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EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
(COUNTRY SAMPLER PUBLICATIONS)
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of February 23,
1999, by and among COUNTRY SAMPLER, INC., an Illinois corporation ("Seller"),
MARK A. NICKEL, an Illinois resident ("Owner") and EMMIS PUBLISHING, L.P., an
Indiana limited partnership ("Buyer").
RECITALS:
1. Seller owns, produces, publishes, sells, and offers for
distribution Country Sampler, Country Sampler Decorating Ideas, Decorating Ideas
Special Interest Publications, Country Sampler's Country Business, Country
Sampler Group Connections, and Country Sampler on the Web (together, the
"Publications").
2. Buyer desires to acquire substantially all the assets used or
useful in the business and operation of each of the Publications, and certain
ancillary businesses, and Seller is willing to convey such assets to Buyer, all
pursuant to the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller, Owner and Buyer hereby agree as follows:
ARTICLE I
TERMINOLOGY
1.1 Defined Terms. As used herein, the following terms shall have
the meanings indicated:
Affiliate: With respect to any specified person or entity, another person
or entity which, or a member of an immediate family which, directly or
indirectly controls, is controlled by, or is under common control with, the
specified person or entity.
Consulting Agreement: The Consulting Agreement to be entered into by and
between Buyer and Owner on the Closing Date, the form of which is attached as
Exhibit A.
Benefit Plans: With respect to Seller or any employee or former employee
of Seller or the beneficiaries or dependents of such employee or former
employee, all compensation or benefit plans, policies, practices, arrangements
and agreements which are or have been established or maintained or to which
contributions have been made by Seller or by any other trade or business,
whether or not incorporated, which is or has been treated as a single employer
together with Seller under Section 414 of the Code (such other trades and
businesses referred to collectively as the "Related Persons") or
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to which Seller or any Related Person is or has been obligated to contribute
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, employment, retention, change of control, severance,
stock option or other equity based, bonus, incentive compensation, deferred
compensation, retirement, fringe benefit and welfare plans, policies, practices,
arrangements and agreements.
Business: The business of owning, producing, publishing, selling and
offering for distribution the Publications, as well as the ownership and
operation of all the related ancillary businesses of Seller (other than Seller's
equity interest in The Country Sampler Store, L.L.C.).
Code: The Internal Revenue Code of 1986, as amended.
Documents: This Agreement and all Exhibits if any and Schedules hereto,
and each other agreement, certificate or instrument delivered pursuant to or in
connection with this Agreement.
HSR Act: The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Lien: Any mortgage, deed of trust, pledge, hypothecation, title defect,
right of first refusal, security or other adverse interest, encumbrance, claim,
option, lien, lease or charge of any kind, whether voluntarily incurred or
arising by operation of law or otherwise, affecting any assets or property,
including any written or oral agreement to give or grant any of the foregoing,
any conditional sale or other title retention agreement, and the filing of or
agreement to give any financing statement with respect to any assets or property
under the Uniform Commercial Code or comparable law of any jurisdiction.
Loss: With respect to any person or entity, any and all costs,
obligations, liabilities, demands, claims, settlement payments, awards,
judgments, fines, penalties, damages and reasonable out-of-pocket expenses,
including court costs and reasonable attorneys' fees, whether or not arising out
of a third party claim.
Material Adverse Condition: A condition which would restrict, limit,
increase the cost or burden of or otherwise adversely affect or impair in any
material respect the right of Buyer to the ownership, use, control, enjoyment or
operation of the Business or the proceeds therefrom.
Material Adverse Effect: A material adverse effect on the assets,
business, operations, financial condition or results of operations of (i) the
Business or (ii) Seller.
Office Building: All of Seller's right, title and interest in the real
property and all improvements thereon at 707 Kautz Road, Saint Charles,
Illinois.
Permitted Lien: Any statutory lien which secures a payment not yet due
that arises, and is customarily discharged, in the ordinary course of Seller's
business; or any other imperfections in Seller's title to any of its assets or
properties that, individually and
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in the aggregate, are not material in character or amount and do not and could
not reasonably be expected to impair the value or interfere with the use of any
of the Sale Assets.
Seller's Knowledge: Actual knowledge, after reasonable investigation, of
Mark A. Nickel, Margaret Kernan, Stephen Borst, or John Dziewiatkowski.
Taxes: All federal, state, local and foreign taxes including, without
limitation, income, unemployment, withholding, payroll, social security, real
property, personal property, excise, sales, use and franchise taxes, levies,
assessments, imposts, duties, licenses and registration fees and charges of any
nature whatsoever, including interest, penalties and additions with respect
thereto and any interest in respect of such additions or penalties.
Tax Return: Any return, filing, report, declaration, questionnaire or
other document required to be filed for any period with any taxing authority
(whether domestic or foreign) in connection with any Taxes (whether or not
payment is required to be made with respect to such document).
1.2 Additional Defined Terms. As used herein, the following terms
shall have the meanings defined in the introduction, recitals or section
indicated below:
Acquisition Proposal Section 5.11
Adjustment Amount Section 2.6(a)
Arbitrating Firm Section 2.6(e)
Assumed Obligations Section 2.3(a)
Business Agreements Section 2.1(f)
Buyer's Trade Credit Section 2.6(b)(ii)
Closing Section 8.1
Closing Date Section 8.1
Effective Time Section 8.1
Excluded Assets Section 2.2
Indemnified Party Section 10.4(a)
Indemnifying Party Section 10.4(a)
Initial Adjusted Purchase Price Section 2.4
Intellectual Property Section 2.1(a)
Interim Balance Sheet Section 3.12(a)(iii)
License Agreement Section 12.7(b)
Other Permitted Exceptions Section 6.4.1
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Permitted Tax Lien Section 6.4.1
Preliminary Adjustment Report Section 2.6(d)
Publications Recitals
Purchase Price Section 2.4
Real Property Section 2.1(b)
Sale Assets Section 2.1
Seller's Trade Credit Section 2.6(b)(ii)
Standard Exceptions Section 6.4.1
Survey Section 6.4.2
Survival Period Section 10.1
Tangible Personal Property Section 2.1(c)
Title Commitment Section 6.4.1
Title Insurance Company Section 6.4.1
Trade Agreements Section 2.1(j)
ARTICLE II
PURCHASE AND SALE
2.1 Sale Assets. Upon and subject to the terms and conditions
provided herein, on the Closing Date, Seller will sell, transfer, assign and
convey to Buyer, and Buyer will purchase from Seller, all of Seller's right,
title and interest, legal and equitable, in and to all tangible and intangible
assets (except Excluded Assets) used or useful in the operation of the Business
as it has been and is now operated (the "Sale Assets"), including the following:
(a) Intellectual Property. All trade names, trademarks,
service marks, symbols, logos, copyrights, publishing rights, domain names,
websites, and any other proprietary material or trade right used in the
operation of the Business, all goodwill associated therewith, and all state and
federal registrations, applications and licenses for any of the foregoing,
including, without limitation, the trademarks and registrations listed in
Schedule 2.1(a) (the "Intellectual Property").
(b) Real Property. The Office Building (the legal description of
which is listed in Schedule 3.10) and all fixtures and improvements thereon,
together with such additional improvements and interests in real estate made or
acquired between the date hereof and the Closing Date (the "Real Property").
(c) Tangible Personal Property. All computers and office and
other equipment, furniture, fixtures, library and research materials, all copies
of past or current issues of any Publication now in the possession of or owned
by the Seller and other tangible personal property owned by Seller and used in
the operation of the Business as it has been and is now operated, including, but
not limited to, the items listed in Schedule 2.1(c) (the "Tangible Personal
Property").
(d) Inventory. All inventories, supplies, computer software (to
he extent of Seller's interests therein) and materials of any kind, including
without limitation all work in process (to the extent of Seller's interests
therein) on any issue of any Publication, photographs, layouts, advertising
materials, paper, film, stripped material, pre-press materials or transparencies
produced or designed for any past, present, or future issue of any Publication.
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(e) Business Records. The originals or true and complete copies
of all circulation records and other sales and distribution records and
documents, books, files, logs, and other business records or documents,
including but not limited to copies of current and expired advertising
contracts, in whatever existing form or format.
(f) Business Agreements. The agreements (other than trade or
barter), if any, relating principally to the operation of the Business
(including advertising contracts and personal property leases) if, and only if,
listed in Schedule 2.1(f) and the License Agreement (the "Business Agreements").
(g) Accounts Receivable. All accounts receivable relating to
subscriptions (i.e., unpaid subscriptions) to any Publication, all accounts
receivable relating to advertising (i.e., unpaid advertising) published in any
Publication, receivables related to Trade Agreements (as hereinafter defined),
and other receivables of any Publication such as newsstand receivables
(collectively, the "Accounts Receivable").
(h) Subscription Records. The current complete paid
subscription list, complimentary subscription list, and a list of all available
past subscribers (as maintained by or on behalf of Seller), including in each
case the subscriber's name, address, payment status and renewal date, and all
other relevant subscription information such as carrier routes, gift codes,
tracking codes, source codes, all other information relating to subscription
records, and all physical subscription records, including subscription cards,
telephone orders and any other physical subscription record documents, in
whatever existing form or format.
(i) Prepaid Expenses. Any and all rights to prepaid expenses of
Seller relating to items used in the operation of the Business.
(j) Trade or Barter Agreements. Trade or barter agreements
relating to the operation of any Publication if, and only if, listed in Schedule
2.1(j) (the "Trade Agreements").
(k) Miscellaneous Assets: Any other tangible or intangible
assets, properties or rights of any kind or nature not otherwise described above
in this Section 2.1 and now or hereafter owned or used by Seller in connection
with the operation of the Business, including but not limited to all goodwill of
the Business.
2.2 Excluded Assets. Notwithstanding any provision of this
Agreement to the contrary, Seller shall not transfer, convey or assign to Buyer,
but shall retain all of its right, title and interest in and to, the following
assets owned or held by it on the Closing Date (the "Excluded Assets"):
(a) Any and all cash, bank deposits and other cash equivalents,
cash deposits to secure contract obligations (except to the extent Seller
receives a credit therefor under Section 2.6, which excepted deposits are set
forth in the List of Deposits set forth in Schedule 2.2(a));
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(b) Any and all claims of Seller with respect to transactions
occurring or other matters arising prior to the Closing Date including, without
limitation, claims for tax refunds;
(c) A note owing to Seller from the Country Sampler Store,
L.L.C.;
(d) All Benefit Plans and collective bargaining agreements;
(e) All employment agreements;
(f) All policies of insurance owned by Seller;
(g) All tangible personal property disposed of or consumed
between the date hereof and the Closing Date in accordance with the terms and
provisions of this Agreement;
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Business, in which case Seller
shall deliver true and accurate copies thereof to Buyer;
(i) Seller's equity interest in The Country Sampler Store,
L.L.C.; and
(j) Those assets specifically listed in Schedule 2.2(j).
2.3 Assumption of Liabilities.
(a) At the Closing, Buyer shall assume and agree to perform,
without duplication, the following liabilities and obligations of Seller (the
"Assumed Obligations"):
(i) The obligations of Seller arising under the Business
Agreements listed in Schedule 2.1(f) that are transferred to Buyer at Closing in
accordance with this Agreement, but only to the extent such obligations relate
to any period from and after the Closing Date.
