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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
__________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
October 15, 1997
____________________________
(Date of earliest event reported)
BIG FLOWER HOLDINGS, INC.
_______________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-14084 13-397-1556
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(State of other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3 East 54th Street
New York, New York 10022
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(Address of principal executive offices, including zip code)
(212) 521-1600
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(Registrant's telephone number, including area code)
BIG FLOWER PRESS HOLDINGS, INC.
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On October 15, 1997, Treasure Chest Advertising Company, Inc. ("Treasure
Chest"), a Delaware corporation and a wholly-owned subsidiary of Big Flower
Holdings, Inc. (a successor registrant to and a new parent holding company of
Big Flower Press Holdings, Inc.) (the "Registrant"), completed its acquisition
(the "RCPC Acquisition") of certain assets and liabilities of Gruner + Jahr
Printing & Publishing Co., a Delaware general partnership ("Gruner + Jahr")
operating as the Riverside County Publishing Company ("RCPC"), First Western
Graphics, West Coast Ink, PrepSAT Riverside and PrepSAT San Leandro, pursuant to
an Asset Purchase Agreement, dated as of September 19, 1997 (the "Asset Purchase
Agreement"), by and between the Treasure Chest and Gruner + Jahr. The aggregate
purchase price for the RCPC Acquisition was approximately $105,500,000 in cash,
subject to a post-closing adjustment. The purchase price was established
through arms-length negotiations between Treasure Chest and Gruner + Jahr.
Treasure Chest obtained funds necessary to finance the RCPC Acquisition
from borrowings under a Credit Agreement, dated June 12, 1997, among Big Flower
Press Holdings, Inc., the financial institutions from time to time a party
thereto, Bank of America NT & SA and The Industrial Bank of Japan Limited, as
Co-Agents, Credit Suisse First Boston, as Documentation Agent, and Bankers Trust
Company, as Administrative Agent.
RCPC operates in Riverside and San Leandro, California and produces
advertising inserts for grocers, drugstores, home improvement merchants and
other retailers. The Registrant intends to continue to use the assets acquired
in the acquisition for the same purpose as used by Gruner + Jahr prior to the
RCPC Acquisition.
The foregoing description of the RCPC Acquisition does not purport to be
complete and is qualified in its entirety by reference to the Asset Purchase
Agreement, a copy of which is attached as Exhibit 2.1 hereto and is incorporated
by reference herein in its entirety.
On October 15, 1997, the Registrant issued a press release, a copy of which
is attached as Exhibit 99.1 hereto and is incorporated by reference herein in
its entirety, announcing the consummation of the RCPC Acquisition.
Item 7. Financial Statements, PRO FORMA Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable for the Registrant to provide the financial
statements required to be filed herewith at the time this report on Form 8-K is
filed. The Registrant expects to file the required financial statements by
means of an amendment to this Current Report on Form 8-K as soon as practicable,
and in any case not later than December 29, 1997.
(b) Pro Forma Financial Information.
It is impracticable for the Registrant to provide the pro forma
financial information required to be filed herewith at the time this report on
Form 8-K is filed. The Registrant expects to file the required pro forma
financial information by means of
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an amendment to this Current Report on Form 8-K as soon as practicable, and in
any case not later than December 29, 1997.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of September 19, 1997, by and
between Treasure Chest Advertising Company, Inc. and Gruner + Jahr
Printing & Publishing Co. (omitting schedules and exhibits thereto,
which will be furnished supplementally to the Commission upon
request).
99.1 Copy of press release issued by the Registrant on October 15, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
BIG FLOWER HOLDINGS, INC.
Date: October 29, 1997 By: /s/ Irene B. Fisher
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Name: Irene B. Fisher
Title: Vice President
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EXHIBIT INDEX
2.1 Asset Purchase Agreement, dated as of September 19, 1997, by and
between Treasure Chest Advertising Company, Inc. and Gruner + Jahr
Printing & Publishing Co. (omitting schedules and exhibits thereto,
which will be furnished supplementally to the Commission upon
request).
99.1 Copy of press release issued by the Registrant on October 15, 1997.
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of September 19,
1997, by and between GRUNER + JAHR PRINTING & PUBLISHING CO., a Delaware general
partnership with its address for the purposes hereof c/o Brown Printing Company,
2300 Brown Avenue, Waseca, MN 53906 ("Seller") and TREASURE CHEST ADVERTISING
COMPANY, INC., a Delaware corporation with its address for the purposes hereof
at 250 W. Pratt Street, Baltimore, Maryland 21201 ("Purchaser").
WHEREAS, Seller is engaged, among other things, in the business of offset
and rotogravure printing, consisting, in part, of Riverside County Publishing
Company, an unincorporated division of Seller operating from facilities in
Riverside and San Leandro, California, including (a) those assets of the
associated prepress business of PrepSAT operating at the Division and (b) those
assets of the West Coast Ink business operating from facilities in San Leandro,
California (such operations being referred to as the "Division" and the business
carried on at the Division, including the PrepSAT business and the West Coast
Ink business there located, as the "Business"),
WHEREAS, Seller desires to sell substantially all of the assets, properties
and rights used in its operations at the Division and the associated Business
thereof, and Purchaser desires to purchase the same, all in accordance with the
terms and conditions of this Agreement, and
WHEREAS, Seller will continue in the offset printing business subsequent to
the closing of the transactions contemplated hereby, subject to Section 12.2
hereof,
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
1. DEFINITIONS. The words "hereof", "herein", "hereto" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Terms defined in the singular shall have a comparable meaning when used in the
plural, and VICE VERSA. As used herein, the following terms shall have the
following meanings:
ACCOUNTS as defined in Section 2.2.1 below
ACCRUED COMPENSATION items of accrued compensation set forth on Books
and Records of Seller and reflected on the line
item "Accrued Compensation" on the Pro Forma
Balance Sheet
ADJUSTED PURCHASE PRICE the Purchase Price (as hereafter defined), as
increased or decreased by the Working Capital
Adjustment (as hereafter defined) and the Property
Adjustment (as
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hereafter defined)
AFFILIATE with respect to a given Person (as hereafter
defined), any Person directly or indirectly
controlling, controlled by or under common control
with such Person, and "CONTROL" means the
possession, directly or indirectly, of the power
to direct or cause the direction of the management
and policies of the given Person, whether through
ownership of voting equities, by contract or
otherwise
AGREEMENT this Asset Purchase Agreement, together with the
Exhibits hereto
ALLOCATION the allocation of the Adjusted Purchase Price to
the Assets as set forth in Section 3.4 hereunder
ASSETS Assets used in the Business of the Division being
sold to Purchaser hereunder, as further set forth
in Section 2.2 hereunder
ASSUMED LIABILITIES liabilities and obligations of the Division being
assumed by the Purchaser, as further set forth in
Section 2.4 hereunder
BOOKS AND RECORDS all books, records, ledgers, files, reports or
plans, written or electronic, of or maintained by
or maintained for the Division, or by Seller
solely with respect to the Division
BROWN 401(K) PLAN as defined in Section 6.13.3 hereunder
BUSINESS as defined in the recitals to this Agreement
BUSINESS DAY any day other than a Saturday, Sunday, or a day on
which banks in New York City are authorized or
obligated by law or executive order to close
CASH as defined in Section 2.2.1 hereunder
CERCLA the Comprehensive Environmental Response,
Compensation and Liability Act, as amended
CERCLIS the Comprehensive Response, Compensation Liability
Information System List
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CLAIM any claim, cause of action, action, lawsuit,
litigation, arbitration, administrative
proceeding, condemnation proceeding, expropriation
proceeding or other legal proceeding, whether by
or against Seller and whether any party thereto is
private or public
CLOSING the completion of the transaction herein
contemplated, as further described in Section 4.1
hereunder
CLOSING DATE The fourth Business Day following the date on
which all conditions set forth in Section 9 shall
have been satisfied or waived, or such other date
and time agreed to by Seller and Purchaser
CLOSING DATE BALANCE SHEET the audited and consolidated balance sheet of the
Division as at the Closing Date as prepared in
accordance with Section 3.4.2 hereof
CLOSING DATE WORKING CAPITAL Working Capital of the Division as at the Closing
Date, as shall be determined from the Closing Date
Balance Sheet, in the same manner as the June 30
Working Capital (as hereafter defined) was
determined from the Pro Forma June 30 Balance
Sheet (as hereafter defined)
CODE the Internal Revenue Code of 1986, as amended
CONFIDENTIAL INFORMATION as defined in Section 2.2.5 hereunder
CONFIDENTIALITY AGREEMENT a certain confidentiality agreement between Seller
and Purchaser dated as of May 27, 1997, in respect
of, INTER ALIA, Purchaser's due diligence
investigation of the Business and the Division
CUSHION as defined in Section 10.2 hereunder
DAMAGES all losses, liabilities, damages, judgments,
settlements, penalties and expenses, including
without limitation, reasonable fees and expenses
of investigation and reasonable attorneys fees and
disbursements
DIVISION(S) as defined in the recitals to this Agreement
EMPLOYEE BENEFIT PLAN any severance pay, supplemental unemployment,
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vacation, leave of absence, incentive or deferred
compensation plan or right, or any equity
participation or equity appreciation plan or
right, or any health, dental, disability, workers'
compensation or other insurance plan (including
any self-insured arrangements), or any other
employee benefit plan (as defined in Section 3(3)
of the Employee Retirement Income Security Act of
1974, as amended), or any other employee benefit
plan, program, policy or arrangement applicable to
or maintained by Seller for the benefit of
employees of the Division
ENVIRONMENT as defined in Section 6.16.1 hereunder
ENVIRONMENTAL CLAIM as defined in Section 6.16.1 hereunder
ENVIRONMENTAL CONDITION as defined in Section 6.16.1 hereunder
ENVIRONMENTAL LAW as defined in Section 6.16.1 hereunder
ESTIMATED CLOSING DATE
BALANCE SHEET Seller's good faith reasonable estimate of the
audited and consolidated balance sheet of the
Division as of the Closing Date as prepared in
accordance with Section 3.3.2 hereof
ESTIMATED CLOSING DATE
WORKING CAPITAL Seller's good faith reasonable estimate of the
Working Capital of the Division, as shall be
determined from the Estimated Closing Date Balance
Sheet
ESTIMATED WORKING CAPITAL
ADJUSTMENT The amount calculated by subtracting the June 30
Working Capital from the Estimated Closing Date
Working Capital
EXCESS PAID LEAVE RESERVE as defined in Section 3.3.2.1 hereunder
EXCLUDED ASSETS Assets of the Division not being transferred to
Purchaser, as set forth in Section 2.3 hereunder
EXCLUDED LIABILITIES liabilities and obligations of the Division not
being assumed by Purchaser, as set forth in
Section 2.5 hereunder
FIXED ASSETS as defined in Section 2.2.10 hereunder
GAAP generally accepted accounting principles in the
United
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States
GOVERNMENTAL BODY any federal, state or municipal or other local
court or governmental body or any subdivision,
commission, board, bureau, instrumentality,
administrative agency, official or other authority
thereof
HAZARDOUS SUBSTANCE any toxic, caustic or otherwise hazardous
substance, pollutant or contaminant, including,
without limitation, (i) any petroleum or other
hydrocarbon products, by-products and derivatives,
radon gas, radioactive materials, asbestos in any
form that is friable, urea formaldehyde foam
insulation, transformers or other equipment that
contain dielectric fluid containing levels of
polychlorinated biphenyls in amounts in excess
permissible levels, (ii) any chemicals, materials
or substances defined as or included in the
definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes",
"toxic substances", "toxic pollutants" or words of
similar import, under any applicable Environmental
Law and (iii) any other chemical, material or
substance, exposure to which is prohibited,
limited or regulated by any Governmental Body or
Law
HSR ACT the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended
INTERIM PERIOD the time from the close of business on June 30,
1997 to the close of business on the Closing Date
JUNE 30 FINANCIALS the audited and consolidated financial statement
of the Division, consisting of a balance sheet of
the Division as of June 30, 1997 (the "JUNE 30
BALANCE SHEET") and a statement of operations and
statement of cash flows for the fiscal year then
ended for the Division, prepared by Seller and
audited by Price Waterhouse LLP, auditors for
Seller ("PW") as set forth on Exhibit 6.4 hereto
JUNE 30 WORKING CAPITAL Working Capital of the Division as at June 30,
1997 as determined from the Pro Forma June 30
Balance Sheet, the amount of which is $14,293,455
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LAW any law, statute, ordinance, rule or regulation of
any Governmental Body
LEASE as defined in Section 6.7.3 hereunder
LIABILITY any liability including any direct or indirect
indebtedness, guaranty, endorsement, claim,
deficiency, cost, expense, obligation or
responsibility (whether absolute, fixed, accrued,
contingent or otherwise)
LIEN any lien, security interest, mortgage, pledge,
charge, claim, encumbrance, restriction or legal
limitation of any kind
MATERIAL CONTRACT each contract, agreement, plan, arrangement or
procedure required to be listed on Exhibit 6.12
pursuant to Section 6.12 hereunder
NOTICE any written notice, notification, demand, request
for information, citation, summons or other
writing
NOTICE OF DISAGREEMENT as defined in Section 3.3.4 hereunder
ORDER any judgment, injunction, stipulation, order,
writ, award or decree issued by any Governmental
Body or any arbitrator, arising in connection with
any Claim of any private Person or Governmental
Body
PARTNERSHIP AGREEMENT the partnership agreement of Seller, as amended to
date
PERMIT any permit, license, certificate, permission,
easement, variance, order, consent, registration,
certification, approval or any other authorization
of any kind granted by any Governmental Body
PERMITTED ENCUMBRANCES as defined in Section 2.1 hereunder
PERSON any person, individual, firm, company,
corporation, partnership, trust or any other
natural or juridical person or entity
PERSONNEL any officer or employee of the Division
POST-CLOSING PAYMENT DATE the date on which the Working Capital Adjustment
is to be paid, as set forth in Section 3.4.4.1
hereunder
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PREPAIDS as defined in Section 2.2.9 hereunder
PRO FORMA JUNE 30
BALANCE SHEET June 30 Balance Sheet which has been adjusted to
eliminate the Excluded Liabilities and the
Excluded Assets; a copy of such Pro Forma June 30
Balance Sheet (which specifically sets forth the
amount of each such adjustment) is attached as
Exhibit 3.3.1 hereto
PROPERTY ADJUSTMENT as defined in Section 3.3.8 hereunder
PURCHASE PRICE the amount to be paid by Purchaser to Seller at
the Closing, as further set forth in Section 3.1
hereunder as adjusted by Section 3.3
PURCHASER as defined in the recitals hereto
PURCHASER'S PLANS as defined in Section 7.6 hereunder
QUOTATION as defined in Section 6.14 hereunder
REAL PROPERTY as defined in Section 2.2.10 hereunder
RECEIPT DATE as defined in Section 3.3.4 hereunder
RECEIVABLES as defined in Section 2.2.2 hereunder
RELEASE disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping,
emptying, seeping, placing and the like on, under,
above, into or upon any land, water or air, or
otherwise entering into the Environment, or
otherwise, the release or threatened release of a
Hazardous Substance, as defined in 42 U.S.C.
Section 9601(22)
REMEDIAL ACTION as defined in Section 6.16.1(iv) hereunder
REQUIRED DELETIONS as defined in Section 8.3.1 hereunder
RIGHTS as defined in Section 2.2.6 hereunder
RIGHTS OF ACTION as defined in Section 2.2.8 hereunder
SELLER as defined in the recitals to this Agreement
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SELLER'S OTHER FACILITIES all plants and facilities of Seller other than the
Division
SELLER'S PRINT CUSTOMERS customers of Seller for work produced at Seller's
Other Facilities pursuant to contractual
commitments (including Quotations) in force on the
Closing Date
SOFTWARE as defined in Section 2.2.7 hereunder
TANGIBLE PROPERTY as defined in Section 2.2.3 hereunder
TAXES all taxes of any nature (including, without
limitation, gross receipts, income, estimated,
franchise, use or property taxes and customs
duties) imposed upon the Seller in respect of the
Division or the Business or its property held for
the Division by any taxing jurisdiction anywhere
in the world, or that any Seller in the Business
carried on by the Division is required to collect
from others (including, without limitation, taxes
imposed on retail sales and amounts that are
required to be withheld from payments to employees
or to foreign Persons) and all interest, additions
to tax, penalties, fines and other amounts that
are imposed with respect to any such taxes or
amounts
THIRD ACCOUNTING FIRM as defined in Section 3.3.5 hereunder
TITLE COMPANY as defined in Section 8.3.1 hereunder
TRANSFER TAX a Tax or similar governmental imposition, imposed
as a result of the transactions contemplated by
this Agreement upon the sale or other transfer of
a particular asset or assets based upon the sale
price, market value or similar measure of the
assets transferred (but not including any income,
franchise, gross receipts or similar Tax that is
measured by net or gross income) regardless of
whether Seller or Purchaser is exclusively or
primarily liable for such tax or imposition, and
all interest, additions to tax, penalties, fines
and other amounts that are imposed with respect to
such tax or imposition.
