U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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 21, 1997
Courier Corporation
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(Exact name of registrant as Specified in Charter)
Massachusetts
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(State or Other Jurisdiction of Incorporation)
0-7597 04-2502514
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(Commission File Number) (IRS Employer Identification No.)
15 Wellman Avenue, North Chelmsford, Massachusetts 01863-1334
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (508) 251-6000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OF ASSETS.
On July 21, 1997, the Company acquired all of the outstanding capital
stock of Book-mart Press, Inc. ("Book-mart"), a North Bergen, New Jersey book
manufacturer specializing in short to medium runs of softcover and hardcover
books. The Company paid approximately $12.7 million in cash to the former
stockholders of Book-mart for their shares of capital stock. At the time of the
closing, Book-mart had approximately $2.3 million of outstanding bank
indebtedness which was subsequently paid in full. In connection with the
acquisition, 11,111 shares of Courier common stock (based upon a valuation of
$18 per share) were issued to two key executives of Book-mart for non-compete
agreements. In addition, one of such executives was issued 16,667 shares
(subject to a four-year vesting schedule) in connection with an employment
agreement. The acquisition will be accounted for as a purchase and, accordingly,
the results of operations will be included in the consolidated financial
statements from July 21, 1997 forward.
The purchase price was determined in an arm's-length negotiation and
was financed using the Company's existing credit facility with BankBoston, N.A.
and State Street Bank and Trust Company. The amount available under this
facility was extended from $20 million to $30 million in contemplation of the
transaction. The facility was also used by the Company to repay the
approximately $2.3 million of Book-mart's existing bank debt subsequent to the
consummation of the acquisition.
In connection with the acquisition, a long-term lease agreement for
Book-mart's facility in New Jersey was executed by Book-mart. The lessor is a
corporation owned by two of the former stockholders of Book-mart, one of whom
remains as a key executive of Book-mart.
It is intended that Book-mart will continue to operate as a book
manufacturer specializing in short to medium runs of softcover and hardcover
books.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The required financial statements for the acquired business shall
be filed within 60 days of this filing.
(b) Pro Forma Financial Information
The required pro forma financial information shall be filed within
60 days of this filing.
(c) Exhibits
See Exhibit Index attached hereto.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COURIER CORPORATION
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(Registrant)
Date: August 5, 1997 By: /s/ Robert P. Story, Jr.
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Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
2.1 Stock Purchase Agreement by and among Courier Corporation and the
stockholders of Book-mart Press, Inc., dated as of July 21, 1997.
4
EXHIBIT 2.1
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
by and among
Courier Corporation
(the "Buyer")
and
the stockholders of
Book-mart Press, Inc.
(the "Stockholders")
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
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<C> <C>
1. DEFINITIONS..............................................................................................1
2. SALE AND TRANSFER OF COMPANY SHARES; PURCHASE PRICE;
CLOSING.................................................................................................13
2.1 COMPANY SHARES.................................................................................13
2.2 PURCHASE PRICE AND PAYMENT.....................................................................13
2.3 TIME AND PLACE OF CLOSING......................................................................13
2.4 CLOSING OBLIGATIONS............................................................................14
2.5 TRANSFER TAXES.................................................................................15
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS......................................................15
3.1 ORGANIZATION AND GOOD STANDING.................................................................16
3.2 AUTHORITY; NO CONFLICT.........................................................................16
3.3 CAPITALIZATION.................................................................................18
3.4 FINANCIAL STATEMENTS...........................................................................18
3.5 BOOKS AND RECORDS..............................................................................19
3.6 REAL AND PERSONAL PROPERTY.....................................................................20
3.7 CONDITION AND SUFFICIENCY OF ASSETS............................................................22
3.8 ACCOUNTS RECEIVABLE............................................................................22
3.9 INVENTORY......................................................................................22
3.10 NO UNDISCLOSED LIABILITIES.....................................................................23
3.11 TAXES..........................................................................................23
3.12 EMPLOYEE BENEFIT PROGRAMS......................................................................24
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.................................................................................26
3.14 LEGAL PROCEEDINGS; ORDERS......................................................................28
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS..........................................................29
3.16 CONTRACTS; NO DEFAULTS.........................................................................31
3.17 INSURANCE......................................................................................34
3.18 ENVIRONMENTAL MATTERS..........................................................................35
3.19 EMPLOYEES......................................................................................38
3.20 LABOR RELATIONS; COMPLIANCE....................................................................38
3.21 INTELLECTUAL PROPERTY..........................................................................39
3.22 CERTAIN PAYMENTS...............................................................................42
3.23 DISCLOSURE.....................................................................................42
3.24 RELATIONSHIPS WITH RELATED PERSONS.............................................................43
3.25 BROKERS OR FINDERS.............................................................................43
(i)
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Page
3.26 BANKING RELATIONS..............................................................................43
3.27 LIST OF DIRECTORS AND OFFICERS. ..............................................................43
3.28 NON-FOREIGN STATUS.............................................................................43
3.29 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS..........................................................44
3.30 TRANSFER OF COMPANY SHARES.....................................................................44
3.31 STOCK REPURCHASE...............................................................................44
3.32 NO INDEBTEDNESS BETWEEN STOCKHOLDER/COMPANY....................................................44
3.33 NO ACQUISITION OF CAPITAL STOCK OF BUYER BY
STOCKHOLDERS...................................................................................44
3.34 COMPLIANCE WITH SECTION 280G OF THE IRC BY THE
COMPANY........................................................................................45
3.35 ADDITIONAL TAX REPRESENTATION..................................................................45
3.36 TERMINATION OF AGREEMENTS......................................................................45
3.37 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS...................................................................................45
3.37.1 COMPANY SHARES........................................................................45
3.37.2 AUTHORITY.............................................................................46
3.37.3 FINDER'S FEE..........................................................................46
3.37.4 AGREEMENTS............................................................................46
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................47
4.1 ORGANIZATION AND GOOD STANDING.................................................................47
4.2 AUTHORITY; NO CONFLICT.........................................................................47
4.3 INVESTMENT INTENT..............................................................................48
4.4 CERTAIN PROCEEDINGS............................................................................48
4.5 BROKERS OR FINDERS.............................................................................48
5. INDEMNIFICATION; REMEDIES...............................................................................48
5.1 SURVIVAL.......................................................................................48
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
STOCKHOLDERS...................................................................................48
5.3 INDEMNIFICATION AND PAYMENT OBLIGATIONS OF
STOCKHOLDERS--ACCOUNTS RECEIVABLE..............................................................49
5.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER................................................51
5.5 TIME LIMITATIONS...............................................................................51
5.6 LIMITATIONS ON AMOUNT--STOCKHOLDERS............................................................52
5.7 CERTAIN PROVISIONS REGARDING INDEMNIFICATION...................................................53
5.8 LIMITATIONS ON AMOUNT--BUYER...................................................................55
5.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS..............................................55
5.10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS....................................................56
5.11 CERTAIN RIGHTS AND REMEDIES NOT AFFECTED.......................................................57
(ii)
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Page
6. GENERAL PROVISIONS......................................................................................57
6.1 EXPENSES.......................................................................................57
6.2 PUBLIC ANNOUNCEMENTS...........................................................................57
6.3 CONFIDENTIALITY. .............................................................................58
6.4 NOTICES........................................................................................58
6.5 JURISDICTION; SERVICE OF PROCESS...............................................................60
6.6 FURTHER ASSURANCES.............................................................................61
6.7 WAIVER.........................................................................................61
6.8 ENTIRE AGREEMENT AND MODIFICATION..............................................................62
6.9 DISCLOSURE LETTER..............................................................................62
6.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.............................................62
6.11 SEVERABILITY...................................................................................62
6.12 SECTION HEADINGS, CONSTRUCTION.................................................................63
6.13 GOVERNING LAW..................................................................................63
6.14 SPECIFIC PERFORMANCE...........................................................................63
6.15 COUNTERPARTS...................................................................................63
EXHIBITS
Exhibit 2.1 List of Stockholders, Company Shares
Exhibit 2.4(a)(ii) Stockholders' Releases
Exhibit 2.4(a)(iii)(x) and (y) Employment Agreements
Exhibit 2.4(a)(vii) Other Stockholder Documents
Exhibit 2.4(a)(viii) Opinion of Counsel for the Stockholders and the Company
Exhibit 2.4(b)(iv) Buyer's Releases
Exhibit 2.4(b)(v) Other Buyer Documents
Exhibit 2.4(b)(vi) Opinion of Counsel for Buyer
(iii)
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT entered into as of July 21, 1997 by and among
Courier Corporation, a Massachusetts corporation ("Buyer"), and the holders of
all of the issued and outstanding stock of Book-mart Press, Inc., a Delaware
corporation (the "Company"), as listed on Exhibit 2.1 (the "Stockholders," and
each, a "Stockholder").
R E C I T A L S
WHEREAS, the Stockholders own of record and beneficially, in the
aggregate, all of the issued and outstanding capital stock of the Company,
consisting of 1,081.081 shares of the Company's Common Stock, $.0001 par value
per share (said shares of Common Stock being referred to collectively herein as
the "Company Shares");
WHEREAS, the Stockholders desire to sell all of their Company Shares to
Buyer, and Buyer desires to acquire all of the Company Shares; and
WHEREAS, as a material inducement to Buyer acquiring the Company
Shares, Mr. Gluckow (as defined below) and Ms. Gluckow (as defined below) shall
each enter into an Employment Agreement with Buyer prior to or at the Closing,
on the terms and conditions substantially in the form attached hereto as Exhibit
2.4(a)(iii)(x) and Exhibit 2.4(a)(iii)(y), respectively, and as referred to in
Section 2.4(a)(iii).
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
hereby covenant and agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Accounts Receivable"-- as defined in Section 3.8.
"Actual Knowledge"--an individual will be deemed to have "Actual
Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) such individual had actually received notice (written or
oral) of such fact or other matter.
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STOCK PURCHASE AGREEMENT
A Person (other than an individual) will be deemed to have "Actual
Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at the relevant time served, as a director, officer, Key
Employee (only in the case of the Company), partner, executor, or trustee of
such Person (or in any similar capacity) has, or at any time had, Actual
Knowledge of such fact or other matter.
For the purposes of this Agreement, (i) the Actual Knowledge of a fact
or other matter of any Stockholder shall be attributed to each of the other
Stockholders, and (ii) if the Company has Actual Knowledge of a particular fact
or matter, then each of the Stockholders shall be deemed to have Actual
Knowledge of such fact or other matter.
"Affiliate" --any Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, another Person or any
Subsidiary of such other Person. A Person shall be deemed to control another
Person if the controlling Person owns 10% or more of any class of voting
securities of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Applicable Contract"--any Contract (a) under which the Company has or
may acquire any rights, (b) under which the Company has or may become subject to
any obligation or liability, or (c) by which the Company or any asset owned or
used by it is or may become bound.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the reasonable efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved expeditiously; provided, however, that an obligation to use
Best Efforts under this Agreement does not require the Person subject to that
obligation to take action if it would result in a materially adverse change in
the benefits to such Person of this Agreement and the Contemplated Transactions.
"Breach"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument or agreement
delivered pursuant to this Agreement will be deemed to have occurred if there is
or has been any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision.
"Business Days"--each day, except Saturdays, Sundays and legal holidays
in the State of New Jersey, ending at 5:00 p.m., Eastern Standard Time or
Eastern Daylight Savings Time, whichever is then in effect in New Jersey.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer's Closing Documents" -- as defined in Section 2.4(b)(v).
"Buyer's Releases" --as defined in Section 2.4(b)(iv).
"Buyer Disclosure Letter"--the disclosure letter delivered by Buyer to
Stockholders concurrently with the execution and delivery of this Agreement.
"Certified Indebtedness Statement"-- as defined in Section 2.4(a)(v)
"Closing"--as defined in Section 2.3.
"Closing Date"--as defined in Section 2.3.
"Company"--as defined in the first paragraph of this Agreement.
"Company Shares"--as defined in the Recitals of this Agreement.
"Competing Business"--as defined in Section 3.24.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including, without limitation, any Governmental Authorization).
"Constructive Knowledge" -- An individual will be deemed to have
"Constructive Knowledge" of a particular fact or other matter if:
(a) such individual has Actual Knowledge of such fact or other
matter; or
(b) a prudent individual would be expected to discover or
otherwise become aware of such fact or other matter in the course of
conducting a reasonable inquiry or investigation concerning the
existence of such fact or other matter.
A Person (other than an individual) will be deemed to have
"Constructive Knowledge" of a particular fact or other matter if any individual
who is serving, or who has at the relevant time served, as a director, officer,
Key Employee (only in the case of the Company), partner, executor or trustee of
such Person (or any similar capacity) has, or at any time had, Constructive
Knowledge of such fact or other matter.
For the purposes of this Agreement, (i) the Constructive Knowledge of
any Stockholder shall be attributed to each of the other Stockholders and (ii)
if the Company has Constructive
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Knowledge of a particular fact or other matter, then each of the Stockholders
shall be deemed to have Constructive Knowledge of such fact or other matter.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Company Shares by Stockholders to Buyer;
(b) the execution, delivery, and performance of this
Agreement, the Employment Agreements, the Set-Off Agreements, the
Stockholders' Releases, the Designated Contract Releases and the Other
Stockholder Documents (collectively, the "Stockholders' Closing
Documents"); and
(c) the performance by Buyer and Stockholders of their
respective covenants and obligations under this Agreement and the other
Stockholders' Closing Documents.
"Contract"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Customers and Distributors"--as defined in Section 3.29.
"Damages"--as defined in Section 5.2.
"Designated Contracts"--any Contract to which the Company is a party or
by which it is bound pursuant to which the Company has had, at any time since
the date of the Balance Sheet, or (assuming that the Contemplated Transactions
had not been consummated) hereafter will have any liability (contingent or
otherwise) or obligations (contingent or otherwise) to any present or former
stockholder, officer, director of the Company or Harriette Gluckow or Michelle
Gluckow, or any Affiliate thereof (including, without limitation, liability for
buy-out or termination costs, early termination fees, costs or penalties, or
similar liability or obligations).
"Designated Contract Releases"--as defined in Section 2.4(a)(vi).
"Disclosure Letter"--the disclosure letter delivered by Stockholders to
Buyer concurrently with the execution and delivery of this Agreement.
"ECRA" --the Environmental Cleanup Responsibility Act as enacted in the
state of New Jersey and as in effect from time to time, and any regulations
promulgated thereunder.