(ii) The obligations of Seller to be performed on or after
the Closing Date under subscription agreements for any Publication in effect as
of the Closing Date.
(iii) The obligations of Seller to provide advertising in
any Publication after Closing under the Trade Agreements transferred to Buyer in
accordance with this Agreement.
(iv) Provided that Seller pays Buyer the amount, if any,
owed by Seller after Closing under Section 2.6, the Assumed Obligations shall
also include such other liabilities of Seller to the extent, and only to the
extent, the amount thereof is included as a credit to Buyer in calculating the
Adjustment Amount as ultimately determined pursuant to Section 2.6.
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(b) The Assumed Obligations shall in no event include any
liability or obligation arising (i) from the assignment to Buyer of any Business
Agreement in violation of its terms or (ii) from any other breach or default by
Seller upon or prior to Closing under any Business Agreement.
(c) Except for the Assumed Obligations, Buyer shall not assume
or in any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, all of which Seller shall pay, discharge and
perform when due.
2.4 Purchase Price. The purchase price ("Purchase Price") shall
equal the sum (i) Sixteen Million Five Hundred Thousand ($16,500,000.00) in
consideration of the Sale Assets other than the Real Property, and One Million
Five Hundred Thousand Dollars ($1,500,000.00) in consideration of the purchase
of the Real Property, all subject to adjustment as provided in Section 2.6 (as
adjusted, the "Initial Adjusted Purchase Price"), plus (ii) Five Hundred
Thousand Dollars ($500,000.00) to be paid by the six-month anniversary of the
Closing Date as a holdback on the Purchase Price (the "Holdback"). The Initial
Adjusted Purchase Price shall be paid by Buyer to Seller at Closing by wire
transfer of immediately available funds. Seller shall furnish Buyer wire
instructions at least three (3) business days prior to the Closing Date. The
Holdback, subject to offset as provided in Section 2.6(g) and Article X, shall
be paid by Buyer to Seller by the six-month anniversary of the Closing Date by
wire transfer of immediately available funds.
2.5 Allocation of the Purchase Price. Seller and Buyer shall use
good faith efforts to agree, prior to Closing, upon an allocation of the
Purchase Price among the Sale Assets which, if agreed, will be incorporated in a
schedule to be executed by the parties prior to or at Closing. Buyer and Seller
each agree to report such allocation, if agreed upon, to the Internal Revenue
Service in the form required by Treasury Regulation 1.1060-IT and to use such
allocation for all other reporting purposes in connection with federal, state
and local income and, to the extent permitted under applicable law, franchise
taxes.
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2.6 Adjustment of Purchase Price.
(a) All operating income and operating expenses of the Business
shall be adjusted and allocated between Seller and Buyer, and an adjustment in
the Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to any issue of the Publications prior to and including the Cut-Off
issues shall be attributable to Seller, and all income and expenses attributable
to the Publications subsequent to the Cut-Off issues shall be attributable to
the Buyer, provided further that any such income and expenses which cannot be
attributed to a specific issue of any Publication shall be allocated to reflect
the principle that all such all such income and expenses attributable to the
operation of the Business on or before the date preceding the Closing Date shall
be for the account of Seller, and all such income and expenses attributable to
the operation of the Business on and after the Closing Date shall be for the
account of Buyer. A list of Cut-Off issues for each Publication is set forth in
Schedule 2.6(a). The net amount by which the Purchase Price is to be increased
or decreased in accordance with this Section is herein referred to as the
"Adjustment Amount".
(b) Without limiting the generality of the foregoing:
(i) Seller shall receive a credit for the unapplied
portion, as of the Closing Date, of the security deposits made by Seller
under those Business Agreements assumed by Buyer at Closing in accordance
with Section 2.3.
(ii) Buyer shall be given a credit ("Buyer's Trade
Credit") in the amount equal to the financial value (determined in
accordance with generally accepted accounting principles consistently
applied) of all advertisements required to be published in the
Publications on or after the Closing Date under the Trade Agreements, and
Seller shall be given a credit ("Seller's Trade Credit") for the
financial value (determined in accordance with generally accepted
accounting principles consistently applied) of the goods and services to
be received on or after the Closing Date under the Trade Agreements;
provided that Seller's Trade Credit shall in no event exceed Buyer's
Trade Credit.
(iii) With respect to each vacation or personal day earned
but not taken or for which compensation has not been paid by Seller to
Employee in lieu of time off before the Closing Date by each Employee
hired by Buyer, Buyer shall receive a credit equal to the compensation
equivalent thereof, including applicable payroll taxes.
(iv) The credit given Seller for each prepaid expense
shall not exceed an amount commensurate with the benefit therefrom to be
received by Buyer after Closing.
(c) To the extent not inconsistent with the express
provisions of this Agreement, the allocations made pursuant to this
Section 2.6 shall be made in accordance with generally accepted accounting
principles.
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(d) Three (3) business days prior to the Closing Date, Seller
shall provide Buyer with a statement setting forth a detailed computation of
Seller's reasonable and good faith estimate of the Adjustment Amount as of the
Closing Date (the "Preliminary Adjustment Report"). The Preliminary Adjustment
Report shall include an itemization of all prepaid expenses included in
estimating the Adjustment Amount as of the Closing Date. If the Adjustment
Amount reflected on the Preliminary Adjustment Report is a credit to Buyer, then
the Purchase Price payable on the Closing Date shall be reduced by the amount of
the preliminary Adjustment Amount, and if the Adjustment Amount reflected on the
Preliminary Adjustment Report is a charge to Buyer, then the Purchase Price
payable on the Closing Date shall be increased by the amount of such preliminary
Adjustment Amount. Thereafter, Seller and its auditors and Buyer and its
auditors shall have ninety (90) days after the Closing Date to review the
Preliminary Adjustment Report and the related books and records of Seller, and
Buyer and Seller will in good faith seek to reach agreement on the computation
of the Adjustment Amount as of the Closing Date. If agreement is reached within
ninety (90) days after the Closing Date, then upon reaching such agreement,
Seller shall pay to Buyer or Buyer shall pay to Seller, as the case may be, an
amount equal to the difference between (i) the agreed Adjustment Amount and (ii)
the preliminary Adjustment Amount indicated in the Preliminary Adjustment
Report. Any such payment shall be made as provided in Section 2.6(g). If
agreement is not reached within such 90-day period, then the dispute resolutions
of Section 2.6(e) shall apply.
(e) If Seller and its auditors and Buyer and its auditors do
not, within the 90-day period specified in Section 2.6(d), reach an agreement on
the Adjustment Amount as of the Closing Date, then an independent accounting
firm of recognized national standing (the "Arbitrating Firm") selected by Seller
and Buyer shall resolve the disputed items. If Seller and Buyer are unable to
agree on the Arbitrating Firm, the Arbitrating Firm shall be a "national"
accounting firm selected by lot (after excluding one firm designated by Seller
and one firm designated by Buyer, as well as any firm with which either party
has or has had a business relationship, which relationship shall be promptly
disclosed by the relevant party). Buyer and Seller shall each inform the
Arbitrating Firm in writing as to their respective positions concerning the
Adjustment Amount as of the Closing Date, and each shall make readily available
to the Arbitrating Firm any books and records and work papers relevant to the
preparation of such firm's computation of the Adjustment Amount. Such firm shall
be instructed to complete its analysis within thirty (30) days from the date of
its engagement and upon completion to inform the parties in writing of its own
determination of the Adjustment Amount, and the basis for its determination. Any
determination by the Arbitrating Firm in accordance with this Section shall be
final and binding on the parties for purposes of this Section. Within five (5)
days after the Arbitrating Firm delivers to the parties its written
determination of the Adjustment Amount, Seller shall pay to Buyer, or Buyer
shall pay to Seller, as the case may be, an amount equal to the difference
between (i) the Adjustment Amount as determined by the Arbitrating Firm and (ii)
the preliminary Adjustment Amount indicated in the Preliminary Adjustment
Report. Any such payment shall be made as provided in Section 2.6(g).
(f) Seller and Buyer shall each pay one-half of the fees and
disbursements of the Arbitrating Firm in connection with its analysis.
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(g) Any payments required under foregoing Subsection (d) or (e)
shall be paid by wire transfer in immediately available funds to the account of
the payee with a financial institution in the United States and shall for all
purposes be deemed an adjustment to the Purchase Price; provided however, that
if such payment is to be made to Buyer, Buyer may setoff such amount against the
Holdback.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization, Good Standing and Corporate Power. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois, and has all requisite power to own, operate and lease
its properties and carry on its business. Seller is duly licensed, qualified to
do business and in good standing in each jurisdiction, domestic and foreign,
where the failure to be so licensed or qualified would have a Material Adverse
Effect, which jurisdictions are set forth in Schedule 3.1.
3.2 Ownership. All of the issued and outstanding capital stock of
Seller is owned beneficially and of record by Owner.
3.3 Authorization and Binding Effect of Documents. Seller has all
requisite corporate power and authority to enter into this Agreement and the
other Documents and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and each of the other
Documents by Seller and the consummation by Seller of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action (including shareholder approval) on the part of Seller. This
Agreement has been, and each of the other Documents at or prior to Closing will
be, duly executed and delivered by Seller. This Agreement constitutes (and each
of the other Documents, when executed and delivered, will constitute) the valid
and binding obligation of Seller enforceable against Seller in accordance with
its terms.
3.4 Absence of Conflicts. Except as set forth in Schedule 3.4, the
execution, delivery and performance by Seller of this Agreement and the other
Documents, and consummation by Seller of the transactions contemplated hereby
and thereby, do not and will not (i) conflict with or result from any breach of
any of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, or (v) result in the creation of
any material Lien upon the Sale Assets under, the provisions of the articles of
incorporation and by-laws of Seller, any material indenture, mortgage, lease,
loan agreement or other agreement or instrument to which Seller is bound or
affected, or any law, statute, rule, judgment, order or decree to which Seller
is subject.
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3.5 Consents. Except as set forth in Schedule 3.5 and except for the
filing required by the HSR Act, the execution, delivery and performance by
Seller of this Agreement and the other Documents, and consummation by Seller of
the transactions contemplated hereby and thereby, do not and will not require
the authorization, consent, approval, exemption, clearance or other action by or
notice or declaration to, or filing with, any court or administrative or other
governmental body, or the consent, waiver or approval of any other person or
entity.
3.6 Sale Assets; Title. The Sale Assets include all of the assets,
properties and rights of every type and description, real, personal and mixed,
tangible and intangible, that are used in the operation of the Business in the
manner in which it is now conducted, with the exception of the Excluded Assets.
Other than as noted in Schedule 3.6, which Liens will be removed prior to or at
Closing, Seller has good and marketable title to, or a valid lessee's interest
in, all of the Sale Assets free and clear of all Liens except Permitted Liens.
3.7 Circulation. For those of the Publications which are so audited,
Seller has provided or caused to be provided to Buyer (i) the audited
circulation reports (the "White Sheet") of the Audit Bureau of Circulations
("ABC") with respect to each Publication for the twelve months ended December
31, 1997, and (ii) the unaudited publisher's circulation statement (the "Pink
Sheet") published by ABC with respect to each Publication for the six months
ended June 30, 1998. Such White Sheet and Pink Sheet fairly present the
information shown thereon in all material respects. Schedule 3.7 sets forth
which Publications are audited and which are not.