TRANSFERRED EMPLOYEES as defined in Section 11.1.1 hereunder
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WARN ACT the Worker Adjustment and Retraining Notification
Act of 1988, as amended, or any similar state law
WORK PAPERS as defined in Section 3.3.4 hereunder
WORKING CAPITAL current assets minus current liabilities
WORKING CAPITAL ADJUSTMENT the amount calculated by subtracting the Estimated
Closing Date Working Capital from the Closing Date
Working Capital
WORKING CAPITAL REPORT as defined in Section 3.3.6.2 hereunder
2. PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
hereof, Seller agrees to sell, transfer, assign and deliver to Purchaser on the
Closing Date, effective as of the close of business on the Closing Date, to
Purchaser, and Purchaser agrees to buy from Seller, all of Seller's rights,
title and interest in and to the Assets, free and clear of all Liens, except for
those Liens (the "Permitted Encumbrances") described on Exhibit 2.1 hereto.
2.2. DEFINITION OF ASSETS. "Assets" shall mean all of the assets,
properties and rights of Seller of every kind and description, whether real or
personal, tangible or intangible, and wherever situated, relating to the
operation of the Division and the Business, except the Excluded Assets. Assets
shall include, but not be limited to, the following categories of assets held
by, owned by or, in the case of a leasehold interest, leased by Seller, but only
in respect of the Division or the Business, in each case whether or not
reflected on the June 30 Balance Sheet, as of the Closing:
2.2.1. all cash or cash equivalents, whether in hand or held in accounts
with banks or other financial institutions, held and owned as of the Closing
Date (respectively, "Cash" and "Accounts");
2.2.2. all accounts receivable, notes receivable or other receivables
("Receivables");
2.2.3. all machinery, equipment, inventory, unbilled work in process,
raw material, office furniture, fixtures, leasehold improvements, computers,
cameras, copiers, tools, vehicles, maintenance and other supplies, goods and
other tangible personal property of the Division and used or held for use in the
Business, including leasehold interests in tangible personal property ("Tangible
Property");
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2.2.4. all agreements, contracts, purchase orders, commitments, leases,
plans, bids, Quotations, proposals, Permits, instruments and other documents
relating to the Business, to the extent assignable to Purchaser ("Assumed
Contracts"), including the Material Contracts set forth on Exhibit 6.12 hereto;
2.2.5. all technologies, methods, formulations, databases, customer
lists, trade secrets, production methods and techniques, know-how, inventions,
training programs, and other intellectual property and confidential information
used in the Business or under development for use in the Business ("Confidential
Information");
2.2.6. all rights (whether pursuant to oral or written licenses or
otherwise) under any patent, trademark, service mark (and in the case of
trademarks or service marks, the goodwill of the Business symbolized by and
associated with such mark), logo, trade name or copyright used in the Business,
whether owned or used subject to license granted by third parties, and whether
registered or unregistered, and any applications for registration thereof,
including the following corporate or business names: Riverside County Publishing
Company; First Western Graphics; and West Coast Ink and including the exclusive
rights to the copyright(s) in the database currently used in the Business with
respect to Rite Aid ("Rights");
2.2.7. all computer software used in the Business and created or owned
by Seller, including documentation and available object and source codes,
whether for the purposes of assisting the Business as currently carried on or
for third party training purposes ("Software")
2.2.8. all of Seller's Claims and other rights, causes of action, choses
in action and rights of recovery against third parties relating to the Business
or the Assets, including without limitation all rights under express or implied
warranties relating to any of the foregoing Assets to the extent any claims now
do or by the Closing Date will exist with respect to the Business or any of the
Assets ("Rights of Action");
2.2.9. all rights arising from the prepayment of any expenses or
obligations of Seller, which by their terms are not due for payment until
subsequent to the Closing Date ("Prepaids");
2.2.10. all fixed assets, all real property and all real property to
which Seller has the right to acquire a fee interest ("Fixed Assets"), including
any buildings, structures, installations, fixtures and improvements thereon or
appurtenances belonging thereto, and all licenses and permits relating thereto,
including (i) all real property owned by Seller listed on Exhibit 6.7.3(1)
hereto ("Real Property") and (ii) all real property leased by Seller listed on
Exhibit 6.7.3(2) hereto ("Leased Real Property");
2.2.11. to the extent assignable, all Permits relating to the
foregoing Assets or otherwise to the Business;
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2.2.12. all information, files, books, records, data, plans and
recorded knowledge, including customer and supplier records, related to the
foregoing Assets or otherwise to the Business ("Books and Records").
2.3. EXCLUDED ASSETS. Anything contained in this Agreement to the contrary
notwithstanding, the Assets shall not include all of the assets, properties and
rights of Seller of every kind, nature and description (whether real or
personal, tangible or intangible, and wherever situated) which are not used in,
arising from or relating to the Business, and any of the following assets,
properties or rights of Seller as of the Closing Date (collectively, the
"Excluded Assets"):
2.3.1 any assets of any nature owned or leased by Seller and used
exclusively at or held in respect of any plant, facility or operations other
than the Division or any business other than the Business;
2.3.2 any right which accrues or will accrue to Seller under this
Agreement;
2.3.3. any right to any of Seller's claims for any federal, state, local
or foreign tax refund with respect to the Division or the Business.
2.3.4. any asset of any Employee Benefit Plan (as set forth in Section
6.13 hereof);
2.3.5 any right (including logos or other associated rights) with
respect to the use of the names "Gruner + Jahr" or "G+J" or "Brown" or "PrepSAT"
(subject to Section 12.2);
2.3.6 Seller's insurance contracts and policies;
2.3.7 with respect to Software and Confidential Information, (i) Seller
shall retain ownership of and have the right to use any Software and
Confidential Information which is currently used in both the Business and in the
Seller's other businesses for its own purposes after the Closing Date, and no
exclusive rights to such Software or Confidential Information are meant to be
hereby granted, PROVIDED that the Purchaser shall receive the right to use the
same if used at the Division in the ordinary course of its business prior to the
Closing Date, and (ii) Software shall not include software licensed by third
parties to Seller unless the right to use such Software is transferable with
consent or payment, (which may be obtained or payment made by Purchaser at its
election); PROVIDED that Software will not include any master license agreement
which covers the Business and Seller's other businesses so long as Purchaser is
given the right to use such Software (other than Software used by Seller under a
master license agreement) which is commercially available on a "shrink-wrap"
basis);
2.3.8 Books and Records, to the extent consisting of (i) tax returns
and corporate or similar organizational records of Seller, and (ii) any other
documents or instruments which Seller is required by any Law to maintain in
original form, but in such cases, Purchaser shall have the right to have
examine the same and make copies thereof and to use such originals in any case
required as best evidence; or
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2.3.9 any asset, property or right set forth on Exhibit 2.3.9 hereto.
2.4. ASSUMPTION OF LIABILITIES. Subject to the terms and conditions of
this Agreement and except with respect to the Excluded Liabilities described in
Section 2.5 hereunder, on the Closing Date, Purchaser shall assume and agree to
pay, perform or discharge, as appropriate and when due (the "Assumed
Liabilities"):
2.4.1. all current and long-term Liabilities set forth on the June 30
Balance Sheet unless paid, performed or discharged during the Interim Period
(including any amounts of Accrued Compensation thereon stated);
2.4.2. all current and long-term Liabilities of the Division or of
Seller in respect of the Business incurred during the Interim Period in the
ordinary course of the Business in compliance with Section 8 (including any
amounts of Accrued Compensation); and
2.4.3. all of Seller's obligations of performance under the Leases and
the Assumed Contracts which are assigned to the Purchaser and which arise on or
after the Closing Date.
2.5. EXCLUDED LIABILITIES. Anything in this Agreement to the contrary
notwithstanding, Purchaser shall not assume nor bear any responsibility with
respect to the payment, performance or discharge any of the following ("Excluded
Liabilities"), and the Assumed Liabilities shall not include:
2.5.1. any liability or obligation of Seller or any of its affiliates
relating to or associated with the businesses or properties of Seller or its
affiliates other than the Business except if reflected on the June 30 Balance
Sheet;
2.5.2. any liability or obligation related to the Excluded Assets,
except to the extent specifically set forth in this Agreement;
2.5.3. any liability or obligation for which Seller is obligated to
indemnify Purchaser pursuant to this Agreement or which may be (i) reflected on
the June 30 Balance Sheet or (ii) incurred in the ordinary course of the
Business during the Interim Period, in the case of (i) or (ii) which Seller has
agreed to pay or bear subsequent to the Closing Date pursuant to the terms of
this Agreement;
2.5.4. all liabilities for any Taxes (other than Transfer Taxes arising
in connection with the Transactions herein contemplated) payable with respect to
the Assets or Seller's operations or income for any periods ending on or prior
to the Closing;
2.5.5. all liabilities and obligations arising from any rights or Claims
of customers of the Business for returns, exchanges, credits or otherwise, but
only to the extent such rights or
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Claims (i) relate to any pre-Closing work and (ii) in the aggregate, exceed any
reserve for such items reflected on the Closing Date Balance Sheet;
2.5.6. all liabilities of Seller under Employee Benefit Plans (other
than the liabilities assumed by Purchaser pursuant to Section 11.3) relating to
Transferred Employees (including liabilities for benefits owned with respect to
former employees who were retired as of Closing);
2.5.7. all liabilities and obligations, if any, for payment to Seller or
its affiliates for management, administrative services or other internal Seller
allocations (other than obligations in connection with any transition services
arrangement entered into in connection with the transactions consummated
hereby); and
2.5.8. any liability or obligation set forth on Exhibit 2.5 hereto.
3. PURCHASE PRICE
3.1. PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, Purchaser will purchase the Assets from Seller and will pay Seller
the sum of $105,500,000 (One Hundred Five Million Five Hundred Thousand U.S.
dollars; the "Purchase Price") at the Closing. The Purchase Price shall be paid
by Purchaser to Seller on the Closing Date by wire transfer of immediately
available funds to such bank and account in the United States as Seller shall
designate in writing to Purchaser at least three (3) Business Days prior to the
Closing Date. In addition to paying the Purchase Price to Seller, Purchaser will
assume at the Closing and agree to pay, discharge or perform, as appropriate and
when due, the Assumed Liabilities to the extent and as provided herein.
3.2. TRANSFER TAXES.
3.2.1. Purchaser shall be responsible for and shall pay, in addition to
the Purchase Price, all Transfer Taxes.
3.2.2. Promptly after the execution of this Agreement, Seller, Purchaser
and their respective tax advisors shall confer with the aim of determining the
nature, amount and method specified by law for the payment of each Transfer Tax.
If Seller and Purchaser are not able to agree to such a determination, Seller or
Purchaser or both, as may be required by law, shall file a return or report of
each Transfer Tax in accordance with its good faith judgment, and
(a) to the extent that Seller is required to collect a
Transfer Tax from Purchaser, Purchaser shall pay to Seller the amount
of such tax that in Purchaser's good faith judgment Seller is required
to collect from Purchaser, at the time Seller is required to collect
it,
(b) to the extent that a Transfer Tax not described in the
preceding paragraph is imposed on Seller, Purchaser shall pay to
Seller the amount of such tax
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that in Purchaser's good faith judgment is imposed on Seller, not
later than five (5) days before Seller is obligated to pay such tax,
and
(c) the amount of each Transfer Tax with respect to which
Seller and Purchaser were not able to agree shall be determined by the
Third Accounting Firm using procedures as similar as practicable to
those set forth in Section 3.4.6 and the subsections thereof. The
amount of any Transfer Tax as so determined that was not previously
paid by Purchaser shall bear interest at the rate announced in New
York City from time to time by Chase Manhattan Bank, N.A. as its prime
rate, from the date Purchaser is required to make a payment to Seller
under whichever of Section 3.2.2(a) or (b) shall apply to the tax in
question to the date such amount is paid by Purchaser.
3.3. ESTIMATED CLOSING DATE BALANCE SHEET
3.3.1. Ten (10) days prior to the anticipated Closing Date, Seller shall
prepare and deliver to Purchaser, and Purchaser and Purchaser's accountants
shall jointly review, (i) the Estimated Closing Date Balance Sheet, (ii)
Seller's calculation of the Estimated Closing Date Working Capital and (iii)
Seller's calculation of the Estimated Working Capital Adjustment.
3.3.1.1. If the Estimated Working Capital Adjustment is a
positive amount, the Purchase Price shall be increased by an amount equal to the
Estimated Working Capital Adjustment.
3.3.1.2. If the Estimated Working Capital Adjustment is a
negative amount, the Purchase Price shall be decreased by an amount equal to the
Estimated Working Capital Adjustment.
3.3.2. The Estimated Closing Date Balance Sheet shall be prepared in
accordance with GAAP applied in a manner consistent with the preparation of the
June 30 Balance Sheet. During the period from the date of this Agreement to the
Closing, Seller shall (i) provide Purchaser and its representatives full access
at all reasonable business hours to the facilities at the Division and further,
to the Personnel and Books and Records of Seller associated with the Business
and (ii) cooperate fully with Purchaser and its representatives, including
without limitation, the provision on a timely basis of all information
reasonably requested in connection with the Estimated Closing Date Balance Sheet
and the calculation of the Estimated Working Capital Adjustment.
Notwithstanding the first sentence of this Section 3.3.2, (A) Seller shall state
reserves in accordance with GAAP on the Estimated Closing Date Balance Sheet for
vacation pay, sick leave and similar paid leave time for Transferred Employees
as if all such Transferred Employees were terminated as of the close of business
on the Closing Date and (B) Excluded Assets and Excluded Liabilities shall not
be reflected on the Estimated Closing Date Balance Sheet.
3.4. POST-CLOSING ADJUSTMENT
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3.4.1. Within sixty (60) days after the Closing Date, Purchaser shall,
with the full cooperation of Seller, prepare and deliver to Seller (i) the
Closing Date Balance Sheet (ii) Purchaser's calculation of the Closing Date
Working Capital and (iii) Purchaser's calculation of the Working Capital
Adjustment.
3.4.1.1. If the Working Capital Adjustment is a positive amount,
Purchaser shall pay Seller an amount equal to the Working Capital Adjustment,
dollar for dollar, on the Post-Closing Payment Date;
3.4.1.2. If the Working Capital Adjustment is a negative amount,
Seller shall pay Purchaser an amount equal to the absolute amount of the Working
Capital Adjustment, dollar for dollar, on the Post-Closing Payment Date;
3.4.1.3. The payment of the Working Capital Adjustment shall be
made by a wire transfer of the amount thereof on the Post-Closing Payment Date
to such account as the recipient thereof shall advise the payor thereof at least
three (3) Business Days prior to the Post-Closing Payment Date.
3.4.2. The Closing Date Balance Sheet shall be prepared in
accordance with GAAP applied in a manner consistent with the preparation of the
June 30 Balance Sheet. For purposes of this Section 3.4.2, Purchaser shall
after the delivery of the Closing Date Balance Sheet permit Seller and its
representatives reasonable access at all reasonable business hours to the
facilities at the Division, and further, to the Personnel and Books and Records
as set forth in Section 3.4.3 below. Notwithstanding the first sentence of this
Section 3.4.2:
3.4.2.1. Purchaser shall state reserves in accordance with GAAP,
on the Closing Date Balance Sheet for vacation pay, sick leave and similar paid
leave time for Transferred Employees as if all such Transferred Employees were
terminated as of the close of business on the Closing Date; and
3.4.2.2. Excluded Assets and Excluded Liabilities shall not be
reflected on the Closing Date Balance Sheet.
3.4.3. In connection with the foregoing and during such time as
Purchaser shall require to fulfill its obligations pursuant to Section 3.4.1 and
3.4.2 above, Seller shall (a) maintain at their current locations and make
available to Purchaser all Books and Records reasonably required by Purchaser to
review the June 30 Balance Sheet, the Pro Forma June 30 Balance Sheet, the
Estimated Closing Date Balance Sheet and the calculation of the Estimated
Closing Date Working Capital, and (b) make reasonably available to Purchaser,
all Personnel who, prior to the Closing Date, had material responsibility for
the preparation of financial statements of the Division, for the purpose of
assisting in Purchaser's preparation of the Closing Date Balance Sheet and
calculation of Closing Date Working Capital. In addition, for purposes of
preparing the Closing Date Balance Sheets and the calculation of the Closing
Date Working Capital, Seller shall use all reasonable efforts to provide
Purchaser and its accountants with access to the working papers, trial balances
and similar materials of PW and Seller. In connection with this Section 3.4
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and during such time as Seller shall require to fulfill its rights to review
pursuant to Section 3.4.4 below, Purchaser shall (a) maintain at their current
locations and make available to Seller all Books and Records reasonably required
by Seller to review the Closing Date Balance Sheet and the calculation of the
Closing Date Working Capital, and (b) make reasonably available to Seller, all
Transferred Employees and other employees of Purchaser who, following the
Closing Date, had material responsibility for the preparation of the Closing
Date Balance Sheet, for the purpose of assisting in Seller's review of the
Closing Date Balance Sheet and Closing Date Working Capital.