"Employment Agreements"--as defined in Section 2.4(a)(iii).
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
"Encumbrance"--any mortgage, conditional sale agreement, charge, lien,
option, pledge, security interest, security title, or encumbrance.
"Environment"--soil, land surface or subsurface strata, surface waters
(including, without limitation, navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including, without limitation, indoor air), plant and
animal life, and any other environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including, without limitation, on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances
or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including, without limitation, any investigation, cleanup,
removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
resource extraction or construction, that could have significant impact
on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health
or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and the regulations and rules issued pursuant to that Act or any
successor law.
"Exchange Act"--the Securities Exchange Act of 1934, as amended, or any
successor law, and the regulations and rules issued pursuant to that Act or any
successor law.
"Facilities"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or material equipment (including, without limitation, motor
vehicles, tank cars, and rolling stock) currently or formerly owned or operated
by the Company or its Predecessors).
"GAAP"--generally accepted United States accounting principles.
"Governmental Authorization"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or
other political jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including, without limitation, any governmental agency, branch,
department, official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
governmental, administrative, executive, judicial, legislative,
regulatory, or taxing authority or power of any nature.
"Group Representative" --as defined in Section 5.5.1
"Groups" --shall mean all of the following, and a "Group" shall mean
any one of (i) the "Merrill Lynch Group", comprised of Merrill Lynch Business
Capital, Inc., (ii) the "Gluckow Group", comprised of Gary S. Gluckow and
Seymour Gluckow, and (iii) the "Rothschild Group", comprised of the other
Stockholders.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including,
without limitation, any withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, about, or from the Facilities or any part thereof into
the Environment, and any Environmental, Health and Safety Liabilities that
present or pose an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company to
the extent they arise out of or are related to the Environment.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined by a Governmental
Body (and promulgated in writing) to be, hazardous, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any Environmental Law which is
applicable to the Company or its Facilities or its operations, including,
without limitation, any admixture or solution thereof.
"Indemnified Persons"--as defined in Section 5.2.
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STOCK PURCHASE AGREEMENT
"Intellectual Property Assets" --as defined in Section 3.21.
"Interim Balance Sheet"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code of
1986, as amended, or any successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"ISRA" --Industrial Site Recovery Act as enacted in the state of New
Jersey, and any successor statute thereto and any regulations promulgated
thereunder.
"Key Employee" -- each of those individuals listed in Part 1.1 of the
Disclosure Letter.
"Leased Real Property" --as defined in Section 3.6(a).
"Legal Requirement"--any applicable federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Material," "in all material respects," "materially adversely," and/or
"materially and adversely" shall mean -- (a) solely for the purposes of those
representations or warranties contained in Section 3 of this Agreement to the
extent and only to the extent that they directly relate to Environmental Law or
Environmental, Health and Safety Liabilities, those events, conditions and/or
circumstances which result or may reasonably be expected to result individually,
or when taken in the aggregate with all other such events, conditions and/or
circumstances (whether relating to one or more of such representations and
warranties and whether contained in one or more Sections, subsections or clauses
hereof) in Damages to Buyer and/or the Company in excess of $100,000, and (b)
solely for the purposes of the representations and warranties contained in
Section 3 of this Agreement to the extent that they do not directly relate to
Environmental Law or Environmental, Health and Safety Liabilities, those events,
conditions and/or circumstances which result, or may reasonably be expected to
result individually, or when taken in the aggregate with all other such events,
conditions and/or circumstances (whether relating to one or more of such
representations and warranties within a particular specifically identified
subsection or clause hereof (by way of example only, the Damages computation
would be cumulative within Section 3.16(a)(i) but not among Sections 3.16(a)(i)
and 3.16(a)(ii) hereof)) in Damages to Buyer and/or the Company in excess of
$5,000.
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STOCK PURCHASE AGREEMENT
"Material Adverse Effect upon the Company"-- a material adverse effect
upon the Prospects, operations, properties, assets, or financial condition of
the Company.
"Material Applicable Contract" -- as defined in Section 3.16(d)(i).
"Mr. Gluckow"--Mr. Gary S. Gluckow, an individual resident in Alpine,
New Jersey and a Stockholder.
"Ms. Gluckow"--Ms. Michelle Gluckow, an individual resident in Alpine,
New Jersey.
"NJDEP" -- as defined in Section 3.6(a)(iv).
"Occupational Safety and Health Law"--any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including,
without limitation, those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order"--any award, decision, injunction, judgment, order, ruling, or
subpoena, entered, issued, made, or rendered by any court, administrative
agency, or other Governmental Body or by any arbitrator having jurisdiction in
the matter.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent in nature and magnitude with the
past practices of such Person and is taken in the ordinary course of
the normal day-to-day operations of such Person; and
(b) such action is not required to be authorized specifically
by the board of directors of such Person (or by any Person or group of
Persons exercising similar authority).
"Organizational Documents"--(a) the articles or certificate of
incorporation or organization and the bylaws of a corporation; (b) the
partnership agreement and any certificate of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) any organizational document
and any operating agreement of any limited liability company; (e) any charter or
similar document adopted or filed in connection with the creation, formation, or
organization of a Person; and (f) any amendment to any of the foregoing.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
"Other Buyer Documents"--as defined in Section 2.4(b)(v).
"Other Stockholder Documents"--as defined in Section 2.4(a)(vii).
"Outstanding Indebtedness"--as defined in Section 2.4(a)(v).
"Permitted Encumbrances" -- as defined in Section 3.6(a)(ii).
"Person"--any individual, corporation (including, without limitation,
any non-profit corporation), general or limited partnership, limited liability
company, limited liability partnership, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Body.
"Predecessor"--as defined in Section 3.12.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Proprietary Rights Agreement"--as defined in Section 3.19(b).
"Prospects" -- the prospects of the Company to the extent evidenced by
the projections (the "Projections") with respect to the future performance of
the Company as described in Part 1.2 of the Disclosure Letter.
"Purchase Price"--as defined in Section 2.2.
"Real Property Encumbrances" --as defined in Section 3.6(a)(i).
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, manager, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
member, manager, executor, or trustee of such specified Person (or in a
similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause
(b) or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree of kinship, and (iv) any other
natural person who resides with such individual (excluding, in each case from
this clause (iv), any domestic employee or non-related house guest residing in
the home of such individual), and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including, without limitation, legal counsel, accountants, and financial
advisors.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
"Securities Act"--the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Set-Off Agreements" -- as defined in Section 2.4(a)(iii).
"Stock Restrictions"--as defined in Section 2.1.
"Stockholders"--as defined in the first paragraph of this Agreement.
"Stockholders' Releases"--as defined in Section 2.4(a)(ii).
"Stockholders' Closing Documents"--as defined under the definition of
"Contemplated Transactions" in this Section 1.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries.
"Suppliers"--as defined in Section 3.29.
"Tax"--any tax (including, without limitation, any income tax, capital
gains tax, value-added tax, sales tax, use tax, property tax, gift tax, or
estate tax), levy, assessment, tariff, duty (including, without limitation, any
customs duty), deficiency, or other fee, and any related charge or amount
(including, without limitation, any fine, penalty, interest, or addition to
tax), imposed, assessed, or collected by or under the authority of any
Governmental Body having jurisdiction to so act with respect thereto or payable
pursuant to any tax-sharing agreement or any other Contract relating to the
sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency,
or fee.
"Tax Return"--any return (including, without limitation, any
information return), report, statement, schedule, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body having jurisdiction to so act with respect
thereto in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
"Threatened"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing)
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. SALE AND TRANSFER OF COMPANY SHARES; PURCHASE PRICE; CLOSING
2.1 COMPANY SHARES. Subject to the terms and conditions of this
Agreement, Stockholders are hereby selling and transferring the Company Shares
to Buyer, and Buyer is hereby purchasing the Company Shares from Stockholders.
Contemporaneously with the execution and delivery of this Agreement, each
Stockholder is delivering or causing to be delivered to Buyer certificates
representing all of the Company Shares owned by such Stockholder, as set forth
in Exhibit 2.1. Such stock certificates shall be duly endorsed in blank for
transfer or shall be presented with stock powers duly executed in blank, with
signature guarantees by a commercial bank or a member firm of the New York Stock
Exchange and such other documents as may be required hereunder or otherwise
reasonably required by Buyer to effect a valid transfer of such Company Shares
by such Stockholder, free and clear of any and all (i) rights of first refusal
or restrictions of any kind, including any restriction on use, voting, transfer,
receipt of income or expense of any other attribute of ownership ("Stock
Restrictions") and (ii) Encumbrances.
2.2 PURCHASE PRICE AND PAYMENT. In consideration of the sale by the
Stockholders to Buyer of all of the Company Shares and in reliance upon the
representations, warranties and covenants of the Stockholders herein contained,
Buyer agrees that it is delivering to the Stockholders, in the aggregate,
payment (by wire transfer of immediately available United States Funds) equal to
$12,701,000.00 (herein, the "Purchase Price"), subject to and in accordance
with, the provisions set forth in this entire Section 2.2. The Purchase Price
due to Stockholders (as specified in Exhibit 2.1) shall be paid to Stockholders
by Buyer's wire transfer of immediately available United States Funds payable to
Jack M. Platt, Esquire, as agent for the benefit of each of the Stockholders.
Written wire instructions have been provided to Buyer.
2.3 TIME AND PLACE OF CLOSING. The closing of the purchase and
sale provided for in this Agreement (herein called the "Closing") is being held
at the offices of Jack M. Platt, Esquire, One Rockefeller Plaza, New York, New
York 10020 on July 21, 1997 at 10:00 P.M. The date on, and the time at which,
the Closing occurs is hereinafter referred to as the "Closing Date."
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STOCK PURCHASE AGREEMENT
2.4 CLOSING OBLIGATIONS. At the Closing:
(a) Stockholders are delivering to Buyer:
(i) certificates representing all of the Company
Shares, duly endorsed (or accompanied by duly executed stock
powers), with signatures guaranteed by a commercial bank or by
a member firm of the New York Stock Exchange, for transfer to
Buyer;
(ii) releases in the form of Exhibit 2.4(a)(ii)
executed by each of the Stockholders (collectively,
"Stockholders' Releases");
(iii) an employment agreement in the form of Exhibit
2.4(a)(iii)(x), executed by Mr. Gluckow and an employment
agreement in the form of Exhibit 2.4(a)(iii)(y) executed by
Ms. Gluckow (collectively, the "Employment Agreements") and
the Set-Off Agreements dated of even date herewith between
Buyer and each of Mr. Gluckow and Ms. Gluckow (collectively,
the Set-Off Agreements);
(iv) the Disclosure Letter executed by each of the
Stockholders;
(v) A certified statement (the "Certified
Indebtedness Statement") to be signed by each of the
Stockholders as of the Closing Date, setting forth the amount
of Outstanding Indebtedness. (For purposes of this Agreement,
"Outstanding Indebtedness" shall mean the amount of
outstanding obligations for borrowed monies and operating
equipment leases (including, without limitation, accrued and
unpaid interest thereon) of the Company in the aggregate, as
of the Closing Date); and
(vi) a release executed in favor of Buyer and the
Company by each party to each of the Designated Contracts in a
form reasonably acceptable to Buyer and which may be included
as part of the Stockholder's Releases (the "Designated
Contract Releases");
(vii) those additional agreements, documents and
instruments listed on Exhibit 2.4(a)(vii) (the "Other
Stockholder Documents") and the other Stockholders' Closing
Documents ; and
(viii) The opinion of Jack M. Platt, Esq., counsel to
the Stockholders and the Company, in the form of Exhibit
2.4(a)(viii); and
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
(b) Buyer is delivering to Stockholders:
(i) the amounts of cash payable to the respective
Stockholders as set forth in Exhibit 2.1, to be effected by
wire transfer of funds to the account of Jack M. Platt,
Esquire as agent for the benefit of each of the respective
Stockholders pursuant to Section 2.2;
(ii) the Buyer Disclosure Letter executed by the
Buyer;
(iii) the Employment Agreements and the Set-Off
Agreements executed by Buyer;
(iv) releases in the form of Exhibit 2.4(b)(iv)
executed by the Buyer and the Company ( the "Buyer's
Releases");
(v) those additional agreements, documents and
instruments listed on Exhibit 2.4(b)(v) (the "Other Buyer
Documents" and together with this Agreement, the Buyer
Disclosure Letter, the Employment Agreements, the Set- Off
Agreements, and the Buyer's Releases, collectively, the
"Buyer's Closing Documents"); and
(vi) the opinion of Goodwin, Procter & Hoar LLP,
counsel to the Buyer, in the form of Exhibit 2.4(b)(vi).
2.5 TRANSFER TAXES. All transfer taxes, fees and duties under
applicable law incurred in connection with the sale and transfer of the Company
Shares under this Agreement will be borne and paid by the Stockholders and the
Stockholders shall promptly reimburse the Company and Buyer for any such tax,
fee or duty which any of them is required to pay under applicable law.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, the Stockholders hereby make to
Buyer the representations and warranties contained in this Section 3. Except to
the extent otherwise expressly provided in Section 3.37 of this Agreement and
subject to any additional limitations on liability expressly set forth in
Sections 5.6 and 5.7 of this Agreement, all representations and warranties set
forth in this Section 3 shall be several as to the three Groups, so that the
Merrill Lynch Group shall be severally responsible and liable for 7.5% of any
such Breach under this Section 3 and any Damages relating thereto, the
Rothschild Group shall be severally responsible and liable for 50.875% of any
Breach under this Section 3 and any Damages
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
relating thereto (but Nathaniel de Rothschild and Donald B. Elitzer shall be
jointly and severally responsible and liable for such 50.875% of any Breach
under this Section 3 and any Damages relating thereto for which any Stockholder
which is a member of the Rothschild Group may be liable hereunder, including,
without limitation, for any liability for Breach or asserted Breach of any
representation and warranty under Section 3.37), and the Gluckow Group shall be
severally responsible and liable for 41.625% of any Breach under this Section 3
and any Damages relating thereto (but each of the members of the Gluckow Group
shall be jointly and severally responsible and liable for 41.625% of any Breach
under this Section 3 and any Damages relating thereto); provided; however, that
no Stockholder shall have any right of indemnity or contribution from the
Company with respect to any Breach or asserted Breach of any representation or
warranty under this Section 3.