3.8 Business Agreements.
(a) Schedule 3.8(a) lists all agreements, contracts,
understandings and commitments as of the date indicated thereon for advertising
in any Publication of the Business for other than monetary consideration ("Trade
Agreements") as of January 31, 1999, and sets forth the parties thereto, the
financial value of the advertisements required to be provided from and after the
date of such Schedule and the financial value of the goods or services to be
received by Seller from and after the date of such Schedule. True and complete
copies of all written Trade Agreements in effect as of such date, including all
amendments, modifications and supplements thereto, have been delivered to Buyer
and each Trade Agreement hereafter entered into prior to Closing shall be
promptly delivered to Buyer.
(b) Schedule 3.8(b) lists all the following types of Business
Agreements now in effect, whether written or oral relating to the Business or
the Sale Assets:
(i) Agreements for sale of advertising in any Publication
for monetary consideration;
(ii) All affiliation agreements;
(iii) All sales agency, advertising representation, or
distribution contracts;
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(iv) Each lease of any Sale Asset (including a description
of the Sale Asset leased thereunder);
(v) All employment agreements and agreements with
independent contractors;
(vi) All agreements to which an Affiliate of Seller is a
party;
(vii) Each of the other Business Agreements (other than
Trade Agreements) involving a commitment by any party thereto with a fair
market value of, or requiring any party thereto to pay over the life of
the contract, more than Five Thousand Dollars ($5,000); and
(viii) Any other Business Agreement that is material to the
business, operations or financial condition of any Publication or the
Business.
True and complete copies of all the foregoing Business Agreements that are in
writing, and true and accurate summaries of all the foregoing Business
Agreements that are oral, including all amendments, modifications and
supplements thereto, have been delivered to Buyer. The Business Agreements
(other than Trade Agreements) that are not listed in Schedule 3.8(b) do not
involve commitments by parties thereto with an aggregate fair market value of
more than Fifty Thousand Dollars ($50,000).
(c) Except as set forth in Schedule 3.8(c), (i) all Business
Agreements which are, individually or in the aggregate, material to the
business, operations or financial condition of any Publication or the Business
are valid and in full force and effect; (ii) neither Seller nor, to the Seller's
Knowledge, any other party is in material default under, and no event has
occurred which (after the giving of notice or the lapse of time or both) would
constitute a material default under, any Business Agreements which are,
individually or in the aggregate, material to the business, operations or
financial condition of the Business; (iii) neither Seller nor an Affiliate has
granted or been granted any material waiver or forebearance with respect to any
Business Agreements which are, individually or in the aggregate, material to the
business, operations or financial condition of the Business; (iv) Seller holds
the right to enforce and receive the benefits under all the Business Agreements
which are, individually or in the aggregate, material to the business,
operations or financial condition of the Business, free and clear of Liens
(other than Permitted Liens) but subject to the terms and provisions of each
such agreement; (v) none of the rights of Seller or an Affiliate under Business
Agreements which are, individually or in the aggregate, material to the
business, operations or financial condition of the Business is subject to
termination or modification as a result of the consummation of the transactions
contemplated by this Agreement; and (vi) no consent or approval by any party to
Business Agreements which are, individually or in the aggregate, material to the
business, operations or financial condition of the Business is required
thereunder for the consummation of the transactions contemplated hereby.
3.9 Tangible Personal Property. Except as set forth in Schedule 3.9:
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(a) Such Schedule lists all Tangible Personal Property (other
than office supplies and other incidental items) material to the conduct of the
Business and operations of any Publication or the Business in the manner in
which it has been and is now operated.
(b) The Tangible Personal Property has been properly maintained
in accordance with industry practices in all material respects, is in a good
state of repair and operating condition (normal wear and tear excepted), and
complies in all material respects with applicable laws, rules, regulations and
ordinances.
3.10 Real Property. The list of Real Property set forth in Schedule
3.10 is a true and correct list of all of the interests in real estate which
Seller holds which are used to any material extent in the operation of any
Publication or the Business in the manner in which it has been and is now
operated.
3.11 Intellectual Property. Schedule 3.11 lists all of the Intellectual
Property, including all registrations, applications and licenses for any of the
Intellectual Property. Except as disclosed in Schedule 3.11:
(a) To the Seller's Knowledge, Seller owns, free and clear of
Liens, all right and interest in, and right and authority to use in connection
with the conduct of the Business as presently conducted, all of the Intellectual
Property listed in Schedule 3.11, and all of the rights and properties
constituting a part of the Intellectual Property are in full force and effect;
(b) There are no outstanding or, to the Seller's Knowledge,
threatened judicial or adversary proceedings with respect to any of the
Intellectual Property;
(c) Seller has not granted to any other person or entity any
license or other right or interest in or to any of the Intellectual Property or
to the use thereof;
(d) Seller has no knowledge of any infringement or unlawful use
of any of the Intellectual Property;
(e) Seller has not knowingly violated any provisions of the
Copyright Act of 1976, 17 U.S.C. Section 101, et. seq., in any material respect;
and
(f) Seller has delivered to Buyer copies of all state or federal
registrations, applications, and other material documents, if any, establishing
any of the rights and properties constituting a part of the Intellectual
Property.
3.12 Financial Statements.
(a) Seller has delivered to Buyer:
(i) The reviewed balance sheets of the Business as of
December 31, 1997 and 1996;
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(ii) The reviewed statements of income of the Business for
the years ended December 31, 1997 and 1996;
(iii) The unaudited balance sheet of the Business as of
December 31, 1998 (the "Interim Balance Sheet"); and
(iv) The unaudited statement of income of the Business for
the interim period ended December 31, 1998.
All such statements (i) are in accordance with the books and records of Seller
and (ii) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present the assets and
liabilities of Seller as of the dates stated and accurately reflect the results
of operations of Seller for the periods covered by the statements, with the
exceptions, as to the Interim Balance Sheet and related unaudited statement of
income, that (A) statements of cash flows are not included (B) federal income
tax, expense or benefit are not reflected therein, (C) such statements do not
contain the disclosures required by generally accepted accounting principles in
notes accompanying financial statements, and (D) such statements are subject to
normal year-end adjustments.
(b) With respect to the Business or the Sale Assets, Seller has
no debt, liability or obligation, secured or unsecured (whether absolute,
accrued, contingent or otherwise, and whether due or to become due), of a nature
required by generally accepted accounting principles to be reflected in a
corporate balance sheet or disclosed in the notes thereto, except such debts,
liabilities and obligations which (i) are fully accrued or fully reserved
against in the Interim Balance Sheet, or (ii) are incurred after the date of the
Interim Balance Sheet in the ordinary course of business consistent with past
practices and in an amount not material to the business or financial condition
of Seller.
(c)(i) Seller is not now, and, on the date of Closing, after
giving effect to the transactions contemplated by this Agreement, Seller will
not be insolvent as such term is defined in the Bankruptcy Code of 1978, as
amended; (ii) after giving effect to the transactions contemplated by this
Agreement, the property remaining with Seller shall not constitute an
unreasonably small capital to conduct its current business or its business as
proposed to be conducted after consummation of the transactions contemplated
hereby; and (iii) Seller does not intend to incur, or believe that Seller will
incur, concurrently with or after consummation of the transactions contemplated
hereby, debts beyond Seller's ability to pay as debts mature.
3.13 Absence of Certain Changes or Events. Since the date of the
Interim Balance Sheet, other than as described in Schedule 3.13:
(a) There has not been any damage, destruction or other
casualty loss with respect to the Sale Assets (whether or not covered by
insurance) which, individually or in the aggregate has, or could reasonably be
expected to have, a Material Adverse Effect.
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(b) Neither Seller nor the Business has suffered any adverse
change or development which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
(c) Seller has not, with respect to the Business or the Sale
Assets:
(i) amended or terminated any Business Agreement set
forth in Schedule 3.8(a), 3.8(b) or 3.8(c) except in the ordinary course
of business;
(ii) mortgaged, pledged or subjected to any Lien, any of
its properties or assets, tangible or intangible, except for Permitted
Liens;
(iii) acquired or disposed of any assets or properties or
entered into any agreement or other arrangement for such acquisition or
disposition, except in the ordinary course of business;
(iv) with the exception of this Agreement, entered into
any agreement, commitment or other transaction other than in the ordinary
course of business;
(v) paid any bonus to any officer, director or employee
or granted to any officer, director or employee any other increase in
compensation in any form, except in the ordinary course of business
consistent with past practices;
(vi) adopted or amended any collective bargaining, bonus,
profit-sharing, compensation, stock option, pension, retirement, deferred
compensation, severance or other plan, agreement, trust, fund or
arrangement for the benefit of employees (whether or not legally binding)
or made any material changes in its policies of employment;
(vii) entered into any agreement (other than agreements
that will be terminated prior to Closing) with any Affiliate of Seller;
or
(viii) operated other than in the ordinary course.
3.14 Litigation. Except as described in Schedule 3.14, (i) there are
no actions, suits, claims, investigations or administrative, arbitration or
other proceedings pending or, to the Seller's Knowledge, threatened against
Seller before or by any court, arbitration tribunal or governmental department
or agency, domestic or foreign; (ii) neither Seller nor, to the Seller's
Knowledge, any of the officers or employees of Seller, has been charged with, or
is under investigation with respect to, any violation of any provision of any
federal, state, foreign or other applicable law or administrative regulation in
respect of the business of Seller; and (iii) neither Seller nor any properties
or assets of Seller nor, to the Seller's Knowledge, any officer or employee of
Seller is a party to or bound by any order, arbitration award, judgment or
decree of any court, arbitration tribunal or governmental department or agency,
domestic or foreign, in respect of any business practices, the acquisition of
any property, or the conduct of any
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business, of Seller, which, individually or in the aggregate, has or could
reasonably be expected to have, a Material Adverse Effect or materially impair
the ability of Seller to perform its obligations hereunder and consummate the
transactions contemplated hereby.
3.15 Labor Matters.
(a) Except as listed in Schedule 3.15(a):
(i) To the Seller's Knowledge, no present or former
employee (or independent contractor) of the Business has a pending claim
or charge which has been asserted or threatened against Seller for (A)
overtime pay; (B) wages, salaries or profit sharing; (C) vacations, time
off or pay in lieu of vacation or time off; (D) any violation of any
statute, ordinance, contract or regulation relating to minimum wages,
maximum hours of work or the terms or conditions of employment; (E)
discrimination against employees on any basis; (F) unlawful or wrongful
employment or termination practices; (G) unlawful retirement, termination
or labor relations practices or breach of contract; or (H) any violation
of occupational safety or health standards.
(ii) There is not pending or, to the Seller's Knowledge,
threatened against Seller any labor dispute, strike or work stoppage that
affects or interferes with, or is likely to affect or interfere with, the
operation of any Publication or the Business. Seller has no knowledge of
any organizational effort currently being made or threatened by or on
behalf of any labor union with respect to employees of any Publication or
the Business. There are no unresolved unfair labor charges against
Seller. Seller has not experienced any strike, work stoppage or other
similar significant labor difficulties within the past twelve (12)
months.