3.4.4. During the 30 days immediately following the date on which Seller
shall have received the Closing Date Balance Sheet from Purchaser ("Receipt
Date"), Seller and PW shall be entitled to review the Closing Date Balance Sheet
and Purchaser shall use all reasonable efforts to provide Seller and PW with
access to any working papers, trial balances and similar materials (generally,
"Work Papers") relating to the Closing Date Balance Sheet prepared by Purchaser.
The Closing Date Balance Sheet shall become final and binding upon the parties
on the earlier of (a) the date on which the parties agree in writing that such
Closing Date Balance Sheet is correct, or (b) the thirty-first day following the
Receipt Date, unless Seller gives Notice to Purchaser of its disagreement with
the Closing Date Balance Sheet or any portion thereof (a "Notice of
Disagreement") on or prior to the thirtieth day following the Receipt Date. Any
Notice of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted and the amount in dispute.
3.4.4.1. If no such Notice of Disagreement is given, the Post-
Closing Payment Date shall be the fortieth day following the Receipt Date, or if
not a Business Day, the next following Business Day.
3.4.4.2. If a timely Notice of Disagreement is received by
Purchaser, then the Post-Closing Payment Date shall be the tenth day following
the earlier of (i) the date the parties hereto resolve in writing all
differences with respect to any Notice of Disagreement, and agree on the amount
of the Post-Closing Payment or (ii) the date any matters in dispute are finally
resolved in writing by the Third Accounting Firm (as defined below), or if not a
Business Day, the next following Business Day.
3.4.5. During the fifteen (15) days immediately following the delivery
of any Notice of Disagreement, Purchaser and Seller shall seek in good faith to
resolve in writing any differences which they may have with respect to any
matter specified in such Notice of Disagreement and shall provide each other
with access to their Work Papers. Unless resolved in writing by the parties, at
the end of such fifteen (15) day period, Seller and Purchaser shall submit to a
mutually acceptable independent "Big 6" public accounting firm (the "Third
Accounting Firm") for review and resolution any and all matters which remain in
dispute and which were included in any Notice of Disagreement.
3.4.6. The Third Accounting Firm shall be such independent Big 6 public
accounting firm, excluding Deloitte & Touche LLP (Purchaser's accountants, and
herein, "DT") and PW, as shall be agreed upon by Seller and Purchaser in writing
or, if Purchaser and Seller
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cannot so agree within such fifteen (15) day period, by lot from among the
remaining independent Big 6 public accounting firms willing to act. The Third
Accounting Firm shall be requested to reach a decision in good faith in
accordance with the terms of this Agreement as to each item in dispute, and not
later than ninety (90) days after the reference to it of the dispute.
3.4.6.1. Each of Seller and Purchaser, as applicable, shall
provide, the Third Accounting Firm with access to employees of Purchaser
(including any Transferred Employees) responsible for the preparation of the
Closing Date Balance Sheet and of Seller responsible for the preparation of the
June 30 Balance Sheet, the Pro Forma June 30 Balance Sheet and the Estimated
Closing Balance Sheet, and Purchaser shall use all reasonable efforts to provide
the Third Accounting Firm with access to the Books and Records of Purchaser
(including Work Papers, trial balances and similar materials, whether in the
hands of Purchaser or DT, in respect of the Closing Date Balance Sheet) and
Seller shall use all reasonable efforts to provide the Third Accounting Firm
with access to the Books and Records of Seller (including Work Papers, trial
balances and similar materials, whether in the hands of Seller or PW, in respect
of the June 30 Balance Sheet and the Pro Forma June 30 Balance Sheet) as it may
reasonably request. The Third Accounting Firm shall, acting as experts and not
arbitrators, determine on the basis of GAAP and in accordance with the terms of
this Agreement the differences so submitted, including the determination of what
adjustments, if any, must be made in one or more items reflected on the Closing
Date Balance Sheet. As to each such item disputed in any Notice of Dispute, the
Third Accounting Firm may agree with Purchaser, or with Seller's Notice of
Dispute, or may reach an independent conclusion as to the issue in contention,
but shall make such conclusion based on matters or issues of fact as they
existed on the Closing Date and subject to the terms of this Agreement. Each of
Seller and Purchaser shall be permitted to make a presentation of their position
to the Third Accounting Firm, and the Third Accounting Firm may determine
whether such presentations shall be made individually by each of the parties
hereto or in each other's presence, and whether it desires more than one such
presentation. The determination of the Third Accounting Firm shall be
determined in accordance with the provisions of this Agreement.
3.4.6.2. Upon reaching its conclusion with respect to all items
in dispute, the Third Accounting Firm shall be requested to provide each of
Purchaser and Seller with a final, written report of its resolution and decision
of each item in dispute, and its calculation of the Closing Date Working Capital
and the Working Capital Adjustment as defined herein (the "Working Capital
Report"). The Working Capital Report shall be final, conclusive and binding
upon the parties, as of the date delivered by the Third Accounting Firm, and not
subject to collateral attack by the parties.
3.4.7. If the Working Capital Report results in a change in the Working
Capital Adjustment from that determined by Purchaser in excess of $100,000 in
favor of Seller, the costs and expenses of the Third Accounting Firm shall be
borne by Purchaser, and Purchaser shall reimburse Seller for its reasonable
costs and expenses incurred in the dispute subsequent to issuance of the Notice
of Disagreement. If the Working Capital Report results in no change in the
Working Capital Adjustment from that determined by Purchaser (or a change in
favor of Purchaser), the costs and expenses of the Third Accounting Firm shall
be borne by Seller, and Seller shall reimburse Purchaser for its reasonable
costs and expenses incurred in the dispute
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subsequent to receipt of the Notice of Disagreement. Otherwise, Purchaser and
Seller shall bear the costs and expenses of the Third Accounting Firm equally,
and shall each bear their own costs and expenses in any disputes with respect to
the calculation of the final Working Capital Adjustment.
3.4.8. Within ten (10) Business Days after the Closing, Seller and
Purchaser shall apportion, (i) all real and personal property Taxes (other than
Transfer Taxes) for the current taxable year attributable to or otherwise
relating to the Assets or the Business on a per diem basis in accordance with
the method described in Section 164(d)(1) of the Code and regulations
promulgated thereunder, and (ii) in an equitable manner as of close of business
on the Closing Date, all rents, additional rents, utility charges, water and
sewer rents and all other amounts payable by Seller pursuant to the provisions
of the Leases or otherwise relating to the Real Property (the "Property
Adjustment"), and any net amount owed by one party to the other shall be
promptly paid.
3.4.9. To the extent that any matter or item shall cause an adjustment
to Working Capital or otherwise to be reflected in the Working Capital
Adjustment, Purchaser shall make no claim that such matter or item may also
constitute a basis for indemnification for a breach of any representation,
warranty or covenant herein relating to such matter or item.
3.5. ALLOCATION. Seller and Purchaser agree that an allocation among the
Assets of the Adjusted Purchase Price will be determined with the assistance of
DT and PW, in accordance with the guidelines of the Internal Revenue Service,
and Seller and Purchaser will use their best efforts to reach agreement as to a
fair and equitable allocation within thirty (30) days following the Post-Payment
Closing Date. Each of Seller and Purchaser shall report, and to the extent
relevant shall cause each person controlled by it to report, the tax
consequences of such sale in a manner consistent with the Allocation, and shall
not take any position inconsistent therewith.
4. CLOSING
4.1. PLACE AND TIME OF CLOSING. The Closing shall take place on the
Closing Date, at the offices of Seller's counsel, Fox Horan & Camerini LLP, One
Broadway, New York, New York 10004, commencing at 10:00 A.M., local time.
4.2. ITEMS TO BE DELIVERED AT CLOSING. At the Closing and subject to the
terms and conditions herein contained, the parties shall execute and deliver
such agreements and instruments as set forth herein for the purposes of
transferring the Assets and the Assumed Liabilities and assigning the Assumed
Contracts and to do such other things as may require the signatures of Purchaser
and Seller, all in form and substance as reasonably approved by the other party
prior to the Closing Date.
4.2.1. Seller shall deliver to Purchaser the following:
4.2.1.1. (i) such bills of sale (including a general bill of
sale and assignment), assignments (including assignments and assumptions of the
Assumed Liabilities, the Assumed
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Contracts and the Leases) and other good and sufficient instruments and
documents of conveyance and transfer (including without limitation all documents
that may be required for recording purposes) as shall be necessary and effective
to convey, transfer and assign to, and vest in, Purchaser all of Seller's right,
title and interest in and to all of the Assets, (ii) such grant deeds
(collectively, the "Deeds"), duly executed and in recordable form and otherwise
in form and substance reasonably satisfactory to Purchaser and its counsel,
which shall be effective to vest in Purchaser good and valid fee simple title to
the Real Property, in each case free and clear of all Liens, except for the
Permitted Encumbrances and (iii) valid and subsisting Certificates of Occupancy
or equivalent required certificates of compliance (or evidence that none was
needed) covering the building(s) and all the other improvements covering the
Real Property described on Exhibit 6.7.3(1);
4.2.1.2. a certificate of the President or a Vice President of
Seller's Managing Partner, dated the Closing Date, certifying that (i) Seller
has performed or complied with all agreements and conditions required by this
Agreement to be performed or complied with by Seller on or prior to the Closing
Date, and (ii) the representations and warranties of Seller contained in Section
6 of this Agreement are true and correct in all material respects on the Closing
Date with the same effect as though made on the Closing Date, except for any
such representation or warranty that was expressly made as of a specific date or
time;
4.2.1.3. an incumbency certificate of the Secretary of Seller's
Managing Partner, dated the Closing Date, including specimen signatures,
together with a certificate of the Secretary of Seller's Managing Partner, dated
the Closing Date, certifying that all actions required pursuant to Seller's
partnership agreement (as amended through the Closing Date) have been duly and
timely taken in order to authorize and empower Seller, by the officers of its
Managing Partner, to enter into this Agreement and to perform in accordance with
its terms; and
4.2.1.4. an opinion of (i) Walter, Conston, Alexander & Green,
general counsel to Seller, generally in the form attached as Exhibit 4.2A and
otherwise in form and substance reasonably satisfactory to Purchaser and (ii)
Fox Horan & Camerini LLP, special counsel to Seller, in the form attached as
Exhibit 4.2B and otherwise in form and substance satisfactory to Purchaser.
4.2.1.5. (a) a Certification of Nonforeign Status in accordance
with Sections 897 and 1445 of the Code and the regulations promulgated
thereunder and (b) a written certificate certifying as to Seller's residential
status in California under Sections 18805 and 26131 of the California Revenue
and Taxation Code (collectively, the "Certifications"), PROVIDED, HOWEVER, that
if the Seller fails to deliver the Certifications at the Closing, the Purchaser
shall deduct and withhold from the Purchase Price the sum required by law to be
so withheld and shall remit such amount to the Internal Revenue Service ("IRS")
or the California Department of Taxation and Revenue, as the case may be. In
the event of such withholding by Purchaser, Seller's obligations hereunder shall
not be excused or otherwise affected. In the event of a claim by Seller for
over-withholding, Seller shall be limited to action solely against the IRS or
the California Department of Taxation and Revenue, as the case may be, for a
refund, and Seller hereby waives any right to action against Purchaser on
account of such withholding.
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4.2.2. Purchaser shall deliver to Seller the following:
4.2.2.1. cash, in an amount equal to the Purchase Price, by wire
transfer of immediately available funds as provided in Section 3.1 above;
4.2.2.2. such instruments as are described in Section 4.2.1.1 as
shall require the execution and delivery thereof by Purchaser;
4.2.2.3. a certificate of an authorized officer of Purchaser,
dated the Closing Date, certifying that (i) Purchaser has performed or complied
with all agreements and conditions required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date and (ii) the
representations and warranties of Purchaser contained in Section 7 of this
Agreement are true and correct in all material respects on the Closing Date with
the same effect as though made on the Closing Date, except for any such
representation or warranty that was expressly made as of a specific date or
time; and
4.2.2.4. an incumbency certificate of the Secretary of
Purchaser, including specimen signatures, together with a certificate of the
Secretary of Purchaser dated the Closing Date, certifying that all actions
required pursuant to Seller's certificate of incorporation and by-laws have been
duly and timely taken in order to authorize and empower Seller to enter into
this Agreement and to perform in accordance with its terms.
4.2.2.5. an opinion of (i) the Vice President and Associate
General Counsel of Purchaser, in the form attached as Exhibit 4.2C and otherwise
in form and substance satisfactory to Seller and (ii) Howard, Darby & Levin, in
the form attached as Exhibit 4.2D and otherwise in form and substance
satisfactory to Seller.
4.3. THIRD PARTY CONSENTS.
4.3.1. To the extent that Seller's rights under any Assumed Contracts,
Assumed Liability, Lease or any other Asset (including any claim or right to any
benefit arising thereunder or resulting therefrom), to be assigned to Purchaser
hereunder may not be assigned without the consent of another person which has
not been obtained by Seller prior to the Closing, neither this Agreement nor any
of the instruments of transfer, assignment or conveyance as set forth above
shall constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and Seller shall use all
reasonable efforts to obtain any such required consents as promptly as possible
after the Closing Date (including any postponed Closing Date). If (i) any such
consent has not been obtained or (ii) any attempted assignment would be
ineffective or would impair Purchaser's rights under the instrument in question
so that Purchaser would not in effect acquire the benefit of all such rights,
then Seller, to the maximum extent permitted by law and the instrument, shall
act as Purchaser's agent in order to obtain for Purchaser the benefits
thereunder subsequent to the Closing Date and, as may be appropriate, shall
cooperate with Purchaser in any other reasonable arrangement designed to provide
to
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Purchaser with the benefits of such instrument (including without limitation by
entering into a subleasing, subcontracting, or equivalent alternate
arrangement).
4.3.2. If, prior to the Closing Date, Purchaser determines in its sole
discretion that it does not wish to assume that certain agreement listed as item
1 to Exhibit 6.12(ii), Purchaser shall notify Seller, and the parties shall
agree that such agreement shall be an Excluded Asset and the liabilities
associated with such agreement shall be Excluded Liabilities. Furthermore, in
the event Seller is notified pursuant to the preceding sentence, Purchaser and
Seller shall enter into a subcontracting arrangement pursuant to which Seller
shall act as Purchaser's agent with respect to such agreement and shall take all
actions necessary to obtain for Purchaser all of the benefits thereunder. In
connection with such arrangement, (a) Seller shall (i) comply with all
obligations under such agreement and (ii) without further consideration therefor
pay and remit to Purchaser promptly all monies, rights and other considerations
received in respect of Seller's performance of the obligations under such
agreement and (b) Purchaser shall reimburse Seller for all costs and expenses
incurred by Seller in complying with the obligations under such agreement. The
arrangement set forth in this Section 4.3.2 shall terminate on the one-year
anniversary of the termination or expiration of the agreement referred to in
this Section 4.3.2.;
4.4. FURTHER ASSURANCES. From time to time after the Closing Date, Seller
agrees to execute, acknowledge and deliver to Purchaser such other instruments
of conveyance and transfer, to take such other actions and to execute and
deliver such other documents, certifications and further assurances as Purchaser
may reasonably request in order to vest more effectively in Purchaser, or to put
Purchaser more fully in possession of, any of the Assets, or to better enable
Purchaser to complete, perform or discharge any of the liabilities or
obligations assumed by Purchaser at the Closing.
4.5. EFFECTIVE TIME. The parties agree that in the event that the Closing
occurs, the effective date and time of the Closing shall be 5 A.M. (Pacific
Standard Time) on the day immediately following the Closing Date.
5. EXHIBITS; DISCLOSURE AND RELIANCE
5.1. EXHIBITS TO AGREEMENT. Seller has previously prepared and,
simultaneously with the delivery of its executed copy hereof, has delivered the
Exhibits (dated the date hereof and certified by Seller as complete) setting
forth certain information required to be provided to Purchaser under the terms
of this Agreement (the "Exhibits"). The Exhibits are hereby incorporated into,
and made a part of, Seller's representations, warranties and covenants for all
purposes of this Agreement.
5.2. SINGLE DISCLOSURE; NO ADMISSION. Any item disclosed for any one
purpose in any Exhibit shall not be deemed disclosed for any other purpose in
such or any other Exhibit unless expressly provided otherwise herein. The
inclusion of any information in any Exhibit shall not be deemed to be an
admission or acknowledgment, in and of itself, that such information is required
to be disclosed or otherwise set forth in any of the Exhibits.
