduct business in each
other jurisdiction wherein the nature of its business or ownership of
property requires it to be so qualified except where failure to so
qualify would not materially adversely effect the assets, business,
operations or financial condition of Purchaser.
(b) Authorization of Transaction. Purchaser has the power and
authority to execute and deliver this Agreement and the other agreements
contemplated hereby to which it is a party and to perform its
obligations hereunder and thereunder. This Agreement and the other
agreements contemplated hereby to which Purchaser is a party have been
duly executed and delivered by Purchaser and constitute the valid and
legally binding obligations of Purchaser, enforceable against Purchaser
in accordance with their respective terms.
(c) Noncontravention. The consummation of the transactions
contemplated hereby will not (i) violate any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which
Purchaser is subject or any provision of the Operating Agreement of
Limited Liability Company of Purchaser or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any contract, lease, sublease,
license, sublicense, fran chise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Lien, or other
arrangement to which Purchaser or any of its Affiliates is a party or by
which any of them is bound or to which any of their assets is subject.
(d) Governmental Consent. Purchaser is not required to give any
notice to, make any material declaration to or registration or filing
with, or to obtain any material permit, license, consent, accreditation,
exemption, approval or authorization from, any governmental or
regulatory authority in connection with the execution, delivery or
performance of this Agreement or the consummation of any of the
transactions contemplated hereby.
(e) Brokers' Fees. Purchaser has no Liability to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Sellers could
become liable or obligated.
(f) Investment Purposes. Purchaser is aware that the shares of
the Company Stock delivered to Purchaser hereunder have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), or under applicable state securities laws. Purchaser is
purchasing the Company Stock for its own account for investment and not
with a view to or for sale in connection with any distribution in
violation of the Securities Act. By virtue
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of Purchaser's acumen, knowledge and business experience, Purchaser is
capable of understanding and evaluating the risks, hazards and merits of
purchasing the Company Stock.
ARTICLE 4 - ADDITIONAL AGREEMENTS
4.1 Post-Closing Assistance. In case at any time after the date
hereof any further action is necessary or desirable to carry out the purposes of
this Agreement and to effect, consummate, confirm or evidence the consummation
of the transactions contemplated hereby (including, without limitation, with
respect to the sales into, printing and publication of each of the Future
Editions), each of the Parties will take such further action (including, without
limitation, the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, at the sole cost and
expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 4.3).
4.2 Confidentiality.
(a) Information Concerning the Parties. Each Seller shall keep
confidential all information regarding the Directories or Purchaser's
businesses which is or has been furnished to Seller or his
representatives, employees, advisors or Affiliates; provided that the
foregoing restriction shall not apply to any information which (i)
becomes generally available to the public other than as a result of any
breach of this Section 4.2(a) or (ii) becomes available to Sellers on a
non-confidential basis from a source other than the Party to which the
information relates (provided that such source is not bound by a legal
or fiduciary obligation or secrecy with or the Party to which the
information relates).
(b) Notice of Compulsory Disclosure. In the event any Seller is
required to disclose any confidential information pursuant to applicable
law, such Seller shall promptly notify Purchaser in writing, which
notification shall include the nature of the legal requirement and the
extent of the required disclosure, and shall cooperate with to preserve
the confidentiality of such information consistent with applicable law.
(c) Non-Competition.
(i) As a material inducement to Purchaser to enter into
and perform its obligations under this Agreement, for the
five-year period commencing with the date hereof, neither Seller
will, directly or indirectly, either for himself or herself or
for or on behalf of any partnership, individual, corporation,
joint venture or any other entity participate in any business
(including, without limitation, any division, group or franchise
of a larger organization) which engages in or proposes to engage
in the promotion, sale, distribution, production or printing of
telephone directory "yellow pages" or similar products or related
services in any area within the 50-mile radius surrounding
locations covered by any yellow page directory published by
Purchaser (including the Directories) in Michigan or Ohio. For
purposes of this Agreement, the term "participate in" shall
include, without limitation, having any direct or indirect
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26
interest in any corporation, partnership, joint venture or other
entity, whether as a sole proprietor, owner, shareholder,
partner, joint venturer, creditor or otherwise, or rendering any
direct or indirect service or assistance to any individual
corporation, partnership, joint venture and other business entity
(whether as a director, officer, manager, supervisor, employee,
agent, consultant or otherwise).