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1(a) of the Disclosure Letter contains a complete
and accurate list for the Company of its actual corporate name, its jurisdiction
of incorporation, other jurisdictions in which it is authorized to do business,
and its capitalization (including, without limitation, the identity and mailing
address of each Stockholder and the number of Company Shares held by each). The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of Delaware, with full corporate power and authority to conduct
its business as it is now being conducted, to own or use the properties and
assets that it purports to own or use, and to perform all its obligations under
Applicable Contracts. The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of (i) New Jersey and (ii)
each other state or jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except in the case of this clause (ii) only, where
the failure to so qualify or the failure to be in good standing would not have a
Material Adverse Effect upon the Company.
(b) Stockholders have delivered to Buyer true and complete
copies of the Organizational Documents of the Company, as currently in effect.
(c) Except as set forth in Part 3.1(c) of the Disclosure
Letter, neither Crown Bookbindery, Inc. ("Crown") nor the Company has or has
ever had any Subsidiary.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of each of the Stockholders, enforceable against Stockholders in
accordance with its terms. The other Stockholders' Closing Documents constitute
the legal, valid, and binding obligations of each of the respective Stockholders
who are parties thereto, enforceable against such
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Stockholders in accordance with their respective terms. Each of the Stockholders
has the right, power, authority and capacity to execute and deliver this
Agreement and the other Stockholders' Closing Documents to which such
Stockholder is a party and to perform such Stockholders' respective obligations
under this Agreement and such other Stockholders' Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement or the other Stockholders'
Closing Documents nor the consummation or performance of any of the Contemplated
Transactions by the Stockholders will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents
of the Company, or (B) any resolution adopted by the board of
directors or the shareholders of the Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person
the right to challenge any of the Contemplated Transactions or
to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Company or any
Stockholder, or any of the assets owned or used by the
Company, may be subject (it being acknowledged by Buyer that
any relief seeking specific performance or other equitable
remedy may be within the discretion of a court having
jurisdiction with respect thereto);
(iii) contravene, conflict with, or result in a
violation in any material respect of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets
owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to,
or to become liable for the payment of, any Tax (other than
income Tax with respect to the Company's earnings in respect
of any period following the Closing);
(v) to the Constructive Knowledge of the
Stockholders, cause any of the material assets owned by the
Company to be reassessed or revalued by any Taxing authority
or other Governmental Body;
(vi) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person
the right to declare a default or exercise any
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or (in any material respect) modify
any Applicable Contract; or
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or
used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, neither any
Stockholder nor the Company is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement and the other Stockholders' Closing Documents or the
consummation or performance by the Stockholders of any of the Contemplated
Transactions.
3.3 CAPITALIZATION. The authorized equity securities of the Company
consist of (i) 2,000 shares of common stock, par value $.0001 per share, of
which 1,081.081 shares are issued and outstanding and constitute the Company
Shares and (ii) 1,000 shares of preferred stock, par value $.0001 per share, of
which no shares are issued and outstanding. The ownership of the Company Shares
is set forth in Exhibit 2.1. Except as set forth in Part 3.3 of the Disclosure
Letter, no legend or other reference to any purported Encumbrance or Stock
Restriction appears upon any certificate representing equity securities of the
Company. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in Part 3.3 of the Disclosure Letter, there are no Contracts
(including, without limitation, any stock option agreements or warrants, written
or oral) relating to the issuance, sale, or transfer of any equity securities or
other securities of the Company. None of the outstanding equity securities or
other securities of the Company was issued in violation of the Securities Act or
any other Legal Requirement. The Company does not own, and has no Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business except indirectly
through short-term investments in money-market accounts and similar accounts,
all of which are included in the Balance Sheet.
3.4 FINANCIAL STATEMENTS. (a) Stockholders have delivered to Buyer: (i)
consolidated balance sheets of the Company as at September 30 in each of the
years 1993 through 1996, inclusive, and the related consolidated statements of
income, changes in stockholders' equity, and cash flow for each of the fiscal
years then ended prepared in accordance with GAAP, consistently applied,
together with the notes thereto and the audit and opinion thereon of Ernst &
Young LLP, independent certified public accountants, (for purposes of this
Agreement, the audited consolidated balance sheet of the Company as at September
30, 1996 (including, without limitation, the notes thereto) is referred to
herein as the "Balance Sheet"), and (ii) an unaudited consolidated balance sheet
of the Company as at May 31, 1997 with a comparative balance sheet as at May 31,
1996 (the "Interim Balance Sheet") and the related unaudited consolidated
statements of income, changes in stockholders'
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
equity, and cash flow for the eight (8) months then ended prepared in accordance
with GAAP, consistently applied. Such financial statements and notes fairly
present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the absence of notes (that, if
presented, would not differ materially from those included in the Balance Sheet
and other audited financial statements); the financial statements referred to in
this Section 3.4 reflect the consistent application of GAAP throughout the
periods involved, except as disclosed in the notes to such financial statements.
No financial statements of any Person other than the Company are required by
GAAP to be included in the consolidated financial statements of the Company.
(b) The Projections attached to Part 1.2 of the Disclosure
Letter were prepared in good faith, and, to the Constructive Knowledge of the
Stockholders and the Company, the assumptions employed in their preparation were
reasonable at the time of such preparation and on the date hereof, but Buyer
acknowledges that financial performance may vary from projections and forecasts
because, among other things, events and circumstances frequently do not occur as
expected and because the period to which the projections relate may be affected
by changes in ownership and control of the Company following the Closing Date;
and the parties further acknowledge that the assumptions employed include,
without limitation, that the business will continue to operate as of the date
hereof and will not include corporate charges above those used by the Company in
preparing such Projections or any non-recurring or extraordinary post-closing
costs associated directly or indirectly with the Buyer's acquisition of the
stock of the Company.
3.5 BOOKS AND RECORDS. Except as set forth in Part 3.5 of the
Disclosure Letter, the books of account, minute books, stock record books, and
other records of the Company, all of which have been made available to Buyer,
are complete and correct in all material respects and have been maintained in
accordance with sound business practices, including, without limitation, the
maintenance of an adequate system of internal accounting controls. Except as set
forth in Part 3.5 of the Disclosure Letter, the minute books of the Company
contain accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders, the Boards of Directors, and committees of
the Boards of Directors of the Company. Except as set forth in Part 3.5 of the
Disclosure Letter, no meeting of any such stockholders, Board of Directors, or
committee has been held at which any action was taken or authorized for which
minutes have not been prepared and are not contained in such minute books. All
of those books and records are in the possession of the Company.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
3.6 REAL AND PERSONAL PROPERTY.
(a) Real Property. The Company does not own, directly or
indirectly, any real property. All of the real property leased by the Company is
identified in Part 3.6(a) of the Disclosure Letter (herein referred to as the
"Leased Real Property").
(i) Title. Except for the exceptions contained in
title policies issued by Stewart Title Guaranty Co. (Nos.
H-4065, dated 2/23/82, and H-6126-M, dated 2/28/85), and in
the reports of Phoenix Title Agency, Inc., dated 5/30/97 (Nos.
CCC-971033 and CCC-971034), copies of which have been
furnished to Buyer's counsel, to the Actual Knowledge of
Stockholders, except as set forth in Part 3.6(a) of the
Disclosure Letter, the lessors of the Leased Real Property
have good, clear, record title to the Leased Real Property,
free and clear of all Encumbrances, easements, covenants,
restrictions, leases, mortgages, assessments, claims, rights,
judgments, encroachments or other matters affecting title
(collectively, "Real Property Encumbrances"), other than:
(x) easements, covenants,
restrictions and similar encumbrances that do not and
could not materially interfere with the use of the
Leased Real Property as currently used and improved
by the Company, and
(y) minor encroachments that do not
and, to the Actual Knowledge of Stockholders, could
not materially adversely affect the value or use of
the Leased Real Property as currently used by the
Company and that could be removed without material
cost
((x) and (y) being herein collectively referred to as
"Permitted Encumbrances"). Except as set forth in Part 3.6(a)
of the Disclosure Letter, and in the title policies and
reports referenced in Section 3.6(a)(i) above, the Company has
good, clear, record and marketable title to enforceable
leasehold interests in the Leased Real Property, free and
clear of all Real Property Encumbrances other than Permitted
Encumbrances.
(ii) Status of Leases. All leases of Leased Real
Property are identified on Part 3.6(a) of the Disclosure
Letter, and true and complete copies thereof have been
delivered to Buyer. Each of said leases has been duly
authorized and executed by the Company and, to the Actual
Knowledge of Stockholders, by the other parties thereto, and
is in full force and effect. To the Constructive Knowledge of
Stockholders, the Company is not in default under any of said
leases, nor has any event occurred which, with notice or the
passage
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
of time, or both, would give rise to such a default. To the
Actual Knowledge of Stockholders, the other party(ies) to each
of said leases is not in default under any of said leases and
there is no event which, with notice or the passage of time,
or both, would give rise to such a default.
(iii) Condition of Leased Real Property. None of the
Leased Real Property is located in an area designated by any
Governmental Body (having jurisdiction with respect to the
subject matter) as being within a flood plain or subject to
special flood or other hazards. Access to the Leased Real
Property is by a public way or public street. Except as set
forth in Part 3.6(a) of the Disclosure Letter, all water,
sewer, gas, electric, telephone, drainage and other utilities
required by law or necessary for the current operations of the
Company on the Leased Real Property have been connected under
valid permits and pursuant to valid easements where required,
and are sufficient to service the Leased Real Property in all
material respects and in good operating condition.
(iv) Compliance with the Law. Neither the Company nor
any Stockholder has received any notice from any Governmental
Body of any violation of any Legal Requirement or Governmental
Authorization with respect to any Leased Real Property that
has not been heretofore corrected and no such violation exists
which could materially and adversely affect the operation or
value of any Leased Real Property. All improvements located on
or constituting part of the Leased Real Property and their use
and operation by the Company have been since October 1, 1995
and are now in compliance in all material respects with all
applicable Legal Requirements and Governmental Authorizations,
except as set forth in Part 3.6(a) of the Disclosure Letter.
No Consent to the Contemplated Transactions is required of any
Governmental Body with jurisdiction over any aspect of the
Leased Real Property or its use or operations, except for
approval from the New Jersey Department of Environmental
Protection ("NJDEP") pursuant to ISRA, which has been obtained
(and a true and complete copy of which has been delivered to
the Buyer). Neither the Company nor any Stockholder has
received any notice of any current real estate tax deficiency
or assessment (other than regular, ongoing periodic
assessments for real property, town and school Taxes) or has
Actual Knowledge of any proposed deficiency, claim or
assessment (other than regular, ongoing, periodic assessments
for real property, town and school Taxes) with respect to any
of the Leased Real Property, or any pending or Threatened
condemnation thereof.
(b) Personal Property. A complete description of each piece of
machinery and equipment of the Company having an estimated fair market value of
in excess of $30,000
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
is contained in Part 3.6(b) of the Disclosure Letter. Except as specifically
disclosed in Part 3.6(b) of the Disclosure Letter, the Company has good and
marketable title to all of its personal property. None of such personal property
is subject to any Encumbrance except as specifically disclosed in Part 3.6(b) of
the Disclosure Letter. The Balance Sheet reflects all personal property of the
Company except items that have been fully expensed or fully depreciated in
accordance with GAAP. Except as otherwise specified in Part 3.6(b) of the
Disclosure Schedule, all material leasehold improvements, furnishings, machinery
and equipment of the Company are in good operating condition, have been well
maintained, and in all material respects comply with all applicable Legal and
Governmental Authorizations. Except as set forth in Part 3.6 of the Disclosure
Letter, to the Actual Knowledge of Stockholders, there are no pending or
Threatened changes of any such Legal Requirements or Governmental Authorizations
which could have a Material Adverse Effect upon the Company.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth in Part
3.7 of the Disclosure Letter, to the Actual Knowledge of Stockholders, the
Leased Real Property, buildings, plants, structures, material machinery and
equipment of the Company are structurally sound, are in good operating condition
and repair in all material respects, and are adequate in all material respects
for the uses to which they are being put, and none of such Leased Real Property,
buildings, plants, structures, or machinery and equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. Except as set forth in Part 3.7 of the
Disclosure Letter, to the Constructive Knowledge of Stockholders, the buildings,
plants, structures, and equipment of the Company are sufficient for the
continued conduct of the Company's business after the Closing in substantially
the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Company that
are reflected on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date (collectively, the
"Accounts Receivable") represent valid obligations arising from sales actually
made or services actually performed and, in each case, properly recorded in
accordance with GAAP in the books and records of the Company. To the Actual
Knowledge of Stockholders, except as set forth in Part 3.8 of the Disclosure
Letter, there is existing, as of the date hereof, no dispute, contest, claim, or
right of set-off involving an amount, individually or in the aggregate, in
excess of $5,000 with any obligor of any Account Receivable which is outstanding
on the Closing Date, relating to the amount or validity of, or quality of
services or products covered by such Accounts Receivable. Part 3.8 of the
Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Balance Sheet, which list sets forth
the aging of such Accounts Receivable.
3.9 INVENTORY. All inventory of the Company, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and
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salable in the Company's Ordinary Course of Business, except for obsolete items
and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Balance Sheet or the Interim Balance
Sheet , as the case may be. All inventories not written off have been properly
valued in accordance with GAAP at the lower of cost or market on a first-in,
first-out basis. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but in the
judgment of the Company's management, are reasonable in the present
circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.10 of
the Disclosure Letter, to the Actual Knowledge of Stockholders, the Company has
no liabilities or obligations of any nature (whether absolute, accrued,
contingent, or otherwise) which individually or collectively could have a
Material Adverse Effect upon the Company, except for liabilities or obligations
reflected or reserved against in the Balance Sheet or the Interim Balance Sheet
and current liabilities incurred in the Company's Ordinary Course of Business
since the respective dates thereof and properly recorded in accordance with GAAP
in the books and records of the Company.
3.11 TAXES.
(a) For all periods which include August 18, 1989 or any
period thereafter, the Company has filed or caused to be filed prior to the date
of this Agreement all United States federal and state, local and foreign Tax
Returns that are or were required to be filed by or with respect to it, pursuant
to applicable Legal Requirements. Stockholders have delivered to Buyer copies
of, and Part 3.11 of the Disclosure Letter contains a complete and accurate list
of, all such Tax Returns (including any amendments thereof) filed prior to the
date of this Agreement. The Company has paid, or made provision for the payment
of, all Taxes that have or may have become due pursuant to such Tax Returns or
otherwise pursuant to applicable Legal Requirements, or pursuant to any
assessment received by Stockholders or the Company, except such Taxes, if any,
as are listed in Part 3.11 of the Disclosure Letter and are being contested in
good faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided in the Balance Sheet and the Interim Balance Sheet.