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5.3. RELIANCE. Each of Seller and Purchaser shall give Notice to the other
promptly after becoming aware of any inaccuracy (or event which, if it occurred
prior to the date hereof, would have caused an inaccuracy) in any such
representations or warranties; PROVIDED, HOWEVER, that the delivery of Notice
pursuant to this Section 5.3. shall not limit or otherwise affect the remedies
available hereunder. Notwithstanding the foregoing, if either party willfully
breaches its obligation to provide Notice as required by the foregoing sentence,
such party shall not be entitled to rely on the applicable representation and
warranty if such inaccuracy may reasonably and objectively be quantified by an
estimated dollar amount and then, only to the extent of such party's knowledge
of such estimated quantifiable amount. The consequences of either party failing
to notify the other party of any inaccuracy in any representation or warranty
shall be limited to the foregoing.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and agrees as follows:
6.1. EXISTENCE. Seller is a general partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller
is duly qualified and in good standing as a foreign corporation in all states in
which either the ownership or the use of the properties or the nature or
character of the Business requires Seller to be so qualified. Seller has the
power, authority and legal right to own, lease, operate and sell its Business
and property, to carry on the Business as it has been and is now being conducted
and to own and use its properties and assets.
6.2. POWER AND AUTHORITY. Seller has the power, authority and legal right
to execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Seller have been duly authorized by all
necessary partnership action. This Agreement has been duly executed and
delivered by a duly authorized officer of Seller's Managing Partner and
constitutes the legal, valid and binding obligation of Seller enforceable
against Seller in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether the issue of enforceability
is considered in a proceeding in equity or at law).
6.3. NO THIRD PARTY OPTIONS. There are no existing agreements, options,
commitments or rights with, to or in any person or entity to acquire any of the
Assets or any part of the Business or any interest therein, except for those
contracts entered into in the ordinary course of the Business consistent with
past practice for the sale of the products and services of the Business.
6.4. FINANCIAL STATEMENTS. Seller has delivered to Purchaser June 30
Financials together with the report of PW with respect thereto, and true and
correct copies of the June 30 Financials are attached hereto as Exhibit 6.4.
The June 30 Financials have been prepared in accordance with the Books and
Records of Seller and the Division and present fairly the financial position and
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assets and liabilities of the Division as of June 30, 1997 and the results of
its operations for the fiscal year then ended. Seller has prepared the June 30
Financials, in accordance with GAAP, applied consistently with past practice
except as set forth on Exhibit 6.4 hereto. The Books and Records fairly
reflect, in all material respects, the income, expenses, assets and liabilities
of the Division and provide a fair and accurate basis for the preparation of the
June 30 Financial Statements. When prepared by Seller the Estimated Closing
Date Balance Sheet and the Estimated Closing Date Working Capital Adjustment
will have been prepared in good faith based on the best available information as
of the date thereof and will be presented in conformity with the principles and
procedures used in the preparation of the June 30 Financials and will present
fairly the financial position, and assets and liabilities of the Division in
accordance with the terms of this Agreement.
6.5. INVENTORY AND RECEIVABLES. All inventory of the Division reflected on
the June 30 Balance Sheet, and all inventory of the Division acquired since June
30, 1997, has been acquired in the ordinary course of the Business and
maintained in accordance with the regular business practices of Seller. All
Receivables stated on the June 30 Balance Sheet and all Receivables created
since June 30, 1997 have arisen in the ordinary course of the Business. Except
as set forth on Exhibit 6.5, the Receivables shown on the June 30 Balance Sheet
(subject to reserves as reflected therein), and all Receivables acquired or
generated by Seller relating to the Business since June 30, 1997, are bona fide
receivables and represent amounts due with respect to actual transactions
entered into in the ordinary course of business. Such reserves have been
reflected on the Balance Sheet in accordance with GAAP and, in the good faith,
reasonable estimate of Seller's management, are adequate. No such account has
been assigned or pledged to any other person, firm or corporation. Except as
may be set forth on Exhibit 6.5, Seller has not received Notice that any defense
or setoff to any such account has been asserted by the account obligor and to
Seller's knowledge, there is currently no dispute regarding the payment of any
such receivables. No receivables or payables (other than (i) compensation
(including salaries) paid in the ordinary course of business, (ii) payments
contemplated by the Participating Loan Agreements between the Division and each
of Messrs. Decker and Penprase, each dated December 17, 1986 and (iii) payments
contemplated by the Employee Relocation Loan Agreement, dated April 30, 1994,
between Ulrich and Carola Oels and the Riverside County Publishing Company)
between the Division or any officer, director or employee of Seller have been,
since the date of the June 30 Balance Sheet, or will be prior to the Closing
Date, acquired or generated. The inventories on the June 30 Balance Sheet are
stated at the lower of cost (first in, first out method) or market in accordance
with GAAP. Except for inventory or equipment supplied to the Division by its
customers, all inventories used in or relating to the conduct of the business of
the Division are owned by the Seller free and clear of any Lien other than
Permitted Encumbrances.
6.6. EXISTING CONDITION. Except as disclosed on Exhibit 6.6, since June
30, 1997, (i) Seller has conducted the Business in the ordinary course thereof,
consistent with prior practice, and there has not occurred any event, condition,
circumstance, change or development, whether or not in the ordinary course of
the Business that, individually or in the aggregate, has had or in the future,
is reasonably likely to have, a material adverse effect on the Business, and
(ii) Seller has not:
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6.6.1. incurred any Liability with respect to the Business, other
than Liabilities incurred in the ordinary course of the Business, or failed to
pay or discharge when due any liability with respect to the Business, except as
and to the extent that Seller shall have given notice of a dispute as to payment
or discharge thereof in good faith;
6.6.2. sold, assigned or transferred any of the Assets except in the
ordinary course of the Business consistent with past practice;
6.6.3. retired, sold, assigned or transferred any machinery,
equipment or other Tangible Property having a net book value in each individual
case in excess of $50,000, or any Fixed Asset used in the Business, except in
either case, in the ordinary course of the Business and consistent with past
practice;
6.6.4. subjected any of the Assets of the Division to any material
Lien, except in the ordinary course of the Business;
6.6.5. made or suffered any materially adverse amendment or any
termination of any Material Contract or Lease or other agreement, contract,
lease or plan material to the Business to which it is a party or by which it is
bound, or canceled, modified or waived any debts owed or Claims against third
Persons held by it with respect to the Business, other than in the ordinary
course of the Business, or waived any Rights of Action of substantial value to
the Business, whether or not in the ordinary course of the Business;
6.6.6. suffered any damage, destruction or loss, materially and
adversely affecting the Assets or the Business, whether or not covered by
insurance, or suffered any repeated, recurring or prolonged shortage, cessation
or interruption of inventory shipments, supplies or utility services material to
the conduct of the Business;
6.6.7. received actual or, to Seller's knowledge, threatened notice,
of any labor dispute, strike, labor organizing drive or campaign or other
occurrence or condition of any similar character relating to the Business;
6.6.8. increased the salaries, other compensation or fringe benefits
of any employee of the Business having an annual base salary after such increase
of $100,000 or more, or made any advance (excluding advances for business
expenses) or loan to any employee of the Business or made any material increase
in other Employee Benefits;
6.6.9. entered into, adopted, amended or terminated any Employee
Benefit Plan applicable to any Transferred Employee or paid any benefit to any
Transferred Employee not required by an existing Employee Benefit Plan;
6.6.10. changed any of the accounting principles followed by it with
respect to the Business or the method of applying such principles;
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6.6.11. accelerated or delayed collection of Receivables in advance of
or beyond their regular due dates or the dates when the same would otherwise
have been collected; or
6.6.12. agreed in writing to take any of the actions set forth in this
Section 6.6(ii).
6.7. SUFFICIENCY OF ASSETS; TITLE TO PROPERTIES; LEASEHOLD INTERESTS.
6.7.1. The Assets include all of the assets necessary to conduct the
Business as it has been and is currently conducted by Seller (except, as the
case may be, the names "Brown", "PrepSAT" or "Gruner + Jahr" and derivatives
thereof) and are all of the assets used in the Business as currently conducted.
Seller owns and will own, or in the case of the leased Assets, has and will have
valid leasehold interests in, such Assets and will sell (or in the case of
leased Assets, otherwise transfer) such Assets to Purchaser at the Closing free
and clear of all Claims and Liens except the Permitted Encumbrances, or in the
case of the leased Assets, to the terms of the Leases applicable thereto. The
Permitted Encumbrances in the aggregate do not and will not materially interfere
with the current or contemplated use of the Real Property or Leased Real
Property subject thereto.
6.7.2. A true and complete copy of each deed to Real Property owned
by Seller and used in the Business by a Division, together with such title
reports, title insurance policies and surveys in respect thereof as Seller has,
have been delivered by Seller to Purchaser prior to the date hereof.
6.7.2.1. None of the Real Property is subject to any Lease
granted to any third Person, and to Seller's knowledge, (i) no Claim or Lien not
of record exists in respect of such Real Property, and (ii) no third Person is
adversely possessing, occupying or otherwise asserting any right to any of the
Real Property contrary to Seller's interests therein.
6.7.2.2. The Real Property is all of the real property relating
to the Business which is owned by Seller, and the Leased Real Property is all
of the leasehold interests in real property relating to the Business in which
Seller holds any leasehold interest. As to any of the same, Seller has not
received Notice of any pending or threatened condemnation proceeding or other
similar action to take by eminent domain any of the Real Property or any
leasehold interest to any real property relating to the Business in which Seller
holds any leasehold interest.
6.7.3. All material leases, licenses, Permits or other agreements,
related to the Assets or the Business and pursuant to which Seller has obtained
the right to use in connection with the Business any personal or real property
owned by any third party (generally "Leases") are listed on Exhibit 6.7.3
hereto.
6.7.3.1. A true and complete copy of each Lease, together with
all amendments thereto, has been delivered by Seller to Purchaser prior to the
date hereof.
6.7.3.2. To Seller's knowledge, (i) the Leases are valid and
effective in accordance with their respective terms and no material default or
event which with notice or lapse
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of time, or both, would constitute such a default, exists under any such Lease;
(ii) there are no payments due from Seller to the respective lessors thereunder
that have not been duly and timely made prior to the date hereof, or that will
not be duly and timely made as they become due through the Closing Date; (iii)
neither Seller nor the respective lessors have given to the other any Notice of
default or termination under any of the Leases; and (iv) Seller has not assigned
any of its rights or interests in any of the Leases to any third party.
6.8. CONDITION OF TANGIBLE ASSETS. All facilities, buildings, structures,
vehicles, machinery, equipment and other items of tangible personal property
used by Seller in connection with the Business (i) are included in the Assets
(other than the Excluded Assets, as applicable); (ii) are, except as described
on Exhibit 6.8 hereto, structurally sound with no known material defects and in
good operating condition and repair, subject to normal wear and tear; and (iii)
have been regularly maintained. No Notice from any Governmental Body has been
received by Seller requiring or calling attention to the need for any work,
repair, construction, alteration or installation on, or in connection with, any
of the Real Property or Leased Real Property or any of the plants, buildings,
structures, facilities or equipment located thereon.
6.9. LITIGATION. Except as described on Exhibit 6.9 hereto, (i) there is
no Claim, arbitration or other proceeding before any arbitrator or Governmental
Body pending or, to Seller's knowledge, threatened against Seller and relating
to the Assets, the Business or the transactions contemplated by this Agreement,
and (ii) Seller is not a party to or subject to the provisions of any Order
issued by any Governmental Body that relates to or might materially affect the
transactions contemplated by this Agreement. Seller does not know of any basis
for any such Claim. Except for the Trend litigation, no Claim set forth on
Exhibit 6.9 hereto, if adversely decided, would have a material adverse effect
on the Assets or the Business or would prevent consummation of the transaction
contemplated by this Agreement. With respect to the Trend litigation disclosed
on Exhibit 6.9, Seller will continue to defend and carry on such litigation, and
will indemnify Purchaser against any Damages which may result therefrom without
regard to the Cushion, provided that Purchaser shall comply with the provisions
of Section 10.4 hereunder, and further provided that if Seller shall be
successful in seeking the award of any costs, expenses, interest or damages in
either of such matters, the same shall be for the account of and belong to
Seller.
6.10. COMPLIANCE WITH LAW. Except for immaterial violations of Laws, Orders
or Permits or those violations described on Exhibit 6.10 hereto, Seller has
complied with each, and is not in violation of any, Law or Order of any
Governmental Body which is applicable to the Business or the Assets and has not
failed to obtain or to adhere to the requirements of any Permit necessary to the
ownership of the Assets or to the conduct of the Business, and has not received
Notice of any present or past failure of Seller to comply with any Law or Order
with respect to the Assets or the Business. Seller has not received Notice of
any present or past failure of Seller to comply with any Law or Order with
respect to the Assets or the Business and to Seller's knowledge, there are no
facts or circumstances or conditions that could form the basis for such
notification or assertion.
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6.11. NO VIOLATION. The execution, delivery and performance of this
Agreement by Seller do not and will not contravene or violate (i) any existing
Law to which Seller is subject, (ii) any existing Order which is applicable to
Seller or any of the Assets, or (iii) the partnership agreement of Seller, nor
will such execution, delivery or performance violate, be in conflict with or
result in the breach (with or without the giving of notice or lapse of time, or
both) of any term, condition or provision of, or require the consent of any
other party to, any Material Contract, Lease, Permit or other material
instrument or document to which Seller is a party, by which Seller may have
rights or by which any of the Assets or the Business may be bound or affected,
or give any third party with rights thereunder the right to terminate, modify,
accelerate or otherwise change any existing material rights or obligations of
Seller or any successor or assign of any Asset or the Business thereunder. No
notice to, authorization, approval or consent of, and no registration or filing
with, any Governmental Body is required in connection with the execution,
delivery and performance of this Agreement by Seller other than pursuant to the
HSR Act, or as set forth on Exhibit 6.11 hereto.
6.12. CONTRACTS AND AGREEMENTS. (i) Except as listed and described on
Exhibit 6.12 hereto, or except as entered into subsequent to the date hereof in
the ordinary course of the Business of the Division, Seller is not, with respect
to the Assets or the Business, a party to or bound by (in each case whether
written or oral):
6.12.1. any agreement with any present or former officer, employee,
agent, consultant, advisor, salesperson or sales representative, independent
contractor, affiliate or associate of Seller pursuant to which payments may be
required to be made at any time following the date hereof to any such person in
excess of $50,000 in any year.
6.12.2. any agreement with or recognizing any labor union or employee
representative;
6.12.3. any agreement for the future purchase of, or payment for,
supplies or products (other than contracts entered into for the purchase of
paper, ink, plates and film that have been entered into in the ordinary course),
involving in any one case $50,000 or more (invoice value) per annum and not
cancelable upon 30 or less days' notice;
6.12.4. any agreement (a) for the sale or supply of products or the
performance of services (other than contracts entered into by Seller for its
purchase of paper, ink, plates and film that have been entered into in the
ordinary course), involving in any one case $50,000 or more (invoice value) per
annum and not cancelable by the customer thereof with or without penalty upon 30
or less days' notice, (b) any other agreement with any customer (other than open
purchase orders not subject to a written contract which continues for a period
of more than twelve months) for the purchase by such customer of goods and
services which continues for a period exceeding twelve months after the Closing
Date, or (c) any agreement for the sale or lease of any other asset of real or
personal property owned or used by Seller exceeding $50,000 in annual payments;
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6.12.5. any sales representative, sales agent, dealer, distributor,
license or franchise agreement, including those which relate in whole or in part
to any patent, trademark, trade name, service mark or copyright or to any ideas,
technical assistance or other know-how of or used by the Business;
6.12.6. any agreement for the sale or supply of products or the
performance of services which would be cancelable by, would require a consent
from, or would require the payment of money to, the recipient of such goods,
products or services as a result of the assignment of any such agreement to
Purchaser or the consummation of the transactions contemplated by this
Agreement;
6.12.7. any lease with respect to real property under which Seller is
either lessor or lessee, other than the Leases;
6.12.8. any Permit material to the Business;
6.12.9. any note, debenture, bond, mortgage, indenture, installment
obligation, conditional sale agreement, equipment trust agreement, letter of
credit agreement, loan agreement or other agreement or contract for the
borrowing or lending of money (including without limitation loans to or from
officers, employees, or any member of their immediate families, except for
advances for ordinary and necessary business expenses consistent with prior
practice),
6.12.10. any agreement for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any other Person or the guaranty of
performance of any obligation of any other Person;
6.12.11. any agreement for any charitable or political contribution;
6.12.12. any agreement for any capital expenditure in excess of $50,000
for any single capital asset;
6.12.13. any agreement included in the Assets limiting or restraining
Seller or any other entity from engaging or competing in any lines of business
or in any geographic area;
6.12.14. any material agreement not made in the ordinary course of the
Business.