(ii) Each Seller agrees that Purchaser would suffer
irreparable harm from a breach by such Seller or any of such
Seller's representatives of any of the covenants or agreements
contained in Section 4.2. In the event of an alleged or
threatened breach by any Seller or any of such Seller's
representatives of any of the provisions of this Section 4.2,
Purchaser or its successors or assigns may, in addition to all
other rights and remedies existing in its favor, apply to any
court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof equal to the length of the
violation of this Section 4.2(c).
(iii) If, at the time of enforcement of this Section 4.2,
a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing,
the Parties agree that the maximum duration, scope or area
reasonable under such circumstances shall be substituted for the
stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the
maximum period, scope and area permitted by law. Seller agrees
that the restrictions contained in this Subsection 4.2(c) are
reasonable.
(iv) Each Party agrees that the covenants made in this
Section 4.2 shall be construed as an agreement independent of any
other provision of this Agreement and shall survive any order of
a court of competent jurisdiction terminating any other provision
of this Agreement.
4.3 Indemnification.
(a) In addition to all rights and remedies available to Purchaser
at law or in equity, Seller shall indemnify Purchaser, its Affiliates,
members, managers, officers, employees, agents, representatives,
permitted successors and assigns (collectively, the "Purchaser
Indemnitees") in respect of, and save and hold each Purchaser Indemnitee
harmless against, and pay on behalf of or reimburse each Purchaser
Indemnitee for, as and when incurred at any time after the date hereof,
any Loss which any such Purchaser Indemnitee may suffer, sustain or
become subject to, as a result of, in connection with, relating or
incidental to or by virtue of (i) subject to the limitations set forth
in Section 4.5(a), any breach of any representation or warranty made by
any Seller in this Agreement or any facts or circumstances constituting
such a breach or (ii) any breach of any covenant or agreement by any
Seller contained in this Agreement or any other agreement delivered
pursuant hereto; provided that Sellers' liability hereunder with respect
to Losses arising out of Section 4.3(a)(i) (other than as a result of
any breach of Sections 3.1(a), (b), (q), (r) and (v) and Sections 3.2(a)
and (c) (collectively, the "Unlimited Warranties") (i) Sellers'
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aggregate liability shall not exceed the Escrow Amount, as may be
reduced pursuant to the terms of the Escrow Agreement and (ii) Sellers
shall have no liability until and then, to the extent that, such Losses
exceed $5,000 in the aggregate.
(b) In addition to all rights and remedies available to Sellers
at law or in equity, Purchaser shall indemnify Sellers in respect of,
and save and hold them harmless from and against, and pay on behalf of
or reimburse Sellers for, as and when incurred at any time after the
Closing, any Loss which Sellers may suffer, sustain or become subject
to, as the result of, in connection with, relating to or incidental to
or by virtue of the breach by Purchaser of any representation, warranty,
covenant or agreement made by Purchaser contained in this Agreement or
the ownership and operation of the Directories by Purchaser after the
date hereof.
