<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------
Date of Report (Date of earliest event reported): July 26, 1996
UNITED MAGAZINE COMPANY
(Exact Name of Registrant as Specified in Charter)
Ohio 0-2675 31-0681050
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5131 Post Road 43017
Dublin, Ohio (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (614) 792-0777
<PAGE> 2
The Form 8-K of United Magazine Company dated July 26, 1996, as amended, is
being amended to file as exhibits to such Form 8-K the documents listed in Item
7 below.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
- -------
The following exhibits are included herein:
1. Option Agreement of the Registrant dated March 1, 1996 to
Acquire The Stoll Companies.
2. Option Agreement of the Registrant dated March 1, 1996 to
Acquire Michiana News Service, Inc.
3. Option Agreement of the Registrant dated March 1, 1996 to
Acquire Assets or Capital Stock of Ohio Periodicals
Distributors, Inc. and Northern News Company.
4. Joint Operating Agreement between the Registrant and The Stoll
Companies, dated July 3, 1996.
5. Joint Operating Agreement between the Registrant and Michiana
News Service, Inc. dated March 1, 1996.
6. Joint Operating Agreement among the Registrant and Ohio
Periodicals Distributors, Inc., and Northern News Company,
dated March 1, 1996.
7. Document Escrow Agreement dated October 21, 1996 among the
Registrant, Michiana News Service, Inc. ("Michiana"), all of
Michiana's shareholders, and Baker & Hostetler.
8. Document Escrow Agreement dated October 24, 1996 among the
Registrant, The Stoll Companies ("Stoll"), all of Stoll's
shareholders, and Baker & Hostetler.
9. Document Escrow Agreement dated October 9, 1996 among the
Registrant, Northern News Company, and Baker & Hostetler.
10. Salary Continuation and Death Benefit Agreement dated
September 18, 1996 between The Stoll Companies and Richard H.
Stoll, Sr.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
UNITED MAGAZINE COMPANY
(Registrant)
Date: June 19, 1997 By: /s/ Thomas L. Gerlacher
-------------------------------
Name: Thomas L. Gerlacher
--------------------------
Title: Chief Financial Officer
------------------------
3
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Exhibit Description Page No.
----------- ------------------- --------
<S> <C> <C>
2(h) Option Agreement of the Registrant dated March 1, 1996
to Acquire The Stoll Companies.
2(i) Option Agreement of the Registrant dated March 1, 1996
to Acquire the Michiana News Service, Inc.
2(j) Option Agreement of the Registrant dated March 1, 1996
to Acquire Assets or Capital Stock of Ohio Periodicals
Distributors, Inc. and Northern News Company.
2(k) Joint Operating Agreement between the Registrant and
The Stoll Companies, dated July 3, 1996.
2(l) Joint Operating Agreement between the Registrant and
Michiana News Service, Inc. dated March 1, 1996.
2(m) Joint Operating Agreement among the Registrant and
Ohio Periodicals Distributors, Inc., and Northern
News Company, dated March 1, 1996.
2(n) Document Escrow Agreement dated October 21, 1996
among the Registrant, Michiana News Service, Inc.
("Michiana"), all of Michiana's shareholders, and
Baker & Hostetler.
2(o) Document Escrow Agreement dated October 24, 1996
among the Registrant, The Stoll Companies ("Stoll"),
all of Stoll's shareholders, and Baker & Hostetler.
2(p) Document Escrow Agreement dated October 9, 1996
among the Registrant, Northern News Company and
Baker & Hostetler.
2(q) Salary Continuation and Death Benefit Agreement
dated September 18, 1996 between The Stoll Companies
and Richard H. Stoll, Sr.
</TABLE>
4
<PAGE> 1
Exhibit 2(h)
March 1, 1996
Mr. Richard Stoll
The Stoll Companies
2021 Adams Street
Toledo, Ohio 43624
Re: Option to Acquire The Stoll Companies
Dear Dick:
This Option Agreement is made and entered into this ___ day of March,
1996, by and between UNITED MAGAZINE COMPANY (hereinafter referred to as
"Buyer") and The Stoll Companies, an Ohio corporation (hereinafter referred to
as the "Company") having wholesale newspaper, magazine and periodicals
distribution businesses with offices located in Jackson, Michigan, Wyoming,
Michigan and Toledo, Ohio, under the following terms and conditions:
1. For and in consideration of the sum of one hundred and no/100
dollars ($100.00), and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company hereby grant to Buyer
the option, during the term set forth in Paragraph 4 hereof (the "Term"), to
cause the Company to merge with a to-be-formed wholly-owned subsidiary of Buyer
("Sub"). Buyer may exercise its option upon written notice to the Company at
any time during the term.
2. The consideration payable to the shareholders of the Company in the
event of the contemplated merger shall be calculated as follows:
a. an amount equal to sixty percent (60%) of the net annual
wholesale sales of the Company, to be calculated as of December 31,
1995; plus or minus
b. the actual net worth of the Company (exclusive of good
will, customer lists and non-compete contracts), at Closing (as
hereinafter defined), which is estimated to be thirteen million two
hundred sixty thousand seven hundred two and no/100 dollars
($13,260,702.00), with the actual amount to be determined at Closing
pursuant to a certified financial statement to be completed by the
parties in accordance with generally accepted accounting principles.
3. Buyer and the Company acknowledge and agree that the estimated net
total of Paragraphs 2(a) and 2(b), above, as of the date of execution of this
Option Agreement, amounts to approximately sixty-two million nine hundred
eighty-two thousand six hundred ninety-one and no/100 dollars ($62,982,691.00),
<PAGE> 2
based upon the Company's PRO FORMA financial statement attached hereto as
Exhibit A. Such figure, as adjusted at closing, shall be the total
Consideration, to be payable as follows:
a. fifty-three and fourteen hundredths percent (53.14%) of the
Consideration shall be payable in voting common shares of the capital
stock of Buyer, to be valued for the purposes of this transaction at
one and 50/100 dollars ($1.50) per share. The Company understands and
agrees that the shares of Buyer's capital stock will be restricted
pursuant to applicable federal securities regulations;
b. forty-six and eighty-six hundredths percent (46.86%) of the
Consideration shall be payable in immediately available funds at
closing, as hereinafter defined.
4. The term of this Option Agreement shall commence upon the written
acceptance by the Company of this proposal, and shall continue thereafter until
the earlier of (i) the termination or expiration of either of Buyer's options
to purchase the assets of Ohio Periodical Distributors, Inc., Northern News
Company and MacGregor News Agency, Inc. (collectively, the "Scherer Companies")
and to acquire Michiana News Service, Inc. ("Michiana") on terms and conditions
set forth on Exhibits B and C, respectively, hereto; (ii) the exercise of the
Company's election to terminate this option pursuant to this Paragraph 4; or
(iii) August 31, 1996. In the event Buyer does not purchase the assets of
Scherer Companies and close on the merger of Michiana on the terms and
conditions set forth in Exhibits B and C hereto simultaneous with the Closing
of the merger of the Company and the Sub, then the Company may, in its sole
discretion, either proceed to close with Buyer on this transaction or refuse to
do so. Notwithstanding anything contained herein to the contrary, the Company
shall have the right to terminate this Option Agreement and Buyer's rights
hereunder on written notice to Buyer in the event Buyer has not, on or before
May 31, 1996, obtained a financing commitment satisfactory to Buyer to enable
Buyer to complete the merger of the Company and the acquisition of Michiana and
the assets of Scherer Companies or if there has, since the date hereof, been a
material adverse change in the financial condition or prospects of Buyer or any
of its subsidiaries, the Scherer Companies or Michiana.
5. During the term of this option, the Company shall retain the
exclusive right to continue operating its businesses. The Company shall strive
to maintain, to the extent possible, the current balance sheet and
profitability of the Company as reported to Buyer at the execution of this
Agreement. During the Company's continuing operations, the parties
acknowledge that the Company may find itself in competitive bid situations with
Buyer, and the parties agree that the submission of such proposals by either
party shall have no effect on the continued viability of this Option Agreement.
Further, the Company agrees that
<PAGE> 3
from and after the execution of this Option Agreement, the Company will cause
its business to be conducted in the usual and ordinary course, and will,
consistent with such operation, use all reasonable efforts to preserve the
present business organization substantially intact and to continue to present
business relationships with publishers and customers.
6. Notwithstanding anything contained herein to the contrary, the
Company reserves the right to sell non-operating assets and to make
distributions to its shareholders to the extent such transactions will not
inhibit the Company from achieving as of Closing the targets set forth on its
PRO FORMA balance sheet attached hereto as Exhibit A.
7. During the term of this option, the Company shall cooperate with
Buyer to complete Buyer's due diligence process on the Company, and further,
the Company shall cooperate with Buyer and assist in its negotiations with
lending institutions and investment bankers as may reasonably be required by
Buyer. The parties agree that they will both participate in any presentations
that may be made to either investment banks or lending institutions. Buyer and
the Company further covenant and agree that they will work together to bring
the transaction contemplated hereunder to a successful conclusion. The Company
shall make available to Buyer, for its due diligence, all of the Company's
records, including tax and accounting records, and any other information on the
Company as may be required by Buyer. The Company acknowledges that Buyer's
decision to exercise this option is dependent upon its ability to complete a
thorough due diligence review of the Company.
8. During the Term of this Option, Buyer will cause its business and
the business of its wholly-owned subsidiaries to be conducted in the usual and
ordinary course and will not amend, modify or otherwise supplement its option
agreements with the Scherer Companies attached hereto as Exhibit B and with
Michiana, attached hereto as Exhibit C, without the Company's prior written
consent.
9. Notwithstanding anything herein to the contrary, the Company shall
not be required to close any transaction with Buyer unless and until (i) the
contemplated survivor of Sub and the Company has executed employment agreements
with, and containing terms acceptable to, Richard Stoll, Jr., John Heiniger and
Ron Lankerd for their continued employment with the survivor of Sub and the
Company after the Closing, and (ii) arrangements satisfactory to the Company
have been made to assure the Company's shareholders of representation on Buyer's
Board of Directors.
10. The parties recognize that the nature of information being made
available to Buyer and its agents and employees pursuant to its due diligence
review of the Company is of such a confidential nature that the parties agree
that
<PAGE> 4
this information shall be kept confidential, and in the event Buyer does not
exercise its option to purchase the Company, all records and information shall
be immediately returned to the Company.
11. The parties agree that, immediately upon Buyer's exercise of the
option provided hereunder, they shall enter into good faith negotiations of a
Merger Agreement acceptable to Buyer and the Company's shareholders which sets
forth usual and customary provisions, representations, warranties, covenants
and indemnities (and limitations thereof) of Buyer, the Company and its
shareholders, including, but not limited to, those relating to the ownership of
assets, compliance with laws, accuracy of financial statements, existence of
contracts and such other items as may be reasonably required by Buyer or the
Company and its shareholders, with all said representations, warranties,
covenants and indemnities to survive the closing, such agreement to be fully
executed within thirty (30) days after Buyer provides to the Company written
notices of its exercise of this option. The transaction is intended to qualify
as a partially tax-free reorganization with cash boot of up to 49% of the
Consideration. The transaction shall close no later than thirty (30) days
after the execution of the definitive Merger Agreement.
12. The parties agree that the terms and conditions of any addendum
executed by the parties to amend or expand upon the terms of this option, shall
thereafter be incorporated by reference into this Option Agreement.
Please acknowledge your agreement with the terms and conditions of the
option outlined above by signing and returning to me the enclosed copy of this
Option Agreement. Buyer and Sellers agree and acknowledge that they execute
this Option Agreement intending to be legally bound.
Very truly yours,
AGREED TO AND ACCEPTED UNITED MAGAZINE COMPANY,
this ___ day of March, 1996 an Ohio corporation
The Stoll Companies
- ----------------------------------- --------------------------------------
By: Richard Stoll, Jr. By: Ronald E. Scherer
Its: Chairman
- -----------------------------------
By: Richard Stoll
<PAGE> 5
EXHIBIT A
UNIMAG
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NORMALIZED BALANCE SHEET
PURCHASE PHASE 1 PURCHASE PHASE 2
AS OF DECEMBER 31, 1995 UNIMAG SCHERER ACCOUNTING TOTAL STALL MAJEREK ACCOUNTING TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current Assets
Cash 232,040 405,142 637,182 4,586,593 0 0 5,223,775
Account Receivable
Trade 6,581,522 5,455,286 12,036,808 8,402,664 2,420,591 0 22,860,063
Retail 0 1,599,022 1,599,022 0 1,183,000 0 2,782,022
Shareholder Receivable 0 0 0 0 1,921,486 0 1,921,486
Inventory 5,641,769 4,099,853 9,741,622 11,077,628 1,959,546 0 22,778,796
Other current Assets 316,075 16,116 332,191 404,342 457,111 0 1,193,644
------------------------------------------------------------------------------------------------------
Total Current Asset 12,771,406 11,575,419 24,346,825 24,471,227 7,941,734 0 56,759,786
------------------------------------------------------------------------------------------------------
Property Plant & Equipment
Land 0 590,000 590,000 97,662 0 0 687,662
Building 141,276 2,803,519 2,944,795 751,230 398,000 0 4,094,025
Display Racks 0 932,785 932,785 978,859 728,399 0 2,640,043
Furniture and Fixtures 777,339 4,765,705 5,543,044 1,153,811 645,500 0 7,342,355
Vehicles 456,861 1,604,584 2,061,445 1,045,277 285,679 0 3,392,401
Assets held for sale 0
------------------------------------------------------------------------------------------------------
Gross PP&E 1,375,476 10,696,593 12,072,069 4,026,839 2,057,578 0 18,156,485
Accumulated Depreciation 0 (3,376,479) (3,376,479) 0 0 0 (3,376,479)
------------------------------------------------------------------------------------------------------
Net 1,375,476 7,320,114 8,695,590 4,026,839 2,057,578 0 14,780,006
------------------------------------------------------------------------------------------------------
Other assets
Notes Receivable nonrelated 0 0 0 0 0 0
Other 2,950 0 2,950 260,231 3,000 0 266,181
------------------------------------------------------------------------------------------------------
2,950 0 2,950 260,231 3,000 0 266,181
------------------------------------------------------------------------------------------------------
Intangibles
Purchase Premium 34,648,442 34,648,442 77,738,090 112,386,532
O&R records/customer list 2,183,819 0 2,183,819 251,389 560,363 0 2,995,571
Non compete 425,000 0 425,000 294,733 917,752 0 1,691,485
Consulting 0 0 0 0 218,446 0 218,446
Goodwill 8,611,331 3,000,890 1,384,432 12,996,653 889,127 1,080,388 (5,100,000) 9,866,168
------------------------------------------------------------------------------------------------------
Total Intangibles 11,220,150 3,000,890 36,032,874 50,253,914 1,435,249 2,830,949 72,638,090 127,158,202
------------------------------------------------------------------------------------------------------
Total Assets 25,369,982 21,896,422 36,032,874 83,299,278 30,193,546 12,833,261 72,638,090 198,964,175
======================================================================================================
</TABLE>
<PAGE> 6
UNIMAG
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NORMALIZED BALANCE SHEET
PURCHASE PHASE 1 PURCHASE PHASE 2
AS OF DECEMBER 31, 1995 UNIMAG SCHERER ACCOUNTING TOTAL STALL MAJEREK ACCOUNTING TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current Liabilities
Short term Debt 345,575 0 345,575 1,400,000 750,000 0 2,495,575
Current Portion long term debt 362,500 0 362,500 190,262 822,000 0 1,374,762
Current Portion capital leases 0 0 0 0 0 0
Publisher Payables 12,161,026 16,032,023 28,193,049 8,882,233 4,268,422 0 41,343,704
Other payables 806,269 21,240 827,509 237,711 0 0 1,065,220
Accrued expenses (327,040) 42,166 (284,874) 364,077 122,240 0 201,443
Deferred taxes 0 223,875 223,875 2,339,312 1,022,400 0 3,585,587
0
458 Reserve 1,532,286 2,186,137 3,718,423 2,084,000 750,000 0 6,552,423
Related Party 0 0 0 0 1,109,859 0 1,109,859
------------------------------------------------------------------------------------------------------
Current Liabilities 14,880,616 18,505,441 33,386,057 15,497,595 8,844,921 0 57,728,573
------------------------------------------------------------------------------------------------------
Long term debt
Long-term Debt 1,652,837 4,761,142 16,977,737 23,391,716 0 3,259,969 38,091,664 64,743,349
Long term Capital leases 0 0 0 0 0 0
Dealer advance payments 40,000 0 40,000 0 0 0 40,000
Pension & Postretirement 2,880,000 2,880,000 0 0 2,880,000
Other 0 14,272 14,272 0 0 0 14,272
Related Party 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------
4,572,837 4,775,414 16,977,737 26,325,988 0 3,259,969 38,091,664 67,677,621
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Common stock subject to Puts 3,935,461 3,935,461 0 3,935,461
------------------------------------------------------------------------------------------------------
Stockholders Equity Asset Deal
Common Stock 250 (1,384,432) 1,384,432 250 5,000,000 100,000 (5,100,000) 250
Paid in Capital 42,744,575 0 17,670,705 60,415,280 0 0 39,646,426 100,061,706
Retained earnings (40,763,757) 0 0 (40,763,757) 9,695,951 628,371 0 (30,439,436)
------------------------------------------------------------------------------------------------------
1,981,068 (1,384,432) 19,055,137 19,651,773 14,695,951 728,371 34,546,426 69,622,520
------------------------------------------------------------------------------------------------------
Total Liabilities and
Stockholders Equity 25,369,982 21,896,422 36,032,874 83,299,278 30,193,546 12,833,261 72,638,090 198,964,175
======================================================================================================
</TABLE>
<PAGE> 7
UNIMAG
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NORMALIZED INCOME STATEMENT
PURCHASE PHASE 1 PURCHASE PHASE 2
AS OF DECEMBER 31, 1995 UNIMAG SCHERER ACCOUNTING TOTAL STALL MAJEREK ACCOUNTING TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales 57,039,662 65,056,274 122,095,936 82,869,983 28,096,626 233,062,545
Cost of Sales (44,878,484) (48,612,571) (93,491,055) (61,984,576) (22,013,114) (177,488,745)
------------------------------------------------------------------------------------------------------
Gross Profit 12,161,178 16,443,703 28,604,881 20,885,407 6,083,512 55,573,799
GPM% 21.32% 25.28% 23.43% 25.20% 21.65% 23.85%
Other Operating Income 1,688,265 1,851,624 3,539,889 1,824,972 580,004 5,944,865
Employee Related Costs (8,196,084) (9,588,702) (17,784,786) (11,578,187) (2,964,215) (32,327,188)
Other SG&A (4,012,008) (3,826,281) (7,838,289) (5,817,463) (1,828,305) (15,484,057)
Other Income, net 427,920 10,391 438,311 471,857 160,111 1,070,279
------------------------------------------------------------------------------------------------------
EBITDA 2,069,271 4,890,734 6,960,005 5,786,586 2,031,107 14,777,698
Cash interest (219,865) (122,383) (342,248) 0 (577,789) (920,037)
------------------------------------------------------------------------------------------------------
Operating Cash Flow 1,849,406 4,768,352 6,617,758 5,786,586 1,453,318 13,857,661
Non cash
Depreciation & Amort. (1,128,259) (694,614) (900,822) (2,723,695) (1,167,005) (1,011,636) (1,557,844) (6,460,180)
Put Interest (369,437) 0 (369,437) 0 0 (369,437)
Consulting In stock (294,719) 0 (294,719) 0 0 (294,719)
------------------------------------------------------------------------------------------------------
Total non cash (1,792,415) (694,614) (900,822) (3,387,851) (1,167,005) (1,011,636) (1,557,844) (7,124,336)
------------------------------------------------------------------------------------------------------
Net Income before tax 56,991 4,073,737 (900,822) 3,229,906 4,619,581 441,682 (1,557,844) 6,733,325
======================================================================================================
RETURN ON SALES 6.26% 2.65% 5.57% 1.57% 2.89%
Purchase Price
60% of sales 39,033,764 39,033,764 49,721,990 16,857,976 105,613,730
+/- tangible net worth (4,385,322) (4,385,322) 13,260,702 (2,102,578) 6,772,801
------------------------------------------------------------------------------------------------------
Total purchase price 34,648,442 34,648,442 62,982,691 14,755,397 112,386,531
======================================================================================================
Distribution
Cash 16,977,737 16,977,737 29,513,689 6,207,596 52,699,021
Stock of Unimag 17,670,705 17,670,705 33,469,002 8,547,802 59,687,509
======================================================================================================
34,648,442 34,648,442 62,982,691 14,755,397 112,386,531
======================================================================================================
Distribution
Cash 49% 49% 46.86% 42.07%
Stock of Unimag 51% 51% 53.14% 57.93%
======================================================================================================
Present Shares 15,615,334 11,045,000 26,660,334 26,660,334
New Shares 11,780,470 11,780,470 22,312,668 5,698,534 39,791,673
Total Shares After Purchase 15,615,334 22,825,470 38,440,804 22,312,668 5,698,534 66,452,007
Phase 1 Ownership 40.62% 59.38% 100.00%
Phase 2 Ownership 23.50% 34.35% 33.58% 8.58% 100.00%
Phase 3 Ownership 16.38% 23.95% 23.41% 5.98%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
Exhibit 2(i)
March 1, 1996
Mr. Thaddeus A. Majerek
Michiana News Services, Inc.
