<PAGE> 2
ITEM 5. OTHER EVENTS
On October 15, 1999 TransWestern Publishing Company LLC (the Company), a
wholly owned subsidiary of TransWestern Holdings L.P., purchased certain
tangible and intangible assets of United Multimedia (American Media) for a
total of $16.0 million. The purchase price consists of $14.4 million in cash
and a note payable of $1.6 million due in 18 months subject to adjustment based
on actual account receivable collections. The Comapany will pay a $0.5 million
production fee on January 1, 2000 for completion of certain in-process
directories. The cash portion of the purchase price was funded with borrowings
under the Company's revolving credit facility. United Multimedia published six
directories in Riverside County and northern San Diego County, California.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on November 5, 1999 on its
behalf by the undersigned thereunto duly authorized.
TRANSWESTERN HOLDINGS, L.P.
(Registrant)
By: TransWestern Communications Company,
Inc.
(General Partner)
Date: November 5, 1999 By:
-------------------------------------
Name: Joan M. Fiorito
Title: Vice President, Chief
Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C>
2.1 Asset Purchase Agreement between TransWestern
Publishing Company, LLC, United Multi Media and
all of its Shareholders dated as of September
29, 1999
</TABLE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS 1
ARTICLE 2 - PURCHASE AND SALE 7
2.1 Purchased Assets 7
(a) Asset Purchase 7
(b) Limited Assumed Liabilities 8
(c) Excluded Liabilities 9
2.2 Purchase Price 9
2.3 Closing Date Transactions 10
(a) Closing 10
(b) Deliveries on the Closing Date 10
2.4 Determination of Pre-Paid Direct
Costs and Advance Payments 10
(a) Adjustment at Closing 10
(b) Post Closing Adjustment 11
2.5 Post-Closing Adjustment for
Actual Collections 12
ARTICLE 3 - REPRESENTATIONS AND
WARRANTIES 13
3.1 Representations and Warranties
of Seller 13
(a) Organization, Qualification
and Corporate Power 13
(b) Authorization of Transaction 14
(c) Noncontravention 14
(d) Consents and Approvals 14
(e) Recent Events 14
(f) Intellectual Property 16
(g) Contracts and Commitments 17
(h) Financial Statements 17
(i) Accuracy and Completeness of
Information Furnished 18
(j) Affiliated Transactions 18
(k) Undisclosed Liabilities 18
(l) Customer Contract Receivables;
Advance Payments 19
(m) Employees. 19
(n) Employee Benefits. 19
(o) Guaranties 21
(p) Environmental, Health, and
Safety Matters 21
(q) Insurance 22
(r) Legal Compliance with Laws 23
(s) Litigation; Proceedings 23
(t) Title and Sufficiency of Assets 24
(u) Directory Listings 24
(v) Brokers' Fees 24
(w) Tax Matters 24
(x) Owned and Leased Property 26
(y) Customers and Suppliers 27
(z) Closing Date 28
3.2 Representations and Warranties
of TransWestern 28
(a) Organization 28
(b) Authorization of Transaction 28
(c) Noncontravention 28
(d) Governmental Consent 29
(e) Brokers' Fees 29
(f) Closing Date 29
<PAGE>
ARTICLE 4 - COVENANTS 29
4.1 Pre-Closing Covenants 29
(a) Affirmative Covenants Concerning
the Business 29
(b) Negative Covenants Concerning
the Business Prior to Closing 30
(c) Exclusivity 31
(d) General Obligation to Close 31
4.2 Other Covenants 32
(a) Full Access 32
(b) Notice of Developments 32
4.3 Employee Matters 32
4.4 Seller's Post-Closing
Obligations 33
ARTICLE 5 - CONDITIONS 34
5.1 Conditions To Closing 34
(a) Conditions to Closing
Obligations of TransWestern 34
(b) Conditions to Closing
Obligations of Seller 35
ARTICLE 6 - TERMINATION 36
6.1 Termination 36
6.2 Effect of Termination 37
6.3 Breakup Fees and Expenses 37
ARTICLE 7 - ADDITIONAL AGREEMENTS 38
7.1 Post-Closing Assistance 38
7.2 Confidentiality 38
7.3 Non-Competition 39
7.4 Indemnification 40
7.5 Indemnification Procedures 41
(a) Notice of Claim 41
(b) Control of Defense; Conditions 41
(c) Control of Defense; Exceptions,
etc. 42
(d) Payments. 42
(e) Adjustments 43
(f) Other Indemnification Provisions 43
7.6 Arbitration 43
7.7 Miscellaneous 45
(a) Survival of Representations and
Warranties 45
(b) Press Releases and Announcements;
Notice to Customers 45
(c) Further Transfers and Assurance 45
(d) Name and Logos of Parties 46
(e) No Third Party Beneficiaries 46
(f) Entire Agreement 46
(g) Succession and Assignment 46
(h) Counterparts 46
(i) Headings 46
(j) Notices 46
(k) Governing Law 47
(l) Amendments and Waivers 47
(m) Severability 47
(n) Expenses 48
(o) Taxes; Recording Charges 48
(p) Construction 48
(q) Incorporation of Exhibits and
Schedules 48
(r) Number and Gender 48
<PAGE>
EXHIBITS
Exhibit A Form of Seller Note
Exhibit B Form of Bill of Sale
Exhibit C Form of Opinion of Seller's and Stockholder's Counsel
SCHEDULES
Section Reference
Permitted Security Interest Schedule
Definitions
Assumed Liability Schedule
2.1(b)(ii)
Purchase Price Allocation Schedule
2.2(b)
Qualifications Schedule
3.1(a)
Recent Events Schedule
3.1(e)
Intellectual Property Schedule
3.1(f)
Contracts Schedule
3.1(g)
Financial Statements Schedule
3.1(h)
Affiliated Transactions
3.1(j)
Benefit Plan Schedule
3.1(n)
Environmental and Safety Permits Schedule
3.1(p)
Environmental and Safety Matters Schedule
3.1(p)
Insurance Schedule
3.1(q)
Litigation Schedule
3.1(s)
Taxes Schedule
3.1(w)
Real Property Schedule
3.1(x)
Assumed Lease Schedule
3.1(x)
Employee Schedule
4.2(c)
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of September 29, 1999, by and among TransWestern Publishing Company, LLC, a
Delaware limited liability company ("TransWestern"), United Multi Media, a
California corporation d/b/a American Media ("Seller"), and Roy French, Harris
Kay and Dennis Reimert (collectively, the "Shareholders"). TransWestern,
Seller and the Shareholders sometimes are referred to herein individually as a
"Party" and collec-tively as the "Parties." Capitalized terms not otherwise
defined have the meanings set forth below in Article 1.
Each of Seller and TransWestern are in the business of printing, publishing
and distributing telephone directory "yellow pages." Subject to the terms and
conditions set forth herein, TransWestern desires to acquire from Seller and
Seller desires to sell to TransWestern certain of its businesses, assets and
properties including all of its business and assets of or relating to each of
the following Directories located in California: the Temecula Directory, the
Sun City Directory, the Elsinore Directory, the Southwest Riverside County
Directory, the Fallbrook Directory and the Hemet Directory (each as defined
below and sometimes referred to herein collectively as the "Directories";
each, a "Directory").
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the represen-tations, warranties, and
covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
"Accounts Receivable Measurement Date" means period ending on the earlier of
(i) the last day of the 18-month period following the Closing Date (or such
later date as may mutually be agreed upon by the Parties) and (ii) such date
when all of the outstanding accounts receivable associated with the Current
Editions have been satisfied in full.
"Actual Net Collection Amount" means the aggregate amount of customer cash
payments collected by TransWestern after the Closing Date through the period
ending on the Accounts Receivable Measurement Date in respect of outstanding
accounts receivable for Current Editions.
"Advance Payment" means a customer payment received by either Seller (or
TransWestern, as the case may be) with respect to any Customer Contract
associated with any edition of any Directory prior to publication of such
edition.
"Affiliate" of any Person means any other Person controlling, controlled by or
under common control with such first Person.
"Business means the business of printing, publishing and distributing
telephone directory "yellow pages" as conducted by Seller as of the date
hereof and over the 12-month period immediately preceding the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and all rules and
regulations promulgated thereunder.
"Confidential Information" means any information that is not generally known
to the public or in the telephone directory industry and that is or has been
used, developed or obtained by Seller or TransWestern (as applicable) and
their respective Affiliates in connection with their respective businesses
including but not limited to (i) products or services, (ii) fees, costs and
pricing struc-tures, (iii) designs, (iv) analysis, (v) drawings, photographs
and reports, (vi) computer software, including electronic mail, operating
systems, applications and program listings, (vii) flow charts, transaction
summaries and models, manuals and documentation, (viii) data bases, (ix)
financial reports, investment summaries, and accounting and business methods,
(x) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (xi)
customers and clients and customer, contact or client lists, (xii)
copyrightable works, (xiii) Records and (xiv) all similar and related
information in whatever form, except that Confidential Informa-tion shall not
include any information that has been published in a form generally available
to the public.
<PAGE>
"Current Editions" means, collectively, the 1999 Fallbrook Directory, the 1999
Hemet Directory, the 2000 Southwest Riverside County Directory, the 2000
Temecula Directory, the 2000 Sun City Directory and the 2000 Elsinore
Directory.
"Customer Contract" means any written contract or agreement (other than trade
contracts) between Seller and any of its customers (or under which Seller has
rights) which has been entered into and signed by the parties thereto in
connection with the publication of the Directories and corresponding provision
of Directory Services.
"Direct Costs" means, with respect to any Directory (or edition thereof), (i)
sales commissions, salaries, benefits, payroll taxes and related travel
expenses for account executives, (ii) license fees for white pages, and (iii)
third party paper, printing, production (including, without limitation, ad
creation, colorization, listing and keying) and shipping costs and (iv)
distribution costs, in each case to the extent allocable to or associated with
such Directory (or edition thereof) .
"Directory" shall have the meaning set forth in the preamble.
"Directory Services" means the printing and publishing of advertisements in
any Directory.
"Elsinore Directory" means the telephone directory owned by Seller as of the
date hereof which covers those areas of California which fall within the
following zip codes: 92530, 92532, 92587 and 92595. "2000 Elsinore
Directory," for example, means the edition of such Directory published in
March 2000.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit or other retirement, bonus, or
incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA '3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA '3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means each entity which is treated as a single employer with
Seller for purposes of Code '414.
"Estimated Net Collection Amount" means an amount equal to (i) the aggregate
amount of accounts receivable of the Business with respect to the Current
Editions as of the Closing Date, minus (ii) an amount equal to 4.2% of the
aggregate amount of recognized Net Revenue received in respect of the Current
Editions.
<PAGE>
"Fallbrook Directory" means the telephone directory owned by Seller as of the
date hereof which covers those areas of California which fall within the
following zip codes: 92003 and 92028. "2000 Fallbrook Directory," for
example, means the edition of such Directory published in April, 2000.
"Fiduciary" has the meaning set forth in ERISA '3(21).
"Future Edition Customer Contract" means any Customer Contract associated with
any Future Edition.
"Future Edition" means any edition of any of the Directories which is
published after the Closing Date.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Hemet Directory" means the telephone directory owned by Seller as of the date
hereof which covers those areas of California which fall within the following
zip codes: 92536, 92539, 92543, 92544, 92545, 92548, 92549, 92553, 92581,
92582, 92583 and 92596. "2000 Hemet Directory," for example, means the
edition of such Directory published in August, 2000.
"Intellectual Property" means all (i) patents, patent applications, patent
disclosures, and improvements thereto, (ii) trademarks, service marks, trade
dress, logos, trade names, and corpo-rate names and registrations and applica-
tions for regis-tration thereof, (iii) copyrights and registra-tions and
applications for registration thereof, (iv) mask works and regis-trations and
applications for registra-tion thereof, (v) computer software, data and
documenta-tion, (vi) trade secrets and confi-den-tial business infor-mation
(including ideas, formulas, composi-tions, inventions (whether patent-able or
unpatent-able and whether or not reduced to practice), know-how, manufactur-
ing and produc-tion processes and techniques, research and develop-ment
informa-tion, software products in development, drawings, specifications,
designs, plans, proposals, technical data, copy-rightable works, financial
(excluding employee benefit plans), marketing, and business data, pricing and
cost informa-tion, business and market-ing plans, and customer and supplier
lists and information), and (vii) copies and tangible embodi-ments thereof (in
whatever form or medium).
"Knowledge" means with respect to a Person, (a) the actual knowledge of such
Person (which includes the actual knowledge of all officers, directors and
executive employees of such Person) and (b) the knowledge which a prudent
business person would have obtained in the ordinary course of conduct of his
or her business after making reasonable inquiry and reasonable diligence with
respect to the particular matter in question.
"Liability" or "Liabilities" means any liability (whether known or unknown,
whether asserted or not asserted, whether absolute or contingent, whether
liquidated or unliquidated, and whether due or to become due), including any
liability for taxes.
"Loss" means any loss, Liability, damage or expense, whether or not arising
out of third party claims (including, without limitation, interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing).