(c) If a party hereto seeks indemnification under this Section
4.3, such Party (the "Indemnified Party") shall give written notice to
the other Party (the "Indemnifying Party") of the facts and
circumstances giving rise to the claim. In that regard, if any suit,
action, claim, liability or obligation (a "Proceeding") shall be brought
or asserted by any third party which, if adversely determined, would
entitle the Indemnified Party to indemnity pursuant to this Section 4.3,
the Indemnified Party shall within thirty (30) days notify the
Indemnifying Party of the same in writing, specifying in detail the
basis of such claim and the facts pertaining thereto; provided, that the
failure to so notify an Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent
such failure shall have harmed the Indemnifying Party. The Indemnifying
Party, if it so elects, shall assume and control the defense of such
Proceeding (and shall consult with the Indemnified Party with respect
thereto), including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of expenses; provided however,
that in the event any Proceeding shall be brought or asserted by any
third party which, if adversely determined, would not entitle the
Indemnified Party to full Indemnity pursuant to Section 4.3, the
Indemnified Party may elect to participate in a joint defense of such
Proceeding (a "Joint Defense Proceeding") for which the expenses of such
joint defense will be shared equally by such parties and the employment
of counsel shall be reasonably satisfactory to both parties. If the
Indemnifying Party elects to assume and control the defense of a
Proceeding, it will provide notice thereof within thirty (30) days after
the Indemnified Party has given notice of the matter and if such
Proceeding is not a Joint Defense Proceeding, the Indemnified Party
shall have the right to employ counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel employed by
the Indemnified Party shall be at the expense of the Indemnified Party
unless (i) the employment thereof has been specifically authorized by
the Indemnifying Party in writing or (ii) the Indemnifying Party has
failed to assume the defense and employ counsel. The Indemnifying Party
shall not be liable for any settlement of any Proceeding, the defense of
which it has elected to assume, which settlement is effected without the
written consent of the Indemnifying Party; provided that no settlement
of a Joint Defense Proceeding may be effected without the written
consent of both parties. If there shall be a settlement to which the
Indemnifying Party consents or a final judgment for the plaintiff in any
Proceeding, the defense of which the Indemnifying Party has elected to
assume, the
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Indemnifying Party shall indemnify the Indemnified Party with respect to
the settlement or judgment. If the Indemnifying Party elects to assume
and control the defense or in the event of a Joint Defense Proceeding,
the Indemnified Party shall take all reasonable efforts necessary to
assist the Indemnifying Party in such defense.
(d) The Indemnifying Party shall pay the Indemnified Party in
immediately available funds promptly after the Indemnified Party
provides the Indemnifying Party with written notice of any Loss incurred
by the Indemnified Party hereunder but in any event not later than
thirty (30) days after Indemnifying Party received notice of a Loss.
(e) Purchaser's sole and exclusive remedy against Seller with
respect to Losses arising out of any breach of the representations and
warranties set forth in Sections 3.1 and 3.2 (other than the Unlimited
Warranties) shall be recourse, pursuant to Section 4.4, against the
Escrow Amount.
4.4 Arbitration.
(a) The arbitration procedure set forth below shall be the sole
and exclusive method for resolving and remedying claims for money
damages arising out of the provisions of Section 4.3 (the "Disputes"),
provided that, nothing in this Section 4.4 shall prohibit a party hereto
from instituting litigation to enforce any Final Determination or
availing itself of the remedies set forth in Section 4.2(c). The Parties
hereby agree and acknowledge that, except as otherwise provided in this
Section 4.4 or in the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time, the arbitration
procedures and any Final Determination hereunder shall be governed by,
and shall be enforced pursuant to the Uniform Arbitration Act and
applicable provisions of Michigan law.
(b) In the event that any Party asserts that there exists a
Dispute, such Party shall deliver a written notice to each other Party
involved therein specifying the nature of the asserted Dispute and
requesting a meeting to attempt to resolve the same. If no such
resolution is reached within fifteen business days after such delivery
of such notice, the Party delivering such notice of Dispute (the
"Disputing Person") may, within 45 business days after delivery of such
notice, commence arbitration hereunder by delivering to each other Party
involved therein a notice of arbitration (a "Notice of Arbitration") and
by filing a copy of such Notice of Arbitration with the Detroit,
Michigan office of the American Arbitration Association. Such Notice of
Arbitration shall specify the matters as to which arbitration is sought,
the nature of any Dispute, the claims of each Party to the arbitration
and shall specify the amount and nature of any damages, if any, sought
to be recovered as a result of any alleged claim, and any other matters
required by the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time to be included therein, if
any.
(c) Sellers and Purchaser shall agree upon one independent
arbitrator expert in the subject matter of the Dispute. If Sellers and
Purchaser are unable to agree on an arbitrator within 20 days after
their selection, Sellers and Purchaser shall each prepare a list
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of three independent arbitrators. Sellers and Purchaser shall each have
the opportunity to designate as objectionable and eliminate one
arbitrator from the other arbitrator's list within 7 days after
submission thereof, and the arbitrator shall then be selected by lot
from the arbitrators remaining on the lists submitted by Sellers and
Purchaser.