(ii) Except as may be disclosed on Exhibit 6.12, each of the agreements
or items described on Exhibit 6.12 is (i) valid and enforceable in accordance
with its terms, (ii) each of Seller and, to Seller's knowledge, the other party
thereto, is in compliance in all material respects with the provisions thereof,
(iii) neither Seller, nor, to Seller's knowledge, the other party thereto is in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein, nor has either party given
any Notice with respect thereto; (iv) no event has occurred which with or
without the giving of notice or lapse of time, or both, would constitute a
default thereunder, and (v) except for those consents or approvals that have
been obtained by Seller and except for any consents for customer contracts
listed on Exhibit 6.12(ii),
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the failure of Seller to obtain the consent or approval of any party to any
agreement listed on Exhibit 6.12 to the execution of this Agreement or the
consummation of the transactions contemplated hereby will not result in a
default, termination, breach, renegotiation or acceleration of any material term
of any such agreement, or be materially adverse to Purchaser's use of the Assets
or operation of the Business after the Closing Date.
6.13. EMPLOYEE BENEFIT PLANS
6.13.1. Seller neither maintains nor participates in any Employee
Benefit Plan which would constitute a "multiemployer plan" as defined in Section
3(37) of ERISA. Exhibit 6.13 identifies each Employee Benefit Plan applicable
to the Division which is subject to Title IV of ERISA. As to each Employee
Benefit Plan pursuant to which Seller deducts payments for the purpose of its
federal income tax, Seller has duly and timely filled all IRS Form 5500's, true
and accurate copies of which have been provided to Purchaser prior to the date
hereof. As of the Closing Date and as may be applicable, the fair market value
of assets in each Plan maintained for the benefit of Seller's employees,
including the Transferred Employees, equals or exceeds the present value of all
benefits accrued under such Plan on an on-going basis, using reasonable and
permissible actuarial assumptions in respect thereof. Except as stated on
Exhibit 6.13 hereto, there has been no (i) amendment to, (ii) written
interpretation of or announcement (whether or not written) by Seller relating
to, or (iii) change in employee participation or coverage under, any Employee
Benefit Plan that would increase materially the expense of maintaining such
Employee Benefit Plan above the level of the expense incurred with respect
thereto for the fiscal year of Seller ended June 30, 1997.
6.13.2. Exhibit 6.13 is a complete list of all Employee Benefit Plans
in existence on the date hereof. With respect to each Employee Benefit Plan, to
the extent applicable, Purchaser has been provided with true and accurate copies
of each of the Employee Benefit Plan documents and summary plan descriptions
therefor prior to the date hereof, as well as true and accurate copies of
applicable IRS determination letters with respect thereto. Each Employee
Benefit Plan intended to be tax qualified under Section 401(a) of the Code has
been determined by the IRS to be so qualified and no circumstances exist that
could adversely affect its tax qualified status.
6.13.3. Purchaser acknowledges that the Division is included in the
Brown Printing Company Deferred Compensation Plan, which calls for a matching
contribution of Seller up to $200 per plan year per employee (the "Brown 401(k)
Plan") with respect to certain Transferred Employees. Exhibit 6.13 sets forth
the level of employee loans against such Brown 401(k) Plan as of the date
hereof. As of the Closing Date, Seller shall have made all prorated payments as
required pursuant to the Brown 401(k) Plan. Seller has provided Purchaser with
copies of (i) reports demonstrating that the Brown 401(k) Plan has complied with
the non-discrimination rules of Section 401(k) and 401(m) of the Code for the
three most recently ended Plan years and (ii) any correspondence with the
Internal Revenue Service or Department of Labor concerning any audit,
investigation or controversy concerning the Brown 401(k) Plan.
6.13.4. With respect to each Employee Benefit Plan, Seller shall have
on the Closing Date paid all contributions (including employee salary reduction
contributions) and all
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insurance premiums that have become due and payable by their terms on or before
the Closing Date or otherwise funded any obligations which require funding under
any such Employee Benefit Plan.
6.13.5. No Employee Benefit Plan provides or is required to provide,
now or in the future, health, medical, dental, accident, disability, death or
survivor benefits to or in respect of any person beyond termination of
employment, except to the extent required under any state insurance law or under
Part 6 of Subtitle B of Title I of ERISA and under Section 4980(B) of the Code.
6.13.6. The consummation of the transactions contemplated by this
Agreement will not (A) entitle any employee of Seller to severance pay or
termination benefits for which Purchaser or any of its Affiliates may become
liable, (B) accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee or former employee of Seller for which
Purchaser or any of its Affiliates may become liable or (C) except to the extent
provided in Section 11.3, impose on Purchaser or any of its Affiliates any
liability to any person under any law or statute (including ERISA) in respect
of, or any obligation to pay or otherwise be liable for any compensation,
vacation days, pension contribution or other benefits of (i) any employee,
consultant or agent of Seller for periods before the Closing Date or (ii)
personnel whom Purchaser and its Affiliates do not actually employ.
6.14. QUOTATIONS. Seller has previously delivered to Purchaser accurate
copies of all material outstanding bids, quotations and proposals made by Seller
which relate to the Business and remain outstanding on the date hereof. Such
bids, quotations and proposals were, and all material bids, quotations and
proposals entered into prior to the Closing Date (generally, "Quotations") will
have been, prepared and made in accordance with the normal and customary
procedures and practices of the Division.
6.15. DELIVERY OF DOCUMENTS. Seller has delivered or made available to
Purchaser copies of all (i) Material Contracts listed on Exhibit 6.12 and (ii)
the Employee Benefit Plans described on Exhibit 6.13. Such copies are true and
complete and include all amendments, supplements and modifications thereto or
waivers in effect thereunder through the date hereof.
6.16. ENVIRONMENTAL MATTERS.
6.16.1. As used in this Agreement, the terms (i) "Environmental Law"
shall include, without limitation, (a) any and all federal laws, including but
not limited to the Clean Water Act, the Toxic Substances Control Act, the Clean
Air Act, the Safe Drinking Water Act, CERCLA, the Resource Conservation and
Recovery Act and similar Laws relating to pollution, the protection of the
Environment or the Release of Materials in the Environment, and (b) any state
and local Laws relating to the same matters; (ii) "Environmental Condition"
means any condition or circumstance, that (a) requires abatement or correction
under an Environmental Law, (b) is reasonably likely to give rise to any civil
or criminal fine for Seller under an Environmental Law or (c) is reasonably
likely to create a public or private nuisance with respect to any Hazardous
Substance; (iii) "Environmental Claim" shall mean any accusation, allegation,
notice of
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violation, claim, demand, abatement or other order or direction (conditional or
otherwise) by any Government Authority or any person for personal injury
(including sickness, disease or death), tangible or intangible property damage,
damage to the environment or natural resources, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, resulting from or based upon: (a) the existence, or
the continuation of the existence, of a Release (including, without limitation,
sudden or non-sudden, accidental or nonaccidental Releases), of, or exposure to,
any substance, chemical, material, pollutant, Hazardous Material, odor or
audible noise or other release or emission in, into or onto the environment
(including, without limitation, the air, ground, water or any surface) at, in,
by, from or related to the Assets, (b) the environmental aspects of the
generation, use, manufacture, refining, transportation, storage, treatment,
refining or disposal of materials in connection with the operation of the
Assets, (c) the violation, or alleged violation, of any statutes, ordinances,
orders, rules, regulations, permits or licenses of, by or from any Government
Authority relating to environmental matters connected with the Assets; (iv)
"Remedial Action" shall mean all actions required or voluntarily undertaken to
(a) clean up, remove, treat, or in any other way address any Hazardous Material
or other substance in the indoor or outdoor environment, (b) prevent the Release
or threat of Release, or minimize the further Release of any Hazardous Material
or other substance so it does not migrate or endanger or threaten to endanger
public health or welfare of the indoor or outdoor environment, or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care;
and (v) "Environment" shall mean any surface water, ground water, drinking water
supply, land surface or subsurface strata, or ambient air within or without the
United States or under the jurisdiction of the United States or any other
Government Authority.
6.16.2. Except as described on Exhibit 6.16 hereto:
6.16.2.1. the Assets and Business of the Division have been and
are in compliance in all respects with all applicable Environmental Laws except
for immaterial violations of Environmental Laws and Seller has obtained all
material Permits which are required under Environmental Laws for the conduct of
the Business as presently conducted;
6.16.2.2. Seller has not received any Notice of any condition or
circumstance and to Seller's knowledge, there are no circumstances that are
likely to interfere with or prevent material compliance with any Environmental
Law;
6.16.2.3. Seller has not received Notice of any civil, criminal
or administrative Claim pending or Order existing against Seller or any of the
Assets relating in any way to any Environmental Law concerning the generation,
treatment, storage, recycling, transportation, disposal, Release or threat of
Release of any Hazardous Substance;
6.16.2.4. there are no underground storage tanks, containers,
drums, cylinders, or cans in, on or under any portion of any of the premises
owned or leased by the Division, that are used or have been used for the storage
of any Hazardous Substance; and
6.16.2.5. there exists no Environmental Condition at the
Division.
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6.16.2.6. Seller has not transported or arranged for the
transportation of any Hazardous Substance to any location which is listed or
proposed for listing on the National Properties List pursuant to CERCLA, on the
CERCLIS or on any similar federal or state list or which is the subject of any
federal, state or local enforcement actions or other investigations which may
lead to claims against Purchaser for any remedial work, damage to natural
resources or personal injury, including claims under CERCLA. There are no
polychlorinated biphenyls or friable asbestos present at any Real Property or
Leased Real Property that, singly or in the aggregate, have, or may reasonably
be expected to have, a material adverse effect on the Business. No conditions
exist at, on or under any Real Property or Leased Real Property which, with the
passage of time, or the giving of notice or both, could reasonably be expected
to give rise to liability under any Environmental Law which singly or in the
aggregate have or may reasonably be expected to have a material adverse effect
on the Business. No generation, manufacture, storage, treatment, transportation
or disposal or Release of Hazardous Substances has occurred or is occurring on
or from any Real Property or Leased Real Property that, singly or in the
aggregate, has, or may reasonably be expected to have, a material adverse effect
on the Business.
6.16.2.7. To Seller's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents arising out of, based
upon, resulting from or relating to the operation, ownership or use of any of
the Assets, including, without limitation, the Release of Hazardous Substances
that (i) could reasonably be expected to result in the incurrence of costs under
Environmental Laws or (ii) could reasonably be expected to form the basis of any
Notice against or with respect to Seller or against any person or entity whose
liability for any Notice may have been retained or assumed by or could be
imputed or attributed by law or contract to Purchaser. To Seller's knowledge,
there has been no Release, threatened Release or presence of any Hazardous
Material at, on or beneath any Real Property or Leased Property, or at any other
property to which wastes or substances generated by the Seller were sent for
treatment or disposal, or were otherwise Released, in each case prior to the
Closing Date, whether or not such Release, threatened Release or presence is
disclosed in or pursuant to this Agreement. Seller is not, with respect to the
Business, subject to any reporting requirements with respect to any material
which is a Hazardous Material. Exhibit 6.12.8 identifies all Permits issued
pursuant to any Environmental Law that are possessed by Seller and utilized in
or related to the Business. All of such Permits are in full force and effect
and Seller is in compliance with all material terms and conditions of such
Permits; PROVIDED, HOWEVER, it is acknowledged that for purposes of this Section
6.16, material terms and conditions shall include any term and condition the
violation or non-compliance of which will result in a revocation of such Permit.
Seller has not been notified by any relevant Governmental Entity, and has no
basis to believe, that any Permit will be modified, suspended or revoked or
cannot be renewed, provided or otherwise obtained by Purchaser in the ordinary
course of business (other than by reason of qualifications which are specific to
Purchaser).
6.17. ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no Liabilities
relating to the Division or the Business, except:
6.17.1. those Liabilities set forth on the June 30 Balance Sheet and
not heretofore paid or discharged;
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6.17.2. those Liabilities arising in the ordinary course of the
Business under any agreement, contract, purchase order, Quotation, commitment or
Lease or plan specifically disclosed on any Exhibit to this Agreement, or any
such Liability which, because of the term, the nature of the Liability or the
amount involved or otherwise, was not required to be reflected as a Liability on
the June 30 Balance Sheet, the Estimated Closing Date Balance Sheet or the
Closing Date Balance Sheet; and,
6.17.3. those liabilities and obligations incurred in the ordinary
course of the Business during the Interim Period.
6.18. TAX MATTERS. Except as disclosed on Exhibit 6.18 hereto:
6.18.1. all material federal, state and local Tax returns, reports and
statements (including all income tax, unemployment compensation, social
security, payroll, sales and use, excise, privilege, property, ad valorem,
franchise, license, school and any other Tax under laws of the United States or
any state or municipal or political subdivision thereof) required to be filed by
Seller in connection with the Business (the "Tax Returns") have been filed with
the appropriate governmental agencies in all jurisdictions in which such
returns, reports and statements are required to be filed;
6.18.2. Seller has not waived the statute of limitations on the right
of any Governmental Body to assess any additional Taxes or to contest the items
reported on any such Tax Returns; and
6.18.3. all federal, state and local taxes, assessments, interest,
penalties, deficiencies, fees and other governmental charges or impositions due
and payable on the Tax Returns have been timely paid or duly reserved for on the
June 30 Balance Sheet or the Estimated Closing Date Balance Sheet.
6.19. NAMES; LOCATION OF BUSINESS. Within five years prior to the Closing
Date, Seller has not conducted the Business under, or used any other name
(whether corporate or assumed) in connection with the Business except for those
names set forth on Exhibit 6.19 hereto, or at any location as set forth on
Exhibit 6.19.
6.20. BANK ACCOUNTS; POWERS OF ATTORNEY. Exhibit 6.20 hereto sets forth a
true and complete list of the names and addresses of (i) all banks, savings and
loan associations and other financial institutions in which any Company has an
Account or safe deposit box, together with the Account number thereof, as the
case may be, and the names of all persons authorized to draw thereon or to have
access thereto and (ii) all persons, firms or corporations (other than service
companies for statutory representation) holding general or special powers of
attorney from a Company and a summary statement of the terms thereof.
6.21. Intentionally omitted.
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6.22. SELLER'S KNOWLEDGE; MATERIAL ADVERSE EFFECT. For purposes of this
Agreement, (i) a matter is deemed to be to "Seller's knowledge" if such matter
is actually known by any Personnel of Seller listed on Exhibit 6.22 hereto or
that which should have been known after reasonable investigation by such
Personnel and (ii) "material adverse effect" shall mean any event, violation or
other matter that would have a material adverse effect on the business, assets,
liabilities, operations, financial condition or prospects of the Business, taken
as a whole.
6.23. QUALIFICATIONS AND LIMITATIONS. Anything contained in this Agreement
to the contrary notwithstanding, the representations and warranties of Seller
expressly and specifically set forth in this Agreement, including the Exhibits
hereto, constitute the sole and exclusive representations and warranties by
Seller to Purchaser in connection with the transactions contemplated hereby, and
Purchaser agrees that no other representations and warranties of any kind or
nature (whether relating to the past, present or future financial condition or
results of operations of the Division, or other subjects) are made or to be
implied.
6.24. AFFILIATE TRANSACTIONS. Except as set forth on Exhibit 6.24, the
Assumed Liabilities do not include any outstanding indebtedness, liabilities or
obligations for amounts owing to, or notes or accounts receivable from, or
leases, contracts or other commitments or arrangements with or for the benefit
of, Seller, or its affiliates or associates, or Seller's directors, officers or
employees, or affiliates of any of the foregoing. Except as set forth on
Exhibit 6.24, as of the Closing Date, (i) all indebtedness, liabilities and
obligations of the Division set forth on Exhibit 6.24 shall have been repaid in
cash and in full and (ii) all leases, contracts or other commitments or
arrangements set forth on Exhibit 6.24 shall have been terminated without
continuing liability on the part of Purchaser.
6.25. PERMITS. Seller owns, holds or possesses all Permits which are
necessary to entitle it to own or lease, operate and use the Assets and to carry
on and conduct the Business substantially as currently conducted, except for
such Permits as to which the failure to so own, hold or possess would not have a
material adverse effect on the Business.
6.26. CUSTOMERS AND SUPPLIERS. Exhibit 6.26 sets forth a true and complete
list of the names and addresses of the ten largest suppliers (and for each such
supplier the dollar volume and percentage of total purchases of similar items
from all suppliers of such item) of products and services to the Business and
the ten largest customers (and for each such customer the dollar volume and
percentage of total sales of the Business to all customers) of products and
services of the Business during the twelve month period ended June 30, 1997,
indicating any existing contractual arrangements for continued supply from or to
each such customer. Except as set forth on Exhibit 6.26, there exists no actual
or, to Seller's knowledge, threatened termination, cancellation or any material
modification or change in, the business relationship with any customer or group
of customers which are listed on Exhibit 6.26 or which are otherwise material to
the operations of the Business, or with any supplier or group of suppliers which
are listed on Exhibit 6.26 or which are otherwise material to the operations of
the Business, and there exists no present or future condition or state of facts
or circumstances involving customers, suppliers or sales representatives
(including the consummation of the transactions contemplated in this Agreement)
which would materially adversely affect the Business or the prospects of the
Business or prevent
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the conduct of the Business after the consummation of the transactions
contemplated in this Agreement on substantially the same terms as the Business
has been conducted.