(b) Seller is not a signatory or a party to, or otherwise bound
by, a collective bargaining agreement which covers employees or former employees
of Seller or who are involved in the operation of any Publication or the
Business, (ii) Seller has not agreed to recognize any union or other collective
bargaining unit with respect to any employees of any Publication or the
Business, and (iii) no union or other collective bargaining unit has been
certified as representing any employees of any Publication or the Business.
(c) Schedule 3.15(c) sets forth a true and complete list of all
persons employed by Seller or at any Publication or the Business as of the date
of this Agreement, and states for each such employee (i) the compensation paid
to such employee and the termination pay or other severance benefits, if any,
that may be payable to such employee upon termination of employment, (ii)
accrued but unused vacation and personal days, (iii) whether such employee is
employed under a written contract, and (iv) the policies applicable to the
employee if not employed under a written contract. A true and complete copy of
each written employment agreement and of any handbook, policy manual or similar
written guidelines furnished to employees of any Publication or the Business has
been delivered to Buyer.
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3.16 Employee Benefit Plans. Buyer will not acquire any rights or
interests in, or assume any obligations under, any Benefit Plan. Buyer shall
not, as a result of the transactions contemplated by this Agreement (or the
employment of any of Seller's current employees), become liable for any
contribution, tax, lien, penalty, cost, interest, damage or other similar type
of liability or expense of Seller with regard to any Benefit Plan.
3.17 Compliance with Law. Seller has operated and is operating in
all material respects in compliance with all federal, state, local or other
laws, statutes, ordinances, regulations, licenses, permits or exemptions
therefrom and all applicable orders, writs, injunctions and decrees of any
court, commission, board, agency or other instrumentality, and Seller has not
received any notice of noncompliance pertaining to Seller's operations that has
not been cured.
3.18 Tax Returns and Payments.
(a) Seller has accurately prepared and is not delinquent in the
filing of any Tax Returns required to be filed by Seller, including filings
regarding employees, sales, operations or assets. All Taxes due and payable
pursuant thereto and all other Taxes or assessments due and payable by Seller or
chargeable as a Lien upon its assets have been paid.
(b) Except as set forth in Schedule 3.18, (i) no outstanding
unsatisfied deficiency, delinquency or default for any Tax has been claimed,
proposed or assessed against Seller, (ii) Seller has not received notice of any
such deficiency, delinquency or default, and (iii) to the Seller's Knowledge, no
taxing authority is now threatening to assert any such deficiency, delinquency
or default and, to the Seller's Knowledge, there is no reasonable basis for any
such assertion.
(c) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transactions contemplated by this Agreement.
(d) Seller has withheld any Tax required to be withheld under
applicable law and regulations, and such withholdings have either been paid to
the proper governmental agency or set aside in accounts for such purpose, or
accrued, reserved against and entered upon the books of Seller.
3.19 Environmental Matters. To the Seller's Knowledge, there are no
conditions or circumstances associated with the Sale Assets which may give rise
to any material liability or cost under applicable environmental law.
3.20 Broker's or Finder's Fees. Except for The Jordan Edmiston Group,
Inc., whose fee is the sole responsibility of Seller, no agent, broker,
investment banker or other person or firm acting on behalf of or under the
authority of Seller or any Affiliate of Seller is or will be entitled to any
broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with the transactions contemplated by this Agreement.
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3.21 Insurance. There is now in full force and effect with reputable
insurance companies fire and extended coverage insurance with respect to all
tangible Sale Assets and public liability and publisher's liability insurance,
all in amounts consistent with past practices.
3.22 Year 2000 Compliance. To the Seller's Knowledge, the technology
embodied in the Business' operating systems, other computer programs, and
websites is Year 2000 Compliant (to the extent applicable). "Year 2000
Compliant" means that the technology will accurately and without interruption
process (including but not limited to calculate, compare, interpret, and
sequence) (i) date and time data before, during and after the year 2000, (ii)
year dates in a manner that is explicit and unambiguous for operation with
interfacing software and for data storage, (iii) year 2000 as a leap year, and
(iv) year dates specified as "99" and "00" regardless of any other meanings that
may be given to those numbers. The Seller has received from each material vendor
listed on Schedule 3.22 a year 2000 compliance certificate, and has provided
copies of them to Buyer.
3.23 Disclosure. To the Seller's Knowledge, no representation or
warranty by Seller in this Agreement or any other Document furnished by Seller
or on its behalf contains any untrue statement of a material fact, or omits to
state a material fact, necessary to make any statement contained herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Indiana. Buyer has all requisite partnership power to own, operate and
lease its properties and carry on its business as it is now being conducted and
as the same will be conducted following the Closing.
4.2 Authorization and Binding Effect of Documents. Buyer has all
requisite partnership power and authority to enter into this Agreement and the
other Documents and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and each of the other
Documents by Buyer and the consummation by Buyer of the transactions
contemplated by this Agreement have been duly authorized by all necessary
partnership action on the part of Buyer. This Agreement has been, and each of
the other Documents at or prior to Closing will be, duly executed and delivered
by Buyer. This Agreement constitutes (and each of the other Documents, when
executed and delivered, will constitute) the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
4.3 Absence of Conflicts. Except for obtaining all necessary approvals
under the HSR Act, the execution, delivery and performance by Buyer of this
Agreement and the other Documents, and consummation by Buyer of the transactions
contemplated hereby and thereby, do not and will not (i) conflict with or result
from any
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breach of any of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in a violation of, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, the provisions of
the articles of partnership or limited partnership agreement of Buyer, any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which Buyer is bound or affected, or any law, statute, rule, judgment, order or
decree to which Buyer is subject.
4.4 Consents. Except for obtaining all necessary approvals under
the HSR Act, the execution, delivery and performance by Buyer of this Agreement
and the other Documents, and consummation by Buyer of the transactions
contemplated hereby and thereby, do not and will not require the authorization,
consent, approval, exemption, clearance or other action by or notice or
declaration to, or filing with, any court or administrative or other
governmental body, or the consent, waiver or approval of any other person or
entity.
4.5 Broker's or Finder's Fees. No agent, broker, investment banker, or
other person or firm acting on behalf of Buyer or under its authority is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee, directly or indirectly, from Buyer in connection with the transactions
contemplated by this Agreement.
4.6 Litigation. There are no legal, administrative, arbitration or
other proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
OTHER COVENANTS
5.1 Conduct of the Business Prior to the Closing Date. Seller
covenants and agrees with Buyer that from the date hereof through the Closing
Date, unless Buyer otherwise agrees in writing, and provided that none of the
following shall impede Seller's ability to conduct the Business consistent with
past practices, Seller shall:
(a) Operate each Publication and the Business only in the
ordinary course of business, including (i) incurring promotional expenses
consistent with the amount currently budgeted, (ii) the use of reasonable
commercial efforts to preserve each Publication's and the Business' present
business operations, organization and goodwill and its relationships with
material customers, employees, advertisers, suppliers and other contractors, and
(iii) the continuance of each Publication's and the Business' usual and
customary policy with respect to extending credit and collection of accounts
receivable and the maintenance of its facilities and equipment;
(b) Operate each Publication and the Business in all material
respects in accordance with the terms or conditions of all rules, regulations,
laws and orders of all governmental authorities having jurisdiction over any
aspect of the operation of each Publication and the Business;
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(c) Maintain Seller's books and records in accordance with
generally accepted accounting principles on a basis consistent with prior
periods;
(d) Promptly notify Buyer in writing of any event or condition
which, with notice or the lapse of time or both, would constitute an event of
material default under any of the Business Agreements which are, individually or
in the aggregate, material to the Sale Assets or the operations, financial
condition or results of operations of any Publication or the Business;
(e) Timely comply in all material respects with the Business
Agreements which are, individually or in the aggregate, material to the Sale
Assets or the operations, financial condition or results of operations of any
Publication or the Business;
(f) Not sell, lease, grant any rights in, or to otherwise
dispose of, or agree to sell, lease or otherwise dispose of, any of the Sale
Assets except for dispositions of assets that (A) are in the ordinary course of
business consistent with past practice and (B) if material, are replaced by
similar assets of substantially equal or greater value and utility;
(g) Not amend or enter into any employment contracts or other
Business Agreements except on terms comparable to those of Business Agreements
now in existence and otherwise in the ordinary course of business consistent
with past practice;
(h) Maintain its technical equipment currently in use in normal
operating condition and repair, except for ordinary wear and tear;
(i) Not increase in any manner the compensation (including
severance pay or plans) or benefits of any employees, independent contractors,
consultants or commission agents of the Business, except in the ordinary course
of business consistent with past practice;
(j) Not introduce any material change with respect to the
operation of any Publication or the Business;
(k) Not enter into any agreement (other than agreements that
will be terminated prior to Closing) with any Affiliate of Seller which pertain
to the Business or the Sale Assets;
(l) Not voluntarily enter into any collective bargaining
agreement applicable to any employees of any Publication or the Business or
otherwise voluntarily recognize any union as the bargaining representative of
any such employees; and not enter into or amend any collective bargaining
agreement applicable to any employees of any Publication or the Business to
provide that it shall be binding upon any "successor" employer or such
employees; and
(m) Not take or agree to take any action inconsistent with
consummation of the Closing as contemplated by this Agreement.
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5.2 Notification of Certain Matters. Seller shall give prompt notice
to Buyer, and Buyer shall give prompt notice to Seller, of (i) the occurrence,
or failure to occur, of any event that would be likely to cause any of their
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Closing Date, and (ii) any failure on their respective parts to comply with
or satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by any of them under this Agreement.
5.3 HSR Filing. Within ten (10) days after the execution of this
Agreement, Seller and Buyer shall make the filings required to be made under the
HSR Act in connection with the transactions contemplated herein. As promptly as
practicable, Seller and Buyer shall make the additional filings, if any,
required to be made under the HSR Act, or other applicable laws, in connection
with the purchase and sale of the Sale Assets and shall otherwise take all
commercially reasonable actions necessary and proper to comply with any requests
for additional information with respect to such HSR Act filings.
5.4 Title; Additional Documents. At the Closing, Seller shall transfer
and convey to Buyer good and marketable title to all of the Sale Assets free and
clear of any Liens except Permitted Liens. Seller shall execute or cause to be
executed such documents, in addition to those delivered at the Closing, as may
be necessary to confirm in Buyer such title to the Sale Assets and to carry out
the purposes and intent of this Agreement.
5.5 Other Consents. Seller shall use its best efforts to obtain the
consents or waivers to the transactions contemplated by this Agreement required
under the Business Agreements.
5.6 Inspection and Access. Seller will, prior to the Closing Date,
open the assets, books, accounting records, correspondence and files of Seller
(to the extent related to the operation of the Business) for examination by
Buyer, its officers, attorneys, accountants and agents, with the right to make
copies of such books, records and files or extracts therefrom. Such access will
be available during normal business hours, upon reasonable notice and in such
manner as will not unreasonably interfere with the conduct of the Business.