2232 South 11th Street
Niles, Michigan 49120
Re: Option to Acquire the Majerek Companies
Dear Tad:
This Option Agreement is made and entered into this _____ day of
March, 1996, by and between UNITED MAGAZINE COMPANY (hereinafter referred to as
"Buyer") and Thaddeus S. Majerek, Thaddeus A. Majerek (individually and as
trustee), Michael J. Majerek (individually and as trustee), Jeffrey A. Majerek,
Anita M. Majerek, Thomas E. Majerek, Jeanine E. Gilbert, Deborah A. Toman and
David W. Majerek (hereinafter collectively referred to as "Sellers" or
"Shareholders") for an option to acquire Michiana News Services, Inc., a
Michigan corporation, together with its trucking company (Toman) and re-ship
operations (hereinafter referred to as the "Company"), having wholesale
newspaper, magazine and periodicals distribution businesses with offices
located in Niles, Michigan, under the following terms and conditions:
1. For and in consideration of the sum of one hundred and no/100
dollars ($100.00), and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company hereby grant to Buyer
the option, during the term set forth in Paragraph 4 hereof (the "Term"), to
cause the Company to merge with a to-be-formed wholly-owned subsidiary of Buyer
("Sub"). Buyer may exercise its option upon written notice to the Company at
any time during the Term.
2. The consideration payable to the shareholders of the Company in the
event of the contemplated merger shall be calculated as follows:
a. an amount equal to sixty percent (60% of the net annual
wholesale sales of the Company, to be calculated as of December 31,
1995; plus or minus
b. the actual net worth of the Company (exclusive of any
intangibles), which is estimated to be a deficit of two million one
hundred two thousand five hundred seventy-eight and no/100 dollars
<PAGE> 2
($-2,102,578.00), such amount to be increased or decreased as of date
of closing pursuant to a certified financial statement to be completed
by the parties in accordance with generally accepted accounting
principles.
c. Exhibit A is attached hereto to illustrate the procedure
(but not necessarily the amounts) agreed upon in making the
calculations in paragraph 2(b), above.
3. Buyer and the Company acknowledge and agree that the estimated net
total of Paragraphs 2(a) and 2(b), above, as of the date of execution of this
Option Agreement, amounts to approximately fourteen million seven hundred
fifty-five thousand three hundred ninety-eight and no/100 dollars
(14,755,398.00), based upon the Company's PRO FORMA financial statement
attached hereto as Exhibit A. Such figure, as adjusted at closing, shall be the
total Consideration, to be payable as follows:
a. fifty-seven and ninety-three hundredths percent (57.93%) of
the Consideration shall be payable in voting common shares of the
capital stock of Buyer, to be valued for the purposes of this
transaction at one and 50/100 dollars ($1.50) per share. Sellers
understand and agree that the shares of Buyer's capital stock will be
restricted pursuant to applicable federal securities regulations;
b. forty-two and seven hundredths percent (42.07%) of the
Consideration shall be payable in immediately available funds at
closing, as hereinafter defined.
4. The term of this Option Agreement shall commence upon the written
acceptance by the Company of this proposal, and shall continue thereafter until
the earlier of (i) the termination or expiration of either of Buyer's options
to purchase the assets of Ohio Periodical Distributors, Inc., Northern News
Company and MacGregor News Agency, Inc. (collectively, the "Scherer Companies")
and to acquire The Stoll Companies ("Stoll") on terms and conditions set forth
on Exhibits B and C, respectively, hereto; (ii) the exercise of the Company's
election to terminate this option pursuant to this Paragraph 4; or (iii) August
31, 1996. In the event Buyer does not purchase the assets of Scherer Companies
and close on the merger of Stoll on the terms and conditions set forth in
Exhibits B and C hereto simultaneous with the Closing of the merger of the
Company and the Sub, then the Company may, in its sole discretion, either
proceed to close with Buyer on this transaction or refuse to do so.
Notwithstanding anything contained herein to the contrary, the Company shall
have the right to terminate this Option Agreement and Buyer's rights hereunder
on written notice to Buyer in the event Buyer has not, on or before May 31,
1996, obtained a financing commitment satisfactory to Buyer to enable Buyer to
complete the merger of the Company and the acquisition Stoll and the assets of
<PAGE> 3
Scherer Companies or if there has, since the date hereof, been a material
adverse change in the financial condition or prospects of Buyer or any of its
subsidiaries, the Sherer Companies or Stoll.
5. During the term of this option, the Company shall retain the
exclusive right to continue operating its businesses. The Company shall strive
to maintain, to the extent possible, the current balance sheet and
profitability of the Company as reported to Buyer at the execution of this
Agreement. At closing, the Company and its shareholders shall warrant to Buyer
the accuracy of its balance sheet. During the Company's continuing operations,
the parties acknowledge that the Company may find itself in competitive bid
situations with Buyer, and the parties agree that the submission of such
proposals by either party shall have no effect on the continued viability of
this Option Agreement. Further, Sellers agree that from and after the execution
of this Option Agreement, Sellers will cause the business of the Company to be
conducted in the usual and ordinary course, and will, consistent with such
operation, use all reasonable efforts to preserve the present business
organization substantially intact and to continue the present business
relationships with publishers and customers. In the event Sellers acquire Twin
City News Agency, Inc. of Lafayette, Indiana, prior to closing under the Stock
Purchase Agreement, the value of the annualized sales of the acquired agency
shall be included in the calculation of the purchase price under this option at
an amount equal to the formula set forth in paragraph 2, above.
6. Notwithstanding anything contained herein to the contrary, the
Company reserves the right to sell non-operating assets and to make
distributions to its shareholders to the extent such transactions will not
inhibit the Company from achieving as of Closing the targets set forth on its
PRO FORMA balance sheet attached hereto as Exhibit A.
7. During the term of this option, Sellers shall cooperate with Buyer
to complete Buyer's due diligence process on the Company, and further, Sellers
shall cooperate with Buyer and assist in its negotiations with lending
institutions and investment bankers as may reasonably be required by Buyer. The
parties agree that they will both participate in any presentations that may be
made to either investment banks or lending institutions. Buyer and the Company
further covenant and agree that they will work together to bring the
transaction contemplated hereunder to a successful conclusion. The Company
shall make available to Buyer, for its due diligence, all of the Company's
records, including tax and accounting records, and any other information on the
Company as may be required by Buyer. The Company acknowledges that Buyer's
decision to exercise this option is dependent upon its ability to complete a
thorough due diligence review of the Company.
8. During the Term of this Option, Buyer will cause its business and
the business of its wholly-owned subsidiaries to be conducted in the usual and
<PAGE> 4
ordinary course and will not amend, modify or otherwise supplement its option
agreements with the Scherer Companies attached hereto as Exhibit B and with
Stoll, attached hereto as Exhibit C, without the Company's prior written
consent.
9. In the event Buyer elects not to exercise the option granted
hereunder, Buyer and Sellers hereby agree, for themselves, their successors and
assigns, to release and forever discharge the other party, its successors and
assigns, from any and all debts, claims, demands, damages, actions and causes
of action whatsoever, past, present or future, which can or may ever be
asserted as a result of, or in any way arising out of, this Option Agreement
and/or the effects or consequences thereof.
10. The parties recognize that the nature of information being made
available to Buyer and its agents and employees pursuant to its due diligence
review of the Company is of such a confidential nature that the parties agree
that this information shall be kept confidential, and in the event Buyer does
not exercise its option to purchase the Company, all records and information
shall be immediately returned to Sellers.
11. The parties agree that, immediately upon Buyer's exercise of the
option provided hereunder, they shall enter into good faith negotiations of a
Merger Agreement acceptable to Buyer and the Company's shareholders which sets
forth usual and customary provisions, representations, warranties, covenants
and indemnities (and limitations thereof) of Buyer, the Company and its
shareholders, including, but not limited to, those relating to the ownership of
assets, compliance with laws, accuracy of financial statements, existence of
contracts and such other items as may be reasonably required by Buyer or the
Company and its shareholders, with all said representations, warranties,
covenants and indemnities to survive the closing, such agreement to be fully
executed within thirty (30) days after Buyer provides to the Company written
notices of its exercise of this option. The transaction is intended to qualify
as a partially tax-free reorganization with cash boot of up to 49% of the
Consideration. Performance by Sellers is contingent upon this transaction
qualifying as a tax-free exchange of the corporate stock. The transaction shall
close no later than thirty (30) days after the execution of the definitive
Merger Agreement.
12. The parties agree that the terms and conditions of any addendum
executed by the parties to amend or expand upon the terms of this option, shall
thereafter be incorporated by reference into this Option Agreement.
13. The parties agree that, upon the execution of this Option
Agreement, they will enter into a Joint Operating Agreement, in the form
attached hereto as Exhibit B, for the purposes of preserving, maintaining and
enhancing the value of the optioned companies during the term of this option.
<PAGE> 5
Please acknowledge your agreement with the terms and conditions of the
option outlined above by signing and returning to me the enclosed copy of this
Option Agreement. Buyer and Sellers agree and acknowledge that they execute
this Option Agreement intending to be legally bound.
Very truly yours,
AGREED TO AND ACCEPTED UNITED MAGAZINE COMPANY,
this _____ day of March, 1996 an Ohio corporation
_________________________ _________________________
Thaddeus A. Majerek By: Ronald E. Scherer
individually and on behalf of the Its: Chairman
Company and its shareholders
<PAGE> 6
ADDENDUM
To Option Agreement
An Addendum made this _____ day of ____________ , 1996, to an Option
Agreement for the acquisition of Michiana News Service, Inc., entered into by
and between United Magazine Company and Thaddeus S. Majerek, representing the
Majerek family interests ("Majerek"). The parties understand and agree that the
following terms and conditions will be met to the mutual satisfaction of both
parties at the time of closing.
1. Prior to or at closing on the merger, Thaddeus S. Majerek and A. Marie
Majerek shall be released from all personal liability for the debts and
obligations of Michiana News Service, Inc. ("Michiana") which they have
personally guaranteed.
2. At closing on the merger, Unimag/Michiana will enter into a supply agreement
with Hall of Cards and Books, Inc., an Indiana corporation ("HOCAB"). The terms
of the agreement will be the supply to HOCAB of wholesale magazines at
Michiana's cost, plus 10% All books to be supplied to HOCAB by Unimag/Michiana
at a 43% discount. This provision shall continue in effect for five (5) years
provided that Majerek or his children or grandchildren, or entities controlled
by them, shall have a majority interest in HOCAB or its successor(s). At the
end of five (5) years, HOCAB shall receive Unimag/Michiana's (or if applicable,
the survivor of Sub or Unimag/Michiana) best discount as calculated by
averaging the discount then given to its three largest customers.
3. HOCAB owes Michiana, in accounts and notes receivable, an amount not in
excess of $2,500,000.00. At closing on the Merger Agreement, Majerek shall pay
in full, from the proceeds, all such accounts and notes receivable in excess of
60 days, except for the sum of $1,250,000.00, which will be converted to a
cognovit note, amortized over five years at an interest rate equal to prime
plus one percent (but not to exceed a total annual rate of ten percent) with
HOCAB to make 60 equal monthly installments of principal plus interest. The
note will be secured by the stock of HOCAB and by 833,333 shares of the Unimag
stock owned by Majereks after closing. The note shall contain such operating
covenants and restrictions as are mutually satisfactory to the parties. The
entire balance of the note shall be due on sale of a majority of the assets or
stock of HOCAB to a purchaser other than the children or grandchildren of
Majerek or entities controlled by them. Unimag/Michiana will have the right of
first refusal to purchase HOCAB.
4. Real estate used by the operations of the business and known as the "Niles
building" will be leased by Unimag/Michiana for a period of three years at an
agreed upon market rental rate. Unimag/Michiana shall have an option to
purchase the Niles building, exercisable at any time during the three years.
Unimag/Michiana will have the sole right to sublease the property, but will at
all times guarantee the performance of any sublease. During the term of the
lease, Majereks shall have the right to list the building for sale and close on
a sale, provided however, that Unimag/Michiana shall have the right of first
refusal on any such sale. The Majerek real estate known as the "Ft. Wayne
building" will be purchased by Unimag/Michiana with payment in full at closing.
Each of the above buildings will be appraised by an independent national
appraiser to establish both market rent and purchase price, and the parties
shall share
<PAGE> 7
equally the cost of such appraisals.
5. At closing, Unimag/Michiana will purchase the assets and liabilities of
Toman Trucking for $1.00 and other good and valuable consideration, based upon
the following balance sheet items: Assets (to be valued at fair market value),
including customer contracts, accounts receivable of $50,000.00 and trailers
valued at $50,000.00; and liabilities, including bank debt at $55,000.00 and
trailer installment notes at $45,000.00. Unimag/Michiana will assume the leases
on the six tractors and employ Steve Toman. The above amounts are approximate.
Liabilities assumed or paid shall not exceed the value of the assets.
6. Closing on the Merger Agreement shall be subject to Unimag/Michiana entering
into three year employment agreements with Mike Gilbert, Dave Majerek and Tad
Majerek, upon terms and conditions reasonably satisfactory to the parties.
7. The above agreements shall be binding upon Unimag/Michiana, its assigns or
successors in interest.
If you agree that these items are the issues to be addressed at the time of
closing in form and substance, please so indicate by your signature, and this
document will be made a part of the Option Agreement.