(b) None of the United States federal and state income Tax
Returns of the Company have been audited by the IRS or relevant state tax
authorities. There have been no adjustments to, or deficiencies proposed by the
IRS or State Taxing Authority with respect to, any of the United States federal
and state income Tax Returns filed by the Company prior to the date hereof for
any taxable years which include August 18, 1989 or any period thereafter. Except
as described in Part 3.11 of the Disclosure Letter, no Stockholder or the
Company has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or for
which the Company may be liable.
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(c) To the Constructive Knowledge of Stockholders, the
charges, accruals, and reserves with respect to Taxes on the respective books of
the Company are adequate (determined in accordance with GAAP) and are at least
equal to the Company's liability for Taxes. To the Actual Knowledge of
Stockholders, there exists no proposed tax assessment against the Company except
as disclosed in the Balance Sheet or in Part 3.11 of the Disclosure Letter. No
consent to the application of Section 341(f)(2) of the IRC has been filed with
respect to any property or assets held, acquired, or to be acquired by the
Company. All Taxes that the Company is or was required by applicable Legal
Requirements to withhold or collect for any period which includes August 18,
1989 or any period thereafter, have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by the Company for any period which
includes August 18, 1989 or any period thereafter, are true, correct, and
complete in all material respects, including, without limitation, with respect
to any accruals or valuations of tangible or intangible assets. There is no tax
sharing agreement that will require any payment by the Company after the date of
this Agreement. The Company is not, and within the five-year period preceding
the Closing Date has not been, an "S" corporation.
(e) The Company has disclosed on its United States federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Section
6662 of the IRC or could give rise to a substantial underpayment of any state or
local taxes.
3.12 EMPLOYEE BENEFIT PROGRAMS.
(a) Part 3.12 of the Disclosure Letter lists every Employee
Program (as defined below) that has been maintained (as defined below) by the
Company or any of the companies merged with and into the Company or acquired by
the Company prior to the date hereof (collectively, the "Predecessors") (i) at
any time since July 1, 1991 and (ii) any other Employee Program so maintained at
any time prior to the date hereof to the extent that the Company has any
liability (contingent or otherwise) with respect thereto.
(b) Each Employee Program which has ever been maintained by
the Company or any of its Predecessors and which has at any time been intended
to qualify under Section 401(a) or 501(c)(9) of the IRC has received a favorable
determination or approval letter from the IRS regarding its qualification under
such section and, to the Constructive Knowledge of the Stockholders, has, in
fact, been qualified under the applicable section of the IRC from the effective
date of such Employee Program through and including the Closing (or, if earlier,
the date that all of such Employee Program's assets were distributed). No event
or
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omission has occurred which would cause any such Employee Program to lose its
qualification under the applicable IRC section.
(c) To the Constructive Knowledge of Stockholders, no material
failure of any party to comply with any Legal Requirement applicable to the
Employee Programs that have been maintained by the Company or any of its
Predecessors has occurred or exists. With respect to any Employee Program ever
maintained by the Company or any of its Predecessors and which is listed or
required to be listed in Part 3.12 of the Disclosure Letter pursuant to Section
3.12(a) hereof, there has occurred no "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975 of the IRC, or breach of any duty under
ERISA or other applicable Legal Requirement (including, without limitation, any
health care continuation requirements or any other Tax law requirements, or
conditions to favorable Tax treatment, applicable to such plan), which will
result, directly or indirectly, in any material Taxes, penalties or other
liability to the Company or Buyer. No litigation, arbitration, or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or, to the Actual
Knowledge of Stockholders, Threatened with respect to any such Employee Program.
(d) Neither the Company nor any Affiliate (as defined below)
nor any of the Company's Predecessors (i) has ever maintained any Employee
Program which has been subject to Title IV of ERISA (including, but not limited
to, any Multiemployer Plan (as defined below)) or (ii) has ever provided health
care or any other non-pension benefits to any employees after their employment
is terminated (other than as required by Part 6 of Subtitle B of Title I of
ERISA) or has ever promised to provide such post-termination benefits.
(e) With respect to each Employee Program maintained by the
Company or any of its Predecessors at any time prior to the Closing and which is
listed or required to be listed in Part 3.12 of the Disclosure Letter pursuant
to Section 3.12(a) hereof, complete and correct copies of the following
documents (if applicable to such Employee Program) have previously been
delivered to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, any trust agreements) as they may have been amended; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under IRC Sections 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three most
recently filed IRS Forms 5500, with all applicable schedules and accountants'
opinions attached thereto; (iv) the summary plan description for such Employee
Program (or other descriptions of such Employee Program provided to employees)
and all modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy) related to such Employee Program; (vi) any documents
evidencing any loan to an Employee Program that is a leveraged employee stock
ownership plan; and (vii) all other materials reasonably necessary for Buyer to
perform any of its responsibilities with respect to
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any Employee Program subsequent to the Closing (including, without limitation,
health care continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit
plans within the meaning of ERISA Section 3(3), including, but
not limited to, multiple employer welfare arrangements (within
the meaning of ERISA Section 3(4)), plans to which more than
one unaffiliated employer contributes and employee benefit
plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (B) all stock option plans, bonus or
incentive award plans, severance pay policies or agreements,
deferred compensation agreements, supplemental income
arrangements, vacation plans, and all other employee benefit
plans, agreements, and arrangements not described in (A)
above. In the case of an Employee Program funded through an
organization described in IRC Section 501(c)(9), each
reference to such Employee Program shall include a reference
to such organization.
(ii) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides (or has
promised to provide) benefits under such Employee Program, or
has any obligation (by agreement or under applicable law) to
contribute to or provide benefits under such Employee Program,
or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependents,
or beneficiaries.
(iii) An entity is an "Affiliate" of the Company if
it would have ever been considered a single employer with the
Company under ERISA Section 4001(b) or part of the same
"controlled group" as the Company for purposes of ERISA
Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or
non-pension) employee benefit plan to which more than one
employer contributes and which is maintained pursuant to one
or more collective bargaining agreements.
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.13 of the Disclosure Letter:
(i) to the Constructive Knowledge of Stockholders,
the Company is, and at all times since October 1, 1995, has
been, in compliance in all material
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respects with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) to the Constructive Knowledge of Stockholders,
no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result
in a material violation by the Company of, or a failure on the
part of the Company to comply in any material respect with,
any Legal Requirement, or (B) may give rise to any obligation
on the part of the Company to undertake, or to bear all or any
portion of the cost of, any material remedial action of any
nature; and
(iii) to the Constructive Knowledge of Stockholders,
the Company has not received, at any time since October 1,
1995, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person
regarding (A) any actual, alleged or potential material
violation of, or failure to comply in any material respect
with, any Legal Requirement, or (B) any actual, alleged or
potential obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any material
remedial action of any nature.
(b) Part 3.13 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by the Company, or
by which the Company or any of the assets owned or used by the Company is bound.
To the Constructive Knowledge of Stockholders, each Governmental Authorization
listed or required to be listed in Part 3.13 of the Disclosure Letter is in
effect. Except as set forth in Part 3.13 of the Disclosure Letter:
(i) the Company is, and at all times since October 1,
1995, has been, in compliance in all material respects with
all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part
3.13 of the Disclosure Letter;
(ii) to the Constructive Knowledge of Stockholders,
no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result
directly or indirectly in a material violation of or a failure
to comply in any material respect with any term or requirement
of any Governmental Authorization listed or required to be
listed in Part 3.13 of the Disclosure Letter, or (B) result
directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any material
modification to, any Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Letter;
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(iii) the Company has not received, at any time since
October 1, 1995, any notice or other written communication
from any Governmental Body or any other Person regarding (A)
any actual, alleged or potential material violation of or
failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, alleged or
potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental
Authorization; and
(iv) to the Constructive Knowledge of Stockholders,
all applications required to have been filed for the renewal
of the Governmental Authorizations listed or required to be
listed in Part 3.13 of the Disclosure Letter have in all
material respects been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
To the Constructive Knowledge of Stockholders, the Governmental
Authorizations listed in Part 3.13 of the Disclosure Letter collectively
constitute all of the Governmental Authorizations necessary (a) to permit the
Company to lawfully conduct and operate its business in the manner it currently
conducts and operates such business and (b) to permit the Company to own and use
(in all material respects) its assets in the manner in which it currently owns
and uses such assets.
3.14 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.14 of the Disclosure Letter,
there is no pending Proceeding:
(i) that has been commenced by or against the Company
or that otherwise relates in any material respect to or may
materially and adversely affect the business of, or any of the
assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
in any material respect with, any of the Contemplated
Transactions.
To the Actual Knowledge of Stockholders, (1) no such Proceeding has
been Threatened, and (2) no event has occurred or circumstance exists that may
reasonably be expected to give rise to or serve as a basis for the commencement
of any such Proceeding. Stockholders have delivered to Buyer copies of all
material pleadings, correspondence, and other documents relating to each
Proceeding listed in Part 3.14 of the Disclosure Letter.
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Except as set forth in Part 3.14 of the Disclosure Letter, none of the
Proceedings listed in Part 3.14 of the Disclosure Letter will result in a
Material Adverse Effect upon the Company.
(b) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) there is no Order now in effect to which any of
the Company, or any of the assets owned or used by the
Company, is subject;
(ii) no Stockholder is subject to any material Order
that relates to the business of, or any of the assets owned or
used by, the Company; and
(iii) to the Actual Knowledge of Stockholders, no
officer, director, agent, or employee of the Company is
subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Company.
(c) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since October 1,
1995, has been, in compliance in all material respects with
all of the terms and requirements of each Order now in effect
to which it, or any of the assets owned or used by it, is or
has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or
lapse of time) a material violation of or failure to comply in
any material respect with any term or requirement of any Order
to which the Company, or any of the assets owned or used by
the Company, is subject; and
(iii) the Company has not received, at any time since
October 1, 1995, any notice or other written communication
from any Governmental Body or any other Person regarding any
actual, alleged or potential violation of, or failure to
comply with, any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is
or has been subject.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in Part
3.15 of the Disclosure Letter, since the date of the Balance Sheet, the Company
has conducted its businesses only in the Ordinary Course of Business and there
has not been:
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(a) any change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
the Company; issuance of any security convertible into such capital stock; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of such capital stock;
(b) any amendment to any of the Organizational Documents of
the Company;
(c) any payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Company's Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any stockholders, director,
officer, or employee;
(d) any adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) any damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
Prospects of the Company;
(f) any entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Company in excess of
$20,000;
(g) any sale (other than sales of inventory in the Company's
Ordinary Course of Business), lease, or other disposition of any asset or
property of the Company or mortgage, pledge, or imposition of any lien or other
Encumbrance on any material asset or property of the Company, including, without
limitation, the sale, lease, or other disposition of any of the Intellectual
Property Assets;
(h) any cancellation or waiver of any claims or rights or any
write-off with a value to the Company (either individually or in the aggregate)
in excess of $5,000;
(i) any change in the accounting methods used by the Company;
(j) any agreement, whether oral or written, by the Company to
do any of the foregoing;
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(k) to the Actual Knowledge of Stockholders, any other
occurrence or event that has or could result in a Material Adverse Effect upon
the Company; or
(l) any termination of or release or waiver of, any rights
under any Contract identified or, to the Actual Knowledge of Stockholders,
required to be identified in part 3.16(a) or 3.16(b) of the Disclosure Letter.
3.16 CONTRACTS; NO DEFAULTS
(a) Part 3.16(a) of the Disclosure Letter contains a complete
and accurate list, and Stockholders have made available to Buyer true and
complete copies (or written summaries in the case of oral arrangements), of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by
the Company for an amount or having a value in excess of
$20,000;
(ii) each Applicable Contract that involves
performance of services for, or delivery of goods or materials
to the Company for an amount or having a value in excess of
$20,000;
(iii) each Applicable Contract that was not entered
into in the Company's Ordinary Course of Business and that
involves expenditures or receipts of the Company in excess of
$5,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement affecting
the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property
(except personal property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $5,000 and with terms of less
than one year);
(v) each licensing agreement, sales agreement or
other Applicable Contract with respect to patents, trademarks,
copyrights, or other intellectual property (other than
licensing agreements normally accompanying non-material
software programs such as WordPerfect(TM) and Quicken(TM));
(vi) each currently effective Applicable Contract
with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of
the Intellectual Property Assets;
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(vii) each collective bargaining Applicable Contract
and each other Applicable Contract to or with any labor union
or other employee representative of a group of employees;
(viii) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by the Company with any
other Person;
(ix) each Applicable Contract containing covenants
that in any way purport to restrict the business activity of
the Company or, to the Actual Knowledge of Stockholders, any
Affiliate of the Company or limit the freedom of the Company
or any Affiliate of the Company to engage in any line of
business or to compete with any Person;
(x) each Applicable Contract providing for payments
to or by any Person based on sales, purchases, or profits,
other than direct payments for goods;
(xi) each power of attorney that is currently
effective and outstanding;
(xii) each Applicable Contract entered into other
than in the Company's Ordinary Course of Business that
contains or provides for an express undertaking by the Company
to be responsible for special, consequential or indirect
damages which may exceed $5,000;
(xiii) each Applicable Contract for capital
expenditures in excess of $20,000;
(xiv) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by the Company other than in the Company's Ordinary
Course of Business; and
(xv) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
Part 3.16(a) of the Disclosure Letter sets forth the subject matter of
such Contracts, the parties to such Contracts, and (if ascertainable) the amount
of the remaining commitment of the Company under such Contracts.
(b) Except as set forth in Part 3.16(b) of the Disclosure
Letter:
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(i) no Stockholder (and no Related Person of any
Stockholder) has or may acquire any rights under, and no
Stockholder has or may become subject to any obligation or
liability under, any Applicable Contract; and
(ii) to the Actual Knowledge of Stockholders, no
officer, director, agent, employee, consultant, or contractor
of the Company is bound by any Contract that purports to limit
the ability of such officer, director, agent, employee,
consultant, or contractor to (A) compete with the Company or
otherwise engage in or continue any conduct, activity, or
practice directly relating to such Person's involvement with
the business of the Company, or (B) assign to the Company or
to any other Person any rights to any invention, improvement,
or discovery.