Seller will furnish to Buyer monthly unaudited financial statements of Seller
prepared in a manner consistent with the unaudited statements identified in
Section 3.12. Seller will furnish to Buyer such additional financial and
operating data and other available information regarding Seller as Buyer may
reasonably request. Those books, records and files the possession of which is
not being transferred to Buyer pursuant to this Agreement which relate to the
Sale Assets shall be preserved and maintained by Seller for four (4) years after
the Closing and those books, records and files relating to the Sale Assets the
possession of which is being transferred to Buyer hereunder shall be maintained
and preserved by Buyer for a period of four (4) years after the Closing. Each
such party shall give to the other party and its authorized representatives,
during normal business hours, such access to, and
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the opportunity at the other party's expense to copy, such books and records
retained by it as may be reasonably requested by the other party.
5.7 Confidentiality. The parties shall continue to be bound by the
Non-Disclosure Agreement executed on November 2, 1998; subject thereto, all
information delivered to Buyer and otherwise disclosed in writing as
confidential by Seller (or its representatives) before or after the date hereof,
in connection with the transactions contemplated by this Agreement, shall be
kept confidential by Buyer and its representatives and shall not be used other
than as contemplated by this Agreement, except to the extent that such
information (i) was otherwise publicly available or known by the recipient when
received, (ii) is or hereafter becomes lawfully obtainable from third parties
not related to Buyer or its Affiliates, (iii) is necessary to disclose to a
governmental authority, (iv) is required by law or the rules of any stock
exchange to be disclosed or (v) to the extent such duty as to confidentiality is
waived in writing by Seller.
5.8 Publicity. The parties agree that no public release or
announcement concerning the transactions contemplated hereby shall be issued by
any party without the prior written consent of the other party, except as such
release or announcement may be required by law or applicable regulations, in
which event the party so required will give prior written notice to the other
party.
5.9 Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each party will use its reasonable best efforts to take all
action and to do all things necessary, proper or advisable to satisfy any
condition hereunder in its power to satisfy and to consummate and make effective
as soon as practicable the transactions contemplated by this Agreement.
5.10 Tax Returns and Payments. Seller will timely file with the
appropriate governmental agencies all Tax Returns required to be filed by Seller
and timely pay all Taxes owed by Seller that could result in a lien on the Sale
Assets.
5.11 No Solicitation. From the date hereof until the earlier of Closing
or termination of this Agreement, neither Seller nor any Affiliate of Seller
shall directly or indirectly (i) solicit or encourage submission of any proposal
or offer from any person relating to the acquisition or purchase of any interest
in Seller or any material assets of Seller or any merger, consolidation or other
business combination with Seller (each an "Acquisition Proposal"), or (ii)
otherwise assist or participate in any effort or attempt by any person to make
or effect an Acquisition Proposal. Seller shall promptly notify Buyer in writing
if an Acquisition Proposal is made in writing after the date of this Agreement.
5.12 Certified Resolutions.
(a) Within five (5) business days after the date hereof, Seller
shall furnish Buyer with certified resolutions of the Board of Directors of
Seller evidencing the authorization and approval of the execution and delivery
of this Agreement and each of the other Documents and the consummation of the
transactions contemplated hereby and thereby.
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(b) Within five (5) business days after the date hereof, Buyer
shall furnish Seller with certified resolutions of the general partner of Buyer
evidencing the authorization and approval of the execution and delivery of this
Agreement and each of the other Documents and the consummation of the
transactions contemplated hereby and thereby.
5.13 Audited Financial Statements. Seller recognizes that Buyer's
general partner is a publicly reporting company and agrees that notwithstanding
the restrictions in Section 5.7, that entity shall be entitled at its expense,
following Closing, to cause audited and unaudited financial statements of the
Business to be prepared for such periods and filed with the Securities and
Exchange Commission, and included in a prospectus distributed to prospective
investors, as required by laws and regulations applicable to Buyer's general
partner as a publicly reporting company or registrant. Seller agrees to
cooperate with Buyer and the auditing accountants as reasonably requested by
Buyer in connection with the preparation and filing of such financial
statements, including providing a customary management representation letter in
the form prescribed by generally accepted auditing standards.
5.14 Post-Closing Assistance. Following Closing, Buyer shall cooperate
with Seller and make available to Seller, at Seller's reasonable request and at
no expense to Seller, such facilities, equipment, personnel and assistance as
shall be necessary to enable Seller to carry out its post-closing obligations
under this Agreement and to otherwise effectuate the transfers and transition
contemplated hereunder. Buyer further agrees to cooperate with and assist Seller
to the extent reasonably necessary to permit Seller to adequately prosecute or
defend itself in connection with any claim, demand, action, lawsuit, proceeding,
investigation, audit, or other similar matter brought by or against any third
party or governmental entity relative to the Business or the Sale Assets, and
Buyer shall make available to Seller such facilities, equipment, personnel and
assistance as reasonably requested by Seller in that regard. Notwithstanding the
foregoing, nothing in this Section shall require Buyer to expend any significant
amounts of money, or require any of its employees to expend any significant
amounts of time, to fulfill Buyer's obligations in this Section.
ARTICLE VI
CONDITIONS PRECEDENT TO THE
OBLIGATION OF BUYER TO CLOSE
Buyer's obligation to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless waived by Buyer in writing:
6.1 Accuracy of Representations and Warranties; Closing Certificate.
(a) The representations and warranties of Seller contained in
this Agreement or in any other Document shall be true and correct in all
material respects on the date hereof, and at the Closing Date with same effect
as though made at such time except for changes permitted hereunder.
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(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that the conditions specified in Sections 6.1(a), 6.2, 6.7, and 7.5
are satisfied as of the Closing Date.
6.2 Performance of Agreement. Seller shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 HSR Act. The waiting period (including any extension thereof)
under the HSR Act applicable to the sale and purchase of the Sale Assets
pursuant to this Agreement shall have expired or been terminated.
6.4 Title Insurance and Survey.
6.4.1 Seller shall have obtained, at Seller's expense, a title
commitment (the "Title Commitment") on the current ALTA form from a title
insurance company (the "Title Insurance Company") wherein the Title Insurance
Company shall agree to insure in Buyer fee simple title to the Real Property.
The exceptions to title specified in the Title Commitment shall be limited to
the preprinted or standard exceptions to title (the "Standard Exceptions"), the
lien for taxes not yet due and payable (the "Permitted Tax Lien") and such other
exceptions (the "Other Permitted Exceptions") that will neither (1) materially
impair Buyer's ability to use the Real Property in the operation of the Business
in the manner in which it is now used, nor (2) constitute or evidence a mortgage
or other lien (other than a Permitted Tax Lien) against such title, except
mortgages or other liens that will be released at Closing at Seller's expense.
6.4.2 Seller shall have obtained, at Seller's expense, a current
"as built" survey (each, a "Survey") of the Real Property. Such Survey shall be
prepared by a registered surveyor, shall comply with current ALTA Minimum
Standard Detail Requirements, shall be accompanied by a certification sufficient
for the Title Insurance Company's deletion of the Standard Exceptions relating
to survey matters, and shall not disclose any matters which would materially
impair Buyer's ability to use any of the Real Property in the operation of the
Business in the manner in which it is now used.
6.4.3 On the Closing Date, the Title Insurance Company shall have
unconditionally agreed in writing to issue pursuant to the Title Commitment a
final title policy as of the Closing Date insuring fee simple title in Buyer to
the Real Property, subject only to the Permitted Tax Lien and Other Permitted
Exceptions. On or before the Closing Date, Seller shall execute and deliver to
the Title Insurance Company an affidavit regarding mechanic's liens sufficient
to allow deletion of such liens as a Standard Exception in the final title
policy.
6.4.4 If within sixty (60) days after the date hereof:
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6.4.4.1 A Title Commitment has not been obtained for the
Real Property, Buyer shall be deemed to have waived the conditions precedent in
foregoing Subsections 6.4.1 and 6.4.3 with respect to the Real Property.
6.4.4.2 A Survey has not been obtained by Seller and
provided to Buyer for the Real Property, Buyer shall be deemed to have waived
the condition precedent in foregoing Subsection 6.4.2 with respect to the Real
Property, and shall be deemed to have waived the condition precedent in
foregoing Subsection 6.4.3 to the extent satisfaction of such condition with
respect to the Real Property would require such Survey.
6.4.4.3 Buyer does not by written notice to Seller
specifically identify and object to a defect or exception to title to the Real
Property, Buyer shall be deemed to have waived its right to object to such
defect or exception.
6.5 Environmental Inspection. At Buyer's expense, Buyer shall have
caused an environmental inspection to be performed by a reputable environmental
engineering company of the Real Property, and the inspection report shall not
disclose a reasonable basis for a determination that the Real Property in its
current condition would cause Buyer as the owner thereof to incur a material
liability under any applicable environmental law, rule or regulation. Buyer
shall cause the environmental consultant to deliver to Seller a copy of each
such inspection report at the same time such report is delivered to Buyer. In
the event that within sixty (60) days after the date hereof, Buyer shall have
failed to give Seller written notice specifying in detail the manner in which
such report discloses a reasonable basis for a determination that the Real
Property in its current condition would cause Buyer as the owner thereof to
incur a material liability under applicable environmental laws, rules or
regulations, Buyer shall be deemed to have waived the condition precedent set
forth in this Section 6.5.
6.6 Opinion of Seller's Counsel. Buyer shall have received the written
opinion of Seller's and Owner's outside counsel, dated as of the Closing Date,
that (i) Seller is a corporation duly formed and in good standing under the laws
of Illinois, (ii) the execution, delivery and performance of the Agreement and
each of the other Documents have been duly authorized by all requisite corporate
action (including all necessary shareholder approval) on the part of Seller,
(iii) the Agreement and each of the other Documents have been duly and validly
executed and delivered by Seller and Owner and constitute valid and legally
binding obligations enforceable against Seller and Owner in accordance with
their terms, subject to bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights generally and general principles of equity, and
(iv) the execution, delivery and performance by Seller and Owner of this
Agreement and the other Documents do not violate or contravene, to counsel's
knowledge, any judgment, order, or material agreement to which Seller or Owner
is subject or a party or to which the Sale Assets are bound.
6.7 Other Consents. Seller shall have obtained in writing (in form
reasonably satisfactory to Buyer's counsel) and provided to Buyer on or before
the Closing Date, without any condition materially adverse to Buyer, any
Publication, or the
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Business, the consents or waivers to the transactions contemplated by this
Agreement required under each Business Agreement.
6.8 Delivery of Closing Documents. Seller shall have delivered or
caused to be delivered to Buyer on the Closing Date each of the documents
required to be delivered pursuant to Section 8.2.
6.9 No Adverse Proceedings. No judgment or order shall have been
rendered, and no action or proceeding shall be pending, against Buyer that would
restrain or make unlawful the purchase and sale of the Sale Assets as
contemplated by this Agreement.
6.10 No Material Adverse Change. There shall have been no change nor
development affecting the Seller, any Publication or the Business after the date
hereof which has resulted in, or could reasonably be expected to result in, a
Material Adverse Condition.
6.11 The Country Sampler Store, L.L.C. Seller shall have delivered to
Buyer the written consent of the Managers of the LLC (as hereinafter defined) as
to the assignment of the License Agreement to Buyer contemplated in Section
12.7(b).
ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLER TO CLOSE
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless waived by Seller in writing:
7.1 Accuracy of Representations and Warranties.
(a) The representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time,
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that the conditions specified in Sections 7.1(a), 7.2, and 6.9 are
satisfied as of the Closing Date.
7.2 Performance of Agreements. Buyer shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3 HSR Act. The waiting period (including any extension thereof)
under the HSR Act applicable to the sale and purchase of the Sale Assets
pursuant to this Agreement shall have expired or been terminated.
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7.4 Opinion of Buyer's Counsel. Seller shall have received the written
opinion of Buyer's counsel, dated as of the Closing Date, that (i) Buyer is a
limited partnership duly formed and in good standing under the laws of the State
of Indiana, (ii) the execution, delivery and performance of the Agreement and
each of the other Documents have been duly authorized by all requisite
partnership action on the part of Buyer, (iii) the Agreement and each of the
other Documents have been duly and validly executed and delivered by Buyer and
constitute valid and legally binding obligations enforceable against Buyer in
accordance with their terms, subject to bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and general principles
of equity, and (iv) the execution, delivery and performance by Buyer of this
Agreement and the other Documents do not violate or contravene, to counsel's
knowledge, any judgment, order or agreement to which Buyer is subject or a party
or to which Buyer's assets are bound.
7.5 No Adverse Proceedings. No judgment or order shall have been
rendered, and no action or proceeding shall be pending, against Seller that
would restrain or make unlawful the purchase and sale of the Sale Assets as
contemplated by this Agreement.
7.6 Delivery of Closing Documents. Buyer shall have delivered or cause
to be delivered to Seller on the Closing Date each of the Documents required to
be delivered pursuant to Section 8.3.
ARTICLE VIII
CLOSING
8.1 Time and Place. Closing of the purchase and sale of the Sale
Assets pursuant to this Agreement (the "Closing") shall take place at the
offices of Bose McKinney & Evans, 135 North Pennsylvania Street, Suite 2700,
Indianapolis, Indiana, at 10:00 o'clock A.M. on the date (the "Closing Date")
that is the fifth business day following satisfaction or waiver of the
conditions precedent hereunder to Closing, effective as of 12:01 AM on the
Closing Date (the "Effective Time").
8.2 Documents to be Delivered to Buyer by Seller. At the Closing,
Seller shall deliver or cause to be delivered to Buyer the following, in each
case in form and substance reasonably satisfactory to Buyer:
(a) The opinion of Seller's counsel, dated the Closing Date, to
the effect set forth in Section 6.6;
(b) Governmental certificates, dated as of a date as near as
practicable to the Closing Date, showing that Seller is duly formed and in good
standing in the State of Illinois and is qualified to do business and in good
standing under the laws of the jurisdictions listed in Schedule 3.1;
(c) A certificate of the Secretary of Seller attesting as to the
incumbency of each officer of Seller who executes this Agreement and any of the
other Documents and to similar customary matters;
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(d) A bill of sale and other instruments of transfer and
conveyance transferring the Sale Assets (except the Real Property) to Buyer;
(e) A general warranty deed, in a form recordable in the State
of Illinois, for the Real Property, which deed shall convey insurable, fee
simple title for that parcel free and clear of all Liens except the Permitted
Tax Lien and the Other Permitted Exceptions.
(f) A certificate of nonforeign status under Section 1445 of the
Code, complying with the requirements of the Income Tax Regulations promulgated
pursuant to such section;
(g) The Consulting Agreement executed by Owner;
(h) The certificate described in Section 6.1(b); and
(i) Such additional information and materials as Buyer shall
have reasonably requested to evidence the satisfaction of the conditions to its
obligations hereunder, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained, and any other documents expressly required by this Agreement
to be delivered by Seller at Closing.
8.3 Deliveries to Seller by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller the following, in each case in form and
substance reasonably satisfactory to Seller:
(a) The Initial Adjusted Purchase Price in accordance with
Section 2.4, as adjusted under Section 2.6(d);
(b) The certificate described in Section 7.1(b);
(c) The opinion of Buyer's counsel, dated the Closing Date, to
the effect set forth in Section 7.4;
(d) An agreement by Buyer assuming the Assumed Obligations;
(e) The Consulting Agreement executed by Buyer; and
(f) Such additional information and materials as Seller shall
have reasonably requested to evidence satisfaction of the conditions to its
obligations hereunder, and any other documents expressly required by this
Agreement to be delivered by Buyer at Closing.
ARTICLE IX
RESTRICTIVE AGREEMENT
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9.1 Covenant Not to Compete. Neither Seller nor Owner shall, during
the period of three (3) years after the Closing Date (which period shall be
extended by any amount of time this covenant is violated), engage directly or
indirectly (whether as owner, employee, or otherwise) in the business of (i)
producing or publishing, managing, selling or offering for distribution a
magazine or periodical publication the content of which primarily pertains to
the craft industry or craft enthusiasts anywhere within North America or (ii)
maintaining a website with a craft focus on the Internet (or similar medium).
Notwithstanding the foregoing, Buyer, Seller and Owner each acknowledge that
Owner has an ownership interest in Independent Direct Distributors, Inc. and
Store Level Service Group, Inc. and that Seller is the majority owner of County
Sampler Store, L.L.C., and that the conduct of the business or operations of
such entities consistent with past activities shall not constitute a violation
of this Covenant Not to Compete by Seller or Owner. Each of Seller and Owner
acknowledges that this covenant not to compete constitutes material
consideration for Buyer's agreement to purchase the Sale Assets in accordance
with this Agreement.
9.2. Remedies for Violation. Each of Seller and Owner acknowledges and
agrees that Buyer will be irreparably harmed by a violation of Seller's
restrictive covenant set forth in Section 9.1, and that Buyer shall be entitled
in the event of such a violation to obtain an injunction in a court of competent
jurisdiction restraining any such violation, without prejudice to other remedies
available to Buyer at law or in equity and without the necessity of posting a
bond, and shall be entitled to reimbursement of reasonable attorneys' fees and
related costs and expenses in enforcing its rights in this Section.
ARTICLE X
INDEMNIFICATION
10.1 Survival. All representations, warranties, covenants and
agreements in this Agreement or any other Document shall survive the Closing
regardless of any investigation, inquiry or knowledge on the part of either
party, and the Closing shall not be deemed a waiver by either party of the
representations, warranties, covenants or agreements of the other party in this
Agreement or any other Document; provided however, that the period of survival
shall in all cases end two (2) years after the Closing Date (the "Survival
Period") with the exception of tax and environmental matters, with respect to
which the period of survival (the "Environmental and Tax Survival Period") shall
be three (3) years. No claim may be brought under this Agreement or any other
Document unless written notice describing in reasonable detail the nature and
basis of such claim is given on or prior to the last day of the applicable
Survival Period. In the event such notice of a claim is so given, the right to
indemnification with respect to such claim shall survive the Survival Period
until the claim is finally resolved and any obligations with respect to the
claim are fully satisfied. The rights to indemnification set forth in this
Article X shall be exclusive of all other rights to monetary damages that any
party (or the party's successors or assigns) would otherwise have by statute or
common law in connection with the transactions contemplated by this Agreement or
any other Document.
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10.2 Indemnification by Seller.
(a) Subject to Section 10.1 and Sections 10.2(b) and (c), Seller
shall indemnify, defend, and hold harmless Buyer and its officers, directors,
employees, Affiliates, successors and assigns from and against, and pay or
reimburse each of them for and with respect to, any Loss relating to, arising
out of or resulting from:
(i) Any breach by Seller of any of its representations,
warranties, covenants or agreements in this Agreement or any other
Document; or
(ii) Any obligation, indebtedness or liability of Seller
(other than the Assumed Obligations) regardless of whether disclosed to
Buyer and regardless of whether constituting a breach by Seller of any
representation, warranty, covenant or agreement hereunder or under any
other Document; or
(iii) Noncompliance by Seller with the provisions of the
Bulk Sales Act, if applicable, in connection with the transactions
contemplated by this Agreement.
(b) Seller shall not be obligated to indemnify Buyer unless and
until the aggregate amount of Buyer's Losses exceeds Twenty-Five Thousand
Dollars ($25,000.00) (the "Basket"), in which case Buyer shall then be entitled
to indemnification in the entire amount of Buyer's Losses (i.e., back to the
first dollar of Loss), provided that any adjustment to the Purchase Price
pursuant to Section 2.6 or any payment owed by Seller to Buyer for any Liability
pursuant to or under Section 10.2(a)(ii) shall not be counted in determining
whether the Basket limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation.
(c) The aggregate amount of all payments made by Seller in
satisfaction of claims for indemnification pursuant to this Section 10.2 shall
not exceed Eighteen Million Five Hundred Thousand Dollars ($18,500,000.00) (the
"Cap"), provided that any payment owed by Seller to Buyer pursuant to Section
2.6 or any payment owed by Seller to Buyer for any Liability pursuant to or
under Section 10.2(a)(ii) shall not be counted in determining whether the Cap
has been met.
10.3 Indemnification by Buyer. Subject to Section 10.1, Buyer shall
indemnify and hold harmless Seller and its officers, directors, employees,
agents, representatives, Affiliates, successors and assigns from and against,
and pay or reimburse each of them for and with respect to any Loss relating to,
arising out of or resulting from:
(i) Any breach by Buyer of any of its representations,
warranties, covenants or agreements in this Agreement or any other
Document;
(ii) The Assumed Obligations; and
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(iii) Unless Seller is obligated to indemnify Buyer
pursuant to Section 10.2, all other obligations and liabilities
associated with the operation of the Business after Closing.
10.4 Administration of Indemnification. For purposes of administering
the indemnification provisions set forth in Sections 10.2 and 10.3, the
following procedure shall apply:
(a) Whenever a claim shall arise for indemnification under this
Article, the party entitled to indemnification (the "Indemnified Party") shall
reasonably promptly give written notice to the party from whom indemnification
is sought (the "Indemnifying Party") setting forth in reasonable detail, to the
extent then available, the facts concerning the nature of such claim and the
basis upon which the Indemnified Party believes that it is entitled to
indemnification hereunder. The parties agree to negotiate in good faith in order
to attempt to resolve any claim for indemnification with as small as possible
liability of the Indemnifying Party, and the Indemnified Party shall take no
action in connection with such indemnification claim until thirty (30) days have
expired from the day the notice of the indemnification claim is given to the
Indemnifying Party.
(b) In the event of any claim for indemnification resulting from
or in connection with any claim by a third party, the Indemnifying Party shall
be entitled, at its sole expense, either (i) to participate in defending against
such claim or (ii) to assume the entire defense with counsel which is selected
by it and which is reasonably satisfactory to the Indemnified Party provided
that (A) the Indemnifying Party agrees in writing that it does not and will not
contest its responsibility for indemnifying the Indemnified Party in respect of
such claim or proceeding and (B) no settlement shall be made and no judgment
consented to without the prior written consent of the Indemnified Party which
shall not be unreasonably withheld (except that no such consent shall be
required if the claimant is entitled under the settlement to only monetary
damages actually paid by the Indemnifying Party). If, however, (i) the claim,
action, suit or proceeding would, if successful, result in the imposition of
damages for which the Indemnifying Party would not be solely responsible, or
(ii) representation of both parties by the same counsel would otherwise be
inappropriate due to actual or potential differing interests between them, then
the Indemnifying Party shall not be entitled to assume the entire defense and
each party shall be entitled to retain counsel who shall cooperate with one
another in defending against such claim. In the case of Clause (i) of the
preceding sentence, the Indemnifying Party shall be obligated to bear only that
portion of the expense of the Indemnified Party's counsel that is in proportion
to the damages indemnifiable by the Indemnifying Party compared to the total
amount of the third-party claim against the Indemnified Party.