"Material Adverse Effect" means any change, event or occurrence which has a
material adverse effect upon the assets, business, operations, prospects,
profitability or condition (financial or otherwise) of any Directory or the
Directories considered as a whole or Seller and the Directories considered as
a whole.
"Multiemployer Plan" has the meaning set forth in ERISA '3(37).
"Net Revenue" means aggregate amount of gross revenue (both local and
national) minus all cash discounts (but not trade discounts or sales
discounts) and national sales commissions.
<PAGE>
"Ordinary Course of Business" means the ordinary course of the Business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Security Interests" means the Security Interests described on the
attached "Permitted Security Interests Schedule."
"Person" means an individual, a partnership, a corporation, an association, a
limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization, a governmental entity or any department, agency
or political subdivision thereof or any other entity.
"Pre-Paid Direct Costs" means any Direct Costs associated with any Future
Editions (other than the Transition Directories) paid by Seller as of the
Closing Date and evidenced by a receipt in the amounts set forth on the Pro
Forma Closing Schedule.
"Prior Edition" means all editions of any Directory which have a publication
date prior to the Closing Date.
"Pro Forma" means the pro forma statement of Advance Payments and Direct Costs
(separately identifying the Pre-Paid Direct Costs and other Direct Costs)
delivered by Seller to TransWestern on the Closing Date.
"Prohibited Transaction" has the meaning set forth in ERISA '406 and Code
'4975.
"Records" means, collectively, (i) any and all procedure manuals, books,
records and accounts; (ii) all invoices and commission reports; (iii) customer
lists (whether partial and/or complete); (iv) data layouts, including magnetic
tape layouts, diskette layouts, etc.; (v) promotional letters, brochures and
advertising materials; (vi) displays and display materials; (vii) processor
notes or information; (viii) correspondence and old or current proposals to
any former, present or prospective customer; (ix) information concerning gross
sales and profitability and any other measurements of a business' financial
condition; (x) data, account information or other similar matters furnished by
or concerning customers; and (xi) all copies of any of the foregoing data,
documents or devices in any form, including carbon copies, photo copies,
copies of floppy disks, diskettes, tapes, cassettes or any other form
whatsoever.
"Reportable Event" has the meaning set forth in ERISA '4043.
"Sales/Use Tax Liability" means any state sales and use Tax Liability for
periods (or portions thereof) ending on or prior to the Closing Date relating
to or arising in connection with the Business or any operations of Seller.
"Security Interest" means any mortgage, pledge, secu-rity interest,
encumbrance, lien or charge, of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale of receivables with recourse against Seller, any Affiliate
of Seller) or any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to Seller under a lease which is
not in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the Ordinary Course of Business).
"Southwest Riverside County Directory" means the telephone directory owned by
Seller as of the date hereof which covers those areas of California which fall
within the following zip codes: 92530, 92532, 92562, 92563, 92584, 92586,
92587, 92590, 92591, 92592, 92595 and 92596. "2000 Southwest Riverside County
Directory," for example, means the edition of such Directory published in
February, 2000.
<PAGE>
"Sun City Directory" means the telephone directory owned by Seller as of the
date hereof which covers those areas of California which fall within the
following zip codes: 92584 and 92586. "2000 Sun City Directory," for example,
means the edition of such Directory published in March, 2000.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, communications, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unem-ployment, disability, real
property, personal property, sales, use, transaction, transfer, registration,
value added, alterna-tive or add-on minimum, estimated, or other tax of any
kind whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, information report or filing with respect to
Taxes, including any schedules attached thereto and including any amendment
thereof.
"Temecula Directory" means the telephone directory owned by Seller as of the
date hereof which covers those areas of California which fall within the
following zip codes: 92562, 92563, 92590, 92591, 92592 and 92596. "2000
Temecula Directory," for example, means the edition of such Directory
published in February, 2000.
"Transition Directories" means, collectively, the 2000 Elsinore Directory, the
2000 Southwest Riverside County Directory, the 2000 Sun City Directory and the
2000 Temecula Directory.
ARTICLE 2 - PURCHASE AND SALE
2.1 Purchased Assets.
(a) Asset Purchase. On the terms and subject to the conditions set forth
in this Agreement, at the closing of the transactions contemplated herein (the
"Closing"), TransWestern agrees to purchase from Seller, and Seller agrees to
(and Shareholders agree to cause Seller to) sell, trans-fer, convey and
deliver to TransWestern, free and clear of any Security Interest (other than
Permitted Security Interests) all of Seller's right, title and interest in and
to all of the assets, rights, properties and interests of every kind and
nature, whether tangible or intangible, and wherever located, which are owned
or used by Seller in the operation of the Business (collectively, the
"Purchased Assets"), other than those assets identified on the attached
"Excluded Assets Schedule", including, without limitation, all of Seller's
right, title and interest in the following assets:
(i) Records (including, without limitation, customer lists, customer
correspondence and customer telephone numbers) relating to any edition of any
Directory, together with copies of all Customer Contracts;
(ii) Customer Contracts with respect to all Future Editions;
(iii) Intellectual Property, goodwill associ-ated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder,
reme-dies against infringe-ments thereof, and rights to protection of
interests therein under the laws of all jurisdictions, in each case associated
with, relating to or used by Seller in connection with the ownership,
operation or publication of any Directories;
(iv) Advance Payments made in connection with the Future Editions (other
than the Transition Directories);
(v) all accounts, notes and other receivables arising in connection with
any Future Editions of the Directories;
(vi) all Pre-Paid Direct Costs;
<PAGE>
(vii) agreements, contracts, purchase orders, contractual rights and other
similar arrangements identified as "Assumed Contracts" on the attached
"Contracts Schedule";
(viii) all claims, refunds, rights of recovery, rights of set off and rights
of recoupment of any kind relating to any Future Editions;
(ix) all franchises, approvals, permits, licens-es, orders, registrations,
certif-i--cates, variances and similar rights obtained from governments and
govern-mental agencies associated with, relating to or arising out of or as a
result of the ownership or operation of the Directories;
(x) rights to receive mail, telephone calls and other communications
addressed to or directed at Seller (including mail, telephone calls and other
communications from customers (including, without limitation, any customer
inquiries regarding the terms or provision of Directory Services pursuant to
any Customer Contract), suppliers, distributors, agents and others), but
subject to Seller being able to fulfill its obligations under Section 4.4
after the Closing, and payments relating to the Purchased Assets;
(xi) ad-copy, drawings, specifications, advertis-ing and promotional
materials, studies, reports and other printed or written materi-als relating
to, associated with or used by Seller in connection with the ownership or
publication of any Directories; and
(xii) the fixed assets listed on the attached "Fixed Assets Schedule."
(b) Limited Assumed Liabilities. TransWestern will not assume or in any
way be responsible for any Liabilities of Seller or any other Liabilities
whatsoever arising out of or relating to the condition or operation of the
Directories at any time as of or prior to the Closing Date or, except as set
forth in the following sentence, any other Liabilities. Subject to the terms
and satisfaction of the conditions in this Agreement, from and after the
Closing Date, TransWestern will assume and agree to pay, defend, discharge and
perform as and when due only the following specific Liabilities of Seller that
relate exclusively to the ownership and operation of the Directories after the
Closing (the "Assumed Liabilities"):
(i) Liabilities accruing on or after the Closing Date under the Assumed
Contracts, but only to the extent any Assumed Contract is actually assigned to
TransWestern (but excluding any Liability relating to or arising out of (A)
any breach of contract, violation of law, breach of warranty, tort,
infringement or other claim based on events, circumstances or conditions
arising or existing prior to the Closing Date, (B) event or condition
occurring or existing prior to the Closing Date or (C) with respect to the
foregoing items (A) and (B), any related charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand); and
(ii) current Liabilities arising in the Ordinary Course of Business and
classified as such on the Latest Balance Sheet (as defined in Section 3.1(h))
or incurred in the Ordinary Course of Business after the date of the Latest
Balance Sheet to the extent such current Liabilities are reflected on the
attached Assumed Liability Schedule and not paid prior to the Closing Date.
(c) Excluded Liabilities. TransWestern shall not assume or be liable for
any Liability of, or incurred on behalf of, Seller other than the Assumed
Liabilities (all such other Liabilities being referred to herein collectively
as the "Excluded Liabilities") regardless of whether such other Liability is
disclosed herein or on any schedule hereto. Without in any way limiting the
generality of the foregoing sentence, Excluded Liabilities specifically
includes any Liability resulting from any error, omission or illegality
arising out of or relating to sales into, or the printing or publication of,
any Prior Editions or any actions, conditions or events occurring or existing
prior to the Closing (other than Assumed Liabilities) in connection with the
printing or publication of any Future Edition. Seller acknowledges that
Seller is retaining the Excluded Liabilities and that Seller shall have full
responsibility to pay, discharge and perform any Excluded Liabilities promptly
when due.
<PAGE>
2.2 Purchase Price.
(a) The aggregate consideration to be paid by TransWestern to Seller for
the Purchased Assets shall be equal to the sum of:
(i) the assumption by TransWestern of the Assumed Liabilities; plus
(ii) $16,068,141 (the "Base Purchase Price"), as adjusted pursuant to
Sections 2.4 and 2.5 (the "Purchase Price"), consisting of $14,068,141 payable
in cash at the Closing (the "Cash Price") and a subordinated promissory note
in the form attached hereto as Exhibit A (the "Seller Note"), the principal
amount of which will be equal to the remainder of the Purchase Price; plus
(iii) the Production Fee (as defined in Section 4.4(b) below);
(b) The Purchase Price shall be allocated among the Purchased Assets and the
non-competition agreement in Section 7.3 as set forth in the "Purchase Price
Allocation Schedule" attached hereto. The allocation of the Purchase Price
among the Purchased Assets and the noncompetition agreement set forth in
Section 7.3 hereof shall be made in a manner consistent with the provisions of
Section 1060 of the Code and applicable Treasury Regulations thereunder. The
fair market value of the Purchased Assets shall be determined by TransWestern
in good faith and approved by the Seller (such approval not to be unreasonably
withheld) and such determination shall be used by the Parties in allocating
the Purchase Price and in preparing (a) Form 8594, Asset Acquisition
Statement, for each of TransWestern and Seller, and (b) all Tax Returns. Each
of TransWestern and Seller shall file Form 8594, prepared in accordance with
this section, with its federal income Tax Return for its Tax period including
the Closing Date, and make all other filings in a manner consistent with this
provision.
2.3 Closing Date Transactions.
(a) Closing. Subject to the terms and conditions set forth in this
Agreement, the Closing shall take place via facsimile and wire transfer of
funds on October 29, 1999 or such other date agreed to by the Parties when all
of the conditions set forth in Article V are satisfied or otherwise waived by
the Parties (the "Closing Date").
(b) Deliveries on the Closing Date. On the Closing Date:
(i) TransWestern shall deliver to Seller the Cash Price, by wire transfer
of immediately available funds to an account designated by Seller, and the
Seller Note.
(ii) TransWestern shall deliver to Seller (A) the various certificates,
instruments and documents referred to in Section 5.1(b) and (B) such other
instruments of assumption as Seller may reasonably request in form reasonably
satisfactory to Seller and consistent with the provisions of this Agreement.
(iii) Seller shall deliver to TransWestern a bill of sale in the form
attached hereto as Exhibit B.
(iv) Seller shall deliver to TransWestern (A) the various certificates,
instruments and documents referred to in Section 5.1(a) and (B) all other
documents, instruments of sale, transfer, conveyance and assignment as
TransWestern may reasonably request with respect to the Purchased Assets in
form and substance reasonably satisfactory to TransWestern and consistent with
the provisions of this Agreement.
(v) Seller shall deliver to TransWestern evidence that all Security
Interests (other than Permitted Security Interests) in any of the Purchased
Assets have been released and all of Seller's outstanding Indebtedness has
been satisfied and paid in full.
<PAGE>
2.4 Determination of Pre-Paid Direct Costs and Advance Payments.
(a) Adjustment at Closing. On the Closing Date, TransWestern shall acquire
the Pre-Paid Direct Costs from Seller by offsetting the aggregate amount of
the Pre-Paid Direct Costs against the aggregate amount of the Advance Payments
included in the Purchased Assets. At least three (3) but no more than ten
(10) business days prior to the Closing Date, Seller shall deliver to
TransWestern a statement setting forth Seller's estimate as of the Closing of
the aggregate Advance Payments included in the Purchased Assets and of the
Pre-Paid Direct Costs. TransWestern shall have the opportunity to review such
statement and raise questions or objections regarding the estimates set forth
therein and Seller shall deliver to TransWestern all documentation requested
by TransWestern or used by Seller in calculating such estimates. The Parties
shall use their respective best efforts to agree on the aggregate amount of
such Advance Payments to be included in the Purchased Assets (the "Estimated
Advance Payments") and the amount of Pre-Paid Direct Costs ("Estimated Pre-
Paid Direct Costs") as of the Closing Date, which agreement shall be reflected
on the Pro Forma. If the aggregate amount of the Estimated Advance Payments
exceeds the Estimated Pre-Paid Direct Costs, the Base Purchase Price shall be
reduced dollar-for-dollar by the amount of such excess. If the Estimated Pre-
Paid Direct Costs exceeds the aggregate amount of such Estimated Advance
Payments, the Base Purchase Price shall be increased dollar-by-dollar by the
amount of such difference.