(c) Except as set forth in Part 3.16(c) of the Disclosure
Letter, each Contract identified or, to the Actual Knowledge of Stockholders,
required to be identified in Part 3.16(a) or 3.16(b) of the Disclosure Letter is
in full force and effect and, to the Actual Knowledge of Stockholders, there is
no basis for believing that each such Contract is not valid and enforceable in
all material respects in accordance with its terms (it being acknowledged by
Buyer that any relief seeking specific performance or other equitable remedy may
be within the discretion of a court having jurisdiction with respect thereto).
(d) Except as set forth in Part 3.16(d) of the Disclosure
Letter:
(i) the Company is, and at all times since October 1,
1995, has been, in compliance in all material respects with
all applicable terms and requirements of each Contract
identified or, to the Actual Knowledge of Stockholders,
required to be identified in Part 3.16(a) or 3.16(b) of the
Disclosure Letter (for purposes of this clause (d), a
"Material Applicable Contract") under which the Company has or
had any obligation or liability or by which the Company or any
of the assets owned or used by the Company is or was bound;
(ii) to the Actual Knowledge of Stockholders, each
other Person that has or had any obligation or liability under
any Material Applicable Contract under which the Company has
or had any rights is, and at all times since October 1, 1995
has been, in compliance in all material respects with the
terms and requirements of such Contract;
(iii) to the Constructive Knowledge of Stockholders,
no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict
with, or result in a material violation or breach of, or give
the Company or any other Person the right to declare a default
or exercise
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any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Material
Applicable Contract; and
(iv) to the Constructive Knowledge of Stockholders,
the Company has not given to or received from any other
Person, at any time since October 1, 1995, any notice or other
communication (whether oral or written) regarding any actual,
alleged or potential violation or breach of, or default under,
any Material Applicable Contract.
(e) The presently effective Applicable Contracts relating to
the sale, design, manufacture, or provision of products or services by the
Company have been entered into in the Company's Ordinary Course of Business.
3.17 INSURANCE
(a) Stockholders have delivered to Buyer:
(i) true and complete copies of all policies of
insurance to which the Company is a party or under which the
Company, or, to the extent such policies have been obtained or
are paid for by the Company, any officer, director or employee
of the Company, is or has been covered at any time since June
1, 1996;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement by the auditor of the Company's
financial statements with regard to the adequacy of such
entity's coverage or of the reserves for claims.
(b) Part 3.17(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting
the Company, including, without limitation, any reserves
established thereunder;
(ii) any Contract, other than a policy of insurance,
for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third parties
with respect to insurance (including, without limitation, such
obligations under leases and
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service agreements) and identifies the policy under which such
coverage is provided.
(c) Except as set forth on Part 3.17(c) of the Disclosure
Letter:
(i) Said insurance policies and arrangements are in
full force and effect, all premiums with respect thereto are
currently paid, and the Company is in compliance in all
material respects with the terms thereof and said insurance is
adequate and customary for the business engaged in by the
Company and is sufficient for compliance by the Company with
all applicable Legal Requirements and all material Applicable
Contracts to which the Company is a party. There is no fee or
penalty for the early termination of any of said insurance
policies or arrangements. The Company currently has in its
files accurate copies of all such insurance policies and
arrangements and any other similar policies and arrangements
in effect for any period which includes August 18, 1989 or any
period thereafter.
(ii) No Stockholder or the Company has received (A)
any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) The Company has given notice to the insurer of
all claims that may be insured thereby.
3.18 ENVIRONMENTAL MATTERS. Except as set forth in part 3.18 of the
Disclosure Letter:
(a) Except as may have been disclosed by the Company in its
NJDEP Submissions (as defined below), or as may be lawful and not
require such disclosure under applicable Environmental Law, to the
Actual Knowledge of Stockholders, neither the Company nor any of its
Predecessors has Released any Hazardous Materials or engaged in
Hazardous Activities on or from any of the Facilities.
(b) To the Actual Knowledge of Stockholders, all written
statements, representations and supporting documents submitted to NJDEP
as part of or relating to the Company's May 19, 1997 ISRA submission to
NJDEP in connection with the Contemplated Transactions and as part of
all other submissions previously made to NJDEP pursuant to ECRA or ISRA
regarding the Facilities (collectively, the "NJDEP
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Submissions") were true, complete and correct in all material respects
as of the date when made.
(c) True and complete copies of all written communications
between NJDEP and the Company (or its Predecessors) or any of its
Representatives pursuant to ECRA or ISRA regarding the Facilities have
been provided to Buyer and a complete list thereof is set forth in Part
3.18(c) of the Disclosure Letter.
(d) To the Constructive Knowledge of Stockholders, there are
no actual or Threatened Orders, claims, notices or Proceedings of or by
any Governmental Body respecting any violation of or failure to comply
with any applicable Environmental Law by the Company.
(e) Except as expressly disclosed by the Company prior to the
date hereof in its NJDEP Submissions, to the Actual Knowledge of
Stockholders, no subsurface contamination of the Environment at levels
in excess of applicable reporting or cleanup standards currently exist
on, in or under the Facilities under applicable Environmental Law.
(f) To the Constructive Knowledge of Stockholders, no actual
or Threatened Orders, claims, notices or Proceedings by any Person
asserting responsibility or liability of the Company under applicable
Environmental Law or based upon a claim of tortious conduct or
contractual breach for the disposal of Hazardous Materials by or on
behalf of the Company or any of its Predecessors at any off-site
location have been received by the Company.
(g) The Stockholders and the Company have provided to Buyer
complete and accurate copies of (i) all environmental reports,
submissions to or correspondence with NJDEP, and (ii) to the extent
they are in the custody of the Company, have made available to Buyer
copies of all Hazardous Materials manifests and other related
information regarding off-site waste storage, treatment or disposal
locations to which Hazardous Materials generated or transported by the
Company (and its Predecessors) have been transported for disposal.
(h) To the Actual Knowledge of EACH EMPLOYEE OF THE Company
RESPONSIBLE FOR ENVIRONMENTAL AFFAIRS, CONTROL OR COMPLIANCE AND EACH
MANAGER, SUPERVISOR, OFFICER AND DIRECTOR of the Company (collectively,
"Responsible Persons" and individually a "Responsible Person"), during
the past five (5) years, neither the Company nor any Responsible
Person: HAS HAD ANY REPORTABLE RELEASES OR SPILLS OF HAZARDOUS
SUBSTANCES, HAZARDOUS WASTE OR ANY OTHER
36
POLLUTANTS, AS DEFINED BY APPLICABLE ENVIRONMENTAL STATUTES
OR REGULATIONS.
(i) To the Actual Knowledge of each Responsible Person, during
the past five (5) years, (i) neither any Responsible Person nor (ii)
the Company: HAS BEEN PROSECUTED, OR IS CURRENTLY BEING PROSECUTED, FOR
CONTRAVENTION OF ANY STANDARD OR LAW RELATING TO THE RELEASE OR
THREATENED RELEASE FROM THE LOCATION OF A HAZARDOUS SUBSTANCE,
HAZARDOUS WASTE OR ANY OTHER POLLUTANT.
(j) To the Actual Knowledge of each Responsible Person, Part
3.18(j) of the Disclosure Letter LISTS ALL CLAIMS MADE AGAINST the
Company or any Responsible Person DURING THE PAST FIVE YEARS FOR
CLEANUP OR RESPONSE ACTION, "TOXIC TORT" OR OTHER BODILY INJURY, OR
PROPERTY DAMAGE, RESULTING FROM THE RELEASE OF HAZARDOUS SUBSTANCES,
HAZARDOUS WASTE, OR OTHER POLLUTANTS, FROM THE LOCATION OR OTHER
LOCATIONS OWNED OR OPERATED BY any Responsible Person or the Company,
INTO THE ENVIRONMENT. Part 3.18(j) of the Disclosure Letter PROVIDES A
BRIEF DESCRIPTION OF THE CLAIM(S) AND ITS DISPOSITION.
(k) To the Actual Knowledge of each Responsible Person, as of
the Closing Date, except as DESCRIBED IN DETAIL in Part 3.18(k) of the
Disclosure Letter, neither (i) any Responsible Person nor (ii) the
Company: KNOWS OF ANY FACTS OR CIRCUMSTANCES WHICH MAY REASONABLY BE
EXPECTED TO RESULT IN A CLAIM OR CLAIMS BEING ASSERTED AGAINST the
Company FOR ENVIRONMENTAL CLEANUP OR RESPONSE, OR FOR BODILY INJURY OR
PROPERTY DAMAGE ARISING FROM THE RELEASE OF POLLUTANTS INTO THE
ENVIRONMENT.
(l) Part 3.18(l) of the Disclosure Letter lists each
individual who is a Responsible Person and all of them collectively
constitute all of the Responsible Persons. Mr. Gluckow has consulted
with each of the individuals designated in Part 3.18(l) of the
Disclosure Letter and has confirmed with each of them that the
representations and warranties set forth in Sections 3.18(h), (i), (j)
and (k) are accurate.
Buyer and Stockholders expressly agree that the words appearing in all CAPITAL
LETTERS in the representations and warranties contained in Sections 3.18(h),
(i), (j) and (k), above, shall have the respective meanings ascribed thereto in
the "American International Companies Pollution Legal Liability Application"
(61868(1/95)) and in the "Commercial and Industry
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Insurance Company Pollution Legal Liability Select SM Policy" (64159 (2/96)),
copies of which have been provided to Mr. Gluckow for the benefit of
Stockholders on or prior to the Closing Date and which receipt Stockholders
hereby acknowledge. Other terms with initial capital letters used in the
representations and warranties contained in Sections 3.18(h), (i), (j) and (k),
above, and not specifically defined therein shall have the respective meanings
ascribed thereto in Section 1 of this Agreement.
3.19 EMPLOYEES
(a) Part 3.19 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or director of the
Company, including, without limitation, each employee on leave of absence or
layoff status: name; job title; date of hire; current compensation paid or
payable and any change in compensation since October 1, 1996; vacation accrued;
the amount of income reported on Form W-2 for calendar 1996; and service
credited for purposes of vesting and eligibility to participate under each of
the Company's profit-sharing, thrift-savings, deferred compensation, stock
bonus, stock option, cash bonus, severance pay, insurance, medical, welfare, or
vacation plan, or any other employee or director benefit or welfare plan.
(b) No employee or director of the Company is a party to, or
is otherwise bound by, any agreement or arrangement, including, without
limitation, any confidentiality, noncompetition, or proprietary rights
agreement, between such employee or director and any other Person ("Proprietary
Rights Agreement") that in any way adversely affects or will affect (i) the
performance of his duties as an employee or director of the Company, or (ii) the
ability of the Company to conduct its business, including, without limitation,
any Proprietary Rights Agreement with Stockholders or the Company by any such
employee or director. Except as set forth in Part 3.19 of the Disclosure Letter,
to the Actual Knowledge of Stockholders, no director, officer, or other Key
Employee of the Company intends to terminate his or her employment with the
Company.
(c) Part 3.19 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee or director of the Company or any of its Predecessors, or their
dependents, receiving benefits or scheduled to receive benefits from or at the
expense of the Company in the future: name and a description of retirement
benefits including, without limitation, retiree medical insurance coverage,
retiree life insurance coverage, and other benefits.
3.20 LABOR RELATIONS; COMPLIANCE. Prior to the date hereof, the Company
has not been or is a party to any collective bargaining or other labor Contract.
Since October 1, 1995, there has not been, there is not presently pending or
existing, and, to the Actual Knowledge of Stockholders, there is not Threatened,
(a) any strike, slowdown, picketing,
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
work stoppage, or administrative process with respect to any employee grievance,
(b) any Proceeding against or affecting the Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including, without limitation, any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting any of the
Company or their premises, or (c) any application for certification of a
collective bargaining agent. To the Actual Knowledge of Stockholders, no event
has occurred or circumstance exists that could reasonably be expected to result
in any work stoppage or other labor dispute. There is no lockout of any
employees by the Company, and no such action is contemplated by the Company. The
Company has complied in all material respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing. The Company is not liable for the payment of any compensation, damages,
Taxes, fines, penalties, or other amounts, however designated, for failure to
comply in any material respect with any of the foregoing Legal Requirements.
3.21 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual
Property Assets" shall mean:
(i) "Word Marks", which shall mean the following
insofar as they contain the following words or some of the
following words: the trademark/service mark "BOOK-MART PRESS"
and the corporate name "Book-Mart Press, Inc." and any of the
following as have acquired secondary meaning as used in the
Company's Ordinary Course of Business: all fictional business
names, trade names, registered and unregistered trademarks and
service marks, and applications therefor;
(ii) "Non-Word Marks", which shall mean any marks
that contain no words or parts of words, but may have acquired
secondary meaning;
(iii) "Patents", which shall mean all inventions for
which U.S. Patents have been obtained or for which a U.S.
Patent is currently applied-for;
(iv) "Patentables", which shall mean all inventions
of the Company that are patentable that belong to the Company,
and that are used in the Company's Ordinary Course of
Business, but for which no U.S. Patents have been obtained or
are currently applied-for by the Company;
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
(v) "Non-Secret Proprietary Information", which shall
mean all items of non-secret proprietary information
(specifically excluding Word Marks, Non-Word Marks, Patents,
Patentables, and Trade Secrets) that belong to the Company and
that are reasonably necessary to the ordinary operation of the
Company's current business, including any of the following to
the extent that they are not secret: customer lists, technical
information, data, plans, drawings, and blueprints;
(vi) "Trade Secrets", which shall mean such items of
proprietary information that fulfill all of the following: (A)
they belong to the Company; (B) they are unknown outside the
Company, and (C) they are (and their secrecy is) reasonably
necessary to the ordinary operation of the Company's current
business;
(vii) "Software", which shall mean all computer
programs used by the Company in the ordinary operation of the
Company's current business, and
(v) "Copyrights", which shall mean all copyrights and
federal registrations thereof in which the Company has an
interest.
(b) Agreements--Part 3.21(b) of the Disclosure Letter contains
a complete and accurate list and summary description, including, without
limitation, any royalties paid or received by the Company, of all Contracts
relating to the Intellectual Property Assets to which the Company is a party or
by which the Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software programs
with a value of less than $5,000 under which the Company is the licensee. There
are no outstanding and, to the Constructive Knowledge of Stockholders, no
Threatened disputes or disagreements with respect to any such Contract.