(c) If the Indemnifying Party does not choose to defend against
a claim by a third party, the Indemnified Party may defend in such manner as it
deems appropriate or settle the claim (after giving notice thereof to the
Indemnifying Party) on such terms as the Indemnified Party may deem appropriate,
and the Indemnified Party shall be entitled to periodic reimbursement of defense
expenses incurred and prompt indemnification from the Indemnifying Party in
accordance with this Article.
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(d) Failure or delay by an Indemnified Party to give a
reasonably prompt notice of any claim (if given prior to expiration of the
applicable Survival Period) shall not release, waive or otherwise affect an
Indemnifying Party's obligations with respect to the claim, except to the extent
that the Indemnifying Party can demonstrate actual loss or prejudice as a result
of such failure or delay. Buyer shall not be deemed to have notice of any claim
by reason of any knowledge acquired on or prior to the Closing Date by an
employee of the Business.
(e) To the extent the Holdback has not been paid to Seller,
Buyer shall be entitled to setoff against the Holdback the amount of any
indemnifiable Loss pursuant to Section 10.2 (subject to the Basket), provided
that Buyer has complied with the applicable obligations in this Section 10.4.
ARTICLE XI
TERMINATION
11.1 Right of Termination. This Agreement may be terminated prior to
Closing:
(a) By written agreement of Seller and Buyer; or
(b) By written notice from Seller or Buyer, provided such
terminating party is not then in material breach of this Agreement if:
(i) The other party has continued in material breach of
this Agreement for twenty (20) days after written notice of such breach
from the terminating party; or
(ii) Closing does not occur within sixty (60) days after
the date hereof other than due to a failure to satisfy the condition
precedent set forth in Section 6.3 and Section 7.3.
11.2 Obligations Upon Termination. Upon termination of this
Agreement, each party shall thereafter remain liable for breach of this
Agreement prior to such termination and remain liable to pay and perform its
indemnity obligation under Article X.
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ARTICLE XII
POST CLOSING
12.1 Termination of Employees. Seller shall pay, discharge and be
solely responsible for all liabilities, obligations, costs and expenses which
arise or become payable as a result of or in connection with Seller's
termination of any of its employees before, upon or after Closing, including,
without limitation, all severance or termination pay and all accrued vacation
and personal days, salary, wages and other compensation payments or benefits, if
any, which arise or become payable as a result of or in connection with such
terminations, except to the extent included as a credit to Buyer in determining
the Adjustment Amount. Seller acknowledges and agrees that Buyer shall not
acquire any rights or interest in, or assume or have any obligations or
liabilities under, any employment agreements or Benefit Plans between Seller and
its employees, except to the extent included as part of the Assumed Obligations.
12.2 Employee Benefit Plans. Buyer shall not acquire any rights or
interest in, or assume or have any obligations or liabilities under, any of the
Benefit Plans, and Seller or the Benefit Plans, as applicable, will retain all
assets and liabilities in respect of Seller's employees under the Benefit Plans.
Seller shall comply with the provisions of the Continuation Coverage Under Group
Health Plan of ERISA, Title I, Part 6, to the extent applicable in connection
with the transactions contemplated by this Agreement.
12.3 Offer of Employment. Buyer hereby agrees to offer employment
(effective as of the Effective Time) to all current employees of Seller on terms
and conditions generally offered and imposed on other prospective employees of
Buyer and its Affiliates. Furthermore, as to such employees who accept
employment with Buyer, Buyer will (i) waive benefit eligibility waiting periods
and pre-existing condition exclusions consistent with its other acquisitions of
publication companies and to the extent permitted under the applicable plan and
(ii) consider the employees' tenure, or a portion of such tenure, with Seller in
computing vacation eligibility and other tenure-based benefits (subject to
limitations imposed by Buyer pursuant to applicable company policies).
12.4 Change of Corporate Name. Seller agrees to deliver to Buyer,
within three (3) business days of the Closing Date, copies of articles of
amendment changing the Seller's corporate name to not include "Country Sampler"
or any similar name thereto, certified by the Office of the Secretary of State
of Illinois.
12.5 Stay Bonus. Seller shall comply with and pay all amounts due
and owing under the stay bonus program Seller adopted, prior to entering into
this Agreement, for the benefit of certain of Seller's key employees.
12.6 Accounts Receivable.
(a) For a period of one-hundred twenty (120) days after the
Closing Date (the "Collection Period"), Buyer will use its usual and customary
procedures to collect the Accounts Receivable outstanding as of the Effective
Time, provided that Buyer shall not be required to commence litigation, employ
legal counsel or a collection
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agency or make any other extraordinary collection efforts. For the purpose of
determining amounts collected by Buyer with respect to the Accounts Receivables,
each payment by an account debtor shall be applied to the older or oldest
accounts receivable of such account debtor unless the account debtor identifies
such an account in writing as being in dispute and directs in writing that a
particular payment be applied to a specific newer account receivable.
(b) Seller shall be required to purchase from Buyer all unpaid
Accounts Receivable for the full amount thereof at the expiration of the
Collection Period, less an amount equal to the product of (i) two percent (2%)
multiplied by (ii) the aggregate amount of the Accounts Receivable as of the
Effective Time (as adjusted, the "Adjusted Receivables Amount"). Within ten (10)
business days after the expiration of the Collection Period, Buyer shall provide
such written evidence as reasonably requested by Seller as to the calculation
and documentation of the Adjusted Receivables Amount. Seller shall, with ten
(10) business days receipt of such materials, pay the Adjusted Receivables
Amount in cash to Buyer, and Buyer shall assign all such unpaid Accounts
Receivable to Seller.
12.7 Possible Purchase of Seller's Interest in Country Sampler Store,
L.L.C. Each of the parties agrees and acknowledges that various discusses have
occurred as to Buyer purchasing Seller's fifty-one percent (51.0%) equity
interest (the "Equity Interest") in The Country Sampler Store, L.L.C. (the
"LLC"), but that no agreement has been reached as to if, and upon what terms,
such purchaser would occur. In order that such discussions can continue and
Buyer can continue to learn more about the operations of the LLC, the parties
hereto agree as follows:
(a) From the period from the date hereof and ending on the
three-month anniversary of the Closing Date (the "CSS Period"), as long as Buyer
desires to pursue the possible purchase of the Equity Interest, Buyer and Seller
shall continue the discussions as to Buyer's possible purchase of the Equity
Interest. (Buyer agrees to promptly notify Seller if Buyer no longer desires to
pursue the possible purchase of the Equity Interest, and the CSS Period shall
end upon delivery of such notice to Seller.) During the CSS Period, Buyer shall
have a right of first refusal to match any offer, the terms of which are
acceptable to Seller (the "Offer"), to purchase all or any portion of the Equity
Interest on the same terms (including the form of consideration and the timing
of payments of such consideration) as offered by the potential purchaser.
Promptly upon receipt of any Offer during the CSS Period, Seller shall promptly
give written notice to Buyer of all of the terms of the Offer, and Buyer shall
have thirty (30) days in which to match the Offer by providing written
acceptance to Seller. If such acceptance is given, the purchase of the Equity
Interest (or portion thereof) by Buyer shall close within thirty (30) days of
the Seller's receipt of the acceptance.
(b) Seller agrees and acknowledges that one of the Business
Agreements transferred to Buyer pursuant Section 2.1(f) is the License Agreement
between Seller's predecessor, Sampler Publications, Inc., and the LLC, dated as
of June 30, 1997 (the "License Agreement"). Accordingly, as long as Seller owns
the Equity Interest, Seller agrees to cause the LLC to make all payments
required to be
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made under the License Agreement to be paid to Buyer and to otherwise fulfill
its obligations under the License Agreement.
(c) During the CSS Period, Buyer shall cause the employees of
Seller who become employed by Buyer to provide the same administrative and
managerial services to the LLC as currently provided or required to be provided
pursuant to the LLC's operative documents (the "CSS Services"). Buyer shall be
reimbursed by Seller for all of its wage and benefit costs incurred in providing
the CSS Services, to the extent quantifiable, without any mark-up for corporate
or other overhead expenses. On a monthly basis, Buyer shall provide to Seller
written documentation as to such costs, and Seller shall promptly reimburse
Buyer in cash for such costs.
ARTICLE XIII
MISCELLANEOUS
13.1 Further Actions. From time to time before, at and after the
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents as reasonably requested by the other party in
order more effectively to consummate the transactions contemplated hereby.
13.2 Payment of Expenses.
(a) All sales, use, stamp, transfer, grant and other similar
taxes payable in connection with consummation of the transactions contemplated
hereby shall be paid by Seller.
(b) Seller and Buyer shall split equally payment of all filing
fees under the HSR Act.
(c) Except as otherwise expressly provided in this Agreement,
each of the parties shall bear its own expenses, including the fees of any
attorneys and accountants engaged by such party, in connection with this
Agreement and the consummation of the transactions contemplated herein.
13.3 Specific Performance. Seller acknowledges that each Publication is
of a special, unique and extraordinary character, and that damages alone are an
inadequate remedy for a breach of this Agreement by Seller. Accordingly, as an
alternative to termination of this Agreement under Section 11.1, Buyer shall be
entitled in the event of Seller's breach to enforcement of this Agreement
(subject to obtaining any required approval of the HSR Act) by a decree of
specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. Such right of specific performance or
injunctive relief shall be in addition to, and not in lieu of, Buyer's right to
recover damages and to pursue any other remedies available to Buyer for Seller's
breach. In any action to specifically enforce Seller's obligation to close the
transactions contemplated by this Agreement, Seller shall waive the defense that
there is an adequate remedy at law or in equity and agrees that Buyer shall be
entitled to obtain specific performance of Seller's obligation to close without
being required to prove actual damages. As a condition to seeking specific
performance, Buyer shall not be
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required to tender the Purchase Price as contemplated by Section 2.4 but shall
be required to demonstrate that Buyer is ready, willing and able to tender the
Purchase Price as contemplated by such Section.
13.4 Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
courier (including overnight delivery service) addressed as follows:
(a) if to Buyer, to:
Emmis Publishing, L.P.
c/o Emmis Communications Corporation
One Emmis Plaza, Suite 700
40 Monument Circle
Indianapolis, Indiana 46204
Attention: J. Scott Enright, Vice President and
Associate General Counsel
Copy to:
Bose McKinney & Evans
2700 First Indiana Plaza
Indianapolis, Indiana 46204
Attention: Dwight L. Miller, Esq.
(b) if to Seller, to:
Country Sampler, Inc.
c/o Rooks, Pitts and Poust
4200 Commerce Court, #300
Lisle, Illinois 60532
Attention: David Bressler, Esq.