(d) The arbitrator selected pursuant to clause (c) will determine
the allocation of the costs and expenses of arbitration based upon the
percentage which the portion of the contested amount not awarded to each
Party bears to the amount actually contested by such Party. For example,
if Purchaser submits a claim for $1,000, and if Seller contests only
$500 of the amount claimed by Purchaser, and if the arbitrator(s)
ultimately resolves the dispute by awarding Purchaser $300 of the $500
contested, then the costs and expenses of arbitration will be allocated
60% (i.e. 300 / 500) to Seller and 40% (i.e. 200 / 500) to Purchaser.
(e) The arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association as in effect
from time to time, except as otherwise set forth herein or as modified
by the agreement of all of the parties to this Agreement. The
arbitrator(s) shall so conduct the arbitration that a final result,
determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no
event later than 90 business days after the delivery of the Notice of
Arbitration nor later than 10 days following completion of the
arbitration. The Final Determination must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as the
case may be). The Final Determination shall be final and binding on all
parties and there shall be no appeal from or reexamination of the Final
Determination, except for fraud, perjury, evident partiality or
misconduct by an arbitrator prejudicing the rights of any Party and to
correct manifest clerical errors.
(f) Purchaser and Seller may enforce any Final Determination in
any state or federal court having jurisdiction over the dispute. For the
purpose of any action or proceeding instituted with respect to any Final
Determination, each Party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of
process by registered mail or personal service and hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it
may have or hereafter have as to personal jurisdiction, the laying of
the venue of any such action or proceeding brought in any such court and
any claim that any such action or proceeding brought in such court has
been brought in an inconvenient forum.
(g) If any Party shall fail to pay the amount of any damages, if
any, assessed against it within ten (10) days of the delivery to such
Party of such Final Determination, the unpaid amount shall bear interest
from the date of such delivery at the lesser of (i) the prime rate of
interest announced by Key Bank, N.A., in effect from time to time (which
rate shall be adjusted on the effective date of each change in such
prime rate) plus 3.00% and (ii) the maximum rate permitted by applicable
usury laws. Interest on any such unpaid amount shall be compounded
semi-annually, computed on the basis of a 360-day year consisting of
twelve 30-day months and shall be payable on demand. In addition, such
Party shall promptly reimburse the other Party for any and all costs or
expenses of any nature or kind whatsoever
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(including but not limited to all attorneys' fees) incurred in seeking
to collect such damages or to enforce any Final Determination.
4.5 Tax Matters. Sellers and Purchasers shall provide each other
with such cooperation and information as either of them reasonably may request
of the other in filing any tax return, amended return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in conducting
any audit or other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of all relevant Tax returns, together
with accompanying schedules and related workpapers, documents relating to
rulings or other determinations by taxing authorities and records concerning the
ownership and tax basis of property, which either party may possess. Upon
reasonable notice from the Sellers, Purchaser shall cause the Company to make
its employees available on a mutually convenient basis to provide explanation of
any documents or information provided hereunder. Notwithstanding the foregoing,
neither party shall be required to prepare any documents, or determine any
information not then in its possession, in response to a request under this
Section. Except as otherwise provided in this Agreement, the party requesting
assistance hereunder shall reimburse the other for any reasonable out-of-pocket
costs incurred in providing any return, document or other written information,
and shall compensate the other for any reasonable costs (excluding wages and
salaries) of making employees available, upon receipt of reasonable
documentation of such costs. Purchaser will retain all returns, schedules and
workpapers and all material records or other documents relating thereto, until
the expiration of the statute of limitations (including extensions) of the
taxable years to which such returns and other documents relate and, unless such
returns and other documents are offered to the other party, until the final
determination of any payments which may be required in respect of such years
under this Agreement. Any information obtained under this Section shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of returns or claims for refund or in conducting any audit or other proceeding.
Sellers will have the right to control any response to any audit or litigation
with respect to Taxes for which they are obliged to indemnify Purchaser as an
Unlimited Warranty under this Agreement; provided that Sellers will not enter
into any compromise or settlement with respect to such Taxes without Purchaser's
prior consent (which consent shall not be unreasonably withheld).