(c) Intellectual Property Necessary for the Business
(i) Except as set forth in Part 3.21(c) of the
Disclosure Letter, any ownership by the Company in each of the
Intellectual Property Assets is free and clear of all
Encumbrances. Except as set forth in Part 3.21(c) of the
Disclosure Letter, to the Constructive Knowledge of the
Stockholders, the Company has the right to use all of the
Intellectual Property Assets which it owns or otherwise uses
without payment to a third party. The Intellectual Property
Assets are all those necessary for the operation of the
Company's businesses as they are currently conducted or as
reflected in the Confidential Memorandum, dated December 26,
1996, as updated or supplemented and provided to Buyer by or
on behalf of Stockholders..
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
(ii) Except as set forth in Part 3.21(c) of the
Disclosure Letter, no former or current employees of the
Company have executed written Contracts with the Company that
assign to the Company any rights to any inventions,
improvements, discoveries, or information relating to the
business of the Company. To the Actual Knowledge of
Stockholders, no employee of the Company has entered into any
Contract that restricts or limits in any way the scope or type
of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information
concerning his work to anyone other than the Company.
(d) Patents & Patentables. The Company owns no Patents, and,
except insofar as a patent license may be implied in law on grounds of the
Company's lawful purchase or use of one or more items of equipment, inventory,
or Software, the Company licenses no Patents from any third parties. To the
Actual Knowledge of Stockholders, the Company owns no Patentables.
(e) Trademarks
(i) Part 3.21(e) of the Disclosure Letter contains a
complete and accurate list and summary description of all Word
Marks owned by the Company or currently used by the Company in
the Ordinary Course of Business. Any ownership by the Company
of a Word Mark is free and clear of Encumbrances. To the
Actual Knowledge of Stockholders, the Company neither owns nor
uses any Non-Word Marks in the Ordinary Course of Business.
(ii) The Company owns no registered Word Marks or
registered Non-Word Marks and, except insofar as a trademark
license may be implied in law on grounds of the Company's
lawful purchase or use of one or more items of equipment,
inventory, or Software, the Company licenses no Word Marks or
Non-Word Marks from any third parties.
(iii) The Company has not commenced any Proceeding
(currently pending) alleging that anyone has infringed upon
any of the Company's rights in any Word Mark or Non-Word Mark
listed in Part 3.21(e) of the Disclosure Letter, and, to the
Actual Knowledge of Stockholders, no one is infringing the
Company's rights in any such Word Mark or Non-Word Mark or is
using any such Word Mark or Non-Word Mark in a manner which
would materially interfere with the Company's continued
ability to make use of such Word Mark or Non-Word Mark as
currently used in the Ordinary Course of Business. To the
Actual Knowledge of Stockholders: the Company has received no
notice of
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
any pending Proceeding asserting trademark, service mark, or
trade name infringement by the Company in respect of any Word
Mark or Non-Word Mark listed in Part 3.21(e) of the Disclosure
Letter or otherwise, and no such lawsuit is pending or
Threatened.
(f) Copyrights. The Company makes no claim to ownership of any
Copyrights, and, except insofar as a copyright license may be implied in law on
grounds of the Company's lawful printing of one or more copyrighted works at the
request of the Copyright owner (or its licensee) or insofar as a license may
have been obtained to operate copyrighted Software lawfully licensed by the
Company, the Company licenses no Copyrights from any third parties.
(g) Trade Secrets and Non-Secret Proprietary Information. The
Company makes no claim to ownership of any Trade Secrets. To the Actual
Knowledge of Stockholders, the Company has the right to continue to make use of
its Non-Secret Proprietary Information in the ordinary course of its current
business without a valid adverse claim by any third party. The Company has
received no notice of any adverse claim to any of the Company's Non-Secret
Proprietary Information.
3.22 CERTAIN PAYMENTS. To the Constructive Knowledge of Stockholders,
since October 1, 1995, neither the Company nor any director, officer, agent, or
employee of the Company or any other Person acting for or on behalf of the
Company, has directly or indirectly (a) made any unlawful contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other unlawful payment to
any Person, private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, or (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company or any Affiliate of the Company, or (b) established or maintained
any fund or asset that has not been recorded in the books and records of the
Company.
3.23 DISCLOSURE.
(a) Except as set forth in Part 3.23(a) of the Disclosure
Letter, no representation or warranty of Stockholders in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) Except as set forth in Part 3.23(b) of the Disclosure
Letter, to the Actual Knowledge of Stockholders, there is no fact that has
specific application to any Stockholder or the Company (other than general
economic or industry conditions) and that has had a Material Adverse Effect upon
the Company or, as far as any Stockholder can reasonably foresee, could
42
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
have a Material Adverse Effect upon the Company that has not been set forth in
this Agreement or the Disclosure Letter.
3.24 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in Part
3.24 of the Disclosure Letter, no Stockholder or any Related Person of any
Stockholder or of the Company has, or since October 1, 1995 has had, any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible) used in or pertaining to the Company's businesses. Except as set
forth in Part 3.24 of the Disclosure Letter, no Stockholder or any Related
Person of any Stockholder or of the Company is the owner of or since October 1,
1995 has owned (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with the Company,
or (ii) engaged in competition with the Company with respect to any line of the
products or services of the Company (a "Competing Business") in any market
presently served by the Company except for less than one percent of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Except as set forth
in Part 3.24 of the Disclosure Letter, no Stockholder or any Related Person of
any Stockholder or of the Company is a party to any Contract with, or has any
claim or right against, the Company.
3.25 BROKERS OR FINDERS. Except as set forth in Part 3.25 of the
Disclosure Letter, the Company has not incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement or the Contemplated
Transactions.
3.26 BANKING RELATIONS. All of the arrangements which the Company has
with any banking institution are described in all material respects in Part 3.26
of the Disclosure Letter, indicating with respect to each of such arrangements
the type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the individual or individuals
authorized in respect thereof.
3.27 LIST OF DIRECTORS AND OFFICERS. Part 3.27 of the Disclosure Letter
contains a true and complete list of all current directors and officers of the
Company. In addition, Part 3.27 of the Disclosure Letter contains a list of all
managers, employees and consultants of the Company who, individually, are
scheduled to receive compensation from the Company for the fiscal year ending
September 30, 1997, in excess of $50,000. In each case such listing includes the
current job title and current aggregate annual compensation of each such
individual.
3.28 NON-FOREIGN STATUS. The Company is not a "foreign person" within
the meaning of Section 1445 of the Code and Treasury Regulations Section
1.1445-2.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
3.29 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. Part 3.29(a) of the
Disclosure Letter sets forth the approximate aggregate amount of sales by the
Company from June 1, 1996 through May 31, 1997 to, and the name of, any
customer, sales representative or distributor (whether pursuant to a commission,
royalty or other arrangement) which accounted for more than 10% of the sales of
the Company for the twelve months ended September 30, 1996 or for the eight
months ended as of the date of the Interim Balance Sheet (collectively, the
"Customers and Distributors"). Part 3.29(b) of the Disclosure Letter lists all
of the suppliers of the Company to whom during the fiscal year ended September
30, 1996 or the eight-month period ended as of the date of the Interim Balance
Sheet the Company made payments aggregating $20,000 or more, showing, with
respect to each, the name, address and approximate dollar volume involved for
the period from October 1, 1996 to May 31, 1997, inclusive (the "Suppliers"). To
the Actual Knowledge of Stockholders, the relationships of the Company with its
Customers, Distributors and Suppliers are good commercial working relationships.
Except as set forth in Part 3.29(c) of the Disclosure Letter, no Customer,
Distributor or Supplier has canceled, materially modified, or otherwise notified
the Company of the termination of its relationship with the Company, or has
during the last twelve months decreased materially its services, supplies or
materials to the Company or its usage or purchase of the services or products of
the Company, nor to the Actual Knowledge of Stockholder, does any Customer,
Distributor or Supplier have any plan or intention to do any of the foregoing.
3.30 TRANSFER OF COMPANY SHARES. To the Constructive Knowledge of
Stockholders, no holder of stock of the Company has at any time transferred any
of such stock to any employee of the Company, which transfer constituted or
could be viewed as compensation for services rendered to the Company by said
employee.
3.31 STOCK REPURCHASE. Except as set forth in Part 3.31 of the
Disclosure Letter, the Company has not redeemed or repurchased any of its
capital stock.
3.32 NO INDEBTEDNESS BETWEEN STOCKHOLDER/COMPANY. Except as set forth
in Part 3.32 of the Disclosure Letter, no Stockholder has any outstanding
indebtedness for borrowed monies, directly, or indirectly through such
Stockholder's Related Persons, to the Company as of the date hereof; and the
Company has no outstanding indebtedness for borrowed monies or, except in their
capacity as an employee or director, if any, any financial or employment
obligations or liability of any kind as of the date hereof to any Stockholder or
any Related Person of such Stockholder.
3.33 NO ACQUISITION OF CAPITAL STOCK OF BUYER BY
STOCKHOLDERS. Except as set forth in Part 3.33 of the Disclosure Letter, at no
time during the twelve-month period ending as of the date hereof has any
Stockholder or any Related Person of such Stockholder acquired any capital stock
or other securities of Buyer.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
3.34 COMPLIANCE WITH SECTION 280G OF THE IRC BY THE COMPANY. The
Company has not made any payment, and is not obligated to make any payments, and
is not a party to any agreement to make payments which would not be deductible
under Section 280G of the IRC.
3.35 ADDITIONAL TAX REPRESENTATION. The Company (a) has not been a
member of an Affiliated Group (as defined in the IRC) filing a consolidated
federal income Tax Return (other than a group the common parent of which was the
Company) and (b) has no liability for the Taxes of any Person (other than the
Company) under Reg. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by Contract or otherwise except for
collection and remission to the applicable Governmental Body of sales and/or use
Taxes with respect to its customers.
3.36 TERMINATION OF AGREEMENTS. Part 3.36 of the Disclosure Letter sets
forth a description of all Designated Contracts. Except as expressly set forth
in Part 3.36 of the Disclosure Letter, all Designated Contracts have been
irrevocably terminated as of the Closing Date and the Company has not incurred
or accrued any cost or expense with respect to any Designated Contract since the
date of the Balance Sheet and the Company will have no further liability or
obligations under any of the Designated Contracts on or after the Closing Date.
3.37 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. As
a material inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, each Stockholder hereby severally makes to
Buyer each of the representations and warranties set forth in this Section 3.37
with respect to such Stockholder, subject in all cases with respect to any
Stockholder who or which is a member of the Rothschild Group to the provisions
of the introductory paragraph of this Section 3 and Section 5.7 hereof. Except
to the extent of the liability of Donald B. Elitzer and Nathaniel de Rothschild
for Breaches or asserted Breaches of this Section 3.37 by any member of the
Rothschild Group, no Stockholder will have liability for the Breach or asserted
Breach of this Section 3.37 by any other Stockholder. No Stockholder shall have
any right of indemnity or contribution from the Company with respect to the
Breach or asserted Breach of any representation or warranty hereunder.
3.37.1 COMPANY SHARES. Such Stockholder owns of record and
beneficially the number of the Company Shares set forth opposite such
Stockholder's name in Exhibit 2.1. Such Company Shares are, and when delivered
by such Stockholder to Buyer pursuant to this Agreement will be, duly
authorized, validly issued, fully paid, non-assessable and free and clear of any
and all Encumbrances and Stock Restrictions.
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COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
3.37.2 AUTHORITY. This Agreement and the other Stockholders'
Closing Documents executed and delivered by such Stockholder pursuant to this
Agreement have been duly authorized by all necessary corporate action of each
Stockholder which is a corporation, and such Stockholder has full power and
authority to transfer, sell and deliver such Stockholder's Company Shares to
Buyer pursuant to this Agreement. The execution, delivery and performance of
this Agreement and each such agreement, document and instrument:
(a) does not and will not violate any provision of the
Organizational Documents of any Stockholder which is not a
natural person, or any laws of the United States or any state
or other jurisdiction applicable to such Stockholder, or
require such Stockholder to obtain any approval, consent or
waiver from, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or
made; and
(b) does not and will not result in a Breach of, constitute a
default under, accelerate any obligation under, or give rise
to a right of termination of, any indenture or loan or credit
agreement or any other material Contract or Order to which
such Stockholder is a party or by which the property of such
Stockholder is bound or affected in any material respect, or
result in the creation or imposition of any Encumbrance on the
assets of the Company or any Encumbrance or Stock Restriction
on Company Shares owned by such Stockholder.
3.37.3 FINDER'S FEE. Except as set forth in Part 3.25 of the
Disclosure Letter, such Stockholder has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.37.4 AGREEMENTS. Except as set forth in Part 3.37.4 of the
Disclosure Letter, if such Stockholder is employed by the Company, such
Stockholder is not a party to any non-competition, trade secret or
confidentiality agreement with any Person other than the Company. There are no
Contracts or arrangements not contained herein or disclosed in the Disclosure
Letter, to which such Stockholder is a party relating to the business of the
Company or to such Stockholder's rights and obligations as a stockholder,
director or officer of the Company. Except as set forth in Part 3.37.4 of the
Disclosure Letter, such Stockholder does not own, directly or indirectly, on an
individual or joint basis, any material interest in, or serve as an officer or
director of, any customer, competitor or supplier of the Company, or any Person
which has a Contract or arrangement with the Company. Such Stockholder has not
at any time transferred any of the capital stock of the Company held by or for
such holder to any employee of the Company, which transfer constituted or could
be viewed as compensation for services rendered to the Company by said employee.
The execution, delivery and performance of this Agreement and each other
Stockholder's Closing Documents to which such Stockholder
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is a party will not violate or result in a default or acceleration of any
obligation under any Contract or other instrument to which such Stockholder is a
party.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Stockholders as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement and the other Buyer's Closing Documents
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms. Buyer has the right,
power, and authority to execute and deliver this Agreement and the other Buyer's
Closing Documents and to perform its obligations under this Agreement and the
other Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational
Documents;
(ii) any resolution adopted by the board of directors
or the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer
may be subject; or
(iv) any Contract to which Buyer is a party or by
which Buyer may be bound.
Buyer is not and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
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4.3 INVESTMENT INTENT. Buyer is acquiring the Company Shares for its
own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To the best of Buyer's Actual Knowledge, no such Proceeding has
been Threatened.