6.27. INTELLECTUAL PROPERTY.
6.27.1. Except (i) as set forth on Exhibit 6.27(a) and (ii) for the
Excluded Assets, the Assets include the ownership of or, to the extent not owned
by Seller prior to Closing, the license to use the rights to all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, maskworks, net lists, schematics, inventories, technology, trade
secrets, source codes, know-how, computer software programs or applications and
tangible or intangible proprietary information or material that in any material
respect are used or proposed by Seller to be used in the Business as currently
conducted or proposed by Seller to be conducted (the "Intellectual Property
Rights").
6.27.2. Exhibit 6.27(b) lists, as of the date hereof, all: (A)
patents, trademarks, trade names, service marks, registered and unregistered
copyrights, and any applications therefor included in the Intellectual Property
Rights, and (B) licenses and other agreements to which Seller is a party and
pursuant to which Seller is authorized to use any Intellectual Property Right,
in each case, other than Intellectual Property Rights which are commercially
available on a "shrink-wrap basis."
6.27.3. Seller is not and as a result of the execution and delivery of
this Agreement or the performance of Seller's obligations hereunder will not be,
in violation of, or lose any Intellectual Property Rights pursuant to, any
material license or agreement described on Exhibit 6.27(b).
6.27.4. As of the date hereof, no Claims with respect to the
Intellectual Property Rights have been asserted or, to Seller's knowledge, are
threatened by any Person nor does Seller know of any valid grounds for any bona
fide Claims against the use by Seller of any Intellectual Property Rights.
Neither party is in material breach or violation of any grants of Intellectual
Property Rights listed on Exhibit 6.27(b) nor will the consummation of the
transactions contemplated by this Agreement result in any breach or violation.
To Seller's knowledge, all grants of Intellectual Property Rights are valid,
enforceable and subsisting.
6.27.5. Except as may be set forth on Exhibit 6.27(c), to Seller's
knowledge, Seller's ownership and/or use of the Intellectual Property Rights
does not infringe upon the Intellectual Property Rights of any third person and
there is not any material unauthorized use, infringement or misappropriation of
any of the Intellectual Property Rights by any third party, employee or former
employee.
6.28. BROKERS' AND FINDERS' FEES. All negotiations relative to this
Agreement have been carried on by Seller directly without the intervention of
any person who may be entitled to any brokerage or finder's fee, commission or
other similar amount in respect of this Agreement or the consummation of the
transactions contemplated hereby other than Lehman Brothers, and all such fees,
commissions and other amounts owing to Lehman Brothers in respect of this
Agreement or the consummation of the transaction contemplated hereby shall be
paid by Seller.
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7. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents, warrants and agrees as follows:
7.1. EXISTENCE. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
7.2. POWER AND AUTHORITY. Purchaser has all requisite corporate power,
authority and legal right to execute, deliver and perform this Agreement, and
the execution, delivery and performance of this Agreement by Purchaser have been
duly authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether the issue
of enforceability is considered in a proceeding in equity or at law).
7.3. NO VIOLATION. The execution, delivery and performance of this
Agreement by Purchaser do not and will not contravene or violate (i) any
existing Law to which Purchaser is subject, (ii) any existing Order of any
arbitrator or governmental body which is applicable to Purchaser or (iii) the
certificate of incorporation or by-laws of Purchaser; nor will such execution,
delivery or performance violate, be in conflict with or result in the breach
(with or without the giving of notice or lapse of time, or both) of any term,
condition or provision of, or require the consent of any other party to, any
material mortgage, indenture, agreement, contract, commitment, lease, plan or
other material instrument or document to which Purchaser is a party or by which
Purchaser is otherwise bound. No authorization, approval or consent of, and no
registration or filing with, any Governmental Body is required in connection
with the execution, delivery and performance of this Agreement by Purchaser
other than as may be required under the HSR Act.
7.4. LITIGATION. There is no material litigation, arbitration or other
proceeding of or before any arbitrator or governmental body pending against
Purchaser or any of its Affiliates and relating to the transactions contemplated
by this Agreement. Neither Purchaser nor any of its Affiliates is a party to
or subject to the provisions of any Order of any arbitrator or governmental body
that relates to or might materially affect the transactions contemplated by this
Agreement.
7.5. SUFFICIENT FUNDS. As of the date hereof, Purchaser has, and at the
Closing Date, Purchaser will have sufficient funds available to it to purchase
and pay for all of the Assets and the Business pursuant to the terms of this
Agreement.
7.6. WARN ACT MATTERS. Purchaser has no plans or intentions of taking any
action with respect to the Division or any of the Transferred Employees within
two (2) years after the Closing Date that would constitute a "plant closing" or
"mass layoff" within the meaning of the WARN Act, except in compliance with the
provisions of the WARN Act.
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7.7. QUALIFICATIONS AND LIMITATIONS. Anything contained in this Agreement
to the contrary notwithstanding, the representations and warranties of Seller
expressly and specifically set forth in this Agreement and the representations
and warranties contained in any transfer documents delivered to Purchaser
pursuant to Section 4.2.1.1. constitute the sole and exclusive representations
and warranties by Purchaser to Seller in connection with the transactions
contemplated hereby, and Seller agrees that no other representations and
warranties of any kind or nature are made or to be implied.
7.8. BROKERS' AND FINDERS' FEES. All negotiations relative to this
Agreement have been carried on by Purchaser directly without the intervention of
any person who may be entitled to any brokerage or finder's fee, commission or
other similar amount in respect of this Agreement or the consummation of the
transactions contemplated hereby, other than Lehman Brothers.
8. AGREEMENTS PENDING CLOSING
8.1. AGREEMENTS OF SELLER PENDING CLOSING. Seller covenants and agrees
that, pending the Closing and except as otherwise agreed to in writing by
Purchaser:
8.1.1. The Business shall be conducted by Seller solely in the
ordinary course consistent with past practice. From the time of the execution
of this Agreement until the Closing Date Seller shall not, without the prior
written consent of Purchaser, either sell or purchase Assets having an
individual invoiced value in excess of $100,000 (other than the purchase of
paper, ink, film or plates in the ordinary course or performance of customer
jobs in the ordinary course).
8.1.2. Seller will not take any action which would result in a
material breach in any of its representations and warranties hereunder.
8.1.3. Seller shall cooperate with Purchaser and use all commercially
reasonable efforts to cause all of the conditions to the obligations of
Purchaser under this Agreement to be satisfied on or prior to the Closing Date.
8.1.4. Seller shall not cause any of the events or occurrences
described in Section 6.6 to occur without the prior consent of Purchaser.
8.1.5. Seller shall continue to maintain and service the Tangible and
Fixed Assets used in the conduct of the Business consistent with its past
practice.
8.1.6. Seller shall use all commercially reasonable efforts to keep
available the services of the present agents and representatives of the Business
and to maintain its relations and goodwill with the suppliers, customers and any
others having business relations with the Division, and to facilitate the
transfer of the employment of the Transferred Employees of the Business from
Seller to Purchaser, such transfers to be effective as of the Closing Date.
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8.1.7. Seller agrees to satisfy all wage, salary and employee benefit
obligations owing or accruing to Transferred Employees through the close of
business on the Closing Date, except as otherwise herein provided.
8.1.8. Seller shall use all commercially reasonable efforts to
preserve and keep in full force and effect all Permits, Leases and Rights used
in the conduct of the Business.
8.1.9. Seller shall comply in all material respects with all Laws and
Orders applicable to the Division and the Business.
8.1.10. Seller shall not, directly or indirectly, (i) sell or encumber
all or any part of the Assets, other than sales in the ordinary course of the
Business, consistent with past practice, or (ii) solicit, initiate or
participate in any discussions or negotiations concerning, or enter into any
agreement to do, any of the foregoing. Seller shall promptly notify Purchaser
of any person who approaches Seller with respect to any of the foregoing, as
well as the price and terms of any such proposal, if applicable. Subsequent to
the date hereof, Seller shall not provide any Confidential Information
concerning the Business or its properties or assets to any third party other
than (i) in the ordinary course of the Business consistent with past practice
and (ii) in compliance with any lawful Order, Law, subpoena or similar demand in
connection with any Claim mandating the disclosure of such Confidential
Information.
8.1.11. Seller shall give to Purchaser's appropriate Personnel,
counsel, accountants and other representatives reasonable access to and the
right to inspect, during normal business hours and upon reasonable prior Notice
thereof, all of the premises, properties, assets, records, contracts and other
documents relating to the Business and shall permit such persons to consult with
the appropriate Personnel, accountants, counsel and agents of Seller for the
purpose of making such investigation of the Business as Purchaser shall desire
to make, provided that such investigation shall not unreasonably interfere with
Seller's business operations. Furthermore, Seller shall furnish to Purchaser
all such documents and copies of documents and records and information with
respect to the affairs of the Business and copies of any Work Papers relating
thereto as Purchaser may from time to time reasonably request and shall permit
Purchaser and its agents to make such physical inventories and inspections of
the Assets as Purchaser may from time to time reasonably request.
8.1.12. Prior to the Closing, Seller shall not make any public
statement regarding this Agreement or the transactions contemplated hereby
except for such written information as shall have been reasonably approved in
writing by Purchaser, which approval shall not be unreasonably withheld or
delayed, provided that Seller may, without such approval, disclose necessary
information, on a confidential basis, to those persons from whom consents must
be received in order to transfer or assign any of the Assets, and may comply
with any Law or Order mandating such disclosure.
8.1.13. Seller, in consultation with Purchaser, shall use all
commercially reasonable efforts to obtain as promptly as practicable all
consents, authorizations, approvals and waivers to be obtained in connection
with the consummation of the transactions contemplated by this
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Agreement including the consent of the landlord of the leased premises
identified on Exhibit 6.7.3(2). In addition, Seller, in consultation with
Purchaser, shall use all commercially reasonable efforts to obtain as promptly
as practicable an estoppel certificate (in the form attached as Exhibit 8.1.13
and otherwise in form and substance reasonably satisfactory to Purchaser) from
the landlord of the leased premises identified on Exhibit 6.7.3(2), PROVIDED
that any out-of-pocket fees and expenses associated with the obtaining of such
estoppel certificate shall be borne by Purchaser.
8.2. AGREEMENTS OF PURCHASER PENDING CLOSING. Purchaser covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Seller:
8.2.1. Purchaser shall not take any action which would result in a
material breach of any of its representations and warranties hereunder.
8.2.2. Purchaser shall cooperate with Seller and use all commercially
reasonable efforts to cause all of the conditions to the obligations of Seller
under this Agreement to be satisfied on or prior to the Closing Date.
8.2.3. Prior to the Closing, Purchaser shall not make any public
statement regarding this Agreement or the transactions contemplated hereby
except for such written information as shall have been reasonably approved in
writing by Seller, which approval shall not be unreasonably withheld or delayed,
provided that Purchaser may, without such approval, comply with any Law or Order
mandating such disclosure.
8.3. TITLE EXAMINATION: SURVEYS
8.3.1. Seller shall deliver, and Purchaser shall be required to
accept only such title to the Real Property as Seller is obligated to deliver to
Purchaser pursuant to this Agreement and as Purchaser's title company (which
shall be a nationally recognized, reputable title insurance company selected by
Purchaser) (the "Title Company"), shall be willing to insure at regular rates,
under its customary form of owner's policy, but with such customary endorsements
attached and exceptions deleted as are reasonably requested by Purchaser,
subject only to the Permitted Encumbrances. Prior to the Closing Date,
Purchaser shall, at Purchaser's sole cost and expense, order from the Title
Company a commitment for title insurance for each parcel of the Real Property.
Upon receipt of each such commitment, Purchaser shall deliver a copy to Seller,
together with a statement of those exceptions listed thereon which are not
Permitted Encumbrances ("Required Deletions"), which Seller shall forthwith
undertake, with due diligence, to eliminate.
8.3.2. If Seller has not been able to eliminate the Required
Deletions by the Closing Date, Seller shall give Purchaser Notice thereof, and
Purchaser may thereafter terminate this Agreement by Notice given to Seller. No
such right of termination shall exist if Purchaser shall reasonably under the
circumstances be able to obtain title insurance as provided in this Section 8.3
and at similar rates from another title insurer that satisfies the conditions of
Section 8.3.1 (including the elimination of the Required Deletions) and which
title insurer and title
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insurance is otherwise reasonably acceptable to Purchaser; PROVIDED that Seller
shall pay any additional costs and expenses, if any, incurred by Purchaser in
connection with replacing the original Title Company.
8.3.3. At the Closing, Seller shall deliver to the Title Company, all
customary certificates, affidavits and other materials reasonably requested by
the Title Company as a condition to its issuance of the title policy, including,
without limitation, (i) an affidavit with respect to mechanics' liens certifying
that there are no unpaid bills except as included in the Assumed Liabilities for
services rendered or materials furnished to the Real Property, and (ii) a
customary agreement indemnifying the Title Company against claims for any such
services or materials.
8.3.4. Prior to the Closing Date, Seller shall provide Purchaser and
its representatives with access to the Real Property to enable Purchaser, at
Purchaser's sole cost and expense, to obtain a current, accurate survey of each
Real Property.
9. CONDITIONS TO CLOSING
9.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each of Purchaser and Seller to consummate the transactions contemplated by
this Agreement are expressly subject to the fulfillment on or prior to the
Closing Date of the following conditions:
9.1.1. Neither Purchaser nor Seller shall be subject to any Order
issued by any Governmental Body, or any Law, which prohibits the consummation of
the transactions contemplated hereby.
9.1.2. No Claim before any Governmental Body shall be pending against
Purchaser or Seller (i) challenging the consummation of this Agreement, (ii)
seeking to restrain, prevent or change in any material respect the transactions
contemplated hereby, or (iii) seeking substantial damages in connection with
such transactions.
9.1.3. Each "person" (as defined in the HSR Act and the rules and
regulations thereunder) required in connection with the transactions
contemplated by this Agreement to file a Notification and Report Form for
Certain Mergers and Acquisitions with the U.S. Department of Justice and the
U.S. Federal Trade Commission shall have made such filing, and the applicable
waiting period with respect to each such filing (including any extension thereof
by reason of a request for additional information) shall have expired or been
terminated.
9.2. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement are
expressly subject to the fulfillment or satisfaction, prior to or at the
Closing, of each of the following conditions precedent, any of which Purchaser
may at its election and without prejudice waive in writing at or prior to the
Closing:
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9.2.1. The representations and warranties of Seller contained in this
Agreement or in any Exhibit to this Agreement that are qualified by material
shall be true and correct in all respects and each of the representations and
warranties of Seller that are not so qualified shall be true and correct in all
material respects on and as of the Closing Date, with the same effect as though
such representations and warranties had been made on and as of such date, and
Seller shall have delivered to Purchaser a certificate of an authorized officer
of Seller, dated the Closing Date, to such effect.
9.2.2. Each of the agreements and covenants of Seller to be performed
on or before the Closing Date pursuant to the terms hereof shall have been duly
performed in all material respects, and Seller shall have delivered to Purchaser
a certificate of an authorized officer of Seller, dated the Closing Date, to
such effect.
9.2.3. All actions by, registrations or filings with, or consents,
approvals or authorizations of, any Governmental Bodies applicable to Seller and
necessary for the consummation of the transactions contemplated hereby shall
have been obtained or completed by Seller, and not revoked.
9.2.4. Any instrument agreed to be signed and/or delivered by Seller
at the Closing shall have been duly signed and/or delivered by Seller.
9.2.5. There shall not have occurred any event, violation or other
matter which would materially and adversely affect (i) the Business or the
Division or (ii) the Purchaser's ability to operate or conduct the Business
substantially in the manner which it is currently operated or conducted by
Seller, PROVIDED that for purposes of this condition, any such event, violation
or other matter shall not be deemed to have occurred by reason of (a) a material
and adverse change that has affected the printing industry generally or (b) the
loss of any customer relationship during the Interim Period.
9.2.6. The parties to this Agreement shall have received all material
consents and approvals listed on Exhibit 9.2.6 (including all consents and
approvals required to transfer the Material Contracts).
9.3. CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller to
consummate the transactions contemplated by this Agreement are expressly subject
to the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent, any of which Seller may at its election and
without prejudice waive in writing at or prior to the Closing:
9.3.1. The representations and warranties of Purchaser contained in
this Agreement or in any Exhibit to this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
and Purchaser shall have delivered to Seller a certificate of an authorized
officer of Purchaser, dated the Closing Date, to such effect.