4.6 Miscellaneous.
(a) Representations and Warranties. Subject to Section 4.3(e),
all of the representations and warranties made by Purchaser in this
Agreement and all of the representations and warranties made hereunder
by the Parties (other than the Unlimited Warranties) shall survive the
execution and delivery of this Agreement and consummation of the
transactions contemplated hereby, regardless of any investigation made
by any Party or on its behalf through the one-year anniversary of the
date hereof. Neither Party's participation in the consummation of any
transaction pursuant to this Agreement (or any agreement contemplated
hereby) nor any waiver of any condition to such participation (including
any condition that a representation or warranty of any other Party be
true and correct) will constitute a waiver by such participating Party
of any representation or warranty of any Party or otherwise affect the
survival of any such representation and warranty which shall continue in
full force and effect after the Closing.
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(b) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties
and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, that may have related in any
way to the subject matter hereof (including the letter agreement by
Purchaser to Sellers dated June 4, 1998).
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Parties hereto.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given (i) when delivered, if personally delivered, (ii) when receipt is
electronically confirmed, if faxed (with hard copy to follow via first
class mail, postage prepaid) or (iii) one day after deposit with a
reputable overnight courier, in each case addressed to the intended
recipient as set forth below:
If to Seller: with a copy (which shall not constitute
notice) to:
Dale Engberson
676 Stonecrest Drive Dykema Gossett PLLC
Adrian, MI 49221 315 East Eisenhower Parkway
Suite 100
Ann Arbor, MI 48101
Attn: Jeffrey Lipshaw
Telecopy #: (734) 214-7696
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If to Purchaser: with a copy (which shall not constitute
notice) to:
TransWestern Publishing
Company LLC
8328 Clairemont Mesa Blvd. Kirkland & Ellis
San Diego, CA 92111 200 East Randolph Drive
Attn: Joan Fiorito Chicago, IL 60601
Chief Financial Officer Attn: Wendy L. Chronister
Telecopy #: (619) 292-4125 Telecopy #: (312) 861-2200
Any Party may change the address and/or telecopier number to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Party notice in the manner herein set forth.
(H) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF MICHIGAN,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION
OR RULE (WHETHER OF THE STATE OF MICHIGAN OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF MICHIGAN.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed
by each Party. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that
any term or provision hereof is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or
area of the term or provision, to delete specific words or phrases, or
to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
(k) Expenses. Except as otherwise specifically provided herein,
Sellers and Purchaser each will bear their own costs and expenses
(including legal and broker fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
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(l) Taxes; Recording Charges. All transfer, documentary, sales,
use, stamp, registration, conveyance, income, gains, value added or
other Taxes and fees arising out of the sale of the Company Stock or
otherwise incurred in connection with this Agreement or the consummation
of the transactions contemplated hereby shall be paid by Sellers when
due and will not be paid with the assets of the Company. Sellers will,
at their own expense, file all necessary Tax Returns and other
documentation in connection with the Taxes and fees encompassed in this
Section 4.5(l).
(m) Construction. The Parties have jointly participated in the
negotiation and drafting of this Agreement. In the event of an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumptions or
burdens of proof shall arise favoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to
any federal, state, local, or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(o) Number and Gender. Each defined term used in this Agreement
has a comparable meaning when used in its plural or singular form. Each
gender-specific term used herein has a comparable meaning whether used
in a masculine, feminine or gender- neutral form.
* * * * *
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34
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
TRANSWESTERN PUBLISHING COMPANY LLC
By: TransWestern Communication Inc.,
its Manager
By: /s/ RICARDO PUENTE
--------------------------------
Its: President and CEO
TARGET DIRECTORIES OF MICHIGAN, INC.
/s/ DALE ENGBERSON
-------------------------------------
Dale Engberson
President
/s/ DALE ENGBERSON
-------------------------------------
Dale Engberson
/s/ RHONDA L. ENGBERSON
-------------------------------------
Rhonda L. Engberson
(Signature Page to Stock Purchase Agreement)