/s/ Ronald E. Scherer /s/ Thaddeus A. Majerek
- ------------------------------ -------------------------------------
Ronald E. Scherer Thaddeus A. Majerek, individually and
Chairman on behalf of Michiana and its
United Magazine Company Shareholders
<PAGE> 8
Unimag
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Normalized Balance Sheet PURCHASE PHASE 1 PURCHASE PHASE 2
As of December 31, 1995 UNIMAG SCHERER ACCOUNTING TOTAL STALL MAJEREK ACCOUNTING TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current Assets
Cash 232,040 405,142 637,182 4,586,593 0 0 5,223,775
Account Receivable
Trade 6,581,522 5,455,286 12,036,808 8,402,664 2,420,591 0 22,860,063
Retail 0 1,599,022 1,599,022 0 1,183,000 0 2,782,022
Shareholder Receivable 0 0 0 0 1,921,486 0 1,921,486
Inventory 5,641,769 4,099,853 9,741,622 11,077,628 1,959,546 0 22,778,796
Other current Assets 316,075 16,116 332,191 404,342 457,111 0 1,193,644
------------------------------------------------------------------------------------------------------
Total Current Asset 12,771,406 11,575,419 24,346,825 24,471,227 7,941,734 0 56,759,786
------------------------------------------------------------------------------------------------------
Property Plant & Equipment
Land 0 590,000 590,000 97,662 0 0 687,662
Building 141,276 2,803,519 2,944,795 751,230 398,000 0 4,094,025
Display Racks 0 932,785 932,785 978,859 728,399 0 2,640,043
Furniture and Fixtures 777,339 4,765,705 5,543,044 1,153,811 645,500 0 7,342,355
Vehicles 456,861 1,604,584 2,061,445 1,045,277 285,679 0 3,392,401
Assets held for sale 0
------------------------------------------------------------------------------------------------------
Gross PP&E 1,375,476 10,696,593 12,072,069 4,026,839 2,057,578 0 18,156,485
Accumulated Depreciation 0 (3,376,479) (3,376,479) 0 0 0 (3,376,479)
------------------------------------------------------------------------------------------------------
Net 1,375,476 7,320,114 8,695,590 4,026,839 2,057,578 0 14,780,006
------------------------------------------------------------------------------------------------------
Other assets
Notes Receivable nonrelated 0 0 0 0 0 0
Other 2,950 0 2,950 260,231 3,000 0 266,181
------------------------------------------------------------------------------------------------------
2,950 0 2,950 260,231 3,000 0 266,181
------------------------------------------------------------------------------------------------------
Intangibles
Purchase Premium 34,648,442 34,648,442 77,738,090 112,386,532
O&R Records/customer list 2,183,819 0 2,183,819 251,389 560,363 0 2,995,571
Non compete 425,000 0 425,000 294,733 971,752 0 1,691,485
Consulting 0 0 0 0 218,446 0 218,446
Goodwill 8,611,331 3,000,890 1,384,432 12,996,653 889,127 1,080,388 (5,100,000) 9,866,168
------------------------------------------------------------------------------------------------------
Total Intangibles 11,220,150 3,000,890 36,032,874 50,253,914 1,435,249 2,830,949 72,638,090 127,158,202
------------------------------------------------------------------------------------------------------
Total Assets 25,369,982 21,896,422 36,032,874 83,299,278 30,193,546 12,833,261 72,638,090 198,964,175
======================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
UNIMAG
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Normalized Balance Sheet PURCHASE PHASE 1 PURCHASE PHASE 2
As of December 31, 1995 UNIMAG SCHERER ACCOUNTING TOTAL STALL MAJEREK ACCOUNTING TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current Liabilities
Short term Debt 345,575 0 345,575 1,400,000 750,000 0 2,495,575
Current Portion long term debt 362,500 0 362,500 190,262 822,000 0 1,374,762
Current Portion capital leases 0 0 0 0 0 0
Publisher Payables 12,161,026 16,032,023 28,193,049 8,882,233 4,268,422 0 41,343,704
Other payables 806,269 21,240 827,509 237,711 0 0 1,065,220
Accrued expenses (327,040) 42,166 (284,874) 364,077 122,240 0 201,443
Deferred taxes 0 223,875 223,875 2,339,312 1,022,400 0 3,585,587
458 Reserve 1,532,286 2,186,137 3,718,423 2,084,000 750,000 0 6,552,423
Related Party 0 0 0 0 1,109,859 0 1,109,859
------------------------------------------------------------------------------------------------------
Current Liabilities 14,880,616 18,505,441 33,386,057 15,497,595 8,844,921 0 57,728,573
------------------------------------------------------------------------------------------------------
Long term debt
Long-term Debt 1,652,837 4,761,142 16,977,737 23,391,716 0 3,259,969 38,091,664 64,743,349
Long term Capital leases 0 0 0 0 0 0
Dealer advance payments 40,000 0 40,000 0 0 0 40,000
Pension & Postretirement 2,880,000 2,880,000 0 0 2,880,000
Other 0 14,272 14,272 0 0 0 14,272
Related Party 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------
4,572,837 4,775,414 16,977,737 26,325,988 0 3,259,969 38,091,664 67,677,621
======================================================================================================
------------------------------------------------------------------------------------------------------
Common stock subject to Puts 3,935,461 3,935,461 0 3,935,461
------------------------------------------------------------------------------------------------------
Stockholders Equity Asset Deal
Common Stock 250 (1,384,432) 1,384,432 250 5,000,000 100,000 (5,100,000) 250
Paid in Capital 42,744,575 0 17,670,705 60,415,280 0 0 39,646,426 100,061,706
Retained earnings (40,763,757) 0 0 (40,763,757) 9,695,951 628,371 0 (30,439,436)
------------------------------------------------------------------------------------------------------
1,981,068 (1,384,432) 19,055,137 19,651,773 14,695,951 728,371 34,546,426 69,622,520
------------------------------------------------------------------------------------------------------
Total Liabilities and
Stockholders Equity 25,369,982 21,896,422 36,032,874 83,299,278 30,193,546 12,833,261 72,638,090 198,964,175
======================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
UNIMAG
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Normalized Income Statement PURCHASE PHASE 1 PURCHASE PHASE 2
As of December 31, 1995 UNIMAG SCHERER ACCOUNTING TOTAL STALL MAJEREK ACCOUNTING TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales 57,039,662 65,056,274 122,095,936 82,869,983 28,096,626 233,062,545
Cost of Sales (44,878,484) (48,612,571) (93,491,055) (61,984,576) (22,013,114) (177,488,745)
------------------------------------------------------------------------------------------------------
Gross Profit 12,161,178 16,443,703 28,604,881 20,885,407 6,083,512 55,573,799
GPM% 21.32% 25.28% 23.43% 25.20% 21.65% 23.85%
Other Operating Income 1,688,265 1,851,624 3,539,889 1,824,972 580,004 5,944,865
Employee Related Costs (8,196,084) (9,588,702) (17,784,786) (11,578,187) (2,964,215) (32,327,188)
Other SG&A (4,012,008) (3,826,281) (7,838,289) (5,817,463) (1,828,305) (15,484,057)
Other Income, net 427,920 10,391 438,311 471,857 160,111 1,070,279
------------------------------------------------------------------------------------------------------
EBITDA 2,069,271 4,890,734 6,960,005 5,786,586 2,031,107 14,777,698
Cash Interest (219,865) (122,383) (342,248) 0 (577,789) (920,037)
------------------------------------------------------------------------------------------------------
Operating Cash Flow 1,849,406 4,768,352 6,617,758 5,786,586 1,453,318 13,857,661
Non cash
Depreciation & Amort. (1,128,259) (694,614) (900,822) (2,723,695) (1,167,005) (1,011,636) (1,557,844) (6,460,180)
Put Interest (369,437) 0 (369,437) 0 0 (369,437)
Consulting in stock (294,719) 0 (294,719) 0 0 (294,719)
------------------------------------------------------------------------------------------------------
Total non cash (1,792,415) (694,614) (900,822) (3,387,851) (1,167,005) (1,011,636) (1,557,844) (7,124,336)
------------------------------------------------------------------------------------------------------
Net Income before tax 56,991 4,073,737 (900,822) 3,229,906 4,619,581 441,682 (1,557,844) 6,733,325
======================================================================================================
RETURN ON SALES 6.26% 2.65% 5.57% 1.57% 2.89%
Purchase Price
60% of sales 39,033,764 39,033,764 49,721,990 16,857,976 105,613,730
+/- tangible net worth (4,385,322) (4,385,322) 13,260,702 (2,102,578) 6,772,801
------------------------------------------------------------------------------------------------------
Total purchase price 34,648,442 34,648,442 62,982,691 14,755,397 112,386,531
======================================================================================================
Distribution
Cash 16,977,737 16,977,737 29,513,689 6,207,596 52,699,021
Stock of Unimag 17,670,705 17,670,705 33,469,002 8,547,802 59,687,509
======================================================================================================
34,648,442 34,648,442 62,982,691 14,755,397 112,386,531
======================================================================================================
Distribution
Cash 49% 49% 46.86% 42.07%
Stock of Unimag 51% 51% 53.14% 57.93%
======================================================================================================
Present Shares 15,334 11,045,000 26,660,334 26,660,334
New Shares 11,780,470 11,780,470 22,312,668 5,698,534 39,791,673
Total Shares After
Purchase 15,615,334 22,825,470 38,440,804 22,312,668 5,698,534 66,452,007
Phase 1 Ownership 40.62% 59.38% 100.00%
Phase 2 Ownership 23.50% 34.35% 33.58% 8.58% 100.00%
Phase 3 Ownership 16.38% 23.95% 23.41% 5.98%
======================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
Exhibit 2(j)
March 1, 1996
Ms. Linda Talbott (Scherer)
5131 Post Road
Dublin, Ohio 43017
Re: Option to Acquire Assets or Capital Stock Of
Ohio Periodicals Distributors, Inc. and
Northern News Company
Dear Linda:
This Option Agreement is made and entered into this _____ day of March,
1996, by and between UNITED MAGAZINE COMPANY (hereinafter referred to as
"Buyer") and Linda Talbott (Scherer), an individual residing in Dublin, Ohio
(hereinafter referred to as "Seller"), representing the owners of all the
authorized, issued and outstanding shares, voting and non-voting, of the capital
stock of Ohio Periodicals Distributors, Inc., an Ohio corporation, and Northern
News Company and its wholly-owned subsidiary, MacGregor News Agency, Inc., both
Michigan corporations (hereinafter collectively referred to as the "Company"),
for the acquisition of the assets and liabilities (or at Seller's option, all of
the authorized, issued and outstanding capital stock) of the Company, which
operated wholesale newspaper, magazine and periodicals distribution businesses
having offices in Columbus and Cincinnati, Ohio and Petoskey and Mount Pleasant
Michigan under the following terms and conditions:
1. For and in consideration of the sum of one hundred and no/100 dollars
($100.00), and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sellers hereby grant to Buyer the
option, during the term set forth in Paragraph 4 hereof (the "Term"), to acquire
all of the above referenced assets or, at Seller's option, to cause the Company
to merge with a to-be-formed wholly-owned subsidiary of Buyer ("Sub"). Buyer may
exercise its option upon written notice to the Company at any time during the
Term.
2. The consideration for the assets or capital stock shall be calculated
as follows:
a. an amount equal to sixty percent (60%) of the net annual
wholesale sales of the Companies to be calculated as of December 31,
1995; plus or minus
<PAGE> 2
b. the actual net worth of the Company (exclusive of any
intangibles) which is estimated to be a deficit of four million three
hundred eighty-five thousand three hundred twenty-two and no/100
dollars ($-4,385,322.00), such amount to be increased or decreased as
of date of closing pursuant to a certified financial statement to be
completed by the parties in accordance with generally accepted
accounting principles, as later defined in the Acquisition Agreement.
3. Buyer and Seller acknowledge and agree that the estimated net total
of Paragraph 2(a) and 2(b), above, as of the date of execution of this Option
Agreement, amounts to approximately $34,648, 442.00, based upon the Company's
PRO FORMA financial statement attached hereto as Exhibit A. Such figure, as
adjusted at closing, shall be the total Consideration to be payable as
follows:
i) fifty-one percent (51%) of the Consideration shall be payable in
voting common shares of the capital stock of Buyer, to be valued for the
purposes of this transaction at $1.50 per share. Seller understands and agrees
that the shares of Buyer's capital stock may be restricted pursuant to
applicable federal securities regulations; and
ii) forty-nine percent (49%) of the Consideration shall be payable in
immediately available funds at Closing, as hereinafter defined.
4. The term of this Option Agreement shall commence upon the written
acceptance by the Seller/Company of this proposal and shall continue thereafter
until the earlier of (i) the termination or expiration of either of Buyer's
options to acquire Michiana News Service, Inc., ("Michiana") and The Stoll
Companies ("Stoll") on the terms and conditions set forth on Exhibits B and C,
respectively, hereto; (ii) the exercise of the Seller/Company's election to
terminate this option pursuant to this Paragraph 4; or (iii) August 31, 1996. In
the event Buyer does not close on the merger of Michiana and Stoll on the terms
and conditions set forth in Exhibits B and C hereto simultaneous with the
Closing of the acquisition of the Company, then the Seller/Company may, in its
sole discretion, either proceed to close with Buyer on this transaction or
refuse to do so. Notwithstanding anything contained herein to the contrary, the
Seller/Company shall have the right to terminate this Option Agreement and
Buyer's rights hereunder on written notice to Buyer in the event Buyer has not,
on or before May 31, 1996, obtained a financing commitment, satisfactory to
Buyer, to enable Buyer to complete the acquisition of the Company and the
acquisition of Michiana and Stoll, or if there has been, since the date hereof,
a material adverse change in the financial condition or prospects of Buyer or
any of its subsidiaries, Michiana or Stoll.
<PAGE> 3
5. During the term of this Option, Seller shall retain the exclusive
right to continue operating the Company. Seller shall strive to maintain, to the
extent possible, the current balance sheet and profitability of the Company as
reported to Buyer at the execution of this Agreement. At closing, Seller shall
warrant to Buyer the accuracy of its balance sheet. During Seller's continuing
operations, the parties acknowledge that the Company may be in competitive bid
situations with Buyer, and the parties agree that the submission of such
proposals by either party shall have no effect on the continued viability of
this Option Agreement. Further, Seller/Company agree that from and after the
execution of this Option Agreement, Seller will cause the business of the
Company to be conducted in the usual and ordinary course, and will, consistent
with such operation, use all reasonable efforts to preserve the present business
organization substantially intact and to continue the present business
relationships with publishers and customers. In the event Seller acquires
another wholesale agency prior to Closing, the value of the annualized sales of
the acquired agency shall be included in the calculation of purchase price
under this Option at an amount equal to the lesser of a) Seller's cost pursuant
to its purchase contract for such agency; or b) the formula set forth in
Paragraph 2, above.
6. Notwithstanding anything contained herein to the contrary, the
Seller/Company reserves the right to sell non-operating assets and to make
distributions to its shareholders to the extend such transactions will not
inhibit the Company from achieving, as of Closing, the targets set forth on its
PRO FORMA balance sheet attached hereto as Exhibit A.
7. During the term of this Option, Seller shall cooperate with Buyer to
complete Buyer's due diligence process on the Company, and further Seller shall
cooperate with Buyer and assist in its negotiations with lending institutions
and investment bankers as may reasonably be required by Buyer. The parties agree
that they will both participate in any presentations that may be made to either
investment banks or lending institutions. Buyer and Seller further covenant and
agree that they will work together to bring the transaction contemplated
hereunder to a successful conclusion. Seller shall make freely available to
Buyer, for its due diligence, all of the Company's records, including tax and
accounting records, and any other information on the Company as may be required
by Buyer. Seller acknowledge that Buyer's decision to exercise this Option is
dependent upon its ability to complete a thorough due diligence review of the
Company.
8. During the Term of this Option, Buyer will cause its business and,
the business of its wholly-owned subsidiaries to be conducted in the usual and
ordinary course and will not amend, modify or otherwise supplement its option
agreements with Michiana, attached hereto as Exhibit B, and with Stoll,
attached hereto as Exhibit C, without the Seller's prior written consent.
<PAGE> 4
9. In the event Buyer elects not to exercise the Option granted
hereunder, Buyer and Seller hereby agree, for themselves, their successors and
assigns, to release and forever discharge the other party, its successors and
assigns, from any and all debts, claims, demands, damages. actions and causes of
action whatsoever, past, present or future, which can or may ever be asserted as
a result of, or in any way arising out of, this Option Agreement and/or the
effects or consequences thereof.
10. The parties recognize that the nature of information being made
available to Buyer and its agents and employees pursuant to its due diligence
review of the Company is of such a confidential nature that the parties agree
that this information shall be kept confidential, and in the event Buyer does
not exercise its Option to purchase the Companies, all records and information
shall be immediately returned to Seller.
11. Notwithstanding anything contained herein to the contrary, the
Company shall not be required to close any transaction with Buyer unless and
until (i) the contemplated survivor of Sub and the Company, or Buyer itself if
the transaction is structured as an asset purchase, shall have executed
employment agreements with three key executives of the Company, who shall be
designated by the Company prior to closing, for their continued employment with
the survivor of the Sub or the Company, or Buyer;, and (ii) arrangements
satisfactory to the Company have been made to assure the Company's shareholders
of representation on Buyer's Board of Directors.
12. The parties understand and agree that the terms and conditions of
this Option Agreement are subject to Buyer's receipt of a "fairness opinion"
from the appropriate regulatory body and the approval of the Board of
Directors of Buyer.
13. The parties agree that, immediately upon Buyer's exercise of the
Option provided hereunder, they shall enter into good faith negotiations of a
Acquisition Agreement acceptable to Buyer and Seller, which sets forth usual and
customary provisions, representations, warranties, covenants and indemnities
(and limitations thereof) of Buyer and Seller, including but not limited to
those relating to the ownership of assets, compliance with laws, accuracy of
financial statements, existence of contracts and such other items as may be
reasonably required by Buyer or Seller, with all said representations,
warranties, covenants and indemnities to survive the Closing, such agreement to
be fully executed within thirty (30) days after Buyer provides to Seller written
notices of its exercise of this Option. The transaction shall close no later
than thirty (30) days after the execution of the definitive Acquisition
Agreement.
<PAGE> 5
14. The parties agree that upon the execution of this Option Agreement,
they will enter into a joint operating agreement, in the form attached hereto
as Exhibit D, for the express purpose of preserving and maintaining the value of
the optioned companies during the term of this Option.
Please acknowledge your agreement with the terms and conditions of the
Option outlined above by signing and returning to me the enclosed copy of this
Option Agreement.
Very truly yours,
AGREED TO AND ACCEPTED UNITED MAGAZINE COMPANY,
this ____ day of March, 1996 an Ohio Corporation
/s/ Linda Scherer Talbott /s/ Ronald E. Scherer
- -------------------------------- --------------------------------------
Linda Talbott (Scherer), individually By: Ronald E. Scherer
and on behalf of Seller Its: Chairman
<PAGE> 1
EXHIBIT 2(K)
JOINT OPERATING AGREEMENT
THIS AGREEMENT, made and entered into as of this 3rd day of July, 1996, by and
between United Magazine Company, an Ohio corporation (hereinafter referred to
as "UNIMAG"), and The Stoll Companies, an Ohio corporation (hereinafter
referred to as "The Merging Company").
WITNESSETH:
WHEREAS, UNIMAG and The Merging Company have heretofore entered into an Option
Agreement, dated March 1, 1996, for the purchase by UNIMAG of all of the issued
and outstanding capital stock of the Merging Company; and
WHEREAS, THE PURPOSE of this agreement is to protect the agreed upon value of
The Merging Company during the option period. In order to accomplish this
purpose, the parties desire to engage in a Joint Operating Agreement to
preserve, maintain and enhance such value of The Merging Company up to and
including the time of closing.
NOW THEREFORE, for and in consideration of the mutual covenants hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed by and between the
parties hereto as follows:
ARTICLE I
BASIC STRUCTURE
1.1 FORM. The parties hereby enter into this agreement for joint operations
pursuant to the laws of the State of Ohio.
1.2 NAME. The joint business operations of the parties shall be conducted under
such names as the parties may from time to time agree.
1.3. PLACE OF BUSINESS. The principal office and place of business of the
joint operations shall be located at 5131 Post Road, Dublin, Ohio, or at such
other place as the parties may from time to time designate.
1.4. TERM. The term of this Agreement shall commence on the 3rd day of July,
1996, and shall continue thereafter until closing on the merger, as
contemplated under the option agreement or until the expiration of the option
period, whichever first occurs, unless otherwise extended by mutual agreement
of the parties hereto.
<PAGE> 2
1.5. SCOPE OF JOINT OPERATIONS. UNIMAG and The Merging Company will work
together in all areas necessary to address existing, changing and future market
conditions as if the merging company had already successfully become an
operating subsidiary of UNIMAG. It is understood that UNIMAG, through its
existing operating subsidiaries and other optioned companies, has certain
knowledge and expertise, that when shared with The Merging Company can and is
expected to preserve, maintain and enhance its value. At the same time, UNIMAG
recognizes that through the Joint Operating Agreement, The Merging Company will
share with UNIMAG certain knowledge and expertise that could assist it in the
preservation, maintenance and enhancement of the value for its operating
subsidiaries and other optioned companies. It shall therefore be the joint
responsibility of UNIMAG and the optioned company to research, evaluate, make
use of and distribute such information among the subsidiaries and optioned
companies of UNIMAG to at all times accomplish the stated purpose of this
agreement.
ARTICLE II
FINANCIAL ARRANGEMENTS
2.1. EXPENSES OF THE PARTIES. Each party shall be responsible for its own costs
and expenses incurred as a result of its participation in this agreement. In
addition, the managing party, as hereinafter defined shall have the authority
to assess The Merging Company, reasonably operating expenses under this
Agreement (anticipated to be the parties' cost(s), in amounts and proportions
to be determined by the managing party.
2.2. SHARE OF PROFITS AND LOSSES. Each party shall retain for its own account
all profits from its operations less any charges for services by UNIMAG as
determined by the managing party.
ARTICLE III
MANAGEMENT
3.1. MANAGING PARTY. The managing party of joint operations shall be UNIMAG.
UNIMAG shall oversee the operations of The Merging Company, in conjunction with
the present ownership of The Merging Company, as if The Merging Company were
already a subsidiary of UNIMAG.