(b) Post Closing Adjustment.
(i) Within 45 days after Closing, TransWestern may in good faith prepare
and deliver to Seller a final statement (the "Post Closing Statement") of its
calculation of the actual Pre-Paid Direct Costs ("Actual Pre-Paid Direct
Costs") and the actual Advance Payments included in the Purchased Assets
("Actual Advance Payments"). The Post Closing Statement shall be based on
books and records and customer checks, bank statements and other documentation
relating to the Business then available. Seller may review the Post Closing
Statement and raise questions or objections regarding the Post Closing
Statement and the Parties shall use their respective best efforts to agree
thereon as soon as practicable but in any event within five (5) business days
of TransWestern's delivery of the Post Closing Statement to TransWestern.
(ii) In the event that TransWestern and Seller are unable to resolve any
such disputed matters regarding the Post Closing Statement within twenty (20)
business days after the delivery of the Post Closing Statement to Seller,
TransWestern and Seller shall refer all remaining disputes concerning the Post
Closing Statement to a certified public accounting firm mutually agreed to by
the Parties (the "Independent Accounting Firm"); provided, that if Seller and
TransWestern are unable to agree upon an Independent Accounting Firm within
ten (10) days, the Independent Accounting Firm shall be a nationally
recognized accounting firm selected by TransWestern and Seller by lot (after
Seller and TransWestern each exclude one such accounting firm). The Parties
shall instruct the Independent Accounting Firm to promptly (and in any event
within twenty (20) business days after submission of the disputes to the
Independent Accounting Firm) resolve such disputed matters. TransWestern and
Seller will make available to the Independent Accounting Firm at reasonable
times and upon reasonable notice during the pendency of any dispute under this
clause (ii) the work papers and back-up materials used in preparing the Post
Closing Statement and the books and records of the Business and shall have the
right to meet with the Independent Accounting Firm during this period and to
present their respective positions. The resolution of disputes by the
Independent Accounting Firm and its determination of the actual Pre-Paid
Direct Costs or Advance Payments will be set forth in writing and will be
conclusive and binding upon the Parties.
<PAGE>
(iii) The Independent Accounting Firm will determine the allocation of its
costs and expenses in resolving the disputes over the Post Closing Statement
based upon the percentage which the portion of the contested amount not
awarded to each Party bears to the amount actually contested by such Party.
For example, if Seller claims the Pre-Paid Direct Costs were $1,000 greater
than the amount determined by TransWestern and its accountants, and
TransWestern contests only $500 of the amount claimed by Seller, and if the
Independent Accounting Firm ultimately resolves the dispute by awarding Seller
$300 of the $500 contested, then the costs and expenses of arbitration will be
allocated 60% (i.e., 300 ? 500) to TransWestern and 40% (i.e., 200 ? 500) to
Seller.
(iv) Within two (2) business days of the final determination of the Actual
Advance Payments and Actual Pre-Paid Costs pursuant to this Section 2.4: (A)
if Actual Pre-Paid Direct Costs exceed Estimated Pre-Paid Direct Costs, or if
Actual Advance Payments are less than Estimated Advance Payments, TransWestern
shall pay to Seller any such excess and/or any such shortfall (as applicable)
in cash, by wire transfer of immediately available funds to an account
designated by Seller and (B) if Actual Pre-Paid Direct Costs are less than
Estimated Pre-Paid Direct Costs, or if Actual Advance Payments exceed
Estimated Advance Payments, Seller shall pay to TransWestern any such
shortfall and/or any such excess in cash, by wire transfer of immediately
available funds to an account designated by TransWestern.
2.5 Post-Closing Adjustment for Actual Collections.
(a) Closing Date Adjustment. At least two (2) business days prior to the
Closing Date, Seller and TransWestern shall attempt in good faith to agree on
the Estimated Net Collection Amount. If the Parties are unable to agree on
the Estimated Net Collection Amount, such amount shall be deemed to be the
determination thereof by Seller's President.
(b) Post Closing Adjustment.
(i) Not later then fifteen (15) days following the Accounts Receivable
Measurement Date, TransWestern shall in good faith prepare and deliver to
Seller a statement (the "Net Collections Statement") setting forth the Actual
Net Collection Amount.
(ii) In the event that Seller disputes TransWestern's calculation of the
Actual Net Collection Amount as set forth on the Net Collections Statement, or
any of the components thereof, and TransWestern and Seller are unable to
resolve any such disputed matters regarding the Net Collections Statement
within ten (10) days after the delivery of the Net Collections Statement to
Seller, TransWestern and Seller shall refer all remaining disputes concerning
the Net Collections Statement to the Independent Accounting Firm. The Parties
shall instruct the Independent Accounting Firm to promptly (and in any event
within five (5) business days after submission of the disputes to the
Independent Accounting Firm) resolve such disputed matters. TransWestern and
Seller will make available to the Independent Accounting Firm at reasonable
times and upon reasonable notice during the pendency of any dispute under this
clause (c) the work papers and back-up materials used in preparing the Net
Collections Statement and the books and records of Seller (if any) on which
such objection are based and shall have the right to meet with the Independent
Accounting Firm during this period and to present their respective positions.
The resolution of disputes by the Independent Accounting Firm and its
determination of the Actual Net Collection Amount will be set forth in
writing and will be conclusive and binding upon the Parties.
(iii) The Independent Accounting Firm will determine the allocation of its
costs and expenses in determining the Actual Net Collection Amount based upon
the percentage which the portion of the contested amount not awarded to each
Party bears to the amount actually contested by such Party. For example, if
Seller claims the Actual Net Collection Amount is $1,000 greater than the
amount determined by TransWestern and its accountants, and TransWestern
contests only $500 of the amount claimed by Seller, and if the Independent
Accounting Firm ultimately resolves the dispute by awarding Seller $300 of the
$500 contested, then the costs and expenses of arbitration will be allocated
60% (i.e., 300 ? 500) to TransWestern and 40% (i.e., 200 ? 500) to Seller.
(iv) Within two (2) business days following the final determination of the
Actual Net Collections Amount pursuant to this Section 2.5, if the Actual Net
Collection Amount is less than the Estimated Net Collection Amount (such
difference, the "Deficient Collections Amount"), then the principal amount of
the Seller Note should be reduced automatically (effective as of the Closing
Date) by an amount equal to 3 times the Deficient Collections Amount.
<PAGE>
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. As a material inducement to
TransWestern to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller and the Shareholders hereby jointly and severally
represent and warrant to TransWestern that:
(a) Organization, Qualification and Corporate Power. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California and is qualified to conduct business in all
jurisdictions in which the conduct of its business or its ownership of
property require it to be so qualified.
(b) Authorization of Transaction. Seller has full requisite corporate power
and authority and all material licenses, permits and authorization necessary
to own and operate the Directories, provide Directory Services and carry on
its telephone directory business as now conducted and as proposed to be
conducted, to execute and deliver this Agreement and the other agreements
contemplated hereby to which it is a party and to perform its obliga-tions
hereunder and thereunder. Without limiting the generality of the foregoing,
Seller has obtained all consents and approvals that are necessary for Seller
to consummate the transactions contemplated hereby, including the consent of
the Shareholders. This Agreement has been duly executed and delivered by
Seller and the Shareholders. Each of this Agree-ment and each of the other
agreements contemplated hereby to which Seller and/or the Shareholders are a
party consti-tutes the valid and legally binding obliga-tions of such Person,
enforce-able against such Person in accordance with its respective terms and
conditions.
(c) Noncontravention. Neither the execu-tion and the delivery of this
Agreement and the other agreements contemplated hereby, nor the consumma-tion
of the transac-tions contemplated hereby or thereby will violate, conflict
with, result in a breach of, consti-tute a default under, result in the accel-
eration of, create in any party the right to accelerate, termi-nate, modify,
or cancel, or require any authorization, consent, approval, execu-tion or
other action by or notice to any third party under, any contract, lease,
sublease, license, sublicense, fran-chise, permit, indenture, agreement,
instrument of indebted-ness, Security Interest, or other arrangement by which
Seller or any Shareholder is bound or affected or to which any of the
Purchased Assets is subject, or any law, statute, rule, regulation, order,
judgment, decree, stipulation, injunction, charge or other restriction, to
which Seller is subject or to which any of the Purchased Assets is subject.
(d) Consents and Approvals. Except as set forth on the attached "Consents
Schedule," (i) neither Seller nor Shareholders are required to give any notice
to, make any declaration to or registration or filing with, or to obtain any
permit, license, consent, accreditation, exemption, approval or authorization
from, any governmental or regulatory authority in connection with the
execution, delivery or performance of this Agreement or the consummation of
any of the transactions contemplated hereby and (ii) no consent or approval of
any other third party is required in connection with the execution, delivery
and performance of Seller or the Shareholders of this Agreement or the
agreements contemplated hereby to which it is a party, in order to prevent a
breach of, or a default under or a termination, change in the terms and
conditions or modifications of, any instrument, contract, lease, license or
other agreement to which Seller or any Shareholder is party.
(e) Recent Events. Except as described in the attached "Recent Events
Schedule," since December 31, 1998, Seller has not experienced any change that
has had a Material Adverse Effect. Without limiting the generality of the
foregoing, since such date:
(i) Seller has not sold, leased, transferred or assigned (or entered into
any agreement to sell, lease, transfer or assign)any of its assets, except
pursuant to this Agreement other than sales of inventory in the Ordinary
Course of Business;
(ii) Seller has not entered into any agreement, contract, lease or license
with respect to the Directories (or any series of related agreements,
contracts, leases or licenses) other than in the Ordinary Course of Business;
<PAGE>
(iii) no Person (including without limitation, Seller and the Shareholders)
has accelerated, terminat-ed, modi-fied or canceled any contract, lease,
sublease, license or subli-cense (or series of related contracts, leases,
subleases, licens-es and sublicenses) involving more than $10,000 to which
Seller is a party or by which Seller is bound and, to Seller's Knowledge, no
Person intends to take or has basis for taking such action;
(iv) Seller has not delayed or postponed the payment of accounts payable
relating to or affecting the Directories or the operation of the Directories
or other Liabilities associated with the operation of the Directories outside
the Ordinary Course of Business;
(v) there has not been any other material occurrence, event, incident,
action, failure to act or other transaction outside the Ordinary Course of
Business;
(vi) Seller has not increased or decreased billing rates under its Customer
Contracts and Seller has not agreed to payment terms under any Customer
Contract other than in the Ordinary Course of Business;
(vii) Seller has not disclosed any information required to be kept
confidential pursuant to Section 7.2 hereof to any Person other than
TransWestern and TransWestern's agents, attorneys and accountants;
(viii) Seller has not suffered any extraordinary loss, damage, destruction or
casualty loss or waived any rights to any Purchased Asset or any other asset
which, if it existed and was held by Seller on the Closing Date, would
constitute a Purchased Asset, whether or not covered by insurance and whether
or not in the Ordinary Course of Business;
(ix) Seller has not received any indication that any customer or supplier will
cease, reduce or adversely affect the rate of business conducted with Seller
or otherwise in connection with the publication of the Directories, prior to
or following the Closing;
(x) Seller has not entered into any other material transaction relating to or
affecting the Directories, individually or as a whole; and
(xi) Neither Seller nor the Shareholders have committed to any of the
foregoing.
(f) Intellectual Property. Except as set forth on the attached
"Intellectual Property Schedule":
(i) Seller has not interfered with, infringed upon, misappropriated, or
violated any Intellectual Property rights of third parties, and neither Seller
nor the Shareholders have ever been subject to any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that Seller must license
or refrain from using any Intellectual Property rights of any third party). To
the Knowledge of Seller and the Shareholders, no third party has interfered
with, infringed upon, misappropriated, or violated any Intellectual Property
rights of Seller.
(ii) The Intellectual Property Schedule identifies each registration which
has been issued to the Seller with respect to any of its Intellectual
Property, each pending application for registration which Seller has made with
respect to any of its Intellectual Property, and each license, agreement, or
other permission which Seller has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). The Seller
has delivered to TransWestern correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date). The Intellectual Property Schedule also identifies each material
trade name or unregistered trademark used by the Seller in connection with any
of its businesses. With respect to each item of Intellectual Property required
to be identified in the Intellectual Property Schedule:
(A) Seller possesses all right, title, and interest in and to the item,
free and clear of any Security Interest, license, or other restriction;
(B) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
<PAGE>
(C) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or, to the Knowledge of any of the Seller, is
threatened which challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) Seller has not ever agreed to indemnify any Person for or against any
interference, infringement, misappropriation, or other conflict with respect
to the item.