Copy to:
Rooks Pitts & Poust
4200 Commerce Court, #300
Lisle, Illinois 60532
Attention: David Bressler, Esq.
or such other address as a party may from time to time notify the other party in
writing (as provided above). Any such notice, demand or communication shall be
deemed to have been given (i) if so mailed, as of the close of the third
business day following the date so mailed, and (ii) if delivered by courier, on
the date received.
13.5 Entire Agreement. This Agreement, the Schedules, Exhibits
and the other Documents constitute the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersede any
prior negotiations,
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agreements, understandings or arrangements between the parties hereto with
respect to the subject matter hereof.
13.6 Binding Effect; Benefits. Except as otherwise provided herein,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or permitted assigns. Except to the
extent specified herein, nothing in this Agreement, express or implied, shall
confer on any person other than the parties hereto and their respective
successors or permitted assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
13.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by either party without the
prior written consent of the other party, provided that:
(a) Either party may assign its rights under this Agreement as
collateral security to any lender providing financing to the party or any of its
Affiliates; and
(b) Buyer may assign all of its rights under this
Agreement to an Affiliate, provided that (i) the representations and
warranties of Buyer hereunder shall be true and correct in all material respects
as applied to the assignee, (ii) both Buyer and the assignee shall execute and
deliver to Seller a written instrument in form and substance satisfactory to
Seller within its reasonable judgment in which both Buyer and the assignee agree
to be jointly and severally liable for performance of all of Buyer's obligations
under this Agreement, and (iii) Buyer and the assignee shall deliver such other
documents and instruments as reasonably requested by Seller, including
appropriate certified resolutions of the boards of directors of Buyer and the
assignee.
13.8 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Indiana without regard
to its principles of conflicts of laws.
13.9 Amendments and Waivers. No term or provision of this Agreement may
be amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
13.10 Severability. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
13.11 Attorneys' Fees. If one party brings suit against the other
in connection with this Agreement or any other Document and the party against
whom suit is brought
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(the "Defendant") is successful in denying substantially all the relief sought
by the claimant, then the Defendant shall be entitled to recover from the
claimant the reasonable attorneys' fees and other costs and expenses incurred by
the Defendant in connection with such suit regardless of whether such suit is
prosecuted to judgment.
13.12 Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
13.13 Counterparts. This Agreement may be executed in any number of
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.14 References. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.15 Schedules and Exhibits. Unless otherwise specified herein, each
Schedule and Exhibit referred to in this Agreement is attached hereto, and 4each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above.
COUNTRY SAMPLER, INC.
By: /s/ MARK A. NICKEL
------------------
Mark A. Nickel, Chief Executive Officer
"Seller"
/s/ MARK A. NICKEL
------------------
Mark A. Nickel, Individually
"Owner"
EMMIS PUBLISHING, L.P.
By: Emmis Communications Corporation,
Its General Partner
By: /s/ JEFFREY H. SMULYAN
----------------------
Jeffrey H. Smulyan, Chairman
"Buyer"
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement"), made this 1st day of
April, 1999, by and between EMMIS PUBLISHING, L.P., an Indiana limited
partnership (the "Company"), and MARK A. NICKEL, an Illinois resident
("Consultant").
W I T N E S S E T H: THAT
WHEREAS, of even date herewith, the Company purchased substantially all
the assets of Country Sampler, Inc., of which Consultant was an owner and by
which the Consultant was employed, pursuant to an Asset Purchase Agreement,
dated as of February 23, 1999, by and among Country Sampler, Inc. (to be known
as "Archdale Holding, Inc. ("Archdale"), the Company and Consultant; and
WHEREAS, the Company desires to obtain future services of Consultant,
and to safeguard the Company against disclosure of confidential data.
NOW, THEREFORE, in consideration of the engagement of Consultant by the
Company and the other benefits provided him under this Agreement and the mutual
covenants herein contained, and in consideration of other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereby
agree as follows:
1. Consulting. During the Term (as hereinafter defined), Consultant,
individually or through Archdale, shall serve as a consultant to the Company
with such reasonable duties and responsibilities as are specified by the
Company's chief executive officer or his designee (collectively, the "Duties")
from time to time consistent with Consultant's prior position with Country
Sampler, Inc. In fulfilling his Duties, Consultant shall be required (i) to
travel only as reasonably requested by the Company and (ii) to provide his
services on an as-available basis.
2. Best Efforts. Consultant shall at all times faithfully and
diligently perform his obligations under this Agreement, and in connection with
the performance of his duties hereunder shall act in the best interest of the
Company and its affiliated companies including any parent or subsidiaries
(hereinafter, where applicable, the reference to the "Company" shall include the
Company and such affiliated companies together).
3. Consulting Fees. On the date hereof and on each April 1 of 2000,
2001, 2002, and 2003, the Company shall pay to Consultant, or to Archdale if
designated by Consultant, consulting fees of Five Hundred Thousand Dollars
($500,000.00), payable in cash. Consultant shall be responsible for all Federal,
State and local taxes applicable to the amounts paid by the Company under this
Agreement. In no case shall the Company be liable for any additional payments to
Consultant due to any tax liability incurred by Consultant as a result of this
Agreement. Consultant agrees to indemnify the Company, and its officers,
directors, employees and agents, for any and all tax liability (including but
not limited to, fines, penalties, interest and costs and expenses
41
including attorneys' fees) arising from or relating to any amounts paid pursuant
to this Agreement. Consultant is at all times during this Agreement an
independent contractor and shall not be considered an employee of the Company.
4. Expenses. Consultant shall be entitled to reimbursement for such
reasonable expenses as shall be determined in accordance with the Company's
policies regarding reimbursement of expenses and pursuant to the prior
determinations of the Company's officers.
5. Fringe Benefits. Consultant will be entitled to no benefits of any
type as he is an independent contractor.
6. Use of Office and Storage Space. During the period of this
Consulting Agreement, the Company shall provide and make available to
Consultant, the occupancy and use of the office and storage space and equipment
and furniture that is currently available to Consultant at 707 Kautz Road, St.
Charles, Illinois.
7. Non-Disclosure of Confidential Information.
(a) As used herein, the term "Confidential Information" means: any
oral or written information disclosed to Consultant or known by Consultant which
relates to the Company's business, products, processes, or services, including,
but not limited to, information relating to research, sales, development,
inventions, computer program designs, programming techniques, flow charts,
source code, object code, passwords, access codes, products under development,
costs, pricing, purchasing, accounting, technical data, marketing, business
plans, and objectives of the Company and its affiliates; identity and
requirements of customers of the Company and its affiliates; and the
documentation thereof, provided that Confidential Information shall not include:
(i) information which is published or is or becomes publicly known through no
wrongful action of the publisher or the recipient; (ii) information obtained
from or by a third party within such third party's legal rights; or (iii)
information developed independently by Consultant or any third party. It will be
presumed that information supplied to Consultant from affiliates of the Company
and other outside sources is Confidential Information unless and until it is
designated otherwise.
(b) Consultant acknowledges that all Confidential Information
shall at all times remain the property of the Company, and the Company shall
have free and unlimited access at all times to all materials containing
Confidential Information and shall have the right to claim and take possession
of such materials on demand.
(c) Consultant will not, during Consultant's consulting with the
Company or thereafter, directly or indirectly use, divulge, disseminate,
disclose, lecture upon, or publish any Confidential Information without having
first obtained written permission from the Company to do so.
(d) Consultant will safeguard and maintain secret all Confidential
Information and all documents and things that include or embody Confidential
Information.
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(e) Upon termination of Consultant's consulting, for whatever
reason, or upon request by the Company, Consultant will deliver to the Company
all notes, computer program listings, flow charts, drawings, memoranda,
correspondence, documents, records, notebooks, tapes, disks, and similar
repositories of Confidential Information, including all copies thereof then in
Consultant's possession or under Consultant's control, whether prepared by
Consultant or by others.
(f) Consultant acknowledges that the legal remedy available to the
Company for any breach of covenants in this Agreement on the part of Consultant
may be inadequate, and therefore, in the event of any threatened or actual
breach of this Agreement and in addition to any other right or remedy which the
Company may have, the Company shall be entitled to specific enforcement of this
Agreement through injunctive or other equitable relief in a court with
appropriate jurisdiction. Further, in addition to other equitable and legal
relief available to the Company, Consultant shall pay the Company's costs and
reasonable attorney fees incurred in enforcing this Agreement or in seeking
relief from Consultant's breach of this Agreement.
8. Term. The term of this Agreement is from the date hereof and until
March 31, 2004.
9. Obligation to Make Payments. In the event of Consultant's death or
his sustaining a condition which disables him from performing the obligations
imposed by this Agreement (which condition is expected to be permanent or of
greater than two years duration), within thirty (30) days of the Consultant's
death or disability, as additional consideration for services rendered, Company
shall pay the balance of the unpaid consulting fees which will become due under
the remaining term of this Agreement to Archdale, unless otherwise directed by
Consultant during his lifetime, his guardian or his estate, as appropriate.
10. Entire Agreement. This Agreement contains the entire agreement of
the parties relating to the consulting by Consultant for the Company,
superseding any and all such prior agreements and cannot be amended, modified or
supplemented in any respect except by subsequent written agreement entered into
by the parties.
11. Assignment. Consultant acknowledges that the services to be
rendered by Consultant are unique and personal; accordingly, Consultant may not
assign any of the Consultant's rights or delegate any of the Consultant's duties
or obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the legal
representatives, successors and assigns of the Company.
12. No Waiver. No failure on the part of either party to require the
performance by the other party of any term of this Agreement shall be taken or
held to be a waiver of such term or in any way affecting such party's right to
enforce such term, and no waiver on the part of either party of any term in this
Agreement shall be taken or held to be a waiver of any other term hereof or the
breach thereof.
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13. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision had not been contained herein.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of Indiana.
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IN WITNESS WHEREOF, executed as of the date and year first above
written.
EMMIS PUBLISHING, L.P.
By: Emmis Communications
Corporation,
Its General Partner
By: /s/ J. Scott Enright
--------------------------------------
J. Scott Enright, Vice President
The "Company"
/s/ Mark A. Nickel
--------------------------------------
"Consultant"
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EMMIS COMMUNICATIONS CORPORATION
April 1, 1999
Mr. Mark A. Nickel
RE: Consulting Agreement (the "Agreement") between Emmis Publishing,
L.P. and you, dated as of the date hereof.
Dear Mark:
This letter will augment and clarify Section 1 in the Agreement and
your obligation to fulfill your Duties (as defined in the Agreement) and Emmis
Publishing's obligation to make the payments to you required in Section 3 of the
Agreement. Specifically, if you fail to fulfill the Duties for any reason
besides your death or disability (which situations are covered in Section 9 of
the Agreement), the Company will remain obligated to make the payments in the
amounts and at the times provided in Section 3 of the Agreement.
If you have any questions about this, please call the undersigned.
Thank you.
Sincerely,
EMMIS PUBLISHING, L.P.
By: Emmis Communications
Corporation, Its General Partner
By: /s/ J. Scott Enright
-------------------------------
J. Scott Enright, Vice President