All decisions made by UNIMAG with respect to the operations of The
Merging Company will be submitted to "The Merger Board" (hereinafter referred
to as TMB) for final approval prior to implementation. TMB shall consist of the
following individuals, or their designees:
Richard Stoll, Jr.
Ronald E. Scherer
2
<PAGE> 3
The managing party shall be vested with the authority to do all things
necessary and proper to carry out the responsibilities outlined above and the
overall intent of this Agreement.
ARTICLE IV
TERMINATION
4.1. TERMINATION. In the event that this agreement shall hereinafter be
terminated for any reason whatsoever, a full and general account of any assets,
liabilities, transactions and profits shall at once be taken. Such assets may be
sold and turned into cash as soon as possible and any debts or other amounts
due the joint operations collected. The proceeds thereof shall thereupon be
applied as follows:
a) To discharge any debts and liabilities associated with the joint
operations and the expenses of liquidation.
b) To pay each party or its legal representative any unpaid sums,
interest or profits to which it shall then be entitled.
c) To divide the surplus, if any, among the parties as determined by
the managing party.
ARTICLE V
MISCELLANEOUS
5.1. BOOKS AND STATEMENTS. Full and accurate books of account shall be kept at
such place as the Managing Party may from time to time designate, showing the
condition of the business and finances of joint operations; and each party
shall have access to such books of account and shall be entitled to examine
them at any time during ordinary business hours.
Each party shall be deemed to have waived all objections to any
transaction or other facts about the operation of the joint operations disclosed
in any balance sheet and/or statement of operations prepared by the Managing
Party unless it shall have notified the Managing Party within 30 days after
receipt of such statement.
5.2. TITLES AND SUBTITLES. Titles of the paragraphs and subparagraphs are
placed herein for convenient reference only and shall not to any extent have the
effect of modifying, amendment or changing the express terms and provisions of
this Joint Operating Agreement.
3
<PAGE> 4
5.3. WORDS AND GENDER OR NUMBER. As used herein, unless the context clearly
indicates the contrary, the singular number shall include the plural, the plural
the singular, and the use of any gender shall be applicable to all genders.
5.4. EXECUTION IN COUNTERPART. This Joint Operating Agreement may be executed
in any number of counterparts, each of which shall be taken to be an original.
5.5 SEVERABILITY. In the event any parts of this Agreement are found to be
void, the remaining provisions of this Agreement shall nevertheless be binding
with the same effect as though the void parts were deleted.
5.6. EFFECTIVE DATE. This Agreement shall be effective only upon execution by
all parties.
5.7. WAIVER. No waiver of any provisions of this Agreement shall be valid
unless in writing and signed by the persons or party against whom charged.
5.8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
5.9. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement shall only be settled by arbitration in accordance with the rules of
the American Arbitration Association, one Arbitrator, and shall be enforceable
in any court having competent jurisdiction.
Witness: United Magazine Company,
an Ohio corporation
/s/ Pamela Mahler /s/ Ronald E. Scherer
By: Ronald E. Scherer
Its: Chairman
The Stoll Companies,
an Ohio corporation
/s/ Richard Stoll
--------------------------------
By:
Its: Chairman
<PAGE> 1
EXHIBIT 2(l)
JOINT OPERATING AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of March, 1996, by and
between United Magazine Company, an Ohio corporation (hereinafter referred to
as "UNIMAG"), and Michiana News Services, Inc., a Michigan corporation
(hereinafter referred to as "The Merging Company").
WITNESSETH:
WHEREAS, UNIMAG and The Merging Company have heretofore entered into an Option
Agreement, dated March 1, 1996, for the purchase of UNIMAG of all of the issued
and outstanding capital stock of the Merging Company; and
WHEREAS, THE PURPOSE of this agreement is to protect the agreed upon value of
The Merging Company during the option period. In order to accomplish this
purpose,the parties desire to engage in a Joint Operating Agreement to
preserve, maintain and enhance such value of The Merging Company up to and
including the time of closing.
NOW THEREFORE, for and in consideration of the mutual covenants hereinafter
contained, and other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, it is agreed by and between the
parties hereto as follows:
ARTICLE I
BASIC STRUCTURE
1.1 FORM: The parties hereby enter into this agreement for joint operations
pursuant to the laws of the State of Ohio.
1.2 NAME: The joint business operations of the parties shall be conducted
under such names as the parties may from time to time agree.
1.3 PLACE OF BUSINESS: The principal office and place of business of the
joint operations shall be located at 5131 Post Road, Dublin, Ohio, or at such
other pace as the parties may from time to time designate.
1.4 TERM: The term of this Agreement shall be 12 months commencing on the 1st
day of March, 1996, and expiring on the first day of March, 1997 unless
otherwise extended by mutual agreement of the parties hereto or canceled upon
the earlier of successful completion of the merger transaction as contemplated
under the option agreement.
1.5 SCOPE OF JOINT OPERATIONS: UNIMAG and The Merging Company will work
together with all areas necessary to address existing, changing and future
market conditions as if the merging company had already successfully become an
operating subsidiary of UNIMAG. It is understood that UNIMAG through its
existing operating subsidiaries and other optioned companies has certain
knowledge and expertise, that when shared with The Merging Company
<PAGE> 2
can and is expected to preserve, maintain and enhance its value. At the same
time UNIMAG recognizes that through the Joint Operating Agreement, The Merging
Company will share with UNIMAG certain knowledge and expertise that could
assist it in the preservation, maintenance and enhancement of the value of its
operating subsidiaries and other optioned companies. It shall therefore be the
joint responsibility of UNIMAG and the optioned company to research, evaluate,
make use of and distribute such information among the subsidiaries and optioned
companies of UNIMAG to at all times accomplish the stated purpose of this
agreement.
ARTICLE II
FINANCIAL ARRANGEMENTS
2.1 EXPENSES OF THE PARTIES: Each party shall be responsible for its own costs
and expenses incurred as a result of its participation in this agreement. In
addition, the managing party, as hereinafter defined, shall have the authority
to assess the Merging Company, reasonable operating expenses under this
Agreement, in amounts and proportions to be determined by the managing party.
2.2 SHARE OF PROFITS AND LOSSES. Each party shall retain for its own account
all profits from its operations less any charges for services by UNIMAG as
determined by the managing party.
ARTICLE III
MANAGEMENT
3.1 MANAGING PARTY. The managing party of joint operations shall be UNIMAG.
UNIMAG shall oversee the operations of the Merging Company, in conjunction with
the present ownership of the Merging Company, as if the Merging Company were
already a subsidiary of UNIMAG.
All decisions made by UNIMAG with respect to the operations of the
Merging Company will be submitted to "The Merger Board" (hereinafter referred
to as TMB) for final approval prior to implementation. TMB consist of the
following individuals, or their designees.
Ted Majerek
Ronald E. Scherer
The managing party shall be vested with the authority to do all things
necessary and proper to carry out the responsibilities outlined above and
the overall intent of this Agreement.
ARTICLE IV
TERMINATION
4.1 TERMINATION. In the event that this agreement shall hereafter be
terminated for any reason whatsoever, a full and general account of the assets,
liabilities, transactions and profits shall at once be taken. Such assets
may be sold and turned into cash as soon as possible and
<PAGE> 3
any debts or other amounts due the joint operations collected. The proceeds
thereof shall thereupon be applied as follows:
a) To discharge any debts and liabilities associated with the joint operations
and the expenses of liquidation.
b) To pay each party or its legal representative any unpaid sums, interest or
profits to which it shall then be entitled.
c) To divide the surplus, if any, among the parties as determined by the
managing party.
A R T I C L E V
M I S C E L L A N E O U S
5.1. Books and Statements. Full and accurate books of account shall be kept at
such place as the Managing Party may from time to time designate, showing the
condition of the business and finances of joint operations; and each party
shall have access to such books of account and shall be entitled to examine
them at any time during ordinary business hours.
Each party shall be deemed to have waived all objections to any
transaction or other facts about the operation of the joint operations disclosed
in any balance sheet and/or statement of operations prepared by the Managing
Party unless it shall have notified the Managing Party within 30 days after
receipt of such statement.
5.2. Titles and Subtitles. Titles of the paragraphs and subparagraphs are
placed herein for convenient reference only and shall not to any extent have
the effect of modifying, amending or changing the express terms and provisions
of this Joint Operating Agreement.
5.3. Words and Genter or Number. As used herein, unless the context clearly
indicates the contrary, the singular number shall include the plural, the plural
the singular, and the use of any gender shall be applicable to all genders.
5.4. Execution in Counterpart. This Joint Operating Agreement may be executed
in any number of counterparts, each of which shall be taken to be an original.
5.5. Severability. In the event any parts of this Agreement are found to be
void, the remaining provisions of this Agreement shall nevertheless be binding
with the same effect as though the void parts were deleted.
5.6. Effective Date. This Agreement shall be effective only upon execution by
all parties.
5.7. Waiver. No waiver of any provisions of this Agreement shall be valid
unless in writing and signed by the persons or party against whom charged.
<PAGE> 4
5.8. Assignment. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns.
5.9. Arbitration. Any controversy or claim arising out of or relating to this
Agreement shall only be settled by arbitration in accordance with the rules of
the American Arbitration Association, one Arbitrator, and shall be enforceable
in any court having competent jurisdiction.
Witness:
(as to both)
United Magazine Company,
/s/ Sara B. Cooper an Ohio corporation
- ------------------------------
/s/ Ronald E. Scherer
/s/ Mallary Majerek -------------------------------
- ------------------------------ By: Ronald E. Scherer
Its: Chairman
Michiana News Service, Inc.,
a Michigan corporation
/s/ Tod A. Majerek
-------------------------------
By:
Its
<PAGE> 1
Exhibit 2(m)
JOINT OPERATING AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of March, 1996, by and
between United Magazine Company, an Ohio corporation (hereinafter referred to as
"UNIMAG"), and Ohio Periodicals Distributors, Inc., an Ohio corporation, and
Northern News Company, a Michigan corporation (hereinafter collectively referred
to as "The Merging Company").
WITNESSETH:
WHEREAS, UNIMAG and The Merging Company have heretofore entered into an Option
Agreement, dated March 1, 1996, for the purchase by UNIMAG of all of the issued
and outstanding capital stock of the Merging Company; and
WHEREAS, THE PURPOSE of this agreement is to protect the agreed upon value of
The Merging Company during the option period. In order to accomplish this
purpose, the parties desire to engage in a Joint Operating Agreement to
preserve, maintain and enhance such value of The Merging Company up to and
including the time of closing.
NOW THEREFORE, for and in consideration of the mutual covenants hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed by and between the
parties hereto as follows:
ARTICLE I
BASIC STRUCTURE
1.1 FORM: The parties hereby enter into this agreement for joint operations
pursuant to the laws of the State of Ohio.
1.2 NAME: The joint business operations of the parties shall be conducted under
such names as the parties may from time to time agree.
1.3 PLACE OF BUSINESS: The principal office and place of business of the joint
operations shall be located at 5131 Post Road, Dublin, Ohio, or at such other
place as the parties may from time to time designate.
1.4 TERM: The term of this Agreement shall be 12 months commencing on the 1st
day of March, 1996, and expiring on the first day of March, 1997 unless
otherwise extended by mutual agreement of the parties hereto or canceled upon
the earlier of successful completion of the merger transaction as contemplated
under the option agreement.
<PAGE> 2
1.5 SCOPE OF JOINT OPERATIONS: UNIMAG and The Merging Company will work together
in all areas necessary to address existing, changing and future market
conditions as if the merging company had already successfully become an
operating subsidiary of UNIMAG. It is understood that UNIMAG through its
existing operating subsidiaries and other optioned companies has certain
knowledge and expertise, that when shared with The Merging Company can and is
expected to preserve, maintain and enhance its value. At the same time UNIMAG
recognizes that through the Joint Operating Agreement, The Merging Company will
share with UNIMAG certain knowledge and expertise that could assist it in the
preservation, maintenance and enhancement of the value for its operating
subsidiaries and other optioned companies. It shall therefore be the joint
responsibility of UNIMAG and the optioned company to research, evaluate, make
use of and distribute such information among the subsidiaries and optioned
companies of UNIMAG to at all times accomplish the stated purpose of this
agreement.
ARTICLE II
FINANCIAL ARRANGEMENTS
2.1 EXPENSES OF THE PARTIES: Each party shall be responsible for its own costs
and expenses incurred as a result of its participation in this agreement. In
addition, the managing party, as hereinafter defined, shall have the authority
to assess the Merging Company, reasonable operating expenses under this
Agreement, in amounts and proportions to be determined by the managing party.
2.2 SHARE OF PROFITS AND LOSSES. Each party shall retain for its own account all
profits from its operations less any charges for services by UNIMAG as
determined by the managing party.
ARTICLE III
MANAGEMENT
3.1 MANAGING PARTY. The managing party of joint operations shall be UNIMAG.
UNIMAG shall oversee the operations of the Merging Company, in conjunction with
the present ownership of the Merging Company, as if the Merging Company were
already a subsidiary of UNIMAG.
All decisions made by UNIMAG with respect to the operations of the Merging
Company will be submitted to "The Merger Board" (hereinafter referred to as TMB)
for final approval prior to implementation. TMB shall consist of the following
individuals, or their designees:
David B. Thompson
Ronald E. Scherer
<PAGE> 3
The managing party shall be vested with the authority to do all things necessary
and proper to carry out the responsibilities outlined above and the overall
intent of this Agreement.
ARTICLE IV
TERMINATI0N
4.1 TERMINATION: In the event that this agreement shall hereafter be terminated
for any reason whatsoever, a full and general account of any assets,
liabilities, transactions and profits shall at once be taken. Such assets may be
sold and turned into cash as soon as possible and any debts or other amounts due
the joint operations collected. The proceeds thereof shall thereupon be applied
as follows:
a) To discharge any debts and liabilities associated with the joint operations
and the expenses of liquidation.
b) To pay each party or its legal representative any unpaid sums, interest or
profits to which it shall then be entitled.
c) To divide the surplus, if any, among the parties as determined by the
Managing party.
ARTICLE V
MISCELLANEOUS
5.1. Books and Statements. Full and accurate books of account shall be kept at
such place as the Managing Party may from time to time designate, showing the
condition of the business and finances of joint operations; and each party shall
have access to such books of account and shall be entitled to examine them at
any time during ordinary business hours.
Each party shall be deemed to have waived all objections to any transaction
or other facts about the operation of the joint operations disclosed in any
balance sheet and/or statement of operations prepared by the Managing Party
unless it shall have notified the Managing Party within 30 days after receipt of
such statement.
5.2. Titles and Subtitles. Titles of the paragraphs and subparagraphs are placed
herein for convenient reference only and shall not to any extent have the effect
of modifying, amending or changing the express terms and provisions of this
Joint Operating Agreement.
5.3. Words and Gender or Number. As used herein, unless the context clearly
indicates the contrary, the singular number shall include the plural, the plural
the singular, and the use of any gender shall be applicable to all genders.
<PAGE> 4
5.4 Execution in Counterpart. This Joint Operating Agreement may be executed in
any number of counterparts, each of which shall be taken to be an original.
5.5. Severability. In the event any parts of this Agreement are found to be
void, the remaining provisions of this Agreement shall nevertheless be binding
with the same effect as though the void parts were deleted.
5.6. Effective Date. This Agreement shall be effective only upon execution by
all parties.
5.7. Waiver. No waiver of any provisions of this Agreement shall be valid unless
in writing and signed by the persons or party against whom charged.
5.8. Assignment. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns.
5.9. Arbitration. Any controversy or claim arising out of or relating to this
Agreement shall only be settled by arbitration in accordance with the rules of
the American Arbitration Association, one Arbitrator, and shall be enforceable
in any court having competent jurisdiction.
Witness:
(as to both)
United Magazine Company,
an Ohio corporation
/s/ David B. Thompson /s/ Ronald E. Scherer
- -------------------------------- -----------------------------
By: Ronald E. Scherer
Its: Chairman
- --------------------------------
/s/ Linda Scherer Talbott
-------------------------------
By: Linda Talbott (Scherer),
on behalf of the Shareholders of:
Ohio Periodicals Distributors, Inc.,
an Ohio corporation, and
Northern News Company,
a Michigan corporation
<PAGE> 1
Exhibit 2(n)
DOCUMENT ESCROW AGREEMENT
Michiana News Service, Inc.
---------------------------
This agreement is made and entered into as of October 21, 1996, among
United Magazine Company, an Ohio corporation ("UNIMAG"), Michiana News Service,
Inc., a Michigan corporation ("MICHIANA"), all of Michiana's shareholders
(individually, a "MICHIANA SHAREHOLDER" and collectively, the "MICHIANA
SHAREHOLDERS"), and Baker & Hostetler ("ESCROW AGENT").
BACKGROUND INFORMATION
----------------------
A. Unimag, Michiana, and the Michiana Shareholders are parties to a
Stock Transfer and Exchange Agreement (the "EXCHANGE AGREEMENT") dated July 30,
1996, and certain other documents executed in connection with the transactions
contemplated by the Exchange Agreement (the "ADDITIONAL DOCUMENTS").
B. Unimag, Michiana, and the Michiana Shareholders desire to consummate
the Exchange (defined in the Exchange Agreement) and the other transactions
contemplated by the Exchange Agreement upon the satisfaction of certain
conditions (as described in Section 6.5 of the Exchange Agreement and as also
described more fully in this agreement).
C. Unimag, Michiana, and the Michiana Shareholders desire to deposit
the Additional Documents into escrow with the Escrow Agent, to be held by the
Escrow Agent upon the terms and subject to the conditions of this agreement. Any
and all agreements, instruments, and other documents delivered to Escrow Agent
to be held by it pursuant to the terms and subject to the conditions of this
agreement are sometimes referred to hereinafter, collectively, as the "CLOSING
DOCUMENTS".
D. Escrow Agent is willing to serve as the escrow agent upon the terms
and subject to the conditions of this agreement.
STATEMENT OF AGREEMENT
----------------------
The parties to this Agreement (each a "PARTY," and collectively, the
"PARTIES") hereby acknowledge the accuracy of the above Background Information
and, in consideration of the mutual covenants and agreements set forth in this
agreement, the Parties agree as follows:
Section 1. Unless otherwise defined in this agreement, all capitalized
words and phrases in this agreement shall have the same meanings as set forth in
the Exchange Agreement.
- 1 -
<PAGE> 2
Section 2. Unimag, Michiana, and/or the Michiana Shareholders have
executed and/or delivered to Escrow Agent and Escrow Agent hereby acknowledges
receipt of the agreements and documents described on Exhibit A.
Section 3. Unimag has executed and/or delivered to Escrow Agent and
Escrow Agent hereby acknowledges receipt of the documents and instruments
described on Exhibit B.
Section 4. Michiana has executed and/or delivered to Escrow Agent and
Escrow Agent hereby acknowledges receipt of the documents and instruments
described on Exhibit C.
Section 5. The Michiana Shareholders have executed and/or delivered to
Escrow Agent and Escrow Agent hereby acknowledges receipt of the documents and
instruments described on Exhibit D.