(iii) The Intellectual Property Schedule identifies each material item of
Intellectual Property that any third party owns and that Seller uses pursuant
to license, sublicense, agreement, or permission. Seller has delivered to
TransWestern correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each such
item of used Intellectual Property required to be identified in the
Intellectual Property Schedule:
(A) the license, sublicense, agreement, or permission covering the item is
legal, valid, binding, enforceable, and in full force and effect in all
material respects;
(B) no party to the license, sublicense, agreement, or permission is in
material breach or default, and no event has occurred which with notice or
lapse of time would constitute a material breach or default or permit
termination, modification, or acceleration thereunder;
(C) no party to the license, sublicense, agreement, or permission has
repudiated any material provision thereof; and
(D) Neither Seller nor Shareholders have granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
(g) Contracts and Commitments. Except as set forth on the attached
"Contracts Schedule," other than Customer Contracts, Seller is not party to
any other written or oral contract or commitment that relates to the provision
of Directory Services in connection with any Directories or any of the
Purchased Assets (including, without limitation, any contract with a third
party or parties relating to the purchase or sale of services or products
relating to any Directories), or any other material agreement. Seller has
delivered or otherwise made available to TransWestern a correct and complete
copy of the standard forms of Customer Contract used in connection with any
Directories and each written agreement (including all amendments thereto)
identified on the Contracts Schedule. The Contracts Schedule identifies all
contracts (other than Customer Contracts) associated with the Prior Editions
and, to the extent available, the Future Editions, and identifies all Assumed
Contracts included in the Purchased Assets. Seller has delivered to
TransWestern a true and complete list of all Customer Contracts associated
with the Directories all of which are in the form previously delivered to
TransWestern. With respect to each Customer Contract and each agreement
identified on the Contract Schedule: (A) such agreement is (and following
consummation of the transactions contemplated hereby will continue to be)
legal, valid, binding, enforceable, and in full force and effect; and (B)
neither Seller, nor any of the Shareholders nor any other party to such
agreement are in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default by Seller or any
of the Shareholders or permit termination, modification, or acceleration (in
each case, other than by Seller), under such agreement. Seller has not waived
or modified any limitation on liability or similar provision in any Customer
Contract.
(h) Financial Statements. The attached "Financial Statements Schedule"
contains the following financial statements (the "Financial Statements"):
(i) the compiled balance sheets of Seller as of December 31, 1996, December
31, 1997 and December 31, 1998, and the related statements of income, changes
in stockholders' equity and cash flow for the twelve-month period then ended;
and
<PAGE>
(ii) the compiled balance sheet of Seller as of June 30, 1999 (the "Latest
Balance Sheet") and the related statements of income, changes in stockholders'
equity and cash flow for the six-month period then ended.
Each of the Financial Statements (including in all cases the notes thereto, if
any) is accurate and complete in all material respects, is consistent with the
books and records of Seller (which, in turn, are accurate and complete in all
material respects) and presents fairly the financial condition and results of
operations of Seller in accordance with GAAP throughout the periods covered
thereby.
(i) Accuracy and Completeness of Information Furnished. No representation
or warranty of Seller or any of the Shareholders contained in this Agreement
or in any document delivered to TransWestern by Seller or the Shareholders in
connection with the transactions contemplated hereby (including, without
limitation, any Customer Contract or any other Records compiled in connection
with the Directories) contains or will contain as of the date such
representation and warranty is made or other document has been, is or will be
furnished, any untrue statement of a material fact or omitted, omits, or will
omit to state as of the date such representation or warranty is made or such
document is or will be furnished, any material fact which is necessary not to
make the statement contained herein or therein not misleading. There is no
material fact which has not been disclosed to TransWestern which materially
adversely affects or could reasonably be anticipated to materially adversely
affect the Directories. Except for the representations and warranties
contained in this Agreement and in any schedule, exhibit or other written
material delivered in connection with this Agreement, neither Seller nor the
Shareholders have made any representation or warranty in connection with the
transactions contemplated by this Agreement (including, without limitation,
any oral representations or warranties or any representation or warranty
regarding any financial projections heretofore delivered to TransWestern).
(j) Affiliated Transactions. Except as set forth on the attached
"Affiliated Transaction Schedule," no officer, director, employee, shareholder
or Affiliate of Seller or any individual related by blood, marriage or
adoption to any such Person or any entity in which any such Person or
individual owns any beneficial interest, is a party to any agreement,
contract, commitment or transaction with Seller or has any interest in any
property used by Seller.
(k) Undisclosed Liabilities. The Seller has no Liability as of the date of
this Agreement and will have no Liability as of the Closing Date (and, as of
the Closing Date, there is no (and there will be no) basis for any present or,
to the Knowledge of Seller, future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller giving rise
to any Liability), except for (i) Liabilities set forth on the face of the
Latest Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the Latest Balance Sheet in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, claim or violation of law).
(l) Customer Contract Receivables; Advance Payments. The receivables
associated with Customer Contracts reflected on the books and records of
Seller as of the Closing Date are bona fide receivables recorded in the
Ordinary Course of Business. The Advance Payments associated with Customer
Contracts reflected on the books and records of Seller as of the Closing Date
are bona fide Advance Payments recorded in the Ordinary Course of Business.
Such books and records of Seller accurately identify receivables associated
with the Prior Editions and the Future Editions, respectively.
<PAGE>
(m) Employees. To the Knowledge of Seller or Shareholders, no executive,
key employee, or group of employees has any plans to terminate employment with
Seller. Seller has complied with all laws relating to the employment of labor
(including, without limitation, provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security
and other taxes). The Seller is not a party to or bound by any collective
bargaining agreement, and has not experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. Seller
has not committed any unfair labor practice. Neither the Seller nor any of
Seller's employees with responsibility for employment matters has any
Knowledge of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of Seller. No
employee of Seller is owed any sales commissions, bonus or other payment by
Seller other than sales commissions paid or payable in the Ordinary Course of
Business.
(n) Employee Benefits.
(i) The attached "Benefit Plan Schedule" lists each Employee Benefit Plan
which Seller maintains or to which Seller contributes or has any obligation to
contribute.
(A) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all material respects
with the applicable requirements of ERISA, the Code, and other applicable
laws.
(B) All required reports and descriptions (including Form 5500 Annual
Reports, summary annual reports, PBGC-1's, and summary plan descriptions) have
been timely filed and distributed appropriately with respect to each such
Employee Benefit Plan. The requirements of COBRA have been met in all material
respects with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(C) All contributions (including all employer contributions and employee
salary reduction contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are
not yet due have been paid to each such Employee Pension Benefit Plan or
accrued in accordance with the past custom and practice of the Seller. All
premiums or other payments for all periods ending on or before the Closing
Date have been paid with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee Pension Benefit
Plan meets the requirements of a "qualified plan" under Code '401(a), has
received, within the last two years, a favorable determination letter from the
Internal Revenue Service that it is a "qualified plan," and Seller is not
aware of any facts or circumstances that could result in the revocation of
such determination letter.
(E) The market value of assets under each such Employee Benefit Plan which
is an Employee Pension Benefit Plan (other than any Multiemployer Plan) equals
or exceeds the present value of all vested and nonvested liabilities
thereunder determined in accordance with PBGC methods, factors, and
assumptions applicable to an Employee Pension Benefit Plan terminating on the
date for determination.
(F) The Seller has delivered to the TransWestern correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
(G) With respect to each Employee Benefit Plan that the Seller or any ERISA
Affiliate maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to contribute:
<PAGE>
(H) No such Employee Benefit Plan which is an Employee Pension Benefit Plan
(other than any Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to which notices would
be required to be filed with the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than any Multiemployer Plan) has
been instituted or, to the Knowledge of Seller, threatened.
(I) There have been no Prohibited Transactions with respect to any such
Employee Benefit Plan. No Fiduciary has any liability for material breach of
fiduciary duty or any other material failure to act or comply in connection
with the administration or investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits) is pending or,
to the Knowledge of Seller, threatened.
(J) Seller has not incurred any material liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due) to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal liability as
defined in ERISA '4201) or under the Code with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
(ii) Seller does not contribute to, nor ever has contributed to, or ever
has been required to contribute to any Multiemployer Plan or has any material
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any withdrawal
liability (as defined in ERISA '4201) under any Multiemployer Plan.
(iii) Seller does not maintain or nor ever has maintained or contribute, ever
has contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code
'4980B).
(o) Guaranties. Seller is not a guarantor or otherwise responsible for any
liability or obligation (including indebtedness) of any other Person.
(p) Environmental, Health, and Safety Matters.
(i) Seller has complied and is in compliance with all applicable
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of the Seller
and its Affiliates, has obtained, has complied, and is in compliance with all
permits, licenses and other authoriza-tions that are required of such Person
pursuant to Environmental, Health, and Safety Requirements for the occupation
of Seller's facilities by Seller and the operation of the Business; a list of
all such permits, licenses and other authorizations is set forth on the
attached "Environmental and Safety Permits Schedule."
(iii) Neither Seller nor its Affiliates has received any written or oral
notice, report or other information regarding any actual or alleged violation
of Environmental, Health, and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
relating to Seller's facilities arising under Environmental, Health, and
Safety Requirements.
(iv) Except as set forth on the attached "Environmental and Safety Matters
Schedule," the Seller's Knowledge, none of the following exists at any
property or facility owned or operated by Seller: (1) underground storage
tanks, (2) asbestos-containing material in any friable and damaged form or
condition, (3) materials or equipment containing polychlorinated biphenyls, or
(4) landfills, surface impoundments, or disposal areas.
<PAGE>
(v) To the Seller's Knowledge, neither Seller nor its Affiliates has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that has given or would give rise to any liabilities, including any liability
for response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(vi) To the Seller's Knowledge, neither this Agreement nor the consummation
of the transaction that is the subject of this Agreement will result in any
material obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of the so-
called "transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
(q) Insurance. The "Insurance Schedule" attached hereto sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which Seller has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past 5 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name of
each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other loss-
sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will
continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to
above); (C) neither Seller nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) no party to the
policy has repudiated any provision thereof. Seller has been covered during
the past 5 years by insurance in scope and amount customary and reasonable for
the businesses in which it has engaged during the aforementioned period. The
Insurance Schedule also describes any self-insurance arrangements affecting
the Seller.
(r) Legal Compliance with Laws. Seller has complied and is in compliance
in all material respects with all applicable laws, rules or regulations of any
federal, state, local or foreign government or agency thereof with respect to
any of the Directories and no notice, claim, charge, complaint, action, suit,
proceeding, investigation or hearing has been received by Seller or filed,
commenced or, threatened in writing against Seller alleging any such
violation.
<PAGE>
(s) Litigation; Proceedings. Except as set forth in the attached
"Litigation Schedule," there are no actions, suits, proceedings, hearings,
orders, investigations, charges, complaints or claims, pending or, to the
Knowledge of Seller, threatened, against or affecting, Seller, or any of the
Directories or the Purchased Assets or to which Seller, the Directories or the
Purchased Assets may be bound or affected, at law or in equity, or before or
by any federal, state, municipal, foreign or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
there is no basis for any of the foregoing; Seller is not subject to any
judgment, order or decree of any court or governmental agency; Seller has not
received any opinion or memorandum or legal advice from legal counsel to the
effect that they or any of the Directories or the Purchased Assets is exposed,
from a legal standpoint, to any liability or disadvantage which may be
material to its business and Seller is not engaged in any legal action to
recover monies due it or for damages sustained by them.
(t) Title and Sufficiency of Assets. Seller owns good and marketable
title, free and clear of all Security Interests (other than Permitted Security
Interests), to all property and assets (tangible and intangible) used by
Seller, located on Seller's premises or shown on the Latest Balance Sheet. At
the Closing, Seller will convey good and marketable title to all of such
property and assets included within the Purchased Assets, free and clear of
all Security Interests (other than Permitted Security Interests). The
Purchased Assets so conveyed will include all of those assets (personal,
tangible and intangible) used in connection with the ownership and operation
of the Directories during the twelve months prior to the Closing Date (other
than inventory or raw materials used, sold or consumed in the Ordinary Course
of Business) and will enable TransWestern to own and operate Directories in
the same manner as operated by and conducted by Seller prior to and as of the
Closing Date.
(u) Directory Listings. Each of the directory listings associated with the
Directories has been published in the Ordinary Course of Business and in
accordance with customary practices currently prevailing in the telephone
directory industry for companies of a size comparable to Seller. No such
listing has been published in violation of any applicable law, code or
regulation. Seller has provided TransWestern with copies of all invoices (or
other evidence reasonably satisfactory to TransWestern) relating to the
purchase by Seller of the white page listings and yellow page listings used or
to be used (as the case may be) in connection with the printing and
publication of any Directory.
(v) Brokers' Fees. Seller has no Liability to pay any fees or commis-
sions to any broker, finder, or agent with respect to the trans-ac-tions
contemplated by this Agreement or which TransWestern or any other party could
become liable or obligated.
(w) Tax Matters.
(i) Seller has timely filed all Tax Returns required to be filed by them,
each such Tax Return has been prepared in compliance with all applicable laws
and regulations, and all such Tax Returns are true and accurate in all
respects. All Taxes due and payable by Seller (whether or not shown on any
Tax Return) have been paid or the provision therefore has been made.