4.5 BROKERS OR FINDERS. Except as set forth in Part 4.5 of the Buyer
Disclosure Letter, Buyer and its officers and agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
5. INDEMNIFICATION; REMEDIES
5.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter, the Stockholders' Closing
Documents, the Buyer's Closing Documents, the Certified Indebtedness Statement
delivered pursuant to Section 2.4(a)(v), and any other certificate agreement or
document delivered pursuant to this Agreement or such other documents will,
except as otherwise expressly provided in this Agreement, survive the Closing.
The right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Actual Knowledge or
Constructive Knowledge capable of being acquired at any time, whether before or
after the execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
STOCKHOLDERS. Stockholders will indemnify and hold harmless Buyer and the
Company, and their respective officers, directors and employees (collectively,
the "Indemnified Persons") for, and will pay to the Indemnified Persons the
amount of, any loss, liability, claim, damage, expense (including, without
limitation, reasonable costs of investigation and defense and reasonable
attorneys' fees and disbursements) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with or based upon:
(a) any Breach or asserted Breach of any representation or
warranty made by any of the Stockholders in this Agreement, the
Disclosure Letter, any of the other Stockholders' Closing Documents, or
any other certificate or document delivered by any of the Stockholders
pursuant to any of the foregoing (excepting in all cases only the
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Employment Agreements, the Set-Off Agreements, and the Master Lease
Agreement of even date between the Company and 2001 Realty Corp (the
"New Lease");
(b) any Breach or asserted Breach by any Stockholder of any
covenant, agreement, obligation or undertaking (as distinguished from a
representation or warranty) of such Stockholder in this Agreement or in
any of the other Stockholders' Closing Documents to which such
Stockholder is a party (excepting in all cases only the Employment
Agreements, the Set-Off Agreements, and the New Lease);
(c) any matter set forth in Part 5.2 of the Disclosure Letter,
but only as and to the extent set forth therein;
(d) except to the extent set forth in Part 5.2(d) of the
Disclosure Letter, any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with any
Stockholder or the Company (or any Person acting on any such Person's
behalf) in connection with any of the Contemplated Transactions; or
(e) any liability or asserted liability of the Company for
Taxes arising from any event or transaction prior to the Closing which
has not been paid or provided for or reserved against in full by the
Company, including, without limitation, any increase in Taxes due to
the unavailability of any loss or deduction claimed by the Company (it
being understood that this Section 5.2(e) is in addition to and not in
limitation of any other claim relating to Taxes arising pursuant to
Section 5.2(a) hereof, but, to the extent duplicative, is not intended
to multiply Stockholders' liability hereunder).
5.3 INDEMNIFICATION AND PAYMENT OBLIGATIONS OF
STOCKHOLDERS--ACCOUNTS RECEIVABLE.
(a) In addition to any other provisions of Section 5 (but as
Buyer's sole recourse under this Agreement respecting Stockholders'
obligations to the extent but only to the extent they relate directly
to the collection of the Company's Accounts Receivable), Stockholders
will, upon demand by Buyer or the Company at any time on or after
October 1, 1998, pay to Buyer (or the Company) the amount (if any) by
which the aggregate amount of all Accounts Receivable outstanding on
the Closing Date (the "Company Receivables") which have not been
collected on or before September 30, 1998 (the "Uncollected
Receivables") exceeds $200,000 (the amount by which the Uncollected
Receivables exceeds $200,000 being referred to as the "Uncollectibles
Amount"); provided, however, that:
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(i) if any payment ("Collected Amount") is received
by Buyer or the Company in respect of any Uncollected
Receivable (determined with respect to each Account
Receivable) after September 30, 1998 and prior to September
30, 2001 (the "Collection Period"), then Buyer or the Company
shall promptly thereafter make a payment in the amount of such
Collected Amount (net of any reasonable out-of-pocket costs of
collection of such amounts) to the Person designated by the
Stockholders in Part 5 of the Disclosure Letter (the "A/R
Designee"); provided, however, that in no event shall the
aggregate of all such payments exceed the Uncollectibles
Amount; and
(ii) the Company may, in its sole discretion, assign
any Company Receivables for which uncollected amounts remain
as of September 30, 1998 to the A/R Designee (for the ratable
benefit of each of the Stockholders), in which case the
Company's and Buyer's obligations under clause (a)(i) of this
Section 5.3 shall not thereafter apply to any such Account
Receivable. The Stockholders may pursue collection of any
Company Receivables so assigned in any manner they may deem
desirable.
(b) During the period commencing on the Closing Date and
ending upon expiration of the Collection Period, Buyer will attempt to
collect all Company Receivables in accordance with the Company's
regular, customary commercial policies and practices (but without being
required to resort to litigation or the use of collection agencies).
(c) Payments received by the Company from account debtors who
may also be account debtors to the Company in connection with the
post-closing business of the Company shall be applied to Company
Receivables in the order that the accounts receivable owing by each
such account debtor arose (i.e., on a "first-in", "first-out" basis),
except and to the extent of Disputed Receivables as provided for in
this Section 5.3.
(d) Buyer shall assure that the A/R Designee shall have
access, no less frequently than once per calendar quarter, to (a) the
name of each person who was an account debtor as of the Closing Date
and who has made any payment (whether on account of any Company
Receivables or otherwise) since the Closing Date, (2) the remaining
balance of such account debtor's outstanding Company Receivable, and
(3) the aggregate amount of all uncollected Company Receivables as at
the close of the immediately preceding quarter. With respect to any
Uncollected Receivables transferred to the Stockholders in accordance
with subclause (a)(ii) of this Section 5.3, Buyer will provide the
Stockholders with true, complete and correct copies of the files
relating thereto, including copies of individual remittance advices, if
any.
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(e) At a reasonable time and upon reasonable notice to Buyer
between the Closing Date and September 30, 1998, the Stockholders shall
have the right to audit on one occasion (at the Stockholders' sole
expense) the Company's books and records to confirm the accuracy of
Buyer's information in respect of collections of Company Receivables.
The Company, under the direct supervision of its President, shall have
the right, in its discretion, without the consent of the Stockholders,
to grant or allow reasonable credits, returns or other allowances
(collectively, "Allowances") for any Company Receivable for which the
Company has received or shall receive written notification of refusal
to pay all or any part of any such Company Receivable ("Disputed
Receivable"). Neither Buyer nor the Company will promote, encourage or
recommend that any account debtor dispute any Company Receivable. The
Company shall make reasonable efforts consistent with the Company's
practices to collect such Disputed Receivables.
(f) Within ten (10) days after the Closing Date, Mr. Gluckow
shall supervise the preparation of a complete and accurate list of the
Company's Accounts Receivable outstanding as of the Closing Date, and
shall cause a copy of such list to be provided to the A/R Designee, the
Buyer and the Group Representatives.
5.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Stockholders for, and will pay to Stockholders the
amount of any Damages arising, directly or indirectly, from or in connection
with or based upon (a) any Breach of any representation or warranty made by
Buyer in this Agreement, in any of the other Buyer's Closing Documents, or in
any other certificate or document delivered by Buyer pursuant to this Agreement
(excepting in all cases only the Employment Agreements, the Set- Off Agreements,
and the New Lease); (b) any Breach by Buyer of any covenant, agreement,
obligation or undertaking (as distinguished from a representation or warranty)
of Buyer in this Agreement or in any of the other Buyer's Closing Documents
(excepting in all cases only the Employment Agreements, the Set-Off Agreements,
and the New Lease); or (c) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer (or any Person
acting on its behalf) in connection with any of the Contemplated Transactions.
5.5 TIME LIMITATIONS.
5.5.1 Stockholders will have no liability for indemnification
under this Section 5 with respect to any representation or warranty, other than
those in Sections 3.1(a) (first sentence to the extent it relates to
capitalization or ownership), 3.1(b), 3.2(a), 3.3 (except the last sentence
thereof), 3.11 (or any other representation or warranty contained in Section 3
to the extent, but only to the extent, that it relates to Taxes), 3.12, 3.18,
3.36, 3.37.1 and 3.37.2 (first sentence only), unless on or before December 31,
1998, Buyer notifies the
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respective Group Representative named in Section 6.4 hereof ("Group
Representative") in writing of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Buyer.
5.5.2 A claim with respect to Sections 3.11 (or any other
representation or warranty contained in Section 3 to the extent, but only to the
extent, that it relates to Taxes) or 3.12 may be made at any time on or before
the later of (i) the sixtieth (60th) day after the date upon which the liability
to which any such claim may relate is barred by all applicable statutes of
limitation and (ii) the sixtieth (60th) day after the date upon which any claim
for refund or credit related to such claim is barred by all applicable statutes
of limitations (after taking into effect any waiver or extensions thereof for
any reason).
5.5.3 A claim with respect to Section 3.18 may be made at any
time on or before July 21, 2002.
5.5.4 A claim with respect to Sections 3.1(a) (first sentence
to the extent it relates to capitalization or ownership), 3.1(b), 3.2(a), 3.3
(except the last sentence thereof), 3.36, 3.37.1 and 3.37.2 (first sentence
only) may be made at any time.
5.5.5 A claim for indemnification or reimbursement not based
upon any representation or warranty (in other words, a claim based upon a
covenant, agreement, obligation or undertaking) may be made at any time.
5.5.6 Buyer will have no liability for indemnification under
this Section 5 with respect to any representation or warranty, unless on or
before December 31, 1998 Stockholders notify Buyer of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Stockholders.
5.5.7 Anything contained in this Section 5.5 to the contrary
notwithstanding, the parties acknowledge and agree that this Section 5.5 is not
intended to increase or extend any statute of limitations otherwise applicable
to any matter referred to herein.
5.6 LIMITATIONS ON AMOUNT--STOCKHOLDERS.
5.6.1 Stockholders will have no liability for indemnification
under this Section 5 with respect to the matters described in clauses (a)
(except to the extent set forth in Section 5.6.2) or (b) of Section 5.2, until
the total of all Damages with respect to such matters exceeds $50,000 (the
"Basket"), whereupon the full amount of such Damages in excess of $50,000 shall
be recoverable in accordance with the terms hereof.
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5.6.2 The Basket shall not apply with respect to the matters
described in clause (a) of Section 5.2 to the extent they are based upon a
Breach or asserted Breach of any of the representations and warranties contained
in Sections 3.1(a) (first sentence to the extent it relates to capitalization or
ownership), 3.1(b), 3.2(a), 3.3 (except the last sentence thereof), 3.11 (or any
other representation or warranty contained in Section 3 to the extent, but only
to the extent, that it relates to Taxes), 3.12, 3.18, 3.36, 3.37.1 or 3.37.2
(first sentence only).
5.6.3 Except to the extent expressly provided in Section 5.7,
there shall be no limitation upon Stockholders' liability for indemnification
under this Section 5 (and the Basket shall not apply) with respect to the
matters described in clauses (c) or (d) of Section 5.2 or (except to the extent
expressly set forth therein) in Section 5.3.
5.6.4 Except to the extent expressly provided in Section 5.7,
Stockholders will have liability for indemnification under this Section 5 with
respect to the matters described in clause (e) of Section 5.2 and with respect
to the representations and warranties set forth in Section 3.11 (or any other
representation or warranty contained in Section 3 to the extent, but only to the
extent, that it relates to Taxes) for only one half of the first $250,000 in
Damages (and no more) with respect to such matters (for a maximum aggregate
liability to such Stockholders of no greater than $125,000), such liability to
be paid on a dollar- for-dollar basis with Buyer in respect of such first
$250,000 in Damages; provided, however, that the Basket shall not apply to the
indemnification payable pursuant to clause (e) of Section 5.2 or with respect to
the representations and warranties set forth in Section 3.11 (or any other
representation or warranty contained in Section 3 to the extent, but only to the
extent, that it relates to Taxes).
5.6.5 Notwithstanding anything contained in this Agreement to
the contrary, this Section 5.6 will not apply (including, without limitation,
the Basket) to (i) any Breach or asserted Breach by any Stockholder of any
covenant, agreement, obligation or undertaking (as distinguished from a
representation or warranty), or (ii) any fraud by any Stockholder, and
Stockholders will be liable for all Damages (without limitation of any sort,
except to the extent expressly provided in Section 5.7) with respect to such
Breaches and/or asserted Breaches and/or fraud referred to in clauses (i) and
(ii) of this sentence.
5.7 CERTAIN PROVISIONS REGARDING INDEMNIFICATION. All obligations of
Stockholders pursuant to this Section 5 shall be several as to the three Groups,
so that
(i) the Merrill Lynch Group shall be severally responsible and
liable for 7.5% of any indemnification liability under this Section 5
and any Damages relating thereto,
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(ii) the Rothschild Group shall be severally responsible and
liable for 50.875% of any indemnification liability under this Section
5 and any Damages relating thereto (but Nathaniel de Rothschild and
Donald B. Elitzer shall be jointly and severally responsible and liable
for such 50.875% of any indemnification liability under this Section 5
and any Damages relating thereto for which any Stockholder which is a
member of the Rothschild Group may be liable hereunder, including,
without limitation, for any liability for Breach or asserted Breach of
any representation and warranty under Section 3.37 hereof. It is agreed
that:
(a) of the members of the Rothschild Group, only
Nathaniel de Rothschild and Donald B. Elitzer (each, a
"Recourse Member") shall be responsible as provided herein and
may have liability hereunder;
(b) no other members of the Rothschild Group (each, a
"Non-Recourse Member") shall be responsible as provided herein
or shall have any liability hereunder;
(c) no Proceeding shall be brought against any
Non-Recourse Member naming him a party on grounds that he may
be responsible as provided herein or may have liability
hereunder, except that if a Non-Recourse Member shall be a
necessary or indispensable named party to a Proceeding seeking
recourse against a Recourse Member, the following rules shall
govern:
(I) only such Non-Recourse Members as shall
be necessary or indispensable parties to such
Proceeding may be named as parties;
(II) service of process upon such necessary
or indispensable Non-Recourse Members in such
Proceeding shall be effected by service upon either
of the Recourse Members (except as otherwise provided
in Section 6.5), each of whom individually is hereby
designated by such Non-Recourse Member (and by the
other Recourse Member) as his irrevocable agent for
the receipt of such process; and
(III) no order or judgment arising out of
any such Proceeding shall be enforced or executed
against any Non-Recourse Member or his assets, but
shall be enforced or executed solely against the
Recourse Members, jointly and severally, and their
respective assets, to which enforcement and execution
each Recourse Member hereby irrevocably expressly
consents; and
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(iii) the Gluckow Group shall be severally responsible and
liable for 41.625% of any indemnification liability under this Section
5 and any Damages relating thereto (but each of the members of the
Gluckow Group shall be jointly and severally responsible and liable for
41.625% of any indemnification liability under this Section 5 and any
Damages relating thereto).