Section 6. Unimag, Michiana, and/or the Michiana Shareholders, as the
case may be, may hereafter deliver to Escrow Agent various other agreements,
instruments, and other documents to be held upon the terms and subject to the
conditions of this agreement. Upon delivery of such items to Escrow Agent, they
shall become Closing Documents under this agreement.
Section 7. Promptly following the Escrow Closing and the escrow
closings for the other acquisitions, the Escrow Agent shall take all necessary
action to file or record the documents listed as item 1 of Exhibit B and item 2
of Exhibit C in such offices as may be required to properly perfect in favor of
the trustee under the Debenture Agreement the security interests granted by item
1 of Exhibit B and item 1 of Exhibit C.
Section 8. Unless Unimag, Michiana, and the Michiana Shareholders all
otherwise agree and collectively instruct Escrow Agent in writing accordingly,
the delivery of the Closing Documents out of escrow shall be subject to the
fulfillment of the following conditions:
(a) Unimag shall have consummated the escrow closings of the
Stoll Acquisition, all of the Scherer Companies Acquisitions (except
for Northern), and the acquisition of The George R. Klein News Co.,
Central News Co., and Newspaper Sales, Inc. (collectively, the "KLEIN
COMPANIES"). Such escrow closings shall have been completed no later
than November 15, 1996, and shall be upon terms and conditions
substantially similar to the Escrow Closing under the Exchange
Agreement and this agreement (hereinafter referred to as this "ESCROW
CLOSING"). Unimag and Michiana hereby acknowledge that the escrow
closing for Northern has been completed prior to this Escrow Closing
and that such escrow closing was upon terms and conditions
substantially similar to this Escrow Closing. This condition shall be
satisfied by delivery to Escrow Agent of certificates executed by
Unimag and by Stoll, by each of Ohio Periodical Distributors, Inc., The
Scherer Companies, Wholesalers Leasing Corp., and Read-mor Book Stores,
Inc. (collectively, the "SCHERER COMPANIES"), and by each of the Klein
Companies, respectively (for the Stoll Acquisition, each of the
respective Scherer Companies Acquisitions (except for Northern), and
each of the respective Klein Companies acquisitions), in the form
attached hereto as Exhibit E, certifying that the escrow closing for
the Stoll Acquisition, each of the respective Scherer Companies
- 2 -
<PAGE> 3
Acquisitions (except for Northern), and each of the respective Klein
Companies acquisitions has been completed, the date completed, and that
such escrow closing was upon terms and conditions substantially similar
to this Escrow Closing. Each certificate shall also be executed by
Michiana for the purpose of evidencing Michiana's acknowledgement and
agreement to the certifications set forth in that certificate.
(b) The Exchange, the Stoll Acquisition, the Scherer Companies
Acquisitions (except for the acquisition of Read-mor Book Stores,
Inc.), and each of the respective Klein Companies acquisitions shall
have been approved by the affirmative vote of the shareholders of
Unimag entitled to exercise voting power over at least a majority of
the outstanding common shares, without par value, of Unimag. This
condition shall be satisfied by delivery to Escrow Agent of a
certificate executed by the inspector of elections for this
shareholders' meeting, in the form attached hereto as Exhibit F,
certifying that the Exchange, the Stoll Acquisition, the Scherer
Companies Acquisitions (except for the acquisition of Read-mor Book
Stores, Inc.), and each of the respective Klein Companies acquisitions
were approved by the affirmative vote of shareholders entitled to
exercise voting power over at least a majority of the outstanding
common shares of Unimag.
(c) A 1 for 10 reverse stock split of the outstanding common
shares, without par value, of Unimag shall have been effected. This
condition shall be satisfied by delivery to Escrow Agent of a
certificate from the Ohio Secretary of State certifying the
effectiveness of an amendment to Unimag's articles of incorporation,
which has a provision providing for such reverse stock split.
Section 9. Upon the satisfaction of the conditions set forth in Section
8 by Escrow Agent's receipt of all of the certificates described in Section 8,
the Parties will attend the Closing (as contemplated by the Exchange Agreement)
and Escrow Agent will distribute (a) the Debenture Agreement counterpart
signature pages list on Exhibit A and the Shareholder Voting Agreement
counterpart signature pages listed as item 1 on Exhibit D to the trustee under
the Debenture Agreement with instructions to distribute fully executed copies of
the Debenture Agreement and the Shareholder Voting Agreement (once all of the
closings have been completed) to (i) Thaddeus A. Majerek (who shall represent
Michiana and its shareholders for purposes of receipt of such documents), (ii)
Richard Stoll, Jr. (who shall represent Stoll and its shareholders for purposes
of receipt of such documents), (iii) Ronald E. Scherer (who shall represent the
Scherer Companies and their shareholders for purposes of receipt of such
documents), and (iv) George R. Klein (who shall represent the Klein Companies
and their shareholders for purposes of receipt of such documents); (b) the
documents listed as item 1 of Exhibit B and items 1 and 2 of Exhibit C to the
trustee under the Debenture Agreement; (c) the remaining documents listed in
Exhibit B to Thaddeus A. Majerek (who shall represent Michiana and all of the
Michiana Shareholders for purposes of receipt of such documents); (d) the
remaining documents listed in Exhibit C to an officer of Unimag; and (e) the
certificates (and stock powers) for the Michiana Shares and HOCAB Shares listed
on Exhibit D to an officer of Unimag. If instructed to do so by a Party entitled
to receive documents, the Escrow Agent may deliver such documents to another
person or entity. Unimag, Michiana, and the Michiana Shareholders hereby
acknowledge that the closings for the Stoll Acquisition, the remaining Scherer
Companies Acquisitions, and the Klein Companies acquisitions will be held
shortly after the Closing.
- 3 -
<PAGE> 4
Section 10. If all of the conditions set forth in Section 8 have not
been satisfied by December 31, 1996, or such later date as Unimag and Michiana
may agree to and so instruct Escrow Agent in writing, provided that they also
obtain the written consent of 1st Source Bank to such later date, then Escrow
Agent shall (a) destroy the Closing Documents described in Exhibit A, (b) return
the Closing Documents described in Exhibit B to Unimag, except for items 2, 3,
4, 11, 12, and 16, all of which the Escrow Agent shall destroy, (c) return the
Closing Documents described in Exhibit C to Michiana, except for items 9, 12,
13, and 16, all of which Escrow Agent shall destroy, and (d) return the Closing
Documents described in Exhibit D to the Michiana Shareholders (via Thaddeus A.
Majerek as their attorney-in-fact), except for the Voting Agreement, which the
Escrow Agent shall destroy; and all of the Closing Documents shall be deemed
void and of no further force and effect. Notwithstanding the foregoing, the
Exchange Agreement shall be deemed terminated and each of Unimag, Michiana, and
the Michiana Shareholders shall remain responsible for its or their costs and
expenses associated with the transactions contemplated by the Exchange Agreement
in accordance with the provisions of Section 9.10 of the Exchange Agreement.
Section 11. In the event of any dispute between or among any of the
Parties relating to distribution of the Closing Documents by Escrow Agent or any
other matter, Escrow Agent may submit the matter to any court of competent
jurisdiction in an interpleader or similar action. Any and all costs incurred by
Escrow Agent in connection therewith, including reasonable attorneys' fees and
costs, shall be shared equally by Unimag and the Michiana Shareholders. Escrow
Agent shall perform any acts ordered by any court of competent jurisdiction
without any liability or obligation to any other Party by reason of such act.
Section 12. Escrow Agent shall have no liability to any other Party, or
such Party's successor or assigns, or to any person or entity claiming under or
in the right of any other Party, based upon or on account of any action taken or
omitted by Escrow Agent, unless such action or omission shall have been the
result of Escrow Agent's gross negligence or intentional misconduct.
Notwithstanding the foregoing to the contrary, in no event shall the Escrow
Agent be liable to any party for acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram, facsimile transmission or other
paper or document believed by Escrow Agent to be genuine and correct and to have
been signed or sent by the proper person or persons. Unimag, Michiana, and the
Michiana Shareholders shall, jointly and severally, hold harmless and indemnify
Escrow Agent from and against any and all losses, liabilities, damages, claims,
suits, actions, costs, and expenses (including attorneys' fees) which may be
asserted against or incurred by Escrow Agent as a result of it serving as escrow
agent under this agreement.
Section 13. Instructions to Escrow Agent shall be addressed to:
Baker & Hostetler
65 East State Street, Suite 2100
Columbus, Ohio 43215
Attention: Boyd Moehring, Esq.
and shall be deemed to have been delivered to the Escrow Agent when delivered
personally, by facsimile (which is confirmed), mailed by registered or certified
mail (return receipt requested),
- 4 -
<PAGE> 5
or delivered to Federal Express, United Parcel Service, or any other nationally
recognized express delivery service.
Section 14. The Parties hereby: (a) designate the Court of Common Pleas
of Franklin County, Ohio, as a court of proper jurisdiction and venue for any
actions or proceedings relating to this agreement; (b) irrevocably consent to
such designation, jurisdiction and venue; and (c) waive any objections or
defenses relating to jurisdiction or venue with respect to any action or
proceedings initiated in the Court of Common Pleas of Franklin County, Ohio.
Section 15. The rights and obligations of the Parties under this
agreement shall be construed and resolved in accordance with the laws of the
State of Ohio, exclusive of conflict of laws principles. This agreement shall be
binding upon, inure to the benefit of, and be enforceable by and against the
respective successors and permitted assigns of the Parties. This agreement may
be executed in one or more separate counterparts, which, when read together,
shall be as fully-effective as a single, executed counterpart and all of which
shall constitute one and the same document.
Section 16. If the Escrow Agent receives a written notice from any of
the Parties of a dispute as to completion of any of the conditions set forth in
Section 8, and such notice is received prior to the distributions from escrow
set forth in Section 9, then Escrow Agent shall, until such dispute is resolved,
either submit the documents held in escrow to another law firm selected by it to
act as successor escrow agent, or deposit such documents with a court of
competent jurisdiction or continue to retain the documents and act as Escrow
Agent. In the event of such dispute, the escrow documents shall be held by the
Escrow Agent or its successor or the court until otherwise directed in writing
by agreement of the parties or otherwise directed by a court of competent
jurisdiction. In any such event, the parties agree that Baker & Hostetler may
continue to represent Unimag in any matter, including any dispute under this
agreement, and the parties hereby waive any conflict of interest of Baker &
Hostetler in that regard.
UNITED MAGAZINE COMPANY
By /s/ Ronald E. Scherer
--------------------------------
Ronald E. Scherer, Chairman
MICHIANA NEWS SERVICE, INC.
By /s/ Thaddeus A. Majerek
--------------------------------
Thaddeus A. Majerek, President
[Signatures continued on the following page.]
- 5 -
<PAGE> 6
THE MICHIANA SHAREHOLDERS:
/s/ Thaddeus S. Majerek
-------------------------------------------
THADDEUS S. MAJEREK, Trustee under
a Self-Declaration Trust dated July 6, 1990
/s/ Thaddeus S. Majerek
-------------------------------------------
THADDEUS A. MAJEREK, Trustee under
an Irrevocable Family Trust Agreement with
Thaddeus S. Majerek, dated January 22,
1986
/s/ Michael J. Majerek
-------------------------------------------
MICHAEL J. MAJEREK, Trustee under an
Irrevocable Family Trust Agreement with
Thaddeus S. Majerek, dated January 22,
1986
BAKER & HOSTETLER
By /s/ Robert K. Rupp
-------------------------------------------
Robert K. Rupp, Partner
- 6 -
<PAGE> 7
EXHIBIT A
DOCUMENTS DELIVERED BY UNIMAG, MICHIANA,
AND/OR THE MICHIANA SHAREHOLDERS
1. Debenture Agreement dated as of October 9, 1996, among Unimag, the
Michiana Shareholders, and certain other parties. (Includes counterpart
signature pages for only Unimag and the Michiana Shareholders. The
remaining counterpart signature pages will be provided in connection
with the other Escrow Closings.)
<PAGE> 8
EXHIBIT B
DOCUMENTS DELIVERED BY UNIMAG
1. Two Mortgages executed by Unimag, as mortgagor. (Counterpart signature
page of Trustee to be delivered to Escrow Agent in connection with the
other Escrow Closings.)
2. Employment Agreements with Michael Gilbert, David W. Majerek, and
Thaddeus A. Majerek.
3. Agreement not to compete of Thaddeus S. Majerek.
4. Real Estate Purchase Agreement dated October 21, 1996, between A. Marie
Majerek and Unimag for the Fort Wayne facility.
5. Certified articles of incorporation of Unimag.
6. Good standing certificate of Unimag.
7. Certified code of regulations of Unimag.
8. Incumbency certificate of Unimag.
9. Certificate of president of Unimag.
10. Certified board of directors resolutions.
11. Supply Agreement dated October 21, 1996, between Unimag and HOCAB.
12. Asset Purchase Agreement dated October 21, 1996, between Toman Trucking
and Unimag. (Schedules to be revised by parties as provided in the
Agreement.)
13. Letters from shareholders of Unimag entitled to vote more than 50% of
Unimag common shares indicating they will vote in favor of the
Exchange.
14. Letter or copy of federal register notice from Federal Trade Commission
terminating HSR Act waiting period for the acquisition of Ohio
Periodical Distributors, Inc.
15. Letter of Arthur Andersen LLP with respect to tax effect on Unimag of
the Section 351 exchange.
16. Opinion letter of Baker & Hostetler.
17. Irrevocable instruction letter to Unimag's transfer agent for the
issuance of Unimag Shares to the Michiana Shareholders as required by
the Exchange.
<PAGE> 9
18. Nine Senior Debentures to be issued to the Michiana Shareholders (or
their designee) under the Debenture Agreement.
19. Nine Subordinated Debentures to be issued to the Michiana Shareholders
(or their designee) under the Debenture Agreement.
20. Resolutions of Unimag as the sole shareholder of Michiana electing new
directors and officers of Michiana (to be effective at the Closing).
<PAGE> 10
EXHIBIT C
DOCUMENTS DELIVERED BY MICHIANA
1. Two Security Agreements between Michiana and the Trustee granting to
the Trustee (for the benefit of the Debenture Holders) a security
interest in all tangible personal property of Michiana. [Includes
counterpart signature page for Michiana only. Signature page of Trustee
to be delivered to Escrow Agent in connection with the other Escrow
Closings.]
2. Six UCC-1 financing statements executed by Michiana, as debtor. (Name
of Trustee, as secured party, and execution by Trustee, to be provided
to Escrow Agent in connection with the other Escrow Closings.)
3. Certified articles of incorporation of Michiana.
4. Good standing certificate of Michiana.
5. Certified By-laws of Michiana.
6. Incumbency certificate of Michiana.
7. Certificate of president of Michiana.
8. Written actions of board of directors and shareholders.
9. Lease Agreement dated October 21, 1996, between A. Marie Majerek and
Michiana.
10. Letter from 1st Source Bank dated July 29, 1996, consenting to Michiana
entering into the Exchange Agreement.
11. Agreement of 1st Source Bank dated July 30, 1996, to release its
security interest in certain Michiana shares.
12. HOCAB Note dated October 21, 1996.
13. Stock Pledge Agreement dated October 21, 1996, among HOCAB, certain of
its shareholders, certain specified Michiana Shareholders, and Unimag
(Exhibit B to be added at Closing).
14. Agreement dated August 28, 1996, to terminate Stock Restriction
Agreement and Stock Redemption Agreement.
15. Agreement dated August 28, 1996, to terminate Retirement Income
Agreement.
16. Assignment of Executive Bonus Agreement of David A. Berkenes.
<PAGE> 11
17. Amendment to Bonus Income Agreement of Tim Knoblauch.
18. Opinion letter of Sperry & Bowman.
19. Resignations of all of the members of Michiana's board of directors and
all of Michiana's officers (to be effective as of the Closing).
20. Michiana's minute books and other corporate records.
<PAGE> 12
EXHIBIT D
DOCUMENTS DELIVERED BY THE MICHIANA SHAREHOLDERS
1. Shareholder Voting Agreement dated October 9, 1996, among the Michiana
Shareholders and certain other parties (includes counterpart signature
pages for only the Michiana Shareholders).
2. All of the certificates for the Michiana Shares endorsed for transfer
to Unimag.
3. All of the certificates (and blank stock powers) for the HOCAB Shares
to be pledged under the Stock Pledge Agreement.
<PAGE> 13
EXHIBIT E
CERTIFICATE OF ESCROW CLOSING
[INSERT NAME OF COMPANY]
The undersigned hereby certify, on behalf of [insert name of Company],
and United Magazine Company, an Ohio corporation ("UNIMAG"), respectively, to
Baker & Hostetler, which is the escrow agent under a certain document escrow
agreement dated October ___, 1996 (the "MICHIANA DOCUMENT ESCROW AGREEMENT"),
among Unimag, Michiana News Service, Inc. ("MICHIANA"), all of Michiana's
shareholders, and Baker & Hostetler, as follows:
1. The escrow closing (the "_________ Escrow Closing")
contemplated by [insert description of appropriate acquisition
agreement] was completed on [insert date];
2. The _________ Escrow Closing was completed upon terms and
conditions substantially similar to the escrow closing
provided for in the Michiana Document Escrow Agreement.
[INSERT NAME OF
COMPANY]
Date: October ___, 1996 By__________________________________
Print Name________________________
Its__________________________________
UNITED MAGAZINE COMPANY
Date: October ___, 1996 By__________________________________
Print Name________________________
Its__________________________________
[Acknowledgement on the following page.]
<PAGE> 14
ACKNOWLEDGEMENT
The undersigned hereby acknowledges and agrees, on behalf of Michiana,
that the certifications set forth in this certificate satisfy the requirements
of Section 7(a) of the Michiana Document Escrow Agreement.
MICHIANA NEWS SERVICE, INC.
Date: October ___, 1996 By__________________________________
Print Name________________________
Its__________________________________
<PAGE> 15
EXHIBIT F
CERTIFICATE OF INSPECTOR OF ELECTIONS
The undersigned, as the inspector of elections for the annual meeting
of shareholders of United Magazine Company, an Ohio corporation ("UNIMAG"), held
on ______________, 1996, hereby certifies to Baker & Hostetler that the
acquisitions described below have been approved by the affirmative vote of
shareholders entitled to exercise voting power over at least a majority of the
outstanding common shares of Unimag:
1. The Stock Transfer and Exchange Agreement among Unimag,
Michiana News Service, Inc. ("MICHIANA"), and all of its
shareholders and the acquisition of the stock of Michiana in
accordance with the terms of such exchange agreement;
2. The Stock Transfer and Exchange Agreement among Unimag, The
Stoll Companies ("STOLL"), and all of its shareholders and the
acquisition of the stock of Stoll in accordance with the terms
of such exchange agreement;
3. The Asset Transfer and Exchange Agreement between Unimag and
Northern News Company ("NORTHERN") and the acquisition of
certain assets and liabilities of Northern in accordance with
the terms of such exchange agreement;
4. The Asset Transfer and Exchange Agreement between Unimag and
Ohio Periodical Distributors, Inc. ("OPD"), and the
acquisition of certain assets and liabilities of OPD in
accordance with the terms of such exchange agreement;
5. The Stock transfer and Exchange Agreement among Unimag, The
Scherer Companies ("SCHERER"), and all of its shareholders and
the acquisition of the stock of Scherer in accordance with the
terms of such exchange agreement; and
6. The Asset Transfer and Exchange Agreement between Unimag and
Wholesalers Leasing Corp. ("WHOLESALERS") and the acquisition
of certain assets of Wholesalers in accordance with the terms
of such exchange agreement.