(ii) Except as set forth in the attached Taxes Schedule:
(A) with respect to each taxable period of Seller either such taxable
period has been audited by the relevant taxing authority or the time for
assessing or collecting income Tax with respect to each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authority;
(B) no deficiency or proposed adjustment which has not been settled or
otherwise resolved for any amount of Tax has been proposed, asserted or
assessed by any taxing authority against either Seller;
<PAGE>
(C) Seller has not consented to extend the time in which any Tax may be
assessed or collected by any taxing authority;
(D) Seller has not requested or been granted an extension of the time for
filing any Tax Return to a date later than the Closing Date;
(E) there is no action, suit, taxing authority proceeding or audit now in
progress, pending or, to the Knowledge of Seller, threatened against or with
respect to either Seller with respect to any Tax;
(F) Seller has not been a member of an Affiliated Group or filed or been
included in a combined, consolidated or unitary income Tax Return (other than
consolidated Tax Return filed by Seller);
(G) Seller is not a party to or bound by any Tax allocation or Tax sharing
agreement and Seller has no current or potential contractual obligation to
indemnify any other Person with respect to Taxes;
(H) Seller does not reasonably expect any taxing authority to claim or
assess any additional Taxes for any period;
(I) the Assumed Liabilities do not include any obligation to make any
payment that will be non-deductible under Section 280G of the Code (or any
corresponding provision of state, local or foreign Tax law);
(J) no claim has ever been made by a taxing authority in a jurisdiction
where Seller does not pay Tax or file Tax Returns that Seller is or may be
subject to Taxes assessed by such jurisdiction;
(K) Seller has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party;
(L) Seller has not been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii).
(iii) The Taxes Schedule contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which Seller is required to
file Tax Returns.
(iv) Seller's unpaid Taxes (x) did not, as of the Latest Balance Sheet,
exceed the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
set forth on the face of Latest Balance Sheet (rather than in any notes
thereto) and (y) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice
of the division in filing its Tax Returns.
(x) Owned and Leased Property.
(i) The Seller does not own any real property or any option to acquire real
property. The attached Real Property Schedule describes all of the real
property leased by Seller and used in the conduct of the Business (showing
the record owner, legal description, permanent index number and location)
(collectively, the "Leased Real Property"). Seller does not use any real
property in the conduct of the Business and the operation of the Directories
other than the Leased Real Property.
<PAGE>
(ii) Seller has delivered to TransWestern correct and complete copies of the
leases and subleases with respect to Leased Real Property (collectively, the
"Leases"). Each of the Leases is legal, valid, binding, enforceable and in
full force and effect. Neither Seller nor any other party to such leases are
in breach or default of such Lease and no event has occurred which, with
notice or lapse of time, would constitute such a breach or default or permit
terminations, modification or accelerations under the Leases. Neither Seller,
the Shareholders nor any other party to the Leases have repudiated any
provision thereof and there are no disputes, oral agreements, or forbearance
programs in effect as to any of the Leases. The Leases have not been modified
in any respect, except to the extent that such modifications are disclosed by
the documents delivered to TransWestern, and Seller has not assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest
in the Leases.
(iii) with respect to each parcel of Leased Real Property:
(A) Neither Seller nor the Shareholders have actually received notice of
any condemnation proceedings with regard to all or any part of such Leased
Real Property and to Seller's Knowledge, there are no such proceedings
contemplated by any governmental authority;
(B) to Seller's Knowledge, all governmental licenses which are necessary to
permit the lawful access, use and operation of the building and improvements
thereon for their present and intended use have been obtained, are in full
force and effect, and there is no pending threat of modification or
cancellation of any such governmental licenses; no improvements located on
such Leased Real Property depend on any variance, grandfather rights, special
use permit or other special municipal approval for their continuing legality;
all utilities required for the operation of such Leased Real Property either
enter such Leased Real Property through adjoining public streets or, if they
pass through adjoining private land, do so in accordance with valid public or
private easements which will inure to the benefit of TransWestern; and all
utilities are installed and operating and all installation and connection
charges have been paid for in full;
(C) to the Seller's Knowledge, the present maintenance, operation, use and
occupancy of such Leased Real Property as an office, warehouse, distribution
and/or manufacturing facility does not, to the Seller's Knowledge, violate any
law, including any zoning, building, health, environmental, pollution, fire or
similar law, ordinance or regulation; Seller has not received any notices from
any governmental body in respect to such Leased Real Property that have not
been corrected; and there is no plan, study, or effort by any governmental
body or any nongovernmental person or agency which may adversely affect the
present use of such Real Property;
(D) to the Seller's Knowledge, the structural components of the buildings
on such Leased Real Property are in a good state of repair and all electrical,
plumbing, water, sewer, air conditioning, heating, ventilating, mechanical and
other building systems are in good working order and repair; the roofs of such
buildings are free from leaks and the improvements are free from insect
infestation; and there are no latent defects in the condition of such Leased
Real Property or in the soil or geology of the land;
(E) Seller has not received any notice and has no Knowledge of any increase
in any of the factors comprising the real estate Tax bills for such Leased
Real Property, including without limitation, the assessed valuation and the
Tax rate; there are no assessments, general or special, which have been, or
are in the process of being levied against such Leased Real Property, and
Seller has no Knowledge of any contemplated assessments;
(F) to the Seller's Knowledge, there are no options or rights of any party
(including without limitation any tenants under any lease) to purchase, or
acquire any ownership interest in such Leased Real Property, and Seller shall
not grant any such options or rights after the date of this Agreement; and
(G) to the Seller's Knowledge, no portion of such Leased Real Property lies
within a flood hazard zone.
<PAGE>
(y) Customers and Suppliers. Seller has not received any notice that any
material customer or supplier intends to terminate or materially reduce its
business with Seller and no material customer or supplier has terminated or
materially reduced its business with Seller in the last twelve (12) months.
(z) Closing Date. All of the representations and warranties made by Seller
or Shareholders contained in this Section 3.1 and elsewhere in the Agreement
and all information delivered in any schedule, attachment or exhibit hereto or
in any certificate delivered by Seller to TransWestern shall be true and
correct on the Closing Date as though then made, except as affected by the
transactions expressly contemplated by this Agreement and except as expressly
disclosed in writing to TransWestern by Seller prior to the Closing. Prior to
the Closing Date, Seller and/or Shareholders shall notify TransWestern of any
information that came into existence after the date hereof and would have been
required to be disclosed on one or more schedules or reflected in such
representations or warranties if such information was in existence on the date
hereof and may or supplement the disclosure schedules attached hereto to
reflect such information; it being understood, however, that such revisions,
supplements, amendments or modifications, if any, permitted to be made
pursuant to this Section 3.1(z) shall not modify the representations and
warranties set forth herein for purposes of determining whether the condition
set forth in Section 5.1 has been satisfied and shall not cure any default
existing as a result of a breach of any of Seller's or Shareholders'
representations or warranties contained in this Agreement.
3.2 Representations and Warranties of TransWestern. As a material
inducement to Seller to execute this Agreement and consummate the transactions
contemplated hereby, TransWestern hereby represents and warrants to Seller
that:
(a) Organization. TransWestern is a limited liability company duly
organized, validly existing and in good standing under the laws of the State
of Delaware. TransWestern is qualified to conduct business in each other
jurisdiction wherein the nature of its business or ownership of property
requires it to be so qualified except where failure to so qualify would not
materially adversely effect the assets, business, operations or financial
condition of TransWestern.
(b) Authorization of Transaction. TransWestern has the power and authority
to execute and deliver this Agreement and the other agreements contemplated
hereby to which it is a party and to perform its obliga-tions hereunder and
thereunder. This Agreement and the other agreements contemplated hereby to
which TransWestern is a party have been duly executed and delivered by
TransWestern and consti-tute the valid and legally binding obliga-tions of
TransWestern, enforceable against TransWestern in accor-dance with their
respective terms.
(c) Noncontravention. The consumma-tion of the transac-tions contemplated
hereby will not violate or conflict with any statute, regulation, rule,
judgment, order, decree, stipula-tion, injunction, charge, or other restric-
tion of any govern-ment, governmental agency, or court to which TransWestern
is subject or any provision of the Operating Agreement of Limited Liability
Company of TransWestern.
(d) Governmental Consent. To the Knowledge of TransWestern, TransWestern
is not required to give any notice to, make any material declaration to or
registration or filing with, or to obtain any material permit, license,
consent, accreditation, exemption, approval or authorization from, any
governmental or regulatory authority in connection with the execution,
delivery or performance of this Agreement or the consummation of any of the
transactions contemplated hereby.
(e) Brokers' Fees. TransWestern has no Liability to pay any fees or
commis-sions to any broker, finder, or agent with respect to the transac-tions
contemplated by this Agreement for which Seller could become liable or
obligated.
<PAGE>
(f) Closing Date. All of the representations and warranties of
TransWestern contained in this Section 3.2 and elsewhere in this Agreement and
all information delivered in any schedule, attachment or exhibit hereto or in
any certificate delivered by TransWestern shall be true and correct on the
Closing Date as though then made and except as expressly disclosed in writing
to Seller by TransWestern prior to the Closing. Prior to the Closing Date,
TransWestern shall notify Seller of any information that came into existence
after the date hereof and would have been required to be disclosed on one or
more schedules or reflected in such representations or warranties if such
information was in existence on the date hereof, may supplement this Agreement
with disclosure schedules, or otherwise amend or modify its representations
and warranties hereunder to reflect such information; it being understood,
however, that such revisions, supplements, amendments or modifications, if
any, permitted to be made pursuant to this Section 3.2(f), shall not modify
the representations and warranties set forth herein for purposes of
determining whether the condition set forth in Section 5.2 has been satisfied
and shall not cure any default existing as a result of a breach of any of
TransWestern's representations or warranties contained in this Agreement.
ARTICLE 4 - COVENANTS
4.1 Pre-Closing Covenants.
(a) Affirmative Covenants Concerning the Business. At all times prior to the
Closing Date, Seller shall operate only in the Ordinary Course of Business.
Without limiting the foregoing, Seller covenants and agrees that:
(i) The business and the operations of Seller shall be conducted only in the
Ordinary Course of Business and Seller shall use its best efforts to preserve
intact Seller's business organization and keep available satisfactory
relationships with suppliers, customers and others having business
relationships with it and promote the ordinary and smooth transition of the
Business and the Purchased Assets to TransWestern;
(ii) Seller's cash management practices (including, without limitation, the
collection of receivables and the payment of payables) and Seller's policies,
practices and procedures (including, without limitation, with respect to
collection of trade receivables and receivables associated with Customer
Contracts, establishment of reserves for uncollectible accounts, accrual of
accounts receivable, inventory control, prepayment of expenses, payment of
trade accounts payable, accrual of other expenses, deferral of revenue,
acceptance of Advance Payments or other customer deposits and maintenance of
the quality of the Directories) shall be maintained and conducted in the
Ordinary Course of Business;
(iii) Seller's current insurance policies (to the extent such policies relate
to operation of the Directories) shall not to be canceled or terminated and no
action shall be taken (or fail to be taken) to cause any of the coverage
thereunder to lapse, unless, simultaneously with such termination,
cancellation or lapse, replacement policies providing coverage equal to or
greater than the coverage under the canceled, terminated or lapsed policies to
the extent practicable for market premiums are in full force and effect;
(iv) Seller shall retain its present employees and its relationships with
its agents, distributors, licensees, suppliers and customers relating to the
operation of the Directories;
(v) Seller shall maintain its books and records in accordance with GAAP;
(vi) Seller's corporate name shall be maintained in full force and effect;
(vii) Seller shall comply (and remain in compliance with) all legal
requirements and contractual obligations applicable to or binding upon Seller;
(viii) Seller shall maintain in full force and effect all of the city or
county business licenses required to be maintained by it; and
<PAGE>
(ix) Seller shall duly and timely file (by the due date or any duly granted
extension thereof) all income Tax reports and returns and non-income Tax
reports and returns required to be filed with federal, state, county, local,
foreign and other Tax authorities, promptly pay all Taxes indicated by such
returns or otherwise lawfully levied or assessed upon Seller or any of
Seller's properties.
(b) Negative Covenants Concerning the Business Prior to Closing. At all
times prior to the Closing Date, Seller will not (and the Shareholders will
not permit Seller to):
(i) forgive, cancel, or waive any rights or any debts or other obligations
owed to Seller without obtaining TransWestern's prior written consent;
(ii) merge or consolidate with, or purchase substantially all of the stock
or assets of, or otherwise acquire, any corporation, partnership, association
or other business organization or entity or division thereof;
(iii) institute any material change in the methods of purchase, sale, lease
or accounting from those used in the Ordinary Course of Business or in the
collection of accounts receivable (including receivables associated with
Customer Contracts) or the payment of accounts payable other than to the
extent consistent with the Ordinary Course of Business;
(iv) mortgage, pledge or subject to any Security Interest any of the
Purchased Assets;
(v) sell, assign or transfer any of the Purchased Assets;
(vi) sell, assign or transfer any of Seller's patents or other Intellectual
Property or other intangible assets, or disclose any proprietary information
to any Person;
(vii) terminate or in any way encourage the resignation of any employee or
sales representative for any reason other than such employee's gross
negligence or wilful misconduct;
(viii) pay or commit to pay commissions, bonuses or similar payments outside
of the Ordinary Course of Business; or
(ix) enter into a binding commitment to do any of the foregoing.