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9.3.2. Each of the agreements and covenants of Purchaser to be
performed on or before the Closing Date pursuant to the terms hereof shall have
been duly performed in all material respects, and Purchaser shall have delivered
to Seller a certificate of an authorized officer of Purchaser, dated the Closing
Date, to such effect.
9.3.3. All actions by, registrations or filings with, or consents,
approvals or authorizations of, any Governmental Bodies applicable to Purchaser
and necessary for the consummation of the transactions contemplated hereby shall
have been obtained or completed by Purchaser, and not revoked.
9.3.4. Any instrument agreed to be signed and/or delivered by
Purchaser at the Closing shall have been duly signed and/or delivered by
Purchaser.
10. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No party shall have any
liability to the other party hereunder with respect to any misrepresentation or
breach of any representation or warranty herein contained, unless on or before
the end of the twenty-fourth (24th) full month following the Closing Date, it is
given Notice asserting a claim with respect thereto and specifying the factual
bases of such claim in reasonable detail to the extent then known, provided,
however, that (i) a claim for breach of any covenant or for breach of any
representation or warranty made by Seller contained in 6.1, 6.2 or 6.3 above and
Section 6.7 ("Title Representations") may be made until such time as the
applicable statute of limitations with respect to the enforcement of any claims
shall have expired, (ii) a claim for breach of any representation or warranty
made by Seller contained in Section 6.16 above may be made until the end of the
66th full month following the Closing Date and (iii) a claim for breach of any
breach of any representation or warranty made by Seller contained in Sections
6.18 ("Tax Representations") may be made until such time as the statute of
limitations applicable to the Taxes in question shall have expired. If Notice of
assertion of an indemnity claim is timely given, the obligation of the party
receiving such Notice shall not be limited by any time periods set forth herein.
10.2. SELLER'S OBLIGATION TO INDEMNIFY. Subject to the limitations set
forth in Section 10.3, Seller shall indemnify and hold Purchaser and any of
Purchaser's direct or indirect wholly-owned subsidiaries, and Purchaser and such
subsidiaries only, harmless in respect of any and all Damages actually incurred,
suffered or sustained by Purchaser in connection with (i) an imposition of any
liability against Purchaser in connection with any Excluded Asset or arising
from any Excluded Liability, (ii) the breach of any representation or warranty
contained in Section 6, (iii) the breach or other failure of Seller to perform
any covenant, agreement or obligation of Seller pursuant to this Agreement, (iv)
arising from, by reason of or in connection with Seller's failure to comply with
the requirements of any bulk sales or similar legislation applicable to the
transactions contemplated by this Agreement, (v) arising from, by reason of, in
connection with, or relating to any Environmental Claim resulting from, arising
out of or relating to the ownership, operation, condition at anytime on or
before the Closing Date or the conduct of the Business by Seller at anytime
prior to the Closing Date, in either case, even if such claim is not discovered
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until after the Closing Date, (vi) the costs of any Remedial Action necessary in
connection with any of the Assets in order to prevent the occurrence of any
Environmental Claim or arising out of or based upon a condition relating to the
Assets which existed prior to the Closing Date, or (vii) arising from, reason of
or in connection with the lawsuit identified as the Trend Litigation, including
any effect such lawsuit had on the continuing operations or customer
relationships of the Business; PROVIDED that in no case shall Seller's
obligations to Purchaser or any party associated or Affiliated with Purchaser in
respect of Damages incurred by reason of or in connection with this Agreement or
the breach, non-performance or any other Claim in respect hereto exceed the
amount of the Purchase Price (herein, the "Cap").
10.3. INDEMNIFICATION LIMITATIONS.
10.3.1. Notwithstanding any provision to the contrary contained in
Section 10 herein, Seller's obligation to indemnify Purchaser or any party
associated or Affiliated with Purchaser pursuant to Section 10.2 shall not be
effective until the aggregate dollar amount of all Damages indemnified against
under such Section exceeds Two Hundred and Fifty Thousand Dollars ($250,000)
(herein, the "Cushion") in the aggregate; PROVIDED, HOWEVER, that this Section
10.3.1 shall not apply to (x) Seller's indemnification obligations pursuant to
Section 10.2(i), Section 10.2(v), Section 10.2(vi) and Section 10.2(vii) or (y)
any Damages resulting from any breach of (i) any Tax Representation, (ii) any
representation or warranty of Seller contained in Section 6.16 above, (iii) any
Title Representations, or (iv) any Claims relating to fraud. The Cushion shall
be a deductible amount which Purchaser shall have to satisfy prior to having any
right to an indemnity hereunder; for example, if Purchaser shall prove Damages
in the aggregate of $250,001, then Seller, pursuant to its indemnity
obligations, would be required to indemnify Purchaser $1.00.
10.3.2. In addition, in no case shall Seller's obligation to indemnify
Purchaser or any party associated or Affiliated with Purchaser pursuant to
Section 10.2 exceed the amount of the Purchase Price (herein, the "Cap"), except
for any Claims relating to fraud.
10.4. PURCHASER'S OBLIGATION TO INDEMNIFY. Purchaser shall indemnify and
hold Seller harmless in respect of:
(i) any and all Damages actually incurred, suffered or sustained by
Seller in connection with any breach or other failure by Purchaser to
perform any obligation under or in connection with:
(a) any of the Leases, the Assumed Liabilities or the Assigned
Contracts (to the extent assigned to Purchaser),
(b) all Environmental Claims (including, without limitation, removal
and clean-up costs and reasonable attorneys' and consultants fees and
disbursements) which arise after the Closing Date which are directly
related to any actions taken following the Closing Date (and are not
related to any actions taken prior to the Closing Date) from or in
connection with (1) Purchaser's violation of any
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Environmental Law at the Division, (2) the generation, use, manufacture,
refining, transportation, treatment, storage, handling or Release of any
Hazardous Materials on, in or under the Real Property or the real property
to which any Lease relates (the "Property") by Purchaser (or any of its
directors, officers, agents and employees) or the presence of Hazardous
Materials at, in or under the Property or (3) any disturbance or migration
of any Hazardous Materials on, onto, within or from the Property, or
(c) the payment of any Taxes with respect to the operations of the
Division and the Business subsequent to the Closing Date; and
(ii) any Damages in excess of $100,000 in the aggregate as a deductible
amount in connection with (a) the breach of any representation or warranty
contained in Section 7, (b) the breach of other failure of Purchaser to
perform any covenant, agreement or obligation of Purchaser pursuant to this
Agreement (other than as set forth in Section 10.4(i) above) or pursuant to
any other instrument delivered by Purchaser in connection herewith, and (c)
the operation of the Business by Purchaser from and after the Closing Date.
10.5. NOTICE AND DEFENSE OF CLAIM. Whenever any Claim shall arise for
indemnification hereunder, the party asserting the Claim or any officer,
director or affiliate thereof (each an "Indemnified Party") shall provide prompt
Notice to the other party (the "Indemnifying Party") of the right to
indemnification and the facts constituting the basis for such Claim. Failure to
provide prompt Notice shall not prejudice the rights of the Indemnified Party,
except to the extent that the Indemnifying Party shall have been materially
prejudiced by such failure.
10.5.1. In connection with any claim giving rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the Indemnifying Party, at its sole
cost and expense and upon Notice to the Indemnified Party, may assume the
control of the defense of any such claim or legal proceeding (including, without
limitation, the ability to settle such claim or legal proceeding) with counsel
reasonably satisfactory to the Indemnified Party; provided, however, that (a)
if, in the judgment of the Indemnified Party such claim cannot properly be
resolved by money damages alone or (b) the Indemnified Party, at the
Indemnifying Party's sole cost and expense, may assume control of the defense of
such claim or legal proceeding; PROVIDED, FURTHER, that this indemnity does not
fully cover the claim or legal proceeding, the Indemnified Party and the
Indemnifying Party will jointly control the defense of such claim or legal
proceeding. The Indemnified Party shall be entitled to participate in the
defense of any such action, with its counsel and at its own expense.
10.5.2. If the Indemnifying Party, after receiving Notice of a claim
or litigation, does not assume the defense of any such claim or litigation
resulting therefrom within a reasonable period of time, the Indemnified Party
may defend against such claim or litigation in such manner as it may deem
appropriate including, but not limited to, settling such claim or litigation,
after giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate and no action taken by the Indemnified
Party in accordance with such defense
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and settlement shall relieve the Indemnifying Party of its indemnification
obligations herein provided with respect to any Damages resulting therefrom.
Except under the circumstances described in the immediately preceding sentence,
the Indemnifying Party shall not be obligated to indemnify the Indemnified Party
for any settlement entered into without the Indemnifying Party's prior written
consent.
10.5.3. The Indemnifying Party shall pay promptly to any Indemnified
Party the amount of all Damages to which the foregoing indemnities relate.
10.6. INDEMNIFICATION SOLE REMEDY. Following the Closing, the
indemnification procedures and remedies set forth in this Section 10, including
the qualifications and limitations contained herein, shall constitute the sole
and exclusive remedy for (i) an Indemnified Party hereto for a breach of any
covenant or representation or warranty an Indemnifying Party, or (ii) any third
party, who by reason of a relationship with an Indemnified Party, whether as an
Affiliate, guarantor, successor in interest or assignee of such party or
otherwise, shall have, allege to have or seek Damages in respect of any
covenant, representation or warranty of the Indemnifying Party hereto, or
otherwise have recourse against the Indemnifying Party in respect of this
Agreement or any representation, warranty or covenant herein contained;
provided, however, nothing in this Section 10.5 shall limit the remedies of
Purchaser in the event of a claim relating to fraud. Notwithstanding the
foregoing, any Damages that Purchaser may claim hereunder for the breach of any
representation, warranty or covenant by Seller shall be limited to matters or
items that shall not have been taken into account in the determination of the
Working Capital Adjustment.
11. ADDITIONAL COVENANTS
11.1. TRANSFERRED EMPLOYEES.
11.1.1. Purchaser hereby agrees to offer employment to each employee
actively employed in the Division by Seller on the Closing Date (other than any
such employee who has been given notice of termination or who has given notice
of resignation or retirement prior to the Closing Date) and each of the Other
Personnel (subject to any other provisions herein provided with respect to Other
Personnel). Such employment with the Purchaser or an Affiliate of Purchaser
shall commence as of the close of the business on the Closing Date, or, in the
case of an employee of the Seller absent from active service with the Seller on
the Closing Date on account of leave of absence, disability, or illness, on the
day such individual returns to active service. Each such employee who has
become an employee of Purchaser is referred to herein as a "Transferred
Employee". Purchaser or one of its Affiliates will provide each Transferred
Employee with at least the level of base pay and the level of bonus (equal to
the average bonus paid to each Transferred Employee (excluding any one-time
bonus payment) over the last three fiscal years) in effect on the Closing Date
for such Transferred Employee, in each case for the remainder of the calendar
year ending December 31, 1997, and Purchaser shall provide benefit plans and
programs to Transferred Employees that are at least as favorable as such plans
and programs that are available to other employees of the Purchaser and its
Affiliates generally. Nothing in this Agreement, including, without limitation,
the prior sentence of this Section 11.1.1, is intended to,
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or shall, require the Purchaser or any of its Affiliates to employ a Transferred
Employee on a basis other than as an employee at will.
11.1.2. Immediately as of the commencement of their employment with
Purchaser or one of its Affiliates, all Transferred Employees shall be entitled
to participate in one or more group health plans maintained or contributed to by
Purchaser with the result that no Transferred Employee who commenced employment
with Purchaser or one of its Affiliates as of the Closing Date shall be
entitled to continuation coverage under Seller's group health plans pursuant to
Section 601 of ERISA because of the transactions contemplated by this Agreement.
11.1.3. All service rendered for Seller prior to the Closing Date by
Transferred Employees shall be counted for all purposes on and after the Closing
Date under all of Purchaser's employee benefit plans, policies and arrangements,
except for benefit accruals under any defined benefit plan of Purchaser. With
respect to Purchaser's health plans, any deductible, co-insurance or maximum
out-of-pocket payments made by a Transferred Employee under Seller's Employee
Benefit Plans relating to health and accident coverage for any given
qualification period prior to the Closing Date shall be credited to such
Transferred Employee, and shall reduce the amount of any deductible,
co-insurance or maximum out-of-pocket payments payable under Purchaser's Plans,
during a similar period of qualification.
11.1.4. Purchaser shall cause one or more employee benefit plans
maintained by Purchaser and qualified under Sections 401(a) and 401(k) of the
Code to accept rollovers of Transferred Employees' accounts in the Brown 401(k)
Plan, subject to the requirements of ERISA and the Code.
11.2. WARN ACT MATTERS. Purchaser shall indemnify and hold the Seller
harmless from and against any loss which the Seller incurs under the WARN Act
arising out of, or relating to, any actions taken by the Purchaser with respect
to Transferred Employees after the Closing Date.
11.3. ASSUMPTION OF ACCRUED COMPENSATION. Effective as of the Closing,
Purchaser shall assume Seller's obligations with respect to accrued sick pay,
vacation pay and other Accrued Compensation for all Transferred Employees.
During the Interim Period, Seller shall pay and/or accrue all compensation,
including vacation pay, sick leave, and similar time, in the ordinary course of
business.
11.4. PAYMENT OF HEALTH BENEFIT AND DISABILITY CLAIMS. Seller shall be
responsible for the payment of health benefit, welfare and short- and long-term
disability claims of Transferred Employees and their covered dependents for
events incurred though the close of business on the Closing Date or, if later,
the commencement of employment with Purchaser or one of its Affiliates and
Purchaser shall be responsible for the payment of health benefit and short- and
long-term disability claims of Transferred Employees and their covered
dependents for events incurred after the close of business on the Closing Date
or, if later, the commencement of employment with Purchaser or one of its
Affiliates.
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11.5. COBRA MATTERS. Seller shall be responsible for providing health care
continuation coverage pursuant to the requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), to the extent required
by COBRA, for all Transferred Employees and their covered dependents who had a
"qualifying event" under COBRA prior to commencement of employment with
Purchaser or one of its Affiliates, and Purchaser shall be responsible for
providing health care continuation coverage pursuant to COBRA for all
Transferred Employees and their dependents who had a "qualifying event" under
COBRA at any time after commencement of employment with Purchaser or one of its
Affiliates.
11.6. NO THIRD PARTY BENEFICIARIES. Notwithstanding any possible inferences
to the contrary, neither Seller nor Purchaser intends for this Section 11, or
any other representation, warranty or covenant herein made, to create any rights
or obligations except as between Seller and Purchaser as terms and conditions of
this transaction, and no third Person (including without limitation, any past,
present or future employees of Seller or Purchaser, or any Transferred
Employees) shall be treated as third party beneficiaries of any representations,
warranties or covenants of either party herein made.
11.7. DISCHARGE OF BUSINESS OBLIGATIONS. From and after the Closing Date,
Seller shall pay and discharge, in accordance with past practice but not other
than on a timely basis, all obligations and liabilities incurred prior to the
Closing Date in respect of the Business, its operation or the assets and
properties used therein (except for those obligations and liabilities expressly
assumed by Purchaser hereunder).
11.8. MAINTENANCE OF BOOKS AND RECORDS. Each of Seller and Purchaser shall
preserve until the seventh anniversary of the Closing Date all records possessed
or to be possessed by such party relating to the Business as existing or
conducted prior to the Closing Date, provided, however, that all such records
relating to tax matters shall be retained until all tax years included within or
prior to the year in which the Closing Date occurs have been closed by all
relevant federal, state and local taxing authorities. After the Closing Date,
where there is a legitimate purpose (including, without limitation, in
connection with defense of third party litigation), such party shall provide the
other party with reasonable assistance and access, upon prior reasonable written
request specifying the need therefor, during regular business hours, to (i)
authorized Personnel or representatives of such party and (b) the Books and
Records of such party, but, in each case, only to the extent relating to the
Business prior to the close of business on the Closing Date, and the other party
and its representatives shall have the right to make copies of such Books and
Records; provided, however, that the foregoing right to assistance and access
shall not be exercised in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further, provided, that, as to
so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party and its authorized
Personnel and representatives will use due care to not disclose such information
to any third Person, except (i) as required by applicable Law or Order, (ii)
with the prior written consent of such party, which consent shall not be
unreasonably withheld or delayed, or (iii) where such information becomes
available to the public generally, or becomes generally known to competitors of
such party, through sources other than the requesting party, its Affiliates or
its Personnel or representatives. Such records may nevertheless be destroyed by
a party if such party sends to the
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other party Notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may
then be destroyed after the 60th day after such Notice is given unless the other
party objects to the destruction, in which case the party seeking to destroy the
records shall deliver such records to the objecting party at the expense of the
objecting party.