7. The Stock Transfer and Exchange Agreement among Unimag, The
George R. Klein News Co., Central News Co., Newspaper Sales,
Inc. (collectively, the "KLEIN COMPANIES"), and all of their
shareholders and the acquisition of the stock of the Klein
Companies in accordance with the terms of such exchange
agreement.
Date: _____________, 1996 ____________________________________
_________________, Inspector of Elections
<PAGE> 1
Exhibit 2(o)
DOCUMENT ESCROW AGREEMENT
The Stoll Companies
-------------------
This agreement is made and entered into October 24, 1996, among United
Magazine Company, an Ohio corporation ("UNIMAG"), The Stoll Companies, an Ohio
corporation ("STOLL"), all of Stoll's shareholders (individually, a "STOLL
SHAREHOLDER" and collectively, the "STOLL SHAREHOLDERS"), and Baker & Hostetler
("ESCROW AGENT").
BACKGROUND INFORMATION
A. Unimag, Stoll, and the Stoll Shareholders are parties to a Stock
Transfer and Exchange Agreement (the "EXCHANGE AGREEMENT") effective July 31,
1996, and certain other documents executed in connection with the transactions
contemplated by the Exchange Agreement (the "ADDITIONAL DOCUMENTS").
B. Unimag, Stoll, and the Stoll Shareholders desire to consummate the
Exchange (defined in the Exchange Agreement) and the other transactions
contemplated by the Exchange Agreement upon the satisfaction of certain
conditions (as described in Section 6.5 of the Exchange Agreement and as also
described more fully in this agreement).
C. Unimag, Stoll, and the Stoll Shareholders desire to deposit the
Additional Documents into escrow with the Escrow Agent, to be held by the Escrow
Agent upon the terms and subject to the conditions of this agreement. Any and
all agreements, instruments, and other documents delivered to Escrow Agent to be
held by it pursuant to the terms and subject to the conditions of this agreement
are sometimes referred to hereinafter, collectively, as the "CLOSING DOCUMENTS".
D. Escrow Agent is willing to serve as the escrow agent upon the terms
and subject to the conditions of this agreement.
STATEMENT OF AGREEMENT
----------------------
The parties to this Agreement (each a "PARTY," and collectively, the
"PARTIES") hereby acknowledge the accuracy of the above Background Information
and, in consideration of the mutual covenants and agreements set forth in this
agreement, the Parties agree as follows:
Section 1. Unless otherwise defined in this agreement, all capitalized
words and phrases in this agreement shall have the same meanings as set forth in
the Exchange Agreement.
- 1 -
<PAGE> 2
Section 2. Unimag, Stoll, and/or the Stoll Shareholders have executed
and/or delivered to Escrow Agent and Escrow Agent hereby acknowledges receipt of
the agreements and documents described on Exhibit A.
Section 3. Unimag has executed and/or delivered to Escrow Agent and
Escrow Agent hereby acknowledges receipt of the documents and instruments
described on Exhibit B.
Section 4. Stoll has executed and/or delivered to Escrow Agent and
Escrow Agent hereby acknowledges receipt of the documents and instruments
described on Exhibit C.
Section 5. The Stoll Shareholders have executed and/or delivered to
Escrow Agent and Escrow Agent hereby acknowledges receipt of the documents and
instruments described on Exhibit D.
Section 6. Unimag, Stoll, and/or the Stoll Shareholders, as the case
may be, may hereafter deliver to Escrow Agent various other agreements,
instruments, and other documents to be held upon the terms and subject to the
conditions of this agreement. Upon delivery of such items to Escrow Agent, they
shall become Closing Documents under this agreement.
Section 7. Promptly following the Escrow Closing, the Escrow Agent
shall take all necessary action to file or record the documents listed as item 2
of Exhibit B and as items 2 and 3 of Exhibit C in such offices as may be
required to properly perfect in favor of the Trustee the liens granted by item 1
of Exhibit B and items 1 and 3 of Exhibit C.
Section 8. Unless Unimag, Stoll, and the Stoll Shareholders all
otherwise agree and collectively instruct Escrow Agent in writing accordingly,
the delivery of the Closing Documents out of escrow shall be subject to the
fulfillment of the following conditions:
(a) Unimag shall have consummated the escrow closings of all
of the Scherer Companies Acquisitions and the acquisition of The George
R. Klein News Co., Central News Co., and Newspaper Sales, Inc.
(collectively, the "KLEIN COMPANIES"). Unimag, Stoll, and the Stoll
Shareholders hereby acknowledge that the escrow closings for Northern
and Michiana have been completed prior to the Escrow Closing under the
Exchange Agreement and this agreement (hereinafter referred to as this
"ESCROW CLOSING") and that such escrow closings were upon terms and
conditions substantially similar to this Escrow Closing. This condition
shall be satisfied by delivery to Escrow Agent of certificates executed
by Unimag and each of Ohio Periodical Distributors, Inc., The Scherer
Companies, Wholesalers Leasing Corp., and Read-mor Book Stores, Inc.
(collectively, the "SCHERER COMPANIES") (for each of the respective
Scherer Companies Acquisitions), and by Unimag and each of the Klein
Companies, in the form attached hereto as Exhibit E, certifying that
the escrow closing for each of the respective Scherer Companies
Acquisitions and for each of the respective Klein Companies
acquisitions has been completed, the date completed, and that such
escrow closing was upon terms and conditions substantially similar to
this Escrow Closing. Each certificate shall also be
- 2 -
<PAGE> 3
executed by Stoll for the purpose of evidencing Stoll's acknowledgement
and agreement to the certifications set forth in that certificate.
(b) The Exchange, the Michiana Acquisition, the Scherer
Companies Acquisitions (except for the acquisition of Read-mor Book
Stores, Inc.), and the Klein Companies acquisitions shall have been
approved by the affirmative vote of the shareholders of Unimag entitled
to exercise voting power over at least a majority of the outstanding
common shares, without par value, of Unimag. This condition shall be
satisfied by delivery to Escrow Agent of a certificate executed by the
inspector of elections for this shareholders' meeting, in the form
attached hereto as Exhibit F, certifying that the Exchange, the
Michiana Acquisition, the Scherer Companies Acquisitions (except for
the acquisition of Read-mor Book Stores, Inc.), and the Klein Companies
acquisitions were approved by the affirmative vote of shareholders
entitled to exercise voting power over at least a majority of the
outstanding common shares of Unimag.
(c) A 1 for 10 reverse stock split of the outstanding common
shares, without par value, of Unimag shall have been effected. This
condition shall be satisfied by delivery to Escrow Agent of a
certificate from the Ohio Secretary of State certifying the
effectiveness of an amendment to Unimag's articles of incorporation,
which has a provision providing for such reverse stock split.
(d) The Closings for Northern and Michiana, including the
delivery of documents from escrow in connection therewith, shall have
been completed. This condition shall be satisfied by delivery to Escrow
Agent of certificates executed by Unimag and each of Northern and
Michiana in the form attached hereto as Exhibit G, certifying that such
closings have been completed.
(e) The Escrow Agent shall have received a certificate
executed by Unimag and each of the Scherer Companies and by Unimag and
each of the Klein Companies, in the form attached to this agreement as
Exhibit H, certifying that as of the date of the Closing, none of those
entities are aware of any facts or circumstances which would impede or
prohibit the consummation of the closings by Unimag of the acquisitions
of the Scherer Companies or the Klein Companies.
(f) The Escrow Agent shall have received a certificate
executed by the Secretary of Unimag, in the form attached to this
agreement as Exhibit I, certifying that Nancy Lyman Stoll and Richard
Stoll, Sr., have been elected to the Board of Directors of Unimag to
serve for a period of one year and until their successors are duly
elected and qualified.
Section 9. Upon the satisfaction of the conditions set forth in Section
8 by Escrow Agent's receipt of all of the certificates described in Section 8,
the Parties will attend the Closing (as contemplated by the Exchange Agreement)
and Escrow Agent will distribute (a) the Debenture Agreement counterpart
signature pages listed on Exhibit A and the Shareholder Voting Agreement
- 3 -
<PAGE> 4
counterpart signature pages listed as item 1 on Exhibit D to the Trustee with
instructions to distribute fully executed copies of the Debenture Agreement and
the Shareholder Voting Agreement (once all of the closings have been completed)
to (i) Thaddeus A. Majerek (who shall represent Michiana and its shareholders
for purposes of receipt of such documents), (ii) Richard Stoll, Jr. (who shall
represent Stoll and its shareholders for purposes of receipt of such documents),
(iii) Ronald E. Scherer (who shall represent the Scherer Companies and their
shareholders for purposes of receipt of such documents), and (iv) George R.
Klein (who shall represent the Klein Companies and their shareholders for
purposes of receipt of such documents) (b) the documents listed as items 1 and 2
of Exhibit B to the Trustee; (c) the documents listed as items 1, 2, and 3 of
Exhibit C to the Trustee; (d) the remaining documents listed in Exhibit B to
Richard Stoll, Jr. (who shall represent Stoll and all of the Stoll Shareholders
for purposes of receipt of such documents); and (e) the remaining documents
listed in Exhibits C and D to an officer of Unimag. If instructed to do so by a
party entitled to receive documents, the Escrow Agent may deliver such documents
to another person or entity. Unimag, Stoll, and the Stoll Shareholders hereby
acknowledge that the closings for Northern and Michiana shall have been
completed prior to the Closing and that the closings for the remaining Scherer
Companies Acquisitions and the Klein Companies acquisitions will be held shortly
after the Closing.
Section 10. If all of the conditions set forth in Section 8 have not
been satisfied by December 31, 1996, or such later date as Unimag, Stoll, and
the Stoll Shareholders may agree to and so instruct Escrow Agent in writing,
then Escrow Agent shall (a) destroy the Closing Documents described in Exhibit
A, (b) return the Closing Documents described in Exhibit B to Unimag, except for
the Employment Agreements, lease for the Indianapolis warehouse facility,
opinion letter of Baker & Hostetler, Senior Debentures, Subordinated Debentures,
and resolutions of Unimag as the sole shareholder of Stoll, all of which the
Escrow Agent shall destroy, (c) return the Closing Documents described in
Exhibit C to Stoll, except for the opinion letter of Eastman & Smith, which
Escrow Agent shall destroy, and (d) return the Closing Documents described in
Exhibit D to the Stoll Shareholders (via Richard Stoll, Jr. as their
attorney-in-fact), except for the Voting Agreement, which the Escrow Agent shall
destroy; and all of the Closing Documents shall be deemed void and of no further
force and effect. In addition to the foregoing, the Exchange Agreement shall be
deemed terminated, but each of Unimag, Stoll, and the Stoll Shareholders shall
remain responsible for its or their costs and expenses associated with the
transactions contemplated by the Exchange Agreement in accordance with the
provisions of Section 9.10 of the Exchange Agreement.
Section 11. In the event of any dispute between or among any of the
Parties relating to distribution of the Closing Documents by Escrow Agent or any
other matter, Escrow Agent may submit the matter to any court of competent
jurisdiction in an interpleader or similar action. Any and all costs incurred by
Escrow Agent in connection therewith, including reasonable attorneys' fees and
costs, shall be shared equally by Unimag and the Stoll Shareholders. Escrow
Agent shall perform any acts ordered by any court of competent jurisdiction
without any liability or obligation to any other Party by reason of such act.
Section 12. Escrow Agent shall have no liability to any other Party, or
such Party's successor or assigns, or to any person or entity claiming under or
in the right of any other Party, based
- 4 -
<PAGE> 5
upon or on account of any action taken or omitted by Escrow Agent, unless such
action or omission shall have been the result of Escrow Agent's gross negligence
or intentional misconduct. Notwithstanding the foregoing to the contrary, in no
event shall the Escrow Agent be liable to any party for acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram, facsimile
transmission or other paper or document believed by Escrow Agent to be genuine
and correct and to have been signed or sent by the proper person or persons.
Unimag, Stoll, and the Stoll Shareholders shall, jointly and severally, hold
harmless and indemnify Escrow Agent from and against any and all losses,
liabilities, damages, claims, suits, actions, costs, and expenses (including
attorneys' fees) which may be asserted against or incurred by Escrow Agent as a
result of it serving as escrow agent under this agreement.
Section 13. Instructions to Escrow Agent shall be addressed to:
Baker & Hostetler
65 East State Street, Suite 2100
Columbus, Ohio 43215
Attention: Boyd Moehring, Esq.
and shall be deemed to have been delivered to the Escrow Agent when delivered
personally, by facsimile (which is confirmed), mailed by registered or certified
mail (return receipt requested), or delivered to Federal Express, United Parcel
Service, or any other nationally recognized express delivery service.
Section 14. The Parties hereby: (a) designate the Court of Common Pleas
of Franklin County, Ohio, as a court of proper jurisdiction and venue for any
actions or proceedings relating to this agreement; (b) irrevocably consent to
such designation, jurisdiction and venue; and (c) waive any objections or
defenses relating to jurisdiction or venue with respect to any action or
proceedings initiated in the Court of Common Pleas of Franklin County, Ohio.
Section 15. The rights and obligations of the Parties under this
agreement shall be construed and resolved in accordance with the laws of the
State of Ohio, exclusive of conflict of laws principles. This agreement shall be
binding upon, inure to the benefit of, and be enforceable by and against the
respective successors and permitted assigns of the Parties. This agreement may
be executed in one or more separate counterparts, which, when read together,
shall be as fully-effective as a single, executed counterpart and all of which
shall constitute one and the same document.
Section 16. If the Escrow Agent receives a written notice from any of
the parties to this agreement of a dispute as to completion of any of the
conditions set forth in Section 8, and such notice is received prior to the
distributions from escrow set forth in Section 9, then Escrow Agent shall, until
such dispute is resolved, either submit the documents held in escrow to another
law firm selected by it to act as successor escrow agent, or deposit such
documents with a court of competent jurisdiction or continue to retain the
documents and act as Escrow Agent. In the event of such dispute, the escrow
documents shall be held by the Escrow Agent or its successor or the court until
otherwise directed in writing by agreement of the parties or otherwise directed
by a court
- 5 -
<PAGE> 6
of competent jurisdiction. In any such event, the parties agree that Baker &
Hostetler may continue to represent Unimag in any matter, including any dispute
under this agreement, and the parties hereby waive any conflict of interest of
Baker & Hostetler in that regard.
UNITED MAGAZINE COMPANY
By /s/ Ronald E. Scherer
-------------------------------
Ronald E. Scherer, Chairman
THE STOLL COMPANIES
By /s/ R. H. Stoll, Jr.
-------------------------------
R. H. Stoll, Jr., Pres.
-------------------------------
[Signatures continued on the following page.]
- 6 -
<PAGE> 7
THE STOLL SHAREHOLDERS:
/s/ Virginia Hiteshew
-------------------------------
VIRGINIA HITESHEW
/s/ Nancy A. Lyman
-------------------------------
NANCY A. LYMAN
/s/ Stephanie Hamilton
-------------------------------
STEPHANIE HAMILTON
/s/ Francis Stoll
-------------------------------
FRANCIS STOLL
/s/ Mary Oelerich
-------------------------------
MARY OELERICH
/s/ John Stoll
-------------------------------
JOHN STOLL
/s/ James Stoll
-------------------------------
JAMES STOLL
/s/ Richard H. Stoll, Jr.
-------------------------------
RICHARD H. STOLL, JR.
/s/ Susan Voss
-------------------------------
SUSAN VOSS
/s/ William Stoll
-------------------------------
WILLIAM STOLL
/s/ Margaret Stoll
-------------------------------
MARGARET STOLL
/s/ Richard H. Stoll, Sr.
-------------------------------
RICHARD H. STOLL, SR.
BAKER & HOSTETLER
By /s/ Robert K. Rupp
-------------------------------
Robert K. Rupp, Partner
- 7 -
<PAGE> 8
EXHIBIT A
DOCUMENTS DELIVERED BY UNIMAG, STOLL,
AND/OR THE STOLL SHAREHOLDERS
1. Debenture Agreement dated October 9, 1996, among Unimag, the Stoll
Shareholders, and certain other parties. (Includes counterpart
signature pages for only Unimag, the Trustee, and the Stoll
Shareholders. The remaining counterpart signature pages will be
provided in connection with the other escrow closings.)
<PAGE> 9
EXHIBIT B
DOCUMENTS DELIVERED BY UNIMAG
1. Two Security Agreements among Unimag, all of its active subsidiaries,
and the Trustee granting to the Trustee (for the benefit of the
Debenture Holders) a security interest in all tangible personal
property of Unimag and its subsidiaries.
2. 24 UCC-1 financing statements executed by Unimag (or one of its
subsidiaries) as debtor.
3. Employment Agreements with Richard A. Stoll, Jr., John Heiniger, and
Ron Lankerd.
4. Employment Agreement with Richard H. Stoll, Sr.
5. Lease dated October 24, 1996, between Unimag and Richard H. Stoll, Sr.
for Indianapolis warehouse facility.
6. Certified articles of incorporation of Unimag.
7. Good standing certificate of Unimag.
8. Certified code of regulations of Unimag.
9. Incumbency certificate of Unimag.
10. Certificate of president of Unimag.
11. Certified board of directors resolutions.
12. Letters from shareholders of Unimag entitled to vote more than 50% of
Unimag common shares indicating they will vote in favor of the
Exchange.
13. Letter or copy of federal register notice from Federal Trade Commission
terminating HSR Act waiting period for the acquisition of Ohio
Periodical Distributors, Inc.
14. Letter of Arthur Andersen LLP with respect to tax effect on Unimag of
the Section 351 exchange.
15. Opinion letter of Baker & Hostetler.
16. Irrevocable instruction letter to Unimag's transfer agent for the
issuance of Unimag Shares to the Stoll Shareholders as required by the
Exchange.
17. Twelve Senior Debentures to be issued to the Stoll Shareholders under
the Debenture Agreement.
<PAGE> 10
18. Twelve Subordinated Debentures to be issued to the Stoll Shareholders
under the Debenture Agreement.
19. Resolutions of Unimag as the sole shareholder of Stoll electing new
directors and officers of Stoll (to be effective at the Closing).
<PAGE> 11
EXHIBIT C
DOCUMENTS DELIVERED BY STOLL
1. Two Security Agreements between Stoll and the Trustee granting to the
Trustee (for the benefit of the Debenture Holders) a security interest
in all tangible personal property of Stoll.
2. 5 UCC-1 financing statements executed by Stoll, as debtor.