Notwithstanding the foregoing provisions of this Section 5.7, (i) in no event
shall the aggregate liability for indemnification for all Stockholders hereunder
exceed the Purchase Price and (ii) Merrill Lynch Business Capital, Inc. shall in
no event have any liability for indemnification in excess of the portion of the
Purchase Price incurred by it.
5.8 LIMITATIONS ON AMOUNT--BUYER. Buyer will have no liability for
indemnification under this Section 5 with respect to the matters described in
clause (a) or (b) of Section 5.4 (except for a failure to pay all or any portion
of the Purchase Price set forth in Section 2.2 hereof) until the total of all
Damages with respect to such matters exceeds $50,000, whereupon the full amount
of such Damages in excess of $50,000 shall be recoverable in accordance with the
terms hereof. However, this Section 5.8 will not apply to (i) any Breach or
asserted Breach by Buyer of any covenant, agreement, obligation or undertaking
(as distinguished from a representation or warranty), or (ii) any fraud by
Buyer, and Buyer will be liable for all Damages with respect to such Breaches
and/or asserted Breaches and/or fraud referred to in clauses (i) and (ii) of
this sentence.
5.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under
Section 5.2, 5.3 or 5.4 of notice of the commencement of any Proceeding against
it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnified party's failure
to give such notice.
(b) If any Proceeding referred to in Section 5.9(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the
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STOCK PURCHASE AGREEMENT
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 5 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable out-of-pocket costs of investigation. If the indemnifying party
assumes the defense of a Proceeding, no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party and (C) the indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its consent other than
the giving of a general release with respect to specific claims covered in such
settled claim. If notice is given to an indemnifying party of the commencement
of any Proceeding and the indemnifying party does not, within fifteen (15) days
after the indemnified party's notice is given, give notice to the indemnified
party of its election to assume the defense of such Proceeding, the indemnifying
party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Stockholders hereby irrevocably consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought by any
Stockholder against any Indemnified Person for purposes of any claim that an
Indemnified Person may have under this Agreement with respect to such Proceeding
or the matters alleged therein or for purposes of making any other claim against
any Stockholder under this Agreement, and agree that process may be served on
Stockholders with respect to such a claim anywhere in the world.
5.10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by written notice to the applicable Group Representative naming the Person from
whom indemnification is sought.
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5.11 CERTAIN RIGHTS AND REMEDIES NOT AFFECTED. Except for remedies
based upon fraud and except for specific performance and injunctive remedies,
and except for claims pursuant to the Employment Agreements, the Set-Off
Agreements, the Stockholders' Releases, the Designated Contract Releases, the
Buyer's Releases, the New Lease and any agreements relating to the release and
termination of the Existing Leases, the remedies provided in this Section 5
constitute the sole and exclusive remedies for recovery against the indemnifying
party hereunder (i) based upon the Breach or asserted Breach of any
representation or warranty of any indemnifying party contained herein or in any
other Closing Document furnished by such party in connection herewith, or (ii)
based upon the failure of any indemnifying party to perform any covenant,
agreement, obligation or undertaking (as distinguished from a representation or
warranty) of such indemnifying party required by the terms of this Agreement or
any other such Closing Document.
6. GENERAL PROVISIONS
6.1 EXPENSES. Except as set forth in Section 5.2 and this Section 6.1
and Part 6.1 of the Disclosure Letter, (i) Buyer will bear its own costs and
expenses and each of the Stockholders will bear its own costs and expenses and
the Stockholders shall jointly and severally bear the costs and expenses of the
Company (including, without limitation, any broker's or finder's fees) in
connection with the negotiation and the consummation of this Agreement and the
Contemplated Transactions, and, (ii) no costs or expenses of the Company or any
Stockholder relating to the purchase and sale of the Company Shares hereunder
and the Contemplated Transactions hereby, including, without limitation, legal,
accounting or other professional expenses of the Company or the Stockholders or
the lessor of any real property to the Company, shall be charged to or paid by
the Company or Buyer on or after the date of the Interim Balance Sheet.
6.2 PUBLIC ANNOUNCEMENTS. Except as required by law, none of the
Stockholders shall, directly or indirectly, issue any press release, or other
public announcement, comment or other communication to any Person concerning the
Contemplated Transactions without the prior approval of Buyer. Buyer may, in its
discretion, issue a press release or make such other public announcement
describing the Contemplated Transactions after notice to Jack M. Platt, Esquire,
principal counsel to the Stockholders, or such other one attorney as the
majority in interest of Stockholders shall designate ("Stockholders' Principal
Counsel"), and a reasonable opportunity (taking into effect the applicable
securities laws and applicable stock exchange requirements and the timeliness of
disclosure required thereby) for him to review and provide comments thereon.
Each of the Buyer and the Stockholders shall direct its Representatives to
comply with the provisions of this Section 6.2. Buyer shall discuss in good
faith with Stockholders' Principal Counsel the nature and scope of any such
press release or public announcement; provided, however, that the final
determinations as to the content and timing thereof shall remain solely with
Buyer, except for information about
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Stockholders and the Company, which, subject to applicable legal requirements
(as reasonably determined by Buyer), shall be subject to the review of
Stockholders' Principal Counsel.
6.3 CONFIDENTIALITY. The Stockholders acknowledge that Buyer is a
publicly-traded company, and the Stockholders agree that they will hold in
strict confidence, and will not use, any confidential or proprietary data or
information obtained from Buyer with respect to its business or financial
condition except for the purpose of evaluating, negotiating and completing the
transaction contemplated hereby. Information generally known in Buyer's industry
or which has been disclosed to the Stockholders by third parties which have a
right to do so shall not be deemed confidential or proprietary information for
purposes of this Agreement.
6.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is promptly mailed by certified mail, return receipt requested,(c) if sent by
registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three (3) Business Days after deposit in
United States post office facilities properly addressed with postage prepaid, or
(d) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
TO BUYER: Courier Corporation
15 Wellman Avenue
North Chelmsford, MA 01863
Attn: James F. Conway III, President
Facsimile: (508) 251-0482
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: F. Beirne Lovely, Jr., P.C.
Facsimile: (617) 523-1231
TO COMPANY: Book-mart Press, Inc.
2001 42nd Street
North Bergen, NJ 07047
Attn: Treasurer
Facsimile: (201) 864-7559
58
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: F. Beirne Lovely, Jr., P.C.
Facsimile: (617) 523-1231
TO THE STOCKHOLDERS: For purposes of this Agreement, the respective Group
- ------------------- Representative for notices to or by each Group (which
for all purposes hereof shall constitute notice to
all Stockholders, it being understood and agreed that
the respective Group Representative shall have sole
and full authority to act on behalf of each member of
its Group with respect to all matters under this
Agreement) shall be as follows:
Merrill Lynch Group: Until August 10, 1997:
Mr. Jeff A. Rosencranz
Merrill Lynch Private Sales
& Divestitures
33 W. Monroe Street, 22nd Floor
Chicago, IL 60603
Facsimile: (312) 368-4352
After August 10, 1997:
Mr. Jeff A. Rosencranz
Merrill Lynch Private Sales
& Divestitures
Sears Tower
233 South Wacker Drive
Chicago, IL 60608
Facsimile: (312) 928-8842
Gluckow Group: Mr Gary S. Gluckow
Hemlock Drive
Alpine, NJ 07620
Facsimile: (201) 784-4035
59
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Rothschild Group: Mr. Nathaniel de Rothschild
Nathaniel de Rothschild Holdings
767 Fifth Avenue
46th Floor
New York, NY 10153
Facsimile: (212) 826-1236
Any Group Representative (or its notice address
hereunder) may be changed by a written notice to
Buyer and the Company pursuant to this Section 6.4
signed by a majority in interest of the members of
such Group.
With a copy to: Jack M. Platt, Esq.
Attorney At Law
One Rockefeller Plaza
New York, New York 10020
Facsimile: (212) 332-3315
TO: DONALD ELITZER: Mr. Donald B. Elitzer
39 Alford Road
Great Barrington, MA 02130
Tel: (413) 528-4693
Facsimile: (413) 528-1289
TO: NATHANIEL de ROTHSCHILD: As set forth above.
In each case with a copy to: Jack M. Platt, Esq.
at the address set forth above.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized Representatives.
6.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of New Jersey, or, in the United States District Court for the District of New
Jersey, and each of the parties consents to the personal jurisdiction, service
of process, venue and New Jersey jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world. Each
Stockholder who is a member of the
60
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
Rothschild Group hereby irrevocably designates and appoints each of Nathaniel de
Rothschild and Donald B. Elitzer (and Mr. de Rothschild and Mr. Elitzer hereby
each irrevocably so designates and appoints the other) at their respective
addresses set forth in Section 6.4 of this Agreement as such Stockholder's
exclusive agent to receive for and on his behalf service of process in any
Proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement or any of the other Stockholders' Closing Documents.
Except as set forth in this sentence and the following sentence, service of
process shall be effectively served on said Stockholders only if served upon one
of said agents, and Buyer and the Company agree that (unless Buyer and the
Company are unable to serve such process on either agent after using their
respective Best Efforts for 10 days (including an attempted communication by
telephone)) any such process, if served personally upon said Stockholder, shall
be null and void. In the event of any such inability to successfully serve
process on one of such agents, service of process may thereafter be made
personally upon any such Stockholder as provided herein. Nathaniel de Rothschild
and Donald B. Elitzer each hereby irrevocably accepts the above designation and
appointment as agent for service of process and each hereby consents to service
of process made in the manner provided for the giving of notices in Section
6.4(c), and any process so given shall constitute and be deemed good, proper and
effective service upon such Person.
6.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request (but which shall not cause the complying party to
incur any unreasonable expense) for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
6.7 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
61
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
6.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement and any
agreements executed contemporaneously herewith) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
6.9 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter or Buyer
Disclosure Letter, as the case may be, relate only to the representations and
warranties in the subsection of the Section of the Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement.
(b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Disclosure Letter or Buyer
Disclosure Letter, as the case may be (other than an exception expressly set
forth as such in the Disclosure Letter or Buyer Disclosure Letter, as the case
may be, with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.
6.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties except that Buyer may assign any of its
rights under this Agreement to any direct or indirect Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement (and
the Company on and after the Closing Date) any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement (and the Company on
and after the Closing Date) and their respective successors and permitted
assigns, (and the parties intend that there be no third-party beneficiaries
except to the extent of those Indemnified Persons identified in Section 5.2, but
only to the extent of the indemnification provided thereby).
6.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
62
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
6.12 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the words "including, without
limitation," do not limit the preceding words or terms.
6.13 GOVERNING LAW. This Agreement will be governed by the laws of the
State of New York (except with respect to matters relating to the Environment,
with respect to which the internal laws of New Jersey shall apply where
applicable) without regard to conflicts of laws principles.
6.14 SPECIFIC PERFORMANCE. The parties agree that it would be difficult
to measure damages which might result from a breach of this Agreement by any of
the Stockholders and that money damages would be an inadequate remedy for such a
breach. Accordingly, if there is a breach or proposed breach of any provision of
this Agreement by any of the Stockholders, Buyer shall be entitled, in addition
to any other remedies which it may have, to an injunction or other appropriate
equitable relief to restrain such breach without having to show or prove actual
damage to Buyer.
6.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. In order to prove the existence of this Agreement,
however, it shall only be necessary to produce a counterpart signed by or on
behalf of each party hereto.
63
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth by their duly authorized representatives.
BUYER:
COURIER CORPORATION
------------------------------------
By: James F. Conway III
Title: Chairman, President and Chief
Executive Officer
STOCKHOLDERS:
------------------------------------
Seymour E. Gluckow
------------------------------------
Gary S. Gluckow
------------------------------------
Nili de Rothschild*
------------------------------------
Nathaniel de Rothschild
ERER TRUST
By: Marigny Inc., Trustee
By:
---------------------------------
Director
*By Nathaniel de Rothschild as attorney-in-fact
64
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
------------------------------------
Donald B. Elitzer*
------------------------------------
Daniel A. Zilkha*
------------------------------------
Mark A. Boyar*
------------------------------------
Pierre Valla*
Mousseteek Venture
By:
--------------------------------
Charles Heilbronn, a partner
------------------------------------
Donald E. Zilkha*
Benjamin 1990 Trust
By:
--------------------------------
Pierre Valla, Trustee
Eva 1990 Trust
By:
--------------------------------
Pierre Valla, Trustee
*By Nathaniel de Rothschild as attorney-in-fact
65
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
------------------------------------
Irene R. Miller*
------------------------------------
Anoush Khoshkish*
MERRILL LYNCH BUSINESS
CAPITAL, INC.
By:
--------------------------------
Title:
------------------------------
*By Nathaniel de Rothschild as attorney-in-fact.
66
COURIER/BOOK-MART PRESS, INC.
STOCK PURCHASE AGREEMENT
EXHIBIT 2.1
LIST OF STOCKHOLDERS COMPANY SHARES OWNED
-----------------------------------------
OWNERSHIP
OF COMMON
NAME AND ADDRESS OF STOCKHOLDER SHARES
- ---------------------------------------- ---------
Seymour E. Gluckow 225
163 Wood Road
Englewood Cliffs, NJ 07632
Gary S. Gluckow 225
Hemlock Drive
Alpine, NJ 07620
Nili de Rothschild* 20
Nathaniel de Rothschild* 30
Erer Trust* 300
Donald B. Elitzer* 110
Daniel A. Zilkha* 10
Mark A. Boyar* 10
Pierre Valla* 10
Mousseteek Venture* 10
Donald E. Zilkha* 10
Benjamin 1990 Trust* 15
Eva 1990 Trust* 15
Irene R. Miller and Anoush 10
Khoshkish, JTWROS*
Merrill Lynch Business Capital, Inc. 81.081
Same address as set forth in Section 6.4
hereof
============================================== ================
TOTAL: 1,081.081
============================================== ================
* - addresses of all asterisked Stockholders is c/o Nathaniel de
Rothschild at the address set forth in Section 6.4 hereof.