(c) Exclusivity. Neither Seller nor any of the Shareholders will permit
any Affiliate of (or Persons acting in concert with Seller or any of the
Shareholders to) at any time prior to the Closing Date: (i) solicit,
initiate, or encourage the submis-sion of any propos-al or offer from any
Person relating to any (A) liquida-tion, dissolu-tion, or recapitalization,
(B) merger or consoli-dation or share exchange, (C) acqui-sition or purchase
of securities or assets, or (D) similar transaction or business combi-nation
involving Seller, the Directories or any Purchased Assets or (ii) participate
in any discus-sions or negotia-tions regarding, furnish any infor-mation with
respect to, assist or participate in, execute, sign, deliver or enter into
any agreement (whether written or oral) relating to, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
forego-ing. Seller and each Shareholder agrees to notify TransWestern
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing and the terms thereof and such Person's
response thereto.
(d) General Obligation to Close. Each of the Parties will use their
respective reasonable best efforts to take all actions and to do all things
necessary or desirable to consummate and make effective the transactions
contemplated by this Agreement (including, without limitation, satisfaction,
but not waiver, of the closing conditions set forth in Article 5) and to cause
the other conditions to TransWestern's and Seller's respective obligations
hereunder to be satisfied as soon as practicable but in any event no later
than required to permit the Closing to occur on or prior to November 5, 1999.
<PAGE>
4.2 Other Covenants.
(a) Full Access. At all times prior to the Closing Date, Seller and the
Shareholders shall permit TransWestern, TransWestern's Affiliates, and their
respective employees, accountants, legal counsel and other representatives to
have full access to Seller's premises, properties, personnel, books, records,
contracts, Tax records, and to all documents of or pertaining to Seller, the
Purchased Assets or the Directories, as is reasonably necessary or (in the
opinion of TransWestern) desirable to consummate all of the transactions
contemplated herein. All information given to TransWestern and its
representatives shall be subject to the confidentiality provisions set forth
in Section 7.2(a).
(b) Notice of Developments. At all times prior to the Closing Date, (i)
Seller and/or the Shareholders will give prompt written notice to TransWestern
of any material development affecting the condition, opera-tion, results of
operations, or future prospects of the Directories or any Purchased Assets,
and (ii) each Party will give prompt written notice to the other of any
development affecting the ability of the notifying Party to consummate the
transactions contem-plat-ed by this Agreement. No disclosure by any Party
pursuant to this Section 4.2(b) shall be deemed to amend or supplement the
schedules attached hereto delivered by such Party or to prevent or cure any
misrepre-sentation, breach of warranty, or breach of covenant by such Party.
<PAGE>
4.3 Employee Matters. Immediately prior to the Closing, Seller shall
terminate the employment of all of the active employees identified (the
"Employees") on the attached "Employee Schedule" and, immediately after the
Closing, TransWestern will offer employment to the Employees. At the time of
such termination, each Employee shall have the option to elect to receive
either (a) all accrued vacation pay then owed to such Employee as of such
termination or (b) to carry forward a number of paid vacation days accrued
prior to the Closing to his or her employment with TransWestern. At Closing,
Seller shall deliver to TransWestern a schedule setting forth all of the
vacation days which the Employees have elected pursuant to the foregoing
clause (b) to carry forward to their employment with TransWestern and shall
pay to TransWestern an amount equal to the amount which would have been paid
the Employees but for their election pursuant to the foregoing clause (b) to
carry forward vacation days. As of the Closing, Seller will deliver to
TransWestern a list (the "Collection Employees Schedule") of individuals to
remain employed by Seller solely for the purpose of conducting collection
activities with respect to the past, present and future editions of the
Directories as provided in Section 4.4(a) (collectively, the "Collection
Employees"), which list will identify the complete and correct costs to be
incurred by Seller in continuing to employ the Collection Employees and will
be subject to review and approval of TransWestern. Seller shall terminate,
and TransWestern will hire, the Collection Employees for the period commencing
March 1, 2000 as reflected on the Collection Employees Schedule through the
Accounts Receivable Measurement Date (or such earlier date as may be
designated by Seller) at a rate of pay commensurate with such persons'
respective compensation packages as reflected on the Collection Employees
Schedule. Nothing in this Agreement shall obligate TransWestern to offer
employment to any employee of Seller or any other individual other than the
Employees and, to the extent provided in this Section 4.3, the Collection
Employees; and nothing in this Agreement shall limit the ability of
TransWestern to terminate the employment of any Employee at any time and for
any reason, whether for cause or without cause, or the employment of any
Collection Employee for cause, it being understood that TransWestern shall not
terminate the employment of any Collection Employee without cause prior to the
Accounts Receivable Measurement Date without the prior consent of Seller.
From and after the Closing Date, Seller shall retain all Liabilities arising
under or in connection with any "employee benefit plan" (as such term is
defined in Section 3(3) of ERISA) or any other employee benefit plan or
arrangement at any time maintained or contributed to by Seller, including, but
not limited to, those Liabilities arising under Part 6 of Title I of ERISA and
Section 4980B of the Code. Seller shall be additionally responsible for all
Liabilities (i) relating to compensation (including vacation pay and insurance
benefits) of any Employee for periods prior to the Closing Date and of any
other employee of Seller for any period and/or (ii) arising as a result of the
transactions contemplated by this Agreement, including, but not limited to,
severance compensation and bonus payments.
4.4 Seller's Post-Closing Obligations.
(a) As of the Closing, TransWestern shall assume complete responsibility
for all billing and collection activities associated with any past, present or
future edition of any Directory, including, but not limited to, collection of
all trade accounts receivable outstanding as of the Closing (including local,
foreign and national advertising accounts). The foregoing notwithstanding,
Seller shall be responsible for all compensation expense (including salary,
bonus, benefits and commissions, if any) associated with all such collection
activities undertaken prior to March 1, 2000 in connection with accounts
receivable relating to any past, present or future editions of the Directories
(including payment of salaries and other compensation of Collection
Employees).
<PAGE>
(b) Seller shall retain sole responsibility for the printing, publication
and production of and the completion of all selling activity in connection
with, each of the Transition Directories, each of which is being purchased by
TransWestern hereunder and is scheduled to be published by Seller on
TransWestern's behalf in February 2000 and March 2000. Seller covenants and
agrees to use all of its reasonable best efforts to perform the foregoing
tasks in a timely fashion and in a manner consistent in all respects with past
practices with respect to such Directories as if Seller continued to own such
Directories. As consideration for Seller's good faith agreement to engage in
the foregoing post-closing activities, on January 1, 2000, TransWestern shall
pay Seller a fee of $500,000 in cash (the "Production Fee"), plus the
aggregate amount of printers invoices for services rendered in connection with
printing of the Transition Directories, by wire transfer of immediately
available funds to an account identified by Seller to TransWestern.
ARTICLE 5 - CONDITIONS
5.1 Conditions To Closing.
(a) Conditions to Closing Obligations of TransWestern. The obliga-tion of
TransWestern to consummate the transactions contemplated hereby is subject to
satisfaction at or prior to the Closing Date of the following conditions:
(i) The representations and warranties set forth in Section 3.1 shall be
true and correct in all material respects, in each case at and as of the
Closing Date, as though the Closing Date were substituted for the date hereof
throughout such representations and warranties (without giving effect to any
disclosures made after the date hereof pursuant to Section 3.1(z)), except for
representations and warranties that are made by their terms as of a specified
date, which shall be true and correct as of a specified date and except for
changes contemplated by this Agreement.
(ii) Shareholders shall have per-formed and complied with all of their
respective covenants and agreements set forth in this Agreement through the
Closing Date.
(iii) All governmental or third party filings, licenses, consents, authoriza-
tions, waivers and approvals (including, without limitation, any consent or
approval that may be required from TransWestern's lenders) that are required
to be made or obtained for the transfer to TransWestern of the Purchased
Assets will have been duly made and obtained without conditions or
requirements that are materially adverse to TransWestern.
(iv) ASs of the Closing Date, no suit, action or proceeding before any court
or quasi-judicial or administrative agency shall be pending or threatened
wherein any adverse judgment, decree, order or injunction would (A) prevent
the consummation of the transactions contemplated by this Agreement,(B) cause
any of such transactions to be rescinded following consummation of the
transactions contemplated by this Agreement, (C) materially and adversely
affect the right of TransWestern to operate or control the Directories or (D)
result in a Material Adverse Effect (and no such judgment, decree, order or
injunction shall be in effect).
(v) There shall have occurred no Material Adverse Effect since December 31,
1998.
(vi) TransWestern shall have received from Duckor Spradling & Metzger, coun-
sel to Seller and the Shareholders, an opinion substantially in the form of
Exhibit C and satisfactory to TransWestern, addressed to TransWestern and
dated as of the Closing Date;
(vii) Seller shall have delivered to TransWestern a certificate signed by
officers of Seller to the effect that each of the conditions specified above
in subsections (a)(i)-(v), inclusive, are satisfied in all respects.
(viii) On or prior to the Closing Date, Seller will have delivered to
TransWestern each of the following:
<PAGE>
(A) copies of all governmental licenses, consents, authorizations,
accreditations, waivers and approvals and of all consents, waivers and
approvals by third parties that are required to be obtained pursuant to
subsection (iii) above;
(B) copies of all of the invoices or other documentation satisfactory to
TransWestern of all direct sales costs associated with each of the Prior
Editions and the Future Editions, (ii) a copy of the licensing agreement
entered into by Seller for the licensing of white pages in connection with
publication of each of the Future Editions, (iii) copies of printing quotes
obtained in connection with publication of each of the Future Editions and
(iv) the Pro Forma;
(ix) TransWestern shall have completed to its satisfaction all of its
business, legal, environmental and financial due diligence review of Seller,
the Directories and the Purchased Assets; and
(x) TransWestern shall have determined to its satisfaction that the Net
Revenue attributable to the Transition Editions is not less than $3,760,000,
and Seller shall have delivered all information reasonably requested by
TransWestern in connection with the foregoing determination.
(b) Conditions to Closing Obligations of -Seller. The obliga-tion of Seller
to consummate the transactions contemplated hereby is subject to satisfaction
at or prior to the Closing Date of the following conditions:
(i) TransWestern's representations and warranties set forth in Section 3.2
shall be true and correct in all material respects, in each case at and as of
the Closing Date, as though the Closing Date were substituted for the date
hereof throughout such representations and warranties (without giving effect
to any disclosures made after the date hereof pursuant to Section 3.2(f))
except for representations and warranties that are made by their terms as of a
specified date, which shall be true and correct as of a specified date and
except for changes contemplated by this Agreement;
(ii) TransWestern shall have performed and complied with all of its
covenants and agreements set forth in this Agreement through the Closing Date;
(iii) All governmental or third party filings, licenses, consents,
authorizations, waivers and approvals that are required to be made or obtained
by TransWestern for the transfer to TransWestern of the Purchased Assets will
have been duly made and obtained without conditions or requirements that are
materially adverse to Seller;
(iv) TransWestern shall have delivered to Seller a certifi-cate signed by an
officer of TransWestern to the effect that each of the conditions specified in
subsections (b)(i) through (iii) are satisfied in all re-spects;
(v) As of the Closing Date, no suit, action or proceeding before any court or
quasi-judicial or administrative agency shall be pending or threatened wherein
any adverse judgment, decree, order or injunction would (A) prevent the
consummation of the transactions contemplated by this Agreement, and (B) cause
any of such transactions to be rescinded following consummation of the
transactions contemplated by this Agreement.
(vi) TransWestern shall have delivered the Purchase Price to Seller in
accordance with Article 2.
<PAGE>
All actions to be taken by any Party in connection with consumma-tion of the
transac-tions contemplat-ed hereby and all certificates, opinions, instru-
ments, and other documents required to effect the transac-tions contem-plated
hereby will be reasonably satis-factory in form and substance to the other
Party. Any Party may waive any condition to such Party's obligation, in whole
or in part, specified in this Section 5.1 if it executes a writing so stating
at or prior to the Closing Date or if the Closing occurs; provided, however,
that consummation of the Closing by a Party prior to the satisfaction of any
closing condition in this Section 5.1 shall not operate as a waiver of such
Party's right to terminate this Agreement under Section 6.1(b) or (c), as
applicable, and shall not operate as a waiver of any indemnification rights
such Party may otherwise have hereunder as a result of any breach of any
representation, warranty or covenant of the other Party contained herein.
ARTICLE 6 - TERMINATION
6.1 Termination. The Parties may terminate this Agreement as provided
below:
(a) TransWestern and Seller may terminate this Agree-ment by mutual written
consent.
(b) TransWestern may terminate this Agreement by giving written notice to
Seller in the event Seller is in breach of any represen-tation, warranty,
covenant or agreement contained in this Agree-ment.
(c) Seller may termi-nate this Agreement by giving written notice to
TransWestern in the event TransWestern is in breach of any represen-tation,
warranty, covenant or agreement contained in this Agree-ment.