3. Two mortgages executed by Stoll as mortgagor granting to the Trustee a
mortgage and security interest in the real property located at 2021
Adams Street, Toledo, Ohio.
4. Certified articles of incorporation of Stoll.
5. Good standing certificate of Stoll.
6. Certified code of regulations of Stoll.
7. Incumbency certificate of Stoll.
8. Certificate of president of Stoll.
9. Certified board of directors resolutions.
10. Termination of Share Redemption Agreement among Stoll and the Stoll
Shareholders.
11. Opinion letter of Eastman & Smith.
12. Resignations of all of the members of Stoll's board of directors and
all of Stoll's officers (to be effective as of the Closing).
13. Stoll's minute books and other corporate records.
<PAGE> 12
EXHIBIT D
DOCUMENTS DELIVERED BY THE STOLL SHAREHOLDERS
1. Shareholder Voting Agreement dated October 9, 1996, among the Stoll
Shareholders and certain other parties. (Includes counterpart signature
page for the Stoll Shareholders Ronald E. Scherer, Linda Scherer
Talbott, Ohio Periodical Distributors, Inc., Wholesalers Leasing Corp.,
Northern News Company, Read-mor Book Stores, Inc., and the Scherer
Companies. Signature pages for the Michiana Shareholders have been
delivered to the Escrow Agent in connection with the Michiana escrow
closing.)
2. Letter dated July 30, 1996, executed by the Stoll Shareholders
appointing Richard Stoll, Jr. as attorney-in-fact for purposes of
executing and delivering Closing Documents.
3. Certificate of Richard Stoll, Jr. as agent of the Stoll Shareholders.
4. All of the certificates for the Stoll Shares endorsed for transfer to
Unimag.
<PAGE> 13
EXHIBIT E
CERTIFICATE OF ESCROW CLOSING
[INSERT NAME OF SCHERER COMPANY OR KLEIN COMPANY]
The undersigned hereby certify, on behalf of [insert name of Scherer
Company or Klein Company], and United Magazine Company, an Ohio corporation
("UNIMAG"), respectively, to Baker & Hostetler, which is the escrow agent under
a certain document escrow agreement dated August __, 1996 (the "STOLL DOCUMENT
ESCROW AGREEMENT"), among Unimag, The Stoll Companies ("STOLL"), all of Stoll's
shareholders, and Baker & Hostetler, as follows:
1. The escrow closing (the "_________ ESCROW CLOSING")
contemplated by [insert description of appropriate acquisition
agreement] was completed on [insert date];
2. The _________ Escrow Closing was completed upon terms and
conditions substantially similar to the escrow closing
provided for in the Stoll Document Escrow Agreement.
[INSERT NAME OF SCHERER COMPANY
OR KLEIN COMPANY]
Date: _____________, 1996 By__________________________________
Print Name________________________
Its__________________________________
UNITED MAGAZINE COMPANY
Date: _____________, 1996 By__________________________________
Print Name________________________
Its__________________________________
[Acknowledgement on the following page.]
<PAGE> 14
ACKNOWLEDGEMENT
The undersigned hereby acknowledges and agrees, on behalf of Stoll,
that the certifications set forth in this certificate satisfy the requirements
of Section 8(a) of the Stoll Document Escrow Agreement.
THE STOLL COMPANIES
Date: ______________, 1996 By__________________________________
Print Name________________________
Its__________________________________
<PAGE> 15
EXHIBIT F
CERTIFICATE OF INSPECTOR OF ELECTIONS
The undersigned, as the inspector of elections for the annual meeting
of shareholders of United Magazine Company, an Ohio corporation ("UNIMAG"), held
on ______________, 1996, hereby certifies to Baker & Hostetler that the
acquisitions described below have been approved by the affirmative vote of
shareholders entitled to exercise voting power over at least a majority of the
outstanding common shares of Unimag:
1. The Stock Transfer and Exchange Agreement among Unimag,
Michiana News Service, Inc. ("MICHIANA"), and all of its
shareholders and the acquisition of the stock of Michiana in
accordance with the terms of such exchange agreement;
2. The Stock Transfer and Exchange Agreement among Unimag, The
Stoll Companies ("STOLL"), and all of its shareholders and the
acquisition of the stock of Stoll in accordance with the terms
of such exchange agreement;
3. The Asset Transfer and Exchange Agreement between Unimag and
Northern News Company ("NORTHERN") and the acquisition of
certain assets and liabilities of Northern in accordance with
the terms of such exchange agreement;
4. The Asset Transfer and Exchange Agreement between Unimag and
Ohio Periodical Distributors, Inc. ("OPD"), and the
acquisition of certain assets and liabilities of OPD in
accordance with the terms of such exchange agreement;
5. The Stock transfer and Exchange Agreement among Unimag, The
Scherer Companies ("SCHERER"), and all of its shareholders and
the acquisition of the stock of Scherer in accordance with the
terms of such exchange agreement; and
6. The Asset Transfer and Exchange Agreement between Unimag and
Wholesalers Leasing Corp. ("WHOLESALERS") and the acquisition
of certain assets of Wholesalers in accordance with the terms
of such exchange agreement; and
7. The Stock Transfer and Exchange Agreement among Unimag, the
George R. Klein News Company, Central News Co., and Newspaper
Sales, Inc. ("KLEIN"), and all of its shareholders and the
acquisition of the stock of Klein in accordance with the terms
of such exchange agreement.
Date: _____________, 1996 ____________________________________
_________________, Inspector of Elections
<PAGE> 16
EXHIBIT G
CERTIFICATE OF CLOSING
The undersigned hereby certify, on behalf of [Northern News Company or
Michiana News Service, Inc.] and United Magazine Company, an Ohio corporation
("UNIMAG"), respectively, to Baker & Hostetler, which is escrow agent under a
certain Document Escrow Agreement dated October __, 1996, among Unimag, The
Stoll Companies ("STOLL"), all of Stoll's shareholders, and Baker & Hostetler,
that the closing contemplated by [insert description of appropriate acquisition
agreement] was completed on [insert date].
[NORTHERN NEWS COMPANY or
MICHIANA NEWS SERVICE, INC.]
Date: _____________, 1996 By__________________________________
Print Name________________________
Its__________________________________
UNITED MAGAZINE COMPANY
Date: _____________, 1996 By__________________________________
Print Name________________________
Its__________________________________
<PAGE> 17
EXHIBIT H
CERTIFICATE REGARDING CONSUMMATION OF CLOSINGS
[ITEMS IN BOLD ITALIC PERTAIN TO KLEIN]
The undersigned hereby certify, on behalf of [United Magazine Company
("Unimag"), Wholesalers Leasing, Inc., Ohio Periodical Distributors, Inc., The
Scherer Companies and Readmor Book Stores, Inc. (collectively, the "Scherer
Companies"), respectively], [GEORGE R. KLEIN NEWS COMPANY, CENTRAL NEWS CO., AND
NEWSPAPER SALES, INC. (COLLECTIVELY, THE "KLEIN COMPANIES")], to Baker &
Hostetler, which is escrow agent under a certain Document Escrow Agreement dated
October ___, 1996, among Unimag, the Stoll Companies ("Stoll") all of Stoll's
Shareholders, and Baker & Hostetler, that the closings contemplated by the
[various stock or asset transfer and exchange agreements between Unimag and each
of the Scherer Companies] [STOCK TRANSFER AND EXCHANGE AGREEMENT BETWEEN UNIMAG
AND THE KLEIN COMPANIES] [were [WAS] completed on (insert date)] [will be
completed within ten (10) days after the date hereof, and none of the
undersigned are aware of any fact or circumstance presently existing which would
interfere with or postpone [any of such closings]].
UNITED MAGAZINE COMPANY
Date:__________________, 1996 By:_________________________________
WHOLESALERS LEASING, INC.
Date:__________________, 1996 By:_________________________________
OHIO PERIODICAL DISTRIBUTORS,
INC.
Date:__________________, 1996 By:_________________________________
THE SCHERER COMPANIES
Date:__________________, 1996 By:_________________________________
READ-MOR BOOK STORES, INC.
Date:__________________, 1996 By:_________________________________
[Signatures continued on following page.]
<PAGE> 18
[GEORGE R. KLEIN NEWS COMPANY
DATE:_________________, 1996 BY:_________________________________]
[CENTRAL NEWS CO.
DATE:_________________, 1996 BY:_________________________________]
[NEWSPAPER SALES, INC.
DATE:_________________, 1996 BY:_________________________________]
<PAGE> 19
EXHIBIT I
CERTIFICATE REGARDING ELECTION OF DIRECTORS
The undersigned, the duly elected and acting Secretary of United
Magazine Company, an Ohio corporation ("UNIMAG"), hereby certifies to Baker &
Hostetler, which is escrow agent under a certain Document Escrow Agreement dated
October ___, 1996, among Unimag, The Stoll Companies ("STOLL"), all of Stoll's
Shareholders, and Baker & Hostetler, that at the annual meeting of shareholders
of Unimag held on [insert date], Nancy A. Lyman and Richard H. Stoll, Sr. were
duly elected to the Board of Directors of Unimag to serve for a period of one
(1) year and until their successors are duly elected and qualified.
Date:____________________,1996 __________________________________
Secretary, United Magazine Company
<PAGE> 1
Exhibit 2(p)
DOCUMENT ESCROW AGREEMENT
Northern News Company
---------------------
This agreement is made and entered October 9, 1996, among United
Magazine Company, an Ohio corporation ("UNIMAG"), Northern News Company, a
Michigan corporation ("NORTHERN"), and Baker & Hostetler ("ESCROW AGENT").
BACKGROUND INFORMATION
----------------------
A. Unimag and Northern are parties to an Asset Transfer and Exchange
Agreement (the "EXCHANGE AGREEMENT") effective July 29, 1996, and certain other
documents executed in connection with the transactions contemplated by the
Exchange Agreement (the "ADDITIONAL DOCUMENTS").
B. Unimag and Northern desire to consummate the Exchange (defined in
the Exchange Agreement) and the other transactions contemplated by the Exchange
Agreement upon the satisfaction of certain conditions (as described in Section
7.5 of the Exchange Agreement and as also described more fully in this
agreement).
C. Unimag and Northern desire to deposit the Additional Documents into
escrow with the Escrow Agent, to be held by the Escrow Agent upon the terms and
subject to the conditions of this agreement. Any and all agreements,
instruments, and other documents delivered to Escrow Agent to be held by it
pursuant to the terms and subject to the conditions of this agreement are
sometimes referred to hereinafter, collectively, as the "CLOSING DOCUMENTS".
D. Escrow Agent is willing to serve as the escrow agent upon the terms
and subject to the conditions of this agreement.
STATEMENT OF AGREEMENT
----------------------
The parties to this Agreement (each a "PARTY," and collectively, the
"PARTIES") hereby acknowledge the accuracy of the above Background Information
and, in consideration of the mutual covenants and agreements set forth in this
agreement, the Parties agree as follows:
Section 1. Unless otherwise defined in this agreement, all capitalized
words and phrases in this agreement shall have the same meanings as set forth in
the Exchange Agreement.
Section 2. Unimag and Northern have executed and/or delivered to Escrow
Agent and Escrow Agent hereby acknowledges receipt of the agreements and
documents described on Exhibit A.
- 1 -
<PAGE> 2
Section 3. Unimag has executed and/or delivered to Escrow Agent and
Escrow Agent hereby acknowledges receipt of the documents and instruments
described on Exhibit B.
Section 4. Northern has executed and/or delivered to Escrow Agent and
Escrow Agent hereby acknowledges receipt of the documents and instruments
described on Exhibit C.
Section 5. Unimag and/or Northern, as the case may be, may hereafter
deliver to Escrow Agent various other agreements, instruments, and other
documents to be held upon the terms and subject to the conditions of this
agreement. Upon delivery of such items to Escrow Agent, they shall become
Closing Documents under this agreement.
Section 6. Unless Unimag and Northern otherwise agree and together
instruct Escrow Agent in writing accordingly, the delivery of the Closing
Documents out of escrow shall be subject to the fulfillment of the following
conditions:
(a) Unimag shall have consummated the escrow closings of the
Stoll Acquisition, the Michiana Acquisition, all of the Scherer
Companies Acquisitions, and the acquisition of The George R. Klein News
Co., Central News Co., and Newspaper Sales, Inc. (collectively, the
"KLEIN COMPANIES"). Such escrow closings shall have been completed no
later than November 15, 1996, and shall be upon terms and conditions
substantially similar to the Escrow Closing under the Exchange
Agreement and this agreement (hereinafter referred to as this "ESCROW
CLOSING"). This condition shall be satisfied by delivery to Escrow
Agent of certificates executed by Unimag and by Stoll, by Michiana, by
each of Ohio Periodical Distributors, Inc., The Scherer Companies,
Wholesalers Leasing Corp., and Read-mor Book Stores, Inc.
(collectively, the "SCHERER COMPANIES"), and by each of the Klein
Companies, respectively (for the Stoll Acquisition, the Michiana
Acquisition, each of the respective Scherer Companies Acquisitions, and
each of the respective Klein Companies acquisitions), in the form
attached hereto as Exhibit D, certifying that the escrow closing for
the Stoll Acquisition, the Michiana Acquisition, each of the respective
Scherer Companies Acquisitions, and each of the respective Klein
Companies acquisitions have been completed, the date completed, and
that such escrow closing was upon terms and conditions substantially
similar to this Escrow Closing. Each certificate shall also be executed
by Northern for the purpose of evidencing Northern's acknowledgement
and agreement to the certifications set forth in that certificate.
(b) The Agreement (with all of its schedules and exhibits) and
the Exchange shall have been finally approved by Unimag's Board of
Directors. This condition shall be satisfied by delivery to Escrow
Agent of resolutions of Unimag's Board of Directors providing such
approval, certified by Unimag's Secretary.
- 2 -
<PAGE> 3
(c) The Exchange, the Michiana Acquisition, the Stoll
Acquisition, the Scherer Companies Acquisitions (except for the
acquisition of Read-mor Book Stores, Inc.), and the Klein Companies
acquisitions shall have been approved by the affirmative vote of the
shareholders of Unimag entitled to exercise voting power over at least
a majority of the outstanding common shares, without par value, of
Unimag. This condition shall be satisfied by delivery to Escrow Agent
of a certificate executed by the inspector of elections for this
shareholders' meeting, in the form attached hereto as Exhibit E,
certifying that the Exchange, the Michiana Acquisition, the Stoll
Acquisition, the Scherer Companies Acquisitions (except for the
acquisition of Read-mor Book Stores, Inc.), and the Klein Companies
acquisitions were approved by the affirmative vote of shareholders
entitled to exercise voting power over at least a majority of the
outstanding common shares of Unimag.
(d) A 1 for 10 reverse stock split of the outstanding common
shares, without par value, of Unimag shall have been effected. This
condition shall be satisfied by delivery to Escrow Agent of a
certificate from the Ohio Secretary of State certifying the
effectiveness of an amendment to Unimag's articles of incorporation,
which has a provision providing for such reverse stock split.
(e) Unimag, Northern, and the former shareholders of the
MacGregor News Agency, Inc., a Michigan corporation ("MACGREGOR"),
shall have entered into a Release of Pledge of Stock and Security
Agreement and Consent to transfer of Assets (the "MACGREGOR AGREEMENT")
in a form substantially similar to the form of the MacGregor Agreement
attached as Exhibit F (any revisions to the MacGregor Agreement must be
approved by Unimag's legal counsel). This condition shall be satisfied
by delivery to Escrow Agent of (i) a fully executed MacGregor
Agreement, and (ii) all of the certificates for the shares of stock of
MacGregor (the "MACGREGOR SHARES") endorsed for transfer to Unimag.
Notwithstanding anything in this agreement to the contrary, this
condition may not be waived or altered in any manner by Unimag and/or
Northern and Escrow Agent will disregard any instructions from Unimag
and/or Northern which may attempt to waive or alter this condition.
Section 7. Upon the satisfaction of the conditions set forth in Section
6 by Escrow Agent's receipt of all of the certificates described in Section 6,
the Parties will attend the Closing (as contemplated by the Exchange Agreement)
and Escrow Agent will distribute (a) the Debenture Agreement counterpart
signature pages listed on Exhibit A and the Shareholder Voting Agreement
counterpart signature pages listed as item 1 on Exhibit C to the Trustee with
instructions to distribute fully executed copies of the Debenture Agreement and
the Shareholder Voting Agreement (once all of the closings have been completed)
to (i) Thaddeus A. Majerek (who shall represent Michiana and its shareholders
for purposes of receipt of such documents), (ii) Richard Stoll, Jr. (who shall
represent Stoll and its shareholders for purposes of receipt of such documents),
(iii) Ronald E. Scherer (who shall represent the Scherer Companies and their
shareholders for purposes of receipt of such documents), and (iv) George R.
Klein (who shall
- 3 -
<PAGE> 4
represent the Klein Companies and their shareholders for purposes of receipt of
such documents), (b) the documents listed in Exhibit B to an officer of
Northern, and (c) the documents listed in Exhibit C, the MacGregor Agreement,
and the certificates for the MacGregor Shares, endorsed for transfer to Unimag,
to an officer of Unimag. If instructed to do so by a Party entitled to receive
documents, the Escrow Agent may deliver such documents to another person or
entity. Unimag and Northern hereby acknowledge that the closings for the Stoll
Acquisition, the Michiana Acquisition, the remaining Scherer Companies
Acquisitions, and the Klein Companies acquisitions will be held shortly after
the Closing.
Section 8. If all of the conditions set forth in Section 6 have not
been satisfied by December 31, 1996, or such later date as Unimag and Northern
may agree to and so instruct Escrow Agent in writing, then Escrow Agent shall
(a) destroy the Closing Document described in Exhibit A, (b) return the Closing
Documents described in Exhibit B to Unimag, except for item 10, which the Escrow
Agent shall destroy, (c) return the Closing Documents described in Exhibit C and
the MacGregor Shares to Northern (with the MacGregor Shares owned by Mr. Foster
to be returned to him), except for items 5, 12, and 13, and the MacGregor
Agreement, all of which Escrow Agent shall destroy; and all of the Closing
Documents shall be deemed void and of no further force and effect.
Notwithstanding the foregoing, the Exchange Agreement shall be deemed terminated
and both Unimag and Northern shall remain responsible for their costs and
expenses associated with the transactions contemplated by the Exchange Agreement
in accordance with the provisions of Section 10.10 of the Exchange Agreement.
Section 9. In the event of any dispute between or among any of the
Parties relating to distribution of the Closing Documents by Escrow Agent or any
other matter, Escrow Agent may submit the matter to any court of competent
jurisdiction in an interpleader or similar action. Any and all costs incurred by
Escrow Agent in connection therewith, including reasonable attorneys' fees and
costs, shall be shared equally by Unimag and Northern. Escrow Agent shall
perform any acts ordered by any court of competent jurisdiction without any
liability or obligation to any other Party by reason of such act.
Section 10. Escrow Agent shall have no liability to any other Party, or
such Party's successor or assigns, or to any person or entity claiming under or
in the right of any other Party, based upon or on account of any action taken or
omitted by Escrow Agent, unless such action or omission shall have been the
result of Escrow Agent's gross negligence or intentional misconduct.