11.9. PAYMENTS RECEIVED; COLLECTION OF RECEIVABLES. Seller and Purchaser
each agree that after the Closing they will hold and will promptly transfer and
deliver to the other, from time to time as and when received by them, any cash,
checks with appropriate endorsements (using their best efforts not to convert
such checks into cash), mail or other property that they may receive on or after
the Closing which properly belongs to the other party. Anything contained in
this Agreement to the contrary notwithstanding, the collection of Seller's
Receivables relating to the Business prior to the Closing Date is the risk and
responsibility of Purchaser, provided, however, that Seller will cooperate with
Purchaser to insure an orderly collection by Purchaser of such accounts
receivable.
11.10. SELLER'S CONTINUED EXISTENCE. Seller hereby agrees that for the
period beginning on the Closing Date and ending on the last day of the 66th full
month following the Closing Date or, if any claims for which Seller has been
notified is currently pending, the date on which such claim is finally resolved
in accordance with the provisions of this Section 10, Seller shall, at all times
during such period, maintain a minimum net worth equal to the Purchase Price;
PROVIDED that this Section 11.10 shall not restrict Seller from changing into a
corporate form or taking other structural arrangements with its affiliates, so
long as its successor-in-interest shall agree in writing to be bound by this
Section 11.10 and the indemnification obligations of Seller set forth herein.
11.11. RITE AID PAYMENTS. Prior to the Closing Date, Seller shall pay to
Rite Aid all amounts owed by Seller to Rite Aid in respect of the overpayment of
severance benefits, which amount is estimated by Seller to be $87,131.94.
Furthermore, the parties agree that to the extent that the June 30 Balance Sheet
contains an account payable for all or a portion of the amount owed to Rite Aid
in respect of the overpayment of severance benefits, such amount shall be an
Excluded Liability for purposes of this Agreement and shall be appropriately
excluded from the Pro Forma Balance Sheet and Closing Date Balance Sheet in
accordance with the terms hereof. If such amount is not paid by Seller prior to
the Closing Date, Seller shall be fully indemnified for such amount without
application of the cushion.
12. RESTRICTIONS ON BUSINESS ACTIVITIES
12.1. NON-SOLICITATION OF EMPLOYEES. Each of the parties hereto agrees that
it will not, for a period of eighteen (18) months subsequent to the Closing
Date, induce or seek to induce any of the employees of the other (including, in
Seller's case, any inducement of any of the Transferred Employees), to leave the
employment of the other party or to obtain employment with any third party,
provided that this shall not apply to discussions with any employees of the
other party who shall or may seek employment with a party without inducement of
such party.
12.2. PRINTING.
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12.2.1. Seller agrees that for a period of five (5) years following
the Closing Date, it will not, and it will cause its Affiliates not to, (i)
engage in the business of printing of advertising circulars and other
publications of the types currently produced at the Division and television
books, newspapers, Sunday magazines and comics in the United States, provided
that such restriction shall not apply to occasional sales made in the United
States by any non-United States based Affiliate of Seller to the extent printed
outside of the United States or (ii) invest in, manage, operate, join or control
as a partner, stockholder, consultant or otherwise, any person that competes in
the business of printing advertising inserts in the United States ("Restricted
Business"); PROVIDED, HOWEVER, that nothing in this Section 12.2 shall prohibit
Seller, or its affiliates, from (a) owning up to 5% of the outstanding voting
securities of any publicly traded entity or (b) acquiring a Restricted Business
as an incidental part of an acquisition (by joint venture, merger or other) of
the assets of, or the majority of voting interests in, another person (a "Target
Business") if the sales of the Target Business from the Restricted Business are
not in excess of 10% of the sales of the Target Business in the fiscal year of
the Target Business, for reporting purposes, preceding such acquisition. In the
event the Seller or its affiliates acquire a Restricted Business pursuant to
provision (b) in the preceding sentence and the sales of the Restricted Business
are in excess of 10% of the sales of the Target Business in such fiscal year,
Seller shall provide Purchaser with Notice of such acquisition, and for a period
of three months following such acquisition, Purchaser shall have the right to
acquire the Restricted Business on the terms and conditions mutually
satisfactory to the parties hereto. If the parties fail to reach an agreement
within such three-month period, Seller shall thereafter divest such Restricted
Business within such nine-month period by way of auction or other competitive
bidding process, negotiation, sale or such other manner or divestiture as Seller
shall deem appropriate. If prior to the expiration of nine-month period,
Purchaser shall have made an offer to purchase the Restricted Business (the
"Offer"), then Seller shall not, for as long as the Offer remains outstanding,
sell the Restricted Business for an amount that would result in gross proceeds
to Seller less than the amount Seller would have received from Purchaser under
the Offer. In addition, Seller agrees that it will not provide prepress or
related services for the activities listed in Section 12.2(a)(i) under the
"PrepSAT" name.
12.2.2. If any provisions contained in this Section 12.2 shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section 12.2, but this Section 12.2 shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein.
It is the intention of the parties that if any of the restrictions or covenants
contained herein is held to cover a geographic area or to be for a length of
time which is not permitted by applicable law, or in any way construed to be too
broad or to any extent invalid, such provision shall not be construed to be
null, void and of no effect, but to the extent such provision would be valid or
enforceable under applicable law, a court of competent jurisdiction shall
construe and interpret or reform this Section 12.2 to provide for a covenant
having the maximum enforceable geographic area, time period and other provisions
(not greater than those contained herein) as shall be valid and enforceable
under such applicable law. Seller agrees that Purchaser shall be entitled, upon
a proper showing, to injunctive relief requiring specific performance of this
Section 12.2 by Seller.
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12.3. CUSTOMER RELATIONS. Seller agrees that with respect to the current
business of Seller's customers reflected in the Assumed Contracts, and during
the current term of each such Assumed Contract, Seller will not induce or seek
to induce such customer to have work done other than at the Division. Purchaser
agrees that following the Closing, it will honor all outstanding Quotations made
by Seller during the period from the date of this Agreement to Closing, provided
such Quotations were made in accordance with this Agreement.
12.4. AUDITED FINANCIAL STATEMENTS. Seller agrees, at the request of the
Purchaser, to authorize PW (or another mutually agreed upon "Big Six" accounting
firm) to prepare such additional financial statements and reports as may be
necessary for Purchaser to comply with its financial reporting obligations under
the Federal securities laws or otherwise. In connection with the foregoing,
Seller agrees to provide Purchaser and its representatives access to all Books
and Records reasonably necessary to prepare such statements and to provide
access to all personnel as are reasonably necessary to assist in the preparation
of the statements. Purchaser shall reimburse Seller for, or pay PW directly
for, the actual cost plus reasonable expenses of the PW audit, to the extent
requested by Purchaser, except to the extent such expenses would have been
incurred by Seller in the ordinary course of its business.
13. MISCELLANEOUS
13.1. TERMINATION. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated by Notice of termination at
any time before the Closing (that is, prior to the Closing and the application
of the various conditions to Closing as set forth in Section 9 above) only as
follows:
13.1.1. by mutual consent of Seller and Purchaser;
13.1.2. by Purchaser or Seller, upon Notice to Seller or Purchaser,
as applicable, given at any time after December 31, 1997, if the Closing has
not by then occurred;
13.1.3. by either Purchaser or Seller, as applicable, if the other
party is in material breach of any provision of this Agreement and such breach
has not been waived by the non-breaching party; PROVIDED, HOWEVER, that such
termination shall not be effective unless and until the nonbreaching party has
given written notice to the breaching party of such breach and of its intention
to terminate this Agreement and the breaching party fails to cure, or cause to
be cured, such breach within ten (10) Business Days following receipt of such
notice;
13.1.4. By either Purchaser or Seller if a court of competent
jurisdiction or governmental, regulatory, or administrative agency or commission
shall have issued an order, decree, or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable (provided, however, that the right to
terminate this Agreement pursuant to this Section 13.1.4 shall not be available
to any party until such party has used all reasonable efforts to remove such
order, decree, or ruling);
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13.1.5. In the event of the termination and abandonment hereof
pursuant to the provisions of this Section 13.1, this Agreement (except for the
provisions of Sections 5, 8.1.12, 8.2.3 and this Section 13.1.5, all of which
shall continue) shall become void and have no effect.
13.2. EXPENSES. Except as specifically provided otherwise in this
Agreement, the parties hereto shall pay their own costs and expenses relating to
the negotiating and entering into of this Agreement and the consummation of the
transactions contemplated hereby. In the event that this Agreement is
terminated by either party pursuant to Section 13.1.3, the breaching party shall
pay to the non-breaching party on demand an amount equal to the non-breaching
party's reasonable out-of-pocket fees and expenses (for which the breaching
party has been provided reasonable documentation) incurred in connection with
the transactions contemplated by this Agreement, including attorney's fees,
filing fees (including under the HSR Act), and fees and expenses relating to the
non-breaching party's due diligence had the closing occurred; PROVIDED, HOWEVER,
that the fees and expenses to be paid by the breaching party pursuant to this
Section 13.2 shall not exceed $250,000 in the aggregate; PROVIDED, FURTHER, that
the amount of any fees and expenses of Seller shall not include those fees and
expenses incurred by Seller in connection with the sale of Seller's businesses
other than the Business.
13.3. ENTIRE AGREEMENT. This Agreement, including the Exhibits attached
hereto and the other documents referred to herein which form a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, including without limitation any matters stated in May 1997
Descriptive Memorandum prepared by Lehman Brothers or in Purchaser's bid
documents or other correspondence, but the parties specifically agree that the
Confidentiality Agreement shall only be deemed superseded upon the occurrence of
the Closing, and shall until such event, shall constitute a separate enforceable
agreement between them.
13.4. COMPLIANCE WITH BULK SALES LAWS. Purchaser and Seller hereby waive
compliance with the bulk sales laws and other similar laws in any applicable
jurisdiction in respect of the transactions contemplated by this Agreement.
13.5. AMENDMENTS. This Agreement may be amended, modified and supplemented
only by a written agreement signed by the parties hereto.
13.6. WAIVER OF COMPLIANCE. Any failure of Seller, on the one hand, or
Purchaser on the other hand, to comply with any obligation, covenant, agreement
or condition contained herein may be expressly waived in writing by the other
party or parties, as the case may be, but such waiver or failure to insist upon
strict compliance shall not operate as a waiver of any subsequent or other
failure.
13.7. NOTICES. Any Notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be sufficient
if given in writing and delivered personally or sent by facsimile, telegram,
recognized courier service (with receipt
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acknowledged) or by registered or certified mail, postage prepaid, with copy
thereof being telefaxed as an information copy only, as follows:
If to Seller, to: Gruner + Jahr Printing & Publishing Co.
c\o Brown Printing Company
2300 Brown Avenue
Waseca, Minnesota 56093-0517
Attention: Mr. Arno Buchholz
Facsimile No.: (507) 835-0238
With a copy to: Fox Horan & Camerini, LLP
One Broadway (7th Floor)
New York, New York 10004
Attention: Clifford A. Rathkopf, Jr., Esq.
Facsimile No.: (212) 709-0248
or to such other person, facsimile number or address as Seller shall furnish to
Purchaser in writing.
If to Purchaser, to: Big Flower Press Holdings, Inc.
3 East 54th Street
New York, New York 10022
Attention: General Counsel
Facsimile No.: (212) 223-4074
or to such other person, facsimile number or address as Purchaser shall furnish
to Seller in writing.
13.8. GOVERNING LAW. This Agreement shall be governed by and interpreted
and enforced in accordance with the substantive and procedural laws of the State
of New York, but without regard to its conflict of laws rules and laws.
13.9. JURISDICTION. Any judicial proceeding brought against any of the
parties to this Agreement on any dispute arising out of this Agreement or any
matter related hereto may be brought in the court of the State of New York or in
the United States District Court for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the parties to this Agreement
accepts the exclusive jurisdiction of such courts and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement, and
agrees that venue in any such court or in such jurisdiction is not inconvenient.
13.10. ASSIGNMENT. This Agreement and all the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any other
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties hereto,
which consent may be refused for any reason or no reason, except that Purchaser
shall be
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permitted to assign its rights and interests hereunder to any wholly-owned
subsidiary at any time, upon Notice thereof to Seller, if such assignment shall
not relieve Purchaser of primary financial responsibility hereunder. Any
assignment which contravenes this Section 13.10 shall be void AB INITIO.
13.11. TABLE OF CONTENTS AND CAPTIONS. The Table of Contents and all
section headings contained in this Agreement are for convenience and reference
only, do not form a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
13.12. SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
13.13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument.
[signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
GRUNER + JAHR PRINTING & PUBLISHING CO.
By: G+J USA Group, Inc., managing general
partner
By: /s/ Arno Buchholz
-------------------------------
Name: Arno Buchholz
Title: Executive Vice President
TREASURE CHEST ADVERTISING COMPANY, INC.
By: /s/ Mark A. Angelson
--------------------------------
Name: Mark A. Angelson
Title: Secretary
<PAGE>
SUMMARY OF EXHIBITS TO
THE ASSET PURCHASE AGREEMENT,
DATED AS OF SEPTEMBER 15, 1997, BETWEEN
GRUNER + JAHR PRINTING & PUBLISHING CO.
AND TREASURE CHEST ADVERTISING COMPANY, INC.
EXHIBITS
2.1 Permitted Encumbrances
2.3.9 Additional Excluded Assets
2.5 Additional Excluded Liabilities
3.3.1 June 30 Working Capital
4.2.1.4 Legal Opinion of Fox Horan & Camerini LLP and of Walter, Conston,
Alexander & Green
4.2.2.5 Legal Opinion of Howard, Darby & Levin and of Vice President and
Associate General Counsel of Purchaser
6.4 Financial Statements for Fiscal Year ended 6/30/97
6.5 Inventory and Receivables
6.6 Disclosure of Existing Conditions
6.7.3 List of Real Property and Real Property Leases
6.8 Conditions of Tangible Assets
6.9 Litigation and Claims
6.10 Compliance with Law
6.11 Required Governmental Approvals and Consents
6.12.1 Certain Agreements with Officers, etc.
6.12.2 Labor Unions
6.12.3 Purchase of Supplies
6.12.4 Products or Service Sale Agreements
6.12.5 Sales Representative Agreements
6.12.6 Terminable Agreements
6.12.7 Certain Real Property Leases
6.12.8 Permits Material to the Business
6.12.9 Certain Notes, Loans, etc.
6.12.10 Lines of Credit or Guarantees
6.12.11 Charitable or Political Contributions
6.12.12 Capital Expenditures in Excess of $50,000
6.12.13 Restrictive Covenants or Agreements
6.12.14 Agreement not in the Ordinary Course of Business
6.12(ii) Customer Contracts
6.13 Employee Benefit Plans
6.16 Environmental Matters
6.18 Tax Matters
6.19 Names and Locations of RCPC Business
6.20 Bank Accounts and Powers of Attorney
6.22 List of Personnel with "Seller's Knowledge"
6.24 Affiliate Transactions
55
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6.26 Largest Suppliers and Customers
6.27 List of Intellectual Property Rights
8.1.13 Estoppel Certificate
9.2.6 Material Consents and Approvals
56
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EXHIBIT 99.1
[Big Flower Press Letterhead]
Press Release
Big Flower Completes Acquisition of
Leading West Coast Advertising Insert Producer
New York City, October 15, 1997 - Big Flower Press Holdings, Inc. (NYSE: BGF)
announced today that it has completed the acquisition of Riverside County
Publishing Company (RCPC), a division of Brown Printing with revenues of
approximately $130 million. RCPC, with operations in Riverside and San Leandro,
California, produces advertising inserts for grocers, drug stores, home
improvement merchants and other retailers.
Edward T. Reilly, President and Chief Executive Officer of Big Flower,
commented, "This acquisition contributes strategic western capacity to TC
Advertising's nationwide production network, and adds important year-round
customers to our advertising insert business."
RCPC is the second acquisition Big Flower has completed in the past several
weeks. Big Flower recently acquired Olwen Direct Mail, a full-service, UK-based
direct mail producer, and announced agreements to acquire Columbine JDS Systems,
a leading computer-based management service provider for the broadcast industry,
and Gamma One, one of New England's leading digital premedia services companies.
As previously announced, Big Flower will be effecting a $100 million private
offering of Senior Subordinated Notes due 2007 and a $100 million private
offering of Convertible Quarterly Income Preferred Securities, the proceeds of
which will be applied to repay indebtedness incurred in connection with the four
acquisitions.
Big Flower is a leading advertising and marketing services company specializing
in advertising insert programs, circulation-building newspaper products, digital
image and content management, customized direct mail products and fragrance
samplers. For the 12
<PAGE>
months ended June 30, 1997, Big Flower's sales were approximately $1.6 billion,
pro forma for the recently announced acquisitions of RCPC, Olwen, Columbine JDS
and Gamma One.
# # #
For more information, please contact: Nancy S. Murray
Big Flower Press Holdings, Inc.
212.521.1606
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