(d) TransWestern may terminate this Agreement at any time prior to the
Closing Date if the Closing shall not have occurred on or prior to the close
of business on November 7, 1999 as a result of Seller's inability to satisfy
the conditions to TransWestern's obligations hereunder set forth in Article 5;
provided that TransWestern is not in material breach of any of its
representations, warranties or covenants contained in this Agreement.
(e) Seller may terminate this Agreement by giving written notice to
TransWestern at any time prior to the Closing Date if the Closing shall not
have occurred on or before the close of business on November 7, 1999 as a
result of TransWestern's inability to satisfy the conditions to Seller's
obligations hereunder set forth in Article 5; provided that Seller is not in
material breach of any of its representations, warranties or covenants
contained in this Agreement.
6.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 6.1, all obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach); provided, however, that
Sections 6.3, 7.2, 7.6 and 7.7(b) and (n) shall survive such termination.
6.3 Breakup Fees and Expenses. If the transactions
consummated hereby are not consummated other than pursuant to Section 6.1
(a) as a result of Seller's termination of this Agreement at such time when
either (1) all of the conditions to Seller's obligations hereunder are
satisfied or (2) a violation of Section 4.1(c) hereof has occurred, then
promptly upon such termination of this Agreement, so long as TransWestern is
not in breach of any provision of this Agreement, Seller shall pay or
reimburse TransWestern for all actual out-of-pocket fees and expenses incurred
by it or its representatives and advisors, whether before or after the date
of this Agreement, directly related to the transactions contemplated hereby,
or
<PAGE>
(b) as a result of TransWestern's termination of this Agreement at such time
when all of the conditions to TransWestern's obligations hereunder are
satisfied, then promptly upon such termination of this Agreement, so long as
Seller is not in breach of any provisions of this Agreement, TransWestern
shall pay or reimburse Seller for all actual out-of-pocket fees and expenses
incurred by it or its representatives and advisors, whether before or after
the date of this Agreement, directly related to the transactions contemplated
hereby, plus a fee in the amount of $500,000, payable by a cashier's or
certified check or by wire transfer of immediately available funds to an
account designated by Seller.
ARTICLE 7 - ADDITIONAL AGREEMENTS
7.1 Post-Closing Assistance. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement and to effect, consummate, confirm or evidence the consummation of
the transactions contemplated hereby (including, without limitation, with
respect to the sales into, printing and publication of each of the Future
Editions), each of the Parties will take such further action (in-cluding,
without limitation, the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, at the sole cost and
expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 7.3). During the seven-year period
following the Closing Date, TransWestern shall have reasonable access to
Seller's books and records (and to make copies thereof at TransWestern's
expense) for any proper purpose set forth by TransWestern in a writing
delivered to Seller; provided, however, that during such period Seller may
destroy its book and records subject to providing TransWestern with prior
written notice and the opportunity to make copies of such books and records.
7.2 Confidentiality.
(a) Prior to the Closing Date, without Seller's prior consent, TransWestern
shall keep confidential and not disclose to any third party Confidential
Information received or obtained by TransWestern from Seller and the
Shareholders relating to the Business; provided that any such Confidential
Information may be disclosed to the TransWestern's representatives and
advisors who need to know such information in connection with consummation of
the transactions contemplated hereby. If this Agreement is terminated prior
to the Closing Date, TransWestern agrees that after the date of such
termination (the "Termination Date"), without the prior written consent of
Seller, it shall not disclose or permit to be disclosed to any person, or
utilize for their own account or permit to be utilized by any Person, at any
time, any Confidential Information disclosed or made available to TransWestern
or obtained, observed or known by TransWestern relating to Seller's Business,
whether before or after the signing date and whether or not such information
was developed by such Person or such Person's officers, employees,
representatives or advisors. TransWestern shall take all appropriate steps to
safeguard all such Confidential Information and to protect Seller against
disclosure, misuse, espionage, loss and theft. As soon as practicable after
the Termination Date, TransWestern shall promptly deliver to Seller all copies
and embodiments, in whatever form, of all such Confidential Information in
TransWestern's possession or within its control, irrespective of the location
or form of such material and, if requested by Seller, shall provide Seller
with written confirmation that all such materials have been delivered to
Seller. In the event TransWestern is required to disclose any such
Confidential Information pursuant to applicable law, it shall promptly notify
Seller in writing, which notification shall include the nature of the legal
requirement and the extent of the required disclosure, and shall cooperate
with Seller to preserve the confidentiality of such information consistent
with applicable law.
<PAGE>
(b) Seller acknowledges that as of the Closing Date all Confidential
Information relating to the Business shall become the property of
TransWestern. Seller and the Shareholders agree that, without the prior
written consent of TransWestern, they shall not disclose or permit to be
disclosed to any Person, or utilize for their own account or permit to be
utilized by any Person, at any time, any Confidential Information disclosed or
made available to Seller or the Shareholders or obtained, observed or known by
Seller or any Shareholder relating to the Business, whether before or after
the Closing and whether or not such information was developed by such Person
or such Person's officers, employees, representatives or advisors. Seller and
the Shareholders shall take all appropriate steps to safeguard all such
Confidential Information and to protect them against disclosure, misuse,
espionage, loss and theft. As soon as practicable after the Closing Date,
Seller shall promptly deliver to TransWestern all copies and embodiments, in
whatever form, of all such Confidential Informa-tion in Seller's or any
Shareholder's possession or within its or his control, irrespective of the
location or form of such material and, if requested by TransWestern, shall
provide TransWestern with written confirma-tion that all such materials have
been delivered to TransWestern. In the event any Seller or any Shareholder is
required to disclose any such Confidential Information pursuant to applicable
law, such Person shall promptly notify TransWestern in writing, which
notification shall include the nature of the legal requirement and the extent
of the required disclosure, and shall cooperate with TransWestern to preserve
the confidentiality of such information consistent with applicable law.
7.3 Non-Competition.
(a) As a material inducement to TransWestern to enter into and perform its
obligations under this Agreement, for a period of five years following the
Closing Date (the "Noncompetition Period"), neither Seller nor the
Shareholders nor any of their successors or affiliates will, directly or
indirectly, either for themselves or for any partnership, individual,
corporation, joint venture or any other entity participate in any business
(including, without limitation, any division, group or franchise of a larger
organization) which engages in or proposes to engage in the promotion, sale or
distribution of telephone directory "yellow pages" or similar products in any
area of California which is covered by the Directories or any other
directories currently owned or published by TransWestern or any of its
Affiliates during the Noncompetition Period. For purposes of this Agreement,
the term "participate in" shall include, without limitation, having any direct
or indirect interest in any corporation, partnership, joint venture or other
entity, whether as a sole proprietor, owner, shareholder, partner, joint
venturer, creditor or otherwise, or rendering any direct or indirect service
or assistance to any individual corporation, partnership, joint venture and
other business entity (whether as a director, officer, manager, supervisor,
employee, agent, consultant or otherwise).
(b) During the Non-Competition Period, none of Seller, the Shareholders or
any of their affiliates shall (i) induce or attempt to induce any employee of
TransWestern to leave the employ of TransWestern, or in any way interfere with
the relationship between TransWestern and any employee thereof, (ii) hire
directly or through another entity any individual employed by TransWestern who
was previously employed by Seller or its Affiliates, or (iii) induce or
attempt to induce any customer, supplier, licensee or other business relation
of TransWestern to cease doing business with TransWestern, or in any way
interfere with the relationship between any such customer, supplier, licensee
or business relation and TransWestern (including, without limitation, making
any negative statements or communications concerning TransWestern).
(c) Seller agrees that TransWestern would suffer irreparable harm from a
breach by such Party of any of the covenants or agreements contained in
Section 7.3. Accordingly, in the event of an alleged or threatened breach by
Seller or any of its Affiliates of any of the provisions of Section 7.3,
TransWestern or its successors or assigns may, in addition to all other rights
and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce or prevent any violations of the provisions hereof equal to
the length of the violation of this Section 7.3.
<PAGE>
(d) If, at the time of enforcement of this Section 7.3, a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the Parties agree that the maximum
duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. Seller agrees that the restrictions
contained in Section 7.3 are reasonable.
(e) Each Party agrees that the covenants made in this Section 7.3 shall be
construed as an agreement independent of any other provision of this Agreement
and shall survive any order of a court of competent jurisdiction terminating
any other provision of this Agreement.
(f) Any breach of this section by a Shareholder shall not be deemed to be a
breach of this Agreement by the Seller or the nonbreaching Shareholders.
7.4 Indemnification.
(a) In addition to all rights and remedies available to TransWestern at law or
in equity, Seller and Shareholders shall indemnify TransWestern, its
affiliates, members, managers, officers, employees, agents, representatives,
permitted successors and assigns (collectively, the "TransWestern
Indemnities") in respect of, and save and hold each TransWestern Indemnitee
harmless against, and pay on behalf of or reimburse each TransWestern
Indemnitee for, as and when incurred at any time after the Closing Date or
such earlier date when this Agreement may be terminated pursuant to Article 6,
any Loss which any such TransWestern Indemnitee may suffer, sustain or become
subject to, as a result of, in connection with, relating or incidental to or
by virtue of:
(i) any breach of any representation, warranty, covenant or agreement made by
Seller in this Agreement or any facts or circumstances constituting such a
breach;
(ii) any Excluded Liability;
(iii) any Sales/Use Tax Liability; or
(iv) the items listed on Schedule 3.1(s) (concerning Litigation).
(b) In addition to all rights and remedies available to Seller at law or in
equity, TransWestern shall indemnify Seller and its affiliates, officers,
directors, employees, agents, representatives and permitted successors and
assigns (collectively, "Seller Indemnitees") in respect of, and save and hold
each of them harmless from and against, and pay on behalf of or reimburse each
Seller Indemnitee for, as and when incurred at any time after the Closing Date
or such earlier date when this Agreement may be terminated pursuant to Article
6, any Loss which such Seller Indemnitee may suffer, sustain or become subject
to, as the result of, in connection with, relating to or incidental to or by
virtue of the breach by TransWestern of any representation, warranty, covenant
or agreement made by TransWestern contained in this Agreement or any Assumed
Liability.
7.5 Indemnification Procedures.
(a) Notice of Claim. Any Person making a claim for indemnification pursuant
to Section 7.4 above (an "Indemnified Party") must give the Party from whom
indemnification is sought (an "Indemnifying Party") written notice of such
claim describing such claim and the nature and amount of such Loss (to the
extent that the nature and amount of such Loss is known at such time) (an
"Indemnification Claim Notice") promptly after the Indemnified Party receives
any written notice of any action, lawsuit, proceeding, investigation or other
claim (a "Proceeding") against or involving the Indemnified Party or otherwise
discovers the liability, obligation or facts giving rise to such claim for
indemnification; provided that the failure to notify or delay in notifying an
Indemnifying Party will not relieve the Indemnifying Party of its obligations
pursuant to Section 7.4.
<PAGE>
(b) Control of Defense; Conditions. With respect to the defense of any
Proceeding against or involving an Indemnified Party in which the party in
question seeks only the recovery of a sum of money for which indemnification
is provided in Section 7.4, at its option an Indemnifying Party may appoint as
lead counsel of such defense any legal counsel selected by the Indemnified
Party; provided that before the Indemnifying Party assumes control of such
defense it must first
(i) enter into an agreement with the Indemnified Party (in form and substance
satisfactory to the Indemnified Party) pursuant to which the Indemnifying
Party agrees to be fully responsible (with no reservation of any rights other
than the right to be surrogate to the rights of the Indemnified Party) for all
Losses relating to such Proceeding and unconditionally guarantees the payment
and performance of any liability or obligation which may arise with respect to
such Proceeding or the facts giving rise to such claim for indemnification,
and
(ii) furnish the Indemnified Party with evidence that the Indemnifying Party,
in the Indemnified Party's sole judgment, is and will be able to satisfy any
such liability
(c) Control of Defense; Exceptions, etc. The Indemnified Party will be
entitled to participate in the defense of such claim and to employ counsel of
its choice for such purpose at its own expense; provided that notwithstanding
the foregoing, the Indemnifying Party will bear the reasonable fees and
expenses of such separate counsel incurred prior to the date upon which the
Indemnifying Party effectively assumes control of such defense. The
Indemnifying Party will not be entitled to assume control of the defense of
such claim, and will pay the reasonable fees and expenses of legal counsel
retained by the Indemnified Party, if
(i) the Indemnified Party reasonably believes that an adverse determination of
such Proceeding could be detrimental to or injure the Indemnified Party's
reputation or future business prospects,
(ii) the Indemnified Party reasonably believes that there exists or could
arise a conflict of interest which, under applicable principles of legal
ethics, could prohibit a single legal counsel from representing both the
Indemnified Party and the Indemnifying Party in such Proceeding, or
(iii) a court of competent jurisdiction rules that the Indemnifying Party has
failed or is failing to prosecute or defend vigorously such claim; and
The Indemnifying party must obtain the prior written consent of the
Indemnified Party (which the Indemnified Party will not unreasonably withhold)
prior to entering into any settlement of such claim or Proceeding or ceasing
to defend such claim or Proceeding.