Notwithstanding the foregoing to the contrary, in no event shall the Escrow
Agent be liable to any party for acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram, facsimile transmission or other
paper or document believed by Escrow Agent to be genuine and correct and to have
been signed or sent by the proper person or persons. Unimag and Northern shall,
jointly and severally, hold harmless and indemnify Escrow Agent from and against
any and all losses, liabilities, damages, claims, suits, actions, costs, and
expenses (including attorneys' fees) which may be asserted against or incurred
by Escrow Agent as a result of it serving as escrow agent under this agreement.
- 4 -
<PAGE> 5
Section 11. Instructions to Escrow Agent shall be addressed to:
Baker & Hostetler
65 East State Street, Suite 2100
Columbus, Ohio 43215
Attention: Boyd Moehring, Esq.
and shall be deemed to have been delivered to the Escrow Agent when delivered
personally, by facsimile (which is confirmed), mailed by registered or certified
mail (return receipt requested), or delivered to Federal Express, United Parcel
Service, or any other nationally recognized express delivery service.
Section 12. The Parties hereby: (a) designate the Court of Common Pleas
of Franklin County, Ohio, as a court of proper jurisdiction and venue for any
actions or proceedings relating to this agreement; (b) irrevocably consent to
such designation, jurisdiction and venue; and (c) waive any objections or
defenses relating to jurisdiction or venue with respect to any action or
proceedings initiated in the Court of Common Pleas of Franklin County, Ohio.
Section 13. The rights and obligations of the Parties under this
agreement shall be construed and resolved in accordance with the laws of the
State of Ohio, exclusive of conflict of laws principles. This agreement shall be
binding upon, inure to the benefit of, and be enforceable by and against the
respective successors and permitted assigns of the Parties. This agreement may
be executed in one or more separate counterparts, which, when read together,
shall be as fully-effective as a single, executed counterpart and all of which
shall constitute one and the same document.
Section 14. If the Escrow Agent receives a written notice from any of
the Parties of a dispute as to completion of any of the conditions set forth in
Section 6, and such notice is received prior to the distributions from escrow
set forth in Section 7, then Escrow Agent shall, until such dispute is resolved,
either submit the documents held in escrow to another law firm selected by it to
act as successor escrow agent, or deposit such documents with a court of
competent jurisdiction or continue to retain the documents and act as Escrow
Agent. In the event of such dispute, the escrow documents shall be held by the
Escrow Agent or its successor or the court until otherwise directed in writing
by agreement of the parties or otherwise directed by a court of competent
jurisdiction. In any such event, the parties agree that Baker & Hostetler may
continue to represent Unimag in any matter, including any dispute under this
agreement, and the parties hereby waive any conflict of interest of Baker &
Hostetler in that regard.
UNITED MAGAZINE COMPANY
By /s/Ronald E. Scherer
-------------------------------
Ronald E. Scherer, Chairman
[Signatures continued on following page.]
- 5 -
<PAGE> 6
NORTHERN NEWS COMPANY
By /s/ David B. Thompson
---------------------------------
David B. Thompson, Treasurer
BAKER & HOSTETLER
By /s/ Robert K. Rupp
---------------------------------
Robert K. Rupp, Partner
- 6 -
<PAGE> 7
EXHIBIT A
DOCUMENTS DELIVERED BY UNIMAG AND/OR NORTHERN
1. Debenture Agreement dated as of October 9, 1996, among Unimag,
Northern, and certain other parties. (Includes counterpart signature
pages for only Northern and only Exhibits A and B. The remaining
counterpart signature pages and exhibits and Schedule I will be
provided in connection with the other Escrow Closings.)
<PAGE> 8
EXHIBIT B
DOCUMENTS DELIVERED BY UNIMAG
1. Certified articles of incorporation of Unimag.
2. Good standing certificate of Unimag.
3. Certified code of regulations of Unimag.
4. Incumbency certificate of Unimag.
5. Certificate of president of Unimag.
6. Certified board of directors resolutions.
7. Letters from shareholders of Unimag entitled to vote more than 50% of
Unimag common shares indicating they will vote in favor of the
Exchange.
8. Letter or copy of federal register notice from Federal Trade Commission
terminating HSR Act waiting period.
9. Letter of Arthur Andersen LLP with respect to tax effect on Unimag of
the Section 351 exchange.
10. Opinion letter of Baker & Hostetler (This document has not been
deposited into escrow. It will be deposited into escrow no later than
October 18, 1996.)
11. Irrevocable instruction letter to Unimag's transfer agent for the
issuance of Unimag Shares to Northern as required by the Exchange.
12. One Senior Debenture to be issued to Northern under the Debenture
Agreement.
13. One Subordinated Debenture to be issued to Northern under the Debenture
Agreement.
<PAGE> 9
EXHIBIT C
DOCUMENTS DELIVERED BY NORTHERN
1. Shareholder Voting Agreement dated October 9, 1996, among Northern and
certain other parties (Counterpart signature pages for Northern will be
deposited into escrow in connection with the escrow closing for
Stoll.).
2. Bill of Sale for certain of the Acquired Assets executed by Northern.
3. Assignment of Certain Acquired Assets and Assumption of Assumed
Liabilities executed by Northern and Unimag.
4. Certificates of Title to the Vehicles, endorsed for transfer to Unimag.
(Date of sale, odometer reading, and sale price to be completed at
Closing.)
5. Lease Agreement dated October 9, 1996, between Northern News Company
and Unimag for the Petoskey Warehouse.
6. Certified articles of incorporation of Northern and MacGregor
7. Good standing certificates of Northern and MacGregor.
8. Certified By-laws of Northern and MacGregor.
9. Incumbency certificates of Northern and MacGregor.
10. Certificates of the presidents or other officers of Northern and
MacGregor.
11. Certified resolutions of the boards of directors of Northern and
MacGregor.
12. Opinion letter of Northern's Legal Counsel.
13. Opinion letter of independent legal counsel.
14. MacGregor's minute books and other corporate records.
15. Agreement dated October 9, 1996, between Mr. Foster and Northern.
<PAGE> 10
EXHIBIT D
CERTIFICATE OF ESCROW CLOSING
[INSERT NAME OF COMPANY]
The undersigned hereby certify, on behalf of [insert name of Company],
and United Magazine Company, an Ohio corporation ("UNIMAG"), respectively, to
Baker & Hostetler, which is the escrow agent under a certain document escrow
agreement dated September ___, 1996 (the "NORTHERN DOCUMENT ESCROW AGREEMENT"),
among Unimag, Northern News Company ("NORTHERN"), and Baker & Hostetler, as
follows:
1. The escrow closing (the "_________ ESCROW CLOSING")
contemplated by [insert description of appropriate acquisition
agreement] was completed on [insert date];
2. The _________ Escrow Closing was completed upon terms and
conditions substantially similar to the escrow closing
provided for in the Northern Document Escrow Agreement.
[INSERT NAME OF COMPANY]
Date: September ___, 1996 By__________________________________
Print Name________________________
Its__________________________________
UNITED MAGAZINE COMPANY
Date: September___, 1996 By__________________________________
Print Name________________________
Its__________________________________
[Acknowledgement on the following page.]
<PAGE> 11
ACKNOWLEDGEMENT
The undersigned hereby acknowledges and agrees, on behalf of Northern,
that the certifications set forth in this certificate satisfy the requirements
of Section 6(a) of the Northern Document Escrow Agreement.
NORTHERN NEWS COMPANY
Date: September ___, 1996 By__________________________________
Print Name________________________
Its__________________________________
<PAGE> 12
EXHIBIT E
CERTIFICATE OF INSPECTOR OF ELECTIONS
The undersigned, as the inspector of elections for the annual meeting
of shareholders of United Magazine Company, an Ohio corporation ("UNIMAG"), held
on ______________, 1996, hereby certifies to Baker & Hostetler that the
acquisitions described below have been approved by the affirmative vote of
shareholders entitled to exercise voting power over at least a majority of the
outstanding common shares of Unimag:
1. The Stock Transfer and Exchange Agreement among Unimag,
Michiana News Service, Inc. ("MICHIANA"), and all of its
shareholders and the acquisition of the stock Michiana in
accordance with the terms of such exchange agreement;
2. The Stock Transfer and Exchange Agreement among Unimag, The
Stoll Companies ("STOLL"), and all of its shareholders and the
acquisition of the stock of Stoll in accordance with the terms
of such exchange agreement;
3. The Asset Transfer and Exchange Agreement between Unimag and
Northern News Company ("NORTHERN") and the acquisition of
certain assets and liabilities of Northern in accordance with
the terms of such exchange agreement;
4. The Asset Transfer and Exchange Agreement between Unimag and
Ohio Periodical Distributors, Inc. ("OPD"), and the
acquisition of certain assets and liabilities of OPD in
accordance with the terms of such exchange agreement;
5. The Stock transfer and Exchange Agreement among Unimag, The
Scherer Companies ("SCHERER"), and all of its shareholders and
the acquisition of the stock of Scherer in accordance with the
terms of such exchange agreement; and
6. The Asset Transfer and Exchange Agreement between Unimag and
Wholesalers Leasing Corp. ("WHOLESALERS") and the acquisition
of certain assets of Wholesalers in accordance with the terms
of such exchange agreement.
7. The Stock Transfer and Exchange Agreement among Unimag, The
George R. Klein News Co., Central News Co., Newspaper Sales,
Inc. (collectively, the "KLEIN COMPANIES"), and all of their
shareholders and the acquisition of the stock of the Klein
Companies in accordance with the terms of such exchange
agreement.
Date: _____________, 1996 ____________________________________
_________________, Inspector of Elections
<PAGE> 13
EXHIBIT F
RELEASE OF PLEDGE OF STOCK AND SECURITY AGREEMENT
-------------------------------------------------
and
CONSENT TO TRANSFER OF ASSETS
-----------------------------
This Release of Pledge of Stock and Security Agreement, entered into
this ____ day of September, 1996, by and among Charles MacGregor, Keith and
Debra J. Hayes, David MacGregor and Scott MacGregor of Mount Pleasant, Michigan
(hereinafter collectively referred to as "MacGregors"), Northern News Company,
a Michigan corporation (hereinafter referred to as "Northern") and Arthur C.
Foster, Sr., of Petoskey, Michigan (hereinafter referred to as "Foster").
WITNESSETH:
WHEREAS, Northern and Foster have heretofore entered into a Pledge of
Stock and Security Agreement, dated January 10, 1996, with each of the
MacGregors (hereinafter the "Agreement") to secure payment to MacGregors under
the terms of certain Promissory Notes, dated January 10, 1996; delivered to
MacGregors by Northern and
WHEREAS, Northern now desires to transfer the pledged stock, together
with certain of the assets comprising the Collateral under the Agreement, to
United Magazine Company ("Unimag") pursuant to an Asset Transfer and Exchange
Agreement, dated August 30, 1996, between Northern and Unimag; and
WHEREAS, the terms of the Asset Transfer and Exchange Agreement
require that the stock and the assets transferred to Unimag be free of any
liens and encumbrances; and
WHEREAS, the MacGregors have agreed to such transfer.
NOW THEREFORE, for and in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
A. MacGregors hereby consent to the transfer to, and assignment of,
the Promissory Notes and the Security Agreements (with respect to the assets of
Northern associated with its wholesale periodical distribution business), as
referenced above, and to the transfer of all of the assets of Northern
associated with its wholesale periodical distribution business to Unimag, and
further, MacGregors consent to the granting of additional security interests in
such assets by Unimag.
B. MacGregors hereby release the security interests held by them
pursuant to the above referenced security agreements with respect to any and
all of the assets of Northern which are not transferred to Unimag pursuant to
the Asset Transfer and Exchange Agreement.
<PAGE> 14
C. MacGregors hereby terminate the pledge of stock of MacGregor News
Agency, Inc., a Michigan corporation, and consent to the transfer to Unimag of
all of the issued and outstanding capital stock of that company.
The MacGregors agree to execute any termination statements or other
instruments which may be required to evidence the above releases and consents.
IN WITNESS WHEREOF, the parties have executed this document as of the
day and year first above written.
NORTHERN NEWS COMPANY
_______________________ ________________________
By: David B. Thompson Charles D. MacGregor
Its: Treasurer
_______________________
_______________________ Keith Hayes
Arthur C. Foster, Sr.
_______________________
_______________________ Debra J. Hayes
David MacGregor
_______________________
Scott MacGregor
United Magazine Company, in consideration of the above agreements
hereby agrees to assume the obligations and responsibilities of Northern under
the Agreement and the Promissory Notes from and after the date of final closing
of the Asset Transfer and Exchange Agreement.
UNITED MAGAZINE COMPANY
_______________________
By: Ronald E. Scherer
Its: Chairman
<PAGE> 15
CONSENT TO ASSIGNMENT OF LEASE
------------------------------
For and in consideration of the sum of ten dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Charles D. MacGregor and Lois MacGregor, of 575 Hiawatha
Drive, Mt. Pleasant, Michigan, Lessor under that certain Lease Agreement, dated
January 10, 1996, with MacGregor News Agency, Inc., a Michigan corporation, as
Lessee, for the property and warehouse located at 1733 Industrial Park Drive,
Mt. Pleasant, Michigan (the "Lease"), hereby consent to the transfer of the
capital stock of Lessee, together with the assignment of the Lease, pursuant to
the Asset Transfer and Exchange Agreement, dated July 29, 1996, between
Northern News Company, a Michigan corporation, and United Magazine Company, an
Ohio corporation.
_______________________
Charles D. MacGregor
_______________________
Lois MacGregor
<PAGE> 1
Exhibit 2(q)
SALARY CONTINUATION AND DEATH BENEFIT AGREEMENT
-----------------------------------------------
THIS AGREEMENT is entered into effective as of the 18th day of
September 1996 by and between The Stoll Companies, an Ohio corporation (the
"Company"), and Richard H. Stoll, Sr. (the "Employee").
WHEREAS, Employee has rendered over forty (40) years of faithful and
diligent service on behalf of the Company; and
WHEREAS, in consideration of the Employee's past services to the
Company, the Company is willing to pay the Employee (or his estate in the event
of his prior death) certain specified amounts for a specified period following
his retirement from active employment.
NOW, THEREFORE, in consideration of the foregoing and mutual promises
and provisions hereinafter contained, and for good and valuable consideration,
the parties do hereby agree as follows:
1. SALARY CONTINUATION. The Company shall pay to the Employee the
monthly sum of $20,833.33, commencing on October 1, 1996 and continuing on the
first day of each month thereafter until a total of sixty (60) monthly payments
have been made to the Employee and shall thereafter pay to the Employee the
monthly sum of $8,333.33, commencing on October 1, 2001, and continuing on the
first day of each month thereafter until a total of eighty-four (84) monthly
payments have been made to the Employee.
2. PAYMENT TO BENEFICIARY. If the Employee dies prior to receiving all
of the payments to which he is entitled under Section 1 of this Agreement, the
Company shall continue to make such monthly payments to Employee's surviving
spouse, if any, or to Employee's designated beneficiary or estate as the
Employee may designate in writing from time to time.
3. EQUIVALENT BENEFITS. In the event that payments are being made by
the Company to the Employee or his beneficiary pursuant to the provisions of
Section 1 or 2 hereof, the Company may at any time prior to full payment, in
its sole discretion, pay to the Employee or his beneficiary the equivalent of
the remaining payments to which the Employee or his beneficiary is entitled, in
the form of a lump sum cash settlement in an amount equal to the then present
cash value of the future payments required to be made, discounted at the then
current rate being used by the Pension Benefit Guaranty Corporation or any
successor thereto to value immediate annuities of similar duration, but in no
event less than six percent (6%) per annum.
EXHIBIT
A
ALLSTATE - INTERNATIONAL
<PAGE> 2
4. NO OBLIGATION TO FUND. The Company reserves the absolute right, in
it sole and exclusive discretion, to fund the obligations of the Company
undertaken by this Agreement or to refrain from funding the same, and to
determine the extent, nature and method of such funding, if any.
5. INSURANCE OR ANNUITY POLICIES. Should the Company elect to fund
this Agreement, in whole or in part, through the purchase of a life insurance
or annuity policy or policies, the Company shall be the owner and beneficiary
of all such policies. The Company reserves the absolute right to terminate,
borrow against, assign or otherwise encumber such life insurance or annuity
policies, as well as any other alternative funding program, at any time, either
in whole or in part. At no time shall the Employee be deemed to have any right,
title or interest in or to any specified asset or assets of Company, including,
but not limited to, any insurance or annuity policy or policies owned by the
Company or the proceeds therefrom.
Any insurance or annuity policy or policies purchased by the Company
to fund this Agreement or for any other purpose shall not be considered to be
security for the performance of the obligations of the Company under this
Agreement, but rather shall at all times be the general, unpledged and
unrestricted assets of the Company.
6. ERISA EXEMPTION. The parties acknowledge that the Employee is a
"high compensated employee" within the meaning of ERISA and the regulations
promulgated thereunder and that this Agreement shall be entitled to the
exemption from coverage under Titles I and II of ERISA afforded by 29 CFR
Section 2520.104-24. The Company agrees to file with the Department of Labor
the notice attached as Exhibit A hereof within thirty (30) days following the
date of this Agreement.
7. SECURITY. The parties agree that no security or other collateral
has been or will be given to the Employee or otherwise allocated by the company
to secure the payment of any obligations of the Company to the Employee
hereunder. The Employee shall be considered as and have the status of a general
unsecured creditor of the Company.
8. AMENDMENT. This Agreement may be amended at any time and from time
to time by the agreement of the parties hereto; provided, however, that no
amendment shall be effective unless it is in a writing which has been signed by
both of the parties hereto.
9. ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
agreements of the parties, if any, whether written or oral.
2
<PAGE> 3
10. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced under the laws of the State of Ohio.
11. IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth herein.
THE STOLL COMPANIES,
as Ohio corporation
/s/ Richard H. Stoll, Jr.
By: Richard H. Stoll, Jr.
Its: President
EMPLOYEE
/s/ Richard H. Stoll, Sr.
Richard H. Stoll, Sr.
3
<PAGE> 4
EXHIBIT A
(Date)
Office of Employee Benefits Security
Labor-Management Services Administration
U.S. Department of Labor
Washington, DC. 20216
Gentlemen:
In order to comply with the alternative reporting and disclosure method
under ERISA, Part I, Title I, for an unfunded or insured pension plan for a
select group of management or highly compensated employees pursuant to 20 CFR
Section 2520.104.23, the following information is provided by the undersigned:
1. The name of the employer is The Stoll Companies, an Ohio
corporation.
2. The mailing address of the employer is 2021 Adams Street, Toledo,
Ohio 43624.
3. The employer's federal identification number (EIN) is
____________________ .
4. The employer currently maintains one (1) agreement establishing
post-retirement salary continuation benefits for a management and highly
compensated employee of employer.
5. The employer will provide a copy of the agreement to the Secretary
of Labor upon request.
THE STOLL COMPANIES
BY: _____________________
Richard H. Stoll, Jr.
President