(d) Payments. Any payment pursuant to a claim for indemnification shall be
made not later than thirty (30) days after receipt by the Indemnifying Party
of written notice from the Indemnified Party stating the amount of the claim,
unless the claim is subject to defense as provided in Section 7.5(b) or is
otherwise disputed by the Indemnifying Party, in which case payment shall be
made not later than 30 days after the amount of the claim is finally
determined in accordance with this Section 7.4 or Section 7.5, as applicable.
Any payment required under this Section 7.5(d) shall bear interest at 18% per
annum or, if less, the maximum rate permitted by applicable usury laws from
the date that the Indemnified Party incurred the Loss for which
indemnification is sought. Interest on any such unpaid amount shall be
compounded monthly, computed on the basis of a 365-day year and shall be
payable on demand. In addition, such party shall reimburse the other party
for any and all costs or expenses of any nature or kind whatsoever (including
but not limited to all attorneys' fees) incurred in seeking to collect such
Losses. Any payment required under this Section 7.5(d) to be made to
TransWestern by Seller (together with interest thereon (if any) and all costs
and expenses related thereto) may be made by offset against the Seller Note or
any other amounts due and payable to Seller by TransWestern.
<PAGE>
(e) Adjustments. Amounts paid to the Purchaser as indemnification shall be
treated as adjustments to the Final Cash Price.
(f) Other Indemnification Provisions. Each Shareholder hereby agrees that he
or she will not make any claim for indemnification hereunder against
TransWestern by reason of the fact that he or she was a director, officer,
employee, or agent of any such entity or was serving at the request of any
such entity (or any of its predecessors) as a partner, trustee, director,
officer, employee, or agent of another entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses or expenses) with respect to any action, suit, proceeding, complaint,
claim, or demand brought by TransWestern against such Shareholder (if such
action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement).
7.6 Arbitration.
(a) The arbitration procedure set forth below shall be the sole and exclusive
method for resolving and remedying claims for money damages arising out of the
provisions of Section 7.3 (the "Disputes"), provided that, nothing in this
Section 7.4 shall prohibit a party hereto from instituting litigation to
enforce any Final Determination or availing itself of the remedies set forth
in Section 7.2(c). The Parties hereby agree and acknowledge that, except as
otherwise provided in this Section 7.4 or in the Commercial Arbitration Rules
of the American Arbitration Association as in effect from time to time, the
arbitration procedures and any Final Determination hereunder shall be governed
by, and shall be enforced pursuant to the arbitration provisions set forth in
the California Code of Civil Procedure.
(b) In the event that any Party asserts that there exists a Dispute, such
Party shall deliver a written notice to each other Party involved therein
specifying the nature of the asserted Dispute and requesting a meeting to
attempt to resolve the same. If no such resolution is reached within ten
business days after such delivery of such notice, the Party delivering such
notice of Dispute (the "Disputing Person") may, within 45 business days after
delivery of such notice, commence arbitration hereunder by delivering to each
other Party involved therein a notice of arbitration (a "Notice of
Arbitration") and by filing a copy of such Notice of Arbitration with the San
Diego, California office of the American Arbitration Association. Such Notice
of Arbitration shall specify the matters as to which arbitration is sought,
the nature of any Dispute, the claims of each Party to the arbitration and
shall specify the amount and nature of any damages, if any, sought to be
recovered as a result of any alleged claim, and any other matters required by
the Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time to be included therein, if any.
(c) Seller and TransWestern each shall select one independent arbitrator
expert in the subject matter of the Dispute (the arbitrators so selected shall
be referred to herein as "Seller's Arbitrator" and "TransWestern's
Arbitrator," respectively). In the event that either Party fails to select an
independent arbitrator as set forth herein within 20 days from delivery of a
Notice of Arbitration, then the matter shall be resolved by the arbitrator
selected by the other Party. Seller's Arbitrator and TransWestern's
Arbitrator shall select a third independent arbitrator expert in the subject
matter of the dispute, and the three arbitrators so selected shall resolve the
matter according to the procedures set forth in this Section 7.4. If Seller's
Arbitrator and TransWestern's Arbitrator are unable to agree on a third
arbitrator within 20 days after their selection, Seller's Arbitrator and
TransWestern's Arbitrator shall each prepare a list of three independent
arbitrators. Seller's Arbitrator and TransWestern's Arbitrator shall each
have the opportunity to designate as objectionable and eliminate one
arbitrator from the other arbitrator's list within 7 days after submission
thereof, and the third arbitrator shall then be selected by lot from the
arbitrators remaining on the lists submitted by Seller's Arbitrator and
TransWestern's Arbitrator.
<PAGE>
(d) The arbitrator(s) selected pursuant to clause (c) will determine the
allocation of the costs and expenses of arbitration based upon the percentage
which the portion of the contested amount not awarded to each Party bears to
the amount actually contested by such Party. For example, if TransWestern
submits a claim for $1,000, and if Seller contests only $500 of the amount
claimed by TransWestern, and if the arbitrator(s) ultimately resolves the
dispute by awarding TransWestern $300 of the $500 contested, then the costs
and expenses of arbitration will be allocated 60% (i.e. 300 ? 500) to Seller
and 40% (i.e. 200 ? 500) to TransWestern.
(e) The arbitration shall be conducted under the Commercial Arbitration Rules
of the American Arbitration Associa-tion as in effect from time to time,
except as otherwise set forth herein or as modified by the agreement of all of
the parties to this Agreement. The arbitrator(s) shall so conduct the
arbitration that a final result, determination, finding, judgment and/or award
(the "Final Determination") is made or rendered as soon as practicable, but in
no event later than 90 business days after the delivery of the Notice of
Arbitration nor later than 10 days following completion of the arbitration.
The Final Determination must be agreed upon and signed by the sole arbitrator
or by at least two of the three arbitrators (as the case may be). The Final
Determination shall be final and binding on all parties and there shall be no
appeal from or reexamination of the Final Determination, except for fraud,
perjury, evident partiality or misconduct by an arbitrator prejudicing the
rights of any Party and to correct manifest clerical errors.
(f) TransWestern and Seller may enforce any Final Determination in any state
or federal court having jurisdiction over the dispute. For the purpose of any
action or proceeding instituted with respect to any Final Determination, each
Party hereto hereby irrevocably submits to the jurisdiction of such courts,
irrevocably consents to the service of process by registered mail or personal
service and hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may have or hereafter have as to personal jurisdiction,
the laying of the venue of any such action or proceeding brought in any such
court and any claim that any such action or proceeding brought in such court
has been brought in an inconvenient forum.
(g) If any Party shall fail to pay the amount of any damages, if any, assessed
against it within ten (10) days of the delivery to such Party of such Final
Determination, the unpaid amount shall bear interest from the date of such
delivery at the lesser of (i) 18% and (ii) the maximum rate permitted by
applicable usury laws. Interest on any such unpaid amount shall be compounded
semi-annually, computed on the basis of a 360-day year consisting of twelve
30-day months and shall be payable on demand. In addition, such Party shall
promptly reimburse the other Party for any and all costs or expenses of any
nature or kind whatsoever (including but not limited to all attorneys' fees)
incurred in seeking to collect such damages or to enforce any Final
Determination.
7.7 Miscellaneous.
(a) Survival of Representations and Warranties. All of the representations
and warranties made by any Party in this Agreement and the other agreements
delivered at the Closing in connection herewith shall survive the execution
and delivery of this Agreement and consummation of the transactions
contemplated hereby, regardless of any investigation made by any other Party
or on its behalf. Neither Party's participation in the consummation of any
transaction pursuant to this Agreement (or any agreement contemplated hereby)
nor any waiver of any condition to such participation (including any condition
that a representation or warranty of any other Party be true and correct) will
constitute a waiver by such participating Party of any representation or
warranty of any Party or otherwise affect the survival of any such
representation and warranty which shall continue in full force and effect
after the Closing.
<PAGE>
(b) Press Releases and Announcements; Notice to Customers. All press releases
and other public announcements and all announcements to Seller's customers,
suppliers, licensees or employees relating to the transactions contemplated
hereby (including with respect to any termination of this Agreement pursuant
to Article 6) shall be prepared jointly by Seller and TransWestern. Without
in any way limiting the generality of the foregoing, at the request of
TransWestern, Seller shall promptly notify (in a manner in form and substance
mutually satisfactory to TransWestern and Seller) each of its customers and
each other Person deemed by TransWestern to be an appropriate recipient of
such notice (i) that TransWestern will own and publish all editions of the
Directories as of the Closing Date and (ii) setting forth such other
information as TransWestern may reasonably request to confirm or evidence the
transfer of the Directories to TransWestern.
(c) Further Transfers and Assurance. Each Party will execute and deliver
such other documents as the other Party may reasonably request to effect,
consummate, confirm or evidence the transfer to such other Party of the
Purchased Assets and any other transactions contemplated hereby. Without
limiting the generality of the foregoing, to the extent there are any assets
necessary or (in the opinion of TransWestern) advisable to the ownership and
publication of the Directories as presently owned and published by Seller and
as proposed to be owned and published by TransWestern that are not transferred
hereunder to TransWestern, Seller will execute and deliver such further
instruments of conveyance and transfer and take such additional action as may
be required to transfer such assets to TransWestern.
(d) Name and Logos of Parties. The Parties hereby agree that the cover of the
first edition of each Directory to be published after the Closing shall be
designed to reflect the names and logos of each of TransWestern and Seller and
shall be produced in a style and format reasonably acceptable to TransWestern
and Seller.
(e) No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(f) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agree-ments, or representations by or between the
Parties, written or oral, that may have related in any way to the subject
matter hereof (including the letter executed by TransWestern and Seller dated
July 20, 1999).
(g) Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties hereto, except that
(h) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instru-ment.
(i) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(j) Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) when delivered, if
personally delivered, (ii) when receipt is electronically confirmed, if faxed
(with hard copy to follow via first class mail, postage prepaid) or (iii) one
day after deposit with a reputable overnight courier, in each case addressed
to the intended recipi-ent as set forth below:
<PAGE>
If to Seller:
United Multi Media
9715 Carroll Centre Road
San Diego, CA 92126
Attn: Roy French
Telecopy #: (619) 695-1701
with a copy (which shall not constitute notice) to:
Duckor Spradling & Metzger
402 West A Street, Suite 2400
San Diego, California 92101-7915
Attn: James B. Ryan
Telecopy #: (619) 231-6629
If to TransWestern:
TransWestern Publishing Company
8328 Clairemont Mesa Blvd.
San Diego, CA 92111
Attn: Ricardo Puente
Joan Fiorito
Chief Financial Officer
Telecopy #: (619) 292-4125
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: Wendy L. Chronister, Esq.
Telecopy #: (312) 861-2200
Any Party may change the address and/or telecopier number to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(k) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
California.
(l) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
each Party. No waiver by any Party of any default, misrepre-sentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepre-sentation, or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subse-quent such occur-rence.
(m) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforce-ability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforce-able and that comes closest to
expressing the intention of the invalid or unenforceable term or provision,
and this Agreement shall be enforceable as so modified after the expiration of
the time within which the judgment may be appealed.
<PAGE>
(n) Expenses. Except as otherwise specifically provided herein, each Party
will bear its own costs and expenses (including legal and broker fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(o) Taxes; Recording Charges. All transfer, documentary, sales, use, stamp,
registration, conveyance, income, gains, value added or other Taxes and fees
arising out of the sale of the Purchased Assets or otherwise incurred in
connection with this Agreement or the consummation of the transactions
contemplated hereby and all charges for or in connection with the recording of
all of the documents and instruments contemplated hereby shall be paid by
Seller.
(p) Construction. The Parties have jointly participated in the negotiation
and drafting of this Agreement. In the event of an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumptions or burdens of proof shall
arise favoring any Party by virtue of the authorship of any of the provisions
of this Agreement. Any reference to any feder-al, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. Nothing in the
disclosure schedules shall be deemed adequate to disclose an exception to a
representa-tion or warranty made herein unless the disclosure schedules
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The Parties intend that each represen-
tation, warranty, and covenant contained herein shall have indepen-dent
significance. If any Party has breached any repre-sentation, warranty, or
covenant contained herein in any respect, the fact that there exists another
represen-tation, warranty, or covenant relating to the same subject matter
(re-gard-less of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or cove-nant.
(q) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(r) Number and Gender. Each defined term used in this Agreement has a
comparable meaning when used in its plural or singular form. Each gender-
specific term used herein has a comparable meaning whether used in a
masculine, feminine or gender-neutral form.
<PAGE>
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
TRANSWESTERN PUBLISHING COMPANY, LLC
By: TransWestern Communications Company, Inc.,
Its: Manager
By: /s/ Joan M. Fiorito
Its: _ Vice President and Chief Financial Officer
SELLER:
UNITED MULTI MEDIA
By: /s/ Roy French
Its: President
SHAREHOLDERS:
/s/ Roy French
Roy French
/s/ Harris Kay
Harris Kay
/s/ Dennis Reimert
Dennis Reimert
